Clorox and Roundy's Marketing Strategy Could Help Kellogg's and Campbell Soup Clean Up
Eric is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Clorox (NYSE: CLX) implemented a category marketing strategy for the Roundy's (NYSE: RNDY) supermarket chain that boosted sales for several Clorox products. Most notably, Clorox disinfecting wipes sales improved by 154 percent, reported Ann Meyer for Retail Leader. With the Prevent, Protect, and Soothe campaign, Clorox separated products and services into four categories: On Me, In Me, Around Me, and Help Me, explained Consumer Goods Technology. The campaign encouraged a shopper to purchase a product from each category instead of considering each purchase individually. Although many of these items are Clorox products, some are made by Kellogg's (NYSE: K) and the Campbell Soup Company (NYSE: CPB), which could boost these food companies' sales as well.
Clorox offers a wide array of products, so it can gain some complementary sales just by promoting its own brands. For example, because Clorox owns Burt's Bees, it gains cosmetics sales in the On Me category, even though most of its cleaning products are in the Around Me category. Clorox does not have as many products in the In Me category, which focuses on food, and it used other consumer products companies to fill out that category. The In Me category includes Kellogg's cereals and Campbell soups, so Clorox benefits from Kellogg's and Campbell's strong brand recognition.
Articles about this strategy primarily focus on its benefits for Clorox, because Clorox worked with the Acosta Marketing Group to create the strategy. If Clorox benefits by its association with these other supermarket brands, it seems like Clorox' brand strength could give these other companies a marketing boost as well. Roundy's could come out the biggest winner here. Higher sales for Kellogg's, Campbell, and Clorox through this campaign all mean higher sales for Roundy's.
Clorox' decision to focus its campaign around pharmacies in Roundy's supermarkets bolstered the images of both Campbell soup and Kellogg's Corn Flakes as health foods. This is a major branding advantage for Campbell and Kellogg, because shoppers normally see soup and corn flakes in the food aisles, next to other foods which aren't necessarily associated with good health. Because of this marketing campaign, Campbell and Kellogg's may both pick up some additional sales from shoppers who are concerned about getting sick.
This doesn't seem like a strategy that only worked because of the specific tastes of Roundy's shoppers, as shoppers in every supermarket worry about getting sick. Clorox could use the sales figures from its Roundy's campaign to convince supermarkets in other regions of the country to set up similar marketing campaigns. Although expanding the campaign throughout the nation wouldn't help Roundy's, it could lead to higher sales for Clorox, Kellogg's, and Campbell if the three companies continue to work together.
Clorox, Kellogg's, and Campbell have products on the shelf at many supermarket chains, so an effective marketing campaign at Roundy's won't necessarily have a huge impact on Roundy's partners' sales by itself. If Clorox uses this campaign to develop similar, customized marketing plans for other supermarket chains throughout the country, that could provide a major revenue boost for Clorox, Kellogg's, and Campbell, and it seems likely to happen. It's normal for a company to test out a strategy in a limited region, and then roll out the strategy nationwide if it achieves good results. Clorox, Kellogg's, and Campbell worked well together on this campaign, so it doesn't seem like Clorox would search for new partners for a nationwide launch either. Roundy's is geographically concentrated, so Clorox could probably work with supermarket chains in other states without hurting Roundy's sales. This marketing strategy should help Clorox, Roundy's, Campbell Soup, and Kellogg's show solid revenue growth.
The Motley Fool owns shares of The Clorox Company. enovinson has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.