case review final 2003

8/13/2019 Case Review Final 2003

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INSTITUTE OF PROFESSIONAL EDUCATION &

RESEARCH, BHOPAL

Strategic Management-II

Assignment

On

Kelloggs-Case Study

Submitted To:

Prof H!rs" C"!#"!$

SM Faculty, IPER

Submitted By:

%s"!l S$g"

Trim , !"#!-!"#


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1. Case review (your opinion)

Kellogg's special K is the most selling brand of Kelloggs. It was developed by the

Kelloggs for diversify their core product line. Company had tested special K with

different variable, the first variable was Kelloggs Special K red barriers and it had

achieved tremendous success in the market. he second variable was Kelloggs

Special K !ar, basically the both product focus on woman diet segment, the concept

behind to launch special K cereal and bar to cater the market segment of women diet.

"s Kelloggs was already established brand in #$ countries they hadnt faced any

problem in terms of product positioning.

2. Introduction (Actual)

In the cases Kelloggs is well establish brand in term of cereal. It is operating in #$

countries and sells its product world wild more than #%& countries. Case is basically

driven by Kellogg s roduct line. Kelloggs even presence in #%& countries but their

core product line is not developed. In the conte(t of product line development they had

introduced product for women diet segment these product are)

Kelloggs Special K red berries

Special K !ar

"s Kelloggs special K was already establishing brand they didnt have problem to

establish their variable in market but apart from their native market people not like their

variable especial in *K market. +ue to lake of product line its full potential had never

been reached. It was viewed as a standalone product, and Kelloggs had not created

any variants or brand e(tensions to develop the core product.

3. Situation analysis (competitors, market, product lines, 4!s)

Competitors o" #ello$$!s%

-eneral mills Inc.


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estle S.".

/alcorp holding Inc.

&arket%

&arket si'e%sales of nearly 0#1.#$2 billion in the /eadyo3at 4arket in 5&

roduct se$ments% the bestselling kids cereal brands-4 6ucky Charms,

-4 Count Chocula, ost 4arshmallow "lphabits, 7 4arshmallow Safari, and

/ice Krispy.

&arket sare%competition is heating up in this market as flat sales and low

priced clones have eroded the market shares of Kellogg and -eneral 4ills

&arket orecasts% the kidsmarket has been growing at a rate of more than

#89 a year, for the 8 to 2 years and shows no sign of slowing through the end of

the decade. -rowth in the overall kids food market was driven, to the largest

e(tent, by gains in cereals

4 o" #ello$$!s

roduct%Kellogg's cereals in India consist of Cornflakes and :rosties. Indians

have strongly entrenched beliefs and preferences with regard to food. heir

preferred breakfast comprises parathas with fillings of sattu, potatoes or

cauli;ower. o stay on the right side of Indian tastes, Kellogg is selling cereals

made from corn, wheat and basmati rice. !ut Indian breakfast habits being what

they are, Kellogg has faced strong resistance to its products, particularly

because it seeks to change these habits. Characteristic of Indian breakfast

habits is that they like to have their meals with hot milk. !esides, Kelloggs

positioning on crustiness loses its meaning because the flakes get soggy in

warm milk, which is what Indians prefer.


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rice%he initial pricing of Kellogg's products was an e(act e pricing. Kelloggs packs which were priced at /s 1& for a

8&& gm pack were %& per cent more e(pensive than their Indian counterparts.

Consumers lapped up the product to begin with, attractive package . !ut soon

they, particularly the lady of the house, realised that it did not provide value for

money. o housewife wants or can even afford to spend /s 1& every two or

three days. hey switched to local brands like 4ohun's, or stopped eating

cornflakes at all. ?f late, Kellogg has reali@ed that it had failed in the pricing

strategy. he consumers perception was that Kellogg did not provide value for

money.

lace%Kellogg has restructured its distribution network right now. o begin with,it has decided to concentrate on building the network in urban centers and

metros.

