Wednesday, 9 July 2008

Things with which I have done for breakfast: Kellogg's

This project was done for my course and required me to radically update a brand of my choice, according to the effect current and future trends may have on their business...

Strategy: Future Thinking

Kellogg’s Proposal

In 5 years time trends, regulations and lifestyle changes will create, destroy or evolve many different brands. This report aims to highlight and solve those problems which may affect the Kellogg’s brand in the UK in 2013.

About the Company

Kellogg’s is an American company which focuses mainly on breakfast cereal. It was founded by W. K. Kellogg in 1906, under the idea that he could keep people healthy by providing them with a better diet.[1]

Kellogg’s are the leaders in the breakfast cereal category, with a total market share of just under 40%, compared to its rivals Nestle and Weetabix with 20% each. However, like most leader brands, they have been slowest to react to changes in the market, allowing Nestle to present a healthier ‘wholegrain’ image of their company and Weetabix to extend its lead as the single best selling cereal product.

The Consumer

Kellogg’s specialises in cold cereal, and this is eaten most amongst the young, with around 87% of 15-24 year olds and 89% of 25-34 year olds enjoying it.[2]

This graph shows the consumption of hot and cold cereals by age group.[3]
Although general penetration of the products is high across all the age groups, it is how often they eat it which really makes a difference to sales.
For Kellogg’s, their current highest users are children, with 10% of them eating more than one bowl of cereal per day.[4]

Trends which could negatively affect Kellogg’s

There will be a number of issues and trends which will affect the success of the Kellogg’s company in the UK in 2013. One example of these is the growing concerns about childhood obesity, and in turn, the pressure this puts on companies selling junk food to children. Recent rulings from Ofcom, to stop products with excessive fat, sugar or salt in them from being advertised in programmes watched by under 16s, have not been considered enough by health bodies.[5] This means the debate and controversy around the issue is likely to continue for years to come.

Kellogg’s have already tried to avoid negative press on this issue by limiting the use of their child-friendly cartoon characters, such as Coco the Monkey. This means that by 2013, there will be a generation of children who are unlikely to recognise these famous icons, who have been a big draw for children in the past.

This could result in a big drop in usage, as children lose interest in cold cereal, and parents are no longer encouraged to sit and eat it along side them. It may therefore soon be down to the parents to have to convince their children to eat breakfast cereal, as apposed to the other way round. This would require a big change in how and who Kellogg’s tries to communicate to.

Another problem facing Kellogg’s is the recent increase in the popularity of hot cereals, such as porridge, which is now starting to take sales away from cold cereal. Advances in recipes by their competition and the common ownership of microwaves, mean that hot cereal is now almost as quick to make as cold cereal. This is a problem to Kellogg’s because Ready Brek and Quaker are proving popular with children and older adults respectively, but currently Kellogg’s do not even have a product in the category.[6]

The reason that shorter preparation times for hot cereal has led to increased sales is down to the fact that most adults don’t have enough time to prepare decent food in the morning. Having time to themselves is such a rare thing, that many people are now considering time and space to be the new definition of luxury[7]. Finding the time in their customer’s day for them to eat their favourite Kellogg’s cereal will definitely be a factor in the years to come.

Potentially, the distribution of Kellogg’s products may be an issue by 2013 as well. Currently, 95% of cereal that reaches the consumer is purchased from a supermarket. This is largely due to the smaller local shops that used to stock it dying out under the pressure from major chains such as ASDA and Tesco.[8]

This is not a major problem at the moment, but should the controversy over junk food or general relations with one of the supermarket brands become strained, Kellogg’s could lose much of its shelf space. This would leave them unable to sell their products in the same quantity or number of varieties as before.

Trends which offer opportunities

However, as much as 2013 could hold threats for Kellogg’s, there are also developing trends which will offer opportunities for growth, or at least further ways to hold off the competition and retain their leadership.

One such opportunity is the increasing use of ‘added health’ ingredients in everyday food products[9]. Omega3 has been appearing on the labels of everything from fish fingers to margarine and as science continues to pick out the ingredients that do our bodies good, the demand for them will increase and people will look for the easiest way to obtain them.

This trend goes beyond people picking a product because of a single ingredient though. Today we can see the start of a trend for mass customisation, where people want their products exactly to their specification. This can be seen across a range of stores and caf├ęs, such as Starbucks and Smoothie bars. People are beginning to expect to be able to pick their specific drink, to their own specification, adding or leaving out whatever they choose.[10]

Another factor which may affect Kellogg’s success in 2013 will be the growing concern over the environment. Kellogg’s obviously uses a lot of packaging, so an innovative, thorough recycling scheme could have people looking favourably towards the brand, even if they don’t like the product.

