KELLOGG is the world's leading producer of cereal products with total sales volume of practically $13 billion during 2008. Kellogg products are made in 19 countries and marketed in more than 180 countries across the world. Major Kellogg's products include crackers, Toaster pastries, cereal bars, fruit-flavored snacks, iced waffles and vegetarian foods (http://www. kelloggs. co. uk/ Accessed on March 03, 2011). The company famous brands include all- bran, corn flakes, keebler, pop-tarts, eggo, cheez-it, nutri-grain, grain krispies, bearnaked, morningstar farms, famous amos, special K, and frosted mini-wheats.
Mission declaration: "Kellogg is a worldwide company committed to building long-term development in quantity and profit also to improving its worldwide management position by giving nutritious foods of superior value" http://www. kelloggs. co. uk/ Accessed on March 03, 2011)
In a swiftly changing and competitive business environment, it isn't easy to forecast:
future developments in consumer tastes and preferences
Creating new products or making changes to existing brands consists of making investment decisions, in the trust of making a go back. Weighing up future returns against an investment is vital and requires an aspect of risk, because the future is never certain. Prior experience, together with general market trends information helps to predict future situations and effects. However, all business activities incorporate some aspect of risk. There is usually a website link between risk and go back. More the chance, the bigger the likely comes back (or income); however, a balance must be struck.
In making a decision to develop a fresh brand, it needs to decide how much investment to make and to forecast the probability of a successful final result. Decision makers aim to create a long-term technique to meet a variety of targets such as:
growing market share
developing a unique market position
creating consumer or brand loyalty
generating a targeted level of profit.
This case study describes a significant investment in Kellogg's 'All-Bran'. It illustrates business case for the new product and identifies the way the company's investment in new product development assists to strengthen a global brand. Later part of the essay will reflect an outline plan which recognizes resources required for the job that is materials, equipment, labour, and training and development of staff
In an uncertain world where in fact the organisation's strategy is to give attention to products and brands that are either the market head or in a strong position the company believes that focus upon main and successful products permits it to provide regular and reliable profits and rewards because of its stakeholders.
Before proceeding with the change, Kellogg carried out some detailed general market trends with consumers to discover their thoughts and feelings. There are two main approaches to market research i. e. : qualitative and quantitative.
Qualitative research involves working in depth with a relatively small number of consumers e. g. observing and hearing them talking in small groupings in which they discuss the brand, products, packaging, advertising ideas, etc. The qualitative research helped Kellogg to build up the idea of a family group of fibre brands. The advertising and promotional materials with which the consumer groups did the trick were very similar to the end special offers that Kellogg wanted to communicate.
Quantitative research included using questionnaire and study methods with a much larger test of targeted consumers to calculate the impact on sales if these changes were put into market. Kellogg's undertook market research by responding to the questions as per questionaire-1 in Appendix.
In Sept 2004, Kellogg designed to introduce a new product i. e. 'All-Bran' to make the benefits more relevant to consumers. Promotion of 'feel great' communication was featured on 8 million packs and on the 'All-Bran' website. It centered on the actual fact that high-fibre diets may help visitors to feel lighter and more vigorous as well as assisting the digestive tract. Bran which is saturated in fiber is necessary in a human's diet. It is advisable to be utilized in moderation to get the positive health it stimulates. The high bran, high fibre cereal has been designed to aid a wholesome digestive system and help people control their morning eating habits; without compromising on taste! Research confirmed that consumers see cereals as a 'natural product'. That is a strong feature. It makes it essential to feature the materials on the presentation. This is because All-Bran range is seen as part of a daily healthy diet (http://www. thetimes100. co. uk/case-study--building-brand-order-to-sustain-its-life-cycle Reached on March 03, 2011).
