Marketing

Balancing the marketing mix through creative & innovative strategies

Introduction
The Kellogg company was founded in 1898 by W.K. Kellogg
and his brother, Dr. John Harvey Kellogg. Through
experimentation with flaked corn, W.K. Kellogg created the
recipe for Corn Flakes. In 1906, he opened the Battle Creek
Toasted Corn Flake Company and recruited his first 44
employees. Together with these employees he developed the
initial batch of Kelloggs Corn Flakes bringing to life his vision
for great-tasting, better-for-you breakfast foods.
Kellogg embraced every opportunity to make a difference in
peoples lives and was motivated by his passion to help
people improve their health. Today, over a hundred years
since it was first founded, the Kellogg company still upholds
his original values. The company is the worlds leading
producer of cereals and a market leader in health and
nutrition. Kelloggs was one of the first companies to print
nutrition labels on its packaging and, in 2007, was amongst
the first companies to print Guideline Daily Amounts (GDA) on
its products to inform the public about the food they are
eating. This has helped the company to engage with a market
more concerned with healthy living.

For Kelloggs to remain as market leader it needs innovative

marketing strategies to help ensure that it is manufacturing
the right products to meet consumer needs, that the products
are sold at the right price and in the right locations (place) and
that the promotion of its products is suited to the target
audience.
This case study demonstrates how Kelloggs uses
groundbreaking and innovative strategies to market its
products.

The Marketing Mix

Marketing is a key business function that enables a company
to ensure that its products and services either match or
exceed a customers needs or expectations. The Chartered
Institute of Marketing defines marketing as:
Marketing is the management process responsible for
identifying, anticipating and satisfying consumer
requirements profitably.

With a vision to enrich and delight the world, through foods

and brands that matter Kelloggs employs over 31,000
people worldwide. Its products are manufactured in 18
countries and sold in over 180 countries. Kelloggs well known
cereal brands include Coco Pops, Rice Krispies, Crunchy
Nut and Special K. With a 37% market share of the value
of the UKs breakfast cereal market, Kelloggs has a wide
range of products including 25 brands of cereals, cereal bars,
and snacks.
The food manufacturing sector is highly competitive, with
consumers having considerable choice over which products
they buy.

Curriculum Topics:

Marketing Strategies Market Research

Promotion Evaluation

Promotion

A marketing strategy determines what a company is going to

produce in terms of products or deliver in terms of services,
how much it is going to charge for these products or services,
how it will deliver these products or services to the customer,
and how it is going to tell its customers about its products
and services. This is known as the marketing mix and is often
referred to as the 4Ps of marketing. The mix involves creating
the right product, sold at the right price, in the right place,
using the most suitable methods of promotion. Although the
marketing mix will vary from business to business and market
sector, its purpose is to assist a business to balance these
four key factors to meet the needs of the customer.
Kelloggs balances the 4Ps by:

offering a wide range of popular products and

regularly introducing exciting new products to the
market - Product
pricing its products to ensure that customers
receive the best possible product for their money Price
help ensuring its products are available wherever
shoppers are, from supermarkets, to the internet or
on-the-go, and by understanding shopper
behaviours - Place
delivering engaging and exciting marketing
communications Promotion.

Every business will determine its own balance of the 4Ps to

suit the needs of its customers. In addition, a business needs
to incorporate other factors into the mix; internal factors such
as the amount of finance for marketing, the types of products
being sold, as well as external factors such as the market
sector and competitors products and services.

Marketing strategies and market

research

The marketing strategy of a company sets out its overall aims

and objectives through a detailed plan.
For many businesses a key objective within the strategy will
be to increase profits and gain market share.
One of Kelloggs marketing objectives is to get its products
into as many households as possible by providing new ways
to make a positive impact on people. To achieve this objective
Kelloggs needs to undertake detailed market research to
understand and test the market for customer preferences.
In a groundbreaking initiative Kelloggs created and
implemented a Crunchy Nut (CN) restaurant in 2012, and
again in 2013, which invited consumers to a unique outdoor
experience to taste new products and actively engage with
the Crunchy Nut brand.
You are invited to enter the Crunchy Nut restaurant
at your own risk! Inside you can enjoy one of the eight
irresistibly tasty options from the menus with a choice
of juices to compliment your food.
Located at the Manchester Arndale shopping centre, the
2013 restaurant served 9,049 customers over a 12 day
period. Many customers were surprised that everything was
free of charge, over 8000 50p-off coupons were distributed,
and the redemption rate of those coupons exceeded the
industry average. Customers were invited to leave feedback
on their experience through the use of social media channels,
as part of Kelloggs digital marketing strategy. The use of
Facebook and Twitter enabled Kelloggs to reach almost a
million people.
As part of the event, the CN restaurant ran a Twitter
competition and offered a specially designated Wi-Fi code to
encourage Facebook/Twitter usage:

Both Facebook and Twitter were used to amplify the UK

Crunchy Nut Restaurant experiential activity.

Feedback from one of the event managers indicates that it

was a very positive experience for customers:
Consumers constantly made comments on their shock that
they were being given a free bowl of cereal. The overall look of
the stand impressed many people with them thinking it was a
proper eatery and queuing up expecting to pay.
As a result of this initiative, 10,000 in media value was
delivered across social channels and 2m shoppers were
exposed to the CN restaurant, which has enabled the
company to conduct further and more diverse market

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Above and below the line promotion

A business needs to use different promotional activities to
raise awareness of its products and services. When planning
promotional activity, the acronym AIDA is a tool that can be
used to make marketing communication more effective:

initiating awareness amongst non-customers or

increasing knowledge of new offers for existing
customers
generating interest for and a desire to have the product
ensuring action to purchase.

