A Case Study

BY: NATHANIEL LEPASANA

RAPH BALANOBA
Who and What is Kellogg's?
• Began by the Kellogg brothers in 1906
– who originally ran a sanatorium in Michigan, USA
– experimented with different ways to cook cereals
without losing the goodness
• World’s leading breakfast cereal manufacturer
– Since 1938 it has opened manufacturing plants in:
• UK, Canada, Australia, Latin America and Asia
• manufactures in 19 countries and sells in more than 160
countries
• Wide range of cereal products:
– Kellogg’s Corn Flakes, Rice Krispies, Special K, Fruit n’ Fibre,
as well as the Nutri-Grain cereal bars.
KELLOG’S Company Profile:

• Founded :1906 BY “WILL and KEITH KELLOGG”

• Country: U.S.
• Had manufacturing products in 19 countries
• Marketed its products in more than 160 countries.
• Turnover in 1990-00 was $7billion.
• It is the world’s leading producer of cereal &
leading producer of convenience foods in which
includes cookies, crackers, toster, pastries, cereal
bars, fruit flavor, snacks, frozen waffles &
vegetarian foods
VIEW POINT

• The case analyzed in the view Kellogg’s

Brothers a Cornflake Company began in 1906
who originally ran a sanatorium in Michigan,
USA.
TIME CONTEXT
• In the year 1995 kellogg requires the necessary
Plan action that suit existing political and
economic environments.
STATEMENT OF THE PROBLEM
Primary Problem
• The Causes, ‘Kellogg’s Indian Experience’ that led to the
failure of the Kellogg breakfast cereal brand in the Indian
market at its initial period of launch.
Secondary Problem
• There were complaints that the products were not available
in many cities.
• The case also examines the measures that the company
has adopted on the marketing front to rectify its mistakes
and highlight the efficacy of these measures.
STATEMENT OF OBJECTIVES
• • To analyzes the causes that led to the
failure of the Kellogg breakfast cereal brand in
the Indian market at its initial period of launch.

• • To examine the measures that the company

has adopted on the marketing front to rectify its
mistakes and highlight the efficacy of these
measures.
AREAS OF CONSIDERATION
SWOT ANALYSIS
Strengths
Corporate Social Responsibility
Environmentally aware
Computerised warehousing
The general public remains highly aware of All-Brand
The only large very high fibre brand in the marketplace

Weaknesses
Awareness of the brand is declining
The fibre products have limited scale, making it hard to
make advertising investment economic
The position that a fibre cereal keeps you regular is less
motivating to consumers than in the past.
Consumers now more interested in products that
promote “inner health”
AREAS OF CONSIDERATION
SWOT ANALYSIS
• Opportunities
• People are looking to eat more healthy
• The rapid growth of non-cereal products that meet inner health needs
• In the UK, the number of people over the age of 55 continues to
increase
• Baby-boomer market
• Internet Advertizing
• Threats
• The sales of private labels fibre cereals are growing
• There is a consumer trend towards tastier cereal
• General Mills
• Kraft
– Generates triple the revenues that General Mills and Kellogg produce
– Leading segment is snacks which accounts for about $10 billion in
revenue
Affecting Factors
Taste

Positioning

Pricing

Distribution
Taste FACTOR
 The Great Indian Breakfast Habit.
 An average Indian family consume milk,
biscuits, bread, butter or local home
made food(idlis, parathas etc).
 Boiled Kellogg's Soggy & Bad
Milk Flakes Test Food
Positioning FACTOR
• Initially Kellogg's have positioned their
product as a health product which was a
fundamental departure from the
successful ‘fun and taste’ adopted in the
US.
• This positioning had given the brand a
‘health product’ image instead of the fun
and health product.
Pricing FACTOR

• High pricing in Indian market.

• Premium Brand Image.

• Dollar-to-Rupee pricing.
Distribution FACTOR
• Focus only on the premium and
middle-level retail stores.

• Companies Mind-Set about Service.

Affecting Factors:

• Taste FACTOR: The Great Indian Breakfast Habit. An average Indian

family consume milk, biscuits, bread, butter or local home made food( idlis
, parathas etc). Boiled Kellogg's Soggy & Bad Milk Flakes Test Food

• Positioning FACTOR: Initially Kellogg's have positioned their product as a

health product which was a fundamental departure from the successful
‘fun and taste’ adopted in the US. This positioning had given the brand a
‘health product’ image instead of the fun and health product.

