The Cereal Industry Essay

The RTE cereal industry had historically been one of the most concentrated of all U.S. industries,

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

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.

The purpose of the cereal box lesson is for us to see how advertise work and how it’s made the effort on our lives. We believe in ads and buy almost everything that seem benefits to our live. Cereal box has so many things that can determine our health. Each cereal targeted on different consumer such as gender, age range, economic background, social background, group membership, and etc… If I were an entrepreneur selling products for women, my goal is to produce an attractive packaging for my promotional tool. Can a real gentleman eat Honey Comb’s and he doesn’t like concert or teenage

1) The Big Three firms, Kellogg, General Mills, and Philip Morris, formed practically an oligopoly in the RTE cereal market. Their price and cost levels moved in lockstep, following signals sent mostly by the biggest player, Kellogg, while their tactics could be used against outside competition, as suggested in the scenario below. Although RTE cereal is a basic food item and production technology stabilized for about half century, the industry had effective barriers to entry. The competition between incumbents was friendly while most of the inputs came from a perfectly competitive market, agriculture. Major customers, the food stores, were coopted in perpetuating barriers to entry in the form of shelf space “slotting”.

The Kellogg is continuing to innovate a century later, offering cereals that are affordable, convenient to prepare and eat, and tasty. It will also reduce ingredients such as sugar that consumers want less of while increasing fiber, whole grains, vitamins and other nutrients(Kelloggcompany, 2011).

This marketing strategy will venture in to a previously unexploited market segment by refreshing an existing product and introducing a new product to General Mills’ extensive product mix. General Mills will need to undertake a strategic plan to revitalize and further develop the Cheerios product over the next two to four years. As the millennial influence increases this marget segment presents a significant opportunity for General Mills to modernize Cheerios through and revitalization and complimentary product innovation. Currently Cheerios appears to be a standalone product marketed as a breakfast product to families and children. In order to gain market share and attract the “Y Not Be The Change” market General Mills will need to implement an aggressive marketing strategy involving product innovation, price, distribution, and promotion. Market Research confirms that Gen Y’s make up about a fourth of the population confirming that this segment is potentially very profitable. This health conscious, connected and well educated Gen Y market is an emerging segment where General Mills can effectively capitalize as an entry point to the growing healthy snack food market versus the breakfast food market.

Growing up during the time when I was considered a "latch key kid", I know how easy it was to persuade guilty parents to buy cereals that I liked. During my childhood days, typically after school, commercials would run in between watching cartoons, advertising happy families at the breakfast table eating cereal that had colorful characters and promising a toy in each box. However, General Mills began advertising that their cereal was made from "whole grain", therefore implying that a healthier cereal option, which often were not. "Those messages are often contain misleading messages appealing to the benefits of eating high-sugar cereals and leading to believe high-sugar cereals are healthy choices" (Song, Halvorsen & Harley, 2014, p. 575). The rabbit on the box of Trixx, the bird on the Cocoa Puffs (that we went coocoo for), the leprachon on the lucky charms, the Captain on Captain Crunch, etc. all served as cereal from memories.

To promote a new breakfast cereal in an already crowded market is not an easy thing to do; especially if the one who is trying to promote a new cereal wants to make a huge success on that project, it might be able to a very serious problem. However, if the one follow and correctly apply what Malcom Gladwell, the author of The Tipping Point, says in his book, it will definitely increases the possibility of success. There are three factors that help to make a huge success on their cereal promotion. The first is that the law of few, which is about connectors, mavens, and Salesmen. Second, stickiness, which is about examples of Sesame Street, Blue’s Clues, and Educational Virus. Third, the power of context, which is about examples of Bernie Goetz and the magic number one hundred and fifty.

What do you think about the most important meal of your day? When you see breakfast cereal you think of something that is healthy and something that will help you stay full until lunch time. Have you every bought cereals based on if it will fill you up or not or based on the words or how they look? Although some cereals are healthy for you some cereal companies use the boxes to detract you from the real meaning of the cereal names. Each cereal brands have been known to use euphemisms and cartoons and exaggerated word meanings to get you to buy their products.

The nutritional information given focuses on calories and fat. For example, the first advertisements states that the cereal contains 0 grams of saturated fat, and the third reads “Fat free, as always”. This appeals to the fat free boom beginning in 1976, wherein Americans vilified fat and sought to avoid it as much as possible (by replacing the fat in products with more sugar). Although much of this marketing is geared towards sports fans, and children in particular, the nutritional information appeals to adults and is geared toward the societal values of the time so that parents will purchase the cereal for their children.

wasn’t perfect entailed to more hard work. Eventually, Kellogg manifested his way up to the creation of Corn Flakes, and they both slammed the market in 1897. Ultimately, other companies began to create and distribute cereals, and by 1911, there were over a hundred cereal companies in the city of Battle Creek. In 2011, the world’s largest cereal company, Kellogg, sold over $13 billion in cereal. Speaking of which, an online article from the MSU library-“Cereal” is insightful regarding the topic. Did you know cereal sales have increased $1 billion from 2006-2010? According to the journal, General Mills is also sending coupons to consumer’s smart phones. Another brilliant marketing strategy, convenience to the max. To further prove my point, other companies such as Nestle, Purina, Campbell Soup co, are all studying the psychology of shoppers, and their attitude towards most of the factors you can think of. The science in America is innovating is one of the few factors of why America is sometimes called the best country in the world.

Competition: * A big emphasis on reducing consumer price with discount offers.We have another 20 competitor cereal company cross Canada as well. Such as: Weetabix of Canada, Kraft

General Mills competes in a dynamic environment. Some of their competitors are Kellogg’s in the cereal segment. Cereal was a product that used to be the number one election for breakfast in American. As time and new knowledge evolved, consciousness about products with less sugar or gluten free arose making the cereal industry tumble. Products like protein bars, Greek yogurts, and even fast food are the new options to start the date, gaining market share over the cereal industry.

Kellogg’s created a new category of branded breakfast cereal products throughout the world. Over the longer period of time, it has successfully been able to change eating habits of consumers and has converted various nations as corn flakes eating nations. After capturing over 40% US’s ready-to-eat market in breakfast cereals alone, Kelloggs introduced its flagship products into Indian markets in 1994. India at that time has over 950 million inhabitants, 250 of whom were middle class.