By setting up SMART (specific, measurable, attainable or agreed, realistic and time-related) objectives Kellogg would know whether each goal for starting 'All-Bran' have been achieved. The objectives were clear and were communicated to all staff. This made sure that all staff agreed to follow certain actions to achieve the stated goals. By arranging these aims Kellogg set a direction that could take the business to where it wanted to be 3 years in to the future.
Major aims include;
encourage and support physical exercise among all parts of the population
use resources to sponsor activities and run exercise focused community programmes because of its consumers and the public in general
increase the relationship between Kellogg and physical activity
use the cereal packs to connect the 'balance' communication to consumers
introduce food labeling that could enable consumers to make decisions about the right balance of food
It is the process of assessing each market segment and select one or more segments to go into. Premiums and gifts are excellent tools for call to mind primary trial, brand turning, and repeat purchase. Now and then company is able to target because they're financially strong and they can arrange a huge product line. People aged 55 and over will be the target markets of Kellogg's ALL BRAN. Kellogg's ALL BRAN are easily available in urban and rural areas from coast to coast. It has been targeted every section and we can say that Kellogg has a 'fragmented market'.
Market appeal factors for "All-bran" include market, size, differentiation opportunities, bargaining vitality of customers, seasonality, syndication, product development and level in product life cycle
Main factors influencing marketing of something are;
a) Economic and technical factors i. e. Investment level, Industry capacity, Technology, Obstacles to entry and leave and Access to supplies
b) Competitive i. e. competitive composition, competitive groupings, substitute products, price, and Person competitor analysis
The product life cycle is the period over which it attracts customers and can be illustrated in a series of stages exhibiting how consumer interest, and hence sales, has modified as time passes. Kellogg's All-Bran has a long and distinguished history. Like a great many other famous products, however, it is important from time to time to re-energize its life pattern. To prolong the life span cycle of your brand or product an organisation must use skilful marketing ways to inject new life into the product.
The traditional product life-cycle shows what sort of product undergoes 4 levels during its life in the market place. At each stage in the product life-cycle, there's a close marriage between sales and revenue so whenever a product goes into decline, profit decreases. Whenever a product is unveiled to the market, growth is sluggish scheduled to limited awareness. As the product is establishing itself, sales will begin to increase during the period of growth. As the merchandise reaches maturity, the company needs to inject new life into the product; either by creating brand extensions or variations otherwise the merchandise will reach maturity and commence to decline. All-Bran is standing on the maturity stage with 65% of total market share. To stay spirited in the market it requires to create time to time new offers and flavors and various promotional schemes. Processing capabilities is another key issue. If launches of new products are successful in global markets, Kellogg's must have the creation capacity to meet consumer demand as well as the source chain essential to reach those consumers.
When a business like Kellogg's is looking into a big change in its marketing it can consider four elements (http://www. thetimes100. co. uk/case-study--using-new-product-development-to-grow-a-brand Accessed on May 03, 2011) of marketing combination or 4Ps:
This is approximately meeting changing needs and desires of customers through offers. The expansion in healthier life styles creates opportunities for Kellogg's to improve the variety of products because of this segment. In case of ALL BRAN, the product is the cereal development by the company. Primary Product is cereal, for breakfast time so when a snack. Genuine product is high quality level; different tastes, flavors, product packaging and the mark K. Augmented product provides tastes and energy as well as healthy ingredients.
Pricing decision is vital because the survival of a company in the market depends upon rates decision. Costs strategy depends upon pricing objectives. The total amount a company costs for its product is important in determining sales. Super brands like Kellogg's may charge a premium as a result of strength of the brand and product quality.
Where customers can buy the merchandise is also a significant factor in identifying sales. If a brand like All-Bran is not stocked in supermarkets where most buys are made, sales will be lost.
The marketing blend activities of something planning, pricing, and circulation are performed mainly within the business or between the organization and its own marketing "partners". However, with promotional activities, the firm communicates straight with customers. Kellogg's uses above the lines promotion like Tv set advertising as well as below the collection advertising like on-pack deals and sampling. The marketplace research revealed several concerns that Kellogg needed to addresses when alerting the general public to changes in the brand family.
