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COMPANY BACKGROUND

Kelloggs Company products are relished around the world, of which Kelloggs Corn Flakes has been a part of the starting meal of the day for many for more than 100 years. In 1906 when Kelloggs started, it had only 44 employees in its company located in Battle Creek, Michigan. Kelloggs has its presence in 18 countries as manufacturer and in more than 180 countries for selling its products. Kelloggs is a world leader in cereal industry, innovation and marketing. With 2009 sales of nearly $13 billion, Kelloggs Company is the worlds leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, fruitflavoured snacks, frozen waffles and veggie foods. The Companys brands include Kelloggs, Keebler, Pop-Tarts, Eggo, Cheez-It, All-Bran, Mini-Wheats, Nutri-Grain, Rice Krispies, Special K, Chips Deluxe, Famous Amos, Sandies, Austin, Club, Murray, Kashi, Bear Naked, Morningstar Farm, Gardenburger and Stretch Island. ANALYSIS OF THE 4 PS OF MARKETING

Product Launched in September 1994, Kellogg's initial offerings in India included cornflakes, wheat flakes and Basmati rice flakes. Despite offering good quality products and being supported by the technical, managerial and financial resources of its parent, Kellogg's products failed in the Indian market. Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace. Meanwhile, negative media coverage regarding the products increased, as more and more consumers were reportedly rejecting the taste. Converting the experimenters into regular buyers had become a major problem for the company. Realising that a major reason for Kellogg's failure was the fact that the taste of its products did not suit Indian breakfast habits, it came up with the idea of Indianisation of the taste. Kellogg decided to launch two of its highly successful brands - Chocos (September 1996) and Frosties (April 1997) in India. Chocos were wheat scoops coated with chocolate, while Frosties had sugar frosting on individual flakes. The success of these variants took even Kellogg by surprise and sales picked up significantly. Launch of the Mazza series in August 1998 - a crunchy, almond-shaped corn breakfast cereal in three local flavors - Mango Elaichi,' Coconut Kesar' and Rose.' Developed after a one-year extensive research to study Consumer patterns in India, Mazaa was positioned as a tasty, nutritional breakfast cereal for Families. Continuing the success journey, Iron Shakti variant was launched in 2000 which offered a new dimension to health with iron fortified cornflakes. And most recently, Special K plus variant has been launched in 2008 targeting especially the women and projected as a low-fat breakfast. Price

At an average cost of Rs 21 per 100 gm, Kellogg products were clearly priced way above the product of its main competitor, Mohan's Cornflakes (Rs 16.50 for 100 gm).Also, Kellogg did not have retail packs of different sizes to cater to the needs of different consumer groups. To counter this criticism, the company introduced packs of suitable sizes to suit Indian consumption patterns and purchasing power. Kellogg introduced the 500gm family pack, which brought down the price per kg by 20%. Also, Mazza was introduced in 60gm pouches, priced at Rs 9.50. It did not position Mazza in the premium segment. The glossy cardboard packaging was replaced by pouches, which helped in bringing down the price substantially. And, the decision to reduce prices seemed to be a step in the right direction and worked well for Kellogg. Place Kellogg identified distribution as another major area to address in order to increase its penetration in the market. When Launched in September 1994, there were complaints that the products were not available in many cities. Before the product was made available nationally in March 1995, the demand from Mumbai had been very encouraging. Within a year of its launch in Mumbai, Kellogg had acquired a 53% market share. Following this, the company accelerated its national expansion plans and launched the product in 60 cities in a 15-month period. In 1995, Kellogg had 30,000 outlets, which was increased to around 40,000 outlets by 1998 i.e. a significant increase of 33%. And, that really helped attain the desirable as the deeper penetration fetched in larger consumer base nationwide, which was earlier confined to only the metropolitan cities. Promotion Initially, the company's advertisements and promotions focussed only on the health aspects of the product. In doing this, Kellogg had moved away from its successful fun-and-taste' positioning adopted in the US and positioning had given the brand a health product' image, instead of the fun/health plank that the product stood on in other markets. So, to rectify this wrong move they resorted back to building the fun-and-taste image and took various moves in the same direction which is evident in the advertising and promotion schemes used. Though, Kellogg's advertising had not been very impressive in the initial years. Apart from Jago jaise bhi, lo Kellogg's hi,' the brand had no long-term baseline lines. To set things right, Kellogg attempted to Indianise its campaigns instead of simply copying its international promotions. The rooster that was associated with the Kellogg brand the world over was missing from its advertisements in India. One of its campaigns depicted a cross section of individuals ranging from a yoga instructor to a kathakali dancer attributing their morning energy and fitness to Kellogg. The advertisement suggested that cornflakes could be taken with curds, honey, and banana. In April 1997, Kellogg launched The Kellogg Breakfast Week,' a community-oriented initiative to generate awareness about the importance of breakfast. The program focussed on prevention of anemia and conducted a series of nutrition workshops activities for both individuals and families. Kellogg also increased its focus on promotions that sought to induce people to try their product and targeted schools across the country for this. By mid-1995, the company had covered 60 schools in the metros. In March 1996, the company offered specially

designed 50 gm packs free to shoppers at select retail stores in Delhi. This was followed by a house tohouse sampling exercise offering oneserving sachets to housewives in the city. The company also offered free pencil-boxes, water bottles, and lunch boxes with every pack. Plastic dispensers offering the product at discounted rates were also put up in petrol pumps, super markets, airports etc. Kellogg also launched the Chocos biscuits, claiming that cereals being a narrow category,' the foray into biscuits would create wider awareness for the Kellogg brand.

Analysis of Macro-environment influences through the PESTEL model Political :


Reforms for the problem of obesity in USA (wide problem) US focus on cereal products in the level of 17% of the food market(2000)

Economical :
The deterioration of general economic activity and the contraction of the food market have not been without consequences for the food industry .Faced with financial difficulties and difficulties of access People doesnt have money to buy expressive food because of the decrease of salary. High unemployment rate : 9,00%( january 2011) GDP in 2009:14 266 milliards of $ Curent Deft: 6% of GDP Increase of the inflation rate:1,5% Decrease of the money , low rate of the dollar Hard competition between the breakfast and snack brands Decrease of all the sales in cereal market (began in 2005 with less 0, 4%)

Social :
Population of USA: 312.061.000 people increase of obesity rate so the cereal market develop the sector of light food Lack of time to take a breakfast: American people would like some easy to transport at work or at school to eat.

