WK Kellogg – inventor of cereal – is being bought by Italian candy maker Ferrero for the soggy-sounding price of $3 billion. Here are two big lessons from the end of a company that once dominated an entire aisle in grocery stores:
1. Businesses have a shelf life – All the preservatives in the world weren’t going to save Kellogg’s cereal, which tied itself too tightly to two very off-trend components: sugar and milk. To give its cereal longer-term potential, Kellogg would have had to focus harder on whole-grain, more nutritious offerings. Its rival General Mills did that, but Kellogg stayed concentrated on its sugary offerings, taking near-term profits while consumers gradually moved toward other breakfast routines.
2. Reinvention is possible – While Kellogg’s once-core cereal business withered, the overall financial story is a happy one. Kellogg invested in snack foods over the past few decades, and those were much more on-trend. The company spun off the snack business and other ventures into Kellanova in 2023, and in 2024 Mars bought that business for almost $30 billion.
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I grew up on Froot Loops and Frosted Flakes (it hasn’t led to my demise). But today’s kids are different, and Kellogg did little to stem the tide. Perhaps Kellogg should have invested in growing its cereal assets like General Mills (which now leads the US market). Maybe it could have introduced new habits, such as how in Europe cereal is eaten not with milk but rather with (more on-trend) yogurt.
Alternatively, Kellogg could have re-visited what business it’s really in. While it’s not typically viewed as a healthy option today, cereal was, in fact, one of the first “health foods.” Kellogg played a major role in creating that category. It could have pioneered new directions within it, rather than defining itself too narrowly.
Either way, it might have aligned its offerings more closely with the Jobs to be Done of consumers. Ironically, its portfolio of sugary cereals was known internally as “Mom Brands.” But were these really designed and marketed with modern Moms in mind? Do they only care about appeasing insistent kids? No.
While Kellogg made a decent business of investing free cash flow into snacks, the breakfast and health food opportunities seem like missed chances to diversify into areas closely adjacent to the company’s core. A good understanding of Jobs to be Done would have illuminated several potential vectors for innovation.
Brands — whether they’re B2C or B2B — win when buyers associate them with clear Jobs to be Done.
- What Are The High-Level Jobs-To-Be-Done?
Rather than looking just at what people buy, examine the needs that arise during their lives. Sometimes the job is much broader than the product or service that is bought. For instance, why did I take five small children to a movie on Sunday afternoon? Because on a rainy day, I needed to get them out of the house for a few hours. Could movie theaters expand their addressable market by emphasizing how they can occupy kids? What if the room used for the 20th screen was adapted instead for inexpensive play like a children’s gym?
- What Are The Current Approaches And What Pain Points Result?
Jobs-to-be-done can sprawl across dozens of industry categories. Clearly a company can’t address each job, but by looking broadly it can re-define its true “competition.”After it understands the full landscape, it can focus narrowly. Theaters may not want to invest in indoor playgrounds, but they need to see playgrounds as a rival every bit as real as a multiplex a few miles away. By understanding the pain points associated with competitive offerings, a business can better invest in emphasizing its distinctive strengths.
- What Benchmarks Exist In The Full Range Of Competing Offerings And Analogies?
Companies should always compare themselves to directly comparable firms, but they should not be seduced by the simplicity of that exercise. Through examining all that the full set of rivals and analogous offerings can do, they can get excellent ideas for their own business. For instance, a movie theater would learn from Disney World about how to market merchandise to children and how to entertain people in lines.
- What Performance Criteria Do Customers Use?
Much psychological research has shown that even horribly complicated decisions are often reduced to a small handful of criteria that people can keep in mind at any one time. What are they for your industry? What adjectives describe a good solution? Asking customers these questions can open up surprising routes for improving current solutions or marketing existing offerings more effectively.
- What Prevents New Solutions From Being Adopted?
Managers are often too enamored of their own ideas. Unfortunately, even compelling ideas can take a long time to catch on. Indoor plumbing took 4,500 years from its invention to become widely adopted. Really, is your idea better than indoor plumbing? Think in a disciplined fashion about all the obstacles hindering adoption of new solutions in your industry. Talk to customers about how they made a decision to adopt a recent innovation – not innovations in general, as that can average out important details, but rather a specific case study.
- What Value Will Success Create For Customers?
By understanding the value that lies in resolving a pain point, you can see how many degrees of freedom you have to engineer a new solution. For instance, if resolving an issue on construction sites will avoid 30 minutes of downtime twice a week, and that time is valued at $600 / hour for the crew, then you get a sense of the potential price and cost of a new solution. Keep in mind that value will be defined by money, time, convenience, peace of mind, and other metrics.
Re-framing a market through the lens of Jobs to be Done can lead to an immensely powerful engine of business growth. But the story played out differently for Kellloggs. Let’s just hope, for Tony the Tiger’s sake, that Ferrero doesn’t end up being…a cereal killer.
Contributed to Branding Strategy Insider by Steve Wunker, Author of JOBS TO BE DONE: A Roadmap for Customer-Centered Innovation
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