ride in India
A study of Indian Consumer
Submitted by Adarsh Kumar Antony Konnoth Ankur Talreja Joshua Noel
INTRODUCTION
About all the cycles we talk about, perhaps the most important of them is Natures cycle With good times there comes the anticipation of bad times. This is a cycle that goes on and on. Old habits die hard, especially when it comes to Indian eating habits. When Kellogg India Ltd. (Kelloggs), the wholly owned subsidiary of the US$ 7-billion Kellogg Company, entered the 3000- ton cereal market in 1994, little did it realize the importance of the adage. It had a clear game plan to position itself on the health platform, highlighting the nutritional values of the brand. With respect to our Project report on Kelloggs India, the overseas company has seen the picturesque of high tides to low tides. Our report will explore the reasons behind the failure of Kellogg and how it succeeded after its second entry. Studying the marketing mix adopted after second entry. The journey from 1994 to present, 2011 has been full of large scale Ups and Downs. Our project report is dedicated to get the larger insight of all the related prospects of the firm. Our project will also discuss about the adopted marketing mix of the Kellogg. The marketing mix is the set of marketing tools that the firm used to pursue its marketing objectives in the target market. McCarthy classified these tools into four broad groups that he called the four Ps of marketing: Product: It is a tangible good or an intangible service that is mass produced or manufactured on a large
scale with a specific volume of units.
Price: The price is the amount a customer pays for the product. The business may increase or decrease the price of product if other stores have the same product. Place: Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet. Promotion: Promotion represents all of the communications that a marketer may use in the marketplace. Promotion has four distinct elements: advertising, public relations, personal selling and sales promotion. Marketing mix decisions must be made for influencing the trade channels as well as the final consumers. The four Ps represent the sellers view of marketing tools available for influencing buyers. From the buyers point of view, each marketing tool is designed to deliver customer a benefit.
FIRM'S OVERVIEW: KELLOGGS
A 1906 established firm, it thoroughly enjoyed the status of top most cereals companies around the globe. When Will Kellogg accidentally invented a new breakfast food in Battle Creek, Michigan in 1894, he did not realise that he was on the threshold of forming a major food manufacturing company. His name would become one of the most instantly recognised throughout the world. It has four main divisions covering North America, South & Central America, Asia Pacific, and finally Europe, Africa and Middle East. Today, Kelloggs is an American owned organisation that has a true global market in the late 1980s, the company had reached an all-time peak, commanding a staggering 40 per cent of the US ready-to-eat market from its cereal products alone. By that time, Kelloggs had over 20 plants in 18 countries worldwide, with yearly sales reaching above US $6 billion. But with inception of 90s, the company started regaining the pressure from its rival, The General Mills. The working force of the company was accused of being unimaginative. As a result the company started looking at the other markets rather than US and that of UKs. As a result, in 1994, three years after the barriers to international trade had opened in India, Kelloggs decided to invest more than US $30 million into launching its number one brand, Corn Flakes. Currently Kellogg is the leading producer of cereal & convenience food of the world with total revenue in excess of US $ 12 billion. It currently has 18 plants worldwide which produces more than 50 different brands and sells in more than 180 countries across the world.
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BREAKING OF STAGNANCY-THE FORAY STORY
With the strategy of the company to break the series of stagnancy in UK and US for a decade, the alternative to look beyond resulted in foray of Kelloggs in India. As the Government of India, open the doors for international trade, new firms found Indian market an interactive enough to set up their operations here. Kelloggs was also a part of the series. Kellogg was the wholly owned Indian subsidiary of the Kellogg Company based in Battle Creek, Michigan in the United States. But the Indian consumer as habituated, consumed regularly the tradition breakfast composed of Paranthas, idli sambar, poha, milk (Varying from region to region) etc. To make and create a demand for the people who are already accustomed to their own eating habits was a mammoth task in front of the company. While this meant that Kelloggs had few direct competitors, it also meant that the company had to promote not only its product, but also the very idea of eating breakfast cereal in the first place. The first sales figures were encouraging, and indicated that breakfast cereal consumption was on the rise. However, it soon became apparent that many people had bought Corn Flakes as a one-off, novelty purchase. Even if they liked the taste, the product was too expensive. A 500gram box of Corn Flakes cost a third more than its nearest competitor. However, Kelloggs remained unwilling to bow to price pressure and decided to launch other products in India, without doing any further research of the market. Over the next few years, Indian cereal buyers were introduced to Kelloggs 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.
