Product Report on Nutri-Grain

Individual Assignment 325-640 Marketing Management

Mohamad Zaky Ihsan Fadhil (217700)

Table of ContentsIntroduction of the product............................................................................................................................3

Company Analysis...............................................................................................................................................3

Competitor Analysis...........................................................................................................................................4

Customer Analysis..............................................................................................................................................7

Customer value creation..................................................................................................................................8

Quality:................................................................................................................................................................8

Marketing:......................................................................................................................................................... 9

Promotion..........................................................................................................................................................9

Post purchase...................................................................................................................................................9

Target Marketing.................................................................................................................................................9

Segmentation.................................................................................................................................................10

Market Targeting.........................................................................................................................................11

Market Positioning......................................................................................................................................12

Marketing Mix....................................................................................................................................................13

1. Product........................................................................................................................................................13

2. Promotion..................................................................................................................................................13

Target Audience......................................................................................................................................14

Response Sought.....................................................................................................................................14

Message.......................................................................................................................................................14

Content........................................................................................................................................................14

Media............................................................................................................................................................14

3. Price..............................................................................................................................................................15

4. Place..............................................................................................................................................................16

SWOT ANALYSIS...............................................................................................................................................17

Strengths......................................................................................................................................................... 17

Weakness........................................................................................................................................................ 17

Opportunities................................................................................................................................................18

Threats............................................................................................................................................................. 18

Conclusion........................................................................................................................................................... 18

Reference List.....................................................................................................................................................19

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Introduction of the productNutri-grain is one of the leading breakfast cereals from the Kellogg’s Australia. It

is targeted at growing boys and young men who need protein, iron and calcium

for growth and muscle development. Nutri-grain was marketed to portray the

symbol of ‘iron man’, with the iron man being someone who is strong, athletic

and at the prime of their physical being. It claims that it is one of the highest

protein level breakfast cereals on the market and also a good source of iron,

calcium & B-group vitamins (Nutri-grain, 2010).

Company AnalysisThe manufacturer of the cereal is Kellogg’s Australia Holding Pty Ltd, the

Australian subsidiary of the Kellogg Company from the United States. Kellogg’s

opened its operations in Australia in 1924. Cereals are manufactured in Botany,

NSW and snack products in Charmhaven, NSW (IBISWorld, 2009).

Kellogg’s is considered to be a reputable brand mainly because it has been long

established in the cereal and snack food market, since its inception in1894

(Kelloggs, 2010). Today it is the largest ready-to-eat cereal manufacturer in the

world operating in 19 countries and marketed to over 180 countries (IBISWorld,

2009). The company’s portfolio brands include Frosted Flakes, All Bran, Coco

Pops, Froot Loops, Special K, etc.

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Graph 1

Both Australia and New Zealand have one of the highest consumptions of ready-

to-eat cereals per capita in the world; only the Republic of Ireland and the UK

have higher consumption levels (Falci, 2006). Graph 1 above shows in Australia

Kellogg’s holds a 17.5% share of the cereal & baking mix industry, compared to

its major competitors, Australian Health & Nutrition Association Limited

(Sanitarium) and Nestle (Uncle Toby’s), which holds a market share of 7.2% and

5.2% respectfully.

Competitor AnalysisCereal brands from Kellogg’s competitors (Uncle Toby’s and Sanitarium) that are

in direct competition to Nutri-grain cereal include, Uncle Toby’s Plus range,

Sanitarium’s Weet-Bix and Nestle’s Milo Energy cereal. These brands are

considered to be direct competitors because they also attempt to fulfill the needs

and wants of Nutri-grain’s target market. The target market is athletic boys and

young men who require breakfast food that will support them throughout their

daily sport activities. Table 1 in the next page attempts to compare Nutri-grain

against its direct competitors.

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Major Players (CerealFood & Baking Mix Manufacturing)

Kellogg Australia Holdings Pty Ltd (17.5%)General Mill Holding (Aus-tralia) Pty Ltd (7.6%)Australian Health & Nutrition Association Limited (7.2%)Nestle Australia (5.2%)Other (62.5%)

Table 1 competitors

Components Nutri-Grain Uncle Toby’s Lift Sanitarium’s WeetBix

Milo Energy Cereal

Price (Au$) $4.98 $4.99 $4.19 $4.98Variety Nutri-grain Sports Lift,

Protein LiftMulti-grain, Kids, Oats & Barley, etc.

