Kellogg's Marketing Strategy and Marketing PlansPPT at BECDOMS

Like Coco the monkey we sing the praises of the chocolatey cereal
Kellogg Company Mission Statement Kellogg is a Global Company Committed to Building Long-Term Growth In Volume and Profit and to Enhancing its Worldwide Leadership Position by Providing Nutritious Food Products of Superior Value
W. K. Kellogg
and Marketing Plans
Organizational Strategies
Leadership in product innovation Strengthening the companys seven largest cereal markets Accelerating the growth of convenience foods business Developing a more focused organization Continuing to reduce costs
Global Strategy
Management continues global strategy Offers brand-differentiated pricing Invests in new product research Brand-building marketing activities Cost structure reduction
Product Market Strategies

Product development
Constant innovation. Introduction of new product to present customers.
Market development
Maintain global position
Diversification
Introduction of new products to fit new customers needs
Kelloggs SWOT Analysis
Strengths
Control 42% of global market share for Pre-sweeter cereal, which is more than triple the market share of any of their competitors. They have the strongest brand recognition and advertising recollection of all the cereal manufacturers
Weaknesses
Have not aggressively developed many new cereal lines in the past four years. Slow erosion of their U.S. market share in the past few years, Follower in Pricing Strategy
Opportunities
International expansion is the biggest area for growth for Kelloggs. Kellogg can continue to slowly diversify, while still remaining in their core business area, which will increase their profitability. If they can develop a better pricing strategy and guarantee lower prices, they can reduce costs while increasing their market share.
Threats
General Mills, Post, and Quaker Oats are using price competition and product proliferation to erode Kelloggs share of the market. Discount imitation cereals brands have been successful in reducing premium brands in the more commodity like cereals.
Market Analysis
Market Analysis
Market size: sales of nearly $9.7 billion in the Ready-To-Eat Market in
2001
Product segments: the best-selling kids cereal brands--GM Lucky

Charms, GM Count Chocula, Post Marshmallow Alphabits, Q Marshmallow Safari, Rice Krispy.
Market share: competition is heating up in this market as flat sales and

low-priced clones have eroded the market shares of Kellogg and General Mills
Market Forecasts: the kidsmarket has been growing at a rate of more

than 15% a year, for the 5 to 7 years and shows no sign of slowing through the end of the decade. Growth in the overall kids food market was driven, to the largest extent, by gains in cereals.
Cereal Industry Volume Sales for Presweet Cereal

Volume Sales
4.5 1.4 4.8 16.7
(As of 2/01)
7.4 11.7
In million
Kellogg USA GM & Ralston Post & Nabisco Quaker Store Brands Malt O Meal Co
Market Analysis
(continued)
Marketing/promotion: Seven breakfast cereal marketers allocated

almost $775 million to purchases of space and time mass media in 2001.
Industry structure: Three food giants--Kellogg, General Mills, and

Philip Morris--responsible for 70% of kids foods in 2001.
Major Trends in Cereal Industry

New products are dominated by line extension and product promotion Increasing popularity of private labeled cereals due to high cost of branded products Higher demand for health food markets & products Health claims is becoming more prevalent; Kelloggs American Heart Association

Competitive Analysis
Competitive Force Analysis

Intensity of Rivals
Four Large companies are dominant in the market Oligopoly Competition is very intense Inflated prices Growth Rate has remained Constant

Threat of a Substitution
Private 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
Strategic Group Map

of Competitors in the Presweeter Cereal Industry
High
Kellogg
General Food
General Mills Quaker Oats
Low
Private Label
Brand Cereals PRODUCT LINE/MANUFACTURING MIX
Private Label Quaker Oats General Foods General Mills

Capn Crunch
KELLOGG
Honey Nut Cheerios Lucky Charm Cocoa Krispies Other Cereals Cheerios Fruit Cereal Bars Honey Nut Cheerios
Honey Nut Shredded
Capn Crunch Snack Bars
Bagged ValuePriced Cereal
Cranberry Almond Crunch Rice Cakes Oatmeal Cereal Bars

High Barriers to Entry
Main barriers to entry in the breakfast cereal market are four major cost factors.
Product development - easy for established manufacturers to duplicate products, new products take more money & time to develop Distribution - high slotting & promotional fees, limited shelf space, need to create retail demand, all increase costs for manufacturers

High Barriers to Entry Marketing - need to compete against current brands
that have been established through large advertising and promotional efforts (t.v., coupon)
High Capital costs - for different types of equipment

and plants

Power of Supplier Supplier does not have much power because of private labels. Similar products have allowed buyers to acquire products from private labels at a Cheaper Price. Now industry is very Sensitive to the buyer.
Customer Analysis
Cocoa Krispies Buying Criteria

Key equity drivers: chocolate taste, Coco the monkey, snap, crackle and pop Package: fun, colorful, capture childrens attention Product: very sweet, colorful and contain nutritious elements
Kelloggs Customer Analysis

Who Are the Buyers? Parents, Older Adults How Often Do They Purchase? Kids cereal are purchased roughly 18 times a year 10th fastest-moving product in the supermarket Where Do they Want to Buy? Grocery Stores responsible for 99% of cereal sales Who Are the Influencers? Kids Who consumes the goods? Kids under 18 Who are Kelloggs Target Market? Kids 8-11 years old
Percent of Total Annual Spending on Presweeter Cereal

(by Age Group)
75+ 65-74
Age Groups
8.2 8.8 10.3 22.3 29.4 16.3

Percentage
55-64 45-54 35-44 25-34
Cocoa Krispies
Objective
Strengthen kid consumer base Secure Kellogg cocoa bit subsegment volume share with competitive focus on GMs Cocoa Puffs and Posts Cocoa Pebbles Create a product that enhances the ultimate multi-sensory food experience by adding additional attributes that satisfy expended consumer needs Attract different target groups
COCOA Krispies Promotion

