PROJECT REPORT

Marketing Management - 1

IMT
September, 2008

Institute of Management Technology

Ghaziabad

By:

Rachita Pandey 08FT-032

Rajesh Kumar 08FT-035
Sameer Jain 08FT-041
Saurav Anand 08FT-045
Shailendra Sharma 08FT-047
Sulabh Gupta 08FT-052
 Table of Contents

Contents
Executive Summary...............................................................................................................................4

Situational Analysis................................................................................................................................4

Economic and Legal Conditions.........................................................................................................4

Market Share – Global Processed Food Trade...............................................................................5
Policies and Regulations................................................................................................................6
Fiscal Policy & Taxation..................................................................................................................6
Food Laws......................................................................................................................................6
Financing and credit availability....................................................................................................7
New Opportunities: In India..........................................................................................................8
Population Growth:...........................................................................................................................8
Population Age mix........................................................................................................................9
India Population Pyramid for 2005................................................................................................9
India Population Pyramid for 2010..............................................................................................10
Literacy and Education....................................................................................................................10
Economic environment................................................................................................................11
Socio culture environment..............................................................................................................14
Consumption...................................................................................................................................14
Gist of the demographic analysis.................................................................................................15
Conclusions drawn from Demographic Analysis..........................................................................16
Survey Analysis....................................................................................................................................16

Findings...........................................................................................................................................17
Product Advantages.........................................................................................................................17
Kellogg in India................................................................................................................................17

Company Profile..............................................................................................................................17
Business Statistics............................................................................................................................18
Company Strategy...........................................................................................................................18
Problems faced by Kellogg...............................................................................................................19
Efficient supply chain network.........................................................................................................19
Kellogg India: At a glance.................................................................................................................20
SWOT ANALYSIS...............................................................................................................................20
 Strengths.....................................................................................................................................20
Weaknesses.................................................................................................................................21
Opportunities..............................................................................................................................21
Threats.........................................................................................................................................22
STP (Market Segmentation, Targeting and Positioning)......................................................................22

Segmentation..................................................................................................................................22
Targeting..........................................................................................................................................23
Positioning.......................................................................................................................................23
The Marketing Mix..............................................................................................................................24

Product............................................................................................................................................24
Constituents...............................................................................................................................24
Price.................................................................................................................................................25
Schemes for retailers...................................................................................................................26
Place................................................................................................................................................26
Promotion........................................................................................................................................27
SALES PROMOTION......................................................................................................................27
Smaller SKUs................................................................................................................................27
Schemes for Retailers..................................................................................................................27
Partnership Scheme.....................................................................................................................27
Aggressive Pricing........................................................................................................................27
ADVERTISING...............................................................................................................................28
CHANNELS...................................................................................................................................30
Market Survey.....................................................................................................................................30

Findings...........................................................................................................................................36
References...........................................................................................................................................36
Executive Summary
This paper presents a business proposition to tap the huge potential in healthy and
ready to eat breakfast segment in India. It further studies how Kellogg’s can use the
proposition to capture a much larger chunk of the Indian market share.

Indians are traditionally known to take either heavy or unhealthy breakfast, that
doubles up as the afternoon meal or skip morning meal due to various reasons. The
need for quick healthy food remains largely insatiated. As a strategic line extension
to Kellogg’s range of breakfast products, “Good Morning”-- soya based flavoured
flakes suitably addresses this need. The plan is to run a campaign that will be two
pronged. On one hand it will popularise the idea of “Importance of healthy breakfast”
by its “Say Good Morning to Yourself” campaign. On the other hand it will
propagate the goodness of soya and what better and tastier way of having it than
Good Morning soya flakes.

Kellogg is right now facing challenge from the local player Mohan Meakin Ltd.
However, even a bigger challenge is to gain the acceptance of a greater Indian
population.
Situational Analysis
Economic and Legal Conditions
With India’s food industry witnessing explosive growth in line with the country’s on-
going economic development, there has been a marked move towards trying to get
more out of the country’s immense agricultural industry.

Despite being the world’s leading producer of cattle, milk, tea and pulses and the
second largest producer of fruit, vegetables, rice, wheat and sugarcane worldwide,
India accounts for just 1.5% of global processed food trade. The government
estimates that the cost of boosting this figure to just 3% would be US$25bn, with
India’s primary focused agricultural and food supply chain having to dramatically
reconsider standard industry practices in order to boost secondary output.

120

100

80

Current Share
60
Projected Share if Govt spends US
$25bn

40

20

0
India Rest of the world

Market Share – Global Processed Food Trade

Fortunately, the government is not alone in attempting to fund this seismic shift. A
vast population, steady urbanization and GDP growth forecasted at 7.9% annually to
2012 help to ensure that multinational investment interest in the market is massive.
More encouraging than this is that the multinationals alone are not being left to drive
development; local corporations are also playing a huge role in the process.

Most notable has been the involvement of Indian companies in the food and
beverage industry, whose primary business interest was formerly elsewhere.
Investment from all companies, as they battle to boost sales and build market share,
should help to lift India’s contribution to global processed food trade in the long term.
In the short-to-medium term, the impact will be on internal processed food sales.
Included in this report for the first time this quarter are our forecasts for the
country’s processed food industry.
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o By 2012, we expect processed food output to increase by 44.2% to US$90.1bn,
while packaged food sales in the country climb by 67.5% to US$21.7bn. On a per
capita basis, it is forecasted that per capita packaged food spending will show an
increase of 56.5% to US$18.06 by 2012.

