Kellogg’s Keeps Marketing High and Sales Sore

As the economy goes downward Kellogg Company is finding it a sweet deal. Kellogg’s reported double-digit increases in third-quarter earnings. They credited stepped-up marketing support for the gains. AS well as help from companies like Wal-Mart.

Kellogg's net earnings were up 12% to $342 million

"Our success was driven by price realization, effective advertising and continued business momentum," Kellogg CEO David Mackay told analysts during the earnings call. "We achieved solid [third-quarter] results, which were above their long-term targets despite the economic slowdown, commodity inflation and higher tax rate."

Kellogg has been aggressively increasing advertising over the past year, spending nearly 9% of sales, or more than $1 billion. John A. Bryant, exec VP-chief financial officer, noted that competitors spend about 5% of sales on advertising. But moving forward, he said, the company said it is scaling back in terms of increase and will be focusing on the efficiency of its spending.

"We are also driving a series of initiatives across brand building to further improve the efficiency and effectiveness of lead investments in the new media environment," he said. "We began to see the benefits of these initiatives during the third quarter."

Together with companies like Wal-Mart, Kellogg has some of its retail partners willing to advertise its products for free. At the same time, the company has been advertising its cereals with milk as a meal for 50 cents; Wal-Mart has taken up this messaging as a way to pitch its own in-store value proposition.

"Wal-Mart has been constantly pushing their angle as being the retailer that gives the best value," Mr. Mackay said. "They paid for the advertising that I think featured an array of Kellogg products, and suggested that the consumers could save $900-plus a year."

Larson note: Coop advertising to sell more. Kellogg Company and Wal-Mart selling cereal with MILK which they sell (of course). Who can you work together with to share the expenses of your advertising and marketing? Who can you form a synergy with? As a Guerrilla Marketer I really like the 9% figure, although something over 10-15% is even better. For a company I am really impressed by Kellogg’s boldness and agressiveness to marketing!

Howard Larson
Larson & Associates
Telesales & Target Marketing Professionals for new account acquisition
Making good businesses great and great businesses even better
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