A Marketing Plan for Nutri-Grain Product of Kellogg Company - Coursework Example

?Kellogg’s Nutri-Grain Executive Summary This report is based on developing a marketing plan for Nutri-Grain product of Kellogg Company. It is observed that Nutri-Grain product is targeted for the niche market of children and young adults. Moreover, it offers high food value in terms of calcium and energy bosting components. In this regard, with these considerations, the overall study describes a detailed marketing analysis of the product i.e. Nutri-Grain. In order to compete with others products, Nutri-Grain of Kellogg’s can adopt certain short-term and long-term objectives for the next 12 months. To maintain the cash flow target, the company should maintain their minimum monthly closing balance. To maintain the brand position in the market, the company can increase their profitability by minimum 3% or the company may increase their shareholders returns by 15%. Moreover, increased use of social media and online platform can be extremely beneficial for the company to increase preference of the distinct offerings of Nutri-Grain. Table of Contents Executive Summary 2 2 Marketing Environment 6 PESTEL Analysis 9 Market Analysis and Current Market Situation of Kellogg’s 11 SWOT Analysis of Kellogg’s Nutri-Grain 11 Marketing Objectives 13 Marketing Strategy 15 The Actual Marketing Programs 18 Market Control Mechanism 18 References 19 Research and Planning Will Keith Kellogg and Dr. John Harvey Kellogg were the co-inventor of Kellogg Company. Over a period of more than 100 years of successful existence amid the global consumer market has been accomplished by Kellogg Company with its continuous focus on rendering an assortment of products that fulfil different health oriented needs of consumers. The company offers a variety of convenience foods such as cereals, cereal bars, cookies, crackers, fruit-flavoured snacks, toaster pastries, frozen waffles along with vegetarian foods. The organisation was established in the year 1906. The current market situation of Kellogg’s has witnessed a considerable extent of upsurge in terms of the company’s market share and profitability as compared to other convenience food companies. Within the current market environment, the leading brands of Kellogg’s include Cornflakes, Special K, Rice Krispies and Nuri-Grain. The main purpose of Kellogg’s Company is “to nourishing the families so that they can flourish and drive” (The Times, 100, 2013). The prime market customers of these leading brands under Kellogg’s include health conscious people, regular office-goers, young and growing male as well as female section of the society. Among these leading offerings, Nutri-Grain is a one type of breakfast cereal along with breakfast bar offering of Kellogg Company. The breakfast cereal product of Nutri-Grain is made up of wheat, corn along with oats. The consumers in the regions such as Australia, the United States, the United Kingdom, South Africa and Canada among others are quite fond of the Nutri-Grain offerings. There is a variety of offerings beneath Kellogg’s Nutri-Grain product such as Kellogg’s Nutri Grain Fruit Crunch, Kellogg’s Cereal Bars, Kellogg’s Nutri Grain Cereal Bars, Kellogg’s Fruit-Fusion with Antioxidants, Kellogg’s Nutri-Grain Soft Bakes among others. Now-a-days, with an increased level of health consciousness amid most of the families on a global basis, they have increasingly becoming fond of starting their day started with Kellogg’s products. In this regard, Nutri- Grain has several nutritional components that carry healthy benefits to a human body (Kellogg NA Co, 2013). With these considerations, the main objective of the study is to prepare a marketing plan for Kellogg’s Nutri-Grain based on the findings associated with the current market scenario of Kellogg’s. This study also describes a succinct SWOT analysis of Kellogg’s Nutri-Grain product. With respect to the SWOT analysis, a precise set of marketing objectives is enumerated to ascertain that Kellogg’s Nutri-Grain attains greater profitability in the future. Marketing Environment The marketing environment of Kellogg’s Nutri-Grain products can be disseminated into the two sections i.e. internal and external environment that significantly affects marketing strategies of the product. . The micro environment factors refer to the elements beyond the control of the product but have considerable impact on it. These factors entail customers, competitors, suppliers and other constituents related to Nutri-Grain. In addition, the macro-environment relates to the PESTEL factors including political, economic, social, technological, environmental and legal. The following section provides a discussion on the macro and micron environment of Kellogg’s Nutri-Grain. Customers of Kellogg’s Nutri-Grain It has been observed that generally the consumers belonging to the nations such as the UK, the US, Australia and South Africa have taken a liking to the cereal bars and fruit crunch bars among other products of Nutri-Grain. Moreover, the delicious offerings are extremely preferred by children because they come in a variety of flavours such as strawberry, cherry, blueberry and blackberry among other varied taste based offerings. Moreover, this product is identified to be an energy booster which in turn enhances its benefits in terms