Kellogg company marketing strategies and practices
Kellogg is a global company holding a special place in the cereals and other convenience foods. The name of the company is familiar to the overwhelming majority of the modern food market consumers. Kellogg's over a century marketing experience has converted the company into the primary competitors of the industry of convenience foods and cereals. The company successfully provides nutritious products of superior value and stays committed to its overall growth and marketing development. Kellogg's company stays loyal to its leadership in product innovation strongly affecting the growth of convenience foods business. Historically it has evolved into a market-oriented organization which persistently continues to reduce its costs. The given report will evaluate Kellogg’s marketing strategies and approaches that have defined it as market-oriented company that is able to stand the stiff competition within the food industry.
Kellogg Company General Overview
Kellogg Company is by right considered the world leading cereal manufacturer which simultaneously is the second largest cookie manufacturer in the world. In addition, it is addressed as the leading producer of a vast variety of frozen products and snacks (Kellogg Company Annual Report 2013, p.79). It is presented in two major markets: the food market of United Kingdom and the food market of the United States of America. Historically, Kellogg was established in1906 and subsequently has managed to secure its position as one of the world' biggest cereal manufacturers. The company possesses manufacturing factories all over the world, nevertheless its largest factory is located in Manchester, United Kingdom (Sewell 2010). The company efficiently functions in the food industry and is widely known for its famous toasted corn cereal as part of its brands and products (Schultz 2007). Globally, Kellogg’s is known as a convenience foods and cereal company with established production in eighteen countries including UK. The company's founder has greatly contributed to the company's status on the market and the direction of its future efficient marketing strategies (Homburg & Sabine 2009). The company is to be addressed as innovative and in a certain degree aggressive in terms of its marketing strategies and practices. It has successfully implemented creative market-oriented approaches to ensure the company's survival in the industry and its ability to appropriately compete on the market. The company is involved in production of many brands such as: Frosted Flakes, Corn Flakes, Rice Krispies, Special K, Pop Tarts, Kashi, Eggo, Keebler, Nutri-Grain, etc. These products have gained the leading positions in corresponding target market segments (Kellogg Company Annual Report 2013). Kellogg’s is a company that can be used as an example of exquisite application of marketing mechanisms. (Sewell, 2010). In spite of its minor size, as compared to its competitors, Kellogg Company never failed to present high quality products and produce high profits.
Kellogg's situational analysis: Corporate Strategy
Contemporarily, Kellogg's is facing the period of consistent growth as a consequence of implementing effective market strategies in terms of product development, continuous innovation, maintaining its global position, and diversification. The major strategic advantage behind the company's success and further development is the establishment of a strong and accurate marketing plan along with Kellogg's corporate strategy (Porter 2008). In such a way, the company manages to satisfy both new and old customers. Presently, Kellogg's has successfully implemented the SMART strategy which implies the specific, measurable, attainable, realistic, and time sensitive nature of its business objectives (Schultz 2014). Kellogg Company 2013 business report states a $14,792 million consolidated net sales in 2013 as opposed to the $14,197million consolidated net sales in the fiscal year 2012 (Kellogg Company Annual Report 2013). Correspondingly, the company has experienced a 4% increase in its consolidated net sales and expected to present similar growth in 2014. In addition, the company's corporate strategy is aimed at the provision of valuable service, enhancement of public relationships, and sales promotion. Kellogg's 2013 corporate report emphasizes the significance of the present corporate strategy of the company with its focus of the improvement of the nutrition benefits and satisfying the varied needs and preferences of the total compound of global consumers (Kellogg's Corporate Report 2013). The primary element that distinguishes Kellogg's corporate strategy from the rest of the companies is that it strives for educating its consumers in terms of nutrition and sports, communicating a unique healthy message to the consumer (Sewell 2010). The corporate strategy is focused on fitting and leading the market throughout producing safe top-quality products, sharing information concerning nutrition patterns, continuously improving the health advantages of the manufactured foods, and stressing the meeting the community needs. Its community-oriented strategy is revealed through the company's hunger relief and breakfast donating programs. The Breakfasts for Better Days Kellogg's global signature initiative has shown the range of the company's concern to the global community. Kellogg Company strategies and practices elucidate its philosophy of seeing the satisfaction of the customer's needs as its major priority.
Performing the SWOT analysis is the first step provides a deeper apprehension of the assessment of the Kellogg company marketing strategies. The company possesses the following strength and weaknesses:
- Strengths. The main strength of the Kellogg Company is its market share. The company has managed to maintain over 40 % of the market cereals. In addition, it has manifested efficient advertising making Kellogg's one of the most recognizable cereal brand in the world. The company is highly concerned with the consumer's needs and stays loyal to its philanthropic corporate strategy ("Using new product development" 2014).