The increase in the Third Age population group (due to better living conditions and better health care) will decrease the sales of Kellogg children product and down growth for adult products. Importance of the health, safety People want to be inform on what people it

Technological :
Innovation on the cereal market: different package, small bar (snack), resealable package (or close package) Recycling package Innovation in communication and advertising level Scientific progress on the health- diet food Increase the cost of R&D Kelloggs did a matrix Sustainability ingredients

Environmental :
Development of the biologic and natural food Development of ecologic packaging, and recyclable packaging to avoid the waste

Legal :
Health claims is becoming more prevalent with the increase of the power of American heath associations. Globalization creates homogeneity of consumer behaviour. Globalization is a key driver for standardization. This sector of tourism has to take into account the requirements of global customers. (Standardize the food, the drink, the activities). Because of this standardization competition increases between firms within the tourism sector. This price war will lead to decrease price.

Analysis of Kelloggs in India


For an established company like Kelloggs, the above listed problems are also a major concern. In this report, we will look into its marketing mix, business environment in which the organisation exists (macro & micro), segmenting, targeting and positioning strategies adopted by them for their brands and provide some recommendations based on this analysis. This analysis has been done keeping in mind the Indian market for Kelloggs. Other factors affecting this analysis are the limitation of word count and time constraints.

1.2 Kelloggs in India


Facing a tough competition from General Mills and a stagnant cereal industry in the US and the UK, Kelloggs entered India in 1994. The concept of eating cereals in the breakfast was totally new to the people in the Indian sub-continent. This indicated that Kelloggs had not only to promote its product, but also the very idea of eating the cereals in a country where people start the day with a bowl of hot vegetables. (Haig, 2005)

Objective
In this report, Infegy will analyze conversations happening online around Special K and its competitors to better understand the unique advantages available in the marketplace for brand management and strategic messaging. Additionally, Infegy will research how perceptions of the Special K brand differs between people who are very passionate about healthy food options versus the general population.

Market segmentation Market:

and

Target

SK is targeted at weight conscious women, employed/homemakers, between the ages of 25-49 who desire to attain a slimmer shape either for a healthy lifestyle or for an occasion. And in pursuit of their weight goals these women will prefer to consume nutritious food substitutes including paying an above average price for the product. Alike the cereal manufacturers who use a number of variables to segment their customers (deduced from the data on consumption of cereals displayed in figure 1.4), it appears that SK also segments its customers using demographic variables such as gender, age and occupation and behavioral variables such as occasion and benefits. But unlike the other cereal manufacturers, SK utilized its customer segmentation to identify and serve a distinct market group, which proved to be attractive and profitable over catering to the entire mass market. Moreover factors that contribute to the continued success of serving this target market are: Dieting trends: Results of a consumer research carried out in 2008 revealed that women are constantly trying to lose weight, where 24.3% of the women dieted most of the time as compared to 13.9% of men (Baxter, 2009). This consumer behaviour augments SKs target market selection. Popularity of Health food: The popularity of health food is increasing as confirmed by a consumer research where 43.8% of the research pool displayed an affirmative

interest in purchasing functional food. This growing trend benefits SK as women (47.3%) accounted for the majority of the preference over men (40.1%) (Taylor, 2008). UK Obesity levels: The forecasted UK obesity levels for 2010 where women (29%) are more likely to be obese then men (27%) (Gower, 2008) not only favors SKs product proposition but also provides the brand with an opportunity to expand its customer base. Grocery shopping: SK can effectively access its target market using Kelloggs existing distribution channel of grocery chains, owing to the consumer behaviour where women undertake majority of the shopping at supermarkets as compared to the men (shown in figure 1.5). Growth of UK cereal market: In addition to its current growth rate (as discussed earlier), the UK cereal market is also forecasted to prosper in the future (displayed in figure 1.6). This future growth rate, supported by an immense market potential that exists in the form of people still skipping their breakfast, enables SK to attract new customers. Whilst the above factors substantiate SKs distinctive target market selection it is also imperative to evaluate the brands positioning in this target market as compared to its competitors to gauge the success of its marketing foresight. Competitors versus Special Ks positioning: Though Porters five force analysis of the UK cereal industry reveals that competitive rivalry in this market is moderate, failure by cereal manufacturers in differentiating their products will result in increased competition. SK endures industry competition based on the category points of the parity from other health cereal brands, including the various Kellogg brands, and market competition from other slimming aids such as diets, meal replacements and appetite suppressants (represented diagrammatically in figure 1.7). Whilst the popularity of the cereals is on the rise (refer to prior discussion) the popularity of the slimming aids is on the decline due to the augmented awareness of the healthy eating habits (Baxter, 2009). Hence though the slimming aids are positioned as weight management products (Refer to figure 1.8 for the positioning of the various slimming aids in the market) also targeted at women, it can be deduced that SK has a superior market potential over these products.

