Kellogg’s

Kellogg’s is a leading producer of cereal products, the products are sold in 180 countries.
The products produced by Kellogg’s are intended to be consumed as part of a healthy
balanced diet. Kellogg’s use various forms of market research to find out the ne eds of
their consumers. Since the launch of Crunchy Nut Cornflakes in 1980 it has become the
main selling product. Kellogg’s has a sales value of £68 million in Crunchy Nut Cornflakes.
The product was also expanded into Crunchy Nut Clusters which is now worth £21 million
in annual sales.

Market research used

There are two different types of market research; product oriented is seen in most
organisations which involves focusing on the product. Kellogg’s are market orientated
which means they build the business around the consumers needs rather than the product.
This allows them to identify the needs of consumers which give them more advantages as
they can plan ahead. Therefore the business has the competitive advantage which means is
can compete more efficient that rivals. As the cereals market is well established there isn’t
much that can be done to improve the sales so therefore Kellogg’s has improvised by
expanding into other areas. This can take a large amount of time and money as well as risk
and also the advertising costs to raise awareness. Of the many products that organisations
launch only a small percentage reach a significant place in the market. Therefore it is
important to carry out the market research.

Stage 1: Discovery

The research here used is secondary, the data is from external websites that keep data on
organisations such as Data monitor and Mintel, and the data can be costly especially if it
applies to multiple competitors in a market. This provides information on trends. Focus
groups were used internally for qualitative research; by using this consumers could be made
aware of different food ideas in the form of prototypes. This way the attitudes and feelings
from the consumers can be used to help the organisation know if the product would be
successful or a waste of time and money.

Stage 2: Selecting the best idea

Kellogg’s put the ideas from the focus groups on boards. The boards were then shown to
consumers in a quantitative survey. The way this was done by asking the consumers to rate
the product as a number, this way Kellogg’s could get a large amount of simple data. The
data concluded that the Crunchy Nut Bites established the proportion that liked it enough
to buy it, and, it identified the ideas that had the best and least response.

Stage 3: Crafting the idea into a complete new product

After stage 2 the best selling product was chosen it needed to be created into a real
product. Using the feedback the product was adjusted so that all possible consumers’ needs
were met and then it was further refined with more qualitative and quantitative survey
data. They produced multiple recipes so that consumers would gain the best taste. Several
packaging designs were also produced.

Both of these were tested with consumers and the two most favourable were made
into the product.

Stage 4: Forecasting sales for the new Crunchy Nut Bites

The product had the “In Home Usage Test” which Kellogg’s use for their developing
products, what this means is that the consumers are given a week to test the product
which allows Kellogg’s to see how consumers interact with it. After the week the
consumers fill out a questionnaire which determines how successful the product may be.
Therefore Kellogg’s could calculate a sales forecast for the first 2 years. This meant they
could set budgets and organise the supply chain. The production could now start for the
product.

Why they were appropriate

Stage 1 was appropriate for getting the original basis of consumer feedback which would
give them just the basic form of data on the potential products, this way they could try to
improve the other products but also focus on the most favourable product. If the
improvements on the other products didn’t work then they could be dropped and focus can
be drawn to the best products. The data from external databases was useful because it gives
them an idea on how their previous products were successful. The focus groups were useful
because they could get a good amount of feedback on the potential products while at the
same time getting the attitudes of consumers. Stage 2 was important because it meant that
the bad ideas were eliminated which meant the good ideas could be focused on instead.
Stage 2 also allowed them to find out how many people liked each product how much by
using quantitative data surveys. Stage 3 was important because it allowed them to find the
correct packaging and product shape that would be best suited to the consumers needs.
Stage 4 was important because it allowed them to get the next few years’ sales which
allowed them to plan and adjust budgets and predicted sales figures.

Qualitative data
Data records – data research on trends within the market for cereal retrieved from Mintel
and Data monitor.

Focus groups – used to show consumers new food ideas as prototypes, captured
attitudes and feelings.

Survey – eating experience asked for on prototypes.

In Home Usage Test – feedback from several days of testing the product.

Quantitative data
Survey – boards from focus groups were shown to large customer groups and asked for
ratings.
Effectiveness
The different types of data helped each other, first of all the Data records gave them the
basis on how to start trying to work their way into the market with the new product ideas,
they then used focus groups to show a small number of consumers which would give them a
small detailed sample of data which they could then adjust and ask in a quantitative
questionnaire survey for ratings on the products, this would be on a large scale. This then
meant they can eliminate the lower rated products and make prototypes of the better rated
products to show the customers and ask feedback on a qualitative scale. Finally they used
the In Home Usage Test which allowed them to get the last feedback over a larger scale in
more detail. After all of this the product could now be produced.

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