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Kellogg Company Mission Statement

ƠKellogg is a Global Company

Committed to Building Long-
Long-Term
Growth In Volume and Profit and to
Enhancing its Worldwide Leadership
Position by Providing Nutritious Food
Products of Superior Valueơ
W. K. Kellogg
Kelloggƍs Marketing
Strategy
and
Marketing Plans
(rganizational Strategies

' Leadership in product innovation

' Strengthening the companyƞs seven largest
cereal markets
' Accelerating the growth of convenience foods
business
' Developing a more focused organization
' Continuing to reduce costs
 ˜lobal Strategy

' Management continues global strategy

' Offers brand-
brand-differentiated pricing
' Invests in new product research
' Brand
Brand--building marketing activities
' Cost structure reduction
Product Market Strategies
Product development
- Constant innovation. Introduction of new product to
present customers.

Market development
- Maintain global position

Diversification
- Introduction of new products to fit new customers
needs

elloggƍs SWOT Analysis
 Strengths

' Control 42% of global market share for Pre-

Pre-
sweeter cereal, which is more than triple the
market share of any of their competitors.

' They have the strongest brand recognition and

advertising recollection of all the cereal
manufacturers
 þeaknesses

' wave Ô
aggressively evel pe

maÔ Ôew cereal lines in the past
four years.
' O w er  Ô of their U.S. marke

e in the past few years,
' Follower in Pricing Strategy
 ( ortunities

' Interntion ex nsion is the biggest area

for growth for Kelloggƞs.
' Kellogg can continue to  w  vef
vef,,
while still remaining in their core business
area, which will increase their profitability.
' If they can eve p a better pÔ


e and guarantee lower prices, they
can reduce costs while increasing their market
share.
 °hreats

' General Mills, Post, and Quaker Oats

are using pe  mpe

 Ô Ô
p  
p fe
 Ô to erode
Kelloggƞs share of the market.
' D Ô
m

 Ô ee  brands
have been successful in reducing
premium brands in the more commodity
like cereals.
!e
AÔ 
 Market Analysis
' Market size: sales of nearly $9.7 billion in the Ready-
Ready-To-
To-Eat
Market in 2001

' Product segments: the best-

best-selling kidsƞ cereal brands--
brands--GM
GM
Lucky Charms, GM Count Chocula, Post Marshmallow Alphabits,
Q Marshmallow Safari, Rice Krispy.

' Market share: competition is heating up in this market as flat

sales and low-
low-priced clones have eroded the market shares of
Kellogg and General Mills

' Market Forecasts: the kidsƞmarket has been growing at a

rate 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 kidƞs food market was driven, to the largest extent,
by gains in cereals.
 „


  



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Volume Sales (As of 2/01)


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' Marketing/promotion: Seven breakfast cereal

marketers allocated almost $775 million to purchases of space
and time mass media in 2001.

' Industry structure: Three food giants--

giants--Kellogg,
Kellogg, General
Mills, and Philip Morris--
Morris--responsible
responsible for 70% of kidƞs foods in
2001.
Major °rends in Cereal
Industry
' New products are dominated by line extension and
product promotion

' Increasing popularity of private labeled cereals due

to high cost of branded products

' wigher demand for health food markets & products

' wealth claims is becoming more prevalent; Kelloggƞs -

American weart Association
„ mpe

ve AÔ 
Com etitive Force Analysis
Intensity of Rivals

XFour Large companies are dominant in the market

XOligopoly

XCompetition is very intense

XInflated prices

XGrowth Rate has remained Constant

Com etitive Force Analysis
Treat of a O bstit tion
XPrivate Labels

Xwas made substitution very significant

XCaused other 3 competitors to lower their prices

XLow switching cost (1/3 of 1,000 shoppers switched to

private label)

XPrice competition (1990ƞs started a price war between rivals)

XMade the buyer more powerful

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Com etitive Force Analysis
Hi Barriers to Entry

Main barriers to entry in the breakfast cereal

market are four major cost factors.
Product development - easy for established manufacturers
to duplicate products, new products take more money &
time to develop

Distribution - high slotting & promotional fees, limited

shelf space, need to create retail demand, all increase
costs for manufacturers
 Com etitive Force Analysis
Hi Barriers to Entry

!
eting - eed
need o
to compee
compete  st
s cu

e
b
ds h  h ve bee es blshed h
ouh l
e
dve
s d p
omoo l effo
s (.v., coupo)

Hh C p l coss - fo
dffe
e ypes of

equpme d pl s
Com etitive Force Analysis
Power of O lier

' Supplier does not have much power

because of private labels.
' Similar products have allowed buyers to
acquire products from private labels at
a Cheaper Price.
' Now industry is very Sensitive to the
buyer.
„ 
me AÔ 
 Cocoa Kris ies
Buying Criteria
' Key equity drivers: chocolate taste,
Coco the monkey, snap, crackle and
pop

' Package: fun, colorful, capture

childrenƞs attention

' Product: very sweet, colorful and

contain nutritious elements
 Kelloggƍs Customer Analysis

Wo Are te Buyers?