A perceptual mapping of SK with its industry competitors (displayed in figure 1.9) divulges that the brand is perceived as high quality premium priced product by its customers. However SKs consumer perceived value is not alone limited to its price and quality differentiation but rather is accentuated by its unique market positioning in the cereal industry. Special K is positioned as a premium shape management nutritious cereal for women The above positioning unveils that instead of imitating its competitors by using common variables such as quality, energy, taste, natural ingredients and price, SK utilizes the popular variable of body shape to differentiate its product (refer to figure 1.10). Though a number of consumer products and services use the variable of shape to differentiate their product, SK was the first cereal brand to employ this positioning making it unique in the cereal industry [3] . Kelloggs by using its extensive experience to develop and position the SK cereal, appears to have understood and delivered its consumer needs; where women may want to lose weight either post an occasion such pregnancy or holiday or to lead a healthy lifestyle or to improve their physical experience. The value proposition offered by SK that acts as its point of difference from the other cereal brands has also helped it minimize the risk of cannibalization from the other Kellogg cereals. Furthermore, SKs market positioning has helped convert the consumers cereal purchase decision from a low involvement to a moderate involvement activity by linking their purchase decision to the psychological and physical benefits that can be derived from the product. Infact the SK 2 week challenge, which is an important element of the brands positioning (refer to figure 1.10), facilitates potential increases in the product usage and brand loyalty as once consumers verify the benefits of the product they may want to extend their association with the brand. It can be argued that by targeting only one distinct consumer group, SK is limiting its profit potential but on the contrary the growth in its market share (depicted in figure 1.11) is a testament of its successful market positioning in highly profitable target market. However SKs current and future market share could be threatened if it is no more the only cereal adopting the shape positioning as revealed in a SWOT analysis displayed below. Hence the strength of its positioning depends on effective management of the marketing mix elements.

Competitive Analysis
When comparing Special K Cracker Crisps with two of its biggest competitors, Snack-aJacks and Walkers Sunbites, we found a common theme; the words sweet chili s howed up in all three topic clouds positively. This tell us that people talking about these brands are talking about the sweet chili flavor more than any other flavors. As you can see from the chart below, Snack-a-Jacks dominate most of the conversations online when comparing the three snacks. However, most discussions involving all three health snacks generate more positive conversation than negative conversation. Conversation around Cracker Crisps results in 86% positivity; Snack-a-Jacks results in 81% positivity; and Walkers Sunbites results in 94% positivity.

Healthy Eating Audience Segment


Next, we will analyze our segment of healthy eaters to compare to the general population. First, we will look at Special Ks perception within the general population. Sentiment gives us a key measure of our brands favorability. This measures the percentage of commentary about the brand that was positive, negative or mixed. We see that amongst the general population, sentiment for Special K is quite good, with 69% of commentary being positive. The most obvious driver of negative discussion is the recall of Red Berries cereal due to glass fragments being present within the cereal. For this group, the brands sentiment exceeds expectations. Amongst our audience, positivity is notably higher, at 72%. We also see a significant change in the topics of discussion. Within this audience we see conversations of calories, losing weight, and notably less recall conversations.

Internal and external analysis of Kelloggs


In this assignment Im going to make an external analysis and an internal analysis of the Kelloggs company. Im going to choose four tools to make the all analysis. For the external analysis I will do PESTEL and Porters five force models and for the internal analysis I will do the Value chain and a benchmarking on Cereal SBU

organization
Kellogg Company is the United States largest cereal-Maker. In 1898, Will Keith and John Harvey give birth to the famous breakfast cereal Kellogg's Corn Flakes. Thanks to the success of the products Will Keith create in 1906 the Battle Creek Toasted Corn Flake

Company. Kellogg is the leading producer of breakfast cereals in the world. It takes places in 18 countries and sells it products in more than 180 countries. Between 1938 and the present day Kellogg opened manufacturing plants in the UK, Canada, Australia, Latin America and Asia. Kellogg produce a wide range of cereal product including the well-know brand of Kelloggs corn flakes, rice krispies, special K , fruit n fibre, as well as the nuti-grain cereal bars. The philosophy was improved diet leads to improved health Kellogg company mission statement: Kellogg is a Global Company Committed to Building Long-Term Growth in Volume and Profit and to Enhancing its Worldwide Leadership Position by Providing Nutritious Food Products of Superior Value

Analysis of Kelloggs external environment

The five porters force Analysis


Industry competitor: In the market industry four large companies are dominant (Kellogg, Nestl, MDD and Jordans). Its an oligopolistic situation (a small number of sellers and a large number of applicants). The competition between the organizations is high and intense because of the price principally. Threat of a Substitution: there are many substitutes because of private label Threat of entry: The cereal industry is oligopolistic, so is very difficult for other firm to enter in this sector. If firm want to penetrate this market he has to have competitive prices, and has to make marketing communication and promotion to attract consumers Bargaining power of buyers: the power of buyer is low in the cereal industry; consumers dont have a deep impact. Bargaining power of suppliers: the power of suppliers is low because the importance of the market shares of private labels. They do exactly the products in cheaper prices. Suppliers can buy product independently. Source: Adapted from Porter M (1998, cited by Johnson G & al, 2008)

Analysis of Kelloggs internal environment (internal strategy)

The Kelloggs value chain


Support Activities

Firm infrastructure:
In order to maintain a good satisfaction level from its clients, Kellogg uses several services and the entire organisation is flexible. Quality Control Finance & Accounting Information system(internal communication) : high level Kelloggs has an intranet to expose the information of the firm Legal service : the law concerning the production of the product Logistical support (restoration...) Planning : Provide a planning to clients and Anticipate customers needs

Human Resources Management:


The company allows a dynamic of human resources management policy. For doing that well, Kellogg establish a model wish name is Kellogg business leaders model (KBLM).It is the base of everyone in Kellogg industry, it improves the competencies of each works and allow to progress in the company. This model is one of the most important competitive advantage, it allow adding value to the firm.

Recruitment policy:
Kellogg is looking for talent workers to develop new products and give freedom to do innovation. It does recruitment on international dimension.

Training:
Kellogg establishes the standing coaching to help workers to improve future operations and profitability. Kellogg is developing plan for individual career to respond to the workers needs (new skills) The innovation is one of the most important sectors that Kellogg develops; it gives time to worker just to think about innovation.

Performance measure
Kellogg measuring performance and make feedback to add value

Add value
Kellogg motivates employees in giving merit reward when they perform.

Technology Development: R&D for products


The innovation is a part of Kelloggs culture, it is the most important cereal heathcare company The development of products aimed at meeting consumers' health and nutrition needs. The development of products packaging to ameliorate the communication for consumer and his comfort (when he use the product) Innovation on the image of health cereal: cereal for men target. Innovation the type of product(museli, cereal) Innovation to keep the iron in the cereal culture Innovation to give notoriety and visibility of the product The company has announced that it is testing the possibility of using lasers to etch the companys name into corn flakes to let customers know they are eating a genuine Kellogs product(geek.com) Innovation in communication all around the world

Procurement:
To achieve economies of scale, purchasing division negotiate with suppliers to obtain group rates to reduce reduce cost and save time on delivery.