romotion%he brand has positioned itself as a fatfree alternative to Indian

breakfast for both adults and children. It is also positioning itself as a wholesome

diet for children, establishing itself on the energy platform. Its communication

strategy is based on the motherAchild relationship, which is, perhaps, of utmost

importance in Indian culture, and on the values of nurturing and caring. hus,

the communication shows a mother feeding Kellogg's to her children. his is in

contrast to Kelloggs strategy in the *S where providing cognitive information

regarding breakfast cereals, particularly the nutritional value of KelIoggs, is

primary. he same marketing strategy has been applied in most 3uropean

countries where product benefits, details of


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Kellogg is a leading food products company based in !attle Creek, 4ichigan. he

company produces a wide variety of readytoeat cereals and other food products. In

India, it makes cereals from three types of grainsAcorn, wheat and basmati riceAand

has launched its :rosties and Cornflakes line of products. he brand's entry in India

drives home interesting points in marketing new foods to a specific culture, one of

which is that eating habits need t& be changed rather than making a direct attempt to

market any new food. his is because eating habits are a strong part of any culture and

care should be taken to ensure the brand does not alienate itself from the consumers in

the process of marketing itself. It is difficult to think of a successful food brand in the

Indian conte(t other than 4aggi noodles. It is interesting to look at the positioning of

4aggi visavis Kelloggs. 4aggi positioned itself for children as a fun snack which

could be made in Btwominutes. he brand was very successful in the eighties as the

positioning also had an impact on urban mothers, who had a number of chores to do

and were also concerned about a snack for their kids sometime in the day. 4ost

importantly, from the point of view of culture the brand never tried to alter the e(isting

habits of consumers by positioning itself as a substitute. Kelloggs positioned itself as a

healthy breakfast substitute. It also slammed the oily foods which have ruled the

country palate for generations as unhealthy. his proved to be Danticultural in terms of

selling the concept. hat Indians liked their milk hot even in corn;akes, never mind if itmade them soggy, only complicated things for Kelloggs. he price was too high for this

new Dsubstitute. 4ost of those who bought the brand did not buy it again. So, the

repeat buy for the brand was low. "ll in all, Kelloggs strongly backfired. Cultural

beliefs, more than logic, have to be addressed especially in categories like snacks, fast

foods or any product with a new taste ='new as perceived by consumers in a cultural

setting>. he brand has, in the recent times, introduced its offerings in lowprice

variants and some of them in ethnic favors. =rames kumar, 2**+)

. Alternative identi"ication (wat can you tink o")

"lternative identification of Kelloggs problem will be elaborate in the following factors

which leads the reason of Kelloggs failure in India.


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Factor one:warm milk. "s each container of milk was Daseptically packaged, it didnt

need refrigeration. Eowever, consumers didnt like the idea of warm milk.

Factor two:cool milk. In order to accommodate for the consumers preference for cool

milk, Kelloggs eventually decided to place Cereal 4ates in refrigerators to imply that

consumers should have the milk cold.

Factor three: advertising. "s if the consumer wasnt confused enough, Kelloggs

complicated matters further with the advertising campaign for Cereal 4ates. he F

ads featured young kids helping themselves to the product, while their parents lay

snoring contentedly in bed. Eowever, the packaging of the product was far from child

friendly, and if they left their kids to help themselves, the parents would have probably

been crying =or at least getting cross> over spilt milk.

Factor four:the taste. 3ven when picked up from a refrigerator, the product was often

consumed at work or away from home. In other words, when the milk was warm and

tasted terrible.

Factor five:the price. /etailing at way over a dollar, Cereal 4ates was considered too

e(pensive by many consumers.

hese factors, working in conGunction, caused the Cereal 4ates brand to fail. "nd so,

after two years on the shelves =or in refrigerators>, Kelloggs pulled the plug on the

product. Eowever, there may be one more reason why Cereal 4ates failed to spark a

revolution in breakfast habits. H!g, ' ()*++

/. 0est possile solution Implementation (easiility i" you can)

Successful businesses use all the tools at their disposal to stay at the top of their

chosen market.

Kelloggs was able to use a number of business tools in order to successfully relaunch

the utri-rain brand. hese tools included the product life cycle, "nsoffs matri( and

the marketing mi(. Such tools are useful when used properly. Kelloggs was able to see


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that although utri-rain fitted its strategic profile a healthy, convenient cereal product

it was underperforming in the market. =B#s$ess!ses.#/eso#0 ()*+1

his information was used, along with the aims and obGectives of the business, to

develop a strategy for continuing success. :inally, when Kelloggs checked the growth

of the relaunched product against its own obGectives, it had met all its aims to)

reposition the brand through the use of the marketing mi(

return the brand to growth

improve the fre


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he various models e(plained here in have helped in assimilating the core branding

elements of the proposed brand study. 3ven though there is no correlation between the

advertising of both chocos cereals and biscuits, cereals still e(tend leverage on the

biscuits. he brand e


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arget market change test) change test snake to fast food and local snakes.

