KELLOGG’S IN INDIA: A BRAND STRATEGY AND BRAND MANAGEMENT STUDY:

Kaavish Kidwai 2010089

Kiran Karkera 2010093

Md. Shahnawaz Akhtar

Niraj Thakur

Syed Shakeeb 2-1-278

Introduction:

Breakfast Cereal is a market that has become popular in India only in the Past 10-12 years. The

concept is very western, American to be specific and consists of grain cereals consumed with milk

with added tastes, flavours and sweeteners. It is a convenient, ready to eat snack that takes less

time to whip up and consume and provides all the essential nutrients required to sustain one

throughout the day.

Various grains and flavours are available targettting health freaks, diet conscious, carbohydrate

avoiding or protein loving people, women and children with chocolate preferences or sweet tooth.

Kellogg’s has been one of the dominant market leader, providing breakfast cereal in the United

States. Kellogg's was founded as the Battle Creek Toasted Corn Flake Company on February 19,

1906, by Will Keith Kellogg as an outgrowth of his work with his brother John Harvey Kellogg at

the Battle Creek Sanitarium following practices based on the Seventh-day Adventist Christian

denomination. The company produced and marketed the hugely successful Kellogg's Toasted Corn

Flakes and was renamed the Kellogg Company in 1922. It is a is a producer of cereal and

convenience foods, including cookies, crackers, toaster pastries, cereal bars, fruit-flavored snacks,

frozen waffles, and vegetarian foods.

Launch

Kellogg’s, three years after the barrier to international trade had opened in India, decided to launch

its number one brand “Corn Flakes”. Kellogg’s launched in India in September 1994 with an initial

investment of US $65 million. Their initial offering in the Indian market included cornflakes, wheat

flakes and Basmati rice flakes.

Positioning at the time of the launch:

When Kellogg’s entered the Indian market in 1994 it positioned itself on the health platform,

highlighting the nutritional values of the brand. This was done keeping in mind the following fact:

In the initial stage Kellogg’s also tried to position itself as an alternative to traditional Indian

Breakfast which they very quickly realized was not a great idea. It was too much of a risk and a

gigantic task to overcome eating habits inculcated over centuries and hence they did some re-

thinking and took a leaf from the marketing strategy of Nestle’s Maggie. They latched onto

the supplement positioning and came out with a campaign which stated that Kellogg’s corn flakes

come in where the Indian breakfast stops. In other words if the Indian breakfast gives the child 85%

nutrients the rest of the nutrients can come from Kellogg’s. The positioning of the food supplement

was taken by Kellogg’s. It was saying to the Indian consumers “eat whatever breakfasts you want to

eat but to get that extra nutrition have Kellogg’s”.

Brand Personality

Kellogg’s is considered to be Sincere, honest and a cheerful brand.

Competition and competitors

Kellogg’s faced a tough competition from the below mentioned brands and products.

Champion oats

Mohan Meakins

Though the competition was tough, Kellogg’s sustained against these competitors by brand building

through advertising and investing behind key brands. They also introduced a limited edition Kellogg’s

Chocos Spider Man 2 “web designed cereal”. In order to bring in the Indianized feel Kellogg’s came

up with different brand names such as “Shakti” which appealed to the Indian consumers. They also

did some modification with the packaging and used it as an effective marketing tool for brand

communication and on-shelf differentiation.

Factors for success

Efficient supply chain network

Price sensitive customers necessitated a constant focus on cost reduction and supply chain efficiency

enhancement in India. Kellogg’s India has taken several initiatives in this area. They localized the

entire raw and packing material requirement which saved import duty. In addition it had adopted

single sourcing strategy achieving scale efficiencies. They 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 optimizing transportation costs. They also 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 to everyone. They optimized overheads by giving distributors

larger responsibility for sales, thus bringing down the strength of its internal sales force. They also

deployed Oracle 11i based ERP to enhance supply chain transparency leading to lesser inventories

and better service levels. Other locally developed systems help monitor stocks and movement on a

daily basis.

