...Natural Cereals Case Questions Question 1: After strongly reviewing this situation over and over again, I have realized how difficult and important this decision really is to our company. I believe my co-workers Sally Thompson and Joe Bradley have done an exceptional job so far, and have definitely pointed our marketing department in the right direction. After our company implemented Sally’s proposal, our market share increased three points, which she definitely deserves credit for. However, her proposal has led to some active criticism from the public which has left our group manager Tom Miller displeased because of how valuable this proposal is to our Natural Cereals division. Sally’s proposal included a limited health message to the high fiber content in our bran cereals. She indicated in a very cautious way that food high in fiber has been associated with studies to lower rates of some forms of cancer; however, she did not go about saying that our bran cereals had more bran than other competing bran cereals. She also went about featuring our new “Re-sealable Pack,” which allows the inside bag to be resealed for freshness, and included a 35 cent coupon toward the next purchase of a product of Natural Cereal. Although she believed her proposal avoided deception to our consumers, one key criticism we have received for Sally’s efforts is that we jumped on the company bandwagon that makes often misleading or incomplete health claims. Tom believes we cannot afford...
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...Oat cereal made from refined and processed to make it more convenient to eat, taste is also improved, becoming popular health food. Which has many health benefits of dietary fiber may reduce the biological effects of LDL triglyceride fat protein, to promote excretion of cholesterol, prevent diabetes, help reduce the incidence of diabetic vascular complications; can catharsis catharsis for habitual patients with constipation have a good help; oatmeal genus low heat food, easy to cause satiety after eating, long-term consumption has a slimming effect. Apple porridge Method: Wash apples and carrots with a good eraser wiping dishes. The good oatmeal and rub 1 tablespoon carrot into the pot, pour the milk and 1/4 cup of water and simmer. Cook and then into the opening 2 tablespoons rub apples until boiled. Oat milk pudding Method: First take 1/2 of boiling milk, oats and mix well into the standby. When the remaining 1/2 of the milk is heated to 40 ℃, then add the whole eggs and sugar, stirring with a whisk in the same direction uniform, then sieved twice, then add 1 practices soaked oatmeal stir. The pudding was poured into the practice of two arms, covered with a layer of plastic wrap, steamed into the rice cooker in 12 minutes. After removing the raisins to put Strawberry milk oatmeal Method: Take the milk into the pot, then add the oatmeal and strawberry jam, stir in low heat, without boiling, the temperature of the ice can not milk, remove from heat and let cool...
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...Rte Cereal Industry The Ready-to-Eat (RTE) Breakfast Cereal Industry in 1994 The Big Three (Kellogg, General Mills, and Phillip Morris) had been enjoying the stable Ready-to-Eat breakfast cereal industry with above average profitability since its start in 1894 until the recent surge of the private label sales and slowing demand. The Big Three had been extremely profitable because they were able to maintain high prices by restraining from direct price competition among themselves, which would have resulted in a lose-lose situation with a decrease in the overall profitability of the industry. The Big Three monopolized 82.5% on average of the concentrated market through 1950 to 1980, as they controlled the whole value chain. The coopetition was formed through unwritten agreements among the Big Three to limit special offers, which would only increase one firm’s market share temporarily at the expense of its competitors. These tactics would initiate a cycle of escalating costs, decreasing industry profitability. To avoid this sequential game, all major players simply followed the price increase of Kellogg, the market leader, who was aware of its power to effectively determine the price levels of the industry by analyzing prior reactions of the competitors. The major manufactures utilized coupons and trade promotions heavily, which resulted in over one fourth of all cereal purchases made with coupons. These price promotions made the hike of RTE cereal prices possible by...
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...‘United Cereal: Lora Brill’s Eurobrand Challenge’ case analysis Question 1. As Lora Brill, United Cereal European VP, would you authorize Jean-Luc Michel’s request to launch of Healthy Berry Crunch in France? Be sure to analyze both sides: Launch and Delay Launch (summarize in a table format and then discuss). Question 2. Does United Cereal represent an example of centralized or decentralized international management? Question 3. What do you think of Brill’s Eurobrand proposals? Should she authorize the launch of Healthy Berry Crunch as the Eurobrand? What concerns do you have? How do you resolve them? Be sure to analyze both sides: Launch and Delay Launch (summarize in a table format and then discuss). Question 4.a. How might United Cereal implement your recommendations? 4.b. What do you think of the Eurobrand Team proposal? 4.c. How can you make the Team work? Introduction The case gives a brief idea about the company’s confusion over a new product launch in Europe. United Cereal was first established in the year 1910 in Kalamazoo, Michigan, It also stepped in to the market of other markets such as beverages, frozen food, and baked food. But the breakfast cereal trend soon set in. And it was very necessary for the company to do a full research before launching a new product. The company had strong values and policies, which it needed for its managers to follow. Breakfast cereal market was a potential market and there was only one major competitor, Kellog. With the growing...
