Universidad Panamericana

Customer Business Planning Process

Research on Kellogg's and Bodega

Aurrera

Camacho Almanza Alan Ulises 0192087

Durn Gonzlez Sofa 0192182
Prez Ramrez Mara Brbara 0187481
Ramrez Fernndez del Castillo Mnica 0186927
Roln Daz Sofa 0187403

Subject: Direccin Estratgica de Ventas

Professor: Roberto Gerardo Gonzlez Rodrguez

Due date : october 24, 2017

MBS: Grow in the market of healthy children's cereals

Bodega Aurrera is the name of one of the formats of self-service stores in Mexico that were
originally owned by the company Almacenes Aurrera; later of its successor, Grupo Cifra and
currently of the Mexican subsidiary of the American retailer Walmart.

Principal target:
Men and women classified in the socioeconomic levels C & D.

Distribution:
Aurrera is present in all 32 states of Mxico and they are located in areas where their
potential consumers are present.
Trying to get more present in the market, Walmart decide to create 3 divisions of the Bodega
Aurrera:

1-.Bodega Aurrera : located in zones with high population of 40,000 to 100,000.

2.-Mini Bodega Aurrera: located in zones with a population of 5,000 to 50,000.
3.-Bodega Aurrera Express: Located in zones near to neighborhoods

General information:

Type Discount stores

ISIN Cellar

Industry Retail trade

Foundation 1958

Incomes 179.021 millions of pesos

Owner Walmart

Slogan La campeona de los precios bajos

Website www.bodegaurrera.com.mx

Branch offices 1,716*

Divisions Bodega Aurrera: 479*

Mi Bodega Aurrera: 328*
Bodega Aurrera Express: 936*
 Days inventory 60 days

Days accounts receivable 30 days

SWOT Bodega Aurrera

Strengths Weaknesses
It is part of Walmart The stores are located in insecure
Efficiency in logistic techniques zones.(Robberies and assaults
Everyday low prices (EDLP) happen often)
Represent the 43% of Walmart sells They don't have a high level of sells
in expensive brands.

Opportunities Threats
Strategic alliance with suppliers Marketing myopia
The market trends Soriana is their principal competitor
Mexicos largest population is the Mexican economy (inflation and
one of C & D socioeconomic levels. competition laws).
New products in the market looking
for a place to sale.
http://expansion.mx/empresas/2017/01/24/bodega-aurrera-la-joya-de-la-corona-del-
crecimiento-de-walmart-citibanamex?internal_source=PLAYLIST

Distribution of the cereal market

http://www.portal.euromonitor.com/portal/statisticsevolution/index

In the distribution of the cereals market, it can be observed that the grocery retailers have
the first place, since they sell the product in bulk, followed by the convenience stores that
apply the same system; this system is effective for small and medium enterprises as they
charge for the weight that the consumer wants to carry, and not for the package with a price
already established or agreed. In third place are the hypermarkets, which are stores like
Sam's or Costco or Walmart, whose orientation is to sell wholesale, so they count with the
largest SKUs that the companies manufacture. Bodega is of the Walmart company group,
but it isn't a hypermarket, it is part of the fourth group are supermarkets.
Kelloggs Company (NYSE: K) (simply called Kellogg or Kellogg's) is an American agri-food
company. It mainly produces food for breakfast, cereals and snacks.Kellogg's was founded
in 1906 by Will Keith Kellogg who relied on the feeding of Seventh-day Adventists, a religion
he himself practiced. The result was so good that the orders did not wait, and shortly after
they were shot in number. Today, it is the leading company along with Nestl in the
breakfast cereal sector worldwide.

General information:

Type Foods

Industry Feeding

Foundation 1906

Incomes 13,014 Millions of pesos

Slogan Nos vemos en el desayuno

Website http://www.kelloggs.com.mx/es_MX/home.h
tml

Divisions Cereal
Snacks

Manufacturing Plants Mexicali (Cereal)

Quertaro( cereal)
Toluca (cereal)
Linares (Snacks)

Days inventory 57 days

Accounts payable days 23 days

Kelloggs Cereals
Kelloggs Cereales Prices in Bodega Prices in Comercial Target market
Brands Aurrera Mexicana

Special K $41.40 for 400g $48.90 for 400g Women who want to
stay in shape. Age
around 20-30.
Exercise regularly.