Milo Energy Cereal, Milo Duo

Place Mid-Shelf Mid-Shelf Lower Mid-Shelf Lower Shelf

Weight (grams) 345 gr 460 gr 750 gr 350 gr

Stock (availability)

Always available Always available Always available Always available

Value Proposition ‘iron man food, for growing boys who need protein, iron and calcium for growth and muscle development’

‘has real plump fruit, nuts and nutritious wholegrains..Put a REAL Plus in your morning’

‘Australia’s favourite cereal for over 40 years’; ‘the breakfast of champions’’

‘always deliver that great taste of Milo…and b/c it’s made w/ wholegrain & fibre it delivers great nutrition too

Attributes - High level of protein, iron & calcium from corn, oat & wheat.- uses iron-man symbol-brown (iron) packaging color

- ‘high level of protein, iron & B-group vitamins’- ‘rich source of iron essential for carrying oxygen to energise active bodies’

- 97% wheat, rich source of fibre- very low in salt & sugar

- includes wholegrain, 10 vitamins & minerals (E, C, B-group vitamins, iron, zinc & calcium)

Promotion - Iron-man series-official sponsor of NRL

- swim survive stay alive campaign- celebrity endorsers include Grant Hackett & Emily Seebohm

- Weet-bix kids try-athlon- official sponsors of the Socceroos

- Milo Summer of Cricket- Milo in 2 Cricket- celebrity endorser s include Adam Gilchrist, Michael Clark

Uncle Toby’s Plus cereal brand emphasizes on the cereal’s various natural

ingredients, which includes dried fruits such as berries, apples and apricots, oats,

nuts and grains. This is shown by displaying a clear and appealing picture of the

cereal in a bowl on its package.

Meanwhile, Weet-bix from Sanitarium prides itself in being Australia’s favourite

cereal for over 40 years and calls itself the ‘breakfast of champions’ (Weet-bix,

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2010). It is the official breakfast cereal for the Australian soccer team

(Socceroos), its latest TV commercial features Tim Cahill. Weet-bix also

highlights the fact that its main ingredient is wholegrain wheat (97%), naturally

high in fibre and contains very low level in salt and sugar; 0.29% & 3.3%

respectively (Weet-bix, 2010).

Milo on the other hand promotes the message of tasting great as well as being

nutritional. It relies on the great taste of its original product, Milo, which is

popularly known by kids as a delicious energy milk drink. It also offers Milo Duo

cereal, which adds an extra source of calcium to the cereal.

Additional promotion effort done by each company is organizing annual sporting

events targeted to its segment market. Nutri-grain has its Iron-man series;

similarly Weet-bix sponsors the Weet-Bix kids Try-athlon for kids aged 7-12.

Uncle Toby’s and Milo have also used celebrity athlete endorsers to promote

their products which include members of the Australian Olympic swimming

team and the National Cricket team.

Indirect competition comes in the form of substitutions; with today's busy

lifestyle, some people can’t find time to eat a bowl of breakfast cereal, thus

companies has responded by producing breakfast bars and breakfast drinks

which can be consumed on the go (GoGrains, 2001). In this case Nutri-grain

provides a great energy meal to start the day, other products that can also

provide this include breakfast bars, traditional breakfast such as sausage, bacon

and eggs, as well as hot cereals (porridge/oats meals) and breakfast drinks.

Kellogg’s as well as its competitors offers these substitutes in the market. For

example Kellogg’s and Nestle offer breakfast bars under the same brand as its

cereal products (Nutri-grain bars & Milo Energy Snack bars) whereas Uncle

Toby’s has its Ot’s and Muesli Bars; meanwhile Up & Go from Sanitarium

provides breakfast drinks. Thus these products do not directly take away the

company’s perspective market share; an exception would be traditional

breakfast meals and hot cereals

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Customer AnalysisCustomer analysis involves the process of distinguishing current and potential

consumers, identifying their characteristics, defining the consumers’ buying

roles and evaluating the buying decision process.