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...1. Why has cereal breakfast been such a profitable business? Cereal breakfast industry has been highly concentrated industry with top four firms accounting for 80% of market share in 1993. Return-On-Sales in this industry (18%) is also significantly higher than compared to those in general food industry (5%). Primary reason for high profitability is * Barrier to entry: Cereals breakfast industry although had no explicit regulatory barriers to entry, still the list mentioned below were acted as high deterrent for new firms to enter the market: * Brand Proliferation: Big-3 had launched a very successful Brand proliferation strategy, by launching products to serve every foreseeable market category. This strategy also resulted in lowering market-share/brand and profit/brand, making it difficult for new entrants to cover the cost of initial capital. * Advertising & Promotion: Advertising/sales ratio in Cereal industry has although reduced from 18% in 1960’s to 10.2% in 1993, still it was higher than most of the other consumer product business. A typical spend of $20 million in the first year of a new brand can be enough to deter a new firm from entering the market. * Retail Channel: With increase in number of brands to offer, prime shelf space in retail channel was of prime importance in success of a product. Securing prime shelf required providing ‘slotting allowance’, which could result in extra spend of $ 1m at national level. While the same was applicable...
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...seeds after shelling no refined. Most belong to coarse grains whole grains, such as millet, big yellow rice, a variety of rice (including ordinary brown rice, black rice, purple rice), wheat and other grains, but also has been pulverized or crushed crushed food, such as oatmeal , whole wheat flour. Nutrients lotus seed, Gorgon, barley and other cereals and similar, can be used as whole grain consumption. The benefits of whole-grain cereals Increasing the supply of nutrients. In the same weight, the same premise of energy, whole grain rice can provide the equivalent of more than 3 times the vitamin b1, b2, and potassium, magnesium and other minerals. Energy intake of disease prevention and health ingredients. Whole grain cereals not only contain more dietary fiber and vitamins, it also contains more antioxidants, such as anthocyanins, carotenoids, β-glucan, these substances have health benefits, such as help prevent cancer and coronary heart disease, help control postprandial blood glucose and blood cholesterol, anti-aging eye. High dietary fiber content, can help reduce the risk of colon cancer. Under the same weight, whole grain cereals provide more dietary fiber and resistant starch, which can not only help bowel purge of constipation is very good, and in the large intestine can promote the proliferation of beneficial bacteria, improve bowel channel micro-ecological environment, help reduce the risk of colon cancer. Postprandial blood glucose rise slowly, most people with...
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...Use the Harvard Business Case, “The Ready-to-Eat Breakfast Cereal Industry in 1994” as the basis for answering the following questions: 1) Prior to the entry of private label producers, how would you classify demand (elastic, inelastic, unit elastic) for cereals produced by the Big Three? Support your answer by using details from the case and referencing the factors that influence the elasticity of demand. The RTE cereal market had an oligopoly market structure where the big three companies are dominating the market. Putting this in mind, a consumer will be forced to pay regardless of how high the prices are increased due to the scarcity of substitutions available. This will result in an inelastic demand trait in this particular market. As the case elicits the big three companies became “highly concentrated, restraining competition and by taking specific steps to keep new firms from entering the industry”. The filing of the antitrust suit against the big three companies in the 1972 proves that these companies had monopolized the RTE cereal market. Quoting from the case “The FTC case was based on the fact that the industry was concentrated and highly profitable, and not on specific actions that the firms might have undertaken to achieve.” Restrained unwritten agreements, and limited trade dealings with pressuring retailers on premium shelf spaces all had an impact on the elasticity of demand. 2) How would the entry of new private label producers impact the elasticity...
