Market Opportunities Nestle Breakfast Cereals - Essay Example

? Nestle Breakfast Cereals inserts his/her s Department’s Contents Nestle Breakfast Cereals 1 Contents 2 1.Market Opportunities 3 2.Product Strategy 4 3.Next Steps 6 1. Market Opportunities The consumption of breakfast cereals in the U.K has risen with 90% consumers claiming to have eaten the same in the past six months. Therefore, breakfast cereals can be termed as “household staples” for individuals in the U.K across all ages and socioeconomic strata. With a 4% growth in 2012, breakfast cereals, particularly ready to eat breakfast cereals, present a great opportunity for companies in the U.K. On the other hand, market remains competitive with competition from pastries, cereal bars and biscuits as well as porridges. It is interesting to note that the consumers over 50, given their need for greater convenience and behavior of eating more at home may be inclined towards “hot cereal” products. These hot cereals offer an even more convenient breakfast option for consumers along with a more portable “pot” format for the cereal. They also reflect the deep-seated cultural tradition of eating “hot oats” or “hot biscuits” across continental Europe (Culliney, 2013). Considering that individuals over 50 tend to prescribe to age-old traditions, this may seem just the right option. Our competitor, Kellogg’s, has already stepped into this market by providing its “Special K Nourish” product (Culliney, 2013). Considering that consumers over 50 years tend to use the microwave or steam for the preparation of their cereals, hot cereals provide just the right opportunity to capitalize this. Furthermore, targeting the mental health of consumers over 50 presents a vast opportunity for breakfast cereals sellers. Although manufacturers have traditionally focused on good health of the brain and heart by providing low cholesterol, sugar or fats to this age bracket, it is now time to shift the focus towards catering to the cognitive areas of development in these individuals. Deterioration in mental health, such as Alzheimer’s disease, is common in the older segment; however, few companies have made claims in the area (Culliney, 2012). Considering that individuals over 50 years constitute a major proportion of purchases of breakfast cereals, a growth in the market for fortified cereals is anticipated. Further growth can be achieved by altering the ingredients used in these cereals. For instance, omega-3, linseed, chia seeds, flax seed and poppy seeds could be added to enrich the nutritional value of these breakfast cereals (Culliney, 2012). Fortified cereals that include special ingredients such as zinc, iodine and GABA could be provided to this age group. Most importantly, segmenting via age could be a misleading idea. It is wrong to assume that consumers aged 55-75, for instance, have similar needs because they do not (Culliney, 2012). For instance, it would be useful to create sub- segments in this age group such as thrivers, seniors, elders and survivors. Furthermore, individuals over 50 dislike the idea of being overtly targeted at on the basis of their age (Hought, 2008). Therefore, marketing should be aimed at health benefits or other perceived benefits of the cereal rather than age. 2. Product Strategy Nestle has not yet tapped the highly profitable segment of hot cereals. This comes as a surprise since our competitor, Kellogg’s, has already launched its hot cereal “pots” which could lure consumers over 50 looking towards microwave cereals. Therefore, our company shall introduce an entirely new product named “Nestle Live Long Hot Pots” which would offer greater indulgence for our over 50 consumers who spend longer time having breakfast. This product would not only be low in terms of calories but also low in sugar and, therefore, safe for individuals with diabetes in this target group. However, low calories shall not be the thrust of this product as consumers want high nutritional value and not just low calories. The product would be packaged in a portable pot format and would be available in two SKUs- single serving and five servings, although only single serving size shall be launched initially keeping in view the behavior of such individuals to eat alone. The product shall be multi-grain, meaning it shall appeal to the taste buds of the over 50 segment while at the same time appeal to their sense of mental well-being with ingredients such “almonds” being specifically included to improve cognitive functions of such individuals. Furthermore, this product shall be introduced with special cups for serving, meaning that consumers can add toppings of their choice. This is in line with research which suggests that consumers in the older segment tend to add fruit toppings to their breakfast cereals. Also, the lack of sugar may sometimes prompt these individuals to add fruits or nuts to add flavor to the cereal. Keeping this in view, this product will be introduced in three flavors initially including raisins and peanuts, maple and ancient grains. Ancient grains, in particular the British Quinoa, are expected to be highly popular amongst grandparents as this grain is home-grown and offers a very high nutritional value (specially protein) in addition to having strong historical and cultural heritage in Britain (Wakefield, 2013). Considering that Quinoa is, at present, produced by limited companies in the U.K and is generally home-grown, this particular flavor would be premium priced and would be targeted at pensioners or older individuals who have inherited wealth and would now want to indulge in luxury. In addition to this, a new variant of our existing product- Almond, Oats & More shall be