Marketing Management

Unit 2

Unit 2

The Marketing Process

Structure: 2.1 Introduction Learning Objectives 2.2 Marketing mix the traditional 4Ps 2.3 Modern components of the mix -additional 3Ps 2.4 Developing an effective marketing mix 2.5 Marketing Planning, Control and Implementation Marketing Planning Marketing Implementation and Control 2.6 Summary 2.7 Terminal Questions 2.8 Answers 2.9 Mini-case

2.1 Introduction
The earlier unit introduced you to the meaning of markets and marketing. In the process you were also conversant with the evolution of the term marketing. We will take it further to understand what constitutes marketing. Considering marketing as process, what are the components of this process? When you land up in a market, to buy something, you find there are many makes of the same product. You examine several of them, enquire of their prices, you may find out whether any discount or free item is available and also how you can take delivery of the product you may finally purchase. On the other hand had you been looking for a tourist services provider, you would have been interested to know what facilities it provides and whether the people involved are nice to you. In short you are considering the marketing mix of product, price, promotion and place or to go further, people and processes. Learning Objectives After studying this chapter you should be able to: Understand marketing mix Understand the implication of each component of the marketing mix. Identify how these components are being applied in the marketplace Judge the various marketing mix prevailing in the market
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2.2 Marketing mix the traditional 4 Ps

The marketing mix has been engaging the minds of practitioners and academicians alike for a very long period. The 4Ps as the mix was known has been the bulk of marketing literature for a very long period. They still occupy a major portion of any basic understanding of the subject with several modifications and extensions. From 4 the mix has become 7now. While each P can be understood individually at great depth, it can hardly exist in isolation. The 4 Ps are: The product, its price, promotion and distribution/place We shall see each of these in brief detail. 1. Product: It is a good, service, idea that is offered to a customer to satisfy his/her need. The attributes of a product are variety, quality, warranty, design, packaging, after sale-service etc. For example, Marico, a FMCG company offers hair oil in two brand names i.e. Parachute and Nihar. The brand Nihar, offered in two types of packaging i.e. Sachets and bottles and are also offered in two qualities i.e. coconut oil and perfumed hair oil. Sita Traves offer tourism packages. VLCC offers weight reduction services. Oglivy and Mather offer ideas on advertising to clients. Competing firms or enterprises making similar offer would like to differentiate the product on some basis or the other. The differentiation may be small but they could register in the mind of the consumer. Products also need to be modified over time to retain the interest of the consumer. This is where innovation comes into the picture. This is the reason why you are able to witness the various models of cell phone from the same company. Have you noticed how frequently new models are introduced in the market? A lot of work goes behind the scene before a product is brought to the market. We will come to it later. 2. Price: the value at which a marketer offers the product/service/idea to a customer. The actual price at which the exchange may take place between the offerer and the customer may be different than the initial offer. The final exchange price may be determined by the interaction between the supplier and the customer. The supplier may have determined the offer price by a mechanism of cost determination and adding a profit margin, there are several other ways by which costs are
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determined. There are professional cost accountants who do this. Their effort is also to find out ways by which costs can be reduced so that the price offered can be competitive. Sometimes the same company may offer one product at a price lower than the cost and compensate this loss by pricing another product much than the cost. You must have experienced how the Indian railways fixes the price for sleeper class as compared to the A/C; similarly the Post and Telegraph charges a low price for the post card but a higher price for the envelope. You must also have noticed that there are customers who are willing to quote their own price for paintings during an auction. For example, BSNL offers prepaid service recharge coupons in Rs. 110/-, Rs. 331/-, Rs. 551/-, etc. The Marketing Mix

