Tuesday, November 17, 2009Big Bazaar Versus KelloggsI should start with an apology that I have not updated the blog for more than a monthnow, will try and be more regular from now on....I observed this new item a few days back and thought about writing about it, the fightbetween Big Bazaar and Kelloggs , and it is not first of the kind that Big Bazaar isinvolved in , some time back it was with Cadbury’s and even before that it was Lays. Allthe three were removed from the shelves of Big Bazaar, and reasons given were thedifferences Big Bazaar had with the margins that were being given.Some people might see it as a normal routine affair, bargaining between two parties forbetter margins, but it is not. It is part of the larger plan which big Bazaar has and thereality which marketers are walking into, the world which will be dominated by Dealerowned labels. In the news you can also read about how Big Bazaar is not too worriedabout the fact that Kellogg’s would not be there on its shelves, it has its own Brand TastyTreat which would be there as an substitute.Now the typical FMCG marketer in India is used to be on a enviable position, the retailerbeing small and unorganized and at the mercy of the Brand marketers, who could affordto play from the position of strength. But this all will change in the near future.The other day I had an opportunity to listen to Mr Manish Tiwary, who heads the Moderntrade Division at HUL. a the division which deal with the organized retailers like BigBazaars, Spencer’s and he shared his concerns how the dealer brands increasingly putpressure on the brand marketers. He said that the time when you could keep getting morecustomers just on the basis of cosmetic improvements to your brand is more or less over,and only those brands which have a very strong proposition and value for the customerswill be able to survive.Though in India the proportion of organized trade itself is very small and the proportionof the business of dealer owned labels even smaller, but one can see these events givingus a preview of the future holds for brand marketers.....I had written more on Dealer Owned Brands earlier also , Link1,Link2Posted by Rajesh Aithal at 10:39 AMLabels: Brands, Indian Market, Indian RetailBranding Mishaps: Kellogg’s India Venture a Failure
Posted by Meheer Thakare on Sep 14th, 2009 and filed under Branding Mishaps. Youcan follow any responses to this entry through the RSS 2.0. You can leave a response ortrackback to this entryINDUSTRIES HOLD MORE PROMINENCE THAN A BRAND. Phew!! Many of youmust have been amazed to read this. There’s at least something, if not everything, that isgreater than a Brand’. And I wouldn’t dare to disagree with you! We have been talking alot about how a Brand overpowers most other tangible and intangible assets of a business,but this one comes with an exception.Today we talk about how the international breakfast industry leader Kellogg Companyoften referred to as “Kellogg’s” learnt this the hard way in India. Kellogg’s entered Indiain 1994 to introduce Corn Flakes into the market, eyeing opportunities right after theIndian economy liberalized.Kellogg’s, we believe, rode on the globalization horse confidently hoping for a smoothgrowth and revenue in the Indian economy. The company did everything they usually didwhile entering new markets without realizing that they were about to enter an emergingeconomy with strong cultural roots and essentially a very low-priced (moreoveruniversally embraced) breakfast Industry competition which included Hot milk, Idli,Dosa, Vadaa, Bread & Spread, etc depending on various regions.Kellogg’s believed that its brand equity carried forward from the West would mirror itssuccess in India. So it started building its brand by promoting its quality crispy flakeswhich were a worldwide success accepted throughout the western countries. But whatsounded like a safe strategy, turned out to be drastically daunting for the company.Firstly, Indians have always preferred their milk hot. When the Kellogg’s crispy flakesare mixed with hot milk, they turned out to be soggy thereby out rightly rejected by theconsumers. Kellogg’s later had to modify their products to suit hot milk but the damagehad been done.Secondly, the cost of a 500 gm package of Kellogg’s was itself way higher than itstraditional rivals. Kellogg’s brand was mostly meant to be targeted at the middle-classconsumer. But the high pricing resulted in the consumers buying their products on one-off basis as a status buy rather than a nutritionally rich breakfast. Additionally, Kellogg also managed to overlook the cultural dimensions of India.Something similar to what we saw turned out to be vicious for Pizza Point (see how Pizzapoint missed out on appealing to the Indian consumers) when they entered India. Apartfrom the high pricing, it proved to be an unachievable task of convincing consumersabout the highly nutritional contents of the corn flakes. The Indian consumer typicallyholds extremely strong cultural values and refuses to let off traditional (eating) habits.The company should have known and researched well into these factors.
