Kellogg's: Analysis of Marketing Environment for Business Strategy

This report provides a comprehensive analysis of Kellogg's marketing environment. It begins with an introduction highlighting the importance of environmental analysis for business survival, focusing on both macro and micro environmental factors impacting Kellogg's. The report then delves into a detailed examination of the macro environment, including political, economic, social, technological, environmental, and legal factors influencing Kellogg's operations in the UK market. It also explores the micro environment, including opportunities like increasing health consciousness and local focus on emerging markets, and threats such as private label brands. The report concludes by examining Kellogg's strategies and how they adapt to the changing market dynamics and competitive landscape. The analysis provides insights into the company's strengths, weaknesses, and overall market position.

MARKETING
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Macro environment analysis.................................................................................................1
ENVIRONMENTAL.......................................................................................................................3
TASK 2............................................................................................................................................3
2.1 Micro environment analysis..................................................................................................3
TASK 3............................................................................................................................................6
3.1 Internal organisation environment........................................................................................6
TASK 4............................................................................................................................................8
4.1 Strategies of Kellogg's ..........................................................................................................8
..........................................................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

Illustration Index
Illustration 1: Kellogg's products.....................................................................................................9

INTRODUCTION
The survival of any business organisation is quite difficult where it is not easy to
maintain the sound position of companies. The competition level remains high in market among
various industries due to which it becomes very complex for the organisations to exists for a long
term purpose. Therefore, it is crucial for each and every firm to analyse there internal and
external environment on regular basis which can provide them a vast knowledge about the
current trends. There are a number of internal and external factors that can impact the activities
of an organisation as well as its position in market (Blythe and Megicks, 2010). The present
report is based on this aspect where Kellogg' s company is taken into consideration for study
purpose. The said organisation is a famous brand in the industry of cereals and similar
convenience food. The report will attempt to make a study on different analysis based on macro
and micro environment. This analysis will help in knowing various strong and weak points of
the firm. The final section of report will entail the strategy of cited venture for further
developments in the current market.
TASK 1
1.1 Macro environment analysis
POLITICAL
In 2000, brand pull off the main advertisement from its site due to the obesity makes the
market values so down. Market shares had got very low so to overcome this problem Kellog's
made out a strategy for reconstructing the better environment. Basically that time UK have
channelised the cereal products in the food zone of the present market with the rate of 17% of all.
The government is also concerned because of increasing cases of obesity due to which it assisted
the companies like Kellogg's and encouraged their development. But that time a criticism was
boosting in the industry (Ho, 2014). It is declared by a news site for a complete boycott of the
cereal products and after this the organisation had decided to refuse to advertise its site on the
board. This is how the mentioned company have justified their position in market.
ECONOMICAL
The food industry has no importance if there is any declination in the economic graph
because the growth of the market is dependent on the quality and the less contradiction between
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the economical sites and the brand. Its like a situation as well as recession in which people do not
have the money to buy the food products and then it goes down to set a lapse of the economic
status. The deft is pointed as 6% of current GDP and it will increase the general inflation of 1-
5%.When the rate of GBP is getting down the money in hands would be less then market
expecting (Constantinescu and Cojoaca, 2011). The other fast food and regular food companies
have made very tough competition so it is very must to give a competitive rate to the customers
that they can afford it.
SOCIAL
The population of UK is around 64.1 million so there are people in diverse ranges. Some
are from working sides while some are students, senior citizens all over a large number of
civilians are there. The obesity level was increased in the town so requirement of light food was
necessary. The market of cereal have made light food junctions to get over the health issue like
obesity. The certain people who were travelling on daily basis so they like to eat healthy food.
Healthy food is getting in people's mind very rapidly because the soundness of health is so
important to do anything. Presently the supermarkets have made a kind of offer to serve sweet
cornflakes as children like it and they want it (Taylor, 2013). Because it is so essential to justify
what people exactly need. Some of them used to have butter, bread, tea, coffee in the breakfast,
even they also started the products under the marked brand.