India presents a huge untapped opportunity for the food processing sector
enhanced with low penetration levels and a liberal regulatory regime. Increased
economic growth, evolving food-consumption patterns, a higher standard of living
due to rising disposable incomes and a trend towards nuclear dual-income families
all present considerable potential. Government studies show that an average Indian
spends majority of his income on food consumption. Recognizing an opportunity to
grow, multinational food companies have entered this industry to meet consumer
demand for convenience and value-added products. U.S. brands such as
McDonald's, Pizza Hut and Kentucky Fried Chicken (KFC) have already become
household names in India while more are set to enter. With socio-economic
progress, consumer tastes are increasingly inclined towards convenience; health and
organic foods offering value for money

Policies and Regulations

Since liberalization several policy measures have been taken with regard to
regulation & control, fiscal policy, export & import laws, taxation, exchange & interest
rate control, export promotion and incentives to high priority industries. Food
processing and agro industries have been accorded high priority with a number of
important relieves and incentives.

At present, no industrial license is required for almost all of the food & agro
processing industries except for some items like: beer, potable alcohol & wines,
cane sugar, hydrogenated animal fats & oils etc. and items reserved for exclusive
manufacture in the small scale sector.
Fiscal Policy & Taxation

Wide ranging fiscal policy changes have been introduced progressively. Excise &
Import duty rates have been reduced substantially. Many processed food items
are totally exempt from excise duty. Custom duty rates have been substantially
reduced on plant & equipments, as well as on raw materials and intermediates,
especially for export Production. Corporate taxes have been reduced and there is a
shift towards market related interest rates.

Food Laws

Different laws govern the food processing sector in India. The prevailing laws and
standards adopted by the Government to verify the quality of food and drugs is one
of the best in the world. Multiple laws/regulations prescribe varied standards
regarding food additives, contaminants, food colours, preservatives and labelling.
Currently there are more than twenty Indian laws relating to food, which are
administered by a number of different Ministries and Departments. Food processors
have to comply with these rules.

Among the more important food laws are:

 Prevention of Food Adulteration Act (PFA) of 1954 and the PFA Rules of
1955: Covers specifications related to food color, preservatives, pesticide
residues, packaging and labeling, and regulation of sales.
 The Standards of Weights and Measures Act, 1976, and the Standards of
Weights and Measures (Packaged Commodities) Rule, 1977: Designed to
establish fair trade practices with respect to packaged commodities.
 The Fruit Products Order, 1955: Specifications and quality control requirements
regarding the production and marketing of processed fruits and vegetables,
sweetened aerated water, vinegar, and synthetic syrups.
 Meat Food Products Order, 1992: Administers the permissible quantity of heavy
metals, preservatives, and insecticide residues for meat products.
 Milk and Milk Products Order, 1992: Regulates the production, distribution, and
supply of milk products; establishes sanitary requirements for dairies, machinery,
and premises; and sets quality control standards for milk and milk products
 The Food Safety and Standards Act, 2006: In August 2006, Government of
India has passed a new legislation Food Safety and Standards Act. The Act
proposes establishment of a new authority; the Food Safety and Standards
Authority, reorganization of scientific support pertaining to the food chain through
the establishment of an independent risk assessment body and a new Food Law,
merging eight separate Acts.

However, in spite of these challenges, India presents a significant untapped

opportunity for the FPI sector enhanced by low penetration levels and a liberal
regulatory regime. The role of food processing has become more critical since food
production is targeted to double in the next 10 years.
Financing and credit availability

Inadequate and high cost of credit has been one of the major reasons for the
subdued agri-sector growth. According to industry estimates, rural credit penetration
in India is just 15 percent of the all India average of 40 percent.

Credit Penetration in India

45

40

35

30

25 credit penetration in India

20

15

10

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India Rural India

Due to inadequate formal credit delivery mechanism farmers have to rely on informal
sources such as money lenders and traders who charge higher interest rates.
Factors such as lopsided regulatory policies and non-availability of timely and
adequate credit have led to the highly fragmented nature of the industry. Lack of
economies of scale and uncertainty in raw-material availability has resulted in higher
inventory holdings and low capacity utilization. Due to the unorganized industry
structure, most of the units in the FPI are stand alone without significant backward or
forward linkages. All these factors are responsible for the significant constraints on
banks with regard to credit assessment evaluations increasing the cost of borrowing.

New Opportunities: In India

• Government establishing Special Economic Zones with the purpose of promoting

exports and attracting FDI.

• Rural credit penetration estimated to be 40%

• Global market share to be increased to 3% from present share of 1.5%

 • No duty on imports of inputs and they enjoy simplified fiscal and foreign exchange
procedures and allow 100% FDI.

• Introducing of an integrated food law, which is expected to help meet the

requirements of international trade and make the Indian food industry competitive in
the global market.

• Harness the value-creating potential of agro processing, superior market mechanism

and infrastructure.

Population Growth:
India is a country of striking contrasts and enormous ethnic, linguistic, and cultural
diversity. It has a population of 1028.6 million (as per census of India, 2001) which
accounts for 16.7% of the world’s total population. Different states in India differ
vastly in resources, culture, food habits, living standards, and languages. About 75
percent of the country’s people live in its 550,000 villages; the rest in 200 towns and
cities. There are 27 cities with a population above one million people.

India’s economic scenes has good consumption growth potential, and income levels,
increasing urbanization, a changing age profile (more young people), increasing
consumerism, a significant rise in the number of single men and women
professionals, and the availability of cheap credit will push India onto a new growth
trajectory.

