Ankil Sanghvi

DM16106

HOW CAN CORNFLAKES COMPANIES

EXPAND THE CATEGORY IN INDIA?

Ankil Sanghvi
DM16106

INTRODUCTION
All region of India has their own style of breakfast and that is more healthier according to the
perception of Indian. So competition of cornflakes is with authentic Indian breakfast rather
than any other competitor. So the cereal market of India is much more smaller than any other
developed country like USA but the growth of cereal market is rapid. In 2012, the market size
of cereal market is around $139 and has witnessed almost doubling a size over last six years.
The whole market consist of two types of cereal Cold Cereal and Hot Cereal. Cornflakes,
Chocos, Muesli are cold cereal and which consist of 60% of the market. Oats is the Hot
cereal and that contains 40% of market share. Kellogg is the market leader and it is far ahead
of its competitor.
Kellogg's had invested 65 million US $ in India in 1994 three years after the barriers of
international trade has been lifted. And they had started it with its number one brand called
corn flakes. Their research had suggested them that if they are able to grab 2% market share
than it would result to get around 18 million consumer and this would be the largest market.
MARKET SHARE
Market segment of Kellogg's is estimated around Rs. 600 Crore, and growth of th market is
18-20%. Kellogg's is the leader with 55 % of market share. There are few other players like
McCain, Marico, PepsiCo etc.
COMPETITIVE LANDSCAPE
Although Kellogg's is the market leader but the worry about Kellogg is that they are losing
market share every year. The reason behind this is mainly the offerings of Kellogg's. Indian
market is inclined towards muesli and oats but they are mainly offering corn flakes.
PROSPECTS
The expectation is that, between 2012 and 2017, breakfast cereal will maintain high growth
rate. The growth of oats and muesli will be very high in compare to other cereal mainly
because of following reason.

Taste of oats and muesli suits the Indian more than cornflakes' taste.
The way oats are marketed, as a healthy food and good for heart.

According to the survey almost half of the self space of breakfast cereal in retail outlets has
been occupied by oats and muesli. Even the flakes have equal self space but the fact is that
even retail outlets are pushing oats and muesli.

Ankil Sanghvi
DM16106

PRODUCT MIX
KELLOGG'S CORN FLAKES
Corn Flakes
Corn Flakes With Real
Honey
Corn Flakes With Real
Strawberry Puree
Corn Flakes With Real
Almond & Honey
Corn Flakes With Real
Mango Puree

KELLOGG'S CHOCOS
Chocos

KELLOGG'S EXTRA
MUESLI
Nuts Delight

Chocos Smacks

Fruit Magic

Chocos Duet

Crunchy Fruit & Nut

Chocos Moons and Stars

Kellogg's Special K

Kellogg's Honey Loops

Kellogg's Oat Bites

Kellogg's All Bran

Kellogg's oats

Corn Flakes With Real

Banana Puree & Chips

CHALLENGES FACED BY KELLOGGS

Kellogg's doesn't have major competitors but main challenge faced by them was to
make people aware about cereal food and need to change consumption pattern of
Indian for breakfast

Initially the consumption of Kellogg's was increased but it is not like people had
changed their breakfast habits. People had bought it as a novelty product.

Cornflakes is a western product and it was very successful in USA but they should
modify it as regional tastes.

Kellogg's is much more expensive than its competitors product

Kellogg's has positioned itself as an alternative of the traditional breakfast. But

traditional breakfast of India is much more heavier like dosas, parathas with butter,
Puris and Indian people feel like they had eaten something. On that case it's very
difficult for the company like Kellogg's to replace authentic food.

Indian people are variety seeking people. They are fond of variety in their food. Like
we have so many type of breakfast like Idli, Dosas, Vada etc. But kellogs doesn't have
much variety which declines the sales.

Ankil Sanghvi
DM16106

Indians like to have spicy breakfast instead of cold and sweet breakfast. Kellogg's had
been failed to convince people to switch to cereal.

Advertising campaign of Kellogg's is hurting the sentiments of Indian mother and that
created mental block towards the cornflakes

Kellogg's had targeted whole family but instead of that they should target children.
And they have to make some changes to attract children.

WHY SHOULD KELLOGGS EXPAND WITHIN THE CATEGORY AND OTHER

CATEGORIES?
1. To respond their competitors they need to expand within the segment as well as
within the category, because it is necessary to prove its presence in growing segments.
2. As discussed earlier it is important to introduce variants and innovation to keep
consumer involved in the product.
3. Having different categories will decrease the risk and it will avoid the situation "all
the eggs in one basket"
4. Image of the brand will enhanced when brand have more category.

CURRENT EFFORTS AT EXPANSION

Line Extension:

Company has started new single serve pack priced at Rs. 10 to attract the New
consumers in tier I and tier II cities.

They want to increase penetration in tier II and tier III town by introducing "Kpac"
packets. Main idea is to make cornflakes affordable.

They changed the positioning of new product, "Iron Shakti", to "Shaam ka Nashta"
means evening snack.

Tasty Treat cornflakes are priced at the same rate as Kelloggs, it is not available at
the Rs 10 price point which gives Kellogg's an advantage

In 2012, Kelloggs India took a second shot at limiting its India portfolio, over 10
years after the dispatch of coconut and elaichi variations of its cornflakes had met
with lukewarm reaction. The creator of cornflakes, Chocos, Special K and Heart-toHeart oats took off variations like pudina, tomato and garam masala as a piece of its
oats go and is liable to take after this with confined variations of its different items too

Ankil Sanghvi
DM16106

Brand Extension:

They have to expand their portfolio beyond cereal and they should start fast growing
snack categories..