Inbound Logistics:
Kellogg calls the best suppliers and partners in term of cost efficiency, maintain the quality of the products. The suppliers are responsible (deal with) all the tasks upstream.( packaging, manufacturing, transportation management services, logistics management services and supplier management/procureme nt)

the inbound logistic is automatic , evry part of the production is automated.

Operations:
Kellogg has un structure for all operation system very flexible. Kellogg set up On office in each country of the world. So Kellogg can manage the transformation between the raw material and the final product

Outbound logistics:
The distribution of the products to consumers (end user) is doing via a multi-layers channel system. The different channel of distribution allows comforting the consumers during the purchase. (distribution on retail, hypermarket and supermarket in general)

Marketing and sales:


All the consumers are familiar with the Kelloggs brand and Kellogg cereal. Kellogg company make sponsorships locally to height brand awareness. Thank to that Kellogg cereal are famous in all around the world. Kelloggs cereal use sometime promotion to reduce the price and increase the purchase. Kellogg has managed to establish itself in almost all supermarkets and hypermarkets in the world

Services:
Kellogg offers several services that can enhance these product to the consumer. Kellogg offering outstanding customer services( promotion to attract people and to loyaty the consumer with a relational communication program across all brands for adults and children, built around a mini-consumer Primary Activities

Benchmarking

To do this benchmark we are going to take the Kelloggs human resources sector and we will compare with Nestl human resource (Nestl is the principal competitor).

Kelloggs Nestl HR culture


- Goal: add value thanks to innovation - HR program: Kellogg business leaders model - Kellogg join the high ethical standards -Freedom in the post - HR program:Principles of Conduct Nestls business - relationships between employees - Communication is the principal factor of the HR policy. - Equity between employees has to be respected. - Give responsibility to employees - Non freedom in the post

Selection & recruitment


- Kellogg is looking for talent workers - Human Diversity - attract and loyalty future employees(long term contract) - Recruitment on the personality and professional skills develop a long term relationship.

Training and Development


- Trainee program - Personal development and team development - Tainting program

-Personal development

Pay & Benefit


- employee rewarding - benefit: adaptation of working hours - Employees social security. - wage level( inferior to superior) - Equity - Financial compensation allows motivating employees.

Participation/employee relation/communication
-Power of employees unions -participation in important decisions. - Every employee has got a personal responsibility in the company. -Importance of employee association.

THE MARKETING KELLOGGS

ENVIRONMENT

FOR

Marketing Environment: The factors not relating to marketing which influence the marketing managements competence to create and sustain everlasting bond with the target customers. (Armstrong & Kotler, 2007:65) Considering the marketing environment before the marketing planning is a must for any organisation. A marketing environment consists of micro-environment or internal environment and macro-environment or external environment.

3.1 The Micro-environment


The factors within the company influencing its competence to serve the target customers fall in the Microenvironment. They can be listed as Company, Suppliers, Marketing Intermediaries, Competitors and Customers. (Armstrong & Kotler, 2007:65)

To analyse the micro-environment, one needs to have much of the inside information which is not readily available and easily accessible. Only we can say is that Kelloggs, as an organisation is driven by its vision and mission statements Vision Statement: To be the food company of choice. Mission Statement: To drive sustainable growth through the power of our people and our brands by better serving the needs of our consumers, customers and communities (Kellogg Company, 2010) Competition in the Micro-environment Industry Competition For healthy living, many companies like Britannia, Glaxo Smithkline, ITC, etc. have come up with nutri bars and health biscuits which can affect the market share of Kelloggs. Brand Competition Companies like Mohan Meakin and General Mills have been giving Kelloggs a tough competition since it has entered Indian market. In the recent past Britannia and Glaxo Smithkline have also shown interest in involving in the Indian breakfast cereals industry (The Economic Times, 10th November 2010). Also there are low-priced private label brands that threaten to erode Kelloggs market share.

3.2 The Macro-environment


All the external factors influencing a companys competence to serve the target customers fall in the Macro-environment. They are listed as Political, Economical, Social, Technological, Environmental and Legal, also referred as PESTEL. (Solomon et al., 2009:54) Competition in the Macro-environment Kelloggs has competition from many companies, some of which are already in the cereal industry and some of which have shown interest in getting into in the Indian breakfast cereals industry. Thus Kelloggs operates in the Oligopoly market with companies sharing substantial market share. PESTEL Analysis Political Analysis: India is a stable democracy with political equilibrium which confides international companies to invest in India. Kelloggs being an US-based company did not have problems entering the Indian market due to the friendly relations the two nations share. Economic Analysis: India has a developing economy with moderate spending power of its residents. Before investing in the country, a MNC like Kelloggs will want to determine this factor. Moreover the economic benefits sought after investing will also be analysed. India has even introduced Special Economic Zones (SEZs) which offer free trade and many tax exemptions. Social Analysis: Social aspects like the acceptance of the products and the availability and willingness of the people of the country to work for that company are also analysed. Kelloggs being a global brand had

no concerns with the acceptance of the product. By entering a country with a population of 100 billion, it was a boon as it created employment. It also engages in employee development programs which will improve skills of the employees. (Kellogg Company, 2009 Corporate Responsibility Report, p. 49) Technological Analysis: In a developing country like India, the use technology is also increasing. With the entry of Kelloggs automation in the food industry was also introduced. With the amount spent on R&D the company will still introduce technological advancements. Environmental Analysis: Kelloggs decided to enter India where there is a potential to meet the raw material requirement adequately. (Ministry of Food Processing Industries, Govt. Of India, 2007). Also Kelloggs has undertaken many initiatives to reduce the usage of energy and water and properly plan the waste management and CO2 emission. (Kellogg Company, 2009 Corporate Responsibility Report, p. 51) Legal Analysis: Legally, India has some flexible rules for a MNC to establish itself, but the company has to follow the laws regarding the food and packaging laid by the Food Corporation of India. Kelloggs staunchly follows all these laws. Figure: 3.1 Managing Marketing Strategy and the Marketing Mix Source: Armstrong, G. and Kotler, P. (2007:49). Marketing: An Introduction, (8th Ed.). New Jersey: Prentice Hall Looking at a friendly marketing environment that was available, Kelloggs just had to go ahead by properly managing marketing strategy and the marketing mix.