Figure 2.4

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3. Place: The term place in marketing has a specific meaning. It refers to the distribution of goods from the point of production to the target customer. It may include distributors/wholesalers, stockiest/C&F agents and retailers who are together referred to as middlemen or as channel partners in modern parlance. There are others too like franchisees, branches, depots etc. A most recent version made popular by Amway is known as network marketing although a similar version was adopted by chit funds. The aspect of distribution involves logistical support like transportation, warehousing, loading unloading services etc. of the product often determines the type of logistical support. While the distribution of milk would require refrigerated vehicles, for the distribution of liquefied petroleum would require pipelines. Zenith computers uses authorized distributor to sell laptops and desktops to the target customers. 4. Promotion: Communicating product features and its benefits to target customers through different mediums is known as promotion. Advertising, personal selling, public relations, sales promotion, sponsorship are some of the promotional tools being used. How quickly are products brought to the notice of the consumer or end-user, how persistently and how the differentiations in the products are highlighted, are some of the questions that the exercise of promotion answers. Companies run promotional campaigns for a long duration which may include various components of promotion. These are designed by specialized agencies like Rediffusion, Everest, Oglivy and Mather, Thomson, etc. you would be able to recall the famous campaign by Vodafone in the electronic media where the Zoozoos were used or the popular Hutch campaign with the dog Chika or Pug and the little girl were involved. The mediums used in such campaigns are the electronic, print, outdoors, graffiti etc. For example, Bharati group promotes its cellular services (AIRTEL) through TV, Radio and news paper.

2.3 Modern Components of the Mix: Additional 3Ps

Modern authors on marketing have added few more Ps namely People, Processes and Physical evidence to the traditional 4Ps. These have assumed significance with the offering of services like hospitality, health etc
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becoming more professional and specialized. A brief introduction of each of them is given belowPeople: The front office staffs of a hotel are the most important decision making catalyst to the visitors stepping into the hotel. Similarly the staff in a wellness care center would be crucial to the customer who walks in to have a check up. For services such as these, people become the real differentiator for the marketer. No doubt that services marketing has emerged as a separate branch of study in management. Processes: Many enterprises today are process driven. The term has been commonly used for manufacturing concerns where the products would go through processes. Today we talk about quality processes, office processes, information processes and so on. Since the adoption of total quality management, marketers are not merely satisfied with quality in the final product but are deeply involved in the entire processes that an enterprise puts into practice throughout the organization. Carpet vendors in Germany were equally concerned with the processes that a carpet manufacturer would follow in the organization as much as they were particular with the quality of the carpets. The details in the processes would indicate the work behind the end product. It has become easier to work out minute details as these are monitored by computer systems and software solutions like SAP, ERP etc. In many cases the line between the process and the product is so thin that the words are being used interchangeably. Some fine examples are the e-learning programs offered by institutes, the e-library solutions like Proquest, or EBSCO. The features of these offerings are in the processes inbuilt to navigate through the software easily. Physical evidence: About a decade back, you would visit a hotel or a restaurant on word of mouth evidence and order by the menu. Today many of these eateries display photographs of their dishes on display boards. Similarly marketers are offering experiential learning on their products as a test use before a purchase decision is taken. Similarly a specifically attired attendant is the evidence of the quality of the service that may be expected from the service provider.

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2.4 Developing an effective marketing mix:

Following example shows how Big Bazaar has worked out on its marketing mix in India after doing a SWOT analysis: SWOT analysis indicates the 4 specific and crucial areas by which an organization can know its position in the market. SWOT analysis can be done by any kind of organization, dealing with any kind of products or services, at any point of time and whenever it feels the need to do so. SWOT analysis is an analysis showing the Companys a) Strengths i.e. areas where it has got advantage, its core processes, its unique or successful brands, key people etc. If the company has a good reputation in the consumer market then it becomes strength of that company. b) Weaknesses i.e. areas where the company is weak or having drawbacks and which needs to be improvised or eliminated from the existing system. If the company is feeling that its sales force has too many inefficient people then it becomes the weakness of the company. c) Opportunities i.e. areas where company can establish itself and the challenges that it can accept to its benefit as well as the consumers. Suppose a company knows that there are consumers all over the world who consume companys products then there presents opportunity of expanding its activities globally. d) Threats i.e. areas where the company feels that it might be subject to pressure situations or where it is unable to pull itself from a possible crises or the threat may simply come from competitive forces or other external factors such as Recession.

