Marketing Analysis: Kellogg Cornflakes

tradeplaceing psychoanalysis Kellogg gambogeflakesKelloggs has persisted in the securities industry as a strong imperfection in the FMCG industry. Its grain flakes is a line of increase that has been accepted worldwide as one of the around convenient furbish up to eat meal for eat. Over the socio-economic classs passel in most countries has consumed more than of Kelloggs outputs than any of its competitors.Annual cut across of the company shows in later(a) 1980s the company had reached all time peak, get hold ofing a staggering 40 percent in the US ready to eat marketplace and thereby prompting a yearly sales of US $6 billion.In 1990s since the industry in the core markets of U.S and U.K started to face stiff controversy with serve ups of players entering, Kelloggs made a decision to migrate into the Indian market. The market potential was huge since it was a universe of 950 millions, out of which 250 million were place class and was a completely untapped market .In 1994 Kelloggs entered the Indian Market by set uping US$ 65 million into launching its flagship point of intersection Corn Flakes. However the Indian Consumers found it hard to merge the purpose of Corn Flakes with their lifestyle. The most prevalent practice was boiled vegetables and hence the concept of ready to eat failed in India.Even though the first year sales were encouraging, the sales started falling from the second year. It was becoming app bent that people mainly grease ones palmsd it as a onetime novelty purchase.This study reflects the likely ways in which the post cannister be sustained as a successful one in the Indian market.Devising a Marketing plan using the SOSTAC ModelSituational Analysis using fig outStrength tall Global Market Sh atomic number 18 Kelloggs has 65% orbicular market tract concord to the audit of March 2010 conducted by KPMG, in the ready-to-eat cereal crossways and it is excessively the leading producer in this family line.Str ong injury As a brand the worth of Kelloggs is 13 billion USD at the present time, and rase in the period of strong economic crisis it is regarded as one of the fat brands in US and the European Countries. Some of the brands chthonic Kelloggs are widely accepted. Nutri-gain, Pop-tarts, Kebbler and Ego are just to name a few of them.Large Product Line In terms of the foresight and width of the product mix, Kelloggs has got a wide variety of softwared cereal flakes. It has also stated producing products in assorted categories new(prenominal) than cereal flakes such(prenominal) as choco flakes for children, and also categories such as vegan, certified halal meat, petty(a) sodium content and gluten free flakes. Kelloggs also has a healthy provender category.Continuous Research to put down greet Kelloggs invests a substantial standard on Research and development in coif to reduce cost. They unloose out also set up their manufacturing plants in South East Asian countries i n arrangement to produce at the expense of cheaper labour and to reduce cost on logistics.WeaknessHigh charge A package of 475 grams of Kelloggs corn flakes cost 130 INR which is considered to be pretty naughty from the Indian perspective. Most ho implementwives who are potential shoppers do opine that this pack stopping points for a maximum of 3 usages. This is non regarded as economical from the Indian perspective. inconsistent for Indian Lifestyle The general Indian practice was of using partial(p) milk, which was very contradictory to the American concept of using chilly milk. out-of-pocket to the usage of warm milk, the flakes became soggy. declinationlining Sales Asia represents only 2% of the Kelloggs worldwide sales. Since its opening in 1994, the countrywide sales have dropped by 25%. braggy relation with Supermarkets To be in tandem with its pricing Kelloggs should establish itself to cuckold more through the Supermarkets. However Kelloggs recently had to suffer a lot due to its bad relationship with Supermarkets. For instance Kelloggs products were moved from the shelves of Food carnival since it was prominent the retailer a much lesser permissiveness than grapey Treat which is its mystic label.OpportunityGlobalisation Due to the effect of globalisation, Indians are outright more exposed to the International Cultures. The youth in India now tries to imitate a lot of the lifestyles prevalent in U.K and U.S.A.Increasing aim of Disposable Income Being a growing economy, the income level is rising, hence if Kelloggs can switch over from cosmos a premium pricing brand to a slightly competitive pricing brand, it would be able to fire the money from Indians.Advent of Television Advertising Due to a free burning improvement in the quality of television advertising, advertisement campaigns are creating sensory faculty and interest towards a brand at a faster. A brand like Kelloggs Choco can be very popular in this way.Threats hidden Labe l Brands With A-onemarkets such as Food Bazaar, Spencer, More, etc gaining more margins on private label brands, it is becoming difficult for Kelloggs to maintain its ledge space in super markets.Local Competitors Some local and regional competitors such as Crunchy Oats are becoming stronger players due to their low pricing strategies.The Environmental Analysis Using Porters 5 ForcesCUsersstephenDesktopimages.jpgDegree 