4. KELLOGGS & THE MARKETING MIX


To create a reaction of the target market, a firm mixes the set of regulatory tactical marketing toolsProduct, Price, Place and Promotion which is known as Marketing Mix. (Armstrong & Kotler, 2007) Product: This marketing tool accounts as to how anything can be tendered to satisfy the ever changing needs and preferences of the customers. (Armstrong & Kotler, 2007) Healthier life styles are currently in trend which has offered many opportunities for Kelloggs to introduce many products in the cereal breakfast industry. Price: The amount exchanged by customers for the product offered (Armstrong & Kotler, 2007). Being a super brand and the quality of the product offered, Kelloggs has the liberty to charge premium for its products. Place: Where a companys products are available for purchase is an important tool in marketing. (Armstrong & Kotler, 2007) In a country like India with a mix of urban and rural population, Kelloggs have to make its products available even in every smallest outlet. Promotion: Communication about the availability and merit of a product is also an essential marketing tool. (Armstrong & Kotler, 2007) Kelloggs has used above the line promotion like TV advertising and below the line promotion like on-pack promotions and free sampling.

4.1 Kelloggs & The Initial Marketing Mix


4.1.1 Product: Looking at the product that Kelloggs had to offer, it seemed that it tried to forcibly change the Indian food habits, which did not suit the taste the Indians. Also the product was not hunger satisfying and concentrated more on the health aspects. 4.1.2 Price: Taking into consideration this new breakfast concept and that Kelloggs initially had to just offer its product which was manufactured outside India, the price was very high. Infact it is deduced that the pricing adopted by Kelloggs was direct conversion of US Dollars to Indian Rupees. Thus, adopting a prestige pricing policy. 4.1.3 Place: Kelloggs made its product available only in premium and middle level stores, neglecting the rural markets which form a majority of Indian market. 4.1.4 Promotion: Kelloggs mainly chose T.V. advertisements as means for promotion, but these advertisements lacked a main factor i.e. Cornelius Rooster, the Kelloggs mascot. The packaging also was not that attractive and this mascot was absent there too. The Product Life Cycle in India would have seen a decline because of this Marketing Mix. (Figure 4.1) C:\Users\Ankit Chandorkar\Desktop\plc1.png Figure 4.1: The presumed Product Life Cycle of Kelloggs in India with marketing mix adopted in late 90s. Adapted from: Newman, N. (2010). Lec 5: Marketing the Product (MGT 6045), Sheffield: The University of Sheffield This was certainly not going according to plans that Kelloggs had. This hinted Kelloggs to change its marketing mix through a proper marketing planning. (Figure 4.2) E:\Kellogg's\plc.png Figure 4.2: The expected Product Life Cycle in India with a change in the marketing planning. Adapted from: Newman, N. (2010). Lec 5: Marketing the Product (MGT 6045), Sheffield: The University of Sheffield

4.2 Kelloggs & The Changed Marketing Mix


4.2.1 Product: Kelloggs did not change the product, but Indianised it. Thus following an outside -in perspective. A. Branding Strategies Kelloggs is a very well-known and established brand all over the globe. It has always adopted the Fixed & Flexible endorsement strategy. It gives the advantage of new product development and also a chance to explore new markets worldwide. An idea developed somewhere could be easily adapted and applied worldwide.

B. New Product Development Kelloggs adopted Market-Oriented Product Development. (Figure 4.3) Figure 4.3: Market-Oriented Product Development by Kelloggs. Source: The Times 100. (2010). New Products From Market Research. (15th Ed.), [Online]. Available from: http://www.thetimes100.co.uk/download-kelloggs-edition-15-full-case-study_6_115_115 [Accessed on 12/11/2010]. Kelloggs India Head Marketing Vikram Bahl promises to introduce more Kelloggs products in India to meet present and new customers needs. Introduction of flavours like Elaichi, Kesar, Rose, etc. have increased the sales. Kelloggs has also introduced Special K, Chocos and Frosties into the Indian market. 4.2.2 Price: Kelloggs opened a plant in Taloja, India by teaming up with Corn Agra. This reduced the cost effectively. Also it changed its packaging by introducing sachet packets for its products. Kelloggs has successfully shifted from Cost-based pricing (prestige pricing) to Competitor-based pricing (market penetrating pricing) with new products to offer. 4.2.3 Place: In the new marketing mix, place, where the products will be sold were more important as Indianised products were available and at affordable price. Kelloggs made its products available throughout India with increased number of outlets. However, the focus is still on the Indian metropolitan cities. 4.2.4 Promotion: Cornelius Rooster, the Kelloggs mascot was introduced. Kelloggs also Indianised its ad campaigns with a tag line: Jago jaise bhi, lo Kelloggs hi. It teamed up with the Indian Dietetic Association (IDA), thus gaining confidence of parents in its products. It promotes its products in schools and offers them for discounted rates. Kelloggs also offers free samples for its new products. G:\Kellogg's\plc2.png Figure 4.4: The Product Life Cycle of Kelloggs in India with changed Marketing Mix. Adapted from: Newman, N. (2010). Lec 5: Marketing the Product (MGT 6045), Sheffield: The University of Sheffield Adaption of the new marketing mix after proper marketing planning, the product life cycle of Kelloggs in India has again started from growth stage. (Figure 4.4)

5. SEGMENTATION, TARGETING & POSITIONING IMPLEMENTED BY KELLOGGS 5.1 The Segmentation Strategy
The process to serve the common needs of one or more segments, a company plans its marketing efforts, which is known as Segmenting. (Kotler et al., 2009) Kelloggs has segmented the market in India mostly using the Geo-Demographic Segmentation and Behaviour Segmentation upto some extent. The reason for

adopting Geo-Demographic segmentation is that Kelloggs wants children and males and females from all age groups falling under the middle income to the higher income group to buy its products. Also, as its products have nutritional and health values, the Behaviour Segmentation is also adopted in accordance to the end users.

