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Presented By:: Ekta Bawa Naina Deo Rupshika Borah Rushad Nasim Md. Faiz Ahmed Subhodeep Ray Chaudhury

Kellogg's entered the Indian market in 1994 with cornflakes, wheat flakes and basmati rice flakes. However, they failed to understand Indian consumer habits and tastes. Indians preferred warm milk with sugar, whereas Kellogg's cereals were meant to be eaten cold with milk. They also positioned it as a health product rather than for fun. Due to these mistakes, Kellogg's saw a 25% decline in sales in its first year. Later, they had success with brands like Chocos and Frosties that better suited Indian tastes. They learned important lessons about understanding local culture and pricing products affordably.

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267 views

Presented By:: Ekta Bawa Naina Deo Rupshika Borah Rushad Nasim Md. Faiz Ahmed Subhodeep Ray Chaudhury

Kellogg's entered the Indian market in 1994 with cornflakes, wheat flakes and basmati rice flakes. However, they failed to understand Indian consumer habits and tastes. Indians preferred warm milk with sugar, whereas Kellogg's cereals were meant to be eaten cold with milk. They also positioned it as a health product rather than for fun. Due to these mistakes, Kellogg's saw a 25% decline in sales in its first year. Later, they had success with brands like Chocos and Frosties that better suited Indian tastes. They learned important lessons about understanding local culture and pricing products affordably.

Uploaded by

ekta4gaurav
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Kellogg's Cornflakes: Consumer Perceptions

Presented By:
Ekta Bawa
Naina Deo
Rupshika Borah
Rushad Nasim
Md. Faiz Ahmed
Subhodeep Ray
Chaudhury
History of Kellogg’s in INDIA

• In September 1994, US-based cereal


manufacturer, Kellogg's entered India with
investment of US$ 6.9 billion in its Indian
Subsidiary.

• September,1994,Kellogg’s initial offerings


in India included cornflakes, wheat flakes
and Basmati rice flakes.

• Set up its 30th manufacturing facility in


India with a total investment of $30million.
Failure of Kellogg’s in the INDIAN market

Failed Launch

• In April 1995, KELLOGS received unsettling


reports of gradual drops in sales from its
distributors
• 25% decline in countrywide sales.

KELLOGS product failed in Indian market even after:

• Offering good quality products, supported by


technical, managerial & financial resources
• High profile launch backed by hectic media
activity
Failure of Kellogg’s in the INDIAN market

• Despite offering good quality products and being supported by the


technical, managerial and financial resources of its parent, Kellogg's
products failed in the Indian market.

• Kellogg's knew it will be difficult to get Indian customers to accept its


products hence it relied heavily on the quality of its crispy flakes.

• Indians liked to boil their milk and consume it warm or lukewarm, they
also like to add sugar to their milk.

• The rice and wheat versions did not do well because


sugar could not easily dissolve in cold milk which made it
not sweet enough for the Indians.
Some consumers called the rice flakes, rice corn flakes.
Reasons for Failure

• Positioning – positioned it as health product

• Over confidence and ignorance of cultural aspects

• Non understanding of Indian consumer behavior and


habits

• Banked heavily on crispy flakes

• Premium Pricing policy


Main Reasons for Failure

• Analysts believe that the major reason for Kellogg’s failure in the Indian
market was the fact that the taste of its products did not suit Indian breakfast
habits.
• The second mistake it made in the Indian market was its positioning front.
Its advertisements and promotions focused initially on the health aspects of
the product which was a fundamental departure from the successful ‘fun
and taste’ positioning adopted in the United States. In the U.S, Kellogg's
offered toys and other branded merchandise for children and had a
Kellogg’s fan club.
• At an average cost of Rs 21 per 100gm,Kellogg products were clearly
priced way above the product of its main competitor, Mohun
Cornflakes(Rs16.50 for 100gm). Another small time brand,
Champion was selling at prices almost half that of
Kellogg's.
• This gave Kellogg a premium image and
unattainable for the average Indian
consumer.
Main Reasons for Failure
• In most third world countries pricing is believed to play a dominant role in
the demand for any product but Kellogg did not share this position and this
affected the demand for its products.
• Due to the premium pricing problem faced by Kellogg's, it tried a dollar to a
rupee pricing for its products, still it could not attract the mass consumer.
• Even those consumers at the higher end of the market failed to perceive
any extra benefits in Kellogg’s products.
• A Business Today report said that like other Multinational Companies,
Kellogg had fallen into a price trap by assuming that there was substantial
“latent niche market” in India for premium products.
• In order to maintain quality Kellogg's focused on Premium
and middle-level retail stores.
• This decision made it difficult for the larger population to
get its products.
Correcting its mistakes…

• In order to forge ahead, Kellogg decided to launch two of


its highly successful brands-Chocos(September,1996) and
Frosties (April,1997) in India.

• These brands were very successful and sales picked up


significantly.

• Brands were even consumed as snacks and led to the


launch of Chocos Breakfast Cereal Biscuits.

• The success of Chocos and Frosties led to the total


indianisation of the Company’s flavours in future which
resulted in the launch of Mazza series in August,1998 in
three local flavors Mango Elaichi,Coconut Kesar and Rose
after one year extensive research to study consumer
patterns in India.
Correcting its mistakes…
• Kellogg's was able to reduce prices by reducing its cost of production.
For example Mazza was not positioned in the premium segment. The
glossy cardboard packaging was replaced by poaches which helped in
reducing the price.
• Furthermore, Kellogg's saw advertising as a vital tool in promoting its
brand .This made it attempt to indianise its campaign instead of simply
copying its international promotions. The rooster that was associated with
the Kellogg brand worldwide was missing from its advertisements in India.
Oneof the adverts depicted a cross section of individuals from a yoga
instructor to a kathakali dancer attributing their morning energy and fitness
to Kellogg.
• Kellogg saw distribution as an important area to look
into to improve its market penetration.In1995,Kellogg had
30000 outlets which was increased to 40000 outlets by
1998.
Importance of Demand Forecasting

• Planning and Scheduling production.


• Budgeting of cost and sales revenue
• Controlling Inventories.
• Making policies for long term investments.
• Helps in achieving targets of the firm.
Lessons from Kellogg’s

• It was just clumsy cultural homework. It was


important for them to study cultural behavior of
Indians.
• Do not underestimate local competitors.
‘Multinational corporations must not start with the
assumption that India is a barren field,’ said C K
Prahalad, business professor at the University of
Michigan, in a Business Week article.
Importance of Demand Forecasting

Lessons from Kellogg’s cont…

• It may be easy for brand managers of global brands to view the world as
homogenous, where consumer demands are all the same, but the reality is
rather different. Globalization may be an increasing trend, but regional
identities, customs and tastes are as distinct as ever. When Kellogg’s first
launched Corn Flakes in India it was essentially launching a Western
product attempting to appeal to Indian tastes.

• Don’t try and make consumers strangers to their culture. You can
alienate one a bit from their culture, but you cannot make them a stranger
to their own culture.
The society is much stronger than any company or
product. Brands who want to succeed in India and other
culturally distinct markets need to remember this.

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