Marketing Mix

Katherine Mulhall
20041462

This assignment has been prepared with the highest standards of academic integrity

Katherine Mulhall

BBS2

20041462

Table of Contents
TABLE OF CONTENTS.....................................................................................2
TABLES AND FIGURES....................................................................................3
COMPANY HISTORY/BACKGROUND..................................................................4
JOHN HARVEY KELLOGG-BROTHER.......................................................................................... 4
THE ACCIDENTAL CREATION OF KELLOGGS CORNFLAKES............................................................5
CORPORATE IMAGE.............................................................................................................. 5
MARKET SEGMENTATION & TARGETING...........................................................6
MARKET SEGMENTATION....................................................................................................... 6
TARGET MARKETING............................................................................................................ 7
MARKET POSITIONING...................................................................................8
POSITIONING STRATEGIES..................................................................................................... 8
PRODUCT...................................................................................................... 9
NEW PRODUCT DEVELOPMENT.............................................................................................. 9
New Product- Special K.......................................................................................... 10
PRODUCT LIFE CYCLE........................................................................................................ 11
Introductory Stage................................................................................................... 11
Growth Stage........................................................................................................... 11
Maturity Stage.......................................................................................................... 12
Decline Stage........................................................................................................... 13
PRICING...................................................................................................... 14
INTERNAL & EXTERNAL FACTORS.........................................................................................14
Internal Factors Affecting Pricing Decisions.............................................................14
External Factors Affecting Pricing Decisions.............................................................16
PLACE (DISTRIBUTION).................................................................................17
DISTRIBUTION STRATEGY.................................................................................................... 17
ONLINE MARKETING.......................................................................................................... 18
What business benefits can the Internet provide?...................................................18
Kelloggs Online Marketing.......................................................................................18
PROMOTIONS.............................................................................................. 20
ADVERTISING................................................................................................................... 20
Institutional Advertising........................................................................................... 20
Product Advertising.................................................................................................. 20
CONCLUSIONS & RECOMMENDATIONS...........................................................22
CONCLUSIONS.................................................................................................................. 22
RECOMMENDATIONS.......................................................................................................... 23
REFERENCES............................................................................................... 24

2|Page

Katherine Mulhall

BBS2

20041462

Tables and Figur

FIGURE
FIGURE
FIGURE
FIGURE
FIGURE
FIGURE
FIGURE
FIGURE
FIGURE
FIGURE

1-WILLIAM KEITH KELLOGG............................................................................................ 4

2-JOHN HARVEY KELLOGG............................................................................................. 4
3-SNAP, CRACKLE & POP.............................................................................................. 7
4-KELLOGG'S SPECIAL K............................................................................................. 10
5-SPECIAL K BLISS..................................................................................................... 10
6-NUTRI-GRAIN......................................................................................................... 13
7-SPECIAL K LOGO.................................................................................................... 19
8-DROP A JEAN SIZE..................................................................................................19
9-CRUNCHY NUT....................................................................................................... 21
10-KELLOGG'S LOGO.................................................................................................25

Y
TABLE 1-THE SEGMENTATION PROCESS.......................................................................................6
TABLE 2-NUTRI-GRAIN SALES FIGURES.....................................................................................13

3|Page

Katherine Mulhall

BBS2

20041462

Company History/Background
Kelloggs began on February 19th 1906.
William Keith Kellogg was born April 7th, 1860, in Battle Creek, Michigan and he died in
October 6th, 1951.William Kellogg was the person responsible for it all and was the person
who signed the papers that officially incorporated the Battle Creek Toasted Corn Flakes
Company which is now commonly known as Kelloggs.
Will Kellogg started his business ventures by selling brooms, before helping his brother,
John Harvey Kellogg, run the Battle Creek
Sanitarium. Now he is responsible for the W.K
Kellogg Co. Although William Keith Kellogg
is the official founder of the cereal, it was his
brother John who had first attempted to
develop the first breakfast cereal. John Kellogg
failed to invent the cereal as the taste was not
appealing and then that is when William
stepped in and took over and with the addition
of a simple ingredient, sugar, it became a huge
success.
The popularity of his new Corn Flakes cereal
was discovered by accident in 1876, which
Figure 1-William Keith Kellogg
encouraged William Kellogg to set up the
Kellogg company, now the most successful cereal manufacturer in the world (Kellogg's ).

John Harvey Kellogg-Brother

John Harvey Kellogg (February 26, 1852 - December 14,
1943).
Kellogg was a dynamo of human energy, a personification
of the work ethic, who needed only 4 to 5 hours of sleep a
night, went cycling or jogging every morning, dictated 25 to
50 letters a day, adopted and reared 42 children, wrote
nearly 50 books, edited a major magazine, performed more
than 22,000 operations, gave virtually all of his money to
charitable organizations, loved human service, generally
accomplished the work of ten active people, and lived in
good health to age 91. (John H, 1999).
Whilst Dr. John Harvey Kellogg worked at the hospital and
health spa in Michigan, his brother William worked
alongside him as the business manager. The hospital
stressed healthy living and kept its patients on a diet that
eliminated caffeine, meat, alcohol, and tobacco.

