Kellogg's Ride in India - - Get a Free Blog Here

ride in India

Master of International BusinessDepartment of Commerce, Delhi School of Economics

Submitted by group no.11MIB 2011-2013

A marketing study

Kellogg's Ride in India 2011

MIB, Delhi School of Economics P a g e | 1

Kellogg’s Ride in India

A Marketing Study Report

Submitted in Partial Fulfillment of the Requirements

For the Degree of

Master of International Business

Submitted by :

Akshaya Shah

Himanshu Chauhan

Malvi Goyal

Prapti Aggarwal

Vaibhav Gupta

Submitted to:

Dr. S. K. Jain

Dept. of Commerce

Delhi School of Economics

Delhi University



CONTENTS

1. Introduction

2. Research Methodology

3. Objectives of The Proposed Study

4. Firm’s Overview: Kellogg’s

5. Breaking of Stagnancy-The Foray Story

6. inception of The Launch of Products

7. Hurdles in Indian Market as A Novice

8. The Initial Failure

9. Steps towards Success

10. Proposition & Positioning by Kellogg

11. The Journey so Far

12. Brand Building-The Advertising

13. Marketing Mix

14. Launch of a New Product : Special - K

15. Distribution Network Of Kellogg’s

16. Data Collection

17. Calculation of The Sample Size By The Help Of The Pilot Survey

18. Chi-Square Test

19. Respondents' Profile

20. Suggestions from Non- Users

21. Suggestions from Users

22. Adverts: Sole Driver for The Awareness of A Brand

23. Insights from Retailers

24. Conclusion

25. Annexure

26. Bibliography



INTRODUCTION

About all the cycles we talk about, perhaps the most important of them is Nature’s cycle “With

good times there comes the anticipation of bad times”. This is a cycle that goes on and on.

Old habits die hard, especially when it comes to Indian eating habits. When Kellogg India Ltd.

(Kellogg’s), the wholly owned subsidiary of the US$ 7-billion Kellogg Company, entered the

3000- ton cereal market in 1994, little did it realize the importance of the adage. It had a clear

game plan to position itself on the health platform, highlighting the nutritional values of the

brand.

With respect to our Project report on

“Kellogg’s India”, the overseas company

has seen the picturesque of high tides to

low tides. Our report will explore the

reasons behind the failure of Kellogg and

how it succeeded after its second entry.

Studying the marketing mix adopted after

second entry. The journey from 1994 to

present, 2011 has been full of large scale

Up’s and Down’s. Our project report is dedicated to get the larger insight of all the related

prospects of the firm. Our project will also discuss about the adopted marketing mix of the

Kellogg.

The marketing mix is the set of marketing tools that the firm used to pursue its marketing

objectives in the target market. McCarthy classified these tools into four broad groups that he

called the four P’s of marketing:

Product: It is a tangible good or an intangible service that is mass produced or manufactured on a large

scale with a specific volume of units.



Price: The price is the amount a customer pays for the product. The business may increase or

decrease the price of product if other stores have the same product.

Place: Place represents the location where a product can be purchased. It is often referred to as

the distribution channel. It can include any physical store as well as virtual stores on the

Internet.

Promotion: Promotion represents all of the communications that a marketer may use in the

marketplace. Promotion has four distinct elements: advertising, public relations, personal

selling and sales promotion.

Marketing mix decisions must be made for influencing the trade channels as well as the final

consumers. The four Ps represent the seller’s view of marketing tools available for influencing

buyers. From the buyer’s point of view, each marketing tool is designed to deliver customer a

benefit.



RESEARCH METHODOLOGY

To find out the insight of any given product, it is necessary to find out the various underlying

factors that are responsible for fostering its growth and for other decisions to be made

regarding the structuring of the product in the future. Here we have divided our research into

two parts:-

1. SECONDRY RESEARCH-

• It is exploratory in nature. • Sources of information are journals, magazines, periodicals and books. • Case studies of various successful brands.

1. PRIMARY RESEARCH-

• It is conclusive in nature. • As essentially required, Pilot survey (Simple size of 30) will be done. • The Pilot survey is conducted to find out the Simple size for research and to check the appropriateness of the questionnaire.

Primary research is divided into two parts,

1. Consumer Research:

• Buying behavior of the consumers. • Consumption Patterns of the consumers. • Preferences of the consumers in terms of variants of the product. • Positioning of the product.

2. Retailer Survey:

• Retailer’s perception of the strength and weakness of various brands of cereals available in the market. • Retailers influence in pushing a brand.



OBJECTIVES OF THE PROPOSED STUDY

To get an insight on the launch of a new product in the Market.

To understand the use of new product development to grow the brand.

To understand the Marketing Mix.

To understand the theory behind cultural and other differences in the markets.

To study the buying behaviour of the consumers keeping in mind the various attributes of

the products.

HYPOTHESIS TO BE TESTED

Consumer wants all the benefits equally by consumption of cereal food.



FIRM'S OVERVIEW: KELLOGG’S

A 1906 established firm, it thoroughly enjoyed the status of top most cereals companies around

the globe. When Will Kellogg accidentally invented a new breakfast food in Battle Creek,

Michigan in 1894, he did not realise that he was on the threshold of forming a major food

manufacturing company. His name would become one of the most instantly recognised

throughout the world. It has four main divisions covering North America, South & Central

America, Asia Pacific, and finally Europe, Africa and Middle East.

Today, Kellogg’s is an American owned organisation that has a true global market in the late

1980s, the company had reached an all-time peak, commanding a staggering 40 per cent of the

US ready-to-eat market from its cereal products alone. By that time, Kellogg’s had over 20

plants in 18 countries worldwide, with yearly sales reaching above US $6 billion.

