Dynamic Marketing Communiqué

Why fix something that’s not broken? How Mondelēz successfully adapted to new business and marketing strategies [Monday Marketing Marvels]

February 17, 2020

With more than a century in the industry, Mondelēz International Inc. (formerly Kraft) has been making good food and beverages for its consumers for over a century.

…biscuits, cookies, crackers, and salted snacks
…chocolates, candies, and bubblegum
…coffee and powdered beverages
…dairy products
…and other grocery products

You name it, they probably have it!

They have over 80,000 employees bringing the brands they handle to life, reaching consumers from 150 countries around the world.

Their mission?

“Lead the future of snacking around the world by offering the right snack, for the right moment, made the right way.”

With the company’s success today, you’re probably wondering what their secret is.

Today, Mondēlez International carries all the popular food brands we love—Oreo, Ritz, Chips Ahoy!, Cadbury, Milka, Trident Gum, Tang, and many more!

They’ve been adapting to the market needs for over a century, but then, a new problem arises.

Mondelēz saw that the evolution of the digital landscape, along with changing consumer needs, was holding them back in terms of growth. They lacked investment in progressive technologies and their ways of working had become old and traditional.

Recognizing this problem, they knew they had to do something fast.

They needed to come up with new marketing and business strategies.

Part of their strategy included each Regional Chief Marketing Officer to come up with a new marketing set up. The approach they focused on was to transform the company into the modern-day business it is now and also make it an attractive destination for marketers to want to work at.

Their business strategy included:

The 5Cs:

  • Capabilities (its digital transformation)
  • Community (strengthening its marketing community)
  • Celebration (talking about what it is doing best)
  • Complexity (simplifying the business and becoming more agile), and
  • Careers (providing more opportunities)

The 3Fs:

  • Fast
  • Focused
  • Fearless

Because of the new strategies they developed, now…

– They have powerful global brands and local jewels.

– They bear strong global presence and scale. 75% of their business is outside of the United States. They also have a strong presence in emerging markets, which represent 37% of their business.

– They have a strong value chain. They are able to supply millions of stores around the world because of their state-of-the-art manufacturing.

– They employ and value committed people. They have an employee community that can make things happen and fast.

Mondelēz also embraced new technology and partnerships by using the “test and learn” approach.

  • Since everything is moving, changing, and advancing, they adapted and became more agile
  • They started focusing more on trends, consumers, and technologies
  • They became fearless in exploring new techniques and approaches

Collaborations, partnerships, experimentation, and trying different models through innovation helped Mondelēz grow.

In 2018, Mondelēz had 26% profitability, measured in Return on Assets (ROA), compared with about 20% ROA in 2012 when it spun off its grocery business and began operating solely as a snack food company. In the last 8 years, their profitability has not fallen below that 20%.

They are driven by operational excellence in sales execution, marketing, and supply chain management. They’re also generating continuous cost and quality improvements across the business.

As a result, they currently hold the number 1 position globally in biscuits, chocolate, and candy and the number 2 position in gum according to Nielsen Global Data.

Mondelēz’s Earning Power: Valens Research vs. As-reported numbers

Mondelēz makes for a great study because of one simple reason: they have proved to be a phenomenal earnings power generator.

The blue bars below represent true earning power (Uniform Return On Assets). For Mondelēz, that number has been at well over 13% for more than 15 years.

For context, the global average of this number over the last 60 years is just 6%.

The orange bars are the as-reported financial information. If you relied on these numbers, you wouldn’t know this—you’d just see the 6% or below (orange bar) when you look at the as-reported ROA (return on assets, measure of earning power).

That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.

So, how is Mondelēz actually doing now, and how have embracing new technologies, new marketing strategies, and acquisitions been effective tools in their business?

The research and results don’t lie. Earning power (the blue bars) has gone up and continues to show results much higher than what traditional databases show.

The stock price performed better than the rest of the stock market (the blue line) over the past ten years, with returns well above the market.

The numbers show that they are doing well and making a profit.

“At Mondelēz International, we’re building the best snacking company in the world through a focus on our three strategic priorities: Growth, Execution, and Culture.” – Mondelēz Corporate Fact Sheet, Mondelēz International

Mondelēz’s efforts on embracing new technologies, new marketing strategies, and acquisitions played a big role in how their company is today.

Their growth accelerated because they were open to change. They embraced different and better approaches to improve their global and local brands. They developed their marketing strategies to effectively promote their products to their consumers.

They have built a winning growth culture that more effectively leverages local commercial expertise and invests in talent and key capabilities while enabling the business to move with greater speed and agility.

Finally, Mondelēz International’s mission of empowering people to “snack right” from both a social and sustainable standpoint has helped people around the world make healthier choices. The way they have shaped their business today has also made an impact on people’s lives and the society as a whole, extending far beyond shop shelves.About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”

Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.

…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.

The true ROI in marketing can’t be separated from the business as a whole.

What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?

At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.

Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.

However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).

By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.

We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.

Hope you found this week’s marketing marvel interesting and helpful.

Stay tuned for next week’s Monday Marketing Marvels!

Cheers,

Kyle Yu and Joel Litman
Head of Marketing & President and CEO
Valens Dynamic Marketing Capabilities
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