1.0 Introduction
1.1 Background
Kellogg Company (often referred to as Kellogg or Kellogg's in its corporate logo, or even more formally as Kellogg's of Battle Creek), with 2011 sales revenue of nearly $13 billion, is the world's leading producer of cereal and a leading producer of convenience foods, including cookies, crackers, Toaster pastries, cereal bars, fruit-flavored snacks, frozen waffles, and vegetarian foods. The company's brands include Kellogg's, Keebler, Pop-Tarts, Eggo, Cheez-It, Nutri-Grain, Rice Krispies, BearNaked, Morningstar Farms, Famous Amos, Special K, All-Bran, Frosted Mini-Wheats, Club and Kashi. Kellogg products are manufactured in 18 countries and marketed in more than 180 countries around the world. Its global headquarters are in Battle Creek, Michigan, USA. Kellogg trades under the ticker symbol NYSE: K.
When preparing a strategy for success, a business needs to be clear about what it wants to achieve. It needs to know how it is going to turn its desires into reality in the face of intense competition. Setting clear and specific aims and objectives is vital for a business to compete.
However, a business must also be aware of why it is different to others in the same market.
This case study looks at the combination of these elements and shows how Kellogg prepared a successful strategy by setting aims and objectives linked to its unique brand.

One of the most powerful tools that organizations use is branding. A brand is a name, design, symbol or major feature that helps to identify one or more products from a business or organization. The reason that branding is powerful is that the moment a consumer recognizes a brand, the brand itself instantly provides a lot of information to that consumer. This helps them to make quicker and better decisions about what products or services to buy.

Managing a brand is part of a process called product positioning. The positioning of a product is a process where the various attributes and qualities of a brand are emphasized to consumers. When consumers see the brand, they distinguish the brand from other products and brands because of these attributes and qualities. Focused on Kellogg, this case study looks at how the company has strategized their branding along with their product range selection to give a unique position in the minds of its consumers.

1.2 Market

The value of the UK cereals market is around £1.1 billion per year. Kellogg has a 42% market share of the value of the UK’s breakfast cereal market. The company has developed a range of products for the segments within this market, targeted at all age groups over three years old. This includes 39 brands of cereals as well as different types of cereal bars. Consumers of cereal products perceive Kellogg to be a high quality manufacturer. As the market leader, Kellogg has a distinct premium position within the market. This means that it has the confidence of its consumers.

2.0 Aims and Objectives
2.1 Aims
Today, making the decision to eat a healthy balanced diet is very important for many consumers. More than ever before people want a lifestyle in which the food they eat and the activities they take part in contribute equally to keeping them healthy. Research undertaken for Kellogg, as well as comprehensive news coverage and growing public awareness, helped its decision-takers to understand the concerns of its consumers. In order to meet these concerns, managers realized it as essential that Kellogg was part of the debate about health and lifestyle. It needed to promote the message 'Get the Balance Right'.

Decision-takers also wanted to demonstrate Corporate Responsibility (CR). This means that they wanted to develop the business responsibly and in a way that was sensitive to all of Kellogg’s consumers’ needs, particularly with regard to health issues. This is more than the law relating to food issues requires. It shows how Kellogg informs and supports its consumers fully about lifestyle issues.

Any action within a large organization needs to support a business direction. This direction is shown in the form of a broad statement of intent or aim, which everybody in the organization can follow. An aim also helps those outside the organization to understand the beliefs and principles of that business. Kellogg’s aim was to reinforce the importance of a balanced lifestyle so its consumers understand how a balanced diet and exercise can improve their lives.

2.2 Objectives

Having set an aim, managers make plans which include the right actions. These ensure that the aim is met. For an aim to be successful, it must be supported by specific business objectives that can be measured. Each of the objectives set for Kellogg was designed to contribute to a specified aim. Kellogg’s objectives were to:

• Encourage and support physical activity among all sectors of the population
• Use resources to sponsor activities and run physical activity focused community programmes for its consumers and the public in general
• Increase the association between Kellogg and physical activity
• Use the cereal packs to communicate the ‘balance’ message to consumers
• Introduce food labeling that would enable consumers to make decisions about the right balance of food.

3.0 Current Situation Analysis
A current situation analysis is a clear, concise look at the present state of a business within its market. Often used to formulate marketing strategy, a current situation analysis tends to examine several factors that play into the current standing of the business, including macroeconomic trends, customer data, and information about competitors. The analysis of this data may be done in several different ways, including the popular SWOT (strengths, weaknesses, opportunities, threats) method. Using this information, a situation analysis provides a summary of the business as it stands, as well as a forecast of performance and progression in the near future.
The SWOT analysis of Kellogg’s gives the following vital information:
Strengths:
• Solid Revenue Growth: In 2006, Kellogg reported revenue of $10.907 billion; in 2011, the company reported revenue of $13.198 billion, representing year over year annual growth of 3.89%, a stable and secure rate that is projected to sustain into the future
• Brand Loyalty: Kellogg’s iconic red logo can be found on the majority of the cereal boxes in your local supermarket, and drives customers back again and again
• Geographic Diversity: The company’s products are marketed and sold in more than 180 countries around the world; the company will not be seriously hurt by economic problems exclusive to one market or country
• Dividend: Kellogg currently pays out quarterly dividends of $0.44, which when annualized puts the dividend yield at 3.29%, which is significantly north of any rate that can be found in a CD or treasury bond
• Institutional Vote of Confidence: 78% of shares outstanding are held by institutional investors, displaying the confidence long-term and big-money investors have in the company and its future
Weaknesses:
• Saturation of Market: Kellogg’s products are already in nearly every market around the world, so there is little room left for geographical expansion
• Debt: The company currently possesses around $7.366 billion of debt on its balance sheets, and until they pay down this debt it will weigh heavily on their core business
• Massive Valuation: Kellogg is relatively average when one looks at the company’s price to earnings ratio (16.20) and price to sale ratio (1.39); however, the price to book ratio (10.86) is massive when considering the company’s sluggish growth rate
• Reliance on One Product: The company derives the wide majority of their revenue from a wide array of cereal brands, and even while these brands are different, they are all the same thing: cereal, and if cereal was to lose popularity, Kellogg would be in some deep trouble

Opportunities:
• Acquisitions: On June 1, Kellogg acquired the Pringles brand from Procter & Gamble, and further acquisitions in the future are a strong possibility and could help fuel Kellogg’s growth prospects
• Product Innovation: Kellogg has for years innovated and created new brands and products, and further product innovation is probable and should fuel sales growth
• Selling Brands For Cash: Just as Kellogg can purchase brands from other companies, other companies can purchase brands from Kellogg, which can help Kellogg raise cash to reinvest in their own company or to pay down their debt
Threats:
• Rising Food Prices: This year's historic drought has already caused food prices to drastically rise, and further pain caused by this occurrence could leave Kellogg to face a decision where they either pass the extra costs on to their customers or swallow the pain in their margins
• Competition: Fierce competition to offer the best product to the customer for the lowest price leads to margin contraction; and the food industry is one of the most crowded industries in the world
• Shifts in the Market: When cereal was invented it was a revolutionary product that was interesting and new, and nothing is stopping another trailblazer from thinking up the breakfast of tomorrow

4.0 Planning Horizon
The Kellogg Company has been using a large-scale linear program, the Kellogg Planning System (I