Objectives And Background Of Kellogg's Marketing Strategy

Objectives and Background of Kellogg's Marketing Strategy Enhancement

Our objective is to provide helpful suggestions in which the Kellogg’s team can implement to improve their current marketing strategy. Kellogg’s faces a decline in cereal sales over the years, prompting the need for new product development and cost management to boost sales and profits (Peltz, 2016). A key challenge is convincing consumers to choose Kellogg’s cereal over competitors like General Mills. The team recommends increasing media presence through advertising and TV commercials that evoke nostalgia and highlight the health benefits of Kellogg’s products. Additionally, securing premium shelf spots at eye level and end caps could improve visibility. Diversifying product options to cater to various diets (gluten-free, whole grains, fiber-rich) and entering the breakfast-on-the-go market with products like breakfast bars and hot cereal in portable cups are strategic suggestions. Implementing these measures aims to increase brand consumption, sales, and awareness.

Background

Kellogg’s is an American multinational founded in 1898 by W.K. Kellogg and his brother Dr. John Harvey Kellogg. Their initial attempt to create granola bars accidentally led to the invention of flaked wheat, which evolved into Kellogg’s corn flakes (Kellogg, 2017). W.K. Kellogg launched the company as Battle Creek Toasted Corn Flakes, heavily investing in advertising to boost sales, which skyrocketed following early campaigns (Kellogg, 2017). Despite setbacks like a fire in 1907, Kellogg’s expanded, rebranding as Kellogg’s after losing the “toasted corn flakes” trademark in 1922. Kellogg’s marketing efforts have historically included television advertising, beginning in 1950, and innovating with characters like Tony the Tiger, which doubled sales and profits over the subsequent decade (Kellogg, 2016).

Situation Analysis

External Situation

Kellogg’s operates globally, with manufacturing in 21 countries and marketing in over 180. Its main products include cereals such as Corn Flakes, Rice Krispies, Mini-Wheats, Fruit Loops, and Frosted Flakes (Kellogg Company, 2016). Nonetheless, the company faces stiff competition from General Mills, which has recently surpassed Kellogg’s as the market leader with a higher U.S. market share of around 75% compared to Kellogg’s 25% (Statista, 2015). Challenges also stem from the broader breakfast food industry’s shift toward healthier, more convenient options, contributing to a 4.1% decline in cold cereal sales in four weeks (Lachapelle, 2017). Competitive pressures from Kraft, Nestlé, Cadbury, and Quaker Oats further influence the landscape, emphasizing the importance of innovation and marketing strategies that adapt to consumer preferences.

Business Ecosystem

Kellogg’s products are sold via direct sales, broker and distributor arrangements, especially outside developed markets. The company's portfolio includes brands like Keebler, Pringles, Cheez-It, and Eggo, marketed through diverse trade channels—retail stores, foodservice, and restaurants (Kellogg, 2017). The company's global reach and strategic acquisitions, such as Keebler in 2001 and Pringles in 2012, have expanded its product lines and market influence (Kellogg, 2016). However, with competitive product offerings and changing consumer trends, Kellogg’s must continually adapt its distribution and marketing approaches to sustain growth and market relevance.

Internal Situation

Organizationally, Kellogg’s is divided into North American and International segments, with North America contributing roughly 68% of revenue (Kellogg, 2016). Leadership includes CEO Steven A. Cahillane, elected in 2017, who navigates the company through shifting consumer demands (Kellogg, 2017). With over 37,000 employees globally, Kellogg’s invests significantly in research and development—about $182 million in 2016—to innovate and enhance its product offerings (Kellogg, 2016). Decision-making is centralized but flexible enough to accommodate regional differences, vital for addressing varying consumer preferences worldwide. The company’s R&D efforts are concentrated at the W.K. Kellogg Institute and other global loci, fostering innovation in healthy foods and convenience products.

Product Lines and Performance

Kellogg’s product lineup spans cereals, snack foods, and frozen items. Iconic cereals like Frosted Flakes, Apple Jacks, and Fruit Loops are supplemented by snack brands such as Cheez-It, Pringles, and Nutri-Grain. In 2015, Kellogg’s total sales reached approximately $13.5 billion, with cereals accounting for 24%, snacks 33%, and frozen foods 11% of revenue (Statista, 2015). Despite achieved success, recent years have seen a decline in traditional breakfast cereal sales, prompting diversification into health-focused products like protein bars (Lachapelle, 2017). The recent appointment of a new CEO and strategic acquisitions underscores Kellogg’s commitment to innovation and adapting to market trends.

Current Marketing Strategies

Target Market

Kellogg’s target consumers encompass all breakfast eaters, with specific focus on children and health-conscious adults. Products often feature colorful packaging with mascots like Tony the Tiger to attract children, who influence parental purchasing decisions. Kellogg’s also targets adults seeking nutritious options through products like Special K. By offering a variety of health-oriented and convenient items, Kellogg’s aims to position itself as a versatile and healthful choice for diverse consumer needs.

Positioning Strategy

Kellogg’s emphasizes quality, energy, taste, natural ingredients, and affordability in its positioning. The company leverages its extensive history of meeting consumer needs, framing its products as both convenient and nutritious. The branding emphasizes health benefits, natural ingredients, and ease of preparation, aligning with market trends toward healthier, on-the-go breakfasts. This strategy has historically been successful, with characters like Tony the Tiger reinforcing brand recognition and consumer loyalty.

References

• Kellogg. (2017). Annual Report. Kellogg Company. https://investor.kellogg.com
• Kellogg. (2016). Our Business. Kellogg Company. https://www.kelloggcompany.com
• Kellogg. (2017). Steven A. Cahillane Named Kellogg Company CEO. Kellogg Press Release.
• Lachapelle, T. (2017). Kellogg, It's Grrr-oan! Bloomberg.
• Peltz, J. F. (2016). Why Americans are eating less cold cereal for breakfast. Bloomberg Intelligence.
• Statista. (2015). Breakfast cereal market share of the Kellogg Company worldwide in 2010 and 2015.
• W.K. Kellogg Institute for Food and Nutrition Research. (2016). Kellogg R&D Annual Review.
• References for Business. (2017). Kellogg’s history and financial performance.
• Baines, P., & Page, K. (2013). Essentials of Marketing. Oxford University Press.
• Baker, M., & Hart, S. (2016). The Marketing Book. Routledge.