This report is aimed at discussing and evaluating the development strategies adopted by Kellogg's in India. Kellogg's is a widespread brand operating in about 160 countries featuring its manufacturing facility in more than 16 countries to produce breakfast cereals, snack and other confectionary. Kellogg's marked its existence in the Indian market in 1994 to increase its business as it observed huge potential progress owing to India's large people and expansion in overall economy. This article will analyse the main challenges that the company is facing now in India. Further the article aims at recommending and justifying the actions that Kellogg's should take in India to maintain their market command.
The current multi-national food empire of cereals was inadvertently discovered by William Kellogg in Michigan, USA in 1870's. On Feb 19, 1906, W. K. Kellogg's officially registered the documents and integrated the Struggle Creek Toasted Corn Flakes Company which later came to be known as Kellogg's.
Kellogg's India has gone a remarkable growth from 1994 for this day. To analyse the expansion strategy of Kellogg's, various strategical theories can be utilized like Ansoff Development theory, the 4ps of marketing, Product development process, etc.
In the original stage Kellogg's moved into the Indian market in the entire year 1994 with three types of cornflakes.
Then Kellogg's improved its growth strategy by changing the presentation and product to be more attractive to the targeted consumers. The business chased through the procedure of product development and diversification. To comprehend it we have to follow the Ansoff's Matrix.
By adding ethnic flavours like coconut and mango, Kellogg's embarked on the procedure of the product development. Product development is a required development strategy and can be compared with the strategy of market penetration. Kellogg's strategy becomes far better because of the fact that the organisation not only embarked on product development with only a particular aim at heart in fact Kellogg's early access in the Indian market draws more attention towards the customer's needs.
Diversification is being exhibited by Kellogg's when it released its products like Sunrich and Cheez-it which were made focussing more on the impulse food rather than the breakfast cereals. The procedure of diversification helps an organisation to signify its brand name more widely and decrease the threat of focussing heavily on specific market. Irrespective of various attempts and strategies the merchandise of Kellogg's weren't successful.
The Marketing Combine and the 4Ps of Marketing:-
Neil Borden brought up the idea of the concept of the 4ps in 1964 (Adcock et al 2001) such as Product, Price, Place and campaign. These are broadly being employed by the several companies to consider tactical marketing decisions to build up product to meet customer's requirements, the right price, taking the product to the right place and then promote it.
1 Product:- Products means the real service or product that the company offers to its consumers. Matching to (Levitt, 1969). 'People do not buy products, they buy the expectation of benefits. It's the benefits that are the product. ' Kellogg's paid much concentrate on the products as it continually transformed its product. It launched flavour like coconut and mango in its cereal products for the Indian flavour. The company modified the packaging to attract the prospective customers. Even some of the products received the Indian titles.
2 Price:- Price provide revenue. Kellogg's has always faced problems for Price in India as Indian people couldn't afford its products. In 1994, when Kellogg's got into India the average cost of its product was INR 21 per 100gm in comparison to Mohan's INR 16. 50 per 100gm (Vasudha, 2009). Rather than offering clients small plans of its products, Kellogg's didn't do much in reducing its price.
Place:- Place indicates distribution through various medium like supermarkets, office buildings, grocery outlets etc. Kellogg's has over 200 marketers in India which includes made its syndication quite successful. While operating in India, it used to launch a fresh product every month to focus on the Indian customers.
Promotion:- This plan is used by the firms to let people know what they are providing to them with an objective to make sure they are buy and use their products. It requires commercial advertisings, sales promotion etc. Kellogg's used a lot of promotion techniques to promote its products like sponsoring university programmes, associating itself with JWT advertising agency, videos like Spiderman 2 etc. to boost its brand and sales of its products.
To understand the many Obstacles, various opportunities and risks that Kellogg's now face in India can be carried out by evaluating the exterior environment of Kellogg's. To understand it the PESTEL Evaluation, SWOT Evaluation and the PORTER'S 5 Common Pushes have been analysed.
