Sales Development and Merchandising Analysis: Kellogg Company Report

This report provides a detailed analysis of Kellogg Company's sales development and merchandising activities. It begins by examining the key components of Kellogg's products, classifying them into core, actual, and augmented products, and then explores how the product mix, including cereals, bars, beverages, and treats, contributes to sales and profit. The report then assesses the role of market segmentation in maximizing sales, highlighting Kellogg's use of psychographic segmentation. It delves into the factors influencing buyer behavior, including cultural and social factors, and evaluates advertising media and external merchandising techniques for sales development. Furthermore, the report assesses the influence of design and layout on customer spending, the effectiveness of internal merchandising materials, and different promotional activities. Finally, it evaluates personal selling techniques, the influence of operational design on sales revenue, and key principles for a sales training program, offering a comprehensive overview of sales and merchandising strategies within the context of Kellogg's operations.

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Sales Development & Merchandising
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Contents
Introduction......................................................................................................................................3
1.1 A discussion about the key components of the product.......................................................3
1.2 How the product mix contributes to sales and profit............................................................4
1.3 An assessment on how market segmentation contributes to maximize sales............................6
2.1 Discussion about the factors affecting buyer behavior..............................................................7
2.2 An assessment of the advertising media that could be used for sales development situations..8
2.3 An evaluation of the use of external merchandising to maximize customer volumes..............9
3.1 An assessment of the influence of design and layout on customer spending..........................10
3.2 A review and evaluation of the effectiveness of internal merchandising materials................11
3.3 An evaluation of different promotional activities according to different scenarios................12
4.1 An evaluation of personal selling techniques..........................................................................14
4.2 A discussion about the influence of operational design on sales revenue...............................15
4.3 Key principles that should be included in a sales training program me..................................16
Conclusion.....................................................................................................................................17
References......................................................................................................................................18
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Introduction
Sales development and merchandising is the activity through which a company builds up
strategies for effective selling. A company’s first and foremost duty is to sell their product to the
ultimate customers. And for this effective selling process and merchandising knowledge is very
important (Bradley, 2014).
The current report has been done on sales and merchandising activities of Kellogg Company
which is an American multinational firm that is headquarter in United States. The company
produces cereal and convenience foods, snacks, cereal bars, flakes as well as vegetarian foods
(Our Brands, 2016). The company has made its purpose as providing nourishment to families so
that they can flourish and thrive.
From this report different aspects of selling techniques and merchandising activities are shown.
First of all key ideas of product and product mix components are highlighted. Then external sales
development techniques are shown through buying behavior and related issues. In the later part
the internal process of sales promotion and development is highlighted which is an important
task of selling. Finally the role of employees in maximizing sales is shown with different aspects.
From the overall analysis a clear understanding of sales development can be archived.
1.1 A discussion about the key components of the product
Product is the marketing offering whether it is tangible or intangible that consumer wants to
purchase for their consumption. For this one might believe that product decisions are basically
made up exclusively on designing and building the consumable elements of goods, services and
ideas (Brennan, 2012). For example when one thinks about a floor cleaner product he might
think that it is all about how effectively it cleanses the floor. But it reality product elements are
more than just one feature rather t is the combination of total products which is more what is
consumed. This total product can be classified into three categories. They are-
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Figure- product key elements
Source- Brennan, (2013)
Core product- when it comes about the benefit of a product sometimes it is not only about
consumption. There are some other benefits that are also related with this product. For instance
customers may need to be perceived highly by other members of their group or need a product
that is easy to use or have risk free (Burk, 2013). In terms of product elements not only the actual
outcome matters but other subsidiary benefits also related to it. Core benefit of a product is the
benefit that will actually satisfy the need of the customers. In terms of Kellogg’s cereal brand the
core benefit is having a healthy meal at breakfast. Consumers buy this product to satisfy their
breakfast need (Bruhn, 2011). Consequently, at the very heart of all decisions about a product is
based on this core benefit of a product.