But with inception of 90’s, the company started regaining the pressure from its rival, The

General Mills. The working force of the company was accused of being unimaginative. As a

result the company started looking at the other markets rather than US and that of UK’s.

As a result, in 1994, three years after the barriers to international trade had opened

in India, Kellogg’s decided to invest more than US $30 million into launching

its number one brand, Corn Flakes.

Currently Kellogg is the leading producer of cereal & convenience food

of the world with total revenue in excess of US $ 12 billion. It currently

has 18 plants worldwide which produces

more than 50 different brands and sells in

more than 180 countries across the world.



BREAKING OF STAGNANCY-THE FORAY STORY

With the strategy of the company to break the series of stagnancy in UK and US for a decade,

the alternative to look beyond resulted in foray of Kellogg’s in India. As the Government of

India, open the doors for international trade, new firms found Indian market an interactive

enough to set up their operations here. Kellogg’s was also a part of the series. Kellogg was the

wholly owned Indian subsidiary of the Kellogg Company based in Battle Creek, Michigan in the

United States.

But the Indian consumer as habituated, consumed

regularly the tradition breakfast composed of

“Paranthas, idli sambar, poha, milk “(Varying from

region to region) etc. To make and create a demand

for the people who are already accustomed to their

own eating habits was a mammoth task in front of

the company.

While this meant that Kellogg’s had few direct competitors, it also meant that the company had

to promote not only its product, but also the very idea of eating breakfast cereal in the first

place.

The first sales figures were encouraging, and indicated that breakfast cereal consumption was

on the rise. However, it soon became apparent that many people had bought Corn Flakes as a

one-off, novelty purchase. Even if they liked the taste, the product was too expensive. A 500-

gram box of Corn Flakes cost a third more than its nearest competitor. However, Kellogg’s

remained unwilling to bow to price pressure and decided to launch other products in India,

without doing any further research of the market. Over the next few years, Indian cereal buyers

were introduced to Kellogg’s Wheat Flakes, Frosties, Rice Flakes, Honey Crunch, All Bran,

Special-K and Chocos Chocolate Puffs ± none of which have managed to replicate the success

they have encountered in the West.



INCEPTION OF THE LAUNCH OF PRODUCTS

When Kellogg Company entered India, the per capita consumption of breakfast cereals was a

low 2 gm per annum against 5 kg per annum globally. The Indian ready-to-eat-cereal market,

clearly, posed several challenges. The Indian sub-continent found the whole concept of eating

breakfast cereal a new one. Indeed, the most common way to start the day in India was with a

traditional regional breakfast. While this meant that Kellogg’s had few direct competitors it also

meant that the company had to promote not only its product, but also the very idea of eating

breakfast cereal in the first place.



HURDLES IN INDIAN MARKET AS A NOVICE

Cultural factors and eating habits – population not used to processed foods

Kellogg pitched itself as an alternative to the regularly

consumed breakfast. The Indian breakfast is heavy and there

is a feeling of fullness at the end of an Indian breakfast.

What with oily Parantas, Puris and Dosas, the feeling of

fullness is real and not imagined. Kellogg’s Corn flake

breakfast does not give that feeling of fullness and that went

against the grain of having a full breakfast. In short after

having a corn flake based breakfast the Indian consumers

were still hungry. Also Indians have spicy and hot food for breakfast. To ask them to eat the

sweet tasting and cold corn flake breakfast was too much of a sweet breakfast for the Indians

to digest.

Easy availability of low-priced traditional breakfast

Indian breakfast is known for its variety.

There can be 30 types of Dosas (there is a

restaurant in Hyderabad that offers 99

types of Dosas!) or Idlis, Parantas or other

types of native Indian breakfast items.

Indians are used to a variety and one item

that is eaten will not be on offer for the

next two or three weeks. Asking Indians to

have the same type of corn flake based

breakfast was too much of a cultural change for the Indians to accept.



Low awareness about processed foods

Low awareness about processed foods and Calorie

requirements about various diet plans to be followed

from health prospective. Also Kellogg in its

advertising campaigns hinted that the Indian

breakfast was not nutritious and that Indian

breakfast was not very good for health. This deeply

hurt the sentiments of the home maker. The home

makers said to themselves “We have eaten and

served the Indian breakfast for decades and

centuries. My family is doing fine”. Once the home maker’s ego was hurt they psychologically

turned themselves against the concept of corn flake based breakfast.

Price sensitive customers

Indian customers are very price sensitive. With Kellogg price a third more than its nearest

competitor it created an image of being a high class product and also pushed it out of reach of

just liberated Indian middle class.

Considering all these challenges, Kellogg India required to come up with a real brand equity and

a framework to convince Indian consumer to get out of from the long following breakfast eating

pattern and face to an entirely new range of products offered by the company.



THE INITIAL FAILURE

With so much of global exposure, success and the well renowned value that the company

enjoyed in the world market, the question that stuck in the mind is what is that that led to the

initial failure in Indian market with its foray.

India is a country that has a history that comprises of traditional practices, that also includes

the regular and long followed eating habits.

Kellogg’s believed that it is going to introduce the new breakfast product, heavily on the quality

of its crispy flakes. But pouring hot milk on the flakes made them soggy.

With this it was also failed in understanding the very needs and taste of Indian consumer,

perhaps the HOMEWORK done was not good enough. Kellogg's failure was the fact that the

taste of its products did not suit Indian breakfast habits. Kellogg sources were however quick to

assert that the company was not trying to change these habits; the idea was only to launch its

products on the health platform and make consumers see the benefit of this healthier

alternative.

