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Transcript of Kelloggs Ppt
Like Coco the monkey we sing the praises of
the chocolatey cereal
Kellogg Company Mission Kellogg Company Mission StatementStatement
““Kellogg is a Global Company Kellogg is a Global Company
Committed to Building Long-Term Committed to Building Long-Term
Growth In Volume and Profit and to Growth In Volume and Profit and to
Enhancing its Worldwide Leadership Enhancing its Worldwide Leadership
Position by Providing Nutritious Position by Providing Nutritious
Food Products of Superior Value”Food Products of Superior Value”W. K. KelloggW. K. Kellogg
Kellogg’s Marketing Kellogg’s Marketing StrategyStrategy
andand
Marketing PlansMarketing Plans
Organizational Organizational StrategiesStrategies
Leadership in product innovationLeadership in product innovation Strengthening the company’s seven Strengthening the company’s seven
largest cereal markets largest cereal markets Accelerating the growth of convenience Accelerating the growth of convenience
foods businessfoods business Developing a more focused organizationDeveloping a more focused organization Continuing to reduce costsContinuing to reduce costs
Global StrategyGlobal Strategy
Management continues global Management continues global strategystrategy
Offers brand-differentiated pricingOffers brand-differentiated pricing Invests in new product research Invests in new product research Brand-building marketing activities Brand-building marketing activities Cost structure reductionCost structure reduction
Product Market Product Market StrategiesStrategies
Product developmentProduct development– Constant innovation. Introduction of new product Constant innovation. Introduction of new product
to present customers.to present customers.
Market developmentMarket development– Maintain global positionMaintain global position
DiversificationDiversification– Introduction of new products to fit new customers Introduction of new products to fit new customers
needsneeds
Kellogg’s SWOT Kellogg’s SWOT AnalysisAnalysis
StrengthsStrengths
Control 42% of global market share for Pre-Control 42% of global market share for Pre-sweeter cereal, which is more than triple sweeter cereal, which is more than triple the market share of any of their the market share of any of their competitors.competitors.
They have the strongest brand recognition They have the strongest brand recognition and advertising recollection of all the cereal and advertising recollection of all the cereal manufacturersmanufacturers
WeaknessesWeaknesses
Have Have notnot aggressively aggressively developed developed many newmany new cerealcereal lines in the past lines in the past four years.four years.
Slow erosionSlow erosion of their U.S. of their U.S. market market shareshare in the past few years, in the past few years,
Follower in Pricing StrategyFollower in Pricing Strategy
OpportunitiesOpportunities
International expansionInternational expansion is the biggest is the biggest area for growth for Kellogg’s.area for growth for Kellogg’s.
Kellogg can continue to Kellogg can continue to slowly diversifyslowly diversify, , while still remaining in their core business while still remaining in their core business area, which will increase their profitability.area, which will increase their profitability.
If they can If they can develop develop a bettera better pricing pricing strategystrategy and guarantee lower prices, they and guarantee lower prices, they can reduce costs while increasing their can reduce costs while increasing their market share.market share.
ThreatsThreats
General Mills, Post, and Quaker Oats General Mills, Post, and Quaker Oats are using are using price competition and price competition and productproduct proliferationproliferation to erode to erode Kellogg’s share of the market.Kellogg’s share of the market.
Discount imitation cerealsDiscount imitation cereals brands brands have been successful in reducing have been successful in reducing premium brands in the more premium brands in the more commodity like cereals.commodity like cereals.
Market AnalysisMarket Analysis
Market AnalysisMarket Analysis Market size:Market size: sales of nearly $9.7 billion in the Ready-To-Eat sales of nearly $9.7 billion in the Ready-To-Eat
Market in 2001Market in 2001
Product segments:Product segments: the best-selling kids’ cereal brands--GM the best-selling kids’ cereal brands--GM Lucky Charms, GM Count Chocula, Post Marshmallow Alphabits, Q Lucky Charms, GM Count Chocula, Post Marshmallow Alphabits, Q Marshmallow Safari, Rice Krispy.Marshmallow Safari, Rice Krispy.
