Snap, Crackle and P-O-P

Cereal, once the crown jewel of breakfast tables, has seen better days. After years of high prices, high consumer demand and little competition, cereal sales have become, well, soggy. In part, the decline is due to consumers taking less time for a sit-down breakfast in the morning. Also, pricing pressures and low inflation have hindered profitability.In response, Kellogg Co., the leading manufacturer of ready-to-eat cereal, is attempting to reenergize its sales by providing consumers with what it thinks consumers want -- single-serve breakfast and snack alternatives that can be taken on the go. The Battle Creek, Mich.-based company recently launched a new division dedicated to putting single-serve breakfast foods and snacks into the hands of consumers."Single-serve is one of the Kellogg Co.'s new focal points for the years to come," says Gerard Gausselin, manager of merchandising innovation. "Single-serve is a huge opportunity for us so we're taking it very seriously through every aspect of marketing, packaging, promotion and point-of-sale."The in-store merchandising for single-serve products is slated for launch in January 2000. It will be supported with a full arsenal of P-O-P for 28 single-serve products. Also, the company is making serious moves into the permanent display arena. By the end of 2000, the company hopes to have 200,000 pieces of P-O-P in stores.From Sanitarium to CerealThe company's history dates back to 1894 with the invention of flaked cereal. While working at the well-known Seventh Day Adventist hospital and health spa (featured in the 1994 movie "The Road To Wellville"), Dr. John Harvey Kellogg and his younger brother, Will Keith Kellogg, were experimenting with a variety of grain-based foods. Through a series of accidents and coincidences, cooked wheat was left out and became stale. The brothers decided to roll the stale wheat through granola rollers, which flattened the wheat into small flakes. When baked, the flakes tasted crisp and light and quickly became a favorite among guests of the spa. In fact, the flakes were so successful with patrons that Dr. Kellogg formed the Sanitas Nut Food Co. to sell the wheat flakes.In 1898, Will Keith developed the process for flaking corn. Taking advantage of his new invention, he founded The Battle Creek Toasted Corn Flake Co. in 1906, which was later renamed Kellogg Co.With a product portfolio that includes such brand names as Corn Flakes, Apple Jacks, Corn Pops, Froot Loops, Frosted Mini-Wheats, Rice Krispies, Pop-Tarts, Nutri-Grain bars and Eggo waffles, the company has maintained its focus on healthy breakfast foods and snacks.In 1995, the company introduced Rice Krispies Treats for the pantry section of stores. A single-serve Rice Krispies Treats bar soon followed. A national mass merchant chain helped prove the effectiveness of selling single-serve bars by placing them in the front end of stores. "They put them on their front end and they became top performers," says Tom McKay, sales development manager for single-serve.Rice Krispies Treats have served as the flagship brand in the single-serve division. The company has further delved into the single-serve business with its Nutri-Grain and Pop-Tarts brands. "Pop-Tarts are a $355 million brand and now we've created a single-serve offering," says McKay. "In c-stores, we're seeing tremendous opportunities to not only get Nutri-Grain and Pop-Tarts into stores, but to get them next to the coffee pot because that's a great equation. Coffee plus a breakfast item equals breakfast on the run."Champions of BreakfastTo ensure the success of the single-serve division, Kellogg assembled a team of P-O-P and single-serve experts that fall under the department heading of trade marketing. Gausselin has worked in P-O-P for the past 14 years and was brought to the team to provide point-of-purchase expertise, work with vendors and monitor the company's P-O-P efforts. "I make sure this is the right item, the right price and the best production method for what we're trying to accomplish," he says.McKay, who has been in the industry for the past nine years with companies like Hershey Chocolate U.S.A. and Nestle U.S.A., works with the field salesforce to make sure that they have the tools they need to service their accounts.Geoff Snow, manager of trade promotion for single-serve, spent 12 years with Nabisco and serves as the group's liaison to brokers and retailers. "Geoff is very adept at dealing with brokers and understanding how products and displays move into the field and what it costs to get it in there," says Gausselin."Everyone in management realizes the potential for single-serve and our product offering is growing," says McKay. "We're a separate unit within the company to drive impulse sales. We've got a very organized structure."Much of the non P-O-P for single-serve is aimed at c-stores, where Gausselin sees the greatest area of opportunity, though all market channels are being supported with extensive P-O-P."Traditionally, the P-O-P offering in single-serve was pretty much just a wire rack," says Gausselin. "Now, we're expanding into signage, endcaps, lane blockers, anything and everything that will help us get distribution and get our products into reach."Part of this effort has been to design merchandising systems that utilize a retailer's unused space."Studies have shown that the average c-store customer is picking up one item," says Snow. "Now, we're trying to get them to pick up two items that conveniently complement each other. We have to sell the idea of what our merchandising can do for the retailer and the space it's going to take. Basically, we create sales out of the air for them."In the drugstore channel, the group is also taking advantage of cross-merchandising opportunities. "We're developing programs to put our products with other complementary items, like morning newspapers," says Snow. "Consumers