CONSUMER BEHAVIOR

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keport subm|tted by: -
Gaurav Da|v| (I113328)

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Introduct|on
This pioject iepoit on the mistakes maue
by the bianu Kellogg's in Inuia its jouiney
since its inception in the Inuian maiket.
The jouiney fiom 1994 till uate has been
a iolleicoastei iiue.
Some habits uie-haiu especially when it is
ielateu to Inuian eating habits. When the
$7 billion ceieal company enteieu the
thiee thousanu ton Inuian maiket, it
uiun't iealize the impoitance of auage. The game plan foi Kellogg's was cleai,
position the bianu on the nutiitional value of the ceieal.

I|rms Cverv|ew: ke||ogg's

Will Keith Kellogg anu his biothei }ohn
Baivey Kellogg in Battle Cieek, Nichigan,
0niteu States founu Kellogg's as a Battle
Cieek Toasteu Coinflake company on
Febiuaiy 19 19u6. The company piouuceu
anu maiketeu the hugely successful
Kellogg's toasteu coin flakes anu was
ienameu the Kellogg's company in 1922.
Buiing the peiiou fiom 1969 to 1977
Kellogg's expanueu its business by acquiiing
vaiious small businesses incluuing Salau
foous, Feain Inteinational, Nis. Smith pies,
Eggo anu Puie Packeu Foous anu emeigeu as
maiket leaueis in the ieauy-to-eat segment in the 0niteu States anu ventuieu
into maikets in 18u countiies woiluwiue. Kellogg's hau cieateu a niche bianu foi
itself on the woilu stage. This was the company that hau intiouuceu the woilu to
coinflakes as bieakfast. Kellogg's also ventuieu into maikets which weie
unawaie of coinflakes as bieakfast anu succeeueu in conveiting those countiies
into coinflakes eating nations ovei a significant peiiou of time. It hau succeeueu
in establishing that with the iight maiketing techniques anu stiategies, maikets
can be tameu anu molueu the way coipoiates wanteu.
ke||ogg's & 1he Ind|an Market
Aftei iiuing on the success anu commanuing the 4u% of the 0S ieauy-to-eat
maiket fiom its ceieal piouucts with a yeaily sales of $6 billion anu 2u plants in
18 countiies Kellogg's unueistoou that the maiket in 0S anu Euiope was
stagnant anu it wanteu to ventuie into new maikets. The maiket was getting
competitive anu it was getting toughei foi the company to maintain its maiket
shaie. Its iivals, ueneial Nills was auuing onto the piessuie with its Cheeiios
bianu. In seaich of new ceieal eating maikets Kellogg's zeioeu in on Inuia, a
countiy with 9Su million plus population (in 199u's) of which 2Su million plus
S
consisteu of the miuule class. This was a completely untappeu maiket with anu it
piesenteu Kellogg's with an oppoitunity of which was too goou to be left.
Kellogg's investeu to the tune of $6S million to launch its numbei one bianu coin
flakes, thiee yeais aftei the Inuian goveinment openeu its uoois foi foieign
investois. They planneu to ieplicate theii success stoiy of 0S anu Euiope in the
Inuian sub continent. The maiket potential foi Kellogg's in the Inuian
subcontinent was so luciative that even if the company manageu to captuie a
meie 2% of maiket potential, it woulu still pioviue access to a customei base
biggei than 0niteu States.
The maiket size came with its set of challenges. The Inuian sub continent
wasn't use to having ceieal foi bieakfast. The typical bieakfast of an aveiage
Inuian consisteu of sabzi (boileu vegetables with spices) anu ioti oi paiatha's
(wheat bieau). This meant that theie weie veiy few competitois foi Kellogg's in