. 8ow mi$t new tecnolo$ies a""ect usiness7

In India Kelloggs using tradition way of distribution network like many Indian

companies. !ut new technology will affect in term of positive, it will provide

better communication process in +..S. =distribution network system>. his will

increase product rotation system. ew technology will also insure thats rapid

system to cater the changing trend of market this will increase efficiency in time

to market system.

. 6at are likely to e te "uture market trends7

:acing stagnant growth in their base grocery business, packagedfood

companies increasingly turning to snacks as an avenue for growth, reports +ow

Hones ewswire. It's no longer about inventing the ne(t big meal idea, but about

coming up with the ne(t big snack for timeimpaired consumers, who are looking

for healthier and flavorful options. early J& percent of snack launches

recorded by Innova 4arket Insights in 5# had a health positioning of some

kind, says 6u "nn illiams, research manager forInnova &arket Insi$ts."s

report says snaking segment growth highly efficiently Snacking Could !e the

:uture of 3ating.

. 6ere are te opportunities witin te market place7

"s Kelloggs try to become an established brand in India with effect of S3CI"6

K in women diet segment food. as there is no such competitor in the market.

Kelloggs could easily Identified opportunities within the market place and these

opportunities are)

9ntouced snake market

:iet "ood market


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ro'en "ood market

. 6at new cate$ories would appeal to te tar$et market7

!asically the target markets of Kelloggs are diet conscience woman and snake

for children. he appeal in terms of new snake and cereal meal are not specific

but new variant in snake might be new appeal like chocolate and vanilla ice

cream flavor for snakes, honey and orange flavor for diet cereal cornflakes etc.

;e"erence%

#$ Rames% &umar, '$ (!"")*$ Consumer behaviour and branding$ +e 'el%i: Pearson

Education$

!$ oo.ers$com (!"#/*$Kellogg Company Names of Competitors$ 0online1 Retrie.ed 2rom:

%tt3:44$%oo.ers$com4com3any-

in2ormation4cs4com3etition$&ellogg56om3any$b7/"8!"d988a7a2c$%tml 0Accessed: #9

+o. !"#/1$

/$ aig, M$ (!"##*$ T%e trut% about t%e #"" biggest branding mistaes o2 all time$ ;ondon:

&ogan Page$

$ Businesscasestudies$co$u (!"#/*$ E

&ellogg=s case studies, .ideos, social media and in2ormation > T%e Times #""$ 0online1

Retrie.ed 2rom:%tt3:44businesscasestudies$co$u4elloggs4e


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7$ 6%atteree, P$ (!"#/*$ Kelloggs eyes a bite of ethnic breakfast cereal market$ 0online1

Retrie.ed 2rom: %tt3:44$t%e%indubusinessline$com4com3anies4elloggs-eyes-a-bite-

o2-et%nic-brea2ast-cereal-maret4article7"87!#$ece 0Accessed: #9 +o. !"#/1$

8$ &earney, C$ (!"#"*$ Food consum3tion trends and dri.ers$Philosophical Transactions of

the Royal Society B Biological Sciences, /87 (#77*, 33$ !)/-!9"$

doi:#"$#")94rstb$!"#"$"#)$

$ T%emarmanager$blogs3ot$in (!"#/*$ The !ark !anager Brand Story Kellogg"s in

#ndia$ 0online1 Retrie.ed 2rom: %tt3:44t%emarmanager$blogs3ot$in4!"##4##4brand-story-

elloggs-in-india$%tml 0Accessed: #9 +o. !"#/1$

9$ &elloggcom3any$com (!"#/*$ &ellogg 6om3any > Our Brand Port2olio$ 0online1

Retrie.ed 2rom: %tt3:44$elloggcom3any$com4en5DS4brand3ort2olio$%tml

0Accessed: #9 +o. !"#/1$


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case review final 2003

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