KELLOGG: BUSINESS AND MARKETING STRATEGY
PROMOTIONAL STRATEGIES USED BY KELLOGG TO ACHIEVE ITS COMPETITIVE ADVANTAGE
Kellogg is market leader in the ready to eat cereals production. It has applied appropriate marketing and promotional strategies to achieve its leadership position. Kellogg is a company based in America and produces a range of brands. The brands of Kellogg mainly include Corn flakes, Special K, Pop – Tarts and Nutri –Grain. Range of products form tasty cereals to healthy breakfasts helped the company in achieving its leadership position (Marketing Week 2012). Company uses many marketing and promotional techniques to gain its competitive advantage. Promotional strategies used by Kellogg Company is identified and analyzed below.Promotional activities are required by Kellogg because without promotion it would not be able to make its consumers aware about its products. It is essential for a company that the target consumers of the company have knowledge about the products of the company. Kellogg is involved in many promotional activities. Promotional activities applied by Kellogg encourages its target audience to purchase its products as in these promotional activities Kellogg tells its consumers about those benefits that they will get while having products of Kellogg. Kellogg uses many promotional activities like advertising, event management, above the line promotion and below the line promotion. Activities implemented by Kellogg are described below in this report.
Kellogg is able to manage effective promotional activities which are not focused only at its consumers but also at its suppliers and distributors. Promotional activities applied by Kellogg involve mainly three important factors:
- Consumers: Consumers are the main focus of promotions of Kellogg. It has a range of products and with effective promotional techniques Kellogg wants to make its consumers aware about its products.
- Advertising: Kellogg uses advertising techniques to send its messages to the consumers. Messages which are required to reach at the consumers are the features of the products as well as the benefits that the consumers will get by consuming the products of Kellogg.
- Trade: Promotional activities cannot be completed without a proper trade practices. When promotions are done people become aware about the products and then advertising encourages them to purchase the products. When consumers go to the retail outlets or shops the products should be available there and this can be done with proper trade. Kellogg is able to manage its trade practices efficiently which helps it in its promotion (Kellogg School of management 2012).With the help of all the above mentioned factors Kellogg applies effective promotional strategies. It uses ‘events’ for the promotion of its products. Different promotional activities at Kellogg aim different target audiences. According to the activities given in the case study Kellogg targeted family members in the event of Star War TM Movies. This event was conducted by Kellogg on a large scale and attracted the attention of families towards the brands of Kellogg. The brands which were highlighted in this event were mainly Corn Flakes, Rice Krispies, Frosties and Coco pops. This event was a large scale event and Kellogg needed better trade practices to fulfill the requirements of the consumers.
As we discussed above that trade and advertising both are necessary for an effective promotional activity, Kellogg used advertising as well in this event. It gave a 30 second Television commercial so that it can support is promotional event. This event was the biggest event of Kellogg for families which was conducted with the help of Television commercial as well as online support. Kellogg used contests, special offers, prizes etc to attract it consumers in this event. These kind of promotional techniques help companies in making its good image into the mind of consumers e.g. Kellogg produced more than 30 million promotional packs and these packs included free gifts like mini Lightsabers TM as well as consumers can also get the Lightsabers signed by actor Christopher Lee. In this activity Kellogg not only provided its products, special offers and prizes to the consumers but also it used a celebrity which helped it in its promotion. After this event Kellogg measured the success of the event and it got that the market share of Kellogg has been increased by approximately 8% and reached up to 53% from 45% (Marketing Week 2012).There was another event conducted by Kellogg which aimed adults and the brand which was promoted through this event was Kellogg’s crunchy Nut. This event also included some special offers and prizes. With the help of this event Kellogg was able to promote its many brands successfully which mainly included Crunchy Nut, Crunchy Nut – Nutty and Crunchy Nut Clusters.
Apart from above mentioned promotional activities Kellogg is also involved in above and below the line promotions. Kellogg used both the promotional methodology in Star War TM event as we have already discussed that Kellogg prepared a thirty second television commercial in the Star War TM event to attract the consumers which will come under above the line promotion. Television commercial is an above the line promotional activity because it is paid directly. The special offers and prizes offered by Kellogg will come under below the line promotion as below the line promotion involves those techniques which do not use direct advertising and promotes the products e.g. stories, offers like buy one get one free, discounts, prizes, stories related to brand or company etc (Charles, G 2011).
In short we can say that Kellogg uses approximately all the techniques of promotion whether it is advertising through print media, electronic media, internet or stories, special offers and prizes. In our case study we find that Kellogg uses events to promote its brands and in these events it uses promotional activities like special offers, prizes as well as television commercial.
