Jonathan McCallum

Should Cadbury launch a cereal?

Introduction

Market research is an essential factor when planning to launch a new product because it provides the company with valuable details about the market, competitors, and distribution trends. I decided to do secondary research for my new product – a Cadbury Cereal – because:

  • It is cheap to obtain, often without cost
  • It is easier to collect than primary research
  • It provides a wide range of information about the whole market
  • It is usually based on actual sales figures, and the market research is of large samples.

I collected my secondary research from a number of market intelligence reports: Mintel, Snapshots UK CD-ROM, and Euromonitor. I found out information about the Ready to Eat (RTE) cereal market to find out about changes in the market, and about competitors, or other important issues. These details will help me decide whether or not it would be feasible for Cadbury to launch a RTE cereal by analysing the data gathered.

Analysis

After finding out about the cereal market I split up my analysis into the following sections:

Brand Image

This is relevant as it gives background knowledge of the company Cadbury Trebor Basset (CTB). This aids the decision about whether the company has an adequate brand to launch a successful product.

CTB is the nations leading confectionary company with a 28% market share. CTB is part of an oligopoly confectionary market along with Mars and Nestle. Consumers have a very high opinion of CTB, 70% of consumers believe that Cadbury makes the best chocolate. CTB is also the leading manufacturer of sweets – because no other manufacturer can offer the consumer such a variety ( - marketing information). CTB is the market leader in both the sugar and chocolate confectionary market. Also a great bonus is that CTB already has contacts with multiples so it may be easier to convince them to stock the products.

Market share

This is relevant because I can see how much of the market is owned by other companies in the market, I need to know this so I can tell whether the market has a market leader and if there is any sign of brand loyalty, if it has then it may be difficult to enter the market.

The following pie chart shows the split of companies in the cereal market:

(Euromonitor)

As you can see from the chart Kellogg Co is the market leader with a number of smaller manufacturers making up the rest of the market. This market is an oligopoly with a market leader (Kellogg Co). Kellogg Co has a 40.7% market share, over double their closest rival of private labels with a market share of 16.8%. This means that the small producers especially would not take kindly to a new competitor, especially an existing large company like CTB, which would be able to price its product low at a penetration price to quickly get market share.

Join now!

In this market there is a significant market leader indicating high brand loyalty towards Kellogg Co, this is a problem because the dominance of Kellogg Co would make it more difficult to enter the market.

The price of a Kellogg Co cereal is significantly higher than a shop’s own brand e.g. Kellogg Frosties cost £2.48 for a 1kg packet, whereas Tesco’s Frosted Flakes cost £1.10 for a 1kg box (actually 55p for a 500g packet). This shows that Kellogg Co is a market leader and has high brand loyalty for people to pay over £1 for the ...

This is a preview of the whole essay