（英）Understanding Factors Influencing Consumers' Decisions to Consume Breakfast and Ready-to-Eat Cereals

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(1)國立中山大學企業管理學系碩士班碩士論文. Understanding Factors Influencing Consumers' Decisions to Consume Breakfast and Ready-to-Eat Cereals. 研究生：徐慧中撰指導教授：周泰華. 中華民國九十六年六月.

(2) Acknowledgements I wish to thank the many people who have made significant contributions to this research. I wish to acknowledge the excellence help and advice provided by Lin Lin Ku, the Senior Product Manager of Kellogg Asia Marketing Incorporation, Taiwan Branch. It was my honor to be able to interview Lin Lin Ku, and to obtain a clear picture of Taiwanese breakfast cereal industry. Besides, she also arranged for me the distribution of questionnaires through a marketing company. The views and opinions expressed here do not, however, represent Kellogg’s official policies or practices, but are mine alone. For research assistance, I am greatly indebted to Professor Tai Hwa Chou. I have carried out Professor Chou’s instructions; therefore, I should attribute the research results to Professor Chou’s guidance. Professor Chou has been open to any kind of marketing research, allowing me to look into my own interested subject. In addition, Professor Chou has always been very concerned about the research progress, and has provided assistance whenever I felt confused. Finally, I wish to thank my family and friends for being supportive. For their valuable encouragements, suggestions and improvements, I am grateful to my mother Grace, my father WT, my sisters Helen and Sabrina, and my reviewer Julie. For creative inspiration and company, I wish to express my appreciation to my dearest friends, especially to Arvin, Hua, Jay, Lana, and Paul..

(3) Abstract The purpose of the study is to understand factors influencing consumers’ decisions to buy breakfast and RTE cereals. In accordance with the research motivation and objectives, questionnaire was designed and sent to parents rearing children under the age of 18 and young adults in college and graduate school. Conclusions drawn from the study includes the implications for management practice and recommendations made for the policy makers and managers of Kellogg Taiwan. The study investigates the determinants of breakfast-buying decision and turns out that health, mood, and sensory appeal are rated more important than price, weight control, and familiarity. Then the questionnaires are used to find out key factors that motivate consumers to adopt RTE cereal or to reject it as a breakfast alternative. The research results show that health and convenience aspects are emphasized by users, while taste and lack of variety are major causes of rejection. Furthermore, through the ANOVA test by SPSS software, respondents from Taipei area show more favor to RTE cereal than those from Middle and South of Taiwan. The research results also indicate that Kellogg has been successful in gaining publicity, whereas the publicity does not generate the same magnitude of favorability and desirability. Based on the research findings, the possible managerial implications were proposed to Kellogg including inventing new products that can be consumed in hot milk, placing more emphasis on public relations, converting low-involvement breakfast purchase into a high-involvement one, etc..

(4) Table of Content Chapter One Introduction .......................................................................................1 Section 1 Research Topic....................................................................................1 Section 2 Research Background..........................................................................1 Section 3 Research Motive .................................................................................2 Section 4 Research Purpose................................................................................3 Section 5 Research Process.................................................................................3 Chapter Two Literature Review ..............................................................................4 Section 1 Consumer Behavior.............................................................................4 Section 2 Factors Influencing Consumer Behavior..............................................6 Section 3 Motivation ..........................................................................................9 Section 4 Global Breakfast Cereal Industry ......................................................14 Section 5 Breakfast Cereal Industry in Taiwan..................................................23 Section 6 Kellogg Company .............................................................................23 Section 7 Conclusion........................................................................................26 Chapter Three Research Method ..........................................................................28 Section 1 Research Framework.........................................................................29 Section 2 Set-up and Sampling .........................................................................30 Section 3 Questionnaire....................................................................................32 Section 4 Analytical Methods ...........................................................................37 Chapter Four Data Analysis ..................................................................................39 Section 1 Demographic and Purchase Behavior Characteristics ........................39 Section 2 Mean Comparison between User and Nonuser Groups ......................48 Section 3 Mean Comparison between Sociodemographic Groups .....................50 Chapter Five Research Findings and Marketing Implications ............................55 Section 1 Research Findings.............................................................................55 Section 2 Marketing Implications .....................................................................62 Section 3 Limitations and Further Research Recommendations ........................67 References...............................................................................................................69 Online Resources....................................................................................................72 Appendix: Questionnaire.......................................................................................73.

(5) Table of Chart Figure 2-2 Quality guidance model ............................................................................5 Figure 2-3 Allport consumer behavior model..............................................................6 Figure 2-4 Rice’s cycle of consumer behavior ............................................................9 Figure 2-5 Maslow’s hierarchy of needs ...................................................................10 Table 2-1 Herzberg’s two-factor theory ....................................................................11 Table 2-2 Global breakfast cereals market segmentation: % share by value, 2004.....14 Figure 2-6 Global breakfast cereals market segmentation: % share by value, 2004 ...15 Table 2-3 Global breakfast cereal market value: $ billion, 2000-2004....................17 Figure 2-7 Global breakfast cereals market value: $ billion, 2000-2004....................17 Table 2-4 Global breakfast cereals market segmentation: % share by value, 2004.....18 Figure 2-8 Global breakfast cereals market segmentation: % share by value, 2004 ...18 Table 2-6 Asia-Pacific breakfast cereals market value: $ billion, 2000-2004.............20 Figure 2-10 Asia-Pacific breakfast cereals market value: $ billion, 2000-2004..........20 Table 2-7 Leading firms in three of the principle regional markets ...........................21 Table 2-8 Global breakfast cereals market value forecast: $ billion, 2004-2009 ........21 Table 2-10 Market share of Taiwanese RTE cereal industry in July and August, 2004 .........................................................................................................................23 Table 2-11 Kellogg’s revenue segmentation by geography, 2005 ..............................24 Figure 2-13 Kellogg’s revenue segmentation by geography, 2005.............................25 Table 2-12 Kellogg’s SWOT analysis .......................................................................25 Figure 3-1 Research framework ...............................................................................30 Table 3-1 Food choice questionnaire-36 items and 9 factors .....................................34 Figure 3-2 Five-stage model of buying decision process...........................................35 Figure 3-3 Research Process.....................................................................................36 Table 4-1 Respondent characteristics........................................................................39 Figure 4-1 Respondent characteristics ......................................................................39 Table 4-2 Mean ratings (range: 1-5) of the importance of each breakfast choice factor .........................................................................................................................40 Table 4-3 Rank order of top ten most important breakfast choice factors ..................41 Table 4-4 Mean ratings (range: 1-5) of the importance of information source of food .........................................................................................................................42 Table 4-5 Mean ratings (range: 1-5) of the importance of RTE cereal choice motives .........................................................................................................................43 Table 4-6 Mean ratings (range: 1-5) of the importance of reasons to reject RTE cereal .........................................................................................................................44 Table 4-7 Frequency and ratio of the most impressive/ favorable/ desirable brand ....45.

