Kellogg’s

History

Will Keith Kellogg (W.K.) began his cereal-making career in the 1890’s when he assisted his brother, Dr. John Harvey Kellogg, in creating foods for the patients of The Battle Creek Sanitarium in Battle Creek, Michigan. Accidentally when they left the dough overnight, it dried up and to their pleasant surprise, they found that it separated into flakes when passed through a roller. When the flakes were baked, they became crisp and light, creating an easy to prepare breakfast when milk was added. The ready-to-eat cereal industry was formed.

Mission statement

Kellogg is a global company committed to building long-term growth in volume and profit and to enhancing its worldwide leadership position by providing nutritious food products of superior value.

Value statement

The company’s value statement on it website “We build great brands and the make the world a little happier place by bringing our best to you.”

Location

Kellogg’s products are manufactured in 17 countries on six continents. The company has a workforce of about 25,200 employees and is headquartered in Battle Creek, Michigan.

General Information

Since 1906, Kellogg has built itself a solid image as a company to rely on for great-tasting, high-quality foods. With 2004 sales at almost $10 billion, Kellogg Company is the world’s leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, toaster pastries, cereal bars, frozen waffles, meat alternatives, piecrusts and ice cream cones. The company’s brands include Kellogg’s, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, Murray, Austin, Morningstar Farms, Famous Amos, Carr’s and Kashi. Kellogg icons such as Tony the Tiger, Snap! Crackle! Pop! , and Ernie Keebler are among the most recognized characters in advertising.

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Organization Culture

 In spite of its growing size, the company adheres to the following five fundamental components as vital to its organization culture.

• People
• Profit and Growth
• Consumer Satisfaction and Quality
• Integrity and Ethics
• Social Responsibility

Financial statement

The company recorded revenues of $9,613.9 million during the fiscal year ended December 2004, an increase of 9.1% over 2003. The increase was primarily attributable to an increase in sales in all geographical markets. The operating profit of the company during fiscal 2004 was $1,681.1 million, an increase of 8.8% over fiscal 2003. The net profit was $890.6 million during fiscal year 2004, an increase of 13.1% over 2003.

Growth Strategy

• Grow Cereal consumption, which is their mainstream through brand building, promotion and research and development.
• Expand Snacks. Kellogg’s also has a number one wholesome snack business and the number two cookie and cracker businesses in the U.S. The focus for all of these businesses is also innovation and strong brand-building support.
• Pursue Selected Growth Opportunities. The opportunities for growth include: possible, small, complementary acquisitions; expansion of existing infrastructure or capabilities; and expansion into related categories.
• A Consistent, Proven, Process which embodies the three principles, Volume to value, Manage for cash, Realistic targets, have worked tremendously well for them.

Marketing strategy

Kellogg always relied upon for quality, has strived to maintain its high standards including in its marketing practices. The Kellogg marketing is responsible for all the company-wide marketing initiatives, including customized strategies for each Kellogg brand. Internally, Kellogg marketing includes:

• Product Management
• New Product Development
• Consumer Understanding
• Consumer Affairs
• Promotion Marketing
• Nutrition Affairs
• Product Communications/PR

S.W.O.T Analysis

Strengths

• Having a very strong brand
• A long-standing presence in the market
• Geographically widespread.
• Having a strong management
• Company strategies that focus on long-term sustainability rather than short-term growth.

Weakness

• Unable to capitalize on its branding and increase market penetration.
• Not being able to compete with the low cost competitors in the low price range.
• Foray into International markets without sufficient research and facing problems
• No dramatic new product to capture public interest in recent years

Opportunities

• Doctors and nutritionists, immensely popularized by the media and gaining acceptance by the public, are insisting upon the nutritional benefits of “breakfast”. These can be converted into sales as cereal being the meal of choice.
• More people looking for “meals on the go” will help create areas for diversification in such “ready to eat foods” building on its current business models.
• Since awareness of “eating healthy” is gaining strength and people are now more concerned, Kellogg’s can use its reliable dependable image to offer products in this category.

Threats

• The prevalence of “Store brands” which distract customers hugely is a looming threat.
• The lower price of the local brands that is a tough range to meet.
• Competitors like General Mills who compete with newer multiple products launched in quick succession in the same target segment.

Recommendations

• Trying to diversify the product ranges banking on its goodwill.
• Customizing products to varying demographics according to geographical location. For example the USA prefers less sugar in their cereal while countries like India like it sweeter.
• Promoting the concept of “Breakfast” and “Healthy eating” in the marketing campaigns and integrating the Kellogg’s name to be synonymous with it.
• Invest in research and development to improve product and production efficiencies to keep costs low.
• Conduct market analysis and reinvent company according to growing needs and changing trends to keep abreast with the changes.