Another reason for the low demand was deemed to be the premium pricing adopted by the

company. The prices of its products were way too much than the nearest competitors like the

Mohan's Cornflakes.

Kellogg Mohan's Cornflakes (competitor)

Prices Rs. 21 per 100 gm, Rs 16.50 for 100 gm

Focused on Affluent consumer Mass consumer

Market comp Premium and middle-level Small-level consumers & retail stores as well



STEPS TOWARDS SUCCESS

The failure that the company witnessed with its launch, did not stays for longer. The mistake

that the company did initially in judging the Indian market was revamped as soon as company

realized that the long continued policies is not going to work here. There were several factors

that lead to this progress.

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 by introducing the sweeter product

On ground promotion activities like Kellogg health week and free samples distribution in

schools and to housewives.

Projection of products as ‘fun-filled' brands rather emphasizing only on the “nutrition

value”.



PROPOSITION & POSITIONING BY KELLOGG

From the day Kellogg’s forayed into INDIAN market, several parameters are taken care of while

launching the product.

When Kellogg’s entered the Indian market in 1994 it positioned itself on the health platform,

highlighting the nutritional values of the brand. This was done keeping in mind the following

fact: The 1991 census had already revealed that 40 per cent of Indians were below the age

of18- its prime target of growing children/ young adults who needed the right nutrition, besides

mothers who needed

Later the company emphasized on more fun filled flavours with the nutrition value.

In 1996 the Chocos brand was heavily advertised.- 50% of the money allocated for advertising

was spent on promotions and- 50% of Money allocated was spent on thematic Advertising- All

the Advertisements were Brand driven- Initially to encourage the consumer to try the product

various sales promotion techniques were used.

Kellogg’s advertising has admittedly not been very compelling thus far. A long-term thematic

line has not been developed in the campaign. Apart from `Jago Jaise bhi, to Kellogg’s hi”.

Getting the brand on the breakfast table really appears to be the main motive behind all the

promotions. Earlier this year, posters with the line `Naye saal ki sahi shuruat, lo Kellogg’s se hi”,

were put up at strategic points.

Later Kellogg’s India shifted its Positioning from nutrition to fun-filled flavours, consumer

promotions that accompanied a Rs.25 crore media-spend. Constant free sampling exercises and

an on-going process of developing price volume packages.

Then the company is attempted to indianise its campaigns instead of simply copying its

international promotions. In the staples campaign, a cross section of individuals ranging from a

yoga instructor to a Kath Kali dancer attribute their morning energy and fitness to Kellogg’s,



suggesting accompaniments as varied as curds, honey, pistachio and bananas. The commercial

ends with line `Jaago jaise bhi, lo Kellogg’s hi’.

But conspicuous in its absence from print and TV advertising, is the famous `cock’ identity,

which symbolizes the morning association the world over. Later the CHOCOS BRAND has been

positioned as “THE IRRESISTIBLE TASTE OF CHOCOLATE”. The Media spend by Kellogg’s on

Chocos brand was distributed equally between Chocos flakes and Chocos Biscuits.



THE JOURNEY SO FAR

Kellogg’s from time to time has come up with different products. The journey from initial failure

to present success has seen the launch of various mix of products from time to time.

Kellogg's initial offerings in India included cornflakes, wheat flakes and Basmati rice flakes.

The hi-tech launch stood out as a failure, because of various technical, financial and other

reasons which would be discussed I detail in this report.

As a comeback strategy, Kellogg decided to launch two of its highly successful brands in

other countries - Chocos (September 1996) and Frosties (April 1997). This time the dice rolled in

the company’s favour and the sales started increasing significantly.

Next in the league was Chocos Breakfast Cereal Biscuits.

The launch continued resulted with the Mazza series in August 1998 - a crunchy, almond-

shaped corn breakfast cereal in three local flavors - ‘Mango Elaichi,' ‘Coconut Kesar' and ‘Rose.'



THE JOURNEY SO FAR- Timeline



BRAND BUILDING-THE ADVERTISING

Advertising of the product is one of the prominent steps in building and creating the niche in

the market. But the initial brand building strategies, the advertising policy was not that much

impressive.

The rooster and the charm, with which the company did the wonders in the West was missing

here. Later, Kellogg attempted to Indianise its campaigns instead of simply copying its

international promotions. It came out with the taglines such as ‘Jago jaise bhi, lo Kellogg's hi”.

In 1997, Kellogg launched ‘The Kellogg Breakfast Week,' a community-oriented initiative to

generate awareness about the importance of breakfast. The program focused on prevention of

anemia and conducted a series of nutrition workshops activities for both Individuals and

families. The program was launched in Chennai, Delhi and Mumbai. Continuing the success

journey, Iron Shakti variant was launched in 2000 which offered a new dimension to health with

iron fortified cornflakes. One of their ads went like this

Kellogg’s Iron Shakti TVC

A gang of thieves is seen loading

some stolen items in a truck. Just

then a man with his family arrives

at...

...the scene. Thinking that his

neighbour, Pandey Ji, is shifting

home he does not pay much

attention...

...to their activity. As his

daughter worryingly points out

to him, “hamara TV,” our man

cools her off by saying,

“Pandey Ji ka”.



The little girl gets more disturbed

on seeing the thieves with her

cupboard. But the father assures

her, “Pandey Ji ka”.

Not able to take any more of this,

she vehemently protests on

seeing

their refrigerator with the

stealers. But our...

...man still reassures her,

“Pandey Ji ka”. On reaching

home he finds the things

missing and realizes every-

thing.

VO: "Iron kam khaoge toh dimaag

kaise chalega. Aapko chaahiye

Kellogg’s corn flakes jisme hai iron

shakti. Ab poore parivaar ka

dimaag chalega...

