Kellogg's & Nestlé: two well-known groups on the Cereal Market

In this blog, we have decided to look at two precise cereal brands which are Special K and Fitness.

Special K belongs to Kellogg’s which has a great amount of cereals that are well-known, especially the breakfast cereals for children. Fitness is a Nestlé’s brand. Here, we want to give you a short presentation of these two very important groups.

Nestlé is a Swiss multinational nutritional and health-related consumer goods company founded in 1866. Nestlé is more known through its different brands. Their portfolio covers almost every food and beverage. Their goal is to provide people with "tastier and healthier products to enjoy at every eating occasion and throughout life’s stage including times of special nutritional need”. Their motto is “Good food, good life”. Thus, it provides from baby foods to petcare, through weight management products or coffee.
It also produces cereals: Chocapic, Cini Minis, Cookie Crisp, Estrelitas, Fitness & Nesquik Cereal.

Nestlé gives a lot of attention to create value: their “Creating Shared Value”concept  is essential for them. To sum up, they elaborate this concept in 2006 which relies on “a strong base of performance in an environmental sustainability and compliance. They also care about the vital role of their people and the importance of engaging and collaborating with other organisations. This company is really dynamic concerning committed actions to society and environment.

The Kellogg Company is an American multinational food manufacturing company, created in 1906. Kellogg's produces cereal and convenience foods, including cookies, crackers, toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles, and vegetarian foods. Contrary to Nestlé, Kellogg’s is exclusively focused on the food industry. It produces a much wider range of cereals such as: All-Bran, Apple Jacks , Bran Buds , Bran Flakes, Choco Krispis (Latin America), Chocos (India, Europe), Chocolate Corn Flakes, Cinnabon, Coco Pops (Europe, Australia), Cocoa Hoots, Cocoa Krispies, Corn Flakes, Complete Wheat Bran Flakes/Bran Flakes, Corn Pops, Country Store, Crispix, Crunch, Crunchy Nut Cornflakes …and Special K.

Their motto is “The Start of Possible”. Because for them, “with every morning comes a new beginning. It is an opportunity for all of us to realize the potential of the day. And when we start the morning right, there's no end to what each day can bring.”

Beginning with a great breakfast make great things happen: with Kellogg’s you can make the most of every moment.

Baked beans, French toast and eggs or breakfast cereal?

What’s your excuse for not eating breakfast?

Because you have “no time”; “you are not hungry?”; “you might gain weight?” or “you simply don’t like breakfast food?”

Nowadays too many consumers are skipping their breakfast or do not see the importance of a healthy breakfast. We all assume that breakfast cereal is one of the physiological needs that everyone try to fulfill however it seems difficult according to the varieties of brand cereals offered.

Therefore, brand managers have to deal with the consumer’s mindset to position their breakfast cereal as a main component of the consumer’s daily life.

The theory of cognitive dissonance explains that humans have a need for consistency in their normal lives, and a state of tension is created when beliefs or behaviours conflict with one another. (Michael et al 2007) While consuming cereals we try to seek for quality and start to think about the amount of value that we can get; healthy which include the amount of vitamin c, source of iron and superior taste.

Motivational conflicts have three main sections and two types of these conflicts will be applied: approach-approach and approach-avoidance.

The approach-approach conflict is when a person has to determine between two desirable alternatives. The conflict is based on the taste vs the health (French toast and eggs vs breakfast cereal).

In the approach-avoidance conflict, consumers face both a positive and negative feelings during the purchase. The consumer wishes the taste and emotional satisfaction but does not want to gain weight. Most breakfast cereals are healthy as compared to other breakfast options like eggs.

The consumer would rather prefer purchasing breakfast cereal but it is difficult to ascertain whether breakfast cereals satisfy him or not. Moreover, consumer have now begun to realize that breakfast cereals are extremely healthy and they do not account for weight gain as opposed to eggs that do confer satisfaction on consumption and make gained weight.  

The different between these types of food with regards to time taken to make has made the consumer to move from making eggs to having breakfast cereals.

Finally the avoidance-avoidance conflict occurs when the customer faces two undesirable choices. For example, an option of either spending more money on an old car once it breaks down or deciding to buy a new one. Marketers usually address an avoidance-avoidance conflict with some messages that emphasize unexpected benefits of choosing only one option.

Consumers are largely influenced by sensory stimuli like sight, sound, smell, taste and texture.

Brand managers can use external stimuli to touch the 5 senses of a human body. For example consumers might see a billboard, feel the softness, hear the sound of jingle or even taste a new flavour of cereals. It allows brand managers to work on perpetual process using sight and taste signals that the consumers receive from different channels.

Then brand managers have to work on the exposure. Indeed, consumers are exposed to knowledge through scenes (advertisements, billboards) and this gets transformed into a purchase decision.

This would attract consumer attention towards breakfast cereal and make consumers wonder about the reason behind choosing that product - whether it is health or taste.

Finally, brand manager have to emphasize on the attention: clear weighs advantages and disadvantages.

For breakfast cereal if brand managers have to take in consideration some tools to work with is the vision and taste.

Vision

Marketers have tried most of the time to satisfy consumers' needs throughout using advertising, store design and packaging. In case of breakfast cereals, consumers may be attracted to many types of cereals not because they like it but because the color influences them.

The blue, red and yellow color create a feeling of appetite. The white is related to healthy.

Females are much quicker in noticing colors especially once the thing is related to healthier food like breakfast cereal.

Taste

The taste preference differs from one consumer to another; therefore we can apply this theory to the breakfast cereals. Children will prefer the cereal that contains sweet taste because in their minds the image of sweet food is strong and positive. 

