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Like Coco the monkey we sing the praises of the chocolatey cereal. Kellogg Company Mission Statement.

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kellogg company mission statement
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

organizational strategies
Organizational Strategies
  • Leadership in product innovation
  • Strengthening the company’s seven largest cereal markets
  • Accelerating the growth of convenience foods business
  • Developing a more focused organization
  • Continuing to reduce costs
global strategy
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 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
strengths
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
Weaknesses
  • Have not aggressively developed many newcereal lines in the past four years.
  • Slow erosion of their U.S. market share in the past few years,
  • Follower in Pricing Strategy
opportunities
Opportunities
  • International expansion is the biggest area for growth for Kellogg’s.
  • 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
Threats
  • General Mills, Post, and Quaker Oats are using price competition and productproliferation to erode Kellogg’s share of the market.
  • Discount imitation cereals brands have been successful in reducing premium brands in the more commodity like cereals.
market analysis13
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 kids’market has beengrowingat 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 kid’s food market was driven, to the largest extent, by gains in cereals.
slide14

Cereal Industry Volume Sales

for Presweet Cereal

slide15

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 kid’s foods in 2001.
major trends in cereal industry
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; Kellogg’s - American Heart Association
competitive force analysis intensity of rivals
Competitive Force AnalysisIntensity of Rivals
  • Four Large companies are dominant in the market
  • Oligopoly
  • Competition is very intense
  • Inflated prices
  • Growth Rate has remained Constant
competitive force analysis threat of a substitution
Competitive Force AnalysisThreat 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
slide20

Strategic Group Map

of Competitors in the Presweeter Cereal Industry

High

Kellogg

General

Mills

General

Food

Quaker

Oats

PRICE/QUALITY/IMAGE

Private

Label

Low

Brand Cereals

PRODUCT LINE/MANUFACTURING MIX

slide21

Private Label

Quaker Oats

General Foods

General Mills

Cap’n Crunch Snack Bars

Cap’n Crunch

KELLOGG

Honey Nut Shredded

Honey Nut Cheerios

Lucky Charm

CocoaKrispies

Honey Nut Cheerios

Other Cereals

Bagged Value-Priced Cereal

Cheerios

Fruit Cereal Bars

Cranberry Almond Crunch

Rice Cakes

Oatmeal Cereal Bars

competitive force analysis high barriers to entry
Competitive Force AnalysisHigh 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

competitive force analysis high barriers to entry23
Competitive Force AnalysisHigh 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

competitive force analysis power of supplier
Competitive Force AnalysisPower 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.
cocoa krispies buying criteria
Cocoa KrispiesBuying Criteria
  • Key equity drivers: chocolate taste, Coco the monkey, snap, crackle and pop
  • Package: fun, colorful, capture children’s attention
  • Product: very sweet, colorful and contain nutritious elements
kellogg s customer analysis
Kellogg’s 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 Kellogg’s Target Market?

  • Kids 8-11 years old
cocoa krispies objective
Cocoa KrispiesObjective
  • Strengthen kid consumer base
  • Secure Kellogg “cocoa” bit subsegment volume share with competitive focus on GM’s Cocoa Puffs and Post’s 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
COCOA KrispiesPromotion
  • 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
kellogg s distribution players
Major players:

Kroger

Farmer Jack

Target

Minor players:

Convenience stores

Gas stations

Kellogg’sDistribution Players

Retail/Distribution: Grocery stores are responsible for the overwhelming 99%--of cereal sales

kellogg s distribution channels
Kellogg’sDistribution Channels

Kellogg’s

Kellogg’s

Kellogg’s

Computer system

Wholesaler

Kroger, Target, distrib. centers

Retailer

Retailers

Distrib. In stores

slide34

Cocoa Krispies:

PRODUCT LIFE CYCLE

Dollars

Introduction

Growth

Maturity

Decline

Time

critique of the plan
Critique of the Plan
  • Have we heard of it? Promotional issues
  • Can we get it? Distribution
  • Can we afford it? Pricing
  • Are we buying it? Target marketrecord
  • Is it legitimate? Corporate responsibilities
promotional issues
Promotional Issues
  • Mass AdvertisingTV, Cocoa the Monkey, and Snap, Crackle and Pop.
  • Direct PromotionsCoupons
  • Trade Promotions In-store displays,Samples
  • Personal SellingKey-account reps, Area reps, Merchandisers
distribution
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
The Target

Fastest Growing Foods in the American Diet:

Carbonated Soft drinks

Pre-Sweet Cereal

Bagels

Toaster Pastries

Pizza

corporate responsibilities
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

america s top 10 r t e cereals
1. Frosted Flakes

2. Cheerios

3. Frosted Mini-Wheat

4. Corn Flakes

5. Rice Krispies/Cocoa Krispies

6. Honey Nut Cheerios

7. Raisin Bran

8. Fruit Loops

9. Special K

10. Corn Pops

America’s Top 10 R-T-E Cereals
slide41

Positioning Map

Taste

Cocoa Krisp

Fruit Loops

Cheerios

Raisin

Bran

Corn Flakes

Nutrition

Special K

sources
Sources
  • Kellogg - Mike Culverson / Customer Service
  • Farmer Jack’s - Ron Van Este / Cereal buyer
  • Media Week - May‘98 / ‘Something New Under My Nose”
  • Business Week - Wednesday, May 29, 2002 “Kellogg Co.”
  • WWW.industryweek.com - “Food Industry Focus”
  • Field Visits - Kroger, Farmer Jack’s, 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
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