...nahin daudega. The ad ends on

our man telling his family the

thieves’ truck number, thereby

proving his better memory.

Following the latest trends in the present scenario, packaging and Today, advertising and

packaging are also key aspects of the marketing mix. Kellogg’s advertise using a whole range of

media: in the press, on posters, radio and cinema, direct mail and, most recently, on the

Internet. However, the main channel for its advertising is on television, where individual brands

are given their own air time, aimed specifically at a target audience. Although breakfast cereals

are consumed by the whole population, individual products may be aimed at specific groups.

For example, Special K is aimed towards women, Start has a sporty image and Frosties and Coco



Pops are primarily aimed at children. Corn Flakes, by contrast, are aimed at the whole family.

This targeting will determine the content of the advert and the time of broadcast.

Kellogg’s Special-K TVC

We see a woman asking her

husband how she looks in the

attire she is wearing?

He turns back and says it's a

perfect fit and she tells him he

has lost the bet.

He explains how till sometime

back his wife couldn't fit into

this dress but she took a

challenge to wear it for her

friend's wedding.

He says that in just 2 weeks

she lost weight with the

challenge.

VO: Take the Kellogg's Special

K Challenge....and lose up to 2

1/2 Kgs of weight.

The ad ends as the husband tells

his wife, "Tonight you'll look

prettier than the bride".



MARKETING MIX

Product

Launched in September 1994, Kellogg's initial offerings in

India included cornflakes, wheat flakes and Basmati rice

flakes. Despite offering good quality products and being

supported by the technical, managerial and financial

resources of its parent, Kellogg's products failed in the

Indian market. Even a high-profile launch backed by hectic

media activity failed to make an impact in the marketplace.

Meanwhile, negative media coverage regarding the

products increased, as more and more consumers were

reportedly rejecting the taste. Converting the experimenters

into regular buyers had become a major problem for the

company. Realising that a major reason for Kellogg's failure

was the fact that the taste of its products did not suit Indian

breakfast habits, it came up with the idea of Indianisation of

the taste. Kellogg decided to launch two of its highly

successful brands - Chocos (September 1996) and Frosties

(April 1997) in India. Chocos were wheat scoops coated with

chocolate, while Frosties had sugar frosting on individual

flakes. The success of these variants took even Kellogg by

surprise and sales picked up significantly. Launch of the

Mazza series in August 1998 - a crunchy, almond-shaped corn

breakfast cereal in three local flavors - ‘Mango Elaichi,' ‘Coconut Kesar' and ‘Rose.' Developed

after a one-year extensive research to study Consumer patterns in India, Mazaa was positioned

as a tasty, nutritional breakfast cereal for Families. Continuing the success journey, Iron Shakti

variant was launched in 2000 which offered a new dimension to health with iron fortified

cornflakes. And most recently, Special K plus variant has been launched in 2008 targeting

especially the women and projected as a low-fat breakfast.



Price

At an average cost of Rs 21 per 100 gm, Kellogg products were clearly priced way above the

product of its main competitor, Mohan's Cornflakes (Rs 16.50 for 100 gm).Also, Kellogg did not

have retail packs of different sizes to cater to the needs of different consumer groups. To

counter this criticism, the company introduced packs of suitable sizes to suit Indian

consumption patterns and purchasing power. Kellogg introduced the 500gm family pack, which

brought down the price per kg by 20%. Also, Mazza was introduced in 60gm pouches, priced at

Rs 9.50. It did not position Mazza in the premium segment. The glossy cardboard packaging was

replaced by pouches, which helped in bringing down the price substantially. And, the decision

to reduce prices seemed to be a step in the right direction and worked well for Kellogg.

Place

Kellogg identified distribution as another major area to address in order to increase its

penetration in the market. When Launched in September 1994, there were complaints that the

products were not available in many cities. Before the product was made available nationally in

March 1995, the demand from Mumbai had been very encouraging. Within a year of its launch

in Mumbai, Kellogg had acquired a 53% market share. Following this, the company accelerated

its national expansion plans and launched the product in 60 cities in a 15-month period. In

1995, Kellogg had 30,000 outlets, which was increased to around 40,000 outlets by 1998 i.e. a

significant increase of 33%. And, that really helped attain the desirable as the deeper

penetration fetched in larger consumer base nationwide, which was earlier confined to only the

metropolitan cities.

Promotion

Initially, the company's advertisements and promotions focussed only on the health aspects of

the product. In doing this, Kellogg had moved away from its successful ‘fun-and-taste'

positioning adopted in the US and positioning had given the brand a ‘health product' image,

instead of the fun/health plank that the product stood on in other markets. So, to rectify this



wrong move they resorted back to building the “fun-and-taste” image and took various moves

in the same direction which is evident in the advertising and promotion schemes used. Though,

Kellogg's advertising had not been very impressive in the initial years. Apart from ‘Jago jaise bhi,

lo Kellogg's hi,' the brand had no long-term baseline lines. To set things right, Kellogg attempted

to Indianise its campaigns instead of simply copying its international promotions. The rooster

that was associated with the Kellogg brand the world over was missing from its advertisements

in India. One of its campaigns depicted a cross section of individuals ranging from a yoga

instructor to a kathakali dancer attributing their morning energy and fitness to Kellogg. The

advertisement suggested that cornflakes could be taken with curds, honey, and banana.

In April 1997, Kellogg launched ‘The Kellogg Breakfast Week,' a community-oriented initiative to

generate awareness about the importance of breakfast. The program focussed on prevention of

anemia and conducted a series of nutrition workshops activities for both individuals and

families.

