Kellogg Company of Great Britain Ltd.

University Degree Business and Administrative studies

COMPANY BACKGROUND

Kellogg Company of Great Britain Ltd, a subsidiary of the US Kellogg Company of Michigan, remains the dominant brand in the UK breakfast cereals market, with around 40% sales volume in 2000. The company has a large portfolio of well-established cereal brands, seven of which were in the top ten RTE cereal brands in the grocery trade in 2000. Kellogg’s operates mainly in the RTE sector, with a range of over 30 products, and is most famous for its Corn Flakes product. Other popular brands include Frosties, Crunchy Nut Corn Flakes, Rice Krispies, Special K, Coco Pops,

DECONSTRUCT THE BRAND INTO SYMBOLIC AND FUNCTIONAL ATTRIBUTES AND DEFINE ITS POSITIONING AND TARGET MARKET.

Kellogg’s are renowned for its traditional red Kellogg’s logo; it has been associated with different cereals for many years. It is apparent that customers associate the logo with different functional and symbolic attributes. This is a large contributory factor in creating loyalty toward the product. The strategic focus of Kellogg’s is on superior quality and image that reflects on their quality control and assurance.

When a consumer is brand loyal, they do not consider going through the decision making process. Though a great similarity swims between habit and loyalty and copy products, repeat purchases are made out of convenience where commitment purchases are made out of loyalty and passion towards the brand. People generally become loyal to a particular brand as a result of its functional and symbolic benefits. With Kellogg products, consumers are able to evaluate the functional benefits before purchase. Kellogg’s advertised on symbolic associations when the brand was first advertised in the 1990s. Continuous appealing symbolisms in Kellogg’s advertisements have been the dimension that trigger loyalty over a period of time especially with all the ‘copycat’ products from its competitors such as Nestle and supermarket own products. The basic assumption is that Kellogg has always updated its offerings of product line, which have resulted in competitive advantage over competing brands.

Kellogg’s plays role of a “nutritional code”, which when decoded revels the consumer nutritional life-style. Hence, it is not a surprise that Kellogg’s brand name is highly recognizable within the children and adult population at breakfast time, placing the Kellogg’s brand close to certain attributes:

First meal of the day
Healthy eating
Snacking
Reasonable price
Tony the tiger

The physical attributes in Kellogg’s vast product range vary from the different features, quality and weight issues. Its main beneficial functional attribute is the reliability aspect and its winning performance. Effectively functional attributes of a product will distinguish one product from the next on supermarket shelf.

The main factors in symbolic attributes are in self-esteem, social recognition and pricing. Symbolic attributes can also be emotional attributes. Where an individual has grown up with Kellogg’s breakfast cereal, the brand will have strong associations of childhood and home. The Kellogg’s brand symbolizes the beginning of the day and instigates the first thought of breakfast. The brand plays on the security issue of family and home. This becomes appealing to many people despite being in a fast corporate and somewhat broken society.

Its functional attributes are from the benefit of continuous advertising therefore it stays at the top of the mind. Its positive highly flavoured lasting taste of appeal forges for consumption. Kellogg’s illustrates the relationship between segmentation, targeting and positioning and branding. Various market segments will respond appropriately to different brands in the same product category—whether high or low involvement. Kellogg’s primarily targeted children by offering current Disney world toys in every pack purchased. This enhances their interest in the brand hence more sales and sales targets are reached. Well, another aspect of increasing high involvement is through the timing of their adverts in the media. Specifically the television where the Kellogg’s adverts are on after school times i.e. the early morning and in between weekend cartoon slots. Kellogg’s is such a big well-known name that branding takes place everyday in supermarkets and in the homes. It just doesn’t target children, but also adults. Here, the shredded wheat and its slogan that it reduces heart failure for the old folks. This is effective targeting since everyone is obsessed with living longer. This just shows, very clearly how segmenting the market cleverly has induced the high involvement and separated Kellogg’s and nestle. Kellogg’s has a basic position strategy, which is superior quality. This targets the ‘superior’ and premium demanding person.

