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CONAGRA'S NEW ETHIC BRINGS RETURN TO ADS MARKETING EFFORTS RISE WITH SMITH'S LEADERSHIP

By Published on .

When ConAgra Frozen Foods reformulated the Banquet frozen chicken lines late last year, it sent a letter to each consumer who had complained about the products. Then last week, it told the rest of the world-in the first TV advertising for Banquet in seven years.

The effort, from Grey Advertising, New York, demonstrates the new marketing ethic sweeping through ConAgra. "Banquet is a major brand," said Jim Smith, president. "It needed to be treated that way."

In the past, the commodity product heritage of ConAgra meant it marketed because it had to. The company spent about $50 million in advertising its products last year. But under the leadership of former Procter & Gamble Co. veteran Mr. Smith, marketing motivation is purer.

Already, there are dividends: Con-Agra's centerpiece Healthy Choice frozen foods line, pooh-poohed by competitors for a year, is growing again.

"We're betting harder on our brand names and planning to keep them stronger," Mr. Smith said.

"Marketing has become a more integrated part of the way we do business," he said. "At times in the past, we tended to think of some of our brands as independent operating companies. Now there's a commonality in technology, operations and some in marketing, too."

A critical element is the refocusing of marketing dollars. Overwhelming numbers had been spent on slotting allowances, trade discounts and price promotions to drive short-term sales. Mr. Smith said the company has changed the division of marketing dollars between consumer and trade marketing by as much as 30 percentage points this year, allotting more for advertising and consumer promotion.

For Healthy Choice, the new focus has meant axing unprofitable line extensions and recommitting to consumer marketing. Ice cream, once marketed as a separate entity, is now managed within the frozen foods group, with coupons for ice cream on the brand's dinners and entrees.

Next month, retailers will stock updated versions of Healthy Choice entrees, packaged in more expensive but consumer friendly trays rather than plastic bags. ConAgra did not pass the extra production costs on to consumers.

Something's going right. After two lackluster years, Healthy Choice sales in the $3.3 billion frozen dinner and entree market rose 6%, to $422.3 million, for the 52 weeks ended Oct. 3, Information Resources Inc. reported.

No. 2 in the category with a 12.8% share, the brand outperformed the category in which overall sales fell 0.8%. The No. 1 brand, Stouffer Foods Corp.'s red box line, registered a sales drop of 2.2%.

"I don't think we as a corporation have yet fully leveraged what Healthy Choice can be," Mr. Smith said. "It's a spectacular equity; How many brands in such a short period of time get to $1 billion in sales?"

Mr. Smith hopes to help revive the frozen food category as a whole, hit by rampant discounting and price competition.

"There's been too much of an internal category focus," he said. "We've all been acting like little kids, and [with] that kind of inward focus, all it does is make the [retailers] rich."M

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