Figure 2-John Harvey Kellogg

4|Page

Katherine Mulhall

BBS2

20041462

The Accidental Creation of Kelloggs Cornflakes

The two brothers invented many foods that were made from grains, including a coffee
substitute and a type of granola, which they forced through rollers and rolled into long
sheets of dough. One day, after cooking some wheat, the men were called away. When they
eventually returned, the wheat had become stale. They decided to force the tempered grain
through the rollers regardless of its condition.
Surprisingly, the grain did not come out in long sheets of dough as it previously had done.
Instead each wheat berry was flattened and came out as a thin flake. The brothers baked
the flakes and were delighted with their new invention. They had discovered a new
delicious cereal but they had no way of knowing they had accidently invented a whole new
industry. There was one problem, it didnt taste very good, and it was dull and tasteless.
John Kellogg gave up and decided he wanted out on the new discovery and left it up to his
brother. By taking a cheap commodity and simply adding value such as sugar, William
came up with a great business opportunity for success. Will Keith eventually opened his
own cereal business, and its most famous products are still sold today. It wasnt until 1906
that Kelloggs Corn Flakes were made available to the general public. (Kellogg's ).
It soon became a leading U.S. producer of these and other convenience foods. By the
early 21st century, its annual sales exceeded $9 billion. (Answers.com).
But Kelloggs did not stop there. The company introduced a wide range of products such
as:

All-Bran
Bran Flakes
Coco Pops
Crunchy Nut
Elevenses
Fibre Plus
Frosties
Fruit n Fibre
Wheats

Fruit Winders
Hot Oak Krumbly
Krave
Natures Pleasure
Nutri-Grain
Optivita
Pop Tarts
Rice Krispies
Special K

Corporate Image
Kelloggs portrays their corporate image with various advertising for each individual product.
Advertising wasnt their only campaigns to polish their corporate image, Kelloggs also
contributes back to the society and very generously. The W.K. Foundation was founded in
1930 by William Kellogg. It all began when his grandson, Kenneth Williamson, was involved
in a tragic accident which left him paralysed. This, along with the cereal companys fast
growing capital and W.K.s love of children, inspired him to form the foundation. Initially,
the Foundation was meant to assist handicapped children in securing better health, confidence
and trust in the country and its institutions. Now the principle of the foundation is for the
promotion of the health, education and welfare of mankind, but principally for children and
youth. By 1934, W.K. Kellogg donated $66 million to the foundation.

5|Page

Katherine Mulhall

BBS2

20041462

Market Segmentation & Targeting

Segmentation and targeting are two key elements of marketing planning. Segmentation
involves dividing the market of potential customers into homogenous groups. These groups
may be distinguished in terms of their behaviour, attitudes, demographic characteristics, age,
gender, work status, social class etc. Target marketing follows on from the initial
segmentation decision.

Market Segmentation
Why segment?
Market segmentation is the strategy of last resort. (Kotler, 2001)
An organisation would rather attract a large market than a specific part of that market and
then target to that market as a whole but based on the fact that most markets consists of
buyers who have different needs and who cannot all be served with the same product offering
this is why organisations segment their market.
Specify
Specify

the
the

market
market

Describe
Describe who
who buys,
buys, what
what
they buy,
they
buy, where
where they
they
buy, and
buy,
and how
how they
they buy
buy

Build profile of individual

segments, using
segments,
using any
any or
or
all of the possible
segmentation bases
bases
segmentation

Determine the
attractiveness of each
segment

Determine firm's ability to

serve the most attractive
segments
segments

Table 1-The Segmentation Process

Behavioural segmentation is based on buyers behavioural patterns. These patterns can

include the occasion when the buyer uses the product, timing of use etc.
For instance, most consumers of Kelloggs ate the product at breakfast, but the company
mounted an advertising campaign to encourage consumers to use the product at other times of
6|Page

Katherine Mulhall

BBS2

20041462

the day as a snack. Kelloggs hoped this would open up a new segment for them. (Rogan,
2007)

Target Marketing
Targeting means selecting particular customers or customer groups at which to aim the firms
marketing mix. It may involve the development of different marketing mixes for different
segments.
Targeting is the decision about which segment(s) a business decides to prioritise for its sales
and marketing efforts. (Dibb, Simkin, Pride, & Ferrell, 1997)
Kelloggs targets its products at different segments depending on the product. For example
Special K is targeted at women as Kelloggs was aware of the increasing demand for health
products for women.
Another example would be Kelloggs Rice Krispies: They target this product at children as a
fun cereal that snap crackle & pops and they also associated the cereal with characters to
catch the kids interest.

Figure 3-Snap, Crackle & Pop

7|Page

Katherine Mulhall

BBS2

20041462

Market Positioning
Marketing positioning has been defined as the place a product occupies in a given market, as
perceived by the relevant group of customers (Blythe, 2001)
Product positioning is strongly related to perception and image. Marketers hope that the
buyer will perceive their product to be unique and that they will have a distinctive image of
the product and its benefits.
Product positioning involves establishing a unique position for the product in the mind of the
consumer. (Rogan, 2007)
Buyers are being constantly bombarded with advertising and promotions which are all
attempts to position products in the buyers minds. Marketers try to find a distinct position
and must compete for attention with other existing competitors. The products positioning
will be based on the value offered to the consumer. This value can be expressed in a number
of ways including:

Product benefits
Features
Style
Value for money
Uniqueness
Sophistication

Positioning Strategies
There are a number of product positioning strategies, and which one the marketer select will
depend on the nature of the buyers needs. The positioning strategies are:
Product features- emphasised by some marketers to differentiate their products.
Benefit positioning- involves the marketer concentrating on the benefits of the
product.
Usage occasion- depending on how the consumer uses a product.
Type of user- Heavy users, medium users, and light users.
Competitive users- differentiate their product offering to other competing
organisations.
The type of user- heavy users can be encouraged to continue using the product, while
medium and light users can be encourages to increase their use.... Kelloggs aim brands such
as Special K at female users, while Frosties and Coco Pops are aimed at children. (Rogan,
2007)

8|Page

Katherine Mulhall

BBS2

20041462

Product
A product is anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a want or a need (Kotler, Armstrong, Saunders, & Wong,
2005)
Kelloggs cereals and snack bars are non-durable products; they are consumed quickly on one
or a few occasions. Kelloggs products would be classified as convenience. They are low
priced, frequently purchased and can be found in most locations such as convenient stores
and supermarkets.