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...Ready To Eat Breakfast Cereal Industry Monday, September 09, 2013 3:09 PM The Big 3 and the industry before the 1990's 1972 Federal trade Commission file a major antitrust suit against the big 3 (Kellogg, General Mills, and General Foods) Argued: Monopolized cereal market and had taken specific steps to deter entry by new firms How? Restrained competition amongst themselves through "unwritten agreements" to limit the in-pack premiums (free toys, gifts, e tc) -Refrain from trade dealing-offering discounts to retailers for special treatment or special promotions -Refrained from widespread fortification of their brands because it was believed to not be in the long run interests of the industry (vitamin fortification) FTC also argued the big three took specific actions to make new entry ventures unprofitable -prevented entry into the RTE cereal industry by encouraging super markets and other retailers to adopt a shelf space plan that ensured the big threes products received the most valued center aisle position Caught off guard with the introduction of natural cereal brands Industry environment in the 1990's Technology Processes utilized in creation of many children's cereals took substantial engineering expertise and production experience to master. -Standard plant was estimated to req. a capacity of 75 million pounds per year to achieve minimum efficient scale -employed 125 people -req. capital in excess of 100 million -a singly plant...
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...Executive Summary: Ready-to-Eat Breakfast Cereal Industry in 1994 From 1950s to the 1980s, the ready-to-eat (RTE) cereal industry was concentrated with three companies dominating the volume market share: Kellogg, General Mills, and General Foods (acquired by Philip Morris in 1985 – makers of post), with volume market share that hovered around the 30s, 20s, and 10s, respectively. Quaker, Nabisco, and Ralston held single digit volume market share throughout this time. The industry was characterized by stability and above average profitability. Sales were steady at a compound annual volume growth rate of three percent between 1950 and 1993 due to new offerings such as vitamin fortification (during WWII), presweetening (1950s), and interested in granola and natural cereals in 1970s to 1980s. The largest cereal manufacturers were extremely profitable, routinely posting Return on Assets in the 15-30 % range. Some industry observers claimed that the Big Three (Kellogg, General Mills, and Post) had effective unwritten agreements to limit in-pack premiums to one brand at a time for each company, to refrain from trade dealing (offering discounts to retailers for special treatment or special promotions), and withhold from widespread vitamin fortification. These tools, if employed, would temporarily increase a firm’s market share at the expense of its competitors. Because the Big Three avoided these practices for many years, they prevented a cycle of escalating costs that would...
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...3. Take a closer look at consumer behavior. What are the determinants of their demand for breakfast cereal? Consumer behavior for the RTE cereal industry started to change in the early 90s. Before that, consumers were buying mainly the branded products of the Big Three as evidenced by volume market share of around 85% for decades. This is despite the fact that the branded products are more expensive compared to private labels. There was a perceived higher quality with the higher price of the branded products. This was supported by intensive advertising by the Big Three with an average advertising budget of 12% of revenue. The industry also was the top issuer of coupons for the consumers to buy the product. In addition, they were doing costly trade promotions particularly buy-one-get-one-free offers. Because of the high advertising and promotions spending, this is the justification used by the brands for constantly increasing prices with the process known as “price up and spend back.” This price promotion strategy increased the RTE cereal prices up to 15.6% from 1990 to 1993 which is the period where consumer behavior started changing. The price promotion strategy had the unintended consequence of widening the price gap between the branded cereals and private labels. In addition, it was during this time that the private labels increased in technological competence which led to improvement in quality that rivals branded ones and still able to maintain the lower manufacturing...
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...THE BATTLE FOR THE BREAKFAST CEREAL MARKET, by Richard Lynch 1. INTRODUCTION Corporate strategy is certainly a topic that is exciting and challenging. It makes fundamental decisions about the future directions of organisations. And it has the potential to have a real impact on people's lives. But it isn't the easiest subject to study. There are several reasons for this: *It's a young academic subject when compared to more traditional topics like economics and organisational behaviour. This means that there is a lot that we still don't understand. *It's a complex subject that involves many different aspects of organisations, all of which may be important. This makes it difficult to record and analyse. *And it's a subject that lacks a widely agreed body of accepted knowledge. Different strategists have different opinions on what is important and how strategy should be developed. All these factors make it quite tough. Certainly, some strategists argue that there is a place for strategic analytical frameworks like Professor Michael Porter's Five Forces. But the same strategists also point out the most successful strategies need to be more experimental and creative. For example, they argue that the successful strategy of Dell Personal Computers - selling directly to customers, cutting out the distributor - owed much more to innovation than to traditional strategic analysis. In more general terms and arguably to oversimplify strategy theory, strategic processes need to be both prescriptive...