(6) Figure 4-2 Ratio of the most impressive/ favorable/ desirable brand .........................46 Table 4-8 Frequency and ratio of budget for breakfast each time per capita ..............47 Table 4-9 Market price of popular brands of RTE cereal...........................................47 Table 4-10 Market price of popular brands of milk ...................................................47 Table 4-11 Usage effect on the importance of breakfast choice factors......................48 Table 4-12 Mean scores of the importance of breakfast choice factors by usage .......49 Table 4-13 Usage effect on information search .........................................................49 Table 4-14 Mean scores of information search by usage ...........................................50 Table 4-15 ANOVA test for usage effect on preference .............................................50 Table 4-16 ANOVA test for usage effect on price perception ....................................50 Table 4-17 Gender effect on the importance of breakfast choice factors....................51 Table 4-18 Mean scores of the importance of breakfast choice factors by gender......51 Table 4-19 Age effect on the importance of breakfast choice factors.........................52 Table 4-20 ANOVA test for gender effect on preference toward RTE cereal .............53 Table 4-21 ANOVA test for age effect on preference toward RTE cereal...................53 Table 4-22 ANOVA test for residence effect on preference toward RTE cereal .........53 Table 4-23 Gender effect on information search .......................................................54 Table 4-24 Age effect on information search ............................................................54.

(7) Chapter One Introduction Section 1 Research Topic With the growth of GNP, change of social values, and rise of education level, food quality has been demonstrated as one of the consumer’s major concerns when choosing what to eat. In addition to satisfying hunger needs, people place more and more emphasis on a variety of other needs, such as health, entertainment and aesthetics. Similarly, consumers are picky about what they eat for breakfast as well, and have more alternatives than before due to the liberalization of the culture and the economy. Traditional Chinese breakfast foods, such as steamed buns, porridge, and soybean milk, have been encountering competition with Western breakfast foods. Among these emerging foods of Western style, ready-to-eat (RTE) cereal was introduced in Taiwan in the mid-1980s when Kellogg’s products were first distributed in Taiwan, thus providing customers with one more alternative when choosing breakfast. The present study, focusing on existing and potential customers of RTE cereal, attempts to investigate motives for breakfast choice, so that the basic needs for breakfast are confirmed. Further on, to allow the case company, i.e. Kellogg, to understand if its own development strategy complies with consumers’ actual needs, the research scrutinizes the purchasing determinants of RTE cereal. Section 2 Research Background The food industry is one of the world’s largest industries. In the United States, the number of people employed in the food manufacturing and processing sector is about 1.8 million- about 10% of all industrial workers. Another 4 million people are engaged in agriculture and fishing. In Europe, about 3.6 million people work in food operations and about 22 million produce raw agricultural and fishery products (Conn, 1995). In less industrialized areas, the proportion of the population engaged in agriculture and fishing is greater than that in highly industrialized countries, but the proportion of people employed in the manufacturing and processing sector is smaller. In addition, the elimination of most trade barriers has facilitated the exchange of food product across countries. For example, more than $3 US billion worth of processed foods was imported into Taiwan in 2006 (Monthly Statistics of Imports- the Republic of China Taiwan District, 2006). In Taiwan, most RTE cereal products are imported, especially from Kellogg’s factories located in the Asia-Pacific area. If the demand continues increasing, it is likely that the other two major RTE cereal makers- Kraft Foods and General Mills1.

(8) will hit the Taiwan market in the future. Moreover, due to the prevalence of certain modern concept, such as that of medical treatment, health, and information, the society has come across dramatic value changes in many aspects, and such changes lead to the rise of new consumerism. Although labor-intensive industries have waned since industrialism emerged, most employees feel much more stressed than before. Besides, while enjoyment of delicate foods and lack of exercise have become common phenomena, functional claims of foods, such as effects of healthiness and weight control, have prospered in the food industry. As a natural plant product instead of from animal origin, RTE cereal hence becomes appealing to those who care about their own health condition. Section 3 Research Motive In certain Western countries, especially in the United States, RTE cereal is a commonly consumed item which generated total revenue of $13.6 billion in 2004 (Datamonitor). The US market is by far the largest market for RTE cereal, generating almost 50% of the global market’s value. Although the US market is extremely large, the low compound annual growth rate (CAGR) of the US market, only 0.7% during the period 1999-2003, implies the maturity of the market. In comparison, the Asia-Pacific market, accounting for only 14.7% of the global RTE cereal market, generated total revenue of $4.1 billion in 2004, representing a CAGR of 3.2% during the period 2000-2004, which is much higher than that of the US market,. Although RTE cereal has come to Taiwan for almost twenty years, the penetration rate is by far still less than 20%. In other words, at most one-fifth of the population located in Taiwan has tested this product in their whole lives. Taking examples from neighboring countries in Asia, however, the penetration rate is as high as 40% in Japan, and 30% in Korea. Although possessing the largest market share, accounting for 70% of Taiwan’s RTE cereal market, in Taiwan, Kellogg still has many development possibilities before attaining revenues and volumes common in a mature market. Such low penetration rate could probably result from different consumption habits and the difficulty to change ingrained habits of breakfast. If Kellogg successfully raises its market penetration rate, it could substantially increase its profits. It can also be said that the bottleneck against Kellogg does not lie in market share but penetration rate, and it is the question of broadening its clientele acceptance that constitutes the research topic. According to the discussions presented above, in order to increase the consumer’s willingness to test RTE cereal, understanding consumers’ buying behavior of RTE cereal is key to correctly readjusting the company strategies. The present 2.

(9) study firstly explores the relative importance of motives for consuming breakfast, and then demonstrates the customer’s considering factors when buying RTE cereal, and reasons why some customers do not regard RTE cereal a preferable choice for breakfast. Section 4 Research Purpose The present study respectively investigates motivations to consume breakfast, determinants of product purchase, and reasons of product rejection. By applying the factors presented above as variables, the present study investigates consumer behavior, and is aimed at providing a new picture for the company’s prospective strategic adjustment This research administers questionnaires by applying consumer behavior theories, and analyzes the results to sort out relevant information and suggestions. 1. 2. 3.. The concrete purposes of this research are: to investigate what is important to consumers when deciding what to eat for breakfast; to interpret each factor influential to consumers when choosing RTE cereal;. to analyze why some never buy RTE cereal.. Section 5 Research Process In brief, the aim of the present study is to investigate motives for breakfast choice and RTE cereal. Therefore, in the first chapter, there is a need to confirm the research topic or research question with which the case company is faced, and the research background, motive, and purpose are briefed. Chapter two is about literature review, including certain consumer behavior models proposed to support the research proposal, industry profile, and company information. In the third and fourth chapters, the detailed questionnaire proposal is introduced, and the results are analyzed using statistics methods. Finally, the research conclusion comes out based on the analysis and annotation, and underlies the suggestions of feasible solutions to the problem.. 3.

(10) Chapter Two Literature Review Section 1 Consumer Behavior The aim of the present study is to understand consumers’ purchasing behavior, especially their motives for breakfast cereal. Before learning the influence of motivations on buying-decision process, two famous consumer behavior theories are demonstrated as starting points, because consumer behavior contains a series of stages where motivation is only one that is involved. Theory of Reasoned Action Ajzen and Fishbein’s (1980) Theory of Reasoned Action, however, does not regard consumer behavior as a linear sequence. The model predicts behavior by intention to perform the behavior. This is decomposed into two components: attitude toward the behavior and subjective norm, which are decomposed into their component parts. Attitude is predicted by salient beliefs about the outcome of the behavior, weighted by the subject’s evaluation of the probability that performing that behavior will result in the given consequence. Subjective norm is predicted by normative beliefs about what salient referents would advice, modified by respondents’ motivation to comply with the advice of those referents. Figure 2-1 Theory of reasoned action model Beliefs. Attitude. Evaluation Intention Normative beliefs Subjective norm Motivation to comply 4. Behavior.

