Froot loops History : Froot Loops is a brand of breakfast cereal produced by Kellogg’s and sold in Austria, India, Australia, Canada, New Zealand, the United States, Germany, The Middle East, The Caribbean and Latin America. The cereal pieces are torus-shaped (hence “loops”) and come in a variety of bright colors and a blend of artificial fruit flavors. Kellogg’s introduced Froot Loops in 1963. Originally, there were red, orange, andyellow loops, but green, then purple, and, finally, blue were added by the 1990s.. Kellogg’s has made many ventures for Froot Loopso, including snack bags called Snack Ums.
Snack Ums were just like the cereal, only bigger. Their slogan was “Super sized bites with deliciously intense natural fruit flavors” Mission statement of kellogg’s : “Kellogg is a Global Company Committed to Building Long-Term Growth In Volume and Profit and to Enhancing its Worldwide Leadership Position by Providing Nutritious Food Products of Superior Value. ” A) Situation analysis: Internal factors: Current data: With 2010 sales of nearly $12. 6 billion, Kellogg is the world’s leading producer of cereal and one of the largest producers of convenience food].Order now
With sales in more than 180 countries, Kellogg’s produces some of the world’s most iconic and easily recognizable brands including: Keebler , Pop-Tarts, Eggo and Rice Krispies. As of FY 2009, the company generated 67% percent of its revenues in North America, 19% in Europe, 8% in Latin America, and the remainder in the Asia Pacific region. In June 2010, Kellog’s voluntarily recalled 28 million boxes of cereal (Apple Jacks, Corn Pops, Froot Loops, and Honey Smacks) that may have a strong “waxy” smell or taste. In the first quarter of 2010, Kellogg posted revenues of $3. 17 billion, a decrease of 2. % from Q1 2008 figures; net income remained nearly unchanged at $321 million. The decrease in revenues is predominantly due to unfavorable foreign exchange fluctuations which had a negative 7. 7% impact on the company during the quarter. This was partially mitigated by net pricing increases which raised revenues by 4. 2%. The increase in net income is a result of Kellogg’s ability to maintain costs and operating expenses as prices increased, contributing to a higher margin. In the second quarter of 2010, Kellogg posted revenues of $3. 23 billion, a 3. 5% decrease from Q2 2009 figures; net income grew 13. 5% to $354 million.
In terms of volume, the company fared relatively well, losing only . 5% across its operating divisions. A net pricing increase of 3. 1%, however, was negated by a 6. 4% adverse shift in foreign currency translation. % Change Q2 2009 vs. Q2 2008| Volume| (. 5%)| Net Pricing| 3. 1%| Acquisitions| . 4%| Foreign Currency Impact| (6. 4%)| http://www. wikinvest. com/stock/Kellogg_Company_(K) http://en. wikipedia. org/wiki/Froot_Loops Positioning map expensive Bread and toast instant breakfast Butter and eggs Tea Muffins , biscuits cold mik Instant breakfast slow quick inexpensive Promotional strategies of Kellogg’s fruitloops: Tv ads -Strong brand logos -packaging -magazine ads Some slogans used by Kellogg’s fruitloops: * “Central heating for kids” * “Everyone loves my Cocoa Krispies” * “Gotta have my loops! ” * “They’re grrreat! ” Kellogg’s Kelloggs distribution channels Kellogg’s Kellogg’s fruit loops Computer system Retailers Wholesaler Coles ,woolworths, distrib. centers Retailer Distrib. In stores External micro environment: Market analysis: In its report on the Australian breakfast cereal market, Mintel International Group (Melbourne) finds a category with increasing competition and a consumer base abandoning breakfast entirely.