TECHNOLOGICAL
Regarding the quality of the infrastructure, the UK is ranked down on list, due to the poor
functionality and challenging environment of market. But the innovations that the company have
executed in their past work are very commendable. To change the package, innovative
advertisement and further tiny packs of bar were invented. The communication strategy should
be established by the company that people will easily get the idea what the thing is and how it
can be healthier for them. Also there must be a product which might affect the people who are on
dieting. By increasing the cost of R&D, host can make a diverse nature to the other dominating
brands (Marketing, 2011).
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ENVIRONMENTAL
The cereal products in breakfast has a clash with the environment. It is responsibility of
the government of UK to take care of it and the environmental sustainability has to be
maintained. Before, where people did not care about the environment, they have not felt any kind
of regret what they have done. But as of now the generation changed, technology altered, people
use to maintain the atmospheric things. They have started recycling by keeping a separate waste
management system. Milk consumed with the cereals have made a big impact on the
environment more then 3-4 times. This kind of change in attitude has made the popularity of
environmental concoction at a higher level (Houben, Lenie and Vanhoof, 2010).
LEGAL
For a leading packing food brand there are some endorsements that are protected under
the laws of trademark and copyright as it is on national level or international level. The name of
the brand, the trademarks, the way to characters which are shown on the package of the brand
etc. are important features that must be included in it.. It has the copyright @2006 in the UK
itself and has all the patents of its self made entities. Company is independent to import or export
its material across all the countries with the permission of their custom department. If there is
any error in quality of the product the officers, affiliates, employees are mainly responsible for
that. All rights are reserved so that company can change anything in the production without
notice, at any time (Simkin and Dibb, 2012). There is no space for any type of violence regarding
business to business or consumer to consumer.
TASK 2
2.1 Micro environment analysis
The Kellogg's is a popular brand in the market of cereals industry that provides a number
of varieties to be eaten in breakfast. The products are quite popular as it is good from health
point of view. Along with UK, it has its operations all across the globe and have been a
successful brand in various parts of world. UK is the major place from where this organisation is
achieving large part of its profits. Mentioned company use to make various strategies so that it
can keep a control over its internal and external environments so that it can be affected minimum
from any of the negative factors (Nikolaou and Evangelinos, 2010).
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The Kellogg's organisation has various opportunities on the basis of which it can make a
good progress in the market. It is necessary that firm identifies these opportunities in well
advanced time so that it can have the access of better profits and many similar gains. Apart from
these opportunities, it is evident that there are may threats in the external environment which can
act as a barrier for the organisation. Hence, this will be a crucial part of company's strategy to
determine these threats and make right course of action to meet them (Blythe and Megicks,
2010). In current part, the opportunities and threats for mentioned enterprise is studied which
will help in getting the gist of its external environment.
Opportunities
Increasing health consciousness
It is quite evident that in many parts of country, the issues related to health has increased
a lot. Among these issues the most common diseases from which the 50 to 60% of population in
all countries are suffering includes Obesity, Diabetes and Blood pressure. Because of a
continuous increase in this type of issues, the consciousness among the people has been raised
towards their health. Further, government and different private agencies are also making efforts
to create awareness among people for their unhealthy eating habits. As a result, there is a boom
in the market of products and services that can aid in relieving people from various issues related
to obesity or other diseases (Nwankwo, 2010). Thus, there is a high demand of functional foods
and other similar subsidiary products which are made up of whole grains. These types of food
are more healthier as they provide two way benefits. Individuals in taking such food have will
have healthier diet which is able to satisfy their hunger and it will not have any impact on their
weight increase. Thus, the trend has become quite popular among the people who are much
health conscious in their diet.
In this scenario, Kellogg's is considered as a boon which provides ready to eat food that
can meet the major demand of customers. This provides the food containing cereals and grains
which can help in rendering wellness and different health benefits to the customers (Böhm,
2009). The consumers who are in search of a food which can help in managing their weights can
eat its well known product called Special K which is a perfect match for this purpose. This is a
low fat containing food which help in providing necessary proteins and nutritions for body
without affecting weight of an individual. The cited company have launched various products as
per the needs of customers demanding the nutritious food with different health benefits. Apart
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from this, the organisation is also making efforts for meeting the demands of various new and
potential consumers by providing them a healthy food with better taste. With this purpose, they
have launched its wide range of products that contains 0 grams of fats per serving. Thus, the
cited firm has the opportunity to identify the needs and demands of its customers (Kelloggs
SWOT Analysis, USP & Competitors. 2017). The current trend of being fit and healthy among
people provides opportunity to give a response with better products so that it can maintain its
strong position in the market.