Kellogg’s cereals can be broken down by type of cereal, e.g. corn flakes, wheat biscuits, bran or muesli, and also by product/consumer category, i.e. staples, children’s, health, adult indulgence and muesli. The two largest sectors are staples and children’s cereals. Kellogg’s All-Bran Apricot Bites, for example, is aimed at consumers aged 40and over who are seeking better-tasting health products, while its indulgent, luxury range World Temptations is more suitable for indulgent snack treats and is aimed at professional women. On the other hand, we have the wide range of shaped cereals which are aimed to children who represent a massive market for breakfast cereals, and their influence on their parents’ choice of products cannot be underestimated.

Since then, Kellogg has stepped up its convenience range with the introduction of cereal-and-milk bars for children in 1999, and Nutri-Grain Elevenses, a morning snack, in summer 2000. A new flavour variant, Chocolate Caramel, was also added to its Rice Krispies Squares countline. Another innovative product was a new fruit-flavoured variant of Kellogg’s classic All-Bran cereal, called All-Bran Apricot Bites. The product is marketed as an all-day snack product, and is aimed at consumers aged 40 and over who are looking for better-tasting high-fibre products.

In early 2000, Kellogg reformulated four of its popular children’s brands — Frosties, ...

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In early 2000, Kellogg reformulated four of its popular children’s brands — Frosties, Coco Pops, Corn Pops and Honey Loops — with added calcium. In autumn 2000, a new luxury range called World Temptations was launched, targeted particularly at professional women. Based on the expectation of cereal volume growth, and strong results from product innovation and the continued global rollout of convenience foods, management believes the Company is well positioned to deliver sales and earnings growth. Key Note Ltd 2001

WHAT IS THE BRAND IDENTITY COMMUNICATED BY THE COMPANY AND WHAT IS THE BRAND IMAGE PERCIEVED BY THE TARGET MARKET? IS THERE A FIT?

The marketing of Kellogg's and the creation of some of the most valuable individual brand names has been key to the Company's success. The overall Kellogg’s brand identity commentates and conveys an image to consumers of products that provide high quality and great tasting foods worldwide. Kellogg’s has, over the years, built up a number of key core brand identity characteristics, emphasising quality and nutritional benefits that apply to the Kellogg’s product. Consumers trust the Kellogg’s brand name to fulfil these requirements whichever type of cereal they choose. To these core brands identity values are added the elements of the individual brand personality. Like members of a family, each will bear the same surname, but each individual has its own characteristics and strengths. The Kellogg’s brand communicates a brand that promotes a positive, energising, optimistic and fun environment which serves customers and delight consumers through the quality of their products and services, through its bright, colourful new corporate image for all its cereal brands.

The Kellogg’s brands tries to communicate itself as a wholesome fun loving family, which emphasis’s a high live of nutritional value of it brand and a health conscious life style living to both children and adults. In the past five years, in particular, Kellogg’s have underlined the healthy qualities of its product. Indeed, Kellogg’s has carried out educational campaigns to raise awareness of the importance of a balanced diet and was a major sponsor of World Heart Day 2001. There is commercial gain to be exploited, as health-oriented products are generally able to command a higher premium, although tough competition makes this higher margin a hard-fought one to maintain. The Kellogg’s brand highlights the quality of their goods and tries to build on the emotional attachments.

Their packaging for children's cereals has enabled them to communicate an image of youth and fun to both adults and kids. By combining some elements of corporate branding with the individual product’s own identity, it has provided the assurances of quality and nutrition that come with Kellogg’s name and also appeal to the end user.