Kellogg also increased its focus on

promotions that sought to induce people

to try their product and targeted schools

across the country for this. By mid-1995,

the company had covered 60 schools in

the metros. In March 1996, the company

offered specially designed 50 gm packs

free to shoppers at select retail stores in

Delhi. This was followed by a house to-

house sampling exercise offering one-

serving sachets to housewives in the city. The company also offered free pencil-boxes, water

bottles, and lunch boxes with every pack. Plastic dispensers offering the product at discounted

rates were also put up in petrol pumps, super markets, airports etc.

Kellogg also launched the Chocos biscuits, claiming that cereals being a ‘narrow category,' the

foray into biscuits would create wider awareness for the Kellogg brand.



LAUNCH OF A NEW PRODUCT: SPECIAL-K

Creating new products can be expensive. It involves making investment decisions now, in the

hope of making a return later. Weighing up future returns against an investment is a crucial

part of a manager’s job. It always involves an element of risk, because the future is never

certain. Managers’ previous experience, together with market research information helps them

to predict future events and outcomes

It follows from this that decisions about a

brand, creating new product or extensions

are an aim to meet a range of objectives

such as:

Growing market share

Developing a unique market position

Creating consumer or brand loyalty

Generating a targeted level of profit.

There was a need for change, company had

already achieved a good market share in

Cereals market and growth was saturating. The cereals market in India was mainly had kids as

consumers with some share coming from working young adults but women were missing from

the scene.

Kellogg’s already knew that women who are keen to watch their weight and shape seek a range

of solutions throughout the day - not just at breakfast. With the help of both users and non-

users of existing cereals products, market researchers undertook further quantitative tests of

product ideas across a range of food categories.

Kellogg’s soon came to realise that these kind variants will be responsible for a huge growth in

the revenue, without a drop in sales of the core cereal product. New product development had

transformed the brand within the India. This in turn has given a great opportunity to roll-out

other developments in market which is yet not has been seized by the Kellogg.



INDUSTRY ANALYSIS

There are many players in the Indian Market:

Kellogg's

Mohan Meakins

Murginns

Shanti's

AIM's Aristo

Savour

The target Segment:

Kellogg’s – Premium Segment.

o CHOCOS is targeted towards growing children and young adults

o Special K is targeted toward women who are keen to watch their weight and shape

Others – Middle and Lower Income (Economy Product)

Market Share of the Kellogg’s Brand

Year Market Share

1995 53%

1998 More than 55

2000 More than 60%

2010 More than 66%

The breakfast cereals market has grown well during 1996-1998, and it is believed that

Kellogg’s has been the growth-driver.”

Chocos has 20% share of the Breakfast Cereal Market

India is also fastest growing cereals markets in South Asia with annual growth of 24% and

forecasting of reaching Rs. 14 billion in 2014



DISTRIBUTION NETWORK OF KELLOGG’S

Today the company claims that its Kellogg’s cereal brand is available in 50,000 outlets across

the country and the Chocos Biscuit Brand is available in 2, 50,000 outlets. The company also

follows the following supply chain I order to reach its end consumer

Kellogg’s gives its Distributors a margin of 5% and 12% to its retailer, whereas the competitors

give a margin of 10-15% to its distributors.

MANUFACTURING PLANT

It has just have one plant in Taloja in Maharashtra, it is also perhaps time that the company

tried spreading its manufacturing operations to other cities, considering that transporting of

breakfast cereals is not easy.

1 • MANUFACTURER

2 • AGENTS

3 • SUPER STOCKISTS

4 • STOCKISTS

5 • RETAILERS



DATA COLLECTION

1. Data collection through personality administrated structured Questionnaires.

2. Sampling Decisions

• TARGET RESPONDENTS:

End Consumer: User and Non User

Age: 10 yrs and above

Income: All Income groups

Retailer: Shop Owner with stocks

SAMPLING PROCEDURE:

Consumer Survey

An online survey was conducted to collect the samples.

Retailer Survey

Retailer respondents were chosen in and around Delhi.



CALCULATION OF THE SAMPLE SIZE BY THE HELP OF THE

PILOT SURVEY

Sample size of the pilot survey 30

Formula Used:

√

---(1)

Where,

In the pilot survey we got 18 people who responded ' Yes ' when asked do they eat cereal and 12

responded 'No' to the same question.

Thus,

√( )( )

Now we also know that for the sample size,

[ ⁄

]

--- (2)

⁄ is known as the critical value , the positive value that is at the vertical boundary for the area of

in the right tail of the standard normal distribution.



is the population standard deviation

= sample size

= Margin of error

Now, at 95% confidence interval ⁄ and keeping our margin of error an

substituting in equation (2),

[ ( )( )

]

Thus sample size we have chosen is 83.



CHI-SQUARE TEST

Hypothesis:

H0: Consumer wants all the benefits equally by consumption of cereal food.

H1: Consumer do not want all the benefits equally by consumption of cereal food .

Formula used:

2 =

( )

Driving factor Observed frequencies (O) Expected Frequencies ( E ) (O-E)2 2

Health and fitness 21 8.333 160.4529 19.25512

Feeling of Strong 4 8.333 18.77489 2.253077

Hunger satisfier 5 8.333 11.10889 1.33312

Happiness 2 8.333 40.10689 4.813019

Feeling energetic 10 8.333 2.778889 0.33348

Thinking Booster 2 8.333 40.10689 4.813019

Healthiest breakfast notion

11 8.333 7.112889 0.853581

Convenience 19 8.333 113.7849 13.65473

Others 1 8.333 53.77289 6.453005

Chi Square = 53.7621

Degree of freedom(Df) = 8



tab (tabulated value) = 15.51 for 95% confidence level and

tab (calculated value) = 53.7621

Since , tab (calculated value) tab (tabulated value), the null hypothesis is rejected.