These segments of the population are aware of quality differences, insist on world
standards, and are willing to pay a premium for quality.

Results of the “Market Information Survey of Households,” conducted by the National

Council of Applied Economic Research, show that the share of households in the
upper middle/high income group (annual household income > Rs. 90,000 on
purchasing power parity basis) is given below:

Share of households in the upper middle/high income

group
60%

50%

40%

30%

20%

10%

0%
1989-90 2001-02 2009-10

Sixty-five million people are expected to enter the 20-34 year age group from 2001 to
2010. By 2025, 40 percent of Indians are expected to be urban dwellers. India’s
 sustained economic growth, which has been relatively strong over the past two
decades, is 6% per annually.

Population Age mix

Indian varies in its age mix; the median age of the population is estimated to cross 30
years by the year 2025. As per the census of India 2001, 15.35% of the population is
6 years of age of less. Among the people who are 12 years or above, 34% are less
than 25 years of age. Another 24% of this population belongs to the age bracket of
25 to 34 years. People who are above the age of 54 years constitute only about 14%
of the population.

India Population Pyramid for 2005

Age and sex distribution for the year 2005:

India Population Pyramid for 2010

Predicted age and sex distribution for the year 2010:
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Since the data above shows that the market potential for the youth segment is very
large as this segment constitutes a significant segment of the country’s population.
This shows that there is a potential market for breakfast cereals which is currently
untapped in India.

Literacy and Education

As per census 2001, India has a literacy rate of 65.38%. This literacy rate is different
for males and female, for males it is 75.85% and for females it is just 54.16%.
Literacy rates also vary across rural and urban areas, with the literacy rate in urban
areas at 80.3% and in rural areas at 59.4%. These contrasts in literacy levels are
significant and have important implications on demand of our product.

Just over half (55 percent) of de facto women age 15-49 are literate, compared with
78 Percent of de facto men in the same age group. Literacy has increased
substantially over time, with recent cohorts being more literate than older cohorts.

Nationally, 35 percent of women and 18 percent of men are not regularly exposed to
newspapers/magazines, television, radio, or cinema.

The education variable is also highly significant and has a positive effect on the total
demand of the breakfast cereals. Educated people are more concern about the
nutrition value, their calorie requirements and the importance of having breakfast
daily. And with increase in the education level their knowledge about different brands
and different products are increasing which will result into their awareness about
different breakfast options present in the market.

Economic environment
Forty-three percent of women age 15-49 are employed, compared with 87 percent of
men in the same age group. Men’s employment varies little by urban-rural residence;
however, urban women are much less likely than rural women to be employed. The
majority of employed women are agricultural workers (59 percent); whereas, no
single occupation accounts for the majority of employed men. Similar proportions of
employed women and men (7 percent, each) are in professional, technical,
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administrative, and managerial occupations. Two-thirds of employed women earn
cash, compared with 91 percent of employed men.

The distribution of income in India shows that 77.7% of urban households in India
have a monthly income up to Rs. 3000. The urban households with a monthly
income of Rs. 3001 and 6000 are estimated to be about 16.2%. A monthly house
hold income of Rs. 6001 to 10000 constitutes 4% and only about 2.1% of urban
households have a monthly income of over Rs. 10000.

Income distribution of households in India has been changing significantly over time.
Households belonging to the lower income segment have been steadily declining
over the years, and the middle income households have been showing an increase.
These are the results of the economic growth. The NCAER has classified Indian
consumers into five categories.

90

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Rich Consuming class Climbers Aspirants Destitute
1995-1996
2006-2007
Number of households in India in millions in different income groups

As per the NCEAR estimates the first three income categories show significant
growth from the year 1995-1996. The number of households classified as the rich is
estimated to grow by 95% from the year 1995-1996 to 2006-2007, the consuming
class by 132%, and the climbers by 51%. The percentage of aspirants on the other
hand is expected to decline by 54% and the destitute by about 50%.

The income levels of rural households show difference in pattern, although the trend
is somewhat similar. The rich class in urban areas is estimated to increase by 400%
from 1995-1996 to 2006-2007, whereas the rural areas indicate a growth of 200%.
The climbers are estimated to grow by 145% in urban areas and by 119% in rural
areas.

This trend suggests that the urban areas are likely to witness a relatively higher
growth of “people with money,” who actively participate in the market exchange. The
overall trend provides a strong indication of better economic levels of population that
is conducive to the demands for gods and services.

As per the NCAER money spend by an Indian on different product categories.

According to the National Council for Applied Economic Research (NCAER) data, the
consuming class, with an annual income of EUR 701 or above, is growing and is
expected to constitute over 80 percent of the population by 2009-10. The increase in
income levels of the Indian population and the emergence of the consuming class
that has higher penchant to spend, offers great growth opportunities for companies
across various segments. The rupee spending by an Indian on food and grocery
item constitutes 57% of their total rupee spending.

The FPI continues to attract investors. FDI inflows in the FPI from August 1991 to
June 2007 stood at USD 1,282.06 mn, 2.43 percent of total inflow in value terms.
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The growth in the processed food industry also affects the demand of the breakfast
cereals market in India.

Socio culture environment

India is a land of diversities with different languages, cultures as well as religious
beliefs. There is a complex mingling of cultures and subcultures. There are some
elements of the culture that are common but many elements that determine the
consumer behaviour of people vary in nature. A survey conducted by Research
International in 2002 indicates that there is a progression from traditionalism to
westernization as one move from lower socioeconomic classes to higher
socioeconomic class.

