General Mills: Squeeze On Strong Brands Can Be Eased Using Blue Ocean Strategy

Lower Profitability
General Mills and its portfolio of strong brands are feeling the squeeze on their profitability as a result of high raw material commodity prices and recent peaks in energy costs. They are still reporting sales gains as they pass these costs to consumers by raising prices to offset these higher costs. According to MiamiHerald.com (December 17, 2008 post), earnings in the quarter ending Nov. 23 fell to $378.2 million from $390.5 million last year. However, revenue rose 8% to $4.01 billion from $3.7 billion last year during the same period. This is a clear indication of the effect that high commodity prices (such as those for grain) are having; these costs are narrowing their margins and causing them to raise prices to consumers. This is all happening in the midst of a troubled economy where consumers are spending less. Even given this scenario, the Wall Street Journal writes in the December 18th, 2008 edition that “most analysts view General Mills as a company well-positioned to weather the slowing economy because of its strong brands and a focus on cost-cutting.”

General Mills’ Marketing Strength And The Direction They Should Head
A major driver of General Mills’ strong brands and its success is their strength in marketing. Now, the pressure is on their marketing personnel to generate sales in an economy which is characterized by consumers spending dramatically less and scrutinizing purchases more tightly. General Mills marketers think in terms of reaching customers at various “touch points” and providing them with relevant messages. It is critical that they link their product’s features to key benefits for their targeted consumer audience. They must demonstrate lucidly and powerfully the link between the features of their products, such as natural ingredients, and increased healthiness. In addition, they must continually seek to understand which benefits are most important and relevant to consumers, and tie them to product features. In Blue Ocean Strategy terms, General Mills must seek to raise and create features which are directly relevant to profiled and targeted customer groups.

Why Online Presence Should Be Key
This messaging must be backed up with the selection of relevant media for a given group. General Mills should examine its online presence to reach a younger and more educated demographic. It is becoming cliché among astute marketers to leverage social networking media online – it is in its growth stage and actually can yield very substantial and positive results when executed effectively. The reason social networking media are important is because they allow a two-way conversation between consumers and a company. A marketer can gain invaluable information about what benefits customers value most – and the features which best provide these benefits. Social networking media also provide marketers with real and mostly unbiased feedback on how a product is performing, and what consumers really think about it. If a company gets all these things right, they will create customer “evangelists” who will create buzz for their products online. And, where do most consumers go first to get “real” information about a product or service nowadays? – online! This is the new “word-of-mouth” channel, and it’s exponentially explosive.