Cas d'entreprise Kellogg's

Introduction

In a rapidly changing and competitive business environment, it is not easy to predict:

◗ future trends in consumer tastes and preferences

◗ competitors’ actions

◗ market conditions.

Creating new products or making changes to existing brands can be expensive. It involves making investment decisions now, in the hope of making a return later. Weighing up future returns against an investment is a crucial part of a manager’s job.

It always involves an element of risk, because the future is never certain. Managers’ previous experience, together with market research information helps them to predict future events and outcomes. However, all business activities involve some element of risk. There is often said to be a link between risk and return. The more you risk, the higher the likely returns (or profits). However, a balance must be struck.

It follows from this that decisions about a brand, (e.g. whether to develop it, maintain it, allow it to decline, or even kill it off) involve much discussion. In deciding to develop a brand, managers have to decide how much investment to make and to forecast the likelihood of a successful

outcome.

Brand managers aim to develop a long-term strategy to meet a range of objectives such as:

◗ growing market share

◗ developing a unique market position

◗ creating consumer or brand loyalty

◗ generating a targeted level of profit.

This case study describes a major investment in Kellogg’s Special K. It illustrates how the company’s investment in new product development served to strengthen a global brand.

Kellogg’s and the marketing mix

Managers can decide when to make key changes to a core product by analysing its position within the product life-cycle. Life-cycle analysis accepts that products have a finite life, and analysts chart a product’s performance through several phases, from its launch through various phases of growth until it reaches maturity and eventually decline.

A product’s life cycle may last only a few months (e.g. with a fad, or craze) or, as with Special K, for many years. Although it was a successful product, Kellogg’s recognised the opportunity to stretch the brand by investments that would:

◗ revitalise it

◗ extend and further develop its growth phase

◗ help to delay the onset of the maturity phase.

Kellogg’s was convinced that such investment would help to maintain the brand’s strength in a rapidly changing market place.

The product life-cycle

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With annual sales of more than £4.5 billion, Kellogg’s is the world’s leading producer of cereal products and convenience foods, such as cookies, crackers and frozen waffles. Its brands include Corn Flakes, Nutri-Grain and Rice Krispies.

Kellogg’s is a global organisation.

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