The middle class of India has not been satisfactorily measured. It is very
heterogeneous and its size depends on the definitions of several parameters.
Estimates range from 25 million to 200 million but it is generally accepted that it is
growing. Breakfast cereal manufacturers are likely to find the greatest opportunities
in the markets serving the middle and upper income groups of India.

With urbanization, rising incomes, more working women, the arrival of some food
multinationals, and a proliferation of fast food outlets, the acceptance of packaged
and ready-to-eat food products is increasing, especially among the urban middle
class.
 These products, nonetheless, are usually tailored to Indian tastes. Many Indians are
quite willing to try new foods, but usually return to traditional fare.

Consumption
The cultural factors and eating habits influence the demand of the breakfast cereals
in India. Cultural factors which already exist in rural and urban areas still make the
people to eat a breakfast which is homemade. Indian population is not used to
processed foods. People in India still prefer to have something with hot milk rather
than cold milk.

But now increasing literacy and exposure to developed nations via foreign media and
overseas work experience/travel has brought about a change in the mindset and
preferences of urban Indians. Increase in the population of working women and
dominance of nuclear double income families, especially in urban areas, are other
trends shaping the changing lifestyles. Lack of time due to a busy lifestyle and
changing consumption patterns has led to an increase in the demand for processed,
ready-to-cook and ready-to-eat food, leading to increased brand-consciousness.

This translates to a consuming class of 56 mn rural households by 2010 more than

half of India's overall estimated middle class by this time. Clearly, consumption
growth in rural India will get a strong boost, thus opening up the vast and relatively
unexplored strata of India to companies. With these promising trends and India's
ready availability of raw materials, India has several competitive advantages in the
breakfast cereals sector.
Gist of the demographic analysis

Conclusions drawn from Demographic Analysis

• Rising disposable income levels: Willing to spend on good and healthy food
• Rising education level: Health consciousness
• Changing age profile: More people in lower age group results in high untapped
potential market
• Increasing urbanization and exposure to Western culture: Openness to non
traditional food items
• Growing number of working women: Less time to prepare breakfast
• Recent trend toward a healthier lifestyle: A niche market for diet, healthy, low-
calorie, and non-fat food products

Survey Analysis
Before launching any new breakfast cereal it is important to study consumer needs
and what benefits consumer expects from their breakfast. Needless to say breakfast
constitute most important part of human daily diet. A survey is conducted to study
their life styles, eating habits and buying habits.

The survey was conducted using a sample of 40 in which there were fairly equal
participants from each age group i.e. 1 to 18, 18 to 23, 24 to 30 and above 30 (Q. 1).
The survey also takes care of gender ratio to consider various points of view. 40% of
 participants were female (Q. 2). Initially the product would be launched in
Metropolitan and later on in cities (Q. 4). The survey will depict the habits and life
style of the people living in such areas.

The investigation shows 50% of people are not taking their breakfast daily (Q. 5) and
reason of skipping the breakfast is nothing but lack of time (Q. 6). They have only 15
minutes for their breakfast (Q. 9). As far as eating habit is concerned a healthy and
nutritional breakfast is more popular. 83% of people accepted this fact (Q. 10). This
means there is a serious need of a quick breakfast which can also meet their daily
need of nutrition.

The above two needs are easily fulfilled by all breakfast cereal available in market.
Then what could be the factors that hamper the sale of breakfast cereal. 90% of
people eat breakfast once or twice in a week (Q.12) and major factors contributing to
consume them daily are taste and cost (Q. 6, Q. 14). As of now only 20% people like
to have cereals in their breakfast (Q. 11) but if above two factors are taken care we
can certainly turn the events in our favor. Most of the people are ready to spend Rs.
25 /- for their breakfast per day (Q. 8). So it’s required to have a cereal in market
which is healthy, tasty and also falls into budget of target customer. One more point
which needs to be taken care is that the breakfast cereal is taken with hot milk so
crispness should be maintained in order to provide taste (Q. 16). Usually people buy
breakfast cereal due to its health and nutritional value on the other hand only 14%
but cereals because of its taste (Q. 13). There is fairly equal distribution of number of
servings one packet should serve so various SKUs should be made available (Q.
17). The two point clearly specifies what additional should be present in our product
to have best of results. More or less people buy their groceries from super market or
retailers so the breakfast is also bought from these places only (Q. 15)

A large number of people believe that vegetarian food is enough to accomplish all
the nutrients which are present in egg or meat (Q. 18). Soya is one of the perfect
constituent to realize the protein diet one should have in their daily diet.

In any nuclear family it’s the responsibility of home maker i.e. wife or mother to
take care of nutritional requirement of their husband and children. It is one
thing that they never ever would not like to compromise. But very few options
available in market to cater this need.

Findings
 Out of the total number of people surveyed (ie. 40) close to 50% have breakfast
daily.

 Most of the people skip breakfast due to lack of time.

 Close to 70% respondents are not willing to spend more than Rs25 on a breakfast.

 80% of the respondents spend 5-15 min on preparing and eating the breakfast daily.

 80% respondent’s primary expectation from the breakfast is nutrition.

 Most preferred breakfast is sandwich, fruits, eggs or meat.

 36% of the respondents never have breakfast cereal.

  The most liked factor in the cereals available in the market is nutrition and the most
unliked factor is cost.

 64% respondents purchase cereals from super market.

 Most respondents prefer hot milk over cold along with cereals.