(11) This theory has been applied extensively to food studies and has been shown to have good predictive power. The theory is concerned with rational, volitional behavior- that is to say behaviors over which the individual has control. Yet positive attitudes towards an object may well not be translated into the action of purchase, because of, for example, cost. Therefore, a model which evaluates attitudes toward a behavior rather than towards the object itself (in this case the act of using RTE cereal) is particularly useful in a marketing context. The Quality Guidance Model Quality guidance (Steenkamp & Trijp, 1996) is an integrated consumer-based quality improvement philosophy that relates perceived quality judgment to physical product characteristics. The first part of the QGM focuses on the quality expectation and the quality experience of consumers and how these are formed. Quality expectations represent the purchase decision consumers’ face and are formed in the shop. Quality attributes perceptions can be inferred from sensory cues. These processes are integrated into the QGM to extend it with credent attribute perceptions. Quality experience represents the quality assessment upon actual consumption in the home situation and is based on quality attribute perceptions and partly on the quality expectation. Integrated in the quality expectations and quality experiences are the intrinsic cue perceptions and attribute perceptions, shown in the second part. Intrinsic cue perceptions are perceptions based on the physical part of the product. Quality attributes are the utility generating benefits provided by the product. They represent what the product is perceived as doing or providing for the consumer in relation to his wants, and form the basis for consumer preference. Perceptions of intrinsic quality cues and quality attributes are influenced by the product’s physical characteristics, which are shown in the third part of the model. Figure 2-2 Quality guidance model 3. 2 Intrinsic Quality Cue Perceptions. 1 Quality Expectation (in-store). Physical + Expert Sensory Characteristics Quality Attribute Perceptions 5. Quality Experience (actual consumption).

(12) Previous applications of the QGM have emphasized experience attributes, but failed to include the important credence attribute perceptions. Credence quality is a question of faith and trust in the information provided (Grunert et al., 2004), and credence attribute perceptions are inferred by consumers from the physical and sensory attribute perceptions and hence influence consumer preference, even though these credence perceptions cannot be objectively verified. The healthiness of RTE cereal for example cannot be verified before consumption and is thus a credence attribute. What can be verified before consumption are the search attributes or otherwise called the quality cues of RTE cereal, like the shape and color of RTE cereal. Section 2 Factors Influencing Consumer Behavior Figure 2-3 Allport consumer behavior model. Sociocultural factors. Culture. Social class. Social factors. Group influence. Individual factors. Motivation and personality. Cognition. Stimulus object. Purchase decision. Product or service. Source: Allport, G. W. (1954). The Nature of Prejudice. Addison-Wesley, p.207 Based on Allport consumer behavior model, Berkman and Gilson (1986) describe what influences consumer behavior in two aspects: Cultural-social influences and Individual influences. 1. Cultural-social influences Consumer activity is strongly influenced by the cultural system. The American cultural system, for example, has always been characterized by rapid technological changes and value shifts, while some values seem to be more enduring than others. Culture is the fundamental determinant of a person’s wants and behavior. 6.

(13) Because marketing is increasingly a multinational activity, marketers are becoming as concerned with consumer behavior in other cultures as in their own. Some cultural traits are universal, while others vary considerably from one culture to another. International marketing efforts could fail if there differences were neglected. In addition to cultural systems, subcultures define certain buying patterns for their members as well. While many aspects of one culture system are homogenized by national marketing and media, great diversity may be found in subcultures, e.g. the young, upper socioeconomic market; the aging; the urban; the rural poor. Societal influences on consumer behavior are as pervasive as cultural influences. For example, consumer buying patterns are affected by how people learn acceptable life styles in society; how reference groups such as family, peer groups, and other types of human relationships determine individual consumption; and how social changes such as the liberation of women influence product and service use. Among all types of reference groups, the family wields a major influence over individual consumer behavior. Additionally, a tremendous number of consumer decisions are not made individually, but together with other family members. 2. Individual influences Beyond the cultural and social influences that affect consumer behavior, customers behave as unique individuals in adopting personal life styles according to which they buy certain products and services. Most of the current knowledge about consumer behavior comes from the discipline of psychology. Like almost all other human activities, consumer behavior patterns are learned. For example, buying habits or loyalties are learned through experience. Because a major marketing goal is to build brand loyalty, marketers need to study and apply principles of habit formation though learning. Provided with information about a consumer’s past choice behavior, marketers may predict future purchasing behavior with reasonable accuracy. Drawn from another field of psychology, perception also plays a major role in consumer decisions. Different consumers perceive the same products and services quite differently. These variations result from physiological traits such as one’s senses; from individual perceptions of a brand’s image; from the fact that consumers cannot possibly notice all that goes around them, but must perceive selectively; and from the individual personality characteristics. Questions of consumer motivation and personality generate much interest but few universally accepted conclusions. A given individual’s personality is popularly believed to be the traits that make that person unique. In consumer behavior research, it is defined as the total set of responses that make that consumer unique across a variety of market stimuli. 7.

(14) In addition, attitudes are considered critical influence affecting consumer behavior. A consumer’s attitude toward some market item is a predisposition to buy or not to buy. Positive attitude probably generate the willingness to purchase, while negative ones are influential in rejection. Once formed, attitudes are stubbornly resistant to change, yet the question of how to persuade consumer to change their attitudes is both interesting and challenging to marketers. Kotler and Keller (2005) propose that a consumer’s buying behavior is influenced by cultural, social, and personal factors. 1. Cultural factors Culture, subculture, and social classes are particularly important influences on consumer buying behavior. Culture is the fundamental determinant of a person’s wants and behavior, and each culture consists of smaller subcultures that provide more specific identification and socialization for their members. Subcultures include nationalities, religions, racial groups, and geographical regions. Social classes are considered next, which are hierarchically ordered and whose members share similar values, interests, and behavior. 2. Social factors In addition to cultural factors, a consumer’s behavior is influenced by such social factors as reference groups, family, and social roles and statuses. A person’s reference groups consist of all the groups that have a direct or indirect influence on his/her attitudes or behavior. Groups having a direct influence on a person are called membership groups. Some membership groups are primary groups, such as family, friends, neighbors, and co-workers, those with whom the person interacts fairly continuously and informally. People also belong to secondary groups, such as religious, professional, and trade-union groups, which tend to be more formal and require less continuous interaction. Among all reference groups, the family is the most important consumer buying organization in society, and family members constitute the most influential primary groups. The person’s position is each group can be defined in terms of role and status. A role consists of the activities a person is expected to perform, and each carries a status, e.g. a senior vice president of marketing has more status than a sales manager. 3. Personal factors A buyer’s decisions are also influenced by personal characteristics. These include the buyer’s age and stage in the life cycle; occupation and economic circumstances; personality and self-concept; and lifestyle and values. People often buy different goods and services, which is age related, over a lifetime. Consumption is also shaped by the family life cycle and the number, age, and gender of people in the household at any point in time. Occupation also influences consumption pattern, e.g. a blue-collar 8.