Customizing products for India

Over time Kellogg’s India has widened its product portfolio and expanded its range to include

Frosties, chocolate-flavored scoops and taste variants of Corn Flakes. Kellogg’ss focused on the

existing need gap in Indian market and tried to fill it. For example, they came up with a product

named “IRON SHAKTI” and “CALCIUM SHAKTI” which focused on iron and calcium fortification.

Strong support from parent

Kellogg’s being a strong player in US market had a huge technological advantage over its competitor

and hence Kellogg’s India received good technological inputs which helped them in customizing

products to suit the Indian nutritional profile, developing packing material for India, manufacturing

process etc... Within the larger management and strategic framework, Kellogg’s India has the

flexibility to adapt its operational strategy suited to the local environment.

Innovative marketing and brand-building

Kellogg’s India has been taking various initiatives to overcome the low awareness of breakfast

cereals. They have sustained brand-building through advertising and investing behind key brands.

They introduced a limited edition Kellogg’s Chocos Spider Man 2 “web designed cereal” which is a

part of the global association between Kellogg’s Company and the movie Spider Man 2. Apart from

this they conducted school contact programs and had active interface with opinion leaders – CFTRI,

the government, independent agencies etc... They also adopted brand names that appeal to the

Indian consumer such as ‘Shakti’ which means power. They also used packaging as an effective

marketing tool, for brand communication and on-shelf differentiation. They built image through

recycling and reusing, improved access to health and human services in local communities. Kellogg’s

works with organizations and programs with proven results that improve lives around the country.

Leveraging the India Advantage

Kellogg’s India has been leveraging Indian managerial talent by moving Indian managers to other

countries. The Indian team also manages neighbouring countries like Sri Lanka, Bangladesh and

Nepal.

1) Portfolio: Launched Corn Flakes in 1994. Over the next few years Indian cereal buyers were

introduced to Kellogg’s Wheat Flakes, Frosties, Rice Flakes, Honey Crunch, All Bran, Special K and

Chocos Chocolate Puffs – none of which have managed to replicate the success they have

encountered in the West. Acknowledging its poor performance in India, Kellogg’s decided to sell

biscuits as a strategy to establish its brand equity. Kellogg’s biscuits are produced only in India and

there are six flavors – Chocos, Glucose, Chocolate Cream, Badam, Pista and Cashew. Kellogg’s

launched Chocos chocolate-coated cornflakes in September, 1996, followed by Frosties sugar-

encrusted cornflakes in April, 1997.

2) Brand Evolution: In 1994 it positioned itself as health food, highlighting the nutritional value of

the brand. This was done because of the fact that as per 1991 census, 40% of Indians were below the

age group of 18 who needed nutritious food i.e. the target market of the brand. Kellogg’s started

with the tagline “Jaago Jaise Bhi, toh Kellogg’s hee”. The idea behind its communication seems to be

of getting the product on the breakfast table. In 1996, they launched Kellogg’s Chocos & Frosties

which were sweet in taste in order to satisfy Indian’s sweet tooth. In early 2000 they changed their

positioning from nutrition to fun filled food. For this the organization spent around Rs. 25 Crore on

advertising and promotional activities. In early 2002 Kellogg’s came up with a tagline “Naye saal ki

sahi shuruwat, lo Kellogg’s hee”. In 1998 Kellogg’s understood that their global strategies won’t work

in India. So, they Indianized their campaign by launch of Mazza range of products. This was done in

order to suit the Indian Palette.

After the success of Kellogg’s Cereals, the organization launched Kellogg’s Biscuits in order to

leverage the brand equity. This was its first entry in convenience food products. This particular

biscuit was the only product at that time which contained all six vital vitamins. This was one of the

points of differentiation for Kellogg’s biscuits.

To further leverage the brand equity, Kellogg’s in 1998 launched Badaam Crunch Cereals which

contained almonds and raisins. This was after the success of wheat flakes, corn flakes and rice flakes.

