Kellogg's has persisted in the market as a solid brand in the FMCG industry. Its cereal flakes is a line of product that is accepted worldwide among the most convenient prepared to eat meals for breakfast. Over time people generally in most countries has used more of Kellogg's products than any of its competitors'.
Annual report of the business shows in past due 1980's the business had reached all time optimum, gaining a staggering 40 percent in america prepared to eat market and in so doing prompting a every year sales folks $6 billion.
In 1990's because the industry in the core markets of U. S and U. K started to face stiff competition with lots of players going into, Kellogg's made a decision to migrate in to the Indian market. The market potential was huge since it was a population of 950 thousands and thousands, out of which 250 million were middle income and was a completely untapped market.
In 1994 Kellogg's inserted the Indian Market by committing US$ 65 million into launching its flagship product Corn Flakes. Nevertheless the Indian Consumers found it hard to merge the idea of Corn Flakes with the lifestyle. Essentially the most widespread practice was boiled fruit and vegetables and hence the concept of ready to eat failed in India.
Even though the first yr sales were motivating, the sales began falling from the next year. It had been becoming apparent that folks mainly purchased it as a onetime novelty purchase.
This study demonstrates the possible ways in which the brand can be sustained as an effective one in the Indian market.
Devising a Marketing plan using the SOSTAC Model:
Situational Examination using SWOT:
High Global Market Show: Kellogg's has 65% global market show according to the audit of March 2010 conducted by KPMG, in the ready-to-eat cereal products which is also the leading designer in this category.
Strong Brand: As a brand the well worth of Kellogg's is 13 billion USD at the present time, and even in the period of strong economical crisis it is undoubtedly one of the profitable brands in US and the European Countries. Some of the brands under Kellogg's are greatly accepted. Nutri-gain, Pop-tarts, Kebbler and Ego are merely to name a few of them.
Large Product Line: In terms of the depth and width of the product mix, Kellogg's offers a multitude of packaged cereal flakes. It has additionally explained producing products in assorted categories apart from cereal flakes such as choco flakes for children, and also categories such as vegan, accredited halal beef, low sodium content and gluten free flakes. Kellogg's also offers a healthy food category.
Continuous Research to lessen cost: Kellogg's invests a substantial amount on Research and development in order to reduce cost. They also have set up their manufacturing vegetation in South East Asian countries in order to create at the expense of cheaper labour and to reduce cost on logistics.
High Price: A package deal of 475 grams of Kellogg's corn flakes cost 130 INR which is known as to be quite high from the Indian perspective. Most housewives who are potential buyers do opine that pack is maintained for a maximum of 3 usages. This isn't regarded as economical from the Indian perspective.
Unsuitable for Indian Lifestyle: The overall Indian practice was of using warm milk, which was very contradictory to the American idea of using cold milk. Due to the usage of warm milk, the flakes became soggy.
Declining Sales: Asia represents only 2% of the Kellogg's worldwide sales. Since its inception in 1994, the countrywide sales have slipped by 25%.
Bad connection with Supermarkets: To maintain tandem using its rates Kellogg's should set up itself to sell more through the Supermarkets. However Kellogg's lately had to suffer from a lot due to its bad romance with Supermarkets. For example Kellogg's products were relocated from the cabinets of Food Bazaar since it was supplying the merchant a much reduced margin than Tasty Treat which is its private label.
Globalisation: Because of the effect of globalisation, Indians are actually more subjected to the International Ethnicities. The children in India now attempts to imitate most of the lifestyles widespread in U. K and U. S. A.
Increasing level of Disposable Income: Being truly a growing current economic climate, the income level is growing, hence if Kellogg's can swap over from being truly a premium charges brand to a just a little competitive prices brand, it would be able to draw out the money from Indians.
Advent of Television Advertising: Because of a continuing improvement in the grade of television advertising, advertising campaign campaigns are creating recognition and interest towards a brand at a faster. A brandname like Kellogg's Choco can be quite popular in this manner.
Private Label Brands: With supermarkets such as Food Bazaar, Spencer, More, etc attaining more margins on private label brands, it is becoming problematic for Kellogg's to maintain its shelf space in super markets.
