Marketing Strategies For Kellogg Sample

Product life cycle is a vital tool to determine which techniques are to be undertaken by a firm. It refers to the stages through which a product has to pass during its life time. Every stage is classified by different features helping in devising marketing strategies by an apple organization (Fire, 2012).

The present report deals with product life cycle of Kellog’s Company. The firm is the largest producer of breakfast cereals in the world and also top-notch selling grocery brand of UK. The product lines include ready-to-eat cereals and nutritious snacks, such as cereal bars. The household names also include Rice Krispies, Special K and Nutri-Grain which are loved by consumers all over the world.

The company is over 100 years old and is still flourishing in its sector. It also became the world’s leading snack’s company by take over of Pringles brand which belonged to Proctor and Gamble. The major domain of its business has been nutritious products which are healthy and serve as a major source of breakfast in most of the households.

This has helped in achieving a great brand value through strong commitment and corporate social responsibility. It is this passion for business that has made Kellogg’s so successful which is demonstrated through its products, promoted for healthy living.

Question 1

Using current products familiar to you draw and label a product life cycle diagram, showing which stage each product is at.

Every product has its own life cycle. It emerges with the help of successful innovation in market, known as introduction stage. Next, it develops series of big and small changes after studying competitor products and taste and preferences of consumers (Market development, 2012). This stage is known as growth. Moving on the next is maturity stage marked by continuous development and innovation.

The last of all stages is the decline which comes in existence due to poor sales and revenue generation by products (Cant, 2010). However, most of products fail in introduction stage only and very few are able to complete the full life cycle. The following figure reveals the product life cycle according to increase or decrease in sales with respect to time.

Introduction: This is generally the first stage of product life cycle, however some products are preceded by development stage also. Whenever any new product is introduced in the market, it has to face situations like that of profits due to high level of expenditures. It happens as the consumers are not aware about the product (Simkin, 1997).

Therefore, good promotional strategies are a must. Kellogg’s has introduced many new products in the year 2012 which include Simply Eggo; new cinnamon-inspired flavours of Frosted Mini-Wheats Little Bites; Kellogg's Raisin Bran plus caramel nut Crunchy Nut etc. Among the latest launches Simply Eggo Waffles have been unimpressive to most consumers in terms of flavour due to same taste like its previous version. The cinnamons inspired mini wheat little bites are loved by kids due to its sweet coating but are not considered to be healthy by adults. Thus, the recent products have received mixed bag of views from consumers resulting in the variation of the promotional strategies accordingly.

Growth: The growth stage occurs when product has gained awareness among the market and is finally ready to face intense competition. This stage is marked by increase in level of sales and profitability. The main concern of any firm during this phase is to build customer loyalty by attracting consumers towards product. This period if successful results in good mouth publicity and product variations. The aim changes to building market share which results in focusing on mass marketing rather than niche marketing (Holland, n.d).

At present Nutri-Grain remains a growing brand and product within the Kellogg’s product family. This product was successful since its launch in 1997 and gained almost 50% of market share in a span of two years. It maintained its level of sales 2002 via developments in flavour. Kellogg’s then developed strategies to re-launch this brand in 2005 which was successful. Special K and Fiber Plus brands also showed growth in year 2011. In cookie category, Keebler brand exhibited increase in sales as well as market share in 2011. Special K Cracker Chips has performed exceptionally well in 2011 and there are plans to reintroduce more flavors in 2012. New Be Natural, All-Bran, Just Right, and LCM products, all contributed to the growth.

Maturity: This stage of product life cycle faces low rate of sales as compared to growth phase. The major target for any firm is to defend market share which is affected by increase in the level of competition. It is usually the longest stage of any product. At this phase, the requirement is on devising new strategies in order to attract customers and newer market. This is due to the fact that absence of proper strategies may result in entry of product into decline stage. Thus, every marketer tries to increase the duration of this stage (Building a brand in order to sustain its life cycle, n.d).

Decline: This is the phase in which a product experiences downfall in level of sales and revenue. There is a heavy decline in profitability of product. There are many products of Kellogg’s which have completed their life cycle and are no longer available in market. This include Homer’s Cinnamon Donut Cereal and Bart’s Peanut Butter Chocolate Crunch, Buzz Blasts, Mud and Bugs, Big Mix, Pop-Tarts Crunch, Nut ‘n Honey Crunch (Joseph, 2012).

Product Life Cycle of Special K Cracker Chips

Special K brand of Kellogg’s has often introduced varieties in its meal replacement and snacks section. Special K has emerged out to be a strong brand for the firm and its strength could be utilized to introduce a whole new range of exciting variants. Whenever any different brand variants is  launched by firm, Kellogg’s keeps  a close watch in such a way, so that the the sale of new variants are not allowed to eat up the sales of its core brand. Special K is still a strong and mature brand. The product is in between the growth and maturity stage as still the company is into launching new variants of Special K.