All-Bran $60.95 for 490g $45.90 for 620g Women and some
men that want to
stay in shape.

Zucaritas $39.68 for 430g $47.14 for 490g Children ages 4-10

Corn Flakes $26.11 for 300g $23.90 for 300g Children and adults

Choco Krispis $36.80 for 500g $49.27 for 450g Children ages 4-10

Extra $42.29 for 370g $51.96 for 310g Adults especially

women

Froot Loops $38.53 for 310g $69 for 450g Children ages 4-10

Kellogg's Granola $49.90 for 465g $47.80 for 380g Adults

Kelloggs Ediciones Depends on the Depends on the Children (depends

Limitadas station station on the edition).
https://mx.investing.com/equities/kellogg-co.-ratios

Categories of the cereal market

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade
interviews, trade sources

Kellogg's is a company that covers all categories, and its line extensions in each one of them
is huge, which allows it to cover most of the market.

Brand share of kellogg's

http://www.portal.euromonitor.com/portal/statisticsevolution/index

Kelloggs is the brand with the highest brand share in the market with 432 million in sales
that remains constant over the years, this is because kellogg's is recognized as a brand of
high quality, low price and for all kinds of tastes and family . The familiar image they give is
one of the most important value aspects for the company since the mexican market has it as
a very ingrained value, for that reason the second brand with the highest part of the market
is Nestl, since it has a stronger image and its products have high quality, but their prices
they are not that accessible.

TRENDS
 In 2016, childrens breakfast cereals accounted for a 53% retail volume share of
breakfast cereals. During this year, the category posted a 5% increase in current
terms to reach sales of MXN 6.1 billion. The relevance of childrens breakfast cereals
is explained by the convenience that these products offer, as they require minimum
preparation time and children can prepare them themselves. In addition to the latter,
children are usually fond of the taste of these products and of the characters that
promote them.2
Sales of muesli and granola posted the fastest growth in 2016, increasing by 5% in
current terms. The positive performance of these products was due to the growing
number of health-aware consumers who were looking for nutritious sources of
energy. In 2016, retail sales of muesli and granola reached 4,200 tonnes and MXN
578 million.
In addition to being convenient and very popular amongst children, breakfast cereals
are also perceived as a fairly balanced breakfast option. Cereal brands have focused
on promoting specific healthy attributes, such as the content of vitamins in childrens
cereals and the content of fibre and low sugar in other categories of cereals. Over
the review period, Kellogg de Mxico launched a Nutri-Crisp version of its
sugary cereal Zucaritas, which is a healthier multigrain version. Also during
this period, Kellogg de Mxico began offering reformulated versions of its
breakfast cereals made with whole grain and 25% less sugar. Meanwhile, Nestl
Mxico started highlighting on the packaging of its cornflakes that the product was
gluten-free, even though this had always been the case.2

Kellogs actions:

Key new launches observed in 2015/2016 included Kelloggs Special K Protein,

which highlights its protein content, and new formulas for the brands Kelloggs All
Bran and Kelloggs Special K, with a claim of a better taste. Also during this period,
Kellogg de Mxico launched Zucaritas Power Balls, which is a new format of the
known flakes brand.2
Packaging innovations observed over the review period included Kellogg de Mxicos
2-portion packs for its All Bran flakes, Corn Pops, Froot Loops, Choco Krispies and
other varieties. This pack type allows consumer to make smaller purchases, which
helps with budgets and also encourages consumers who would not usually finish a
whole bag before it becomes stale to buy these products.2
SWOT Kelloggs

Strengths
Solid revenue growth, has an annual
average of 3%
Is present in 180 countries
78% of shares are from institutional
investors
Weaknesses
Kellogg's products are already
nearly every market around the
world, so there isn't much room for
expansion.
Cannibalism in some of their
products

