This paper presents a comprehensive marketing environment audit of the Kellogg Company, one of the world's leading cereal and convenience food manufacturers. Beginning with an overview of breakfast nutrition and the role of cereal in a healthy diet, the paper examines Kellogg's microenvironment across demographic, economic, technological, political, and cultural dimensions, as well as its task environment covering markets, customers, competitors, distribution, suppliers, facilitators, and public policy trends. The paper also reviews the company's business mission, marketing objectives, and strategic approach. It concludes with an assessment of the competitive challenges Kellogg faces and the importance of aggressive marketing to maintain market share in a maturing industry.
Breakfast is considered the most important meal of the day. It provides a good nutritional start for the hours ahead. The metabolism of the human body is at its peak from morning to noon, meaning more energy is required during this period. Nutritionists believe that breakfast should be the heaviest meal of the day, with meals becoming smaller as the day progresses. Cereal is a good source of carbohydrates — the body's primary fuel source. When the body does not get enough carbohydrates, it scavenges muscles for fuel, leading to a toxic condition known as ketosis.
In today's world of hectic schedules and demanding careers, a quick and healthy diet is essential. Cold cereals are healthy, quick, and easy to prepare. They often provide both carbohydrates (from the cereal) and protein (from the milk) — essential components for the body. Many recent studies have indicated that a bowl of cereal at the end of the day can help reduce temptation for fattier, higher-calorie foods. In addition, cereal also encourages the consumption of milk, which is an excellent source of calcium — an essential ingredient for bone health.
The Kellogg Company has been in operation since 1906 and is headquartered in Battle Creek, Michigan. Some of the products marketed by the Kellogg Company include Kellogg's, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, Special K, Murray, Austin, Morningstar Farms, Famous Amos, Carr's, Plantation, and Kashi.
Demographic: The company has sales operations in more than 160 countries worldwide. It operates 27 manufacturing facilities in the US and 22 manufacturing facilities outside the US. Tony the Tiger is a widely recognized Kellogg's emblem known to people of all ages around the world. [1] The characters developed for individual Kellogg brands were created to identify each product to consumers — this character-based approach has helped in marketing products globally. Kellogg's mascots and symbols transcend language and culture [2] and are easily incorporated into diverse cultural contexts. The company has used this strategy of pairing a marketing character with a brand name very effectively for all new products. The company also avoids advertising themes that belittle any group based on social, racial, ethnic, or religious traits, or any person because of age, sex, or disability. [3]
Economic: Kellogg's has utilized integrated business units and compensation incentive systems to increase accountability in cash expenditure and improve organizational functionality. Product sales have been increasing in the US as well as in other countries. The pricing and availability of products determines their profitability. Streamlining many operations in recent years has helped Kellogg increase its profit margin, freeing more resources for marketing and advertising. Kellogg's also increased the number and frequency of promotional offers — including more toys and DVDs in cereal boxes, tie-ins with movies, and charitable donations to local schools and charities. In 2002, a new "Volume to Value" strategy was introduced throughout the company, whereby more value was added to the product sold to the customer rather than simply decreasing the cost of the product.
Technology: Kellogg's continually employs new and innovative technologies to improve production and reduce the environmental impact of its factories on local ecology at all its manufacturing plants. Many of these innovations have earned the company awards and recognition in the countries where it operates. For example, Kellogg's plant in Querétaro, Mexico, was recognized in 2001 with the Clean Industry Award by the National Environmental Ministry (Certificado de Industria Limpia). Such awards and recognition have helped the marketing department project a positive and wholesome image for the company in local advertising. In addition, these new technologies have contributed to increased profits and reduced costs for developing new promotional material. [2]
Political: The advertising and marketing department must ensure that all promotional and advertisement materials comply with applicable federal, state, and local laws and regulations, including the self-regulatory guidelines of the National Advertising Division (NAD) and the Children's Advertising Review Unit (CARU) in the US. [3] In addition, the marketing and advertising departments must ensure that all foreign promotional materials are not offensive to the sensitivities and cultures of the countries in which they will be used. Advertisement themes should not contain excessive or unwarranted acts of violence and should be family-oriented. Extensive advertising in print, on radio and television, and via the Internet has allowed the company to leverage every available medium for effective promotions. [4] Marketing strategies must also observe a general code of ethics when preparing and distributing marketing material.
Cultural: Kellogg provides advertising that is truthful and not misleading to consumers, and it places its commercials with quality television programming. The company uses local cultural issues to its advantage and extensively promotes its brand image in the highly brand-conscious US market. The brand image concept is also very strong in Western Europe and is slowly gaining popularity in other countries around the world. In the US, where obesity is a significant concern and an entire weight-loss industry is marketed to the public, the "Lose 6 Pounds in Two Weeks" advertisement made a major impact. The program recommended eating cereal for two meals a day over a two-week period. As a result, sales of Special K increased by 14% and sales of Smart Start increased by 39%.
Markets: The market for products such as cereal, cookies, crackers, toaster pastries, cereal bars, frozen waffles, piecrusts, and cones exists in the US and in many countries around the world. These are fast-moving consumer products sold in all supermarkets, convenience stores, and wholesale stores. Kellogg has continuously worked to develop new products and maintains a dedicated team that conducts extensive market research prior to any new product launch. Based on projected cereal volume growth, strong results from product innovation, and the continued global rollout of convenience foods, manufacturers in this category are well positioned to deliver sales and earnings growth.
Customers: The nutritional and dietary needs of the population are constantly changing, as are food patterns and taste preferences. Experts and analysts continuously review the market to identify these shifting trends. In an international market, regional preferences and tastes may affect the sales of certain brands, and market expertise is essential to determining which brands will be profitable. Surveys are used to ensure that consumer expectations are met and that both existing and new products consistently satisfy the customer. Very stringent quality controls further ensure that the product is beyond reproach.
"Markets, customers, competitors, distribution, suppliers"
"Business mission, objectives, and push strategy"
The market for cereal, although expanding, is threatened by competing breakfast trends. Ready-to-eat cereal consumption has grown steadily for nearly a century, offering consumers good value (low cost per serving), convenience (just add milk), nutrition (grains, vitamins), and taste. The Kellogg Company must implement and facilitate a highly efficient and aggressive marketing plan if it wishes to maintain its current market share. The market is already well established with key players, is capital intensive, and carries significant public liability for the products it sells. The market share that Kellogg can obtain and retain over the years will ultimately depend on its product line and the advertising and marketing techniques used to sell those products.
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