For more information
Call 1-800-351-0222
Call 1-800-351-0222
"APPLE JACKS."
Term Paper ID:17325
Essay Subject:
Marketing plan for Kellogg's breakfast cereal. Marketing theory, market & economic environments, competition, target market, strategies.... More...
13 Pages / 2925 Words
4 sources, 12 Citations,
APA Format
$52.00
More Papers on This Topic
Paper Abstract:
Marketing plan for Kellogg's breakfast cereal. Marketing theory, market & economic environments, competition, target market, strategies.
Paper Introduction:
EXECUTIVE SUMMARY
This research developed a marketing plan for the "Apple Jacks" breakfast cereal product produced by the Kellogg Company. "Apple Jacks" is an apple flavored cereal grain product, which is presugared. In fact, "Apple Jacks" has one of the highest concentrations of sugar of any breakfast cereal product marketed in the United States.
The differential advantages of the product are relative. First, the product has a fruit flavor apple. For the consumer desiring a fruit flavor without actual fruit, this advantage is real. Second, the product has a high sugar content coating. Presugared cereal products are no longer unique; however, the level of sugar in the coating of this product is higher than that for almost any cereal. This differential advantage can also be a
Text of the Paper:
The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper.
Thus, at the present time, it does not appearthat Kellogg need worry too much about severe restrictions being placed oncereal advertising directed at children, or about significant governmentalpressures to reduce the sugar content of some of its cereal products. As a proportion of the total population, this age group isalready declining in the late-198 s. 191-192). A market is clustered, when natural segmentsexist, and may be effectively targeted. There are three identifiable patterns inpreference segmentation. (1988). References DeLozier, M. The process of marketsegmentation is the subdividing of a market into distinct customer subsets,where any subset may conceivably be selected as a target market to bereached with a distinct marketing mix. Behavioristic characteristics. The company's market share exceeds 4 percent. Strategic planning is primarily concerned with the externalenvironment. Profit-maximization pricing, which refers to the extraction ofthe maximum profit over the shortest possible time period. Three other companies in the more than $6billion industry have market shares ranging from eight percent to 19percent. Marketingprocess analysis is concerned with the steps required to permit a marketingorganization to effectively interact with the marketplace. Inthis context, the company really has no other viable choice for thedistribution of its cereal products.Promotion Strategies The major decisions related to advertising in marketing are concernedwith money, message, media, motion, and measurement. It doesnot contain actual pieces of fruit in the product. MARKETING OBJECTIVES Kellogg's marketing objectives for "Apple Jacks" concern sales gainsand profit gains. 2. "Apple Jacks" is also apresweetened cereal product. The KelloggCompany. Renewed emphasis onthe promotion of the product, however, will require an increased investmentin marketing approximating $5 , dollars for the next product year. Harvard Business Review, LVIII(1), 115-121. Presugared cereal products are no longerunique; however, the level of sugar in the coating of this product ishigher than that for almost any cereal. Competitive positioning isrequired so that the marketing organization may develop "a general idea ofwhat kind of offer to make to the target market in relation to competitors'offers" (DeLozier & Woodside, 1988, p. Allof the company's products are marketed in both the United States and inmost western and third world foreign countries. First, theproduct has a fruit flavor - apple. 386-388): 1. These pressures are also directed toward the cerealmanufacturers; however, the greatest emphasis is placed on persuadinggovernment to act. Preference segments. The sales gain objective for the next product year willbe $1 million, while the profit gain objective will be one milliondollars. Levitt, T. The major factor present in the social environment, with respect toKellogg is the strong opposition of a significant proportion of parentsagainst high sugar content cereals. A last factor of significance in the development of product strategyis that of product positioning - what place will be sought for the productwithin the market (DeLozier & Woodside, 1988, pp. Internally, in a non-financial context, the most significant factorfor the company is the position of its management towards the major issuesfacing the company. Marketing segmentation may be accomplished on the bases of demographiccharacteristics or geographic dispersion, each of which is widely employed,or market segmentation may be based on one of the following differentiationcriteria: 1. Value Line Investment Service. It is, thus, necessary for the strategic planner to (1) knowand understand the components of the organization's external environment,and (2) understand how the external environment affects its strategicplanning process. At some point in the 199 s, theirabsolute numbers are projected to begin a decline. EXECUTIVE SUMMARY This research developed a marketing plan for the "Apple Jacks"breakfast cereal product produced by the Kellogg Company. Market segmentation is the first step in the target marketingprocess. "Apple Jacks" is inthe mature stage of its life cycle. Current-revenue pricing, which is a cash generating strategy forfirms requiring cash quickly and for which liquidity requirements are morepressing than are profitability goals. MARKETING STRATEGY Marketing strategy is considered within the context of the four Ps ofmarketing - product, price, place, and promotion. 