Kellogs failed in india.
10 likes9,544 views
The document is a case study detailing Kellogg's failure in the Indian market after launching its breakfast cereals in 1994, which did not align with local eating habits and cultural preferences. Key issues included poor product positioning, cultural barriers, high pricing, and inadequate distribution strategies. The company later corrected its approach by introducing localized products, adjusting marketing strategies, and reducing prices, which contributed to improved sales over time.
Kellogs failed in india.
- 1. 1 A CASE STUDY On “KELLOGG’S FAILURE IN INDIA ” Femeena R. Dobariya Enrollment No. : 147600585008 A Report submitted in partial fulfillment for the award of the degree of INTEGRATED MBA (IX) Submitted to: Smt. Shantaben Haribhai Gajera MBA Mahila College, Amreli Affiliated to: Gujarat Technological University, Ahmedabad
- 2. 2 STUDENT DECLARATRION I hereby declare that this case study report titled “Kellogg’s failure in India” submitted to the Smt. S.H Gajera MBA Mahila college – Amreli is a bonafide work undertaken by me and it is not submitted to any other university or Institution for the award of any degree, diploma/certificate or published any time before. Name: Femeena R. Dobariya Signature of student (Femeena R. Dobariya)
- 3. 3 GUIDE CERTIFICATE This is to certify that the case study report “Kellogg’s failure in India” submitted in partial fulfillment for the award of the degree of MBA (AM) in Gujarat Technological University was carried out by Femeena R. Dobariya under my guidance. This has not been submitted to any other University or Institute for the award of any degree/diploma/certificate. Name of faculty Guide: Ms. Pooja bagthaliya Signature of guide Signature of the Director / Principal
- 4. 4 ABSTRACT Case studies are able to provide us with valuable data, which is very detailed on a specific topic. They also enable us to study the effects of things which we would otherwise be unable to study. Case studies are also one form of evidence and information that can be used by practitioners to develop their knowledge and skills. Effective case studies add depth and breadth to the growing knowledge base in the field of consulting psychology. They can document innovations and help to assess their application in various settings. We also recognize that within the practice area of consulting psychology the majority of professionals will spend most of their time and energy providing consultation services to various clients. In addition, the case study can be very useful in explicating idiographic aspects of practice not usually addressed by theory in the homothetic sense. Therefore, we believe that the field of consulting has been and will continue to be particularly useful in advancing the professional practice aspects of the discipline of psychology.
- 5. 5 TABLE OF CONTENT Student Declaration Guide Certificate Abstract NO. PARTICULAR PAGE NO. 1 Introduction 1 2 Background of Kellogg’s 2 3 History of the Kellogg’s 3 4 Mission, vision and values 5 5 Competitor 6 6 Product portfolio 7 7 Kellogg’s failure in India 8 8 Correcting it’s mistake 11 9 The result 13 10 Learning 14 11 Conclusion 15 12 Bibliography 16
- 6. 6 INTRODUCTION Kellogg's stated purpose is "Nourishing families so they can flourish and thrive." In 1984. The Kellogg Company is the world’s leading producer of cereals. For more than 100 years, Kellogg’s has been a leader in health and nutrition through providing consumers with a wide variety of food products. Kellogg’s market leading position and reputation is built on its commitment to ethical business practices and its values-based culture. Business values identify the beliefs that the company holds to be the most important. These values then guide decision making and shape the way the organization behaves. For Kellogg’s, these are referred to as K-Values; Kellogg’s K-Values guide the way the company interacts with all of its stakeholders. Stakeholders are individuals, groups and organizations that have an interest in the decisions a company makes and the products that it produces. They also, depending on their power, affect how businesses perform. This means Kellogg’s has to manage its relationships with a variety of stakeholders around the world. The diagram identifies Kellogg’s key stakeholder groups. Kellogg’s long-term business plans, known as strategies, focus on engaging with its stakeholders to ensure their needs are being met. For Kellogg’s, this means ensuring the highest ethical standards and sustainable business practices. Kellogg’s has a Global Code of Ethics governing how it deals with stakeholders across the world. A sustainable business is one which focuses on minimizing any negative impact to the environment to ensure future generations can prosper. They guide the organization’s decision-making processes to help meet the expectations of its stakeholders. Every Kellogg’s employee, no matter where in the world, is working towards achieving every single day. Kellogg bought about 20 percent of its own stock back from the W.K. Kellogg Foundation, a move that increased profits and helped defend the company against future takeover attempts, while satisfying a legal requirement limiting the holdings of foundations without giving potential raiders access to the stock.