Opportunities Threats
 The acquisition of different brands Increasing food prices
like Pringles, are a strong way to Shifts in the market
help fuel Kellogg's growth. Substitute products for breakfast,
Innovation in their products. not only cereals but many kind of
Sell some of their brands to reinvest snacks like biscuits.
in the company. Mexico is the #1 country in
The children's market is growing. overweight and nutritionists are
Very well position in the market recommending lowering cereal
portions.

https://zakreinobuisness.files.wordpress.com/2014/03/sd.png

Alliances between Kelloggs and Bodega Aurrera

On 2011, Kelloggs and Bodega Aurrera made an alliance for a healthier Mexico. Bodega
Aurrera stores are mainly directed for the low socioeconomic level, this is the majority of
mexican population. The objective of this alliance or campaign was to create conscience
about the importance of a healthy diet as well as giving the consumer orientation about
their current diet and the benefits of changing it with better habits and a more balanced diet.1

Kellogg's competition

Nestl S.A. is a Swiss transnational food and drink company headquartered in Vevey, Vaud,
Switzerland, formed in 1905 by the merger of the Anglo-Swiss Milk Company, established in
1866 by brothers George and Charles Page, and Farine Lacte Henri Nestl, founded in
1866 by Henri Nestl (born Heinrich Nestle). The company grew significantly during the First
World War and again following the Second World War, expanding its offerings beyond its
early condensed milk and infant formula products.

1
http://www.alimentacion.enfasis.com/notas/20563-kellogg-company-y-bodega-aurrera-alianza-un-pais-saludable
2
http://www.portal.euromonitor.com/portal/analysis/tab
General information:

Type Foods

Industry Feeding

Foundation 1866

Incomes 9,467 Millions of pesos

Slogan A gusto con la vida (Good Food, Good Life)

Website http://www.nestle.com/

Divisions Baby foods

Bottled water
Cereals
Chocolate & confectionery
Coffee
Culinary, chilled & frozen food
Dairy
Drinks
Food service
Healthcare nutrition
Ice cream
Petcare
Recipes

Days accounts receivable 27 days

Developing Goals, Strategies and Tactics

As Kelloggs, we want to increase our sales with Bodega Aurrera for the next year.
Analyzing the strengths, weaknesses, threats and opportunities for both companies, we will
develop a strategy to reach the goal of increasing sales for Kellogg's in Aurrera.

After doing the research, we found out that the cereal market for children is growing, but
parents are afraid of obesity and their childrens health. As a company that offers a wide
amount of products we will implement the tactic of launching and selling healthy and
nutritional cereals for children. Kellogg's has famous classical children cereal such as
Zucaritas, Froot Loops, Choco Krispies, but none of them are delicious and nutritional. With
this strategy, we want to increase our market by launching a subproduct of our healthiest
cereal (Special K) but for children, by adding natural colorant to the flakes (made by fruits
and vegetables like: Granada, apple, kiwi, blueberries, carrot, etc.), that way, we avoid
suffering of cannibalism between our brands, but get a new line product. We will also
develop new SKUs with the cartoon Cerealdo that would change depending on the
occasions such as christmas, and the cartoons that are popular in the moment.
What we will do is sell this products to Aurrera at small quantities at first, to analyse the
market response and focus on a pull strategy by making a nation wide campaign of the
importance of cereal for a child to have energy during school, sports, and other daily
activities, but also the importance of nutrition and healthy food. We will target mexican moms
who are dealing with children that doesnt want to eat healthy food because it doesn't taste
good. Also, since we will be socially responsible, because we will reduce the amount of
sugar and refined flour in children's cereal, the mexican government can approve us as a
healthy option for children. This way we will contribute on lowering the obesity of mexican
children while getting free propaganda or governmental rewards.

Goals: get more market in the healthy children's cereals.

Strategies: get Bodega Aurrera to buy our product, it will help us because is part of the
Walmart group, so we would cover more market.

In order to convince our client we will adapt our new product to the market trends, increasing
the consumption of children's cereals.

Tactics:
We will create a new SKU of the original cereal (Special K), but for children, with a greater
amount of vitamins to promote the proper nutrition for infants.

