Analyzing the Most Important Meal of the Day
By Maureen Treankler, Managing Director

As Jim Doucette describes in "A Recipe for Growth at Breakfast," the competitive frame for cold breakfast cereal is not just cereal. It competes in the broad breakfast landscape with bars, fruit, yogurt and other foods sold in the grocery store. Consumers are also getting pulled out of the house with options. Even quick-serve restaurants such as Subway, Starbucks and McDonald's are offering breakfast fare.

True category growth for breakfast cereal will come from innovation that sources volume from adjacencies by delivering benefits that are unique and ownable. Further, growing share in cereal requires strong differentiated trademarks that are supported by leadership advertising, brand equity building activities and a stream of innovation. Let's take a look at three brands of breakfast cereal that have consistently grown by addressing different aspects of consumer needs through smart innovation and marketing.

Cheerios

Cheerios is an iconic breakfast brand and the franchise ranks #1 in sales in the U.S. cold cereal category. General Mills has posted a history of excellence in execution, brand building and innovation – and has the financial and R&D resources to maintain its strong market position.

 

Cheerios has grown by building trademark equity with strong ad spending on both the core Yellow Box and Honey Nut lines, while introducing line extensions that leverage the equity of the well-known brand---wholesome goodness. General Mills has stayed close to the core promise of delivering on a tasty, nutritious breakfast, but provided consumers with a wide variety of ways to get the core Cheerios benefit. The original Yellow Box promotes heart health while Multi Grain supports a healthier body weight. Meanwhile, the recently introduced Chocolate Cheerios provides a way for consumers to indulge healthfully.

Cheerios has been disciplined in maintaining leadership levels of advertising spending on each major line extension in order to build equity and consumer loyalty to the sub-brand.  For example, Honey Nut Cheerios-specific advertising spending has recently exceeded spending on Yellow Box.  Further, when major new Cheerios line extensions are launched, General Mills supports the line extension with dedicated advertising that is incremental to the Cheerios franchise, thus avoiding the common pitfall of taking money from the base brand to support the line extension.

Special K

Kellogg's, the leader in ready-to-eat cereal in the U.S., has the greatest number of power brands and a broad strength across the market. It has a history of excellence in execution, brand building and innovation. The challenge is to continue to innovate to drive category growth in the face of more convenient and sometimes healthier breakfast options.

One of its power brands, Special K, has based its entire platform on weight management, a critical benefit for health and wellness. By consistently staying focused on weight management over a number of years, Special K has come to own this benefit to such an extent that it has been able to extend beyond cereal to become a weight management food (and beverage) brand.  Kellogg's has extended the brand to a variety of meal replacement and snack bars, fruit crisps, crackers and chips, protein shakes and protein water mixes. With the introduction of Chocolate Delight Special K, positioned as a smarter choice to satisfy late-night cravings, the brand extends well beyond the typical breakfast occasion.

The brand equity has been leveraged to capture a larger consumer benefit – weight management – throughout the day which begins and ends with Special K. The brand has consistent messaging and well integrated activation demonstrated by the popular Special K Challenge promotion, a weight management plan that incorporates the suite of Special K products. And Kellogg's has built the broad Special K platform by investing in advertising; in most years, the franchise spending on Special K products in categories outside of cereal nearly equals the brand's cereal-specific spending.

Kashi

Kashi from Kellogg's has extended beyond its overarching natural health and nutrition positioning with sub-brands that deliver specific benefits. Promoting "seven whole grains on a mission" Kashi is about embracing and living your best life. Kashi has tapped into the broad health and nutrition benefit and delivered it through different cereals such as Heart to Heart (heart health) and Go Lean (weight management).

Beyond cold cereal, there are several brands under the Kashi trademark that appeal to different consumer segments and needs. For example: hot cereals, snack bars, cookies, crackers, pizza, entrees, waffles and pilaf.  As Kashi expands, the brand is focusing on categories where the core benefit is unique and differentiating.  And, like Cheerios and Special K, Kashi has been spent aggressively on brand-building advertising, both in cereal and in other categories. 

Looking across these three cereal success stories, each has gained by staying focused on a message that balances taste and nutrition, while increasing spending on brand equity building activities. Kashi has a specific benefit in natural health and Special K has a specific benefit in weight management targeted to adults. Cheerios, as a family cereal, appeals to adults and children, giving the brand a broad reach across the consumer landscape. While the benefits and targets of the three brands differ, they share a common strategy: focusing on a core benefit, extending the core benefit to different cereal expressions and additional categories, while staying true to the brand's core message.