Kelloggs Global Marketing Final Report

STRATEGIC ANALYSIS
PRESENTED BY: SAMUDIO, LARRIZ M.
BACKGROUND OF THE COMPANY

In 1898, the Kellogg brothers had accidentally flaked a wheat berry. As
they keep experimenting, they had created the delicious recipe for Kelloggs
Corn Flakes. W.K. Kellogg opened the Battle Creek Toasted Corn Flake
Company with 44 employees. Kelloggs Corn Flakes was introduced to
Canada and then to different parts of the world. Then, they had introduced
another product, Bran Flakes, which is high-fiber cereal. Kelloggs has been the
first company in the food industry to hire a dietician. This is to define the roles
of the foods for our proper diets.
Kelloggs has been known to be one of the leading breakfast cereal
manufacturer in the world. There are various kinds of cereals produced by this
company to choose from. Also, this manufacture other product such as fruit
flavored snacks, crackers, beverages and etc. As of today, Kelloggs produces
their product in 18 countries and sells them to more than 180 countries.
Kelloggs is already been an established brand and this business has been
running for over 100 years.
The mission statement of the company is as follows: Kellogg is a global
company committed to building long term growth in volume and profit and to
enhance its worldwide leadership position by providing nutritious food products
of superior value.
INDUSTRY OVERVIEW
The breakfast cereal manufacturing industry involves producing readyto-serve packed cereals to consumers. The demand for this product is affected
by demographics and health considerations of the consumers with regards to
their breakfast. Cereals has become staple food eaten in breakfast in some
countries. In this industry, large companies are more advantageous in terms of
purchasing, distributing and marketing. Major companies in this industry are
Kelloggs, General Mills, Post Foods and Quaker.
It is evident that there is a decline in the breakfast cereal industry. Many

people are eating other foods in substitute for cereal such as yogurt and snack
bars containing the same amount of nutrients.
SWOT ANALYSIS
STRENTGHS
Strong Market Recognition
Geographic diversity, being
WEAKNESSES
Some of their product are being
too similar
sold in more than 180 countries
Low switching cost
Agility in satisfying consumers
Declination of the Breakfast

Cereal Industry
demands
Slow in Diversification
OPPORTUNITIES
THREATS
Acquisition of Pringles from
Shifts in the Market Trends
Proctor & Gamble
To manufacture different
products that may increase
their revenue
Producing more healthy and

nutritious food
Promote innovation with their

products
Competition within the Industry

Increasing consumer
awareness
PORTERS FIVE FORCES ANALYSIS
Supplier Power
Kelloggs has medium power with regards to their supplier. Wheat
as the raw material for their product may be varying in price due
to different factors. Suppliers negotiate the prices of these raw
materials. They should establish a stronger relationship with its
supplier.
Barriers to Entry and Threats of New Entrant
Starting companies will have a hard time entering this industry

since there are a lot of established brands nowadays that
consumers trust. There is no problem with regards of Kelloggs
entering the breakfast cereal industry as they are one of the
pioneer companies that are producing this type of product. The
problem that Kelloggs will be facing is to compete with its other
competitors. New entrants on this industry will have much trouble
since there are many established brands which are running over
100 years already.
Buyer Power
Wholesalers, stores and supermarket has a buyer power over
Kelloggs. There is a high buyer power with Kelloggs. They set
the price in selling the products considering that there are other
manufacturers producing the same product. Kelloggs need to
ensure that their products will be visible so that consumers may
consider more to buy the product. Consumers may choose any
brand that they may please.
Threat of Substitutes
Kelloggs producing breakfast complimentary foods may be
substituted by any other food eaten at breakfast. This may include
fruits, bread, cookies and etc. Also, there are other brands that a
consumer can choose from and there is a low switching cost.
Degree of Rivalry
Kelloggs is engaging with price wars especially its product is
much similar with other brands. Most of the products of
Kelloggs and its other competitors are on their mature stage.
This indicates that the degree of rivalry is high in this industry.
As we can notice, its other major competitors has good
advertising.
COMPETITIVE ANALYSIS
Other Companies in the Breakfast Cereal Industry
1. General Mills Inc.
General Mills is one of the top global food manufacturers. A diversified
company which offers meals, cereal, snacks, baking products and yogurt. It is
subdivided into three segments. It has $10.5 B net sales for U.S. retail, $5.1
Billion for its International sales, $2.0 Billion for convenience stores and
foodservice and $1.1 Billion for joint ventures. They sell wide range of food
products which are convenient meals, cereals, snacks and etc. With its various
products, General Mills Inc. is considered to be under cost-leadership strategy.
They sell many products to different types of customers ensuring that they
would have better sales.
2. Post Foods
Post Foods was established on the principle that good nutrition can
change the way we feel, look, and perform. Founder C.W. Post played a key
role in creating breakfast as we know it today, based on the simple idea that
having whole grains in your morning meal is essential to your health. The bowl
of cereal you pour yourself each morning is a part of a story that began more
than 100 years ago, and will continue to improve for years to come.
Post is a leading manufacturer, marketer and distributor of ready-to-eat
cereals in the United States. For more than a century, Post has been bringing
quality foods to the breakfast table. Post company values are rooted in
purposeful goodness, which is reflected in each Post cereal.
3. Quaker Oats
It is one of the first producers of breakfast cereals. Quaker Oats