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Exhibit 1 7P Analysis of Big Bazaar 7P Marketing Mix is more useful for services industries and knowledge intensive industries. Successful marketing depends on number of key issues. The seven keys issues are explained as: Product Big Bazaar offers a wide range of products which range from apparels, food, farm products, furniture, child care, toys, etc. Products of all the major brands are available at Big Bazaar. Also, there are many in house brands promoted by Big Bazaar. Big Bazaar sold over 300,000 pairs of jeans, 50,000 DVD-players and 25,000 microwave-ovens. In all, the fashion, electronics and travel segments made up about 70% of sales. Last year, these categories made up only about 60%. Big Bazaar offers the maximum variety for each category of product and this is cited by the customers as one of the main reasons why they like shopping at the hypermarket. The product is the same in every store in the city but the brand options are more in Big Bazaar. Also, the quantity
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for each product is not limited to large packs only. Observations also revealed that local brands of popular commodities, like diapers, sugar, wheat flour garments etc, are very popular in Big Bazaar stores. These products are never advertised but offer huge margin on sales. In this way lower middle class customers are targeted well. The commodities sold by the retail chain also includes its own products which get a ready distribution network. The own products of Big Bazaar include My World fashion magazine which is not available anywhere else. So costs are low for such products. Price The tag-line is Is se sasta aur accha aur kahin nahi. They work on the model of economics of scale. There pricing objective is to get Maximum Market Share. The various techniques used at Big Bazaar are: Value Pricing (EDLP - Every Day Low Pricing): Big Bazaar promises consumers the lowest available price without coupon clipping, waiting for discount promotions, or comparison shopping. Promotional Pricing: Big Bazaar offers financing at low interest rate. The concept of psychological discounting (Rs. 99, Rs. 49, etc.) is used as promotional tool. Big Bazaar also caters on Special Event Pricing (Close to Diwali, Gudi Padva, and Durga Pooja). Differentiated Pricing: Time pricing, i.e., difference in rate based on peak and non-peak hours or days of shopping is also a pricing technique used in Indian retail, which is aggressively used by Big Bazaar. Bundling: Selling combo-packs and offering discount to customers. The combo-packs add value to customer.

Price is the critical point in a competitive industry. Big Bazaar works on a low cost model. It considers its discounted price as its USP. There is an average discount of 7-8% on all items in respect to their MRP. Prices of products are low because it is able to secure stock directly from the manufacturer. There are huge synergies in terms of bulk purchasing, central warehousing and transportation. These all factors help the retailer to keep low prices. Survey indicated that low prices were the biggest factor in customers mind while coming to Big Bazaar. It has never focused on giving great services, but laid emphasis only on low prices to attract crowd.

