Kelloggs Ppt

Like Coco the monkey we sing the praises of

the chocolatey cereal

Kellogg Company Mission Kellogg Company Mission StatementStatement

““Kellogg is a Global Company Kellogg is a Global Company

Committed to Building Long-Term Committed to Building Long-Term

Growth In Volume and Profit and to Growth In Volume and Profit and to

Enhancing its Worldwide Leadership Enhancing its Worldwide Leadership

Position by Providing Nutritious Position by Providing Nutritious

Food Products of Superior Value”Food Products of Superior Value”W. K. KelloggW. K. Kellogg

Kellogg’s Marketing Kellogg’s Marketing StrategyStrategy

andand

Marketing PlansMarketing Plans

Organizational Organizational StrategiesStrategies

Leadership in product innovationLeadership in product innovation Strengthening the company’s seven Strengthening the company’s seven

largest cereal markets largest cereal markets Accelerating the growth of convenience Accelerating the growth of convenience

foods businessfoods business Developing a more focused organizationDeveloping a more focused organization Continuing to reduce costsContinuing to reduce costs

Global StrategyGlobal Strategy

Management continues global Management continues global strategystrategy

Offers brand-differentiated pricingOffers brand-differentiated pricing Invests in new product research Invests in new product research Brand-building marketing activities Brand-building marketing activities Cost structure reductionCost structure reduction

Product Market Product Market StrategiesStrategies

Product developmentProduct development– Constant innovation. Introduction of new product Constant innovation. Introduction of new product

to present customers.to present customers.

Market developmentMarket development– Maintain global positionMaintain global position

DiversificationDiversification– Introduction of new products to fit new customers Introduction of new products to fit new customers

needsneeds

Kellogg’s SWOT Kellogg’s SWOT AnalysisAnalysis

StrengthsStrengths

Control 42% of global market share for Pre-Control 42% of global market share for Pre-sweeter cereal, which is more than triple sweeter cereal, which is more than triple the market share of any of their the market share of any of their competitors.competitors.

They have the strongest brand recognition They have the strongest brand recognition and advertising recollection of all the cereal and advertising recollection of all the cereal manufacturersmanufacturers

WeaknessesWeaknesses

Have Have notnot aggressively aggressively developed developed many newmany new cerealcereal lines in the past lines in the past four years.four years.

Slow erosionSlow erosion of their U.S. of their U.S. market market shareshare in the past few years, in the past few years,

Follower in Pricing StrategyFollower in Pricing Strategy

OpportunitiesOpportunities

International expansionInternational expansion is the biggest is the biggest area for growth for Kellogg’s.area for growth for Kellogg’s.

Kellogg can continue to Kellogg can continue to slowly diversifyslowly diversify, , while still remaining in their core business while still remaining in their core business area, which will increase their profitability.area, which will increase their profitability.

If they can If they can develop develop a bettera better pricing pricing strategystrategy and guarantee lower prices, they and guarantee lower prices, they can reduce costs while increasing their can reduce costs while increasing their market share.market share.

ThreatsThreats

General Mills, Post, and Quaker Oats General Mills, Post, and Quaker Oats are using are using price competition and price competition and productproduct proliferationproliferation to erode to erode Kellogg’s share of the market.Kellogg’s share of the market.

Discount imitation cerealsDiscount imitation cereals brands brands have been successful in reducing have been successful in reducing premium brands in the more premium brands in the more commodity like cereals.commodity like cereals.

Market AnalysisMarket Analysis

Market AnalysisMarket Analysis Market size:Market size: sales of nearly $9.7 billion in the Ready-To-Eat sales of nearly $9.7 billion in the Ready-To-Eat

Market in 2001Market in 2001

Product segments:Product segments: the best-selling kids’ cereal brands--GM the best-selling kids’ cereal brands--GM Lucky Charms, GM Count Chocula, Post Marshmallow Alphabits, Q Lucky Charms, GM Count Chocula, Post Marshmallow Alphabits, Q Marshmallow Safari, Rice Krispy.Marshmallow Safari, Rice Krispy.