Finally, ‘Pro-active knowledge seeking’ will continue to grow, as the masses of data available over the internet causes consumers to investigate their once trusted brands and demand more information about the food they eat.[11]

People will want to be given all the facts about their products, and become displeased if they feel they have been misled. Recent attempts to provide this have lead to positive feedback for brands, including Sainsbury’s, with their ‘Wheel of health’ diagrams on their packaging.[12]

New Strategies

For Kellogg’s to maintain its position as leader of the breakfast cereal market in 2013, they will need to turn the problems facing the cereal business into innovative solutions, based on the brand values which saw them rise to the top in the first place.

Kellogg’s must start to act like a challenger brand and react to trends sooner rather than later[13], presenting a healthier image, spread over a wider range of product categories, while also providing the customisation, availability and ethics 2013’s customers will demand. They must do all this while still fighting to make breakfast cereal fit into people’s hectic lifestyles, so that new, older, heavier users can take over from the harder to reach children.

New Audience

The target market for their new promotions will be ABC1 young adults, who have children. Currently they will be the generation of University Graduates, who are aimed at by Innocent smoothies, a company which identified a trend for young people that want to get vitamins and minerals as easily as possible[14]. In fact, nearly one in four of them use diet or health food for this purpose, and this is continuing to rise.[15]

By 2013, they will be busy working hard in jobs, trying to get a promotion, while perhaps raising a young family. Research has shown they are the least likely to be able to find time to properly take care of themselves and therefore Kellogg’s is in the perfect position to take the advantages smoothies gave them and apply it to their new lifestyle.[16]

At the moment, this target market eats breakfast only when they can fit it into their hectic day, meaning, although they always buy cereal, they cannot become heavy users.[17] It is instead reserved to being eaten on weekend mornings, or as snacks, when they have the time to sit down and relax with it. On weekday mornings they will simply grab whatever they can eat quickly, or get something at work.

The people in this market are also big users of the internet, as it allows them to do things like bank as quickly as possible. This sums up their lifestyle quite well, with them currently having to settle for speed over experience when it comes to products and services.

The new strategies that will keep Kellogg’s in a leading position in 2013 will all be based around how to solve the key issues which will be affecting this target market of young adults in 5 years time.

Health - W.K Kellogg’s

For Kellogg’s to achieve all it needs to without scaring off their younger customers by removing the fun elements, such as the bright packaging and sugar, Kellogg’s will need to form a sub-brand. This will cover their healthier more natural products and must be capable of providing a health message, in a way their current brand could not believably achieve.

The new brand will play on their history as a Doctor prescribed health food, to add more authenticity to their message, and hopefully, by doing so, add to the perceived image of the original Kellogg’s brand. The new products will also have to command a slightly higher price, again to give weight to a believable healthy image.

For these reasons the new Sub-Brand will be known as W.K. Kellogg’s. This is the name of the founder of Kellogg’s, who invented corn flakes[18]. They were made as part of an experiment to find a tasty food which could make people’s diets healthier. This simple story from the brand’s past can be brought to the forefront of the Kellogg’s identity, by using his name for the healthiest cereals they make.
Early Kellogg’s advert

This sub-brand will be able to reach out to the 25-34 year old consumers who have been so successfully targeted with smoothies by the Innocent brand. These are people who want to eat healthily but feel they are too lazy or too busy to manage it.[19] Therefore, like Innocent, W.K. Kellogg’s could offer a little portion of health, quickly and easily, when they need it.

Hot Cereal Popularity – New Products

There are other opportunities to entice this age group too. They are currently the least likely to consume hot cereal, which is the result of the two biggest brands in this category aiming at the age groups either side of them.[20] Ready Brek are currently a favourite with children and Quaker with the elderly, but there is a big gap in the market for people the age of Kellogg’s new target.

Kellogg’s should therefore release a hot cereal, designed to appeal to these young adults. It is vital however that it is made to taste its best after just a short time in the microwave, to help fit into their busier lives.

This will be a perfect new product to help launch the W.K. Kellogg’s sub-brand, as hot cereal such as porridge is well known for its health value.

