How can Kellogg do better in India?

What
were the mistakes it made?
Introduction:
This project reports on the marketing mistakes Kellogg made in its initial
years in India. This also reports how Kellogg can do better in India
rectifying its past mistakes. Till now Kelloggs journey was similar to roller
coaster ride. Plan of Kellogg is to position its brand on the nutritional
ground.

Firms overview:
Kelloggs company was founded in 1906 in US. It produced highly
successful toasted corn flakes and marketed them well. It later expanded
into other food segments and began market leader in ready-to-eat
segment in the United States. Kelloggs later expanded its business
worldwide covering 150 countries. It introduced corn flakes as a breakfast
to the world. It also ventured into countries which werent aware of corn
flakes as a breakfast and became successful in convincing them with its
right marketing strategies. This also showed how corporates modelled the
environment as per their needs.

Entry into Indian market:

After capturing 40% market share in ready-to-eat segment in US, Kelloggs
growth has become stagnant and therefore looked for new markets to
enter. After 3 years the Indian government opened its doors for the foreign
brands, Kellogg entered in 1994 hoping to replicate its success in India. It
targeted 950 million population of India. Of this 950 million, 250 million
belonged to middle class which was untapped market. According to the
HBR article by Robin Bolton, he reported that if Kellogg could capture just
2% of market potential consuming cereals as their breakfast, it could lead
to more revenue that it earns from the US market. Kellogg launched its
most successful product Corn Flakes in India in 1994. Kellogg spent
around $65 million in advertising its products in its launch year but could
not get the expected returns. Its marketing strategies failed. It couldnt
replicate the success it had all over the world. The product quality was
very good but still it was a failure.

Marketing Mistakes made by Kellogg:

Place:
o Indian population wasnt used with cereals as its breakfast.
More over Indian consumers were used to have breakfast with
warm dishes. But corn flakes which has to be consumed by

cold milk differed the traditional way of having the breakfast.

Kellogg couldnt change the mind-set of the Indian population.
Even addition of sugar didnt help to change the mind-set.
Indian consumers werent willing to change their long old
habits.

Product:
o Kelloggs corn flakes werent offering taste that was required
by Indian consumer. It neither gave salty nor proper taste in
its foods. Corn flakes was not much of a taste. So couldnt
attract many customers consuming corn flakes. Kelloggs later
released many variants like honey loops, chocos targeting
children which were successful to a certain extent.
Promotion:
o Kellogg wrongly assumed that all 950 million population had
breakfast daily and if they could convert 1% of the total, it
could reach its target. Kellogg spent around 65 million in
advertising its products in its launch year. But only in 2010 it
clocked 70 million dollar revenue. Error in estimating its
revenues and thereby investing high in marketing led to its
failure. Kellogg in its early advertising campaigns hinted that
Indian breakfast lacked nutritous content and this hurted
Indian sentiments.
Pricing:
o The pricing was way above the Indian customers capability to
purchase its products even though kelloggs products were of
very high quality. In a developing nation like India, pricing
should have been affordable. When Kellogg mentioned that it
assumed Idlys and Puris as its rival, the pricing should have
been in same lines of that. Instead, each breakfast was
costing Rs 5 more than the normal one. Also it should have
priced keeping in the mind that Indian consumers are new to
this cereal breakfast. Kellogg should have played volume
game.
Soon kelloggs corn flakes became as a novelty purchase. Instead of
rectifying the price, Kellogg moved with release of more variants in
its products. Most of these were also failure.
Having corn flakes alone as the breakfast wasnt filling the stomach
of the Indian consumer. Typically Indian consumers would love to fill
their stomach completely in their breakfast. Kellogg failed to satisfy
this sensation of fullness. This sensation is irrespective of the rich or
the poor.
Kellogg instead of challenging the local competitors it under
estimated them.

Except for the biscuit ranges, cereals category is still not performing well
for Kelloggs. Kelloggs can do better in the future by adopting the
following changes:

Price change:
o In developing countries, price of the product matters a lot. So
reduction in price would help to increase its market share.
Price reduction can target the middle class population. Pricing
should also be done keeping the competitors price in mind.
Advertising:
o Existing advertising strategy has to be modified so that it
correctly reaches the target audience. Celebrity endorsements
highlighting the benefits of corn flakes can help Kellogg gain
the market share. Advertisements should show the positives of
its products rather than showing the negatives of Indian foods.
Packaging:
o Kellogg should introduce its products in different sizes catering
to the needs of the Indian population. Currently they are
offering family size packets. Rather it should lower its packet
size and bring it available in smaller packets. Cost of packaging
can also be reduced by using alternative packaging materials.
Local Competition:
o Though local competitors might not sustain before
international players, Kellogg should not under estimate them.
Its better not to display that you are too big to reach
Promotion:
o Organize good promotional events at places like shopping
malls, educational institutions and urban areas. Highlight the
product in lines that having it gives fun and taste rather than
concentrating on its nutrition. This strategy though followed in
US was not implemented in India.
Re-positioning:
o Reposition its product in lines of the taste it offers, saving the
time for cooking and health aspects. Highlight that it saves a
lot of time in cooking while target the urban population who
feels that they are running short of time.
Tap the untapped:
o Concentrating on bulk supplying to hostels and offices, it can
gain the new market share. This will help Kellogg to increase
its volumes and venture into new market segments.
Market Research:
o Before moving into new market segment or releasing a new
variant, market research is mandatory. This can help Kellogg to
save itself from losses.

With the above changes, Kellogg can get the largest market share in the
ready-to-eat segment in India.

References:
http://vaibhavgnnugupta.files.wordpress.com/2012/01/marketing_
sem1_group11_kellogs_final1.pdf
http://www.termpaperwarehouse.com/essay-on/How-Can-Kelloggs-Do-Better-In/131430
https://www.scribd.com/doc/214137076/How-Can-the-Kellogg-DoBetter-in-India
https://www.scribd.com/doc/117147041/How-can-Kellog-dobetter-in-India-What-mistakes-has-it-made
http://chatbhandaar.brainmaalish.com/marketing-mishapkelloggs-a-failure-of-a-brand/