Market share:Market share: competition is heating up in this market as flat competition is heating up in this market as flat sales and low-priced clones have eroded the market shares of sales and low-priced clones have eroded the market shares of Kellogg and General MillsKellogg and General Mills

Market Forecasts:Market Forecasts: the kids’market has beenthe kids’market has been growinggrowing at a rate at a rate of more than 15% a year, for the 5 to 7 years and shows no sign of of more than 15% a year, for the 5 to 7 years and shows no sign of slowing through the end of the decade. Growth in the overall kid’s slowing through the end of the decade. Growth in the overall kid’s food market was driven, to the largest extent, by gains in cereals.food market was driven, to the largest extent, by gains in cereals.

Cereal Industry Volume Salesfor Presweet Cereal

Volume Sales (As of 2/01)

16.7

11.7

7.4

4.8

4.5 1.4Kellogg USA

GM & Ralston

Post & Nabisco

Quaker

Store Brands

Malt O Meal Co

In million

Marketing/promotion: Marketing/promotion: Seven breakfast cereal Seven breakfast cereal marketers allocated almost $775 million to purchases of marketers allocated almost $775 million to purchases of space and time mass media in 2001.space and time mass media in 2001.

Industry structure:Industry structure: Three food giants--Kellogg, Three food giants--Kellogg, General Mills, and Philip Morris--responsible for 70% of General Mills, and Philip Morris--responsible for 70% of kid’s foods in 2001.kid’s foods in 2001.

Market Analysis(continued)

Major Trends in Cereal Major Trends in Cereal IndustryIndustry

New products are dominated by line extension and New products are dominated by line extension and product promotionproduct promotion

Increasing popularity of private labeled cereals due Increasing popularity of private labeled cereals due to high cost of branded productsto high cost of branded products

Higher demand for health food markets & productsHigher demand for health food markets & products

Health claims is becoming more prevalent; Health claims is becoming more prevalent; Kellogg’s - American Heart AssociationKellogg’s - American Heart Association

Competitive AnalysisCompetitive Analysis

Competitive Force Competitive Force AnalysisAnalysis

Intensity of RivalsIntensity of Rivals

Four Large companies are dominant in the market

Oligopoly

Competition is very intense

Inflated prices

Growth Rate has remained Constant


Threat of a SubstitutionThreat of a SubstitutionPrivate Labels

Has made substitution very significant

Caused other 3 competitors to lower their prices

Low switching cost (1/3 of 1,000 shoppers switched to private label)

Price competition (1990’s started a price war between rivals)

Made the buyer more powerful

High

Low

PR

ICE

/QU

AL

ITY

/IM

AG

E

PRODUCT LINE/MANUFACTURING MIX

Strategic Group Map of Competitors in the Presweeter Cereal Industry

Brand Cereals

Kellogg GeneralMills

General Food

Quaker Oats

Private Label

Bagged Value-Priced

Cereal

Cap’n Crunch

Snack Bars

Rice Cakes

Oatmeal Cereal Bars

Fruit Cereal Bars

Cap’n Crunch

Quaker Oats

General Foods

Honey Nut Shredded

Cranberry Almond Crunch

Honey Nut Cheerios

Private Label

Cocoa Krispies

KELLOGG

General Mills

Lucky Charm

Cheerios

Honey Nut Cheerios

Other Cereals


High Barriers to EntryHigh Barriers to Entry

Main barriers to entry in the breakfast Main barriers to entry in the breakfast cereal market are four major cost factors. cereal market are four major cost factors.

Product developmentProduct development - easy for established - easy for established manufacturers to duplicate products, new manufacturers to duplicate products, new products take more money & time to develop products take more money & time to develop

DistributionDistribution - high slotting & promotional fees, - high slotting & promotional fees, limited shelf space, need to create retail demand, limited shelf space, need to create retail demand, all increase costs for manufacturersall increase costs for manufacturers


High Barriers to EntryHigh Barriers to Entry

MarketingMarketing - need to compete against - need to compete against current brands that have been established current brands that have been established through large advertising and promotional through large advertising and promotional efforts (t.v., coupon)efforts (t.v., coupon)

High Capital costsHigh Capital costs - for different types of - for different types of equipment and plantsequipment and plants

Supplier does not have much Supplier does not have much power because of private labels.power because of private labels.

Similar products have allowed Similar products have allowed buyers to acquire products from buyers to acquire products from private labels at a Cheaper Price.private labels at a Cheaper Price.

