Professional Documents
Culture Documents
UB: 11019361
FT MBA 2011-12
I certify that this assignment is the result of my own work and does not exceed the word
count noted below.
UB: 11019361 1
Contents
1. Terms of Reference ..................................................................................................................... 4
2. Executive Summary ..................................................................................................................... 5
3. Business Mission .......................................................................................................................... 6
4. External Marketing Audit ............................................................................................................. 7
4.1 Macro-environment ................................................................................................................... 7
4.1.1 Political ................................................................................................................................. 7
4.1.2 Economic: ............................................................................................................................ 7
4.1.3 Social:................................................................................................................................... 8
4.1.4 Technological ...................................................................................................................... 9
4.1.5 Legal:.................................................................................................................................... 9
4.2 Microenvironment ...................................................................................................................... 9
4.2.1 The Market .......................................................................................................................... 9
4.2.2 Competitive Environment Analysis: ............................................................................... 10
4.2.3 Customers: ........................................................................................................................ 11
4.2.4 Competition: ...................................................................................................................... 12
4.2.5 Substitutes: ........................................................................................................................ 12
5. Internal Marketing Audit ............................................................................................................ 13
5.1 Operating Results: ................................................................................................................... 13
5.2 Strategic Issues Analysis ....................................................................................................... 13
5.2.1. Current Marketing Objectives: ....................................................................................... 13
5.2.3 Competitive Advantage: .................................................................................................. 15
5.2.5 Positioning: ........................................................................................................................ 16
5.3 Marketing Mix Effectiveness .................................................................................................. 17
6. SWOT Analysis........................................................................................................................... 18
6.1 Strengths:.................................................................................................................................. 18
6.2 Weaknesses:....................................................................................................................... 19
6.3 Opportunities:...................................................................................................................... 19
6.4 Threats: ................................................................................................................................ 19
7. Marketing Objectives ................................................................................................................. 20
7.1 Market Penetration: ................................................................................................................. 20
7.2 Market Development: .............................................................................................................. 20
7.3 Product Development: ............................................................................................................ 20
7.4 Strategic Objectives: ............................................................................................................... 21
UB: 11019361 2
8. Core Strategy: ............................................................................................................................. 21
8.1 Target Markets: ........................................................................................................................ 21
8.2 Competitor Target:................................................................................................................... 22
8.3 Competitive Advantage: ......................................................................................................... 22
9. Marketing Mix Decisions ........................................................................................................... 23
10. Budget: ..................................................................................................................................... 24
11. Organization and Implementation ............................................................................................. 24
12. Control: .......................................................................................................................................... 25
13. Reflective Account:..................................................................................................................... 26
References………………………………………………………………….…………………………………………………………28
UB: 11019361 3
1. Terms of Reference
UB: 11019361 4
2. Executive Summary
Breakfast cereals are an integral part of the diet in many Westernised Countries and
therefore a key sector of the grocery market in the world. But the breakfast market in India
stands unique as most of the population eats variety of food for breakfast. The breakfast
cereal can be a part of it but people in India find it monotonous if they eat the same dish
every day.
This marketing plan analyses the Breakfast Cereal industry in India and identifies key growth
opportunities for Kellogg’s. As shown in Figure 2 a detail stepwise approach has been used
in order to cover all the aspects to understand current market situation, preparing a strategy
based on the market study and recommending how to implement the strategy.
External audit examines the external environment at macro and micro level. Broad
environmental issues such as political and economic issues are analysed in the context of
the business.
Internal audit evaluates the current strategy that company is using. Kellogg’s Cornflakes is
there in Indian market for long now but it is not that successful as it is in the western
countries. Kellogg’s competitive advantage and position in the market are also assessed.
SWOT provides a clear picture of the product in the market. It helps to form Marketing
Objective. It also helps while forming a marketing strategy for maintaining the market share
and leadership.
Finally market is selected on the available opportunities. Organization’s structure and budget
is also considered in recommendations.
