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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