of being consumed by children. The Nutri-Grain offerings are consumed by the children at the time of breakfasts and when they are in schools at lunch time. Nutri-Grain snacks are a type of tasty snacks for the children. Nutri-Grain is used as a soft breakfast bar by people in the United States, Canada, the United Kingdom and Ireland. However, the target customers of Kellogg’s Nutri-Grain have broadened to busy young professionals and the busy families apart from children who are engaged in occupied life schedule. The company has been aiming to target all the age groups mainly the young male and female customers through its offering of Nutri-Grain. Competitors Nestle S.A., The General Mills, Inc, Ralcorp Holdings, Inc are the strong and major competitors of the Kellogg Company. According to report 2012, since last five years Kellogg was the spearhead in the United States market in terms of overall breakfast based cereal product sales (Kellogg’s, 2012). The availability of calcium and whole grain has facilitated to uphold the competitive advantage for Nutri-Grain. Suppliers Kellogg’s directly does not sale the products such as Nutri-Grain to the customers but the company uses certain intermediaries to sell the products like Nutri-Grain. These intermediaries are supermarkets, wholesalers and hotels among others. Kellogg’s is a secondary sector business. It acquires raw materials of wheat, corn, cocoa, rice and sugar from primary dealers of the world. The company works with vendors to increase the promotion of the products. Source: (Wayne State University, n.d.) From the above figure, it has been clearly perceived that there are mainly three distribution channels of Kellogg's. Kellogg’s Company sells its products either directly to the retailers or it can sell the products such as Nutri-Grain firstly to the wholesalers and then to the retailers and finally it reaches to the customers. Kellogg’s also sells its products to the target markets or the distributors centres through online mode and then the products reach the stores or distributors and finally the products reach the purchasing customers (Wayne State University, n.d.). Other Elements The stakeholders involve mainly people who are directly affected by the product of Nutri-Grain of Kellogg’s. Employees, suppliers, investors, communities, shareholders and governments are the key stakeholders of the Kellogg’s Company. PESTEL Analysis Political Environment: The government of different nations operated by Kellogg’s impose different laws and regulations regarding the food safety which might create a significant concern to the company. There are different tax policies prevailing in operational countries which also might create a threat to the company in its global operations. In order to ensure that the products of the company such as Nutri-Grain do not deviate from the stipulated food preparation standards laid down by a government, Kellogg’s needs to abide by quality standards in a rigid manner. Economic Environment: It is determined that the performance of Kellogg Company is increasing day-by-day. The company is continuously striving to develop a niche existence in the market because the quality of the products and the tastes of the products are well acclaimed and for this reason the products such as Nutri-Grain can easily create a strong impact upon the customers. In the year 2013, the annual sales of Kellogg’s have augmented to approximately ?4.5 billion (The Times 100, 2013). The products of Kellogg’s are manufactured in 19 nations internationally and the sales activities are conducted in over 180 nations. In this regard, it observed that the factors such as purchasing power parity (PPP) have a major impact upon the overall growth of particular consumer goods product. Similarly, in case of Kellogg’s Nutri-Grain stable economic indicators can result in an increased preference amid customers to buy varied types of offerings which can be beneficial for Kellogg’s (The Times 100, 2013). Social Environment: The varied assortment of offerings in terms of tastes and flavours regarding Nutri-Grain has been witnessed to create a huge craze amid the youth consumer segment. The offerings of breakfast bars and cereal bars enable Nutri-Grain to attract working persons as well who seek to quench their hunger from a ready-to-eat offering. The increased level of food values such as energy boosting capability can be an invaluable factor for the product to attract different societal people. Technological Environment: For consumer goods based food manufacturing company, technological environment can entail the internet, e-commerce, social media, and electronic media. Kellogg’s is one of the world’s largest food product manufacturers in the world. In order to reach out to the consumers, Kellogg’s uses its website and social media platform to adversities about new offerings. Moreover, it obtains varied feedbacks from customers regarding the betterment of its offerings. It has created mobile based virtual store in relation to its e-commerce endeavour to expand its business horizon. Environmental Factors: Kellogg’s is very popular to the customers on the basis of the products quality and variety. The product of Nutri-Grain of Kellogg’s is sustainable. The product of Nutri-Grain is a very healthy food product which enables to maintain the health and is