5.2 The Targeting Strategy


To enter any segment, a company has to gauge potential success each market segment has to offer. This is called Targeting. Kelloggs uses Differentiated Targeting strategy. (Figure 5.1) Figure 5.1: Differentiated Targeting Strategy Adapted from: Newman, N. (2010). Lec 4: Segmenting, Targeting & Positioning (MGT 6045), Sheffield: The University of Sheffield The chance of target marketing strategy becoming successful is totally dependent upon the marketers expertise of recognising and choosing a befitting market segment. (Solomon et al., 2009, p. 227) Kelloggs has been successful with this strategy globally.

5.3 The Positioning Strategy


Positioning is the perception of the target consumers for a product in relation to competitors product. Companies position themselves to change this perception of the target consumers for their benefit. Kelloggs has positioned its products as healthy and nutritional breakfast to its most sought after alternative bread and butter which is less nutritional. Also it has positioned its products to be affordable to general public compared to its competitors and peers. This positioning has helped Kelloggs to increase the consumption of its Cornflakes and thus increase its revenue by making people think beyond breakfast. It now provides twice a day meal plan for nutritional benefits. Special K has been successful in reaching working women as a weight management snack. For children, Chocos has been a nutritious substitute for junk food like chips, etc. Infact the marketing mix for Chocos has repositioned its image as a more fun-filled snack than nutritional snack for children; however the nutritional factor cannot be ignored. Figure 5.2: Positioning Map for Cereal Brands in India Adapted from: Newman, N. (2010). Lec 4: Segmenting, Targeting & Positioning (MGT 6045), Sheffield: The University of Sheffield After positioning the company, only discussions and talks will not do. It demands some serious steps to be taken. (Kotler et al., 2009) Kelloggs has been instrumental in taking these concrete steps and has positioned itself better than other competitors. (Figure 5.2)

6. RECOMMENDATIONS
Kelloggs already manufactures its products in 18 countries and sells them in more than 180 countries, but it can still look for more international expansions, for its growth. Taking the advantage of its super brand status, Kelloggs should take its advantage and leverage to consider brand extension. This extension can be in related product categories. Furthermore, Kelloggs can slowly diversify to increase its profitability, whilst doing proper justice to its core business which is cereals. To grow in India, Kelloggs should introduce flavours which go along with the Indian palate. It should not make consumers strangers to their own culture. Moreover in a country like India, where people look for value for money products, Kelloggs has to offer affordable prices maintaining the quality of the product with proper pricing strategy. Also it can offer these low prices by introducing smaller packs, thus reducing the cost and increasing the market share. To lure kids it can introduce cereals in various shapes, like stars, fruits, flowers, animals, etc. Further it can also include free toys in the packs meant for children. Kelloggs has products to offer as breakfast meal signifying health aspect (Kelloggs Cornflakes and Kelloggs Chocos) and two time meal for working women signifying weight management aspect (Special K). It already has mascots for each product, but can have a brand ambassador for each of its meal like an athlete or a sports personality for its health meal and an actress or a model for its meal for working women, conveying the importance of these meals in day to day life. Kelloggs should have an Indian website for more information for the people of India. Also having a website is an added advantage for promotions. Lastly, to conclude, it can be said that marketing strategy is the base of any company to sell its products, but all other departments have to give an equal contribution in todays customer oriented market. Finally, to sum up on the basis of this analysis, it can be said that Kelloggs has a good marketing strategy in India which can be bettered in the long run.

Kellogg grows 31% to cross Rs 500 crore sales mark in India


Sagar Malviya & Ratna Bhushan, ET Bureau Dec 27, 2013, 05.34AM IST

Tags:

Wheat| The Kellogg Co| Sangeeta Pendurkar| PepsiCo|

Oetker| net worth| Nestle| MTR| markets| market share| Marico| Kellogg India| Insurability| Honey Loops| Heinz| Food Bazaar| distribution| Devendra Chawla

(In the Rs 700-crore Indian)

MUMBAI/NEW DELHI: The world's largest breakfast cereal maker, The Kellogg Co, crossed Rs 500-crore sales mark in India after growing 31% last fiscal and more than doubling its business in three years, helped by Indiacentric innovations and single-serve affordable packs that attracted new consumers. The American firm's rapid growth has come at a time when most of its multinational rivals, including Nestle and Heinz, have been struggling to register single-digit growth numbers in a slowdown market.

Sangeeta Pendurkar, MD at Kellogg India, attributed the growth to building a relevant portfolio of products driven by consumer-centric innovations. "The single-serve packs priced at Rs 10 in tier-I and tier-II towns have helped recruit new consumers into the nutritious ready-to-eat breakfast cereals market," she said. Kellogg's new launches in recent years include Heart-to-Heart oats, bran wheat flakes, and Chocos andHoney Loops made with whole grain. Kellogg India has been growing at a scorching pace since Pendurkar took over in 2010.

"Under Sangeeta's leadership, Kellogg's has invested in changing habits, by backing innovation-led products like savouries and oats and making the portfolio very India-specific, given that the Indian palette is very difficult and challenging to crack for multinationals," said Devendra Chawla, chief executive at Food Bazaarthat contributes 8%-10% of Kellogg's overall sales. The company, for instance, launched savoury variants green pudina and tomato salsa flavours, and even introduced mango cornflakes. Interestingly, Kellogg's first attempt to localise, over a decade ago, had bombed. With increasing competition, however, it won't be easy for Kellogg to keep up its scorching pace and market share. While Kellogg is trying Indianisation, rivals such as MTR and PepsiCo have already launched packaged Indian breakfast foods like idli, upma and poha. MTR Foods, with sales of Rs 411 crore in FY13, is on the heels of Kellogg India. Even in the Rs 700-crore Indian organised breakfast cereal market, where Kellogg holds more than 60% share, the brand is facing increased competition with firms such as PepsiCo, Marico, GlaxoSmith-Kline and Dr Oetker entering the oats and muesli segments. Yet, Kellogg sees high growth potential, especially from untapped markets. The company, which expanded its distribution footprint by 50% over the last three years, is building a factory in Sricity, Andhra Pradesh, signalling renewed confidence in the Indian market at a time its parent company is seeing stagnant growth. Last month, parent Kellogg Co said it will cut about 7% of its workforce and slash capacity by 2017, after reporting quarterly decline in sales