(15) worker will buy work clothes, work shoes, and lunchboxes, while a company president will buy dress suits, air travel, and country club memberships. In addition, product choice is greatly affected by economic circumstances: spendable income, savings and assets, debts, borrowing power, and attitudes toward spending and saving. Consumers often choose and use brands that have a brand personality consistent with their own actual self-concept. Each person has personality, defined as a set of distinguishing human psychological traits that lead to relatively consistent and enduring responses to environmental stimuli, that influence his/her buying behavior. Self-concept deals with how one views oneself, although in some cases the product choice is based on the consumer’s ideal self-concept or even others’ self-concept (how one thinks others see one) rather than actual self-image. A lifestyle is a person’s pattern of living in the world as expressed in activities, interests, and opinions, and portrays the “whole person” interacting with his/her environment. Consumer decisions are also influenced by core values, the belief systems that underlie consumer attitudes and behaviors going much deeper than behavior or attitude. Section 3 Motivation Rice (1993) proposes a simple cycle governing consumer behavior. An example could be where Need= thirst; Action= get a glass of water; Satisfaction= no thirst. This may hold the key to the popularity of motivation in marketing area. Figure 2-4 Rice’s cycle of consumer behavior need. satisfaction. action/behavior. Rice himself defines motivation as the mixture of wants, needs, and drives within the individual which seek gratification through the acquisition of some experience or object. In fact the prime objective of the marketer might be to persuade or convince consumers that the use of their product will satisfy a specific need. It is observed, however, that every individual is unique, and marketing becomes 9.

(16) totally individualistic. Thus it will be of value to exam areas of similarity and attempt to develop ideas about some of the ways in which individuals’ motivations are alike. Rice classifies needs or motivations as being either unlearned (primary) or learned (secondary), and also as being positive or negative. Unlearned or primary motivation comprises the basic physiological drives for the sake of survival- hunger, thirst, sleep, etc. Learned motivation is in various ways, e.g. what we learn to gain approval of others, what we are taught to be acceptable by the society, and what we learn to avoid that will cause people to withdraw affection. Motivations may also be viewed as being positive or negative. Positive motivations are those we seek to satisfy while the negatives are those we seek to avoid. Much of motivation theory is expressed in positive terms. Hierarchy of Needs Maslow (1987) hypothesizes that a satisfied need is no longer a motivator and that the hierarchy operates such that a person’s behavior will tend to be dominated by trying to satisfy the lowest unsatisfied need, i.e. physiological needs will tend to precede security, companionship or esteem needs; companionship will tend to precede esteem or self-actualization needs and so forth. Figure 2-5 Maslow’s hierarchy of needs Self- actualization- the need to realize one’s potential by using all one’s talent. Esteem- the need for self-respect and self-confidence. Respect, recognition and appreciation from others. Companionship- the need for group membership, friendship, affection and acceptance of one’s peers. Security- the need to have a degree of safety in one’s life, freedom from bodily harm or threat. This may also extend to safety of prized elements of lifestyle. Physiological- basic to everyone are the needs for food, water, shelter, rest and sex. Without fulfillment of these needs most persons are not motivated by higher needs. Clearly we can associate certain products with appropriate levels of the hierarchy and so segment the market into large target populations, e.g. low fat butter with Physiological, insurance with Security, etc. It also offers the marketer the opportunity 10.

(17) to offer the product as a solution to a problem or the satisfier of a need. Expectancy Theory Under Vroom’s (1995) approach, individuals are assumed to make rational decisions based on the importance of the outcome and their perception of the probability of that outcome. The relationship is presented as: F=E × V Where F = motivation to behave; E = expectation that the behavior will be followed by a particular outcome; V= valence of the outcome. Normally a number of different outcomes will be associated with a particular behavior. The hypothesis is that we will behave in the way which we believe will give the most desired outcomes overall. The expectancy equation has to be summed across all of these outcomes so the formula becomes: F= Σ(E × V) Based on the expectancy theory, marketers can tackle the marketing problem in three ways: 1. increasing the perceived value of our product; 2. raising the expectancy of satisfaction; 3. doing both 1 and 2. Two-Factor Theory Herzberg (1959) develops the well-known two-factor theory of motivation. In this a distinction is drawn between: 1. “satisfaction” in the sense of a positive, conscious state of elation and 2. “satisfaction” as a neutral state reflecting an absence of negative sensations. Herzberg classifies the positive satisfier as “motivators” while the neutral one as “hygiene” factors. His studies suggest the following organizational implications: Table 2-1 Herzberg’s two-factor theory Hygiene factors. Motivators. Company policy and administration Supervision Salary Interpersonal relations Physical working conditions. Achievement Recognition Work itself Responsibility Advancement. The hygiene factors do not lead to motivation but only to no dissatisfaction; 11.

(18) motivation is generated by the motivators. This may give an insight to the use of promotional tools as motivators or badges of achievement, e.g. offering incentives such as “achieve your sales target for a period and win a trip to exotic places”. In marketing implications, this may give an insight to the use of promotional tools as motivators or badges of achievement, e.g. offering incentives such as “achieve your sales target for a period and win a trip to exotic places”, Motives for Food Steptoe et al. (1995) summarize from literature factors governing food choice. At the general level, it has long been recognized that food availability and cultural factors are dominant in food selection. The system of provision, including food production and manufacture, marketing message delivery and sale, has also been shown to have a major impact on what people eat. In addition, access to supermarkets selling a variety of food more cheaply than local corner shops affects choice. The increasing trend of supermarkets located in the outskirts of towns has significant implications for those who do not have their own cars. At the individual level, taste or sensory appeal, likes and dislikes, and sheer habit are all relevant. A growing interest in studying the attitudes and beliefs with healthy eating, for example, has been witnessed in recent years. Weight control is a major determinant of food choice for individuals concerned about their body weight. The growth in environmental awareness during the past few decades has led to concerns about the use of natural ingredients and environmentally friendly packaging. All these factors indicate that health is one of many considerations relevant to food choice. Keane and Willetts (1994) indicate that food is also a self-referent part of the repertoire from which personal identity is forged. Changing one’s diet can effectively redefine the self. For example, eating differently from the rest of the family is common in adolescence as a way of demonstrating independence. Priorities change throughout the life-cycle. Popular concepts about gender also affect food choice (Ton Nu et al., 1996). Ideas that men need more food than women, despite differential energy expenditure and metabolic rates, are still pervasive. The idea that women should not eat too much fuels the slimming industry. Surrounded by images of thin, successful and beautiful models, women are constantly policing their own food intake. Increasingly, consumers not only want food products to be of high sensory quality but also to deliver specific benefits in terms of health, safety, and environment quality. It is, therefore, a crucial question to almost every marketing oriented organization to understand what consumers value in their product category, and to effectively and efficiently translate these consumer needs into concrete product 12.

(19) offerings. A more integrative model exists which can be used for the translation of consumer needs toward preferred product features: the Total Food Quality Model (Grunert et al., 1996), which not only focuses on linking customer quality judgments to physical product features, but also considers the factors that intervene between purchase behavior and quality expectation and experience judgments. These quality guidance models have tended to emphasize the sensory quality of foods and other benefits verifiable by the consumer. Heuvel et al. (2007) introduce in their study the important so-called credence attributes, such as safety, environmental quality, and health are recognized as important food choice motivations by consumers. Credence attributes are different from search (e.g. price, size) and experience (e.g. taste, convenience) attributes in that their “true” values cannot be verified by the average consumer not even upon normal consumption of the food. This research project was performed on potatoes and tomatoes, and the result confirms that consumers’ credence motivations, particular those related to health, environmental friendliness, safety, and naturalness are important determinants of consumer quality perception in-store. Increasingly, these “societal” considerations are a driving factor for consumer choice and a competitive weapon in food marketing. These societal considerations can be linked with specific purchase motivations, such as family well being, social relationships, enjoyment, and pleasure. Convenience is also one of the factors that are increasingly important to consumers (Buckle et al., 2005). Goften (1995) distinguishes different stages in the consumption process: planning, shopping, storage and preparation of food, consumption itself, cleaning up and disposal items. Although the preparation stage is commonly regarded as most time and energy consuming, convenience has to be seen in the context of all the stages of the consumption experience. For example, a tendency to eat out may be driven by reluctance to clean up, rather than reluctance to cook. When looking at food choice we cannot ignore the influence of the media. Keane and Willetts (1994) find that advertising aimed at children is a particular concern, with a major content of food or drink. Of these 75% are for products with a high sugar or fat content. Through the use of cartoon characters, media personalities can be effective in establishing consumer loyalty at a very young age. In the supermarket it is often difficult for a parent to resist the insistent demands of a child for a new food which they have seen on TV. Consumer involvement is such an important concept in consumer marketing that is provides a basis for a motivational force, which can explain various behavioral outcomes of consumers, such as number and type of choice criteria, extensiveness of 13.