New Product Development

New product development is the development of original products, product improvements,
product modifications and new brands through the firms own R&D efforts. (Kotler,
Armstrong, Saunders, & Wong, 2005)
In a rapidly changing and competitive business environment its not easy to predict future
trends in consumer tastes, competitors actions, and market conditions. Creating new
products or adjusting and making changes to existing products can be expensive. It involves
making investment decisions now with the hope that it will make a return later on. Market
research helps to predict future events and effects. Whether an organisation decides to
develop the product, maintain it, allow it to decline or kill it off requires time and heavy
decision making. New product development is extremely risky as most new products fail but
it also important for organisations to have product-lines and also product mixes to continue a
steady profit flow and to prevent their individual product to sink beneath the depths of the
current market.
Life blood of corporate success is bringing new products to the marketplace (Kotler,
Armstrong, Saunders, & Wong, 2005)
Kellogg's is a global organisation. Its products are manufactured in 19 countries worldwide
and sold in more than 180 countries. Kelloggs produce over 70 products, a variety of cereals
and snack bars. They have successfully succeeded in the development of new products since
their first product, cornflakes, and this is down to the fact that they own most of the market
for cereal as they were the first to establish it and competitors have only invaded a fraction of
what Kelloggs own. Kelloggs also have a really good reputation of good quality produce so
consumers purchase new products by Kelloggs as they are familiar with their standard.
Kelloggs has been in the market for over a century and their existing products have been
very sustainable and most of their products are now known as cash-cows so they are able to
generate the money from these cash-cows and pump it back into investment to help aid the
development of new products so prices would not be extremely high as the investment from
existing products covers the cost of resources and manufacturing.

9|Page

Katherine Mulhall

BBS2

20041462

New Product- Special K

Kelloggs kept up with current tastes and attitudes of is consumers. As the
desire for a healthier lifestyle became more demanding, Kelloggs seen this
growth and acted on it when they extended their product mix by launching
Special K in October 1999.

Figure 4-Kellogg's Special K

Special K is the delicious crunchy multi-grain flakes made with rice and wheat that is less
than 3% fat and it is also a great source of 6 essential B vitamins, vitamin C, D, and iron. This
proved to be a huge success especially with the women. The Special K challenge encouraged
women around the world to Drop a Jean Size. Kellogg has sustained healthy success,
generating nearly $13 million in 2009 sales which is phenomenal. Most of the products in the
Special K line build on the famous Special K diet and provide versatile weight management
solutions that are marketed toward a largely female consumer segment. Kelloggs then
launched Special K Peach & Apricot in February 2003 to widen their flavours
and sustain interest in the product.
A line extension involves the development of individual offerings that appeal
to different market segments, but that remain closely related to the existing
product line. (Boone & Kurtz, 1995)
Kellogg's already knew that women who are keen to watch their weight and
Figure 5-Special K Bliss shape seek a range of solutions throughout the day - not just at breakfast.
They examined the accomplishment of Special K cereal and expanded its
product line by producing similar low fat, healthy snack bars and nibbles for women to enjoy
on the go. Kelloggs was aware that people would not eat a bowl of cereal at their desk during
the day so this new product was perfect for them mid-day snacks. They brought out a wide
range of Special K Snacks such as Special K Bar (original, apple & pear, chocolate, bliss),
Special K Mini Breaks.

10 | P a g e

Katherine Mulhall

BBS2

20041462

Product Life Cycle

Products are like people, they go through stages of life. A persons life cycle progresses
progress from infancy to childhood to adulthood to retirement to death whereas successful
products progress through four basic stages: introduction, growth, maturity and decline, this
is known as a product life cycle.

Introductory Stage
The firms objective in the early stages of the product life cycle is to stimulate demand for
the new market entry. (Boone & Kurtz, 1995)
Financial losses are common in the introductory stage due to high expensive to develop the
product and heavy promotion costs and extensive research expenditure. Advertising is an
extremely expensive component of marketing a new product as you have to let your potential
customers aware of this new product on the market. A negative profit is usually the outcome
as sales are low and expensive is high. Innovators would be the main type of consumers at the
beginning. Although introduction is a highly expensive and rocky stage there are ways to
assist your product through the unpleasant stage;
I.

II.
III.
IV.

Launch a basic product- start from the bottom and work your way up, test the waters
first to make sure that there is an interest in it. Product complexity- makes sure the
product is easy to understand and use.
Selective distribution- dont distribute everywhere, begin in one place and see the
reaction.
Use heavy sales promotions- such as 50% off next buy or buy one get one free are
great promotions to kick start your sales.
Advertising- Build up consumer awareness, let people know about the product.

Some Kelloggs products, like Kelloggs cornflakes, have retained their market position for a
long time.
Many products do well when they are first brought out and Nutri-Grain was no exception. It
was launched in 1997 and it was an immediate success as it was designed to meet the needs
of busy people who had missed breakfast. Nutri-Grain gained more than 50% share of the
cereal bar market in just two years which is a great introduction for a product of any kind.