- 7. 7 BACKGROUND Of KELLOGG’S Kellogg’s is one of the most successful brands from U.S. which was world’s leading producer of cereal and convenience foods. The products are manufactured in 18 countries and sold over in 180 countries. It is hugely popular breakfast cereal brand. It is sold in 160 countries with sales turnover of over $9 billion. On its initial entry into the Indian market, it used similar marketing mix which it was using in other global markets. When Kellogg’s first entered India in 1994, it heavily bet on transforming the Indian breakfast cereal market. It wanted to switch breakfast habits of Indian consumers who were used to hot breakfast foods. The company wanted the Indian consumer to change its traditional habits of having either Idli Dosas or Parathas in their breakfast and these habits too varied from region to region with the northern region preferring Parathas and southern region preferring Idlis, Vadas etc. and the western region preferred alternatives like Poha. They wanted customers to make an instant switch from their own traditional habits. They wanted people to start having the healthier breakfast cereals which were a huge challenge for the company. Kelloggs Parent Company Kelloggs Category Food processing Sector Food & Beverages Tagline/ Slogan Bring out best to you USP Kelloggs is the first company to enter into readymade cereal breakfast segment Kelloggs STP Segment Food- cereal breakfast and beverages Target Group Family and children looking for healthy tasty breakfast Tagline Bring out best to you
- 8. 8 HISTORY OF THE KELLOGG’S 1898 — In a fortunately failed attempt at making granola, the company’s founder, W.K. Kellogg, and his brother, Dr. John Harvey Kellogg, changed breakfast forever when they accidentally flaked wheat berry. W.K. kept experimenting until he flaked corn, and created the delicious recipe for Kellogg’s Corn Flakes. 1906 — W.K. Kellogg opened the “Battle Creek Toasted Corn Flake Company” and carefully hired his first 44 employees. Together they created the initial batch of Kellogg’s Corn Flakes and brought to life W.K.’s vision for great-tasting, better-for- you breakfast foods. 1914 — Kellogg’s Corn Flakes was introduced to a new country: Canada. (Later the Kellogg Company will spread the goodness of grain around the world by opening factories in Australia, England, Mexico, Japan, India and more. Today Kellogg brightens breakfast in over 180 countries around the world). 1915 — Kellogg introduced Bran Flakes, the first high-fiber cereal, promptly followed by the introduction of Kellogg’s All-Bran one year later. 1923 — The Kellogg Company made another bold move and become the first in the food industry to hire a dietitian. Mary Barber started the Kellogg’s Home Economics Department and began defining the roles different foods played in proper diets. 1930 — As the United States sunk into the Depression, W.K. Kellogg declared, “I’ll invest in people.” He split shifts and hired new employees to work them. He also founded the W.K. Kellogg Foundation, whose mission — to help children realize their potential — complements that of the Kellogg Company to this day. To further its commitment to people, Kellogg became one of the first companies to proudly display its cereals’ recipes and nutritional info on their boxes — so their consumers knew exactly what they were eating. 1942-1945 — Kellogg’s employees proudly produced K-rations for the U.S. armed forces overseas during World War II, and the engineering teams helped manufacture
- 9. 9 supplies in Kellogg machine shops. They continued to help America get nutrition by bringing new, whole-grain cereal to life when they introduced Kellogg’s Raisin Bran. 1969 — The Kellogg Company was honored to provide breakfast for the legendary Neil Armstrong, Buzz Aldrin and Michael Collins during their groundbreaking Apollo 11 trip to the moon. 1997 — Kellogg Company opened the W.K. Kellogg Institute for Food and Nutrition Research — where food scientists, nutritionists and engineers transform wholesome grains and other ingredients into great-tasting and good-for-your-family foods. 2006 — The Kellogg Company celebrated the 100-year commitment to nutrition, health and quality. It also celebrated its future — by creating new Kellogg’s Special K Bars and other innovative ways of giving your family the delicious nutrition you need to make the most of every day. 2009-2010 — after discovering that many people in the U.S. don’t get enough fiber, Kellogg increased the fiber in many of most popular cereals — including Kellogg’s Froot Loops. Now, in the U.S., Kellogg Company offers more ready-to-eat cereals that provide at least one good source of fiber (3 grams) and one-half serving of whole grains (8 grams) than any other U.S. food company