They need to increase the reach to the customer, and with respect to that they need to
use wider and deeper distribution for low priced products.

Kellogg's had acquired Pringles potato chips from P & G worth $2.7 billion. This has
given it a huge diversification and because of acquisition kellogg become big player
in worldwide snacking

While Pringles will give Kellogg's a bigger canvas to work in India yet it won't be
simple. The business has an estimation of Rs 2,000-crore yet is overwhelmed again by
PepsiCo with Lays and it's Kurkure marks alongside ITC with Bingo while
Haldiram's and Parle have its Products solidly in the business sector. Pringles will be
another channel for extra incomes to Kellogg's which is as of now esteemed at an
expected yearly turnover of Rs 350-400 crore right now in India.

RECOMMENDATIONS:
Line Extensions:
1) Oats :

It is widely acceptable in Indian market and more over it is perfect as per the
Indian taste.

Market size of oats is Rs. 200 corer and it is growing at the rate of 25%
according to the experts

Oats has become an active category because of the marketing efforts has been
put in last 5 years.

Few kinds of oats:

Quaker oats: no need to cook. Specially for the people who doesn't
have time.
Saffola Oats: Healthy oats
Horlicks Oats: Manage wweight of consumer, control blood pressure
and reduce cholesterol
Brittania come up with four variants: Plain, Strawberry, Savoury and
Multi grain.

Ankil Sanghvi
DM16106

Targeted customer are those whose income is high or the double income
people who are ready to adopt western food.

Based on the findings of research following are some recommendation to

Kellogg's to expand oats category
Customer Cognizance: Misconception about oats that it is a horse feed.
they need to remove this misconception by marketing campaign and
make them aware about the product category.
Spicy Hot And Filling Breakfast: Indians are fond of spicy hot things
so they need to position it as a Spicy, hot and healthy food. And they
need to market oat such that the perception of Indian, western food
doesn't feel enough, will change. "six our challenge" is the best example
for such a campaign.
Health Angle: Indians are now slowly becoming health conscious. So
Market your oat as an source of protein, fibre and carbohydrate which
help t reduce cholesterol
Areas For Further Exploration: They should provide oats for Working
women, Pregnant women, Children, Aged person.

2) Muesli
How Kellogg can expand in the Muesli market:

Strategically, Kellogg's has position themselves very well in healthy food

market and convenience food market

Ankil Sanghvi
DM16106

They can run this kind of advertisement to attract customers

Muesli bars and snacks, for example, muesli bread rolls have turned into the
fundamental development driver, making up more than a large portion of
offers. They could likewise push the muesli bars and cookies and dispatch a
packaged offer to draw in client

In request to contend with Baggrry in the muesli section Kellogg's, can slice its
costs. However doing this will prompt loss of its premium picture in the
business. Subsequently, rather than taking part in value wars, Kellogg's could
present more variations of the item and get new and energizing flavour

3) Till now they have not targeted the age group between 16-25 years. So they can target
this age group by introducing Dark chocolate, blueberry and similar flavoured
cornflakes. And this kind of cornflakes can be advertised through social media.
4) They can target kids by changing the shape of the cornflakes or they can introduce
junior cornflakes just like junior Horliks.

Ankil Sanghvi
DM16106

5) As the brand is associated with nutrition and healthy food they can enter into the baby
food category.
Brand extension
1. They should change product positioning and make the process of eating cereal into an
experience by providing Chocolate Spoons, Chocolate Straws or some different
flavoured ingredients. This would target children because we are enhancing the
experience of breakfast and making it more enjoyable.
2. They can introduce some products in snacks category instead of being stick to the
breakfast category. They can introduce popcorn, Cheese Nuggets, French Fries Under
the name of Pringles, which they had acquired very recently.
3. They can introduce flavour milk that can be paired with one cereal and that can give
consumer enhanced experience of eating cereal.
4. Kellogg's is associated with breakfast so they can introduce flakes which consumer
can eat with chocolate sauce and Cocoa powder. So they can introduce Cocoa powder
as well as chocolate sauce associated with the flakes.
5. The market of yogurt is growing in India so they can introduce Flavoured yogurt
which they can it with flakes.
6. They can introduce milk powder for the consumer who finds difficulty in getting milk
like Students in hostel, working unmarried male etc. Also you can associate milk
powder with flakes and advertise such like "It tastes better with Kellogg's Powder
milk"
7. You can start flakes for the business travellers who are always busy with their work or
in travelling so you can provide such product so that they can consume it while
travelling as well as in a break of meeting or etc.
This all brand extensions are under the category of breakfast food and by launching this
products Kellogg's can enhance its image in nutritional food

CONCLUSION
Now Indian mindset is being changed and they had become health conscious and because of
that Indian market has the greater scope for the expansion of cereal breakfast which is
healthy, nutritious and delicious. But in India the growth of cornflakes have been reached
saturation level so Kellogg's have to take initiative to expand their categories and focus on
new category which are in high demand like oats and muesli. They should educate people to
eat more healthy and nutritious food and also they should concentrate on healthy food only.
So they should expand their category by providing rich and exciting variety of product

Ankil Sanghvi
DM16106

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