Actual product- actual product means the components that make up the actual product the
customer purchase. For example, when a customer purchase something from the grocery shop
and return home by purchasing an item out of her shopping bag the actual item is the item she
holds in her hand (Cravens, 2012). Actual product benefit is the benefit a consumer perceives
rather than just consuming the product. In terms of Kellogg’s cereal brand the actual benefit
could its health issue, easy to make, ready mix etc. So it is ultimately saves time of the
consumers (Cravens, 2013).
Augmented product- marketers often surround their actual product that provides additional
value to the customer’s purchase. It is not the key reason consumers buy product but it is
additional benefits that customers enjoy after purchasing the product (Burnaz, 2014). For
example after purchasing Kellogg’s cereal people enjoy the different flavor of cereal, its
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complementary products, customer service issue etc. These are all related with the benefit of
augmented product.
1.2 How the product mix contributes to sales and profit
Product mix refers to the total number of product lines that is offered by a company to its target
customers (Clow, 2011). For example a company may sell different types of product under one
brand name. The Unilever Company has thousands of product line with different brand name.
The total offering offered by this company is called product mix. Sometimes product lines are
similar like dish washing and liquid bar soap which is used for cleaning and for similar purpose.
Other times, product line can be vastly different from one another. For example a company
offers chocolate as well as ketchup. There are basically four dimension of product mix. They are-
 Width
 Depth
 Length and
 Consistency (Cohen, William, 2013)
Product mix of Kellogg’s
 Cereals – the cereals offered by Kellogg’s are inclusive of special K, rice krispies, fruit
loops, corn flakes as well as apple jacks.
 Bars - these include Chewy Nuts, Chewy Snack, Protein Granola, Protein Meal as well as
cereal bars. These further include different variants.
 Beverages – this includes Kellogg’s to go and special K. other than that the company
further offers breakfast and protein shakes.
 Treats – Kellogg’s has further offered varied treat items that include brownies, Popped
Delights, snacks, Pastry Crisps among others (Treats, 2016)
Contributions to sales and profit of elements in the product mix
The provided product mix leads to increased sales and profit of the company. For example, other
than just cereals, Kellogg Company has 22 different product lines. The more the product line the
more customers know about the company’s product offerings. It ultimately increases the sales of
a brand or company. In term of Kellogg they have cornflakes, crunchy nut, corn pops, rice food,
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wheat food, chips etc. through this way a company gains importance of the customers and can
get more recall and recognition. It maximizes profit. In terms of Kellogg’s cereal brand, there are
several flavors under one product line (Jensen, 2011). So it can be said that this flavor will be
helpful for achieving market share and profit maximization. More flavors add more customer
attention.
1.3 An assessment on how market segmentation contributes to maximize sales
Benefits of segmentation
Market segmentation is one of the most important activities done by an organization for
developing its strategic marketing plan. In terms of market segmentation a company must
develop research for understanding the marketing environment (Keegan, 2012). Market
segmentation is the activity of dividing a large market into some small portions so that a
company can understand which segment it can serve in the beginning. Market segmentation
divides large market into some small parts according to the consumers demand and company’s
resource allocation.
To lessen the risk of choosing and deciding where, how and when brand will be marketed. Then
it should be developed how the product will be targeted. If company does not know whom they
should sell their product then no successful outcome can be brought. So understanding
segmentation means understanding market demand and customer selection that will increase
sells (Gilligan, 2010).
Segmentation will also increase the efficiency by directing effort towards the designed segment
in a manner consistent with those segments characteristics. Effective segmentation brings
effective target audience. And it helps to develop positioning strategy very quickly. As it is the
base of all strategic marketing efforts a wrong decision in the segmentation can make it a failure.
Right decision about segmentation brings up right audience and right communication strategy
(Lawer, 2012). As a result it will increase sales and market share (Kleinbeck, 2012).
Market segmentation used by Kellogg
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In terms of Kellogg’s different product line it has spate market segmentation plan. The
importance of market segmentation in Kellogg Company is intense as it is the base of all
marketing effort (Gilmore, 2013). Most market segmentation is done for attracting the right
customers. In essence the marketing segmentation is given below-
Kellogg has made use of psychographic segmentation that is based on behavior exhibited by
consumers. For example, people who are breakfast particular have been kept into Tasty start
segment. While the next segment that has focused on health of consumers have been placed in
shape management. There is another segment known as simply wholesome which includes
consumers that are delighted by goodness of Kellogg’s brand. In order to aid the masses that face
health issues have been kept in Inner health segment.
