Kellogg’s – The Indian Experience

Objectives

How to overcome the competition?Understanding the reasons of failure in north India?Acceptance of consumer?Indian food habits ?

Kellogg’s InternationalW.K. Kellogg is the founder of Kellogg’s started in 1906, at Battle Creek Michigan

Kellogg Company is the world’s leading producer of cereal and a leading producer of convenience foods

Kellogg products are manufactured in 19 countries and marketed in more than 180 countries around the world.

Kellogg’s India

When Kellogg Company entered India, the per capita consumption of breakfast cereals was a low 10 gm p.a. against 5 kg p.a. globally.

Existing for past 15 years entered in the year 1994

Kellogg India is a 100 per cent subsidiary of Kellogg’s Company, USA, and is the largest player in the Indian breakfast cereal market.

Investment over US$ 30 million.

Market Analysis

Market size: sales of nearly 70%

Product segments: the best-selling kids’ cereal brands--Quaker Lucky Charms, Count Chocula, Post Marshmallow Alphabits, Quaker Marshmallow Safari, Rice Crispy, Kellogg’s Cornflakes & Chocoo

Market share: competition is heating up in this market as flat sales and low-priced clones have eroded the market shares of Kellogg and General Mills.

Industry structure: Three food giants--Kellogg, Quaker, Mohun’s--responsible for 70% of kid’s foods in 2008-09.

Market Forecasts: the kids' market has been growing at a rate of more than 15% a year, for the 5 to 7 years and shows no sign of slowing through the end of the decade. Growth in the overall kid’s food market was driven, to the largest extent, by gains in cereals

3 players in the Indian Market:– Kellogg’s– Quaker– Champion Oats & Gold Crunch from the Hindustan

Vegetable Oils CorporationThe breakfast cereals market has grown well from 1996 and is growing steadily Kellogg’s has been the growth-driver

Industry Analysis

Year Market Share of Kellogg's

1995 27%

1998 More than 43%

2001 More than 58%

2005 More than 69%

2009 More than 80%

Segmentation

Segmentation for Kellogg's, the segment of people who can buy Kellogg's products are from middle income groups to high income groups

Targeting

Target audience for Kellogg's is mothers and children as it is quiet convenient to serve healthy and affordable and children as the product comes with a variety of flavors and its crispy nature and different flavors are all quiet appealing.

Positioning

Positioning the product has been positioned as a healthy breakfast as it has to supplement the

usual bread and butter which is both less nutritious and butter leads to accumulation of

fat . The product is also positioned as not a niche segment product as can be afforded by the

general public easily for their daily requirements

1994– Heavily Advertised– All Ads were Brand driven– Promotion strategy was focused at encouraging the

consumer to try the product

1996 - 2002– Kellogg’s India shifted its Positioning from

nutrition to fun-filled• Rs.25 crore media-spend• Constant free sampling exercises• An on-going process of developing price volume

packages

Promotion Strategy

Today 2009

– Attempts to Indianize the Ad campaigns

– Punch line: “Jago jaise bhi, lo Kellogg’s hi”

– “Cock” Identity symbolizes the morning

association the world over

Promotion Strategy

Successful Strategy of Kellogg’s for Logistics

Manufacturing Plant at Taloja in Maharashtra

Kellogg’s Cereal brand is available in 1,00,000 outlets across the country

Kellogg’s gives a margin ofDistributors: 5%Retailers: 12%

Operations, Systems & Logistics

Kellogg’s Distribution Channels

Kellogg’s

Big BazaarD-Mart

Kellogg’s

DivisionJacob Circle

Retailers

Kellogg’s

DivisionJacob Circle

Distributor centersVile Parle

Retailers

PRICING WARFARE

Price Barrier: when Kellogg’s entered Rs. 40 cr market in 1994.Kellogg’s price was double the price of it’s sole domestic rival Mohan Meakin’s MOHUN

