Business plan
Jonathan
Business plan
Kellogg
Work By：
Han Tongqing (c05299)
Date: 10/7 2008
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Business plan
Jonathan
Executive Summary
This assignment required that I choose an Australian product to export into the India.
I chose to write a business plan outlining how we plan to export Sultana Bran cereal
by Kellogg into the region. I chose Sultana Bran as there is an emerging market for
such goods in the India due to consumers paying more attention on health and
nutrition than ever before but having less time on their hands. Breakfast cereals are
not a very popular food in the country but we believe there is great potential for such
a product especially because there is a rising demand for breakfast cereals amongst
elitist families who perceive this as a lifestyle need, and other segments such as office
ladies who are taking to the convenience or nutrition factor of family breakfast cereals
as well as Sultana Bran. Sultana Bran provides an alternative to this offering people a
quick and easy way to prepare the breakfast. I chose Kellogg because it has branches
throughout the world and is already well known in Asian. Presently it does not sales
its Sultana Bran to the India and we believe it has the capabilities and opportunities to
make this a successful venture.
I have recommended that Kellogg use a wholly owned subsidiary entry strategy to
enter this market. Wholly owned subsidiary is a great entry mode but more cost than
others, however, as the brand has already been known in the country. I have analysed
the environment in the India and Kellogg’s capabilities and are confident that sale
Sultana Bran to the India will help the company break into this growing market and
become a leader in the cereals market.
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Table of contents:
1.0 introduction ……………………………… 4
1.1
1.2
1.3
Purpose of this report …………………………………..
The country …………………………………………….
The product-Kellogg’s Sultana Bran ………………….
4
4
5
2.0 External Environmental Analysis……….. 5
2.1
2.2
2.3
2.4
2.5
2.6
Political environment …………………………………….
Economic environment …………………………………..
Demographical environment ……………………………
Socio-cultural environment ………………………………
Legal and Technological environment …………………..
Natural environment ……………………………………..
5
6
8
10
11
12
3.0 Industry competitive environment analysis..12
3.1
3.2
3.3
3.4
3.5
Industry Rivalry……………………………………………
Threat of substitutes ………………………………………
Threat of new entrants …………………………………...
Bargaining power of suppliers ……………………………
Bargaining power of buyers ………………………………
12
13
13
13
14
4.0 International market entry strategy—the
alternatives………………………………… 14
4.1
wholly owned subsidiary …………………………………. 15
5.0 Marketing objectives and strategy ……… 17
5.1
5.2
Marketing objectives …………………………………….
Marketing Strategy ………………………………………
6.0 The risk factors …………………………..
6.1
6.2
6.3
Political Risk ……………………………………………
Economic Risk……………………………………………
Other Risks …………………………………………….. .
7.0 Economic evaluation ……………………..
8.0 Recommendation………………………….
9.0 Conclusion…………………………………
10.0 Appendix…………………………………..
11.0 References ………………………………...
3
17
20
24
24
24
25
25
26
26
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Business plan
Jonathan
1.0 INTRODUCTION
This project aims to give an understanding of the attractiveness of India as a potential
product market for the breakfast cereal, Sultana Bran. The project consists of
information on the background of Kellogg’s and the Sultana Bran market
attractiveness of breakfast cereals in India. It begins with a discussion on an
environmental analysis of India, followed by a detailed analysis of market entry
strategy. In order to determine the profitability of this market in India, marketing
objectives and strategy were conducted. As a reminder of success, risk factors were
further emphasized.
1.1
Purpose of this report
The purpose of this report is to find new opportunities in Indian markets to further
expand the company. This business plan explains our international marketing
strategy- how we plan to plan to introduce the product into the India, what entry
modes we’ll be using, and our marketing strategy of the product.
1.2 The country
The country is India because India is a huge emerging market and contains huge
potential consumption for a variety of products. Considering the Indian size and low
brand penetration, Kellogg’s has set its sights on the nascent Indian market for
branded cereal products. Although margins in the cereals business are low, Kellogg’s
can target volumes to obtain substantial profit. In addition, India's growing middle
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class and strong domestic transportation and distribution network had attracted the
company. India is targeted as a good-potential, long-term-growth market.
1.3
The product-Kellogg’s Sultana Bran
The product is Sultana Bran breakfast cereal, which is one of the strongest brands in
Australia (Kellogg’s Company Annual report, 2005). In Australia, the brand has a
healthy, youthful image and diet orientation which is very popular with every family,
particularly females. The needs it satisfies are primarily functional, with marketing
communications focusing on the nutrition and energy eating Sultana Bran can provide
(Kellogg’s Australia, 2005a).
