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Kraft looks to smarter marketing

News, 16 February 2015

CHICAGO: Kraft Foods needs to develop better consumer insights to support the marketing it puts behind its brands, according to the chairman and CEO of the packaged foods business.

"It's clear we are not yet tapping the full potential of our brands," John Cahill told an earnings call as he reported a fourth quarter operating loss of $614m. Those brands include Philadelphia cheese, Oscar Mayer meats and Planters nuts.

Part of the reason for that underperformance was a failure to properly understand consumers. "We must better leverage consumer insights and emerging digital tools to achieve an advantage in this area and reach the right consumers at the right time," he stated.

"Frankly our resources against that particular area [consumer insights] have not been as strong as I thought they would be," he added. And he expected that improvements here would form the base of many future decisions.

Revenues for the year were marginally down and Cahill was determined that the business grow "rather than just hold on", but achieving that, he said, would require "better, lasting differentiation through product quality, relevant innovation and brand building".

Brands would be supported "with communications that can attract the attention of consumers in a fragmented media landscape".

But he was not offering a blank cheque to marketers, being careful to specify that brands would be funded "commensurate with the growth and returns they can generate".

"Marketing remains paramount in its importance to Kraft," he said. ""We would like to spend more money, but we want to do it in an intelligent way."

In a signal of his intent, a top tier of management is being replaced as the current chief financial officer, chief marketing officer and evp of research & development, quality & innovation are all leaving.

One observer was surprised as Cahill himself has only been in the CEO seat since December. "I think his whole point is they're not innovating fast enough, and they're not coming out with the right type of marketing," Brian Yarbrough, analyst at Edward Jones, told Reuters. 

Data sourced from Seeking Alpha, Reuters; additional content by Warc staff