Market share:Market share: competition is heating up in this market as flat competition is heating up in this market as flat sales and low-priced clones have eroded the market shares of sales and low-priced clones have eroded the market shares of Kellogg and General MillsKellogg and General Mills
Market Forecasts:Market Forecasts: the kids’market has beenthe kids’market has been growinggrowing at a rate at a rate of more than 15% a year, for the 5 to 7 years and shows no sign of 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 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.food market was driven, to the largest extent, by gains in cereals.
Cereal Industry Volume Salesfor Presweet Cereal
Volume Sales (As of 2/01)
16.7
11.7
7.4
4.8
4.5 1.4Kellogg USA
GM & Ralston
Post & Nabisco
Quaker
Store Brands
Malt O Meal Co
In million
Marketing/promotion: Marketing/promotion: Seven breakfast cereal Seven breakfast cereal marketers allocated almost $775 million to purchases of marketers allocated almost $775 million to purchases of space and time mass media in 2001.space and time mass media in 2001.
Industry structure:Industry structure: Three food giants--Kellogg, Three food giants--Kellogg, General Mills, and Philip Morris--responsible for 70% of General Mills, and Philip Morris--responsible for 70% of kid’s foods in 2001.kid’s foods in 2001.
Market Analysis(continued)
Major Trends in Cereal Major Trends in Cereal IndustryIndustry
New products are dominated by line extension and New products are dominated by line extension and product promotionproduct promotion
Increasing popularity of private labeled cereals due Increasing popularity of private labeled cereals due to high cost of branded productsto high cost of branded products
Higher demand for health food markets & productsHigher demand for health food markets & products
Health claims is becoming more prevalent; Health claims is becoming more prevalent; Kellogg’s - American Heart AssociationKellogg’s - American Heart Association
Competitive AnalysisCompetitive Analysis
Competitive Force Competitive Force AnalysisAnalysis
Intensity of RivalsIntensity of Rivals
Four Large companies are dominant in the market
Oligopoly
Competition is very intense
Inflated prices
Growth Rate has remained Constant
Competitive Force Competitive Force AnalysisAnalysis
Threat of a SubstitutionThreat 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 (1990’s started a price war between rivals)
Made the buyer more powerful
High
Low
PR
ICE
/QU
AL
ITY
/IM
AG
E
PRODUCT LINE/MANUFACTURING MIX
Strategic Group Map of Competitors in the Presweeter Cereal Industry
Brand Cereals
Kellogg GeneralMills
General Food
Quaker Oats
Private Label
Bagged Value-Priced
Cereal
Cap’n Crunch
Snack Bars
Rice Cakes
Oatmeal Cereal Bars
Fruit Cereal Bars
Cap’n Crunch
Quaker Oats
General Foods
Honey Nut Shredded
Cranberry Almond Crunch
Honey Nut Cheerios
Private Label
Cocoa Krispies
KELLOGG
General Mills
Lucky Charm
Cheerios
Honey Nut Cheerios
Other Cereals
Competitive Force Competitive Force AnalysisAnalysis
High Barriers to EntryHigh Barriers to Entry
Main barriers to entry in the breakfast Main barriers to entry in the breakfast cereal market are four major cost factors. cereal market are four major cost factors.
Product developmentProduct development - easy for established - easy for established manufacturers to duplicate products, new manufacturers to duplicate products, new products take more money & time to develop products take more money & time to develop
DistributionDistribution - high slotting & promotional fees, - high slotting & promotional fees, limited shelf space, need to create retail demand, limited shelf space, need to create retail demand, all increase costs for manufacturersall increase costs for manufacturers
Competitive Force Competitive Force AnalysisAnalysis
High Barriers to EntryHigh Barriers to Entry
MarketingMarketing - need to compete against - need to compete against current brands that have been established current brands that have been established through large advertising and promotional through large advertising and promotional efforts (t.v., coupon)efforts (t.v., coupon)
High Capital costsHigh Capital costs - for different types of - for different types of equipment and plantsequipment and plants
Supplier does not have much Supplier does not have much power because of private labels.power because of private labels.
Similar products have allowed Similar products have allowed buyers to acquire products from buyers to acquire products from private labels at a Cheaper Price.private labels at a Cheaper Price.
Now industry is very Sensitive to Now industry is very Sensitive to the buyer.the buyer.