PESTEL ANALYSIS:-
Political: - The politics challenges and risks Kellogg's is facing results from the growing ethnic issues in the disturbed regions of India like Kashmir and the other parts of it. According to the latest article of IFC and the globe Bank, India is being rated I34 in the set of 'Ease of Doing Business' 2011. Further Indian Government's insurance plan under FOREX Regulation Action (1973), which requires international spending companies to dilute their collateral holdings to 40% become a political concern to it.
Economic: - According to the CIA Factbook 2001, about 1/4th of Indian society is below poverty series. Kellogg's products are very high priced. No doubt the Indian economy is booming as one of the largest economies of the world, still people feel price reluctant to buy Kellogg's product. Further being truly a huge country, there's a huge difference in the spending power of the individuals.
Social: - Difficulty in understanding the frame of mind of different physical segment of customer's i. e. Indian customers, e. g. Indians misinterpreted how to eat cereals with chilly dairy. Instead, they used for taking it with hot milk and so make it soggy.
People choose the traditional Indian breakfast time dishes. But nonetheless people are changing their traditional way to more global cultural features owing to the factors like health advantages, 'Getting in Form' predominantly among women, increment in the knowing of convenient foods and growing matter for the scarcity of vitamins, minerals and other micronutrients especially among the kids.
Technological:- The increasing use of the internet offers a useful medium for communication. Consumers continue to be current of the global developments.
Environmental:- India is a vast country which takes a common and well setup circulation infrastructure.
SWOT Analysis:-.
Strength:- Kellogg's is a respected brand with international quality standards. Kellogg's power includes its promotional initiatives. It is the first producer with the best experience of ready to eat breakfast time cereals gives it a competitive edge on the new companies. Kellogg's has a great distribution channel that help its products to attain the mark consumers. It offers a variety of innovative, nutritional and convenience products that helps it to suit a variety of customer flavour and preferences.
WEAKNESS:- Kellogg's failed to analyse the flavour of customers culturally and biologically. E. g. Northern Indians used to eat 'Paranthas' and South Indians used to consume 'Idli/Dosa'. A total and complete Indian market research was needed before producing Kellogg's in India. Its high prices act as a weakness as most of the Indian public find it hard to manage it. It didn't succeed in repositioning itself as a convenience food company. E. g. its product 'Cheez-It' was far away from breakfast and was an impulse food, therefore a new strategy was required for it. The fluctuating oil prices, non option of good power supply hinders Kellogg's to lower its prices.
Porter's 5 Makes:
Threat of New Entrants:- Multinationals like Heinz, Nestle etc. have inserted in Indian market due to its potential progress. So risk of entrance is high.
Threat of Alternative product:- Danger is medium owing to local breakfast meals.
Rivalry:- Threat is low as there as only a few competition for Kello'ggs.
Supplier's bargaining electricity:- Low danger as suppliers have significantly more opportunity to discount in terms new organisation stepping into the market.
Buyer's bargaining vitality:- High threat as clients have an open up option to obtain other company like Heinz etc.
Recommendations and Justifications:-
On the bases of above statement following suggestions can be given to the organisation:-
Kellogg's should spotlight more on the market research and monitoring before introducing any product or executing some other activity. That is quite important as India is a huge market place with diversity in conditions of costumer's spending electric power. Kellogg's should increase its communication stations in order to addresses the huge society of India. Further one of the primary issues for Kellogg's is to find product to suit well to the Indian style. It will find products that may appeal well to the Indian masses. Kellogg's should collaborate with other small local companies of India which can result in saving its costs and adding constancy to its productions. As India is one of the flourishing economies of the world with a massive potential of progress, so Kellogg's moving to Indian market is fully justified. Its entry in the Indian market was not rather easy as it got to suffer huge loss credited to unacceptance of its products by the Indian public. Kellogg's used a whole lot of innovative strategies to stay in the Indian market. There are a lot of obstacles which Kellogs must face in India like fluctuating essential oil prices, repositioning its brand accurately, performing good market evaluation and monitoring the Indian culture, flavour and price very sensitive market.
