R-T-E Cereal Breakfast Industry
Name: Andres Gil
Competitive Analysis and Strategy
The ready to eat (RTE) cereal industry has grown steadily, with a compounded annual volume rate of three percent between 1950 and 1993. It success during the 20th century had been driven by the surge of consumer’s interest in healthy and dietary food. After World War II there was an increase demand for vitamin fortification products. During the 50’s, pre-sweetening gained popularity among Americans and in the 70’s and through the 80’s consumer’s preferences turned to granola and natural cereals. Ready-to-eat breakfast cereals have become the best option for a healthy and nutritional breakfast mainly due to the market’s perception that
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The more new entrants that enter the market, the more saturated and fragmented it becomes for everyone. Brand name recognition plays a role in the RTE cereal industry. A company with a strong brand name such as Kellogg can sometimes retain a customer even if its prices are higher than competitors.
Power of suppliers:
There are many suppliers in this industry due to the simplicity of the materials, basic food ingredients, needed to manufacture these products. Subsequently, supplier’s cost remains relatively low compared to other industries.
Power of buyers:
Given the number of products available, the bargaining power of customers in this industry is very high. The two main drivers for customer’s preferences are quality and price, there is no service involved.
Threat of substitutes:
This category is very high in the RTE cereal industry. RTE cereals compete with every single breakfast buyer option that is out in the market. For instance, a person might choose to eat an egg sandwich or fruits or pancakes rather than cereals. Through high advertising costs, RTE cereal companies create brand awareness among consumers by presenting their products as the healthier breakfast option and therefore remain competitive.
Competitive rivalry:
This industry had been heavily concentrated by the big three companies during the last 90
the profitability of the industry attracted no significant entry, and the industry continued to become
There is a great opportunity in America with this product for this type of low-carb, antioxidant packed, high protein and fiber breakfast cereal. For those participating in diet plans this product would be a
Breakfast cereal is one of the most popular forms of breakfast in the United States. Just about all of us have
5) Capital Requirements: in order to enter the industry, there were huge capital expenses to be sustained by firms, such as a minimum of $ 100 million for capital investments, and at least 125 employees to run a plant that could produce both packaging and cereals themselves. In this framework, advertising expenses may be added too, since they’re a great part of the expenditures a RTE Cereal firm has to face, and they also represent a great Barrier To Entry, being an amount close to 1/5 of the sales generated by the company.
No product really has to be a commodity. The trick is to know what services your customers want—and to charge more.
Kellogg’s has over 100 years history and we have14 kinds of breakfast cereal products. Our products sell to 180 countries across the world. Our mission is still to provide you and your family with better breakfasts that lead to better days, and now you eat flake corn is the same way W.K. did back in 1898. It just tastes better that way.
This paper will discuss about a particular product producing cereals as breakfast food. The product for this document is Weet-Bix that is a cereal made from wheat, which is well-known for its brand popularity and nutrition. In this document firstly the background, introduction and company history will be talk over. Secondly, this paper will discuss about the products of Weet-Bix, and its ingredients. Thirdly, marketing mix will be discussed, which includes product, price promotions and place subtopics for the discussion. Furthermore to this, the Weet-Bix promotions, it advertisement and sales promotions will be argued. Fourthly, the market will be analysed and will be talk about the competitors of Weet-Bix and a simple SWOT analysis also be included. In the final glance of the topic some recommendations will be given and will finish up with conclusion.
Mainly made up of teenagers (both sexes) from 12-18. Most teens now day do numerous amounts of activities and sports, they need a meal with carbs can sodium which our cereal provides. Additionally, our cereal compared to the other brands are beneficially healthy, parents will be attracted to buying cereal that people will not only love but, will also be a vigorous
1. Executive summary: Nutri-grain is a part of the multi-national brand Kellogg’s. The brand includes cereal, cereal bars and breakfast drinks that has ranked number nine in cereal brand sales reaching 18.2 million people purchasing the cereal so far in 2015. The cereal brand uses many selling techniques to market a product to reach the goal of maximisation of profit. This report will outline the techniques that Nutri-Grain uses to promote their breakfast cereal and will focus on promotion, pricing, placement and product strategies.
Breakfast cereal is a commonly eaten food in the United States. According to the website CEEREAL of the European breakfast cereal Association, the first ever cereal was granola which was invented by James Caleb Jackson in 1863 who was the operator of the Jackson Sanitarian in the state of New York (Ceereal). It would not catch on due to the long prep time needed to make the cereal edible. In 1889 two brothers W.K. Kellogg, and his brother, Dr. John Harvey Kellogg, what accidentally create arguably the first commercially successful breakfast cereal(Kellogg 's.com). W.K. Kellogg would use Kellogg 's Corn Flakes as the flagship brand, for the
However, differences exist between supply-side substitutability of well-established branded cereals, such as Kellogg's and private labels. Specifically, as private labels focus on fewer variations of cereals that are simpler and cheaper to produce, it
85% of the market. The return on sales earned by the incumbents in this market (18%) is
United Cereal began its European expansion in 1952 by the acquiring a baked goods company in England. It then directly invested in other established companies in order to save costs by utilising their well-established distribution lines and branding products using well known subsidiaries. This expansion aimed to achieve leverage by economies of scale and further increase revenues. The company’s strong shared values, ‘The UC way’, effected their strategies by ensuring the company carried out extensive market research before launching their new products to maximise customer value and innovate to prevent stagnation. Additionally, innovation was greatly encouraged in the organisation.
The global recession in 2008/2009 did not just lead to a change in consumption towards an increasing demand for cheaper products in the product range but it was also responsible for a decrease in market growth that resulted in a growth rate less than 1% annually. However UC faces the threat of strong competitors. The largest competitors is Kellogg which is the market leader with a share of 26%. Kellogg has the advantage to lower operating costs due to its volume. Along with this increased market competition in Europe, UC was also threatened by a price and promotion pressure outgoing from its major rivals Kellogg and United Cereal. An ongoing fight for market share, and high costs and investment of time in order to develop new brands are just two more factors that UC and its competitors face in daily business. Another market condition that can be identified as an external threat (and opportunity) is the great variation in consumption. Consumers´ cereal consumption varies greatly throughout Europe. While approximately 8/kg year were consumed by UK citizen, Italians only ate 0.5 kg/year. Throughout Europe the point of sale also
5. Power of suppliers: supplier power is likely to be high when few suppliers are available, suppliers have unique products or strongly differentiated brands, switching costs are high, suppliers can threaten to integrate forward, large number of small customers with weak negotiation power.