Local focus on emerging markets
The mentioned enterprise is trying to reach out its customers with the help of a
customised focus on the basis of differentiated marketplace. Here, the major focus is placed on
grabbing the opportunities available in market for growth through innovations. With various
innovations and differentiated products that are launched in market on timely basis makes the
brand more recognisable and give stronger position. The cited enterprise makes a study on local
habits of breakfast and other trends of eating habits which acts as a base for them in coming up
with a newer and better product in market (Lacar, 2009). The mentioned enterprise has the
opportunities of growth through various changes in market like increase in income,
modernisation, consciousness for health etc. to develop its products at a larger level.
Threats
Private label brands
In recent years, the trend of private label companies have increased to high level which
provide prodcust at a lower price. The concept of private label brands refer to those products
which are provided by any organisation under the brand name of other company. Thus, these
products are made with similar type of concepts adopted by the competitive firms with almost
same quality and lower prices. Because of such products and services in market, the consumers
have shifted their choices to such brands specially in food and drinks market (Ho, 2014). These
types of firms make a substantial amount of investments on making innovations, promotional
efforts, market study and in managing the brand. Therefore such type of companies are a big
threat for major brands like Kellogg' s. The entry of such firms like Wegmans, H-E-B etc. have
made the differences in quality of products narrow and in terms of prices, wider. Thus, there is
large possibilities for Kellogg's to lose its market share and customers. Therefore, it is crucial for
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the mentioned enterprise to make a continuous innovation in its products and make more efforts
to retain customers by making them loyal towards the brand (Bibeau and et.al., 2012).
Fierce rivalry
The cited organisation faces a large competition in both international as well as in
domestic market. The major rival brands for this company include firms like PepsiCo, Mondelez
etc. All these competitors are making the existence of each other very tough as everyone have
their own brand recognition in the market due to which they have attained a good market share.
They have better policies and strategies due to which they have attained a better bargaining
position in market as compared to the Kellogg's. Thus, the threats have become larger for
mentioned entity which necessitates to take some concrete steps in making its position more
stable (Sakkthivel, 2011).
TASK 3
3.1 Internal organisation environment
The internal environment of the organisation consists of various favourable and
unfavourable factors which affects the company in different ways. As per the latest trends in
market, the managers of Kellogg's company use to make various strategies. These strategies are
formulated on the basis of various factors in which a proper study is done to collect assorted
information. These information consists of different positive and negative points of enterprise
which are matched with the market study of trends. On this basis, strategies are formulated
which can help in utilising the positive factors and attempts are made to transform the
weaknesses into strengths (Simkin and Dibb, 2012). In the below section, various strengths and
weaknesses of cited organisation has been discussed which are as follows:
Powerful brand portfolio
The mentioned organisation provides a large number of products in different ranges
which has made the Kellogg's world's largest cereal company. It includes a wide portfolio of
different products like Special K, Pop-Tarts, Nutri-grain, Morning star Farms etc. These brands
have attained the position in top 100 global brands as well. Apart from this, several other
achievements in the form of its position in the UK's list of top 20 consumer superbrands along
with most trusted brand in Canada. This has made a differentiated position of organisation in
market. Further, the mentioned brand try to focus on various advertisement and promotional
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efforts so that it can ensure a strong image in market. The total of 8% amount gained from sales
is invested in the advertising works which helps in making the brand name of organisation quite
recognisable among customers (Constantinescu and Cojoaca, 2011). Thus, the media and various
promotional efforts adopted by firm are moving in right direction that forms a good strength of
organisation.