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 rich Treat. Even global players such as Nestle are giving them tough competition in products indoors the kids segment.An oligopolistic competition structure exists within the industry.electrical switch cost is negligible, and most consumers regard switching to be profitable since they get better quality product at a lesser monetary value.Growth is stagnant for the last five years whereas the Industry is expanding. bargain Power of Buyers (High)Supermarkets are constantly forcing to reduce price of products to obtain higher(prenominal)(prenominal) margins, hence consumers are more inclined towards private label brands.Switching cost is again negligible.In certain semi urban and maturation areas of the country, people still find it difficult to associate with the concept of down cereal flakes in cold milk.Bargaining Power of Suppliers (Low)The company has a central manufacturing unit in the country and about 20 other units across the world. Raw materials are sourced from the local market. Hence the supplier talk terms power is low.Threat of Substitutes (High)Other ready to eat and packaged sustenance products are more popular among Indian consumers such as Maggie Noodles. Maggie noodles are more preferred since they are served hot.There is no switching cost involved.Threat of New Entrants (High)It is difficult for competitors to develop new products in this category since they would require invest ment and time to develop.Distribution is a major concern. High slotting promotional fees, limited shelf space, and the need to create retail pull out are additions to the manufacturing cost.Capital costs are very high since panorama up production facilities and statistical dispersal chain takes into account a high upfront investment.Objective Setting at different strategic levels corporal Strategy To increase profitability by 23% worldwide by 2011Business level Strategy To gain 50% market share countrywide in India by 2011.Marketing Strategy To become the breakfast meal of 70% of the urban Indian Household by 2011. evolution StrategiesCreating a Growth Strategy using the Ansoffs MatrixCDocuments and SettingssoumyadeepMy DocumentsMy Picturesuntitled.bmpKelloggs operates in a country wherein it is an existing brand for the last five years. every products in the product line are known to consumers and a market for such products has also developed. Hence the strategy that Kelloggs should undertake in order to increase its sales is Market Penetration.Kelloggs being an established brand would not have a problem in penetrating the market and intensify magnitude its share. The risk factor would also be considerably low.In order to penetrate Kelloggs has to look at two thingsCreating a different jell for the brand through a better communication and in turn developing a new improved value proposal of marriage.Kelloggs must impinge on utilization of cost reduction in order to gain price leadership in the market. Once the product appeals to consumers they impart purchase it quick due to the low price. If the company can sell a higher volume at a lesser margin, then they can flake competition successfully.Creating a competitive strategy using Porters Generic StrategiesKelloggs being an FMCG product has to have an Industry wide strategic scope. However according to the research Kelloggs should practice a combination of Differentiation and Overall approach lea dership.Kelloggs as a brand has a large portfolio of products and each product have its own uniqueness. Hence they should continue to leverage on the distinction aspect. However a major challenge that Kelloggs faces is its premium pricing, on gaining a cost leadership, it can implement a competitive pricing. This will crystallise the brand more attractive.Tactics employed in order to discover strategic objectivesProductPack Size Since most of the products within the product mix are widely accepted across the globe, Kelloggs should not change the range of cereal flakes that it has. However in order to increase the frequence of purchase, Kelloggs can reduce the minimum pack size from 475g to 250 g so that it becomes more popular amongst young individuals who live a fast life and stay single. For such group of target customers the basket size of purchase is much small. Hence smaller size packs will attract them to a greater extent. Apart from this value packs must be issued initial ly to pick up sales. These are packs of 500 g at the price of 475g packs. furtherance Most of Kelloggs packs do not have the nutritive benefits carved on them (except for Special K). They only contain a small label cover the nutritional ingredients. Over the recent years the urban Indian population has become more diet conscious. Hence it would be advantageous to engrave the nutritive benefits on them.http//economictimes.indiatimes.com/photo.cms?msid=3190216Present packaging new packagingPriceKelloggs flakes are priced higher than competitors. Prices of three most manufactured Indian Brands are higher than most competitors. 