Table of Contents:

Seria Table of Contents Page

l No. No.
1. Introduction of Kellogg’s Company 2

2 Environmental factors affecting Kellogg’s Marketing Decisions: 3-7

3. Concept of Segmentation, Targeting and Positioning for 8-10

Kellogg’s Marketing decisions:

4. Four variables of market selection criteria to target relevant 11

market segment for Kellogg’s products

5. Positioning :- 12-13

Four possible Positioning errors Kellogg’s can make in a country

of your choice:
6. References 14

Remarks: Date:
 Kellogg Company
Kellogg's was founded as the Battle Creek Toasted Corn Flake Company on
February 19, 1906, by Will Keith Kellogg as an outgrowth of his work with his brother
John Harvey Kellogg at the Battle Creek Sanitarium following practices based on the
Seventh-day Adventist Christian denomination. The company produced and
marketed the hugely successful Kellogg's Toasted Corn Flakes and was renamed
the Kellogg Company

Kellogg Company often referred to as Kellogg or Kellogg's in its corporate logo, or even
more formally as Kellogg's of Battle Creek, with 2008 sales of nearly $13 billion, is the
world's leading producer of cereal and a leading producer of convenience foods, including
cookies, crackers, toaster pastries, cereal bars, fruit-flavoured snacks, frozen waffles, and
veggie foods.

The Company's brands include Kellogg's, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain,
Rice Krispies, BearNaked, Morningstar Farms, Famous Amos, Special K, All-Bran, Frosted
Mini-Wheats, Club and Kashi. Kellogg products are manufactured in 19 countries and
marketed in more than 180 countries around the world. From 1969 to 1977, Kellogg's
acquired various small businesses including Salad Foods, Fearn International, Mrs. Smith's
Pies, Eggo, and Pure Packed Foods; however, it was later criticized for not diversifying
further like General Mills and Quaker Oats were.

After underspending its competition in marketing and product development, Kellogg's

U.S. market share hit a low 36.7% in 1983. A prominent Wall Street analyst called it
"a fine company that's past its prime" and the cereal market was being regarded as
"mature." Such comments invigorated Kellogg chairman William E. LaMothe to
improve, which primarily involved approaching the demographic of 80 million baby
boomers rather than marketing children-oriented cereals. In emphasizing cereal's
convenience and nutritional value, Kellogg helped persuade U.S. consumers age 25
to 49 to eat, 26% more cereal than people that age ate five years prior. The U.S.
ready-to-eat cereal market, worth $3.7 billion at retail in 1983, totaled $5.4 billion by
1988, and had expanded three times as fast as the average grocery category.
Kellogg's also introduced new products including Crispix, Raisin Squares, and Nutri-
Grain Biscuits and reached out internationally with Just Right aimed at Australians
and Genmai Flakes for Japan. During this time, the company maintained success
over its top competitors: General Mills, who largely marketed children's cereals, and
Post, who had difficulty in the adult cereal market.

Current members of Kellogg Company's board of directors include: James M.

Jenness, chairman; David Mackay; Dr. Benjamin S. Carson, Sr.; John T. Dillon;
Gordon Gund; Dorothy A. Johnson; Donald R. Knauss; Ann McLaughlin Korologos;
Rogelio M. Rebolledo; Sterling K. Speirn; Robert A. Steele and Dr. John L. Zabriskie.

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 Internal environmental factors that influence
marketing decisions:
Marketing decisions are guided by the overall objectives of the company. Corporate
objectives can be wide-ranging and include different objectives for different
functional areas for e.g., objectives for production, human resources, competition
etc. decision-making and managing can be viewed as being identical in scope, so
the decision-making process and case analysis go hand in hand

1. Politics and laws: This factor determines how and to what degree a government
intervenes in the economy. Specifically, political factors include areas such as tax
policy, labour law, environmental law, trade restrictions, tariffs, and political stability.
Political factors may also include goods and services which the government wants to
provide or be provided.

2. Technological: This factor includes ecological and environmental aspects,

such as R&D activity, automation, technology incentives and the rate of
technological change. They can determine barriers to entry, minimum efficient
production level and influence outsourcing decisions. Furthermore,
technological shifts can affect costs, quality, and lead to innovation.
Technology has a profound impact on business research, and especially on
marketing, because technology changes the way marketing managers do
their job and these changes lead to major changes in the topics that are
important to study.

