As Kellogg's technique for stepping into and growing in the Indian market has included a variety of stages, a critical talk must explore each level of Kellogg's strategy subsequently. The first stage of Kellogg's accessibility in India was in 1994 when the business entered the market with three variations of cornflakes, expensively packaged and centered on the crispiness of the product. This, therefore, shows that in terms of the marketing combine, Kellogg's started out by let's assume that product was the most important factor in comparison with other less significant aspects such as costs (Kellogg's cereals were being sold for INR 4. 5 more than the locally produced Mohan Meakins cereals). This focus on product and brand image is often deemed to be the very best strategy for getting into a new market as it is the product which sometimes appears to be the main element in convincing new and potential consumers to get the goods. One study moves so far as to suggest that "you can consider product as the diamond in the included setting up of the involved marketing mix to produce the irresistible marketing jewel. " (Curtis, 2007: 85)
However, in order for the product to be loved and appreciated by the buyer it must stick to customer trends and be based on sensible research and knowledge. That's where this particular growth strategy was unsuccessful as Kellogg didn't appreciate the market's dislike for frigid dairy and the unsuitability of the merchandise itself to be consumed with warm milk. Thus, whilst the business prides itself on providing a quality product (which might potentially be appropriate to the buyer for a higher price than that made available from competitors), the failure to make a product which truly addresses the needs and wants of the mark market makes this concentrate on 'product' relatively redundant.
Diversification has been exemplified by Kellogg's when they presented Sunrich and Cheez-it; two products concentrating more heavily on the treats market rather than the breakfast cereals market. In theory, diversification comes with a quantity of additional benefits which the company can leverage. According to Markides (2000:76) the most important of these benefits is the fact that the organization can acquire new skills and knowledge by rivalling in a completely different industry. This new knowledge can be employed in three different ways. Firstly, organizations can use the knowledge to boost businesses in the new product market. Secondly, firms may use learning from diversification to make capabilities in a fresh market at a faster tempo or even more cost-effectively in comparison to challengers. Finally, companies can utilize new understanding how to benefit from 'synchronicity'. Aside from this, diversification permits the organization to present its brand name more widely and alleviate the risk of focusing greatly on a person market.
For Kellogg's, however, the services were unsuccessful whatever the additional efforts invested in realigning the marketing mix to give attention to aspects such as pricing (Sunrich were unveiled as a low-priced brand) and circulation channels (as an impulse food product, Cheez-it required the right network for circulation). This means that, therefore, that alternatively than focusing on its strengths (the breakfast cereal market), Kellogg's attempted to enter a totally new industry where it got little knowledge. Thus, the failure of the strategy is based on the actual fact that rather than resolving the original issue of limited market research in relation to breakfast products, Kellogg's impulsively joined new markets where it again lacked basic knowledge.
It is merely in 2003, that Kellogg's can be said to have introduced its most effective growth strategy; that of undertaking thorough general market trends before acting. This led the business to appreciate the importance of price for the Indian consumer; in so doing leading to Kellogg's to again reposition the marketing mix to place more emphasis on the reduced prices offered for KPak. This focus on price is definitely a key strength of the expansion strategy implemented by Kellogg's as it addresses increased price consciousness for consumers who have been impacted by factors such as inflation, the downturn and growing global competition. However, the negative aftereffect of creating a sub brand is that the brand image as an excellent breakfast cereal alternative is somewhat diminished as Kellogg's in not recognized to be an up-market product.
A further consequence of the marketplace research conducted was segmentation to focus on urban women concerned about weight. This contributes to benefits including the possibility to target specifically on the product and marketing needs of the select group of consumers; however, it can be simultaneously damaging by narrowing the buyer base even further particularly whilst a business is still along the way of establishing itself within the market.
Whilst Kellogg's has shown significant amounts of stamina and determination in attempting to both enter and increase within an especially challenging market, one of the key failings of the strategies used is the failure to appreciate the importance of conducting enough market research prior to entry. This suggests that the company has assumed that a 'one size suits all' coverage will suffice in stepping into market which is no doubt completely different to the other well-established marketplaces in the western.
