Description
A case study on Kelloggs failure in India, the main reasons for its failure in India and how it tried to correct their mistakes.
KELLOGG’S FAILURE IN INDIA
- A Case Study
Expanding a brand into a new market isn't just about translating the tagline. The best way to succeed is to study local tastes closely
-Bloomberg Businessweek
Kellogg’s
•
• • •
Founded:1906, Country : U.S.
World’s largest cereal maker and a $13 billion company. In the 1990’s there was the desire by Kellogg’s to expand. Launched in 1994 in India with initial offerings of wheat flakes & basmati
rice flakes
•
Kellogg India’s main products in India includes now Corn flakes, Chocos,
Special K and the single-serve KPak, in addition to muesli and the recently launched oats
•Kellogg
claims it has now tailored the product to suit the Indian palate,
and it takes under three minutes to cook.
Contd.
• •
The brand reaches 1,800 cities now The breakfast cereal market is estimated at close to Rs 400 crore in India with Kellogg’s share estimated at over 70%.(increasing @ 20%)
•
It has tried to segregate the category into corn flakes as an all-family breakfast option :
•
• • •
Chocos and Honey loops as afternoon snacking for kids,
Special K—a weight management cereal aimed at women and Heart to Heart oats—a hot breakfast cereal targeting adult men Similar to most other packaged foods, Kellogg’s too is betting heavily on small packs at Rs 10 to gain volumes, generate trials and increase category penetration.
INITIAL FAILURE OF KELLOGGS IN THE INDIAN MARKET
• Despite offering good quality products and being supported by the technical, managerial and financial resources of its parent,Kellogg’s products failed in the Indian market. • Kellogg’s knew it will be difficult to get Indian customers to accept its products hence it relied heavily on the quality of its crispy flakes. • Indians liked to boil their milk and consume it warm or lukewarm, they also like to add sugar to their milk. • The rice and wheat versions did not do well because sugar could not easily dissolve in cold milk which made it not sweet enough for the Indians.
MAIN REASONS FOR ITS FAILURE
• Insufficient Market Research • The second mistake it made in the Indian market was its positioning front.Its advertisements and promotions focused initially on the health aspects of the product which was a fundamental departure from the successful ‘fun and taste’ positioning adopted in the United States. • In most third world countries pricing is believed to play a dominant role. • At an average cost of Rs21 per 100gm,Kellogg products were clearly priced
way above the product of its main competitor, Mohun Cornflakes(Rs16.50 for
100gm). • This gave Kellogg a premium image and unattainable for the average Indian
consumer.
Contd.
• Due to the premium pricing problem faced by Kellogg's, it tried a dollar to a rupee pricing for its products, still it could not attract the mass consumer. • Even those consumers at the higher end of the market failed to perceive any extra benefits in Kellogg’s products. • A Business Today report said that like other Multinational Companies, Kellogg had fallen into a price trap by assuming that there was substantial “latent niche market” in India for premium products. • In order to maintain quality Kellogg's focused on Premium and middlelevel retail stores. • This decision made it difficult for the larger population to get its products.
CORRECTING ITS MISTAKES
• In order to forge ahead, Kellogg decided to launch two of its highly successful brands-Chocos (September,1996) and Frosties (April,1997) in India. • • These brands were very successful and sales picked up significantly. Brands were even consumed as snacks and led to the launch of Chocos Breakfast Cereal Biscuits.
•
The success of Chocos and Frosties led to the total Indianisation of the Company’s
flavours in future which resulted in the launch of Mazza series in August,1998 in three local flavours Mango Elaichi, Coconut Kesar and Rose after one year
extensive research to study consumer patterns in India.
• Kellogg's was able to reduce prices by reducing its cost of production. For example Mazza was not positioned in the premium segment.
Contd.
• Kellogg's saw advertising as a vital tool in promoting its brand .
•
The glossy cardboard packaging was replaced by poaches which helped in
reducing the price.
•
The rooster that was associated with the Kellogg brand worldwide was missing
from its advertisements in India.
• This made it attempt to indianise its campaign instead of simply copying its international promotions.
Summary
• Prices reduction • Kellogg’s increase the retail packs of different sizes to cater the needs of different consumers group • Kellogg’s repositioned the product as tasty nutritious food • Products were not positioned in premium categories • Indianising the products • Free samples in schools and to housewives
Conclusion
• • Kellogg’s failure in India was a cultural failure. Kellogg’s business model was a recipee of disaster for Indian plates.
•
Company’s initial strategy of causing FOOD HABBIT changes did them a lot of
damage.
•
Though business now showing some positive growth but it is steal far behind
its global standards.
• Kellogg’s has steal not found any answer for its biggest competitor HOME COOKED FOOD.
•
Globalization may be an increasing trend, but regional identities, customs and
tastes are distinct as ever.
•
“Think GLOBALY Act LOCALY”
References
• http://www.kelloggs.com/ • http://brandalyzer.wordpress.com/2010/02/07/kelloggs-in-india/ • http://foodbizdaily.com/articles/32649-kellogg-plans-expansion-inindia.aspx • http://www.business-standard.com/india/news/kellogg-kellogg%5Cs-hotbreakfast/404616/ • http://timesofindia.indiatimes.com/business/india-business/Kellogg-Indiaincreases-prices/articleshow/5486110.cms • http://communications.webalue.com/2009/09/14/branding-mishapskelloggs-india-venture-a-failure/ • http://www.ibef.org/download/Kellogg_India.pdf • http://www.financialexpress.com/news/kellogg-plans-to-launch-newproducts-enhance-manufacturing-facility/483278/ • http://www.business-standard.com/india/news/kellogg%5Cs-goessnacking/391573/
doc_536313199.pptx
A case study on Kelloggs failure in India, the main reasons for its failure in India and how it tried to correct their mistakes.
