Kellogg's Case Study

In the United States, breakfast cereal manufacturers form a giant industry. For years, the cereals have been tailored to the tastes of young children. These come in all kinds of flavors, shapes and colors. The advertising is then directed at the children who, in general, watch T.V. Comics every Saturday. And this has been great success. The cereal makers such as General Mills, General Foods and Quakers Oats have flourished.

In this decade, however, the baby boom of 1960 will turn intyo adult population of 1980’s. So Kellog decided to introduce cereal for adults. Kellog accounts for about 40% of U.S. sales and their market research hd estimated the adult cereal market to be $3 billion. Kellog developed a new cereal called Nutri-Grain, a brand aimed squarely at “the Over-20 plus market. Kellog had not introduced a new cereal in the market for5 years. In 1978, Kellog reached a peak of 43.5% cereal market share. But rival General Mills had been considerably successful with new cereals and was chipping away at Kellog’s market share. So Kellog needed a new product hit to establish its strength.

The idea was developed by the chairman of Kellog, Mr.William Lamothe, on a trip to Switzerland. In 1980, he sampled a European Cereal. He was convinced that such a product might capitalize on consumer interest in health. He was worried that Kellog’s competitors might have similar plans. In order to gain an edge over the competition, he ordered a crash program to come up with a cereal that met criteria for taste, “mouth feel” and “bowl life”- the time it takes for a cereal to become soggy.

Nutri-Grain is Kellog’s only sugarless cereal and is made from whole grain. For other brands, the oil is stripped to extend the shelf life of the cereal, but it removes certain minerals. Kellog devised a process to keep the oil in to make cereal more nutritious. The product development time was reduced to one year from the normal two years.

Product Promotion

In order to...