 80% of the respondents would buy breakfast cereals if they provide all nutrients in
eggs or meat.

Product Advantages

The survey clearly specifies the factors which hampers the sale of cereals and irregular
breakfast habits. They are taste, cost and lack of time in the morning. We have very well
taken care of taste and cost of our product. As far as lack of time is concerned campaign
would made people aware how quick this breakfast can be. A new feature that would be
introduced from this product that crispness of Soyaflakes when taken with hot milk. The
nutritional need is well taken care with specified products with specific targets. Our
distribution network should be strong enough to reach all the retailers and super markets
because most of consumers buy cereals from such places. Nowadays people are getting
aware about essentiality and nutritional capabilities of vegetarian food and it is a open
Soya is one the vegetarian food reach in protein content.
Kellogg in India

Company Profile
Kellogg Company (Kellogg) is an American multinational producer of breakfast foods,
snack foods, cookies, and crackers. The company also manufactures and markets
ready-to-eat cereals and convenience foods such as toaster pastries, cereal bars, fruit
snacks, frozen waffles and veggie foods. Kellogg manufactures and sells its products in
18 and 180 countries respectively.

Business Statistics
With projected annual sales of over US$ 9 billion, Kellogg Company, USA, is the world’s
leading producer of cereal and convenience foods. Founded and head quartered in
Battle Creek, Michigan, Kellogg.

Company manufactures products in 19 countries and markets products in more than 160
countries around the world. Kellogg India is a 100 per cent subsidiary of Kellogg’s
Company, USA, and is the largest player in the Indian breakfast cereal market. Kellogg
India has over 100 employees and has invested over US$ 30 million.

Company Strategy
ls
Kellogg believes in Diversity, and hence has a number of products in the market. Kellogg
has retained the same, simple strategy in recent years.  This strategy includes three
areas of focus for the company.
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Problems faced by Kellogg
When Kellogg Company entered India, the per capita consumption of breakfast cereals
was a low 2 gm per annum against 5 kg per annum globally. The Indian ready-to-eat-
cereal market, clearly, posed several challenges.

Kellogg India has been steadily overcoming these and has contributed to the rapid
growth of the breakfast cereal market in the country. Over time Kellogg India has
widened its product portfolio and expanded its range to include Frosties, chocolate-
flavoured scoops and taste variants of Corn Flakes. Kellogg India also adapted its
products to address the local need gaps.

For example it enhanced its focus on iron and calcium fortification with products like Iron
Shakti (meaning iron power) and Calcium Shakti.

Efficient supply chain network

Price sensitive customers necessitated a constant focus on cost reduction and supply
chain efficiency enhancement in India. Kellogg India has taken several initiatives in this
area:

1.
2.
Localised the entire raw and packing material requirement, saving import duty.
In addition it has adopted single sourcing strategy achieving scale efficiencies
 3. Located its manufacturing plant at Taloja, near Mumbai in the state of
Maharashtra, which is the largest market for breakfast cereals in the country
thereby optimising transportation cost
4. Set up a distribution network with storage hubs in all the key states of the country
(18 clearing and forwarding agents) serving over 200 distributors providing a
good reach.

Kellogg India: At a glance

1. Largest player in the breakfast cereals market.
2. 100 employees, Investments of over US$ 30 million
3. Factors for success:
a. Innovative marketing and brand-building.
b. Efficient supply chain network.
c. Customising products for India.
d. Strong support from parent.
4. For Kellogg, India is: A source for managerial talent and an important market•
Future plans, India: To continue its investment drive to grow the Indian breakfast
cereal market
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SWOT ANALYSIS

Kellogg is one of the world's leading producers of cereal and convenience foods, with
$11.8 billion sales in FY2007. It offers cookies, crackers, toaster pastries, cereal bars,
frozen waffles and meat alternatives. The company’s products are manufactured in 18
countries and marketed in more than 180 countries around the world. Kellogg is the one
of the most recognizable and traditional brand in ready-to-eat cereal product category.
High brand recognition and worldwide large scale operation provide the company with
an edge over its competitors. However, fluctuations in commodity prices and intensifying
competition could hinder the Kellogg's revenue and margin growth.

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Strengths

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a. High brand recognition: Kellogg’s suggest high quality, nutritional value,
value for money etc Kellogg offers its products under a large portfolio of well
recognized brands Some top brands have even become synonymous with
the category. Kellogg enjoys the best visibility amongst its peers in the
market.

b. Strong support from parent company: Kellogg India receives technology

inputs (in customising products to suit the Indian nutritional profile, developing
packing material for India, manufacturing process etc.) from its parent. Within
the larger management and strategic framework, Kellogg India has the
flexibility to adapt its operational strategy suited to the local environment.
Weaknesses

a. Customer concentration: During FY2007, Kellogg's top five customers

accounted for approximately 32% of its consolidated net sales and
approximately 40% of the US net sales. Particularly, Kellogg largely depends
on big retail chains to sell its product. Overdependence on large retail
customers could negatively impact the company's profitability and volume
growth.

b. Unorganised Retail Market: In India, the retail market and specially the
food processing industry is by and large unorganised. Majority of Indians buy
their daily needs from petty shopkeepers.

Opportunities

a. Emerging health consciousness: Over the past few years, there has been a
newfound emphasis on healthier eating. Consumers are showing increased
preference for fat-free and healthy food products. Food items containing trans
fat are losing market share as they are linked to cardiovascular diseases.
Rising health awareness among consumers is leading to a higher demand for
low carbohydrate and low calorie foods worldwide.

