Consumer Behaviour- Corn Flakes Case
HOW CAN CORNFLAKES COMPANIES EXPAND THE CATEGORY?
The Indian breakfast cereal market is a small market when compared to countries like the USA but it is growing rapidly. This segment was valued at $139 million in 2012 and has witnessed a doubling of market growth over the past six years. It is comprised of cold cereals like cornflakes and muesli which represent 60% of the market and hot cereals like oats which represent 40% of the market. The market leader in this segment is Kellogg, which is far ahead of its competitors.
The room for growth of the cereal industry had reduced and thus the cereal industry had been stagnant for over a decade in its core countries like the US and the UK. Thus, in the beginning of the 90s Kellogg’s had to look beyond the countries in the US and Europe. Deciding that India was a suitable target didn’t take too long for Kellogg’s. With a population of over 950 million, out of which 250 million were from the middle class, and let’s not forget that India was a completely untapped market and had a huge potential for growth.
Kellogg’s decided to invest US $65 million in India in 1994 three years after the international trade barriers were lifted. They used this to launch Corn Flakes as its number one brand. It was estimated that even if Kellogg’s grabbed two percent of the market share available it would result to 18 million consumers and this would make it the largest market above the entire US.
MARKET SHARE
Since the first attempt by Kellogg's at localisation, the market for convenience goods has expanded. The breakfast segment by itself is estimated at Rs 600 crore, growing at 18-20%, with Kellogg's the leader with a roughly 55% share. Others wanting a slice of this segment include PepsiCo, Marico, Bagrrys, Dr Oetker, Britannia and McCain.
COMPETITIVE LANDSCAPE
Although Kellogg India has maintained its lead in breakfast cereals, the company has been losing value share every year for a decade at least. This is because Kellogg mainly
The Indian breakfast cereal market is a small market when compared to countries like the USA but it is growing rapidly. This segment was valued at $139 million in 2012 and has witnessed a doubling of market growth over the past six years. It is comprised of cold cereals like cornflakes and muesli which represent 60% of the market and hot cereals like oats which represent 40% of the market. The market leader in this segment is Kellogg, which is far ahead of its competitors.
The room for growth of the cereal industry had reduced and thus the cereal industry had been stagnant for over a decade in its core countries like the US and the UK. Thus, in the beginning of the 90s Kellogg’s had to look beyond the countries in the US and Europe. Deciding that India was a suitable target didn’t take too long for Kellogg’s. With a population of over 950 million, out of which 250 million were from the middle class, and let’s not forget that India was a completely untapped market and had a huge potential for growth.
Kellogg’s decided to invest US $65 million in India in 1994 three years after the international trade barriers were lifted. They used this to launch Corn Flakes as its number one brand. It was estimated that even if Kellogg’s grabbed two percent of the market share available it would result to 18 million consumers and this would make it the largest market above the entire US.
MARKET SHARE
Since the first attempt by Kellogg's at localisation, the market for convenience goods has expanded. The breakfast segment by itself is estimated at Rs 600 crore, growing at 18-20%, with Kellogg's the leader with a roughly 55% share. Others wanting a slice of this segment include PepsiCo, Marico, Bagrrys, Dr Oetker, Britannia and McCain.
COMPETITIVE LANDSCAPE
Although Kellogg India has maintained its lead in breakfast cereals, the company has been losing value share every year for a decade at least. This is because Kellogg mainly