• Pricing FACTOR: High pricing in Indian market. Premium Brand Image.

Dollar-to-Rupee pricing.

• Distribution FACTOR: Focus only on the premium and middle-level retail

stores. Companies Mind-Set about Service.
Reasons for failure

• Positioning – positioned it as health product

• Over confidence and ignorance of cultural
aspects
• Non understanding of Indian consumer
behavior and habits
• Premium Pricing policy
• Banked heavily on crispy flakes
The mistakes
• Kelloggs banked heavily on the quality.
• Indian fooding habits.
• Breakfast eating habbits.
• Selection of wrong platform(grain based food).
• “Health product” image.
• Premium pricing.
• Focus on premium and middle level retail stores.

Brand culture failures: Kellogg’s in India

• Not taking any market research before interring in the Indian market.
• Poor advertising.
• Popular brand myths.
• Underestimate local competitors.
• products are bought, not sold.
• Poor entry strategy
• India is a different market from other.
• Some other company also do the same thinks in India:-Coca-Cola, Whirlpool, MTV,
Domino’s Pizza, Citibank , Mercedes-Benz.
• blinded by figures.
• Western product attempting to appeal to Indian test.
CORRECTING ITS MISTAKES
• In order to forge ahead, Kellogg decided to launch two of its highly successful brands-
Chocos (September,1996) and Frosties (April,1997) in India.
• These brands were very successful and sales picked up significantly.
• Brands were even consumed as snacks and led to the launch of Chocó's Breakfast
Cereal Biscuits.
• The success of Chocos and Frosties led to the total Indianisation of the Company’s
flavours in future which resulted in the launch of Mazza series in August,1998 in three
local flavors Mango Elaichi, Coconut Kesar and Rose after one year extensive research
to study consumer patterns in India.
• Kelloggs was able to reduce prices by reducing its cost of production.For example Mazza
was not positioned in the premium segment.
• The glossy cardboard packaging was replaced by poaches which helped in reducing the
price.
• Furthermore,Kelloggs saw advertising as a vital tool in promoting its brand .
• This made it attempt to indianise its campaign instead of simply copying its international
promotions.
• One of the adverts depicted a cross section of individuals from a yoga instructor to a
kathakali dancer attributing their morning energy and fitness to Kellogg.
• In 1995,Kellogg had 30000 outlets which was increased to 40000 outlets by 1998.
SETTING THINGS RIGHT:

• INDIANISATION Launching of Chocos (September 1996) Frosties (April

1997) Mazza (August 1998) Mango Elaichi Coconut Kesar Rose

• Pricing: pricing Reduced the price by reducing its Cost of Production.

Mazza series was not positioned in the premium segment of the market.
Introduction of poaches.

• Promotion: promotion Food promoted as ‘fun and taste’. Indianise its

campaign. Rooster was missing. The advertisement also suggested that
cornflakes could be taken with curd, honey and banana.

• Distribution: Distribution The kellogg's Breakfast Week. In 1995, Kellogg's

had 30,000 outlets which was increased to around 40,000 outlets by 1998.
STRATEGY FORMULATION
Major steps taken to achieve success
• Prices reduction
• Kellogg’s increase the retail packs of different
sizes to cater the needs of different consumers
group
• Kellogg’s repositioned the product as tasty
nutritious food
• Products were not positioned in premium
categories
• Indianising the products
• Free samples in schools and to housewives
Corporate Strategy
• Grow Cereal
• Expand Snacks
• Sustainable Growth
• Manage for Cash
• Realistic Targets
Business Strategy
• to grow the cereal business – there are now 40
different cereals
• to expand the snack business – by diversifying
into convenience foods
• to engage in specific growth opportunities
Marketing Mix
• Product: they manufactures the right products
based on research into consumer needs

• Price: their focus on cost effective systems

ensures its prices are competitive

• Place: they manage the distribution channels to

place its products in stores

• Promotion: they work with retailers to improve

promotion of its products
Recommendations
• Recruit more Baby-Boomers because their
market is growing and they are the most health
conscious and wealthiest generation
• Increase their advertising towards Generation
Z to establish customer loyalty
• Expand their snack catalogue so it is
marketable to all age groups with all kinds of
concerns and preferences
Indianisation

Pricing

Promotion

Distribution
 Launching of
 Chocos(September 1996)
 Frosties(April 1997)
 Mazza(August 1998)
 Mango Elaichi
 Coconut Kesar
 Rose
Reduced the price by reducing
its Cost of Production.
Mazza series was not positioned
in the premium segment of the
market.
Introduction of poaches.
Food promoted as ‘fun and
taste’.
Indianise its campaign.
Rooster was missing.
The advertisement also
suggested that cornflakes could
be taken with curd, honey and
banana.
The kellogg's Breakfast Week.

