CASE STUDY

STRATEGIC MANAGEMENT

The company has asked you to propose new guidelines for helping it promote food to

children in a socially responsible way. As the third-largest consumer packaged food and

beverage company in North America, KraftHeinz’s 2014 sales exceeded $29 billion.

The company projects steady growth but would like your help in boosting growth. One

of Kraft’s largest brands is Oscar Mayer Lunchables, described as making lunch fun and

targeted to busy parents who want a quick lunch to send with their children to school or

keep on hand as an after-school snack. One of the options is Lunchables with Juice,

Nachos Cheese Dip, and Salsa.

However, there is a growing controversy about the social responsibility of directly

marketing to children when the food is unhealthy—high in fat, sugar, and salt, but low in

nutrition. There is a societal concern with the growing rate of obesity in children and the

increased incidence of diabetes that results from childhood obesity.

In response, most food and beverage companies have agreed to follow voluntary

guidelines created by the Better Business Bureau, termed the Children’s Food and

Beverage Advertising Initiative (CFBAI). The Guidelines ask for participating companies

to pledge to advertise only healthy choices during children’s programs, defined as those

with an audience of 35 percent or more children under 12.

Kraft would like to have a reputation as a socially responsible company. Accordingly,

Kraft would like to create internal guidelines that will help it market Lunchables (as well

as other packaged food items) responsibly and gain the approval of medical

professionals, parents, and watchdog groups.

1. Visit the Kraft food website (www.lunchables.com) and review the Lunchables

products, as well as other packaged food products that Kraft offers. Determine which

the product options are healthy choices.

2. What changes would you recommend to the CFBAI pledge in order to ensure that the

primary audience watching advertisements for Kraft packaged foods will not be

children? Describe alternative guidelines that Kraft might adopt.

3. Identify other actions that Kraft might take in order to demonstrate that it is a food

company that genuinely cares about children’s health and a company that would like to

help reverse the trend of increasing childhood obesity.

4. If you believe that the company is not responsible for personal choices that

consumers make to eat unhealthy food, then describe how the company should

respond to activist groups and public health officials that are urging companies to stop

producing and marketing unhealthy foods.

1. Launched in 1988, dominating the market for kid’s “combination lunches”,

Lunchables have 26 different varieties including crackers, pizzas, chicken nuggets,

small hot dogs, small burgers, nachos, subs, and wraps. Lunchables have been the

number one “go-to” product of parents for their children because of its convenience.

Lunchables has an 84 percent share of the market and considered a leader in that

particular industry. Below are the top 8 Lunchables flavors in the market:

 Lunchables Duo Dunkers.

 Lunchables Breakfast Bacon & Pancake Dippers.

 Lunchables Nacho, Cheese Dip & Salsa.

 Lunchables Turkey & American Cracker Stackers.

 Lunchables Mini Hot Dogs.

 Lunchables Kabbobbles.

 Lunchables Breakfast Waffle & Bacon Dippers.

Based on the data from www.myfitnesspal.com, Lunchables products ranges from

140 calories to as much as 500 calories. Out of the 26 varieties of Lunchables, the

following products have the lowest calories count:

Variety Nutritional Facts

Snack Pack Calories: 140 •Carbs: 9g •Fat: 8g •Protein: 8g
Cracker Crunchers Chicken Calories: 220 •Carbs: 23g •Fat:10g •Protein: 10g
Chicken Nuggets Calories: 150 •Carbs: 12g •Fat: 5g •Protein: 12g
Snack Duos Calories: 150 •Carbs: 9g •Fat: 7g •Protein: 9g
Turkey Lunchables Calories: 190 •Carbs: 17g •Fat: 9g •Protein: 9g
 Based on the nutritional facts of the abovementioned products out of the different

varieties of Lunchables, low calorie count foods are the best to offer for children

since in the long-run it may help reduce child obesity. The five products presented

above also shows the balance of carbohydrates, fat, and protein.

