Like Coco the monkey we sing the praises of the chocolatey cereal
Kellogg Company Mission Statement Kellogg is a Global Company Committed to Building Long-Term Growth In Volume and Profit and to Enhancing its Worldwide Leadership Position by Providing Nutritious Food Products of Superior ValueW. K. Kellogg
Kelloggs Marketing Strategy and Marketing Plans
Organizational Strategiess s
Leadership in product innovation Strengthening the companys seven largest cereal markets Accelerating the growth of convenience foods business Developing a more focused organization Continuing to reduce costs
Global StrategyManagement continues global strategy s Offers brand-differentiated pricing s Invests in new product research s Brand-building marketing activities s Cost structure reductions
Product Market StrategiesProduct development
Constant innovation. Introduction of new product to present customers.
Maintain global position
Introduction of new products to fit new customers needs
Kelloggs SWOT Analysis
Control 42% of global market share for Presweeter cereal, which is more than triple the market share of any of their competitors. They have the strongest brand recognition and advertising recollection of all the cereal manufacturers
Have not aggressively developed many new cereal lines in the past four years. Slow erosion of their U.S. market share in the past few years, Follower in Pricing Strategy
International expansion is the biggest area for growth for Kelloggs. Kellogg can continue to slowly diversify , while still remaining in their core business area, which will increase their profitability. If they can develop a better pricing strategy and guarantee lower prices, they can reduce costs while increasing their market share.
General Mills, Post, and Quaker Oats are using price competition and product proliferation to erode Kelloggs share of the market. Discount imitation cereals brands have been successful in reducing premium brands in the more commodity like cereals.
Market size: sales of nearly $9.7 billion in the Ready-To-EatMarket in 2001
Product segments: the best-selling kids cereal brands--GMLucky Charms, GM Count Chocula, Post Marshmallow Alphabits, Q Marshmallow Safari, Rice Krispy.
Market share: competition is heating up in this market as flatsales and low-priced clones have eroded the market shares of Kellogg and General Mills
Market Forecasts: the kidsmarket has been growing at arate 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 kids food market was driven, to the largest extent, by gains in cereals.
Cereal Industry Volume Sales for Presweet CerealVolume Sales4.5 1.4 4.8 7.4 11.7In million
(As of 2/01)
Kellogg USA GM & Ralston Post & Nabisco Quaker Store Brands Malt O Meal Co
Marketing/promotion: Seven breakfast cereal Industry structure:
marketers allocated almost $775 million to purchases of space and time mass media in 2001.
Three food giants--Kellogg, General Mills, and Philip Morris--responsible for 70% of kids foods in 2001.
Major Trends in Cereal Industrys
New products are dominated by line extension and product promotion Increasing popularity of private labeled cereals due to high cost of branded products Higher demand for health food markets & products Health claims is becoming more prevalent; Kelloggs American Heart Association
Competitive Force AnalysisIntensity of Rivals
Four Large companies are dominant in the market Oligopoly Competition is very intense Inflated prices Growth Rate has remained Constant
Competitive Force AnalysisThreat of a SubstitutionPrivate Labels Has made substitution very significant Caused other 3 competitors to lower their prices Low switching cost (1/3 of 1,000 shoppers switched to private label) Price competition (1990s started a price war between rivals) Made the buyer more powerful
Strategic Group Mapof Competitors in the Presweeter Cereal IndustryHighPRICE/QUALITY/IMAGE
General Mills Quaker Oats
Private LabelBrand Cereals PRODUCT LINE/MANUFACTURING MIX
Private Label Quaker Oats General Foods General MillsCapn Crunch Lucky Charm
KELLOGGHoney Nut Cheerios Cocoa Krispies Other Cereals Cheerios
Honey Nut Cheerios
Honey Nut Shredded
Capn Crunch Snack Bars
Bagged ValuePriced Cereal
Fruit Cereal Bars
Cranberry Almond Crunch Rice Cakes Oatmeal Cereal Bars
Competitive Force AnalysisHigh Barriers to EntryMain barriers to entry in the breakfast cereal market are four major cost factors.Product development - easy for established manufacturers to duplicate products, new products take more money & time to develop Distribution - high slotting & promotional fees, limited shelf space, need to create retail demand, all increase costs for manufacturers
Competitive Force AnalysisHigh Barriers to Entry
Marketing - need to compete against current brands that have been established through large advertising and promotional efforts (t.v., coupon) High Capital costs - for different types of equipment and plants
Competitive Force AnalysisPower of Suppliers
Supplier does not have much power because of private labels. Similar products have allowed buyers to acquire products from private labels at a Cheaper Price. Now industry is very Sensitive to the buyer.
