Name: Noval, Vanessa Dane V.
Case Study Analysis on Growth Strategy of Kelloggs
Case Narrative
The Kellogg Company is the world’s leading manufacturer of breakfast cereals and
convenience foods such as cereal bars, and seeks to maintain that position. Since 1983, it has
opened manufacturing plants in the UK, Canada, Australia, Latin America, and Asia. Their wide
range of cereal products include Kellogg’s Corn Flakes, Rice Krispies, Special K, Fruit n’ Fibre,
and Nutri-Grain cereal bars. The foundation for all of Kellogg’s corporate objectives are set
within a particular context or ideals. At the heart of this is the company’s passion for the
business, the brand and the foods, which is exemplified by its promotion of healthy living.
The case study is about Nutri-Grain, one of Kellogg’s brands. It showed that Kellogg
recognized that there was a brand-related issue and utilized business tools to find a solution.
Relaunching the brand and getting it back to growth in its market were their overall main.
PLC Analysis
1. Launch – when it was first brought out in 1997, Nutri-Grain was immediately
successful, gaining almost 50% share of the growing cereal bars market in only
two years.
2. Growth – As Nutri-Grain was promoted and gained popularity, its sales steadily
increased and maintained growth up until 2002 by enhancing the original
product with fresh flavor and format additions. Additionally, Nutri-Grain’s
market position subtly evolved from being a ‘missed breakfast’ product to an
‘all-day’ healthy snack.
3. Maturity – While this stage is the time of maximum profitability, Nutri-Grain’s
sales slowed down, which chipped away its market position, as competitor
brands from both Kellogg itself and other manufacturers offered the same
benefits. Although the company remained committed to supporting the growth
of the brand, some products struggled in a crowded market. Elevenses
continued to succeed, but it was not sufficient to make up for the total drop in
sales.
4. Saturation – At this point, the market is ‘full’ and most people have the product
with there being other, better or cheaper, alternatives. By mid-2004, NutriGrain was starting to see a decline in sales while the market was continuing to
grow at a rate of 15%.
5. Decline – Sales were falling at this point, and the product was in decline and
losing its position.
Primary Problem
Was the problem with Nutri-Grain the market, the product, or both?
Additionally, their research showed several issues to address:
1. The brand message was not strong enough in the face of competition.
Consumers were not impressed enough by the product to choose it over
competitors.
2. Some of the other Kellogg products had taken the focus away from the
core business.
3. The core products of Nutri-Grain Soft Bake and Elevenses between them
represented over 80% of sales but received a small proportion of
advertising and promotion budgets
4. Those sales that were taking place were being driven by promotional
pricing rather than the underlying strength of the brand.
Solutions
1. Since the brand message was not strong enough, it was fundamental for Kellogg to
renew it. The company looked at the core features that made the brand unique and
modelled the new brand image on these. They identified the unique selling point,
which is that Nutri-Grain is soft baked, and made it the focus of the brand.
The researchers found a key part of the market group called ‘realistic snackers,’ who
are people who want to snack on healthy foods but still crave a great tasting snack.
The re-launched Nutri-Grain needed to focus on helping this key group fulfill both
desires.
2. Kellogg decided to re-focus investment on their core products Soft Bake Bars and
Elevenses as these two had maintained their growth in the market. They improved
three existing Soft Bake Bar products, introduced three new ranges, and withdrew
poorly performing ranges such as Minis.
3. Kellogg introduced new packaging in order to unify the brand image.
4. Kellogg developed an improved pricing structures for stores and supermarkets.
Alternative Solution and Course of Action
 Diversification – Kellogg could use diversification to expand their Nutri-Grain
products and appeal to as many consumers as possible. While the company is
headquartered in the United States, they have about 60% consumer base in the
Asia-Pacific region and they could bank on that opportunity. Innovating widely is
also highly advised as the Asia-Pacific has one of the most diverse consumer
demographics in the world, therefore it would be necessary in order to cater to this
‘mix’ of markets.
 Target Marketing – Since Nutri-Grain is one of Kellogg’s products that fit their
agenda of promoting healthy living, they could focus more on developing said
product in order to cater the consumer needs of Baby-Boomers as this market is
growing and are the most health-conscious generation.
 Market Development – Nutri-Grain mainly focuses on older consumers; however,
it is important for businesses to also target the younger populations. Kellogg should
increase their advertising of Nutri-Grain products towards the younger generations
in order to establish customer loyalty, and develop other flavors that cater to their
needs.
 Product Expansion – Kellogg could expand their flavor catalogue to make it
marketable to all age groups with all kinds of concerns and preferences
 Sustainability – Issues such as the increasing price inflation could pose as a
challenge to both the company and its market, so it is important for Kellogg to find
sustainable ways to manufacture, pack, and distribute their Nutri-Grain products,
and also other products, via more affordable ways and formats to their consumers
 Technology – Technology is increasing nowadays and widespread applications of it
in large businesses is evident. Kellogg should use such technologies to improve
areas such as efficiencies across their supply chain, and finding and providing better
ways to reach and serve their consumers