Kellogg's Marketing Strategy in India

ride in India
A marketing study
Submitted by group no.11 MIB 2011-2013
Master of International Business Department of Commerce, Delhi School of Economics
Kellogg's Ride in India
2011
Kelloggs Ride in India

A Marketing Study Report Submitted in Partial Fulfillment of the Requirements For the Degree of Master of International Business
Submitted to: Dr. S. K. Jain Dept. of Commerce Delhi School of Economics Delhi University
Submitted by :
Akshaya Shah Himanshu Chauhan Malvi Goyal Prapti Aggarwal Vaibhav Gupta
MIB, Delhi School of Economics
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CONTENTS
1. 2. 3. 4. 5. 6. 7. 8. 9.
Introduction Research Methodology Objectives of The Proposed Study Firms Overview: Kelloggs Breaking of Stagnancy-The Foray Story inception of The Launch of Products Hurdles in Indian Market as A Novice The Initial Failure 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 Kelloggs 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
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INTRODUCTION
About all the cycles we talk about, perhaps the most important of them is Natures 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. (Kelloggs), 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 Kelloggs 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 Ups and Downs. 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 Ps 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.
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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 sellers view of marketing tools available for influencing buyers. From the buyers point of view, each marketing tool is designed to deliver customer a benefit.
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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: Retailers perception of the strength and weakness of various brands of cereals available in the market. Retailers influence in pushing a brand.
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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.
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FIRM'S OVERVIEW: KELLOGGS

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, Kelloggs 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, Kelloggs had over 20 plants in 18 countries worldwide, with yearly sales reaching above US $6 billion. But with inception of 90s, 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 UKs. As a result, in 1994, three years after the barriers to international trade had opened in India, Kelloggs 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.
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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 Kelloggs 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. Kelloggs 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 Kelloggs 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 500gram box of Corn Flakes cost a third more than its nearest competitor. However, Kelloggs 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 Kelloggs 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.
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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 Kelloggs 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.
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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. Kelloggs 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.
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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 makers 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.
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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. Kelloggs 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 Prices Focused on Market comp Rs. 21 per 100 gm, Affluent consumer Premium and middle-level Mohan's Cornflakes (competitor) Rs 16.50 for 100 gm Mass consumer Small-level consumers & retail stores as well
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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 Kelloggs increase the retail packs of different sizes to cater the needs of different
consumers group Kelloggs 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.
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PROPOSITION & POSITIONING BY KELLOGG

From the day Kelloggs forayed into INDIAN market, several parameters are taken care of while launching the product. When Kelloggs 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. Kelloggs 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 Kelloggs 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 Kelloggs se hi, were put up at strategic points. Later Kelloggs 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 Kelloggs,
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suggesting accompaniments as varied as curds, honey, pistachio and bananas. The commercial ends with line `Jaago jaise bhi, lo Kelloggs 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 Kelloggs on Chocos brand was distributed equally between Chocos flakes and Chocos Biscuits.
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THE JOURNEY SO FAR

Kelloggs 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 companys 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.'
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THE JOURNEY SO FAR- Timeline
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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 Kelloggs Iron Shakti TVC
A gang of thieves is seen loading
...the scene. Thinking that his
...to their activity. As his daughter worryingly points out to him, hamara TV, our man cools her off by saying, Pandey Ji ka.
some stolen items in a truck. Just neighbour, Pandey Ji, is shifting then a man with his family arrives home he does not pay much at... attention...
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The little girl gets more disturbed Not able to take any more of this, ...man still reassures her, on seeing the thieves with her cupboard. But the father assures her, Pandey Ji ka. she vehemently protests on seeing their refrigerator with the stealers. But our...
Pandey Ji ka. On reaching home he finds the things missing and realizes everything.
VO: "Iron kam khaoge toh dimaag ...nahin daudega. The ad ends on kaise chalega. Aapko chaahiye our man telling his family the
Kelloggs corn flakes jisme hai iron thieves truck number, thereby shakti. Ab poore parivaar ka dimaag chalega... 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. Kelloggs 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
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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. Kelloggs Special-K TVC
We see a woman asking her
He turns back and says it's a
He explains how till sometime
husband how she looks in the perfect fit and she tells him he back his wife couldn't fit into attire she is wearing? has lost the bet. 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 The ad ends as the husband tells K Challenge....and lose up to 2 his wife, "Tonight you'll look 1/2 Kgs of weight. prettier than the bride".
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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.
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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
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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 tohouse sampling exercise offering oneserving 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.
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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 managers 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. Kelloggs 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 nonusers of existing cereals products, market researchers undertook further quantitative tests of product ideas across a range of food categories. Kelloggs 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.
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INDUSTRY ANALYSIS
There are many players in the Indian Market: Kellogg's Mohan Meakins Murginns Shanti's AIM's Aristo Savour
The target Segment: Kelloggs 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 Kelloggs Brand Year 1995 1998 2000 2010 Market Share 53% More than 55 More than 60% More than 66%
The breakfast cereals market has grown well during 1996-1998, and it is believed that Kelloggs 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
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DISTRIBUTION NETWORK OF KELLOGGS