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Place Big Bazaar stores are located in 50 cities with 75 outlets. Big Bazaar has presence in almost all the major Indian cities. They are aggressive on their expansion plans. Place means the location of the business. Big Bazaar has always worked on low-cost locations. It targets semi-urban population with its placement. Its strategy is to find a cheap location and it never goes for hot spots in the city. The talk with the manager revealed that the Teghoria store was opened when it was scarcely populated. Even in Gurgaon, Big Bazaar chose Sahara Mall instead of Metropolitan or City Centre, which are more popular than Sahara Mall. It relied on promotional activities to make up for unattractive locations. The channel of place is company owned stores to have complete control. Another strategy used by Big Bazaar to overcome location disadvantage is use of internet. It has launched a merchandise retailing website www.futurebazaar.com which targets highend customers ready to use credit cards. Therefore Big Bazaar has made headway into a potentially high-yielding sector of online trade. Internet as place has put them in a profitable position because there is minimal expense of maintaining a website. The promotion of this website is done through advertisement on Google. Promotion Big Bazaar started many new and innovative cross-sell and up-sell strategies in Indian retail market. The various promotion techniques used at Big Bazaar include saal ke sabse saste teen din, Future Card (the cardoffers 3% discount), Shakti Card, Endorsement by M. S. Dhoni, Exchange Offer - Junk Swap Offer, Point-of-Purchase Promotions. Advertising has played a crucial role in building of the brand. Big Bazaar advertisements are seen in print media, TV, Radio (FM) and road-side bill-boards. Big Bazaar has got celebrities like Cricketer MS Dhoni and Film actress Asin to endorse its products as well. Big Bazaar has huge promotion budgets. The biggest idea behind all advertisements is to make people do bulk shopping. After talking to the store manager it was found out that there are 2 types of promotional strategies. One is the holistic advertisement which promotes the brand and creates awareness among people. It is not targeted at promoting each store but only creates an image of Big Bazaar as low-cost shopping option. The store has advertised through TV, road shows and also
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started reality show-typed promotional campaign The Big Bazaar Challenge. Promotions like Sabse Sasta Din are a very successful strategy to get footfall. Other type of promotion is the particular store oriented promotion which includes speaking on the loudspeaker in nearby blocks. Leaflets are given in local newspaper. There are promotional efforts even inside the store. During the survey, it was noticed that Buy 2 Get 1 Free type of promotions are very common. Original prices are cut down and new prices are shown, of which customer takes quick notice. There are loyalty schemes which reward the regular clients. Promotion is also done through co-branded credit cards with ICICI bank. People They are one of the key assets for any organization. The salient features of staff of Big Bazaar are: Well-trained staff - the staff employed by Big-Bazaar are well-suited for modern retail. Well-dressed staff improves the overall appearance of store. Employees are motivated to think out-of-the-box. Retail sector is in growth stage, so staff is empowered to take innovative steps. Employs close to 10,000 people and recruits nearly 500 people every month. Use of technology like scenario planning for decision making. Multiple counters for payment, staff at store to keep baggage and security guards at every gate, makes for a customer-friendly atmosphere. Process The goods dispatch and purchasing area has certain salient features which include: Multiple counters with trolleys to carry the items purchased. Proper display / posters of the place like (DAL, SOAP, etc.). Home delivery counters also started at many places. Physical Evidence It deals with the final deliverable or the display of written facts. This includes the current system and available facilities. The billing system, the storage or carry bags, the labels put across the products all display the physical evidence of the Big Bazaar products.

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For The Great Indian Middle Class It is a unit of Pantaloon Retail (India) Ltd and caters to the Great Indian Middle Class. It was started as a hypermarket format in Mumbai with approx. 50,000 sqft of space. Its values and missions are to be the best in Value Retailing by providing the cheapest prices and hence goes the tag-line Is se sasta aur achcha kahin nahin It sells variety of merchandise at affordable rates, the prices of which it claims are lowest in the city but the level of services offered is also very low. Usually the items are clubbed together for offers as on the lines of Wal-mart and Carrefour and it also offers weekend discounts. It currently operates out of 64 stores and top 15 stores register a cumulative footfall of 27 lakhs a month on an average. The retail life cycle: we can say that Big Bazaar is currently at the Growth Stage. (Source: www.managementarticles.info) Self Assessment Questions Are the following statements true or false? 1. Marketing of services is based only on the traditional 4 Ps 2. Cellophane wrapped glasses in hotel rooms are an example of physical evidence in services 3. Services are people intensive 4. Logistics includes all the physical aspects of distribution 5. The final exchange price is usually the same as the initial offer price. Activity 1: Identify the promotion mix (i.e. 7 Ps) of a fast food joint near your place and list out the features associated with each of the 7 Ps of modern Marketing.

2.5 Marketing Planning, Implementation and Control

2.5.1 Marketing planning: Though strategic plan exists in the organization but it is very essential to have functional plans to coordinate departmental activities. For example, the marketing plan guides the sales and distribution activities of the
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organization. Therefore it is essential to know what the contents of a marketing plan are. Contents of marketing plan Executive summary: Brief summary of plan, which help busy executives to go through the points very quickly. a. Analyzing the current market situation: The following factors should be answered in this section. 1. What is the intended market and market segment? 2. What is the consumer buying behavior process for particular category of products? 3. How conducive is the marketing environment to do the business? 4. Whether company got right marketing mix for intended target customer? 5. Who are major competitors and what are their marketing strategies? b. PEST analysis: In this section, the external environment of the company is analyzed to find opportunities and threats. (for detail see UNIT 3) c. Objectives and issues: This part of the marketing plan should discuss marketing objectives that company would like to achieve in particular period and issues that may affect them. d. Marketing strategy: This section should highlight on 1. Identifying the segmentation, target customer and positioning strategy 2. 4Ps of marketing 3. Planned activities: the following factors should be discussed in this section a) What are the programs that company plans to undertake? b) Who are responsible to monitor these programs? c) How much time it takes to complete the program? d) How much will it cost? e. Marketing Budget: a budget has to be prepared periodically to estimate the funds and expenses to be incurred on the marketing activities such as advertising, research, sales promotions etc. The budgets will act as a reference point when actual figures are accounted. Control: Any program implemented need to be controlled to check its performance. Hence organization should take periodic auditing by a review committee. The control process for the plan should be discussed in this section.

f.