245). These three patterns are as follows: a. Thus, in addition to the sugar used in theproduction of the cereal flake, the product is covered with a coatinglargely comprised of sugar. The essentialquestions involved are as follows: 1. A diffused market is one with evenly dispersedpreferences. Buyer purchase occasions. c. Loyalty status of buyers of a specific product or brand. How much money should be spent on advertising? (1987). Cereal sales account for approximately 75 percent of total companysales, and contribute approximately 8 percent of the company's totalprofits. What should the advertising message be? It isadvantageous to marketers to have as short channels of distribution as isfeasible. Significant decisions related to the physicaldistribution of products are concerned with: (1) the size of inventorieswhich will be maintained; (2) the locations of the inventories which aremaintained; and (3) the means by which products will be transported throughchannels of distribution. 29 ). Homogeneous. Each of these fourfactors is considered separately in the following sections.Product Strategies A product is defined as "anything offered for exchange to anotherperson including physical objects, services, places, places, organizations,and ideas" (DeLozier & Woodside, 1988, pp. 196-2 4).While not a part of the target marketing process, it is closely allied toit. Target-profitpricing, through which a specific rate of return on the organizationalinvestment in the product is sought over a specific time period. "Apple Jacks" aredifferentiated by the combination of fruit flavoring, and presweetening.Pricing Strategies Pricing strategy is the overall task of defining the price range andprice movement through the time period required to support theorganizational sales and profit objectives and to support productpositioning decisions (Kotler, 1987, p. The physical distribution of products is accomplished through channelsof distribution. There are many worrying factors in theeconomy, however, such as the high personal and corporate debt levels, thefederal budget deficit, and the country's international trade deficit. The greatest demand for ready-to-eat cereal comes from the under-25age group. Additionally, the companymaintains production facilities in North America, Britain, western Europe,South America, Africa, Australia, Japan, and the Caribbean. Kellogg will attemptto marry the opportunity of luring adults back to cereal consumption withthe problem of a declining target market to reverse the problem situation.The company will attack the resistance to sugar problem by presenting"Apple Jacks" and other presweetened cereals as alternative products forthose consumers desiring them. Thus, the industry isfaced with a shrinking market for its products, unless it developedproducts which appeal to the 25-5 age group, or unless it develops ways ofcausing its existing products to appeal to this age group.The Neutral Environment The entire strategic process within an organization, is a set ofhighly interrelated components. Depending upon the type ofproduct involved - physical, service, and so forth, not all of thesecharacteristics will be applicable in each instance. MARKETING TACTICS The major marketing tactics for the increased emphasis on "AppleJacks" will be in the advertising area. Anyone of these factors could precipitate a recession or alternatively, anyone of these factors could be aggravated by a recession. Marketing throughdifferentiation - of anything. A firm's external environment is composed of a complex and diversearray of factors. Consumers typicallyrecognize five distinctive product characteristics - quality level,features, styling, brand name, and packaging. 2. Continuing pressures are applied by members of social action groupsand concerned parents to persuade the federal government to restrict ready-to-eat cereal manufacturers in the conduct of advertising campaignsdirected at children. Itis anticipated that this investment in marketing will produce a salesincrease of $1 million, and an operating profit increase of one milliondollars in the next product year. For "Apple Jacks,"Kellogg will continue to attempt to attract the traditional target ofschool age children; however, in the next product year, the company'sadvertising effort will also attempt to lure young adults back into theconsumption of ready-to-eat cereals. Another factor involved in the development of product strategy is thatof the product life cycle. Thesepressures are being exerted by (1) government, (2) the medical community,(3) social action groups, and (4) concerned parents. Brand name, features,and packaging are important in the product strategies for ready-to-eatcereals. Together, the four industry leaders accounted for approximatelyfour-fifths of the market.The Company Environment The Kellogg Company was formed in 19 6, as the Battle Creek ToastedCorn Flakes Company. SITUATIONAL ANALYSIS Covered in the situational analysis are (1) the situationalenvironment, (2) the neutral environment, (3) the competitor environment,and (4) the company environment. Off- setting