2.0 External Environmental Analysis
2.1 Political environment
India is the largest democracy in the world. Since its independence in 1947, India’s
growth had been constrained and shaped by policies of import substitution and an
aversion to free markets. There have been three wars between India and Pakistan
since 1947. During the 1990s socialist policies the government began to open its
market gradually and encourage economic reform and foreign investment (Cateor&
Graham, 2007; BBC news, 2006). This transformation leads to the announcement of a
five-point Agenda including improving the investment climate; developing a
comprehensive WTO strategy; reforming agriculture, food processing and small-scale
industry; eliminating red tape and instituting better corporate governance (Cateor&
Graham, 2007).
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President A.P.J.Abdul KALAM was elected in 26 July 2002 to serve a term of 5 years
and he is the head of state. But he has few actual powers can only decide which party
or individual should form the central government after general elections (CIA, 2006).
Prime Minister Manmohan SINGH was chosen in May 2004 after the Congress
Party’s success in general elections. He is the de facto head of government and has
most executive powers. He said his priorities were to reduce poverty and to plough on
with economic reforms and stated a desire to build friendly relations with its
neighbors, especially Pakistan. He is perceived as a strong leader as the held together
a coalition including communist allies and ministers accused of corruptions during his
first year as Prime Minister. He is also keen on pursuing market-friendly economic
policies and supervising the introduction of nuclear non-proliferation legislation. But
his attempts to raise the poorest citizens out of poverty haven’t achieved any desired
results (BBC News, 2006).
Relationships between Australian and India governments are becoming stronger with
both committed to establishing a relationship that benefit both countries. The
Australian Government is committed to upgrading the bilateral relationship with India
in economic, political, strategic and social dimensions. The Australian Government
also seeks reduction in tariff and non-tariff barriers to India (Department of Foreign
Affairs and Trade, 2005)
2.2 Economic environment
India’s diverse economy includes traditional village farming, modern agriculture,
handicrafts, a wide range of modern industries and services (CIA, 2006). In the last
decade, significant structural reforms helped India become one of the world's fastest
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growing emerging economies, boosting living standards and reducing poverty.
Economic liberalisation and rising incomes also stimulated rapid trade growth with
Australia and significantly increased Australia's foreign direct investment in India
(Austrade, 2006). The economy of India has posted an average growth rate of more
than 7% in the decade since 1994, reducing poverty by about 10 percentage points.
India achieved 7.6% GDP growth in 2005 and the GDP for 2005 is US dollar 750.8
billion (CIA, 2006).
Inflation rate is 4.2 per cent and unemployment rate is 8.9 per cent in 2005. Per capita
GDP was increasing at a relatively slow pace in 1990-2000 (around 11.9% per year)
and after taking account of inflation any gains in real income would have been modest.
The rate of growth for this indicator in 2000-2015 is forecast to be about 3.7% per
year but this represents gains in real income, implying a healthy improvement in
purchasing power. Trends in disposable income have followed a very similar track to
the growth in per capita GDP though rates of increase in the future will be lower
(GMID, 2006). The composition of households by occupation doesn’t change over
time. The share of all Indian households headed by employees should remain
relatively stable, amounting to about one fifth of the total. Meanwhile, the share of
households headed by employers and the self-employed is high in comparison with
other countries and is expected to rise further in the future. In 2000, 38% of all Indian
households fell into this category and by 2020 their share will have reached 41.5%
(GMID, 2006).
However, insufficient investment in both public and private physical infrastructure of
India remains a major constraint in the long run (GMID, 2006). In particular, the
failure of state governments to provide basic infrastructure severely undermines the
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long-term growth potential of the economy, as the infrastructure of a country directly
influence its marketing mix, in a way the sound infrastructure facilitate the marketing
process.
India also faces a large and growing budget deficit. India's fiscal deficit is one of the
highest in the world, accounting for nearly 11% of its GDP.Governement borrowing
has kept interest rates high (CIA, 2006). Hopefully, further economic deregulation
could help attract additional foreign capital inflow and lower interest rates. Although
government relaxed its control on foreign trade and invest in India, high tariffs and
limits on FDI still exist. (Cateor& Graham, 2007; CIA, 2006).