Now industry is very Sensitive to Now industry is very Sensitive to the buyer.the buyer.


Power of SupplierPower of Supplier

Customer AnalysisCustomer Analysis

Cocoa KrispiesCocoa KrispiesBuying CriteriaBuying Criteria

Key equity drivers: chocolate taste, Key equity drivers: chocolate taste, Coco the monkey, snap, crackle Coco the monkey, snap, crackle and popand pop

Package: fun, colorful, capture Package: fun, colorful, capture children’s attentionchildren’s attention

Product: very sweet, colorful and Product: very sweet, colorful and contain nutritious elementscontain nutritious elements

Kellogg’s Customer Kellogg’s Customer AnalysisAnalysis

Who Are the Buyers?Who Are the Buyers? Parents, Older Adults Parents, Older Adults

How Often Do They Purchase?How Often Do They Purchase? Kids cereal are purchased roughly 18 times a yearKids cereal are purchased roughly 18 times a year 10th fastest-moving product in the supermarket10th fastest-moving product in the supermarket

Where Do they Want to Buy?Where Do they Want to Buy? Grocery Stores responsible for 99% of cereal salesGrocery Stores responsible for 99% of cereal sales

Who Are the Influencers?Who Are the Influencers? Kids Kids

Who consumes the goods?Who consumes the goods? Kids under 18Kids under 18

Who are Kellogg’s Target Market?Who are Kellogg’s Target Market? Kids 8-11 years oldKids 8-11 years old

Percent of Total Annual Spending Percent of Total Annual Spending on Presweeter Cerealon Presweeter Cereal

(by Age Group)(by Age Group)

16.3

29.4

22.3

10.3

8.8

8.2

25-34

35-44

45-54

55-64

65-74

75+

Ag

e G

rou

ps

Percentage

Cocoa KrispiesCocoa Krispies ObjectiveObjective

Strengthen kid consumer baseStrengthen kid consumer base

Secure Kellogg “cocoa” bit subsegment volume share Secure Kellogg “cocoa” bit subsegment volume share with competitive focus on GM’s Cocoa Puffs and Post’s with competitive focus on GM’s Cocoa Puffs and Post’s Cocoa PebblesCocoa Pebbles

Create a product that enhances the “ultimate multi-Create a product that enhances the “ultimate multi-sensory food experience” by adding additional sensory food experience” by adding additional attributes that satisfy expended consumer needsattributes that satisfy expended consumer needs

Attract different target groupsAttract different target groups

COCOA KrispiesCOCOA KrispiesPromotionPromotion

Spent roughly $15 million for ad campaign: TV, printSpent roughly $15 million for ad campaign: TV, print

Adds include Coco the MonkeyAdds include Coco the Monkey

Advertiser: Kellogg Agency (Leo Burnet)Advertiser: Kellogg Agency (Leo Burnet)

Quantity and price discountsQuantity and price discounts

Packaging: fun, colorful, capture children attentionPackaging: fun, colorful, capture children attention

CerealCereal PricingPricing for Retail Stores for Retail Stores

Farmer Jack Kroger TargetCocoa Pebbles(General Mills)Cocoa Puffs(Post)

$0.25/ounce$0.28/ounce



Cocoa Krispies(Kellogg’s) $0.22/ounce $0.23/ounce $0.17/ounce

Private Labels $0.23/ounce $0.13/ounce n/a

Kellogg’sKellogg’s Distribution PlayersDistribution Players

Major playersMajor players::– KrogerKroger– Farmer JackFarmer Jack– TargetTarget

Minor playersMinor players::– Convenience storesConvenience stores– Gas stationsGas stations

Retail/Distribution: Grocery stores are responsible for the overwhelming 99%--of cereal sales

Kellogg’sKellogg’s Distribution ChannelsDistribution Channels

Kellogg’s

Retailer

Kellogg’s

Wholesaler

Retailers

Kellogg’s

Computer system

Kroger, Target, distrib. centers

Distrib. In stores

Introduction Growth Maturity Decline

Dol

lars

Time

Cocoa Krispies:

PRODUCT LIFE CYCLE

Critique of the PlanCritique of the Plan

Have we heard of it? Have we heard of it? Promotional issuesPromotional issues

Can we get it? Can we get it? DistributionDistribution

Can we afford it? Can we afford it? PricingPricing

Are we buying it? Are we buying it? Target marketTarget market recordrecord

Is it legitimate? Is it legitimate? Corporate responsibilitiesCorporate responsibilities

Promotional IssuesPromotional Issues

Mass AdvertisingMass Advertising TV, Cocoa the Monkey, TV, Cocoa the Monkey, and Snap, Crackle and Pop. and Snap, Crackle and Pop.