(20) information search, length of decision-making process, variety-seeking behavior and brand switching. In particular, the routine buying situation, such as the weekly shop for groceries, has inevitably been regarded as a low involvement activity, characterized by negligible information search, little consideration in brand choice and ease of brand switching. Reflecting this, consumers are now more discerning regarding the food they eat. Effectiveness of company strategies depends on marketers’ understanding of the factors governing food choice. Section 4 Global Breakfast Cereal Industry Market Definition The breakfast cereals are literally made of cereals. The encyclopedia defines cereals as the dry seeds of certain members of the grass family. They are by far the most widely consumed plant foods. The major cereals are wheat, corn, rice, and oats. All cereals are rich is carbohydrates and also contain some proteins, fats, vitamins, and minerals. A leading business information company specializing in industry analysis called “Datamonitor” provides online a thorough profile of breakfast cereal industry. Students of certain universities, e.g. here it was available through student identification from University of Hawaii, possess access to Datamonitor through campus information system. The breakfast cereal market consists of hot breakfast cereals and ready-to-eat (RTE) breakfast cereals. In 2004, the global breakfast cereal market generated total revenue of $27.6 billion wherein RTE cereals dominate, accounting for almost 90% of the market’s value. Table 2-2 Global breakfast cereals market segmentation: % share by value, 2004 Category. % Share. RTE breakfast Cereal Hot Breakfast Cereal. 89.00% 11.00%. Total. 100.00% Source: Datamonitor. 14.

(21) Figure 2-6 Global breakfast cereals market segmentation: % share by value, 2004 Global breakfast cereals market segmentation Hot Breakfast Cereal, 11.00%. RTE Breakfast Cereal, 89.00%. Although this research focuses on RTE cereal market, most figures and tables mentioned below are in the whole market scale, that is, hot breakfast cereal market is also included. Since RTE breakfast cereals predominate over hot breakfast cereals by nine to one, the difference between the whole market and RTE cereal market can simply be neglected. According to their different ingredients, RTE cereals can be categorized into five types: 1. Corn flakes- first introduced by Kellogg brothers in 1989 and mainly made of corn flaked into chips. 2. Shredded wheat- first introduced by Henry Perky in 1984, formed in different shapes such as squares, and sometimes combined with frosting, sugar, honey, nuts, etc. With the rise of health notion, 100% whole shredded wheat is getting more and more popular since it is announced to be heart-healthy. 3. Bran- usually blended with fruits, raisins, nuts, etc, containing much fiber, vitamins and minerals. 4. Oats- the main product type of Quaker Company, which has its origin in manufacturing hot oatmeal. 5. Hybrid- mostly for children, mixed with corns, wheat, oats, bran and other sweeteners such as honey, marshmallows, chocolate, etc. History and Background By the turn of twentieth century, the main producers of RTE cereals had showed up, and the competition became fierce henceforth. Most companies began spending 15.

(22) money on marketing, such as advertising, discounts, and taste tests to increase sales. 1863 1884 1889 1892 1902. 1924. The first RTE cereal product “Granula” was introduced by James Caleb Jackson in, at his own sanatorium in Dansville, New York. Henry Perky in Massachusetts presented his discovery called “shredded wheat”. Kellogg brothers, Dr. John Harvey Kellogg and Will Keith Kellogg, developed the first corn flakes. Charles William Post started to produce his own cereals, and his first success was Grape Nuts cereal. Quaker Oats, in the midst of the hot oatmeal market in the first place, began to support a research that successfully introduced puffed wheat and puffed rice cereals. General Mills, a milling company, kicked off experimental ventures in a new product line of RTE cereals.. The Industry Today There are five fundamental processes of producing RTE cereals (Nevo, 1998): granulation, flaking, shredding, puffing and extrusion. Quite different from common belief, RTE cereals are very complicated to manufacture, which means the production requires so much accumulated experience that lifts entry barrier. That is the reason why all the major producers were present early, and so far the top three firms, Kellogg, General Mills and Post, dominate the market, and the top six firms almost share the whole market. With the exception of Nestle, all the major producers have their origins from the United States, and thus forming one of the most concentrated US industries today. Since the 1980s, the Federal Trade Commission has been investigating and prosecuting the largest three cereals makers on the charge of shared monopoly (Wall Street Journal, 1980.). Advertising is the major means of competition in this industry, especially by television advertising (Ippolito & Mathios, 1990). The television advertising expenditure is second only to automobile producers. Advertising ratio to sales is about 13 percent, while the average in food industry is only 2-4 percent. Born with the convenience trend, the industry today, however, has undergone changes in customers’ concern. Diet nutrition gradually replaces convenience as one of customers’ most concerned factor when purchasing RTE cereals. More than half of men and women are reported to consider nutritional factors such as fiber, vitamins, and sugar content when purchasing RTE cereals. Women express the most concern about the amount of sugar and fat, while men are more interested in vitamin content 16.

(23) (Connor, 1999). Market Analysis The global breakfast cereal market generated total revenue of $27.6 billion in 2004. Sales of breakfast cereals increased faster from 1998 and peaked in 2003. Table 2-3 Global breakfast cereal market value: $ billion, 2000-2004 Year. $ billion. %Growth. 2000 2001 2002 2003 2004. 22.7 23.3 24.0 26.1 27.6. 2.70% 2.90% 8.70% 5.90%. CAGR, 2000-2004. 5.0% Source: Datamonitor. Figure 2-7 Global breakfast cereals market value: $ billion, 2000-2004 Global Breakfast Cereals Market Value: $ billion, 2000-2004 %Growth 10.00%. 30 25 20 15 10 5 0. 8.00% 6.00% 4.00%. %Growth. $Billion. $Billion. 2.00% 0.00% 2000. 2001. 2002. 2003. 2004. In Datamonitor’s report, the European consists of Austria, the Baltic States, Belgium, Croatia, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovenia, Spain, Sweden, Switzerland, Turkey, the UK and the Ukraine. The Asia-Pacific market consists of Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan and Thailand. 17.

(24) The top regional market is in US, which generated total revenue of $13.6 billion in 2004. Table 2-4 Global breakfast cereals market segmentation: % share by value, 2004 Geography. % Share. US Europe Asia- Pacific Rest of the World. 49.20% 25.40% 14.70% 10.70%. Total. 100.00% Source: Datamonitor Figure 2-8 Global breakfast cereals market segmentation: % share by value, 2004. Glo b a l Brea k fa st Cere a ls Mark e t Se g m e n ta tio n : % Sh a re b y Va lu e, 2 0 0 4 Rest of the World, 10.70%. Asia- Pacific, 14.70% US, 49.20%. Europe, 25.40%. Falling US Market The US market is by far the largest market for RTE cereal, generating almost 50% of the global market’s value. Although the US market is extremely large, the maturity of the market means that growth rate is minimal and entry for new comers is difficult. The CAGR of US market is 0.7% during the period 1999-2003, much weaker than that of the global market, which is 5.0%, thus allowing the US market’s share in the global market to decline by 5.3% between 1999 and 2003.. 18.