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2.5.2 Marketing Implementation and control Marketing implementation: The process in which marketing strategies and plans are converted in to proper marketing actions to achieve the objectives. Marketing implementation depends on the following factors: 1. Organization structure 2. Organization culture Marketing control: The process of evaluating marketing performance and taking corrective actions. Marketing control involves four steps. They are a. Set specific marketing goals. b. Measure the marketing performance c. Evaluate the market performance against objectives d. Take corrective actions Marketing control is divided into two parts. They are operation control and strategic control. Operation control involves assessing the current activities against annual plan and taking corrective actions. Strategic control is used to assess whether existing strategic plans of the company meets the opportunities exist for it. Marketing audit is used as a strategic control tool. According to Philip Kotler marketing audit is comprehensive, systematic, independent and periodic examination of a companys environment, objectives, strategies and activities to determine problem areas and opportunities and to recommend a plan of action to improve the companys marketing performance. Characteristics of marketing audit: 1. Comprehensive. 2. Systematic 3. Independent 4. periodic Components of marketing audit: 1. Marketing environment audit 2. Marketing strategy audit 3. Marketing organization audit 4. Marketing systems audit 5. Marketing productivity audit. 6. Marketing function audit
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Self Assessment Questions Fill in the blanks 6. A Marketing audit is used as a __________________ tool. 7. Marketing implementation depends on _____________________. 8. PEST analysis helps to identify a companys ________________ and ___________________ 9. Segmentation, targeting and positioning is part of a _______________ 10. A marketing audit is _____________________ because it examines all aspects of a companys marketing performance.

2.6 Summary

Marketing mix or 4Ps of marketing comprises of product, place, price and promotion. The three additional Ps of marketing include people, processes and the physical evidence. SWOT Analysis is basis for organizations to determine their strengths, weaknesses, opportunities and threats. Marketing planning, implementation and control is necessary in order to estimate or determine future marketing strategies/activities, implement them and then exercise control so as to meet the marketing/company objectives. Marketing Audit is used as a strategic control tool.

List of Key Terms Marketing mix Product Price Place Promotion People Physical Evidence Processes Marketing plan PEST analysis Segmentation
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Positioning Marketing control Marketing audit

2.7 Terminal Questions

1. Briefly explain the contents of a marketing plan. 2. Identify a consumer goods company of your choice and describe its marketing mix. 3. Identify any organization in the service industry and describe its marketing mix in terms of the 3 Ps of services marketing.

2.8 Answers
Answers to Self Assessment Questions: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. F T T T F Strategic control tool Organizational structure/Organizational culture Opportunities and threats Marketing plan/Marketing strategy Comprehensive

Answers to Terminal Questions: 1. Refer 2.5.1 2. Refer 2.4.3 3. Refer 2.4

2.9 Mini-Case
The Kelloggs story At Kellogg Company, we promote eating well and healthy living. Our legacy is based on the philosophy that people can improve their health by eating a
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balanced diet and engaging in regular physical activity. Living a healthy lifestyle begins with a good understanding of nutrition. We believe in providing high-quality, nutritious food and helping educate consumers about the benefits of a healthy diet. Kelloggs has in place a global marketing code and a longstanding commitment to advertising in a responsible manner. This means:

We dont encourage over-consumption of our foods when consumers take part in promotions. We always present Kelloggs breakfast cereals as part of a balanced breakfast. We run balanced promotional calendars featuring a good mix of fun, education and wellbeing based activities. Two of our most successful promotions involved offering consumer pedometers. (Pedometer is a small device that records/counts the no. of steps a person takes)

