CASE – 1
Tony the Tiger goes Global
Kellogg Company has distribution in more than 150 countries and yet is still “unknown to half the world’s population.” according to Arnold Langbo, Kellogg’s CEO. Langbo plans to change that.
Kellogg recently built a company—owned cereal plant in Latvia and currently has sales in Poland, Hungary and Czechoslovakia. It has also started construction on a plant in India and is entering China. However international expansion and the development of global brands will not be easy.
To become more international, the firm recently reorganized into four divisions :North America,Latin America, Europe and Australasia. According to Langbo:
The way we used to be organized, we were a US-based Multinational-a company with a big domestic business and, by the way,some international business. That was the way we were thinking; that’s the way the organization was structured.
Today, if you talk to customers in the UK, Canada, or Australia, they think of Kellogg’s as being based in the U.K or Canada or Australia. We’re global in organizational structure and business but also multidomestic.
We now have a number of truly global brands (Frosted Flakes and Corn Flakes, with Froot Loopa and Rice Krispies close, and Frosted Mini-Wheats and Honey Nut loops moving rapidly).There used to be slight variations in our food around the world, but now you’ll recognize the product wherever you go.
Expanding into many markets will involve more than trying to gain share from other cereal marketers. It will require altering long—held traditions:
In Eastern Europe it’s going to he pretty slow because we’re going to have to go in there and literally create the habit—much as we did in Germany 25 years ago or France 20 years ago. Cereal is a whole new breakfast concept for these people. However, they do eat breakfast in those countries, and they eat fairly substantial breakfasts.
In Asia, consumers are used to eating something warm, soft, and savory for breakfast—and we’re going to sell them something that’s cold, crisp, and sweet or bran tasting. That’s quite a difference.
The challenge is made greater by the presence of aggressive competition in many developed or develop-ing markets. Competition is particularly intense in Europe where Nestle and General Mills formed a joint venture called Cereal Partners Worldwide. Langbo characterizes the new competitor this way:
They are a very formidable competitor with Nestle’s distribution strength and knowledge of the European market and General Mills’ technology and cereal marketing expertise.
The result of the entry of the new competitor, which spent an estimated $35 to $50 million in advertising in the top six European markets, and the response of existing firms such as Kellogg was an increase in the growth rate of total cereal sales as well as share erosion among the weaker brands.
Competition is strong even in some countries where consumption is low. For example, in Japan, with consumption at four bowls per year per person, compared to 10 pounds in the United States, there are more than 100 products fighting for shelf space.
According to Langbo, a global brand requires a core position strategy or product benefit that will work in multiple countries and local execution of that idea to reflect local attitudes. The key ideas for three of Kellogg’s global or near-global brands are described by Langbo in the following paragraph
Frosted Flakes
Frosted Flakes is based on the concept of vitality. This idea originated in the United States but is a universal idea that both translates and travels well. Because the product has a special appeal to children, the cultural differences are not so pronounced. Tony the Tiger illustrates the vitality theme in a universally understandable manner. Tony is loved throughout the world symborizing appeals that are truly global. We use Tony and he vitality message everywhere from the United States to Taiwan in Argentina.
Corn Flakes
The basic positioning concept for Corn Flakes is simple, unadulterated food that tastes surprisingly good. This concept also has universal appeal. It is typically the first product we introduce in a new market, It is the foundation of our line, and it is the world’s most popular cereal.
All-Bran
The value proposition for All-Bran is the health benefits of fiber in the diet. This proposition does not have universal appeal without development. The concept of the value of fiber in the diet is new to many countries and is often resisted.
In 1984, we began a massive campaign to countries where the benefits of fiber were not widely accepted. campaign varied across countries due to differences in the attitudes of local medical and nutritional professionals, specific diseases that were most on the minds of the local population, and local restrictions on health claims. However, the basic approach was to educate and support the medical and nutritional community in each country. We would sponsor symposia on dietary fiber. As a country’s experts became convinced of the value of fiber, they told their story in their academic press, the general press, and in public service announcements. Today, despite competition from many other high-fiber cereals., All-Bran is one of the top 15 cereals worldwide.
Questions
1. What type of innovation would cold cereal be to a country not accustomed to this type of food?
2. Conduct an innovation analysis based for cold cereal in China.
3. What values are involved in the consumption of product such as breakfast cereal?
4. What values would support and what values would harm the chances of Kellogg succeeding the cold cereal in the following countries? What other factors would be important?
a) China
b) Mexico
c) Japan
d) France
5. What nonverbal communications factors would be important in developing an advertising campaign for a cold cereal?
6. Develop a marketing program to market one of Kellogg’s cold cereals in the following countries.
a) China
b) Mexico
c) Japan
d) France
7. Why does Tony the Tiger “travel” so well’?
8. Evaluate the communications process Kellogg used to gain acceptance for All-Bran. Could a version of this work for gaining acceptance of cold cereals in China?
CASE – 2
You are the Business Development Manager of an Engineering company that has developed a highly advanced machine for packaging of pharmaceutical products. The machine saves a lot of time and cost involved in the packaging as it is faster compared to other machines, it consumes lesser electricity and requires lesser manpower. One of your clients, N.K. Pharma is a 1200 crores pharmaceutical company having its head office in Mumbai. The company has six manufacturing units, one in Tarapur, two at Vapi, one in Nagpur, one in Chennai and the newest one at Baddi in Haryana. Each unit is led by a Factory Manager, who reports to the GM – Production who sits at the head office. The GM – Production, GM – R & D, GM – Marketing, and G.M. HRM report to the COO. The Accounts and Finance functions report directly to the COO. The COO is a 36 year old enthusiastic leader who enjoys immense trust of the MD (who is also the founder of the organization). The company sells through a network of 400 Medical Representatives spread all over India.
Questions
1. Analyze the buying behavior of this organization with respect to your product.