Chapter #1: Kellogs’ :The Fall and Rise in the Indian Market

Yes, it has been the part of your breakfast since times immemorial, if not a permanent feature, a temporary ‘healthy’ delight for sure!! Kellogg’s made sure that they get a product for each age group, so as to seek a place in everyone’s plate and a room in their heart too!!

Today they have not less than 16 products in the Indian Market, and are the number one in the Breakfast Cereal Market, with 60% of the market share, competing closely with Baggry’s and Pepsico. From the normal corn flakes to the choco flakes and from oats to the Special K, they have got your back.

But....the path to their success has not been less than any roller coster ride.

They have reached here by  learning lessons from the dud marketing mistakes and complacent decisions that shocked them terribly!!

The Plan:-

When Kellogg’s planned to move its business to the Indian subcontinent, it was already a market leader by then. In the 1990s Indian economy saw some significant policy changes for economic reforms with the introduction of LPG (Liberalisation, Privatisation and Globalisation) , that opened the doors for international trade. Kellogg’s saw this as an opportunity to increase its consumer base internationally and moreover it had had staggered growth for sometime now in the US and UK markets.
The Calculation:-
 In 1994, Kellogg’s came to India, with a very mainstream and an ideal state calculation. The Indian population back then was 900 million . They invested in the idea that, if 900 million people on an average will consume as much cereal as in the US , then merely 2 percent of the Indian population would fetch them more profits than that of entire US. Counting on it they invested a whopping 65 million USD in India, along with a frenzied media activity and marketing.
The Results:-
 Highest minds of the company, were terrified by the sales report!!

 The sales of Kellogg’s had come to standstill, and it became tough for Kellogg’s to survive in the Indian Market, let alone counting profits!!

Reasons:-
 Now, what were the reasons that made Kellogg’s go through such a situation….

•  It did not customized the product according to the location, it just copied the US and UK model in India as well.

• The flavor of the products launched by Kellogg’s did not matched the cultural and taste preferences of the Indian consumers.

• In all other nations , eating habits were more or less same, but in India, it changed after every 100 kms, from idli – dosas in the south , to parathas/puris-sabzi in the north.

•  Most importantly, in western countries milk is often consumed warm or lukewarm , whereas in India, people prefer milk after boiling it , but pouring hot milk on the flakes , made them soggy and it was no longer crunchy as it had been in other countries.

• Moreover, Kellogg’s advertised itself as a health food, and indicated that the Indian breakfast is not healthy, this created a negative sentiment in the consumers.

• They also did not understand the Indian demographics well. The distribution of the products were done in cities and urbanized areas, making the products look premium but far from the reach of the common man who stays in tier 2 cities and villages.

• They also kept the price of the initial product as much as two times than the local competitor that time. Mohan Meakins’ Mohun brand of cornflakes in India sold 500kg of cornflakes at Rs 33, but Kellogg’s were selling theirs at Rs 66.

 Lessons Learnt:-

•  They moved away from the premium priced model
  

• They revamped their advertising.

1. Changed their tagline“Jaago Jaise Bhi, Lo Kellogg’s hi” - No matter how you wake up, have Kellogg’s. 
2. “Andar se khush, to bahar se khush.” - Being happy from inside makes you happy outside.
3. “Shuruat sahi to din sahi” - The better the start, the better the day.

• They also enhanced their reach , by launching chocos biscuits to build brand awareness for Kellogg’s. Making biscuits available at every nook and corner of the was a completely different game than that of distribution of cereals but they succeeded in this.