What General Mills Can Do Now

Offer Disproportionately Higher Value To Customers
The most effective way for a company like General Mills to offset high commodity costs is to strengthen the brands within their portfolio and highlight a much stronger offering relative to competitors. In the current economic downturn, the most important thing to consumers is VALUE! From a Blue Ocean perspective, a business can move up or down the price-performance balance for its customers. They can slightly increase or maintain price, while offering enhanced benefits which resonate with customers. Or, they can lower price, move down this balance, and reduce performance of a product. If they do not reduce performance, it is a sale, and will be effective in increasing revenue on only a very short term basis. General Mills is a position to do both, however, given the “higher than the norm” quality of most of its brands – they should maintain price or move it up slightly. They can raise product performance and benefit – and critically offer a disproportionate amount of positive benefit relative to the amount of the price increase.

Using Their Scale
In the food manufacturing industry, General Mills’ scale allows them to operate at a lower cost, and to leverage marketing practices across many brands. This will allow them to offer product benefit at a higher relative level than competitors for the same price point. For General Mills’ customers, paying a premium for a General Mills product is worth it because they get so much more benefit than a competitor’s product even at a slightly lower price!

Favorable Macro Trends For General Mills
General Mills’ brands are sitting at the intersection of many macro trends which are favorable to them. These translate into value for consumers; especially relative to their other food consumption options. The first major trend that bodes well for General Mills is that people are eating out less because typical American consumers have less money to spend due to the economic slowdown. The second major trend in the U.S. is that Americans are moving to eating healthier. This trend is impactful, and has moved people from seeking fast food to cooking healthier items at home. General Mills has many brands which can leverage this shift.

How They Can Dominate Their Categories
General Mills’ portfolio of brands is strong, and would grow to unprecedented category dominance using some the Blue Ocean Strategies mentioned in the last two articles. These are ways to win in any economic environment. With commodity prices up, consumer spending down, and value being the spending criteria of customers, General Mills and all food manufacturers must change strategy to maintain margins and combat revenue shrinkage. The good thing about General Mills is their marketers don’t remain in a silo – and their marketing efforts are holistic. They must use this pervasiveness of marketing to seek out and stay on top of consumer benefit preferences. These benefits must be linked to features – and translated into relevant messages for given targeted groups in effective media. Equally as important, General Mills should use its muscle and reach to leverage and provide disproportionate benefit for its customers – and that alone is enough buffer them from this recession and any economic downturn.