The Special K brand of Kellogg’s Company has recently introduced its low calorie popcorn chip under Special K snack line. The snack has been named as Special K cracker chips specifically targetting on health conscious consumers and capitalizes on increasing awareness for healthy snack options. There is a growing demand for healthy food options which possess all the nutritional value (Johnson, 2012). Customers love the newly launched variety due to its low calorific value. Since the chips are baked and not fried, people don’t get that greasy feeling in their mouth. Moreover being prepared from potatoes, they also list brown rice flour as an element. The chips do not withhold on the flavouring either, which is found in other chips. Thus, consumers are happy with the present brand which is picking up sales in the market.

 Product Life Cycle of Kellogg’s All Bran

All Bran is a highly fibrous, wheat bran breakfast option of consumers which is manufactured by Kellogg's company and is marketed as an aid to digestive health. The firm has recently introduced new variations by adding flavour extensions which include Strawberry Medley and many types of new product formats such as All-Bran bars. Kellogg'’s created this product in the fibre segment of the cereal market in the year 1930. From then on, the product has experienced steady growth rate throughout the world. The company also injected regular promotional strategies to support product development.

The product has been famous due to its fibrous nature which makes it a healthy and nutritious breakfast option. Thus, it has gained acceptance among parents and kids due to its qualities. As the product belongs to maturity stage of its life cycle therefore, Kellogg’s has often looked to re-brand it by a range of tools and techniques in order to inject renewed growth and interest. The most common element being changes in its packaging.  The company has also run a £3 million marketing campaigns that urge customers to re-appraise these products.

 Question 2

Suggest appropriate aims and objectives for a small, medium and large business

Aims and objectives are regarded as the destinations where any firm wishes to place itself in the coming future. For any business, they may vary according to the dimensions mentioned as follows;

• Level of operations.
• Size and history of firm.
• Efficiency of its present operations.  
• Personal aims of senior business managers.

Thus, it should be made sure that aims and objectives are in tune with plans and overall goals of business. They should be helpful to achieve the short period and extended targets from time to time.  Moreover, survival is the main aim of any firm which governs businesses at all levels. Any wrong move can completely pull out the company from market and kill it’s overall future plans altogether. Thus, it depends on the managers and owners of the company which play a very important role in drawing realistic objectives and keep monitoring them.

The most important goal for any business is to face the increased level of already stiff competition going on in the market. This gets particularly important for a small firm who wishes to establish itself in the market place. Thus it is very necessary for firm with small level of operations to set up tangible as well as easily achievable set of goals. This helps in proper establishment of strategies which can be easily adjusted according to future needs and requirements. The aims and objectives can further be broken down according to daily or weekly activities so that they are easy to achieve (Analoui and Karami, 2003). The greatest advantage small business has is with respect to close proximity with consumers which help in bringing constant improvement in services according to their needs and requirements. Proper tapping of needs of clients also helps to provide a competitive advantage.

As far as medium business is concerned, the aim is not to establish them in market place as the firm is already well known. Here, the plan is to augment the sales and revenue in order to maximise profits and expand business operations. Greater market penetration by diversification can also be the aim (Warren, 2002). Any medium scale business basically tries to achieve growth by increasing market share. A competition results in success or failure of any business firm and it is very important for medium scale firms to make their marketing activities more precise. This would involve more market research. Thus, the objective of middle scale unit is basically to have a competitive advantage by increasing market share and devising strategies accordingly.

There is a huge dissimilarity in the objectives and goals of small and large business unit due to scale of operation. A small business is usually confined to a particular region while operations of large business firms cross international boundaries as well. Moreover, small businesses are mainly focused to personal goals of owners, whereas large business is mostly customer centric which adds to differences in strategies to be followed. In such a scenario, the aims and objectives of large business enterprises change to expansion, take over, product diversification and reaching out to customers across the globe.

Question 3

Explain the difference between market oriented routes and product oriented routes in Ansoff’s matrix.

The Ansoff Growth Matrix was available in 1957 in Harvard Business Review. It is a very easy and speedy model that helps the companies to think about growth, development, penetration and expansion in prevailing markets. It also helps firm to find out whether it should expand new or existing products in upcoming areas of growth or not. This is judged by taking help of four strategies i.e., market penetration, market development, product development and diversification (Thompson and Martin, 2005).

