Despite its considerable market share, Kellogg has not yet reached a satisfactory amount of sales due to the low penetration rate of RTE cereal in Taiwan. In the final section, some suggestions based on analysis of the present survey by the four Ps marketing method, i.e. marketing: product, price, place, and promotion, are discussed.
Product
Summarizing the main data relating to breakfast choice factors, it can be shown that consumers attach importance to taste when choosing breakfast. Responding to the emphasis on sensory appeal, after careful review of the survey’s results, it appears the main reason for rejection of RTE cereal is that many consumers do not consider RTE cereal delicious. These results show that the one of the primary problems is related to the product’s taste itself.
In accordance with these results, meeting the taste challenge must be called to Kellogg’s attention. Kellogg’s manufacturing techniques have been standardized across the world, giving the product their unique and uniform taste across the global market (Vignali, 2001). However, due to the different preferences across countries worldwide, there is a need for Kellogg to adjust its development strategies in the Asian markets to better respond to local taste preferences. Since 2007, Kellogg has been promoting its new products in Taiwan, such as Five Grains, Brown Rice, and Black Sesame, to particularly focus on Taiwanese flavor.
Even though Kellogg has been endeavoring to woo Taiwanese consumers by adapting its products’ properties to local preferences, the company has also always been faced with another basic problem. That is, some consumers are reluctant to accept RTE cereal due to their habit of eating a traditional hot breakfast. This barrier conflicts directly with the product’s attributes, and implies either the creation of products that may be consumed differently or a change in consumer’s eating habits. It may be difficult to modify ingrained eating habits, as they not only represent a lifestyle that has been cultivated for centuries but also cultural differences between different geographical regions. One feasible way is for Kellogg to invent new products or adjust its existing products so that they may be consumed hot milk or soybean milk. Therefore, a large investment in innovation will be necessary to solve problems that will arise from adaptation of existing products to the Asian market, e.g.
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how to maintain the crispy mouth feel and original taste of RTE cereal in hot milk.
In addition to drawing acceptance from nonusers, continuing attempts to solicit more demand from old customers are required to ensure Kellogg a steady expansion and growth rate. So far, the consumption of RTE cereal seems to be restricted by its own position as a breakfast alternative. Kellogg can try to educate customers that in fact, RTE cereal should be viewed not only as breakfast food but also as a more commonly eaten snack. This will lead to new marketing initiatives promoting RTE cereal as an all-day food. An existing way to stimulate consumption is the recipe on Kellogg’s website that encourages customers to use RTE cereal as one of the culinary materials.
Further to the problem of taste, the lack of variety is considered also as one of the main reasons for rejection of RTE cereal. Pampered by the convenience provided by the omnipresence of convenience stores, Western and Chinese fast food restaurants, and other types of breakfast vendors, consumers are used to changing their breakfast’s content frequently. This problem could easily be solved by the sale of smaller size packs, such as Kellogg’s Fun Pack for six-time use containing six small packs of different flavors. As a matter of fact, Kellogg has been slow to introduced new products to Taiwan and has depended upon the strength of its current product. Kellogg can import some new products in case that, along with the consumer’s increasing demand for more breakfast alternatives, the continued diversification in the breakfast food industry becomes an adverse market condition.
Price
The RTE cereal oligopoly has become consolidated in the United States, and the phenomenon of fewer participants is not a good sign for consumers. Nevertheless, it may not be the case in Taiwan due to the little market share of RTE cereal in the breakfast food industry. Consumers could swiftly change to another alternative once they find RTE cereal unaffordable. This will lead to marketing drives to raise customer loyalty not only toward Kellogg but also toward RTE cereal itself.
According to price investigation, Kellogg’s best-selling products, including Tony the Tiger and Corn Flakes, are both cheaper than Cerear’s. This result seems to reverse the general understanding that imported RTE cereal products should be more expensive than local ones. The surprisingly low price could be attributed to the economy of scales, since Kellogg is the largest producer and the two brands investigated are its best-selling stars in Taiwan.
