Keebler: A Hollow Tree With Strong Roots

With a history that dates back to 1853, the Keebler name is indeed a house-hold word. In fact, the company produces and markets one out of four cookie and cracker products found on supermarket, mass merchant, club store and convenience store shelves today. But, as executives at the Elmhurst, Ill.-based company will tell you, marketing the Keebler name and the Hollow Tree heritage are more important today than ever before.From a Small Bake ShopThe Keebler brand dates back to Godfrey Keebler, a baker who opened a small shop in pre-Civil War Philadelphia. In 1927, the Keebler company joined with a group of local bakeries to form the United Biscuit Co. of America. By 1944, the joint venture had grown to a network of 16 bakeries across the country that marketed cookies and crackers under separate brand names. In 1966, the members of United Biscuit Co. adopted Keebler Co. as the official corporate name and the brand name for all products. Eight years later, the company was acquired by a British company, which sold it to INFLO Holdings Corp. in 1996.That same year, Keebler merged with Sunshine Biscuits Inc., adding to its product arsenal brands such as Cheez-It, Hydrox and Vienna Fingers. Additionally, through its Diversified Retail Products Division, Keebler markets the Carr's product line (which includes the famous Table Water Cracker) in the United States. In January 1998, with 500 employees working out of the corporate headquarters and 10,000 across the country, Keebler began trading as a public company.At press time, Keebler announced plans to acquire President Baking Co., best known for its Famous Amos brand.A Growing TreeAt the heart of Keebler's success, executives believe, is the DSD (direct store door) delivery system. The company's annual report for 1997, in fact, states that "DSD was instrumental in facilitating increased sales throughout the country."DSD is a two-step system that includes the sales organization and a distribution organization. The product is being delivered on trucks to the backroom," says Roger Kalinowski, vice president, marketing, Keebler Brands. "The sales rep is coming in through the front door, taking product from the backroom and stocking the shelf and working with the store manager to plan the next wave of display activity."Keebler is one of only two cookie and cracker companies that owns and operates a national DSD distribution system. Keebler sales representatives visit 30,000 locations an average of two to three times per week, assembling and placing P-O-P and collateral materials as well as restocking shelves. "Their frequent presence not only insures greater control over product availability and presentation," the annual report notes, "it results in better in-store promotions and product introductions. DSD gives Keebler the leverage to 'show and sell' our brands to consumers in a most effective way.""We have our own salesforce out there calling on headquarter-level contacts for all of the major retailers, as well as people down at the store level, selling in the displays store by store," says Kalinowski. "That is an army of people out there serving up what we have to offer. The service we provide in terms of assembling the displays, coming back and servicing them are responsibilities that we take on being a DSD supplier. Obviously, because of the labor savings to the retailer, it gives us an advantage."As Kalinowski notes, there is a major commitment from the top on down to developing good P-O-P and making sure it gets placed in stores because the cookie and cracker categories are heavily impulse-purchase driven. "Making P-O-P is absolutely critical in the categories that we are competing in."Fully exploiting that advantage is a relatively recent initiative. "One of the observations of the new ownership group was that they characterized Keebler as a DSD company that did not operate like a DSD company," says Kalinowski. "We underutilized the inherent strength that the direct store door sales organization represents. There has also been a lot more focus on providing the salespeople with the proper tools to do their jobs, which enables us to capture display space in-store and integrate all of our marketing programs."At the CoreWithin Keebler's marketing department are four key groups: brand marketing, promotions, market research and marketing services. Although all four groups provide input and feedback about each display or promotion, marketing services primarily directs all P-O-P efforts for the company. This nine-person group develops the structure and graphics for each program and oversees the production and distribution of the materials.Susan Bell, director, marketing services, estimates that 95 percent of marketing services' P-O-P efforts involve corrugated materials, whether it be a stock display (one that has an ongoing position in the store, but is freshened with new materials periodically), a promotional display (usually in place 4-8 weeks) or a seasonal display. Keebler's roster of P-O-P typically includes items such as header cards, combo cards, shelf talkers, danglers and signage. But the marketing services department is best known within the P-O-P industry for its displays -- quite often very large and spectacularly detailed, and frequently revolving around the Hollow Tree theme.Kalinowski adds that the company does produce some permanent merchandisers. "Obviously, the permanent units cost more and we have to be assured that the placement will be over a longer duration," he says. "If a retailer is willing to make a long-term commitment, it makes sense for us to provide the support materials to make that happen."Marketing services concentrates on package design as well. "Through