As the deflationary recession hit the United States in the 1920s, cereal companies began to lose their snap, crackle and pop. The first instinct for all major cereal companies was to cut back on expenditure. But, there was one outlier, Kellogg’s, which choose to distance itself from the common wisdom. In time, Kellogg’s became the fastest-growing cereal maker in the U.S. In fact, by the end of 1920s, its owner, Will Keith Kellogg, had become one of the richest men in America.
Swim against the Tide
During the recession, all major cereal companies started focusing on short-term considerations over long term potential. Voluntarily, these companies chose to cut budget and expenses on advertising. Of course, cutting back on expenditure was then accepted as wisdom. In fact, every single company back then, decided to preserve what they had. Companies during hard times invested less on research and development. But, Will Keith Kellogg, saw the economizing by other companies as a ‘competitive advantage’. So, Kellogg’s company made a rather irrational decision.
Will Keith Kellogg decided to focus on spending more on advertising. In fact, he doubled the advertising budget. And, he began to advertise heavily, using large billboards to get people’s attention. In fact, at one point in time, the company erected a sign that stood 106 feet wide and 50 feet high. It proved to be the largest advertising billboard in the world at that time.
Will Keith Kellogg reasoned that people still needed to eat. Besides, breakfast choice of most Americans by then was milk and cereal. He did not believe in receiving ideas that stem from social conditioning.
Question Social Conditioning
As his financial advisors, financial experts and accountants crusaded so he’d make cuts, he did otherwise. For Will Keith Kellogg, budget cuts on advertising was a competitive advantage for Kellogg’s. Before the recession, when everyone was freely spending on advertising, it became difficult to stand out. Post-recession, every single company’s instinct was to budgetary cut backs.
Will Keith Kellogg went ahead and reduced the hours of three plant shifts, thus creating a fourth shift. By mid-20s, he was spreading the payroll among more workers than ever before. He further expanded his resources into the research and development of nutritional Kellogg’s products.
In fact, Kellogg’s Pep became the company’s first cereal fortified with vitamins through a ‘spray’ method. Will Keith Kellogg even inked new partnerships with entertainers to make advertising more lucrative. He sponsored “The Singing Lady – Irene Wicker”, America’s first network program for children, and many more radio shows.
If there’s one thing, Will Keith Kellogg teaches us, it’s that social conditioning should be questioned every now and then. Had he not overthrown it back then, the company would have never profited. Today, Kellogg’s is the second largest snack company in the world, behind PepsiCo.