PESTEL research conducted at Annex One demonstrates that some of the greatest obstacles facing Kellogg's in India are economic challenges. Firstly, as has been evidenced by Kellogg's multiple efforts at introducing services in the Indian market, the market is very much segmented in conditions of the spending power of individuals in several areas. This, therefore, means that a 'one size meets all' approach will not suffice. This may end up being a particular problem for Kellogg's when trying to find an satisfactory balance between appropriate pricing strategies for more deprived areas of India whilst all together offering a high-quality product which differentiates it from the offerings of competition. Whilst India is not impacted just as much by the recession as many European countries, chances are that the Indian people will feel some impact of the financial downturn in terms of the spending vitality.
When general population sector enterprises need foreign technology or investment, there's generally been a inclination for government options alternatively than private establishments.
Payment of dividends overseas, repatriation of capital as well as inward remittances are subject to stringent laws.
Corporate taxation has generally been rather high
Legal techniques for foreign shareholders are complex. (Cherunilam, 2008:347)
Although, there is absolutely no evidence that negative stresses from the politics sphere have impacted after Kellogg's performance up till now; it might well be that as the company expands this can be more of a challenge and grounds for the company to experience diseconomies of scale.
Regardless of environmental stresses on foreign buyers in India, increasing competition is evidently a crucial obstacle facing Kellogg's in India. As exhibited by the Poster's Five Causes Analysis at Annex two, Kellogg's encounters competition from both rival companies who have presented breakfast options similar or almost equivalent to Kellogg's range but also competition from shops such as McDonalds that take the concept of convenience foods one step further by offering a ready cooked alternative. This competition will probably continue to upsurge in future years as India emerges as a country with great economical potential. Statistics demonstrate that foreign immediate investment has approached about $3 billion annually in recent years, in comparison to an average $200 million in 1985-91 (Ayres, Oldenburg, 2002:59).
The progress of foreign shareholders in the region is also influencing local brands to restructure their businesses and remain competitive head-to-head with international organizations. It has been reflected partly by the increasing quantity of mergers and acquisitions in your community following a rest of regulation in 1997. This, therefore, improves the challenge facing Kellogg's because they are also needing to compete with more robust local competitors who plainly have an edge in terms of knowledge and understanding of the needs of the Indian market.
Based on key factors which might be derived from a SWOT research for Kellogg's, the next recommendations might be put forward for Kellogg's to continue to grow in specifically challenging circumstances. Firstly, the organisation should concentrate on market research as a base for conducting any activity. The forex market research should be conducted on a regular basis and demonstrate an awareness of India as a entire- as the region encompasses a great deal of diversity in terms of consumer spending power and preferences, it is vital for the market research to be all-encompassing. Additionally, as India remains to build up at such an instant rate, it is vital for this research to take into consideration how the development of the country might have a direct effect on customer tastes and spending vitality. To the end, it would be useful for Kellogg's to create a dedicated research device which local hubs. These hubs should be tasked with the procedure of carrying out regular market monitoring and feeding back to the central term.
As Kellogg's best strength lies in its connection with the breakfast cereal's market, the author would advise that Kellogg's maximise upon this particular power rather than wanting to enter new markets at present. This, therefore, means focusing on something development strategy instead of a diversification strategy. Expressing this, however, Kellogg's should take bank account of the fact that this particular market does alone consist of lots of opportunities that will be leveraged. For example, as the segmentation activity already carried out by Kellogg's has shown; the existing market provides scope to introduce differentiated products for specific aim for markets including urban women and children. Thus, whilst focussing on the breakfast time cereals market, Kellogg's should concurrently utilise general market trends to cerate variation in its product range.
Furthermore, as competition is obviously a key task, Kellogg's should harness the opportunities offered by increasing methods and channels for communication. In 2006, for case, India was thought to have 9. 4 million internet users (Logan, 2008: 204). This, therefore, represents a key opportunity which might be maximised to be able to overcome the challenge provided by rival companies. By focussing on different settings of communication, and specifically technology as a way of conversing with customers and creating brand devotion, Kellogg's may very well be in a much better position to propagate brand awareness. No matter this, however, the organisation should ensure that the communication strategies addresses the best option communication stations depending upon the spot in India which is being targeted.
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