Kellogg’s in the 90’s started facing immense pressure from competitors and their main markets of the U.S and Europe had become sluggish. It is during this time that they decided to launch in India.
Our “Marketing Management” textbook outlines the following six major forces to be researched at a macro level when considering the opportunities and threats, especially when venturing into a new territory: Demographic, economic, social-cultural, natural, technological and political-legal (Kotler, Keller, Koshy, Jha, 2009). If the above has been researched and evaluated carefully, you can then position your product well with the other 3’P’s: Place, Promotion and Price.
Yet, Kellogg’s with their over-confidence just gambled on the economics and here too they failed miserably.
While considering economics in 1994, they considered the overall population. Mr. Bhagirat B. Merchant, at that time director of the Bombay Stock Exchange, agreed on this when he stated, “Even if Kellogg’s has only a two percent market share, at 18 million consumers they will have a larger market than in the US itself” (Cashberry, 2006).
Yet, Kellogg’s forgot to take into consideration, before investing USD 65 million, was the “consumer class” was not more than 100 million and were dispersed geographically with very different cultures, customs, and tastes.
Over-confidence came from the fact that they were a huge company in the west and if they could market their products there, India would be “so easy”. Another point, in my opinion, was they felt that the Indians would rush out to buy an “American” brand.
And then the mistakes started:
When launching their product they priced in three times their nearest competitor. They thought that they had done the right thing when they noticed initial sales but failed to understand that this was a ‘one-time buy’ from consumers wanting to try a ‘nouvelle’ product. Considering their target market was the middle-class they just...
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