introduced for patients suffering with Alzheimer’s. Research has suggested that the risk of Alzheimer’s increases for individuals over 70 years old and approximately 1 of every 25 such individuals in the U.K tend to suffer from this disease (Alzheimer's Society, 2013). Keeping this in view, the product variant shall be titled “Dunk Cereals- Extra Folate, Vitamin E and Omega- 3. These three nutrients, have in fact, been shown to be beneficial for patients suffering from Alzheimer’s. Furthermore, research suggests that Alzheimer’s patients tend to have reduced sense of thirst which makes it necessary to consume dunk products. This product is targeted at both end consumers and caregivers such as institutions. It shall be premium priced and carry certifications from the British Medical Association and World Health Organization. Furthermore, the product shall not only incorporate the three nutrients but also multivitamins and other nutrients. Considering that this shall be a hybrid between a breakfast cereal and a medical supplement, it shall be provided in larger quantity (700 grams) as opposed to the regular (450 grams). This product is expected to be the first of its kind in the U.K breakfast cereals market and shall enable us obtain an edge over our rivals while at the same time giving us exclusive access to a large market of such patients in the above 50 age bracket. However, care will have to be taken not to market this as age-related which is in line with earlier research which claims that older individuals do not like being reminded of their age. Therefore, the product shall make covert claims. 3. Next Steps A major consideration before developing the marketing plan would be engaging in market research which refers to the systematic analysis of a problem or opportunity at hand along with finding facts, building models to enhance decision making. In the context of our marketing plan, we would be required to undertake both internal and external analysis. External analysis, particularly, competitor analysis is quintessential considering the dominant market share of our competitor Kellogg’s in the breakfast cereals segment and its constant innovation. Furthermore, the ideas for new product and extension presented earlier must be further elaborated with supporting evidence from the industry including a detailed analysis of behavior of customers over 50 years. For this purpose it shall be necessary to conduct primary research by using surveys, focus groups and interviews with our target market segment. This would ensure that data is up to date and relevant to our product strategy as industry information from secondary sources may be very broad in nature and, therefore, not relevant to our case. Furthermore, external information regarding the market demographics including the market size, trends and forecasts for consumption habits of people over 50 years would need to be obtained through industry reports. The impact of external, uncontrollable factors in the breakfast cereals industry on our company shall need to be analyzed. For instance, the recent negative publicity faced by the U.K cereals industry with respect to high sugar content compared to their U.S counterparts could invite negative customer perceptions (Black, 2013). These may have to be consciously dealt with in our future products. Information regarding the cost of inputs, competitors’ prices and consumers’ perceptions shall be obtained. Particularly relevant to this case is the cost of home-grown grains such as Quinoa which is expected to be high. The cost of inputs such as this shall be a major constituent of the marketing budget enclosed in the marketing plan. Internally, the company may consider the profile of its existing consumers and existing sales to people over 50 (if any). This shall enable our company identify the number of existing customers over 50 years and the number of potential customers to be targeted in this segment. References Alzheimer's Society, 2013. Demography. [Web] Available at: HYPERLINK "http://www.alzheimers.org.uk/site/scripts/documents_info.php?documentID=412" http://www.alzheimers.org.uk/site/scripts/documents_info.php?documentID=412 [Accessed 12 November 2013]. Black, J., 2013. Britain's biggest cereal brands contain 30% more sugar than same products in U.S. [Web] Available at: HYPERLINK "http://www.dailymail.co.uk/news/article-2261771/Britains-biggest-cereal-brands-contain-30-sugar-products-US.html" http://www.dailymail.co.uk/news/article-2261771/Britains-biggest-cereal-brands-contain-30-sugar-products-US.html [Accessed 12 November 2013]. Culliney, K., 2012. Don’t forget mental health when targeting seniors, says Leatherhead. [Web] William Reed Business Media SAS Available at: HYPERLINK "http://www.bakeryandsnacks.com/Markets/Don-t-forget-mental-health-when-targeting-seniors-says-Leatherhead" http://www.bakeryandsnacks.com/Markets/Don-t-forget-mental-health-when-targeting-seniors-says-Leatherhead [Accessed 12 November 2013]. Culliney, K., 2013. Special K Nourish: ‘The concept of hot cereal in the US is a cultural change. [Web] William Reed Business Media SAS Available at: HYPERLINK "http://www.bakeryandsnacks.com/Manufacturers/Special-K-Nourish-The-concept-of-hot-cereal-in-the-US-is-a-cultural-change-says-analyst" http://www.bakeryandsnacks.com/Manufacturers/Special-K-Nourish-The-concept-of-hot-cereal-in-the-US-is-a-cultural-change-says-analyst [Accessed 10 November 2013]. Hought, F., 2008. Older.Richer?Wiser? Report. Millennium. Wakefield, K., 2013. Quinoa: Ancient grain being grown in UK. [Web] Available at: HYPERLINK "http://www.bbc.co.uk/food/0/23885313" http://www.bbc.co.uk/food/0/23885313 [Accessed 11 November 2013]. Read More