can pick up their morning paper and their breakfast on the go."In a major West Coast supermarket chain, the company wasn't able to get front-end placement, so the team decided to try merchandising Nutri-Grain bars and Pop-Tarts on top of soda coolers. "We thought that if we can't get on the front end because we're not a confection, then let's talk impulse sales and snacking for those customers who may want an alternative to confection," says McKay.The company has conducted controlled tests to help retailers see the potential for single-serve, non-confection products. "We've run controlled tests in c-stores to prove that our items move just as well as confection when on display," says McKay."We have the data to back it up. It was a controlled test that we purchased from an outside vendor and it ran in two top chains. They came back to us and said that if confection gets a 42% lift in the meal prep area next to the microwave in a c-store, we get a 42% lift on Pop-Tarts or Nutri-Grain when we are next to the coffee pot or microwave. It's all about availability and driving your overall velocities and that's what we're doing through our displays, whether permanent or corrugated."The single-serve team began designing P-O-P for the single-serve portfolio by establishing a catalogue of P-O-P items to meet the needs of each class of trade. "We went out and attacked the market," says Gausselin. "We went to retailers with six or seven ideas that are ideal for the c-store arena. Hopefully, those items will fit 80% to 90% of our target market. If not, we'll sit down and give them what they want. Basically, we're taking a lot of good ideas and configuring them in sizes, shapes and colors to customize for different accounts."The trade marketing strategy outlined areas of the store where single-serve items could be best merchandised -- near the food prep area, coffee pots, destination locations, alternative snacking locations, in the aisle, next to juice and soda coolers, etc. From that point, the team designed P-O-P that would suit those locations, as well as benefit the retailer."We look at the overall foot traffic in a particular store and strategically say, 'We want to plot these permanent fixtures or corrugated displays to maximize takeaway,'" says McKay. "We want to make sure that people interact with these displays, but we have to sell the retailer that this is a small footprint, it won't take up much floor space and, bottom line, it will maximize unused sales space. Ultimately, we can talk about the overall strategy, but it all starts from just maximizing that unused sales space with our displays."Gausselin then works with vendors to find merchandising solutions. Vendors produce mockups and prototypes, and Gausselin presents those to the trade marketing group, which then analyzes each piece.Gausselin's main suppliers include ADC, Lyndhurst, N.J.; Benchmarc Display Inc., Vernon Hills, Ill.; Chicago Display Marketing Corp., Melrose Park, Ill.; E and E Display Group, Lawrence, Kan.; Frank Mayer & Associates Inc., Grafton, Wis.; Great Northern Display Group, Racine, Wis.; Impulse Marketing, Lawrence, Kan.; Kent Design & Manufacturing Inc., Grand Rapids, Mich.; The Niven Marketing Group, Bensenville, Ill.; Phoenix Display, West Deptford, N.J.; P.O.P. Displays International, Woodside, N.Y.; United Displaycraft, Des Plaines, Ill.; Vision Packaging, Kalamazoo, Mich.; and Visual Marketing Inc., Chicago.To help sell the single-serve products and displays into stores, Kellogg hired brokers who specialize in front-end merchandising. "The brokers are our foot soldiers for single-serve," says McKay. "It was a culture shock to our organization before to try and go in and talk to a candy buyer about front-end distribution. As a company, we decided to hire a salesforce and that's where the brokers came in."Displays are designed with little or no assembly required by the retailer. Modular corrugated options allow for experimentation within the retail environment. Shipper boxes with attractive graphics help give retailers further options. "The idea is that if you haven't sold a store on a larger piece, you can take a shelf off one of our shippers and set it next to the coffee bar and watch the velocities of the two different locations," says Snow.Each display piece, some of which have already been fieldtested in controlled tests, will be evaluated on a continual basis. The trade marketing group will assess each piece and add and subtract display vehicles as needed. "We're going to monitor the success of each piece of P-O-P on an individual basis," says Gausselin. "The brochure is going to be built into a slip sheet form so we can have our field force take out a piece if we need to so we don't sell something that we don't have in inventory. We can add to it as well. If we may have missed an opportunity, I can jump on that very quickly and get something produced and get a sell sheet into the field."Though the single-serve division is presently the main thrust of the company's P-O-P efforts, Kellogg hasn't forgotten its core cereal business. Cereal sales may have softened, but it is still the backbone of the business and the company is planning initiatives to reinvigorate the category. "Cereal is changing," says Gausselin. "As a leader in that segment, we need to partner with our retailers to create some excitement and reinforce the tremendous value and nutrition our cereals bring to the breakfast table."Plans are underway to redefine the cereal aisle and display Kellogg's products in what Gausselin calls "product glorification." The company will be moving away from corrugated and promotional P-O-P pieces and will pursue permanent displays and fixtures. "We're going to try to innovate the cereal aisle," he says. "We're looking at a lot of exciting and interesting things that have never been done."

Snap, Crackle and P-O-P

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