ready to eat breakfast cereal n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Ready-to-Eat Breakfast Cereal PowerPoint Presentation
Download Presentation
Ready-to-Eat Breakfast Cereal

Loading in 2 Seconds...

play fullscreen
1 / 63

Ready-to-Eat Breakfast Cereal - PowerPoint PPT Presentation


  • 229 Views
  • Uploaded on

Ready-to-Eat Breakfast Cereal. Sarah Icke, Kamille Jackson, Julian Ordman. Presentation Overview. Introduction Industry Overview Advertising Strategies and Raw Data Analysis Concluding Analysis and Industry Recommendation. Why Cereal?. Breakfast is the most important meal of the day

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

Ready-to-Eat Breakfast Cereal


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
    Presentation Transcript
    1. Ready-to-Eat Breakfast Cereal Sarah Icke, Kamille Jackson, Julian Ordman

    2. Presentation Overview • Introduction • Industry Overview • Advertising Strategies and Raw Data Analysis • Concluding Analysis and Industry Recommendation

    3. Why Cereal? • Breakfast is the most important meal of the day • “Americans buy 2.7 billion packages of breakfast cereal each year. If laid end to end, the empty cereal boxes from one year's consumption would stretch to the moon and back. “ – Cerealizing America: The Unsweetened Story of American Breakfast Cereal • An industry with extremely high brand loyalty • An industry with one of the highest ad-to-sales ratios

    4. Industry Overview Industry Definition Source: IBISWorld

    5. Acquires raw materials such as wheat, flour, rice, and sugar Industry Overview • Key Supplying Industries: • Baking Mix & Prepared Food Manufacturing • Canned Fruit & Vegetable Processing • Corn Farming • Corn, Wheat & Soybean Wholesaling • Flour Milling • Seasoning, Sauce and Condiment Production • Sugar Processing Source: IBISWorld

    6. Industry Overview Processes raw materials into various cereal products, including ready-to-eat cereals, cereal bars, and hot cereals Source: IBISWorld

    7. Industry Overview Sells through sellers in various channels, including supermarkets, wholesalers, and food service providers Source: IBISWorld

    8. Industry Profile Source: IBISWorld

    9. Industry Profile • Key External Drivers • Demand from grocery wholesaling • Per capita disposable income • Healthy eating index • Price of coarse grains • World price of wheat Source: IBISWorld

    10. Industry Profile Source: IBISWorld

    11. Industry Profile • Key Success Factors • Ability to adapt to change • Ability to pass on cost increases • Product differentiation • Supply contracts for key inputs • Economies of scale and scope Source: IBISWorld

    12. Industry Profile • Mature Industry • Revenue: $11.7bn (2013) • Per capita consumption is stagnant • Revenue growth: -0.2% (2008-2013), 1% (2013-2018) Source: IBISWorld

    13. Industry Profile • Highly Concentrated • HHI: 1770.57 (top 4 firms) • Top 4 firms: 74.7% market share • Oligopoly • High barriers to entry Source: IBISWorld

    14. Industry Profile Source: IBISWorld

    15. Industry Profile Highly Competitive Source: IBISWorld

    16. Industry Profile Source: IBISWorld

    17. Industry Profile Source: IBISWorld

    18. Industry Profile Source: IBISWorld

    19. Industry Profile Highly Regulated • Expected to continue increasing. • Production & Labeling Standards • FDA • FD&C Act • Fair Packaging and & Labeling Act • Environmental Regulations • CWA, CAA, Pollution Prevention Act, RCRA • Children advertising Source: IBISWorld

    20. Industry Profile • Regulations Towards Child Advertising • Children’s food consumption heavily influenced by advertising (Goldberg and Gorn, 1978) • Children’s Television Act (1990) – Limited amount of commercial time dedicated to child-targeted products • Children’s Food Better Advertising Initiative (CFBAI) – Pledge to devote at least 50% of child-targeted advertising promoting healthier foods and messages encouraging healthy lifestyles • Kellogg’s, General Mills, and Pepsi have all increased nutritional content of child-oriented brands Sources: Nutrition advertising targeting children. (2012). Retrieved April 8, 2013, from http://www.cdc.gov/phlp/winnable/advertising_children.html Stitt, C., & Kunkel, D. (2008). Food Advertising During Children's Television Programming on Broadcast and Cable Channels. Health Communication,23(6), 573-584. doi:10.1080/10410230802465258 Under self regulation cereals advertised to children are less sugary. (2012). Retrieved April 8, 2013, from  http://www.bbb.org/us/article/under-self-regulation-cereals-advertised-to-children-are-less-sugary-37619

    21. Industry Profile Non-Compliance With Regulations • Often a lot of resistance • Fines • Reputation damage • Impairs producers credibility • Expensive recalls • Create liability to civil/criminal penalty Source: IBISWorld

    22. Industry Profile • Highly Advertised • Advertising-to-sales ratios approximately 13% vs. 2-4% in other food industries • Creates differentiation and demand inelasticity • Cultivates brand loyalty • Prisoners Dilemma Source: Nevo, A. (2000). Mergers with differentiated products: The case of the ready-to-eat cereal industry. RAND Journal of Economics, 31(3), 395.