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...The UK Breakfast Cereal Market Special K 05/02/2014 MARK1500 Principle of Marketing Table of Content Title Page no. Intro Paragraph 3 Business Overview 3 Commentary on Situational Analysis 4 Product Overview 5 Market Segment 6 2016 Olympic Promotions 7 Appendices 8-9 Intro Paragraph This report has been put together to analyse the strength and weakness of Kellogg’s product Special K. This report will identify the strengths and weakness as well as its internal and external factors that affect its sales using ‘PRESTCOM’ and ‘SWOT’ analysis. We will be looking at the market segments that heavily impact the sales of Special K and ways to leap over those barriers to increase revenue. It will also ascertain future promotional ideas for the 2016 Brazil Olympics and the opportunities it may have for Special K Business Overview Kellogg’s is a company with a rich history; established in 1906 by a Mr W.K. Kellogg they have been making great tasting breakfast ever since. Kellogg’s started selling in the UK stores up and down the country ever since 1922. The Kellogg Company was the first company in the food industry to hire a dietician “Mary Barber started the Kellogg’s Home Economics Department and began defining the different types of food and what roll they played in a proper diet” (Kellogg’s, 2014). Kellogg’s quickly established...
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...Assignment One: Cereal Aisle Analysis I work Mondays through Fridays and I do my grocery shopping every Saturdays even though I know it’s might be extremely busy and crowed, but this time it worked to my advantage because I was able to conduct the observations required for this assignment. I went to my local giant store here in Horsham, PA around 10am and I went directly to the cereal aisle for 30mn to have enough information from various people groups. The first group was the families’ mom, dad with children: they were always pulled by the kids toward the cereals they could recognize and that was on the lower shelves. The second group was the single men: they were walking quickly though the aisle because they knew exactly what they want and it was usually the plain ones. The third group was the senior: they were cautious about their selection, they had a list handy but they will read labels and did not seem to care about designs. The fourth group was the single moms: they came prepare with a list handy, will pick more than one box and were knowledgeable of the brand they were looking for. The first group selection was based on the choice of the children because they are the first consumer of it the household. The parents tried to pick one or two boxes out of the selection the kids made and they made sure they didn’t spend a lot of time in the aisle to avoid having the kids second guessing their choice. The second group determined the value based on what they like in the...
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...RTE Cereal Case Study Number of Firms and Market Shares There were six firms in the industry from 1950 to 1990 represented in the case study. In 1990 private label firms entered the market. The industry grew consistently through the 21st century but, the Big Three, consisting of Kellogg, General Mills, and Nabisco, dominated the market. Kellogg has consistently dominated the market shares in the RTE cereal industry with General Mills and Post following close behind. From 1950 to 1993, Kellogg’s average market share was 40.3, General Mills was second with an average market share of 21.7 and third of the Big Three, Post, had an average market share of 17.4. There were not any significant changes in the market shares from 1960 to 1980. However, in 1990 Post dropped to 11.1, 4.5 less than the value in 1980, General Mills reached 24.4, 4.5 more than the value in 1980, and Kellogg, still leading the pack, decreased to 37.5, 3.4 less than the value in 1980. From 1990 to 1993, there were not any significant changes in the market shares for the Big Three. There are three other firms listed in the case study that represented the remainder of the market shares. During the same time frame, Quaker had an average market share value of 6.8. Quaker market shares decreased dramatically from 1950 to 1960 but made a steady increase beginning in 1970. Nabisco’s average market share was 5.0. The market shares for Nabisco decreased in 1970 and continued to decrease giving them the lowest...
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...COMPETITIVE STRATEGY The Ready to Eat Breakfast Cereal Industry in 1994 Word count: 1000 (excluding questions & exhibit) 1. Why has cereal breakfast been such a profitable business? Cereal breakfast industry has been highly concentrated industry with top four firms accounting for 80% of market share in 1993. Return-On-Sales in this industry (18%) is also significantly higher than compared to those in general food industry (5%). Primary reason for high profitability is * Barrier to entry: Cereals breakfast industry although had no explicit regulatory barriers to entry, still the list mentioned below were acted as high deterrent for new firms to enter the market: * Brand Proliferation: Big-3 had launched a very successful Brand proliferation strategy, by launching products to serve every foreseeable market category. This strategy also resulted in lowering market-share/brand and profit/brand, making it difficult for new entrants to cover the cost of initial capital. * Advertising & Promotion: Advertising/sales ratio in Cereal industry has although reduced from 18% in 1960’s to 10.2% in 1993, still it was higher than most of the other consumer product business. A typical spend of $20 million in the first year of a new brand can be enough to deter a new firm from entering the market. * Retail Channel: With increase in number of brands to offer, prime shelf space in retail channel was of prime importance in success of a product...
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