Balancing the marketing mix through creative and innovative strategies

A Kellogg's case study

Page 1: 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
KelloggsCorn 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.

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. 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.

Page 2: 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.

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.

Page 3: 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 research into its products.
 Page 4: 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.
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 its below-the-line activity.
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 door-step 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.

Page 5: 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.
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.
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.
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.
Page 6: 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 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.