Kellogg’s – Market Penetration

It is vital for companies to be continuously monitoring sales figures and making consistent comparisons to identify trends. As such, Kellogg’s have used their marketing information systems to analyse the vast amount of sales data held within their internal databases in order to develop a highly sophisticated degree of marketing intelligence – this is the quality, rather than quantity, of information the company knows about its marketing environment. Hence, Kellogg’s has concluded that Christmas is the time for a sales push; namely, the company is to undertake a marketing penetration strategy. This aims to increase sales in their existing market, and in this case, through advertising.

Typically, buying a consumer buying a box of cereal would be considered habitual buying behaviour: when a consumer’s current choice of cereal runs out they simply replenish their kitchen cupboards with the same brand. This happens without the consumer giving a second-thought as to which brand to choose – there is a low-level of involvement from the customer in the buying decision process. However, as consumers become quality-conscious over the festive season, an example of how culture shapes consumer buying habits, they give more evaluation to the alternative brands available during the buyer decision process. This means that consumers are more likely to review the quality of their brand and therefore consider alternatives. But how does this relate to Kellogg’s?

Consumers base their decisions on brands. Therefore, purchasers of cereals often have to choose between Kellogg’s product portfolio or the supermarket’s own-brand product line. This is where marketing penetration becomes effective: Kellogg’s have developed a very strong brand equity – they are the most obvious producers of the generic cereal ‘Corn Flakes’, for example – which has resulted from successfully emphasising strong beliefs in traditional, family orientated products. Hence, they have used a corporate brand to position their products to be perceived as high-quality in the minds of their consumers. Kellogg’s have clearly identified this through a SWOT analysis. Their Christmas advertising campaign therefore – their first to feature multi-brand advertisements – aim to increase sales by emphasising the consumer’s perceived need for higher quality. More importantly, however, it is Kellogg’s that can fulfill this need.

However, there are a few limitations to this strategy. Although it may be obvious that consumers seeking higher-quality products over the winter months, to what extent will it be breakfast products that they focus on? Thus, Kellogg’s may be over-estimating the demand for their products, as it may be the case that consumers only adopt a more complex buying decision methodology when choosing their food for Christmas lunch and dinner, rather than breakfast. Furthermore, it is insufficient to consider just cultural influences on consumers. For instance, harsh economic circumstances during the current recession may mean that customers are more aware of Kellogg’s higher pricing than the supermarkets’. Hence, they may be too dependent on their brand equity; it would not be a surprise to see a downward-stretch in their brand ranges. This would allow them to compete with the supermarkets’ own-labels.

Having said that, I do agree with their strategy because it takes advantage of the companies strengths – using a strong corporate brand allows them to position their products successfully to various market segments. Furthermore, given the majority of their products are in the maturity stage of the product life-cycle, it is imperative to undertake some form of extension strategy. And, there is no better way to do this than by manipulating Christmas, which consumers strongly identify with – the sense of traditionalism and quality at this time of year is synonymous with what the brand stands for. Thus, this marketing strategy demonstrates the importance of an effective marketing information system that makes use of internal, secondary data to give a firm a competitive advantage to make better decisions.

© Joshua Blatchford author of Manifested Marketing 30/11/10

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