Marketing Strategy for Kellogg's Sultana Bran - Case Study Example

Marketing strategy for Kellogg’s Sultana Bran Table of contents 1.1 Current Marketing Mix 2 1.1.1 Current Product: 2 1.1.2 Current Pricing: 3 1.1.3 Current Distribution: 4 1.1.4 Current Promotion 4 1.2 Environmental Scanning: 5 1.2.1 Political/Legal 5 1.2.2 Economic 6 1.2.3 Social cultural 6 1.2.4 Technological 6 1.2.5 Natural 7 1.2.6 Competitive environment 7 1.2.7 Demographic environment 8 1.3 SWOT Analysis 8 2.0 Market segmentation theory 9 3.0 Target Market identification 10 4.0 Target Market collage 11 5.0 Rationale of the Target Market Collage 15 References Appendix Table of figures Figure 1 outdoor 12 Figure 2 football 12 Figure 3 wild outdoors 12 Figure 4 sleeping kid 13 Figure 5 Swinging kid 13 Figure 6 Kid news anchor 13 Figure 7 Old fashioned couple 14 Figure 8 Healthy eating 14 Figure 9 Family meal 14 Figure 10 kitchen 15 Figure 11 healthy eating 15 Figure 12 old fashioned couple 15 1.1 Current Marketing Mix 1.1.1 Current Product: The cornerstone of marketing is the product itself. As such, firms are keen on developing products that will move fast in the market, meet consumer needs and generate profits (Hoffmann 2008: Kotler, Keller & Brady 2009). Marketers have to manufacture, package and describe their products well in manner that will keep consumers interested and satisfied. Kellogg has been successful in doing this in marketing one of their many products, Kellogg’s Sultana Bran. Kellogg’s Sultana brand is a trusted household breakfast cereal among Australians for a long time. The Sultana Bran exists in three variants; the Sultana Bran, Sultana Bran Crunch and Sultana Bran Buds. The cereal is made from malty crisp wheat bran and contains the juicy sultanas, with the two later variants Sultana Bran, Sultana Bran Crunch having Buds and Crunches. Wheat bran has higher fibre content than other bran hence best suited to fill in daily fibre requirements. Fibre is essential for growing children and adults alike as it helps the digestive system and also keeps one full between meals. Sultana Bran offers both the nutrients and tastes of fibres and fruit in one serving. The cereal is packed in airtight cartons and contains no added preservatives or food colours. This helps in preserving the natural taste of the cereal while keeping the cereal well preserved and free from contamination. Sultana contains some essential vitamins such as thiamine, zinc, folate and magnesium. As a carbohydrate, Sultana also offers enough fats and energy to give one a good start in the morning and is best suited for developing children (Kellogg 2010). To capture the attention of shoppers and consumers, Sultana Bran is packed in bright rectangular, purple packs with images of wheat bran and fresh sultana fruits. The name of the product is calligraphed in bold white letters on the face of the pack. The corporate brand, Kellogg is also laced in smaller letters on the upper right hand corner of the pack. The recommended daily intake of the product is well listed on the side of the pack as well as the ingredients (Kellogg 2010). Hoffmann (2008) says that the packaging of a product reflects image prestige and image of the manufacturer which consumers choose of fail to choose to associate with. Kellogg has achieved this by packaging the product well in a bright purple pack that is easy to identify. Shimp (2008) says that the colour of the packaging has a lot of significance on consumers. By using purple, the Sultana brand seems to target the image conscious consumers given that colour purple is associated with royalty, nobility and spirituality. Thus, the colour of the packaging is also a marketing strategy for Kellogg Sultana Bran. 1.1.2 Current Pricing: The pricing of a product is an indicator of a company’s marketing strategy. Many consumers tend to be price sensitive especially in perfectly competitive markets where there are many substitutes. As a sublime marketer as shown by the success of the Kellogg company, the pricing of the Sultana Bran reflects the aspirations of the company in meeting consumer needs and generating profits (Kotler, Keller & Brady 2009). An inquiry by the Southern Sydney Retailers Association Ltd. (2008) shows that the average price of breakfast cereals, Sultana Bran included has risen by 54% between 1990 and 2007 which is higher than the CPI. Fortunately for Kellogg, the rise in prices has been uniform. Currently, the 820g pack goes for A$7.53 at Best price directory while the same goes for $7.51 at Woolworths as of Monday 29 November, 2010. The closest competitor, Weetabix’s Crunchy Bran is packed in smaller amounts, 375g and goes for around $3.1. Kellogg is a strong brand name