INCEPTION OF THE LAUNCH OF PRODUCTS
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. The Indian sub-continent found the whole concept of eating breakfast cereal a new one. Indeed, the most common way to start the day in India was with a traditional regional breakfast. While this meant that Kelloggs had few direct competitors it also meant that the company had to promote not only its product, but also the very idea of eating breakfast cereal in the first place.
HURDLES IN INDIAN MARKET AS A NOVICE
Cultural factors and eating habits population not used to processed foods Kellogg pitched itself as an alternative to the regularly consumed breakfast. The Indian breakfast is heavy and there is a feeling of fullness at the end of an Indian breakfast. What with oily Parantas, Puris and Dosas, the feeling of fullness is real and not imagined. Kelloggs Corn flake breakfast does not give that feeling of fullness and that went against the grain of having a full breakfast. In short after having a corn flake based breakfast the Indian consumers were still hungry. Also Indians have spicy and hot food for breakfast. To ask them to eat the sweet tasting and cold corn flake breakfast was too much of a sweet breakfast for the Indians to digest. Easy availability of low-priced traditional breakfast Indian breakfast is known for its variety. There can be 30 types of Dosas (there is a restaurant in Hyderabad that offers 99 types of Dosas!) or Idlis, Parantas or other types of native Indian breakfast items. Indians are used to a variety and one item that is eaten will not be on offer for the next two or three weeks. Asking Indians to have the same type of corn flake based breakfast was too much of a cultural change for the Indians to accept.
Low awareness about processed foods Low awareness about processed foods and Calorie requirements about various diet plans to be followed from health prospective. Also Kellogg in its advertising campaigns hinted that the Indian breakfast was not nutritious and that Indian breakfast was not very good for health. This deeply hurt the sentiments of the home maker. The home makers said to themselves We have eaten and served the Indian breakfast for decades and centuries. My family is doing fine. Once the home makers ego was hurt they psychologically turned themselves against the concept of corn flake based breakfast. Price sensitive customers Indian customers are very price sensitive. With Kellogg price a third more than its nearest competitor it created an image of being a high class product and also pushed it out of reach of just liberated Indian middle class. Considering all these challenges, Kellogg India required to come up with a real brand equity and a framework to convince Indian consumer to get out of from the long following breakfast eating pattern and face to an entirely new range of products offered by the company.
THE INITIAL FAILURE
With so much of global exposure, success and the well renowned value that the company enjoyed in the world market, the question that stuck in the mind is what is that that led to the initial failure in Indian market with its foray. India is a country that has a history that comprises of traditional practices, that also includes the regular and long followed eating habits. Kelloggs believed that it is going to introduce the new breakfast product, heavily on the quality of its crispy flakes. But pouring hot milk on the flakes made them soggy. With this it was also failed in understanding the very needs and taste of Indian consumer, perhaps the HOMEWORK done was not good enough. Kellogg's failure was the fact that the taste of its products did not suit Indian breakfast habits. Kellogg sources were however quick to assert that the company was not trying to change these habits; the idea was only to launch its products on the health platform and make consumers see the benefit of this healthier alternative. Another reason for the low demand was deemed to be the premium pricing adopted by the company. The prices of its products were way too much than the nearest competitors like the Mohan's Cornflakes. Kellogg Prices Focused on Market comp Rs. 21 per 100 gm, Affluent consumer Premium and middle-level Mohan's Cornflakes (competitor) Rs 16.50 for 100 gm Mass consumer Small-level consumers & retail stores as well
STEPS TOWARDS SUCCESS
The failure that the company witnessed with its launch, did not stays for longer. The mistake that the company did initially in judging the Indian market was revamped as soon as company realized that the long continued policies is not going to work here. There were several factors that lead to this progress. Prices reduction Kelloggs increase the retail packs of different sizes to cater the needs of different
consumers group Kelloggs repositioned the product as tasty nutritious food Products were not positioned in premium categories Indianising the products by introducing the sweeter product On ground promotion activities like Kellogg health week and free samples distribution in
schools and to housewives. Projection of products as fun-filled' brands rather emphasizing only on the nutrition
value.