Kelloggs and the marketing mix


With annual sales of more than 4.5 billion, Kelloggs is the worlds leading producer of cereal products and convenience foods, such as cookies, crackers and frozen waffles. Its brands include Corn Flakes, Nutri-Grain and Rice Krispies. Kelloggs is a global organisation. Its products are manufactured in 19 countries worldwide and sold in more than 180 countries. In an uncertain world where the organisations strategy is to

focus on products and brands that are either the market leader or in a strong second position the company believes that this focus upon core and successful products enables it to provide consistent and reliable returns and rewards for its stakeholders.

The need for change


When a company like Kelloggs is investigating a change in its marketing it can cons ider four elements. These are known as the marketing mix or 4Ps:

Product - This element relates to how the company offers meets the changing needs and wants of customers. The growth in healthier lifestyles creates opportunities for Kelloggs to increase th e number of products for this segment. Price - The amount a company charges for its product is important in determining sales. Superbrands like Kelloggs can charge a premium because of the strength of the brand and product quality. Place - Where customers can purchase the product is also an important factor in determining sales. If a brand like Special K is not stocked in supermarkets where most purchases are made, sales will be lost. Promotion - Communicating the availability of a product is essential for sales to be made. Kelloggs uses above the line promotion like TV advertising as well as below the line promotion like on-pack promotions and sampling.

In considering Special K, the company concentrated on changing the product through new variants. Although Special K was already a well-established brand, its full potential had never been reached. It was viewed as a stand-alone product, and Kelloggs had not created any variants or brand extensions to develop the core product.

Managers can decide when to make key changes to a core product by analysing its position within the product life-cycle. Life-cycle analysis accepts that products have a finite life, and analysts chart a products performance through several phases, from its launch through various phases of growth until it reaches maturity and eventually decline. A products life cycle may last only a few months (e.g. with a fad or craze) or, as with Special K, for many years. Although it was a successful product, Kelloggs recognised the opportunity to stretch the brand by investments that would:

revitalise it extend and further develop its growth phase help to delay the onset of the maturity phase.

Kelloggs was convinced that such investment would help to maintain the brands strength in a rapidly changing market place.

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Creating a stronger position


For the Kellogg company, market research suggested that using funds to develop variants on Special K looked like a comparatively low risk project that offered the prospect of a goodrate of return. This was largely because it involved developing and extending a brand that already enjoyed huge consumer support in ways that could be adapted to the market place worldwide. The judgement has proved to be correct, to the benefit of the company and its many stakeholders.

Who Are the Buyers? n Parents, Older Adults

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

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

Who Are the Influencers? n Kids

Who consumes the goods? n Kids under 18

Who are Kelloggs Target Market?

Kids 8-11 years old

TARGET MARKET STRATEGY Target market in simple words is a fairly homogenous group of costumers to whom a company wishes to appeal. In case of All Bran, Kelloggs is sailing a fibre rich cereal product thus should target every individual that wants to leave a fit and healthy life. Using Demographic Segmentation we broadly classified on the basis of age group in three: 1. Children 2. Adults 3. Elders What should Kelloggs All Bran do if they decide to target 3 groups discussed above 1. Children: Most of the children tend to eat junk food and many dislike milk and fibrous food like fruits. This is a reason to worry for many parents. As lack of fibre may create a problem in bowel movement of children So, as discussed earlier introduce a flavoured Kelloggs All Bran to attack this segment highlighting its benefits of Kelloggs All Bran as being solution to their worries (considering that parents have the right to purchase even if target is children product must appeal to parents) Attractive packaging could play an important role to get attention of children 2. Adults: Adults which are health conscious usually tend to visit gym to stay fit. So Kelloggs can try getting into partnership with gym instructors so that they capture major junk of health conscious adult group. People visiting gym tend to follow their instructor so this could be good strategy to tap this age group. Kelloggs needs a market team that would convince the gym instructors with benefits of product and also offer them some commission. 3. Elders: This age group is very conscious about their health for them Kelloggs should focus on the fact that high-fibre diets may help people to feel lighter and more energetic as well as aiding the digestive system while promoting the product. Here they can try getting partnership with chemist who would recommend All Bran best in the breakfast.

Although depending upon geodemographic segmentation All Bran will have to consider the lifestyle of different places as it is launched in global market.

Where is the competition? Cornflakes is 80% of the breakfast cereals market and Kellogg's rules the roost here. The other major player in the market is Mohan Meakin. Big super markets have their private labels as well. The competition is priced half of Kellogg's and still is unable to dent the consumers of Kellogg's. This is purely because of the superior quality of Kellogg's. What is surprising to see is that a lot of competition is present in Oats segment which is much smaller than cornflakes. Pepsi has quaker oats not cornflakes. Marico has Saffola Oats but no cornflakes. Britannia also has Oats and Muesli but no cornflakes and cornflakes is a 400 crore market compared to 80-100 crore Oats. I guess fighting in a new and growing category is considered safer than taking Kellogg's head on in the cornflakes market.

Kellogg's Today Strengths of the brand - Kellogg's biggest strength is its brand and its quality. It has a wide range where it caters to everyone in the family. Muesli or Oats whatever becomes big tomorrow, Kellogg's will be there to share the spoils. Issues - It's price point. Just an example, the price of Kellogg's cornflakes is 100% more than Mohan Meakin (another old and strong brand). If they want to grow fast, they need to give more value (value is what we get for the price we pay) to consumers. Remember, India has a big population not a big wallet.

