Media Business Strategies

The Blog of David Polakoff

Two Scoops of…Bunk?

Posted by David Polakoff on December 3, 2009

The Windmills of My Immediate Mind

Media Business Strategies – David Polakoff

Two Scoops of…Bunk?

The only reason I know that Battle Creek is in Michigan is because the geographic morsel has been staring me in the face since my salad days…or should I say my childhood breakfast days.   The Kelloggs “Variety Pack” and large box cereal offerings have been (non-exclusive) commonplace ready-to-eat cereal choices for many years; there’s been a strong personal and family loyalty to the company as well as product satisfaction.  It does, though, have me vexed and miffed why The Kellogg Company would treat its brand loyal consumers with such disdain.  Let’s examine.

In June of 2008, Kellogg’s announced the shrinking of its cereal box size and content on several of its cereal products.  If I thought this was Kellogg’s way to combat American obesity, I’d applaud the effort, but it was driven by higher commodity prices and energy costs. Rather than maintain packaging and raising the price, Kellogg’s chose the “backdoor” route by holding the price, but giving the consumer less; what a non-transparent way to treat the consumer –  like s/he is an idiot who won’t notice the package change, the per unit price variation, or the additional, newly required trips to the supermarket.

Next, Kellogg’s was one of several food manufacturers, including competitor, General Mills, to create the “Smart Choices Program.”  Per the program’s website, “The program was developed because of the need for a single front-of-pack nutrition labeling program that U.S. food manufacturers and retailers could voluntarily adopt to promote informed food choices and help consumers construct better diets.”  The Food and Drug Administration (“FDA”) recently stepped in to question the integrity of the program.  Kelloggs’ Fruit Loops bore the “Smart Choices Program” label.  Hallelujah, FDA; one cup of Fruit Loops has 12 grams of sugar – not really a great “better diet” idea.

Further, earlier this year, the Federal Trade Commission (“FTC”) nailed Kellogg’s for false and misleading advertising.  Per the FTC website, “Kellogg Company, the world’s leading producer of cereal, has agreed to settle FTC charges that advertising claims touting a breakfast of Frosted Mini-Wheats as “clinically shown to improve kids’ attentiveness by nearly 20%” were false and violated federal law. The proposed settlement bars deceptive or misleading cognitive health claims for Kellogg’s breakfast foods and snack foods and bars the company from misrepresenting any tests or studies.”  Presumably, the FTC did not eat the Frosted Mini-Wheats and was still attentive enough to notice the bunk!

Then with some irony, Kellogg’s dropped USA Olympic champion and record setter, Michael Phelps as a spokesman for its Frosted Flakes cereal, after Mr. Phelps was caught in a marijuana related incident; one for which he announced, “I engaged in behavior which was regrettable and demonstrated bad judgment.  I’m 23 years old and despite the successes I’ve had in the pool, I acted in a youthful and inappropriate way, not in a manner people have come to expect from me. For this, I am sorry. I promise my fans and the public it will not happen again.”  Visa, Omega watches, and Speedo retained their deals with Mr. Phelps, while Subway sandwiches temporarily suspended utilizing Mr. Phelps, but has since returned him to their promotions.  Different brands treat celebrity scandals differently (we await the Tiger Woods fallout, though no sponsors have thus abrogated their deals with Mr. Woods*) and I don’t fault Kellogg’s for dropping Mr. Phelps, though I found it ironic in light of the company’s deceptive practices and FDA and FTC admonishments.

Several companies are gambling with their brands (NBC trying to cost-cut their way to success) and Kelloggs was only singled-out due to their plethora of recent and readily available examples of brand-foolery.  Traditional brands have an inherent trust factor.  Why any company would jeopardize that trust, loyalty, and recognition, I am at a loss to explain.  Especially in this current economic climate, with consumers driven, by cost, from brands to generics, traditional brands shouldn’t be helping consumers reach to the lower shelf space.

I provide consulting services, offering operational, financial, and strategic expertise to media/entertainment companies.  While I have a financial background, I am atypical in my constant efforts to have clients focus on the consumer.  I believe in my clients’ product/service concept and assuring that their audience trusts the company.  Recognition drives traffic and ultimately revenue.  Anything that interrupts the transparency and the simplicity for the customer will earn a “red flag” from me.  The consumer has got be respectfully treated; you better believe that matters to me as a trusted advisor and in my everyday personal consumption choices.  That’s my two scoops; hope you’ll come back for more!

* Subsequent to my original post, Accenture and Tag Heuer ended their relationships with Tiger Woods; Gatorade discontinued its Tiger Focus drink, noting the decision preceded the publicity of the Tiger Wood martial situation; Gillette announced it would cut back on Tiger Woods’ marketing role.  AT&T is re-evaluating its relationships with Tiger Woods.

And this just in, December 31st, AT&T is ending its Tiger Woods relationship.

And this just in, during the week ended February 26th, Gillette and Gatorade have dropped their relationships with Tiger Woods.

And this just in, June 2010, the FTC again nailed Kellogg’s for claiming that Rice Krispies strengthens the immune systems of children. Rice Krispies cereal box text had included, “Kellogg’s Rice Krispies has been improved to include antioxidants and nutrients that your family needs to help them stay healthy.”

December 2010 update, Gillette will not be renewing the Tiger Woods endorsement contract.

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