Local Competition: Some local and regional opponents such as Crunchy Oats are becoming stronger players due to their low rates strategies.
The Environmental Evaluation Using Porter's 5 Makes:
Degree of Rivalry: (High)
Face a stiff competition in Indian market from Local and Regional players such as Crunchy Oats and private label brands such as Tasty Treat. Even global players such as Nestle are providing them with difficult competition in products within the kid's segment.
An oligopolistic competition structure exists within the industry.
Switching cost is negligible, & most consumers regard switching to be profitable given that they progress quality product at a lesser price.
Growth is stagnant for the last five years whereas the Industry is extending.
Bargaining Vitality of Potential buyers: (High)
Supermarkets are continually forcing to reduce price of products to acquire higher margins, hence individuals are more inclined towards private label brands.
Switching cost is again negligible.
In certain semi urban and developing regions of the country, people still find it hard to associate with the idea of eating cereal flakes in wintry milk.
Bargaining Electric power of Suppliers: (Low)
The company has a central manufacturing unit in the country and about 20 other systems around the world. Recycleables are sourced from the neighborhood market. Hence the company bargaining electric power is low.
Threat of Substitutes: (High)
Other ready to eat and packaged foods are popular among Indian consumers such as Maggie Noodles. Maggie noodles tend to be preferred being that they are dished up hot.
There is no switching cost involved.
Threat of New Entrants: (High)
It is difficult for competitors to build up new products in this category since they would require investment and time to develop.
Distribution is a significant concern. High slotting & promotional fees, limited shelf space, and the necessity to create retail demand are enhancements to the creation cost.
Capital costs are extremely high since setting up development facilities and circulation chain considers a high in advance investment.
Objective Arranging at different tactical levels:
Corporate Strategy: To increase success by 23% worldwide by 2011
Business level Strategy: To gain 50% market share countrywide in India by 2011.
Marketing Strategy: To become the breakfast food of 70% of the urban Indian Home by 2011.
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Kellogg's operates in a country wherein it is an existing brand going back five years. All products in the merchandise line are known to consumers and market for such products has also developed. Hence the strategy that Kellogg's should embark on in order to increase its sales is Market Penetration.
Kellogg's being an established brand would not have a problem in penetrating the marketplace and increasing its talk about. The chance factor would also be considerably low.
Creating an alternative position for the brand through an improved communication and subsequently developing a new improved upon value proposition.
Kellogg's must make utilization of cost reduction in order to gain price leadership in the market. After the product appeals to consumers they will purchase it commonly due to the good deal. If the company can sell a higher volume at a smaller margin, then they can beat competition efficiently.
Kellogg's as an FMCG product really needs an Industry vast strategic range. However in line with the research Kellogg's should practice a mixture of Differentiation and Overall Cost management.
Kellogg's as a brand has a huge stock portfolio of products and each product have its own uniqueness. Hence they ought to continue to leverage on the differentiation aspect. However a major problem that Kellogg's encounters is its advanced pricing, on increasing a cost management, it can apply a competitive rates. This can make the brand more appealing.
Tactics employed in order to attain strategic targets:
Pack Size: Since most of the merchandise within the merchandise mix are broadly accepted throughout the world, Kellogg's should not change the range of cereal flakes which it has. Yet, in order to raise the consistency of purchase, Kellogg's can reduce the minimum load up size from 475g to 250 g so that it becomes more popular amongst young those who live a fast life and stay single. For such group of target customers the container size of purchase is a lot small. Hence smaller size packs will attract them to a greater degree. Aside from this value packages must be given initially to pick up sales. They are packs of 500 g at the price of 475g packs.
Packaging: The majority of Kellogg's packs do not have the nutritive benefits etched in it (except for Special K). They only contain a small label displaying the nutritional materials. Over the modern times the urban Indian population is becoming more diet conscious. Hence it might be beneficial to engrave the nutritive benefits in it.
http://economictimes. indiatimes. com/image. cms?msid=3190216
Present product packaging new packaging
Kellogg's flakes are charged higher than challengers. Prices of three most made Indian Brands are higher than most competitors. 475g of Kellogg's Corn Flakes costs Rs 130, whereas its closest competitor provides 500g at Rs 109. Kellogg's thus should decrease the price. In the recent company audit record from KPMG it has been found that the most highly purchased product, the Kellogg's choco will set you back Rs 125 for a 375g load up, thus which makes it problematic for a middle class Indian household to avail it. Kellogg's should promote more of the product by lowering the price.