(25) Table 2-5 US breakfast cereals market value: $ million, 1999-2003 Year. $ million. %Growth. 1999 2000 2001 2002 2003. 9,140.6 9,109.3 9,100.3 9,328.3 9,384.7. -0.30% -0.10% 2.50% 0.60%. CAGR, 1999-2003. 0.7% Source: Datamonitor. Figure 2-9 US breakfast cereals market value: $ million, 1999-2003 US Breakfast Cereals Market Value: $ million, 1999-2003 % Growth. 9,500.00 9,400.00 9,300.00 9,200.00 9,100.00 9,000.00 8,900.00. 3.00% 2.00% 1.00% 0.00%. %Growth. $ million. $ million. -1.00% 1999. 2000. 2001. 2002. 2003. Fast growing Asia-Pacific Market In terms of value, Asia-Pacific accounts for 14.7% of the global RTE cereal market. The fastest growing country markets are those of India and Indonesia, and the most lucrative country markets are those of Japan and Australia. The Asia-Pacific market generated total revenue of $4.1 billion in 2004, representing a CAGR of 3.2% during the period 2000-2004. In comparison, the Japanese market generated $2.2 billion in total revenue in 2004, with a CAGR of 1.2%.. 19.

(26) Table 2-6 Asia-Pacific breakfast cereals market value: $ billion, 2000-2004 Year. $ billion. %Growth. 2000 2001 2002 2003 2004. 3.6 3.6 3.7 3.8 4.1. 1.00% 2.30% 3.50% 6.10%. CAGR, 2000-2004. 3.2% Source: Datamonitor. Figure 2-10 Asia-Pacific breakfast cereals market value: $ billion, 2000-2004 Asia-Pacific Breakfast Cereals Market Value: $ billion, 2000-2004 %Growth. 4.2 4 3.8 3.6 3.4 3.2. 8.00% 6.00% 4.00% 2.00%. %Growth. $ billion. $ billion. 0.00% 2000. 2001. 2002. 2003. 2004. Looking forward, the Asia-Pacific market is forecast to accelerate its current performance, which an anticipated CAGR of 4% for the five-year period 2004-2009 expected to drive the market to a value of $4.9 billion by the end of 2009. Competitive Landscape Kellogg Company is the leading firm in all three regional markets, generating total revenues of $1.8 billion in 2004 in Asia-Pacific, $4.4 billion in the US market, and $3 billion in European market. In the Asia-Pacific breakfast cereals market, the company. The second largest companies in all three markets are Calbee, General Mills, Inc., and Nestle/General Mills, respectively.. 20.

(27) Table 2-7 Leading firms in three of the principle regional markets US st. 1 2nd. Firm Kellogg General Mills. Europe %Share 32.2% 31.2%. Firm Kellogg Nestle/ General Mills. %Share 43.2% 14.6%. Asia-Pacific Firm Kellogg Calbee. %Share 45.1% 12.4%. Source: Datamonitor Private label, also called store brand, always features low price. To stave off these rivals sharing 9.7% of the market, major cereal manufacturer has invested in innovation in shapes, flavors, and endorsements. Market Forecast In 2009, the global breakfast cereals market is forecast to have a value of $37.1 billion, an increase of 34.4% since 2004. The compound annually growth rate during the period of 2004-2009 is predicted to be 6.1%. U.S. has always been the main source of breakfast cereal market’s revenue. As the population of US young people is predicted to grow slowly over the next several years, however, manufacturers will soon face a shrinking consumer base. Table 2-8 Global breakfast cereals market value forecast: $ billion, 2004-2009 Year. $ billion. % Growth. 2004. 27.6. 5.90%. 2005 2006 2007 2008 2009. 29.3 30.8 33.2 34.9 37.1. 6.10% 5.20% 7.70% 5.20% 6.20%. CAGR, 2004-2009. 6.1% Source: Datamonitor. 21.

(28) Figure 2-11 Global breakfast cereals market value forecast: $ billion, 2004-2009 Global Breakfast Cereals Market Value Forecast: $ billion, 2004-2009 % Growth. $ billion. 40. 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%. 30 20 10 0 2004. 2005. 2006. 2007. 2008. % Growth. $ billion. 2009. Table 2-9 Forecasts of US sales of breakfast cereals: $ million, 2004-2008 Sales in constant 2003 prices 2008 2007 2006 2005 2004. % Growth. $8,102 $8,259 $8,434 $8,621 $8,806. -1.9% -2.1% -2.2% -2.1% -1.8%. Source: www.preparedfoods.com A Soggy Cereal Market. August 2004 Figure 2-12 Forecasts of US sales of breakfast cereals: $ million, 2004-2008 Forecasts of US sales of breakfast cereals: $ million, 20042008 % Growth. $9,000. 0.00% -0.50% -1.00% -1.50% -2.00% -2.50%. $8,500 $8,000 $7,500 2004. 2005. 2006 22. 2007. 2008. % Growth. $ million, in constant 2003 prices. $ million (Sales in constant 2003 prices).

(29) Section 5 Breakfast Cereal Industry in Taiwan Given the paucity of domestic research about breakfast cereal industry, most information about Taiwanese market is obtained through the interview with Lin Lin Ku, the product manager of Kellogg Taiwan, in November, 2006. Taiwanese breakfast cereal market is estimated around NT$ 450 million in annual revenue, which is as little as only around one-tenth of that in Japan. The largest producer Kellogg remains a steady annual growth rate around 7-8% in both value and volume. Kellogg was the first company that hit the Taiwanese market and has entered for around twenty years, and now, with its 70% market share, is still the leading brand in Taiwan. The second-largest producer is Fwu Sow, a local enterprise popularizing its breakfast cereal products with the brand name “Cerear”. Other competitors include Quaker, Nestle, store brands owned by supermarkets and hypermarkets, etc, which are relatively minimal in comparison with Kellogg. The customer base in Taiwan is almost fixed. About 60% of Kellogg’s customers are children, and the penetrated market is restricted to those families who are used to Western lifestyles, and usually with parents in good working and education status. During July and August in 2004, an investigation regarding brand market share of breakfast cereal was presented by iSURVEY (2005), an online marketing database. The top four brands were Kellogg’s Corn Flakes, Kellogg’s Just Right, Cerear, and Nestle: Table 2-10 Market share of Taiwanese RTE cereal industry in July and August, 2004 Rank 1 2 3 4. Brand Name of Breakfast Cereal Kellogg’s Corn Flakes Kellogg’s Just Right Cerear Nestle. Market Share Ratio (among the top four brands) 49.88% 28.80% 10.69% 10.63% Source: iSurvey (2005). Section 6 Kellogg Company Company Overview Kellogg company is engaged in the manufacture and marketing of RTE cereals, grain-based snacks and convenience foods. The company, engaged in manufacture in 17 countries, sells its products in more than 180 countries worldwide. Headquartered in Battle Creek, Michigan, the company has more than 26000 employers. The company’s operation is managed by two divisions: Kellogg North America 23.