1. Some consumers might find the work of placing a variety of separate products under the All-Bran brand confusing. The perfect solution is was to ensure that packages clearly display both the power brand (All-Bran) and also the product name (e. g. Bran Flakes).
2. Research showed that consumers see cereals as a 'natural product'. That is a strong selling point. It creates it essential to feature the elements on the product packaging.
3. To give the campaign maximum impact, Kellogg carefully co-ordinated tv set and radio advertising, PR and in-store special offers. These inspired consumers to test and reappraise the revamped products.
A product's life routine may last just a few weeks (e. g. with a novelty, or craze) or, much like Special K, for many years. Though it was a successful product, Kellogg's recognised the opportunity to stretch the brand by investment funds that would:
extend and further develop its expansion phase and
Help to delay the onset of the maturity period.
This can be split into two wide categories;
The Micro Environment of the Kellog consists off;
The Company: has to take other communities or departments of company into account. Such as fund, research and development, purchasing, procedure, accounting department.
Suppliers: Kellogg's obtains its recycleables of wheat, corn, cocoa, rice and glucose from major suppliers throughout the world. It is a large-scale maker and stores sufficient stocks and options to meet customer requests.
Marketing Intermediaries Kellogg's does not sell its breakfast time cereals right to consumers. It uses intermediaries like wholesalers, supermarkets, traditional stores and hotels. Kellogg's has major connections in the tertiary sector. These include the major retail supermarkets such as Tesco and ASDA plus some of the low cost sector such as Makro.
Customers: The Kellogg's Company mainly targets customer market that includes people aged 55 and over and weight conscious people.
Competitors: Nestle is the only competitor of Kellogg.
The external factors which have an impact on a company's planning and performance, and are beyond its control: for example, socio-economic, legal and technical change
(http://wiki. answers. com/Q/What_is_the_macro_environment_of_Kellogg)
There are extensive environmental issues that ought to be considered to receive the broader picture of Kellogg's Company. These issues can be grouped into six categories: politics, economical, social-demographic, scientific, legal and honest. The acronym for this is a Pestle evaluation.
Political /Legal Environment: UK has a stable political environment hence, private business is encouraged, gives Kellogg an opportunity to introduce new products and increase the existing ones.
Economic Environment: Economic factors are those that affect consumer buying behavior. As this can be an era of great unhappiness, there is a change in the income of the consumer therefore the sales of Kellogg are influenced by this.
Natural Environment: The natural environment of Kellogg's involves all the natural resources that are needed as inputs by the business and are afflicted by market activities. They've placed themselves lots of focuses on to meet by 2015, and are constantly examining their progress on the way to allow them to see how they're doing. By 2015 they aim to have reduced every one of the pursuing by 15-20% per metric tonne of food produced since 2005.
Greenhouse gas emissions
Waste delivered to landfill (For waste materials to landfill, they achieved a 41. 5% decrease by 2009 and also have set themselves a fresh target of an additional 20% lowering by 2015 against a 2009 baseline. )
Socio-cultural Environment: UK has a tradition of eating cereal as a breakfast so Kellogg has got high market.
Technological Environment:: UK has good infrastructure and distribution channel which again is highly favorable for Kellogg to expand further.
"Kellogg's has utilised integrated business units and compensation incentive systems to improve the accountability of the cash expenditure and increase the functionality of the business. Products sales have been increasing in the UK as well as far away. The costs and option of the product determines the success of something. Streamlining many of the operations in recent times has helped the Kellogg increase the profit percentage. More resources could therefore be spent on the marketing and advertising campaign of products. In addition, Kellogg's also increased the quantity and consistency of promotional offers more playthings and DVD's in cereal bins, tie-ins with films and charitable donations to local schools and charities. In 2002, a fresh strategy of "Volume to Value" was presented throughout the business. "
The process of defining and subdividing a large homogenous market into plainly identifiable sections having similar needs, desires, or demand characteristics. Its aim is to design a marketing mixture that precisely complements the objectives of customers in the targeted segment.