KELLOGG’S FAILURE IN INDIA
- A Case Study
Expanding a brand into a new market isn't just about translating the tagline. The best way to succeed is to study local tastes closely
-Bloomberg Businessweek
Kellogg’s
•
• • •
Founded:1906, Country : U.S.
World’s largest cereal maker and a $13 billion company. In the 1990’s there was the desire by Kellogg’s to expand. Launched in 1994 in India with initial offerings of wheat flakes & basmati
rice flakes
•
Kellogg India’s main products in India includes now Corn flakes, Chocos,
Special K and the single-serve KPak, in addition to muesli and the recently launched oats
•Kellogg
claims it has now tailored the product to suit the Indian palate,
and it takes under three minutes to cook.
Contd.
• •
The brand reaches 1,800 cities now The breakfast cereal market is estimated at close to Rs 400 crore in India with Kellogg’s share estimated at over 70%.(increasing @ 20%)
•
It has tried to segregate the category into corn flakes as an all-family breakfast option :
•
• • •
Chocos and Honey loops as afternoon snacking for kids,
Special K—a weight management cereal aimed at women and Heart to Heart oats—a hot breakfast cereal targeting adult men Similar to most other packaged foods, Kellogg’s too is betting heavily on small packs at Rs 10 to gain volumes, generate trials and increase category penetration.
INITIAL FAILURE OF KELLOGGS IN THE INDIAN MARKET
• Despite offering good quality products and being supported by the technical, managerial and financial resources of its parent,Kellogg’s products failed in the Indian market. • Kellogg’s knew it will be difficult to get Indian customers to accept its products hence it relied heavily on the quality of its crispy flakes. • Indians liked to boil their milk and consume it warm or lukewarm, they also like to add sugar to their milk. • The rice and wheat versions did not do well because sugar could not easily dissolve in cold milk which made it not sweet enough for the Indians.
MAIN REASONS FOR ITS FAILURE
• Insufficient Market Research • The second mistake it made in the Indian market was its positioning front.Its advertisements and promotions focused initially on the health aspects of the product which was a fundamental departure from the successful ‘fun and taste’ positioning adopted in the United States. • In most third world countries pricing is believed to play a dominant role. • At an average cost of Rs21 per 100gm,Kellogg products were clearly priced
way above the product of its main competitor, Mohun Cornflakes(Rs16.50 for
100gm). • This gave Kellogg a premium image and unattainable for the average Indian
consumer.
Contd.
• Due to the premium pricing problem faced by Kellogg's, it tried a dollar to a rupee pricing for its products, still it could not attract the mass consumer. • Even those consumers at the higher end of the market failed to perceive any extra benefits in Kellogg’s products. • A Business Today report said that like other Multinational Companies, Kellogg had fallen into a price trap by assuming that there was substantial “latent niche market” in India for premium products. • In order to maintain quality Kellogg's focused on Premium and middlelevel retail stores. • This decision made it difficult for the larger population to get its products.
CORRECTING ITS MISTAKES
• In order to forge ahead, Kellogg decided to launch two of its highly successful brands-Chocos (September,1996) and Frosties (April,1997) in India. • • These brands were very successful and sales picked up significantly. Brands were even consumed as snacks and led to the launch of Chocos Breakfast Cereal Biscuits.
•
The success of Chocos and Frosties led to the total Indianisation of the Company’s
flavours in future which resulted in the launch of Mazza series in August,1998 in three local flavours Mango Elaichi, Coconut Kesar and Rose after one year
extensive research to study consumer patterns in India.
• Kellogg's was able to reduce prices by reducing its cost of production. For example Mazza was not positioned in the premium segment.
Contd.
• Kellogg's saw advertising as a vital tool in promoting its brand .
•
The glossy cardboard packaging was replaced by poaches which helped in
reducing the price.
•
The rooster that was associated with the Kellogg brand worldwide was missing
from its advertisements in India.
• This made it attempt to indianise its campaign instead of simply copying its international promotions.
Summary
• Prices reduction • Kellogg’s increase the retail packs of different sizes to cater the needs of different consumers group • Kellogg’s repositioned the product as tasty nutritious food • Products were not positioned in premium categories • Indianising the products • Free samples in schools and to housewives
Conclusion
• • Kellogg’s failure in India was a cultural failure. Kellogg’s business model was a recipee of disaster for Indian plates.
•
Company’s initial strategy of causing FOOD HABBIT changes did them a lot of
damage.
•
Though business now showing some positive growth but it is steal far behind
its global standards.
• Kellogg’s has steal not found any answer for its biggest competitor HOME COOKED FOOD.
•
Globalization may be an increasing trend, but regional identities, customs and
tastes are distinct as ever.
•
“Think GLOBALY Act LOCALY”
References
• http://www.kelloggs.com/ • http://brandalyzer.wordpress.com/2010/02/07/kelloggs-in-india/ • http://foodbizdaily.com/articles/32649-kellogg-plans-expansion-inindia.aspx • http://www.business-standard.com/india/news/kellogg-kellogg%5Cs-hotbreakfast/404616/ • http://timesofindia.indiatimes.com/business/india-business/Kellogg-Indiaincreases-prices/articleshow/5486110.cms • http://communications.webalue.com/2009/09/14/branding-mishapskelloggs-india-venture-a-failure/ • http://www.ibef.org/download/Kellogg_India.pdf • http://www.financialexpress.com/news/kellogg-plans-to-launch-newproducts-enhance-manufacturing-facility/483278/ • http://www.business-standard.com/india/news/kellogg%5Cs-goessnacking/391573/
doc_536313199.pptx