Contribution of market segmentation to sales maximization
It happens as it is only on account of market segmentation that the company is able to understand
the varied needs and wants of consumers. It can thus match the product offering with segment.
For example, in case of children segment, he company may start offering sugary snacks that are
tasty. In the same manner, by taking care of older masses it may provide easily chewable and
digestive items. While youth can be provided with protein rich snack items. These are likely to
increase the overall satisfaction of consumers and thus generate repeated sales for company. The
overall advantage will be increased sales and profitability.
2.1 Discussion about the factors affecting buyer behavior
There are several factors that affect the buyer behavior of a company. Buyer behavior actually
the perception and movement through which company understands how and what should they do
for marketing their company’s product (Lamb, 2011). Buyer behavior can be influenced by its
cultural, social, geographic and reference group. Here Kellogg Company’s influencing factors in
terms of buyer behavior is given below-
Cultural factors:
Cultural factors coming from different factors related to its culture and cultural environment
from which the customer belongs (Clow, 2012).
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Culture is important when it comes about understanding the customer behavior of a particular
region. It illustrates how consumer values a particular environmental situation and their own
rituals (Kotler, 2014). On the other hand, for a brand it is important to understand different facts
about a culture so that it can understand what cultural patterns affect consumer’s daily life and
how the company should develop its marketing strategy. In Western country inviting a friend or
colleague at home is normal but in Japan inviting someone to home is not normal. So in this
case, when a product is launched to international arena, people cultural patterns and behavior are
important factors to be considered.
Social status
Social status is another important factor to be considered in terms of buyer behavior towards a
particular product. People status changes their consumption pattern (Lewis, 2013). On the basis
of this, companies make decision about which market segment should be taken for marketing
their product. In terms of social status people income pattern may vary and it will have impact on
the buyer behavior. Lower income people may not have a good breakfast meal. So Kellogg’s
cereal brand may not target lower income people. Characters like extrovert or introverts etc. have
influence over social status. In terms of social factor, reference group like family and friends
buying pattern influence a lot (Lewis, 2013) .
Personal factors
Demographic arena is covered under this segment. People age and lifestyle are important factors
for considering the personal buying influence factors (McClell, 2013). In terms of personal factor
another important feature is purchasing power and revenue. Income level determines which
product a consumer will buy. It also denotes their social class. Some consumers may also look
for social value in terms of buying a product. Lifestyle and self concept are also important
factors for considering buying pattern.
Psychological factors
It is an important issue for changing buyer’s mind towards a particular product. For buying
motivation is an important factor. Motivation is the key that will drive customers to develop a
purchasing behavior (Kotler, 2015). On the other hand, perception determines the way
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consumers interpreting a particular product. For buying behavior this factor is also important.
Learning and beliefs are other important factors. These two interprets what actually consumers
have learned from their environment and what they belief. It will helpful to influence them
through understanding consumer’s learning behavior (Lamb, 2015).
2.2 An assessment of the advertising media that could be used for sales development
situations
Advertising media is the medium through which a company delivers its messages to the outside
world. It broadcast the message and people know about it. There are several types of media now
exist for promotional activity (McDonald, 2014).
List main advertising Media Choices and provide advantages and disadvantages
of few.
main advertising Media
Choices
advantages disadvantages
Television
 Kellogg Company has
separate budget for its
television advertisement
because they consider
advertisement as the most
influential factors. But
here company must
develop a particular
budget for the message
and advertisements
(Russell, 2014).
helpful for seeking attention of
consumers within a short
period of time.
enormously expensive
doesn't offer much audience
selectivity
Radio
 a company targets radio
advertisements especially
Radio advertisement helps to
improve sales because it is the
way of developing awareness
Radio advertisements
normally last only 15 or 30
seconds
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for food and beverage
items.
among consumers.
It is not expansive like TV
advertisements.
