Kellogg has a history of innovating. It successfully created a new breakfast category in 1964 with Pop-Tarts. It repurposed a beloved cereal into an iconic sweet with Rice Krispies Treats in 1940. And last year, it moved toward more individual-sized packages of its snacks.
Smaller packages don't necessarily seem innovative, but, Chief Growth Officer Monica McGurk explained, it's more about how the company realized small packages were a good idea. As the COVID-19 pandemic started to shutter businesses, restaurants and schools and upend normal life, Kellogg looked at data about consumers, the economy, buying patterns and beliefs. The company worked to plan out scenarios for the pandemic, generating early hypotheses about how the pandemic would impact consumer and retailer behavior. They noticed the emphasis consumers were putting on surface cleanliness — with 20-second handwashing, sanitizing and meticulous scrubbing — might be permanently changing their relationship with hygiene and packaging.
"Our instinct there was, hey, large-size packages for group consumption occasions, and evening snacking occasions where you're sitting around the TV, maybe passing a can of Pringles around, maybe that won't be as accessible to people in the future," she said.
Kellogg's packages shrunk and sales in the pandemic period skyrocketed, doing as much as 7.48% better than the same time a year before, according to earnings data. But the outcome wasn't really a surprise. Kellogg, which follows and collects data from a variety of sources, and uses algorithms, machine learning and human intuition to determine what it means, is set up to find data and connect the dots. Part of McGurk's job is to understand how to turn bits of data into actionable plans. She has previously described her job as chief growth officer having a deep understanding of markets, consumers and opportunities to help the company grow — something that is much easier through data.
"We've got that really advanced analytics capability, but we also have some fundamental investments, and things like occasions with proprietary research against it, where we can connect these dots to come to that sort of an insight," she said.
McGurk, who has been with Kellogg since 2018, said the data-centric culture at the company known for its breakfast and snack options predates her time there. But, she said, the company is using data to find places where there is opportunity for growth. Some of this data comes in through the Kellogg's Family Rewards program, which grants digital reward points to consumers who have sent images of store receipts including Kellogg's products. At the virtual Consumer Analysts Group of New York conference in February, McGurk said Kellogg's Family Rewards has more than 33 million U.S. consumers enrolled.
There's also other data available through e-commerce. The company's data scientists can monitor what people are looking at, for how long, and what aspects of products they are clicking on. They can see what other products consumers are considering. They can tell how long consumers are researching products and what they ultimately decide to buy. But there's also data throughout the supply chain, giving automatic feedback about products' journey from factory to consumers' homes, and other more behavioral data that can be scraped from different websites and digital interactions. Information about the point of sale — including location and weather — can also be added into the mix.
Much of the data is collected through a set of technologies and processes called KUBE, which stands for Kellogg Unit Brand Engagement, and was first established in 2016.
"If you think about it as a combination of social listening tools, agile optimization for media and campaigns, and then in its ultimate embodiment, a live data center or hub for the entire commercial operation as a business, that's really the functioning that it provides," McGurk said.
McGurk said KUBE has been established in every region worldwide where Kellogg exists, and is mainly a virtual data hub — though there is a physical KUBE area in Kellogg's headquarters in Battle Creek, Michigan, and in Singapore.
The data has led to great dividends for the company. At CAGNY in February, McGurk said that in Australia, Kellogg was able to tailor an ad for its Nutri-Grain cereal brand and customize it for consumers with visuals and text that were based on the blogs and social content they were interacting with. This resulted in a 25% reduction in digital production costs for the campaign and a 120% increase in effectiveness, McGurk said. In the U.S., machine learning helped optimize web search campaigns for Bare Naked granola, which led to the share of paid search for "granola" skyrocketing from 4% to 85%, and increasing year-over-year sales of the brand 112%, she said in February.
"We've got that really advanced analytics capability, but we also have some fundamental investments, and things like occasions with proprietary research against it, where we can connect these dots to come to that sort of an insight."
Chief growth officer, Kellogg
"These capabilities are foundational to how we've responded during the pandemic and the dynamic circumstances we face, giving us the opportunity — and indeed the requirement — to accelerate their use and effectiveness," McGurk said at CAGNY in February. "We can do things today we couldn't have imagined five years ago, and the possibilities are endless."
With so much data collected, McGurk said the company now has the ability to "interrogate" it — take a look at different contexts, different combinations and in different situations to see what everything means. The challenge is pinpointing where the biggest opportunities for commercial improvement, supply chain enhancement and consumer appeal could lie. And, she said, it can lead to a somewhat backwards way of doing things when compared to more traditional marketing. Traditionally, she said, you're taught to understand why things are happening and to act on it. Using data, sometimes you can see clearly what needs to be done, but the reasons require some deeper research.
"It requires different skills," McGurk said in the interview. "It really requires a lot of integration into processes to be able to move with the speed that some of this should enable. It's one of the screens that we're using to make sure we're focusing on the right thing, that we can get the momentum of change management, again so this can become the more common way of working, as opposed to a pilot [program]."
McGurk said Kellogg will continue to dig into its trove of data as a way to drive its growth, especially as consumers enter a post-pandemic period and their needs and wants may shift. While the food business is not always known for using innovation in its development, McGurk said Kellogg will continue to work to stay on top of the curve — just as much as companies in other sectors like tech and financial management.
"No matter where we sit on the competitive spectrum today, the capability — whether it's from a technology standpoint, a data storage standpoint, the advances that are growing by leaps and bounds every day and the capability of machine learning — we know that the game is in the first inning," McGurk said. "...We gotta keep moving because the state of the art is continuously evolving. And so that's our plan."