The survival of any business organisation is quite difficult where it is not easy to maintain the sound position of companies. The competition level remains high in market among various industries due to which it becomes very complex for the organisations to exists for a long term purpose. Therefore, it is crucial for each and every firm to analyse there internal and external environment on regular basis which can provide them a vast knowledge about the current trends. There are a number of internal and external factors that can impact the activities of an organisation as well as its position in market (Blythe and Megicks, 2010). The present report is based on this aspect where Kellogg' s company is taken into consideration for study purpose. The said organisation is a famous brand in the industry of cereals and similar convenience food. The report will attempt to make a study on different analysis based on macro and micro environment. This analysis will help in knowing various strong and weak points of the firm. The final section of report will entail the strategy of cited venture for further developments in the current market.
TASK 1 - Macro environment analysis
In 2000, brand pull off the main advertisement from its site due to the obesity makes the market values so down. Market shares had got very low so to overcome this problem Kellog's made out a strategy for reconstructing the better environment. Basically that time UK have channelised the cereal products in the food zone of the present market with the rate of 17% of all. The government is also concerned because of increasing cases of obesity due to which it assisted the companies like Kellogg's and encouraged their development. But that time a criticism was boosting in the industry (Ho, 2014). It is declared by a news site for a complete boycott of the cereal products and after this the organisation had decided to refuse to advertise its site on the board. This is how the mentioned company have justified their position in market.
The food industry has no importance if there is any declination in the economic graph because the growth of the market is dependent on the quality and the less contradiction between the economical sites and the brand. Its like a situation as well as recession in which people do not have the money to buy the food products and then it goes down to set a lapse of the economic status. The deft is pointed as 6% of current GDP and it will increase the general inflation of 1-5%.When the rate of GBP is getting down the money in hands would be less then market expecting (Constantinescu and Cojoaca, 2011). The other fast food and regular food companies have made very tough competition so it is very must to give a competitive rate to the customers that they can afford it.
The population of UK is around 64.1 million so there are people in diverse ranges. Some are from working sides while some are students, senior citizens all over a large number of civilians are there. The obesity level was increased in the town so requirement of light food was necessary. The market of cereal have made light food junctions to get over the health issue like obesity. The certain people who were travelling on daily basis so they like to eat healthy food. Healthy food is getting in people's mind very rapidly because the soundness of health is so important to do anything. Presently the supermarkets have made a kind of offer to serve sweet cornflakes as children like it and they want it (Taylor, 2013). Because it is so essential to justify what people exactly need. Some of them used to have butter, bread, tea, coffee in the breakfast, even they also started the products under the marked brand.
Regarding the quality of the infrastructure, the UK is ranked down on list, due to the poor functionality and challenging environment of market. But the innovations that the company have executed in their past work are very commendable. To change the package, innovative advertisement and further tiny packs of bar were invented. The communication strategy should be established by the company that people will easily get the idea what the thing is and how it can be healthier for them. Also there must be a product which might affect the people who are on dieting. By increasing the cost of R&D, host can make a diverse nature to the other dominating brands (Marketing, 2011).
The cereal products in breakfast has a clash with the environment. It is responsibility of the government of UK to take care of it and the environmental sustainability has to be maintained. Before, where people did not care about the environment, they have not felt any kind of regret what they have done. But as of now the generation changed, technology altered, people use to maintain the atmospheric things. They have started recycling by keeping a separate waste management system. Milk consumed with the cereals have made a big impact on the environment more then 3-4 times. This kind of change in attitude has made the popularity of environmental concoction at a higher level (Houben, Lenie and Vanhoof, 2010).
For a leading packing food brand there are some endorsements that are protected under the laws of trademark and copyright as it is on national level or international level. The name of the brand, the trademarks, the way to characters which are shown on the package of the brand etc. are important features that must be included in it.. It has the copyright @2006 in the UK itself and has all the patents of its self made entities. Company is independent to import or export its material across all the countries with the permission of their custom department. If there is any error in quality of the product the officers, affiliates, employees are mainly responsible for that. All rights are reserved so that company can change anything in the production without notice, at any time (Simkin and Dibb, 2012). There is no space for any type of violence regarding business to business or consumer to consumer.
