Grp 3_Kellogg’s Cornflakes

8/4/2019 Grp 3_Kellogg’s Cornflakes

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Kellogg's was founded as the Battle Creek ToastedCorn Flake Company on February 19, 1906

Kellogg, the wholly owned Indian subsidiary of the U.Sbased Kellogg company, entered the Indian market inSeptember 1994.

Set up its 30th manufacturing facility in India.

Total investment of $ 30 billion.



Entry In India:

Replication of America



»Initial offering of cornflakes, wheat flakes and Basmati

rice flakes.

»Went on to market cookies

»Internationally- Products include cookies, crackers,toaster pastries, cereal bars, frozen waffles, and meat

alternatives.

»Eg. 1999-UK: Launched K Redberries- Success higher

than expected.



Rs 21 per 100 gm n the late 90s. Local competitor waspriced at Rs 16.50 per 100gm

Already enjoyed Brand leadership in Americanmarket- replicated similar high pricing in Indiaassuming the Brand equity will justify the same.



y Available only in big stores.

y Launched in Mumbai

- Acquired 53% market share in Mumbai within year of

launch.- Thus launched in 60 cities in 15 month period.

y Decided focus on premium and middle-level retailers

y A regular middle class Indian bought grocery from alocal kirana wallah in the 1990s.



y In India- Focus of Health & Nutrition.

y In US- Strong Fun element.

y Offered toys & other branded merchandise to kids-even had a Kelloggs fan club

y None of this was implemented in India



What Went Wrong?

Hit in Boston, Flop in Bombay!



» Only Quantitative Market research

» Kelloggs banked heavily on the quality of its crispy flakes.

» Indians Boiled the milk and consumed it warm.

» The rice & wheat versions failed. Consumers even referred to the rice

flakes as rice corn flakes (Identity Crisis).

» Tastes-completely ignored

» Food habits- Culture shock!

» Was mostly meant to be targeted at the middle-class consumer. But thehigh pricing resulted in the consumers buying their products on one-off basis as a status buy rather than a nutritionally rich breakfast

» 98% buyers were first timers- ?no regulars

» There was a 25% decline in countrywide sales since March 1995



y No availability.y Converting 1st timers to regulars a major problem.

(out of 100, 2 packets bought by regular customers and 98by 1st timers.)

y Positioning mistake only focused on health aspect.y Moved away from fun-&-taste, an successful US

positioning.y Realized that tremendous response from Mumbai is just

Disguised Demand.y High Profile launch with hectic media coverage failed to

make an impact.y Negative media coverage increased.



Back in Action:

The Situation Now



y Product:

y Larger variety, Newer flavors

y Minor modifications to go well with warm milk

y Surprise utility- Snacks!

y Price:

y Price point launch @ Rs 10 Kpak format

y Reduction in Price - brought down price per kg by 20%.

y Different Skus 500 gm family pack, Rs.10 pack of each variant.

y Contd to be a premium brand



y Place:

y small-pack strategy will help Kelloggs push sales intier II and III towns- lot of headroom in Urban India

y Favorable superstore culture



y Promotion:

y Iron Shakti,

y Shaam ka Nashta

y Repositioning- Fun, Taste & Healthy Gave away free gifts with packs of chocos.

eg. Glowing stickers with Rs. 10 pack of chocos.

y Jaago Jaise Bhi, lo Kelloggs hi

y Yoga instructor to kathakali dancer attributing theirmorning energy and fitness to kelloggs

y Special K Diet



y As of July 2010, market leaders with 70% share in Rs500 Crore market of breakfast cereals.

y Growing competition-enjoys first mover advantage.

More players will only help drive category growthy Kelloggs in now for young adults- the money making,

busy, modern youth is what Kellogg is aiming for andit is seeing success.



y Huge Market potential with westernization &increased demand for convenience foods.

y Giver their west predominance, lots more in their

kitty!y A 100 billion people, where will the profits go!

y The Best Is Yet To Come



Thank You!

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Grp 3_Kellogg’s Cornflakes