Kraft’s Marketing Smarts Opens Up New Channels For Dressings, Ritz Crackers

Kraft Foods (NYSE:KFT) is stepping up efforts to change the way consumers perceive its products by focusing on versatility and usability. In its latest marketing campaign, the company is encouraging consumers to use its dressings beyond salads. ^[1] It has even re-branded its dressings as ‘Anything Dressing’ to highlight that they can be used on a wide variety of dishes. Similarly, the company is relaunching Ritz Crackerfuls by increasing the product’s marketing budget significantly and introducing a Facebook game to appeal to a younger audience. ^[2] Globally, Kraft competes with players like PepsiCo (NYSE:PEP), General Mills (NYSE:GIS) and Kellogg (NYSE:K), among others.

We currently estimate a $40 price for Kraft Foods, which is in line with the current market price.

See our full analysis for Kraft here

Anything Will Do

Kraft realized a change in its marketing strategy would make sense after it found that dishes other than salad accounted for 20% of salad dressing use, which is up from 10% a decade ago. This is not the first time Kraft has changed its product marketing strategy to appeal to a wider customer base. In 2011, Kraft changed the marketing strategy for Philadephia Cheese and encouraged it to be used as a food recipe. The marketing campaign helped double the growth rate of the cheese brand to 15%. Sales of most food and beverage products usually stagnate after some time, and hence companies have to deploy innovative and creative marketing methods to create buzz and incite consumers to keep buying the product.

Ritz Targeting Younger Audience

The budget for the latest marketing campaign of Ritz will be twice of what has been spent in the previous years. (In 2011, the ad spending for the product was $6.9 million). Originally, the product targeted women aged 35 to 54 but with the help of new campaign and the Facebook game, it hopes to appeal to a younger audience. The previous campaigns marketed the product as ‘that’s perfect in between meals’ but the new campaign focuses on ‘Get hunger before it gets you’, or a snack that is perfect for satisfying hunger.

Last year, Kraft announced its decision to split into two independent companies by the end of 2012, namely the North American Grocery division and the Global Snacks division. Kraft will rename its global snacks division to ‘Mondelez’.

Understand how a company’s products impact its stock price at Trefis

1. Kraft pushing dressing beyond the salad bowl to expand sales; dips, recipes, washingtonpost.com, May 8, 2012 [↩]
2. Will the Second Time be the Charm for Ritz Crackerfuls?, brandchannel.com, May 11, 2012 [↩]