TASK 2 - Micro environment analysis
The Kellogg's is a popular brand in the market of cereals industry that provides a number of varieties to be eaten in breakfast. The products are quite popular as it is good from health point of view. Along with UK, it has its operations all across the globe and have been a successful brand in various parts of world. UK is the major place from where this organisation is achieving large part of its profits. Mentioned company use to make various strategies so that it can keep a control over its internal and external environments so that it can be affected minimum from any of the negative factors (Nikolaou and Evangelinos, 2010).
The Kellogg's organisation has various opportunities on the basis of which it can make a good progress in the market. It is necessary that firm identifies these opportunities in well advanced time so that it can have the access of better profits and many similar gains. Apart from these opportunities, it is evident that there are may threats in the external environment which can act as a barrier for the organisation. Hence, this will be a crucial part of company's strategy to determine these threats and make right course of action to meet them (Blythe and Megicks, 2010). In current part, the opportunities and threats for mentioned enterprise is studied which will help in getting the gist of its external environment.
Increasing health consciousness
It is quite evident that in many parts of country, the issues related to health has increased a lot. Among these issues the most common diseases from which the 50 to 60% of population in all countries are suffering includes Obesity, Diabetes and Blood pressure. Because of a continuous increase in this type of issues, the consciousness among the people has been raised towards their health. Further, government and different private agencies are also making efforts to create awareness among people for their unhealthy eating habits. As a result, there is a boom in the market of products and services that can aid in relieving people from various issues related to obesity or other diseases (Nwankwo, 2010). Thus, there is a high demand of functional foods and other similar subsidiary products which are made up of whole grains. These types of food are more healthier as they provide two way benefits. Individuals in taking such food have will have healthier diet which is able to satisfy their hunger and it will not have any impact on their weight increase. Thus, the trend has become quite popular among the people who are much health conscious in their diet.
In this scenario, Kellogg's is considered as a boon which provides ready to eat food that can meet the major demand of customers. This provides the food containing cereals and grains which can help in rendering wellness and different health benefits to the customers (Böhm, 2009). The consumers who are in search of a food which can help in managing their weights can eat its well known product called Special K which is a perfect match for this purpose. This is a low fat containing food which help in providing necessary proteins and nutritions for body without affecting weight of an individual. The cited company have launched various products as per the needs of customers demanding the nutritious food with different health benefits. Apart from this, the organisation is also making efforts for meeting the demands of various new and potential consumers by providing them a healthy food with better taste. With this purpose, they have launched its wide range of products that contains 0 grams of fats per serving. Thus, the cited firm has the opportunity to identify the needs and demands of its customers (Kelloggs SWOT Analysis, USP & Competitors. 2017). The current trend of being fit and healthy among people provides opportunity to give a response with better products so that it can maintain its strong position in the market.
Local focus on emerging markets
The mentioned enterprise is trying to reach out its customers with the help of a customised focus on the basis of differentiated marketplace. Here, the major focus is placed on grabbing the opportunities available in market for growth through innovations. With various innovations and differentiated products that are launched in market on timely basis makes the brand more recognisable and give stronger position. The cited enterprise makes a study on local habits of breakfast and other trends of eating habits which acts as a base for them in coming up with a newer and better product in market (Lacar, 2009). The mentioned enterprise has the opportunities of growth through various changes in market like increase in income, modernisation, consciousness for health etc. to develop its products at a larger level.
Private label brands
In recent years, the trend of private label companies have increased to high level which provide prodcust at a lower price. The concept of private label brands refer to those products which are provided by any organisation under the brand name of other company. Thus, these products are made with similar type of concepts adopted by the competitive firms with almost same quality and lower prices. Because of such products and services in market, the consumers have shifted their choices to such brands specially in food and drinks market (Ho, 2014). These types of firms make a substantial amount of investments on making innovations, promotional efforts, market study and in managing the brand. Therefore such type of companies are a big threat for major brands like Kellogg' s. The entry of such firms like Wegmans, H-E-B etc. have made the differences in quality of products narrow and in terms of prices, wider. Thus, there is large possibilities for Kellogg's to lose its market share and customers. Therefore, it is crucial for the mentioned enterprise to make a continuous innovation in its products and make more efforts to retain customers by making them loyal towards the brand (Bibeau and et.al., 2012).
The cited organisation faces a large competition in both international as well as in domestic market. The major rival brands for this company include firms like PepsiCo, Mondelez etc. All these competitors are making the existence of each other very tough as everyone have their own brand recognition in the market due to which they have attained a good market share. They have better policies and strategies due to which they have attained a better bargaining position in market as compared to the Kellogg's. Thus, the threats have become larger for mentioned entity which necessitates to take some concrete steps in making its position more stable (Sakkthivel, 2011).
