BCG Matrix Analysis of Kellog’s

Company
by Khushdil Kasi | Mar 1, 2017 | BCG Matrix Analysis |

Kellogg’s company, also known as, Kellogg and was formerly known as Kellogg’s of
Battle Creek founded by, two brothers, will Keith Kellogg and john Harvey Kellogg,
in 1906 at Battle Creek sanitarium. It’s headquarter is located at Battle Creek,
Michigan, United States. Kellogg Company is in the business of cereal and
convenience foods, which are as follow, cracker, frozen waffles cereal bars, cookies
and toaster pastries. It has production units in 18 countries; its geographical segments
and target markets are in 180 counties. Kellogg’s company largest production unit is
in Manchester, United Kingdom. Some of the famous brands the company are; corn
flakes, Cheez it, Morningstar farms, Cocoa krispies, Apple Jake and rice Krispies.

BCG Matrix of Kellogg’s

BCG matrix is designed by a private consulting management firm, for those
companies, which have multiple profit centers. It shows the position of each company
on the four quadrant graph in terms of company relative market share and industry
sale growth rate. BCG matrix identify the need of segment in terms strategic planning.
This four dimensional matrix comprises of four component, which are as follow,
Question mark, Stars, Cash Cows and dogs. Segments which lie in each quadrant
requires, distinct strategy from those of others. The operations of the company is
managed, by 9 different segments, which are based on geographical segmentation and
product category segmentation. Following are the segments of the company, The U.S
Morning Foods segment, which comprises of the following products; health and
wellness bars, toaster pastries, beverages and cereal. U.S snacks segment, which
include the following products; Cereal bar, fruit flavored snacks, cookies and savory
snacks, U.S specialty segment, kashi segment, Asia pacific segment. Detailed BCG
matrix of Kellogg’s company is given below;

Question Mark
Question mark are those segments, which are operating in high growth industry and
have low market share. U.S morning foods and kashi segments fall into the category
of question mark. Industry witnessed high sales growth in 2016 but unfortunately,
market share of Kellogg company U.S morning foods and kashi segments declined by
6 %.

Cash Cows
Segments which have low industry sales growth rate and high market share are
embraced in the category of stars. U.S specialty segment comes in to the fold of Cash
cows; this segment represent services of food away from home channel. U.S specialty
is low growth industry and Kellogg Company is generating high revenue out of this
segment. In 2014 and 2015 there was a slight decline in the revenue nonetheless, 4th
quarter of 2016 has witnessed tremendous increase in the revenue. Kellogg’s should
execute product development and market diversification strategy to generate more
revenue from the mentioned segment.

Stars
Stars include those segments which have low industry growth rate and high market
share. U.S snacks is incorporated in to the category of stars. Despite the low industry
sales growth rate U.S snacks segment of Kellogg’s company generates high revenue
amongst all segments. Europe segment also falls in to the stars category. Such profit
centers should execute the following strategies, Product development, market
development and market penetration.

Dogs
Dogs comprises of those segments which have low industry growth rate and low
market share. Asia pacific segment of Kellogg’s company comes into the category of
dog. Retrenchment and liquidation strategies should be executed on such segments.
Application of BCG Matrix on Kellogg’s
This section assesses the BCG matrix of Kellogg’s by focusing on four key brands of
the company, namely, Kellogg’s Corn Flakes, Coco Pops, Nutri-Grain and Body
fortress.

Figure 2: BCG matrix of Kellogg’s, UK

Source: Created by the author
From the analysis of BCG matrix of Kellogg’s, it is identified that Kellogg’s Corn
Flakes is a star product of the company which has high growth rate and market share
in the UK. Kellogg’s Corn Flakes is a pioneering product of the company which is
best and original since 1906. Supreme crunch and taste of Kellogg’s Corn Flakes
make it unique in the market and which is considered as a true legend in the cereal
segment. In the ready-to-eat cereal market in the UK, Kellogg's Corn Flakes is the top
brand. More than 40% of the households in the UK prefer Kellogg's Corn Flakes in
their home (Kellogg’s, 2017b).
In question mark quadrant, Coco Pops of Kellogg’s included. This product of
Kellogg’s has low market share. However, it has high growth rate. Kellogg’s (2017c)
highlighted that Coco Pops is a trusted brand of Kellogg’s for over 50 years. The great
chocolaty taste of Coco Pops makes it ever time favourite Breakfast Cereal. Vitamin
content in the Coco Pops cereal series assists to ensure the maintenance of normal
function of bones, teeth and muscle. It is highly suitable for the healthy lifestyle of
UK consumers and which offers a balanced diet. Even though market share of the
product is low, healthy food habit among UK consumers result to high growth rate of
Coco Pops in UK market.
Nutri-Grain of Kellogg’s is included in the cash cows quadrant, and this product has
high market share and low growth rate in UK market. Nutri-Grain Bars are a tasty mix
of favourite ingredients in a satisfying bar. A balanced diet and healthy lifestyle are
the key advantages of this product. Within two years of implementing the product, the
company is successful in attaining 50% market share in UK market (Kellogg’s,
2017a). However, due to changing food habit of the customers, the growth rate of
Kellogg’s Nutri-Grain is low.
Body fortress of Kellogg’s is included in dogs category and which has low market
share and growth. Kellogg’s Body fortress contains vitamin D, 6 B vitamins and iron.
It is another key breakfast cereal introduced by Kellogg’s with an intention to obtain a
leading position in the global market (Kellogg’s, 2017d). However, Body fortress was
not able to reach up to the expectation of the company and which is unsuccessful in
the market. Lack of compliance with UK customer demand and the taste is the key
reason for the failure of the product in UK market.
Thus it can be deduced from the BCG analysis Kellogg’s that Corn Flakes is the main
product of the company in UK market which improved the company performance and
profitability. Proper innovation and effective promotion of Coco Pops will aid the
Kellogg’s brand to improve the product from question mark to star quadrant.
As Body fortress market share and growth rate is lower, it can be implied that the
company can either liquidate or divest the product. The continuing investments in
dogs do not promise returns and hence these are the better strategic options. As Cash
cows generate a better figure of profit, it is necessary to induce their growth with
adequate investments. But as shown by Hitt, Ireland and Hoskisson (2012), a higher
investment is not necessary as they are the foundation of the company. Nutrigrain
with a market share of 5% offers a stabilised cash generation which can be milked to
induce the growth of star product, cornflakes. At the same time, Cocopops’ market
share is lower which indicates requirement of higher investments.