Market Research into Kellogg - Essay Example

? Marketing Research The Kellogg’s Case [Pick the Table of Contents Table of Contents 2 Executive Summary 3 Introduction 3 Section I 3 Section II: A brief analysis of research stages 5 2.2: The Stage of Selection; the best idea 5 2.3: The Stage of Crafting; from development to launch 6 2.4: Stage 4: Forecasting sales for the new Crunchy Nut Bites 6 Section III: Learning from past mistakes 7 3.2: Changes on Kellogg’s Product attributes or characteristics 7 3.3: Changes in the Marketing / Advertising at Kellogg’s, since inception 8 3.4: New Kellogg’s brands introduced after market research, and why 9 3.5: Marketing research techniques used in this Case 9 Conclusion 9 Bibliography 10 Executive Summary Kellogg offers lots of cereal products to the general public. Kellogg always aimed towards serving the people through new and improved means by exploiting opportunities in the food industry. The continuous process of new product development requires market research through quantitative and qualitative techniques. These techniques are established market techniques to evaluate consumer’s interest and trends in current market. However the Kellogg’s style of market research and techniques were not so effective and efficient in impressing people and attracting them towards its brand name. After Crunchy Nut bites, Kellogg experimented enough to improve its research and marketing methods that can bee assessed through Coco Pops product launch. Introduction Kellogg Company, with 2008 sales of nearly $13 billion, is the biggest producer of cereal and convenience foods, including cookies, crackers, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles, and vegetarian foods in the world. The various brands of company include Corn Flakes, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, BearNaked, Morningstar Farms, Famous Amos, Special K, All-Bran, Frosted Mini-Wheats, Club and Kashi. Kellogg products are produced in eighteen (18) countries and distributed in more than 180 countries around the world. Section I 1.1: Purpose of Research Marketing Research is defined as “Objective gathering, recording and analyzing of all facts about problems relating to the transfer and sales of goods from producer to consumer or user” by Chartered Institute of Management. Research is always done to eliminate risk from business strategy. Marketing research is done to gather particular information regarding customers, competitors, trends and market practices. Market research is one aspect of marketing research. It covers the activities conduct and information gathered for a particular product. Market research is usually done to launch new products but it is also effective in evaluating potentials of new market for existing products. Market research include activities of demand forecasting, sales forecasting, study of market trends, study of market characteristics and projected share in market. But the focus should be right on what to collect and how to collect otherwise any user or provider of marketing research who loses sight of this central focus is likely to end up in one of two awkward and costly positions: (1) failing to collect the information actually needed to make a decision, or (2) collecting information that is not needed in a given decision making context (Wren, Stevens & Loudon, 2006). 1.2: Methods of research Quantitative method of market research is data collection specifically for the purpose of market research. It involves experimentation, observation, sampling, consumer panels, trade audits, pre-tests and post tests. Qualitative method of market research is done by internal and external sources and includes questionnaire, interviewing and attitude scales. Market research is conduct in order to increase brand value by identifying consumer’s needs through research methods. Kellogg used quantitative and qualitative methods to understand the interests and desires of consumers. Focus groups were helpful in deciding the reactions and perceptions of general public towards particular products and its flavors. Quantitative techniques also used in the form of surveys to quantify the general behavior of people. In this strategy of market research Kellogg’s could enhance its results by comparing competitive products in the market. New Product development (NPD) is a good step towards growth and brand building. “In industries ranging from software to cars, firms whose employees quickly develop existing products that people are anxious to buy are likely to win.” (Brown & Eisenhardt) Qualitative research conducted by Kellogg through Focus groups was a great idea but there was no way to ensure that people judged by them are all representatives of the whole population. Section II: A brief analysis of research stages The four stages of research conducted by Kellogg can be analysed more. 2.1: The Stage of Discovery or taking a new path The research obtained through Mintel and Datamonitor revealed the potential of expansion in the cereal market from all over the world and gave some new ideas to product developers. However expansions from competitors were ignored again at this stage. Focus groups were also used to conduct a qualitative research to perceive feelings and attitude of consumers for particular types of food and flavours. The Kellogg could also try to reach some new consumers apart from existing consumers by observing such people on why they don’t use Kellogg’s cereal and use some other brand. The competitive strategy was ignored by the Kellogg’s product developers at every stage of market research. A comparison study at that level could bring competitive advantage for the new product. Michael Porter had identified two basic types of competitive advantage that were cost advantage and differentiation advantage. Those two were also ignored by Kellogg’s research group. 2.2: The Stage of Selection; the best idea This stage involved some product advertisement by displaying the descriptions of potential products to the people. However at this level, the people could be given the samples of upcoming cereal with different proportions of ingredients and then they would be asked about likenesses and dislikenesses. This strategy would be more effective and realistic in the product development in a food industry. Those cereals could also be served with some other cereals of the competitors to evaluate the taste of consumers more appropriately and accurately. At this stage, it was apparent that Kellogg’s researchers were ignoring the world outside the boundary of its existing cereal users. 2.3: The Stage of Crafting; from development to launch At this stage the above mentioned mistakes were rectified by refining the recipes of the Crunchy Nut Bites food prototype through qualitative and quantitative surveys. The Kellogg’s researchers also developed four different types of prototype and then tested them on a group of people and then record their feedback through a quantitative survey. The pack designs for the Crunchy Nut Bites was designed and developed at this stage. In building a brand name, it is very important to give all the brands same look, feeling and message by its packaging to the consumers that it belong to a big setup. Package design was also selected by a panel of people. Problem with that technique was again ignorance towards competitor’s products and their strategic development in the market. The combination of New Product Development and Competitive Intelligence affects many areas of effectiveness of market research. Competitive Intelligence can bring understanding of the markets for the sale and distribution of new products that have the potential of attracting consumers. Competitive Intelligence offers NPD the chance to more effectively and efficiently predict how product development investments will impact the bottom line and the risks and opportunities inherent in their commercialization. 