However, when it comes to the purchase the parents are the one buying the cereals for their children. So it is important to convince the parents about the health benefits of the cereal and the promising taste for their children. Children get easily influenced by the taste and become loyal to the breakfast cereal that tastes good. Taste becomes the driving force to make children loyal to breakfast cereal. For example chocolate or fruity flavors would be preferred by children. More so, if children consume such breakfast cereal, they are happy to eat that breakfast and their parents would love to give them breakfast cereals that are readily and easily eaten by their children and also take care of their health.

Brand managers need to develop the right kind of stimuli while targeting different consumers.

http://www.marketingweek.co.uk/trends/weetabix-teach-a-market-to-love-your-product/4001103.article

How did it all begin?

The First Breakfast Cereal appeared in 1863 thanks to Dr. James Caleb in New York who invented Granula a healthier morning option than pork, but it wasn't particularly tasty or easy to eat at that time. The world's first breakfast cereal was comprised of dense bran nuggets that had to be soaked overnight in order to be chewable.

The Kellogg Brothers’ revolution

Dr. John Harvey Kellogg, a doctor who belonged to a vegetarian group, developed wheat and corn flakes to extend the group's dietary choices. His brother, Will Kellogg, saw potential in these new grain products and initiated commercial production and marketing. Patients at a Battle Creek, Michigan, sanitarium were among Kellogg's first customers.

In the nineteenth century, the Quaker Oats Company was also one of the precursors on the breakfast cereal industry. The Washburn Crosby Company, a predecessor to General Mills, entered the market during the 1920s. The company's first ready-to-eat cereal, Wheaties, was introduced to the American public in 1924. According to General Mills, Wheaties was developed when a Minneapolis clinician spilled a mixture of gruel that he was making for his patients on a hot stove. General Mills launched the world's first ready-to-eat oat cereal in 1941. Originally named Cheerioats, the product later became "Cheerios."

The second half of the twentieth century brought rapid increases in brand offerings and growing national interest in ready-to-eat cereals. In 1950’s many pre-sweetened cereals were introduced to children (Trix and Lucky Charms in 1954; Cocoa Puffs in 1958). Adult cereals made an impact during the 1960s. In 1970, the ready-to-eat cereal market was valued at $659 million, and it had reached $1.9 billion by 1979.

In the early 1990s, consumers became increasingly interested in health issues and, consequently, in improving their diets. In response, Kellogg offered products aimed at the health-conscious market (Nutri Grain with no sugar or preservatives; Crispix in 1983. Just Right in 1985 and Smart Start in 1998). 

In 1985, Kellogg held a 40 percent share of the total ready-to-eat cereal market. By 1992, industry analysts valued the RTE cereal market at $7.3 billion. 

In 2009, General Mills and Kellogg held most of the market share. In 2009, Quaker was the top performer in the hot cereal category. Cereal manufacturers saw their bottom lines increase during this time as record commodity prices were passed onto store shelves.

Overall presentation of the Cereal Market

The story of breakfast cereals began with Granula, invented in the United States in 1863 by James Caleb Jackson. Since then, a lot of different techniques have enabled people to create new kinds of cereals. Thus, in the food industry, the cereal market could be considered as one of the widest regarding its offers. There is a very wide range of products to answer to very different and specific segments.

Even if eating cereals for breakfast is initially an “American-style breakfast”, there are varied countries that have adopted this kind of meal for their breakfasts. 

Source: Euromonitor International

However, people from one country to another do not eat their cereals the same way. For example, in France, people like to blend some cereals with yogurt and fruits. The two brands Danone and Kellogg’s made a partnership to promote a new product “Les Matins Activia”.

While in Spain, people like to dump All-Bran cereal into their coffee, so the marketer is now advertising it this way.

John Bryant

According to Kellogg’s CEO John Bryant, 

[the strategy looks] "at how we can adapt our foods to the local habit, as opposed to trying to change the local breakfast habit". 

Still there is no doubt that the cereal business remains rooted in the U.S., Canada, U.K. and Australia (54% of global consumption). But in the U.S. cereal will grow by just 3.6% from 2011-2016, compared with 38% in China and 108% in India, according to a Euromonitor forecast.

We can definitely say that the global cereal market is a very dynamic and inspiring market. It was valued at $29.1bn in 2011 and estimated to reach $29.5bn in 2012. The market is shared between 6 leading competitors:

<!--[if !supportLists]-->·         <!--[endif]-->Kellogg’s: #1 in market share (34%)  but is losing share to General Mills and private label. The kids segment of the cereal market continues to loose market shares to more adult or all family brands. Unfortunately for Kellogg’s, they happen to have a greater share of the kids segment.

• Special K (Adult)
• Frosted Min Wheats (All Family)
• Fiber Plus (to attack General Mills' successful Fiber One brand)

·         General Mills: #2 in  market share (over 31%).

• Honey Nut Cheerios (All Family )
• Cheerios (Adult)
• Fiber One (Adult)
• Cinnamon Toast Crunch brands (All Family)

·         Ralcorp: leading private label manufacturer and also owner of Post division.

• Honey Bunches of Oats (All Family)

Malt-O-Meal: #4 with a combination of branded (Super Size bags at Wal-Mart) and private label offerings.

Quaker: is a division of Pepsico

• Cap’n Crunch
• Life

Gilster Mary Lee: Leading non public private label manufacturer with strong sales and relationships with all the top retailers.

Welcome on board !

" Sometimes you actually get caught in the web of things where people are talking about... what kind of breakfast cereal you like"

Joshua Homme