A Strong Position of Kellogg in Terms of Marketing - Research Paper Example

Critical Examination on Kelloggs Marketing Mix and how it can gain and/or increase its competitive advantage in the market Critical Examination on Kelloggs Marketing Mix and how it can gain and/or increase its competitive advantage in the market Introduction According to Silk (2006) marketing can be defined as a wide-ranging management plan instituted by businesses to generate and exchange value with their clients. It is a vital constituent in determining the success in the business environment it operates in. On the other hand, marketing mix has been defined by Jain (2010), as a grouping of the distribution scheme, the product, the activities undertaken in promotion, and the price organisation. Various marketing tools exist, they include segmentation is the grouping of clients into varying clusters characterised by their needs (Krolikowski, 2009).Product life cycle is a depiction of the phases a product moves through from its conception to introduction into the market (Stark, 2011). Hence, the paper seeks to critically examine Kellog’s marketing mix and how it can improve its competitive advantage in the market. Kellogg is a multinational company that aims at delivering nutritious foods whose value and quality is superior. Its Headquarter is in Battle Creek Michigan in the US. The company was founded in 1906 (Reference for Business, 2015). Over the years, it has consistently produced a wide range of products and diversified its portfolio as competition in its marketing environment increase. To show its multinationalility, the products it produces are sold in 180 countries and above worldwide. These producst include Corn Pops, Frosted Flakes, Rice Krispies, Kellogg’s Corn Flakes, Nutri-Grain, Eggo waffles, Bear Naked cereal Bars, and snacks like Famous Amos, Keebler, and Cheez-It (Hoovers, 2015). The company has been ranked by Forbes as the sixty fifth most valuable brand in the world. It was ranked number 508 in Global 2000. From its sales, Forbes places it at number 641, number 368 in terms of the profit it makes, 1,296 according to the assets it owns, 493 in accordance to its market valuation, and number 54 in terms of innovation. Its current CEO is John Bryant and it has 30,277 employees (Forbes, 2015). The market capitalization of Kellogg as of May 2014 stood at $22.49 billion. According to Fortune 500 (2015), Kellogg’s financial status is a healthy one. Its revenues total in millions to around $14792, profits in millions of 1807, and assets of around 15474 in millions. The profits the company makes as a percentage of the assets stand at 11.7%, the sales at 12.2%, and the stockholder’s equity at 51%. It is listed in the stock exchange as a fortune 500 company with earnings per share in dollars at 4.94. Its overall return to investors stands at 12.6% (Fortune 500, 2015). Its annual revenue stands at $14.58 billion. The industry it operates in is the food processing industry. As previously stated, the products it produces are manufactured in eighteen countries. The competitors include General Mills, Inc., and Nestle, Inc. When compared with the two direct competitors, its annual revenue is third after that of General Mills, Inc. that stands at $17.64 billion. Nestlé’s Inc. annual revenue is a whopping $96.89 billion (Yahoo Finance, 2015). The comparison with competitors is shown in table 1 below. Direct Competitor Comparison   K GIS NSRGY Industry Market Cap: 22.82B 32.28B N/A N/A Employees: N/A 43,000 333,000 N/A Qtrly Rev Growth (yoy): 0.00 -0.03 -0.05 0.00 Revenue (ttm): 14.58B 17.64B 96.89B N/A Gross Margin (ttm): 0.36 0.34 0.48 0.00 EBITDA (ttm): 1.86B 3.23B 18.06B N/A Operating Margin (ttm): 0.09 0.15 0.15 0.00 Net Income (ttm): 632.00M 1.51B 10.24B N/A EPS (ttm): 1.75 2.40 3.20 N/A P/E (ttm): 36.62 22.30 23.93 N/A PEG (5 yr expected): 3.59 3.08 38.35 N/A P/S (ttm): 1.56 1.83 N/A N/A TABLE 1: Comparison with competitors (Yahoo Finance, 2015). According to a report by the company, its market share by the year 2012 attained $2 billion. A rise of around 140 % from the year 2001. It acquired Pringles and has the ability to expand in virtually all regions whose demographics its expansion (Kellog,s, 2012). As analysts ascertain, the strengths of the company outweigh its weaknesses. The main strength of the company is the investment it has made on its customers. The diversity it has in the products it produces is a critical strength as indicated by the number of products spanning across various food sectors. The strategic location in around 180 countries globally places it in a strong area when it comes to product sales. Due to it being a market oriented company, it has enabled it to beat competitors and play a crucial role in the food market (Kelloggs, 2011). The company has continued to retain profits placing it in a robust position that enables it to make investments for the future, for example through buying new equipment (Vuru, 2015). The products that Kellogg’s produces are as a result of vast research into ways of enhancing the quality of nutrition they offer. It is committed to decreasing the amount of salt and fats in its products. It is so especially in its two main regions of operation, Europe and North America. The amount of sugar and calories in its products is a big issues in America. It has plans to decrease sodium quantities by 25%, and additives like sugars by 10%. From its nutrient reporting system, it has been able to evaluate what products to advertise to children below 12 years of age (The