Competitors versus Special Ks positioning: Though Porters five force analysis of the UK cereal industry reveals that competitive rivalry in this market is moderate, failure by cereal manufacturers in differentiating their products will result in increased competition. SK endures industry competition based on the category points of the parity from other health cereal brands, including the various Kellogg brands, and market competition from other slimming aids such as diets, meal replacements and appetite suppressants (represented diagrammatically in figure 1.7). Whilst the popularity of the cereals is on the rise (refer to prior discussion) the popularity of the slimming aids is on the decline due to the augmented awareness of the healthy eating habits (Baxter, 2009). Hence though the slimming aids are positioned as weight management products (Refer to figure 1.8 for the positioning of

the various slimming aids in the market) also targeted at women, it can be deduced that SK has a superior market potential over these products.

A perceptual mapping of SK with its industry competitors (displayed in figure 1.9) divulges that the brand is perceived as high quality premium priced product by its customers. However SKs consumer perceived value is not alone limited to its price and quality differentiation but rather is accentuated by its unique market positioning in the cereal industry. Special K is positioned as a premium shape management nutritious cereal for women The above positioning unveils that instead of imitating its competitors by using common variables such as quality, energy, taste, natural ingredients and price, SK utilizes the popular variable of body shape to differentiate its product (refer to figure 1.10). Though a number of consumer products and services use the variable of shape to differentiate their product, SK was the first cereal brand to employ this positioning making it unique in the cereal industry [3] . Kelloggs by using its extensive experience to develop and position the SK cereal, appears to have understood and delivered its consumer needs; where women may want to lose weight either post an occasion such pregnancy or holiday or to lead a healthy lifestyle or to improve their physical experience. The value proposition offered by SK that acts as its point of difference from the other cereal brands has also helped it minimize the risk of cannibalization from the other Kellogg cereals. Furthermore, SKs market positioning has helped convert the consumers cereal purchase decision from a low involvement to a moderate involvement activity by linking their purchase decision to the psychological and physical benefits that can be derived from the product. Infact the SK 2 week challenge, which is an important element of the brands positioning (refer to figure 1.10), facilitates potential increases in the product usage and brand loyalty as once consumers verify the benefits of the product they may want to extend their association with the brand. It can be argued that by targeting only one distinct consumer group, SK is limiting its profit potential but

on the contrary the growth in its market share (depicted in figure 1.11) is a testament of its successful market positioning in highly profitable target market. However SKs current and future market share could be threatened if it is no more the only cereal adopting the shape positioning as revealed in a SWOT analysis displayed below. Hence the strength of its positioning depends on effective management of the marketing mix elements.

Read more: http://www.ukessays.com/essays/marketing/analysis-of-marketingpositioning-of-kelloggs-special-k-marketing-essay.php#ixzz2xRRo12Ro

Kellogg brand list: Kellogg offers a vast product line catering to the needs of different customer segments. Kellogg brands include All bran, Coco Pops, Cornflakes, Crunchy Nut, Frosties, Fruit n Fibre, Winders, Natures Pleasure, Optivita, Country Store, Honey Loops, Just Right, Ricicles, Start, Pop tarts, Rice Krispies, Frosted Wheats and Special K. Special K product variations: Special K Packaging: As shown in the above images, Special Ks packaging conveys that it is a low fat cereal and provides information on the personal plan and its benefits and cereal nutrition figures. The red color is synonymous with the Special K branding and labeling which not only shows it strong connection with the Kelloggs brand but also symbolizes confidence and excitement (Kelloggs Special K , 2009) that a consumer will enjoy after achieving the shape desired by them. The packaging supports easy and convenient usage through the cardboard box and plastic bag, which help in storage and preservation of the quality of the cereal. Special K in supermarkets: The observations on the shelf space occupied by Kelloggs Special K were made by visiting two large supermarkets, Tesco and Morrisons. A large section of the middle shelf space in the cereal section of the supermarkets was devoted to Special K cereals and its sub-brands. This shelf positioning helps attract customer attention and expedite the purchase process. Another observation made was that both Tesco and Morrisons placed their cheaper cereals next to Special K which may deter the purchase decision

of a cash strapped consumer. Infact Tesco has also extended this marketing gimmick to its online shop as displayed in the below images.

Read more: http://www.ukessays.com/essays/marketing/analysis-of-marketingpositioning-of-kelloggs-special-k-marketing-essay.php#ixzz2xRS33kRB

ADPLAN Framework
Advertisements can be, and often are, evaluated on a variety of different metrics, such as creativity and popularity. The Kellogg School of Management at Northwestern University has developed a framework known as ADPLAN that assesses advertising from a strategic perspective. Our overall goal is to use our strategic assessment to better understand the strengths and weaknessesof an ad with respect to their ability to build the brand. Our assessments of advertisements reflect six criteria that have been shown through research to be important to achieve these six goals:

Attention Distinction Positioning Linkage Amplification Net equity

The ADPLAN Framework

Kellogg students use the ADPLAN criteria to evaluate ads from a strategic perspective during the Kellogg School's annual Super Bowl Advertising Review. Each factor is taken into consideration when evaluating an advertising campaign. Following is additional information on each of the six dimensions of ADPLAN: Attention - Brands can benefit from consumers paying attention to ad information. Attention, or lack thereof, can often aid or hinder recall not only of the advertisement but of the brand and its position. Given the often cluttered and fierce environment that advertisements compete in, attention requires the aid of a captive audience, repeated exposures, a clever execution, or a combination of these or other factors. [+] Click here for an example.

Distinction - Even if an advertisement is attention-grabbing, it is important that a brand's advertisement is distinct from its competitors. If an ad does not separate itself from the competition, the message might be lost in the mass of advertising or even lead to confusion over the brand. [+] Click here for an example.

EXAMPLES: TAG body spray entered the market using a very similar style to AXE. This approach risked reminding consumers of the leading brand, rather than solely advertising TAG.

A truly distinct ad makes it nearly impossible for consumers to mistake the brand being advertised. Another first-rate example of strong distinction is Budweiser's campaign revolving around frogs uttering the brand name, "Bud-weis-er." This created an ad execution that could not be easily mistaken or emulated by competitors.