Competitive Force Competitive Force AnalysisAnalysis
Power of SupplierPower of Supplier
Customer AnalysisCustomer Analysis
Cocoa KrispiesCocoa KrispiesBuying CriteriaBuying Criteria
Key equity drivers: chocolate taste, Key equity drivers: chocolate taste, Coco the monkey, snap, crackle Coco the monkey, snap, crackle and popand pop
Package: fun, colorful, capture Package: fun, colorful, capture children’s attentionchildren’s attention
Product: very sweet, colorful and Product: very sweet, colorful and contain nutritious elementscontain nutritious elements
Kellogg’s Customer Kellogg’s Customer AnalysisAnalysis
Who Are the Buyers?Who Are the Buyers? Parents, Older Adults Parents, Older Adults
How Often Do They Purchase?How Often Do They Purchase? Kids cereal are purchased roughly 18 times a yearKids cereal are purchased roughly 18 times a year 10th fastest-moving product in the supermarket10th fastest-moving product in the supermarket
Where Do they Want to Buy?Where Do they Want to Buy? Grocery Stores responsible for 99% of cereal salesGrocery Stores responsible for 99% of cereal sales
Who Are the Influencers?Who Are the Influencers? Kids Kids
Who consumes the goods?Who consumes the goods? Kids under 18Kids under 18
Who are Kellogg’s Target Market?Who are Kellogg’s Target Market? Kids 8-11 years oldKids 8-11 years old
Percent of Total Annual Spending Percent of Total Annual Spending on Presweeter Cerealon Presweeter Cereal
(by Age Group)(by Age Group)
16.3
29.4
22.3
10.3
8.8
8.2
25-34
35-44
45-54
55-64
65-74
75+
Ag
e G
rou
ps
Percentage
Cocoa KrispiesCocoa Krispies ObjectiveObjective
Strengthen kid consumer baseStrengthen kid consumer base
Secure Kellogg “cocoa” bit subsegment volume share Secure Kellogg “cocoa” bit subsegment volume share with competitive focus on GM’s Cocoa Puffs and Post’s with competitive focus on GM’s Cocoa Puffs and Post’s Cocoa PebblesCocoa Pebbles
Create a product that enhances the “ultimate multi-Create a product that enhances the “ultimate multi-sensory food experience” by adding additional sensory food experience” by adding additional attributes that satisfy expended consumer needsattributes that satisfy expended consumer needs
Attract different target groupsAttract different target groups
COCOA KrispiesCOCOA KrispiesPromotionPromotion
Spent roughly $15 million for ad campaign: TV, printSpent roughly $15 million for ad campaign: TV, print
Adds include Coco the MonkeyAdds include Coco the Monkey
Advertiser: Kellogg Agency (Leo Burnet)Advertiser: Kellogg Agency (Leo Burnet)
Quantity and price discountsQuantity and price discounts
Packaging: fun, colorful, capture children attentionPackaging: fun, colorful, capture children attention
CerealCereal PricingPricing for Retail Stores for Retail Stores
Farmer Jack Kroger TargetCocoa Pebbles(General Mills)Cocoa Puffs(Post)
$0.25/ounce$0.28/ounce
$0.25/ounce$0.27/ounce
$0.15/ounce$0.21/ounce
Cocoa Krispies(Kellogg’s) $0.22/ounce $0.23/ounce $0.17/ounce
Private Labels $0.23/ounce $0.13/ounce n/a
Kellogg’sKellogg’s Distribution PlayersDistribution Players
Major playersMajor players::– KrogerKroger– Farmer JackFarmer Jack– TargetTarget
Minor playersMinor players::– Convenience storesConvenience stores– Gas stationsGas stations
Retail/Distribution: Grocery stores are responsible for the overwhelming 99%--of cereal sales
Kellogg’sKellogg’s Distribution ChannelsDistribution Channels
Kellogg’s
Retailer
Kellogg’s
Wholesaler
Retailers
Kellogg’s
Computer system
Kroger, Target, distrib. centers
Distrib. In stores
Introduction Growth Maturity Decline
Dol
lars
Time
Cocoa Krispies:
PRODUCT LIFE CYCLE
Critique of the PlanCritique of the Plan
Have we heard of it? Have we heard of it? Promotional issuesPromotional issues
Can we get it? Can we get it? DistributionDistribution
Can we afford it? Can we afford it? PricingPricing
Are we buying it? Are we buying it? Target marketTarget market recordrecord
Is it legitimate? Is it legitimate? Corporate responsibilitiesCorporate responsibilities
Promotional IssuesPromotional Issues
Mass AdvertisingMass Advertising TV, Cocoa the Monkey, TV, Cocoa the Monkey, and Snap, Crackle and Pop. and Snap, Crackle and Pop.
