Consumer behavior is a complex phenomenon to study the consumer certainly is not as rational as once believed. Marketers used to believe that if you provide the consumer all of the information then they would make a rational decision. However, we have learned that psychological and personality traits also play a large role in the decision making process. Kellogg itself learned this fact the hard way when it tried to enter the Indian market. In the 1990s, Kellogg's spent $65 million trying to enter the Indian market in hopes of gaining a small percent of the entire market share with its Corn Flakes cereal (Vaish, 2012). They ignored the buying habits of Indian consumers that were built upon thousands of years of breakfast habits and ultimately there market entry failed.
In the U.S. And other Western markets, one of the biggest trends has been the rise of private labels brands after the recession. As Kellogg CEO, David Mackay, described in 2009, "consumers still have a mindset of looking for value and trying to extract as much value as they can out of every dollar they spend (IndustryWeek, 2009)." Although the effects of the recession have been leveling off for years, consumer behavior can still largely be explained by consumers seeking a good value proposition. At the same time however, many consumers are also looking to save money by consuming packaged goods as opposed to more expensive alternatives. There are obstacles and opportunities for Kellogg's based on the current market conditions. Kellogg's marketing needs to focus in on various individual niches.
2.5 Kellogg's Market Positioning
Kellogg's current market position can be defined by a massive amount of competition in the ready-to-eat cold cereal market. Although Kellogg's is still the market leader, many other market players have been closing the gap (Shea, 2010). Companies like General Mills have been continuously stealing market share away from Kellogg's and an episode with contaminated cereals definitely did not help Kellogg's position. There are other competitive pressures as well. Many Americans have moved on to granola bars, rediscovered the virtues of hot meals such as oatmeal and eggs, and fallen under the spell of Greek yogurt (Leonard, 2015). As a result of consumer buying trends, some predict that the traditional American cereal breakfast will never fully recover.
In this environment, Kellogg's should place a significant marketing emphasis to promote the…