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Submitted by

Voice of Marketing
Jagannath University (Bangladesh)

Submitted to
Mr. Mahmudul Hasan Fouji
Department of Marketing
Jagannath University

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TABLE OF CONTENTS
Introduction

Objectives of Kellogg's

Strategy

SWOT Analysis
Checklist for Formulating and Evaluating Alternative Courses of Action

Checklist for Selecting and Implementing the Chosen Alternative

Guidelines for an Operational Approach to Case and Problems Analysis

Decision and Implementation

Conclusion

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Introduction
The Kellogg Company is the world’s leading producer of cereals. For more than
100 years, Kellogg’s has been a leader in health and nutrition through providing
consumers with a wide variety of food products. Kellogg’s market leading position
and reputation is built on its commitment to ethical business practices and its
values-based culture. Business values identify the beliefs that the company holds
to be the most important. These values then guide decision making and shape the
way the organization behaves. For Kellogg’s, these are referred to as K-Values;
Kellogg’s K-Values guide the way the company interacts with all of its
stakeholders. Stakeholders are individuals, groups and organizations that have an
interest in the decisions a company makes and the products that it produces. They
also, depending on their power, affect how businesses perform. Kellogg’s products
are manufactured in 18 countries and are sold in more than 180 countries. This
means Kellogg’s has to manage its relationships with a variety of stakeholders
around the world. The diagram identifies Kellogg’s key stakeholder groups.

Kellogg’s long-term business plans, known as strategies, focus on engaging with


its stakeholders to ensure their needs are being met. For Kellogg’s, this means
ensuring the highest ethical standards and sustainable business practices.
Kellogg’s has a Global Code of Ethics governing how it deals with stakeholders
across the world. A sustainable business is one which focuses on minimizing any
negative impact to the environment to ensure future generations can prosper.
Kellogg’s vision and core purpose outline what the company wants to achieve.
They guide the organization’s decision making processes to help meet the
expectations of its stakeholders. Kellogg’s vision, which was refreshed in 2012,
sets out the company’s main aim: ‘To enrich and delight the world through foods
and brands that matter.’ This is supported by Kellogg’s purpose of ‘Nourishing
families so that they can flourish and thrive.’ Every Kellogg’s employee, no matter
where in the world, is working towards achieving these every single day.

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Objectives of Kellogg's
Having set an aim, managers make plans which include the right actions. These
ensure that the aim is met. For an aim to be successful, it must be supported by
specific business objectives that can be measured. Each of the objectives set for
Kellogg was designed to contribute to a specified aim. Kellogg’s objectives were
to:
• encourage and support physical activity among all sectors of t he population
• use resources to sponsor activities and run physical activity focused community
programs for its consumers and the public in general
• increase the association between Kellogg and physical activity
• use the cereal packs to communicate the ‘balance’ message to consumers
• introduce food labeling that would enable consumers to make decisions about
the right balance of food
Well constructed objectives are SMART objectives. They must be:
• Specific
• Measurable
• Achievable or Agreed
• Realistic
• Time-related. Each of the objectives set by Kellogg was clear, specific and
measurable. This meant Kellogg would know whether each objective had been
achieved. The objectives were considered to be achievable and were
communicated to all staff. This made sure that all staff agreed to follow certain
actions to achieve the stated aims. The objectives were set over a realistic time-
period of three years. By setting these objectives Kellogg set a direction that
would take the business to where it wanted to be three years into the future.

Strategy
Having created an aim and set objectives, Kellogg put in place a process of
planning to develop a strategy and a series of actions. These were designed to
meet the stated aim and range of business objectives. In the area of food labeling,
Kellogg introduced the Kellogg’s GDAs to its packaging, showing the
recommended Guideline Daily Amounts. These GDAs allow consumers to
understand what amount of the recommended daily levels of nutrients is in a
serving of Kellogg’s food. Working with a group of other major manufacturers,
Kellogg introduced a new format in May 2006, with GDAs clearly identified on
brand products and packages. These GDAs have been adopted by other
manufacturers and retailers such as TESCO. For many years Kellogg has been
working to encourage people to take part in more physical activity. The company
started working with the Amateur Swimming Association (ASA) as far back as
1997, with whom it set some longer term objectives. More than twelve million
people in the UK swim regularly. Swimming is inclusive as it is something that
whole families can do together and it is also a life-long skill. The ASA tries to ensure
that ‘everyone has the opportunity to enjoy swimming as part of a healthy lifestyle’.

