This document provides a case study of Kellogg's efforts to revitalize its Nutri-Grain cereal brand, which was facing declining sales. Kellogg's implemented a market-oriented approach that included rebranding Nutri-Grain, redefining its marketing strategy to address changing consumer perceptions, reinvesting in top-selling products, discontinuing underperforming products, redesigning packaging, and focusing on the marketing mix. As a result, Nutri-Grain's sales transitioned from decline to sustained growth. The document also discusses Kellogg's overall strategies for maintaining market leadership over decades through brand strength, product quality, social responsibility, and developing extension strategies to adapt to shifting trends and

1. EXTENDING THE PRODUCT LIFE CYCLE
A Kellogg’s Case Study
INTRODUCTION
Clarity in the setting of aims and objectives is one of the key features in the success of a business. How
well the business identifies the conditions & devises subsequent strategies to deal with the shifts in future
trends will have a big impact upon the success and the longevity of its product life.
Kellogg’s is the world’s leading supplier of cereals, with production bases across the globe and serving
over 180 countries. In 2006, Kellogg had total worldwide sales of almost $11 billion (£5.5 billion). In
2007, it was Britain’s biggest selling grocery brand, with sales of more than £550 million.
Kellogg’s is the first company to enter into readymade cereal breakfast segment. The company’s product
lines include ready-to-eat cereals and convenience foods, such as cereal bars, cookies, crackers, toaster
pastries, fruit-flavored snacks, frozen waffles, and vegetarian foods. Kellogg’s brands are household
names around the world and include Rice Krispies, Special K and Nutri-Grain and other well-known
brands like Froot Loops, Apple Jacks, Corn Flakes, Frosted Flakes, Cocoa Krispies, Keebler, Pringles,
Pop-Tarts, Kashi, Cheez-It, Eggo, Morningstar Farms and many more.
Central to Kellogg’s business aims are its set of ideals, demonstrated through the promotion of healthy
living. Kellogg's stated purpose is "Nourishing families so they can flourish and thrive."
Kellogg’s has maintained its position as market leader for most of the last century in the face of growing
competition and changing global tastes. To a large part this is due to it having a strong brand name, good
quality products, a range that is tailored for individual countries and a strong commitment to Corporate
Social Responsibility. Having established this position, communication with its customers, suppliers and
other stakeholders as well as emphasis on the development of an extension strategy has been vital in
Kellogg’s maintaining its competitive edge.
Brand managers monitor the success of brands in terms of market share, growth and performance against
the competition. This case study explores Kellogg’s efforts in the identification of a problem with one of
its brands “Nutri Grain” and the incorporation of business tools to re-launch the brand and return it to
growth in its market.
What is the 'Product Life Cycle'
It is based on an economic theory that was developed by Raymond Vernon.
The product life cycle (PLC) describes the period of time over which an item is developed, brought to
market and eventually removed from the market. The cycle is broken into four main stages: introduction,
growth, maturity and decline. The idea of the product life cycle is used in marketing to decide when it is
appropriate to advertise, reduce prices, explore new markets or create new packaging.
However, before these stages of product life cycle, the case describes the Research and Development
(R&D) stage as the most important stage. New product design and development is more often than not a
crucial factor in the survival of a company. In a global industrial landscape that is changing fast, firms
must continually revise their design and range of products. This is necessary as well due to the fierce
competition and the evolving preferences of consumers.
Nutri-Grain was launched in 1997 and instantly gained 50% of the growing cereal bar market in two
years. This was termed as its ‘Launch’ or introduction phase and it was the most expensive phase of the

2. product life cycle for the company. The size of the market for the product was small, which means sales
were relatively low. On the other hand, the cost of research and development, consumer testing and the
marketing needed to launch the product were consequently very high. Steady sales till 2002 with new
product developments of flavour and format is defined as its ‘Growth’ stage.
Competitors from other brands and from Kellogg slowed down sales and weakened Nutri-Grain’s market
position. This was the ‘Maturity’ stage.
Steady influx of new players and undercutting by competitors formed the ‘Saturation’ phase in the
product life cycle.
The final stage, where the sales and brand position fall rapidly, is called as the ‘Decline’ stage.
Revenue vs Profit in Product Life Cycle
At this Kellogg had to make a key decision – whether to abandon the product completely or to extend its
life by incorporating a number of business tools and devising new strategies accordingly.