    23. Brand Equity & Loyalty • Brand Equity important to create greater loyalty • Loyalty crucial in order to stand out among hundreds of brands • Makes demand less elastic to price • Studies show brand loyalty is a strong feature in consumer product markets • Emotional branding Source: Shum, Matthew. "Does advertising overcome brand loyalty? Evidence from the breakfast cereals market." Journal of Economics & Management Strategy. 13.2 (2004): 241-72. Print. Source.:

    24. Brand Equity & Loyalty • However, advertising overcomes brand loyalty in this industry • Encourages “switching” behavior at the household level • Persuades households to try new brands • Advertising may be an effective option for new entrants • An example of Brand Equity: • Blind vs. Branded Test • Choice increase from 47% to 59% when Kellogg’s brand identified Sources: Shum, Matthew. "Does advertising overcome brand loyalty? Evidence from the breakfast cereals market." Journal of Economics & Management Strategy. 13.2 (2004): 241-72. Print. Source.: Harris, Schwartz, Kelly Brownell, and Vishnudas Sarda. ”Evaluating the nutrition quality and marketing of children’s cereals." Cereal FACTS. (2009): 1-102. Online.

    25. AdvertisingStrategies

    26. Kellogg’s Company • Their Purpose: ”Nourishing families so they can flourish and thrive.” • “Create foods and brands that help to fuel the best in everyone everywhere.” Kellogg’s Website  • Highest Advertising Expenditure • Highest Ad-Sales Ratio • Forbes, "World's Most Powerful Brands“ in 2012 and 2011 • Interbrand, "Best 100 Global Brands“ in 2012 and 2011 • Forbes, “World's Most Reputable Companies” in 2012 and 2011

    27. Advertising Mediums Television Social Media Websites In-store Marketing

    28. Television • Most widely used medium to promote cereal to children • Average child (6-11 yrs) viewed 721, while average adults viewed 372 television advertisements. • Purpose for children: to associate products with positive emotions. • Humor is commonly used in Adult & Family cereal advertising.

    29. The Effects of Advertising • Compared to non-TV advertised ready-to-eat cereals: • TV Advertised child-targeted cereals were purchased thirteen times more frequently • Family-targeted brand purchases were ten times more frequently • Adult-targeted cereals were purchased four times more frequently Source: Castetbon, Katia, Jennifer Harris, and Marlene Schwartz. "Purchases of ready-to-eat cereals vary across US household sociodemographic categories according to nutritional value and advertising targets." Public Health Nutrition. (2011): 1-10.

    30. Cereal Television Ads

    31. Brand Percentage of Television Advertisements

    32. Advertisement v. Time of day

    33. Cereal Industry

    34. Top 10 in 2011

    35. Social Media • Myspace & Facebook • Several children and family brand cereals have significant presence. • Fan Pages

    36. Websites • Banners & Advertising on 3rd party websites • Children Websites • Kellogg’s: separate moderately large websites for Apple Jacks, Froot Loops, Frosted Flakes • Engagement techniques: spokes characters, logos, packaging, branded cereal itself.

    37. In-store Marketing • Banners • Packaging • In-store displays & promotions • Shelf Space

    38. Persuasive Complementary Memory Jamming Informative Children’s Advertising Humor and Emotion Celeb Endorsement Sponsorship Online In-Store Marketing Social Media Product Placement Primary Advertising Strategies

    39. Indirect Advertising • Match-products-to-buyer effect • Uninformative advertisements • Cartoon’s • Bright Packaging

    40. Product Placement • Kellogg’s & The Next Food Network Star • Results: • 93% adults (18-49) could recall the brand after reviewing the episode. • This was up 32% from the brand recall Kellogg’s normally has across cable universe.

    41. Persuasive Advertising Effect: increase consumer demand and WTP Children-oriented cereals Promotions (ex. Kellogg’s Family Rewards) Premiums Emphasize nutritional content – “Nutrition at a Glance” in 2007 Adult-oriented cereals Emphasize health benefits

    42. Persuasive Advertising

    43. Memory Jamming Reinforce positive aspects of cereal Use of characters and catchy slogans Evident from high ad-to-sales ratios

    44. Advertising to Children Children heavily influenced by advertising $264 million spent in 2011 promoting child-targeted cereals (increase of 33% from 2008) TV is the most effective medium Children exposed to > 1,000 hours of television annually Half of advertising is for food products Cereal is the most advertised food product to children (one quarter of all food ads) • Sources: • Kids' cereals are healthier, ads aren't. (2012). Retrieved April 8, 2013, from  http://www.foxnews.com/health/2012/06/22/kids-cereals-are-healthier-ads-arent/ • Stitt, C., & Kunkel, D. (2008). Food Advertising During Children’s Television Programming on Broadcast and Cable Channels. Health Communication,23(6), 573-584. Doi:10.1080/10410230802465258