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CASE
– 1
Tony
the Tiger goes Global
Kellogg Company has distribution in more than 150
countries and yet is still “unknown to half the world’s population.” according
to Arnold Langbo, Kellogg’s CEO. Langbo plans to change that.
Kellogg recently built a company—owned cereal plant
in Latvia and currently has sales in Poland, Hungary and Czechoslovakia. It has
also started construction on a plant in India and is entering China. However
international expansion and the development of global brands will not be easy.
To become more international, the firm
recently reorganized into four divisions :North America,Latin America, Europe
and Australasia. According to Langbo:
The way we used to be organized, we were a US-based
Multinational-a company with a big domestic business and, by the way,some international
business. That was the way we were thinking; that’s the way the organization
was structured.
Today, if you talk to
customers in the UK, Canada, or Australia, they think of Kellogg’s as being
based in the U.K or Canada or Australia. We’re global in organizational
structure and business but also multidomestic.
We now have a number of truly global
brands (Frosted Flakes and Corn Flakes, with Froot Loopa and Rice Krispies
close, and Frosted Mini-Wheats and Honey Nut loops moving rapidly).There used to
be slight variations in our food around the world, but now you’ll recognize the
product wherever you go.
Expanding into many markets will involve
more than trying to gain share from other cereal marketers. It will require
altering long—held traditions:
In Eastern Europe it’s going to he pretty slow
because we’re going to have to go in there and literally create the habit—much
as we did in Germany 25 years ago or France 20 years ago. Cereal is a whole new
breakfast concept for these people. However, they do eat breakfast in those
countries, and they eat fairly substantial breakfasts.
In Asia, consumers are used to eating something
warm, soft, and savory for breakfast—and we’re going to sell them something
that’s cold, crisp, and sweet or bran tasting. That’s quite a difference.
The challenge is made greater by the presence of
aggressive competition in many developed or develop-ing markets. Competition is
particularly intense in Europe where Nestle and General Mills formed a joint
venture called Cereal Partners Worldwide. Langbo characterizes the new
competitor this way:
They are a very formidable competitor with Nestle’s
distribution strength and knowledge of the European market and General Mills’
technology and cereal marketing expertise.
The result of the entry
of the new competitor, which spent an estimated $35 to $50 million in
advertising in the top six European markets, and the response of existing firms
such as Kellogg was an increase in the growth rate of total cereal sales as
well as share erosion among the weaker brands.
Competition is strong even in some countries where
consumption is low. For example, in Japan, with consumption at four bowls per
year per person, compared to 10 pounds in the United States, there are more
than 100 products fighting for shelf space.
According
to Langbo, a global brand requires a core position strategy or product benefit
that will work in multiple countries and local execution of that idea to
reflect local attitudes. The key ideas for three of Kellogg’s global or
near-global brands are described by Langbo in the following paragraph
Frosted Flakes
Frosted Flakes is based on the concept of vitality.
This idea originated in the United States but is a universal idea that both
translates and travels well. Because the product has a special appeal to
children, the cultural differences are not so pronounced. Tony the Tiger
illustrates the vitality theme in a universally understandable manner. Tony is
loved throughout the world symborizing appeals that are truly global. We use
Tony and he vitality message everywhere from the United States to Taiwan in
Argentina.
Corn
Flakes
The basic positioning concept for Corn Flakes is
simple, unadulterated food that tastes surprisingly good. This concept also has
universal appeal. It is typically the first product we introduce in a new
market, It is the foundation of our line, and it is the world’s most popular
cereal.
All-Bran
The value proposition for All-Bran is the health
benefits of fiber in the diet. This proposition does not have universal appeal
without development. The concept of the value of fiber in the diet is new to
many countries and is often resisted.
In
1984, we began a massive campaign to countries where the benefits of fiber were
not widely accepted. campaign varied across countries due to differences in the
attitudes of local medical and nutritional professionals, specific diseases
that were most on the minds of the local population, and local restrictions on
health claims. However, the basic approach was to educate and support the
medical and nutritional community in each country. We would sponsor symposia on
dietary fiber. As a country’s experts became convinced of the value of fiber,
they told their story in their academic press, the general press, and in public
service announcements. Today, despite competition from many other high-fiber
cereals., All-Bran is one of the top 15 cereals worldwide.
Questions
1. What type of
innovation would cold cereal be to a country not accustomed to this type of
food?
2.
Conduct an innovation analysis based for cold cereal
in China.
3.
What values are involved in the consumption of
product such as breakfast cereal?
4. What values would
support and what values would harm the chances of Kellogg succeeding the cold
cereal in the following countries? What other factors would be
important?
a.
China
b.
Mexico
c.
Japan
d. France
5. What
nonverbal communications factors would be important in developing an
advertising campaign for a cold cereal?
6. Develop a
marketing program to market one of Kellogg’s cold cereals in the following
countries.
a.
China
b. Mexico
c.
Japan
d.
France
7.
Why does Tony the Tiger “travel” so well’?
8.
Evaluate the communications process Kellogg used to
gain acceptance for All-Bran. Could a version of this work for gaining acceptance of cold cereals in
China?
CASE
– 2
You are the Business
Development Manager of an Engineering company that has developed a highly
advanced machine for packaging of pharmaceutical products. The machine saves a
lot of time and cost involved in the packaging as it is faster compared to
other machines, it consumes lesser electricity and requires lesser manpower.
One of your clients, N.K. Pharma is a 1200 crores pharmaceutical company having
its head office in Mumbai. The company has six manufacturing units, one in
Tarapur, two at Vapi, one in Nagpur, one in Chennai and the newest one at Baddi
in Haryana. Each unit is led by a Factory Manager, who reports to the GM –
Production who sits at the head office. The GM – Production, GM – R & D, GM
– Marketing, and G.M. HRM report to the COO. The Accounts and Finance functions
report directly to the COO. The COO is a 36 year old enthusiastic leader who
enjoys immense trust of the MD (who is also the founder of the organization).
The company sells through a network of 400 Medical Representatives spread all
over India.
Questions
1.
Analyze the buying behavior of this organization with respect to your product.
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