Brian Hansberry was promoted to brand manager on the Jif peanut butter brand in January of 1995. Jif is the market leader and a real success story for Procter and Gamble. Market share has been hovering around the 30% during the second half of 1995, and there is a new vice president on the business who is asking a lot of questions about how Brian intends to grow the brand. The VP has suggested that Brian organize a meeting right before Christmas, when preliminary 1995 performance measures would be available. The meeting would include the VP, Brian, and key account and creative people from Grey Advertising, which has been Jif’s agency for more than 30 years.

The objective of the meeting would be to review the Jif marketing plan for 1996. Jif targeting and positioning strategy would be of primary concern. It seemed obvious that the majority of Jif’s consumption was sourced from mothers. But it was less certain whether the focus should be on all moms or moms with younger kids who were entering the market and thus likely to be decisional about the brand of peanut butter to select. A substantial amount of the category’s consumption derived from people over 50. Were these consumers worth attracting? Kids too seemed like a plausible target in that they consumed the vast majority of peanut butter. "Cereal brands target kids," Hansberry thought, "why not peanut butter?" Whatever the strategic target chosen, it would be important to select the target that would be represented in the creative execution.

Positioning had not changed for many years. The brand has been successful by focusing on the notion that "Choosy moms choose Jif." It seemed questionable to change the strategy. But it was also true that this was no longer growing Jif’s share of market. Hansberry wondered whether Jif’s advertising had worn out, requiring a new campaign, or whether modest changes would enhance Jif’s performance in the marketplace.

Peanut butter was first sold in 1890, when a St. Louis physician encouraged the owner of a food products company, George A. Bayle, Jr., to process and package ground peanut paste as a nutritious protein substitute for people with poor teeth who couldn't chew meat. Other contributors to the growth in popularity of peanut butter during the early part of the 20^th century included the Kellogg brothers, who were later to gain fame for their cereals, and George Washington Carver, who developed over 300 uses for peanuts (including shoe polish and shaving cream).

In 1922, Joseph L. Rosefield developed peanut butter as we know it today. His peanut butter was "churned" like butter making it smoother than the gritty peanut butters of the day. It was a shelf stable product that maintained freshness for up to one year without refrigeration.

One of the first companies to adopt this new process was Swift & Company, a meatpacking firm in Chicago. Its Peter Pan brand was introduced in 1928. Four years later, after Rosefield had a dispute with Swift, he introduced the Skippy brand in California. In 1934, Skippy added the first chunk style peanut butter.

Peanut butter sales grew substantially in the 1940s as a result of its consumption by the Allied forces. In the 1950s, Baby Boomers further popularized the product as a lunch spread for kids. Procter & Gamble entered the peanut butter business in 1955 by acquiring W.T. Young Foods in Lexington, Kentucky, makers of Big Top Peanut Butter. They introduced Jif in 1958.

Peanut butter contains a minimum of 90% peanuts, with no artificial colors or preservatives. Some brands add about 7% sweeteners (usually corn syrup or dextrose) and 1.5% salt for taste, plus a stabilizer (hydrogenated vegetable oil) to keep peanut butter fresh up to one year after opening without refrigeration. Natural or Old Fashioned varieties of peanut butter containing only ground peanuts are available, but they must be refrigerated and stiffened before use. New varieties of gourmet peanut butter products are becoming popular. Chocolate Peanut Butter, Honey Cinnamon Peanut Butter, Banana Crunch Peanut Butter, Chocolate Peanut Butter with Raspberries, peanut sauces, peanut butter-filled pretzels, and peanut butter packaged in resealable tubes for travelers are just some of the new products recently introduced. Peanut butter in foil pouches still travel with the Armed Forces and are consumed by astronauts.

Despite its American popularity and longevity, peanut butter remains primarily a North American phenomenon. In many parts of the world, peanut butter is regarded as an unpalatable American curiosity, despite the presence and worldwide popularity of peanuts for six centuries.²

Peanut butter is an $875 million dollar business at retail. It is eaten in 75% of U.S. households. This household penetration is down 5% in the last decade, a decline that is attributable to the introduction of a host of new lunch and snack products, the foremost of which is Lunchables. Peanut butter consumption is primarily on sandwiches. About 85% of all consumption is as a spread on bread. Although peanut butter and jelly make up about 46% of the consumption, many consumers eat peanut butter without jelly. Creamy peanut butter represents about 70% of the sales, and crunchy the remainder. Peanut butter also comes in reduced sugar (Simply Jif), reduced fat, and honey roasted (Skippy) varieties, though the vast majority of category consumption is of regular peanut butter.

Consumers purchase peanut butter about every three months, though frequency of purchase varies by brand and to some extent by year (Table 1). Consumers also exhibit a

high degree of loyalty to peanut butter (Table 2). Often the peanut butter served is the same one that the female head of household was served when she was a child. While all

brands enjoy a substantial amount of brand loyalty, private label brands receive the highest degree of loyalty, followed closely by Jif.

Table 2: Share of Requirements (Brand Loyalty)

Related to the high degree of consumer loyalty is the fact that household penetration for all brands of peanut butter is relatively low. Jif has the highest degree of penetration in 1995, with 33% of households trying the brand at least once during the year (Table 3).

Peanut butter consumption varies significantly with the working status of the mom. Consumption is significantly higher in families where there was a stay at home mom than one in which the mom is employed outside the home. This observation raised the question of whether it was appropriate to segment on the basis of mom’s working status.

There are three major players in the peanut butter category. Jif (P&G), Skippy, (CPC International), and Peter Pan (Conagra). These brands make up over 60% of the category. Private label brands are strong competitors with about 23% share. Reese’s has a small share of the market. There have been a number of new product introductions during the 1990s. In 1991, Jif introduced a low sugar version called Simply Jif, and Reese’s used their peanut butter and chocolate candy bar equity to launch a peanut butter. In 1994, Jif, Skippy and Peter Pan all introduced a reduced fat product and in 1995 Skippy introduced Roasted Honey. Table 4 presents the volume share by brands.

Jif historically has been the leading advertiser in the peanut butter category (Table 6). In 1995, Jif’s share of voice (Jif advertising weight vs all brands advertising weight) was 76%. Skippy is the other major advertiser. Peter Pan and Reese’s typically do not advertise their peanut butters, unless they are introducing a new product. Most of the peanut butter advertising was done on daytime TV.

In considering Jif’s advertising for 1996, Brian Hansberry examined SMRB data to help him select his target (Exhibit I). At issue was whether to focus on 25-49 year olds, or to consider other targets. The 25-49 year old group constitutes 34.6% of the US population and kids in this segment consume substantial amounts of peanut butter. People over 50 represent about 30% of the population and they also represent a substantial amount of peanut butter consumption. With the projected growth in this population, women 50+ warrant consideration. Thought might also be given to whether focus should be on 25-34 year olds heads of households. While they are only 12.5% of the US population, they exhibit impressive rates of consumption. A kids target deserves analysis, as they do most of the category consumption.

Hansberry reviewed the advertising history of the Jif brand over the last 20 years. For most of that time, Jif had been telling consumers about the fact that choosy moms choose Jif because it has more of the taste of fresh roasted peanuts. He wondered how much longer this attribute-focused campaign was likely to deliver news. Base brand was not growing and maybe it was time to grow the position.

There are two tables for each of the four age segments. The segment of households without a woman head was left out. Thus the percents of a brand’s users summed across age groups is less than 100. For each age segment the first table presents the raw number of people and the second the percents. The percents add to more than 100 because people have kids in more than one segment and thus are double counted.