3. One of the tools to develop an extension strategy is
the Ansoff’s Matrix.
Igor Ansoff identified four courses of action in this planning tool:
1) Market Penetration (LOW risk)
o Consolidation (protect/build)
o Selling existing products to existing markets.
o Increase quality, productivity, and marketing
o Consider collaboration
2) Market Development (MEDIUM risk)
o Extending existing products to new markets, new sales areas, segments and uses
o Consider exporting, buying competitors or licensing
3) Product Development (MEDIUM risk)
o Developing new products for existing markets with existing/new capabilities
o Invest in R&D, modifications or extensions
o Buy-in products
4) Diversification (HIGH risk)
o Developing new products for new markets
o Switch internal focus
o Create new business units
o Buy subsidiaries
o Technology share
o Consortiums
Market Oriented Route vs Product Oriented Route
Product orientation is employed when management is more concerned with product quality. Managers
are often obsessed with their products when a product orientation exists. Managers typically believe their
products are unique and offer distinct benefits. They focus on consistent improvement of the product with
the belief that an ideal product will effectively sell itself.
Consolidation, product development and product diversification are included in the product oriented
approach. Product development is a strategy for company growth by offering modified or new products to
current market segments. In product development, the companies try to sell more product to the same
people. The company may be extending the product life by producing different variants, or packaging
existing products in new ways.

4. Market orientation actually describes the company's approach to doing business. ‘Market-oriented’
defines the company itself. If a company is market-oriented, its board and executive leadership believe
that the best way to succeed is to prioritize the marketplace above products. This usually goes over well
with customers, but the company also must have adequate research and development to provide what the
market wants.
Market penetration, market development and diversification are included in the market oriented approach.
Market penetration is a strategy for company growth by increasing sales of current market segment
without changing the product. An example is an advertisement which encourages more people within our
existing market to choose our product, or to use more of it. Another example could be introducing a
loyalty scheme, launch price or other special offer promotion. Market Development is a strategy for
company growth by identifying and developing new market segments for the current company product. In
this part, the company targets new markets, or new areas of the market. An example is the company using
different sales channels, such as online or indirect sales if they are currently selling through the retail or
trade channel.
Product diversification requires using both market & product oriented routes. It is a strategy for
company growth through fresh start-ups or acquiring of businesses outside the company’s current line-up
of products and market segment. When diversifying, companies must be careful not to overextend. The
main advantage of diversification is that, should one business suffer, the others may not be affected.
2003
Problems faced by Kellogg’s Nutri-Grain
 Weak brand message − leading to a lack of impression in the minds of customers, which resulted
in the subsequent preference to competitors’ brands
 Excessive variation of original product
 Insufficient marketing/promotion of majority selling core products
 Sales driven by promotional pricing and not driven by quality of products – lack of emphasis on
strength of brand
2005
Strategy implementation by Nutri-Grain
The Kellogg Company decided to concentrate on a market oriented approach and decided to opt
out of product development.
Some of the steps undertaken by the company in an effort to revitalize the brand were as follows:

5.  Extensive remodelling of brand image in an effort to completely re-brand and re-launch the
product, with focus on ‘what makes the brand different from its peers’
 Redefined marketing strategy to address the alterations in consumer perceptions & change in
thinking (customers wanted nutrition and taste equally)
 Reinforced investments on top selling products
 Discontinuation of poorly performing products
 Redesign in packaging that is in line with new brand image
 Attractive pricing
Nutri-Grain concentrated on the 4P’s (Product, Promotion, Place, Pricing) of the marketing mix to re-
launch the brand.
As a result of incorporating these business tools, the sales went from a decline to sustained growth.
PESTLE Analysis (Cereal industry)
Political
 Association of Cereal Food Manufacturers (ACFM). ACFM represents the interests of all major
manufacturers of breakfast cereal products (in the UK).
 In India, cereal manufacturers have not faced any problems in the Indian market, because India
promotes Foreign Institutional Investors (FIIs).
Economical
 Premium pricing of cereals is a constant concern to future sales.
 Cereals as a breakfast has certain complementary requirements (like milk, sugar, fresh fruits etc.);
so, its demand is governed by the pricing of these additional goods.
Social
 Taste preferences vary from region to region.
 Some cultures (like India) prefer traditional breakfasts over cereals.
 The Kellogg company also aligns with the support of UN Sustainable Development Goal to -
o To help end hunger by addressing food security and sustainable agriculture.
o Ensure gender equality
o To reduce food waste and loss
 Kellogg’s charitable contributions are made through Kellogg Company and Kellogg Company
Fund. In the past 5 years, they have donated $278.5 million.
 W. K Kellogg (founded 1930) is a completely different legal entity and one of the biggest
philanthropic foundations in the US that received nearly $140 million from the Kellogg Company
to help the foundation’s work with children and communities (source: Kellogg’s Annual Report
2017)
Technological
 Companies must adapt to varying production processes and equipment are dynamic in nature
(rapid progression).
Legal