Consumer markets are ‘all the individuals and households who buy or acquire

goods and services for personal consumption’ (Kotler et al., 2009). For Nutri-

grain the end-consumers mostly consist of growing boys aged between 12 and

16 as well as young man aged between 18 and 24. Girls and young women can

also be consumers of the product (the iron-man series is also opened to young

women) but at the moment Nutri-grain’s main focus target market is still for

boys/young men.

The personality of the Nutri-grain brand is that of growing boys and young males

who are strong, energetic, determined and competitive. This translates as

motivation to consumers when they decide to be active in sports or is seeking to

have an edge over their peers in competitions. When consumers purchase Nutri-

grain they see themselves as somebody who is thriving to be the best they can

be, the fastest, fittest and strongest.

It is important to differentiate the buying roles for growing boys and young men.

Growing boys who consume Nutri-grain normally get it from their mothers;

whereas young men usually purchase the product themselves. In the first case

the initiator and influencer can be both the mother and her son, each would have

some input. Children can have a great influence over purchase decisions of their

parents, especially about food or grocery items; they are often influenced by TV

commercials as well as what their friends (Kotler et al., 2009). However, the

decider and buyer of the product are still the mothers and kids being only the

user.

In the second case the decider and buyer is the same person, the young man, and

the initiator and influencer are normally their peers or girlfriend. Thus, when

promoting itself to the market Nutri-grain creates two different marketing

efforts, one for the mothers and the other for young men.

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1. Problem Recognition: needs a breakfast meal that will provide energy for sporting activite *can be triggered by

ads/peers.

2. Information Search: search for what products are

available in the market and its

nutritional facts *e.g internet website or

through peers

3. Evaluation of alternatives: choosing

between different brands of energy

cereal including Weet-bix, Uncle Toby's Plus etc. *can be influenced

by peers and ads

4. Purchase Decision: goes to the supermarket

and purchases nutri-grain cereal

5. Post-purchase Behaviour:

evaluates the cereal; if it provides energy needed, taste great,

etc. if satisfy will purchase again

Cereals can be considered to be a product that invokes a variety-seeking

behaviour in consumers’ buying decision. Variety-seeking behaviour is where

there is low involvement and significant perceived differences between the

brands when purchasing the product (Kotler et al., 2009). Perceived differences

between the products arise because of promotion efforts by the brand as well as

influence from peer groups.

The buying decision process is a five-stage model in which the consumer goes

through when purchasing a product. Diagram 1 below shows an example of a

consumer decision process for purchasing Nutri-grain.

Diagram 1

Customer value creationKellogg’s must ensure that customer’s expectations and needs are consistently

met as to create the most perceived value for the customer. This is done in a

number of ways.

Quality:- Monitoring and improving food quality to verify that all incoming raw

materials conform to Kellogg’s strict standards

- Ensuring that the packaging maintains the food nutrient level, flavour and

freshness from the manufacturing plant to the consumers.

- Kellogg’s operational facilities must deliver consistent and safe food to

meet the consumer’s high standards (Kelloggs, 2010)

- Ensuring availability of products at the supermarkets.

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Marketing:- Use marketing research to monitor environment of consumer food choices

including nutrition needs, food preferences and eating patterns.

- Test consumer reactions before new products are introduced to the market and

evaluate consumer response to Kellogg’s advertisements.

- Kellogg’s uses three types of research in support of its marketing activity;

product research, consumer research and market tracking research (Kelloggs,

2010)

Promotion- Marketing department must ensure that all promotional activities are

consistent with Nutri-grain’s brand positioning.

- Ensuring the quality of promotional items and activities used to promote

Kellogg’s Nutri-Grain’s products.

- Athlete endorsements and sponsorships to ensure customers that the

product is reliable and credible.

Post purchase - Offering quick and accurate responses to consumer enquiries through the

consumer hotline.

