Vegemite Essay

Osama Salah

Vegemite Case

If you are like every other American I know you’ve probably never heard of Vegemite. This salty black spread is something Australians love, used to spread mostly on bread as a breakfast meal; it has become the hallmark of the Australian breakfast. Made from brewer’s yeast extract, various vegetable additives and spices this black substance is surprisingly one of Australia’s most recognized food products. It has been in the Australian diet for over 70 years and had enjoyed household penetration of almost 80%.

Australians have considered Vegemite as Australian as the outback or kangaroos. They all have different opinions on how to

prepare it and what combinations are the best. Everyone in Australia seems to have their own unique way to eat it and they’ve even produced songs about the spread. A little bit extreme but this shows how much they love this product.
Although this sounds like an unbeatable product, it’s had a decline in recent years. Kraft Australia and New Zealand were doing so well oversees they had to build factories in the Middle East and the Philippines to better manage cost but that meant that the huge factory in Australia would be inefficient as they no longer had to produce for foreign markets which ramped up costs and cut into profits. While this happened they were simultaneously losing revenue in Australia and losing profits. This led Kraft to hire a new managing director who recruited 5 executives to help with turn this around for Kraft.
The new managing director had four things he needed to address. These problems were the loss of connection with consumers, an over bureaucratic business model, a lack of entrepreneur drive and a failed reward system that rewards should you fail or succeed. They felt these were the issues that caused the 8% decline in household penetration and wanted to reinvigorate the brand before they lost more market share. As time went by they continued to lose revenues and market share and Kraft got more and more desperate to halt the fall of Vegemite.
It turned to social media which was one of the best ways to know what’s going on in the world and what real customers are thinking. They enlisted the help of IBM and COBRA systems to help gather and analyze data they find online. Kraft wanted to be proactive and get ahead of the curve and they did this by trying to find patterns in consumer conversations and try to find potential Vegemite product extensions. This turned out to be very successful as they could barely handle all the data they were getting.
Kraft learned quite a bit about its consumers from all the data they collected. Through its consumers on social media they realized that consumers wanted to feel connected again to their product, they also found out Vegemite was the source of a lot of urban myths, they also loved to personalize Vegemite and they love to combine it with other foods. They even found out that their customers loved Vegemite more than any other brand on earth.
This led to the “How do you Love Your Vegemite” campaign which was a huge success and even led to stores running out of the product.

They also realized that a lot of people were mixing Vegemite with cream cheese which was also one of their products and they decided to make a new product by mixing the two. They released the product with no name letting the consumers submit and vote on names. So far Kraft was enjoying its high household penetration and doing better than ever. The winning name was Cheesymite but the name had already been trademarked so it couldn’t be the winner so the team went with a name they chose;

iSnack2.0.
This was the worst mistake they could make as everything that went so right suddenly went so wrong. There was social media anarchy, people enraged with the name and voicing their rage online. The press dedicated pages to this failure, highlighting how a big company got it so wrong. People got creative with how to express their hate of the product, making hate chants that rhymed with the product. It was a sad ending to such a great marketing campaign.
The Kraft team did a lot of things right but they did have their problems. Their most obvious problem was using Social Media to turn their consumers into the decision makers of the product name; only to cut them out of the decision at the last minute. Not only is this showing the consumers that their vote is unimportant but you just insulted all of your consumers and used a name they didn’t want. If I was a customer of Vegemite and I voted and that happened to me I would feel like Kraft was just doing a PR stunt for free publicity and Id stop buying Vegemite simply because I would feel betrayed. I’m sure that was the case for many consumers.
Another problem they had was that the consumer didn’t feel a connection to the product like they used to. It was something that was a part of their culture but like every connection it dwindles if not maintained. They did manage to reconnect the people to their Vegemite but they alienated them again with the name iSnack2.0. It’s a problem that they can’t seem to keep under control.
There are others ways to approach this issue. We see the main issue was that people were not into Vegemite as they used to be. There are simply more choices, new market segments and a loss in connection. Many companies have had the same problem; Marvel and Nintendo both almost died out until they changed their business model and product line. An alternative solution would be to spark a marketing campaign that stresses the emotional connection with vegemite and its long years of being on every breakfast table. Vegemite has been around for so long it’s a cultural necessity and they can market it as such. Kraft focused on a certain segment of the market and it forgot about every other segment which is what caused the rift and bridging that gap is the first step to making Vegemite the only breakfast spread.
Another way to help Vegemite get back on track would have been to create a Vegemite social media page.

