Select a large multi-national (WALMART) company, using the list below, research,

Question

Select a large multi-national (WALMART) company, using the list below, research, identify and evaluate on the following strategies for your chosen company. Not all strategies may be utilized, but in most cases they will be used. If you do not see a specific one used by your chosen company, note why you believe it isn't used and if it should be. Identify your chosen company and include a brief company summary before reporting on the strategies. Growth strategies Internal growth External growth Horizontal related integration Horizontal related diversification Conglomerate unrelated diversification Vertical integration Strategic alliances (partnerships) 2. Stability strategy 3. Retrenchment strategies Turnaround Divestment Liquidation You can use each strategy here as a heading in your paper. You will need to draw your own strategy conclusions based off your company research. Approximate length 3-5 pages.

Explanation / Answer

The Kellogg Company

Company Summery

When Will Kellogg accidentally invented a new breakfast food in Battle Creek, Michigan in 1894, he did not realise that he was on the threshold of forming a major food manufacturing company. His name would become one of the most instantly recognised throughout the world.

Today, Kellogg’s is an American owned organisation that has a true global market. It has four main divisions covering North America, South & Central America, Asia Pacific, and finally Europe, Africa and the Middle East. The European Headquarters is in the UK, which along with Ireland has the highest per capita consumption in the world. However, Kellogg’s has manufacturing operations in several different European countries. The supply chain management, covering all aspects of production, logistics and finance is organised on a pan-European basis, which gives substantial economies of scale. However, marketing and sales tend to be more locally based to meet the different cultural needs as the markets across Europe can vary enormously.

Introduction

William Kellogg, who founded the company in the USA, believed that diet played a key role in a healthy lifestyle and that breakfast was the most important meal of the day. Around 1898 he conducted experiments that led to the development of Corn Flakes. The company prospered, and in 1924 Kellogg’s established the Kellogg Company of Great Britain. By the1950s the US company had begun to develop cereals appealing to younger tastes. Frosted Flakes hit the USA in 1952. In 1954 they arrived in the UK, as Frosties. Kellogg’s has flourished through skilful marketing of good products, and by creating and sustaining a highly valuable brand name. Kellogg’s is an example of multiple branding, where each product within the range is given its own clear identity and defining characteristics, but is marketed using the Kellogg’s name as an umbrella.

Segmentation and targeting are key factors in creating these brand identities. Segmentation involves subdividing markets into constituent parts. Each part has clear characteristics that distinguish it from any other part. For example, the main segment for Frosties consists of children under the age of 12 years, although over half of all Frosties are consumed by adults. When segments have been identified, targeting then takes place. This involves developing a marketing mix that creates characteristics and brand values that appeal to consumers within each segment. It is this approach to marketing that has led to the creation and ongoing development of Tony the Tiger.

The need for change

When a company like Kellogg’s is investigating a change in its marketing it can consider four elements. These are known as the marketing mix or 4Ps:

Product

This element relates to how the company offers meets the changing needs and wants of customers. The growth in healthier lifestyles creates opportunities for Kellogg's to increase the number of products for this segment.

Price

The amount a company charges for its product is important in determining sales. Super brands like Kellogg’s can charge a premium because of the strength of the brand and product quality.

Place

Where customers can purchase the product is also an important factor in determining sales. If a brand like Special K is not stocked in supermarkets where most purchases are made, sales will be lost.

Promotion

Communicating the availability of a product is essential for sales to be made. Kellogg’s uses above the line promotion like TV advertising as well as below the line promotion like on-pack promotions and sampling.

In considering Special K, the company concentrated on changing the product through new variants. Although Special K was already a well-established brand, its full potential had never been reached. It was viewed as a stand-alone product, and Kellogg’s had not created any variants or brand extensions to develop the core product.

Managers can decide when to make key changes to a core product by analysing its position within the product life-cycle. Life-cycle analysis accepts that products have a finite life, and analysts chart a product’s performance through several phases, from its launch through various phases of growth until it reaches maturity and eventually decline.