There are different methods of promoting products and

services. Above-the-line promotion aims to inform and raise
brand awareness. It includes advertising in magazines,
newspapers, online or through television advertisements.
However, these methods are expensive and in an increasingly
cluttered media world it is harder to cut through with just
advertising. Increasingly, below-the-line promotional activity is
being used in addition to advertising, to reach and engage
with consumers.
Below-the-line promotion gives a business more control over
how it communicates with its target audience. Below-the-line
methods include social media, direct marketing through
targeted mailshots, personal selling and sponsorship.

In 2013, Kelloggs launched its new Crunchy Nut Oat Granola

(CNOG) product which was promoted through a 2-stage
door-drop sampling campaign using specially selected postal
areas. These postal sectors, which were clustered around
stores, enabled Kelloggs to target adult taste seekers aged
between18-45, who eat a range of breakfast cereals. The first
stage of the door-drop involved the delivery of branded bags
to 907,435 targeted homes in 1,014 postal sectors. These
bags offered the consumer a free pack of CNOG, and to
accept they had to tick a box and leave the bag on their doorstep for the following morning. The second stage of the
campaign consisted of filling the bags (of households who had
chosen to opt-in) with a free full-size packs of Crunchy Nut
Oat Granola.
The campaign was a success with a significant impact on
sales through new customers trialling the product. It also had
a positive effect on existing customers, demonstrated by an
increase of 6.4% in repeat purchase. The outcome of the
campaign was 155.500 of extra sales and 64.800 in units,
resulting in a small market share increase. As with the CN
restaurant campaign, Kelloggs social media channels were
integral to the promotional activity. A twitter hash-tag on each
bag resulted in consumers sharing their positive experiences
online.
Kelloggs also uses promotional campaigns in-store to drive
brand awareness at the point of purchase. An example of this
was a five week sampling tour at Tesco stores across the UK.
Using branded Crunchy Nut vans, two teams drove around
the UK handing out samples of Crunchy Nut chocolate cereal.
Locating themselves in prime positions in stores, to capture
the highest footfall, nearly 30,000 samples were distributed to
customers. This type of promotion both highlights and
increases demand for products close to the point of purchase,
as well as creating greater engagement with customers.

Kelloggs uses both above and below-the-line methods to

promote its products. Television, radio, online, cinema and
press advertising are examples of its above-the-line activity
with on-pack promotions, sampling and coupons examples of
above-the-line activity with on-pack promotions, sampling and
coupons examples of its below-the-line activity.

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www.kelloggs.co.uk
Evaluating promotional activity
Promotional activity is expensive and a business needs to be
able to measure the return on the investment (ROI) it has
made in developing and implementing promotional
campaigns. A business also needs to learn from the
marketing initiatives it carries out so that the findings can be
used to improve future strategies.
Learning from the experience of both their 2012 and 2013 CN
restaurants, and the use of hash-tags on the door drop bags
initiatives has shown Kelloggs the benefits of utilising social
media, especially when trying to reach a wider and younger
audience. By developing and delivering a digital strategy that
worked alongside the CN restaurant, Kelloggs significantly
increased the number of customers reached by the activity
amongst those who were unable to attend the restaurant in
2013. The use of Twitter competitions enabled Kelloggs to
engage with a wider audience.

balancing the marketing mix enables an organisation to

uniquely position its brand to drive sales of its products and
services. To remain as a market leader a business needs to
continually look at new ways of engaging and exciting
customers in its products and services.
This case study has shown how Kelloggs is able to remain as
market leader through its implementation of groundbreaking
marketing strategies and by learning from every marketing
campaign it undertakes. Through the use of social channels,
Kelloggs is able to innovatively market its new products in
creative and interesting ways, generating opportunities to gain
new customers and retain existing customers.

The first competition, tip with a pic, encouraged visitors to

take photos of themselves and friends, upload them to Twitter
and use the hash-tag CrunchyNutTip; this competition
reached 86,893 people, with 323,492 impressions served by
the hash-tag.
For those who were unable to attend the restaurant, Kelloggs
launched a second competition which allowed the companys
wider Twitter community to get involved for a chance to win a
years supply of CN Chocolate, reaching 766,132 people and
2,285,167 impressions served by the hash-tag
CrunchyNutChocolate. Kelloggs use of social media
demonstrates how a business can engage with and generate
excitement in its products, achieving a far greater reach than
traditional marketing techniques.

Kelloggs, by data sampling and measuring the effectiveness

of their promotional activity, have shown that effective
targeting drives ROI, for example targeting households is
more effective than mass-sampling at events.

Conclusion
Getting the right product or service to the customer, at the
right price, in the right place and at the right time is
fundamental to business success. Understanding and

1.

2.
3.

4.

Explain how above-the-line promotion

differs from below-the-line promotion
(2 marks)
Describe the four components of the
marketing mix (4 marks)
Analyse the benefits to a business of
introducing the use of social media into its
promotional campaigns (6 marks)
Evaluate the effectiveness of Kelloggs
marketing strategies in meeting its objective
of getting its products into as many
households as possible. (8 marks)

Kellogs | Balancing the marketing mix through creative & innovative strategies

Exam style questions

Monitoring and evaluating promotional activity generates sales

and financial data that enables a business to measure key
information. This includes consumer product preferences,
increase or decrease in market share and the level of sales
growth as a result of the promotional activity.