Kotler et al’s ideology of marketing entailing understanding consumers and their needs and designing marketing initiatives to deliver those needs (2009, p. 5) emerges in the marketing endeavors undertaken by the Kellogg’s Special K (SK) cereal brand. The marketing foresight inculcated by the brand not only helped it contribute to the overall success of the Kellogg conglomerate but also helped it evolve as a strong contender in the UK cereal industry. This assignment will unravel the marketing practices followed by the SK brand by analyzing its positioning in the UK cereal market. The analyses will encompass highlighting the customer segmentation adapted by this cereal brand followed by evaluating the efficacy of its target market selection. Subsequently, it will assess the cereal’s positioning as compared with its competitor’s positioning including its usage of the marketing mix elements to sustain that positioning. Finally as an outcome of the above analysis, it will offer recommendations to strengthen the brand’s market positioning.

Assumptions Made:

Barring considering the retailers as buyers for a five force analysis of the UK cereal industry, the assignment considers the end users as the consumers of the SK cereal. Whilst for a perceptual map, price [1] has been used to draw inferences on the product quality of the various cereal brands, Kellogg’s product life cycle stage in the UK market and SK’s brand share have been used to draw inferences on SK’s product life cycle stage.

UK Cereal Market and Kellogg’s:

The UK cereal market grew by 15.7% in value between 2004 and 2008 because of the perceived health benefits of and convenience in consuming cereals coupled with the declining popularity of the traditional breakfast (Worth, 2009). This growth rate indicates the attractiveness of UK cereal industry, which is also substantiated by a Porter’s five forces analysis of the market (represented diagrammatically in Figure 1.1).

This oligopolistic market is dominated by three big brands: Kellogg’s, Weetabix and Cereal Partners (Worth, 2009 and Datamonitor, 2009a) with Kellogg’s leading the market (as shown in figure 1.2).

Since giving the world its very first ready to eat cereal – cornflakes (Emerald, 1991, p. 16), Kellogg’s has become practically synonymous with breakfast cereals (Mitchell and Boustani, 1992, p. 21). With over 100 years of experience in the cereal business, it appears that Kellogg’s has built its high brand value (shown in figure 1.3) on consistent pioneering innovations and incessant delivery of consumer’s nutritious food requirements. And keeping true to this tradition is Special K, the leading cereal brand of the Kellogg’s family [2] .

Special K and its marketing choices:

Launched in the UK in 1959 (Kellogg’s Special K, 2009), Special K is a nutritious low-fat, ready to eat diet cereal that owes its eminent market position to the enhanced marketing choices made by the Kellogg marketers (Kellogg Company, 2003,2004). Following section of the assignment will analyse the components of the marketing choices made by the SK brand.

Market segmentation and Target Market:

SK is targeted at weight conscious women, employed/homemakers, between the ages of 25-49 who desire to attain a slimmer shape either for a healthy lifestyle or for an occasion. And in pursuit of their weight goals these women will prefer to consume nutritious food substitutes including paying an above average price for the product.

Alike the cereal manufacturers who use a number of variables to segment their customers (deduced from the data on consumption of cereals displayed in figure 1.4), it appears that SK also segments its customers using demographic variables such as gender, age and occupation and behavioral variables such as occasion and benefits.

But unlike the other cereal manufacturers, SK utilized its customer segmentation to identify and serve a distinct market group, which proved to be attractive and profitable over catering to the entire mass market. Moreover factors that contribute to the continued success of serving this target market are:

Dieting trends: Results of a consumer research carried out in 2008 revealed that women are constantly trying to lose weight, where 24.3% of the women dieted most of the time as compared to 13.9% of men (Baxter, 2009). This consumer behaviour augments SK’s target market selection.

Popularity of Health food: The popularity of health food is increasing as confirmed by a consumer research where 43.8% of the research pool displayed an affirmative interest in purchasing functional food. This growing trend benefits SK as women (47.3%) accounted for the majority of the preference over men (40.1%) (Taylor, 2008).

UK Obesity levels: The forecasted UK obesity levels for 2010 where women (29%) are more likely to be obese then men (27%) (Gower, 2008) not only favors SK’s product proposition but also provides the brand with an opportunity to expand its customer base.

Grocery shopping: SK can effectively access its target market using Kellogg’s existing distribution channel of grocery chains, owing to the consumer behaviour where women undertake majority of the shopping at supermarkets as compared to the men (shown in figure 1.5).

Growth of UK cereal market: In addition to its current growth rate (as discussed earlier), the UK cereal market is also forecasted to prosper in the future (displayed in figure 1.6). This future growth rate, supported by an immense market potential that exists in the form of people still skipping their breakfast, enables SK to attract new customers.

Whilst the above factors substantiate SK’s distinctive target market selection it is also imperative to evaluate the brand’s positioning in this target market as compared to its competitors to gauge the success of its marketing foresight.