UB: 11019361 5
Figure 2: The marketing Planning Process
3. Business Mission
Kellogg’s main mission is to drive sustainable growth through the power of their people and
brands by better serving the needs of their customers and communities. As they are in food
industry they want to be the food company of people’s choice which means their vision
encompasses the full spectrum of their shareholders, employees, customers, consumers
and communities. Finally through commitment to social responsibilities Kellogg’s want to
remain consumer centric and expand in the market of cereal, snacks and frozen food
(Kellogg Company, 2011).
UB: 11019361 6
4. External Marketing Audit
4.1 Macro-environment
4.1.1 Political
In 1991, the Government of India changed the Industrial policy in order to make Indian
economy dynamic and to provide free business environment. It approved direct foreign
investment upto 51% in high priority industry (India Juris 2011). As per the India Law Offices
report (2007) by 2015 The Indian Government has set an investment target of approximately
INR 1000 billion for the food processing sector. This is expected to almost double the
country’s presence in the global food trade to three per cent. This investment is considered
to boost the growth of this sector, and take it to the next level. Therefore judging the stance
of Indian Government on foreign investment in food industry reflects that it is a big
opportunity.
Effect: Opportunity
4.1.2 Economic:
For over a past decade India’s average quarterly GDP Growth has been 7.45% (Graph 1).
The Indian economy has shown growth with average of approximately 7% for more than a
decade, reducing poverty by 10% points (Trading Economics, 2011).
Graph: 1
UB: 11019361 7
Moreover rapid middleclass expansion, youthful population and massive domestic
consumption have gained momentum helping it to keep multinational investments. This data
shows that Indian Market has much to look forward to. However deepening Eurozone crises,
double-dip recession in U.S and high local borrowing cost have hurt India’s GDP growth
which has slowed down to 6.9% (Trading Economics, 2011). The rise in inflation and
tightening credit conditions are likely to continue which would affect the domestic demand
conditions.
Graph: 2
Effect: Although the Short-run outlook, for demand for consumer goods looks risky in the
Long Run the forecast remains positive (Datamonitor,2011).
4.1.3 Social:
Population wise India stands second in most populated countries in the world. With a
population of 1.2 billion in 2010, the average age was 25 years. The huge working age
population is a positive demographic factor, one that is often described as India’s
demographic dividend. However, India’s social development policies have achieved
negligible in terms of human development. The country was ranked 119th out of 169
countries in the United Nations Development Programme's Human Development Report
2010, the main reason was due to poor social infrastructure development in the areas of
UB: 11019361 8
healthcare and education. There is growing income disparity between the highest and lowest
earners (Datamonitor 2011).
4.1.4 Technological
Cereal manufacturers aim to reinforce the healthy image of the market by re-launching the
existing products, and through new product development (NPD). Consumer awareness of
the cholesterol-lowering properties of oats has also aided the development of the hot cereals
sector (Key Note, 2011). At the same time availability of local machinery to manufacture
Breakfast Cereals makes local competitors to scale-up the production. It also makes it easy
for local companies to reduce the price of their products.
Effect: Threat
4.1.5 Legal:
A sound and strong legal and regulatory framework has made it possible for business
entities in India to grow their business. In recent times the country has witnessed successful
tax reforms, such as the implementation of value-added tax (VAT). In addition, by abolishing
fringe benefit tax and supplementing the online tax payment process, the government has
taken a step towards reducing the administrative complex paperwork in its corporate tax
structure. India has a sound legal framework for business entities, which has driven business
growth in the country. But still work needs to be done regarding the proper implementation of
these laws and regulations. It can be stated that the legal system provides a fair, equitable,
and transparent framework for businesses (Datamonitor 2011).
