Kellogg in India

Marketing Audit

1. Marketing Environment. For India - the whole concept of eating breakfast cereal a new one. The most
common way to start the day in India was with a bowl of hot vegetables, hot milk. While this meant
that Kellogg’s 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.
India is a complex culture, emerging economy. ‘Consumer class’ numbers are around 100 million
people at the most, and buying habits and tastes vary greatly between the Indian regions. India has 17
official languages and six major religions spread throughout 25 states.
2. Marketing strategy. The company concentrated on establishing its brand name in the market,
promoting its quality crispy flakes which were a worldwide success accepted throughout the western
countries. Rapidly launched its products. Quite expensive cereals. The company’s attempts to
‘Indianize’ its range - disastrous. If it can’t sell cereal, it’s going to try and sell biscuits.
3. Marketing Organisation.
4. Marketing Systems.
5. Marketing Productivity. Launched Corn Flakes in India - a Western product attempting to appeal to
Indian tastes. Even if they liked the taste, the product was too expensive. Introduced Chocos, Cheez-It,
Wheat Flakes, Frosties, Rice Flakes, Honey Crunch – unsuccessful. Special K – for obese women.
Three segments: kids, all-family, adult space. Using packaging as an effective marketing tool, for brand
communication. Adopting brand names that appeal to the Indian consumer such as ‘Shakti’, meaning
power.
6. Marketing Functions. Indians preferred their milk hot. When the Kellogg’s crispy flakes are mixed with
hot milk, they turned out to be soggy - rejected by the consumers. Kellogg’s had to modify their
products to suit hot milk.
Marketing mix: Product, Price, Place and Promotion. Failed on Product and Price: did not take into
account people’s tastes. It assumed that if the product sold heavily in US, it should appeal equally to
the Indian masses. Also, Kellogg’s did not find many buyers because of the high price. Its
advertisements and promotions focused initially on the health aspects of the product

Porter’s Five Forces:

1. Threat of substitute products. Hot foods for breakfast. Paranthas, idli, dosa. - high
2. Threat of established rivals. Various brands available. Pepsico`sQuacker oat, Mohan Meakins - high
3. Threat of new entrants. ITC, Nestle, Heintz. - high
4. The bargaining power of suppliers. Located its manufacturing plant at Taloja, near which is the
largest market for breakfast cereals in the country thereby optimising transportation cost. Set up a
distribution network with storage hubs in all the key states of the country. - low
5. The bargaining power of customers. Price sensitivity, Brand identification, Switching to rival brands
– high
= not attractive market