Good strength in market position
The position of mentioned enterprise is strong in global market and it holds a strong
position in category of snacks and cereals industry. As per the analysis of market it has been
discovered that in Japan and Korea the cited brand holds the top position with 29% and 11% of
market share respectively. In context of UK, the place of organisation is at second position where
it holds the 7% of total market share. The strong place of company in market is due to its
powerful efforts that are made for marketing of products which in turn help in generating good
amount of profits (Taylor, 2013). Besides this, it uses a mascot in advertisement of each products
which has been proved as a strong tool for campaigning. The brand has a good presence in global
market that ensures its successful expansion and great market shares that can be developed with
continuous efforts of company. Apart from this, it has a very good control over the cost control
strategies as well because of which the organisation has achieved the minimum cost of
operations. Thus, it has made great profits at lower cost of operation which also provides a good
way for establishing and retaining the better position in market (Marketing, 2011).
Weaknesses
Recall of products
In recent years, the Kellogg's has passed from the stage of product recall which has
proved to be of a serious issue for the company. The product recall refers to the request made by
any party for returning product on the basis of its quality and safety issues. Thus, there are some
cases in which the product may be delivered which is of inferior quality that may endanger the
health and safety issue of a customer can be requested to be returned. These issues are very
serious as it can also result into a serious legal action against the seller of a product. In recent
past, the cited firm was in news for this issue where its 36000 boxes containing Special K red
berries cereals were claimed to have dangerous glass fragments in the form of ingredients. The
cases related to product recall may be a very serious issue as it may lead to a concern regarding
the brand name of product which may deteriorate (Dillon, Madden and Firtle, 2014). The
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confidence of customers may be lost in such cases when the cases of product recall happens.
Apart from this, it also resulted into high costs for the mentioned entity. The production cost
which was incurred in such case amounted to be in high ratio. In addition to this, the cost
incurred in recovering was also an extra burden on company. This type of cases happens if there
is less provision of quality control. Therefore, it is necessary for Kellogg's to maintain a better
quality control approach that can help in presenting good image of the brand. The case happened
in 2013 with Kellogg's raised a question mark on its quality which still sometimes prove to a
weakness for the firm (Kotler, Roberto and Hugo, 2011).
Concentrated number of customers on geographical basis
The Kellogg's company has its relation with Wal-Mart which is a retail customer of
company. It provides the opportunities of great revenues for organisation as it keeps the large
number of said brand's products. But, the mentioned enterprise is largely dependent on it for
making the profits which leads to the concentration of stated brand at one place. Here, it is
essential for the mentioned brand to have a better approach regarding expansion of its focus.
Depending on a single market can lead to the concentration of profits specially in the case of
worsening of economic conditions. Apart from this, the aforesaid venture does not adopt any
particular competitive pricing strategy which can help it in capturing more market share and
draw attention of large number of customers (Dawson, 2014). It is necessary for the organisation
to maintain its productivity and sales through better pricing techniques which can place it as a
better option than its competitors. This will also help in overcoming the barriers of company and
attaining a better position in market by recovering its weaknesses.
TASK 4
4.1 Strategies of Kellogg's
The development and growth of Kellogg's is apparent before entire industry where the
company has made its progress as a well known brand because of it strong corporate objectives
and efficient marketing efforts.
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Illustration 1: Kellogg's products
(Source: Kotler, Roberto and Hugo, 2011)
It is evident that the mentioned brand has a good growth in market with the help of its
different and wide range of products. The majority of its sales accounts from the UK market
where it has Walmart as its retail customer. The founder of company is W.K. Kellogg who
always tried to make the strategies in a pre planned and controlled way (Houben, Lenie and
Vanhoof, 2010). The major reasons behind the success of its products is its goal setting approach
and objectives which are made on the basis of SMART criteria. The major objectives of
mentioned brand is to promote the sales of its goods and to increase the sound relationship with
its customers. The major vision statement of the company is to be the company in food market
which is based on choice of its customers. While the mission of organisation is to become a
leading company at a global level which can attain the long term profits and render its services
by providing nutritious food.
The above stated statements of Kellogg's act as a guiding principle in attaining it
according to which the managers of firm set out their strategies (Nwankwo, 2010). Each and
every activity of organisation is interdependent where it is necessary that to make a systematic
plan for attaining various objectives. In this purpose, the major strategy of organisation is
focussed on its marketing efforts that gives exposure to the company in diversifying its reach.
The past strategy of company was based on different implications which were:
 Encouraging the innovations in products so that it can lead the market in cereals industry.
For this, the firm use to make a deep research of market so that it can collect wide
information on the needs of customers. These information were used for making
strategies so that an innovative concept can be developed.