Growth Stage
During the growth stage, the pace of consumer acceptance and sales quickens. (Harrell,
2002)
The growth stage of a product life cycle is crucial as this is when competitors notice the
increase in sales and will develop competitive products and aggressively pursue distribution
channels. Majority of firms in a particular industry enter the market at the growth stage as
they notice success and substantial profit which attract rivals.
11 | P a g e

Katherine Mulhall

BBS2

20041462

Nutri-Grains sales steadily increased as the product was promoted and became well known.
It maintained growth in sales until 2002 through expanding the original product with new
flavours and format. This was a good idea for the business as it does not have to spend money
on new machinery or equipment for production. The market position of Nutri-Grain also
subtly changed from a missed breakfast product to an all-day healthy snack. (The Times
100, 1995)

Maturity Stage
Sales continue to grow during the early part of the maturity stage, but eventually they reach
their potential peak as the backlog of potential customers dwindles. At this stage a large
number of competitors have entered the market and the firms profits begin to decline as the
competition intensifies. As competition intensifies, competitors tend to cut prices in an
attempt to attract new buyers. Although a price reduction may be the easiest method of
inducing additional purchases, it is also one of the simplest moves for competitors to
duplicate. (Boone & Kurtz, 1995)
Gilbert Harrell indicates that weaker competitors are likely to lower prices, while stronger
rivals may sacrifice market share to maintain a satisfactory profit level. (Harrell, 2002)
Also a lot of companies drop out of the market as their profit margins are suffering too much.
Kelloggs Nutri-Grain bars were faced with a competitor, Alpen bars, which offered the same
benefits as the Nutri-Grain bar. This slowed down sales and chipped away at Nutri-Grains
market position. Kelloggs was one of the strong companies who fought for their product to
succeed and overcome this stage. Kelloggs continued to support the development of the
brand but some products such as Minis and Twists struggles in the crowded market.
Elevenses continued to succeed, this was not enough to offset the overall sales decline.
Not all products follow these stages precisely and time periods for each stage will vary
widely. Growth, for example, may take place over a few months or, as in the case of
Nutri-Grain, over several years. (The Times 100, 1995)

12 | P a g e

Katherine Mulhall

BBS2

20041462

Sales of Nutri-Grain Range

8000
7000
Chewy

6000

Minis

5000
Tonnes

Elevenses

4000

Twists

3000

Soft Bake

2000
1000
0
1997 1998 1999 2000 2001 2002 2003 2004

Table 2-Nutri-Grain Sales Figures

Decline Stage
In the decline stage of the product life cycle, sales start to diminish. For some products, the
decrease of sales may be very quick, for other products, it may be slow and steady.
Companies are likely to return to a much shallower product line at this stage, focusing all
their time and money on the products that generate adequate cash flows. Profit is extremely
low at this stage as they had to reduce the price of the product to keep consumers purchasing
it. The product life cycle implies that companies should have products in all stages at all
times. Firms with only mature and declining products can expect dwindling profitability. Yet
product development and the introductory stage are likely to absorb much of the profit
generated from growing and mature products.
By mid 2004 Nutri-Grain found its sales declining whilst the market continued to grow at a
rate of 15%. Clearly, at this point, Kelloggs had to make a key decision. Sales were falling;
the product was in decline and losing its position. Should Kelloggs let the product die or
should they extend its life? Kelloggs decided to extend the life of Nutri-Grain rather than
withdraw it from the market. This meant developing and extension strategy for the product.

Figure 6-Nutri-Grain

13 | P a g e

Katherine Mulhall

BBS2

20041462

Pricing
Price is the amount of money charged for a product or service, or the sum of the values that
consumers exchange for the benefits of having or using the product or service. (Kotler,
Armstrong, Saunders, & Wong, 2005)
Price is the only marketing mix element that generates income. The other variables include
making the product, telling consumers about it, and making it available to them, all these
other elements generate costs.

Internal & External Factors

Pricing decisions affect profit, volume, share of the market and social stance. In turn, pricing
policy takes account of internal and external factors.
Oscar Wilde once wrote that a cynic is a man who knows the price of everything and the
value of nothing. But the concepts of price and value are hard to separate. (Hill &
O'Sullivan, 1999)

Internal Factors Affecting Pricing Decisions

According to Kotler internal factors affecting pricing include the companys marketing
objectives, marketing-mix strategy, costs and organisation. (Kotler, Armstrong, Saunders, &
Wong, 2001)
Marketing Objectives
Before setting a price, the company must decide on its strategy for the product. Whether or
not the organisation has set its target market and positioning carefully will determine if its
marketing mix strategy, including price, will be straightforward or not. For example
Kelloggs Special K targeted towards women and carefully positioned themselves in the
healthy foods section, this allowed them to price Special K a little higher than their existing
products such as Rice Krispies or Cornflakes. Company objectives are general aspirations
toward which all activities in the firm, not only pricing, are directed (Nagle & Holden, 1995)
To be effective and efficient, the companys pricing decisions must fit into the marketing
strategy, and be in line with decisions on other marketing-mix elements. Reflections on
appropriate prices should occur at the time the product, communication, and distribution are
conceived, because the different instruments of the mix have a synergic influence on the
market. (Blois, 2000)
The company may seek additional objectives, the clearer a firm is about its objectives, the
easier it is to set prices. Examples of common objectives are survival, current profit
maximisation, market-share maximisation and product-quality leadership. (Kotler,
Armstrong, Saunders, & Wong, 2001)
1) Survival- Companies set survival as their fundamental objective if they are troubled
by too much capacity, heavy competition or changing consumer wants. (Kotler,
Armstrong, Saunders, & Wong, 2001). Kelloggs deals with survival by producing
14 | P a g e

