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There can be few better known brands in the world than Kellogg’s, and most particularly its branded breakfast cereals, led by Cornflakes. However, at the end of 1998 the world saw the unthinkable spectacle of Kellogg’s losing market share and profitability; and share value suffering accordingly. The company is struggling to find a way to revive the brand and its experiences suggest that the underlying problem may be more serious than can be overcome with conventional marketing responses such as price cuts and increased promotion, or through management restructuring. The strength of the Kellogg’s brand Kellogg’s is one of the best known brands in the world. A 1998 survey – Brandz – commissioned by WPP, concerned with how closely consumers bond with a brand and ‘brand voltage’ (the * This material has been prepared by Nigel F. Piercy, Cardiff Business School, Cardiff University from published sources. © Nigel F. Piercy, 1999. ‘at the end of 1998 the world saw the unthinkable spectacle of Kellogg’s losing market share and profitability’ degree to which the brand meets customer needs better than competitors), rated Kellogg’s on a par with McDonald’s, Nescaf´e and Heinz as leading global brands. Indeed, a Henley Centre research study in the same year found that British consumers would put more trust in a packet of Kellogg’s Cornflakes than the church, the police, the armed forces, or leading retailers such as Boots, M&S and Sainsbury’s! The history of the brand Dr John Kellogg was the chief physician of the Western Health Reform Institute, founded in Battle Creek, Michigan in 1866 to propound the belief that a diet based on grains, nuts and vegetable-based foods was essential to ‘right living’. Dr Kellogg, and his brother William Keith Kellogg, were the inventors of the first pre-cooked breakfast cereal in 1894, while attempting to locate a digestible substitute for bread through experiments with grains for patients’ diets, rather than develop a breakfast food. Grain was boiled for varying amounts of time to see what would happen and the sticky mess was pushed through rollers. One batch produced large, thin flakes: each grain producing a flake. The final result was a paper-thin maltflavoured toasted flake of maize. The flakes were so popular that Kellogg received many requests from ex-patients for regular supplies to be sent to them. Demand continued to grow between 1902 and 1904. In 1906 W. K. Kellogg established the Battle Creek Toasted Corn Flake Company in a small wooden building in the town, the forerunner to the Kellogg Company. The original building burned down in 1907, but was quickly replaced with a larger plant. Kellogg emphasized rigid quality controls and to avoid confusion with competitors had his signature printed on the packaging. For many years the pack also had the slogan ‘The original bears this signature’. Kellogg advertised the product extensively and output rose from an initial thirty-three cases a day to over a million cases a day by 1909. The advertising budget in 1911 was $1 million and by 1912 the company had the biggest advertising sign in the world in New York’s Time Square. The company added Bran Flakes in 1915 and All-Bran a year later, with Rice Krispies launched in 1928. Kellogg pioneered ‘British consumers would put more trust in a packet of Kellogg’s Cornflakes than the church, the police, the armed forces’ nutritional labelling in the 1930s and produced an increasedprotein cereal, Special K, in 1955. By the 1980s, Kellogg had twenty-two plants operating in seventeen countries and global sales in excess of $6 billion. The Kellogg’s group, still based in Battle Creek, Michigan, makes twelve of the world’s top-selling cereal brands. The company has not diversified far from the expanded range of breakfast cereals, although now around 20 per cent of global sales come from Pop-Tarts toaster pastries, frozen waffles, pancakes, bagels and Nutri-Grain cereal bars. It bought Sanka decaffeinated coffee in 1927 but later sold it to General Foods. Kellogg Company has a mission in the following terms: Kellogg is a global company committed to building longterm growth in volume and profit and to enhancing its worldwide leadership position by providing nutritious food products of superior value.
Approximate Word count = 2751
Approximate Pages = 11
(250 words per page double spaced)
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