So within a minimum budget
company can reach a vast
target market. Thus it
increases profit (Robbins,
2012).
too much information is put in
one ad
Print
newspaper and magazines are
good way of publishing
advertisements. Fashion
brands can be published on
magazines.
When a company wants to
increase their recall and
recognition then print
publications will be a better
way.
It helps to maximize profit
within a short time
(McDonald, 2016).
Standing out from the crowd
is difficult
Direct mail
it is the way of sending mail to
target audiences without their
permission. It is also
considered as spam. Mainly
this advertisement is good for
initially reminding customers
about a company’s offerings.
It helps to increase awareness
in the beginning.
 good for initially
reminding customers about
a company’s offerings.
 It helps to increase
awareness in the
beginning.
High design cost
May Offend Potential
Customers
Low consumer response
Billboard
attractive billboard can help to
increase public awareness and
make them purchase the
product.
 It is cheaper than TV
advertisements and helpful
for attention seeking.
Creativity inhibited by space
limitations.
Ad may become weathered &
vandalized.
·
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Internet
in this era of internet, online
advertisement is the way of
developing recall and
recognition.
 Social networking
websites, online blogging
etc.
 These are the cheapest
ways of developing
internet advertisement and
reaching a wide range of
consumers (Kleinbeck,
2014).
Require higher skills by
marketers who are involved in
internet advertising,
Explain how to select the Right Advertising Media.
Advertising media selection basically depends on
 Audience to be targeted by company
 Budget present with firm
 the communication channels best for specific audience
 how long the communication intervention will continue
Recommend appropriate advertising media for sales development situations
Seeing the present scenario as well as advertising requirements of company the need on part of
Kellogg’s is it involve itself more in TV advertisements so as to reach mass audiences, this is as
Kellogg’s has been depending more on word of mouth publicity. The need of present time is to
make a mark in the minds of consumers once again.
2.3 An evaluation of the use of external merchandising to maximize customer volumes
Various aspects of External Merchandising
Merchandising is the arrangement of products in a physical or online store to maximize
sales. The main objective of merchandising is to close the sale after advertising campaigns brings
customers into the store. Good merchandising frees up time, makes the selling process simpler
and increases the buying experience of the customers (Sanchez, 2013). There are various
activities which of merchandising such as display technique as well as free samples, special
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offers, pricing etc. Company should plan its various activities as per their set objectives. With the
help of this this, they can close the sale after advertising campaign bring customers into store.
The role of external merchandising in maximizing customer volumes
It plays a most important role in enhancing customer value as it is the best way which
makes the whole selling process more simple and appropriate. It is the best and most effective
way to enhance the buying experience of customers and drives their sales growth as well. It
covers several aspects related to the store layout as well as changing theme etc. With the help of
having best type of layout shoppers can find out their products and accompanying toddlers
around when they are trying to do their shopping (Wood, 2015). It is important to have a well
decorated shop and atmosphere that will change the mind of the consumers. A good store layout
may help to bring back customers repeatedly. This factor clearly represents its role and
importance in enhancing their customer value.
Another most common role which is played by external merchandising is related to
development of first and last impression. With the help of this technique they are able to go
through the appropriate window displays in brick-and-mortar stores (Shamma, 2013). They grab
attention of more number of customers and enhance their satisfaction level. In this regards, it can
be clearly stated that external merchandising helps in enhancing maximizing customer values.
Recommendations for external merchandising improvement
Some of the best recommended areas for Kellogg’s is that they can go through the online
external merchandising as it helps them in delivering easy buying of daily necessities of
customers. Here, they can easily enhance their customer base by the way of keeping in touch
with them. Moreover, for external merchandising changing theme is also important. Sometime it
works as a rebranding of a product or brand. Through changing theme a company can develop
several things like creating a new image, developing changing mode etc. It helps them in
increasing their sales and maintaining the growth of company as well.
3.1 An assessment of the influence of design and layout on customer spending
Design and layout of a store is very important for developing a brand image. The positive
environment and layout of a store make customers visit the store repeatedly. Design and layout
of a store means decoration and arrangement of a store for customer convenience. Another
objective of design and layout is seeking out customer attention. As competition increases,
business people are trying to expand their positioning strategy through developing unique design
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