Compared with India, Australia is having strong economic growth with high
purchasing power for consumers.
2.3 Demographical environment
India has a population over 1 billion and contains enormous low-cost labour pools, in
which middle class make up 250 million (Cateor& Graham, 2007). More than half of
all Indians are under the age of 25. It is the only country where the population will
continue to grow for the next several decades and where the proportion of workingage people will increase well beyond 2020. The number of prime working age
between 25 and 54 will increase steadily. In 1980, the country had 221 million in this
category and that number rose to 367 million by 2000, equivalent to 36% of India’s
total population. By 2020, the country can expect to have more than 535 million
people of prime working age or around 41% of all Indians (GMID, 2006).
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In India, English is the most important language for national, political and commercial
communication, Hindi is the national language and there are 14 other official
languages (CIA, 2006).
Literacy rate in India is 64.6% and is increasing and would be higher in urban areas
(Wikipedia, 2006; Encyclopaedia Britannica, 2006). India has 44 cities that meet the
UN definition of urban agglomerations. In 1980, there were 60.5 million residents in
these cities, equivalent to almost 9% of the national population. Rates of growth over
the last two decades were high in almost all cases.
By 2000, there was nearly 119 million Indians living in urban agglomerations and
they accounted for 11.8% of the total population. Only a few cities will see lower
rates of growth over the next 15 years. By 2015, the 44 cities will have a combined
number of 172.6 million people or nearly 14% of the national population (GMID,
2006). Total number of households in India is 191,963,935 and the average household
size is 5.4(Encyclopaedia Britannica, 2006).
The Indian government estimates that the country’s level of urbanisation will rise to
about 36% by the year 2026. However, because of steady increases in population size,
the absolute numbers of people involved in most types of internal migration will also
increase substantially. Thus, there will be a large increase in the size of the urban
population (GMID, 2006).
In terms of demographic statistics, Australia and India are quite different. Australia
has a far smaller population and alternatively a far greater area, resulting a very low
population density. This has implications on distribution strategies. On the contrast,
India has such large population, a small portion of the market would produce high
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profits and this may influence pricing strategies because a company could afford to
sell their product at a cheaper price if it can sell enough volume to be profitable.
2.4 Socio-cultural environment
80.5% of people in India are Hindus, followed by 13.4% of Muslim, the rest of the
population follow Christian 2.3%, Sikh 1.9%, other 1.8% and unspecified 0.1% (CIA,
2006).
The status of women in India is changing. They are becoming more independent and
holding more powerful positions in the workforce. The number of women in marginal
employment doubled from 25.5 million in 1991 to 53.7 million in 2001, as per Census
data. In urban India, the high growth of the tertiary service sector has been good news
for the female workforce. They are finding more employment in call centres, travel
agencies, airlines and hotels in the middle-income range, and as housemaids or
building labour among the uneducated lower income groups (GMID, 2006).
India families consider their children to precious gifts of God and parents do whatever
they can for their children. There is growing health consciousness that is sweeping
through the country, especially among the wealthier urban population (GMID, 2006).
Food and non-alcoholic beverages constitute 50 percent of consumer expenditure in
India (Encyclopaedia Britannica, 2006). This indicates nowadays India families may
consume more and more healthy breakfast, such as cereals. The reasons for the
increase in purchasing of these healthy foods are:
-
The increased pace of urban life, longer working hours
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-
Women living in urban have less time to shop for food and prepare it (GMID,
2006).
-
Health-consciousness among urbanities
These healthy concerns lead the breakfast cereals raised form miniscule base to an
explosive pace and achieved an outstanding value growth of 78 percent over the
200-2005 period in India (GMID, 2006).
2.5 Legal and Technological environment
India’s legal system is based on English common law and it has limited judicial
review of legislative acts and accepts compulsory ICJ jurisdiction. It has separate
personal law codes apply to Muslims, Christians and Hindus (CIA, 2006). Inadequate
protection of intellectual property rights remains a serious concern (Cateor& Graham,
2007).
Technological development is occurring steadily in India, for example, ATM’s are
common in urban and suburban areas, lots of households have TV’s, internet use is
increasing and mobile phones are prevalent in both upper and middle income families
in cities and rural areas as they are perceived as a status symbol (GMID, 2006; BBC
News 2006). All those factors are conducive to more consumers spending in India.