Today the company claims that its Kelloggs 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
1 2 3 4 5
MANUFACTURER AGENTS SUPER STOCKISTS STOCKISTS RETAILERS
Kelloggs 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.
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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.
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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.
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is the population standard deviation = sample size = Margin of error Now, at 95% confidence interval substituting in equation (2), ( )( )
and keeping our margin of error
an
Thus sample size we have chosen is 83.
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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 Health and fitness Feeling of Strong Hunger satisfier Happiness Feeling energetic Thinking Booster Healthiest breakfast notion Convenience Others
Observed frequencies (O) 21 4 5 2 10 2
Expected Frequencies ( E ) 8.333 8.333 8.333 8.333 8.333 8.333
(O-E)2 160.4529 18.77489 11.10889 40.10689 2.778889 40.10689
19.25512 2.253077 1.33312 4.813019 0.33348 4.813019
11 19 1
8.333 8.333 8.333
7.112889 113.7849 53.77289
0.853581 13.65473 6.453005
Chi Square = 53.7621 Degree of freedom(Df) = 8
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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.
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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.
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We saw 55.4% of students and 38.6% salaried employee as respondents to our survey, as the survey was primarily online in nature.
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We got all the income groups' respondents in both users and non-users of cereals.
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We saw that in Students and salaried employee the percentages of users and non-users are almost equal.
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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
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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.
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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.
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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.
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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'.
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ADVERTS: SOLE DRIVER FOR THE AWARENESS OF A BRAND
Clearly evident from the pie chart, Kelloggs 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 Kelloggs) in the Indian market due to no or very less advertising being done. Other than these two major players, Murginns,
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Savour, Shantis 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.
Kelloggs 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 Kelloggs 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 Kelloggs has a market share of 60-65 percent in this category .The
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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 Kelloggs 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 Kelloggs 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
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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 doesnt appeal as the healthy meal to the customer.
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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 & Kelloggs 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 Kelloggs & Chocos, 25% stored
Mohan Meakins, and 20% stored Murginns. On an average, 2 packs of other cereals and 15 packs of Kelloggs & Chocos packs were
sold in a week. Generally 85% of the consumers asked for of Kelloggs & 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 Kelloggs
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. Kelloggs was stored in the almost all the stores since it had the maximum demand as
was reflected by the later question.
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If the retailer had no stocks of Kelloggs & 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 Kelloggs & Chocos he suggested some other brand
because he did not want to lose the customer. Therefore it is imperative for the Kelloggs Company to find favor with the retailers, so that they will push the brand.
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CONCLUSION
The compilation of this report bears a judgmental mark on what a companys 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 paranthas to the convenient way of eating breakfast. This increased crackle in Kellogg India was brought about by its shift in positioning from nutrition to funfilled 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 Kelloggs sales volumes. While Kelloggs 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: Kelloggs 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 Kelloggs 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, Kelloggs 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.
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ANNEXURE
QUESTIONNAIRE: CONSUMER 1. 2. 3. 4. 5. 6. 7. Name: Sex: M/F Age (yrs.) (10 - 14) (15 25) (25 above) Household income level: (Below 15000) pm (15000 25000) pm (25000 40000) pm (Above 40000) pm What do you usually eat in breakfast? Traditional breakfast (Paranthas, poha, idli etc.) Juice and fruits Tea/coffee with biscuits Any other IF only YOU ARE A NON USER OF Breakfast CEREAL PLEASE ANSWER THE question below I am yet to try Kelloggs Chocos Cereal I dont like the taste of Chocos Cereal I dont like the packaging of Chocos Dont like the advertisements of Kelloggs Chocos It is not easily available It is very costly It is children's breakfast/ i used to eat in my childhood 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
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8. 9.
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) 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) 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
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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 Kelloggs 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
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If yes, what do you remember about the ad? Please specify. One thing you would like Kelloggs to do in future?
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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. B. Week: Month:
5. If you do not have Kelloggs or Chocos available on a particular day, what would you tell your consumer? Come tomorrow Suggest another competing brand
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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
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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--usingpromotion-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--rebranding-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--supplychain-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-newproduct-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.
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Kellogg's Ride in India CII:
2011
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. 2739, 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. 205219.
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.
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Kellogg's Marketing Strategy in India

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ride in India

Submitted by group no.11 MIB 2011-2013

Master of International Business Department of Commerce, Delhi School of Economics

Kellogg's Ride in India

Kelloggs Ride in India

MIB, Delhi School of Economics

Kellogg's Ride in India

MIB, Delhi School of Economics

Kellogg's Ride in India

MIB, Delhi School of Economics

Kellogg's Ride in India

MIB, Delhi School of Economics

Kellogg's Ride in India

MIB, Delhi School of Economics

Kellogg's Ride in India

OBJECTIVES OF THE PROPOSED STUDY

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Kellogg's Ride in India

FIRM'S OVERVIEW: KELLOGGS

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Kellogg's Ride in India

BREAKING OF STAGNANCY-THE FORAY STORY

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Kellogg's Ride in India

INCEPTION OF THE LAUNCH OF PRODUCTS

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Kellogg's Ride in India

HURDLES IN INDIAN MARKET AS A NOVICE

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Kellogg's Ride in India

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Kellogg's Ride in India

THE INITIAL FAILURE

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Kellogg's Ride in India

STEPS TOWARDS SUCCESS

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Kellogg's Ride in India

PROPOSITION & POSITIONING BY KELLOGG

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Kellogg's Ride in India

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Kellogg's Ride in India

THE JOURNEY SO FAR

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THE JOURNEY SO FAR- Timeline

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Kellogg's Ride in India

BRAND BUILDING-THE ADVERTISING

A gang of thieves is seen loading

...the scene. Thinking that his

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Kellogg's Ride in India

MIB, Delhi School of Economics

Kellogg's Ride in India

We see a woman asking her

He turns back and says it's a

He explains how till sometime

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Kellogg's Ride in India

Kellogg's Ride in India