Abstract

The case, Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in the Indian market at its initial period of launch.

The case also examines the measures that the company has adopted on the marketing front to rectify its mistakes and highlight the efficacy of these measures.

Issues
There were basically four major issues which lead to the failure of the kellogg's product in the Indian market.

Taste Positioning Pricing Distribution

Taste Issue

The taste of Kellogg's product did not match Indian breakfast habit. An average Indian family consume milk, biscuits, bread, butter or local home made food(idlis, parathas, etc.) Indians always boiled their milk and add sugar to it but when kellogg's flakes put in hot milk they become soggy and did not taste good.

Positioning Issue

Initially Kellogg's have positioned their product as a health product which was a fundamental departure from the successful 'fun and taste' adopted in th U.S.

This positioning had given the brand a 'health product' image instead of the fun/health product.

Pricing Issue

Premium pricing of the product was another reason for low demand in Indian market. The price of kellogg's product (Rs. 21 for 100 gm) was clearly above the price of its main competitor, Mohan Cornflakes (Rs. 16.50 for 100 gm). Kellogg's tried a dollar-to-rupee pricing for its product.

Distribution Issue

Kellogg's decided to focus only on the premium and middle-level retail stores. Company believed that it could not maintain uniform quality of service if it offered its product at a larger number of shops. This decision put large section of the Indian population out of its reach.

Fought-and-Won Strategy

Kellogg's is the past master at the art, having fought-and-won strategy. Kellogg's did a lot changes and followed various steps in pricing, promotion and distribution to overcome the mistakes and re-establish themselves in Indian market.

Step 1

Kellogg's decided to launch two of its highly successful brand in India.

Chocos(Sptember 1996) Frosties(April 1997)

Brands were even consumed as snacks and led to the launch of Chocos Breakfast Cereal Biscuits and hence sales picked up significantly.

Step 1 cont...

The success of Chocos and Frosties led to the total Indianisation of the Companys flavor in future which resulted in the launch of MAZZA series in August in three local flavors

Mango Elaichi Coconut Kesar Rose

Step 2

Kellogg's reduced the price of their product by reducing its cost of production. Mazza series was not positioned in the premium segment of the market.

The glossy cardboard packaging was replaced by poaches.

Step 3

Kellogg's saw advertising as vital tool in promoting its brand. Kellogg's Indianise its campaign instead of copying its international promotion.

The rooster was missing in Kellogg's advertisements in India.

The advertisement also suggested that cornflakes could be taken with curd, honey and banana.

Step 4

Kellogg's launched The kellogg's Breakfast Week a community- oriented initiative to generate awareness about the importance of breakfast and also launched a lot of other health related programs. Kellogg's identified distribution as another key area in order to increase its penetration in the market. In 1995, Kellogg's had 30,000 outlets which was increased to around 40,000 outlets by 1998.

Step 5

Kellogg's also began working towards a better positioning plank for its products. They found that Indians give less importance to the level of IRON and VITAMIN intake and looked at the quantity, rather than the quality, of the food consumed. Kellogg's Chocos and Frosties brand were repositioned as fun-filled brands.

Result

In 1995, Kellogg's had 53% share which had been growing at 4-5% per annum.
In 2000, it launched many new brands including Crispix banana, Crispix chocos, Froot loops, Cocoa frosties, Honey crunch. Krispies Treat an instant snacks targeted at children. Priced on the lower side at Rs 3 & Rs 5, the product was positioned to compete against the products in the impulse snacks category. The prospects were clearly attributed to the shift in :

POSITIONING PROMOTIONS ENHANCED MEDIA BUDGET

Recommendation

Market study is must before you enter to any market. Do not under estimate your competitors no matters how significant they may are.

For successing in country like India company need to Indianise its strategy.
Cultural difference must be addressed.