Using new product development to grow a brand A Kellogg's case study
Page 1: Kellogg’s and the marketing mix
With annual sales of more than £4.5 billion, Kellogg’s is the world’s leading producer of cereal products and convenience foods, such as cookies, crackers and frozen waffles. Its brands include Corn Flakes, Nutri-Grain and Rice Krispies.
Kellogg’s is a global organisation. Its products are manufactured in 19 countries worldwide and sold in more than 180 countries. In an uncertain world where the organisation’s strategy is to focus on products and brands that are either the market leader or in a strong second position the company believes that this focus upon core and successful products enables it to provide consistent and reliable returns and rewards for its stakeholders.
The need for change
When a company like Kellogg’s is investigating a change in its marketing it can consider four elements. These are known as the marketing mix or 4Ps:
Product - This element relates to how the company offers meets the changing needs and wants of customers. The growth in healthier lifestyles creates opportunities for Kellogg’s to increase the number of products for this segment.
Price - The amount a company charges for its product is important in determining sales. Superbrands like Kellogg’s can charge a premium because of the strength of the brand and product quality.
Place - Where customers can purchase the product is also an important factor in determining sales. If a brand like Special K is not stocked in supermarkets where most purchases are made, sales will be lost.
Promotion - Communicating the availability of a product is essential for sales to be made. Kellogg’s uses above the line promotion like TV advertising as well as below the line promotion like on-pack promotions and sampling.
In considering Special K, the company concentrated on changing the product through new variants. Although Special K was already a well-established brand, its full potential had never been reached. It was viewed as a stand-alone product, and Kellogg’s had not created any variants or brand extensions to develop the core product.
Managers can decide when to make key changes to a core product by analysing its position within the product life-cycle. Life-cycle analysis accepts that products have a finite life, and analysts chart a product’s performance through several phases, from its launch through various phases of growth until it reaches maturity and eventually decline.
A product’s life cycle may last only a few months (e.g. with a fad or craze) or, as with Special K, for many years. Although it was a successful product, Kellogg’s recognised the opportunity to stretch the brand by investments that would:
extend and further develop its growth phase
help to delay the onset of the maturity phase.
Kellogg’s was convinced that such investment would help to maintain the brand’s strength in a rapidly changing market place.
Kellogg's | Using new product development to grow a brand