prepared of environmentally friendly offerings such as high quality wheat and other fruit-based components. Legal Environment: Changes in the laws and policies regarding processed and packaged food items by the United States Government have created a significant impact to the Nutri-Grain offerings of Kellogg’s. Ensuring food safety by depicting proper labelling is a crucial factor to be maintained by Kellogg’s in all of its products. Market Analysis and Current Market Situation of Kellogg’s Kellogg’s has a strong brand position in the market in terms of healthy and convenience food offering company. In terms of market share, Kellogg’s has been covered 42% market share of the US breakfast cereal market (The Times 100, 2013). The company offers a numbers of products to the customers. The company has targeted all the age groups of the customers. Despite the presence of a few close competitors such as Nestle and General Mills, Kellogg’s has remained at a stable position in past decade and is the most preferred option among a majority of users. In relation to market niche, the key target populations of Kellogg’s are health conscious customers, young children, teenagers and busy working class population. SWOT Analysis of Kellogg’s Nutri-Grain Strengths of the Product The niche customers are very loyal to the product of the company i.e. Kellogg’s. The key reason behind such a scenario is that Kellogg’s Nutri-Grain contains a high amount of protein. It also possesses calcium and iron. Due to high food and caloric value the product can be quite useful for people of all ages. In terms of other strengths, Kellogg’s has the strongest brand position in the market than its nearest competitors. The advertising and promotion strategies of the company are quite well-crafted that other companies which enables to draw a lot of customer mileage and footfall (Kellogg’s, 2012). Weaknesses of the Product Although Kellogg’s has a strong brand position but the brand message portrayed about Nutri-Grain product at times lack clear visibility (Slide Share, 2013). Although the products of Kellogg’s have been reached all-over the world but the currently the company possesses debt of approximately US $ 7.366 billion on its balance sheets. Limited knowledge of the brand Nutri grain of Kellogg’s in the international market is also a weakness for the product (Kellogg’s, 2012). Opportunities of the Product Kellogg’s has taken the acquisition strategy for the expansion of its business. The company’s acquisition of Pringles product from Procter & Gamble can be a useful option. Other opportunities related to Nutri-Grain product can originate from product innovation. The company can aim to innovate offerings of cereal bars in more unique flavours to attract the taste buds of diverse consumers and not only the youth section (P&G, 2013). Threats of the Product Threats from Competitors There are many competitors of the Kellogg’s Company. These include Nestle, General Millis, Ralcorp Holdings, Quaker, Gilster Mary Lee among others. These companies are producing almost similar quality of products so obviously there is a stiff competition for Kellogg’s in the global market (Kellogg’s, 2012). Rising Food Prices Continuously rising food prices of Kellogg’s can indirectly create a threat for Nutri-Grain offerings as consumers might refrain from purchasing the product. Availability of cheaper alternatives can also create a threat for Nutri-Grain. Thus, in order to alleviate the prevailing threats Kellogg’s can come up with different cheaper varieties of Nutri-Grain for developing markets (Kellogg’s, 2012). Marketing Objectives From the overall analysis, it has been observed that in order to ensure sustainable growth Kellogg’s may adopt certain short-term and long-term objectives to expand their business for the product i.e. Nutri-Grain in the worldwide markets. Short-term goals of any company signify to achieve the objectives in near future and the long-term goals of the company refers to achieving the goals in the long-term futures (i.e. it may be 5 years, 10 years or more). Short-term Objectives Low Price Products: To fulfil the short-term objectives, the Kellogg’s Company may adopt the low and penetration price strategy for the next 12 months because the product with low price but high quality will attract the customers more Although offerings such as Kellogg’s Cornflakes has significantly acquired a strong brand position in the market but Nutri-Grain has been able generate similar mass appeal. To increase the popularity of the product, the company may improve its quality and variety of the product which can enable to increase the sales of the product in the next 12 months Long-term Objectives Kellogg’s may aim to increase its market share generated through Nutri-Grain for the long-term development by around 10% Kellogg’s may adopt the advertising and promotion strategy based on online platform such as social media in a more focused manner for the product i.e. Nutri-Grain The company may produce new products of Nutri-Grain for all age group of the customers The company may increase the customer relationship for the product by offering point-of-sales benefits, combo pack offers, discount coupons among others Marketing Strategy Generally, Kellogg’s can target the youth customer segment for the development of the product