Also, rising consumer income had given them more buying power and they
can afford healthy food even it costs slightly more. 'Light' and ‘fat-free’
versions of snacks and desserts have experienced strong growth. It is
estimated that about 40% of consumers in the India are conscious of a
product's calorie and carbohydrate content. Kellogg's ready-to-eat cereal
brands are well positioned to meet the demands developing from the growing
health and wellness trends

As the literacy rate and income of the family is increasing in India, people are
becoming more and more conscious about their health and nutrition. So
people are ready to switch to healthier breakfast option. 78 % of the men are
between 15 to 49 age group and 89% of them are literate with 87% of them
employed. This makes the breakfast cereal business more attractive.

b. Rising foodservice sector: The total food market turnover in India has been
estimated at US$ 197.7 billion. It is the largest producer of fruits, vegetables,
milk, livestock in the world and its agriculture and food product exports have
been valued at US$ 106 billion. It is calculated that Indians spend about 50
per cent of their household expenditure on food items. And with more
disposable income in the hands of Indian middle class, they buying power is
increased tremendously.

Threats

a. Commodity cost fluctuations: Kellogg depends on commodities, such as

oats, grain, corn, wheat/flour, egg/dairy products, spices, sucrose
sweeteners, fruit and nuts, packaging materials and glass bottles, which are
used in its products, and are subject to price fluctuations.
In January 2007, the US President proposed to increase the mandatory
alternative fuel use from 7.5 billion gallons in 2006 to 35 billion gallons by
2017. This trend to use more alternative fuels increased the price of a bushel
of corn from $1.86 in 2005 to $6.7 in June 2008.

b. Intense competition: Kellogg faces intense competition across its product

lines and also in both domestic and international markets. Some of its
competitors like PepsiCo have substantial financial, marketing and other
principal factors of competition include new product introductions, product
quality, taste, nutritional value, price, and promotion. The company's products
have to compete with branded products and private label products, which are
typically distributed at lower prices.

PepsiCo's Quaker Oats, is perceived to offer healthier and more nutritious

cereals than Kellogg. In India Kellogg is facing huge competition from Mohan
Meakins. Products of Mohan Meakins are much cheaper than Kellogg’s
products and are more readily available in the local market. Middle class
Indian would prefer cheaper products even if they are little less healthy. If
Kellogg is not successful in introducing new products than its category share
and growth can also be adversely impacted.
STP (Market Segmentation, Targeting and
Positioning)

Segmentation
There are three "levels" of segmentation. Levels here refer to the trade off between
the difficulty of implementing a segmentation scheme and the benefits that result.

Since we are launching our product only the metros initially, we are taking into
consideration only the urban population in the middle and upper income groups.

I. The first level of segmentation involves personal characteristics—e.g.,

demographics. This is a fairly easy method of segmentation to employ
because we have a good idea of who is in each segment and we can easily
target these segments. India has a huge population of 48 Million men in
service and 25 million students. Indian females are 496 million in number out
of which around 135 million live in urban areas.
II. The second level is benefit desired—that is, segmenting on what someone
wants rather than who he or she is. India’s 45 million urban females in the
age group 25-50. They generally skip their breakfast while readying their kids’
and husbands to school and work respectively. We will provide them a
healthy and handy breakfast.
III. The third level is segmentation based on behaviour. Many young and single
Indians are tired of cooking the same old traditional breakfast again and
again. We are providing them with tasty, healthy and easy to make breakfast
in different flavours.

Targeting
As we have discussed earlier, our target will be Kids, single working men and women
and housewives of metros. We have two products for this target market Good
morning Sunny Boy and Lady.

Our promotion will target the housewives of metros who find it difficult to have
breakfast in the morning due to time constraint. India has 45 million urban females in
the age group 25-50. They generally skip their breakfast while readying their kids’
and husbands to school and work respectively. Good morning Lady will provide them
a healthy and handy breakfast.

Also, many of the housewives are wary of the children nutritional intake. India has a
huge population of 60 Million urban children between the age group 5-15. Good
morning Sunny Boy provides them a quick and tasty breakfast.

There are 28 million urban male in age group 20-29. 30% of them are staying away
from home and are single. They either skip their breakfast or have something which
is not really healthy. We are providing them with tasty, healthy and easy to make
breakfast in different flavours.
Positioning
Effective Positioning is based on:

Kellogg’s Good Morning Soya Products will position itself as a value for money, one
that is tasty, reliable, trustworthy and fun to eat. Its appeal will be “Healthy-tasty, fun
to eat”.

We will have three fundamental positioning themes

i.

ii.

iii.
Benefit Positioning: Soya Flakes provides a great nutritional value. Soybeans
are considered by some to be a "complete protein" source in that they provide
all the essential amino acids for human nutrition. A research states that:
"25 grams of soy protein a day, as part of a diet low in saturated fat and
cholesterol, may reduce the risk of heart disease”

Apart from that one more benefit is that it is easy to prepare and is less time

consuming.

User Positioning: We have positioned the user into three groups viz. Kids,
Urban women, and single young men.
Competitive Positioning: Our soya product will be a new, non-conventional,
healthy and value for money breakfast option.
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The Marketing Mix
Product

Good Morning
Sunny Boy
Good Morning is Defatted Soya Flakes (toasted) obtained from Soya bean seeds by the
process of cracking, dehulling, flaking, extracting, de-solventizing, to get a flakes with white
to creamish colour.

