It started the way most marketing mistakes start, by misinterpreting data.
Kelloggs had nearly 30% of the cereal market but they wanted more profit.
So they raised their prices by 28% over 4 years, the large variety pack for instance had gone from $29.96 to $38.
Inflation was to blame they said but Rakeen Mabud, MD of Groundwork Collaborative, says corporate profits are behind half of inflation.
In other words, big brands using inflation as a cover to raise profits further, or ‘Greedflation’ as it’s become known.
Kelloggs spotted an opportunity in research data that said 25% of their customers also ate cereal at times other than just breakfast.
What happened next was dumb move number one.
Kelloggs should have run a campaign suggesting people try cereal at different times of the day, but they didn’t do that.
They ran a campaign suggesting families eat cereal INSTEAD of dinner:
(We open on Mum, Dad, and two children at the table, Tony the Tiger pops his head round the door.)
Tony: “When I say cereal, you say dinner…..Cereal”
Kids: “Dinner”
Tony: “Cereal”
Kids: “Dinner”
Chicken (in kitchen): “Chicken”
Mum: “You can have the night off, chicken.”
Chicken: “I’ll just go marinate”
VO: “Give chicken the night off”
Tony: “Cereal”
Kids: “Dinner”
Tony: “Cereal”
Kids” “Dinner”
So Kelloggs tried to increase sales by having families replace dinner with cereal.
In the middle of an inflation crisis, while families are struggling to afford food and Kelloggs are putting prices up, this may seem tone-deaf.
But what they did next was dumb move number two, which was much worse.
Kellogg’s CEO, Gary Pilnick, who earns $5 million a year, went on TV to say that the idea of replacing dinner with cereal was actually Kellogg’s helpful advice for poor families.
If they were struggling to feed their children, they could replace the family dinner with a bowl of cereal for less than a dollar.
He said it was Kellogg’s suggestion to help poor families on low incomes.
Obviously, this infuriated a lot of people.
Robert Reich, founder of Inequality Media, said “With a $5 million salary, do you think this CEO is feeding his kids cereal for dinner?”
Kellogg memes appeared everywhere the headline: “LET THEM EAT CEREAL”.
A huge TikTok campaign exploded, urging people to boycott Kellogg’s products and to buy own-label instead.
In supermarkets all over America, there are large displays of Kellogg’s products, normally $10 now reduced to $3.99, and still unsold.
This is the stupidity of marketing people who think the whole world is like them.
Poor people probably aren’t white-collar workers who sit at desks all day.
Poor people are often blue-collar workers who do hard, manual labour.
At the end of the day, a bowl of cereal is not what they need.
And for children, cereal is high in sugar, low in protein, and low in nutrition – not a meal.
As Senator Welch of Vermont said “They don’t need to eat cereal for dinner, they need corporations to stop ripping them off.”
In his bio, Kellogg’s CEO, Gary Pilnick, describes himself as: “Collaborator and key architect of transformative growth strategies that deliver shareholder value.”
Well thanks to him, Kellogg’s share price is currently going down, not sure that’s what he meant by ‘transformative growth strategies that deliver shareholder value’.
But this is certainly an example of how marketing can reposition the concept of ‘brand’.
From a reassurance of quality to the symbol for corporate greed.
Hi Dave,
I’m not sure what you are getting at here. The reason these execs are paid $5M plus other compensation is that they are so smart and irreplaceable. If they weren’t, surely there would be some ‘underlings’ to point out this kind of dumbness. I mean, if organizations were full of all sorts of smart and tuned in people, wouldn’t it be kind of a waste to spend so much on an out of touch CEO?
There are lots of smart people out there Rein, but many businesses today run purely on greed. They have done for years. Let’s take a few quotes from the past: “I have people walking round my stores with my money in their pockets”
Which retailer said that?
Or there’s the great football club chairman who said about his fans when the directors put the seat prices up: “Let the mugs pay for it.”
Or the utilities boss who poisoned London’s water supply before getting a GOLDEN HANDSHAKE, or the MP’S who voted for fracking licences to turn the Surrey UK parkland into a cesspit of red pigswill, or the group of ministerial clowns who ignored the WHO’S warnings of covid 19 three whole months before it killed 250,000 people in the UK, and purchased yachts and villas on the proceeds of PPE.
Until now, I have never looked up or felt the need to learn the definition of the word GREED.
Dave ‘Greed’ is most certainly le mot juste
As a Good will gesture, in these challenging times and with no doubt the cereal market being price sensitive,
a drop in price would have appealed to the poor, would have increased market share in volume and seen an increase bottom line net profit.
Just a thought !