1. Tuesday, November 17, 2009
Big Bazaar Versus Kellogg's
I should start with an apology that I have not updated the blog for more than a month
now, will try and be more regular from now on....
I observed this new item a few days back and thought about writing about it, the fight
between Big Bazaar and Kellogg's , and it is not first of the kind that Big Bazaar is
involved in , some time back it was with Cadbury’s and even before that it was Lay's. All
the three were removed from the shelves of Big Bazaar, and reasons given were the
differences Big Bazaar had with the margins that were being given.
Some people might see it as a normal routine affair, bargaining between two parties for
better margins, but it is not. It is part of the larger plan which big Bazaar has and the
reality which marketers are walking into, the world which will be dominated by Dealer
owned labels. In the news you can also read about how Big Bazaar is not too worried
about the fact that Kellogg’s would not be there on its shelves, it has it's own Brand Tasty
Treat which would be there as an substitute.
Now the typical FMCG marketer in India is used to be on a enviable position, the retailer
being small and unorganized and at the mercy of the Brand marketers, who could afford
to play from the position of strength. But this all will change in the near future.
The other day I had an opportunity to listen to Mr Manish Tiwary, who heads the Modern
trade Division at HUL. a the division which deal with the organized retailers like Big
Bazaars, Spencer’s and he shared his concerns how the dealer brands increasingly put
pressure on the brand marketers. He said that the time when you could keep getting more
customers just on the basis of cosmetic improvements to your brand is more or less over,
and only those brands which have a very strong proposition and value for the customers
will be able to survive.
Though in India the proportion of organized trade itself is very small and the proportion
of the business of dealer owned labels even smaller, but one can see these events giving
us a preview of the future holds for brand marketers.....
I had written more on Dealer Owned Brands earlier also , Link1,
Link2
Posted by Rajesh Aithal at 10:39 AM
Labels: Brands, Indian Market, Indian Retail
Branding Mishaps: Kellogg’s India Venture a Failure

2. Posted by Meheer Thakare on Sep 14th, 2009 and filed under Branding Mishaps. You
can follow any responses to this entry through the RSS 2.0. You can leave a response or
trackback to this entry
INDUSTRIES HOLD MORE PROMINENCE THAN A BRAND. Phew!! Many of you
must have been amazed to read this. There’s at least something, if not everything, that is
greater than a Brand’. And I wouldn’t dare to disagree with you! We have been talking a
lot about how a Brand overpowers most other tangible and intangible assets of a business,
but this one comes with an exception.
Today we talk about how the international breakfast industry leader Kellogg Company
often referred to as “Kellogg’s” learnt this the hard way in India. Kellogg’s entered India
in 1994 to introduce Corn Flakes into the market, eyeing opportunities right after the
Indian economy liberalized.
Kellogg’s, we believe, rode on the globalization horse confidently hoping for a smooth
growth and revenue in the Indian economy. The company did everything they usually did
while entering new markets without realizing that they were about to enter an emerging
economy with strong cultural roots and essentially a very low-priced (moreover
universally embraced) breakfast Industry competition which included Hot milk, Idli,
Dosa, Vadaa, Bread & Spread, etc depending on various regions.
Kellogg’s believed that its brand equity carried forward from the West would mirror its
success in India. So it started building its brand by promoting its quality crispy flakes
which were a worldwide success accepted throughout the western countries. But what
sounded like a safe strategy, turned out to be drastically daunting for the company.
Firstly, Indians have always preferred their milk hot. When the Kellogg’s crispy flakes
are mixed with hot milk, they turned out to be soggy thereby out rightly rejected by the
consumers. Kellogg’s later had to modify their products to suit hot milk but the damage
had been done.
Secondly, the cost of a 500 gm package of Kellogg’s was itself way higher than its
traditional rivals. Kellogg’s brand was mostly meant to be targeted at the middle-class
consumer. But the high pricing resulted in the consumers buying their products on one-
off basis as a status buy rather than a nutritionally rich breakfast.
Additionally, Kellogg also managed to overlook the cultural dimensions of India.
Something similar to what we saw turned out to be vicious for Pizza Point (see how Pizza
point missed out on appealing to the Indian consumers) when they entered India. Apart
from the high pricing, it proved to be an unachievable task of convincing consumers
about the highly nutritional contents of the corn flakes. The Indian consumer typically
holds extremely strong cultural values and refuses to let off traditional (eating) habits.
The company should have known and researched well into these factors.

