Recently while doing my groceries, I saw this big shelf announcing a new comer: the “Special K® Cracker Chips”
My observation: As a consumer I was really confused, I did not understand what this was. Is this breakfast chips? Is this potato chips? Is a different form of cereal? Does it replace cereal bars?
As a marketer, I did not understand the connection of the Special K brand with chips (a “not-so-healthy” segment)
Regardless, I was so intrigued I took two boxes to try. It actually tastes OK, but certainly not as good as Pringles, and it does not taste healthy at all.
Therefore, to me this is a bad example of line extensions; and it is also a story about branding.
For a line extension product to be part of a branded house, the product brand concept has to fit the core meaning of the brand. Special K is about “staying on track” with healthy eating.
While checking their website, I realized that there are so many products in this branded house that the core meaning is getting lost. And this Cracker Chips doesn’t seem to fit.
However, while doing my research I understand where the pressure comes from. One of the strategy tracks of the company is to “Become a global snacks player”.
As a consequence, in 2011 they introduced the Special K Cracker Chips which remained successful in 2012 according to the company’s annual report. But clearly that wasn’t enough to fully step into the category. Then, in 2012 the company completed the acquisition of Pringles from Procter & Gamble (PG).
The strategic rationale is good - Kellogg increased its snack business and became a leading player. This gives a platform on which to drive growth in both established and developing markets The US Cereals segment hasn't been performing well and the company needs to look elsewhere for growth. Since the 2000s, with the acquisition of Keebler, Kellogg gained terrific brands in the cracker and cookie categories. These include the iconic Keebler brand, Cheez-It crackers and others such as Famous Amos, Austin and Murray cookies.
Therefore the Cracker Chips could indeed be a good addition, but under a different brand and not Special K. It seems that they now have all those other brands in this segment that could be leveraged. And probably one of those has a core meaning that fits better with this Cracker Chips. That would also minimize the cannibalization of other Special K products.
Given what I learned, It was not surprising to see that during 2013 Special K Cracker Chips is presenting an issue as it is coming down and that's weighing upon the snacks business. Internal sales in the cracker business declined in the last reported quarter. Additionally, during the last analysts meeting, there was a concern that innovation is cannibalizing the existing business. Also not a surprise given the “over extension” of this brand.
Special K is a brand that people care about. It is still unique and has meaning, but, as this example shows, the threat of loosing that meaning with line extensions is real.
My observation: As a consumer I was really confused, I did not understand what this was. Is this breakfast chips? Is this potato chips? Is a different form of cereal? Does it replace cereal bars?
As a marketer, I did not understand the connection of the Special K brand with chips (a “not-so-healthy” segment)
Regardless, I was so intrigued I took two boxes to try. It actually tastes OK, but certainly not as good as Pringles, and it does not taste healthy at all.
Therefore, to me this is a bad example of line extensions; and it is also a story about branding.
For a line extension product to be part of a branded house, the product brand concept has to fit the core meaning of the brand. Special K is about “staying on track” with healthy eating.
While checking their website, I realized that there are so many products in this branded house that the core meaning is getting lost. And this Cracker Chips doesn’t seem to fit.
However, while doing my research I understand where the pressure comes from. One of the strategy tracks of the company is to “Become a global snacks player”.
As a consequence, in 2011 they introduced the Special K Cracker Chips which remained successful in 2012 according to the company’s annual report. But clearly that wasn’t enough to fully step into the category. Then, in 2012 the company completed the acquisition of Pringles from Procter & Gamble (PG).
The strategic rationale is good - Kellogg increased its snack business and became a leading player. This gives a platform on which to drive growth in both established and developing markets The US Cereals segment hasn't been performing well and the company needs to look elsewhere for growth. Since the 2000s, with the acquisition of Keebler, Kellogg gained terrific brands in the cracker and cookie categories. These include the iconic Keebler brand, Cheez-It crackers and others such as Famous Amos, Austin and Murray cookies.
Therefore the Cracker Chips could indeed be a good addition, but under a different brand and not Special K. It seems that they now have all those other brands in this segment that could be leveraged. And probably one of those has a core meaning that fits better with this Cracker Chips. That would also minimize the cannibalization of other Special K products.
Given what I learned, It was not surprising to see that during 2013 Special K Cracker Chips is presenting an issue as it is coming down and that's weighing upon the snacks business. Internal sales in the cracker business declined in the last reported quarter. Additionally, during the last analysts meeting, there was a concern that innovation is cannibalizing the existing business. Also not a surprise given the “over extension” of this brand.
Special K is a brand that people care about. It is still unique and has meaning, but, as this example shows, the threat of loosing that meaning with line extensions is real.
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