Marketing Sem1 Group11 Kellogs Final1 2

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.
Introduction
2.
Research Methodology
3.
Objectives of The Proposed Study
4.
Firms Overview: Kelloggs
5.
Breaking of Stagnancy-The Foray Story
6.
inception of The Launch of Products
7.
Hurdles in Indian Market as A Novice
8.
The Initial Failure
9.
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
Mohan's Cornflakes (competitor)
Prices
Rs. 21 per 100 gm,
Rs 16.50 for 100 gm
Focused on
Affluent consumer
Mass consumer
Market comp
Premium and middle-level
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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2011
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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2011
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
some stolen items in a truck. Just neighbour, Pandey Ji, is shifting
daughter worryingly points out
then a man with his family arrives home he does not pay much
to him, hamara TV, our man
at...
attention...
cools her off by saying,

Pandey Ji ka.
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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
she vehemently protests on
Pandey Ji ka. On reaching
cupboard. But the father assures
seeing
home he finds the things
her, Pandey Ji ka.
their refrigerator with the

stealers. But our...
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
proving his better memory.
dimaag chalega...
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
VO: Take the Kellogg's Special The ad ends as the husband tells
she lost weight with the
K Challenge....and lose up to 2 his wife, "Tonight you'll look
challenge.
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
P a g e | 22
2011
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
Market Share
1995
53%
1998
More than 55
2000
More than 60%
2010
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
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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2011
is the population standard deviation

= sample size
= Margin of error
Now, at 95% confidence interval
and keeping our margin of error
an
substituting in equation (2),
)(
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
Observed frequencies (O)
Expected Frequencies ( E )
(O-E)2
Health and fitness
21
8.333
160.4529
19.25512
Feeling of Strong
8.333
18.77489
2.253077
Hunger satisfier
8.333
11.10889
1.33312
Happiness
8.333
40.10689
4.813019
Feeling energetic
10
8.333
2.778889
0.33348
Thinking Booster
8.333
40.10689
4.813019
Healthiest
breakfast notion
11
8.333
7.112889
0.853581
Convenience
19
8.333
113.7849
13.65473
8.333
53.77289
6.453005
Others
Chi Square = 53.7621

Degree of freedom(Df) = 8
P a g e | 30
2011
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.
P a g e | 31
2011
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.
P a g e | 32
2011
We saw 55.4% of students and 38.6% salaried employee as respondents to our survey, as the survey was
primarily online in nature.
P a g e | 33
2011
We got all the income groups' respondents in both users and non-users of cereals.
P a g e | 34
2011
We saw that in Students and salaried employee the percentages of users and non-users are
almost equal.
P a g e | 35
2011
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
P a g e | 36
2011
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.
P a g e | 37
2011
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.
P a g e | 38
2011
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.
P a g e | 39
2011
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'.
P a g e | 40
2011
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,
P a g e | 41
2011
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
P a g e | 42
2011
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
P a g e | 43
2011
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.
P a g e | 44
2011
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.
P a g e | 45
2011
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.
P a g e | 46
2011
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.
P a g e | 47
2011
ANNEXURE
QUESTIONNAIRE: CONSUMER
1.
Name:
2.
Sex: M/F
3.
Age (yrs.)
(10 - 14)
(15 25)
(25 above)
4.
Household income level:
(Below 15000) pm
(15000 25000) pm
(25000 40000) pm
(Above 40000) pm
5.
What do you usually eat in breakfast?
Traditional breakfast (Paranthas, poha, idli etc.)

Juice and fruits
Tea/coffee with biscuits
Any other
6.
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
7.
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
P a g e | 48
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)
8.
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)
9.
What all brands of breakfast cereals are you aware of?
Kellogg's
Mohan Meakins
Murginns
Shanti's
AIM's Aristo
Savour
2011
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
P a g e | 49
2011
Easy to make
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
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
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
P a g e | 50
2011
If yes, what do you remember about the ad? Please specify.

One thing you would like Kelloggs to do in future?
P a g e | 51
2011
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
P a g e | 52
2011
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
P a g e | 53
2011
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.
P a g e | 54
2011
CII:
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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ride in India

Submitted by group no.11

Master of International Business

Kellogg's Ride in India

Kelloggs Ride in India

MIB, Delhi School of Economics

Kellogg's Ride in India

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

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

As essentially required, Pilot survey (Simple size of 30) will be done.

Buying behavior of the consumers.

Retailers influence in pushing a brand.

MIB, Delhi School of Economics

Kellogg's Ride in India

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.

Consumer wants all the benefits equally by consumption of cereal food.

MIB, Delhi School of Economics

Kellogg's Ride in India

FIRM'S OVERVIEW: KELLOGGS

MIB, Delhi School of Economics

Kellogg's Ride in India

BREAKING OF STAGNANCY-THE FORAY STORY

MIB, Delhi School of Economics

Kellogg's Ride in India

INCEPTION OF THE LAUNCH OF PRODUCTS

MIB, Delhi School of Economics

Kellogg's Ride in India

HURDLES IN INDIAN MARKET AS A NOVICE

MIB, Delhi School of Economics

Kellogg's Ride in India

Low awareness about processed foods

MIB, Delhi School of Economics

Kellogg's Ride in India

THE INITIAL FAILURE

Mohan's Cornflakes (competitor)

Rs. 21 per 100 gm,

Rs 16.50 for 100 gm

Premium and middle-level

Small-level consumers & retail stores as well

MIB, Delhi School of Economics

Kellogg's Ride in India

STEPS TOWARDS SUCCESS

Kelloggs repositioned the product as tasty nutritious food

Products were not positioned in premium categories

Indianising the products by introducing the sweeter product

schools and to housewives.

Projection of products as fun-filled' brands rather emphasizing only on the nutrition

MIB, Delhi School of Economics

Kellogg's Ride in India