1. Market Penetration- In this approach the firm sells its active product in the existing market. Thus, it can be considered to be business as usual approach. Its focus is mainly on tried and tested products and markets which makes the strategy less risky. It is assumed that a manager has good information about the marketplace and the present competition (Loudon, 2001). Therefore, this strategy does not involve a lot of market research. It is also considered as the least uncertain strategy.
2. Market Development- This approach allows the company to sell its existing range of product and service in new markets domains. As the main focus of firm is on expansion hence this strategy involves considerable amount of risk factors. The processes in this approach include entry into new markets, product modernization, changes in wrapping, developments of interrelated products etc.
3. Product Development- In this strategy the firm introduces new products in existing markets. The products introduced are simply small level of modification in the existing products so that they appeal to present consumers (Meldrum and McDonald, 2007).
4. Diversification- In this strategy the firm introduces new products in entirely new markets segments. This strategy is extremely uncertain as the firm is making an entry into new market with new range of products. Moreover there is lack of experience about the market or the product.

Question 4

Consider the decision taken by Kellogg to opt for product development. Suggest a way in which it could have diversified instead. Justify your answer.

The term product development can be defined as creation of products with new or slightly different features that are changed in order to offer new or added benefits to the end users. While diversification refers to creation of a new consumer base which helps to expand market potential of existing company. This can be easily done via extension of present brand but in some situations the modifications in present product may create a new market by promoting the products in order to create new uses.

Price diversification – This is a method of diversification by targeting new pricing. The drawback of this strategy is that it can only be applied if firm has a wide range of products which fall in different price ranges. Thus in present case, price diversification strategy can be followed by Kellogg’s as it offers a wide variety of breakfast and other options to its consumers (Knox, 2004).

Demographic Diversification - It involves diversification of product by bringing changes in demographic options available. For success of this strategy it is important to identify the presence of differences with respect to demography based on gender, age, location or ethnic differences. In present case, Kellogg’s has been successful in implementing this strategy by introducing tasty snack option for kids. It has also kept the interest of health conscious people in its mind and introduced many varieties of healthy and nutritious snacks.

1. Product Modifications- Product modifications in terms of color, packaging, addition or deletion of ingredients can also help in diversifying product offers. For example, Heinz expanded its ketchup variety by including colored ketchup in purple and green variants. This approach can be useful if firm faces cost constraints or even slight modification in product can lead to expansion of market share or gives a boost to existing image of products (Kotler, 2008). In present case, the company is well known and accepted by its consumers. Thus small changes in packaging or addition of new flavors can be helpful to increase sales or capturing market share. This is the safest strategy that can be undertaken by any firm
2. Product Extension – It involves creation of new product in such a way that it helps to build an established brand image. An example of a product extension is Coke vs. Diet Coke that belongs to same product category which is soft drinks. This tactic was very helpful for firm as the company enjoyed high levels of brand loyalty and consumers usually buy such products as they have tried and trusted the coke brand (Schimmoeller, 2010). This strategy helps to reduce the business risk on an overall basis as it offers products in a variety of categories.
3. Concentric diversification – It helps in extension of present portfolio of company which is based on an aim to fully make use of the current technology. In order to make use of current set of machinery and ingredients a dairy company may start producing ice cream and variety of curds (Mattern, 2011).

Conclusion

The present report deals with well known company in cereal food industry i.e. Kellogg’s Kellogg’s. The firm has been a market leader since its very start as it has offered a wide range of products and services. To its consumers belonging to different age groups. It has appealed to the masses across all the countries of the world as well. Its major approach towards healthy options has resulted in driving sales.

From the product life cycle it has been observed that different products of Kellogg’s are functioning in different stages of the product life cycle. It is also observed that the firm targets niche market initially and gradually moves on towards mass marketing. The Ansoff Matrix has acted as a good tool to build up several strategies and strengthen the position of its each and every product. Kellogg’s has used all the available tools and techniques available at their disposal in order to build a perfect image in the mind of their consumers. That is the reason why company has been a favourite among all age groups of consumers when it comes to having cereal meals and healthy snacking.

References

Books and Journal articles

• Analoui, F., and Karami, A., 2003. Strategic Management in Small and Medium Enterprises. Cengage Learning.  
• Cant, M., 2010. Essentials of Marketing. 3rd ed. Juta Academic. 
• Kotler, P., 2008. Principles of marketing. 12th ed. Pearson education India.
• Lamb, W.C. Hair, F.J., and Mcdaniel, C., 2008. Marketing.10th ed. Cengage Learning.
• Lockwood, T., and Walton, T., 2008. Building Design strategy: Using design to Achieve Key Business Objectives. Allworth Press.
• Mattern, J., 2011. The Kellogg Family: Breakfast Cereal Pioneers. ABDO.  
• McDaniel, D. C., and Gates, H. R., 1998. Marketing Research Essentials. 2nd ed. Taylor & Francis.

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