6.  Cereal companies are constrained by food & packaging laws of different nations set by respective
governing bodies.
Environmental
 Companies have a certain moral obligation/responsibility towards nature on the whole (CSR).
 Kellogg’s is committed in an overall sustainability strategy that includes conserving natural
resources and sourcing responsibly.
 Awareness about climate change and global warming.
SWOT Analysis
Strengths:
 Kellogg’s has a worldwide presence with manufacturing in 21 countries and marketing in over
180 countries.
 Kellogg’s also owns the Bear Naked, Natural Touch, Cheez-It, Murray, Austin cookies and
crackers, Famous Amos, Garden burger.
 “Fighting hunger” initiative with Walmart.
 It is the world’s largest cereal maker in terms of sales, which spends more than $1 billion annually
on brand advertising and marketing and is an official sponsor of the U.S. Olympic and Paralympic
Teams.
 Master brand and many other TV campaigns are some of its major marketing initiatives.
 Unique identity with Kellogg’s “Heart healthy selection” labels.
 The Kellogg Company was the first to introduce prizes in boxes of cereal.
Weaknesses:
 Kellogg’s has been plagued by several controversies over the years.
o Product recall in 2010 (Consumers reported the cereal smelled or tasted waxy or like metal
or soap.) and 2012 (voluntary recall of some of its "Frosted Mini-Wheats Bite Size Original"
and "Mini-Wheats Unfrosted Bite Size" products due to the possibility of flexible metal
mesh fragments in the food) affected the brand image of Kellogg’s.
o Controversies because of mismatch between the products and marketing messages.
o On June 3, 2010, Kellogg's was found to be making unsubstantiated and misleading claims
in advertising their cereal products by the Federal Trade Commission (FTC).
 Slow innovation in product content & quality.
 Lack of understanding of Indian (regional) consumer behavior and food habits.
Opportunities:
 Development of distribution channels in other countries with help of other companies.
 Tie-up with restaurants, schools, hotels or local government organizations can boost business.
 Further penetration in the current market & targeting other developing markets.
 With changing lifestyle, people are looking to save time with some quick & easy meals. This
could serve as the decisive factor for additional growth, especially in the urban market.

7. Threats:
 Increasing competition – the “cereals” market is overcrowded with local, national
& international brands
 Government regulations
 Limited shelf life
Competitors:
1. Nestle Ltd.
2. Cadbury
3. General Mills
4. Quaker Oats
5. Patanjali
THEORY: Technological Adoption Cycle
After the innovation and initial development,
the brand has to cross a ‘chasm’ from the early
market (launch and growth stages) to the
mainstream market by adopting the
technological variations. It includes choosing a
target market, understanding the whole product
concept, positioning the product, building a
marketing strategy, choosing the most
appropriate distribution channel and pricing.
The five main segments are recognized as: innovators (enthusiasts), early adopters (visionaries), early
majority (pragmatists), late majority (conservatives) and laggards (skeptics). The most difficult step is
making the transition between early adopters and early majority.

8. Technological innovation and adaption to the changing market environment are fundamental to extension
of the product life cycle (PLC).
ALTERNATIVE APPROACH
In its extension strategy planning of Nutri-Grain, Kellogg chose to completely opt out of product
development.
Some of the alternative solutions that could have been undertaken by Kellogg are:
 Diversification into the ‘protein/energy bars’ segment – specifically targeted at a customer base
which prioritizes “fitness” or require a post-workout snack.
Pros: Lack of competition from big brand companies in this segment (untapped market)
Cons: High initial cost (marketing, setup & quality control), consumers may be dissuaded by the
higher price point compared to the original product.
 Development of a Nutri-Grain (malted) hot/cold drink mix.
Pros: Proven flavours, brand novelty of a new product, potential for future variation (in terms of
additional flavours and formats)
Cons: Significant initial costs (R&D, marketing, setup), predominance of existing brands
(saturated market)
 A range of products targeted at different demographics or which include region-specific flavours.
Pros: Regional appeal, discovering unexplored markets
Cons: Significant initial costs (R&D, marketing, setup), uncertain/low shelf life, competition
from local or prevalent brands
RECOMMENDED COURSE OF ACTION
A combination of product and market-oriented approach is recommended. Opting out of product
development (as is the case with Kellogg’s Nutri-Grain) can limit brand potential and hamper subsequent
wealth maximization of the company in the long run.
Diversification is necessary to keep the competition at bay and retain market position.
THE REBIRTH OF KELLOGG’s SPECIAL K
On October 6, 1951, Kellogg Company's legendary founder, W.K. Kellogg, died at the age of 91.
Throughout the 1950s the company introduced some of today's most beloved cereals including: Kellogg's
Corn Pops, Kellogg's Frosted Flakes, Kellogg's Honey Smacks, Kellogg's Cocoa Krispies and Kellogg's
Special K, which was the first high-protein breakfast cereal ever offered to consumers. A growing
interest in nutrition led to the expansion of the company's already broad consumer nutrition information
programs.
1) Launch: Special K, one such brand of breakfast cereal, was introduced to the United States in 1955. It
is made primarily from grains like lightly toasted rice, wheat and barley. Special K used to be marketed
primarily as a low-fat cereal that can be eaten to help one lose weight.
Although Special K is a brand which is over 62 years old, it was not usually associated with innovation
up until the 1990s. The brand idea for Special K has been connected with weight loss since the mid-80s.
The advertisements were focused on 110 calories–which is just a feature, not a benefit for the consumer.
So, Special K as a brand was perceived as indifferent or bland.