Direct PromotionsDirect Promotions CouponsCoupons
Trade PromotionsTrade Promotions In-store displays,In-store displays, SamplesSamples
Personal SellingPersonal Selling Key-account reps, Key-account reps, Area reps, Area reps,
Merchandisers Merchandisers
DistributionDistribution
Penetration Penetration - - Chain stores, Independent Chain stores, Independent wholesalers wholesalers
Sales Channel - Sales Channel - Brand equity helpsBrand equity helps
Logistics - Logistics - Finished goods warehouse / Finished goods warehouse / rail / truck / centers or rail / truck / centers or
independent warehouses independent warehouses
Relationships - Relationships - Conflict or harmony?Conflict or harmony?
The TargetThe Target
Fastest Growing Foods in the Fastest Growing Foods in the American DietAmerican Diet::
Carbonated Soft drinksCarbonated Soft drinks
Pre-Sweet CerealPre-Sweet Cereal
BagelsBagels
Toaster PastriesToaster Pastries
PizzaPizza
Corporate Corporate ResponsibilitiesResponsibilities
Legal IssuesLegal Issues - - Safety, Information, ChoiceSafety, Information, Choice
Environmental - Environmental - Earth Spirit AwardEarth Spirit Award
Issues Issues Civic Responsibilities Civic Responsibilities
- - Ad content standardsAd content standards
- Stakeholder orientation- Stakeholder orientation
- Public program support- Public program support
Ethical Issues - Ethical Issues - Nutritional educationNutritional education
- More than required- More than required
America’s Top 10 R-T-E America’s Top 10 R-T-E CerealsCereals
1. Frosted Flakes1. Frosted Flakes
2. Cheerios2. Cheerios
3. Frosted Mini-3. Frosted Mini-WheatWheat
4. Corn Flakes4. Corn Flakes
5. Rice 5. Rice Krispies/Cocoa Krispies/Cocoa KrispiesKrispies
6. Honey Nut 6. Honey Nut CheeriosCheerios
7. Raisin Bran7. Raisin Bran
8. Fruit Loops8. Fruit Loops
9. Special K9. Special K
10. Corn Pops10. Corn Pops
Positioning Map
Nutrition
Taste
Special K
Cheerios
Cocoa Krisp
Raisin Bran
Corn Flakes
Fruit Loops
Sorry CocoSorry Coco
The boys are back in town!The boys are back in town!
SourcesSources Kellogg - Mike Culverson / Kellogg - Mike Culverson / Customer ServiceCustomer Service Farmer Jack’s - Ron Van Este / Farmer Jack’s - Ron Van Este / Cereal buyerCereal buyer Media Week - Media Week - May‘98 May‘98 / ‘/ ‘Something New Under My Nose” Something New Under My Nose” Business Week - Wednesday, May 29, 2002 “Kellogg Co.”Business Week - Wednesday, May 29, 2002 “Kellogg Co.” WWW.industryweek.com - “Food Industry Focus”WWW.industryweek.com - “Food Industry Focus” Field Visits - Field Visits - Kroger, Farmer Jack’s, Target, Rite-Aid.Kroger, Farmer Jack’s, Target, Rite-Aid. Florida Sun Sentinel - Florida Sun Sentinel - Feb. 7, 1998 / Robin Fields / Feb. 7, 1998 / Robin Fields / ““Get That Get That
One Mommy”One Mommy” The NPD Group - The NPD Group - March, 2001/ “The Twelfth Annual Report on March, 2001/ “The Twelfth Annual Report on
Eating Patterns in America”Eating Patterns in America” Kellogg - www.Kellogg's.comKellogg - www.Kellogg's.com http://faculty.sba.udayton.edu.schenk.kellcase.htmhttp://faculty.sba.udayton.edu.schenk.kellcase.htm
The End