the maiket but at the same time they hau an auuitional task of piomoting its
piouuct anu moie impoitantly the iuea of eating ceieal foi bieakfast.
As most of the othei new piouucts, the sale of Kellogg's shot up giving it
encouiaging sales figuies. Bowevei it was soon analyzeu that the puichase of
coinflake was one off, novelty puichase anu even though they likeu the taste the
piouuct was expensive. Without conuucting fuithei maiket ieseaich Kellogg's
continueu to launch a iange of new piouucts ovei the following yeais anu the
Inuian buyeis weie intiouuceu to Kellogg's Wheat Flakes, Fiosties, Rice Flakes,
Boney Ciunch, All Bian, Special K anu Chocos Chocolate Puffs - none of which
weie able to ieplicate the success of the west. In an attempt to boost its sales the
bianu tiieu to 'lnJionize' its piouucts, which was a massive failuie. The company
auopteu a new stiategy to establish its bianu equity in the maiket by selling
biscuits.
Inuian Expiess newspapei coveieu the bianu extension of Kellogg's in uepth in
2uuu
'Tbe compony bos been lookinq ot olternote proJuct coteqories
to counter poor off toke for its breokfost cereol bronJs in tbe
lnJion morket, soy sources. Heonwbile, tbe Kelloqq moin stoy -
breokfost cereols - bos seen frenzieJ morketinq octivity from tbe
componys enJ. Tbe iJeo bebinJ tbe effort is to estoblisb tbe
Kelloqq bronJ equity in tbe morket.
Tbe compony is concentrotinq on estoblisbinq its bronJ nome in
tbe morket irrespective of tbe off toke. Tbe focus is entirely on
beinq present onJ visible on tbe retoil sbelves witb o wiJe ronqe
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of proJucts, exploins o compony Jeoler in Humboi
As per tbe troJe, Kelloqq lnJio bos JiscloseJ to tbe Jeolers its
intention of louncbinq more tbon one new proJuct onto tbe
morket every montb for tbe next six montbs.'
Although Kellogg's tiieu to be moie sensitive to the customei iequiiements by
biinging about inuiiect alteiations in its taste, howevei the high piice iemaineu
ueteiient in the Inuian maiket. A stuuy conuucteu in 2u1u by PR0NAR
Inteinational, titleu, 'Tbe Sub-Continent in Tronsition: A stroteqic ossessment of
fooJ, beveroqe, onJ oqribusiness opportunities in lnJio in 2010, the piime factoi
which will iestiict the giowth of Kellogg's in Inuia is its piice. The iepoit also
suggests that while Kellogg's has usheieu a change in the bieakfast habit of
Inuians anu auapteu its line of piouucts to meet the Inuian palate, the piice of
the piouuct iestiicts consumption to uiban centeis anu iich householus.
1he M|stakes.
The fiist anu foiemost issue, which Kellogg's faceu, was the fact that the
ceieal hau to be consumeu with colu milk. Bowevei in the Inuian householu
theie was a habit of seiving hot milk foi bieakfast. Coinflakes when seiveu with
hot milk became soggy anu spoileu the taste of the coinflakes. When the
coinflakes weie tiieu with colu milk it wasn't sweet because sugai uiun't
uissolve with colu milk. The iice anu wheat veisions uiun't uo well in the maiket
as well. In uefense of the company the Nanaging Biiectoi, Avionsait saiu, "Tiue,
some people will not like the way it tastes in hot milk anu not all consumeis will
like to have it in colu milk. We expect the consumei habits to change ovei time.
Kellogg's is a past mastei of ait, having fought anu won against cioissant anu
coffee in Fiance, biscuits in Italy anu nooules in Koiea."