Kellogg’s commanded a market share of 55 % in 1995, which increased to 57% by 1998. After this,

they saw a slump in sales. At present Kellogg’s command a market share of 70% in cereals market

with threats from PepsiCo’s Quaker Oats looming large over their head.

The Socio Economic scenario for Kellogg’s also changed over the period of time. In 1994 at the time

of launch, its strategy was of premium pricing, so they were targeting upper middle class or upper

class ignoring middle class which comprises of major chunk of the Indian population. In 2003, they

changed their strategy and targeted the mass market with affordable pricing of its products.

INITIAL STRATEGY:

Indian sub-continent found the whole concept of eating breakfast cereal a new one. Kellogg’s would

not only have to promote its product but the very idea of eating breakfast cereal. But people treated

it only as a novelty purchase. The taste was to the liking of some, but the product was too expensive.

A 500 gm box cost a third more than its nearest competitor. Kellogg’s kept the pressure on by

releasing Wheat Flakes, Frosties, Rice Flakes, Honey Crunch, All Bran, Special K and Chocos

Chocolate Puffs but neither found success.

Kellogg’s did not go in for a positioning strategy and attempted to tackle the entire mass market.

They also did not account for the various buying differences in the consumer class. Kellogg’s went

wrong in trying to make a western product appeal to Indian tastes without localizing their offerings.

They did not account for the strong cultural elements associated with breakfast and rather than ease

the consumers in slowly to their products they tried to initiate a major shift in breakfast patterns.

Kellogg’s had to persuade Indian families to abandon their aloo-paratha and idli-sambar, but their

real battle was to get Indians used to adding cold, not hot, milk to cornflakes.

The company then tried to 'Indianize' the brand. It launched a Mazza-branded series of fusion

cereals with flavours such as mango, coconut and rose but the results were disastrous. The company

tried to counter the poor off take for its breakfast cereal brands by looking at alternate product

categories. Yet the Kellogg’s main stay offerings saw frenzied marketing activity from the company's

end in order to establish the Kellogg’s brand equity in the market. Kellogg’s wanted to remain aware

and visible to the consumers and on the shelves. They intended to launch more than one new

product onto the market every month. These rapid-fire launches were supported with extensive

below the line activity such as consumer offers. Their biscuit ranges were a success with the children

but Kellogg’s struggled in the cereal category. Kellogg’s made subtle taste alternations but the prices

remained high.

The expansion plans of Kellogg’s India, the Indian subsidiary of the $9-bn Michigan-based

convenience-food giant Kellogg’s company, were underway despite its less-than-heartening

performance. Kellogg’s India, the market leader in the cereal market, introduced a new range of

products like crackers and cookies, along with a fresh range of cereals. The new brands from the

Kellogg’s table, which were proposed to be launched, included cheese-it crackers and keebler

cookies. Kellogg’s expanded its cereal range — with cornflakes, wheat flakes, chocolate-flavoured

flakes and lastly, basmati flakes. Kellogg’s also diversified into biscuits, which were specifically made

for the Indian market. Kellogg’s had launched a slew of grain-based products such a 'rice krispies

treats' and 'nutri-grain' cereal bars. The company had also announced plans to import and market

other grain-based products as well as breakfast cereals. Initially Kellogg’s targeted children, via its

Chocos, Frosites, Honey Loops brands by focusing on fun and adventure. It had tie-ups with Star

Wars, Superman during the release of Star Wars: Revenge of the Sith and Superman Returns. They

also had animated mascots like Tony the Tiger, monkey, Choco, The Bear to target children. They

focused on the delicious taste and chocolate/sweetness factor to target children. For advertisements

Kellogg’s has heavily targeted children’s programmes. They were also looking at collectibles and

freebies as an effective, long-term marketing strategy to widen customer base, enhance and

broaden the product life-cycle, beat the competition and get around the price-conscious consumer.

RECENT STRATEGY:

After eight years in India, Kellogg’s seems to have woken up to the fact that it needs a different bill

of fare. So there would be be less of the cornflakes, more snap, crackle and pop coming from

munchies. Kellogg’s has begun to target women in earnest. Leveraging on the growing concern

about health & nutrition among Indian women, FMCG companies are aggressively pushing niche

products to address specific needs of this consumer segment.

