Kellogg’s is the market leader but although it has a lot of power it still has to compete fiercely against many rivals which are looking for a bigger share of the market. The suppliers to Kellogg’s are relatively small independent farms which have very limited buyer power. On the contrary Kellogg’s has a high level of power due to the size of the organization but chooses not to abuse it.
The threat of entry is relatively low due to various barriers to entry which include large advertising campaigns of existing competitors in the market. Kellogg’s alone spent ₤49,184,000 on advertising in 2006.
The final section refers to the threat of substitutes or alternatives for Kellogg’s. These substitutes don’t only depend on elasticity’s but more and more on the ever changing trends and lifestyles.
The Market size for breakfast cereal in the UK accounted for just over ₤1.45 billion at the retail selling price in 2006 alone. A survey conducted using consumer data from BMRM international Target Group Index confirms that Ready-To-Eat breakfast cereal remains as the family favourite. There is no better way to explain the size of the market than showing it graphically so below you can see a table with the size in terms of sales from 2002 to 2007.
£ million 2002 2003 2004 2005 2006 2007
RTE cereals 1,210.39 1,244.81 1,279.53 1,300.37 1,326.25 1,349.78
- Family breakfast cereals 870.99 885.11 907.25 924.17 945.54 964.88
- Children's breakfast cereals 339.40 359.70 372.29 376.20 380.71 384.90
Hot cereals 65.90 70.18 82.57 106.89 126.34 147.00
Breakfast cereals 1,276.29 1,315.00 1,362.11 1,407.25 1,452.59 1,496.78
Source: Euromonitor International
Just to give a feeling of how big the market is,... [continues]
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(2008, 11). Kelloggs Microenvironment. StudyMode.com. Retrieved 11, 2008, from http://www.studymode.com/essays/Kelloggs-Microenvironment-177516.html
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