Katherine Mulhall

BBS2

20041462

new product mixes to meet consumers ever-changing wants such as All-Bran. People
became aware of their health and how much fibre they consumed and this is why
Kelloggs launched All-Bran to meet their consumer wants and needs. In some cases
profit is less important than survival, as long as their prices cover variable costs and
some fixed costs, they can stay in business. In Kelloggs situation they make enough
profit to cover all costs and this is because they are a well-known organisation with
such a huge product line that customers consume their products on a daily basis.
Kelloggs also introduce promotional pricing such as; 50% off, buy 2 get 1 free etc.
This encourages customers to purchase Kelloggs products above other existing
competitors.
2) Current profit maximisation- Many companies use current profit maximisation as
their pricing goal. They estimate what demand and costs will be at different prices and
choose the price that will produce the maximum current profit, cash flow or return on
investment. (Kotler, Armstrong, Saunders, & Wong, 2001). Kelloggs Cornflakes is
so well known that they do not have to promote it which means costs are low. Also it
has such a high demand because of its familiarity that Kelloggs can keep the price of
Cornflakes relatively low and still generate profit off the frequent sales.
3) Market-share leadership- Other companies want to obtain market-share leadership.
They believe that the company with the largest market share will enjoy the lowest
costs and highest long-run profit. (Kotler, Armstrong, Saunders, & Wong, 2001).
Kelloggs posses most of the market-share as they are the ones that invented cereal so
yes their costs are low and profit is high.
4) Product-quality leadership- A company might decide that it wants to achieve
product-quality leadership. This normally calls for charging a high price to cover such
quality and the high cost of R&D. (Kotler, Armstrong, Saunders, & Wong, 2001)
Costs
Costs can determine the price that a company can charge for its product. A company will
want to charge a price that will cover its costs for producing, distributing, and selling the
product but also that will retrieve a fair rate of return for the effort that was put into
producing it. According to Armstrong many companies work to become the low-cost
producers in their industries. Companies with lower costs can set lower prices that result in
greater sales and profits. (Armstrong & Kotler, 2000). As I have mentioned. Kelloggs
Cornflakes is known as their cash-cow as it extremely well recognised so Kelloggs does
not have to pump much investment into the product so costs are low. With having low costs
means that Kelloggs can set low prices but still generate a substantial amount of profit.

15 | P a g e

Katherine Mulhall

BBS2

20041462

External Factors Affecting Pricing Decisions

As well as factors internal to the firm, there are factors that are external to the firm that must
be taken into account when prices are set. External factors that affect pricing decisions
include the nature of the market and demand, competition, and other environmental
elements. (Armstrong & Kotler, 2000)
The Market and Demand
Whereas costs set the lower limit of prices, the market and demand set the upper limit. Both
consumer and industrial buyer balance the price of a product or service against the benefits of
owning it. Thus, before setting prices, the marketer must understand the relationship between
price and demand for its product. (Kotler, Armstrong, Saunders, & Wong, 2001).
The sellers pricing freedom varies with different types of market. Economists recognise four
different types of market, each presenting a different pricing challenge; pure competition,
monopolistic competition, oligopolistic competition, and pure monopoly. I believe that
Kelloggs falls under oligopolistic competition which defines as a market in which there a
few sellers that are highly sensitive to each others pricing and marketing strategies. (Kotler,
Armstrong, Saunders, & Wong, 2001). In the cereal industry there are not a lot of
competitors, the main competitors for Kelloggs would be Nestle and own brands such as
Tesco and St. Bernard. With few competitors in the market each one can be aware and keep
an eye on the other. If Kelloggs lowered their price, competing companies will follow to
survive.
Each price the company might charge will lead to a different level of demand. Kelloggs
products would be elastic as even the slightest change in price will affect the quantity of
demand. If prices went up customers would just change to a substitute brand such as an own
brands which would be cheaper. Their demand changes because they are aware of other
competitors in the market and they become conscious that they do not have to pay this higher
price for Kelloggs when they can get a similar product for less. If Kelloggs had no
competition then they would be inelastic as consumers would have no choice but to purchase
their products.

16 | P a g e

Katherine Mulhall

BBS2

20041462

Place (Distribution)
Products need to be available in adequate quantities, in convenient locations and at times
when customers want to buy them. Producers need to consider not only the needs of their
ultimate customer but also the requirement of channel intermediaries, those organisations that
facilitate the distribution of products to customers. (Jobber, 2004)