2.4: Stage 4: Forecasting sales for the new Crunchy Nut Bites The final stage before product launch is the “In Home Usage Test”. The product is given to the consumers to give it a try at home for several days. This enables the researchers to capture consumer’s reaction after interacting with the product. This final survey is conducted as a real life scenario test in order to determine the appeal of the product to its consumers. However, this process is conducted at a very late stage of the whole market research process. The final stage should give more quantified feedback than general people’s likenesses. At this stage, the company should launch its beta version of the product to a small scale food festival or for other sponsorship projects where people are more random and give honest opinion with out influencing from the brand name. Section III: Learning from past mistakes 3.1: Changes on Kellogg’s Customer needs, wants, expectation or trends In the launch of Coco pops, the Kellogg researchers first time thought out about product differentiation and Competition Intelligence at the time of product development. Not only that Kellogg focused on children demands in their morning cereals but it also focused on the health and nutritional factors of the food it was providing. For the first time Kellogg took a real path of research by segmenting its market. It also focused on the psychological factor of kids by making a fun character of Coco pops monkey rather than boring them on nutritional facts. Nutritional facts are more important for the grown ups. Kellogg segmented the customer needs and expectations into different segments that are as follows: This makes Kellogg the market leader in this sector. Markets are divided into market segments and there are six key segments to the Kellogg market, as shown on the diagram: 1. Taste Good – taste good because people start their day with it. 2. Shape Management – It is good for weight loss as it is a low sugar diet. 3. Parents Approved – As it is specifically designed for children; it must be necessary to get approval of parents. 5. Kid Preferred – The introduction of fun character was made to address the age group of children. 5. Inner Health – Along with all other segments of marketing, inner health was equally liked by adults for their own self and as well as for children. 3.2: Changes on Kellogg’s Product attributes or characteristics A mistake in attribute-based product research and development is for the most basic attributes to be missed or the attribute present are not in demand by consumer up till the time product was launched. In brands, attributes are related with brand personality, image and its basic purpose of business. High quality research is conducted to make the product consistent with the brand image and its own individual existence. Product attributes are used to position the product in to the market. Following are some attributes used by Kellogg to position the Coco pops in to the market: 1. Taste – Kellogg introduced Coco pops as chocolate milk flavor that was new to its list of products. 2. Price – prices are very important but some times considered as the high quality product’s identification. 3. Whole grains – generally demanded by consumers as they are supposed to be a natural part of cereals. 4. Familiarity – Kellogg do not need an introduction, it is already established and its brand name is its biggest advantage. 5. Fiber and/ or sugar content – Ii is very important for a cereal to have right fiber content and sugar content because many people are health conscious and they consider cereal as a health product. 3.3: Changes in the Marketing / Advertising at Kellogg’s, since inception Kellogg?s marketing has taken following ups and downs since the beginning of its brand: Research showed that cereals are perceived as a natural product which is a strong point for producers. Kellogg used television and radio advertising, Public Relations and in-store promotions to give message to the consumers regarding their health. “For example, in September 2004, Kellogg introduced the All-Bran 'Feel Great in a Fortnight' Challenge. This campaign was designed to make the brands benefit more relevant to consumers. Adopting the 'feel great' message moved the brand away from the outdated 'keeps you regular' message and into the feel good territory of better inner health. This promotion featured on 8 million packs and on the All-Bran website. It used William Shatner, best remembered from Star Trek's Starship Enterprise! The challenge invited consumers to eat one bowl of any of the cereals in the All-Bran range for two weeks and see if they could feel the benefit. It focused on the fact that high-fibre diets may help people to feel lighter and more energetic as well as aiding the digestive system.” (The Times) 3.4: New Kellogg’s brands introduced after market research, and why 1. Kellogg’s market research is used to develop a new product for the whole Crunchy Nut range, from the stage of initial idea to the stage of production and delivery. 2. Market research conducted in the UK also identified a market potential in the UK market. Kellogg's launched Special K Red Berries on the basis of that research in the UK. 3. The market research revealed that Special K is very popular as a healthy product so researchers developed Special K bars in the further product development stage. 3.5: Marketing research techniques used in this Case Kellogg used three types of research to develop its latest products and their promotion: Product research is conducted to optimize the quality; Consumer research is conducted to understand the demands and expectations of the consumer; and Market tracking research – is conducted to keep track on brand performance and advertising. Conclusion If a business wants to grow, research is an essential part of business strategy and product development. However research is a very sensitive aspect of whole product development phase. Research methodologies should be devised with great care to give optimum benefit. Kellogg’s case is a clear evidence of how research change can bring change in business profitability and its image in the market. Presently Kellogg’s own more than 42% share of the cereal market and its success is heavily accredited to its advanced research methodologies. Bibliography Breakfast Cereal, 1st June 2011, http://www.foodprocessing.com/articles/2010/breakfast-cereal.html Brown S.L., Eisenhardt K. M., 1995, ‘Product Development: Past research, present findings and future directions’, The Academy of Management review, Vol. 20, No. 2, p 343-378. Kellogg Company. (2011, May 31). In Wikipedia, The Free Encyclopedia. Retrieved 06:54, June 1, 2011, from http://en.wikipedia.org/w/index.php?title=Kellogg_Company&oldid=431831727 Tyboot A., Calder B.J., 2010, Kellogg on Marketing, Edition 2 Illustrated, John Wiley and Sons. Wrenn B., Stevens R.E., Loudon D.L., 2006, Marketing research: text and cases, Edition 2 Illustrated, Routledge. Read More