Its line of product includes the breakfast cereal, frozen specialty food, and commercial bakeries such as cookies and crackers. It also owns a variety of brands to target different groups of consumers. (“Kellogg Company – Company Profile, Information, Business Description, History, Background Information on Kellogg Company”, n. D. ). By using Kellogg 2013 annual report and its 2014 third-quarter financial results and various other articles, the purpose of this report is to analyses Kellogg market mix, identify its market segments based on STOW analysis.
It also seeks to illustrate the customer purchase decision- making process, and to compare with Kellogg major competitor, Nestle, in the market.
Marketing Mix and Market Trends Following two years of slow or negative growth, breakfast cereal had 5% value growth in 2013 whilst volume grew by 4% (“Breakfast in Australia”, 2014). A report made by the national-wide project, Concatenations, which collects real data relevant to students has shown that in Australia, 1 in 7 children starts the day without breakfast. (Australia Bureau of statistics, 2013).
The value growth above could be explained by the fact that whilst some customers are not having breakfast, some others are willing to spend more on it.
Another report shows that the cereal, pasta and baking mix manufacturing industry as grown slightly during the past five years, and industry revenue is forecasted to increase by 1. 1 % annually through 2013-2014. This includes a forecast increase of 1 to $2. 6 billion in 2013-2014 (“Cereal, Pasta and Baking Mix Manufacturing in Australia: Market Research Report”, 2014).
Base on the above data, Kellogg (Australia) Pity Ltd remains the largest player in breakfast cereals in Australia with a dominating 38% market share in 2013 (“Breakfast in Australia”, 2014). Kellogg Australia Holdings Pity Ltd is a proprietary company that was ranked 724 of the top 2000 companies in Australia. In 2013 the company received total revenue of $481, 765,000 including sales and other incomes (“Kellogg Australia Holdings Pity Ltd – Premium Company Report Australia”, 2014).
For the cereal products’ geographical distribution, they tend to be focus on and along the eastern coastline of the Australia mainland. New South Wales, Queensland and Victoria are estimated to account for approximately 80% of all industry establishments (“Cereal, Pasta and Baking Mix Manufacturing in Australia: Market Research Report”, 2014). Market Segments and Opportunities Due to the fact that the resource is limited, many organizations would engage n a market by way of dividing market segments and creating different products to suit for the differentiation by exploiting these segments.
It is important for a company to set up a market segment and identify the appropriate targeting strategy. Segmentation could split potential customers or Organizations into groups with the similar need, for which the company creates and maintains a marketing mix designed for their special needs (Pride, W. , Ferret, CO, Lukas, B. , Shimmer, S. And Out, N. , 2012). In Kellogg, it targets its market at different segments depending on the product. It fraternities its star product – cereal, into varieties of specific brands with formulas targeting specific groups of customers.
For example, Kellogg Frostiest are focused on children with the multicolumn package; the Special K is targeted at female costumers, as the result of Kellogg noticing of the rising demand of the healthy diet products for women (“The Importance of Marketing Segments”, 2014); the Kellogg Rice Crispier is more appealing to children as a fun cereal that “snap crackle & pops”; and Kellogg Crunchy Nut Cornflakes are marketed to the adults by providing the daily energy and nutrition (Katherine Mullah, 2011). The target market of Kellogg is not just several selected area, its targets are all over the world.
Nowadays, Kellogg products are manufactured in 18 countries and these products are marketed into more than 180 countries of the world (“Kellogg History’, 2014). Its targets are not only children and women but also those people who are young and do not have time to have breakfast. Kellogg ready-to-eat food, formula, packaging, advertisement, promotion and brand image have made achieving targeted consumer’s needs effective. Many products of Kellogg have become necessary and non-dispensable for many customers.
With the help of its high quality products and marketing segments, Kellogg has become the largest cereal manufacturing company of the world. Customer Purchase Decision Making The customers purchase decision-making process is a type Of customer behavior, which refers to those who purchase products for personal or household use and not for business purpose (Pride, W. , Ferret, CO, Lukas, B. , Shimmer, S. And Out, N., 2012, p. 1 16). It is a process of customers’ problems- solving, which includes the following four types: Routines response behavior; emitted problem-solving Extend problem solving; and
Impulse buying. In addition, there are five stages during the customer buying decision process, which are: Problem recognition evaluation; Information search; Evaluation of alternatives; Purchase; and Post-purchase Evaluation. For Kellogg customers, the first stage is to find out what caused their ‘problem’. For example, many people who are office-going would not have time for breakfast during the morning rush hours, they then have strong motivation to looking for a product that could fit their need – it has to be easily prepared, quick and also provides energy that would sustain them for he whole day.