Reliance on Supermarkets for Distribution – Health Stores

The new products may boost demand amongst young adults, but Kellogg’s must still find a way to get their packaged products consumed, without relying any further on supermarkets.

To do this Kellogg’s should look at the example set by chewing gum companies, who have successfully managed to distribute their products both at sweet counters and at oral health counters, based on which sort of chewing gum it is.[21]Having provided a cereal with real health credentials, Kellogg’s can now start to stock it in places other than the breakfast food shelves of supermarkets. Chemists and herbal health stores would be ideal locations for the W.K. Kellogg’s sub-brand to reach their health conscious, young adult target market.

Packaging

The W.K. Kellogg’s sub-brand must have distinctive packaging to separate it from the existing cereal’s unhealthy image. It should also be made to fit in with other products sold in health food shops, so that it can acquire some of the positive connotations associated with those goods.

To achieve this the cereal will be sold in jars as apposed to boxes. This will add to the premium and thus healthier image of the product as well as making it seem like a genuine health food product.

It will also give it a distinctive look in the market place and separate it from all of the competition, simply because it’s sold in such a different state.

Full labelling

As more and more people gain access to broadband, information about nearly anything is available to almost everyone. This has lead to a serge in ‘Pro-active knowledge seeking’, which is the use of resources, such as the internet, to find out as much information about products as they can before they buy.[22]

While this would seem unlikely to affect a fast moving consumer good, such as Kellogg’s cereal, controversial facts, such as the amount of sugar in products, can be spread across the globe in minutes. If this information was not made readily available by the brand, then people will begin to feel they were mislead and it can be even worse if it comes out as part of a debate about a current newsworthy issue, such as childhood obesity.This sort of bad press can reflect very badly on a company, so it is important that as part of Kellogg’s new healthier image, they display all the nutritional facts, about their products, good or bad, in the most open way possible.

With the W.K Kellogg’s cereal, this could work in their favour, by displaying exactly what attributed the cereal can provide to the health conscious consumer’s diet. This would allow them to pick out exactly the cereal they need with a minimum of fuss.

Full labelling of benefits is exactly what you would expect from a product in a health shop as well, lending weight to Kellogg’s new distribution strategy. Customers have been shown to appreciate the advice available in health stores, so providing this sort of data with minimum effort will make choosing Kellogg’s an easy choice.[23]

Finding the Time to Eat - Experience Store

These product changes and launches alone will not be enough to help convince 25-34 year olds that they have the time and desire to have a bowl of cereal though. The trouble with these users is that they tend to eat cereal as snacks, where ever they can fit them in, which means they cannot become consistently high users of the products.[24] Therefore, Kellogg’s must provide new and better ways of delivering their products to consumers, a way of handing them the time and space they need to eat breakfast everyday.

For these reasons Kellogg’s is in the perfect position to offer an experiential fast food store. It will follow the trend Starbucks has used for coffee, and provide a range of customisable cereal choices.[25] The W.K. Kellogg’s store will stock all of the newer, healthier cereals, as well as the normal Kellogg’s brands. Customers will then be able to pick their own mix of all the different brands, to create their own unique breakfast.

In keeping with Kellogg’s guidelines to always try and show cereal as part of a larger meal, being eaten with things like fruit and juices,[26] the store will also provide little fruit portions, which can be added to customer’s mixes, as well as offering a range of healthy drinks, including smoothies which actually contain cereal, for those who are really in a rush.

On top of this, Kellogg’s could use the trend for ‘added health’ ingredients, by having ‘Rooster Boosters’ on their menu. These will be things like whey protein, or Omega3, which can be sprinkled over any cereal mix. This allows people who really want a health kick from their cereal to have exactly the benefits they desire.

Finding the Time to Eat - Breakfast Club

To make sure the young adults can make it to the store in time to then go to work, Kellogg’s will begin to run ‘Breakfast clubs’ at schools in major towns and cities. These will provide schools with cheaper cereal for them to sell on to children before the lessons start. It will work in the same ways as school dinners, but in the morning, allowing children to pick three different cereals they would like to have in their bowl, much like in the real W.K. Kellogg’s stores.

This will allow parents to drop off their children earlier, safe in the knowledge that they will not only be looked after and with their friends, but they will also be getting a good breakfast, which is proven to make them concentrate better on their work.[27]

‘The Breakfast club’ helps Kellogg’s to provide that extra bit of time for young adults to eat right before work. The hectic lives of their target market will mean offering the gift of time and space will truly be a valuable contribution to their day.