PROPOSITION & POSITIONING BY KELLOGG
From the day Kelloggs forayed into INDIAN market, several parameters are taken care of while launching the product. When Kelloggs 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: The 1991 census had already revealed that 40 per cent of Indians were below the age of18- its prime target of growing children/ young adults who needed the right nutrition, besides mothers who needed Later the company emphasized on more fun filled flavours with the nutrition value. In 1996 the Chocos brand was heavily advertised.- 50% of the money allocated for advertising was spent on promotions and- 50% of Money allocated was spent on thematic Advertising- All the Advertisements were Brand driven- Initially to encourage the consumer to try the product various sales promotion techniques were used. Kelloggs advertising has admittedly not been very compelling thus far. A long-term thematic line has not been developed in the campaign. Apart from `Jago Jaise bhi, to Kelloggs hi. Getting the brand on the breakfast table really appears to be the main motive behind all the promotions. Earlier this year, posters with the line `Naye saal ki sahi shuruat, lo Kelloggs se hi, were put up at strategic points. Later Kelloggs India shifted its Positioning from nutrition to fun-filled flavours, consumer promotions that accompanied a Rs.25 crore media-spend. Constant free sampling exercises and an on-going process of developing price volume packages. Then the company is attempted to indianise its campaigns instead of simply copying its international promotions. In the staples campaign, a cross section of individuals ranging from a yoga instructor to a Kath Kali dancer attribute their morning energy and fitness to Kelloggs,
suggesting accompaniments as varied as curds, honey, pistachio and bananas. The commercial ends with line `Jaago jaise bhi, lo Kelloggs hi. But conspicuous in its absence from print and TV advertising, is the famous `cock identity, which symbolizes the morning association the world over. Later the CHOCOS BRAND has been positioned as THE IRRESISTIBLE TASTE OF CHOCOLATE. The Media spend by Kelloggs on Chocos brand was distributed equally between Chocos flakes and Chocos Biscuits.
THE JOURNEY SO FAR
Kelloggs from time to time has come up with different products. The journey from initial failure to present success has seen the launch of various mix of products from time to time. Kellogg's initial offerings in India included cornflakes, wheat flakes and Basmati rice flakes. The hi-tech launch stood out as a failure, because of various technical, financial and other
reasons which would be discussed I detail in this report. As a comeback strategy, Kellogg decided to launch two of its highly successful brands in
other countries - Chocos (September 1996) and Frosties (April 1997). This time the dice rolled in the companys favour and the sales started increasing significantly. Next in the league was Chocos Breakfast Cereal Biscuits. The launch continued resulted with the Mazza series in August 1998 - a crunchy, almond-
shaped corn breakfast cereal in three local flavors - Mango Elaichi,' Coconut Kesar' and Rose.'
THE JOURNEY SO FAR- Timeline
BRAND BUILDING-THE ADVERTISING WHICH APPEALED INDIAN CONSUMER
Advertising of the product is one of the prominent steps in building and creating the niche in the market. But the initial brand building strategies, the advertising policy was not that much impressive. The rooster and the charm, with which the company did the wonders in the West was missing here. Later, Kellogg attempted to Indianise its campaigns instead of simply copying its international promotions. It came out with the taglines such as Jago jaise bhi, lo Kellogg's hi. In 1997, Kellogg launched The Kellogg Breakfast Week,' a community-oriented initiative to generate awareness about the importance of breakfast. The program focused on prevention of anemia and conducted a series of nutrition workshops activities for both Individuals and families. The program was launched in Chennai, Delhi and Mumbai. Continuing the success journey, Iron Shakti variant was launched in 2000 which offered a new dimension to health with iron fortified cornflakes. One of their ads went like this Kelloggs Iron Shakti TVC
A gang of thieves is seen loading ...the scene. Thinking that his some stolen items in a truck. Just neighbour, Pandey Ji, is shifting then a man with his family arrives home he does not pay much at... attention...