Kellogg’s are keen to give products their own identity, which will clearly distinguish them from any competition. Kellogg’s’ brand identity and name encourages loyalty amongst consumers, so will be more likely to buy the product on a regular basis. Their effective brand identity will distinguish one product from the next on the supermarket shelves. This familiarity adds extra-perceived value to the product and means that a customer’s decision to buy is not purely determined by price, Kellogg’s effectively does both. Kellogg’s is an example of multiple product branding, where each product within the range is given its own clear identity and personality but is also marketed using the Kellogg’s name as an umbrella. For example, Special K is aimed towards women, Start has a sporty image and Frosties and Coco Pops are primarily aimed at children. Corn Flakes, by contrast, are aimed at the whole family. By combining some elements of corporate branding with the individual product’s own identity, it can provide the assurances of quality and nutrition that come with the Kellogg’s name and appeal to the end user.

The brand identity communicated by the company has already proved to be very consumer friendly and a big success. Kellogg's Cornflakes and Weetabix are the most favoured breakfast cereals, with just over a fifth of consumers choosing to purchase these brands, so there seems to be a matching fit in the brand identity being communicated to the consumer and how it is successfully being perceived by the target market.

WHAT DO YOU THINK HAVE BEEN THE COMPANY’S BRAND DEVELOPMENET STRATEGY?

The Kellogg’s brand development strategies can be broken down and categorized into the following:

Market research

Research some initial designs to reduce risk
The impact of the designs clarify the brand name and product
Particular designs protect the brand’s reputation.

Advertising and Promotion

Use various range of media for the advertisement
Identify and focus on different segments

Developing Their Products

Positive attitude to improve the products
Understand various targets
Nourishment balance with the product
Packaging the symbol “K logo’ with different image characters

Campaigns and Other

Work together with Muller to create new product
Utilise educational and health sector to impress the product

Market research

Kellogg’s market research is particularly focused on the impact of the designs on the shelf, the ease of recognition and the clarity of the brand name and product. Kellogg’s market research found that one design led the field; the “K” logo, which was based on the original signature of W.K Kellogg. By using the “K” logo, there’s an advantage for a protectable image. No any other competitors are able to imitate it.

Advertising and Promotion

Kellogg used all kinds of advertisements, such as advertising in the press, on posters, radio and internet, using the marketing mix. Breakfast cereal advertisement occupies the larger part of advertisement in the UK food industry. Firstly, TV advertisement is one of the most effective advertising method and Kellogg’s used character merchandising, for example; for children; Pokemon craze, Toy Story 2 figures and Digimon cards. For adult they offer extra-free offers and on-pack CD-ROMs.

Developing Their Brands

Kellogg has one of the biggest shares in breakfast cereal sector but they still have improved their products to have firm position. Initially, they have wide range and variety of over 30 products such as popular products Frosties, Crunchy Nut Corn Flakes, Rice Krispies, Special K, Coco Pops and so on. Kellogg has improved and produced the commodity for each group, as mentioned earlier, with understanding of trait of each category, by aging, gender, time and situation and so on.

Next, Kellogg noticed nourishment balance in early 2000; Kellogg added calcium into several products, rich fibre products for over 40s and using Nutri-Grain cereal bar as the missed-breakfast solution. They also cared packaging. They print, of course, their symbol “K” logo, different image characters on each product like the “Tony the Tiger”, sometimes their campaigns and offers to catch customer’s attention. Finally, Kellogg diversified their product into several types of products which are convenience and snacking products to pioneer a new field. Those advanced practice is praise to get customers satisfaction and attention. Kellogg put strong image that breakfast cereal is Kellogg’s and gain customer’s loyalty and increasing sales.

Campaigns and Other

Kellogg cooperates with Muller to expand their brand name. They put their products, for example, “coco pops” into Muller Corner. What is more they advanced educational and health sector. They tied up with the “Children’s Charity Child Line” for a campaign named “Helping Kids Grow”. This campaign advises and helps parents and children to remain brand name in their mind through the national press magazines and school support packs. Moreover they had sponsorship with Health Education Authority (HEA).

Brand Position

Nowadays, Kellogg has become the one of the biggest and most famous cereal company. They had around 40% of sales in the UK breakfast cereals market in 2000. Also they are in the top ten RTE (Ready to Eat) cereal brands. And they are still expanding their market share gradually and producing new products. Kellogg’s are ranked as 39th bigger and are well known brand in the worldwide with an approximate value of over $7bn.