Featuring the highest popularity and a reasonable price, it seems that Kellogg has gained some competitive advantage in its pricing policy. From the questionnaire, however, it appears respondents’ price perceptions of RTE cereal are more than
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average, in that 133 out of 303 respondents perceive price of RTE cereal as high, 164 as average, while only 6 as low. There are two ways to interpret this result. One is that the perception of RTE cereal’s price is a misunderstanding, perhaps due to the stereotype that products of Western origin are usually more expensive than those of local production. This assumption, if correct, unveils an urgent communication need.
The other possibility is that the actual cost is more important than what the data reveal, as the suggested use of RTE cereal and milk is somewhat underestimated. If this is the case, Kellogg needs to build up its own product value which can distinguish itself from any other breakfast alternative, in that price may be less important to consumers than a distinctive product feature.
The price competition is growing fierce in two industrial scales. In the RTE cereal industry, Kellogg is faced with threats from not only branded RTE cereal but also generic RTE cereal. In the breakfast industry, Kellogg is in competition with various breakfast selections other than RTE cereal that could be far less expensive than Kellogg’s products. Only through establishing distinctive product features can Kellogg keep its actual pricing policy, otherwise it may be urged by competitors to reduce its costs and prices, inferring that Kellogg may have to sacrifice its long-lived commitment to quality.
Place
Summarizing the main data relating to breakfast choice factors, Convenience is rated as one of the most important factors governing breakfast food choice. In term of breakfast purchase behavior, Convenience can be discussed in two ways: where to purchase and where to consume
On one hand, the convenience to purchase is considered one of the major motivations to consume RTE cereal, suggesting that its accessibility in retailers is one of the critical successful factors of RTE cereal. Unlike some breakfast alternatives requiring instant cooking and on-the-spot purchase, e.g. porridge, egg cakes, fried bread stick, etc., RTE cereal can be put on display in retailers due to its preserved characteristic.
In most urban areas in Taiwan, grocery shopping is usually concentrated around large retail outlets (e.g. Carrefour, RT-Mart, Geant) and supermarkets (e.g. Wellcome, PX Mart) where RTE cereal is available. In some rural areas, however, grocery shopping is still concentrated around small local stores and markets. Consumers from these regions thus have little access to RTE cereal and little opportunity to realize that they could have another type of breakfast. This phenomenon could be illustrated by the result demonstrating that respondents from the Taipei area are more favorable to RTE cereal. This is probably because they have more chances to perceive and
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understand this product than those from cities in middle and south of Taiwan. It is hardly possible for Kellogg, however, to promote its products in small local stores due to company policy and strategy.
On the other hand, the preserved nature of RTE cereal can constitute a disadvantage as well. It is reported that many respondents refuse to try RTE cereal because they have no time to eat breakfast at home, suggesting a need for Kellogg to solve the problem of “where to consume the product”. In some countries such as the United States, Kellogg has launched cereal bars as a new kind of convenience food which could eliminate pressure of time as the cause of rejection. This commercialization method, still unknown to Taiwanese consumers, could be faced with a problem concerning the product’s own position as a breakfast selection or simply a snack as the manufacturing process of a bar involves more frying technology than normal RTE cereal. Moreover, the image of sweetened corn or rice products without milk also allows consumers to regard it as a kind of snack. What Kellogg needs to do, therefore, is to improve the nutritional quality of cereal bar, for the health aspect is taken into account frequently in breakfast-buying decision.
Another solution to the problem of “where to consume the product” is the promotion of small bowls of RTE cereal attached to a portion of milk that can be mixed together to create a bowl of Kellogg’s cereals for people on the go. This product has been available in the 7-11 convenience stores, with only one or two limited flavors so far. With the growth of convenience store shopping in Taiwan, Kellogg can place more emphasis on the expansion of this product. This strategy, if successful, could increase the visibility of RTE cereal and thus allow more consumers to be aware of this breakfast alternative.
Promotion
Kellogg has the strongest brand recognition and advertising recollection of all the cereal makers worldwide. Its advertising policy has created a strong brand name, one of the most effective in the industry, which translated in higher levels of brand loyalty than any other cereal manufacturer. Since Kellogg has obtained a market share of 70% in Taiwanese RTE cereal industry, its products possess a good chance to be chosen once the decision to purchase RTE cereal is made. Judging from this, the primary challenge for Kellogg is how to increase customer loyalty toward RTE cereal, i.e. the product itself, instead of toward the Kellogg’s brand name.