This means all benefits are not equally asked for . In particular health and fitness is the most

preferred one.



RESPONDENTS' PROFILE

We saw 60.2% males and 39.8% females in the survey respondents. The Income group wise break up of

these males and females is given in the chart above. As you can see (<15000 Rs./Month) income group

is dominant in both males and females.



We saw 55.4% of students and 38.6% salaried employee as respondents to our survey, as the survey was

primarily online in nature.



We got all the income groups' respondents in both users and non-users of cereals.



We saw that in Students and salaried employee the percentages of users and non-users are

almost equal.



SUGGESTIONS FROM NON- USERS

If portrayed as more filling breakfast and Indianised, Kellogg can substantially increase its

consumer base in India.

39 non-users responded with various reasons for not preferring cereals in their breakfast.

Why they do not prefer Cereals:

As is evident from the pie chart above,38.9% of non-users said the cereals meal is not filling

enough to be consumed in their breakfast and this has been given the major deterrent to them.

Also, there were a set of other reasons for not having a cereals breakfast, as per the responses

e.g. lack of the Indian-ness of the traditional Indian breakfast etc which constituted about 25%

of non-users .The flaky appearance of the cornflakes and no "feel-good" factor after eating the

cereals breakfast were the other two reasons which equally shared(16.7%) the role in being a

Vaibhav

Highlight



hindering factor for using cereals breakfast. Cost and the presumed kiddish-ness associated

with the cereals were the next two major reasons, again accounting equally (11.1%).Lastly, a

few non-users (5.6%) also discarded the whole "health" factor attached to the cereals

breakfast.



SUGGESTIONS FROM USERS

Taste as a driving factor for consumption and purchase:

Users clearly pointed out that taste is the most important driver to purchase cereals after

nutritional value

As we can see in the graph above health and convenience are two basic factors why most

consumers eat cereals.



It is clearly visible above that consumer look for Nutritional value when they go for the

purchase, which is consistent with their eating preferences as well.



When we asked them what is that you look for when you buy Cereals, 42.1 % responded with

nutritional value and 28.9% percent responded with Taste and Flavor. If we consider that an

average consumer would not be able to differentiate about the minor changes in nutritional

value and would consider all cereals having equal nutritional value, Taste is the main driver to

attract consumers. People remember Chocos advert as it says its 'chocolaty and tasty' -'chahiye

hi chahiye'.

Vaibhav

Highlight

Vaibhav

Highlight



ADVERTS: SOLE DRIVER FOR THE AWARENESS OF A

BRAND

Clearly evident from the pie chart, Kellogg’s enjoys way too higher level of brand recognition

compared to its not-really-competitors in the Indian market with a whopping figure of 89.5%.

This clearly indicates the great role marketing can play in building a brand personality which

eventually can helps a brand gain market share, command price premium and insulates from

discounting Brands. Next and the only other player in the cereals-based breakfast market in

India is Mohan Meakin which has a brand recognition of 44.7%, which might be owing to the

time period for which the brand has been in the market (since 1949 when the Mohan Meakin

group, basically an alcoholic products manufacturer underwent a dynamic transformation and

forayed into the non-alcoholic segments, including breakfast foods as well) and the parent

company it is associated to. Yet again, the role of marketing comes up even louder considering

the still-so-low recognition Mohan Meakin has (compared to Kellogg’s) in the Indian market due

to no or very less advertising being done. Other than these two major players, Murginns,

Vaibhav

Highlight

Vaibhav

Highlight



Savour, Shanti’s etc. more or less have an almost equal share as far as brand recognition is

concerned and which is almost negligible, as the Pie chart above clearly shows. This is clearly

attributed to the lack of steps being taken by the companies in advertising, marketing the

product and creating the brand personality in the market.

And, since Brand recognition directly and most strongly affects the Sales of the product in the

market, it can be seen from the responses received for the brands of breakfast cereals users

buy in the Indian market which have been compiled in the Pie chart following.

Kellogg’s enjoying a market recognition as high as 89.5%, not surprisingly rules the market as

far as share in the consumer purchase is concerned.94.7% of the respondents preferred

Kellogg’s over any other brand available in the market and it was reflected in a recent report

published in Business Today (“Kellogg's, which hold about 60-65 per cent of the market share in

this category, was able to hold on to the prices of its products for almost five years. The firm is

marketing to maintain its leadership position by launching value packs priced Rs 10) dated

October 8, 2011 which said Kellogg’s has a market share of 60-65 percent in this category .The

Vaibhav

Highlight

Vaibhav

Highlight



second most purchased brand in this category is Mohan Meakin, again owing to the second

highest recognition level it has in the market and also due to relatively lower prices as

compared to the Kellogg’s products. This suggests that low price strategy can work to some

extent ,help fetching some first time buyers as there is an overlap in the users buying Kellogg’s

and Mohan Meakin and also people in lower income group but interested in the cereals based

breakfast. This can also be further substantiated with the 26.5 crore Rs. Sales the group has had

in the year 2010-11 from this division which is the fourth highest after its key business. Other

than these major two, other players in the market have almost negligible purchases and this is

clearly derived from the depressingly low recognition levels amongst the users.