Invite your customers to share how they prepare vegemite and their tips. They feel validated that you listened to how they prepare their Vegemite and in turn you can publish a video of new ways to prepare Vegemite. People tend to watch a 2 minute video on how to make something delicious and it rekindles the connection with the younger generations who are too lazy to even try to attempt anything. This can be taken to the streets with billboards and buses with pictures of people holding Vegemite dishes prepared in new ways as to connect to other segments of the market. This can also be used to fuel line extensions as you’ll be getting new ideas daily and further boost

potential.
Looking at the first alternative solution, the intent is to rekindle the emotional connection to Vegemite. This product has been around for 70 years and holds a special place in every Australians heart. The goal is to show them that this product is what they love, it’s their identity and that Australia eats Vegemite. The first line of marketing would be television; a kangaroo waking up and feeding Vegemite on toast to its joey. In another scene a man is handing his son a Vegemite sandwich before heading out. The boy sits in the car looking out the window and he sees the kangaroo hopping with the car and as he looks closer he sees the joey also eating vegemite and looks at his own sandwich in surprise.
Another commercial would be of a child who eats vegemite and we see every stage of his life, Vegemite in hand in every scene until we reach him at old age on the porch enjoying Vegemite. We want to remind the Australians that they need this product to be Australians. We don’t want them to think about it as food but rather a part of their culture that they should celebrate. This approach can be a complete failure however if the people don’t love the commercials. The hard part as Maxwell Wallace tells us is to create commercials that leave viewers curious and connected to the products you advertise, rather than focusing on the ad (Wallace). The trends in this case show that most Australians just want connection and a commercial may be a hit and miss scenario.
Looking deeper in the second option we see that it may have a bit more potential. The idea is to engage the customers on a personal level. Have them send us videos of themselves preparing Vegemite or just sending us recipes. Kraft in turn makes videos with the best recipes and shares them with its followers. This can be a great way to really engage the consumers in a way that isn’t very direct but creates connection. The genius behind this is the way you can use the information you receive. Susan Gunelius tells us that the best way to succeed online is to listen and talk less, get to know your consumers and learn what’s important to them.(Gunelius)
Hundreds of recipes and tons of happy Vegemite consumers engaging with the company, this is the framework of something big. With all the recipes you receive you are actually generating content to use. You can host monthly polls for best recipes and the winner will be printed on the Vegemite jar. You can use recipes to make videos and share with your followers as to reengage them if they’ve gotten bored with the taste. You’ll be able to see trends firsthand and reach your younger consumers in a click.
Maybe the best part is what you can do with the data. You can use it to create line extensions just as Kraft did with Vegemite and cream cheese. It’s an invaluable tool to see what people are doing with your product and simply following the trend and cashing out on it. If a new trend is emerging you can make gap products of Vegemite and keep the brand interesting and this won’t only be a hit with younger generations but all users of Vegemite.
The recommendation of which alternative solution is the best is social media presence. The amount of data and potential is just incredible. The only change needed to make sure this is a success is to implement a way to accurately identify trends so that the Kraft branches can constantly be on alert for new potential products and ideas. This can be a pool in which all departments can grab inspiration from. From marketing to sales this can be used to see what the market is leaning towards and simply hand it to them.
Of course with a lot of data comes a problem. A likely obstacle would be simply having so much data that it is hard to isolate what’s the best potential product or idea to follow. We saw Kraft have this problem when it tried to name its Vegemite mix. Too much potential names alienated the consumers when they weren’t able to pick the name consumers wanted. Another potential pitfall is the departments relying on what consumers want to the point that they don’t even make their own decisions; this could be deadly in the long run. As long as they use the data as loose guidelines and keep connected with their customers they should be successful for years to come.