these parents, however,are those who continue to buy high sugar content cereals for both theirchildren and for themselves. Market opportunity analysisinvolves the development of a set of attractive opportunities for theorganization. Three years later, "Kellogg" was substituted for"Battle Creek" and even later, the company name was shortened to itspresent form. PROBLEMS AND OPPORTUNITIES The two most significant problems which Kellogg must confront withrespect to "Apple Jacks" are (1) the decline in the proportional size ofthe population segment traditionally targeted for ready-to-eat cereals, and(2) the resistance of many parents to high sugar content cereals. Diffused. INTRODUCTION The purpose of this research is to develop a marketing plan for the"Apple Jacks" breakfast cereal product produced and marketed by the KelloggCompany. 382). Marketing management, sixth edition. The major change in the nextproduct year will be the targeting of young adults. Kellogg, with respect to "Apple Jacks," will employ target-profitpricing. Changes in consumercharacteristics are related to demographic changes in the Americanpopulation which affect the ready-to-eat cereals market. THE TARGET MARKET Target marketing is a part of marketing process analysis. b. An attempt will be made to earn at a specific goals rate.Place Strategies A marketing channel is composed of the set of organizations which isrequired to move a product from its manufacturer to the end user. Marketing channels also provide a means of transmittinginformation between manufacturers and end users and a means of transmittingpayment from end users to manufacturers. These characteristics permitmarket segmentation on the basis of either life style or personality. In mid-1989, the domestic economy of the United States remains, onthe surface, in good health. Target market selection involves the further analysis ofeach of the identified attractive opportunities, to determine thefeasibility of pursuing the opportunity. 382). Second, the producthas a high sugar content coating. "Apple Jacks" is a fruit-flavored cereal grain product. SUMMARY The differential advantages of the product are relative. 2. b. Columbus, Ohio: Charles E. 3. The company is alsoappealing to the desire of busy adults for time saving products. 115-121). Market skimming, which is a practice of exploiting a new productto the maximum, before competing products are placed on the market orbefore fad interest in the product wanes. 3. Market segmentation is the "management strategy in which one ormore groups of potential customers having similar within groupcharacteristics is (sic) selected and (for which) separate marketing mixesare developed for each" (Kotler, 1987, p. Pricing tactics, on theother hand, is the task of setting the specific price levels, together withthe conditions for altering the specific prices, for specific products(Kotler, p. The user status of buyers, non-users, ex-users, potential users, firsttime users, and regular users of a specific product. Kellogg will continue to distribute its "Apple Jacks" cereal productthrough its established chain of grocery distributors and retailers. Promotional pricing, which is employed by marketing organizationsas a means of promoting an entire line of products, regardless of theimpact which such pricing may have on the profitability of a specificproduct. An additional$5 , will be spent on "Apple Jacks" advertising in the next productyear. "Apple Jacks" is an existing product (it has been on the market forapproximately 1 years, and is but one of many of the cereal brandsproduced by the Kellogg Company). 3. For "Apple Jacks" cereal, Kellogg will continue to rely on television. Value Line Investment Survey, 1432.----------------------- 16 First, theproduct has a fruit flavor - apple. Thus, as the American economy continues to stumble along in mid-1989,there are no great opportunities for Kellogg related to the economicenvironment. g. Renewed emphasis onthe promotion of the product, however, will require an increased investmentin marketing approximating $5 , dollars for the next product year. 127). Merrill. This differential advantage canalso be a disadvantage with some consumers. The apple flavor of "Apple Jacks," together with its presweetenedfeature will be emphasized in the Kellogg product strategy for the cereal. Itis anticipated that this investment in marketing will produce a salesincrease of $1 million, and an operating profit increase of one milliondollars in the next product year. Thus, additional investment with respectto product development and production is not required. Marketing management,third edition. The company was the outgrowth of experimentations withvarious cereals conducted by the Kellogg brothers, in an attempt to developa nutritious and economic food for a sanitarium they owned. Segmentation in this instance ismade on the basis of the occasion for purchase. G. In the marketing of "Apple Jacks," Kellogg relies heavily onbehavioristic characteristics. Thegreatest opportunity open to the company lies in the potential to lureadults back into the market for ready-to-eat cereals. Clustered. Factors associated with theseenvironments are discussed in the following sections. 