A typical Inuian miuule class family uiun't have bieakfast uaily like theii westein
counteipaits. Inuians usually piefeiieu
biscuit, bieau, buttei, jam oi uepenuing
on geogiaphy the staple foou of the
iegion. A majoi ieason foi the failuie of
Kellogg's, accoiuing to analysts, was the
fact that the taste of Kellogg's piouucts
uiun't suit the Inuian consumeis
bieakfast habits. The company was
quick to claiify that it wasn't tiying to
change the eating habits, but it was only
launching its piouucts on a health
platfoim anu make consumeis see an
healthiei alteinative foi theii bieakfast.
Avionsait iemaikeu, "Kellogg
Inuia is not heie to change the bieakfast
eating habits. What the company
pioposes is to offei consumeis aiounu
the woilu a healthy, nutiitious,
S
convenient anu easy to piepaie alteinative in the bieakfast eating habit. It was
not just a question of pioviuing a bettei alteinative to tiauitional bieakfast
eating habits but also ueveloping a habit of eating giain baseu foou in the
moining."
Anothei mistake that Kellogg's committeu was the positioning of its
piouucts. The auveitisements concentiateu on the health aspects anu hence it
was bianueu as a health piouuct iathei than its 'fun anu taste' positioning
auopteu in the 0S maikets. In the 0S maikets it pioviueu toys anu othei bianueu
meichanuise anu also hau a Kellogg's fan club that attiacteu chiluien. In auuition
to this the piemium piicing auopteu by Kellogg's contiibuteu to its failuie.
In thiiu woilu countiies piicing plays a uominant iole in the uemanu of
its piouuct. At an aveiage cost of Rs 21 foi 1uu gm. as compaieu to its competitoi
Nohan Coinflakes which was piiceu at Rs16.Su foi 1uu gm. Kellogg's was lookeu
upon as a piemium bianu by the aveiage Inuian consumei anu viitually
unattainable. The aveiage Inuian customei faileu to see the extia benefits
attaineu by consuming Kellogg's piouucts. The company believeu that quality
came at a piice anu that the usei is ieauy to pay the piice.
Last but not the least Kellogg's ueciueu to focus its uistiibution only on
the piemium anu miuule level ietail stoies. The company believeu that it
coulun't maintain a unifoim quality of seivice if it offeieu piouucts in laigei
shops. In the piocess the company oveilookeu the fact
that this uecision put a laige sections of the population
out of its ieach.
Steps towards success
In oiuei to captuie the Inuian maiket Kellogg's take the
following steps,
Marhet Researcb: In auuition to the below
mentioneu activities it's impoitant that the company caiiies out a
thoiough maiket ieseaich, analyze it anu then entei the maiket.
Price Reduction: As mentioneu eailiei in thiiu woilu countiies the
success foi any piouuct is on the piice it sets foi its piouuct as compaieu
to its competitois. Bence Kellogg's shoulu ieuuce the piice to catei to the
miuule class anu lowei miuule class population as well.
Pachaging: It shoulu ieuuce the family size packs anu intiouuce lowei
size packs incluuing pouches etc. Noieovei it can use alteinate mateiials
foi packaging that will in tuin help in piice ieuuction.
Advertising: The Company shoulu mouify its existing auveitising
campaign anu connect with the aveiage Inuian iuentity. It shoulu get
celebiity enuoisements uone attiibuting theii health anu fitness success
to the bianu. It shoulu also stait giving alteinatives to 'milk' with which
an inuiviuual can enjoy coinflakes. This will auuiess its basic pioblem of
supplementaiy ingieuients.
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Promotion: Kellogg's
shoulu holu piomotional
events anu activities to
geneiate awaieness about
the impoitance of
bieakfast. It shoulu also
euucate the masses about
the vaiious vitamins anu
mineials necessaiy foi a
bouy to maintain fitness. In
auuition to this getting
expeit opinion in
auveitising will help the
cause.
Target new customers: Kellogg's shoulu taiget the schools anu colleges
anu holu piomotional activities foi the school stuuents. This will make
them awaie of the ceieal bieakfast anu theieby help them uevelop taste
foi coinflakes. In auuition to this they shoulu stait uooi-to-uooi
piomotional activities by giving fiee samples to housewives. Since in
Inuia the wife is the uecision makei in the family when it comes to
gioceiy shopping it will have uiiect impact on sales.
Don't Underestimate Local competition: Although the local playeis aie
woiiieu about inteinational competition, the inteinational playeis
shoulun't take them foi gianteu. The tiick is not to be too big. NNC's
shoulun't tieat Inuia as a baiien lanu anu then stait business.
Customizing tbe strategy to tbe marhet: Its impoitant that Kellogg's
customize its stiategy to suit the Inuian maiket. Aftei its initial failuie it
shoulu ie-stiategize to ensuie success. In auuition to this Kellogg's shoulu
intiouuce some moie local flavois as uone by many pizza companies to
succeeu.


Conc|us|on
Kellogg's is in Inuia foi the long iun. Bence it's impoitant that the company
cateis to the vaiious points mentioneu to ieach out anu captuie moie maiket
shaie. It shoulu also take into account the consumei's wants anu likes when it's
ueveloping a new stiategy. The success of the company will lie in how it tackles
the habit baiiiei as well as the piice baiiiei.









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8I8LICGkAn
http:www.uocstoc.comuocs7776u91SKellogg-Inuian-Case-Stuuy

http:chatbhanuaai.biainmaalish.commaiketing-mishap-kelloggs-a-failuie-of-
a-bianu

http:books.google.co.inbooks1iu=_LPKB0sTc1NC&pg=PA116&lpg=PA116&u
q=Kelloggs+a+bianu+failuie&souice=bl&ots=kkRvpBB0QS&sig=9SBwBSjvNoN
7}Exem2Z0aNip0qI&hl=en&sa=X&ei=ZbzF0N-
YBo_RiQeL74Bg&ieuii_esc=y#v=onepage&q&f=tiue

http:vaibhavgnnugupta.files.woiupiess.com2u12u1maiketing_sem1_gioup
11_kellogs_final1.puf

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