Firm's Overview: Kellogg’s

Kellogg’s is a 1906 established firm, it thoroughly enjoyed the status of top most cereals companies around the globe. When Will Kellogg accidentally invented a new breakfast food in Battle Creek, Michigan in 1894, he did not realise that he was on the threshold of forming a major food manufacturing company. His name would become one of the most instantly recognised throughout the world. It has four main divisions covering North America, South & Central America, Asia Pacific, and finally Europe, Africa and Middle East.Kellogg’s is an American owned organisation that has a true global market in the late 1980s, the company had reached an all-time peak, commanding a staggering 40 per cent of the US ready-to-eat market from its cereal products alone. By that time, Kellogg’s had over 20 plants in 18 countries worldwide, with yearly sales reaching above US $6 billion.

But with inception of 90’s, the company started regaining the pressure from its rival, The General Mills. The working force of the company was accused of being unimaginative. As a result the company started looking at the other markets rather than US and that of UK’s.

As a result, in 1994, three years after the barriers to international trade had opened in India, Kellogg’s decided to invest more than US $30 million into launching its number one brand, Corn Flakes. Currently Kellogg is the leading producer of cereal & convenience food of the world with total revenue in excess of US $ 12 billion. It currently has 18 plants worldwide which produces more than 50 different brands and sells in more than 180 countries across the world.

Breaking of StagnancyWith the strategy of the company to break the series of stagnancy in UK and US for a decade, the alternative to look beyond resulted in foray of Kellogg’s in India. As the Government of India, open the doors for international trade, new firms found Indian market an interactive enough to set up their operations here. But the Indian consumer as habituated, consumed regularly the tradition breakfast composed of “Paranthas, idli sambar, poha, milk “(Varying from region to region) etc. To make and create a demand for the people who are already accustomed to their own eating habits was a mammoth task in front of the company. While this meant that Kellogg’s had few direct competitors, it also meant that the company had to promote not only its product, but also the very idea of eating breakfast cereal in the first place.

Products

All-Bran® Flakes Chocos® Crunchy Bites

Chocos® Duet

Chocos® Moon and Stars

Chocos® Variety

Corn Flakes Brownie Delite

Corn Flakes Original & the Best

Corn Flakes with Real Almond & Honey

Corn Flakes with Real Banana Puree & Chips Corn Flakes with Real Honey

Corn Flakes with Real Mango Puree

Corn Flakes with Real Strawberry Puree

Honey Loops K-Pak Corn Flakes Original & the Best Muesli Fruit & Nut

Muesli Fruit Magic

Oat Bites

Oats Green Pudina

Oats Tomato Salsa

Special K®

Special K® Multigrain & Honey

Communication Strategy

Give away free gifts with packs of chocos.eg. Glowing stickers with Rs.10 pack of chocos.

Marketing Strategy• Traditional Indian breakfast ,• Kellogg’s Cereals and Nestlé's Maggie,• Indian breakfast gives the child 85% , the rest 15% of the nutrients come from

Kellogg,• Repositioning-  for people who want to lose weight,• Priced packs at Rs10/-

Advertising strategy• Jaago Jaise Bhi, lo Kellogg’s hi,

• Yoga instructor to kathakali dancer attributing their morning energy and fitness to Kellogg's,

• Introduction of new cereals (Chocos, frosties etc.) forced to look at alternate product categories to make up for bad performance of breakfast cereals.

Business Strategy

• To grow the cereal business – there are now 40 different cereals,

• To expand the snack business – by diversifying into convenience foods,

• To engage in specific growth opportunities.

Promotions

Kellogg's Company promotional methods show that it focus more on its target consumers so as to get in their minds. The company recognises the needs to get in the minds of its customers which are also important towards getting information from the customers.

1. Kellogg uses many promotional activities like advertising, event management, above the line promotion and below the line promotion,

2. Kellogg Cornflakes is not only appealing in outlook and contents, its promotional offer of free cereal box are also appealing to customers,

3. Kellogg management is aware of price sensitivity of consumers and gives out coupons,

4. The company has also been using the packaging of Kellogg Cornflakes to influence consumer beliefs about the product,

5. The most noticeable contemporary marketing tool for Kellogg Cornflakes are the company newsletter which incorporates all its product and latest news on each, mass advertising i.e., TV and print media, and direct promotion i.e., coupons,

6. The company is using the right marketing tools through such avenues as newsletter that kept updating the consumer on latest improvement and available offers by Kellogg Company,

7. Kellogg’s promotional offers such as news and offers from Kellogg i.e., coupons, special offers and promotions, great tasting recipes, nutrition tips, product sneak peeks and getting great saving on their products ensure the company maintain its competitiveness,

8. Kellogg’s promotions are made according to the specification of targeted consumers,

9. Kellogg was considered a complete western brand, hence in order compete in the local market, they came up with indianised product names like Iron-Shakti,

10. Catchy phrases like “jago jaise bhi,lo Kelloggs hi”. “Andar se khush, to bahar se kush”, “Shuruvat sahi to din sahi” for attributing the daily energy provision to Kelloggs,

11. Kellogg’s also launched a series of Consumer Awareness Campaigns. The company reached out to the students across a number of schools in the country,

12. Kellogg’s introduced the concept of associating a MASCOT with a particular product,

13. Kellogg uses events to promote its brands and in these events it uses promotional activities like special offers, prizes as well as television commercial,

14. Kellogg uses segmentation, targeting and positing (STP) strategy in its marketing activities,

15. Kellogg also divided its market into segments and this segmentation is mainly based on the behavioural factors of the consumers,

16. It participates in many social and organizational events to make its brand image into the mind of the consumers.

Competitors1. Quaker 2. Uncle Sam

3. Nestle Ltd

4. General mills 5. Cadbury

6. Torto

Factors For Success1. Innovative marketing and brand-building

• Kellogg India has been taking various initiatives to overcome the low awareness of breakfast cereals,

• Sustained brand-building through advertising and investment behind key brands,• Introducing a limited edition Kellogg’s Chocos Spider Man 2 “web designed cereal”

which is part of the global association between Kellogg Company and the movie Spider Man 2.

• Conducting school contact programmes and having active interface with opinion leaders – CFTRI, the government, independent agencies etc,

• Adopting brand names that appeal to the Indian consumer such as ‘Shakti’, meaning power,

• Using packaging as an effective marketing tool, for brand communication and on-shelf differentiation,

• Image building through recycling and reusing, improving access to health and human services in local communities.

2. Efficient supply chain network

Price sensitive customers necessitated a constant focus on cost reduction and supply chain efficiency enhancement in India. Kellogg India has taken several initiatives in this area:

• Localised the entire raw and packing material requirement, saving import duty. In addition it has adopted single sourcing strategy achieving scale efficiencies,

• Located its manufacturing plant at Taloja, near Mumbai in the state of Maharashtra, which is the largest market for breakfast cereals in the country thereby optimising transportation cost,

• Set up a distribution network with storage hubs in all the key states of the country (18 clearing and forwarding agents) serving over 200 distributors providing a good reach.

3. Customising products for India

Over time Kellogg India has widened its product portfolio and expanded its range to include Frosties, chocolate-flavoured scoops and taste variants of CornFlakes. Kellogg India also adapted its products to address the local need gaps. For example it enhanced its focus on iron and calcium fortification with products like Iron Shakti (meaning iron power) and Calcium Shakti.

Future PlansKellogg India is largest player in the breakfast cereals market. It has Investments of over US$ 30 million.Kellogg Company views India as a very important market with a great future. Taking a longer-term perspective, Kellogg India is planning to continue its investment in communication of categories and brands to grow the breakfast cereal market.

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