...to their activity. As his daughter worryingly points out to him, hamara TV, our man cools her off by saying, Pandey Ji ka.
The little girl gets more disturbed Not able to take any more of this, ...man still reassures her, on seeing the thieves with her cupboard. But the father assures her, Pandey Ji ka. she vehemently protests on seeing their refrigerator with the stealers. But our...
Pandey Ji ka. On reaching home he finds the things missing and realizes everything.
VO: "Iron kam khaoge toh dimaag ...nahin daudega. The ad ends on kaise chalega. Aapko chaahiye our man telling his family the
Kelloggs corn flakes jisme hai iron thieves truck number, thereby shakti. Ab poore parivaar ka dimaag chalega... proving his better memory.
Following the latest trends in the present scenario, packaging and Today, advertising and packaging are also key aspects of the marketing mix. Kelloggs advertise using a whole range of media: in the press, on posters, radio and cinema, direct mail and, most recently, on the Internet. However, the main channel for its advertising is on television, where individual brands are given their own air time, aimed specifically at a target audience. Although breakfast cereals are consumed by the whole population, individual products may be aimed at specific groups. For example, Special K is aimed towards women, Start has a sporty image and Frosties and Coco
Pops are primarily aimed at children. Corn Flakes, by contrast, are aimed at the whole family. This targeting will determine the content of the advert and the time of broadcast. Kelloggs Special-K TVC
We see a woman asking her
He turns back and says it's a
He explains how till sometime
husband how she looks in the perfect fit and she tells him he back his wife couldn't fit into attire she is wearing? has lost the bet. this dress but she took a challenge to wear it for her friend's wedding.
He says that in just 2 weeks she lost weight with the challenge.
VO: Take the Kellogg's Special The ad ends as the husband tells K Challenge....and lose up to 2 his wife, "Tonight you'll look 1/2 Kgs of weight. prettier than the bride".
wrong move they resorted back to building the fun-and-taste image and took various moves in the same direction which is evident in the advertising and promotion schemes used. Though, Kellogg's advertising had not been very impressive in the initial years. Apart from Jago jaise bhi, lo Kellogg's hi,' the brand had no long-term baseline lines. To set things right, Kellogg attempted to Indianise its campaigns instead of simply copying its international promotions. The rooster that was associated with the Kellogg brand the world over was missing from its advertisements in India. One of its campaigns depicted a cross section of individuals ranging from a yoga instructor to a kathakali dancer attributing their morning energy and fitness to Kellogg. The advertisement suggested that cornflakes could be taken with curds, honey, and banana. In April 1997, Kellogg launched The Kellogg Breakfast Week,' a community-oriented initiative to generate awareness about the importance of breakfast. The program focussed on prevention of anemia and conducted a series of nutrition workshops activities for both individuals and families. Kellogg also increased its focus on promotions that sought to induce people to try their product and targeted schools across the country for this. By mid-1995, the company had covered 60 schools in the metros. In March 1996, the company offered specially designed 50 gm packs free to shoppers at select retail stores in Delhi. This was followed by a house tohouse sampling exercise offering oneserving sachets to housewives in the city. The company also offered free pencil-boxes, water bottles, and lunch boxes with every pack. Plastic dispensers offering the product at discounted rates were also put up in petrol pumps, super markets, airports etc. Kellogg also launched the Chocos biscuits, claiming that cereals being a narrow category,' the foray into biscuits would create wider awareness for the Kellogg brand.