- 10. 10 MISSION VISION AND VALUES Mission “To safely deliver any project, any time, in any environment for the benefit of our customers, shareholders, employees and the communities we serve.” Vision “To be the world's contractor and employer of choice by safely and consistently delivering successful and innovative capital projects and services anywhere in the world. “ Values ➢ Uncompromising commitment to quality, health, safety and the environment ➢ An open relationship with our employees based on mutual trust, respect and success ➢ Transparency, accountability and discipline in our business ➢ Best in class risk awareness ➢ Integrity in all we do ➢ Financial responsibility to our stakeholders
- 11. 11 COMPETITORS ➢ Rice Krispies ➢ Golden Grahams ➢ Quaker's Cap'n crunch ➢ Mohan's Corn Flakes ➢ Retail Chain Private Labels ➢ Saffola (oats) ➢ Britannia(ready to cat upma, poha) ➢ Pepsico (Quaker oats) ➢ Nestle
- 12. 12 PRODUCT PORTFOLIO ➢ Kelloggs Corn Flakes ➢ Kelloggs Coco Pops ➢ Kelloggs Chocos ➢ Kelloggs All-Bran ➢ Kelloggs Krave ➢ Kelloggs Frosted Flakes ➢ Kelloggs Froot Loops ➢ Kelloggs Special K ➢ Kelloggs Eggo ➢ Kelloggs Fiber Plus ➢ Kelloggs Crispix
- 13. 13 KELLOGG’S FAILURE IN INDIA Launched in September 1994, Kellogg's initial offerings in India included cornflakes, wheat flakes and Basmati rice flakes. Even though it offered good quality products and was supported by the financial resources of its parent, Kellogg's products failed in the Indian market. A high-profile launch backed by intense media activity failed to make an impact in the marketplace. Negative media coverage increased and more consumers started rejecting the taste. There were complaints that the products were not available in many cities. According to analysts, out of every 100 packets sold, only two were being bought by regular customers and the remaining were first-time buyers. These experimenters had to be converted into regular buyers and this had become a major problem for the company. By September, 1995, sales had virtually come to a standstill. Marketing experts pointed out various mistakes that Kellogg had committed and it was being increasingly felt that the company would find it extremely difficult to sustain itself in the Indian market. ➢ Wrong Positioning And Product Awareness: Kellogg pitched itself as an alternative to the regular Indian breakfast. The usual Indian breakfast is heavy and we get a feeling of fullness at the end of Indian breakfast full of Parantas, Puris and Dosas. Kellogg’s Corn flake breakfast does not give that feeling of fullness and that went against the very concept of having a total breakfast. Indian consumers were still hungry after having a corn flake-based breakfast. ➢ Eating Habits And Culture: Indian breakfast is known for variety. Having the same type of corn flake-based breakfast was a big cultural barrier for Indians. Indians are also used to having spicy
- 14. 14 and hot food for breakfast. Asking Indians to have sweet tasting and cold corn flake breakfast was something that was alien to them. 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. Kellogg’s had to be consumed with cold milk. As Indians were used to having hot milk right from their child hood, eating corn flakes with cold milk was unthinkable. Once hot milk was poured over the corn, it became soggy and was no longer edible and tasty ➢ Advertisements Hurt Indian Sentiments: Kellogg’s in its advertisements indicated that Indian breakfast was unhealthy and not nutritious which hurt the sentiments of the Indian home makers and they turned themselves against the concept of corn flakes-based breakfast. . The company's advertisements and promotions initially focussed only on the health aspects of the product. ➢ Price Sensitive Consumers: Kellogg’s was priced very high. The product was 33% more expensive than the nearest competitor. Indians were unwilling out to shell out such a high price for a relatively new product category. At an average cost of Rs 21 per 100 gm, Kellogg products were clearly priced way above the product of its main competitor, Mohun's Cornflakes (Rs 16.50 for 100 gm). ➢ Customization: Kellogg’s did not customize their offerings for the Indian market. This created a disconnect between Kellogg’s products and the Indian consumers. They simply copied their products from US and offered them as such in India. This was a huge mistake which Kellogg’s committed when branding failures are thought of.