Television is the most powerful medium in India. Doordarshan, the government
owned terrestrial television network, is the largest and has the potential to reach
nearly 90% of Indian homes. It has almost 27 channels. At 417 million, Indian
television viewer numbers are the highest in the world. This suggests that broadcast
media advertising would be suitable for Indian market (GMID, 2006).
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2.6 Natural environment
Natural hazards that are a threat to India are droughts, flash floods, severe
thunderstorms and earthquakes. Importers may be concerned that these forces may
interfere with distribution and the sale of their products (CIA, 2006).
India’s environment current issues include soil erosion, water pollution from raw
sewage and runoff of agricultural pesticides, and the most obvious one is that huge
and growing population is overstraining natural resources (CIA, 2006).
3.0 Industry
analysis
competitive
environment
There are many competitors in the Indian cereal market. The Porters 5 forces model
will be used to help illustrate the competitive environment in the Indian cereal
industry.
3.1 Industry Rivalry
The intensity of rivalry among firms varies across industries and market analysts are
interested in these differences. Rivalry can be measured by industry concentration
and/or market share (Quick MBA, 2004). There is increased rivalry in the Indian
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cereal market since there are many firms that struggling for market leadership. The
main competitor in Indian cereal market is Mohan Meakin Ltd holding 16.74% of the
market with brand Mohun’s (GMID, 2006). Other strong player in the breakfast cereal
market include Hindustan Vegetable Oil Corp Ltd 7.99% with Champion brand,
Bagrry’s India Ltd holding 7.59% and Avee’s Products India Ltd hold 2% of the
market share (GMID, 2006).
3.2 Threat of substitutes
The availability of substitute products places limits on the prices market leaders can
charge in an industry (Keegan and Green, 2005). Therefore, the price of breakfast
cereals is constrained by the price of fruit bars, yoghurt smoothies, fast foods and
other breakfast alternatives. Kellogg’s Inc will be targeting middle and upper middle
class families which are less sensitive to price. Yet, Kellogg’s must ensure that the
prices they charge will not cause consumers to switch to substitute products.
3.3 Threat of new entrants
The possibility that new firms may enter an industry also affects competition.
Therefore, Kellogg’s must continuously monitor the external environment to take
advantage of opportunities and avoid threats. It is expected that additional firms enter
markets when profits increase, driving down the profits of other firms (Keegan and
Green, 2005). On the other hand, when profits decrease it is expected that some firms
exit the industry. Firms may be reluctant to enter markets that are extremely uncertain
especially if entering involves expensive start up costs. The cereal industry in India
has increased by 11.77% in volume and this may attract potential firms to enter the
market to take advantage of profits (GMID, 2006).
3.4 Bargaining power of suppliers
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Suppliers are powerful if there is a significant cost to switch suppliers and if suppliers
are concentrated. On the other hand, suppliers are less powerful if there are many
competitive suppliers and if customers are weak. Powerful suppliers have the ability
to raise prices of raw materials to increase profit.
3.5 Bargaining power of buyers
The power of buyers is the impact that customers have in the cereal market industry.
The bargaining power of buyers can impose pressures on margins and volumes.
Buyers are weak if there are significant switching costs. In the cereal industry, buyer
switching costs are low; buyers can purchase a different brand of cereal every time
they shop.
Kellogg’s must also take into consideration the bargaining power of retailers.
Supermarkets, hypermarkets and independent food stores have a high bargaining
power because there are a lot of cereal brands on the market and if they choose to not
stock a particular brand, it could cost that brand a lot of lost sales. It is important to
maintain a positive relationship with retailers as well as ensuring that customer
demand is strong so that retailers will want to stock the product.
4.0 International
alternatives
market
14
entry
strategy—the
Business plan
Jonathan
Entry Mode ----the alternative
Control
Licensing
Low
Resources
Low
Risk
Low
Cost
Low
Exporting
Intermediaries
Direct
Joint Venture
Wholly-owned
Subsidiary
High
High
High
High
From the table above, it illustrates the main points regarding the entry strategies.
For Kellogg’s, it can license its production process which involves lower risk and cost,
but it involves potential problems of the quality of the products. The other
disadvantage of licensing is it may create potential future competitors, especially in
India as the growth potential for cereal market is quite high.
Exporting to India can be difficult as the tariff on export is still quite high as
mentioned in the environmental analysis, then by the time the products reach India
consumers, the price with be even higher compared with other local producers. This
can put Kellogg’s in an uncompetitive position.
