Kellogg cans K-sentials ads for brand work

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Kellogg Co. has decided that its K-sentials is no longer essential.

The extensive TV and print campaign launched in March of this year to support Kellogg's multibrand push will be pulled in favor of specific brand advertising. The K-sentials logo, developed to promote additionally fortified cereals in Kellogg's existing portfolio, will remain on packages.

The campaign, from the Martin Agency, Richmond, Va., was, like most of Kellogg's recent efforts, expected to drive sales of its lagging cereal business, eclipsed recently by competitor General Mills.

Kellogg will retain Martin for yet-to-be-determined projects.

The K-sentials effort-encompassing seven individual cereal brands-was intended to establish Kellogg's kid-targeted cereals as an essential part of a healthy diet.

But, by all accounts, "the K-sentials proposition hasn't been as productive as they'd hoped, likely because it's too complicated," said an executive close to the company. Consumers didn't understand the proprietary health brand that Kellogg created, "because they're using their own terminology," said an executive from a Midwest retail chain. "People on the street don't know what it is."

FOCUS ON SINGLE PRODUCTS

For 2000, the marketer will shift the emphasis away from the multibrand K-sentials effort to focus advertising against its largest single brands, said a company spokeswoman.

Among them will be new work for kids' brands such as Froot Loops and Corn Pops that focuses on nutritional value. Also planned are new ads for Raisin Bran Crunch, a successful extension of the marketer's core Raisin Bran line, for which J. Walter Thompson USA, New York, created uncharacteristically hip ads that tried to convince young males, "Breakfast is back."

STRATEGY EXAMPLES

Raisin Bran Crunch and the recent launch of Special K Plus, a calcium-fortified cereal packaged in a milk carton to drive the point home, are examples of Kellogg's new strategy to build on existing brands. Instead of marketing completely new brands, which requires spending levels of $30 million or more to drive consumer awareness, Kellogg is extending already well-known ones in the hope of driving profitable returns within one year rather than three or four, said Lehman Bros. analyst Andrew Lazar.

Kellogg is applying that same strategy to the launch of a new soy-based cereal, to be launched regionally toward the end of the first quarter under the Smart Start banner. The extension will have 6.5 grams of soy protein per serving, the FDA recommended allowance for a healthy heart, said the Kellogg spokeswoman. Advertising from JWT will focus on the overall Smart Start brand as the best-tasting nutritional cereal out there, likely using the same "Seize the day" tagline used for the initial launch or "Start the day like you mean it."

Kellogg has experimented over the last few years with strategies in what has been a mostly uphill battle to drive cereal sales. But CEO Carlos Gutierrez has ceded to analysts that domestic cereal sales will not likely be the company's growth engine entering the new millennium. Once stabilized and returned to a modest growth track, Mr. Gutierrez has suggested that the products the company was founded on might instead become a reliable source of income for higher-growth initiatives, like convenience and natural/functional foods.

But even modest growth is a challenge.

"After years and years of not innovating and not supporting the brands, they have to play catch-up," said Mr. Lazar.

After a decade of encroaching on Kellogg's leading position in cereal, General Mills has finally surpassed it in sales, if only by a mere $35 million. Kellogg sales for the 52 weeks ended Oct. 10 were up a mere 0.2% to $2.401 billion, while General Mills sales rose 4.4% to $2.436 billion, according to Information Resources Inc.

General Mills has stuck to what a spokesman calls "a tried and true formula of investing in brand building through effective advertising and health news." Kellogg, with more at stake, has looked out of the box to build cereal consumption and, along the way, cut way back on basic brand advertising, said Prudential analyst John McMillin.

Some initiatives, including refrigerated Breakfast Mates kits and Ensemble, have failed; others like K-sentials and the Country Inn Specialties have not fared as well as Kellogg had hoped; still others, like Smart Start, have been embraced by consumers and will be extended.

NOT `A BATTING AVERAGE'

"When you're fighting something like this-the elimination of a meal occasion you've dominated-you've got to try a bunch of things and be willing to have a lot of those things not be successful," said John Stanton, professor of food marketing at St. Joseph's University in Philadelphia. "You can't look at it as a batting average. You have to look at them and say, `Are they better off from any of their innovations?' "

The answer is not yet, said Mr. Lazar. "Kellogg has yet to see the results of the innovation they'd like on the domestic cereal side, but it's still too early to say that this new approach isn't the right one."

Kellogg has no choice but to continue to gamble. Jumping on the soy bandwagon, which Kellogg is also doing via a pending acquisition of meatless entreemaker Worthington Foods, is itself a risk.

"People think of it as baby formula now, but it depends on how much publicity the FDA claim gets," said the retail executive. "It could be a winner. Otherwise it's a lot of money and time spent; and you have it, but does anybody care?"

The latter has so far been the case with Kellogg's Country Inn Specialties, a superpremium cereal the marketer introduced last year. The cereal, which does not bear the Kellogg name, is packaged in unique bags intended for special display racks. Perhaps in part because retailers often chose not to use the racks, instead placing the easily crushed bags on the top shelf with unbranded regional entries, the product has not taken off with consumers.

PACKAGING CHANGED

Kellogg is now rolling out new sturdier cardboard versions of the bag that will stand up on stores shelves, and the marketer is touting its ownership of the brand with the on-package line, "Cereal recipes discovered for you by Kellogg's." Despite lackluster sales, the Kellogg name still acts as a quality assurance to customers, company research found.

Ads for Country Inns from JWT will go into test early next year targeting upscale empty nesters in areas such as Palm Springs, Calif., and parts of Arizona.

Innovation on the convenience end has not been as checkered as innovations in cereal. In fact, said St. Joseph's Mr. Stanton, "Kellogg is getting hammered by the fact that people aren't eating breakfast at home, and convenience foods could be a way out of their dilemma."

The four megabrands within the Convenience division-Eggo, Rice Krispies Treats, Nutri-Grain and Pop-Tarts-have been the subject of new initiatives this year. Within the snack bars category, where Treats and Nutri-Grain fall, Kellogg saw sales rise 12.9% to $337 million for the year ended Oct. 10, per IRI. Much of that can be attributed to popular Nutri-Grain Twists introduced in 1999 featuring two flavors twisted together. The sub-brand has grown thus far to $56.8 million.

For Pop-Tarts, although the base brand is down 1.9%, growth has come from new products, including perforated varieties called Snak-Stix, dual-flavored Pastry Swirls and color-changing Wild Magic Bursts.

Even the cereal business has been extended into convenience with Snack 'Ums, crunchier variations on popular brands Corn Pops, Froot Loops and Rice Krispies Treats in easy-to-snack canisters.

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