that consumers easily recognise and trust hence brand loyalty has protected the company from extreme reactions to price changes and also because price changes have also affected the whole industry. The price of breakfast cereals has gone up in Australia. According to Southern Sydney Retailers Association Ltd. (2008), the results are in part due to poor climatic conditions which have made agricultural products more expensive. Again, cost of energy and doing business has gone up forcing players to increase their prices in order to remain profitable. The difference in price between Kellogg’s Sultana Bran and its competitors is based on quality and product differentiation strategy by Kellogg’s (Kotler, Keller & Brady 2009). Weetabix offers wheat bran but with different nuggets but no fruit. Supermarkets such as Coles offer their branded version of the Sultana bran at a lower price. Such a branded version is limited in distribution hence cannot be a price setter. 1.1.3 Current Distribution: Distribution of the product determines the accessibility of the product to consumers. Kellogg’s sultana bran, like all other Kellogg products is available in a large number of stores in Australia. Chains tore supermarkets such as Coles and Woolworths. A number of online stores also stock the product. The price of the product varies from one store to the other. Online stores tend to be ore accessible to many shoppers though the overall price of the product may vary due to freight charges. The Kellogg Company does not directly retail its products. It engages the services of distributors such as supermarkets and online retailing outlets to deliver the goods to the market which reduces the task of marketing considerably (Kotler, Keller & Brady 2009). The choice of distribution strategy used by marketers largely depends on the nature of products. Products with shot shelf life rely on fast distribution channels which often operate in relatively small areas such as pizza delivery. Products with longer shelf life like the Sultana Bran are suited for less intense distribution network such as online stores (Shimp 2008). Nonetheless, the use of the product also determines distribution channels. As a daily use product, retail and convenience stores come in handy in distributing products. Kellogg’s relies on all channels of distribution to make the Sultana Bran available to its consumers. 1.1.4 Current Promotion Kellogg’s vigorously promotes its products in the market. For instance, there is an ongoing promotion of the Sultana Bran Buds in conjunction with Woolworths, named “Sultana Bran Buds. Win a Backyard makeover” running from 15 November to 12 December 2010. The promotion targets consumers of Sultana Bran Buds and shoppers of Woolworths in Australia and New Zealand who are registered to Woolworth’s loyalty program Everyday Rewards. Consumers who purchase any pack of Sultana Bran Buds 340g or 600g gain entry into the competition draw where winners will be awarded a backyard makeover valued at $20,000 (Kellogg 2010; Win a Backyard makeover 2010). There is another promotion for Kellogg’s Sultana Bran alongside other Kellogg’s common brands such as Kellogg’s Rice Bubbles, Kellogg’s Cornflakes, Kellogg’s Mini Wheats Grains etc. The promotion which commenced on 11/10/10 and continued up to 28/11/10 aimed encouraging consumption in all the participating Kellogg’s brands. To participate, consumers were required to purchase specially marked participating packs containing a special code. To enter the promotion consumers were required to fill informs with their details and wait for a draw to be carried out. The idea of the promotion was to encourage sales across the board and reward consumers (Kellogg 2010). 1.2 Environmental Scanning: 1.2.1 Political/Legal The recent global financial crisis is the best placed to explain the role of political systems in determining the performance of corporations. The government through the economic stimulus package lowered taxation levels and offered tax rebates in an effort to jumpstart consumer confidence and aggregate demand. Trade agreements between the Australia and other countries determine the competition levels in the country. For competitors sourcing goods from foreign countries, they would call for removal or lowering custom duties on imports in order to enable them to be more competitive price-wise in the local market. Kellogg’s is subject to labour laws and other employment regulations that the different levels of government impose on employers. The labour union also sets the minimum wage which employers such as Kellogg’s must adhere to. This impact on the production cost of the company. The Human Rights and Equal Opportunities Commission