Establishing joint venture with local companies can lead to interest conflict, such as
resource allocation, conflicting objectives or ownership of critical assets, which may
be due to different culture and perceptions. And lack of full control and trust can lead
the joint venture into a disaster.
4.1 wholly owned subsidiary
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As a new product entering a foreign market, there are many problems for the
company to solve. Kellogg Corporation, which is the world’s leading cereal
manufacturer, produce quality cereal in 13 regions, marketing them under 40 brands
in more than 170 countries around the world. Moreover, the company has yet
ventured into the India. At present, there is specific Kellogg Cereal Company in India.
When a company makes the commitment to go international, it must choose an entry
strategy. As the Indian market differs significantly in terms of cereal purchasing and
consumption from the Australian market a product adaptation strategy has been
selected as most suitable. So that decision should reflect an analysis of market
characteristics, such as potential sales strategic importance, strengths of local
resources, cultural differences and country restrictions. In order to attract the target
market in Indian, Kellogg’s still use the wholly owned subsidiaries entry mode to
enter the Indian breakfast cereal market, which means the firm owns 100 percent of
the stock.
Kellogg is particularly interested in a wholly owned subsidiary because Kellogg may
manufacture locally to capitalize on low-cost labour, to avoid high import taxes, to
reduce the high costs of transportation to market, to gain access to raw materials,
reduce the risk of losing control over that competence and tight control over
operations in Indian. Kellogg’s introduce spectacular launch and high profile
advertising, which can make a large impact in the marketplace. Kellogg's also
introduced numerous promotional schemes to prompt the sales performance of the
product.
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In addition, a wholly owned subsidiary may be required if a firm is trying to realize
location and experience curve economies. Like when Kellogg's entered the Indian
market, the first challenge the company faced was to increase overall breakfast cereal
consumption in India, where cereal was not a common breakfast food. Next, the
company had to adapt its flavours to Indian tastes. For example, Kellogg’s almost
took one year to study the consumer patterns in India. The launch is part of Kellogg's
ongoing strategy to provide value- added products and greater variety to our
consumers. Fortified with five vitamins and iron, `coca rocks' is packed in laminated
bags to provide a shelf life of nine months. Moreover, a wholly owned subsidiary can
gain first move advantages but are more risky.
Moreover, there is no conflict in production, marketing, and management venture.
There is no risk of local partner gaining control over a firm’s intangible asset
(invention or technology) and market- solution would be hold by itself.
However, there are some shortcomings to this entry mode. Establishing a wholly
owned subsidiary is generally the most costly method of serving a foreign market.
The company should afford full ownership of set-up costs, product development costs,
and product failure risk. Kellogg India doing this must bear the full costs and risks of
setting up operations. The risks associated with learning to do business in India,
which is a new culture, are less if Kellogg acquires an established host-country
enterprise.
5.0 Marketing objectives and strategy.
5.1 Marketing objectives
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Based on Kellogg’s business capabilities and market opportunities, the following
marketing objectives have been determined:
 Financial Objectives
Table 1 Retail Sales of Breakfast Cereals by Kellogg: % Volume Growth 2000-2005
% volume growth
2004/05
Breakfast cereals
RTE cereals
- Family breakfast cereals
- Children's breakfast cereals
Hot cereals
8.36
6.86
6.60
9.95
13.35
2000-05
CAGR
9.77
7.82
7.58
10.74
17.69
2000/05
TOTAL
72.44
57.70
55.99
80.17
143.60
1. Customer sales---- to successfully launch the new product of 20 – 25g Sultana
Bran cereal into the Indian market and capture five percent of the ready to eat
breakfast cereal market share within the first year of product launch.
2. Ratios----The breakfast cereals market has experienced steady growth in India
from 1999 to 2004. In late 2000 an Indian cereal company began positioning cereals
as snacking foods, which lead to greater volume growth in 2001 and 2002 compared
to 2000. Breakfast cereals continue to see growth in 2004 as a result of the health
trend amongst middle to upper class Indian consumers. Convenience has also
supported the growth of breakfast cereals in India (GMID, 2005).