Distribution Strategy
Establishing a supply chain that is efficient and meets customers need is vital to marketing
success. This supply chain is termed a channel of distribution, is the means by which
products are moved from producer to the ultimate customer. Gaining distribution outlets does
not come easily. Choosing an effective channel of distribution is an important aspect of the
strategy. Supermarkets is a type of distribution and effectively shortens the distribution
channel between producer and consumer by eliminating the wholesaler, for example,
Kelloggs distributes to Tesco, Dunnes Stores, SuperValue etc.
The most basic question to ask when deciding distribution strategy is whether to sell directly
to the ultimate customer or to use channel intermediaries such as retailers and/or wholesalers.
The company has to decide if they want to use a direct distribution channel, where a company
use their own employees and physical assets to serve the market, which is economically
feasible for small markets, or if the company wants to use indirect distribution channels
which are, as I have already mentioned, wholesalers, retailers, distributors and dealers,
franchises and agents.
Many manufactures want to connect with customers in as many ways as possible. Multiple
channel systems make use of more than one channel to access markets for the same product.
(Harrell, 2002). For example, Kelloggs distributes its products through company-owned
stores, wholesalers that resell to supermarkets and convenience stores, and franchised outlets.
Intensive distribution aims to achieve saturation coverage of the market by using all
available outlets. (Jobber, 2004). Kelloggs choice of distribution intensity was not selective
distribution or exclusive distribution but intensive distribution. Kelloggs has achieved
saturation coverage of the market and uses every available outlets ranging from local corner
shops to huge supermarkets to college vending machines for their Special K and Nutri-Grain
bars. Kelloggs does not sell directly to its customers or use their website as a distribution
channel as who would want to buy a box of cereal online? Although selling online has
become a major source of distribution in this modern age it does not fit well for Kelloggs as
their products are those that people would not purchase individually from the website but
Kelloggs has intermediaries such as Tesco that have an online website that allows customers
purchase their wide range of products online and it is then delivered to their door and
Kelloggs products are included in their range. This is more suitable as customers would
purchase a box of cereal as part of their weekly shopping. Kelloggs has a fantastic
distribution strategy and its products are distributed nationwide.
17 | P a g e

Katherine Mulhall

BBS2

20041462

Online Marketing
More recently the Internet has been playing a key role in distribution. Internet marketing can
be defined as the use of the Internet and related digital technologies to achieve marketing
objectives and support the modern marketing concept. (Chaffey, Mayer, Johnston, &
Chadwick, 2000)

What business benefits can the Internet provide?

According to Dave Chaffey, the Internet can be used to achieve each of the four strategic
directions as follows:
1) Market penetration. The Internet can be used to sell more existing products into
existing markets. This can be achieved by using the power of the Internet for
advertising products to increase awareness of products and the profile of a company
amongst potential customers in an existing market.
2) Market development. Here the Internet is used to sell into new markets, taking
advantage of the low cost of advertising internationally without the necessity for a
supporting sales infrastructure in the customers country.
3) Product development. New products or services are developed which can be delivered
by the Internet. These are typically information products such as market reports which
can be purchased using electronic commerce.
4) Diversification. New products are developed which are sold into new markets.
(Chaffey, Mayer, Johnston, & Chadwick, 2000)
Kelloggs, like most companies, takes advantage of the internet to advertise and market their
products due to the low cost of advertising, selling and distributing their products online.
E-commerce transactions are the trading of goods and services conducted using the internet
and other digital media. (Chaffey, Mayer, Johnston, & Chadwick, 2000). The Internet has
grown immensely in the past couple of years and nowadays people do everything online
include shopping. Customers purchasing power has increased because since e-commerce has
been introduced as they can buy items that may not be in shops or from other countries.
Companies have realised this and have opted to using e-commerce themselves and have
found it beneficial. The reason for this is that many companies, having decided that ecommerce offers an opportunity for revising distribution management practices, perceive
cyberspace as a way to regain control over transactions by cutting out intermediaries and
selling directly to the end-user customers. (Chaston, 2001)
Disintermediation is the removal of intermediaries such as distributors or wholesalers that
formerly linked a company to its customers.

Kelloggs Online Marketing

Although Kelloggs does not use the Internet for selling directly to its customers as I have
already explained, it does use the Internet effectively to promote and advertise its products,
events they organise, charities, etc. Kelloggs website, www.kelloggs.com, consists of all
their products with nutritional information about each one. It informs people about the
18 | P a g e

Katherine Mulhall

BBS2

20041462

company itself and also about job opportunities within Kelloggs. Any recent events or
charity events are also advertised such as their new fundraiser for schools called Kids4Fun.
Another popular aspect of the website that has been a success, especially with the women, is
their Special K drop a jean size challenge where it allows women to record their weight and
what they eat and watch their progress over the weeks. This is a huge encouragement for
women to get fit and healthy whilst also promoting Special K.

Figure 8-Drop a Jean Size

Figure 7-Special K Logo

19 | P a g e

Katherine Mulhall

BBS2

20041462

Promotions
Few goods or services, no matter how well developed, priced, or distributed, can survive in
the marketplace without effective promotion.
According to Charles W. Lamb, Jr. Promotion is communication by marketers that informs,
persuades, and reminds potential buyers of a product in order to influence their opinion or
elicit a response. (Lamb, Hair, & McDaniel, 2000)

Advertising
Advertising can be defined as any paid form of non-personal promotion transmitted through a
mass medium. The key difference between advertising and other forms of promotion is that
it is impersonal and communicates with large numbers of people through paid media
channels. (Brassington & Pettitt, 1997)
There are different types of advertising. If the companys aim is to build up the image of the
industry then institutional advertising may be used. In contrast, if the company wants to
enhance the sales of a specific good or service then product advertising is used. There are also
other forms product advertising such as pioneering advertising, competitive advertising, and
comparative advertising.

Institutional Advertising
Institutional advertising promotes the corporation as a whole and is designed to establish,
change, or maintain the corporations identity. It usually does not ask the audience to do
anything but maintain a favourable attitude toward the advertiser and its goods and services.
A form of institutional advertising called advocacy advertising is typically used to safeguard
against negative consumer attitudes and to enhance the companys credibility among
consumers who already favour its position. (Lamb, Hair, & McDaniel, 2000)
Kelloggs does not use this style of advertising as it is a worldwide organisation that is well
known to consumers for its loyalty and quality. Because Kelloggs has such a big variety of
products of different types it is best to advertise these products individually. Kelloggs does
not feel the need to advertise the organisation as a whole as they have an extremely
impressive corporate image.