Development Process

Product development is divided into several parts. These are planned innovation, the new product development process, Speeding new product development, and Organization for innovation. Kellogg’s core products are cereals. They have developed their business based on variety of cereals with researching such as their position, products possibility, and products profitability. For next step, the new product development process, Kellogg goes through some of these stages which are idea generation, screening, business analysis, product development, market testing and commercialization. In the other word, Kellogg planned several new product projects and then screening and extracting to find the commodity with high possibility of profit. In next step, business analysis, the company need to compare the product from market. If there is any similar product in market, for example: similar type of cereals, similar taste, or any precedent? Next is Market testing? One of examples, Kellogg has lunched snack product called “Cheez-It” as testing. They can measures and reduce risks. In addition, if the company makes faster movement than other companies, the company can have more advantages like customers’ loyalty and its market would be Monopoly but if its movement is too fast, the things going over the company’s capacity.

View of Kellogg’s brand strategy

Firstly, the brand development is generally well organised. One of the reasons is that Kellogg’s has variety of the image characters that targets for customers. This strategy is very flexible, in order to satisfies and adapts customer’s right needs in right wants. Next, Kellogg’s has corporate with Muller so that Kellogg’s was able to have more advertisements as well as its diversification with Muller. Also, this diversification is relation to its own variation products. However, if this diversification is too far from the current brand’s image, it will not be successfully. If we take example of Cadbury that is famous for chocolate, its brand extensions is too far from its current image. The company had its brand extension throughout even food section such as Smash instant potato and Kesp Soya based synthetic meat in gravy. In relation to Kellog’s extensions, they went a new product that was not linked with the core brand’s product as Cereal. According to its Cheeze-it of brand in Indian, this was not succeeded in the snacks food segment but it was as a test lunch. So Kellogg’s brand extensions seem a good strategy, which did not go wrong like Cadbury.

HOW MIGHT THIS CHANGE IN THE FUTURE?

In 2000, Kellogg’s took the major step of launching a bright, colourful new corporate image for all its cereal brands. This is not course of action that should be taken lightly. So Kellogg’s was concerned that, in a highly competitive market, it was becoming increasingly difficult to differentiate between supermarket own label and other manufacturer’s brands. Consumers were becoming confused when confronted with many similar packs on the supermarket shelves.

Repositioning occurs when a Kellogg’s brand tries to change its market position to reflect a change in consumer’s tastes. This is often required when a brand has become more tired; maybe its original market has matured or has gone into decline. The repositioning of Kellogg brand has made it into a healthier brand for children and adults and making Kellogg’s a leading cereal. Another example would be changing styles of entertainers with above-average longevity such as famous people. Communications also play a key role in building a successful brand so we suggest that brand positioning is essentially about customer perceptions with the objective to build a clearly defined position in the minds of the target audience.

Apart from increased competition from alternative breakfast foods and own labels, the breakfast cereals market has proved itself to be very resilient. According the Keynote report on Breakfast cereals 2001, “traditional cereals still remain a popular breakfast food, eaten at more than 70% of all breakfast occasions. More consumers are eating breakfast outside their homes, i.e. on their way to work or at the office.”

Leading cereal manufacturers, like Kellogg have responded to static sales by tapping into the convenience and snacking markets with new, innovative products, e.g. breakfast snack bars (with the highly successful Nutri-Grain cereal bar in 1997) and portable products (Rice Krispies Squares was launched in 1998). The growing trend towards healthy foods has also given the market a welcome boost, with many companies moving into functional cereals, while organic cereals have become more mainstream over the past year, with many new suppliers entering this lucrative sector.

Breakfast cereals remain an integral part of the British diet, and, despite changes in the market environment and eating habits, new product developments focused on added value and increased market segmentation will continue to drive the market forward.

