REVITALIZATION OF THE KELLOGG COMPANY1
Revitalization of the Kellogg Company’s Snack Segment
Amanda
MKT 4106 Advertising and Promotion
December 1, 2015
Abstract
The Kellogg Company is a brand that is in need of revitalization. I have been hired to reposition the brand in the marketplace and increase sales through an integrated marketing communications (IMC) plan. The following information will detail how I will handle the situation through advertising, sales promotion, social media, online and mobile advertising, direct marketing, and so forth.
The Kellogg Company
The Kellogg Company has a good vision and purpose. Their vision is “to enrich and delight the world through foods and brands that matter”. While their purpose is “Nourishing families so they can flourish and thrive” (Kellogg Company, n.d.). The Company is strong in terms of cereal foods. The issue, however, with the Kellogg Company is that they are weak in their snack foods segment. As a result, the company has done poorly in this area. For improvement of the performance of the product, this report will present a segmentation analysis and integrated marketing communication suggestions.
The Kellogg Company has sustained a decline in sales of the snack business. The snack business decline was due to the company’s poor performance in the Special K Cracker Chips, Special K Bars and the Keebler Right Bites 100 calorie cookie packs (Sosland, 2014). Consumer trends are forever evolving and changing. The Kellogg Company needs to take note of the changing views and opinions of consumers. Consumers are shifting their taste toward healthier alternatives such as peanuts, sprouted foods and other alternatives for a healthier lifestyle. This trend change is causing poor snack sales in the snack division because the Kellogg Company does not offer such alternative snacks. The change in the consumer’s behavior to a desired healthier lifestyle has caused the snack business to struggle since 2013 (Culliney, 2014).
Segmentation Analysis
According to Shimp and Andrews, 2013, there are four sets of segmentation bases or characteristics that either alone or in combination impact what individuals consume and how they respond to marketing communications. These four characteristics are behavioral segmentation, psychographics, demographics, and geodemographics. Before we can analyze these characteristics we must first understand what they mean. Behavioral segmentation can be defined as representing information about the consumer’s behavior regarding past purchasing behavior or online search activity for specific products, categories or related categories. Psychographics depicts characteristics of consumers’ psychological makeup including lifestyles, motivations, values and attitudes. Demographics reflect population characteristics such as age, income, and ethnicity. Lastly geodemographics is centered on demographic characteristics of consumers who inhibit a particular geographic region such as a zip code and/or neighborhood (Shimp & Andrews, 2013).
Behavioristic Segmentation
The Kellogg Company should focus on the behavioristic segmentation of customers because this is the modern trend that has been adopted for market segmentation. Areas such as taste, nutritional values, and user frequency must be taken into consideration by the company. The Kellogg Company needs to recognize the benefits factor for the different age groups as well as offer strategic benefits to the different age groups. It has been revealed that the younger generation is more inclined towards the snack food and the older generation is leaning towards nutritional values (Michman & Mazze, 1998). The company needs to determine whom to target for what purpose. Kellogg’s also needs to take into consideration product nature.
The product is not a specialty good and is a low-involvement product as well as a product of convenience. Consumers do not have to put forth much effort to consume the product. The consumer just needs to open the package and eat it as opposed to eating a bowl of cereal where one needs a bowl, spoon, cereal, and milk. A bowl of cereal, for instance, cannot be eaten while driving a vehicle but a snack product can. Today’s society is always on the go and many food products are now consumed for nutritional value because time does not permit one to stop for a nutritional meal. Consumers also make decisions on what to eat on the basis of functional utility and they can experiment with other products. As snack products are a low involvement product, customers may switch to another company in order to obtain their preference. It has also been discovered that taste, nutritional value and convenience are important qualities that the consumer seek and must be taken in to consideration by Kellogg’s in order to attract the customers. The Kellogg Company must consider these factors in order to target the customers.
The Kellogg Company must consider factors such as education, marital status, family status, transportation to work or school, and travel time. Education is a very important factor for segmenting the market (Shimp & Andrews, 2013). It is divulged that the snack food business is determined by education level. Many educated consumers do not wish to consume high calorie foods. Educated consumers tend to make healthier choices. The most naïve consumers are school level children ranging from grades K-12. This age range is naïve when it comes to caloric consumption. In contrast, this age group, while not calorie conscious, make up a good portion of the snack food customers. This age group usually consumes products for taste and to curb hunger. This is an age group that needs to be targeted by providing products to their area. Consumers this age are self-indulgent in nature and do not display discriminatory behavior in the consumption of snack foods (Michman & Mazze, 1998). This age group also has a vast impact on their parents to purchase certain products. Parents will buy what their children want and like to eat. Another category is the college level graduate. The college graduate level of consumers are more consciences about obesity and welcome snacks with less calories.
Benefits segmentation can be applied to consumers as well. The college and school age lifestyles, as well as past purchasing habits and behaviors make these particular age groups more attractive because they are serious snack eaters. Individuals who travel to other places and countries also consume a vast amount of snacks. The Kellogg Company should target typical travel time to and from work or school as a time to sell their products. Consumers who travel during heavy traffic times often consume light foods (snacks) during their commute to and from work or school. Often times this is the only time individuals get an opportunity to eat, therefore, a nutritious, tasty snack is a good idea. These ideas are simple, general guidelines for promoting snack foods to school and college level graduates.