LAUNCH OF A NEW PRODUCT: SPECIAL-K UNDERSTANDING THE MIND SET OF INDIAN WOMEN
Creating new products can be expensive. It involves making investment decisions now, in the hope of making a return later. Weighing up future returns against an investment is a crucial part of a managers job. It always involves an element of risk, because the future is never certain. Managers previous experience, together with market research information helps them to predict future events and outcomes It follows from this that decisions about a brand, creating new product or extensions are an aim to meet a range of objectives such as: Growing market share Developing a unique market position Creating consumer or brand loyalty Generating a targeted level of profit.
There was a need for change, company had already achieved a good market share in Cereals market and growth was saturating. The cereals market in India was mainly had kids as consumers with some share coming from working young adults but women were missing from the scene. Kelloggs already knew that women who are keen to watch their weight and shape seek a range of solutions throughout the day - not just at breakfast. With the help of both users and nonusers of existing cereals products, market researchers undertook further quantitative tests of product ideas across a range of food categories. Kelloggs soon came to realise that these kind variants will be responsible for a huge growth in the revenue, without a drop in sales of the core cereal product. New product development had transformed the brand within the India. This in turn has given a great opportunity to roll-out other developments in market which is yet not has been seized by the Kellogg.
INDUSTRY ANALYSIS
There are many players in the Indian Market: Kellogg's Mohan Meakins Murginns Shanti's AIM's Aristo Savour
The target Segment: Kelloggs Premium Segment. o CHOCOS is targeted towards growing children and young adults o Special K is targeted toward women who are keen to watch their weight and shape Others Middle and Lower Income (Economy Product)
Market Share of the Kelloggs Brand Year 1995 1998 2000 2010 Market Share 53% More than 55 More than 60% More than 66%
The breakfast cereals market has grown well during 1996-1998, and it is believed that Kelloggs has been the growth-driver. Chocos has 20% share of the Breakfast Cereal Market India is also fastest growing cereals markets in South Asia with annual growth of 24% and forecasting of reaching Rs. 14 billion in 2014
CONCLUSION
The compilation of this report bears a judgmental mark on what a companys approach should be while entering new markets. The culture and habits of new target group play a pivotal role in success of a brand. Promoting a product with right proposition is essential. The perception of the consumers and the attitude of the retailers have no doubt adds a new dimension to the existing advertising strategy in use by the company worldwide. The various models explained here in have helped in assimilating the core branding elements of the proposed brand study. Even though there is no correlation between the advertising of both chocos cereals and biscuits, cereals still extend leverage on the biscuits. The brand equity of cereals has developed over a period of many years and has made its brand extensions like biscuits also a success. There has been considerable success in inculcating new breakfast eating habits in the Indian consumer. The year changing from the traditional idlis and paranthas to the convenient way of eating breakfast. This increased crackle in Kellogg India was brought about by its shift in positioning from nutrition to funfilled flavors. THE HABIT BARRIER The closer Indian food-habits are to the heart of the meal, the harder it is to change them. Their approach to offer nutritious and tasty breakfast has worked well in Indian context after initial failure. At present, Chocos accounts for 20 percent of Kelloggs sales volumes. While Kelloggs argues that it is not looking for volumes for its variants, the search for a product to break down the taste-barrier may force the company to increasingly rely on sub-brands like Chocos. THE PRICE BARRIER: Kelloggs is able to cater only to the A-class towns or the more affluent consumers. Price is the biggest element of consumer resistance. The Indian consumer is not that discerning about quality when it comes to looking at the whole price quality package. The Positioning barrier, Hammering home the nutritional benefits of its products, Kellogg have spent more than Rs.25 crore on advertising over the past few years. This in fact has proven beneficial for them in the longer run, now consumers attaches importance to the level of iron and vitamin they intake. Initially However, research showed that the average Indian consumer rarely use to go for Kelloggs and instead looks at the quantity, rather than the quality, of the food consumed. The Kellogg mandate is to develop awareness about nutrition. While retaining its health positioning, Kelloggs new product-range promotion schemes, and sampling exercises are now not only aimed at a younger audience but new products like Special-K are being launched which caters to women. At one end they are seducing the consumers with promotions. On the other, they are talking to them about health. So, they can persuade people to eat Kellogg because it is a healthy product.
