Ramping up new product development and marketing

Feb. 22, 2010

With the economy on a path to recovery, food marketers are ramping up product pipelines, investing more money into digital, and increasingly using marketing to gain consumer insights, reports Brandweek.

With the economy on a path to recovery, food marketers are ramping up product pipelines, investing more money into digital, and increasingly using marketing to gain consumer insights, reports Brandweek.

Although line extensions, or playing it safe, was the name of the game last year, food companies presenting at the Consumer Analyst Group of New York (CAGNY) conference in Boca Raton, Fla. this week, expect an increase in new product introductions, including innovation that goes beyond the basic extensions and actually "sticks, and grows [past] year one," as ConAgra Foods CEO Gary Rodkin put it. The food maker is once again focusing on its motto-"Fewer, bigger and better"-when it comes to new products. Currently in test marketing, ConAgra will launch Banquet Fruit Pies, the company's first foray into dessert.

 "We went back and looked at recessionary periods in the past, and a lot of great brands and innovation were launched during those periods," Ian Friendly, General Mills' executive vice president and COO of U.S. retail, said in a meeting with reporters. "We see this as a very good time to innovate, whether it's breakthrough innovation or line extensions."

Food makers are also raising the bar on marketing to identify new consumer trends and growth opportunities. ConAgra's new way of looking at Orville Redenbacher's popcorn helped shape marketing and advertising for the brand. Orville Redenbacher's, which went through a packaging upgrade, wasn't just a movie snack; it served as a "social magnet" for consumers, ConAgra's Rodkin said. Healthy Choice also went through a marketing refocus when the marketing team realized that Healthy Choice's target and positioning had lagged behind the times. "We needed the consumer to notice we were no longer your grandfather's frozen dinner, [and so] we started with new formulations and then new packaging," said Rodkin. The key insight, he added, was that the Healthy Choice consumer of the past was "male and [more] dinner targeted," while the modern day consumer was "younger, female" and fashionable.

General Mills still spends the majority of its dollars on TV advertising, although its focus on digital, which offers more bang for the buck, is growing. Most of these efforts take place outside of Twitter and Facebook, at company-created social networking sites. Pillsbury.com and BettyCrocker.com allow General Mills to "reach out to consumers in different ways and let them guide us," Friendly said. Another General Mills-sponsored site, EatbetterAmerica.com, allows visitors to "healthify" recipes. It's a way for the cereal maker to tap into the consumer migration to the Web.

Kellogg COO John Bryant told analysts hat "media deflation" was mostly a boon in Europe in 2009, reports MediaPost. But in 2010, it will be titled toward the U.S. "due to the timing of the upfront buy." Kellogg's spending rose in 2009 to an estimated $1.1 billion globally -- and will again this year, Bryant said. The company last year spent 9 percent of its $12.6 billion in global net sales on advertising, higher than the 7.2 percent of net revenues Kraft. Kellogg is also moving aggressively into social media, Bryant said, tripling spending over the past three years and experiencing "great returns on this investment."

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