emphasizes on equal opportunities being awarded to aboriginal people which the company has to adhere to. 1.2.2 Economic The recent global financial recession affected the consumption patterns in major countries. Although Australia never went into recession, consumption went down which impacted on the market of the Sultana Bran. The crisis also affected the price of raw materials such as power and energy which changed the cost structure for producing the product and eroded on the profit margins. Economic hardships in other countries around the world have seen an influx of immigrants in the country. Such immigrants are from Asia and Africa with most of them being relatively unskilled. Consequently, there has been increased labor supply which has pressed wages downwards. 1.2.3 Social cultural Kellogg’s Sultana Bran is designed for the modern households that understand the need for a balanced breakfast cereal and not just a cereal with high fiber content. Australians tend to be loyal to local brands and hence have remained loyal to Kellogg’s Sultana Bran. Changes in loyalty to local products and patriotism could affect the brand negatively in the market. 1.2.4 Technological There has been increased usage and accessibility of the internet in Australia and New Zealand in general. This implies that online Sultana Bran stores in the region may increase and consumers will take up more online shopping which will ease the distribution of the product and increase the market size considerably. Technological growth has improved production processes and also management practices. Knowledge storage and decision making computer programs has improved management in general and the over all efficiency of the company. 1.2.5 Natural In this age and era of green production, retailers and manufacturers are being pressured through political activism and regulations to be conscious of health and environmental issues of their products. Retailers are ethically expected to be good custodians of their customers’ health by stocking environmentally safe goods and advising them on usage. Again retailers are expected to pressure manufacturers to produce healthy and environmentally friendly goods without sacrificing quality at a reasonable cost. It is on this note that organic foods, totally unheard of two to three decades ago have found their place in the market. These organics foods are reportedly grown, processed and packed in a healthy and environmentally friendly way that eliminate the use of fertilizers and pesticides which are harmful to the environment. This has forced Kellogg’s to consider where its raw materials are sourced. Recurrent drought in and around Australia have implied that the price of wheat has gone up. This increases the production cots for he company which erodes on the profits of the firm. Developments in the world have favored a shift to green energy. Installation of green energy solutions requires heavy initial capital outlay leading to high costs in the short run. 1.2.6 Competitive environment The breakfast cereals market in Australia and New Zealand is dominated by Kellogg’s through a number of products, Sultana Bran being one of them. Weetabix and other smaller brands such as Coles own branded Sultana Bran erode on the markets hare of Kellogg’s Sultana Bran. Other players in the market include Cheerios and Nestle. All of them have introduced diverse breakfast cereal brands though none of them produces Sultana flavored cereal except for Coles. 1.2.7 Demographic environment The Australian breakfast cereals market has been on a growth path. The growth of this industry is in part fueled by growth in population which stands at 1.6% annually hence a large market size for Kellogg’s Sultana Bran. The household unit, which is a major target fro the firms has also been on a growth path at 2.4% annually (ABS 2010) 1.3 SWOT Analysis Strengths Wide product range that increases the market share Strong brand name and recognition in the market Strong financial position Innovative by developing new relevant products such as the Sultana Bran Buds Highly specialised in the breakfast cereals market Weaknesses The Sultana Bran has been imitated by competitors Has no control over the prices of agricultural products i.e. low bargaining power Minimal variation between Sultana Bran and other Kellogg’s brands Opportunities Increased awareness of the importance of high fibre content in food among consumers Recovering economy that boosts consumers purchasing power Has potential to completely dominate the market through added products Globalization and regional market integration creates new markets Growth in households and general population Threats Competition Poor climatic conditions