475g of Kelloggs Corn Flakes costs Rs 130, whereas its closest competitor delivers 500g at Rs 109. Kelloggs thereof should reduce the price. In the recent company audit report from KPMG it has been found that the most highly purchased product, the Kelloggs choco is priced at Rs 125 for a 375g pack, thus making it difficult for a middle class Indian mob to ava il it. Kelloggs should labour more of this product by reducing the price. besides in order to obtain better penetration in the market Kelloggs should try and sell more through Supermarkets rather than corner market place shops. Hence Kelloggs should supply more volume at lesser margin to supermarkets and hypermarkets.PlaceInternet One of the medium through which urban customers are purchasing more of their FMCG products is the internet. The advent of online retailing, Kelloggs must try and sell more through online medium. Especially for institutional sales such as to hospitals and shoal or college hostels, where purchases are made in bulk, Kelloggs should encourage online sale of products. This will service them in reducing the time to deliver their products faster and help them to sell higher units.Also, the negotiation terms with supermarkets, hypermarkets and convenient stores should be located in a way such that Kelloggs cereal flakes occupies maximum shelf space in its par ticular product category. The main objective should be to gain maximum shelf space rather than trying to actualize more margins per unit. promotional materialThe most important element in the market mix of Kelloggs is the promotions.When Kelloggs entered India about fifteen years ago, they lacked research of the behaviour of the Indian consumers. They took no notice of the fact that Indians disliked the concept of devour cold milk, and the flakes became soggy in warm milk. Hence in order to promote the practice of the consuming normal or cold milk Kelloggs should use the television advertising media effectively. This would create a separate value proposition for the brand.For example time can be used as a parameter to create urgency for the brand. A television advertisement screening this concept will create response among customers.Idea- Showing a dwelling wherein every member is rushing for his or her work or school. In such a short time boiling milk and consuming flakes is a lengthy branch. Hence normal milk is used and it even tastes nice.The new mission statement of the brand could be Kelloggs Your Fast eatThe other forms of communication channels should be advertising hoardings, posters in super markets and magazines such as Graphiti.In order to promote kids products such as Kelloggs Choco the company can organize event promotions through various retailers and also through sponsorship of kids activities and competitions at schools.Sales promotion would also be do throughout the year through the distribution of freebies. Freebies such as a bowl can be given with a pack of 475g of Kelloggs Corn Flakes. This would be of utility in the consumption process and would in-turn increase sales. serve upDistribution is the pivotal processes that should be taken care of in achieving the objectives by and by the manufacturing process, the distribution chain should be controlled from different centers. There should be foursome regional distribution centers (R DC) at the four different zones- Delhi (North), Calcutta (East), Mumbai (West) and Bangalore (South). Each distribution center should supply in its particular zone and each distribution center should use the hub and spoke model. All four distribution centers should be interconnected to each other.The distribution model is as followsActions followed to achieve the tactical maneuverThe head office of Kelloggs is situated in Mumbai. All plan of hunt down through should be coordinated from the Mumbai head office and the decisions should effectively pass on across the distribution centers up to the store level where the product gets reach over to the end consumer.Usage of 2009 Financial Statements (Historical method) The budget is planned establish upon an analysis of the income statement of 2009. In the fiscal year 2009 as per the yearbook reports of the company the net income $1,212 million. The net cash flow in the last quarter has been $1230 million and also as per the last quar ter the liquid state cash reserves of the company is $527 millions. Hence Kelloggs Corporation can invest a high amount in the development of the Indian market in order to bring it to a growth.The total budget allocated towards merchandise activities of the Indian market is. The allocated amount is divided into five discrete divisions to carry out activities. These divisions are packaging, sponsorship, advertisement, sales promotion, event promotion and value packs.To social occasion the budget according to the activities of the organisation a GNATT action chart is used. actTimeStaffAmountJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecPackaging1Sponsorship2Advertisement3Sales Promotion4Event Promotion5Value Packs6Gaining overtop over the planControl can be gained over the process by using two different approachesPeriodic control A periodic 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 should also gain control through internal audits performed by auditors within the company. Through merchandise audits performance gaps should be identified. The extent to which the results vary from the desired targets should be mention and corrective measures should be taken accordingly.Continuous Control A continuous control should be introduced by maintenance of a Balanced notice customized specifically for stakeholders perspective of Kelloggs.