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 The stated brand adopted the cost leadership strategy according to which it made various
policies that can help in reducing its cost of operations. This reduced cost of production
helped it in providing the customers its products on comparatively lower price (Lacar,
2009). For this purpose, the company made an attempt to make adjustments in its cost
structures.
With the advancement in time, cited entity understood the importance of making changes
in the strategy so that it can meet the fluctuating conditions of environment. For this purpose,
mentioned enterprise adopted various practices. On this basis, presently the organisation is
adopting strategies which are as below:
 Making improvements in labelling: The packages of Kellogg's contain a guideline which
states the amount of nutrition that must be taken on daily basis by the customers for
getting desired results. As per this guideline, the product also provides information about
the Body mass index (BMI) which must be maintained by people (Sakkthivel, 2011).
Thus on this basis, the customers are provided the directions for using the product in right
quantity and frequency.
 Sponsorship of swimming programmes: To promote the awareness among general public
for their health, the said brand sponsors the biggest swimming in UK under which it has
made a scheme of giving awards in the name of Armature Swimming Association. This
has presented the company as a brand which is taking initiatives for the cause of
promoting wellness. Thus, it makes a good position of brand in market.
Apart from above strategies, the quoted brand has made the policies of providing the
differentiated products along with the management of its brand. All the strategies adopted by
mentioned firm is largely based on consumer oriented approaches (Simkin and Dibb, 2012). In
addition to it, there care several plans of organisation according to which it is intending to make
more growth. It is conducting study of market that can help it in making the brand superior at a
global level. On this basis some of the major focussed areas for which the company is
formulating future strategies are:
 Revision of pricing strategy: As per the earlier discussion, it is manifested that private
labelling is a major concern for mentioned enterprise as it is posing a threat. These
organisations are providing the products at a lower price because of which the profit
share of company has been decreased. Therefore, the firm is making strategies to make a
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revision on the prices of products (Constantinescu and Cojoaca, 2011). Thus, by adopting
different cost saving measures, it can have the advantage of attaining large sum of profits.
 Diversification: It is a high time for enterprise to realise that there is an acute fall in
market of cereals industry as a result of emerging substitute products in the industry.
Therefore, the said venture is planning to make diversification in its products. This will
aid in entering various new markets for the company so that it can offer several new
products to customers. The organisation already holds a good position in market due to
which it will be easier to establish a new product among customers (Dawson, 2014).
CONCLUSION
The marketing environment is very dynamic which offers various challenges and
opportunities for the companies operating in the market. The present report has focussed on the
marketing environment which consists of macro and micro factors. The report has discussed
these factors in consideration of Kellogg's brand operating in various parts of country. The report
articulates that mentioned organisation operates in dynamic environment which consists of
different micro and macro factors. Apart from this, the said company has planned to make a
diversification in products range in future to attain more market share. Apart from this, the
opportunities are wide for the company which can help in attaining a good position in market.
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REFERENCES
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Dawson, J.A., 2014. The Marketing Environment (RLE Marketing) (Vol. 1). Routledge.
Dillon, W.R., Madden, T.J. and Firtle, N.H., 2014. Marketing research in a marketing
environment (Vol. 3). Burr Ridge, IL: Irwin.
Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European
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Houben, G., Lenie, K. and Vanhoof, K., 2010. A knowledge-based SWOT-analysis system as an
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Kotler, p. , Roberto, E. and Hugo, H., 2011. Social marketing. Econ-Verlag.
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Nwankwo, S., 2010. Assessing the marketing environment in sub-Saharan Africa: opportunities
and threats analysis. Marketing intelligence & planning, 18(3). pp. 144-153.
Sakkthivel, A.M., 2011. Modelling the impact of internal and external variables on consumer
durables in a matured marketing environment. International Journal of Electronic Finance,
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Simkin, L. and Dibb, S., 2012. Leadership teams rediscover market analysis in seeking
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Online
Kelloggs SWOT Analysis, USP & Competitors. 2017. [Online]. Available through:
<http://www.mbaskool.com/brandguide/food-and-beverages/3217-kelloggs.html>.
[Accessed on 23rd February 2017].
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