Nutri-Grain. For the improvement of the product Nutri-Grain Kellogg can adopt or may take product strategy, pricing strategy, advertising and sales promotion strategy. Nutri-Grain is the unique product of Kellogg’s because it has certain exclusive features. Nutri-Grain is essentially developed to meet the requirements of the busy people. To expand the business in a more detailed way the company can target the elderly population with the product i.e. Nutri-Grain. The company may improve the product quality for the development of the Nutri-Grain product. For the development of the product Nutri Grain and tapping new target markets, Kellogg’s may adopt penetration pricing strategy. For this purpose, the company may offers certain gifts (including buy 1 get 1 free) or the company may offer certain discounts for the product. For the development of the product Nutri-Grain, it needs to expand the market presence through increasing the products visibility amid masses. Moreover, it can create awareness about the usefulness of the product to a consumer by print and online media apart from advertisement media. Financial Objectives The financial objectives related to the product would focus on increasing the sales figure along with property allocating the finances. The objectives would comprise: To minimise the costs of the product. For this reason, the company may minimize the wage costs per unit or the organisation may improve the output of production by reducing the variable costs per unit The company may increase the shareholders returns by 15%. In most of the cases, it has been viewed that the shareholders of the company can stay with the organisation in fraction to how much dividend they receive from the organisation To achieve the cash flow target, the company may set or take certain strategies for maintaining the position of the product i.e. Nutri-Grain. For example, the company can uphold a minimum closing monthly balance or the company may reduce the bank overdraft to certain extent Kellogg may increase the profits by minimum 3% but for this purpose it should take a proper strategy to enhance the sales figure from each geographical operational region otherwise the product Nutri-Grain’s brand recognition may reduce amid the consumer market. Marketing Expenditures for the Product Nutri-Grain in International Market The estimated figures below are provided for the next three years. Year 1 Year 2 Year 3 Advertisements (US $ million) 900,000 600,000 400,000 Sales Promotion Activities (US $ million) 800,000 750,000 600,000 Product Labelling and Design (US $ million) 700,000 600,000 450,000 Miscellaneous 500,000 400,000 350,000 Total 2,900,000 2,350,000 1,800,000 Sales Forecast for the Product Nutri-Grain Sales Forecasts Year 1 Year 2 Year 3 Sales units in Million 35 40 50 Profit from sales (Amounts in million) 7 8.9 12 Percentage Increase in Sales 14.28 25 Profits from the Products Nutri Grain Nutri Grain Year 1 Year 2 Year 3 Profit Increase (US $ in millions) 400,000 600,000 900,000 The Actual Marketing Programs Kellogg’s for the development of its Nutri-Grain product may adopt some strategies these include the marketing and sales strategy. For example, the company may adopt the mass advertising strategy to promote the product by the television and or the internet mode. The use of classifieds media can also be useful to attract mass population (Grewal & Levy, 2010). Market Control Mechanism It can be said that the balanced scorecard assessment, benchmarking and market share analysis would be useful control mechanisms to evaluate Nutri-Grain’s development pattern. In order to understand if the specified marketing and promotional methods have yielded benefits or not, it is imperative for the company to make quarterly assessment about customer satisfaction, preference, and increase in footfall among other factors. Moreover, an increase in market share can result in increased profitability and customer retention. References Grewal, D. & Levy, M., 2010. Marketing (2nd ed.). McGraw-Hill Kellogg’s, 2012. Kellogg’s Company 2012 Annual Report. Contents. [Online] Available at: http://www.annualreport2012.kelloggcompany.com/assets/pdfs/KELLOGG_12AR.pdf [Accessed August 3, 2013]. Kellogg NA Co, 2013. About Us. Nutri-Grain. [Online] Available at: http://www.nutrigrain.com/about-us.aspx [Accessed August 3, 2013]. P&G, 2013. P&G To Sell Pringles Business to Kellogg’s. Company. [Online] Available at: http://news.pg.com/blog/company-strategy/pg-sell-pringles-business-kelloggs [Accessed August 3, 2013]. Slide Share, 2013. Kellogg’s; Extending the product life cycle. Case Study. [Online] Available at: http://www.slideshare.net/firojmdshah/kelloggs-case-14154356 [Accessed August 3, 2013]. The Times 100, 2013. Extending The Product Life Cycle. Kellogg’s. [Online] Available at: http://businesscasestudies.co.uk/kelloggs/extending-the-product-life-cycle/introduction.html#axzz2an3Pih56 [Accessed August 3, 2013]. Wayne State University, No Date. Like Coco The Monkey We Sing The Praises Of The Chocolatey Cereal. Kelloggs. [Online] Available at: https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0CHIQFjAG&url=http%3A%2F%2Fsbaweb.wayne.edu%2F~ssasser%2Fpp25.ppt&ei=rH_7UbP3Hc7wrQeItIHgAw&usg=AFQjCNF4K9jTyzK7j3lMaIctOzRPE_wI3w&sig2=2mFNGt-JJGeVkS-rIX2vUw&bvm=bv.50165853,d.bmk&cad=rja [Accessed August 3, 2013]. Read More