Retail volume
‘000 tonnes
Retail value rsp
Rp bn
1998
1999
2000
2001
2002
2003
2004
100%
105.29
102.95
104.65
104.5
108.05
108.65
100%
103.23
108.03
109.14
115.8
118.7
118.49
Table 2 Growth Index (%) for retail volume and value of breakfast cereals in India

Marketing Objectives
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1. Market share --- to achieve approximately 50% in sales after the first year of
launch
Mohan Meakin
Hindustan Vegetable Oil
Kellogg
Bagrry's India
Express Food
Avee's Products India
Others
Graph 3
2. Customers --- --The segments within the Indian breakfast cereal market are:

children aged 7 to 15

people with busy lifestyles

health conscious people

families that eat cereal for breakfast
3. Purchases ---- to have 10 percent regular purchase in the target audience
4. Promotional objectives (e.g., store traffic, website traffic) --- --to have 60 percent
awareness of the product in the target audience
Table 4 Breakfast Cereals Brand Shares 2001-2004
% retail value rsp
Kellogg's Corn Flakes
Mohun's
Bagrry's
Champion
Kellogg's Chocos
Kellogg's Frosties
Company
Kellogg India Ltd
Mohan Meakin Ltd
Bagrry's India Ltd
Hindustan Vegetable
Corp Ltd
Kellogg India Ltd
Kellogg India Ltd
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Oil
2001
32.47
17.32
6.20
2002
31.82
16.97
6.39
2003
31.67
17.05
6.71
2004
31.44
16.74
7.59
9.89
8.82
7.96
7.31
4.60
2.30
4.72
2.36
4.82
2.39
4.94
2.39
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Express Foods
Express Foods
Avee's White Oats
Avee's Products India Ltd
Farm House Breakfast Good Earth Foods
Cereal
Kellogg's Muesli
Kellogg India Ltd
Private label
Others
Total
1.38
0.50
1.62
0.53
1.84
0.55
2.00
0.57
-
0.16
0.30
0.26
0.26 0.12 0.72 0.71 0.70 0.68
24.37 25.80 26.01 26.08
100.00 100.00 100.00 100.00
5. Product trials (e.g. sales promotions, product demonstrations) ------to have 60
percent product trial in the target audience.
6. Sales force (e.g. cycle time, cost per call, closing rate, customer visits, etc.)-----to
process customers research about flavor, packaging, price or service. Launch new
flavors of cereal bowls into the market within two years.
7. Channel objectives
Table 5 Retail Sales of Packaged Food by Distribution Format for (1999 – 2004)
% retail value rsp
1999
2004
Supermarkets/hypermarkets 26.17
31.16
Independent food stores
57.76
47.98
Convenience stores
3.51
7.04
Discounters
2.66
2.03
Others
9.90
11.79
Total
100.00
100.00
It is evident from this Table that the leading distribution channel for breakfast cereals
in India is independent food stores. Independent food stores are mostly traditional
stores that carry both food and non-food items. Supermarkets/hypermarkets and
convenience stores played a more significant role in the distribution of breakfast
cereals in 2004. Both provide convenience and supermarkets/hypermarkets provide
consumers with more variety as well as more competitive prices on consumer goods
(GMID, 2005).
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5.2 Marketing Strategy
Product--the product element is the new product itself
The product will be Sultana Bran breakfast cereal adds five vitamins and iron and
enough milk to cover the cereal; the serving size will be between 20 and 25 grams.
The product packaging will not include any green and according to specifications
listed on Austade (2005) will:
 Be written in Indian
 Show an expiration date
 Show the product and registration number
 Have Kellogg’s complete name and address.
Price--getting the price right involves examining customer perceptions and rival
products as well as costs of manufacture
While still being a generally expensive food item, Sultana Bran will retail for less
than its competitors.
Promotion-- involves engaging in a range of promotional activities e.g. competitions,
product tasting etc
During the new product launch, Sultana Bran will be heavily promoted on television
and in magazines and newspaper.
Advertisements will have a strong focus on
testimonials and results demonstrations as these approaches have been successful in
Indian in the past (Austrade, 2005). Edwin (2006) suggests Indian manufacturers have
the notion that advertising promotions with film stars or sports personalities as brand
ambassadors will make the brand successful. They are yet to understand that the
rational factor of the brand, which is product quality, actually gives consumers the
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confidence and motivation for purchase and repurchase. In addition free samples will
be given out in major cities to stimulate purchase and also to facilitate positive word
of mouth about the product. The marketing communications campaign will change
from a sports orientation in Australia to a campaign that highlights the health benefits
and convenience of purchasing Sultana Bran. These benefits, as well as their lower
price than other competitors, will attract all target markets. For example, in 2005,
Kellogg run a Star War- themed program timed to coincide with the release star war
episode III, revenge of the sith. This global promotion ran in more than 30 countries
and contributed their second quarter result. (Kellogg annual report 2005)
Place--involves using the best possible channels of distribution such as leading
supermarket chains.
