The poet and song writer Bob Dylan sang, “The times they are a changin’ in the 1960s but the message still rings true today for local business owners. Everything is changing at such a rapid pace it’s difficult to keep up. But as Dylan sang, “If your time to you is worth savin’ then you better start swimmin’ or you’ll sink like a stone”, that is good advice today. Here is a story about how one company responded to the changing customer needs and grew into a powerhouse brand today.
James immigrated to the United States in 1903 with dreams of building his own business. He settled in Chicago and started a wholesale door-to-door cheese business. During his first year in business James lost more than $3,000. On top of the financial losses, one of his delivery horses died. It was a dismal beginning.
Despite his early failures, James persevered. He convinced his four brothers to join him in the business and he decided to advertise his fledgling new business.
His efforts started to pay off. By 1914, James and his brothers were selling thirty one varieties of cheese throughout the country. They even opened an office in New York City in anticipation of future international sales. Their success was fueled by new product development and a commitment to advertising and marketing.
In 1915, the company invented pasteurized processed cheese that did not need refrigeration. This gave their cheese a longer shelf life than conventional cheese. James and his brothers patented the process in 1916. They sold six million pounds of the product to the U.S. Army for military rations during World War I.
In 1916 James launched his first national advertising campaign promoting his cheese products all across America.
James and his brothers were so successful in building their cheese business they went public and were listed on the Chicago Stock Exchange in 1924. They were selling their stock on the New York Stock Exchange by 1926.
It was called the Roaring Twenties, a time of great wealth creation. With their growing success, James and his brothers used their new found wealth to consolidate the diary business buying twenty nine other companies in six years, capturing forty percent of the cheese market in the United States. James had built the third largest dairy company in the United States.
But on Tuesday, October 29th, 1929, it all came falling down. The Great Crash of the Stock Market on Black Tuesday signaled the beginning of the Great Depression, a worldwide economic collapse that would last for twelve long agonizing years.
Unemployment was rampant during the Great Depression. One in every three people was out of a job. People who were fortunate to find work were making about twenty dollars a week.
Tens of thousands of people traveled the roads and the rails in America looking for work. The continuing drought in the Midwest made more and more of the country into dust bowls.
In 1933, Hitler is declared the Chancellor of Germany and promptly opened the first concentration camp in Dachau. President Roosevelt was inaugurated and he gave his famous speech bout “The only thing we have to fear is fear itself”.
As Americans struggled to make ends meet, they could no longer afford to buy some of their favorite food items. What were once regular items in the kitchen were now financially out of reach. Something as common as mayonnaise was now too expensive. James used this shift in consumer behavior as an opportunity to innovate and develop a new, less expensive alternative. Consumers were growing tired of the bland taste of vegetables, salads and sandwiches without the flavor of mayonnaise.
The cooks in the company kitchen started experimenting with different oils and spices to develop a new product. They tried blend after blend in pursuit of a delicious taste that could be sold for a lower price than mayonnaise.
One day the cooks decided they needed to build their own more powerful machine to ensure that the ingredients (including more than 20 different spices) could be thoroughly blended. They quickly realized that the new “emulsifying machine” was going to produce something special. The machine was such an enhancement to the development process the inventor dubbed it the miracle whip machine.
As they refined the formula for their new product excitement grew. When they were finally satisfied with their new spread they started to test market it. People loved it. It was tasty and it could be sold at a much lower price than mayonnaise.
But what should they call this new product the miracle whip machine had created? Miracle Whip Salad Dressing of course!
James Kraft and his company introduced Miracle Whip to the public at the Century of Progress World’s Fair in Chicago in 1933. Miracle Whip was an instant success as a condiment on fruits, vegetables and salads.
The Kraft Foods Company developed other low cost but delicious new food products like Macaroni and Cheese during the Great Depression. They used the economic troubles of the nation as motivation to find ways to adapt to the changes. Even though people had less money, consumer demand was there for quality products at affordable prices.
The Kraft Foods Company understood consumer behavior and they rushed to develop new products to fulfill these needs.
The Kraft Food Company also understood the value of consistent marketing even in tough economic times. In 1933, Kraft Foods launched a new nationwide advertising campaign on Radio.
As you try to navigate your company through these challenging changes in consumer behavior, remember the lessons we can learn from James Kraft and the Kraft Food Company, pay attention to your customer’s needs and never cease trying to find new ways to fulfill those needs.
Always maintain your advertising in both bad times and the good times to remind the buying public that you and your company are there to help them make their lives better.