In order to make the cereal attractive to our user (children), we will place Cerealdo (The
cartoon of kellogs) wSPECIith a costume of a trending cartoon or movie at the moment, in
the package and add natural colorant to the cornflakes (made by fruits and vegetables like:
Granada, apple, kiwi, blueberries, carrot, etc., in order to add more flavor to the product, also
to avoid the need of more sugar). Then, to attract the attention of the parents( who are the
buyers), we will make an outpack promotion by adding a small SKU of our new product to
the original (Special K) to make sure the buyers know that our product is as healthy as the
Special K.

Finally, we will continue with the campaigns that are already being implemented, Probemos
con alguien ms so we don't lose market with the substitute products, like bars or yogurt,
proving that our product has more than one use, no just eating it with milk, also this
campagnes will help us to inform the consumers that cereal is a good source of energy.

What we would do with Bodega is that we will give them the exclusivity of the sale of our
product, at a lower price, but with the condition that we have greater lay outs
Identify
the
impact

on customers KPIs

1) The impact on key performance

indicators and customer strategies
If we develop the healthy plan on Kelloggs
children cereals, the KPIs that will be
affected on our customer, Bodega Aurrera,
will be:
- An important increase in our brand
share because of the product extension.
- An increase in the number of
products that are being sold in Bodega
Aurrera because that will show an increase
in our consumers satisfaction.
- An increasing growth rate of the
brand
- More loyal clients of the company
The only conflict that Bodega could have with our product is the price, but that has already
been solved, since at the beginning it will be given at the same price that is had to introduce
the normal Special K, since only the new SKU is added to the same.
Later a specific price may be given to the cereal, but this will be less or equal to that of the
other types of cereals such as Choco Crispies. This does not affect us since what we are
looking for now is not yield, it is to make the cereal known

KPIS Bodega
1-.Innovation
2-.Low price
3-.Growth in the children's market
4-.Accessible
5.- Better relationship with the market's leader

KPIS
1.- Better positioning in the market
2.- Increase in the sales volume
3.- Long term relationship with Bodega Aurrera
4.- Higher number of consumers/users
5.- Inform and educate the consumers about the importance of eating cereal as well as the
benefits

Create the Activity plan to the customer

January February March April

-Start to do - First activations: - Refill the shelves -Children's Day

informational First two with the cereal activation in the
campaigns about the weekends in (inventory rotation is most used stores
cereal (Social the Bodega 60 days).
media) Aurrera of -The activations
the center
will also combine
-Launch of the new Area
product: Special K The Third the Easter, so in
Kids. weekend in the store children
the south and will have to find
-Adding a small SKU north area Easter eggs, those
of the new product to The last one who find one will
the normal version of in west and receive discounts.
the Special K. east area
-Bodega will have
-Anuncios o -These activations a discount on the
referencias con consist in putting a sale, by purchase
starwars support outside the
amount (product
stores, with a
bounce, so that we increase in
can show that you shelves).
need cereal to be
active and have
enough energy.
(giving the
participants sku's of
the product).
------

May June July August

-For mothers' day, Starts the summers -Activations by Back to school

children will have to activations, during giving away yogurt
find the cartoon june and july. popsicles with -Negotiate a
cereal in the super, cereal. possible discount
when they find it and -Activations by with the warehouse
arrive at the cashier giving yogurt pops for the purchase
with the purchase of with cereal amount (if the
their cereal, a gift will purchase is greater,
be given to their -Replenish the you will receive a
mothers, shelves discount), for the
encouraging return to classes.
physical activity.
energy / cereal. -Informative
campaigns in the
cellar of fast and
nutritious breakfasts
with cereal

-Giving samples of
smoothie with
cereal, toast, etc.
September October November December

-To promote by Halloween:not -On the day of the Christmas

September 15 that mexican at all but dead, activations will activations in the
cereal can be a people here be made regarding most busy stores
healthier snack than celebrate anyway the caricature of and references of
potatoes. Coco Frozen.
-Merchandiser
-Giving samples of disguised will give -Give a basket of
cereal with chamoy candies made with kellogg's products to
the cereal as a trick the warehouse
-Replenish the or treat negotiators.
shelves
-Replenish the
shelves