Cocoa Krispies Buying Criterias
Key equity drivers: chocolate taste, Coco the monkey, snap, crackle and pop Package: fun, colorful, capture childrens attention Product: very sweet, colorful and contain nutritious elements
Kelloggs Customer AnalysisWho Are the Buyers? s Parents, Older Adults How Often Do They Purchase? s Kids cereal are purchased roughly 18 times a year s 10th fastest-moving product in the supermarket Where Do they Want to Buy? s Grocery Stores responsible for 99% of cereal sales Who Are the Influencers? s Kids Who consumes the goods? s Kids under 18 Who are Kelloggs Target Market? s Kids 8-11 years old
Percent of Total Annual Spending on Presweeter Cereal(by Age Group)
75+ 65-74Age Groups
8.2 8.8 10.3 22.3 29.4 16.3Percentage
55-64 45-54 35-44 25-34
Strengthen kid consumer base Secure Kellogg cocoa bit subsegment volume share with competitive focus on GMs Cocoa Puffs and Posts Cocoa Pebbles Create a product that enhances the ultimate multi-sensory food experience by adding additional attributes that satisfy expended consumer needs Attract different target groups
COCOA Krispies Promotions
Spent roughly $15 million for ad campaign: TV, print Adds include Coco the Monkey Advertiser: Kellogg Agency (Leo Burnet) Quantity and price discounts Packaging: fun, colorful, capture children attention
Cereal Pricingfor Retail StoresFarmer Jack Kroger Target Cocoa Pebbles (General Mills) $0.25/ounce $0.25/ounce $0.15/ounce Cocoa Puffs $0.28/ounce $0.27/ounce $0.21/ounce (Post) Cocoa Krispies (Kelloggs) $0.22/ounce $0.23/ounce $0.17/ounce
Distribution PlayersRetail/Distribution: Grocery stores are responsible for the overwhelming 99%--of cereal saless
Major players :Kroger Farmer Jack Target
Minor players :Convenience stores Gas stations
Distribution ChannelsKelloggs Kelloggs Kelloggs
Computer system Wholesaler Kroger, Target, distrib. centers Retailer Retailers Distrib. In stores
Cocoa Krispies:PRODUCT LIFE CYCLE
Critique of the Plans s s s s
Have we heard of it? Can we get it? Can we afford it? Are we buying it? Is it legitimate?
Promotional issues Distribution Pricing Target market record Corporate responsibilities
Mass Advertising Direct Promotions Trade Promotions Personal Selling
TV, Cocoa the Monkey, and Snap, Crackle and Pop. Coupons In-store displays, Samples Key-account reps, Area reps, Merchandisers
Chain stores, Independent wholesalers
Sales Channel - Brand equity helps Logisticscenters or warehouses
- Finished goods warehouse /rail / truck / independent
Relationships - Conflict or harmony?
The TargetFastest Growing Foods in the American Diet : Carbonated Soft drinks Pre-Sweet Cereal Bagels Toaster Pastries Pizza
Corporate ResponsibilitiesLegal Issues - Safety, Information, Choice s Environmental - Earth Spirit Award Issues s Civic Responsibilities - Ad content standardss
- Stakeholder orientation - Public program supports
Ethical Issues - Nutritional education- More than required
Americas Top 10 R-T-E Cereals1. Frosted Flakes 2. Cheerios 3. Frosted Mini-Wheat 4. Corn Flakes 5. Rice Krispies/Cocoa Krispies 6. Honey Nut Cheerios 7. Raisin Bran 8. Fruit Loops 9. Special K 10. Corn Pops