- 15. 15 ➢ Poor Distribution: Kellogg concentrated only on India’s metros. Kellogg had also decided to focus only on the premium and middle-level retail stores. The company thought that it could not maintain uniform quality of service if it sold its products at a larger number of shops. Kellogg overlooked was the fact that this decision put large sections of the Indian population out of its reach.
- 16. 16 CORRECTING ITS MISTAKE ➢ Promotional Strategies: The Re-launch of Kellogg’s included heavy promotional activities. This comprised of Mass Advertisement in which a new array of TV Commercials were aired targeting the different audiences. These advertisements were aired during the Prime time for creating mass awareness. o Kellogg’s also launched a series of Consumer Awareness Campaigns. The company reached out to the students across a number of schools in the country. Several other Direct Promotion strategies were included as well. o Kellogg’s kept on introducing new products and brands in the market as explained in the products section of the report. These new launches were accompanied by offers and discounts. It was a continuously used tool by the company whenever a new variant was to enter the market. o Kellogg’s also improvised on its packaging of the products. The products now came in attractive packages and with goodies as well for the kids and the teens. o Kellogg’s introduced the concept of associating a MASCOT with a particular product. These MASCOT’s were famous cartoon characters or the already famous Mascots amongst the kids in the West. ➢ Launch variety of product: Kellogg decided to launch two of its highly successful brands - Chocos (September 1996) and Frosties (April 1997) in India. The company hoped to repeat the global success of these brands in the Indian market. Chocos were wheat scoops coated with chocolate, while Frosties had sugar frosting on individual flakes. The success of these variants took even Kellogg by surprise and sales picked up significantly. (It was even reported that Indian consumers were consuming the products as snacks.) This was followed by the launch of Chocos Breakfast Cereal Biscuits.
- 17. 17 The success of Chocos and Frosties also led to Kellogg's decision to focus on totally indianizing its flavors in the future. This resulted in the launch of the Mazza series in August 1998 - a crunchy, almond-shaped corn breakfast cereal in three local flavors - ‘Mango Elaichi,' ‘Coconut Kesar' and ‘Rose.' Developed after a one- year extensive research to study consumer patterns in India, Mazaa was positioned as a tasty, nutritional breakfast cereal for families. Kellogg was careful not to repeat its earlier mistakes. Kellogg then launched the Chocos biscuits, claiming that cereals being a ‘narrow category,' the foray into biscuits would create wider awareness for the Kellogg brand. Biscuits being a mass market product requiring an intensive distribution network, Kellogg's decision to venture into this competitive and crowded market with stalwarts like Britannia, Parle and Bakeman, was seen as a bold move not only in India, but also globally. Avronsart said, "We are ready to develop any food based on grain and nutrition that will satisfy consumer needs." ➢ Reduce price: The decision to reduce prices seemed to be a step in the right direction. However, analysts remained skeptical about the success of the product in the Indian market. They pointed out that Kellogg did not have retail packs of different sizes to cater to the needs of different consumer groups. To counter this criticism, the company introduced packs of suitable sizes to suit Indian consumption patterns and purchasing power. Variation in the sizes of packaging helped them to address the different variety of consumers. Corn Flakes was made available in family pack, smaller pack. Kellogg introduced the 500gm family pack, which brought down the price per kg by 20%. Also, Mazza was introduced in 60gm pouches, priced at Rs 9.50. the Rs. 10 Chocos pack as an evening snacks option.
- 18. 18 THE RESULT In 1995, Kellogg had a 53% share of the Rs 150 million breakfast cereal market, which had been growing at 4-5% per annum till then. By 2000, the market size was Rs 600 million, and Kellogg's share had increased to 65%. Analysts claimed that Kellogg' entry was responsible for this growth. The company's improved prospects were clearly attributed to the shift in positioning, increased consumer promotions and an enhanced media budget. The effort to develop products specifically for the Indian market helped Kellogg make significant inroads into the Indian market. However, Kellogg continued to have the image of a premium brand and its consumption was limited to a few well-off sections of the Indian market. The company had to face the fact that it would be really very difficult to change the eating habits of Indians. In 2000, Kellogg launched many new brands including Crispix Banana, Crispix Chocos, Froot Loops, Cocoa Frosties, Honey Crunch, All Bran and All Raisin. Kellogg also launched ‘Krispies Treat,' an instant snack targeted at children. Priced on the lower side at Rs 3 and Rs 5, the product was positioned to compete against the products in the ‘impulse snacks' category. According to some analysts, the introduction of new cereals and the launch of biscuits and snacks could be attributed to the fact that the company had been forced to look at alternate product categories to make up for the below-expectation performance of the breakfast cereal brands. Kellogg sources however revealed that the company was in India with long- term plans and was not focusing on profits in the initial stages. In Mexico the company had to wait for two decades, and in France nine years, before it could significantly influence local palates. With just one rival in the organized sector (Mohan Meakins) and its changed tactics in place, what remained to be seen was how long it would take Kellogg to crack the Indian market.