Creating Heavy Users – All Day Store

Although it is likely to be their busiest period, the W.K. Kellogg’s store is not just for mornings. The 25-34 year old age group are one of the biggest users of cereal at other times of the day, and often eat them as snacks. Therefore, continuing this trend and making people accept cereal as a health food for any time of day is another one of the store’s objectives. Their hectic lives mean that they try to get the health and fibre it provides whenever they have a big enough break to make it. Therefore the store can act as a great place to come on breaks, or just after work.

This is where the experiential nature of the store comes in to play. It will offer comfortable sofas, corn plant decorations and a rustic, cottage like feel to the interiors. This will link back to the heritage of Kellogg’s and provide a homely environment that is even more relaxing than their own house, because is it will feel separate from their busy lifestyle.

Protecting the Environment – Recycling Initiatives


The problem with fast food stores is the litter they can create, and with environmental trends and causes getting bigger and bigger, Kellogg’s will have to make sure they are making a visible effort to recycle and keep the streets clean. Today’s protesting students will be their target market of the future, and with an 11% increase in the amount of people who recycle in the last 2 years, there is every reason to believe that they will continue to push for change in 5 years too.[28]

To make their stance clear, the stores will not only have recycle bins throughout the store and outside it, but they will also have a special recycling system for their products which are not even eaten within the store.

A giant letter box will be placed at the front of the building, inviting people to post through their cereal boxes from home. These will then be used as part of the covering around the take away bowls sold in store. Turning recycling material immediately into new products shows instant results to the public and has already been successful for the company Doy Bags, who turn drinks cartons into fashion accessories, so more schemes like this are likely to be popular in the future.[29]

This will work well with the normal Kellogg’s products, but for the healthier Sub-brand an even more practical tactic can be deployed.

Due to the more expensive, but aesthetically pleasing packaging of the W.K. Kellogg’s products, the store will offer refills for the jars. These will be priced at less than the cost of the cereal sold with the jar and provide a real incentive to reduce the amount packaging consumers use.

These recycling initiatives will provide a very visible indication that Kellogg’s is committed to the environment, while keeping their take away items branded.

Advertising

The advertising will play a vital part in making the new Kellogg’s health image believable. The story of the company’s creation and the invention of corn flakes as a Doctor prescribed health food will be a great asset for the communication.

The advertising must also draw upon more general health and scientific visuals and language, again, to help the new product positioning.

As the target market are big internet users, something which is simple visually and therefore able to appear both on the internet, through Flash, and during TV programmes is important.[30] To provide all this, the advertising will focus on a timeline of health inventions from the 20th century, listing all of the things we have come to expect today. However, it will stop when it gets to ‘Corn Flakes, W.K. Kellogg, 1976 and imply that the health and concentration benefits of the cereal helped the other inventors to make their contribution, with the phrase ‘Must have been something they ate…’ as the punch line.

This will be followed by a brief shot of the W.K Kellogg’s products, to introduce the exciting new packaging and the line ‘The Original Health Food’, to reinforce the company’s healthier past.The campaign will reach the target where they are most likely to see and engage with it and provide them with a little knowledge about Kellogg’s past, to help them appreciate the benefits of the new cereals.


Media Plan

The campaign to keep Kellogg’s the leader of the cereal market in 2013 should begin with the opening of the Kellogg’s store. This will give people the biggest push to get cereal into their lives again and promote eating it at any time of day.

The opening will be done in conjunction with the advertising for the new W.K Kellogg’s products which will at that point only be available from the experiential store. These adverts will therefore also act as a teaser for their mainstream release.

Of course, as this is going on, the ‘Kellogg’s Breakfast Clubs’ will be starting up in primary schools around the country, giving children healthier diets and better concentration and allowing parents to have a little more time to themselves in the morning.

As the store is meant to be a place for workers to stop off and get a health kick, the eventual release of the cereal, previously only available in the specialist healthy fast food store, will add yet more impact to its health message. This should work in much the same way as the assumed quality that products used in hair dressers receive when eventually sold in shops.[31]

When all of the new strategies have been introduced, Kellogg’s should be in a position to compete better than their competitors in the 2013 market, because they will have reacted to the important consumer trends in a fast and innovative way. From here though, they must continue to actively engage new trends and technical advancements, if they want to remain the cereal market’s leader in 2018.