3. Cultural influence: This factor includes the cultural aspects and includes health
consciousness, population growth rate, age distribution, career attitudes and
emphasis on safety. For example, an ageing population may imply a smaller and
less-willing workforce (thus increasing the cost of labour). Knowledge of cultural
influence can also assist managers, at home and in operations abroad, in
predicting ethical, political, social or economic issues that may influence the
international company.

4. Economical factors: This factor includes economic growth, interest rates,

exchange rates and the inflation rate. These factors have major impacts on how
businesses operate and make decisions. For example, interest rates affect a firm's
cost of capital and therefore to what extent a business grows and expands.

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 Exchange rates affect the costs of exporting goods and the supply and price of
imported goods in an economy.

5. Market competition: In social marketing understanding your competition is

fundamental to your most central strategic decisions. Competition matters
because your programs exist in a free choice society. Your consumers – your
target audiences – always have the power to choose something else, so you
have to compete to be their preferred choice. Competition between
companies for customers will lead to product innovation and improvement,
and ultimately, lower prices.

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 Three Micro Environmental factors important for
Kellogg’s marketing decisions are:

Consumers : Organisations survive on the basis of meeting the needs, wants and

providing benefits for their customers. Failure to do so will result in a failed business
strategy. Kellogg is a breakfast food brand that everyone needs breakfast, although
people’s flavour varies different places and different cultures around the world. In
addition people in different gender, age have different need for breakfast. Kellogg
has to make certain changes in every country’s market as well as designing different
products to feed the demand of customer in different cultures, gender and ages.

Supply chain: Increase in raw material prices will have a knock on affect on the
marketing mix strategy of an organisation. Prices may be forced up as a result.
Closer supplier relationship is one way of ensuring competitive and quality products
for an organisation.  Kellogg builds cereal plants where they expand the market. This
assures a closer supply and lower costs. However the cost still depends on the price
of raw materials. When expanding market, signing long term contract with local raw
material suppliers and make them exclusive suppliers is one option.

Competitors: The name of the game in marketing is differentiation. What benefit

can the organisation offer which is better than their competitors? Can they sustain
this differentiation over a period of time from their competitors? Competitor analysis
and monitoring is crucial if an organisation is to maintain its position within the
market. According to the case study, competition is strong even in some countries
where consumption is low, e.g. in Japan, Kellogg can use its advantage in its more
famous brand and larger size of organization.

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 Five Macro Environmental factors important for
Kellogg’s marketing decisions are:

Changes in the wider macro-environment may not be as close to the marketing firm’s
day-to-day operations, but they are just as important. The main factors making up
these wider macro-environmental forces fall into four groups.
1. Culture: The way that people view themselves, others and organization plays a
significant role for shaping one’s culture. For instance, in case study there are
different between Japanese and American culture. Japanese prefers cereal less
than American, as a result, Kellogg may assume that in State industry is bigger
than Japan. It is compulsory for Kellogg to study the consumer’s culture and plan
an appropriate marketing plan suit with each.
2. Economic: Both consumer and organization are involved when we are talking
about economics topic. For consumer side, economic will either increase or
decrease the purchasing power. On the other hand, organization obtains an
effect via adjusting price and promotion of product. Such as during the recession
period, consumer may possibly buy cheaper product with acceptable quality
rather than high price with high quality. Accordingly, the marketing department
should come up with plan that catch up with economic trend and flexible for
dynamic environment.
3. Political: In order to set up business or expand market to countries, laws,
regulation and government policies must be crystal understand. Even though
today’s markets are developing into free market, some still apply for example
tariff, tax and limits. Those regulations are essential for C-levels of Kellogg to
considering on make decision and judge which country the organization will able
to expand to and gain market share.
4. Social concepts: This factor arise as important as increasingly competitive
international business calls upon exporters to tailor or adapt their business
approach to the culture and traditional of specific foreign markets. Kellogg must
consider socio-culture in term of language, aesthetics and religious beliefs, for
instant.
5. Technology: Our society comes about new technology every single day such as
new stuff, new idea which improve organization productivity and performance. In
other word to keep the higher image of Kellogg, Kellogg must always up to date
on what goes around on day today business. It can bring Kellogg new opportunity
for business and competitive advantage.

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 Ethical and Social responsibility

ETHICS: ethics are basically a rule to know what to do or what not to do. This helps
companies to satisfy customers anyhow. Marketing, which goes beyond the mere
provision of information about (and access to) a product, may seek to manipulate our
values and behaviour. To some extent society regards this as acceptable, but where
is the ethical line to be drawn? Marketing ethics overlaps strongly with media ethics,
because marketing makes heavy use of media. However, media ethics is a much
larger topic and extends outside business ethics.