- 19. 19 Learning ➢ Don’t mix your messages. On the one hand, Cereal Mates was an ‘eat anywhere’ product. On the other, Kellogg’s was implying it needed to be stored in a refrigerator. ➢ Sell the brand in the right place. Cereal Mates was, essentially, a cereal rather than a milk product. Consumers would have therefore expected to see it on the shelves next to the other cereal products. ➢ Be the best in at least one thing. As a cereal product Cereal Mates failed because there were tastier and equally healthy alternatives. As a convenience product it failed because breakfast bars proved to be a faster, more flexible option. ➢ Don’t price too high. Consumers did not expect to pay as much as they did for a four ounce box of cereal. ➢ Don’t underestimate (or overestimate) – Being truthful to your company and its standing is the biggest gift you can give to it. From the many examples above, you must realize that underestimating your competition or overestimating your strengths are some of the first anti- business practices. Kellogg’s underestimated its local competition, Nokia overestimated its market stature. Results? Scroll up to read, re- read, and re-re-read. ➢ Consumer is boss – Changing regional dynamics and consumer behavior in different cultures can make it really tough for even the biggest businesses to understand and adapt to. Nevertheless, if one is willing to treat customers as the boss of the company and keep their wants and expectations at the top, the going can get a lot easier. This is also a must for any brand who wants to succeed in India, or any other culturally diverse market for that matter. ➢ Research and adapt – Market research and careful scrutiny of the same is vital for any business and helps in assigning realistic goals and making necessary changes. The importance of adapting in accordance with the research cannot be emphasized enough.
- 20. 20 CONCLUSION Compilation of our report throws light on the question of what a company’s 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 explanations studied 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 parantha’s to the convenient way of eating breakfast. This increased crackle in Kellogg India was brought about by its shift in positioning from nutrition to fun filled favours. Kellogg’s failure was a cultural failure. The business model of Kellogg’s was a recipe of disaster for Indian Plates. Company’s initial strategy of causing food h a bit changes did them crucial damage. Though business is now showing some positive growth but it is still far behind its global standards. Globalization may be an increased trend, but regional identities, customs and tastes are Distinct asever.
- 21. 21 BIBLIOGRAPHY https://simconblog.wordpress.com/2016/03/17/kelloggs-case-study-analysis/ (view at 26 July 2018, 10:00 am) https://www.linkedin.com/pulse/attempt-analyze-mistakes-corrections-kelloggs- made-india-utkarsh(view at 26 July 2018, 5:00 pm) https://www.linkedin.com/pulse/why-kelloggs-failed-indian-market-reetu-chopra(view at 27 July 2018, 2:10 pm) https://www.translatemedia.com/translation-blog/how-kelloggs-failed-and-then-won- in-india/(view at 28 July 2018, 8:20 am) https://prezi.com/chjcqskd794e/kelloggs-failure-in-india/(view at 30 July 2018, 9:37 am) https://www.scribd.com/document/343591894/Kellogg-s-Indian-Experience-a-Failed- Business-Strategy(view at 30 July 2018, 3:10 pm) http://www.icmrindia.org/free%20resources/casestudies/Marketing%20freecasestudy p1.htm(view at 2 august 2018, 4:15 pm) https://www.firstpost.com/business/how-the-mnc-ego-blinded-kelloggs-coke-and- unilever-in-india-1309483.html(view at 2 august 2018, 6:20 pm) http://www.icmrindia.org/casestudies/catalogue/Marketing/MKTG017.htm(view at 5 august 2018, 10:10 am) http://www.kelloggcompany.com/en_US/our-vision-purpose.html(view at 5 august 2018, 6:20 pm) http://www.kelloggcompany.com/en_US/about-kellogg-company.html(view at 5 august 2018, 6:40 pm)