Constituents
Soya Sugar
Chocolate Syrup
Salt

Iron Niacinamide
Vitamin C  
Vitamin B6 Vitamin B1
Vitamin A Vitamin B12
Folic Acid Vitamin D

Good Morning Sunny Boy is the same composition as above. However, it will be available
in following shapes

1. Sphere shapes-chocolate.
2. Star shapes-chocolate.
3. Mixture of both with “Sunny Boy” shapes also in it.
The shapes are decided keeping children in mind.

Good Morning Lady is soya flakes fortified with Calcium, Iron and Iodine to fulfil the needs
of Indian woman. Other constituents are same as that of good morning.

There will be packaging of the following two types:

1. Flakes-chocolate
2. Flakes-strawberry

The SKUs for all the three brands will be of following sizes:

1. 35 g (all varieties except one with sunny boy shapes)

 2. 70 g (all varieties)
3. 200 g (all varieties)
4. 500 g (all varieties)
5. 1 kg (all varieties)

After some time more flavours will be launched giving the consumer more options. The
thrust will be on Indian flavours: –
a. Mango
b. Coconut Kesar
c. Rose.

Price
 Currently, 55 % of the price of a packet of Kellogg’s cereal is allocated to
marketing and profits, while 45 per cent is paid for all the ingredients, packaging,
labour and capital costs associated with manufacturing and distributing the product.

 Kellogg’s uses this pricing strategy in all of its markets, showing that the pricing
strategy is standardised.

 However, looking at the continuous loss of market share to Mohan Meakin’s, the
company has to set the price level at par with that of Mohun’s.

Following pricing is suggested based on the existing prices of Kellogg’s, Mohun’s and Indian
Consumer’s expectation. It is also taken into account that the actual cost of production will
be 60-65 % of the price of a packet of Good Morning.

Pack Sizes   Sunny Boy Lady Mohun’s

1.    35 g (except the mixture) Rs. 10 12 --
2.    70 g (all varieties) Rs. 18 20 --
3.    200 g (all varieties) Rs. 28 31 30
4.    500 g (all varieties) Rs. 60 66 60
5.    1 kg (all varieties) Rs. 98 108 127
The Prices are decided to target the customers of Mohan Meakins as well as the market that
has not been captured because of price barrier. The strategy is to focus on “economies of
scale” rather than “larger profit margins”.

 Kellogg’s gives its Distributors a margin of 5% and 12% to its retailers.

Whereas, the competitors give a margin of 10-15% to its distributors.

 To incentivise the retailers, discounts on volumes will be given to make them

partners in the “economies of scale strategy”

Schemes for retailers

1. 10% margin for retailers in metros where there is strong hold of Mohan Meakin’s. On
sale of every 15 kg of Sunny boy or Lady the retailer will be given a kg of anyone
one of them free.
2. Markets will be divided in sectors. Retailer or a group of retailers showing the highest
sale in any sector (minimum 1000 kgs) within six months will be given a holiday
package worth Rs. 5,000.
3. Attractive credit schemes will be extended to the retailers and distributors.

Place
1. Initially the Good Morning brand will be introduced in all the four metros.

2. After having a good look at the responses of consumers later it will be introduced in
other parts of India.

3. Today KELLOGG’s Chocos cereal brand is available in 50,000 outlets across the
country. Good Morning will make use of this extensive network and even strengthen it
with the PARTNERSHIP schemes.

4. Kellogg should have manufacturing plants near all the metros (It has just have
one plant in Taloja in Maharashtra and transporting of breakfast cereals is not easy).

5. Through Partnership Schemes, the distributors and retailers will be encouraged to

keep the stocks, reducing inventories with Kellogg’s.
Promotion

SALES PROMOTION
Smaller SKUs
Pack sizes of 35 g and 75 g are designed to target the following types of consumers:

 Testers: who want to test the product before start buying; if they get
satisfied, larger pack sizes will be bought in repeat orders.
 Seldom-ers: who do not have breakfast regularly, and so buy as and
when required, but do not keep stock.
 Low-Budget-ers: who have lower budgets for breakfast and cannot have
Good Morning daily as breakfast.

Schemes for Retailers

10% margin for retailers in metros where there is strong hold of Mohan Meakin’s. On sale of
every 15 kg of sunny boy or Lady the retailer will be given a kg of respective variety free.
Markets will be divided in sectors. Retailer or a group of retailers showing the highest sale in
any sector (minimum 1000 kgs) within six months will be given a holiday package worth Rs.
5,000.

Partnership Scheme
Dealers and distributors, who show sales figures more than a set threshold, will be made
PARTNERS of the Good Morning campaign. A Partner will have following benefits

 Credit period 50 % more than other retailers and distributors.

 Annual Festival for all the Partners with their families where the top three
partners will be recognised and rewarded.
 Advertisement aids from company to increase sales in the Partners areas
Aggressive Pricing
The prices of Sunny Boy and Lady

have been set lower than Mohan meakin’s. This will help in making inroads in the
competitor’s market share. Moreover, the traditional price barrier that Kellogg’s has
been facing will also be breached.

ADVERTISING

Theme Good Morning; It is clear from the demographic analysis and the sample survey that
Indians prefer traditional breakfasts like parantha, pudi, idli, dosa, sabzi-roti which are
usually oily, lacking in proper nutrients as well as very heavy. Moreover, there is also a
substancial number that skip breakfast because of price, time or the effort of making
breakfast or lack of good options.

