Kellogg’s – Product Range Filling

Last week I made a post about Domino’s Pizza and brand stretching; this week, however I want to discuss the complete opposite: product range filling.  One of the world’s most recognisable cereal producers, Kellogg’s, have just announced a new brand of cereal to join their product range.  ‘Mini Max’ is a cereal positioned as a healthy breakfast that is particularly appealing to young children – it is low in saturated fat, salt and sugar, while also high in fibre.

Unlike Domino’s Pizza’s plans to extend into gourmet pizzas, Kellogg’s have decided to launch a whole new brand (the alternative approach would be to modify an existing cereal, Frosties for example, and make a healthier version, possibly ‘Frosties-light’ or ‘Frosties-fibre’).  Moreover, they are targeting the same market.  This is not lowering their product range to a budget-consumer nor is it a premium product – the new brand, Mini Max, will have similar pricing to Kellogg’s’ other cereal brands.

The benefit of creating a whole new brand identity to market the healthy cereal is that it is much easier to convince the target market of the product’s benefits.  While Domino’s Pizza will have difficulty in trying to get customers to change their perception of the firm as high-quality, by creating the new brand – ‘Mini Max’ – a separate identity has been created from Kellogg’s’ other products.  Hence, no matter how much junk is packed into their other products, parents are unlikely to be deterred from purchasing Mini Max; consumers have no pre-conceived perceptions.

However, there is a drawback to product range filling.  Namely cannibalization; this is where a new product does not increase total sales but instead steals sales from the other items in a firm’s product range.  This could easily happen with Kellogg’s.  Not only does the firm plan on the Mini Max brand becoming worth more than Frosties, the new healthy cereal may prompt parents to re-consider purchasing their normal cereal over health concerns.  It is this habitual buying behaviour that is vitally important for Kellogg’s to create cash-cows, like Frosties.

Although Domino’s Pizza also risks cannibalisation, this is far less of a problem with upward brand stretching.  Albeit cannibalisation may mean few new consumers are attracted, if existing customers suddenly start purchasing the pricier gourmet pizzas, overall sales will still increase.  The worst damage cannibalisation does is during a downward brand stretch; consumers start paying less than before for similar products.

Ultimately, these past two weeks show two different examples firms can use when introducing new products.  Although they both have their drawbacks, I personally think that product range filling, undertaken by Kellogg’s, is a far less riskier strategy that is more likely to work.

© Joshua Blatchford, author of Manifested Marketing, 24/08/2011

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