9. 2) Growth: Around the year 2000, Special K made a dramatic turn in the market. With all the diet-crazed
consumers looking for new solutions, Special K had a stroke of brilliance when someone figured out that
“if you ate Special K twice a day for just two weeks, you could lose up to 6 pounds in 2 weeks”. While all
the other diet options felt daunting, this felt pretty easy to do.
While Special K had spent decades dancing around the weight loss idea, now they had a Brand Promise
that was benefit focused and empowering: “With Special K, just twice a day for 2 weeks, you can lose 6
pounds or better yet, drop a jean size.” They stopped talking about the product and starting talking in the
voice of the consumer.
The brilliant strategy is around the usage occasion of the second meal each day. Cereal had been a
category that grew +3% for years, steady only with population growth and some demographics around
boomers and echo generations.
Special K enabled Kellogg’s to be alert to current consumer trends such as social trends and changes in
technology. The research enabled Kellogg’s to identify consumer perceptions of the brand and what
developments consumers would favour. Armed with this consumer and market focused knowledge,
Kellogg’s was best placed to inject growth into the product life cycle.
3) Maturity: Increasing competition by both national and international players in the segment as well as
ever-changing food & safety regulations by the government served a constant threat of market saturation
to Kellogg’s Special K.
DIVERSIFICATION
It started with the launch of Berry Special K that thrust the brand into a good tasting cereal. Building on
the success of Special K and Special K Red Berries, Kellogg’s carried out market research to identify
further ways of extending the range to give consumers greater satisfaction, to increase consumption and
to broaden the appeal of the range. It has since added bars, shakes and water.
In the US, Special K currently comes in fourteen different varieties of Special K Cereal: Original,
Chocolatey Delight, Chocolatey Strawberry, Cinnamon Pecan, Red Berries, Vanilla Almond, Fruit &
Yogurt, Brown Sugar Gluten Free, Oats & Honey, Touch of Honey Granola, Chocolate Almond,
Cranberry Granola, Protein, Cinnamon Brown Sugar Crunch Protein, and Apple Cinnamon Crunch
(Seasonal).

10. In the UK & Ireland, Special K comes in ten different varieties of Special K Cereal: Original, Red
Berries, Hazelnut & Almond, Milk Chocolate, Strawberry and Chocolate, Fruit & Nut, Creamy Berry
Crunch, Peach & Apricot, and Yoghurty.
Most recently, Kellogg’s Special K has branched out into meal replacements and low-fat alternatives to
snacks. The meal replacements are available in two different forms, protein meal bars and protein shakes.
There are several varieties of Special K snacks, including Special K Protein Granola Bars, Special K
Breakfast Shakes, Special K Cereal Bars, Special K CrackerChips, Special K Popcorn, and Special K
Crackers.
The launch of Special K variants helped to build the market for the original Special K product in the UK.
Consumers became a lot more interested and aware of the product and its benefits as a healthy cereal. The
range of variants therefore acted as complements to Special K rather than as substitutes.
The diversified line up beyond cereal helped off-set any sales softness on cereal.
4) Decline: Kellogg’s has been hurt by shifting morning-eating trends that include growing competition
from other categories including yogurt. Kellogg's U.S. morning-foods division posted a net sales decline
of 4.9% in the second quarter of 2014; the company's overall sales fell less than 1% to $3.7 billion.
Special K, in particular, struggled to maintain its market share. Dollar sales of the main variety fell by
22.3% in the 52 weeks ending June 15, 2014 to $175 million. Special K with red berries dropped by
13.2% to $134 million. The steep declines compare to a 4% sales drop in the overall $9 billion ready-to-
eat cereal category.
To overcome this shift in trend, Kellogg’s moved the brand away from weight-loss messaging to embrace
nutrition. The main reason for this change in marketing strategy was due to consumers changing their
views on weight management from 'reduce calories' to 'nutritious foods'.