- Weaknesses. Kellogg's has not introduced a great variety of new product lines of cereals during the last few years. Another weakness to mention is the absence of the company's initiative in terms of price setting. It is to be addressed to as a price follower.
It goes without saying that the strength outweighs the weaknesses of the Kellogg Company making it the world's leading cereal manufacturer. To obtain a profound understanding of the company's strategies and practices it is also necessary to evaluate its opportunities and threats:
- Opportunities. One of the major opportunities of the company is the international character of its expansion. The company succeeds in maintaining its positions in the global food market along with revealing consistent growth of consolidated net sales. Kellogg's can potentially increase its market share under the condition of introducing lower prices.
- Threats. The biggest company's threats are associated with its primarily competitors, which are: General Mills, Post, and Quaker Oats. The latter tend to decrease their prices to minimize Kellogg's market share. Being a premium brand it faces tough competition from the side of discount cereal companies.
The company's SWOT analysis is the ground base for the company's gaining its positions in the international food market. Kellogg’s management entered the United Kingdom and the international markets with a definite strategy. It started by doing market analysis and assessing the customer needs. The competitive intensity of the market stimulated the company's strategic development and converted it into a market-oriented company. Kellogg's has achieved its success by means of evaluating the competitors and the market itself, along with the consumers and the suppliers of raw materials (Carey, 2010).
The analysis of the marketing mix
According to the latest theoretical frameworks, the company's marketing mix is revealed through a unique compellation of marketing decision-making patterns and variables. These variables are used by any company to successfully introduce its product to the market. Generally speaking, in order to be efficient, the company has to identify its target market and chose appropriate marketing strategies (Porter 2008). Both of the forenamed elements are used to challenge the largest market's competitors and winning a market niche. Evidently, a marketing mix is a unique combination of marketing elements that help the company to achieve its goal profits, increase the volume of sales, attain a larger portion of market share, and obtain return on investment. Similarly to other global companies, Kellogg's strives to conducts a deep investigation of its four important marketing mix elements, which are: product, place, price, and promotion. The forenamed elements are referred to as the marketing mix or 4 P's correspondingly.
- Product. It is common knowledge that the product component is evaluated throughout the company's ability to meet the needs of its target consumers. Kellogg's has taken into consideration the contemporary popularity of healthy eating and sports. Owing to the company's dedication to its consumer's healthy eating trends it has successful introduced a number of appropriate products in the frames of the aforementioned market segment ("Using new product development" 2014).
- Place. The second most important element of the marketing mix is defined through the accessibility of the product to the target consumer. The place compound is essential in terms of the consumer's attractiveness as it basically determines the rate of the product sales. Correspondingly, Kellogg's has occupied the best place for grocery shopping - the supermarkets. Thus, Kellogg's is accessible for all types of consumers all over the world. The failure to present its products in supermarket may cost the company a significant loss of sales.
- Price. The following marketing mix element is defined through the amount of money the company decided to charge the consumer for its products. For many consumers, price is the leading index in terms of determining the company's sales. The majority of discount brands uses low-quality raw materials and therefore can afford a set a minimal price for their products. Kellogg Company can afford setting premium prices due to the brand's market positioning and the top-quality of its raw materials. Kellogg's consumers are ready to pay the price for obtaining quality products.
- Promotion. The last, but not the least marketing mix element is promotion. Promotion deals with the products popularity in the market. It goes without saying that if the product is not available at the moment, the consumer will chose an alternative one. Promotion strives for making the brand recognizable to others in order to stimulate the market demand on it. Kellogg's has efficiently implemented TV advertising patterns along with popular on-pack promotions, and give-away product samples. Kellogg's has also introduced a video game to promote its product.
Kellogg Company belongs to a group of global companies that have achieved popularity and managed to maintain controllable demand on their products. The aforementioned analysis of the company's market practices leads to the necessity to identify its major marketing strategies. Evidently, Kellogg's has adopted an efficient and diverse marketing strategy that has subsequently converted the company in to the world's leaders of the food industry ("Kellogg Company" 2014). The company uses the global marketing strategy and subordinates the following goals:
- Achieve leadership in product innovation;
- Stimulate promotion of the substantial growth of the business;
- Improve the company's product representation in all of its markets;
- Maintain cost leadership throughout cost reduction (Homburg & Sabine 2009).
Thus, Kellogg's global marketing goals are applied to each market it has entered. In addition to the goals of the global marketing strategy, the company subordinated to four primary objectives in terms of providing efficient marketing practices:
- Providing pricing brand differentiation;
- Introducing and creating new products;
- Shaping the company's market image;
- Performing cost adjustments to satisfy the consumer (Homburg & Sabine 2009).