registered as the first trademark for a breakfast cereal. It all started when
Ferdinand Schumacher founds German Mills American Cereal Company in
Akron, OH. During the same period, John Stuart established the North Star Mills
Company in Canada. Quaker Oats has been acquired by PepsiCo on 2001.
Breakfast Cereal Manufacturers
AVERAGE PRICE
KELLOGGS
POST
QUAKER
NUMBER OF BRANDS
GENERAL MILLS
Broad
Narrow
COMPETITIVE SCOPE WITHIN INDUSTRY
Cost
Uniqueness
SOURCE OF COMPETITIVE ADVANTAGE
Revenue of Major Cereal Manufacturer

20
18
16
14
12
10
8
6
4
2
0
Kellogs
General Mills
Post Foods
Revenue
Quaker
CONCLUSION & RECOMMENDATIONS

With its brand name, Kelloggs has already a competitive advantage.
The company has already gained customers loyalty from around the world. This
company has been known for the great quality products they provide.
Kelloggs must widen the variety of their snacks as to meet the desires
and preferences of the different types of consumers. We are all aware that the
industry is changing and consumers preference changes with time. It is the
responsibility of Kelloggs to keep up with this changes and to establish
customers loyalty.
Kelloggs should develop a good pricing strategy. Considering the high
advertising of its competitors, this may be own way to keep and have more
customers. Kelloggs should be able to device a way to keep up with its
competitors regarding low price products. Keeping up with the price wars help
it to keep their customers since other may result in purchasing lower price
product.
REFERENCES:
About Quaker
http://www.quakeroats.com/about-quaker-oats.aspx
Breakfast Cereal Manufacturing Report Summary,
http://www.hoovers.com/industry-facts.breakfast-cerealmanufacturing.1826.html
General Mills Products,
https://www.generalmills.com/en/Brands/Cereals/genmills-cereals
General Mills Businesses,
https://www.generalmills.com/en/Company/Businesses
Get to Know More about Post Foods,
http://postfoods.com/about-us/our-values
Kelloggs: Who We Are Our History,
http://www.kelloggs.com/en_US/our-history.html
Kelloggs: Our Brands, http://www.kelloggs.com/en_US/our-brands.html
Quaker Products, http://www.quakeroats.com/products.aspx
US Retail sales of RTE cereal dropped 4% in 2014, says IRI, but Kellogg,
Gen Mills insist decline isnt terminal, Elaine Watson, 2015,
http://www.foodnavigator-usa.com/Markets/US-retail-sales-of-ready-to-eatcereal-dropped-4-in-2014-says-IRI
Yahoo! Finance on Cereal Manufacturers Companies,
http://finance.yahoo.com/q/co?s=POST

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STRATEGIC ANALYSIS

PRESENTED BY: SAMUDIO, LARRIZ M.

BACKGROUND OF THE COMPANY

It is evident that there is a decline in the breakfast cereal industry. Many

Strong Market Recognition

Geographic diversity, being

sold in more than 180 countries

Low switching cost

Agility in satisfying consumers

Declination of the Breakfast

Acquisition of Pringles from

Shifts in the Market Trends

Proctor & Gamble

Producing more healthy and

Promote innovation with their

Competition within the Industry

PORTERS FIVE FORCES ANALYSIS

Barriers to Entry and Threats of New Entrant

Starting companies will have a hard time entering this industry

It is one of the first producers of breakfast cereals. Quaker Oats

Breakfast Cereal Manufacturers

COMPETITIVE SCOPE WITHIN INDUSTRY

Revenue of Major Cereal Manufacturer

CONCLUSION & RECOMMENDATIONS

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