Sultana
Bran
will
be
distributed
through
independent
food
stores,
supermarkets/hypermarkets and convenience stores because it is very populated and
has a lot of middle to upper class residents.
For long term market strategies of Kellogg generally fall under one of the following:

Market growth
Kellogg pays more attention on higher market penetration in Indian market. To
establish breakfast cereals as part of the diet of average urban families and a regular
feature in middle class and elitist Indian homes, leading player Kellogg India Ltd has
spent considerable money in product education for its breakfast cereals to position
these products as nutritious and ready to eat breakfast alternatives, that align well with
the changing urban lifestyles and Western eating habits. Spurred by manufacturer
efforts and rising product presence from local players, there is a rising demand for
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breakfast cereals amongst elitist families who perceive this as a lifestyle need, and
other segments such as working women or foreign travelers who are taking to the
convenience or nutrition factor of family breakfast cereals as well as Sultana Bran.

Sell more to same market
The company tries to get current customers to buy more or buy more frequently.
Kellogg India Ltd's brands are heavily advertised throughout the media, including
television, positively impacting consumer expenditure, brand choice, and repeated
purchases, by reinforcing consumer brand recall. At the same time, newer methods of
reaching out to consumers have evolved.

Sell to markets or market segments not previously targeted
Kellogg should develop new products for existing India customers and develop new
products for new India customers. Segmentation of consumer profile has enabled
leading manufacturer Kellogg India to target different consumer segments effectively.
The company has been tapping on entertainment zones such as multiplexes or health
related zones like upmarket gymnasiums to reach out to health conscious urbanites.
Kellogg India also undertakes promotional activities in schools to create product
awareness among children, who play an important role in product and brand selection.
Furthermore, they company has built an association with a UHT milk brand since
milk and breakfast cereal go hand in hand. Besides these channel and strategic
partnerships, the time tested modes such as banners, hoardings, POP, promotions, free
gifts, as well as in-store activities like sampling continued to strategies used by
Kellogg's to drive sales of breakfast cereals over the review period.

Market stability
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They use techniques to keep the India market status quo Family breakfast cereals on
the whole performed well over the review period, with different age-groups taking
fancy to the different product types within breakfast cereals, moving on from
traditional options that cater to one and all within the family. Sultana Bran, on the
other hand, can have been riding on the health and wellness trends across urban cities
and towns to spur demand. Children's breakfast cereals have gained increasing
popularity amongst children under 12 years of age, as they are increasingly being
perceived by mothers as a nutritive yet fashionable breakfast option, facing less
resistance from children than the conventional Indian breakfast offerings.

Cost control
The company should have techniques to contain costs or operate more effectively in
India as well. The best benefit to Kellogg India is cheap labour, which is useful tool to
reduce cost. With control still on raw materials, such as wheat and sugar, and a high
import tariff regime, it would not be easy for manufacturing companies to control
costs. Both these factors appear to give entrenched players an advantage.
6.0 The risk factors
As a multinational corporation, the Kellogg sells the Sultana Bran in India face to
some political, economic and other risks. These risks might influence the success of
Sultana Bran in India.
6.1 Political Risk
Under some conditions, the Kellogg might encounter some political risks form the
government of India. Like one is the confiscation, and this is the seizing of a
company’s assets without payment. Secondly, expropriation is that where the
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government seizes an investment but some reimbursement for the assets is made. The
another one is the domestication, which means when host countries gradually cause
the transfer of foreign investments to national control and ownership through a series
of government decrees by mandating local ownership and greater national
involvement in a company’s management.
6.2 Economic Risk
The government of India implements some economic measure for protecting domestic
cereal industry and limiting foreign investment in domestic market. Hence, the
Kellogg faces to some economic risks, such as local-content laws, import restrictions,
tax controls and price controls.
6.3 Other Risks
There is the big tastes difference between India and Australia. Some Indian may not
like the cereal from foreign countries. By competitors, in contrast to Kellogg India,
other rival breakfast cereal manufacturers are much smaller and do not undertake
significant advertising and promotional activities, instead leveraging on economical
pricing and distribution to spur sales. Some of these smaller local competing brands
within best-selling flakes are Mohun's Corn Flakes by Mohan Meakin Ltd, which was
incidentally the pioneer of the western concept of breakfast cereals in India, and
Champion Corn Flakes marketed by Hindustan Vegetable Oil Corp.