In other words, what Kellogg needs to do is not only to increase the willingness to purchase RTE cereal, but also to prevent quick and easy shift to other breakfast alternatives. The daily purchase for breakfast, however, has inevitably been regarded as a low involvement activity due to the routine buying situation, characterized by
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negligible information search, little consideration in content choice and ease of product switching.
There are four techniques that Kellogg can adopt to convert a low-involvement purchase into a high-involvement one. First, it can link RTE cereal to some actual issues, such as weight control or any kind of health benefits. Second, it can target certain groups of customers by for example adding nutrients such as fiber, calcium, or iron into its products which buyers may find suitable for their personal conditions.
Third, it can design advertising to trigger strong emotions related to personal values, such as advertising the warmness of eating breakfast at home with one’s family.
Fourth, it may diversify its product line, as when Kellogg has begun to promote its new products the health care and life cultivation series since the beginning of 2007, including Five Grains, Brown Rice, and Black Sesame.
When it comes to the RTE cereal industry, the low-involvement buying feature is favorable to Kellogg due to its dominant status, for most consumers can swiftly retrieve its brand name when buying RTE cereal. As market leader, Kellogg should try to encourage habitual purchase by occupying the most visible shelf space with a variety of related but different product versions, avoiding being out of stock, and sponsoring frequent reminder advertising. Other means to turning consumers in favor of Kellogg include advertisement repetition, celebrity endorsement, or attractive packaging.
Brand familiarity can be very important in low-involvement purchase, as consumers often decide to buy the brand they have heard about or seen the most. The particularly outstanding ratio as the most impressive brand name among the four main RTE cereal producers reflects Kellogg’s success in gaining publicity. Kellogg should maintain its strategies of using the company’s name to cover the complete spectrum of products with a globally standard image, including Tony the Tiger, Coco Monkey, and Cornelius the Cockerel, etc. The unity of the name and image across different products facilitate the consumer’s brand recognition and recollection.
Although gaining the best publicity, some respondents drop Kellogg and turn to Quaker in the question relating to favorability and desirability, leading to an almost even status between Kellogg and Quaker. Perhaps the gap between publicity and favorability means that Kellogg has not sufficiently cultivated the public relations sector, i.e. even though Kellogg is the best-known brand, it is not necessarily the favorite one. Some news release can have negative impact on Kellogg’s reputation, e.g. in August, 2004, Danish health officials banned Kellogg from adding vitamins and minerals to its famous food brands, arguing they could damage the health of children and pregnant women. In addition, the amount of sweeteners added into RTE cereal has always been the target of some health organizations. In the present, Kellogg
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needs to concentrate on dealing with health-related issues; in the future, attention should also be paid to other issues, such as packaging waste, should be paid as well.
Based on the data of mean comparison between two different regions (Taipei area; Middle and South of Taiwan), there is a significant difference in preference towards RTE cereal. Respondents from the Taipei area apparently like RTE cereal better than those from the Middle and South of Taiwan. One feasible way of improving likings for RTE cereal is allowing consumers to become familiar with the product first. Since respondents from the Middle and South of Taiwan show lower interests in RTE cereal, Kellogg can try to set degustation points in some large retail outlets there. Additionally, the data concerning importance of information source reveal that, following TV commercial, direct mail (DM) is thought to be the second most important sources instead of simply junk mail. This suggests that direct mails sent from supermarkets or large retailers are useful marketing tools as well, for the consumer is very likely to consult them before going shopping. Kellogg can also try to attach more discount information to direct mails, especially to those of retailers in the Middle and South of Taiwan, to call attention to its products.
In the mean comparison between two genders for factors governing breakfast choice, female respondents give significantly higher ratings to weight control, fiber content, and natural ingredients than male respondents. Kellogg has actually promoted some products targeting females who usually worry more about obesity and beauty than males. Kellogg’s Just Right series, for example, including Harvest Fruit, Raisin and Almond Crunch, Tropical Passion, and Orchard Beauty, are characterized by high fiber, low fat, vitamin C, etc. Kellogg’s certain products containing whole grains, however, have either never introduced to the Taiwanese market, or are no longer imported. To respond to the female consumer’s emphasis on high fiber foods, Kellogg could consider launching whole grain series in Taiwanese market.
Section 3 Limitations and Further Research Recommendations