In1995, Kellogg's had 30,000

outlets which was increased to
around 40,000 outlets by 1998.
By 2000, market size was 650
million & share had increased to
65%.

In 2000, it launched many new

brands including Crispix banana,
Crispix chocos, Froot loops,
Cocoa frosties, Honey crunch.
 Understand
the
Culture.

Global to
Local
Strategy.

Market Analyzing.
The supply chain
 Covers three sectors of industry – primary
(raw materials), secondary (manufacturing)
and tertiary (services)
 Businesses aim to eliminate waste in the
supply chain e.g. reducing carbon emissions,
use of energy and water, improving
packaging
 Kellogg’s is not active in the primary sector
but uses raw materials, eg corn, wheat, sugar
The supply chain - secondary
 Kellogg’s specialises in the manufacturing
area and uses partners for other activities
e.g. transport, with Service Level Agreements
 Its R&D programmes develop new recipes
 It locates manufacturing plants near to its
distribution partners for efficiency
The supply chain - tertiary
 Tertiary includes retailers or service
companies (eg IT)
 Kellogg’s relies on relationships with retailers
to reach consumers, eg developing new
displays for easier promotion of its products
 Stock storage and transportation link the
three sectors of industry
 Kellogg’s shares transportation to reduce
costs and improve energy use
Managing the supply chain
 The marketing mix provides focus for
managing the supply chain
 Kellogg’s manufactures the right products based
on research
 Controls production costs to keep prices
competitive
 Its partners manage the distribution and placing
of products
 It works with retailers to improve promotion of its
products and reduce the cost of stock holdings
SWOT Analysis
• Strengths
– Corporate Social Responsibility
– Environmentally aware
– Computerised warehousing
– The general public remains highly aware of All-
Brand
– The only large very high fibre brand in the
marketplace
SWOT Analysis
• Weaknesses
– Awareness of the brand is declining
– The fibre products have limited scale, making it hard
to make advertising investment economic
– The position that a fibre cereal keeps you regular is
less motivating to consumers than in the past.
Consumers now more interested in products that
promote “inner health”
SWOT Analysis
• Opportunities
– People are looking to eat more healthy
– The rapid growth of non-cereal products that meet
inner health needs
– In the UK, the number of people over the age of 55
continues to increase
– Baby-boomer market
– Internet Advertizing
SWOT Analysis
• Threats
– The sales of private labels fibre cereals are growing
– There is a consumer trend towards tastier cereal
– General Mills
– Kraft
• Generates triple the revenues that General Mills and
Kellogg produce
• Leading segment is snacks which accounts for about $10
billion in revenue
In the words of Denis Avronsart, M.D. kellogg India” our only rivals are
traditional Indian foods like idlis and vadas.

Its entrance & failure….

A multi national company.
Investment in India.
High profile launch backed by hectic media activity.
Improper distribution channel.
Lack of regular buyers.
The mistakes
Kelloggs banked heavily on the quality.
Indian fooding habits.
Breakfast eating habbits.
 Selection of wrong platform(grain based food).
 “Health product” image.
 Premium pricing.
 Focus on premium and middle level retail stores.
Setting things right
 Launch of highly successful brands- Chocos and Frosties
 Indianising its flavors.
 Bringing down the price.
 Retail packs of various size.
 Non impressive advertising.
 emphasis on Iron fortification.
 Target on schools
 Penetration into the market.
 Nutritious diet.
 launch of chocos biscuit.
 Maintained the image of premium brand.
 Quality
 Eating habits
 Positioning
 Low demand due to premium pricing
 Launched the products without doing
research.
 Be the best in at least one thing.
 Don’t mix your message.
 If a product is good, it will succeed. This is
blatantly untrue.
 Replace packaging by pouches.
 Raise awareness about nutritions