Catch-22 for Kellogg's?
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Case Details:
Case Code : MKTG212
Case Length : 24 Pages
Period : 2008-2009
Pub Date : 2009
Teaching Note :Not Available
Organization : - Kellogg Company
Industry : - Consumer Packaged Goods
Countries : US
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"Michael's most recent behavior is not consistent with the image of Kellogg. His contract expires at the end of February and we have made a decision not to extend his contract."
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- A Kellogg spokeswoman, in a statement, in 2009.
"Certainly the only athlete featured more than once on Kellogg's cereal box was Bonnie Blair -- and she was featured in non-consecutive years, 1992 and 1994. Meaning: They likely had no plans to extend Phelp's contract, but dropping him now makes a strong statement to the public about the company's ethics and integrity."
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- Anna De Souza,3 in 2009.
Introduction
On February 5, 2009, Olympic swimming champion Michael Fred Phelps4 (Phelps) was suspended by USA Swimming5 for three months after a British newspaper News of the World
6 published a photograph of him smoking marijuana7 from a bong at a private party in November 2008. The organization also withdrew financial support8 to Phelps during the suspension period. In a statement issued by them, USA Swimming said, "This is not a situation where any anti-doping rule was violated, but we decided to send a strong message to Michael because he disappointed so many people, particularly the hundreds of thousands of USA Swimming-member kids who look up to him as a role model and a hero. Michael has voluntarily accepted this reprimand and has committed to earn back our trust."9
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The day the photograph was published, cereal and snack manufacturer Kellogg Company (Kellogg) in a statement distanced itself from Phelps and announced its decision not to renew its advertising contract with the swimming champion. Founded in 1906, Kellogg was engaged in the manufacture and marketing of ready-to-eat cereal and convenience foods such as cookies, crackers, cereal bars, fruit snacks, frozen waffles, and veggie foods.
As of 2009, Kellogg products were being manufactured in 19 countries and marketed in more than 180 countries. For the year ended 2008, the company recorded net sales of US$12.8 billion.10 The company had earlier entered into a celebrity endorsement deal with Phelps and placed his pictures on boxes of Kellogg's Frosted Flakes11 and Corn Flakes. Susanne Norwitz, a spokeswoman from the company, said, "Michael's most recent behavior is not consistent with the image of Kellogg. His contract expires at the end of February, and we have made a decision not to extend his contract."12
Kellogg, which had earned a name for itself in recent years as a company with high ethical standards, soon found itself in the midst of a controversy. While some consumers welcomed the move, there were others who were unhappy with the judgmental approach adopted by the company. They felt that Phelps was a sporting great who had brought laurels to the US, and did not deserve such treatment.
Introduction Contd...
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