Ads focused on bringing family together for a healthy fun breakfast, focusing on health benefits like

iron for memory, the new fitness breakfast. Frosties and Chocos have positioned as fun and healthy

foods for kids, desirable breakfast material. Chocos was also available as a separate snack pack for

those who preferred to munch on it without the milk. Chocos was also re-launched with more focus

on taste and health benefits. Each product category has a strong individual position and specific

target group from women, to health freaks to children. Each product also had a separate mascot or

Brand Ambassador, a different value proposition and Brand Characteristics. Honey Loops had

sweetness and health, Chocos had taste and health benefits, Special K and Bran Flakes were for diet

freaks, Kellogg’s Cornflakes was positioned as the complete family breakfast. Thus Kellogg’s

targeted individual family members and their characteristics and also family as a whole.

Kellogg’s now enjoys a healthy 60 per cent share in the Rs 400-crore cereal market in India, is of late

facing stiff competition from international players, such as Nestle and Unilever in the breakfast

segment. Original breakfast cereal maker Kellogg’s India has begun exploring new formats of cereal

consumption, category segmentation and localisation, in the Rs 250-crore small but rapidly growing

breakfast cereal market. Kellogg’s India is also in the process of rolling out its re-launched muesli

brand Extra and plans capacity expansion at its Taloja plant on an ongoing basis.

Kellogg’s Company decided to drop the popular licensed characters Spiderman and Shrek to

promote its cereals and snacks. The guidelines will not apply to characters that Kellogg’s owns- like

Tony the Tiger. The licensed characters are much more powerful than company-owned characters

like Tony the Tiger. Kellogg’s says it won't promote foods on television, radio, print or the internet

through advertising that reaches audiences, at least, half of whom are under 12 years of age, unless

every food serving has less than 200 calories, no trans fats and under 12 grams of sugar. It plans to

phase out ads of all products that fail to meet these nutritional guidelines. About half of Kellogg’s

products sold in global markets do not meet these criteria.

Kellogg’s has found itself under fire for launching Krave, a breakfast cereal with a chocolate filling,

aimed at 16- to 24-year-olds. The reaction has at times been almost hysterical. Earlier this year

Kellogg’s also drew criticism for advertising Coco Pops as an after-school treat.

The American multinational wanted to reposition itself as a convenience food company from making

just cereals. But now, Kellogg’s pulled out of the extruded snack food market to focus on its main

strength which was breakfast cereal. Kellogg’s decided to stop selling the Cheeze-It range of cheese

based snacks. Kellogg’s also withdrew its chocos line of biscuits as the sales volumes did not have

the desired impact. It continued to expand its range of cereals with offerings like Chocos Planet and

Stars etc. Kellogg’s, which has over 70 per cent value share in the ready-to-eat cereal business in

India, recently introduced corn flakes that are "98 per cent fat-free" and claims it helps women who

follow a parallel exercise and calorie-control regimen to reduce weight. This cereal is selling briskly.

Muesli is now sold in many versions—'fat-free', 'wheat-free', 'gluten-free', 'nut free' or 'sugar-free'.

No wonder the breakfast cereals market in India has more than doubled between 2003 and 2007.

Newest addition to the Kellogg’s family is the multi-grain cereal, Honey Loops. Made of wheat, corn

and barley flours, and enriched with vitamins A, B, C, the cereal makes for a healthy bowlful at

breakfast, or even between meals as a snack, if your child likes it enough. The cereal is also fortified

with iron, calcium and zinc. Besides, as its name suggests, Honey Loops is honey-flavoured, so it's

likely to be a favourite with most children as they tend to have a sweet tooth.

After concerns over price issues, Kellogg’s has recently launched more affordable products for the

Indian market. Kellogg’s has started launching small packs for its breakfast cereal foods as snack

packs. They have launched a special K series for women to specifically target women on health

benefits.