Spent roughly $15 million for ad campaign: TV, print Adds include Coco the Monkey Advertiser: Kellogg Agency (Leo Burnet) Quantity and price discounts Packaging: fun, colorful, capture children attention
Cereal Pricing
for Retail Stores
Farmer Jack Kroger Target
Cocoa Pebbles (General Mills) $0.25/ounce $0.25/ounce $0.15/ounce Cocoa Puffs $0.28/ounce $0.27/ounce $0.21/ounce (Post) Cocoa Krispies (Kelloggs) $0.22/ounce $0.23/ounce $0.17/ounce
Private Labels
$0.23/ounce $0.13/ounce
n/a
Kelloggs
Distribution Players
Minor players: Major players: Convenience stores Kroger Retail/Distribution: Grocery stores are responsible for Gas sales Farmer Jack the overwhelming 99%--ofcereal stations
Target
Kelloggs
Distribution Channels
Kelloggs Kelloggs Kelloggs
Computer system Wholesaler Kroger, Target, distrib. centers Retailer Retailers Distrib. In stores
Cocoa Krispies:
PRODUCT LIFE CYCLE
Introduction
Growth
Maturity
Decline
Time
Critique of the Plan

Have we heard of it? Can we get it? Can we afford it? Are we buying it? Is it legitimate?
Promotional issues Distribution Pricing Target market record Corporate responsibilities
Promotional Issues
Mass Advertising Direct Promotions Trade Promotions Personal Selling
TV, Cocoa the Monkey, and Snap, Crackle and Pop. Coupons
In-store displays, Samples
Key-account reps, Area reps, Merchandisers
Distribution
Penetration
Chain stores, Independent wholesalers
Sales Channel - Brand equity helps Logistics - Finished goods warehouse /

rail / truck / centers or independent warehouses
Relationships - Conflict or harmony?
The Target
Fastest Growing Foods in the American Diet: Carbonated Soft drinks Pre-Sweet Cereal Bagels Toaster Pastries Pizza
Corporate Responsibilities
Legal Issues - Safety, Information, Choice Environmental - Earth Spirit Award Issues Civic Responsibilities - Ad content standards
- Stakeholder orientation - Public program support
Ethical Issues - Nutritional education

- More than required
Americas Top 10 R-T-E Cereals

1. Frosted Flakes 2. Cheerios 3. Frosted Mini-Wheat 4. Corn Flakes 5. Rice Krispies/Cocoa Krispies 6. 7. 8. 9. 10. Honey Nut Cheerios Raisin Bran Fruit Loops Special K Corn Pops
Positioning Map
Taste Cocoa Krisp Fruit Loops Corn Flakes Cheerios Raisin Bran Nutrition
Special K
SORRY COCO
The boys are back in town!
Sources
Kellogg - Mike Culverson / Customer Service Farmer Jacks - Ron Van Este / Cereal buyer Media Week - May98 / Something New Under My Nose Business Week - Wednesday, May 29, 2002 Kellogg Co. WWW.industryweek.com - Food Industry Focus Field Visits - Kroger, Farmer Jacks, Target, Rite-Aid. Florida Sun Sentinel - Feb. 7, 1998 / Robin Fields / Get That One Mommy The NPD Group - March, 2001/ The Twelfth Annual Report on Eating Patterns in America Kellogg - www.Kellogg's.com http://faculty.sba.udayton.edu.schenk.kellcase.htm
The End

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Like Coco the monkey we sing the praises of the chocolatey cereal

and Marketing Plans

Product Market Strategies

Constant innovation. Introduction of new product to present customers.

Maintain global position

Introduction of new products to fit new customers needs

Kelloggs SWOT Analysis

Product segments: the best-selling kids cereal brands--GM Lucky

Market share: competition is heating up in this market as flat sales and

Market Forecasts: the kidsmarket has been growing at a rate of more

Cereal Industry Volume Sales for Presweet Cereal

 Marketing/promotion: Seven breakfast cereal marketers allocated

 Industry structure: Three food giants--Kellogg, General Mills, and

Major Trends in Cereal Industry

Competitive Force Analysis

Competitive Force Analysis

Strategic Group Map

General Mills Quaker Oats

Private Label Quaker Oats General Foods General Mills

Honey Nut Shredded

Capn Crunch Snack Bars

Bagged ValuePriced Cereal

Cranberry Almond Crunch Rice Cakes Oatmeal Cereal Bars

Competitive Force Analysis

Competitive Force Analysis

High Capital costs - for different types of equipment

Competitive Force Analysis

Cocoa Krispies Buying Criteria

Kelloggs Customer Analysis

Percent of Total Annual Spending on Presweeter Cereal

8.2 8.8 10.3 22.3 29.4 16.3

55-64 45-54 35-44 25-34

COCOA Krispies Promotion

Critique of the Plan

In-store displays, Samples

Key-account reps, Area reps, Merchandisers

 Sales Channel - Brand equity helps  Logistics - Finished goods warehouse /

 Relationships - Conflict or harmony?

 Ethical Issues - Nutritional education

Americas Top 10 R-T-E Cereals

The boys are back in town!

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Marketing/promotion: Seven breakfast cereal marketers allocated

Industry structure: Three food giants--Kellogg, General Mills, and

Sales Channel - Brand equity helps Logistics - Finished goods warehouse /

Relationships - Conflict or harmony?

Ethical Issues - Nutritional education