References

1) MORGAN, A. Eating The Big Fish, Canada, John Wiley & Sons Inc, 1999.
2) Simmons, J. Great Brand Stories: Innocent, GB, TJ International Ltd, 2006.
3) Mininni, T. Interbrand, Letting Consumers Design Their Own Experiences: Case for the Mass Customization Model, Brand Channel.com.
4) Mintel Breakfast Cereals Report, Mintel International Group Limited, UK, 2006.
5) Mintel, Impact of the Environment Report (The), Mintel International Group Limited, UK, 2007.
6) Mintel Hair Salon Products Report, Mintel International Group Limited, UK, 2006.
7) Mintel Health Food Retailing Report, Mintel International Group Limited, UK, 2006.
8) Mintel Marketing to Tomorrow's Consumer Report, Mintel International Group Limited, UK, 2006.
9) BBC, Junk food Ad limits ‘Not enough’, (http://news.bbc.co.uk/1/hi/health/7090206.stm), (Accessed Nov 2007)
10) Doy Bags Website, All about Doy Bags, (http://www.doybags.com/about.html), (Accessed Nov 2007)
11) Euromonitor International, Top 10 food trends for 2007, (http://www.marketresearchworld.net/index.php?option=com_content&task=view&id=1134&Itemid=2), (Accessed Nov 2007)
12) Kellogg’s Website, How it all began, (http://www.kelloggs.co.uk/company/history/howitallbegan.aspx), (accessed Nov 2007)
13) Kellogg’s Website, Responsible Marketing, (http://www.kelloggs.co.uk/company/corporateresponsibility/responsiblemarketing.aspx) , (Accessed Nov 2007)
14) LiquidRock, Info Journey, (http://liquidrock.info/trend_info.php), (Accessed Nov 2007)
15) LiquidRock, Slow Show, (http://liquidrock.info/trend_slow.php), (Accessed Nov 2007)
16) LiquidRock, Techno Goodness, (http://liquidrock.info/trend_techno.php), (Accessed Nov 2007)
17) PersonalMD, Breakfast: How Eating Breakfast Helps Children Be Their Best, (http://www.personalmd.com/news/breakfast_030800.shtml), (Accessed Dec 2007)
18) Sainsbury’s Website, Healthy Eating – Labelling, (http://www.j-sainsbury.com/files/reports/cr2006/index.asp?pageid=20#wheelofhealth), (Accessed Nov 2007)
19) Scientist Live, Satiety enhancers in food, (http://www.scientistlive.com/food/20070601/ingredients/2.3.296.299/17801/satiety-enhancers-in-food.thtml), (Accessed Nov 2007)

[1] Kellogg’s Website
[2] Mintel Breakfast Cereals - UK - February 2006 -The Consumer
[3] Taken from the TGI survey, Source: GB TGI, BMRB Quarter 4 2005/Mintel
[4] Mintel Breakfast Cereals - UK - February 2006 - Detailed Demographics
[5] BBC News
[6] Mintel Breakfast Cereals - UK - February 2006 -Executive Summary
[7] Liquid rock
[8] Breakfast Cereals - UK - February 2006Distribution
[9] Liquid Rock, Scientist live
[10] Interbrand
[11] Liquid Rock, Euromonitor International
[12] Sainsbury’s Website
[13] ‘Eating the big fish’ – Adam Morgan
[14] Great Brand Stories – Innocent – John Simmons
[15] Mintel, Marketing to Tomorrow's Consumer, UK, September 2006
[16] Mintel, Marketing to Tomorrow's Consumer, UK, September 2006
[17] Mintel Breakfast Cereals - UK - February 2006 - Detailed Demographics
[18] Kellogg’s Website
[19] Great Brand Stories – Innocent – John Simmons
[20] Mintel Breakfast Cereals - UK - February 2006 -Executive Summary
[21] Mintel, Chewing Gum and Mints - UK - June 2007
[22] Liquid Rock, Euromonitor International
[23] Mintel Health Food Retailing - UK - March 2006
[24] Mintel Breakfast Cereals - UK - February 2006 - Detailed Demographics
[25] ‘Eating the big fish’ – Adam Morgan
[26] Kellogg’s Website
[27] Personal MD Website
[28] Mintel, Impact of the Environment (The) - UK - April 2007 Consumer 1 – Defining the Consumer – TGI
[29] Doy Bags Website
[30] Mintel Breakfast Cereals - UK - February 2006 - Detailed Demographics
[31] Mintel Hair Salon Products - UK - September 2006