The Great Depression and Kellogg’s Bold Move
Before the Great Depression hit, Post cereal was number one. Kellogg’s was a close second.
When the Great Depression hit in 1929, businesses across the United States faced devastating financial pressures. Many companies, including Kellogg’s biggest rival, Post, responded by cutting costs and scaling back on marketing and innovation. Kellogg’s, however, took a contrarian approach, which is the path I often choose as an inventor. I like to go against the grain.
Instead of retreating, Kellogg’s aggressively doubled its advertising budget, expanded production, and introduced new products. They realized that during times of disruption people were more open to new ideas. One of those ideas was Rice Krispies. It was marketed as “the talking cereal” for its sound of snap, crackle and pop. They capitalized on the sound with mascots who appeared on the cereal boxes. One of the Kellogg’s employees came up with the recipe for Rice Krispie treats. The recipe was put on the cereal box in 1940 and is still on there.
These bold marketing moves increased their visibility while competitors pulled back, giving Kellogg’s a significant advantage when the economy rebounded. By the early 1930s, Kellogg’s had become the dominant cereal brand, a position it retained for decades.
Key Lessons for Business Owners
Kellogg’s strategy during the Great Depression offers several key lessons for business owners seeking opportunities amid disruption:
Invest in Brand Visibility During Uncertainty
In times of economic hardship, many companies instinctively cut marketing budgets to conserve cash. However, history shows that brands maintaining or increasing visibility during downturns tend to gain significant market share. During disruption view advertising as an investment rather than a cost.
Identify Market Gaps and Consumer Needs
Just when you think you have customers figured out, something changes. This seems to happen in overdrive during times of major disruption. I call it the “bright, shiny new thing” syndrome. With the advent of social media, new ideas spread faster and to more people. You could get whiplash trying to keep up with customer tastes. It happens so quickly that you need to stay ahead of the curve to keep up. Be the disruptor. Don’t wait for it to happen to you.
Kellogg’s didn’t just maintain its presence. It adapted to changing consumer behavior. With families eating at home more often during the Depression, Kellogg’s products became a staple. Companies that identify evolving consumer trends and pivot accordingly can yield impressive returns.
Leverage Innovation as a Growth Catalyst
Disruption and uncertainty are uncomfortable. It triggers a fight or flight response in the amygdala part of the brain. And most people choose flight. But disruption is a great time to innovate. Well, actually anytime is a great time to innovate. But when people are surrounded by uncertainty they know change is happening to them and they will have to roll with it or go under.
By launching Rice Krispies during a crisis, Kellogg’s demonstrated that innovation can thrive even in difficult times. Modern business owners should maintain strong R&D pipelines and innovate during times of disruption.
Commit to Long-Term Vision Over Short-Term Fear
When you’re in a period of chaos and disruption it’s hard to see into the future. Fear drives people to make bad choices. For example when the stock market goes down we tend to panic and sell. Being able to see into the future helps us make better decisions. Investing in your marketing when things are down can better help prepare you for the inevitable ride up.
Kellogg’s decision to increase spending while competitors scaled back was a calculated risk that paid off long-term. Business owners should focus on strategic growth rather than reactionary cost-cutting.
Applying Kellogg’s Strategy Today
Business owners need to:
- Invest in marketing and maintain consumer engagement during downturns.
- Demonstrate adaptability in meeting changing consumer needs.
- Continue to innovate despite economic uncertainty.
- Exhibit leadership with a bold, long-term vision.
For example, during the COVID-19 pandemic, companies like Netflix, Amazon, and Shopify invested heavily in marketing, innovation, and customer acquisition. These were strategies that helped them expand their market dominance as conditions improved.
Conventional Wisdom
Kellogg’s defied conventional wisdom during one of the most challenging economic crises in history, emerging stronger by investing when others hesitated. Their strategy of aggressive marketing, product innovation, and strategic risk-taking offers invaluable guidance for modern business owners navigating disruption. By being a resilient, forward-thinking company that leans into uncertainty with bold moves, they can unlock significant growth potential even in turbulent times. Now is the time for marketing during disruption.