KRAFT FOOD

Kraft Food

Kraft Food

Kraft Foods, Inc. (Kraft) is the largest branded food and beverage company in the United States and the second largest in the world (behind Nestle) (Datamonitor). It was spun off by Philip Morris (now Altria Group) in June 2001 in the U.S.'s second largest IPO ever (behind AT&T Wireless). Altria Group owns approximately 84% of Kraft (Hoover's). Kraft operates through two main subsidiaries, Kraft Foods North America and Kraft Foods International (Datamonitor).

Kraft's business spans five core sectors: snacks, beverages, cheese, grocery and convenient meals and includes some of the country's most familiar brands, including Kraft cheese, Maxwell House coffee, and Oscar Mayer meats (Wahlgren).

One of Kraft's most important strengths is the power of its brands (Altria) and few things in the food business are as bankable as Kraft extending one of those powerful brands (Gogoi, 2006). For Kraft, determining how to effectively and efficiently develop and introduce new products is important to retaining a profitable bottom line (Dahm 2008). Prioritizing new product development while retaining emphasis upon core brands is a balance that can be hard to achieve. However, it appears as though Kraft has been able to walk that tightrope well (Dahm and Malovany 2008). The company has an aggressive attitude toward new product development, but also aggressively pursues improvements in core brands and existing products (Dahm, 2008).

Kraft sees innovation in every aspect, not just in product development. Another way that Kraft focuses upon innovation within the company is by holding "innovation weeks" wherein employees from all across the company are encouraged to create new product ideas. The innovation weeks charge divisions not usually responsible for new product ideas to take on that challenge. Kraft also holds idea fairs, where key suppliers or key customers are encouraged to present new product ideas to Kraft (Dahm, 2008).

In fact, Kraft's relationship with key suppliers has changed overall. It has become more interactive. According to Ruff, "It used to be that the top priority with suppliers was the price. Today, price is the last factor. The first criteria are the quality suppliers can deliver, the ideas suppliers can bring and how we work together with a supplier" (Dahm and Malovany 2008). In 2004, Kraft won The Grocery Manufacturers of America's Associate Member Council (AMC) first AMC CPG award, which honors innovation through creativity, product innovation and industry collaboration ("Kraft Wins Inaugural Award").

Customer and Market Focus

Kraft Foods accomplishes its goals of customer attraction, retention, and solving customer complaints through several means. According to Eccles (1981) customers prefer flexibility in their product and service offerings. Flexibility in product and service offerings not only provides the options to customers to choose and select only those products and services that best meet their needs but it also facilitates the process of customization and personalization. Similarly, Porter (1980) argues that in the present dynamic environment, a number of firms are shifting their focus from transaction-based interactions to relationship-based interactions(Bosworth, 2008).

Since a firm usually incurs far more money in attracting ...