4.2 Microenvironment
4.2.1 The Market
Kellogg remains the leader in 2010 in breakfast cereals although its share is in
decline
Earlier till 2008 the market for cereal grew at the rate of 10%(datamonitor.com, 2010). But
the awareness of Urban Consumers fuelled by active advertising of breakfast cereals like
oats and muesli has increased the consumption. The total breakfast cereal market in India is
estimated to be INR 3.75 to 4 billion which is growing rapidly by 20 to 25 per cent (The
Economic Times, 2009).
UB: 11019361 9
While the breakfast cereal market is growing and established players like Quaker from
PepsiCo’s FritoLay, Hindustan Unilever and Nestle have launched their respective cereal
brands, Kellogg India’s market share remains dominant which is more than 70%(The
Economic Times, 2009).
UB: 11019361 10
• RISK: Low
• Big Brand name, wide product range and almost
Potential Entrants worldwide presence creates srategic entry barrier
for new entrants.
• RISK: Low
• Products are manufactured in comany owned
Supplier Power factories.
• RISK: High
• First time buyers might opt for the competitors , but
Buyer Power repeated buyers often prefer the same supplier.
• Price is a major issue.
• RISK: High
Substitutes Threat • There are so many substitues to Breakfast Cereal
in India that it is a major threat.
• RISK: HIGH
• Competitors offer products with different costs.
• They carry big brand identity i.e . Quaker,PepsiCo’s
Competitors FritoLay, Hindustan Unilever, Nestle .
• Heavy investement in new strategies to gain
maximum market share by competitors.
4.2.3 Customers:
All the breakfast cereal companies have targeted middle-class customers living in the cities.
The main brands have also increased their market by targeting tier two and tier three towns
and cities. Especially Kellogg’s with its localised verity and low priced packs has reached to
approximately 1400 towns and cities and is targeting to reach the footprint of 2000 towns
within next few years (Sarkar and Baksi, 2007).
Although breakfast cereals are now for more than a decade in Indian market, typical day of
an Indian starts with freshly cooked and hot meal. Every day for most of the Indian families
the dish cooked for breakfast is different. Therefore for Indian customer eating breakfast of
cereal every day can serve as monotonous. Also it is a well-known fact that cornflakes,
wheat flakes or any other type of cereals are taken with cold milk whereas in India normally,
as a habit, people pore hot milk which make the flakes soggy. Therefore unlike other
countries breakfast cereal can never actually replace the authentic Indian breakfast. As
Anupam Dutta, managing director of Kellogg India said, “It would be foolhardy for me to say
Kellogg has replaced cooked breakfast. I don't think we can ever hope for that. But we've
become a part of the consideration set for breakfast in many Indian homes, and that's a
tipping point.” (Express Health Care Management, 2007).
UB: 11019361 11
Today, most of the Indian middle class customers are buying breakfast cereals because of
the powerful advertisements. The best examples are Kellogg’s Chocos which has been
targeted primarily towards children and Special K fat-free cereal targeted to the women to
lose weight. Both the products had a positive impact because of the correct promotion
strategy (4Ps Business and Marketing, 2010.)
4.2.4 Competition:
The competition in the market can be termed as fierce as most of the competitors are major
multinational companies like Frito-Lay India, Heinz India and Nestle. But, as mentioned
earlier, for breakfast cereals Kellogg India still rules the market by 49% of value sales and
70% of market share (euromonitor.com, 2010).
The main competitor of Kellogg’s is FritoLay, the biggest snack company in the country and
a division of Pepsico India. It has entered into the market with Quaker Oats, and is working
on variants and flavours in this range (Sarkar and Baksi, 2007).
Heinz India has launched ‘Complan Nutri Bowl Muesli’ claiming that Kellogg’s Cereal goes in
the cold breakfast category whereas according to Indian eating habits their product is
suitable for steamed, hot milk (Sindhu, 2010).
Nestle India subsidiary of Swiss Giant is set to enter the cereal market. Antonio Waszyk
Nestle India’s chairman and Managing Director told reporters that breakfast segment was to
achieve massive sales in the year 2010 and Breakfast Cereals was one the category
company was reviewing (euromonitor.com, 2010).