Today Kellogg's is doing its business in Usa, China, India, Indonesia, Jordan, Lebanon, Malaysia, Maldives, UK, Qatar, Saudi Arabia, Singapore, Sri Lanka, Thailand, United Arab Emirates and Vietnam. In this particular project we are just discussing its market segmentation in United Kingdom. These are segmenting the marketplace by means of geographic, demographic, psychographic, and behavioral.
All-Bran Original is available in Australia, Somalia, USA, Canada, Colombia, UK, Italy, Mexico, France, Japan, Latin America, and South Africa
After dividing the marketplace into various segments, the Kellogg Company has to decide which segment it can serve better. So first they assessed each segments. They want the pieces of customers who share common needs and characteristics to serve. Kellogg mainly utilized undifferentiated (mass) marketing strategy because cereal will always be mass marketed. They need to conduct business on large scale so Kellogg Company is using mass marketing.
New product development process of product begins with idea generation.
Marketing Strategy Development
Concept Development &Testing
Use of interior and external resources is crucial in the launch of a fresh product.
Product development teams
Formal research and development (asked consumers through questionnaires )
Brains of its professionals, scientists, engineers, making staff and salespeople
Companies successful entrepreneurial programs (encourages employee to take into account new cereal product )
Value advancement program
Customers (through questionnaires)
Competitors (Kellogg's get hint about their new product by watching competitor's ads, evaluate the sales, and then determine).
Suppliers (let company about new ideas, techniques and materials you can use to develop new products).
a) Kellogg 'All Bran' is the one large, very high fibre brand in the market place. Private label provides the key competition.
b) Everyone remains highly aware of ALL BRAN
c) The ALL BRAN brand is strong; consumers relate it with healthy activity.
a) Awareness of the brand have been declining because of little promotional (e. g. advertising) activity lately.
b) Compared with leading brands such as Kellogg corn flakes, the average person fibre products have limited level, which makes it hard to make advertising investment monetary.
c) The preposition a fibre cereal keeps you regular is less motivating to consumers than previously. Consumers now more interested in products inner health
a) People are looking to eat more healthily
b) The speedy growth of non cereal products that meet inner health need (pro biotic drinks and yogurts)
c) In the united kingdom the number of individuals over 55(the merchandise main consumers) is constantly on the increase.
a) The sales of private brands fibre cereal keeps growing.
b) There's a consumer's trend on the tastier cereal
By creating the energy brand 'All-Bran' and providing the right type of well explored promotional support, Kellogg has had the opportunity to inject restored vigor into a family group of related products. Through appropriate promotional activities and much more relevant messages, Kellogg has re-awakened consumers' interest in products that can play an important part in developing a nutritious diet in a health-conscious world. Regular promotions of promotional activity are helpful in allowing all organizations to maintain their own life circuit and those with their brands and products. It really is start in assessing the success of the marketing activity supporting All-Bran but the indications are good.
What changes taking place in society will probably affect the merchandise?
How might new technologies impact our business?
What will tend to be the future market movements?
Where are the opportunities within the marketplace place?
What new categories would charm to the prospective market?
How significantly do consumers think the brand could expand into the market for different product categories?
39 yrs or above
2. Which income bracket do you participate in?
GBP 1000 & above
3. What's your marital position?
4. What is the make of the cereal that you usually purchase?
5. Is ALL BRAN your chosen cereal?
6. How often do you purchase cereal?
Once a week
Once a month
7. Please rank accordingly to the characteristics of most BRANS:
a) Preference b)Price c) Flavor d) Packaging
1=least preferred 5=most preferred
1 2 3 4 5
8. Do you like the ads of ALL BRAN?
9. What flavors of Kellogg do you like the most?