Kellogg Company, 2013). The packing of its products along with the appearance sizes are a major consideration in the amount of sales. In 2009, it was reported that it aimed at decreasing the packaging of its Corn Flakes in a material that utilised less material by up to 8%. The idea was that this would ensure its products used less space in store shelves like Walmart. The packs used on its products have a combination of bright colours that aims at attracting customers (Sustainable is Good, 2009). The prices of Kellogg have been hugely affected by an increase in the prices of major inputs for its snack and cereal foods. These inputs include wheat and corn. It has been coupled y high energy prices that have increased tie delivery and transportation costs. Thus it has had to increase its prices leading to a drop in net sales (Rooney, 2012). The promotion of its products is a vital marketing strategy that determines the amount of sales it makes. It has utilised various promotions such as the Special K resolution that runs until the end of April this year. It also has the Holiday Hasbro promotion where customers are given coupons for a free Hasbro Game. The other promotion is the vector resolution promotions where clients get free product coupon of their selection from any partaking Vector Protein Bars. Also, free Kellogg’s cereal or milk are given to customers for any purchase of participating Kellogg’s cereal boxes or Nutri-Grain Bars (Kelloggs, 2015). The company’s place in technology is evident through online platforms in its web site and the mobile platforms. In the mobile platform, it is making use of applications that allow customers to manage their weight loss through computers and cell phones. The application has been used for its Special K diet and includes a cooperation with the digital agency Razorfish in print, social media and broadcast (Johnson, 2012). The company is located in 19 countries in various regional locations that include the Asia Pacific, Latin America, North America, and Europe. It ensures that it nullifies completion of smaller competitors and goes head on with its competitors in these locations. Conclusion It can be determined that Kellogg is in a strong position in terms of marketing due to the competitive advantage it has from a vast network in various regions. The strategy and marketing mix it has made use of has ensured it has had years of profits and growth in revenues. Consistency is prime for the company. The large customer base it has due to successful sales has helped it maintain its operations in the food processing industry. However, it is recommended that the company expand on its promotion strategy while finding a means to overcome external factors like the price of its inputs. References Forbes, 2015. Kellogg. [Online] Available at: http://www.forbes.com/companies/kellogg/ [Accessed 22 February 2015]. Fortune 500, 2015. Kellogg Company. [Online] Available at: http://fortune.com/fortune500/kellogg-company-198/ [Accessed 22 February 2015]. Hoovers, 2015. KELLOGG COMPANY Information. [Online] Available at: http://www.hoovers.com/company-information/cs/company-profile.Kellogg_Company.b530620d866a5afc.html [Accessed 22 February 2015]. Jain, A., 2010. Principles of Marketing. New Delhi: FK Publications. Johnson, L., 2012. Kellogg Co. builds on 2012 marketing strategy with mobile. [Online] Available at: http://www.mobilemarketer.com/cms/news/strategy/11827.html [Accessed 22 February 2015]. Kellog,s, 2012. 2012 KELLOHH Company Financial Highlights. [Online] Available at: http://investor.kelloggs.com/files/doc_downloads/Final%202013%20Fact%20Sheet.pdf [Accessed 22 February 2015]. Kelloggs, 2011. Kellogg Recognized for Strength of Company, Brands and Corporate Responsibility Efforts. [Online] Available at: http://newsroom.kelloggcompany.com/index.php?s=27529&item=76385 [Accessed 22 February 2015]. Kelloggs, 2015. Offers and Promotion. [Online] Available at: http://www.kelloggs.ca/en_CA/promotionsCategoryPage.html [Accessed 22 February 2015]. Krolikowski, B., 2009. Is segmentation effective?: That is, does one or more market groups appear to be identifiable and measurable, accessible, substantial, and responsive?. Munich: GRIN Verlag. Reference for Business, 2015. Kellogg Company - Company Profile, Information, Business Description, History, Background Information on Kellogg Company. [Online] Available at: http://www.referenceforbusiness.com/history2/91/Kellogg-Company.html [Accessed 22 February 2015]. Rooney, J., 2012. Kelloggs Completes Major Brand Overhaul. [Online] Available at: http://www.forbes.com/sites/jenniferrooney/2012/05/10/kelloggs-embarks-on-major-brand-overhaul/ [Accessed 22 February 2015]. Silk, A. J., 2006. What is Marketing?. Boston: Havard Business Press. Stark, J., 2011. Product Lifecycle Management: 21st Century Paradigm for Product Realisation. London: Springer Science & Business Media. Sustainable is Good, 2009. Kelloggs Reduces Size of Corn Flakes Packaging. [Online] Available at: http://www.sustainableisgood.com/blog/2009/02/kelloggpackaging.html [Accessed 22 February 2015]. The Kellogg Company, 2013. Company Scorecard: Access to Nutrition Index Global Index 2013. [Online] Available at: file:///D:/videos/Downloads/atni_scorecard_kellogg.pdf [Accessed 22 February 2015]. Vuru, 2015. KELLOHH COMPANY. [Online] Available at: http://www.vuru.co/analysis/K/financialStrength [Accessed 22 February 2015]. Yahoo Finance, 2015. Kellogg Comany. [Online] Available at: http://finance.yahoo.com/q/co?s=K+Competitors [Accessed 22 February 2015]. Read More