There are some other local companies which also compete with Kellogg’s. Their main
strength is the price as they sell breakfast cereal at less than the half price of these
multinational companies. But because of inconsistent quality and lack of brand name they do
not play a major role. Also since Kellogg’s launched the value packs at low cost of INR 10,
Kellogg’s sales have sore up (Singh, 2010).
4.2.5 Substitutes:
Although Kellogg’s market hold can be seen stronger in Indian breakfast cereal market, it
should be noted that a decade ago Kellogg’s had entered with motive of changing the
breakfast habits of an average Indian and winning the breakfast market (businessweek.com,
2006). Kellogg’s clearly failed to do so becoming one of the brands that failed to make an
impact in Indian Market. The main competition for Kellogg’s is the local food and not its
competitors in the same segment. The local food is way cheaper than one pack of Kellogg’s
Cornflakes or Chocos. Although the costs are hard to compare Kellogg’s 425 gms of Wheat
flakes cost around INR.140 (Groc Bay, 2011). If we buy 1 kg wheat flour it costs around Rs.
30 (Agri Corner, 2011) which is used for a type of Indian Pancakes for breakfast. Therefore
Kellogg’s for Indian middle class customer serves as a costlier and monotonous option for
breakfast.
UB: 11019361 12
Table: 2
UB: 11019361 13
5.2.2 Segmentation:
Figure: 4
Breakfast
Cereals
Children's
Corn/Wheat Special K (For
For Adults breakfast
Flakes Women)
cereals
Puffed Wheat /
rice-based Frostries
cereals
For a long time now Kellogg's weakest categories in breakfast cereals are hot cereals and
muesli. Kellogg attempted to shore up its presence in muesli but it failed. Except for French
market, the Company is almost absent from hot cereals segment. Flakes’ is Kellogg's
traditional strong point and even today it maintains the same. According to Euromonitor
(2011) the company had a 45% market share globally in 2010. Other Ready to Eat (RTE)
cereals are target towards different groups of the population in which Kellogg’s has a strong
hold in children’s breakfast cereal category.
UB: 11019361 14
Graph: 3
Figure: 5
Differentiation
Cost Leader
Leader
Differentiation
Cost Focuser
Focuser
UB: 11019361 15
5.2.5 Positioning:
Table: 3 Breakfast Cereals Company Shares 2006-2010
From the above table (Table: 3) it can be noticed that Kellogg still rule the market. The main
reason is the variety of product that company has introduced since it entered in Indian
market.
UB: 11019361 16
5.3 Marketing Mix Effectiveness
UB: 11019361 17
6. SWOT Analysis
Figure: 7
Strengths
Weakness
1. Strong Brand
name 1. Unable to
compete with local
2. First to market food
advantage
2. Price
3. Promotion
Opportunities
1. Changing Threats
Consumer 1. Stiff Competition
Behaviour 2. Cost
2. Growth in Food effectiveness
Industry
6.1 Strengths:
As Kellogg’s India is subsidiary of Kellogg’s it has a strong brand name. The company is
now in Indian Market for approximately 15 years and has created sufficient goodwill for itself.
With the introduction of K-value pack Kellogg’s has lead the breakfast cereal market in new
direction. None of the big competitors have managed to bring low cost cereal in the market
till now.
3. Promotion:
With the help of bullish advertisement of its new products Kellogg’s has managed to
penetrate the market well.
UB: 11019361 18
6.2 Weaknesses:
Although Kellogg’s has achieved sufficient growth it has not been able to compete with local
food variety or local substitutes. Therefore unlike foreign markets Kellogg’s has still not
become a part of breakfast of average Indian family.
2. Price:
Compared to local food Kellogg’s breakfast cereals price is too high. And Kellogg’s has
refused to bend itself against the price.
6.3 Opportunities:
The young working class in the cities does not want to waste time on cooking which is a big
opportunity for the company. Targeting young population which is earning sufficient income
may increase the sale.