Along with the general global marketing strategy, Kellogg's has successfully implemented the following marketing practices which focus on the public sector and therefore on the consumer needs and preferences:
- Improving food labeling (introduction of the Kellogg's Guideline Daily Amounts (GDA) which equipped the product packages with the recommendations concerning the daily norms of product intake; additionally, Kellogg's company has presented the body mass index (BMI) guide to assist the consumers in assessing their food habits (Schultz 2014).
- Participating in sponsoring programs (Kellogg's is recognized as one of the biggest sponsors of swimming on the territory of the United Kingdom; it strongly cooperates with the Armature swimming Association (ASA) in order to provide annual awards to swimmers. Thus, Kellogg's brand positioning is very strong as compared to its other competitors) ("Kellogg Company" 2014).
- Promoting physical activity (Kellogg's motivates its consumers to exercise more in order to be healthier. It has managed to convert Sustrans, one of UK's leading physical activity organizations, into its major partner. Thus, the company supports the pro-green global initiative) (Sewell 2010).
- Presenting community work (In accordance with its corporate culture, Kellogg's has been actively introducing community programs with the aim of encouraging the nation to be more active in terms of physical education. It has organized a variety of fitness, badminton and table-tennis community activities (Carey 2010).
Kellogg' systematically participates in hunger campaigns similar to the one that was conducted on October 2014. The October campaign was directed towards the prevention of hunger and war all over the world and involved Kellogg's significant sponsorship and employee support. Owing to the Kellogg's global management strategy more than thirty nations have collected food to feed the hungry (Morschett, Schramm-Klein & Zentes 2010). The company's employees worked at a global marketing level funded by Kellogg’s department of social responsibility collecting one hundred and thirty pounds of food. This beat the 2013 records of the same tasks by thirty thousand pounds, signifying more work and dedication of the Kellogg Company.
Generally speaking, marketing incorporates the concept of consumer conduct and the provision of exclusive value for customers. It is hard to underestimate the impact of Kellogg's marketing strategies and practices on its overall performance. Throughout its history Kellogg’s has applied numerous marketing methods. Marketing activities of the company were applied in accordance with the needs and desires of the consumers. The analysis of Kellogg's global marketing strategy has proved its positioning as a market-oriented company. It is evident that every consumer would psychologically want to purchase products from Kellogg’s since the company is concerned with the needy section of the society. The company has manages to create a powerful social image which has subsequently positively affected the sales rates. This year the Company donated four thousand pounds of cereals to twenty different charitable organizations. Kellogg Company conducts multinational manufacturing according to the global marketing strategy patterns. Today Kellogg’s is a world class enterprise employing thousands of workers across borders. The core competences of the Kellogg Company include large capital access, technical understanding, market leadership, and a strong marketing strategy. It managed to introduce a unique global marketing strategy and successfully spread it all over the world. The company's level does not allow it to underestimate the needs of the global community but motivates it to introduce numerous community-based programs that do make a difference in the world in general and Kellogg's business success in particular. The assessed strategies and practices will greatly contribute to the company's global expansion and the wider popularization of the K brand.
- Homburg, C and Sabine K 2009, Marketing Management - A Contemporary Perspective (1st ed.), McGraw-Hill, London.
- Carey, S. 2010, ‘Snap, crackle, slap: FTC objects to Kellogg's rice krispies health claim’, The Wall Street Journal, viewed 10 November 2014, <http://online.wsj.com/articles/SB10001424052748703340904575284701223216466>.
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- Porter, M 2008, ‘The five competitive forces that shape strategy’, Harvard Business Review, viewed 10 November 2014, < https://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1>.
- Kellogg 2013 Corporate Responsibility Report, Kellogg Official Website, viewed 10 November 2014,<http://www.kelloggcompany.com/content/dam/kelloggcompanyus/corporate_responsibility/pdf/2013/2013_Kellogg_Global_CR_Report.pdf>.
- Kellogg Company, The New York Times, viewed 10 Novermber 2014, <http://topics.nytimes.com/top/news/business/companies/kellogg_company/index.html>.
- Morschett D, Schramm-Klein H & Zentes, J 2010, Strategic international management: texts and cases (2 ed.), Gabler Verlag, Germany.
- Sewell, C 2010, ‘Kellogg to restrict ads to settle U.S. inquiry into health claims for cereal’, The New York Times, viewed 10 November 2014, <http://www.nytimes.com/2010/06/04/business/04ftc.html?_r=0>.
- Schultz, E 2014, ‘Kellogg switches up special k marketing to battle cereal woes’, Ad Age, viewed 10 November 2014, <http://adage.com/article/news/kellogg-switches-special-k-marketing-battle-cereal-woe/294418/>.