7.0 Economic evaluation
New product takes considerable time to establish itself. Tuscani introduced a new
concept on the UK natural sparkling fruit drink scene. Naturally, consumers take time
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Business plan
Jonathan
to accept something new. Tuscani never tried to change the drinking habits of UK.
But Tuscani offered an alternative option. So base above analysis, Tuscani fruit drink
will be a profitable product in Indian market.
8.0 Recommendation
So what's really drink in the UK drinking market today? Facing no major competition,
TUscani now reigns supreme in this segment. The manager of Tuscani points out that
"Our only rival is traditional UK foods like tea. As for our future plans, we will be
introducing a host of new products in the near future.”
9.0 Conclusion
Based on the extensive analysis provided throughout this report, UK appears to be a
strong emerging market. Tuscani uses a wholly owned subsidiary is likely to shape
the future of the UK fruit drink business. Tuscani stands a good chance at capturing
its target markets within UK and subsequently generating large revenue.
10.0 Appendix
Table 6 Retail Sales of Breakfast Cereals by Subsector: Volume 2000-2005
'000 tonnes
2000
Breakfast cereals
3.29
RTE cereals
2.73
Family
breakfast
2.53
cereals
- Children's breakfast 0.19
2001
3.75
3.04
2002
4.23
3.35
2003
4.71
3.67
2004
5.21
4.00
2005
5.74
4.36
2.81
3.10
3.39
3.69
4.00
0.22
0.25
0.28
0.31
0.35
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Business plan
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cereals
Hot cereals
0.57
0.72
0.87
1.03
1.20
1.39
Table 7 Retail Sales of Breakfast Cereals by Subsector: Value 2000-2005
Rs million
2000
Breakfast cereals
769.12
RTE cereals
652.57
- Family breakfast cereals 595.13
- Children's breakfast
57.45
cereals
Hot cereals
116.55
2001
878.02
733.12
665.75
2002
991.10
817.40
739.40
2003
1,107.77
905.68
815.95
2004
1,234.38
998.79
897.15
2005
1,369.23
1,096.32
981.94
67.37
78.00
89.72
101.64
114.38
235.59
272.90
144.90 173.70 202.10
Table 8 Sultana Bran NUTRITION INFORMATION (AVERAGE)
average serving size - 45g (3/4 metric cup †)
quantity
%daily intake▲ per serve with quantity
per serving per serving
1/2 cup skim milk per 100g
ENERGY
639 kJ
7.3%
833 kJ
1419 kJ
PROTEIN
4.3 g
8.6%
8.9 g
9.5 g
-
FAT
- TOTAL
0.8 g
1.1%
0.9 g
1.7 g
- SATURATED
0.2 g
0.8%
0.3 g
0.4 g
-
CARBOHYDRATE
- TOTAL
28.6 g
9.2%
35.1 g
63.6 g
- SUGARS #
10.2 g
11.4%
16.7 g
22.7 g
DIETARY FIBRE
6.4 g
21.3%
6.4 g
14.2 g
- SOLUBLE
1.1 g
-
1.1 g
2.5 g
- INSOLUBLE
5.3 g
-
5.3 g
11.7 g
SODIUM
122 mg
5.3%
178 mg
270 mg
POTASSIUM
324 mg
-
530 mg
721 mg
THIAMIN (VIT B1)
0.28 mg
0.33 mg
0.61 mg
(% R.D.I.*)
(25%)
(30%)
(56%)
RIBOFLAVIN (VIT B2) 0.4 mg
0.7 mg
1 mg
(% R.D.I.*)
(25%)
(40%)
(56%)
NIACIN
2.5 mg
2.6 mg
5.6 mg
(% R.D.I.*)
(25%)
(26%)
(56%)
FOLATE
100 µg
106 µg
222 µg
(% R.D.I.*)
(50%)
(53%)
(111%)
IRON
3 mg
3.1 mg
6.7 mg
(% R.D.I.*)
(25%)
(26%)
(56%)
MAGNESIUM
64 mg
80 mg
142 mg
(% R.D.I.*)
(20%)
(25%)
(44%)
ZINC
1.8 mg
2.3 mg
4 mg
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Business plan
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(15%)
(% R.D.I.*)
11.0
(19%)
(33%)
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