TASK 3 - Internal organisation environment
The internal environment of the organisation consists of various favourable and unfavourable factors which affects the company in different ways. As per the latest trends in market, the managers of Kellogg's company use to make various strategies. These strategies are formulated on the basis of various factors in which a proper study is done to collect assorted information. These information consists of different positive and negative points of enterprise which are matched with the market study of trends. On this basis, strategies are formulated which can help in utilising the positive factors and attempts are made to transform the weaknesses into strengths (Simkin and Dibb, 2012). In the below section, various strengths and weaknesses of cited organisation has been discussed which are as follows:
Powerful brand portfolio
The mentioned organisation provides a large number of products in different ranges which has made the Kellogg's world's largest cereal company. It includes a wide portfolio of different products like Special K, Pop-Tarts, Nutri-grain, Morning star Farms etc. These brands have attained the position in top 100 global brands as well. Apart from this, several other achievements in the form of its position in the UK's list of top 20 consumer superbrands along with most trusted brand in Canada. This has made a differentiated position of organisation in market. Further, the mentioned brand try to focus on various advertisement and promotional efforts so that it can ensure a strong image in market. The total of 8% amount gained from sales is invested in the advertising works which helps in making the brand name of organisation quite recognisable among customers (Constantinescu and Cojoaca, 2011). Thus, the media and various promotional efforts adopted by firm are moving in right direction that forms a good strength of organisation.
Good strength in market position
The position of mentioned enterprise is strong in global market and it holds a strong position in category of snacks and cereals industry. As per the analysis of market it has been discovered that in Japan and Korea the cited brand holds the top position with 29% and 11% of market share respectively. In context of UK, the place of organisation is at second position where it holds the 7% of total market share. The strong place of company in market is due to its powerful efforts that are made for marketing of products which in turn help in generating good amount of profits (Taylor, 2013). Besides this, it uses a mascot in advertisement of each products which has been proved as a strong tool for campaigning. The brand has a good presence in global market that ensures its successful expansion and great market shares that can be developed with continuous efforts of company. Apart from this, it has a very good control over the cost control strategies as well because of which the organisation has achieved the minimum cost of operations. Thus, it has made great profits at lower cost of operation which also provides a good way for establishing and retaining the better position in market (Marketing, 2011).
Recall of products
In recent years, the Kellogg's has passed from the stage of product recall which has proved to be of a serious issue for the company. The product recall refers to the request made by any party for returning product on the basis of its quality and safety issues. Thus, there are some cases in which the product may be delivered which is of inferior quality that may endanger the health and safety issue of a customer can be requested to be returned. These issues are very serious as it can also result into a serious legal action against the seller of a product. In recent past, the cited firm was in news for this issue where its 36000 boxes containing Special K red berries cereals were claimed to have dangerous glass fragments in the form of ingredients. The cases related to product recall may be a very serious issue as it may lead to a concern regarding the brand name of product which may deteriorate (Dillon, Madden and Firtle, 2014). The confidence of customers may be lost in such cases when the cases of product recall happens. Apart from this, it also resulted into high costs for the mentioned entity. The production cost which was incurred in such case amounted to be in high ratio. In addition to this, the cost incurred in recovering was also an extra burden on company. This type of cases happens if there is less provision of quality control. Therefore, it is necessary for Kellogg's to maintain a better quality control approach that can help in presenting good image of the brand. The case happened in 2013 with Kellogg's raised a question mark on its quality which still sometimes prove to a weakness for the firm (Kotler, Roberto and Hugo, 2011).
Concentrated number of customers on a geographical basis
The Kellogg's company has its relation with Wal-Mart which is a retail customer of company. It provides the opportunities of great revenues for organisation as it keeps the large number of said brand's products. But, the mentioned enterprise is largely dependent on it for making the profits which leads to the concentration of stated brand at one place. Here, it is essential for the mentioned brand to have a better approach regarding expansion of its focus. Depending on a single market can lead to the concentration of profits specially in the case of worsening of economic conditions. Apart from this, the aforesaid venture does not adopt any particular competitive pricing strategy which can help it in capturing more market share and draw attention of large number of customers (Dawson, 2014). It is necessary for the organisation to maintain its productivity and sales through better pricing techniques which can place it as a better option than its competitors. This will also help in overcoming the barriers of company and attaining a better position in market by recovering its weaknesses.
