Using new product development to grow a brand
A Kellogg's case study

Page 0: Introduction

In a rapidly changing and competitive business environment, it is not easy to predict:future trends in consumer tastes and preferencescompetitors' actionsmarket conditions. Creating new products or making changes to existing brands can be expensive. It involves making investment decisions now, in the hope of making a return later. Weighing up future returns against an investment is a crucial...
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Page 1: Kellogg’s and the marketing mix

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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...
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Page 2: The product life-cycle

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The traditional product life-cycle shows how a product goes through 4 stages during its life in the market place. At each stage in the product life-cycle, there is a close relationship between sales and profit so when a product goes into decline, profits decrease. When a product is introduced to the market, growth is slow due to limited awareness. As the product is establishing itself, sales...
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Page 3: Special K - cereal

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Initial developments came from Kellogg's in France, who introduced red berries into the cereal. This new product performed well. Market research in the UK, including consumer tests, also identified a real opportunity within the UK market. In October 1999, Kellogg's launched Special K Red Berries in the UK. From the outset it performed well, with very little damage to the core brand: most...
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Page 4: Special K - bars

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Kellogg's already knew that women who are keen to watch their weight and shape seek a range of solutions throughout the day - not just at breakfast. With the help of both users and non-users of existing Special K products, market researchers undertook further quantitative tests of product ideas across a range of food categories. The research identified that cereal bars offered the strongest...
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Page 5: Growing the brand

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Kellogg's soon came to realise that the variants were responsible for a huge growth in the Special K brand, without a drop in sales of the core cereal product. New product development had transformed the brand within the UK. This in turn gave a great opportunity to roll-out other developments in other markets, including the USA, Australia and Canada. Product research showed that the UK products...
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Page 6: Creating a stronger position

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When contemplating long-term investment decisions, brand managers face two key questions. In what projects should the company invest? What level of investment should be approved? For the Kellogg company, market research suggested that using funds to develop variants on Special K looked like a comparatively low risk project that offered the prospect of a good rate of return. This was largely...
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