that increase price of raw materials Globalization and regional market integration expose the brand to stiffer competition Increased costs of doing business 2.0 Market segmentation theory Market segmentation is a response to different consumer needs. Because consumers are unique, it is only proper to segment them into groups where majority of the needs match. Perreault and McCarthy (2004) write that “each person is unique; many of these people are similar in terms of how much status and dependability they want.” Many consumers continue to depend on Kellog’s brands because it is well trusted and meets the needs that the consumers have. According to (Perreault and McCarthy 2004), a good market meets these 4 criteria: Homogenous, Heterogeneous, Substantial and Operational. There is a strong belief at Kellogg’s that each market segment targeted wit the Sultana Bran, Sultana Bran Buds and Sultana Bran meet these 4 criteria because everyone is similar enough to have the urge to consumer a high fibre content breakfast cereal and thoughtful enough to think of a breakfast cereal that has its unique formula and flavour. Market segmentation is highly recommended for al marketers by marketing professionals. “In general, it’s usually safer to be a segmenter—that is, to try to satisfy some customers very well instead of many just fairly well” (Perreault and McCarthy, 2004, p. 94). Offering a line of products that works for a variety of people is what Sultana Bran aims at by developing affiliates brands; Sultana Bran Buds and Sultana Bran Crunchy. Kellogg’s takes the “multiple target market approach—segmenting the market and choosing two or more segments, then treating each as a separate target market needing a different marketing mix” (Perreault and McCarthy, 2004. p 95). Other advantages of market segmentation are; more significant analysis of the competition, increased accuracy in calculating relative market share, it is easier to predict brand performance, better understanding of industry and better choice of distribution channels (Lodato 2006; Shimp 2005), lead to better identification of objectives and better allocation of resources and better monitoring on the performance of marketing strategy (Leung, 2009, McDonald & Dunbar 2007). 3.0 Target Market identification Demographic description There are various ways to segment markets. McDonald and Dunbar (2007) observes that market segmentation strategies mostly border on age, gender, income level, occupation, number of children, family life cycle, type of residence among other factors. Weinstein (2005) says that the factors of segmentation used by a company depend on the experience of the firm in the market and the company’s product portfolio. As marketers carry out subsequent researches over time in the market, they segment their markets further by identifying more particular needs of the market. The marketing strategies are therefore revised and enhanced and more products are also developed to meet the more particular needs of customers. However, not all particular needs are considered, they have to be operational and heterogeneous as earlier observed by Perreault and McCarthy (2007). Kellogg’s Sultana Bran is positioned for differentiated marketing. The brand is marketed as good for kids’ breakfast cereal to cater for energy needs and at the same time a high fiber cereal that is fit for the whole family. A high fiber content cereal is also likely to be more attractive to weight watchers who are enticed by the products ability to keep one full between meals to prevent excessive food intake. This way, Kellogg’s aims at targeting persons who require high energy and at the same time those who need to reduce their daily food intake for health, fashion and lifestyle reasons. Multidimensional products must be able to meet different sets of needs simultaneously (Weinstein 2005). Behavioral description The packing of the Sultana Bran as aforementioned targets the social class consumers. The colour purple which is associated with affluence and royalty is used to package the product. The inclusion of Sultana fruits in the wheat bran is a response to a need by parents to offer wholesome meals which include as many nutrients as possible. The Sultana fruits add the benefits of fruits to a breakfast cereal excluding the need to serve fruits to make the meal balanced. Geographic description Kellogg’s Sultana is specifically developed for the New Zealand and Australian market. This is indicated by the fact that Kellogg’s is a global brand but the Sultana Bran is only marketed in the two countries only. The marketing strategies used in the two countries are somehow different as the cultures slightly differ. In Australia, different markets are targeted differently. In the rural northern parts of the country, the pricing of the product is relatively lower as the area has relatively lower economic activities. Psychographic description Kellogg’s has recognizes the health conscious consumers as a market segment by itself. Kellogg’s has transformed its entire product portfolio by reducing the amounts salts on their food by a third and the amount of fats also. This targets health conscious consumers and also meets government regulation. 