Behavioral Factor
The behavioral factor such as loyalty, usage rate factor, benefit sought and occasion are also important factors. It is identified that many people purchase snack products for specific occasions, or taste and to curb hunger rather than for nutritional value. Recently it has been noted that consumers are shifting their purchasing behavior toward being more health conscious. Therefore, the Kellogg Company should add more nutritious snacks to the product mix in order to capture the health conscious market. The Kellogg Company should also target the middle and high income groups as these people have high usage rate for snacks. The loyalty factor is low in low involvement products. In order to attract new customers, the Kellogg Company should heavily advertise and offer samples for customers to taste. The new products need to be available everywhere in order to try and capture the market.
Psychographic Factors
The psychographic factor such as lifestyle and social class must be taken in to account (Shimp & Andrews, 2013). As people are becoming more brand conscious they can certainly buy the products from the branded company and those people who have an upper lifestyle are generally inclined to purchase the snacks from the Kellogg Company. There are people such as reformer, succeeder, aspirer in the lifestyle categories and these people like to have a good appearance and image (Shimp & Andrews, 2013). These individuals are brand conscious as well as consumers living a middle or upper class lifestyle. The reformer, succeeder, aspirer, middle and upper class individuals should be targeted for snacks because they are brand conscious.
Demographic Factors
The demographic factors are age, income and ethnicity and other important factors (Shimp & Andrews, 2013). The target groups should be consumers from 10 years to 60 years old. The age group can be divided in order to target each age group separately with different snacks. The younger group are not very calorie conscious. They prefer to have snacks that taste good and will simply curb their hunger. The young adult to middle age consumers worry about calories therefore, a more nutritious snack needs to be tailored to this group. The older generation often does not worry about their appearance and will eat whatever makes them happy. Both genders, male and female should be targeted as both genders consume snack products. Level of education plays a significant role in purchasing snacks. Generally more educated college level consumers will tend to eat healthier and want a heather snack while school level children are more inclined to eat tasty snacks regardless of calories or fat content. The Kellogg Company should add nutritious snacks to their product mix in order to attract the more health conscious consumer. The employment factor is a crucial factor as well. In order to be able to afford certain snack foods one must have money which comes from employment.
Geodeomographic Factor
The geodemographic factor should take into account of supplying the product to customers in areas of poverty for less cost. Urban and semi-urban areas should also be targeted and supplied where the density of people are high and the stores are easy to access (Shimp & Andrews, 2013). Supplying heavily populated areas can reduce the inventory and distribution cost as the product will not be kept in warehouses for a long time due to high demand. Distribution cost will also be low due to high reach at low cost.
Positioning of the Product
The product positioning is done on the basis of price and quality. The product is a well-known product from a reputed company and it has a strong brand image in the market so the Kellogg Company should maintain its product price stable. The quality of the snack should be increased and more nutritional value added that will help to ensure customer’s needs and demands are being met. Another positioning strategy for the product is positioning by the product’s attributes. The Kellogg Company should clearly communicate the benefits of the product to customers by comparative advertising. Kellogg’s competitors are General Mills, Nestle, Heinz, Pillsbury and a few others.
The benefits and attributes associated with the snack brand should be to offer emotional and more functional benefits such as more attributes for customers according to their desires.
Marcom Budget
The marketing and communication budget should be based on affordability. For this purpose, objective and task method should be adopted as there are issues with the percentage of sales method and competitive parity method (ShimpAndews, 2013). The objective and task method establishes the budget by measuring the goals of communication and it considers what the Kellogg Company wants to achieve and how to set a budget accordingly. After setting the objectives, tasks are defined then in the final step the costs are estimated associated with performing the required task. The example is to increase market share of product by 8 percent and increase the brand awareness by 30 percent. The marketing and advertising tasks such as creating a campaign for advertising, social media advertising, poster and banners advertising, search engine advertising, recruiting sales personal, training to sales personal, POP distribution, and training to suppliers needs to be implemented. In the final step, the media cost, agency fees and cost for recruiting sales people as well as for marketing research cost should be estimated (Shimp & Andrews, 2013).
Advertising Message
The product Special K Cracker Chip has more nutritional values than before, and it is for consumers of all ages, for both male and female, and college students to families. It has a variety of flavors and nutritional values so come and enjoy this great tasting snack.
The advertising should contain the principle of integrated marketing communication. The integrated marketing communication considers the advertising both from traditional and social media, sales promotion, public relation, and direct selling. All these avenues for selling the product must have design consistency, and similar messages. The message must be reinforced by these avenues with similar intended messages to produce the desired responses from the consumer (Shimp & Andrews, 2013).
For measuring the advertising message, communication effects and sales effects are analyzed. The communication effects consist of three types of researches such as direct rating methods, portfolio tests and laboratory tests. Sales effect research is totally dependent on the sales of company (Shimp & Andrews, 2013).
Conclusion
Based on research, market segmentation analysis and the four sets of segmentation characteristics I believe I can help to revitalize the Kellogg Company’s snack division into a profitable entity. I also believe I can increase brand awareness as well as position the product to where the brand is widely recognized and appeals to customers of all ages, races, genders, social class, and lifestyles.
References
Culliney,K. (2014, February 7). Kellogg 2013 results, cereal trouble and snack weakness. Retrieved from
Kellogg Company. (n.d.). Our Vision & Purpose. RetrievedDecember1, 2015, from
Michman, R. D., & Mazze, E. M. (1998). The food industry wars: Marketing triumphs and blunders. Westport, Conn: Quorum.
Shimp,T.A., & Andrews,J.C. (2013). Advertising, promotion, and other aspects of integrated marketing communications (9thed.). Mason, OH: South-Western Cengage Learning.
Sosland,J. (2014, October 31). Sickly results for Kellogg wellness cereal snacks | Food Business News. Retrieved from