As mentioned earlier India is experiencing a massive growth in food sector which will
certainly strengthen the position of the company. Also domestic expansion will help the
company to strengthen its position further.
6.4 Threats:
1. Stiff Competition:
Unlike foreign market for Kellogg’s India the stiff competition is not from the other
multinationals in the breakfast cereal market but the main competition is from local food
items. If not tackled righteously local food items may actually threaten the position of the
company.
2. Cost effectiveness:
Considering the present high inflation rate Kellogg’s price factor may work against it.
Consumer would give preference to the local companies for breakfast cereals due to more
quantity and the low price.
UB: 11019361 19
7. Marketing Objectives
• To increase the sales of Kellogg’s India by regaining the share in the Indian Breakfast
Cereal Market, which was earlier 57%, within next five years.
• To establish Kellogg’s India as the best quality and standard breakfast cereal with
affordable price within next two years.
• To make Kellogg’s Breakfast Cereal as one of the primary product in the Indian daily
breakfast within next five years.
Strategic Thrust:
Figure: 8
UB: 11019361 20
7.4 Strategic Objectives:
For Kellogg’s India, still the main source of income is Breakfast Cereals as company has not
still launched its other products except chocolate biscuits. As discussed again and again the
main issue for Kellogg’s is not whether which of its product is working well or not, the issue is
how to tackle the local fast food. The local fast food dishes are quite healthy as they are
made from number of vegetables, require less time and are cheap. If Kellogg’s wants to see
a growth in its sales it has make changes in its marketing strategy. Kellogg’s Breakfast
Cereal is one of the many products which although succeeded in its own sector were unable
make any impact or draw more profits (Singh 2010). Therefore the strategic objective would
be concentrating on new strategy for marketing its product.
8. Core Strategy:
Figure: 9
Push foward
in Emrging
market
Consider Break
Consider hot
Muesli Fast cereals
market Cereals
Consider new
Campaign to
attract Young
generation
As it can be seen from graph 4 that hot cereals is set to post strong growth led by India.
Unlike western countries in India due to the cultural factors, people like to be served with hot
meals which include hot cereals. Developing such a product which won’t get soggy
immediately after putting into the milk is a challenge for Kellogg’s. This is the exact reason
behind Kellogg remaining weak in the Indian market (Euromonitor 2011).
UB: 11019361 21
Graph: 4
As of now, the strategy of targeting on Tier 2 and Tier 3 cities and towns will definitely help
Kellogg. But main difficultly will be how to attract the customer. The company relies only on
its K-value pack for such market as the higher end packs may not be affordable for Tier 3
towns. Increasing the quantity even slightly of K-value pack may help the company to sell
well.
As India is considered as one of the countries which have youngest working population in
the world targeting the young urban population while promoting is crucial.
The areas in which Kellogg is weak it should consider about improving them so as to remove
the competition and increasing sale.
UB: 11019361 22
9. Marketing Mix Decisions
UB: 11019361 23
10. Budget:
Till 2010 Indian Breakfast Cereal Market was valued at INR 4 Billion out of which Kellogg
had 47.5% market share (INR 1.9 Billion) (Euromonitor 2011). The proposed amount for
achieving new marketing objective and marketing mix over the period of next three year is
50% of the stated market share (INR 0.8 Billion).
Table: 4
UB: 11019361 24
12. Control:
Table: 6
UB: 11019361 25
13. Reflective Account:
Few years back the management of world renowned company Kellogg accepted that it has
failed in India where it saw a potential market. Kellogg India was that despite of being a
world recognised brand Kellogg’s could not make any impact in its initial years. It is
fascinated to know that how a company which has enough capital, enough brand value and
capability to rule the market may still fail due to lack of market research.