Direct PromotionsDirect Promotions CouponsCoupons

Trade PromotionsTrade Promotions In-store displays,In-store displays, SamplesSamples

Personal SellingPersonal Selling Key-account reps, Key-account reps, Area reps, Area reps,

Merchandisers Merchandisers

DistributionDistribution

Penetration Penetration - - Chain stores, Independent Chain stores, Independent wholesalers wholesalers

Sales Channel - Sales Channel - Brand equity helpsBrand equity helps

Logistics - Logistics - Finished goods warehouse / Finished goods warehouse / rail / truck / centers or rail / truck / centers or

independent warehouses independent warehouses

Relationships - Relationships - Conflict or harmony?Conflict or harmony?

The TargetThe Target

Fastest Growing Foods in the Fastest Growing Foods in the American DietAmerican Diet::

Carbonated Soft drinksCarbonated Soft drinks

Pre-Sweet CerealPre-Sweet Cereal

BagelsBagels

Toaster PastriesToaster Pastries

PizzaPizza

Corporate Corporate ResponsibilitiesResponsibilities

Legal IssuesLegal Issues - - Safety, Information, ChoiceSafety, Information, Choice

Environmental - Environmental - Earth Spirit AwardEarth Spirit Award

Issues Issues Civic Responsibilities Civic Responsibilities

- - Ad content standardsAd content standards

- Stakeholder orientation- Stakeholder orientation

- Public program support- Public program support

Ethical Issues - Ethical Issues - Nutritional educationNutritional education

- More than required- More than required

America’s Top 10 R-T-E America’s Top 10 R-T-E CerealsCereals

1. Frosted Flakes1. Frosted Flakes

2. Cheerios2. Cheerios

3. Frosted Mini-3. Frosted Mini-WheatWheat

4. Corn Flakes4. Corn Flakes

5. Rice 5. Rice Krispies/Cocoa Krispies/Cocoa KrispiesKrispies

6. Honey Nut 6. Honey Nut CheeriosCheerios

7. Raisin Bran7. Raisin Bran

8. Fruit Loops8. Fruit Loops

9. Special K9. Special K

10. Corn Pops10. Corn Pops

Positioning Map

Nutrition

Taste

Special K

Cheerios

Cocoa Krisp

Raisin Bran

Corn Flakes

Fruit Loops

Sorry CocoSorry Coco

The boys are back in town!The boys are back in town!

SourcesSources Kellogg - Mike Culverson / Kellogg - Mike Culverson / Customer ServiceCustomer Service Farmer Jack’s - Ron Van Este / Farmer Jack’s - Ron Van Este / Cereal buyerCereal buyer Media Week - Media Week - May‘98 May‘98 / ‘/ ‘Something New Under My Nose” Something New Under My Nose” Business Week - Wednesday, May 29, 2002 “Kellogg Co.”Business Week - Wednesday, May 29, 2002 “Kellogg Co.” WWW.industryweek.com - “Food Industry Focus”WWW.industryweek.com - “Food Industry Focus” Field Visits - Field Visits - Kroger, Farmer Jack’s, Target, Rite-Aid.Kroger, Farmer Jack’s, Target, Rite-Aid. Florida Sun Sentinel - Florida Sun Sentinel - Feb. 7, 1998 / Robin Fields / Feb. 7, 1998 / Robin Fields / ““Get That Get That

One Mommy”One Mommy” The NPD Group - The NPD Group - March, 2001/ “The Twelfth Annual Report on March, 2001/ “The Twelfth Annual Report on

Eating Patterns in America”Eating Patterns in America” Kellogg - www.Kellogg's.comKellogg - www.Kellogg's.com http://faculty.sba.udayton.edu.schenk.kellcase.htmhttp://faculty.sba.udayton.edu.schenk.kellcase.htm

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Kelloggs Ppt

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