' Parents, Older Adults
H w Of
eÔ D Te P e?
' Kids cereal are purchased roughly 18 times a year
' 10th fastest-
fastest-moving product in the supermarket
Wee D
e WÔ

B ?
' Grocery Stores responsible for 99% of cereal sales
W Ae
e IÔf eÔe?
' Kids
W  Ô me
e  ?
' Kids under 18
W e
e  Te
!e
?
' Kids 8-
8-11 years old
 Percent of °otal Annual S ending
on Presweeter Cereal
(by Age ˜rou 

 



 

 

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 Cocoa Kris ies
(bjective

' Strengthen kid consumer base

' Secure Kellogg Ơcocoaơ bit subsegment volume share with

competitive focus on GMƞs Cocoa Puffs and Postƞs Cocoa
Pebbles

' Create a product that enhances the Ơultimate multi-

multi-
sensory food experienceơ by adding additional attributes
that satisfy expended consumer needs

' Attract different target groups

 C(C( Kris ies
Promotion
' Spent roughly $15 million for ad campaign: TV, print

' Adds include Coco the Monkey

' Advertiser: Kellogg Agency (Leo Burnet)

' Quantity and price discounts

' Packaging: fun, colorful, capture children attention

 Cereal Pricing
for Retail Stores

4 
 



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 Kelloggƍs
Distribution Players
±



  
      

    
   

' !ajor players: ' !Ô  p e:

e:
- Kroger - Convenience stores
- Farmer Jack - Gas stations
- Target
 Kelloggƍs
Distribution Channels














  




 

 


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 Critique of the Plan

' wave we heard of it? Promotioal issues

' Ca we get it? Distributio

istributio

' Ca we afford it? Pricig

' Are we buyig it? Target maret record

' Is it legitimate? Corporate re oibilitie

respoibilitie
 Promotional Issues

' Mass Advertising TV, Cocoa the Money,

and Sna
Crace and Po .

' Direct Promotions C ns

Cou ns

' Trade Prmtins In-

In-stre dis ays
am es

' Persna eing Key-acc nt re s

Key-
Area re s

Merchandisers
 istribution
' Penetration - Chain tore
Inde endent
whoeaer
oeaer

' Sae Canne - Brand

rand eq ity e 

' Logitic - Finied good areo e /

rai / tr c / center or
inde endent areo e

' Reationi  - Confict or armony?

 °he °arget

Fatet Gr wÔg F  Ô the AmeraÔ

Det:
Det:

Carbonated Soft drinks

Pre--Sweet Cereal
Pre
Bagels
Toaster Pastries
Pizza
Cor orate Res onsibilities

' Legal Issues - ae

afe
I
a
Ce
' Ev
eal - Ea
  
 Aa

Issues
' Cv Res sbles
- A e saa
s
- aele

ea
- ubl
Publ
g
a su 

' Eal Issues - Nu
al eua
u
al
- !
e a
equ
e
ericaƍs °o 10 R-
R-°-E
Cereals
1. Frosted Flakes 6. woney Nut
2. Cheerios Cheerios
3. Frosted Mini-
Mini-Wheat 7. Raisin Bran
4. Corn Flakes 8. Fruit Loops
5. Rice Krispies/Cocoa 9. Special K
Krispies 10. Corn Pops
   

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$ 
  

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 Sources
' Kellogg - Mike Culverson / Cusoer ervie
' Farer Jakƞs - Ron Van Ese / Cereal buer
' Media Week - Ma98 / oeing
oeing e Under M oseơ
' Business Week - Wednesda, Ma 29, 2002 ƠKellogg Co.ơ
' WWW.indusreek.o - ƠFood Indusr Fousơ
' Field Visis - Kroger, Farer Jakƞs, Targe, Rie-
Rie-Aid.
' Florida un eninel - Feb. 7, 1998 / Robin Fields / ƠGe Ta One
Mo
' e PD Group - Mar, 2001/ Ơe el Annual Repor on Eaing
Paerns in Aeria
' Kellogg - .Kellogg's.o
' p://aul.sba.udaon.edu.senk.kellase.
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