Kellogg’s is, of course, a mighty brand. Its cereals have been consumed around the globe more than any of its rivals. Sub-brands such as Corn Flakes, Frosties and Rice Krispies are the breakfast favourites of millions.
In the late 1980s, the company had reached an all-time peak, commanding a staggering 40 per cent of the
However, in the 1990s Kellogg’s began to struggle. Competition was getting tougher as its nearest rivals General Mills increased the pressure with its Cheerios brand. Kellogg’s management team was accused of being ‘unimaginative’, and of ‘spoiling some of the world’s top brands’ in a 1997 article in Fortune magazine.
In core markets such as the
In 1994, three years after the barriers to international trade had opened in
However, the Indian sub-continent found the whole concept of eating breakfast cereal a new one. Indeed, the most common way to start the day in
The first sales figures were encouraging, and indicated that breakfast cereal consumption was on the rise. However, it soon became apparent that many people had bought Corn Flakes as a one-off, novelty purchase. Even if they liked the taste, the product was too expensive. A 500-gram box of Corn Flakes cost a third more than its nearest competitor. However, Kellogg’s remained unwilling to bow to price pressure and decided to launch other products in
Furthermore, the company’s attempts to ‘Indianize’ its range have been disastrous. Its Mazza-branded series of fusion cereals, with flavours such as mango, coconut and rose, failed to make a lasting impression.
Acknowledging the relative failure of these brands in
The company has been looking at alternate product categories to counter poor off take for its breakfast cereal brands in the Indian market, say sources. Meanwhile, the Kellogg main stay – breakfast cereals – has seen frenzied marketing activity from the company’s end.
The idea behind the effort is to establish the Kellogg brand equity in the market. ‘The company is concentrating on establishing its brand name in the market irrespective of the off take. The focus is entirely on being present and visible on the retail shelves with a wide range of products,’ explains a company dealer in Mumbia.
As per the trade, Kellogg
These rapid-fire launches were supported with extensive ‘below-the-line’ activity, such as consumer offers on half of Kellogg’s cereal boxes. Although most of the biscuit ranges have so far been a success with children, due in part to their low price, Kellogg’s is still struggling in the cereal category.
Although the company tried to be more sensitive to the requirements of the market, through subtle taste alterations, the high price of the cereals remains a deterrent. According to a study conducted by research firm PROMAR International, titled ‘The Sub-Continent in Transition: A strategic assessment of food, beverage, and agribusiness opportunities in
‘While Kellogg’s has ushered in a shift in Indian breakfast habits and adapted its line of cereal flavours to meet the Indian palate, the price of the product still restricts consumption to urban centres and affluent households,’ the study reports.
Kellogg’s tough ride in
- Mercedes-Benz. In 1995 the German car giant opened a plant in
Indiato produce its E-class . The car, which was targeted at the growing ranks of Sedan ’s wealthy middle class, failed to inspire. By 1997, the plant was using only 10 per cent of its 20,000 car capacity. ‘Indians turned up their noses at the India Sedan– a model older than those sold in Europe,’ reported Business Week at the time. ‘Now Mercedes has to reassess its mistakes and start exporting excess cars to Africaand elsewhere.’
’s Lufthansa airline joined forces with Indian company, the Modi Group, to launch a new domestic private airline, Modi-Luft, in 1993. However, three years later ModiLuft had gone bust and Lufthansa filed a lawsuit against one of the Modi brothers, claiming he had used funds obtained from the German company in other ventures. In return, the Modi Group accused Lufthansa of charging too much and of producing defective planes. Germany
- Coca-Cola. The Coca-Cola company understood that distribution was the key to building a strong Indian brand. It therefore decided to buy out one of
’s most successful soft drink companies and manufacturers of popular soda brand Thums Up. However, although this gave Coca-Cola an instant distribution network, Thums Up remained more popular than Coke for many years. Most Indians initially thought that the new entryto the market wasn’t fizzy enough. India
- Whirlpool. When Whirlpool launched its refrigerators on the Indian market, it found the market unwilling to buy larger sizes than the standard
- MTV. When MTV India was launched, the aim was to bring Western rock, rap and pop to the sub-continent. Now, however, the music policy has shifted to accommodate Indian genres such as bhangra.
