Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Executive Update Date: Tue, 10 Nov 92 12:43:39 EST Message-ID: <10.1992Nov10.124340@AmeriCast.com> 11/10/92 TITLE Executive Update #m#gm#m##m#sw/rob#m#Why Borden Repositioning Has Need To Boost Profits Drives Effort To Present Unified Marketing Front Marilyn Much In New York If Elsie the cow could talk, she might ask her bosses at Borden why she's been in the deep freeze so long. After nearly 20 years on ice, the advertising trademark will make a comeback next year as the star in animated television spots and print ads aimed at rejuvenating New York-based Borden Inc.'s dairy brand. But resurrecting Elsie is only part of Restructuring Borden's master plan to beef up its advertising and marketing. Borden's new strategy includes an integrated marketing program for all of its dairy products - milk, processed cheese, ice cream, condensed milk and frozen desserts. The message - "If It's Borden, It's Got To Be Good" - is aimed at reinforcing the company's brand equity, or value. And bringing back the 56- year-old Jersey relays that message. Research indicates Elsie remains a powerful symbol that evokes strong positive recognition among consumers who are 40 years old or older, says a company spokesman. Borden also hopes to gain recognition for Elsie among 20- to 40- year- old consumers who may initially perceive her as a positive symbol. The new campaign comes at a time when Borden Chairman and Chief Executive Anthony D'Amato is under mounting pressure to whip the beleaguered company back into shape. D'Amato's objective is to market all of the company's brands as a single company, with an emphasis on profitability rather than size or market share, he recently told a news conference. Earnings Stalled "The one-company approach is designed to create huge synergies among all units that will enable the company to move more reve- nues onto the top line by moving more products," the spokesman said. D'Amato declined an interview. D' Amato took over the $7.2 billion company last year. He has been struggling ever since. Earnings growth has been stalled by the recession and by competi- tion from PepsiCo Inc.'s Frito-Lay and Philip Morris Cos.' Kraft General Foods. Both have been nibbling away at Borden's market share through aggressive marketing. "Price promotions and strong advertising on the part of Frito-Lay in particular have made it very tough for Borden, which, with its nonintegrated regional brands, has been pretty vulnerable to price and marketing com- petition," said John Ruf#m#cq#m#, a principal with New England Consulting Group in Westport, Conn. D'Amato gave investors more bad news late last month, when he disclosed the company will take a charge of $450 million, or $3.20 a share, in the third quarter to pay for a sweeping reorganization, the company's second in three years. The charge resulted in a quarterly loss of $376.8 million, or $2.68 a share, vs. year-earlier earnings of $98.8 million, or 67 cents a share. His operational and marketing blueprints are meeting skepticism. "Clearly, his strategy is better than the course management has taken in the last five years," said Joanna Scharf, an analyst with S.G. Warburg & Co., New York. "However, Borden has got a long road to travel to turn around, and his strategy has a long way to go before it translates into earnings growth." "Just because D'Amato says he's going to build Borden into a big marketing company doesn't mean it will work," said Robert Cummins, an analyst with Wertheim Schroder & Co. "He's taking a lot of dissimilar businesses and putting them under a single organizational umbrella, a strategy that looks neat and clean, but I'm not sure it will get the job done." Cuts Planned D'Amato's plan includes plant closings and job cuts. It also in- cludes divesting marginal brands in the company's North American snack food unit. "These businesses have been a major drain on Borden earnings, quarter after quarter," he said in a statement, without identifying the brands. A crucial goal of D'Amato's overhaul is to create a slimmer, centralized sales and marketing force. Currently, Borden retains 19 ad agencies and 100 sales promotion firms. "We weren't even a major advertiser, yet we had all these different agencies working for us, selecting creative (strategies) based on different criteria," D'Amato said. D'Amato will reduce the number of ad agencies to about four and unify Borden's domestic sales force into a system that central- izes relationships with major customers. "With the retail food business under a lot of competitive pressure from mass mer- chandisers like Wal-Mart, these retailers don't want to deal with 28 different people from Borden, as they have been," the spokes- man said. Borden has been testing the new approach with one ma- jor retail customer, which it now serves with a single Borden marketing team. Sales to that retailer have been up 31% in the last year, D'Amato says. Borden will expand this concept into Florida early next year and will test alternative sales methods elsewhere. On the marketing side, its dairy business will re- ceive a complete overhaul - all based around Elsie. Possible Regional Focus The new program will bring common packaging to all the milk- based products, so that when consumers look in the dairy case they will see products that look alike, conjuring up the Borden name and image. Its snack food business will undergo a transformation as well, though clearly the sole-brand approach won't apply in that busi- ness. "We will no longer compete with Frito-Lay (No. 1 in snack foods) in terms of being the biggest," asserted the spokesman. That might mean repositioning the business as a regional player with a menu of strong regional brands. "We may not market nationwide anymore, because right now, we're not making money in that many places," said the spokesman. This article is copyright 1992 Investors Business Daily. Redis- tribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM