Sunday, February 7, 2010

Kellogg's in India

Kellogg’s cereals were consumed around the globe with around 40% of the US ready-to-eat market. Kellogg’s had over 20 plants in 18 countries worldwide, with yearly sales reaching above US $6 billion. However, Kellogg’s was under pressure with competition from General Mills and other close rivals. The cereal industry had been stagnant for over a decade and Kellogg’s looked beyond its traditional markets in Europe and United States.

Kellogg’s decided that India is a suitable target for its cereal products. Kellogg’s thought that even if they can manage a two percent market share in India, they will have 18 million consumers, a market larger than the US itself. However, we Indians were not too used to this style of breakfast. So apart from marketing the product, Kellogg’s had an extra challenge to market this style of breakfast to Indians.

Initially, the sales figures were decent which indicated that the Indians are responding well. However, it soon became apparent that many people had bought Corn Flakes as a one-off, novelty purchase. Another big issue is its price, the product is too expensive for the Indian middle-class. Meanwhile, Kellogg’s didn’t reduce the price and decided to launch other products in India. Indian cereal buyers were introduced to Chocos, Rice Flakes, Wheat Flakes, All Bran, Honey Flakes and few other line extensions where none of them have managed to really succeed in a big scale.

Acknowledging its poor performance in India, Kellogg’s decided to sell biscuits as a strategy to establish its brand equity. Kellogg’s biscuits are produced only in India and there are six flavors – Chocos, Glucose, Chocolate Cream, Badam, Pista and Cashew.

Kellogg’s tried to bring in new breakfast habits to Indians, but the price of the product still restricts consumption to the urban consumers and affluent house-holds. Meanwhile Kellogg’s is trying hard to establish the company’s brand equity in the market. So it is to be seen if Kellogg’s experiments(like moving into snack food ) to strengthen its brand equity will be fruitful or not.


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