- Domino’s Pizza. Initially, Domino’s Pizza transferred its Western offerings direct to the Indian market, but the company eventually realized that it had to bow to local tastes, as Arvind Nair, chief executive officer at Domino’s Pizza India explains. ‘Initially, our focus was to stay only in metropolitan areas, but in the last two years we have felt the need to spread ourselves into “mini metros” and B-category towns. We have also experimented with our taste options, especially when we went into smaller towns. We have focused on more regional flavours now,’ he says. As a result of this change of strategy, Domino’s came up with localized toppings such as ‘Peppy Paneer’ and ‘Chicken Chettinad’. This move was greeted with a wry smile from Domino’s main Indian competitor, US Pizza, which was the first to offer local topping. ‘In 1995, when we offered tandoori chicken and paneer toppings, some made fun of us saying, why not offer spaghetti and pasta toppings? The same companies are now offering chole and spicy masala pizzas,’ says Wahid Berenjian, the managing director for US Pizza. He told the Hindu newspaper Business Line that US brands such as Domino’s made the mistake of thinking that US tastes are universal. ‘You cannot change the taste buds that were developed more than a thousand years ago,’ he said.
- Citibank. When Citibank entered the Indian market, the firm’s aim was to target only high-income earners. But, in the words of the Business Line newspaper, Citibank soon realized that ‘in
it makes sense to go the mass banking way rather than the class banking way.’ India
One of the reasons why Kellogg’s and these other brands’ passage to
As a result, only those companies which are in tune with
Indeed, Unilever’s soap and toothpaste products have been available in
As for Kellogg’s, it remains to be seen whether its move into other product categories, such as snack food, will be able to help strengthen its brand. The dilemma that it may face is that if it becomes associated with biscuits rather than cereals, core products like Corn Flakes could become a marginal part of the company’s brand identity in
‘Kellogg’s is caught in a bind,’ one Indian brand analyst remarked in
However, other impartial Indian commentators are more optimistic about Kellogg’s future prospects within the sub-continent. Among those who believe Kellogg’s will eventually succeed is Jagdeep Kapoor, the managing director of Indian marketing firm Samiska Marketing Consultants. ‘With every product offering, Kellogg’s chances improve based on its learning in the Indian market,’ he says.
Only time will tell.
Lessons from Kellogg’s
- Do your homework. Why did Kellogg’s cereals have a tough ride in
? ‘It was just clumsy cultural homework,’ says Titoo Ahluwalia, chairman of market research company ORG MARG in India . Bombay
- Don’t underestimate local competitors. Although Indian brands were worried they would struggle against a new wave of foreign competition following the market opening of 1991, they were wrong. ‘Multinational corporations must not start with the assumption that
Indiais a barren field,’ said C K Prahalad, business professor at the , in a Business Week article. ‘The trick is not to be too big.’ Universityof Michigan
- Remember that square pegs don’t fit into round holes. When Kellogg’s first launched Corn Flakes in
it was essentially launching a Western product attempting to appeal to Indian tastes. Globalization may be an increasing trend, but regional identities, customs and tastes are as distinct as ever. It may be easy for brand managers of global brands to view the world as homogenous, where consumer demands are all the same, but the reality is rather different. ‘There is a bigger opportunity in localizing your offerings and the smarter companies are realizing this,’ says Ramanujan Sridhar, chief executive officer at Indian marketing and advertising consultancy firm Brand Comm. India
- Don’t try and make consumers strangers to their culture. ‘The rules are very clear,’ says Wahid Berenjian, the managing director for US Pizza (which has successfully launched a range of pizzas with Indian toppings) in an article for the Hindu newspaper, Business Line. ‘You can alienate me a bit from my culture, but you cannot make me a stranger to my culture. The society is much stronger than any company or product.’ Brands who want to succeed in
and other culturally distinct markets need to remember this. India