The Kelloggs story starts way back in Battle Creek Sanatorium, Michigan USA, in the 1870s. Set up by brothers Will Keith Kellogg and Dr John Harvey Kellogg, it was founded on a deep belief that you are what you eat Oh, and plenty of fresh air, exercise and a strict ban on caffeine, alcohol, tobacco and meat. In 1876, in pursuit of a breakfast food that was at once wholesome and halfway pleasant to eat (a rarity in those days); Dr John had a Eureka moment! While experimenting with different ways to cook and crush wheat to make it more palatable without losing its goodness, he inadvertently ran a batch of cooked wheat through the rollers that had been standing around for a day or so. And out of the other side came Kellogg's Corn Flakes! (Or at least, a prototype version) Testing their new discovery on their patients confirmed that here indeed was the delicious, nutritious breakfast the brothers had been seeking. When orders starting coming for the new flakes from former patients, they knew they were onto a good thing and set up a separate company to manufacture their cereal under the name Sanitas.
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But it wasnt until 1898 that Kellogg's Corn Flakes as we know them appeared, and in 1902 Will Keith made the momentous decision to leave the San and set up full time in cereal production. In 1906, W.K. decided to risk a portion of his hard earned capital on his first advertising campaign, with spectacular results. Among many innovations W.K. made that were later to be accepted wholesale by the food industry was an insistence on consistency and quality control. Not just that, he also led a relentless campaign for improvement and innovation in his products. Drawing on previous experience as a nutritionist, he printed healthy eating advice on his packs as well as recipe ideas and product information. Seems nothing out of the ordinary now, but in its day it was revolutionary. Going one step further in 1923, he hired a full time home economist to develop recipes and spread the word about healthy eating to consumers and schools - the start of a company tradition of providing the latest information about diet, nutrition and health that persists to this today. By 1930, almost 60 years after his initial, accidental discovery that led to Kellogg's Corn Flakes, W.K. decided it was time to put something back and set up the W.K. Kellogg Foundation. Dedicated to the principle of guidance and self-help, the foundation is still going strong today. In fact, it is one of the worlds largest philanthropic institutions, funding projects in health, education, agriculture, leadership and youth worldwide. Kelloggs in Indian market: Kelloggs came to India with the promise that it will change the breakfast habits of Indians. Till then, regional staples were the norm at the Indian breakfast table paranthas in the North, idli or dosa in the South, for example. People would give up all the greasy and fatty stuff and eat healthy cornflakes, Kelloggs had thought. It saw no reason why its global success could not be replicated in India, especially with the growing awareness amongst its large middle-class population.