1. Pricing: price fixing, price discrimination, price skimming.

2. Anti-competitive practices: these include but go beyond pricing tactics to cover
issues such as manipulation of loyalty and supply chains. See: anti-competitive
practices, antitrust law.
3. Specific marketing strategies: green wash, bait and switch, shill, viral
marketing, spam pyramid scheme, planned obsolescence.
4. Content of advertisements: attack ads, subliminal messages, sex in
advertising, products regarded as immoral or harmful

5. Ethical relations between the company and the environment: pollution,

environmental ethics, carbon emissions trading。
6. Product testing ethics: animal rights and animal testing, use of economically
disadvantaged groups (such as students) as test objects.

Market Segmentation
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Market segmentation pertains to the division of a market of consumers into persons
with similar needs and wants. As an example, if using Kellogg's cereals in this
instance, Frosties are marketed to children. Crunchy Nut Cornflakes are marketed to
adults. Both goods aforementioned denote two products which are marketed to two
distinct groups of persons, both with like needs, traits, and wants.

Four commonly used criteria used for segmentation are:

1. Geographic Segmentation: As with consumer market, geographic

characteristic define useful segmentation for business markets. For example:
firms and products can be grouped by region, city size, state size, climate
etc. This type of segmentation is mostly used by multi-national corporations or
transnational businesses.

Four variables of segmentation Kellogg’s need to apply on the basis of

Geographic Segmentation are:-

 This kind of segmentation involves division of customer base by continent,

country or state etc. Customer groups can also be formed on the basis of size
of population of a particular region.

 Depending upon the climate of locality, marketers can choose to segment

production differently in northern or southern regions. Kellogg’s cannot sell or
promote its products that are not good to eat in hot climate areas and vice
versa.

 The scale of production and stock management can be segmented according

to the population of a particular region selected depending upon the level of
population density i.e. to choose among urban, sub-urban or rural areas.

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2. Demographic Segmentation: Market competition is increasing. Consumers
and business customers are accustomed to many choices, with greater
product and service diversity. Market segmentation uses defined demographic
characteristics to reveal psychographic, socio-graphic and behavioural
characteristics.

Four variables of segmentation Kellogg’s need to apply on the basis of

Demographic Segmentation are:-

 Consumer needs and wants change with age although they may still wish to
consumer the same types of product. So Marketers design, package and
promote products differently to meet the wants of different age groups. For
example........

 Gender segmentation is widely used in consumer marketing. The best

examples include clothing, hairdressing, magazines and toiletries and
cosmetics. There is a vast difference in shopping behaviour of women and
men.

 Many companies target affluent consumers with luxury goods and

convenience services. Good examples include Coutts bank; Moet & Chanson
champagne and Elegant Resorts - an up-market travel company. By contrast,
many companies focus on marketing products that appeal directly to
consumers with relatively low incomes.

 Census data is an important source of demographic information about the

ethnic groups. It is worth noting that changes were made in the ethnicity/race
question in today’s marketing scenario. Ethnic market yields segmentation that
is conspicuous of distinctive needs and preferences, as reflected in
subsequent consumption behaviour. This distinctive consumption behaviour
converts into opportunities for organisation which may or may not be accepted,
but cannot be ignored.

3. Psychographic Segmentation: The psychographic market segmentation

describes your customers in terms of their activities, interests, opinions,
emotions, values, motivations and lifestyles.

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 The application of our psychographic segmentation improves product and
service development, brand positioning, targeting and advertising and
marketing effectiveness, and results in a greater return on marketing
investment.

Four variables of segmentation Kellogg’s need to apply on the basis of

Psychographic Segmentation are:-

 Psychographic Segmentation does not merely assign customers to generic

groups that are too broad to be meaningful and actionable. Although you can
purchase standardized personas, such as the happy senior, or the
adventurous teenager, they are not customized to your products and services .

 Some markets can be segmented into light, medium or heavy user groups. It
will help Kellogg’s marketing to efficiently distribute the products in the market
and eventually helping them to commercialize new products later.

 This covers a huge area and includes consumers’ political opinions, views on
the environment, sporting and recreational activities and arts and cultural
issues.