Kellogg’s has appointed Karishma Kapoor and Lara Dutta as its brand ambassadors. Kellogg’s felt that

Lara Dutta personified the Special K woman to the T. The Special K woman is feminine, positive, and

loves the confidence that comes from the weight that she believes is right for her. She eats and

exercises in a simple and balanced manner.

Kellogg’s has terrific brand equity, but what makes it strong can also be a weakness because it is

associated with brightness, morning-time and sweet cereals.

Based on the experience so far, the company has now realized that they need to focus on taste more

than health benefits, although the image of the brand for offering healthy alternative for breakfast

will not be abandoned. In a country where roadside food stalls do brisk business by selling seemingly

not so hygienic food, the taste factor has to be cashed in on.

The company has introduced new product with various flavours for kids. To get their positioning

correct, they have even planned to re-launch Chocos as a tastier and healthier food for breakfast.

The brand certainly enjoys trust due to strong quality perception. The idea of women losing weight

in two weeks has made women connect with it and now kids. Recently launched Heart-to-Heart

oats, a product made of wholegrain oats targeted at males over 35 years of age. So, the brand has

managed to establish a fairly good connect with the Indian consumers by gradually establishing it as

tasty and healthy family breakfast. The successful “special K” campaign is still strong. Roping

Karishma Kapoor earlier and now Lara Datta also is a good move as they fall in line with the brand

personality.

The company can be said to use 360 degree marketing campaign. It consists of TVCs, print ads, radio

ads, kiosks in malls etc.., visibility drives at point of purchase etc...

Recently they have been focusing substantially on social media. They even have a micro site on

Yahoo.

The branding strategies that has made the brand a success lately are the focus on taste , functional

benefit of getting a better shape within two weeks depicted through special K and the emotional

benefit of becoming special and being loved by dear ones.

With their move of lowering prices, new avenues for distribution are open to them. With products

starting even from Rs.10, they can penetrate the market through presence in smaller retail outlets. It

has also helped the company to increase their presence and acceptability in tier 2 towns.

In Oct, 2010 they increased the retail margin for organized retail stores up to 25%. This was to

reserve good shelf space for the brand in wake of rising sales for the in-house brands introduced by

retail stores, e.g. Tasty Treat by Future group.

Thus Kellogg’s has started niche targeting through highly specialised products besides its flagship

products and has focused on nutrition and health and even engaged in corporate social

responsibility and corporate governance to enhance its image and brand equity.

Future Strategy:

1) Identifying gaps in healthy food consumption and segmenting the ready-to-eat cereal

category. Localised variants such as mango and honey and the low-priced KPak bringing in

volumes. The Indian subsidiary is now among the fastest growing markets for the $12-billion

US-based Kellogg’s though its contribution to the company's global sales remains marginal.

2) The middle - class market has grown considerably and therefore people can now find these

products more affordable. Since Kellogg’s is now strongly repositioning itself as a healthy,

nutritional brand, it can associate itself with intellectual programmes like quizzes and have

intellectual puzzles on its cereal boxes.

3) Free collectibles for children still remains a lucrative way of getting children to buy more

and complete their collection. It also increases the amount of daily consumption done by

children.

4) The cereal flakes can be compressed and sold as on the go nutritional bars for busy people.

Executives and other people who are too busy to stop and eat properly can be targeted with

quick easy to consume snacks that also tout nutritional and health related values.

5) Kellogg’s can also launch impulse snacks, which has a market potential of $ US 3 billion.

Kellogg’s can launch chocolate snacks chips which can be positioned as a “Healthy fun filled

snacks” .The target market should be teenagers and young adults (Age group 13-25).

6) Kellogg’s can also launch Health drinks which can be mixed in milk to be consumed in

breakfast. This goes with its positioning also as well as it can add on the breakfast menu for

consumers.

7) Kellogg’s can indulge in providing healthier options to sweets and candies and associate

itself with children’s outdoor activities as opposed to video games and other plethora off

indoor options available to children, thus emphasising its health image.