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As a eat body for swimming, the ASA has been a good organization for Kellogg to
work with, as its objectives match closely those of the company. Kellogg became
the main sponsor of swimming in Britain. This ensured that Kellogg’s sponsorship
reached all swimming associations so that swimmers receive the best possible
support. Kellogg sponsors the ASA Awards Scheme with more than 1.8 million
awards presented to swimmers each year. This relationship with the ASA has
helped Kellogg contribute in a recognizable way to how individuals achieve an
active healthy balanced lifestyle. This reinforces its brand position. Working with
the ASA helped Kellogg set up links with a number of other bodies and partners.
For example, Sustain is the UK’s leading sustainable transport organization.
Sustain looks at the different ways that individuals can meet their transport needs
in a way that reduces environmental impact. It is the coordinator of the National
Cycle Network. This provides more than 10,000 miles of walking and cycle routes
on traffic-free paths throughout the UK. To meet its business objective of
encouraging and supporting physical activity Kellogg is developing a promotion for
a free cyclometer which will be advertised on television in 2007. Walking is one of
the easiest ways for people to look after themselves and improve their health. To
encourage people to walk more often, Kellogg has supplied a free pedometer
through an offer on All-Bran so that individuals can measure their daily steps.
During 2006 more than 675,000 pedometers were claimed by consumers. From a
research sample of 970 consumers, around 70% said they used the pedometer to
help them walk further. Kellogg’s Corn Flakes Great Walk 2005 raised more than
£1 million pounds for charity on its way from John O'Groats, through Ireland and
on to Land's End. In 2004, 630,000 people took part in the Special K 10,000 Step
Challenge. Kellogg has also delivered a wide range of community programs over
the last 20 years. For example, the Kellogg’s Active Living Fund encourages
voluntary groups to run physical activity projects for their members. The fund helps
organizations like the St John’s Centre in Old Trafford which runs keep-fit classes,
badminton and table tennis. Since 1998 Kellogg has invested more than £500,000
to help national learning charity ContinYou to develop nationwide breakfast club
initiatives. These include start-up grants for new clubs, the breakfast Club Plus
website, the Kellogg’s National Breakfast Club Awards and the Breakfast Movers
essential guide. Breakfast clubs are important in schools because they improve
attendance and punctuality. They help to ensure that children are fed and ready to
learn when the bell goes.
Kellogg promotes breakfast via these clubs, not Kellogg’s breakfast cereals.
Together Kellogg and ContinYou have set up hundreds of breakfast clubs across
the UK, serving well over 500,000 breakfasts each year.

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SWOT Analyzing the Current Situation of Kellogg's

Strengths
1. Strong positioning is the minds of customers: Kellogg's have successfully
established themselves as a breakfast cereal brand and this has helped in the
sales of the rand. There is top of the mind recall for the brand globally.

2. Employee resource group to drive business sustainability and organizational


success: ERGs (Employee Resource Group) offer Kellogg's employee support,
networking, and development opportunities that contribute to the strength of their
business. Currently there are 8 ERGs such as HOLA (Kellogg Latino ERG),
Kapable (People with Disabilities & Supports), KAARG (Kellogg Multinational
ERG), etc.

3. Multinational presence with global manufacturing and marketing capabilities:


Kellogg's currently has manufacturing facilities in 18 countries and products are
marketed in over 180 countries.

4. Strong commitment to nutrition: Kellogg's was among the first companies to


include breakfast nutrition labeling and product information on boxes. It also has
nutrition education programs e they. They are ready and have partnered with
several health and nutrition institutes across us, Australia, Canada and Mexico.
School based initiatives UK Mission Nutrition to encourage health and fitness in
children, parents and other caregivers.

5. Effective marketing campaigns: Kellogg's have re-engineered their marketing


strategy in Asia. They have always focused on agile and hyper marketing that is
real time in order to convey that they have evolved and changed according to the
changing customer needs, Its latest Master Brand campaign focuses on re-
connecting customers with household cereal of the names and creating
advertising campaigns which emphasizes on the experience of having breakfast
rather than just the product.

6. Emphasis on sustainability: They are committed to the marketplace,


workplace, environment, community and strive to safeguard the interests of these
stakeholder. For instance, Kellogg's breakfast for batter days initiative donated
more than 900 million services of products in its first two years of operations.

7. Efficient supply chain management: It utilises lean production system, just in


time inventory management technique and effective development of technology
for efficient distribution and restocking. The company's collaboration with firms
like TDG and Kimberly Clark, for logistics and FDF, for environmental
performance, has helped the company to build long-lasting relationships to value
the end customer.

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Weaknesses
1. Lack of segregation in the product portfolio: A look at competitor firms such as
General fast Mills reveals that the product portfolio in Kellogg's do not fall into
distinct categories like new cereals, snacks, frozen foods etc rather it is an
assortment of products. This might create confusion in the minds of customers
regarding the different types of products Kellogg's has to offer.

2. Known majorly as a breakfast cereal: Even though it has a diversified product


portfolio, start customers know it as a ready-to-eat breakfast cereal brand. This
might affect the sales and new growth of other products under the brand.

3. Majority of the products in the portfolio is sold in North America only: Most of
the brands like Keebler, Frosted Mini Wheats , Pop Tarts, Chees-it are sold only
in North America.

4. R&D centers are limited to certain regions only: Lack of R&D centers in Asia
Pacific. This can limit the production of localized products and those which cater
to the needs of emerging Markets.

Opportunities
1. Venture emerging markets: Emerging markets hold a lot of potential especially
in light of the growing FDI in food processing industry as compared to other
sector. Once R&D is set up in these markets, products suitable to customers in
this segment can be produced and campaigns targeted to this segment can be
devised to gain entry into the market.

