Presentation

on

Kellogg’s Indian Experience

Presented to- Presented by- Col. N.R.Vaid Vishal

FOSTIIMA Business School

OVERVIEW

• FOUNDED :1906

• Country : U.S.

• Had manufacturing facilities in 19 countries

• Marketed its product in more than 160 countries.

• Turnover in 1990-00 was $7billion.

• Launched in 1994 in India with initial offerings of wheat

flakes & basmati rice flakes

• Had set up its 30th manufacturing facility in India, with

total investment of $30 million

A Failed Launch

• In April 1995, KELLOGS received unsettling

reports of gradual drops in sales from its

distributors

• 25% decline in countrywide sales.

KELLOGS product failed in Indian market even after -:

• Offerings good quality products, supported by

technical, managerial & financial resources

• High profile launch backed by hectic media

activity

Reasons for failure

• Positioning – positioned it as health product

• Over confidence and ignorance of cultural

aspects

• Non understanding of Indian consumer

behavior and habits

• Premium Pricing policy

• Banked heavily on crispy flakes

Setting Things Right

KELLOGS

CO’s hoped to repeat the global success of these brands in the

Indian markets

Both products had sugar frosting on individual flakes

CHOCOS & FROSTIES were totally spread in Indian flavors

“NOW IT WAS REPORTED THAT INDIAN CONSUMERS

WERE CONSUMING THE PRODUCT AS SNACKS”

CHOCOS (1996)

FROSTIES(1997)

KELLOGS MAZZAA crunchy, almond shaped corn breakfast cereals, in august 1998

Mango Elaichi Coconut

kesar

Rose

Focus on customers

Mazza was positioned as a tasty , nutritional breakfast cereals for families.

Kelloggs was careful not to repeat its earlier mistakes. It did not position MAZZA in the premium segment

MAJOR STEPS TAKEN TO ACHIEVE SUCCESS

Prices reduction

Kellogg’s increase the retail packs of different sizes to cater the

needs of different consumers group

Kellogg’s repositioned the product as tasty nutritious food

products were not positioned in premium categories

Indianising the products

Free samples in schools and to housewives

RESULTS

• In 1995, kelloggs had a share of the Rs 150 mn breakfast cereals market, which had been growing at 4-5%p.a.

• The market size was Rs 600mn in 2000, & kelloggs share had increased to 65%.

• The co’s improved prospects were clearly attributed to the shift in :

1. POSITIONING 2. PROMOTIONS 3. ENHANCED MEDIA BUDGET

• In 2000, it launched many new brands including

Crispix banana, Crispix chocos, Froot loops, Cocoa

frosties, Honey crunch.

• ‘Krispies Treat’ an instant snacks targeted at children.

Priced on the lower side at Rs 3 & Rs 5, the product

was positioned to compete against the products in the

‘impulse snacks’ category.

KELLOGGS SOURCES however revealed that

the co’s was in India with long-term plans &

was not focusing on profits in the initial

stages. In Mexico the co’s had to wait for

two decades & In France nine years, before

it could significantly influence local palates.

Learning from the case

• Market study is must before you enter any market

• Don’t underestimate local competitors

• Remember that square pegs don’t fit into round holes

• Cultural difference must be addressed

• Over confidence leads to failure

• For succeeding in country like India company has to

Indianise its strategy