Target MarketingTarget marketing is a three-step approach used by companies to deliver its

product to a targeted market segment, which involves market segmentation,

market targeting and market positioning. Companies have realized that they

cannot develop only one type of product that satisfies the consumers needs and

wants, therefore now they attempt to develop a product and marketing mix that

is tailored to its selected segment (Kotler et al., 2009).

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SegmentationTable 2 Sweet-

toothsHealthies Body-

watchersEnergy Junkies

Behaviour :

Benefit sought Sweet and delicious breakfast meal

Fulfilling daily nutritional requirements

Lose and maintain weight, and feeling good

Energy for daily activities and sports

Knowledge of product

Medium to High High High Medium to High

Usage rateLow to Medium (breakfast & snacks)

Low (breakfast only)

Medium (breakfast & snacks)

Low (breakfast only)

Loyalty status Medium Medium to High Low to Medium Low to Medium

Price sensitivity

Low Low Low to medium Low to medium

Occasion consumption

Breakfast & snacks

Breakfast Breakfast & snacks Breakfast

Demographic :        

Income Low to medium Medium to High Medium to high Medium

Life-cycle stage Children Adults/mature Urban Woman Growing Kids/young adults

 Age  5-12 30s to 40s 25-late 30s 12-25

Psychographic :        

Lifestyle Care-free Settled/healthy Urban /modern Active/sporty

Values Fun/outgoing Health-conscious

Modern/confident Energetic/outgoing

Involvement Low High High medium

Brand

Froot-loops, Coco Pops, Frosted Flakes

The Guardian, Weet-Bix multigrain, Uncle toby’s Healthwise

Kellogg’s Special K, Sanitarium’s Light ‘n’ Tasty

Nutri-grain, Uncle Toby’s Plus, Weet-Bix, Milo Energy Cereal

As seen from Table 2, the cereal market is segmented into 4 segment markets,

the Sweet-Tooths, the Healthies, the Body-Watchers and the Energy-Junkies.

Each of the segments has a unique characteristic, resulting from being

categorized by three variables; behaviour, demographic and psychographic.

The Sweet-tooths are seeking for cereals that are good tasting (typically sweet)

and are fairly loyal to their cereal brands. The demographic of this segment

consist of kids under the age of 12, thus they are likely to have whatever is given

to them by their mothers, however as stated earlier, they can carry some role in

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the buying decision. Alternatively, the Healthies are looking for cereals that

provide the most nutritional ingredients, one that will fulfill their daily

nutritional requirements and help with their overall well-being. Thus when

browsing the aisle in the supermarket they look for cereals that contain high

levels of fibre from wheat, wholegrains and oats.

The third segment are the Body-watchers, the market mainly consists of young

women aged between 25 and late 30s who are modern, confident and image-

conscious. It is important for the companies, when promoting their cereal brand

to incorporate the image of the strong and confident women in their ads.

Kellogg’s have their Special K 2 Week Challenge, where they offer to assist

women lose one jean size with a two-week eating and exercise plan (SpecialK,

2010).

The final segment is called the Energy Junkies; here is where the Nutri-grain

brand is placed under. This segment is targeted to people who have an active

lifestyle, very involved in sports/exercising and need a good source of energy to

start the day. Companies who have products in this market segment generally do

heavy promotion of their brands. They have celebrity athletes endorsing their

product, and contribute to local communities through sporting events as well as

sponsoring national sport teams.

Market TargetingAfter segmenting the market the company must evaluate each segment and

select the one they want to target (Kotler et al., 2009). Kellogg’s as a company

incorporate many segment market for each of their brands. Many of their

products can be found in the various segments of the cereal market. Nutri-grain

in particular is categorized under the energy cereal segment.

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Market Positioning

Diagram 2

Diagram 2 above shows the position of Nutri-grain against its competitors in the

energy cereal market segment. It is done by putting the brands under the two

most important criteria of differentiation for segmentation of the cereal market;

taste and nutritional benefits. Nutri-grain compared to its competitors taste

better than Weet-Bix or Uncle Toby’s but is considered to be less nutritional.

Though it is often marketed as a cereal for a great source of energy, it derives

most of it from its considerable high level of sugars.