2. Expansion of product portfolio: Kellogg's can look at a product line extension


into Baking products, Yogurt, Fruits, Dough/pastries etc to cater to different target
segments.

3. Additional business models: Kellogg's can look at E-procurement, E-Logistics


E-commerce to integrate the whole value chain and to effect cost savings.

4. Rapid market growth in ready-to-eat cereal category: The global breakfast


cereals market predicted to progress from US$32.5 B in 2012 to US$43.2 B by
2019. As per recent research of the total demand for breakfast cereals from
Europe and North America was for ready to eat products, on the contrary, the
demand for hot breakfast cereals was higher in Asia By 2019, in terms of value,
the hot breakfast cereals segment is expected to account 8% of the global

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breakfast cereals market. Thus, the growing demand for both ready and hot
breakfast cereals is expected to propel the global breakfast cereals market in few
years.

Threats
1. Intense competition: Kellogg's faces competition from General Mills, Nestle.
Quaker Oats, Heinz, Pillsbury etc. Each of the competition is investing RRD to
create localized products for the customers.

2. Changing customer perceptions about breakfast and processed foods:


Customers are increasingly becoming health conscious and looking for products
with less artificial content. There is a perception amongst common that some of
Kellogg’s products are high in sugar content.

3. Food Regulations by the government: Food regulations vary country to


reforms make it complex for food industry like Kellogg’s to manufacture and
organizations in distribute products keeping in mind the various controls and
limits enforced by the governments.

Checklist for Formulating and Evaluating Alternative Courses of


Action
1.What to do to avoid negative media coverage?

2.How the taste can be good?

3.How the products can be available everywhere?

4.How the first time buyers can be converted into regular buyer?

5.How to co-operate with the taste of Indian breakfast habits?

6.Why the products are unattainable for average Indian consumers?

7.Why there is a shortage of retail packs of different size?

8.What should be the baseline lines for long term advertising?

9.Why the plan should be focused on short term?

10.How to move ahead with the ‘fun & taste’ positioning?

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Checklist for Selecting and Implementing the Chosen Alternative
1.What changes must be done with the taste?

2.Where the product should be sent to make it available everywhere?

3.How the promotion should be done to grab consumer attention?

4.How to be focused on positioning statement?

Guidelines for an Operational Approach to Case and Problems


Analysis
1.Change in taste with different flavors.

2.Products availability in everywhere at a large number of shops.

3.Raising positive media coverage through promotions.

4.Promoting according to the different region.

5.Converting first time buyers into regular buyers.

6.Implementing ‘fun-health-taste’ assumption.

7.Pricing the product considering different state of consumers.

8.Targeting mass market besides premium market.

9.Analyze both low and high expectations.

Decision and Implementation

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Below is a summary of the most focused solution for preventing those selected
problems identified above.

1. While focusing on the health aspects Kellogg's moved away from the
assumption that consumer has a priority of tasty products. They produced
healthy products but that was not so good in taste which evokes consumer
not to buy that product as they prefer taste more. If this nutritious product
will be more tasty, consumer will be interested in buying that product as
they are getting taste with nutrition. That will satisfy consumers properly.

SWOT – Strength
- experienced businesses units
- high profitability and revenue

SWOT – Weaknesses
- future profitability

SWOT – Opportunities
-global markets
- growth rates and profit-ability
-growing demand

SWOT – Threats
-increasing rates interest
- technological problem
- price changes

2. Kellogg's products were made for high expectations. For that they supply it
only in the premium and middle level retail stores. This symbolizes limited
consumer. To get huge consumer the product should be available
everywhere at a large number of shops. That will surely increase many first
time buyers. This first time buyer can be converted into first time buyers if
the consumer find it helpful and interesting.

SWOT – Strength
- Distribution
- Customer Base

SWOT – Weakness
- Cross -Channel support

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- Lack of social media marketing experience
- Churn rate

SWOT – Opportunities

- New Markets
- New Products
- Cross- selling

SWOT – Threats

- Customers reaction on price policy


- Innovative Competitive Products
- Negative feedback in social network

3. Consumer knows about the product through advertising. Due to lack of right
advertisement, Kellogg's product has a negative media coverage. This
discourages consumer to buy their product. If promotions are done in such
way that consumer find the product beneficial for their health including taste
then they will surely consume it. So accurate promotion can also make the
product wanted to the consumers.

SWOT – Strength

- Special expertise,
- reputation
- Cost

SWOT – Weakness

- Limited Service Lines


- Marketing Deficiencies

SWOT – Opportunities

- New technology
- New services

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SWOT – Threats

- New or increased competition


- Adverse demographic changes

Conclusion
 Kellogg's failure in India was a culture failure.
 Kellogg's business model was a recipe of disaster for Indian plates.
 Company's initial strategy of causing FOOd HABIT changes did them a lot
of damage.
 Kellogg's has still not found any answer for its biggest competitor HOME
COOKED FOOD.
 Though business now showing some positive growth but it is steal far
behind its global standards.
 Globalization may be an increasing trend, but regional identities, customers
and testes are distinct as over.
 "Think GLOBALY Act LOCALY"

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