Process:
This assignment gave an insider’s view of the industry with insights on strategies and
objectives of the company. It also showed the importance of marketing plan which is an
essential tool in understanding the core requirements of the business. While preparing a
marketing plan, it is necessary to consider all the factors that are likely to impact the
business. While conducting the external audit, external influences such as political,
economical, social and technological were analysed. How these influences affect the
business environment was discovered. Similarly, internal audit analysed the impact of the
interior factors such as price, place, promotion etc. that might affect the whole business
significantly. Understanding the external and internal factors made me aware of detailed and
precise marketing strategy for the company. This increases the possibility of the
recommendations becoming more sound and effective. I learnt that one of the most
important factors while preparing a marketing strategy is to decide the target market. If we
properly research the market and follow the segmentation process knowing the position of
our product in the market, then we can choose our target market accurately.
Challenge:
The process of preparing a marketing plan was challenging. One of the biggest challenges
was to gather the data. It is easy to gather data like market share of a company as a whole
but not for a particular product. Sometimes the data is outdated in which case it just shows
how the trend was. This made me realise that how difficult it could be to conduct the
research for the company as well, as data can never be readily and completely available.
Therefore it is about how we judge and understand the business, product and the business
environment. In order to reach till the end one has to come up with certain assumptions.
These assumptions then help us to formulate the market strategy and the recommendations,
which would help the company to reach its goals.
Key Learning:
The process of creating a market plan taught me to how to carry out the market research
and helped to understand the business better. It also helped me to improve my analytical
skills and judgements for formulating the marketing strategy.
UB: 11019361 26
References:
AgriCorner: Agriculture Corner (2011). Flour price fixed at Rs 29.5 per kg. Available
at: http://www.agricorner.com/flour-price-fixed-at-rs-29-5-per-kg/ [Accessed On 09
Dec. 2011]
BMI: Business Monitor International, (2012). India Food and Drink Report 2012.
Available at: http://www.marketresearch.com/Business-Monitor-International-
v304/India-Food-Drink-Q2-7011363/ [Accessed On 05 Aug. 2012]
Express Health care. To be Healthy, Wealthy and Wise. Indian Express Newspapers:
Mumbai. Available at: http://www.expresshealthcare.in/200709/market01.shtml
[Accessed On 09 Dec. 2011]
India Juris (2006). Foreign Collaboration and Investments In India. Available at:
http://www.indiajuris.com/pdf/FC-India%20Juris.pdf [Accessed On 09 Dec. 2011] pp.
12-7.
Jobber, D. (2010). Principles and practice of marketing, 6th edition. McGraw-Hill. pp.
40-57.
Kellogg Company (2011). About The Company: Our Company. Available at:
http://www.kelloggcompany.com/company.aspx?id=32 . [Accessed On 05 Aug. 2012]
UB: 11019361 27
Khurana, G. (2007). Indian Food Processing Industry. Indian Law Offices. Available
at: http://www.indialawoffices.com/iloPdf/foodprocessingindustry.pdf [Accessed On
09 Dec. 2011] pp. 15
4Ps Business and Marketing (2010). Breakfast And Beyond. Available at:
http://www.4psbusinessandmarketing.com/25022010/storyd.asp?sid=3469&pageno=
1 [Accessed On 09 Dec. 2011]
Sarkar, J. and Baksi, A. (2007). Cereals battle begins. The Economic Times.
Available at: http://articles.economictimes.indiatimes.com/2007-09-
30/news/28479160_1_breakfast-cereal-indian-consumer-quaker-oats [Accessed 08
Dec 2011]
Singh, N (2010). Kellogg India increases prices. The Times of India. Available at:
http://articles.timesofindia.indiatimes.com/2010-01-22/india-
business/28127629_1_breakfast-cereal-anupam-dutta-input-costs [Accessed On 09
Dec. 2011]
Singhal, P. (2010). Kelloggs’ breakfast gets dearer. Money Mint. Available at:
http://www.moneymint.in/business/kelloggs-breakfast-gets-dearer [Accessed On 09
Dec. 2011]
UB: 11019361 28