The Pie-chart above showing the preferred form gives us a clear indication of the fact that there

are varied tastes of the consumers taking from the most preferred Corn flakes to rice flakes, oat

meals, etc. Still, the corn flakes have been the most preferred form accounting for about 73.7%

of the respondents’ preferences. This is related to the popularity already cornflakes enjoy



owing to the first mover advantage i.e. being the first form the cereals breakfast was

introduced in. Next most preferred form has been the chocolate flavour. This can again be

attributed to an already popular (i.e. chocolate flavour) taste in the Indian market. Also, it was

projected targeting a certain segment (kids and younger people) so it has a regular consumer

base thus preferred by them. After this come the other flavours like muesli, oat meals and

wheat flakes which more or less enjoy the same share (26.3%, 21.1% & 21.1% respectively) in

consumer preference. This is related to the health benefits derived from all of them and almost

a more-or-less same popularity amongst the people. Although, it is worth noting muesli is a

growing market altogether which has recently come up. Quoting Business today dated October

8, 2011 “Of this large market, the corn flakes market is worth Rs 400 crore while muesli is worth

Rs 70 crore in India”. 13.2% of the respondents preferred diet flakes over any other variant .This

is again attributed to a certain segment which is the diet-conscious people in this case and thus

has a smaller but a regular consumer base. Lastly, rice flakes had the lowest preference level

which might be due to the not-so-good taste derived from it and rice being a rich source of

carbohydrates doesn’t appeal as the “healthy” meal to the customer.

Vaibhav

Highlight

Vaibhav

Highlight



INSIGHTS FROM RETAILERS

A survey was undertaken of the retailers in the Delhi and NCR region, primarily to find out their

perceptions and reactions to the four preferred brands of Cereals. They are namely.

• Kelloggs & Kellogg’s Chocos • Mohan Meakins • Murginns

The sample size taken was 20

The findings of the research have been outlined below

• Most of the retailers had stocked all the above 3 brands and they were accompanied by

POP and POS promotions provided by the company since this was an impulse category product.

• As to which brand was stocked the most, 95 % stored Kellogg’s & Chocos, 25% stored

Mohan Meakins, and 20% stored Murginns.

• On an average, 2 packs of other cereals and 15 packs of Kellogg’s & Chocos packs were

sold in a week.

• Generally 85% of the consumers asked for of Kellogg’s & Chocos packs and 15% asked

for other brands.

• The distributor replenished stocks once a week.

• The brand offering the best margin was the Mohan Meakins (16%). While the Kellogg’s

offered (10-12%) to the retailers.

OBSERVATIONS

• The retailers stocked many brand since they all had a demand and they were

accompanied by POP and POS promotions provided by the company since was an impulse

category product.

• Kellogg’s was stored in the almost all the stores since it had the maximum demand as

was reflected by the later question.

Vaibhav

Highlight

Vaibhav

Highlight

Vaibhav

Highlight



• If the retailer had no stocks of Kellogg’s & Chocos cereals he refused or asked the

customer to come later. This was done to because either he did not have any other brand or he

did not want to pass a much lower quality brand to the customers.

• If the retailer had no stocks of Kellogg’s & Chocos he suggested some other brand

because he did not want to lose the customer.

Therefore it is imperative for the Kellogg’s Company to find favor with the retailers, so that they

will push the brand.



CONCLUSION

The compilation of this report bears a judgmental mark on what a company’s approach should be while

entering new markets. The culture and habits of new target group play a pivotal role in success of a

brand. Promoting a product with right proposition is essential. The perception of the consumers and

the attitude of the retailers have no doubt adds a new dimension to the existing advertising strategy in

use by the company worldwide.

The various models explained here in have helped in assimilating the core branding elements of the

proposed brand study. Even though there is no correlation between the advertising of both chocos

cereals and biscuits, cereals still extend leverage on the biscuits. The brand equity of cereals has

developed over a period of many years and has made its brand extensions like biscuits also a success.

There has been considerable success in inculcating new breakfast eating habits in the Indian consumer.

The year changing from the traditional idlis and parantha’s to the convenient way of eating breakfast.

This increased crackle in Kellogg India was brought about by its shift in positioning from nutrition to fun-

filled flavors.

THE HABIT BARRIER

The closer Indian food-habits are to the heart of the meal, the harder it is to change them. Their

approach to offer nutritious and tasty breakfast has worked well in Indian context after initial failure. At

present, Chocos accounts for 20 percent of Kellogg’s sales volumes. While Kellogg’s argues that it is not

looking for volumes for its variants, the search for a product to break down the taste-barrier may force

the company to increasingly rely on sub-brands like Chocos.

THE PRICE BARRIER:

Kellogg’s is able to cater only to the A-class towns or the more affluent consumers. Price is the biggest

element of consumer resistance.” The Indian consumer is not that discerning about quality when it

comes to looking at the whole price quality package.

The Positioning barrier, Hammering home the nutritional benefits of its products, Kellogg have spent

more than Rs.25 crore on advertising over the past few years. This in fact has proven beneficial for them

in the longer run, now consumers attaches importance to the level of iron and vitamin they intake.

Initially However, research showed that the average Indian consumer rarely use to go for Kellogg’s and

instead looks at the quantity, rather than the quality, of the food consumed.

The Kellogg mandate is to develop awareness about nutrition. While retaining its health positioning,

Kellogg’s new product-range promotion schemes, and sampling exercises are now not only aimed at a

younger audience but new products like Special-K are being launched which caters to women. At one

end they are seducing the consumers with promotions. On the other, they are talking to them about

health. So, they can persuade people to eat Kellogg because it is a healthy product.



