Kellogg Company, Battle Creek, MI, the world's leading cereal producer, is preparing to launch a series of inhouse sampling campaigns early next year based on a marketing agreement with Alternate Marketing Networks Inc., Grand Rapids, MI.
The effort is intended “to achieve new growth in our ready-to-eat cereal business,” said Kenna Bridges, a spokeswoman for Kellogg, “and also to rapidly expand our global convenience foods business — such as our toaster pastries and cereal bars. The marketplace requires us to be more strategic in our consumer promotions efforts. And, in order to do that, we needed to increase our strategy.”
Indeed, the Kellogg company is trying to regain market share. It reported a decrease in net earnings in the first quarter of 1999 at $144.4 million, down from $170.7 million for the same period in 1998, and earnings per share were 36 cents, down from 42 cents for the same period last year. In addition, late last month, the company announced that it may close the South Operations portions of its Battle Creek cereal plant to reduce costs.
What's more, rival General Mills, Minneapolis, which has perennially held the No. 2 position behind Kellogg's, reported on June 29 record fourth quarter and 1999 fiscal year financial results. Earnings for the fourth quarter, which ended May 30, totaled 67 cents per diluted share, up 18 percent from 57 cents for the same period a year earlier. Annual earnings totaled $3.60 per diluted share, up 12 percent from $3.22 earned in fiscal 1998.
The cereal maker has conducted previous sampling programs but is putting more effort into this program. In-home delivery is an important medium, Bridges said, because it “meets consumers where they are and makes it extremely convenient for them to interact with our products.”
Kellogg selected AMN as its preferred vendor for all in-home sampling events late last month as well as named several additional preferred consumer promotion agencies, including Draft Worldwide, Chicago, as its full-service agency, and Garner and Nevins, Atlanta, as its field execution agency. Under terms of the AMN agreement, Kellogg will use the APD In-Home Sampling division of AMN for nationwide direct-to-door sampling. APD uses block-group targeting based on census geography and can deliver samples to 53 million households — two-thirds of the country — but Kellogg probably will use the system for very targeted programs, such as brand introductions to specific demographic groups.
Kellogg will supply APD with its sample packs and artwork, as well as its own targeted database. Then, APD will “match block groups applicable to Kellogg's demographic profile,” said APD president Ruth Ann Carroll.
APD's Internet-based End-To-End Tracking Management system was one of the reasons Kellogg selected AMN. The system allows clients to use private PIN numbers to electronically track progress of samples in a campaign from start to finish and offers brand managers immediate access to information that previously would have taken days or weeks to compile.
“They can go in every day and track the progress of their samples,” Carroll said. “For example, they can track when samples are picked up from the co-packer, delivered by truck to the fulfillment center, then delivered to the local markets and then to the homes. Sales managers can keep total control of where their samples are, when they are actually dropping, the day they drop, even the weather that day.”
The system also has a fraud prevention and detection policy program.
“We've instituted these controls because direct-to-door delivery has had some trackability issues,” Carroll said. “This system makes sure samples get to the market and the carriers actually do deliver what they say they are going to deliver. We are able to track samples, verify that they were delivered and verify that they got to the consumer.”