(30) and Kellogg International. North America Division, made by United Sates and Canada, consists of retail cereal, retail snacks, and frozen and specialty channels. Kellogg International Division, which mostly focuses on cereal business, includes Europe, Latin America, Asia Pacific (Asia and Australia). The North American retail cereal business includes many popular brands such as Special K, Kellogg’s cereal such as Corn Flakes and Frosties, and Kashi. With the acquisition of Keebler in 2001, the North American retail snacks business has continually expanded with famous Keebler branded products, such as Chips-Deluxe and Cheez-It. The frozen and specialty channels business includes brands such as Eggo, Morningstar Farms, and Worthington, and the food service, convenience store, vending, and drug stores. As the leading maker of RTE cereals, the company‘s recorded revenue during the fiscal year of 2005 was $10,177 million, an increase of 5.9% over 2004, with the net profit of $980.4 million, an increase of 10.1%. Kellogg’s cereal products are generally marketed under the Kellogg’s brand name, and are sold principally to the grocery trade though the direct sales force. James M. Jenness has served as the chairman and chief executive officer since 2005, and A.D. David Mackay as the president and chief operating officer since 2003. Major Products and Brands Kellogg company is engaged in the manufacture and marketing of RTE cereal, grained-based snack and convenience foods. Products RTE cereals, cookies, crackers, toaster pastries, cereal bars, frozen waffles, meat alternatives, etc. Brands Kellogg’s Corn Flakes, Keebler, Cheez-It, Chocos, Merray, Austin, Famous Amos, Pop-Tarts, Eggo, Nutri-Grain, Rice Krispies, Special K, Morningstar Farms, Kashi, Plantation, etc. Revenue Distribution For the fiscal year 2005, North America was Kellogg’s largest geographical market, accounting for almost 67% of the total revenues Table 2-11 Kellogg’s revenue segmentation by geography, 2005 Geography. $ million. North America Europe Latin America Asia Pacific. 6,807.8 2,013.6 822.2 533.6 24. % share by revenue 67% 20% 8% 5%.

(31) Figure 2-13 Kellogg’s revenue segmentation by geography, 2005. Kellogg Revenue Segmentation: % Share by Geography, 2005 Latin America, 8%. Asia Pacific, 5%. Europe, 20% North America, 67%. SWOT Analysis Table 2-12 Kellogg’s SWOT analysis Strengths Market leadership High brand equity Strong international sales. Weaknesses Giant retailers’ pricing ability Lack of diversification Weak cookie sales. Opportunities Increasing health consciousness Fast growth from developing countries Growth through mergers and acquisitions. Threats Maturity of the US market Increasing fuel price Fierce competition Growth in eating out habit. Strengths Kellogg is the largest and first manufacturer in RTE cereal industry, and has the biggest market share, and the strongest brand recognition and advertising recollection among all the cereal makers. They currently control about 40 percent of the global market. The huge amount of volumes results in economy of scales, giving the company a competitive advantage. Weaknesses The company’s largest customer, Wal-Mart, accounts for approximately 17% of 25.

(32) sales during 2005. Increasing dependence on such distribution channels could weaken the company’s bargaining power. The fundamental of its revenue will certainly waver when its relations with Wal-Mart deteriorate. In addition to increasing dependence on Wal-Mart, Kellogg is slow to develop new products as a result of concentration on RTE cereal products, while its major competitors, such as Kraft Foods and General Mills, provide a variety of products including beverages and other packaged foods. Opportunities Over the past few years, consumers have shown increasing preference for health-oriented food products. In June 2006, Kellogg extended its popular Special K product line into the diet and nutrition sections of grocery and drug stores, and they are also the first products from the company’s new health and wellness division. The emerging focus on healthy foods is likely to increase demand for Kellogg’s products. Besides, merger, acquisition, and international expansion to developing countries are also good opportunities for Kellogg, e.g. the cereal category has been growing 5%-10% annually in Latin America. Threats The US RTE cereal market has been shrinking in terms of both value and volume. Besides, the price of natural gas has been rising. Kellogg’s cereal processing ovens are principally fueled by natural gas. Although the leading RTE cereal company in the world, the company has experienced intense competition, both domestically and internationally. Another threat comes from the rising eating out market. Changes in lifestyle such as divorce, homes with two working parents, increasing hours spent at work and longer commutes are driving more people to abandon eating breakfast home. Section 7 Conclusion As summarized from factors influencing consumer behavior presented above, the consumption process can be viewed as: Macro-perspective. Group perspective. Individual perspective. (cultural influences). (social influences). (psychological influences). Beginning with macro perspective, consumer behavior is influenced by culture and subculture. Group perspective is considered next and consists of various social influences, including social organizations, reference groups, social classes, etc. And, 26.

(33) finally, individual determinants of consumer buying patterns accurately predict real purchase behavior, explained by psychological processes such as leaning, perception, motivation, personality, and attitudes. The macro-perspective is suitable for a cross-cultural study, e.g. the comparison of certain buying behavior in different countries. The group perspective may be taken when the aim of research is to find out differences or similarities between distinguishable societal groups. The individual perspective deals with the consumer’s psychology, which could be more complicated and untraceable than the other two perspectives. Based on the theory of reasoned action, actual behavior is predicted by intention that can be decomposed into attitude and subjective norm. That is, only when an intention or motivation exists should the real behavior take place. In fact, the prime objective of the marketer is to persuade consumers that the use of their product can satisfy a specific need. As summarized from the above, motivation is defined as the mixture of needs within individual. Hence, understanding of consumers’ motivation is one of the most direct ways for the marketer to precisely grasp consumers’ true needs. The aim of the present study is to investigate consumers’ motives for breakfast and RTE cereal, and thus providing Kellogg in Taiwan with marketing references to increase its revenues. Motivations to consumer breakfast and RTE cereal could be hierarchical, e.g. some consumers eat breakfast simply for the problem of hunger, i.e. the lowest physiological need. Other consumers, however, are likely to choose what they usually eat at breakfast because familiarity offers them a sense of security, the second lowest need. Citing the literature reviewed above, higher needs, such as environmental quality, health, and mood are recognized as important food choice motivations by consumers. These important so-called “credence motivations” are different from taste, price, or convenience in that they can be viewed as higher needs in hierarchy. As market leader, however, Kellogg is faced with low penetration rate in Taiwan. The basic cause of unwillingness to try Kellogg’s products is that RTE cereal fails to satisfy consumers’ needs. Therefore, what is necessary for Kellogg is to understand consumers’ motivations to buy breakfast, and to examine if its products meet consumers’ needs. Consumers are assumed to make decisions based on the importance of breakfast-buying factor, that is, they behave in the way which they believe will give the most desired outcomes. Through a thorough understanding of consumers’ motivations, Kellogg can tackle the marketing problem by increasing the expectancy of consumers’ most important motivations.. 27.