ANNEXURE

QUESTIONNAIRE: CONSUMER

1. Name:

2. Sex: M/F

3. Age (yrs.)

(10 - 14)

(15 – 25)

(25 above)

4. Household income level:

• (Below 15000) pm • (15000 – 25000) pm • (25000 – 40000) pm • (Above 40000) pm

5. What do you usually eat in breakfast?

• Traditional breakfast (Paranthas, poha, idli etc.) • Juice and fruits • Tea/coffee with biscuits • Any other

6. IF only YOU ARE A NON USER OF Breakfast CEREAL PLEASE ANSWER THE question below

• I am yet to try Kellogg’s Chocos Cereal • I don’t like the taste of Chocos Cereal • I don’t like the packaging of Chocos • Don’t like the advertisements of Kellogg’s Chocos • It is not easily available • It is very costly • It is children's breakfast/ i used to eat in my childhood

7. IF only YOU ARE A USER OF Breakfast CEREAL PLEASE ANSWER THE question below

• It keeps me healthy and fit • It makes me feel strong • It satisfies my hunger



• It makes me feel happy • It gives me a feeling of being funky and trendy • It makes me feel energetic • It makes me think better • It is the Healthiest Breakfast I can have • It is very convenient to have • Any other (please specify)

8. In your family, who usually eats breakfast cereals (cornflakes etc.)?

• Everyone • Children(0-14) • Young adults(15-25) • Adults(26-50) • Senior adults(50 above)

9. What all brands of breakfast cereals are you aware of?

Kellogg's

Mohan Meakins

Murginns

Shanti's

AIM's Aristo

Savour

10. What all brands of breakfast cereals do you purchase?

Kellogg's

Mohan Meakins

Murginns

Shanti's

AIM's Aristo

Savour

11. What is most important factor in your purchase the breakfast cereals?

• Taste/Flavor • Crispiness • Size/Shape/Color • Nutritional + health value (Vit, Min etc.) • Brand name • Price • Availability



• Easy to make • Any other (please specify)

12. What do you look for when you purchase these breakfast cereals? (Rate 1 as most

important and so on)

Taste/Flavor

Crispiness

Size/Shape/Color

Nutritional + health value (Vit, Min etc.)

Brand name

Price

Availability

Easy to make

Any other (please specify)

13. What are the preferred forms in which you like to have cereals (Tick any one)?

Rice flakes

Corn flakes

Wheat flakes

Muesli

Oat meals

Any other (please specify)

14. What all sub brands of Kellogg’s have you heard of?

Kellogg's Original

Chocos

Rice Flakes

K Plus

Honey loops

Wheat Flakes

All Bran

Kellogg's Mazaa

15. Have you seen the Kellogg's cereal advertisement?

• Yes • No



If yes, what do you remember about the ad? Please specify.

One thing you would like Kellogg’s to do in future?



ANNEXURE

RETAILER: CONSUMER

1. What brands of Cereals do you store in your shop (tick any one)?

Kellogg's

Mohan Meakins

Murginns

Shanti's

AIM's Aristo

Savour

2. Which of these brands sell the most and why (tick any one)?

Kellogg's

Mohan Meakins

Murginns

Shanti's

AIM's Aristo

Savour

3. Which of these brands do you store the most (tick any one)?

Kellogg's

Mohan Meakins

Murginns

Shanti's

AIM's Aristo

Savour

4. How many packs of chocos do you sell in a

A. Week:

B. Month:

5. If you do not have Kellogg’s or Chocos available on a particular day, what would you tell your

consumer?

Come tomorrow

Suggest another competing brand



Send him to the next store

Refuse

Any other

6. How often does the distributor replenish chocos?

Weekly

Fortnightly

Monthly

7. The brand offering the best margin is (tick any one)

Kellogg's

Mohan Meakins

Murginns

Shanti's

AIM's Aristo

Savour



BIBLIOGRAPHY

The Times 100 & Wilson and Wilson Publishing Ltd:

Using promotion to boost sales and brand value

(The Times 100 / Case Studies). Available online at http://www.thetimes100.co.uk/case-study--using-

promotion-to-boost-sales-and-brand-value--6-228-1.php.


Re-branding a Corporate Image

(The Times 100 / Case Studies). Available online at http://www.thetimes100.co.uk/case-study--re-

branding-a-corporate-image--6-64-1.php.


Supply chain from manufacturing to shelf

(The Times 100 / Case Studies). Available online at http://www.thetimes100.co.uk/case-study--supply-

chain-from-manufacturing-to-shelf--6-370-1.php.


Using new product development to grow a brand

(The Times 100 / Case Studies). Available online at http://www.thetimes100.co.uk/case-study--using-new-

product-development-to-grow-a-brand--6-115-1.php.

Learning, Mountainview:

Pricing Practices: Their Effects on Consumer Behaviour and Welfare

checked on 13/10/2011.



CII:

RETAIL SCENARIO IN INDIA. Unlimited Opportunity

checked on 13/10/2011.

G. Vani, M.Ganesh Babu N. Panchanatham (2010):

Toothpaste products-Analysis of consumer behavior in Bangalore city.

In Journal of Economics and Behavioral Sudies Vol.1 (No.1), pp. 27–39, checked on 13/10/2011.

Arvind Sahay and Nivedita Sharma (2010):

Brand Relationships and Switching Behaviour for Highly Used Products in Young

Consumers.

In VIKALPA VOLUME 35 (NO 1), checked on 13/10/2011.

Achenreiner, Gwen Bachman and Roedder Deborah John (2003):

The Meaning of Brand Names to Children: A Developmental.

In Journal of Consumer Psychology 13 (3), pp. 205–219.

Tellis, Gerard (1988):

The Price Elasticity of Selective Demand: A Meta-Analysis of Economic Model of

Sales.

In Journal of Marketing Research 25 (4), pp. 341-341.

Vaibhav

Highlight

Kellogg's Ride in India - - Get a Free Blog Here

Documents

Transcript of Kellogg's Ride in India - - Get a Free Blog Here