450 gm pack of Kellogg’s cost Rs. 63

500 gm pack of Mohun’s cost Rs. 48

Customer’s Value Perception: Family of 4 guzzling 30 g of Kellogg's cornflakes a day will end up finishing a 500 gm pack costing Rs 120 in 4 days flat. The average household would spend about Rs. 900 a month on cornflakes

PRODUCT LIFE STAGE

To Increase Consumption: Beyond Breakfast, Twice daily meal plan and afternoon

snacks

First Mover Advantage:Special K, reaching out to women as a first weight

management cereal in the country

New Market:Kellogg’s packs, offer Chocó variant as a nutritious

substitute for chips and other junk foods

Introduction Growth Maturity Decline

Time

PRODUCT LIFE CYCLE

Positioning of Kellogg’s

1994: Kellogg’s positioned itself on the health platform, highlighting the nutritional values of brand

1996: Positioning shifted from nutrition to fun-filledHealthy Breakfast for Children (Iron Shakti)

2001: Healthy Breakfast for Working people (Iron & Protein)

2004: Healthy Meal for whole family including Women (Iron, Protein & Calcium)

Cereal Industry Volume Salesfor Cereal

36.8

31.7

19.3

12.2

Volume Sales

Kellogg

Quaker

Mohun's

Champion oats

In million

Positioning Map

High Nutritional Valve

High on Taste

Special K

Cheerios

Cocoa

Raisin Bran

Corn Flakes

Fruit Loops

Low on Taste

Low Nutritional

Valve

Reasons for Failure in Since 1994

WRONG MARKETING MIX

WRONG PRICING

Prestige Price Policy.

Unable to trap the rural market.

Overlooked the competitors pricing policy and followed its own pricing policy.

WRONG PRODUCT

Product did not suite the Indian taste.

Product became soggy.

Product was not stomach filling.

More emphasis on Health Aspect.

Products not available in small retail packs.

Tried to change the Indian habits forcefully.

WRONG PLACEFocus only on premium and middle level storesDisguised Demand.

WRONG PROMOTION

Concentrated mainly on T.V. Advertisements and copied International promotions.

ROOSTER, a Kellogg mascot , missing in Indian advertisements.

No Long Term Base –Lines.

RIGHT MARKETING MIX

RIGHT PRICING

Used Glossy cardboard packaging to bring down the price substantially.

Adopted Sachet Revolution E.g.. Mazaa Series.

RIGHT PRODUCT

Launch of Chocos and Frosties.

Decided to Indianise its flavors.E.g. Elaichi, Kesar, Rose.

Addition of Iron Fortification in cereals.E.g. Iron rich Cereals for children.E.g. Special K-Kellogg’s for women.

RIGHT PROMOTION

Started Indianised Campaigns

Launched “The Kellogg breakfast week”

Tied up with Indian Dietetic Association (IDA)

Targeted schools for promotion

Product at discounted rates.

Launched chocos biscuits

RIGHT PLACE

Increased outlets from 30,000 to 40,000.

Targeted metropolitan cities.

Recommendations• Kellogg’s is associated with Breakfast

– Hence the company should take advantage of it & extend the Leverage of Mother brand (Breakfast attribute) to new brand extension

• The Brand “Kellogg’s” could be extended into related product Categories

• Different shapes of the Cereal like Animals, Stars, Flowers, Hearts, Toys (guns, cars etc.)

RecommendationsFree toys with Kellogg's for kidsBrand AmbassadorIntroduce flavors according to target AudienceUnderstand Indian food Habits. Give them anything which us ‘Sweet, Salty or Spicy’ but never give anything which is fade.Remember that square pegs don’t fit into round holesDon’t try and make consumers strangers to their culture

Presented by

Nitesh Bang 47Mithil Jain 61

Nikhil Khanvilkar 65Bharat Kothari 66

Mayur Nahar 72Divya Wadhwani 90