All these might have to change in the future by; Kellogg has to do marketing research and to find out what their customer wants and needs are. Then doing primary research should be done, changing the logo and improving products and developing new products and developing new products and brands:

Kellogg’s strategy of expanding into convenience products continued into 2001 with the launch of its first chilled product. The company teamed up with Müller for a new range of dairy snacks, sold under the Müller Corners with Kellogg’s brand. The split-pot range includes three products: Müller Corner with Kellogg’s Crunchy Nut Corn Flakes, Müller Corner with Kellogg’s Frosties, and Müller Corner with Kellogg’s Coco Pops.
Repackaging some of its Kellogg cereal brand to target a more youthful market and older people over 50.
Another innovative product was a new fruit-flavoured variant of Kellogg’s classic All-Bran cereal, called All-Bran Apricot Bites. The product is marketed as an all-day snack product, and can be aimed at consumer’s aged 40 and over who are looking for better-tasting high-fibre products.
To produce other health products like rice corn snacks in the size of a cereal bars or in popcorn size.
To meet people that has special diets, like produce organic cereals and organic muesli, with no added sugar cereals etc.
Maybe trying to target new markets.
In autumn 2000, a new luxury range called World Temptations was launched, targeted particularly at professional women.
There are also plenty of opportunities to exploit the ’deskfast’ trend with more convenient snack products.
There are still plenty of opportunities for further growth in children’s cereals, especially in character merchandising.
There are enormous opportunities for added value and convenience products targeting the out-of-home and ‘deskfast’ markets.
The increasing consumer appetite for healthier food products should boost demand for both organic and functional cereals in the future.
Kellogg’s should aim at producing new ‘instant’ products that are quick and convenient to make, and are well suited to modern eating trends, i.e. snacking and grazing.
Make favoured hot cereals and porridges and try aim towards the older age groups, although manufacturers have attracted younger consumers with the more convenient microwaveable products.

All these future developments should by done through advertising in the media, on the television and in magazines, having in-store offers like money off coupons and a consumer PR campaign for the launch of new products and brands. Also advertising on the radio with a trial offer price of 99 pence for a 500-gram box and this can improve the product brand sales.

The role of the internet

Most leading branded cereal manufacturers, like Kellogg have used the Internet, and have been creating their own websites as part of their strategy to promote their products and generate greater brand awareness. In October 2000, for example, Kellogg updated its popular Tony the Tiger cartoon character with a new multimillion pound TV campaign and also unveiled a dedicated website at www.frosties.co.uk, which is aimed both at children and at adults between the ages of 16 and 34.

CONCLUSION

In terms of Kellogg’s brand development strategy, they have reached at one of the most popular brand. The reason why Kellogg’s succeeded in this market is their steady progress with precise research and full understanding of customer and market’s need.

Following Kellogg’s success in placing cereal, Kellogg’s has expand their product placement portfolio to include the full range of healthy snacks.

To reinforce Kellogg’s brand image, they have done posters, dispensing displays, and window dressing allowing them to increase exposure but should be more base on sponsorship, direct marketing etc. Also the Kellogg should ask the consumer what they want and need.

Convenience and snacking will continue to be the main drivers in the marketplace, with future growth expected in breakfast snacking bars, portable cereals and adult indulgence products. Children’s cereals also offer great opportunities for further growth, especially in shaped cereals and character merchandising, with more tie-ins with popular cartoon characters and film releases. Children’s health cereals represent another potential growth area, with manufacturers likely to promote more products on a healthy platform, i.e. with added vitamins and minerals.

In the next few years, product developments will focus on organic cereals, with new suppliers launching branded ranges. Promotions and advertising will help improve the sales of Kellogg’s product brand.

BIBLOGRAPHY

G.J.Hooley, J.A.Saunders and N.F.Piercy(1998) Marketing Strategy and Competitive Positioning, 2nd Ed., Prentice Hall International

Kellogg Cereals: brand profile

Kellogg’s homepage

http://www.tbaent.com/em/featured/kelloggs.html

Keynote breakfast cereal report 2001.