 Different people have different lifestyle patterns and our behaviour may
change as we pass through different stages of life.  For example, a family with
young children is likely to have a different lifestyle to a much older couple
whose children have left home, and there are, therefore, likely to be significant
differences in consumption patterns between the two groups.

4. Behavioural Segmentation: This type of segmentation is based on actual

consumer buying behaviour for particular products. Customers are segmented
on the basis of their attitude towards brand loyalty, or user status indicating
the first time buyers, potential buyers, benefits sought etc.

Four variables of segmentation Kellogg’s need to apply on the basis of

Behavioural Segmentation are:-

 When a product is consumed or purchased. For example, cereals have

traditionally been marketed as a breakfast-related product. Kellogg’s have
always encouraged consumers to eat breakfast cereals on the "occasion"
of getting up.

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  Some markets can be segmented into light, medium and heavy user
groups.

 Loyal consumers - those who buy one brand all or most of the time - are
valuable customers. Many companies try to segment their markets into
those where loyal customers can be found and retained compared with
segments where customers rarely display any product loyalty.

 An important form of behavioural segmentation. Benefit segmentation

requires Marketers to understand and find the main benefits customers
look for in a product. An excellent example is the toothpaste market where
research has found four main "benefit segments" - economic; medicinal,
cosmetic and taste...or Kellogg’s nutrition.

Four variables of market selection criteria for the

product of Kellogg’s are:

1. Age: Kellogg’s maintain a commitment today by offering a variety of helpful

tools and resources that can benefit you and your family in many ways. The
factor of age can be targeted as a relevant segment of marketing for Kellogg’s.
Kellogg’s produces products for every age group starting from a kid to oldies.
So the focus can be easily made on each type of age group. For kids the
products are already launched and quite famous like Chocos, Rice Krispies, etc.

2. Gender: Male –female have different taste in food items. Kellogg’s can market
special meals for females like especially for young girls and pregnant ladies.
With male society they can introduce an instant energy meal like Wheat Bix, as
it would attract more young boys and may even sports men. So gender can be a
good segment for Kellogg’s products in every way.

3. Income: Depending upon the level of income of people and their state of
expenditure in a society can also affect the marketing. Income can be a barrier
or a boon. If people in a region are well organised or can afford convenience
foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles,
and meat alternatives then investing in such region is always a boon and u
cannot market Kellogg’s product where people are living on breads only.

4. Flavour/Taste: For more than 100 years, Kellogg has been committed to
producing nutritious, high-quality foods for your dining table. With Kellogg’s

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 there are many other cereal and wafer products in the market so Kellogg’s
requires to update the brand with new flavours or should go for new serve up
great-tasting recipes for all occasions. This will help Kellogg’s to keep the brand
positioning ever high. Taste varies from one area to another so surveying
different regions and introducing products with specific flavours should be
targeted in order to make a healthy market.

‘Positioning’ in the context of this case study:

Having chosen a strategy for reaching their firm’s target market, marketers must then
decide best to position the product. The concept of Positioning seeks to place a
product in a certain ‘position’ in the minds of prospective buyers.

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Kellogg’s recently announced significant progress in both introducing new, healthier
foods and in repositioning some of its old favourites. Last year when the
reformulation program was announced more than half of the Kellogg’s products that
were being marketed to children met nutrition, popularity in certain regions and
usage level criteria.

Some errors can be made in Positioning by selecting a wrong factor or segment in

marketing the product. Factors like price/quality, product users, attributes,
competitors, etc affects positioning. Let’s consider INDIA for marketing of Kellogg’s.

Four positioning errors Kellogg’s can make in Japan are:

1. Product Flavour: Kellogg has a vase variety of products with the different of
flavour and taste. However, due to a small number of consumers, something
the marketing plan might overlap. In other words, the products are overthrown
the consumer’s wanted.
2. Price/Quality: Since the industry has lots of competitions, most consumer’s
choice will be determine by the price and quality. However, the bottom line is
they will skim into the cheapest price rather than the quality.
3. Product User: Base on Indian’s life style, people prefers product that comes
with more vegetarian flavours. This is main weakness that Kellogg must face
on.
4. Competitors: Local product brands are another type of error since they are
owned by the local people which means they can find cheaper materials as
well as they are well known by the local consumer. They also knew what the
consumer wanted since they are the local people themselves.

References

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 www.kelloggs.com
 www.google.com
 www.enterprize.com
 www.netmba.com/marketing
 www.wekiepedia.com

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