For some people, the breakfast cereal is a good idea to solve their problems. However, when they search the ideal cereal in the food market, there are too many brands and products to choose from, so they would evaluate the general cost performance of different products taking into consideration factors like price, quality and nutrition. Finally they would make the decision to purchase one certain product after comparing various kinds and brands of cereal. For different groups of Kellogg cereal customers, their needs and requirements are diversified as well.
The parents would be more keel to consider the ingredient table and the taste of the product, whether that is what their children like to eat; the office-going people may choose to have the cereal that is fast-cooked and possibly could be taken away; the health junkies are more focused on the low fat, low carbohydrate, and high fiber feature which can help to achieve their balanced diet. Competitor Analysis According to the Kellogg 2013 Annual Report, it competed with advertised and branded products of a similar nature that are typically distributed in lower prices.
And the competition was affected by new product introductions, reduce quality, taste, convenience, nutritional value, advertising and promotion. Although Kellogg brands remain in the leading position internationally, they still face fierce challenges and significant competition. Starting 1 989, the Swiss food titan Nestle has engaged the cereal market and by 1994, Nestle was already beginning to eat into Kellogg market share in various countries. (Company profile, Information, Business Description, History, Background Information on Kellogg Company, n. . ). Based in Switzerland, Nestle is the leading brand of health, nutrition food company In the world. It is also the largest food company in terms of revenue. Nestles line of product includes baby food, bottled water, breakfast cereal, coffee and tea, confectionery, daily products, ice cream, frozen food, pet food and snacks. Nestle owns 447 factories worldwide and operates in 194 countries; it also has approximately 333,000 employees. According to its Annual Results in 201 3, Nestle achieved the total revenue of $92. 16 billion and the profit of $10. 2 billion in 201 3 (Annual Result 201 3, 2014). STOW Analysis Strength For the largest food company in the world (measured by revenues), Nestle as a strong brand image that is very difficult to compete with. It has an annual earning of more than $1 billion from its 29 operating brands, and with 8000 different products under the belt (Nestle, The Popular Food Brand, 2009). Because of Nestleg’s strong brand, it is well known almost everywhere in the world, and their dairy products are used by millions of people on a daily basis with a almost unshakable brand loyalty.
To maintain its leading position, Nestle has formed relationship with other leading companies. For instance, it is one of the main shareholders of L’Oreal, the world’s largest cosmetics company. Weakness Because of the giant size, Nestle on occasions is unable to maintain consistency in the quality of their food products. Nestle call in its products from time to time due to quality issues, which creates negative influence on its brand image. It was reported and confirmed that Nestle was engaged in employing illegal child labor in developing countries for the maintaining of its cocoa supply chain.
Although Nestle has been taking actions to rectify its conduct, this scandal has further damaged its public reputation on a worldwide scale (“Child Labor and Slavery in the Chocolate Industry”, n. D. ). Opportunity Since modern people are getting increasingly health conscious these years, Nestle could extend its markets and produce more healthy food for the rising demand. As abovementioned, Nestle has engaged in partnership with many major companies such as L’Oreal and Coca-Cola. These win-win co-operations could potentially bring more promotional opportunities and increase the customer database for Nestle.
Threat Although Nestle is a giant leading company producing healthy food worldwide, it still has to face the fact that there are some countries that do not welcome imports – for instance, some governments in developing Mounties may install local protectionist policy to obstruct Nestleg’s market expansion. Also, there are some substantial corporations that could compete with Nestle and eat up its market share. Like Kellogg as this report has mentioned earlier, especially in the breakfast cereal segment, is a powerful competitor for Nestle.
As the leading supplier of chocolate and cocoa products, Nestleg’s previous market shares may be affected by the increasing demand of healthy food and the popularity of health eating notion. Reflections & Conclusions According to the Kellogg 2013 annual report, the major competitor of its experience is the similar product with a lower price. For this reason, Kellogg should carry out the strategy that could reduce their cost in different procedure of manufacturing process. In 2013, Kellogg pursued a program named Project K.
This four-year cost-cutting project aimed at the reduction of the total cost and the goal of making more profit. To further reduce cost, Kellogg has cut 7% of its global workforce in 2013. Another area that Kellogg could work on is to expand their market in overseas market. Since its success in breakfast cereal, Kellogg has been recognized by many customers and has lid up strong brand loyalty. It is easier for it to introduce and promote new products into the market that aligns with the healthier needs of customers.
Therefore, initiative and market sensitivity are the key to a greater success.
Cite this Market Analysis Of Kellogg Company
Market Analysis Of Kellogg Company. (2018, Apr 12). Retrieved from https://graduateway.com/market-analysis-of-kellogg-s-essay/