General Mills Goes Niche

Posted on Monday 27 July 2009

This past month there have been a number of articles about General Mills’ new gluten-free product line. Their Betty Crocker brand is rolling out gluten-free mixes for cookies, brownies and cakes. But, beyond just this brand extension, this news has huge implications for the willingness of big companies to go after small niches and how companies will market to these niches?

In this case, General Mills has decided to develop a product for the 1% of the U.S. population that suffers from Celiac disease (OK, to be fair their research shows about 12% of U.S. households want to eliminate or reduce their gluten intake). For a large corporation like General Mills the target market for these new products would traditionally not bring in the revenue to make it worthwhile. Just ask Ann Simonds, General Mills’ President of Baking Products. She was recently quoted by as saying, “It used to be, as a marketer in the food industry, you needed a $50 million idea to make the business model work. Today, you can meet an unmet need that will be a $5 million business.”

So what has changed? The mass communication outlets. In the past, General Mills’ needed a huge budget for traditional media (TV, Radio, Print, etc), and to support that budget, they needed huge expected sales. Now, using social media, web sites, etc, General Mills can target smaller niches and skip the traditional methods and huge budgets that used to be necessary to promote their product.

So what can the rest of us learn from this (i.e. those of us smaller than General Mills)?

1. Well for one, don’t count the big guy out just because you’re in a niche market. Yes, historically big companies jump into niche markets then later back out, not having made the revenue to make it worthwhile. This may still be the case. But are you willing to sit back and find out? Learn from them and do it better. They may have the deep pockets but smaller organizations have the agility to respond to market needs much faster than our larger colleagues. Which brings me to my next point…

2. Marketing is changing. The old rules don’t always apply. Look at your current marketing methods and ask: “Is my current marketing leading to conversations with my customers?” “Am I broadcasting to my customers or talking to them?” Start thinking of ways that you can engage in conversations with you customers. This can include social media but more importantly research. Finding out what your customers need and want is the first step to the providing products and marketing messages that hit home.

3. Target marketing. The beauty of the new forms of marketing is that it allows us to target customers like never before. Have multiple target customers? Use new marketing tools to talk directly to these separate and distinct targets. You can develop micro-sites, blogs, social media campaigns and pay-per-click ad programs to communicate directly with your specific customers.

In the end, this news can either be a glass half full or a glass half empty proposition. Half full: I can now use the same tools as this big guys and cut into their market share. Half empty: The big guys can invade my market space using new marketing tools. Either way, realize they’re coming, and you’re not safe. So, don’t just use these tools better than the big guys. Do them first. It will be a lot harder for other companies to invade if you’re already soundly entrenched.

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