However its competitive advantage in the market is derived from its strong

position in the consumers’ mind as a cereal most associated with sporting

activities/exercise. Research show that it is one of the top brands in the Australia

associated with being a sports sponsor, second only to Billabong (Marketingmag,

2009). Nutri-Grain’s also has a long term-association with life surfing, which

targets young men between the ages of 24 and 35 on how to survive in a rip

(SLSA, 2009) as well as sponsoring the Iron Man Series.

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Marketing MixThe marketing mix must be intergrated to the brand positioning of the product;

they include product, price, promotion and place (distribution). The paragraph

below discusses the marketing mix Nutri-grain cereal.

1. ProductNutri-grain cereal is a convenience product. They are bought by consumers with

minimal effort and are further classified into staples because consumers buy

breakfast cereal on a regular basis.

Product levels:

Core product

The core product is a breakfast meal needed by consumers to start the day

Actual product

The actual product is cereal with added protein, calcium, B-group vitamins, iron

and carbohydrates

Features:

- Iron Man symbol

- Winners of the Iron Man competition (picture on packaging).

- Nutritional information, such as the average daily intake of calcium, iron and

carbohydrates.

- The Kellogg’s logo, which can trigger brand awareness amongst consumes.

The packaging plays an important role in the purchase decision. The color of the

package (iron color-very masculine); and the Kelloggs, Nutri-grain and Iron Man

logo will trigger recognition of the brand name.

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2. PromotionNutri-grain adopts integrated marketing communications. All the mediums have

to represent the nutri-grain brand and positioning in a consistent manner.

Target AudienceThe first target audiences are mothers, because generally mothers do the

grocery shopping.

The second target audience is young male adults, because they buy their own

groceries when they have moved out of home.

Response SoughtThe purpose of the message is to create widespread consumer awareness,

reinforce Nutri-grain’s brand image, encourage brand trial and also

encourage brand switching.

MessageThe focus of the message is around the brand positioning, which is “Nutri-

grain, Iron Man food” and “Nutrigrain has what it takes to built you into an

Iron Man”.

ContentThe message shows how Nutri-grain is superior to its competitors, by

communicating that Nutri-grain is one of the highest protein cereals.

In the advertisement that is specifically targeted to mothers; the

advertisement shows a flashback of the son training from when he was a

toddler, and up to when he is a teenager and wins a triathlon

The second advertisement shows a young man eating his cereal, while he

thinks about himself doing active sports such as running, rowing and cycling.

It communicates that Nutri-Grain has all the things he needs to do those sport

activities.

Media- Television commercials - Nutri-Grain appears in 15 and 30 seconds ads,

placed during specific television programs (sport games).

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- Billboards – placed in public spaces such as tram and bus stops as well as

inside the trams and buses.

- Sporting Events - the Iron Man Series, which is the where forty of the

world’s fittest athletes compete in five rounds in the course of three days

(Nutri-grain website).

- Sponsorship - Nutri-grain has an alliance with the National Rugby League.

The program also includes a media partnership with the Nine Network,

grassroots program to support junior rugby development Media Advertising

(BANDT, 2009)

3. PriceNutri-Grain implements a mark up and target return pricing. Kelloggs would

charge wholesalers and retailers a certain price to make profit per unit. The

wholesaler and retailer will then mark up the price for consumers. In general,

cereals is a fast moving item so the mark up is low to medium.

Then the Marketing Department at Kellogg’s must convince consumer through

marketing activities (advertisements, sponsorships) that Nutri-Grain’s value at

that price justifies its purchase. Nutri-Grain is charged at $4.98 for 345grams to

consumers. This price fits the value of how the Energy cereal segment places on

the product.

Because of the oligopolistic nature of the cereal industry, companies earn large

profit margins. Price wars do not exist between the major players (cooperation);

rather it is channeled into advertising and new product introduction (Nevo,

2001).

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Manufacturing plant

in Botany, NSW

Central Wareh

ouse (locate

d in each

State)

Retailers

(Coles, Woolworths,

IGA etc.)