With those notable hurdles, the market for breakfast cereal has managed to post growth over the past several years, albeit slow. In current dollars, sales grew from $8. 5 billion in 2002 to $13 billion in 2009, representing a 2% annual increase. Customer analysis: Being an organization of global stature, Kellogg’s uses multiple methods to communicate with its customers. Cartoon characters like Jack ; Aimee are used to communicate the plus points of physical exercise to parents and children. Competitive analysis Types of Competitors ?? Our product offers a culmination of two different breakfast items: cereal and nutrition bars. ? Main cereal competitors would be Kellogg and General Mills. (direct competitors) In the past 60 months Kellogg has had a revenue growth of 6. 5% and an earnings per share growth of 13. 1%. Marketing strategies: * The management at Kellogg’s anticipated that the dynamism of times and trends would require them to adopt change and so, it directed itself to be more than just a “fair weather” believer i. e. planned for contingency and flexibility. * Keeping in pace with the health consciousness trend of today’s times, the new philosophy of targeting and satisfying the health vigilant consumer was adopt. Macro environment
Breakfast trends – Nutrition : In recent years, doctors have encouraged adults to eat cereal for its high doses of fiber, vitamins, and minerals. Working husbands approaching middle age are more likely to be concerned about proper nutrition at breakfast than young, unmarried working males without children. – Time Pressure : The convenience of ready to eat meals are essential for time pressured individuals such as working mothers who are torn between work, household chores, and looking after children. Balanced breakfasts that can be quickly prepared are in high demand for those with busy work schedules. Economic trends:
As world is undergoing from a recession periods people want to spend money only on inexpensive things because they are struggling from tough conditions. They want quality by spending less money which is a big challenge for Kellogg’s frootloops. Social cultural trends: Product will be marketed as an adult cereal. Main target market would include the more than 58. 8 million younger adults between the ages of 18-35. ?? College students would be heavily targeted as 52. 3% of students consume cereal in oversized proportions. Technological changes : In this moderen world technology is the important part of businesses.
Kelloggs fruit loops are relible on new technological changes in machinery , transportation, communication and marketing. SWOT ANALYSIS Strengths * Strong leadership * Skill management * Dedicated and diverse workforce * Extensive research ability * Control 42% of global market share for Pre-sweeter cereal, which is more than triple the market share of any of their competitors. * They have the strongest brand recognition and advertising recollection of all the cereal manufacturers Weaknesses * Focus on non realistic profitability goals. * Product focused approach. Have not aggressively developed many new cereal lines in the past four years. * Slow erosion of their australian market share in the past few years. * Follower in Pricing Strategy. Opportunities * Health consciousness trends in customers. * $2. 2 billion worth market of cereals in Australia. * International expansion is the biggest area for growth for Kellogg’s. * Kellogg can continue to slowly diversify, while still remaining in their core business area, which will increase their profitability. * If they can develop a better pricing strategy and guarantee lower prices, they can reduce costs while increasing their market share. Threats Criticism on sugary cereals for contributing to obesity. * General Mills, Post, and Quaker Oats are using price competition and product proliferation to erode Kellogg’s share of the market. * Discount imitation cereals brands have been successful in reducing premium brands in the more commodity like cereals. http://www. scribd. com/doc/17571315/Managing-Organizations-and-People-Kelloggs-Case-Study Marketing objectives: * Leadership in product innovation. * Strengthening the company’s seven largest cereal markets . * Accelerating the growth of convenience foods business. * Developing a more focused organization. * Continuing to reduce costs. Product development * Constant innovation. Introduction of new product to present customers. * Market development * Maintain global position * Diversification * Introduction of new products to fit new customers needs The specific tactical objectives were SMART, i. e. Specific, Measureable, Achievable, Realistic and Time-bound. They were set in 3 main areas: • Encouraging and promoting physical activity for health Kellogg’s worked with the Amateur Swimming Association (ASA) and sponsored swimming events in the Australia to promote physical activity for health. Swimming was promoted as a ‘skill for life’. Cycling programs were also romoted in collaboration with the Sustrans, Australia’s leading sustainable transport association. Working with All Bran, walking events and activities were sponsored. • Using packaging to promote the measure of balanced lifestyle Kellogg’s products, use packaging to communicate a balanced lifestyle for each segment of its consumer market. For children, cartoon characters are used to advise them and their parents about benefits of exercise. In addition, active living, shape management and proactive health care is also encouraged through the photographs and images on cereal boxes. • Using food labeling to help consumers make choices
Kellogg’s Guideline Daily Amounts are symbolical graphics printed on the products displaying the percentage amount of calories present in each nutrient contained in the product’s per person serving. This helps the health conscious consumer become familiar with the essential nutrients and their names and weight watchers can always select the cereal or snack which suits their calorie intake. The tactic allows the consumer to “build his own breakfast”. Financial objectives : Until 2015 Kellogg’s frootloops wand to expand their sales up to 15 % approximately by adopting new marketing strategies and plans.