3. Important lesson to be learnt out of this is that, globalization may be an increasing trend,
but regional identities, customs and tastes are distinct as ever. There may be more
opportunities in localizing your concept in the market than globalising the market as
someone rightly said ‘Think Globally, Act Locally’. What Kellogg’s wrongly tried to do
in India was the attempt to turn the consumers against their cultural tastes which wasn’t
quite well received.
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Mumbai, Feb. 18:
Leading producers of ready-to-eat cereals, Kellogg's, which has re-launched its kids
brand Chocos with essential nutrients, will concentrate more on taste in India besides
health benefits as part of its global marketing strategy, a top company official said.
The company in the next 10 days will be launching a 360-degree marketing campaign
including television, print, radio and on-ground activation such as setting up kiosks at
malls and strategic locations, to re-position itself as a tasty breakfast option for children.
“India is a different market altogether, where taste comes above health benefits. We are
now focusing on this aspect and are relaunching Chocos as a tastier and healthy cereal
breakfast. We will also look at our other products moving ahead to improve the overall
taste,” Kellogg India's, Director (Marketing), Mr Vikram Behl, told PTI here today.
Keywords: Kellogg's, Chocos,
Marketing lessons from Kellogg’s Indian experience

4. Kellogg’s is a name to reckon throughout the world. It is the company that introduced the
concept of Corn flakes as a breakfast throughout the world. They have taken on markets
where corn flakes has never been very popular as breakfast and converted them into a
corn flake eating nations over a long period of time. They are experts in changing
breakfast eating habits of customers’ across the world.
In the early nineties Kellogg came to India with lots of hope and confidence. The Indian
organized breakfast market sector was expected to roll over and die. After all Kellogg’s
annual turnover was so big that the Indian organized breakfast sector was written off even
before the skirmishes started.
Kellogg did lot of home work and launched its products in India. They had the best
products, packaging and their marketing strategy was excellent. The advertising
campaign was handled by a leading Indian advertising agency.
Kellogg did not do as well as expected. The witch doctors (read marketing research
firms) were called in. The research findings were very surprising. The areas where
Kellogg went wrong include:
1. Kellogg pitched itself as an alternative to the regularly consumed breakfast. The Indian
breakfast is heavy and there is a feeling of fullness at the end of an Indian breakfast.
What with oily Parantas, Puris and Dosas, the feeling of fullness is real and not imagined.
Kellogg’s Corn flake breakfast does not give that feeling of fullness and that went against
the grain of having a full breakfast. In short after having a corn flake based breakfast the
Indian consumers were still hungry.

5. 2. Indian breakfast is known for its variety. There can be 30 types of Dosas (there is a
restaurant in Hyderabad that offers 99 types of Dosas!) or Idlis, Parantas or other types of
native Indian breakfast items. Indians are used to a variety and one item that is eaten will
not be on offer for the next two or three weeks. Asking Indians to have the same type of
corn flake based breakfast was too much of a cultural change for the Indians to accept.
3. Indians have spicy and hot food for breakfast. To ask them to eat the sweet tasting and
cold corn flake breakfast was too much of a sweet breakfast for the Indians to digest.
4. Kellogg in its advertising campaigns hinted that the Indian breakfast was not
nutritious and that Indian breakfast was not very good for health. This deeply hurt the
sentiments of the home maker. The home makers said to themselves “We have eaten and
served the Indian breakfast for decades and centuries. My family is doing fine”. Once the
home maker’s ego was hurt they psychologically turned themselves against the concept
of corn flake based breakfast.

6. 5. Kellogg corn Flakes have to be consumed with cold milk. Indians have be taught right
from their childhood that milk has to be consumed every day and that milk should always
be consumed hot. In a tropical country that is very logical. If the milk is bad once it is
heated it will become undrinkable. So for the Indian family eating corn flakes with cold
milk was unbearable. So hot milk was poured over the corn flakes. Once hot milk is
poured the corn flakes become soggy and there are no longer tasty and edible.
Posted by Dr. M. Anil Ramesh at 11:06 AM
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Labels: Food Marketing, Marketing communications, Marketing lessons, Product
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