Consumers

4. Place

Diagram 3

The level of distribution for Kellogg’s Nutri-Grain is intensive (Channel 3) with

two intermediaries. It is considered to be a convenience good that is widely

distributed in order to make it widely available to consumers. Nutri-Grain is sold

in supermarkets such as Coles, Safeway, IGA, and one of the few cereal brands

that is available in convenient stores such as 7-Eleven.

Nutri-grain cereal is made in the central warehouse located at Botany in NSW.

The Botany Warehouse then supplies local and export customers in all states

other than Western Australia.

Packaged goods are then moved from the Botany Manufacturing Plant to the

central warehouse to be stored. Retailer’s orders are then received from all

states. The orders are then checked to make sure that products requested are

available and credit conditions are met before sending it off to the retailers.

Kellogg’s has a partnership with retailers such as Coles and Safeway because

they fit in with Kellogg’s Nutri-Grain’s target market of mothers and young

adults. The product itself is always placed closed to other Kellogg’s brands in the

store shelves and at eye-level thus very visible to the consumers

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S W O T A n a l y s i s ( N u t r i -G r a i n )

SWOT ANALYSIS

Diagram 4

StrengthsNutri-grain successfully implements the marketing mix according to the brand

positioning and segmentation. In order for the brand to be more successful, it

needs to continue to build effective marketing campaigns and sponsorship that is

highly to the Iron Man Code and its consumers.

Nutri-Grain’s long term sponsorship with the Iron Man Series and surf Life

Saving has made it the number one brand that Australians associate with sport.

To maintain this brand association, it should keep sponsoring the Iron Man

Series, as the Iron Man has become one of the most important key features in its

promotions.

WeaknessNutri-grain has high contents of sugar and sodium. It should lower its sodium

and sugar content because there are other cereals such as Weetbix that are

healthier and could pose a threat to Nutri-grain.

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OpportunitiesNutri-grain can increase its marketing effort to appeal to young women by

offering a product range or sponsorship specifically made the active/sporty

young woman.

There are also opportunities for Nutri-grain to extend its brand. It could extend

its brand to a breakfast drink, because more and consumers are becoming time

poor.

ThreatsCereal substitutes such as breakfast bars and drinks impose a threat to Nutri-

grain cereal because of their ‘instant-food’ nature. Cheaper brand cereals such as

Home-brand cereals offered in Coles and Woolworths can also reduce Nutri-

grain’s market share.

Conclusion Cereals rely heavily on advertising and promotion as to create a unique market

position in the consumers mind and to show differentiation among its

competitors. Thus as long as Nutri-grain maintains a relevant and strong brand

promotion through those marketing efforts it should still retain its current

market position. However it should always be aware of the marketing effort of its

direct competitors and should consider extending its brand to other forms of

breakfast meals.

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Reference ListFalci, 2006. Mass of US Breakfast Cereal Consumption, Retrieved January 28,

2010, <http://hypertextbook.com/facts/2006/LauraFalci.shtml >.

IBIS World (2009) Cereal Food and Baking Mix Manufacturing in Australia

Kelloggs (n.d) Retrieved February 1, 2010 from <http://www.kelloggs.com.au>

Kotler, P., Keller, K. , Burton, S. (2009) Marketing Management. NSW: Pearson

Education Australia.

Nevo, A 2001 ‘Measuring Market Power in the Ready-to-Eat Cereal Industry’,

Econometrica, Vol. 69, No. 2 , pp. 307-342

Nutri-Grain, Emirates lead sports sponsor list. (2009, June 30). Marketing.

Retrieved January 28, 2010, <http://www.marketingmag.com.au>

Nutri-Grain. (n.d) Retrieved January 28, 2010, <http://www.nutri-grain.com.au>

Reed, P. (2007). Strategic Marketing Planning (2nd edition). Vic: Nelson

Australia.

Special K. (n.d) Retrieved February 1, 2010, <http://www.specialk.com.au>

Uncle Toby's (n.d) Retrieved January 30, 2010,

<http://www.uncletobys.com.au>

Weetbix (n.d) Retrieved January 30, 2010, <http://www.weetbix.com.au>

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