Also in order to obtain better penetration in the market Kellogg's should try to sell more through Supermarkets rather than corner grocery shops. Hence Kellogg's should supply more volume at minimal margin to supermarkets and hypermarkets.
Internet: Among the medium through which urban customers are purchasing more of their FMCG products is the internet. The arrival of online retailing, Kellogg's must try and sell more through online medium. Especially for institutional sales such concerning hospitals and college or college or university hostels, where acquisitions are made in volume, Kellogg's should encourage online deal of products. This can help them in lowering the time to provide their products faster and help them to market higher products.
Also, the negotiation terms with supermarkets, hypermarkets and convenient stores should be laid in a way such that Kellogg's cereal flakes occupies maximum shelf space in its particular product category. The main objective should be to gain maximum shelf space somewhat than trying to earn much more margins per product.
The most important aspect in the marketing mix of Kellogg's is the promotions.
When Kellogg's entered India about fifteen years back, they lacked research of the behaviour of the Indian consumers. They took no notice of the fact that Indian's disliked the idea of consuming cold dairy, and the flakes became soggy in warm milk. Hence to be able to promote the practice of the consuming normal or frosty milk Kellogg's should use the tv set advertising multimedia effectively. This might create a separate value proposition for the brand.
For example time can be used as a parameter to set-up urgency for the brand. A tv set advertisement showing this concept will create response among customers.
Idea- Showing a household wherein every member is hurrying for work or school. In such a small amount of time boiling dairy and consuming flakes is a lengthy process. Hence normal milk is utilized and it even likes nice.
The new quest statement of the brand could be Kellogg's: Your Fast Breakfast time
The other types of communication channels should be advertising hoardings, posters in excellent markets and newspapers such as Graphiti.
In order to market kids products such as Kellogg's Choco the business can coordinate event special offers through various sellers and also through sponsorship of kids' activities and competitions at universities.
Sales advertising would also be done over summer and winter through the circulation of freebies. Freebies such as a bowl can get with a pack of 475g of Kellogg's Corn Flakes. This would be of energy in the use process and would in-turn increase sales.
Distribution is the pivotal operations that should be looked after in reaching the objectives
After the developing process, the distribution chain should be controlled from different centers. There must be four regional circulation centers (RDC) at the four different areas- Delhi (North), Calcutta (East), Mumbai (West) and Bangalore (South). Each distribution center should source in its particular area and each syndication middle should use the hub and spoke model. All four distribution centers should be interconnected to each other.
Actions followed to attain the tactics:
The hq of Kellogg's is situated in Mumbai. All plan of action should be coordinated from the Mumbai head office and the decisions should effectively spread across the circulation centers up to the store level where the product gets handed over to the end consumer.
Usage of 2009 Financial Assertions (Historical method): The budget is prepared based upon an research of the income affirmation of 2009. Inside the fiscal time 2009 as per the annual accounts of the company the web income $1, 212 million. The net cash flow in the last one fourth has been $1230 million and also according to the last quarter the liquid cash reserves of the business is $527 thousands and thousands. Hence Kellogg's Organization can invest a high amount in the introduction of the Indian market in order to take it to a growth.
The total budget allocated towards marketing activities of the Indian market is-----. The allocated amount is split into five discrete divisions to carry out activities. These divisions are product packaging, sponsorship, advertisements, sales advertising, event campaign and value packages.
To map the budget according to the activities of the organisation a GNATT action graph is used.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Gaining Control over the plan:
Periodic control: A regular control can be exercised over the plan by performing Marketing Audits from time to time. The company must not rely only on external auditors such as KPMG, they also needs to gain control through internal audits performed by auditors within the company. Through marketing audits performance spaces should be recognized. The extent to that your results vary from the desired focuses on should be observed and corrective procedures should be studied accordingly.
Continuous Control: A continuous control should be created by maintenance of a well-balanced Scorecard customized specifically for stakeholders' point of view of Kellogg's.
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