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Over the years, it would seem Kelloggs has covered all its flanks. It has products in three distinct segments. There is the kids category with products like Chocos, Chocos Duet, Planet and Stars and Fruit Loops. Next is the all-family segment which includes corn flakes and its six variants. And finally, up the chronological ladder in the adult space are products like Special K (for weight loss), wheat flakes, Extra muesli and oats. The market for breakfast cereals is growing at a fast clip 30 per cent per annum. But Kelloggs is outgrowing it. Its share of the market stands at 48 per cent. Perfect? Too small, too many Not really. There is a fly in the ointment. The market for breakfast cereals is still very small. While the packaged food market is valued at Rs 33,234 crore, the organised breakfast cereal market is just Rs 250 crore. The unorganised breakfast market, says Technopak Advisors Vice-president (food and agriculture) Sanjay Sethi, is far bigger than the organised one. Milk and fruit are the preferred choice. The import is clear: Kelloggs will have to work really hard to grow the market. That the breakfast market holds great potential is beyond doubt. The clearest indication is the growing interest of multinational food companies. PepsiCo has already entered with its bestseller brand, Quaker Oates. Heinz India, which has a hugely strong bond with households because of its Complan health drinks, too has joined the bandwagon. Even a value-for-money fast-food chain like McDonalds wants a share of the pie. According to McDonalds, more and more people are grabbing a quick bite on their way to work. A study carried out by the company threw up some interesting numbers: 18 per cent people in cities prefer eating out of home because of the convenience and variety it offers. Further details reveal that out-of-home breakfast in Mumbai is high during the whole week and in Delhi it peaks during weekends. So, it is carrying out pilots of its breakfast menu across locations in Mumbai and Delhi. The initial response, claims the company, are encouraging. Clearly, it is not an easy market for Kelloggs. So, it has decided to take the food safety and nutrition plank for growth. A cue that it perhaps took from its 1999 success story with Iron Shakti, which aimed to address iron deficiencies in children and boosted sales by 17 per cent.
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New initiatives The Company recently conducted a study of breakfast habits on more than 1,000 people in Mumbai. The revelations were startling: One in three people does not eat breakfast, young girls skip breakfast regularly (probably linked to weight-control issues) and many children go to school without breakfast or inadequate breakfast resulting in nutritional inadequacy. Communicating this idea, Kelloggs hopes, will do the trick. Its important for us because we are in the breakfast space and our food provides the micronutrients that are deficient and thats the message we are going to send out to consumers, says Kelloggs India Managing Director Anupam Dutta. The new initiative therefore doesnt require rolling out new products. All Kelloggs cereals are fortified with essential vitamins and minerals according to the daily requirements of nutrients for Indians and therefore are excellent breakfast choices, adds Dutta. Not surprisingly, even its communication has begun to highlight this with ads emphasising better cognitive performance and academic performance. Sethi of Technopak Advisors views this positively: Consumers are getting more health conscious and there is an emerging market for cereals. Going forward, even packed forms of breakfast will gain prominence as people dont have the time in the morning. The problem for Dutta is that rivals are likely to take the same route. Heinz India in March launched its first breakfast cereal, Complan Nutri Bowl Muesli. Health and wellness is a significant emerging trend and that is our rationale for entering this segment. Breakfast time offers a huge opportunity as the health-conscious consumer is looking for something healthy and convenient, says Heinz India General Manager (new business) Sundip Shah. Flavours and pricing Breakfast cereal players may have a healthy strategy backing them, but their battle with the palate rages on. Experts feel that Indians find it hard to move away from their quintessential hot, cooked meals. During its launch, Kelloggs emphasised on the crispiness of its flakes without considering Indians aversion to cold milk. When mixed with hot milk, Kelloggs corn flakes were no different from local brands, while they were priced far above.

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To tackle that, the company bet big on flavours. So, when the chocolatecovered flakes, Chocos, became a huge success, the company was quick to follow it up with ethnic flavours like coconut, mango and so on. In October 2008, Kelloggs Extra muesli was launched in four different variants extra nut delight, extra fruit magic, extra crunchy fruit and nut and extra tropical bonanza. Dutta feels variety is a key need of the Indian consumers and flavours are the best way to provide that. The company experiments mainly with fruit tastes like mango, strawberry, banana and universally favourite flavours like honey. Kelloggs got it right when it started launching flavours, Sethi points out. People have begun to take a shine to our products, smiles Dutta. Quick on the uptake, however, is Heinz which has also come out with three variants of its cereal: Mixed fruit, crunchy and crunchy with saffron. Kelloggs may have made the right moves with flavours and variants. What has played spoilsport is its premium pricing. For instance, 250 grams of Kelloggs cornflakes is priced at Rs 75 while Mohan Meakins 200 grams is Rs-32 lighter on the purse. With heavy down trading visible across all consumable categories, this could hurt the company in the current scenario. Dutta on his part counters that Kelloggs has not taken a price increase in any of its products since 2005. This is despite significant increase in all input costs and inflationary pressure. We have so far absorbed the cost increase and delivered the benefit to the consumer, he says. Alternatively, its Kpak initiative offers a range of Kelloggs products at Rs 10. Health and convenience are the two things we offer. As long as consumers have these two things in mind, well be a part of their breakfast choice, Dutta says. (Source: Company information; The Times100 companies) After reading the above case, a very young marketing analyst is keen to identify 7 Ps of Kelloggs and the ways in which Kelloggs has replaced the traditional breakfast in a typical Indian family household. He is also aware that Kelloggs faced a big challenge in the Indian market. Help the young marketing analyst and what according to you are the challenges faced by Kelloggs in India?

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