CHALLENGES FACED BY KELLOGG IN ITS BRANDING STRATEGY
The first challenge faced by Kellogg in its branding was the legal requirements of promotional activities. Whenever a company goes for a promotional activity it is required to fulfill the legal requirements of the promotions and consumer law according to that particular country. As we have discussed above that Kellogg is available in more than 180 countries therefore the legal requirements of different countries would be different and it needs to understand those requirements carefully so that there will not be any chance of bad ads. Here bad ads mean those ads which are not according to the legal requirement of the country. Advertising campaigns which do not follow the legal requirements are charged and companies have to bear high financial penalties. These ads could be disobeying the trade description act or ASA guidelines (Grant, J 2005). Kellogg successfully understands this thing and conducts its promotional events within the requirement of the law.Another big challenge which is faced by Kellogg is the reach of its promotional activities. For making a brand it is required that the company makes an image into the mind of the consumers and consumers accept any brand according to their taste and preferences. Since Kellogg is present in more than 180 countries, it is required to understand the taste and preferences of the people of different parts of world. People who are living in Australia will have different taste than the people who are living in India. Similarly, cultures and behaviors of the different countries are different and a company is required to arrange its promotional activities in such a way so that its target audience can easily accept the brand. What I am trying to say here is that Kellogg is required to make different branding strategies for different places of the world which is a big challenge. Reaching at the people of more than 180 countries is not that easy (Russell, M 2012).
The other challenges faced by Kellogg is that it is required to manage its all the departments while having any promotional activities for its branding. A promotional activity affects all the departments of a company. E.g. there should be proper sales team to handle the situation if demand increases as well trade of the company would be able to handle the requirements of the consumers. Marketing department also requires creating good marketing strategies so that consumers can be attracted easily. Kellogg is also required to have a proper supply chain management as after promotional activities the demand will increase and then Kellogg should have the required amount of products in its stock. Availability of the products at the right time is very essential in making product a brand. Similarly, Finance and production department also face challenges in branding of the company (Rooney, J 2012).
The business and marketing practices which were used by Kellogg have been already discussed in the report above that the company used premiums and prizes for its marketing efforts. Kellogg is the first company which introduced concept of prizes in the boxes of cereals. These prizes are of different types and attract the consumers hence make a brand image of the product. Special offers are also other marketing techniques applied by the Kellogg Company. Kellogg also uses mascots for its marketing activities e.g. Cocoa Krispies is known as Choco Krispis in Latin America, Chocos in India, Choco Krispies in Australia, Germany, and Switzerland etc. Company also involves itself in sponsoring events like motor sports which help it in branding (Kellogg School of management 2012).TASK 3
EVALUATION OF KELLOGG’S STRATEGY
Kellogg uses segmentation, targeting and positing (STP) strategy in its marketing activities. We all know that segmentation is done on the basis of many factors which mainly include demographic, psychographic, geographic, behavioral etc. Kellogg also divided its market into six segments and this segmentation is mainly based on the behavioral factors of the consumers. People need breakfast to start their day; Kellogg segmented them and named this segment Tasty start. Next segment of Kellogg is ‘good for you brands’ and it is named as simply wholesome. Many consumers are health conscious while having their breakfast and Kellogg takes care of these people as well and it segmented them as shape management. Next segment of Kellogg is demographic based and it is for children, which is named as Kid Preferred and Mum Approved. And last segment of Kellogg is related to the health issues of its consumers, which is named as Inner health (Charles, G 2011).
While talking about targeting we find that target market of Kellogg is not one or two countries but Kellogg is targeting all over the world. Products of Kellogg are produced in more than 18 countries and these products are sold in more than 180 countries of the world. Obviously the area served by Kellogg is worldwide. Its target consumers are not only children but also those people who are young and office going. Generally office going people need ready to eat breakfast and Kellogg fulfills their requirement very easily and thus makes it brand image. Older age people are also the target consumers of Kellogg as it produces cereals which are nutritious and healthy as well as tasty (Clements, M 2012). When we consider positioning activities we find that with the help of promotional events Kellogg has positioned itself as a market leader in cereal manufacturing industry. It participates in many social and organizational events to make its brand image into the mind of the consumers. Products of Kellogg have become necessity of many people. With the help of its high quality products and marketing strategies Kellogg has become largest cereal manufacturing company of the world (Johnson, L 2012).Another important strategy used by Kellogg is sponsorship of events. In events people gather together and it becomes easy to attract all of them in lesser efforts. The event given in our case study is Star War TM movies. Kellogg used special offers, prizes to attract its target consumers in this event and got the success as well. After the event when company analyzed the success of the event it found that the advertising effort made by Kellogg reached at 65% of the target audience easily. The effectiveness of the marketing effort can be can be explained by the increase in the sales figures of Kellogg products as well as enhancement in the market share. Market share of Kellogg increased from 45 % to 53 % just after the event. Similarly, Kellogg involved itself in many motorsports events to promote its brands e.g. it participated in NASCAR Winston Cup in 1991 – 92 (Kellogg 2010).
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