TASK 4 - Strategies of Kellogg's
The development and growth of Kellogg's is apparent before entire industry where the company has made its progress as a well known brand because of it strong corporate objectives and efficient marketing efforts.
It is evident that the mentioned brand has a good growth in market with the help of its different and wide range of products. The majority of its sales accounts from the UK market where it has Walmart as its retail customer. The founder of company is W.K. Kellogg who always tried to make the strategies in a pre planned and controlled way (Houben, Lenie and Vanhoof, 2010). The major reasons behind the success of its products is its goal setting approach and objectives which are made on the basis of SMART criteria. The major objectives of mentioned brand is to promote the sales of its goods and to increase the sound relationship with its customers. The major vision statement of the company is to be the company in food market which is based on choice of its customers. While the mission of organisation is to become a leading company at a global level which can attain the long term profits and render its services by providing nutritious food.
The above stated statements of Kellogg's act as a guiding principle in attaining it according to which the managers of firm set out their strategies (Nwankwo, 2010). Each and every activity of organisation is interdependent where it is necessary that to make a systematic plan for attaining various objectives. In this purpose, the major strategy of organisation is focussed on its marketing efforts that gives exposure to the company in diversifying its reach. The past strategy of company was based on different implications which were:
- Encouraging the innovations in products so that it can lead the market in cereals industry. For this, the firm use to make a deep research of market so that it can collect wide information on the needs of customers. These information were used for making strategies so that an innovative concept can be developed.
- The stated brand adopted the cost leadership strategy according to which it made various policies that can help in reducing its cost of operations. This reduced cost of production helped it in providing the customers its products on comparatively lower price (Lacar, 2009). For this purpose, the company made an attempt to make adjustments in its cost structures.
With the advancement in time, cited entity understood the importance of making changes in the strategy so that it can meet the fluctuating conditions of environment. For this purpose, mentioned enterprise adopted various practices. On this basis, presently the organisation is adopting strategies which are as below:
- Making improvements in labelling: The packages of Kellogg's contain a guideline which states the amount of nutrition that must be taken on daily basis by the customers for getting desired results. As per this guideline, the product also provides information about the Body mass index (BMI) which must be maintained by people (Sakkthivel, 2011). Thus on this basis, the customers are provided the directions for using the product in right quantity and frequency.
- Sponsorship of swimming programmes: To promote the awareness among general public for their health, the said brand sponsors the biggest swimming in UK under which it has made a scheme of giving awards in the name of Armature Swimming Association. This has presented the company as a brand which is taking initiatives for the cause of promoting wellness. Thus, it makes a good position of brand in market.
Apart from above strategies, the quoted brand has made the policies of providing the differentiated products along with the management of its brand. All the strategies adopted by mentioned firm is largely based on consumer oriented approaches (Simkin and Dibb, 2012). In addition to it, there care several plans of organisation according to which it is intending to make more growth. It is conducting study of market that can help it in making the brand superior at a global level. On this basis some of the major focussed areas for which the company is formulating future strategies are:
- Revision of pricing strategy: As per the earlier discussion, it is manifested that private labelling is a major concern for mentioned enterprise as it is posing a threat. These organisations are providing the products at a lower price because of which the profit share of company has been decreased. Therefore, the firm is making strategies to make a revision on the prices of products (Constantinescu and Cojoaca, 2011). Thus, by adopting different cost saving measures, it can have the advantage of attaining large sum of profits.
- Diversification: It is a high time for enterprise to realise that there is an acute fall in market of cereals industry as a result of emerging substitute products in the industry. Therefore, the said venture is planning to make diversification in its products. This will aid in entering various new markets for the company so that it can offer several new products to customers. The organisation already holds a good position in market due to which it will be easier to establish a new product among customers (Dawson, 2014).
The marketing environment is very dynamic which offers various challenges and opportunities for the companies operating in the market. The present report has focussed on the marketing environment which consists of macro and micro factors. The report has discussed these factors in consideration of Kellogg's brand operating in various parts of country. The report articulates that mentioned organisation operates in dynamic environment which consists of different micro and macro factors. Apart from this, the said company has planned to make a diversification in products range in future to attain more market share. Apart from this, the opportunities are wide for the company which can help in attaining a good position in market.
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