2. According to the CFBAI's Principles, Participants of child-direct advertising are

allowed to advertise to children under 12 years old, only for foods that meet

CFBAI's Category-Specific Uniform Nutrition Criteria. To ensure that the primary

audience watching advertisements for Kraft package foods will not be children, they

should advertise directly to parents. Since Lunchables is only promoting through a

website, it is hard to tell whether its main audiences are parents or children since

there is an option for both.

In compliance with the initiative of the CFBAI, the company should not pay for or

deliberately attempt to put items in program/editorial material specifically aimed at

children under the age of 12 in order to promote the selling of such products. The

company should not incorporate its products in interactive games that are primarily

directed to children under 12. Also, since the company uses the internet as a

platform for advertising, the company should commit to not using influencers to

promote foods and beverages in communications primarily directed to children

under 12.
 Not all kids are allowed to open websites unattended. Since the world wide web is

an open platform, they might witness inappropriate sites. Another alternative

guideline to suggest is that they should only allow participants to advertise to 13

years old above. It will ensure that the primary audience will not be kids. It can help

kids to refrain from excessive use of online platforms or media.

3. A common complaint in Lunchables is that most of its products contain too much

sodium and saturated fat. Some varieties of Lunchables contain as much as 750

grams of sodium for a single serving (more than 30 percent of the daily

recommended intake), while others have almost half a day's worth of the

recommended saturated fat. Based on the variety of products to pick in Lunchables,

there are limited options for vegetables or fruits. Vegetables and fruits are essential

in children's diet. Although the servings for each menu are only minimal, it needs to

be balanced.

For the company to demonstrate that it genuinely cares about children, they should

completely shift into a more healthy and nutritious products for children without

compromising the whole concept of Lunchables. The company should find a way to

introduce a new Lunchables product line with a healthier content while delivering a

balanced and nutritious meal.

Secondly, the company should encourage children to learn how to eat healthy

foods at a young age. They should include fruits and vegetables in Lunchables. In
 this way, children can maintain their healthy diet. If the company really wanted to be

recognized as a company that cares, vegetables and fruits should be included in

the menu. Another suggestion is that they should lessen the sweet desserts on the

menu or replace them with fruits or oatmeal bars.

4. According to Oscar Mayer, Lunchable’s purpose is to provide a convenient way for

busy moms to occasionally treat their kids to their favorite foods, and that the

products are not meant to be a daily habit. The product was really intended for

those busy parents who haven’t got time to prepare for their child’s lunch for school,

but not on a daily basis. Indeed, it is a very convenient way for parents to prepare

lunch for kids but studies show that there could also be negative effects on

children’s behavior.

According to Becky Plotner, ND of Nourishing Plot, a teacher reported that

"Lunchable Kids" have a slew of negative side effects after eating them, stating,

"Their conduct is troublesome in the classroom, disruptive, and exhausting." In

addition, the teacher said, "My Lunchable Kids cause more behavioral issues than

my other children. They take shortcuts, have negative attitudes, and tend to have

social problems. I also suspect that the children's ability to work is impaired by their

lack of nutrition."

Based on the abovementioned statements, it really shows that although the

intention of Lunchables is to provide a more convenient way for parents to prepare

lunch for their children, there are many negative effects for children for both their

health and behavior. Therefore, it is the perfect time for the company to revamp the

entire Lunchables product line shifting into a more nutritious one. Lunchables

should undergo a complete makeover from being the unhealthy option to the only

go-to product which offers convenience for parents as well as healthy treats for their

children.

The first thing that the company should do is to introduce newer product lines for

Lunchables. The company should focus on a healthier and nutritious meals by

eradicating processed meat products and ingredients that are very high in

preservatives which can cause long-term health problems for children. The

company may also opt to inject vegetables and fruits in the product. By doing so,

Lunchables will be a more balanced meal for children.

Another strategy that the company can apply is to shift to a more organic diet for

children, since they are the primary target market of the brand. Instead of

processed meat, Lunchables should offer organic products from its meat, to its

fruits and vegetables. By implementing this, the company can source out their raw

materials from organic farmers supporting their advocacies of healthy living as well

as their livelihood. This way the company can also introduce a sustainable

corporate social responsibility targeting the “Triple Bottom Line” or “3 P’s—Profit,

People, and Planet”.