64). These factors are most often related to (1) the economy,(2) governmental action, (3) technology, (4) geography, and (5) society.Each of these separate environments is dynamic in character. In fact,"Apple Jacks" has one of the highest concentrations of sugar of anybreakfast cereal product marketed in the United States. Thepressures being applied by these parties on the industry are also directedtoward the federal government, where implementation is desired for eitherone or both of the following actions: (a) require ready-to-eat cerealmanufacturers to reduce the sugar content of their products; and (b)require ready-to-eat cereal manufacturers to clearly label their productswith sugar content information. It is obvious that the stage of the lifecycle in which a product is situated will significantly impact the type ofproduct strategy adopted by a marketing organization. 5. By contrast, Kellogg's two leading competitors in the ready-to-eat cereal industry - General Mills and General Foods - rely on cerealsales for only about 1 percent of their total company sales and for anequivalent profit contribution. CONTROL An increase in sales of "Apple Jacks" in the next product year overthe current product year of $5, , is required for the company to breakeven on its increased expenditure for the marketing of the product. W., & Woodside, A. Product usage rate for different user groups. Ex-users with respect to "Apple Jacks" are the youngadults who (Kellogg hopes) can be persuaded to return to the cerealproducts they consumer when they were younger. A market in which there are nonatural segments is considered to be homogeneous. These characteristics permitmarket segmentation on the bases of the following: a. 6. Four stages of the product life cycle arerecognized by most marketing analysts - introduction, growth, maturity, anddecline (Kotler, 1987, p. Marketing factors, such as price and price deals, productquality, and service. The differential advantages of the product are relative. d. f. 2 1-2 2).Differentiation is one of the principal techniques by which productpositioning is accomplished (Levitt, 198 , pp. The Competitor Environment The Kellogg Company is the dominant firm in the ready-to-eat cerealindustry in the United States (Value Line Investment Service [VLIS], 1988,p. Changes insocietal attitudes toward nutrition were reflected in pressures related tosugar content in ready-to-eat cereals, and children-oriented advertising,which were being directed at the producers of ready-to-eat cereal. (198 , January-February). What media should be used to disseminate the advertising message? Stages of readiness of buyers to purchase a specific product. Loss-leader pricing is an example of promotional pricing. This differential advantage can(unfortunately) also be a disadvantage with some consumers."Apple Jacks" is an existing product (it has been on the market forapproximately 1 years, and is but one of many of the cereal brandsproduced by the Kellogg Company). First, it is attempting to lure back ex-users of the product. The company's senior management strongly defends bothits addition of sugar to its cereal products and the direction of itsadvertising towards children. With these positions, Kellogg managementoften finds itself in a confrontational stance. The SituationalEnvironment The future success of Kellogg's organizational strategy has beenbrought into question by (1) changes in consumer characteristics, and (2)changes in societal attitudes toward nutrition. 1432). Marketing systems developmentinvolves the task "of developing a marketing organization informationsystem, planning system, and control system that promises to accomplish thecompany's objectives in the target market" (Kotler, 1987, pp. For the consumer desiring a fruitflavor without actual fruit, this advantage is real. 4. Continuing pressures are applied by members of the medical community,social action groups, and concerned parents to persuade the cerealproducers to reduce the sugar content of their cereal products. Presugared cereal products are no longerunique; however, the level of sugar in the coating of this product ishigher than that for almost any cereal. Kellogg, however, hopes to regaingrowth for the product. "Apple Jacks" isan apple-flavored cereal grain product, which is presugared. Psychographic characteristics. Thus, additional investment with respectto product development and production is not required. Market-share pricing, which is used by a marketing organizationwilling to forego some short-term profits for a long-term assurance ofmarket share. Pricing objectives may be categorized as follows(Kotler, pp. Kotler, P. For the consumer desiring a fruitflavor without actual fruit, this advantage is real. These components function within a dynamicenvironment. Second, the producthas a high sugar content coating. At least as long as a Republican administration is inthe white house, there is little likelihood of strong governmental actiondirected against industry. Marketingprocess analysis is the application of strategic management principles tothe marketing process (Kotler, 1987, p. Benefits sought by buyers through purchase.c. Neither, however, are there any significant threats to thefirm in the economy. In addition to its approximately 3 brands of ready-to-eat cereals, theKellogg Company produces tea, dessert mixes, and other food products. e. The initial step which must be taken by a marketingorganization in the development of a pricing strategy is the establishingof pricing objectives. EnglewoodCliffs, New Jersey: Prentice-Hall. (1988, March 23).
If this paper is not what you are looking for, you can search again:
or
We can write a Custom Essay just for you.
Browse Essays by Subject