Therefore, this campaign is focussed on creating awareness among the Indians

about importance of a good breakfast.
Basic theme:
 Happy families from various walks of life will be shown.
 Slogan “Say Good Morning to yourself” or “Khud ko Good morning
Bola ?”
 By having a healthy breakfast you can say good morning to yourself.

Phase 1: Teasers “KHUD KO GOOD MORNING BOLA ?” spread across all media

Phase 2: Advertisements showing lead actors being asked whether they said Good Morning
to themselves today. And then, getting explained that they can say good morning to
themselves by having a good healthy breakfast.

Phase 3: Lead actors having unhealthy breakfast being pitied that they still cannot say Good
Morning to themselves.

Phase 4: Introduction of Good Morning as the way of saying good morning to yourself.

Theme SUNNY BOY: This brand is targeted at children in age bracket 5-12 yrs. The mascot
of the brand will be sunny boy cartoon character and brand ambassador will be Darsheel
Safari.

 The central idea will be to show a boy who has the mascot friend. The
boy is faced with expectations and challenges and even then is always
smiling and always champion.
 Target mothers: who want their kids to be healthy & winning always
 Target kids: who will start liking and associating with the brand
ambassador.
 MASCOT-SUNNY BOY Brand Ambassador

Theme Lady: This campaign will highlight the various roles that an Indian woman plays, and
how she cares about the whole family. Now it is high time that she starts thinking about her
health and starts saying GOOD MORNING to herself.

 Brand ambassador will be Preity Zinta, because she personifies health-

conscious, aware and responsible Indian woman.
 She will be shown in various roles: working women, student, young
mother and then saying “I ensure that I say Good Morning to myself
everyday”

Brand Ambassador- Lady

INDIAN WOMAN

MANY FACES MANY ROLES

“You deserve Good Morning Lady “

CHANNELS - with tentative spending percentages
 Market Survey
1) What is your age?
30

25
25

20

15

11
10

5
2
1
0
1-18 18-23 24-30 30+

2) What is your gender?

30
28

25

20

15

11
10

0
Male Female

3) What is your occupation?

30

25
25

20

15
13

10

1
0
0
Employed Housewife Student Retired
4) You are living in a?
25

21
20
17

15

10

1
0
0
Metropolitan City Town Village

5) How many times do you have breakfast in a week?

20 19
18

16

14 13
12 11
10 9
8

0
Never 1-3 days 4-6 days Daily

6) Why don't you have breakfast daily?

30

25
25

20

15
13

10

1
0
0
I do not have enough I do not have good Breakfast is not very I do not have enough
time options importantt time

7) Who buys breakfast for you?

 18 17
16

14
12
12
10
10

2
0
0
My wife My mother Myself Others

8) Who much are you willing to spend on your breakfast per day per person?
30

25 24

20

15

10
8
6
5

1
0
upto Rs10 upto Rs25 upto Rs50 above Rs50

9) How much time do you (spend/ willing to spend) on preparing and eating your breakfast per
day?
18 17
16
14
14

12

10

6 5

4 3

0
upto 5 min upto 10 min upto 15 min above 15 min

10) What is your primary expectation from a breakfast?

 35
31
30

25

20

15

10
7
5
1
0
0
It should be tasty It should be healthy and It should be cheap and Others
nutritional filling

11) Which of the following is your preferred choice for breakfast?

16 15

14

12

10 9 9

8
6
6

0
Parantha, puri, samosa, Idli, wada, dosa, Sandwitch, fruits, eggs or Breakfast cereal
bread pakoda or halwa uttappam, poha or upma any meat ( cornflakes, muesli, oats
etc)

12) How many times in a week do you have cornflakes, muesli, oats or other breakfast cereals?
25

21
20

15 14

10

5
3
1
0
Never 1-3 days 4-6 days Daily

13) What do u like in the breakfast cereals available in the market?

 35

30 29

25

20

15 13

10 8

0
0
They are healthy and They are tasty They consume less time They are easily available
nutritional

14) What do u dislike in the breakfast cereals available in the market?

16
15

14
12
12

10
8
8

2
0
0
They are not tasty They are costly They cannot be Other reasons
substitutes for eggs

15) Where do you usually buy breakfast cereal from?

30

25
25

20

15

10
8

5
5
2

0
SuperMarket Kirana Shop Canteen Other

16) You eat your breakfast cereal with?

 35

30 29

25

20

15

10 8

0 0
0
Hot milk Cold milk Cream Other

17) Ideally how many servings should a packet of Breakfast Cereal have?

16
15

14

12

10
10
9

6
5

0
1-2 5-6 11-12 19-20

18) Would you buy a 100% vegetarian Breakfast Cereal that has all nutrients present in an egg
or meat?
35
32

30

25

20

15

10
7

0
Yes No

Findings
 Out of the total number of people surveyed (ie. 39) close to 50% have breakfast
daily.
 Most of the people skip breakfast due to lack of time.
  Close to 70% respondents are not willing to spend more than Rs25 on a breakfast.
 80% of the respondents spend 5-15 min on preparing and eating the breakfast daily.
 80% respondent’s primary expectation from the breakfast is nutrition.
 Most preferred breakfast is sandwich, fruits, eggs or meat.
 36% of the respondents never have breakfast cereal.
 The most liked factor in the cereals available in the market is nutrition and the most
unliked factor is cost.
 64% respondents purchase cereals from super market.
 Most respondents prefer hot milk over cold along with cereals.
 80% of the respondents would buy breakfast cereals if they provide all nutrients in
eggs or meat.

References