Product Advertising
Unlike institutional advertising, product advertising promotes the benefits of a specific good
or service. The products stage in the life cycle often determines which kind of product
advertising is used: pioneering advertising, competitive advertising, and comparative
advertising. Kelloggs uses product advertising frequently as they have so many products
which are at different stage of their life cycle. I will give an example of a different product for
each type of product advertising to give you an idea of how Kelloggs advertises its different
products.

20 | P a g e

Katherine Mulhall

BBS2

20041462

Pioneering Advertising
Pioneering advertising is used in the early stages of the life cycle when it is necessary to
explain just what the product will do and the benefits it can offer. (Brassington & Pettitt,
1997). Pioneering advertising also seeks to create interest.
Kelloggs uses pioneering advertising when launching new products to creative interest to its
consumers and let them know how good it is. When Kelloggs launched Crunchy Nut they
had to advertise it so as people would take an interest in it because after all it is just another
cereal and how would people know or want to know how good it tasted? Kelloggs had to
persuade consumers to try Crunchy Nut and they done this by advertising it as something that
people couldnt get enough of. The common television advertisement that everyone is aware
of consists of people being in love with Crunchy Nut and not being able to resist eating it
anywhere, anytime. For example, one advertisement showed a man getting into his car after
being at the supermarket and just pouring the milk directly into the Crunchy Nut cereal box.
The advertisement shows that he could not wait to eat the delicious cereal and they use the
slogan obviously another Kelloggs Crunchy Nut, this indicates that this man is not alone
when it comes to be addicted to the cereal.
Competitive Advertising
Firms use competitive advertising when a product enters the
growth stage of the product life cycle and other companies begin
to enter the marketplace. Instead of building demand for the
product category, the goal of competitive advertising is to
influence the demand for a specific brand. (Lamb, Hair, &
McDaniel, 2000). Kelloggs Special K bars have been a huge Figure 9-Crunchy Nut
success, especially for the women. Kelloggs was one of the first
companies to create a healthy snack bar. As this product started to grow competitors started to
enter the market as they seen how well Special K bars were attracting customers. Competitors
such as Go-Ahead bars promoted their product as a healthy snack. With competition
Kelloggs had to do something other than just promote Special K as just a healthy snack but
to do something that will attract consumers to Special K instead of Go-Ahead. Kelloggs
decided to direct Special K towards women and introduce a challenge to help keep them
motivated about maintaining a healthy life style, and if they maintained a healthy life style
they would maintain consuming Special K as that was their initial motivator. Kelloggs
advertised Special K as women taking the Special K challenge to drop a jean size and their
advertisements consisted of slim, healthy women wearing red as that is their trade mark and it
also looks great. Everyone knows that Special K is associated with this image and that is what
gives Special K a competitive advantage over Go-Ahead bars.
Not all advertising activity is meant to have a direct effect on sales. Corporate advertising is
not tied to any particular product. (Hill & O'Sullivan, 1999). Kelloggs advertises events
such as charity sponsors (Fun4Kids) or promotions on back to school equipment. This type of
advertising does advertise the corporation, Kelloggs, but no specific product or even a
mention of their products in general.
21 | P a g e

Katherine Mulhall

BBS2

20041462

Conclusions & Recommendations

Conclusions
Overall, Kelloggs is such a massive successful organisation that has done extremely well
over the past decade. The company has grown from an accidental creation to the main brand
in the cereal industry.
Although they still produce the first product that was invented, cornflakes, they also produce
over 70 different products. This shows me how much they have grown as an organisation
throughout the years. As a result of William Keith Kellogg, people in Ireland eat more
breakfast cereal at 8kg per head than any other country in the world. This shows me the huge
demand the Ireland has for this market. An Irish survey states that together we consume
360,000 bowls of Kelloggs Corn Flakes everyday in Ireland, thats 130 million bowls every
year! (Kellogg's ). Kelloggs is the leading supplier of breakfast cereals in Ireland. The
reason for this success is due to the fact that Kelloggs have consistently increased their range
to meet the ever-changing needs of Irish consumers.
Alongside Kelloggs successful breakfast cereal range, they have pioneered the development
of a wide range of nutritious snacks and cereal bars. This was a response to todays fast
moving society; people often skip breakfast as they are constantly on the go.
By Kelloggs continually launching not only new products, but campaigns, has been one of
the reasons why Kelloggs is still such a huge success today and has not matured and declined
as most organisations and products do. Kelloggs kept their customers interested by launching
promotions such as Special K Drop a Jeans Size challenge which was launched in 2003 and it
became one of the companys most successful promotions.
In my opinion, the main cause of Kelloggs still being a success is down to the fact that they
altered their segmentation. Kelloggs segmentation was targeted towards behavioural
segmentation which was based on time of use. Different people consume the same product
at different times. Kelloggs targeted Corn Flakes as a breakfast cereal, to be eaten in the
morning time. Kelloggs then identified that a significant proportion of its customers ate
Corn Flakes as a snack food later in the day. Kelloggs decided to sustain sales and to
promote Corn Flakes to late-night snackers and also during the day snacks by introducing
cereal bars that can be consumed anywhere at any time.
Kelloggs has a fantastic corporate image because of all the charity work they involve
themselves in and because it is such a familiar company with good quality products and
nutritional foods. They are known for their good advertising and promoting and their
exceptional marketing mix which is important. If Kelloggs continues to do what they are
currently doing then they will remain successful in the future. Although, I do feel there are
some areas in which they could improve or alter as I have mentioned in my recommendations
below.