4.0 Target Market collage Geographic The images below show people who love outdoors. The first collage shows a set table outdoors. The second shows a young boy playing football with a pack of Sultana Bran Buds at the backyard or in a park. The third image is man in the wild who has conquered a bear. However, his achievements in the wild are not comparable to having a Sultana Bran Crunch pack. Figure 1 outdoor Figure 2 football Figure 3 wild outdoors Demographic description The family is an important component of the Australian society. Sultana Bran recognises the importance of the family unit as a target for all major marketing initiatives. According to ABS (2010), households in Australia grow at a higher rate of 2.4% annually as compared to annual population growth of 1.6%. However, the size of households has fallen over time to 2.6 persons. The current figures indicate that there are 7.4 million households in Australia housing an estimated 19.1 million people. Figure 4 sleeping kid Figure 5 Swinging kid Figure 6 Kid news anchor Psychographic description Fig. 7 below shows what appears to be a family maybe in the 80’s or 70’s trying to look cool in faded jeans and outdated hair style. The family comprises of a couple and a son where the son and the man of the house have taken a macho pose and above them is the title “TASTELESS.” Opposite this is the pack of Kellogg’s Sultana Bran Crunch labeled “TASTY” boldly on top. This collage is likely to target families which are seeking taste in life to quit fancy dressing and go for the Sultana Bran Crunch to be cool or have a taste of life. Figures 8 and 9 show a family setting where Fig. 8 has a mother watching over her son partake the of Kellogg’s Sultana Bran while Fig. 9 has table set for more than one and of Kellogg’s Sultana Buds as the meal. Figure 7 Old fashioned couple Figure 8 Healthy eating Figure 9 Family meal Behavioural description Fig. 10 and Fig. 11 are representative of people who are conscious about what they eat. The third image are fashion conscious couple which is however old fashioned. Fig. 12 shows a young boy eating from a bowl and a Sultana Bran pack besides the bowl implying he is taking the contents of the pack. The mother in the background is admiring her son eating. On the same table is a bowl of fruits representing healthy eating. Figure 10 kitchen Figure 11 healthy eating Figure 12 old fashioned couple 5.0 Rationale of the Target Market Collage The Sultana Bran targets Australian and New Zealand household in general. However, displaying all family members in all collages may present some difficulties such as representation of single families. As such, there is variation in the targeting of the family. A faceless image of a table seemingly set for a family indicates that the composition of the family is not a huge issue. Again, this is very strategic in averting gender questions in driving the message home. There is emphasis towards families with small growing kids. This is indicated by the emphasis on the product’s nutritional content more so for young kids. The kids displayed are mostly shown to be active. One of the girls is pictured swinging with a Sultana Bran Bud pack as a playing partner. The same idea is used in displaying the outdoor setting as a lifestyle for the market where a young boy is playing football with a pack of Sultana Bran Bud as the playing partner. Figure three captures an adult semi naked man atop a bear. The semi nakedness serves the purpose of representing the strength of the man as a protector of the family. The man has conquered a bear but such an action is not comparable to the goodness and the health contained in a pack of Sultana Bran Crunch. Children are important components of the family unit. Seven of the collages above have children in them. A few of them (Figs. 2, 4 & 6) show how children fall in love with Kellogg’s Sultana Bran Buds and how it plays its part in their lives. It is a well known fact that children have no purchasing power and hence it would be somehow irrational to assume that the adverts targets children. On the contrary, it would be proper only to assume that the collage targets parents assuming that their children’s happiness