Sales table of 2009 Region| Total Sales 2009 ($M)| Percentage of Total Sales| Australia| $1,030| 9. 2%| Europe| $2619| 20. 4%| Asia Pacific| $716| 5. 6%| Expected sales until 2015 is Region| Total Sales 2015 ($M)| Percentage of Total Sales| Australia| $ 1736| 16. 2%| Europe| $3258| 28. 9%| Asia Pacific| $1540| 11. 8%| http://www. wikinvest. com/stock/Kellogg_Company_(K) Target market The target market of kelloggs fruit loops is children of 6 to 18 years old. Children of growing age needs nutrition to grow up and company can look after it by providing a good nutrition value and a good addictive taste for children.
Kelloggs target market are children of age 6 to 18 . company is looking forward to launch different flavours which children usually like . for eg. Strawberry , choclate etc. Main benefit to develop new products for the target market (kids under 18) will be increase in sales. Consumer market segmentation: * Geographic segmentation: Kelloggs is preaparing to launch new fruitloops flavours in two states of Australia because of different facts and figures which may increase the annual sales of kelloggs Queensland Population 4,537,142
Children 6 to 18 1,214,020 Climate There are five predominate climatic zones in Queensland, based on temperature and humidity: * hot humid summer (far north and coastal) * warm humid summer (coastal elevated hinterlands and coastal south-east) * hot dry summer, mild winter (central west) * hot dry summer, cold winter (southern west) * temperate – warm summer, cold winter (inland south-east) Transportation is easy as of clear weather all the times also not very expensive. Victoria Population 5,427,700
Children age 6 -18 2,114,400 Climate victoria’s climate is generally favourable to plant growth, providing a combination of adequate rainfall and warmth, in most parts of the State. In winter, growth may be restricted by lower temperatures, whilst in summer, rainfall may be insufficient to meet plants’ demands for water. If irrigation water is available in summer then the productivity of pastures, crops, orchards and vineyards can be high as plants grow vigorously through long days of sunshine and warm temperatures.
The climate of Victoria is influenced by seasonal weather patterns as well as topographic features. Demographic segmentation: Kellogg’s main target customers by demographic segmentation is: * Age – Kelloggs main target market is the children under the age of 6 to 18. * Life cycle stage – kelloggs is looking forward to target on college and universities students who are under time pressure and need something quick to eat with some nutration values. Target marketing plan * The Proactive Approach Kellogg’s “created the future” by developing a vision and a mission and then eveloped innovative tactics to make it happen. The changing trends were diagnosed by research and proper segmenting, targeting and positioning was done. (4 Approaches to planning, 2008) proactive stance begins from within the organization. As Kellogg’s developed the determinism and became independent, it sought its own opportunities and recognized unique gaps left in the cereal market to explore. Then, it used its own branding expertise to hit each segment. * User-Based Approach – The Family Focus
From the TQM perspective, Kellogg’s centered their strategic planning towards its customer base – “The Family Focus”. It took into consideration what the consumer’s perception of quality would be of a cereal manufacturer. Considering the health safety of consumers, care was taken to ensure total quality of the nutrients and checks for allergic components from the onset of procurement to packaging and distribution. To satisfy the need of the weight conscious consumer to know about the calorie values of the cereal, the labeling of the boxes was made perfect to detail. ttp://www. coffeecrunch. net/coffee_cereal_analysis. pdf Target Market Consideration Strategy Resources were allocated towards wisely selected consumer segments of the market that had potential for profit. Children, weight watchers, athletes, and families were focused on and brands were developed to suit the mind frame of each. Previously, limited products were mass-marketed such as the typical box of frootloops. Marketing mix strategy It is always mainly focus on 4 p’s i. e Product , place , price, promotion Product : Kelloggs fruit loops Flavour – banana Ingredients
