Kellogg's Indian Experience

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Setting Things Right Contd...

Kellogg also increased its focus on promotions that sought to induce people to try their product and targeted schools across the country for this. By mid-1995, the company had covered 60 schools in the metros. In March 1996, the company offered specially designed 50 gm packs free to shoppers at select retail stores in Delhi. This was followed by a house-to-house sampling exercise offering one-serving sachets to housewives in the city. The company also offered free pencil-boxes, water bottles, and lunch boxes with every pack. Plastic dispensers offering the product at discounted rates were also put up in petrol pumps, super markets, airports etc. Kellogg identified distribution as another major area to address in order to increase its penetration in the market. In 1995, Kellogg had 30,000 outlets, which was increased to around 40,000 outlets by 1998. Avronsart said, "We have increased our reach only slightly, but we are now enlarging our coverage." Considering that it had just one plant in Taloja in Maharashtra, the company was considering plans to set up more manufacturing units.

Kellogg's also began working towards a better positioning plank for its products. The company's research showed that the average Indian consumer did not give much importance to the level of iron and vitamin intake, and looked at the quantity, rather than the quality, of the food consumed. Avronsart commented, "The Kellogg mandate is to develop awareness about nutrition. There is a lot of confusion between nourishment and nutrition. That is something that we have to handle." Kellogg thus worked towards changing the positioning of Chocos and Frosties - which were not positioned on the health platform but, instead, were projected as ‘fun-filled' brands.

Kellogg then launched the Chocos biscuits, claiming that cereals being a ‘narrow category,' the foray into biscuits would create wider awareness for the Kellogg brand. Biscuits being a mass market product requiring an intensive distribution network, Kellogg's decision to venture into this competitive and crowded market with stalwarts like Britannia, Parle and Bakeman, was seen as a bold move not only in India, but also globally. Avronsart said, "We are ready to develop any food based on grain and nutrition that will satisfy consumer needs."

The Results

In 1995, Kellogg had a 53% share of the Rs 150 million breakfast cereal market, which had been growing at 4-5% per annum till then. By 2000, the market size was Rs 600 million, and Kellogg's share had increased to 65%. Analysts claimed that Kellogg' entry was responsible for this growth. The company's improved prospects were clearly attributed to the shift in positioning, increased consumer promotions and an enhanced media budget. The effort to develop products specifically for the Indian market helped Kellogg make significant inroads into the Indian market.

However, Kellogg continued to have the image of a premium brand and its consumption was limited to a few well-off sections of the Indian market. The company had to face the fact that it would be really very difficult to change the eating habits of Indians. In 2000, Kellogg launched many new brands including Crispix Banana, Crispix Chocos, Froot Loops, Cocoa Frosties, Honey Crunch, All Bran and All Raisin. Kellogg also launched ‘Krispies Treat,' an instant snack targeted at children. Priced on the lower side at Rs 3 and Rs 5, the product was positioned to compete against the products in the ‘impulse snacks' category. According to some analysts, the introduction of new cereals and the launch of biscuits and snacks could be attributed to the fact that the company had been forced to look at alternate product categories to make up for the below-expectation performance of the breakfast cereal brands.

Kellogg sources however revealed that the company was in India with long-term plans and was not focusing on profits in the initial stages. In Mexico the company had to wait for two decades, and in France nine years, before it could significantly influence local palates. With just one rival in the organized sector (Mohan Meakins) and its changed tactics in place, what remained to be seen was how long it would take Kellogg to crack the Indian market.

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