is one of their priorities. An image of happy child is likely to attract the interest of the parents and caregivers as it would to children too. Figure 10 illustrates a pack of Sultana Bran among other kitchen items on a shelf. Although the other items in jars are hardly recognisable the collage seems to communicate two messages to the audience. One of them is that one can never confuse the packaging of Kellogg’s Sultana Bran with any other product on the shelf, both in the kitchen and in the supermarket. The other message says that that Kellogg’s Sultana Bran should be considered as an important foodstuffs in the kitchen same way as spices and other foods. This is way it is placed among jars of foods in the kitchen shelf. Figures 9 and 10 provide a serving tip to consumers. This is illustrated by inclusion of milk on the table. In Fig 9, there is headless woman holding a Kellogg’s Sultana Bran pack while serving a table. On the same table is a packet of milk which is indicative that the Kellogg’s Sultana Bran should be taken with milk. Fig. 10 again shows a young boy eating from a bowl and beside him a Kellogg’s Sultana Bran pack and a glass of milk. These two images therefore also act as serving tip for consumers. The energy giving element of the Kellogg’s Sultana Bran is capture through illustrations of active and playful children in Fig. 2 and 5. In fig 2, the young boy is playing soccer in with a pack of Kellogg’s Sultana Bran Buds. He is seen scoring against the Kellogg’s Sultana Bran Buds pack which is in goal. Again, this is a sign of success in life. Fig 5 on the other hand illustrates a young girl swinging with the Kellogg’s Sultana Bran Buds as the partner. Such active kids require high energy foods and the Kellogg’s Sultana Bran Buds is presented as the perfect partner in that. The idea of gender balance in presented in a number of the collages. For instance, Fig2 illustrates a playful boy while Fig. 5 illustrates a playful girl. Fig. 11 illustrates a mother and a son rather than a mother and a girl or a father and a son. Gender balance in this case presents Kellogg’s Sultana Bran as a food for both sexes in equal measure. References Adkins, S. (1999). Cause related marketing: who cares wins. London: Butterworth Heinemann Australia bureau of statistics (2010). Retrieved from, http://www.abs.gov.au/ausstats/abs@.nsf/0/D5181CC73561D701CA256F7200832FD9?opendocument Backyard makeover. Retrieved from, http://www.woolworths.com.au/wps/wcm/connect/website/woolworths/whats-new/promotions/promotions-content/sultanabran Hoffmann, S. (2008). Are the 4 P's of International Marketing of Equal Importance to All Firms? What Factors Might Cause Some to More Or Less Important Than Others?: A Short Article. London: GRIN Verlag. Kotler, P., Keller, K. & Brady, M. (2009). Marketing management. New York: Prentice Hall Leung, C. (2009). “An inductive learning approach to market segmentation on customer profile attributes.” Asian journal of marketing. 1-17 Lodato, M. (2006). Market Definition is a Multi-Dimensional Process. Retrieved from, http://www.bptrends.com/publicationfiles/06-06-ART-MarketDefinition-Lodato.pdf Kellogg’s official website. Retrieved from, http://www.kellogg.com.au/ McDonald, H. & Dunbar, C. (2007). Market segmentation: how to do it, how to profit from it. London: Butterworth-Heinemann Perreault, W. D. & McCarthy, E. J. (2004) Basic Marketing: A Global−Managerial Approach (15th ed.) The McGraw−Hill Companies. Shimp, S. (2008). Advertising Promotion, and Other Aspects of Integrated Marketing Communications. 8th ed. London: Cengage Learning, Southern Sydney Retailers Association Ltd. (2008). What About the Increasing Price of Breakfast Cereals ? http://www.accc.gov.au/content/item.phtml?itemId=824336&nodeId=616b1cbc4af2bfbc0033149344301428&fn=186%20%28late%2016%20Apr%29%20-%20Southern%20Sydney%20Retailers%20Association%20%28sub.9%29%20%2812%20pages%29.pdf Appendix NUTRITION INFORMATION (AVERAGE) average serving size - 45g (3/4 metric cup †)   quantity per serving %daily intake▲ per serving per serve with 1/2 cup skim milk quantity per 100g Energy 640kJ 7% 830kJ 1410kJ Protein 4.3g 9% 8.9g 9.5g Fat, total 0.8g 1% 0.9g 1.7g - saturated 0.2g 0.8% 0.3g 0.4g Carbohydrate 28.3g 9% 34.8g 62.9g - sugars^ 10.2g 11% 16.7g 22.7g Dietary fibre 6.7g 22% 6.7g 14.9g - soluble 1.2g - 1.2g 2.7g - insoluble 5.5g - 5.5g 12.2g Sodium# 121mg 5% 178mg 270mg Potassium 324mg - 529mg 720mg     %RDI* Thiamin (Vit B1) 0.28mg 25% 0.33mg 0.61mg Riboflavin (Vit B2) 0.42mg 25% 0.68mg 0.94mg Niacin 2.5mg 25% 2.6mg 5.6mg Vitamin B6 0.4mg 25% 0.4mg 0.9mg Folate 100µg 50% 106µg 222µg Iron 3.0mg 25% 3.1mg 6.7mg Magnesium 64mg 20% 79mg 142mg Zinc 1.8mg 15% 2.3mg 4.0mg Read More