By, Group 10 Akhil Mehta Neha U Patil Shreyas H N Sunayana Jain Vikas N

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Company Facts
Kelloggs was established in the year 1906. Kelloggs is a multinational food manufacturing company headquartered in Battle Creek, Michigan, United States. Their Products are manufactured in 19 countries and marketed in more than 160 countries around the world. World's leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, Toaster pastries, cereal bars, fruit- flavoured snacks, frozen waffles, and vegetarian foods. It has a annual revenue of US $ 13.198 billion as per 2011. In 1994, three years after the barriers to international trade had opened in India, Kelloggs invested US $ 30 million into launching its number one brand, Corn Flakes.

Kelloggs India during initial years

Our only rivals are traditional Indian foods like idlis and vadas" -Denis Avronsart, Managing Director, Kellogg India. The products offered were Corn Flakes, Wheat Flakes and Basmati Rice Flakes. In April 1995, there was 25% decline in sales in comparison to previous month. 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.

According to the analysts, out of every 100 packets sold only 2 were being brought by regular customers, with the rest 98 being first time buyers.

Mistakes that lead to failure of Kelloggs in India

It relied heavily on the quality of its crispy flakes.

Indians liked to boil their milk and consume it warm or lukewarm. When warm milk was added it made the flakes soggy. It did not suit Indian breakfast habits.
Insufficient Market Research. Its advertisements and promotions focused initially on the health aspects of the product, which was a fundamental departure from the successful fun and taste positioning adopted in the United States. In order to maintain quality Kellogg's focused on premium and middle-level retail stores. This made it difficult for the larger population to access this product.

Comparison
KELLOGG MOHANS CORNFLAKES (competitor)

PRICES
FOCUSED ON MARKET COMPARISION

Rs. 21 for 100gm

Affluent customers Premium and Middle level

Rs. 16.50 for 100gm

Mass customers Low income consumers and small retailers as well.

Setting things right

Innovative marketing and brand-building. Replaced cardboard boxes with pouches. Different sizes to different consumer groups. Customizing products for India. 3 local flavors viz., Mango Elaichi, Coconut Kesar and Rose Shift in positioning. From healthy breakfast to Tasty, nutritional breakfast cereal. Nutrition Promotion Initiatives Health and nutrition symposiums. Educative programs for kids. Tie up with Indian dietetic association to raise awareness about iron deficiency problems

Contd..
More focus on promotions Targeted schools Free samples to select retail stores House-to-house sampling exercises Free pencil boxes, water bottles etc. with every pack Modification of products Iron fortification in breakfast cereals Entered the biscuit market Increased the number of outlets In 1995, 30,000 outlets. In 1998, 40,000 outlets.

Results

New products launched in 2000

Reasons behind poor performance

Ignorance of the cultural aspects.
Lack of understanding of Indian consumer behavior and habits.

Product Orientation.
Very few loyal customers. No defense taken even when the competitors were selling the products at much cheaper price.

SWOT Analysis
STRENGTHS:
Kelloggs flexibility and adaptability towards consumer needs. History of introducing new food habits globally. WEAKNESSES: The product was focused only on premium segment. Initially product was not adopted to the taste of Indians .

SWOT Analysis
OPPORTUNITIES: Introduction of new trend with nutritional value in breakfast. Less competition. THREATS: Cultural factors and eating habits population not used to processed foods. Low awareness about processed foods and calorie requirements.

Ansoff Model
Current Product
Market Penetration: Provide manuals to guide consumers about the various benefits of using it. Provide free bowls with a family pack to attract house wives

New Product
Product Development: Spicy cornflakes. Prepare flakes using Ragi. Developing product which retains crispness even after pouring warm milk on it.

Current Market

New Market

Market Development: School kids By conducting competitions such as Kelloggs Quiz for its users. Target youths who are very much into fitness.

Diversification: Cooking oil using cereal.

What should Kelloggs do to change the perception of premium brand?

Make the product available in smaller retail store instead of selling them only in premium and middle level retail stores. Make the product available at lesser price. Increase the promotions and advertisements to reach all the sectors of people.

How should Kellogg influence the Indian middle class to consume the product?
Increase the nutrition promotion initiatives.
Reduce the price of the products by reducing the margins of profit. Sponsor the television shows related to cooking.

Provide trial packs in the retail shops where middle class people are more likely to purchase goods.