package design, we are helping to explore what the positioning for that brand is, who the consumers are and how we are targeting them," says Bell. "The design of the display is a direct result of a lot of development and brand positioning work that was done from the package."The acquisition of the Sunshine brands extended the marketing department's responsibilities. Bell says that by working with more brands than ever before, "It has infused a lot of creativity into what we're doing because we think about every brand in a new way."Creativity or Elfin Magic?Believe it or not, the Keebler elves themselves are involved heavily in the development of the company's P-O-P. Not literally, of course, but as Bell notes, the elves and the Hollow Tree imagery provide a lot of inspiration.Keebler executives and suppliers gather before each new project for brainstorming meetings -- affectionately known as "Ernie Sessions." The marketing services team shows old Keebler commercials and decorates the room with Ernie dolls. "We bring in their designers and production people and try to come up with new ideas by looking at other categories," says Bell.Bell and her team have one constant when designing P-O-P. "We incorporate Ernie into as many of the elements as we possibly can. We want to optimize the equity that we have here at Keebler -- the elves and the Hollow Tree -- things that have been etched in people's memory for many years," says Bell."Ernie really is the Keebler brand," adds Kalinowski. "They are inseparable in the minds of consumers. If you show Ernie to a consumer, they are going to make the connection with Keebler. And we hope it will evoke an emotional response of warmth, generosity, quality ingredients and quality products. When we put Ernie on a display, it clearly represents Keebler and stands for all of those traits."While Keebler is very Ernie-focused, executives never lose sight of the real world. A good example is a recent promotion with Nintendo of America, one of the biggest tie-ins the company has ever done. "We thought it was a great opportunity to go against the common consumer target for the products that we market to kids, tweens and teens," says Kalinowski. "We wanted to leverage equity from other properties and increase the relevance of Ernie and the Keebler elves in an environment that kids relate to."Bell notes that many groups within the company have input throughout the design process. "Sales definitely has a say in display creation because they really are our customers. They are the ones who have to sell this piece in and deal with the retail issues."All design work is farmed out and the company often has one design team working on structure and another on the graphic elements. Bell says an important benefit she finds in using design companies is their understanding of the three-dimensionality of P-O-P, how customers will approach it, what will create impact visually, as well as how to use color, copy and graphic elements.A major improvement Bell notes in working with suppliers is in the use of color. "We have been able to achieve a very strong use of color that can be directly printed on corrugated. We do a lot of prepress testing to create colors and get full coverage as well as test different varnishes -- a process that we have used for a long time in package design," she says. "We are starting to apply some of that knowledge when we create printing dyes in P-O-P. We're using more screens and more color, which we think is the one thing that is really going to stop people in-store. If we can create a space that has a predominate color, it has a lot more stopping power."Efficiency is KeyWith more brands and more promotions, executives at Keebler realize the necessity of efficiency. "The cost of a display is important to us in terms of efficiency. If something costs $60 or $40, that is a critical difference to us," says Kalinowski. "We have to manage our programs very cost effectively, but in terms of the commitment to the use of P-O-P, we have a steady stream of it. These categories live and die in the strength of in-store displays, so we have to get it out there and it has to be very effective."One of the ways to increase efficiency is simply to concentrate on it, says Bell. "We are working to raise awareness within our company that P-O-P really costs money, and even though it is corrugated, it is not a box. It is something that has tremendous value."The challenge, adds Kalinowski, is gauging how much is needed for each program. "Marketing executives present each promotion to the sales team and tell them what types of P-O-P pieces will be available to support it. We then solicit quantity orders so we can gauge their level of interest based on what they think they will be able to do with it in the retail environment. We bump that up against historical usage on other similar promotions."The strength of Keebler's DSD network has taken efficiency to a new level, says Bell. "There have been a lot of changes in the last three years in terms of how the whole process occurs, but I feel that now it is very buttoned up." She says that one of the major problems in the past was the stop-off points for the P-O-P, which slowed the process and allowed for more waste in the system. "We have streamlined that and made the process much more efficient," she says."We are very proud of what we're doing today," adds Kalinowski. "We are dealing in fun categories that are meant for fun occasions and we want to be sure that we carry that idea through in the P-O-P. In doing so, we connect with both the retailers and the consumers, which proves that it is very effective for us."

Keebler: A Hollow Tree With Strong Roots

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