22 | P a g e

Katherine Mulhall

BBS2

20041462

Recommendations
Although Kelloggs has been, and still is, a huge success due to their effective marketing mix
strategy, I feel there are some recommendations that would benefit the company in so many
ways.
Targeting- From researching Kelloggs I have learnt a lot about their products and
who they are aimed at. For example, Rice Krispies, Frosties, and Coco Pops are
targeted at children because of their delicious sugary taste and eye-catching
packaging, Special K is targeted at women who are health conscious and want to lose
weight. With Special Ks low fat and nutritious goodness it really attracts women who
want to be healthier. What about men? Kelloggs has aimed its products at most of the
market but hasnt yet succeeded in reeling in the male population. Some men might
have a bowl of Corn Flakes but there is nothing specifically aimed at them or is
unique to men in general. This is something I feel Kelloggs can focus on and improve
even if it is just something simple like a sports bar.
New Product Development- Kelloggs has accomplished launching new and great
products and now they have such a wide range of products available. Advice I would
give Kelloggs would be to accomplish something completely new, to branch away
from the breakfast and cereal industry and maybe bring out something from another
food section such as minerals, confectionary, etc.
Distribution- Kelloggs uses multiple channel distribution systems as they distribute to
supermarkets, local convenience stores, franchised outlets etc. The one type of
distribution Kelloggs does not use is online distribution. I can understand that a
business to consumer (B2C) distribution would not be ideal as not many customers
would buy cereal online from Kelloggs website. However, I do think that Kelloggs
should consider using business to business (B2B) type of distribution as it would be
great for Kelloggs to handle and keep track of their transactions and it will also
reduce costs as it would cut out the wholesaler.
Promotion- I mentioned institutional advertising and how this type of advertising
promotes the corporation as a whole not just one individual product. Kelloggs does
not seem to do this as they advertise their products separately but I think institutional
advertising could be beneficial for Kelloggs as it helps maintain customers interest
and loyalty. It reminds customers of what your company is and what it does not only
trying to sell your products to them but trying to sell your business also.

23 | P a g e

Katherine Mulhall

BBS2

20041462

References
Answers.com. (n.d.). Retrieved Febuary 15, 2011, from http://www.answers.com/topic/willkeith-kellogg#ixzz1FdgSRHmS
Armstrong, G., & Kotler, P. (2000). Marketing: An Introduction, 5th Edition. New Jersey:
Prentice-Hall Inc. .
Blois, K. (2000). The Oxford Textbook of Marketing. New York: Oxford University Press Inc.
Blythe, J. (2001). Essentials of Marketing, 2nd Edition. Essex: Pearson Education Limited.
Boone, L. E., & Kurtz, D. L. (1995). Contemporary Marketing Plus. Orlando: The Dryden
Press.
Boone, L. E., & Kurtz, D. L. (1995). Contemporary Marketing Plus, 8th Edition. Orlando:
The Dryden Press.
Brassington, F., & Pettitt, S. (1997). Principles of Marketing. London: Pitman Publishing.
Chaffey, D., Mayer, R., Johnston, K., & Chadwick, F. E. (2000). Internet Marketing. Essex:
Pearson Education Limited.
Chaston, I. (2001). E-Marketing Strategy. Berkshire: McGraw-Hill Publishing Company.
Dibb, S., Simkin, L., Pride, W. M., & Ferrell, O. C. (1997). Marketing Concepts &
Strategies, 3rd Edition. Boston: Houghton Miflflin Company.
Harrell, G. D. (2002). Marketing Connecting with Customers, 2nd Edition. New Jersey:
Pearson Education, Inc.
Hill, E., & O'Sullivan, T. (1999). Marketing, 2nd Edition. Essex: Addison Wesley Longman
Limited.
Jobber, D. (2004). Principles and Practice of Marketing, 4th Edition. Berkshire: McGrawHill International Ltd.
John H, G. (1999). The Natural Health Perspective. Retrieved March 07, 2011, from
http://naturalhealthperspective.com/tutorials/john-kellogg.html
Kellogg's . (n.d.). Retrieved January 23, 2011, from http://www.kelloggs.ie/
Kotler, P. (2001). Kellogg on Marketing. New York: John Wiley & Sons.
Kotler, P., Armstrong, G., Saunders, J., & Wong, V. (2001). Principles of Marketing, 3rd
Edition. Essex: Pearson Education Limited.
Kotler, P., Armstrong, G., Saunders, J., & Wong, V. (2005). Principles of Marketing, 4th
Edition. New Jersey: Prentice Hall.

24 | P a g e

Katherine Mulhall

BBS2

20041462

Lamb, J. C., Hair, J. J., & McDaniel, C. (2000). Marketing, 5th Edition. Ohio: South-Western
College Publishing.
Nagle, T. T., & Holden, R. K. (1995). Tactics of Pricing: A Guide to Profitable Decision
Making. Englewood Cliffs, NJ: Prentice Hall.
Rogan, D. (2007). Marketing- An Introduction for Students in Ireland, 3rd Edition. Dublin:
Gill & Macmillan Ltd.
The Times 100. (1995). Retrieved March 21st, 2011, from thetimes100.co.uk:
http://www.thetimes100.co.uk/

Figure 10-Kellogg's Logo

25 | P a g e