SUGAR; WHOLE GRAIN CORN FLOUR; WHEAT FLOUR; WHOLE GRAIN OAT FLOUR; OAT FIBER; SOLUBLE CORN FIBER; PARTIALLY HYDROGENATED VEGETABLE OIL (ONE OR MORE OF: COCONUT, SOYBEAN AND/OR COTTONSEED OILS)†; SALT; SODIUM ASCORBATE AND ASCORBIC ACID (VITAMIN C); NIACINAMIDE; REDUCED IRON LESS THAN 0. 5g TRANS FAT PER SERVING Nutrition value Serving size 1cup Amount per serving Nutrition Facts| Serving Size 1 cup (30. 0 g)| | Amount Per Serving| Calories 118Calories from Fat 5| % Daily Value*| Total Fat 0. 6g1%| Saturated Fat 0. 4g2%| Trans Fat 0. 0g| Polyunsaturated Fat 0. 1g| Monounsaturated Fat 0. 1g| Cholesterol 0mg0%| Sodium 141mg6%|
Total Carbohydrates 26. 7g9%| Dietary Fiber 0. 6g2%| Sugars 12. 5g| Protein 1. 4g| | Packaging designs Froot Loops Cereal, 0. 95-Ounce Individual Boxes (Pack of 70) Features : easily recyclable box Innovative ideas To produce different type of flavours for children of age 6 to 18 . To give free toys with the purchase of the box of different sizes will help to increase sales. Place : Distribution will be in supermarkets * Coles * Woolworths * Aldi Intermediaries are wholesalers and retailers and managed by store supervisors and management staff. Channel network used is * Kellogg’s – computer system – Coles, Woolworths and Aldi
Price Kelloggs Froot Loops 340g| $5. 96| Kellogg’s Cereal Froot Loops 340g| $6. 04| Kelloggs Cereal Froot Loops 550g| $8. 59| Kellogg’s Cereal Froot Loops 550g| $6. 00| Kelloggs Froot Loops 585g| $8. 64| Kelloggs Froot Loops 550g| $8. 30| Kellogg’s Cereal Froot Loops 585g| $8. 72| Promotion Tv advertisement : By giving advertisements on tv of different offers such as buy one get one free, 20 % discount on two packs etc Newspapers : providing new offers to children for exp free toys inside the boxes, free cartoon books with purchase of box Internet : By launching special offers on internet websites, sponsor sports activities and events
BUDGET Marketing budget template (annual) Research firm fees = $ 60,000 Web research = $ 70,000 Public relations: Press kit materilals =$52,000 Analysis fee = $20,000 Press release development = $27,000 Total public relations = $99,000 Advertising : Creative development = $44,000 Newspaper advertisement = $56,000 Radio advertising = $12,000 Magazine advertisement= $29,000 Television advertising = $95,000 Total advertising =$ 236,000 Promotion: Free samples (15 days @ $ 2 each) Coupons = $ 3600 frequent purchase book = $2500 total promotion = $59,000 Implementation and action plan
Timeline to implementation is 3 months according to new marketing strategy. Implementation steps: * Development of marketing and advertising functions by promoting ads in magazines. * Achievement of product diversity, market leadership and competitive edge by advertisement on television. By comparing the sales in the past to the present sale, benchmark new financial figures we can measure that objectives are achieved. If the objectives would not be achieved by strategy the contingency plans can be put in place which is to attract young kids by giving them free toys and carton books with each and every purchase.
Conclusions and recommendation Kellogg is a Global Company Committed to Building Long-Term Growth In Volume and Profit and to Enhancing its Worldwide Leadership Position by Providing Nutritious Food Products of Superior Value. Frootloops are the main product sold in the Australia by kelloggs. It is the attraction of young kids specially children under age of 18. Ultimate marketing strategy is to increase the sale of kellogg’s by 15 % in Australia until 2015 by adopting new action plans and strategies by the company and to target main customers i. young kids and universities students and people who are under the time pressure from the other activities in the life. Refrences http://www. wikinvest. com/stock/Kellogg_Company_(K) http://en. wikipedia. org/wiki/Froot_Loops http://www. scribd. com/doc/17571315/Managing-Organizations-and-People-Kelloggs-Case-Study http://answers. yahoo. com/question/index? qid=20080225125957AAEns2F http://answers. yahoo. com/question/index? qid=20080225125957AAEns2F http://www. marketingteacher. com/lesson-store/lesson-marketing-mix. html