Important lesson to be learnt out of this is that, globalization may be an increasing trend,but regional identities, customs and tastes are distinct as ever. There may be moreopportunities in localizing your concept in the market than globalising the market assomeone rightly said ‘Think Globally, Act Locally’. What Kellogg’s wrongly tried to doin India was the attempt to turn the consumers against their cultural tastes which wasn’tquite well received.Related posts: 1. Which Colleges In India Offer A Course In Brand Management? What Is The Scope For It In India? There is one college in Ahmedabad but i do not... 2. Holistic Marketing: Taking a Deep-Dive Today, I got a question-cum-comment on the Kellogg’s Post. The... 3. Branding Mishaps: Why Fiat Uno failed in India? Fiat usually positions its cars as ‘reliable and sturdy’ cars... 4. Branding Mishaps: Pizza Point In this article, I emphasize on the importance of the... 5. Branding Mishaps: BAL’s ad campaign disaster The Bajaj Group is amongst the top 10 business houses...Mumbai, Feb. 18:Leading producers of ready-to-eat cereals, Kelloggs, which has re-launched its kidsbrand Chocos with essential nutrients, will concentrate more on taste in India besideshealth benefits as part of its global marketing strategy, a top company official said.The company in the next 10 days will be launching a 360-degree marketing campaignincluding television, print, radio and on-ground activation such as setting up kiosks atmalls and strategic locations, to re-position itself as a tasty breakfast option for children.“India is a different market altogether, where taste comes above health benefits. We arenow focusing on this aspect and are relaunching Chocos as a tastier and healthy cerealbreakfast. We will also look at our other products moving ahead to improve the overalltaste,” Kellogg Indias, Director (Marketing), Mr Vikram Behl, told PTI here today. Keywords: Kelloggs, Chocos,Marketing lessons from Kellogg’s Indian experience
Kellogg’s is a name to reckon throughout the world. It is the company that introduced the concept of Corn flakes as a breakfast throughout the world. They have taken on markets where corn flakes has never been very popular as breakfast and converted them into a corn flake eating nations over a long period of time. They are experts in changing breakfast eating habits of customers’ across the world. In the early nineties Kellogg came to India with lots of hope and confidence. The Indian organized breakfast market sector was expected to roll over and die. After all Kellogg’s annual turnover was so big that the Indian organized breakfast sector was written off even before the skirmishes started. Kellogg did lot of home work and launched its products in India. They had the best products, packaging and their marketing strategy was excellent. The advertising campaign was handled by a leading Indian advertising agency. Kellogg did not do as well as expected. The witch doctors (read marketing research firms) were called in. The research findings were very surprising. The areas where Kellogg went wrong include:1. Kellogg pitched itself as an alternative to the regularly consumed breakfast. The Indian breakfast is heavy and there is a feeling of fullness at the end of an Indian breakfast. What with oily Parantas, Puris and Dosas, the feeling of fullness is real and not imagined. Kellogg’s Corn flake breakfast does not give that feeling of fullness and that went against the grain of having a full breakfast. In short after having a corn flake based breakfast the Indian consumers were still hungry.
2. Indian breakfast is known for its variety. There can be 30 types of Dosas (there is a restaurant in Hyderabad that offers 99 types of Dosas!) or Idlis, Parantas or other types of native Indian breakfast items. Indians are used to a variety and one item that is eaten will not be on offer for the next two or three weeks. Asking Indians to have the same type of corn flake based breakfast was too much of a cultural change for the Indians to accept. 3. Indians have spicy and hot food for breakfast. To ask them to eat the sweet tasting and cold corn flake breakfast was too much of a sweet breakfast for the Indians to digest.4. Kellogg in its advertising campaigns hinted that the Indian breakfast was not nutritious and that Indian breakfast was not very good for health. This deeply hurt the sentiments of the home maker. The home makers said to themselves “We have eaten and served the Indian breakfast for decades and centuries. My family is doing fine”. Once the home maker’s ego was hurt they psychologically turned themselves against the concept of corn flake based breakfast.
5. Kellogg corn Flakes have to be consumed with cold milk. Indians have be taught right from their childhood that milk has to be consumed every day and that milk should always be consumed hot. In a tropical country that is very logical. If the milk is bad once it is heated it will become undrinkable. So for the Indian family eating corn flakes with cold milk was unbearable. So hot milk was poured over the corn flakes. Once hot milk is poured the corn flakes become soggy and there are no longer tasty and edible. Posted by Dr. M. Anil Ramesh at 11:06 AM Email This BlogThis! Share to Twitter Share to Facebook Share to Google Buzz Labels: Food Marketing, Marketing communications, Marketing lessons, Product marketing 0 comments: Post a Com