A product’s life cycle may last only a few months (e.g. with a fad, or craze) or, as with Special K, for many years. Although it was a successful product, Kellogg’s recognised the opportunity to stretch the brand by investments that would:

(Horizontal Related Integration)

Special K – cereal

Initial developments came from Kellogg’s in France, who introduced red berries into the cereal. This new product performed well. Market research in the UK, including consumer tests, also identified a real opportunity within the UK market. In October 1999, Kellogg’s launched Special K Red Berries in the UK. From the outset it performed well, with very little damage to the core brand: most sales were additional and above expectations; consumers did not swap the ‘old’ product for the new variant.

Evaluating the launch revealed further scope for product development. It was, however, important to ensure that any new products tasted different from the original Special K and the Special K Red Berries, so as not to harm their sales. Extensive product development research was carried out by food technologists. Kellogg’s then tested the product with quantitative research. Kellogg’s launched Special K Peach & Apricot in February 2003.

(Horizontal related Diversification)

Special K – bars

Kellogg’s already knew that women who are keen to watch their weight and shape seek a range of solutions throughout the day - not just at breakfast. With the help of both users and non-users of existing Special K products, market researchers undertook further quantitative tests of product ideas across a range of food categories.

The research identified that cereal bars offered the strongest opportunity to develop Special K as a healthy snack. The brief was then developed and the Special K bar was launched in July 2001, with significant television coverage. Consumers were also able to sample the bar through specific promotional activity. The Peach & Apricot variant was added to the portfolio in February 2003.

6. Growing the brand

Kellogg’s soon came to realise that the variants were responsible for a huge growth in the Special K brand, without a drop in sales of the core cereal product. New product development had transformed the brand within the UK. This in turn gave a great opportunity to roll-out other developments in other markets, including the USA, Australia and Canada. Product research showed that the UK products could be adapted to meet the individual tastes of consumers within those markets.

The Kellogg’s strategy was truly global; it developed an idea in Europe which it then adapted and applied worldwide. Within the space of 2 years the extensions to the brand had achieved global coverage, and were providing not only significant developments in sales value and volume of Special K products, but also a huge boost to the brand’s equity.

Supporting such expansion was not always easy for Kellogg’s UK. Initially it produced all the Special K variants sold within Europe. The UK company had to increase its manufacturing capacity and also refine supply chain management processes to ensure that the product would be available at the point of purchase. It had opened a portable foods plant at Wrexham, to produce bars. Other capacity was created by commissioning the production of Special K cereal in Spain.

(Diversification Vertical integration)

Kellogg All Bran

Kellogg created All-Bran as a product and the fibre sector of the cereal market in the 1930s. From then onwards the product experienced steady growth with the company injecting regular promotional spends to support product development. The most spectacular growth was in the 1980s with widespread publicity for the 'F' Plan Diet from nutritionists and health experts. This diet had an impact similar to that of the Atkins Diet in recent years. Following this, the Kellogg 'bran' range has been moving into a more mature stage.

Because the product is mature, Kellogg has looked to re-brand a range of fibre cereals in order to inject renewed growth and interest. The company has run a £3 million campaign that urges consumers to re-appraise these products. Large investment was needed to support the strategy and to evaluate the consumer response.

Bran Flakes Yoghurty.

Product Range/ Categories:

Brands

Kellogg needed to identify the benefits that would result from any changes it made. An important advantage related to managing the product range. Kellogg identified which of its existing fibre based products offered the best present and future prospects and decided to concentrate on those. This simplification made it easier to manage the product portfolio. Managers could concentrate on the common elements of the chosen range and focus marketing activity on them. This action produced management and marketing economies of scale, rather than production economies - the complexity of manufacturing individual products has not been reduced. The smaller brands were pulled together into the All-Bran range.

Kellogg's market research showed that, in choosing a cereal product, consumers place high priority on taste. Although they want a healthier cereal, it still must taste good. So Kellogg decided to develop new 'tastier' products under the single All-Bran umbrella such as

Pulling a range of fibre products together under a single brand also made it easier to communicate with the target audiences through a shared communication.

Conclusion

Kellogg has been able to inject renewed vigour into a family of related products. Through appropriate promotional activities and more relevant messages, Kellogg has re-awakened consumers' interest in products that can play an important part in developing a healthy diet in a health-conscious world. Regular campaigns of promotional activity are helpful in enabling all organisations to sustain their own life cycle and those of their brands and products. It is early days in evaluating the success of the marketing activity

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