(34) Chapter Three Research Method Although possessing the strongest brand recognition in the breakfast cereal industry, Kellogg’s still has a long way to go before attaining a satisfactory amount of revenue and volume, for the RTE cereal has not yet penetrated enough into Taiwan’s breakfast food industry, with a penetration rate only about 15 to 20%. It may not be easy, however, to induce new customers to accept RTE cereal due to the unique breakfast habit in Taiwan. First, Taiwanese do not admire Western food consumption habits as much as Japanese do. Taiwanese still prefer warm Chinese-style foods for their breakfast, such as egg rolls, steamed and stuffed buns, soybean milk, etc, to RTE cereal mixed with cold milk. The other reason why Taiwanese do not choose to stay home eating RTE cereal is due to the omnipresence of convenience stores, Western and Chinese fast food restaurants, and other types of breakfast vendors. Consumers have access to various choices, which allow them to vary their breakfast on a daily basis. Therefore, consumers in Taiwan are less willing to buy a whole package of RTE cereal than those in US, where consumers cannot easily find breakfast restaurants within walking distance from their homes or place of work. According to the interview with Ms. Ku, the product manager of Kellogg’s Taiwan, the penetrated market is restricted to the few families who are familiar with Western lifestyles, and usually with parents in high employment and education status. The primary challenge for Kellogg’s Taiwan is how to convince the other 80% of population, outside the penetrated market, to take RTE cereal into concern as a breakfast selection, thus the first task is to investigate what stops Taiwanese consumers from buying RTE cereal. In addition to focusing on penetration rate, Kellogg’s can also increase its revenues by eliciting more demand from its penetrated market, that is, the set of consumers who are already buying its products (Kotler & Keller, 2005). There are some feasible approaches, for example, Kellogg’s can try to persuade customers to select RTE cereal not only as breakfast but also as an all-day food and as a snack alternative In order to allow customers to purchase more, an examination of which factor prompts them the most to buy RTE cereal is required. There are a number of techniques associated with the research of consumer motivation, including depth interview, group discussion or focus group, and projective techniques. Motivation research presents several difficulties mainly related to the correlation between motivation and act of purchasing a product. For example, a respondent’s motivation could simply be an expression of an aspiration which does not necessarily correspond to the real decision-making process. In addition, validity of a survey is suspicious if the numbers of respondents interviewed is not representative 28.

(35) (and commonly is not, due to the costs involved), and the issue of what constitutes a representative group has to be dealt with. Section 1 Research Framework The aim of the present research is to understand consumers' motivations to consume breakfast and RTE cereal, and to discover meaningful conclusions and feasible suggestions for the case company, i.e. Kellogg. To serve this purpose, a thorough review of relevant research and an evidence-proven plan are decided to be taken. On one hand, literatures related to consumer behavior, motivation, and factors influencing actual purchase are reviewed. To applying models and theories to the research topic, additionally, literature review deals with the industry profile of RTE cereal and Kellogg’s company profile. On the other hand, based on the literature review, the questionnaire survey investigates breakfast-buying factors, information source of food purchase, perception of RTE cereal, motives for RTE cereal, reasons to reject RTE cereal, etc. Finally, the result of questionnaire survey is analyzed and discussed by statistical methods. Along with the conclusion drawn from literature review, the interpretation of data underlies research conclusions and suggestions which may be adaptable to Kellogg’s development strategies. The following figure describes the research framework of the present research:. 29.

(36) Figure 3-1 Research framework Understanding Consumers' Motivations to Consume Breakfast and Ready-to-Eat Cereals. Literature review. Questionnaire survey. Breakfast-buying determinants. Concepts of consumer behavior, factors influencing buying behavior, motivation. Information source of food purchase. Food related determinants in consumer behavior field. Brand attitude toward RTE cereal Price perception of RTE cereal. RTE cereal industry profile. Preference toward RTE cereal Motivations to consume RTE cereal. Kellogg company profile. Reasons to reject RTE cereal. Result analysis and discussion. Research conclusion and suggestion. Section 2 Set-up and Sampling The objectives of the survey are to: (1) provide Kellogg advice about how to increase penetration rate of RTE cereal; (2) further figure out how to elicit more demand from the penetrated market. The ultimate goal is to increase sales of RTE cereal through a careful examination of what makes consumers reject choosing RTE cereal for breakfast, and what motivates customers to buy the product. 30.

(37) Studied Subjects Based on the interview with Ms. Ku, the product manager of Kellogg Taiwan, 60% of the company’s customers are children, whom real decision makers are most likely to be their parents. Stafleu et al. (1995) indicate in their study that, although several studies have been performed on the relationship of food preferences between parents and children, little information is available on beliefs or attitudes, and therefore a project regarding the relationships of beliefs or attitudes between parents and children was undertaken. To investigate whether socialization might have an impact on beliefs, a three-generation study is performed. In conclusion, it appears that family resemblance exists for beliefs, attitudes and intentions, and more statistically significant correlations are found between the younger and middle generations than that between older parents and their middle-aged children. That is, parents wield much more influence on children living with them than those moving out from home. Based on this finding, assumption of the present research is that parents usually make breakfast choice for children under the age of 18, while they will gradually lose influence and control over their children growing older than 18 years old. According to the research on staple foods for three main meals, the main breakfast staple foods are cooked rice, porridge, western style cakes, sandwiches, breads, toasts, noodles, steamed and stuffed buns, Chinese baked breads and fried sticks, etc (Tzeng et al., 1999). About 40% of teenagers have western style breakfast mainly including cakes, toasts, breads, sandwiches, RTE cereals, etc., and this kind of eating habit decreases with age. In other words, the willingness to eat western-style wheat products decreases with age groups and reaches a peak at the teenager group. The questionnaire is therefore also designed for teenagers and young adults. This group is different from children under the age of 18 due to their partial or complete autonomy in deciding what to eat for breakfast with their own allowance or part-time job’s payment. Therefore, the population of the questionnaire is restricted to two types of demographic segments including: (1) parents rearing children under the age of 18; (2) young adults in college and graduate school. Ms. Ku also confirmed that these two types of demographic segmentation account for the major part of the company’s customer base, in both the penetrated and potential market. Sampling Method The population has been restricted to parents and young adults that constitute the majority of the product’s customer base. It is very time-consuming, however, to do 31.

(38) random sampling from the population list, so the sampling method is decided to be nonrandom, but instead follow the nonprobability method. Nonprobability methods are those that purposefully or accidentally select specific members of the sample in a nonrandom manner. There are four types of nonprobability methods: convenience sampling, quota control sampling, judgment sampling, and panel sampling (Luck et al., 1978). The questionnaires were distributed in the following three ways: (1) participants were approached in hypermarket store during demo doing sampling in Kellogg’s booth (n=85); (2) respondents were presented the questionnaires through the Internet. Link of the online questionnaire is posted widely on bbs and online forums of cram schools for young children, where the population, i.e. parents rearing children under the age of 12, is most likely to visit (n=122); (3) questionnaires were administered though acquaintances who can get in touch with those eligible for the population condition (n=96). Sample units were only selected if they could be accessed easily and conveniently. Judging from this, the sampling method was determined to be convenience sampling, which is sometimes referred to as haphazard or accidental sampling. The sample was chosen randomly from shopping area or the Internet, without use of a specific survey method. The number of effective samples turns out to be 303 in total, of which 124 respondents are young adults and 179 are parents. Section 3 Questionnaire Food Questionnaire Review Berg et al. (2000) investigate the influences of attitudes, social norms, perceived control and underlying beliefs on 11 to 15-year-old Swedish children’s breakfast choices of milk and bread. The questionnaire is based on the Theory of Planned Behavior, evaluating intentions, attitudes, beliefs, relatively. The children are also asked to fill in a 7-day record of breakfast food. The result reveals that intentions are influenced by attitudes, perceptions of significant others’ preferences, and perceived control. Berg et al. also find that perception of the parents’ consumption of the specific food plays an important role in children’s preferences. Hearty et al. (2007) also use a 7-day food record to estimate attitudes toward healthy eating. The result reveals that females, increasing age, higher social class and education, nonsmokers, lower body-weights and increased recreational activity are linked to a lower odds ratio for having a negative attitude toward their healthy eating behavior. An increased intake of breakfast cereals, vegetables, fruit and poultry dishes 32.