Competitor’s versus Special K’s positioning:

Though Porter’s five force analysis of the UK cereal industry reveals that competitive rivalry in this market is moderate, failure by cereal manufacturers in differentiating their products will result in increased competition. SK endures industry competition based on the category points of the parity from other health cereal brands, including the various Kellogg brands, and market competition from other slimming aids such as diets, meal replacements and appetite suppressants (represented diagrammatically in figure 1.7).

Whilst the popularity of the cereals is on the rise (refer to prior discussion) the popularity of the slimming aids is on the decline due to the augmented awareness of the healthy eating habits (Baxter, 2009). Hence though the slimming aids are positioned as weight management products (Refer to figure 1.8 for the positioning of the various slimming aids in the market) also targeted at women, it can be deduced that SK has a superior market potential over these products.

A perceptual mapping of SK with its industry competitors (displayed in figure 1.9) divulges that the brand is perceived as high quality premium priced product by its customers. However SK’s consumer perceived value is not alone limited to its price and quality differentiation but rather is accentuated by its unique market positioning in the cereal industry.

‘Special K is positioned as a premium shape management nutritious cereal for women’

The above positioning unveils that instead of imitating its competitors by using common variables such as quality, energy, taste, natural ingredients and price, SK utilizes the popular variable of body shape to differentiate its product (refer to figure 1.10). Though a number of consumer products and services use the variable of shape to differentiate their product, SK was the first cereal brand to employ this positioning making it unique in the cereal industry [3] . Kellogg’s by using its extensive experience to develop and position the SK cereal, appears to have understood and delivered its consumer needs; where women may want to lose weight either post an occasion such pregnancy or holiday or to lead a healthy lifestyle or to improve their physical experience.

The value proposition offered by SK that acts as its point of difference from the other cereal brands has also helped it minimize the risk of cannibalization from the other Kellogg cereals.

Furthermore, SK’s market positioning has helped convert the consumer’s cereal purchase decision from a low involvement to a moderate involvement activity by linking their purchase decision to the psychological and physical benefits that can be derived from the product. Infact the SK 2 week challenge, which is an important element of the brand’s positioning (refer to figure 1.10), facilitates potential increases in the product usage and brand loyalty as once consumers verify the benefits of the product they may want to extend their association with the brand. It can be argued that by targeting only one distinct consumer group, SK is limiting its profit potential but on the contrary the growth in its market share (depicted in figure 1.11) is a testament of its successful market positioning in highly profitable target market.

However SK’s current and future market share could be threatened if it is no more the only cereal adopting the shape positioning as revealed in a SWOT analysis displayed below. Hence the strength of its positioning depends on effective management of the marketing mix elements.

Marketing Mix Elements:

Product: SK by offering a series of value added benefits in addition to its core benefits (displayed below) appears to acknowledge the importance of support for its customers during the challenging process of weight loss. And by providing these benefits the brand has transitioned from a low fat consumer product to a perceived personal weight management partner for its customers.

Furthermore it appears to understand variety seeking behaviour [4] of its consumers as it extended its product line to include other SK sub-brands failing which women might have used other tasty healthy cereals with the SK personal plan. The brand’s packaging while being environmentally and user friendly: easy to transport and store, also serves as an effective marketing tool. It provides product information and reinforces the brand’s positioning by illustrating its value proposition of shape on the box. Moreover by using the Kellogg’s name and tag line: If it doesn’t say Kellogg on the box….it isn’t Kellogg in the box’ on the packaging, it depicts its association with Kellogg’s premium quality and high brand value thus discouraging potential brand switching [5] .

Place: Kellogg distributes SK selectively through supermarkets, hypermarkets and convenience stores utilizing the below represented distribution network.

Using popular supermarkets/hypermarkets, which are the leading medium for cereal distribution (shown in figure 1.13), is aligned with SK’s target market selection (covered in a prior discussion) which is accentuated by the supermarkets ability to attract customers through their own high advertising budgets (displayed in figure 1.14).

Promotion: SK utilizes promotional campaigns, advertising and interactive marketing to sustain its winning market positioning. The SK 2 week challenge, which is an integral element of the cereal’s offering, originated as a creative promotional campaign that helped the brand acquire its market growth (Kellogg Company 2003, 2004). Success of the 2 week challenge is largely attributable to the consumer perception that it is an easier challenge to take due to its shorter duration. Another successful campaign launched by the brand is the SK slimmer jeans challenge which astutely kicks-off at the start of the New Year when women would be keen on losing their post holiday weight and dropping a jeans size (Kellogg’s 2009).

SK uses its high media advertising expenditure, which is higher than any of its competitors (shown in figure 1.15) to effectively communicate its positioning to its target market. It creatively employs the informational appeal message style in its television advertisements to convey product information and benefits, aimed at sustaining and attracting new customers (as evident in its latest advertisement [6] ). On the downside, some women may not relate to the product as the brand stereotypes a women’s body shape by using perfect size models in most of its advertisements which may also conflict with its brand’s positioning of slimmer shape (not perfect shape).

SK also recognized the growing popularity of internet among UK consumers (Euromonitor International 2009a) and hence uses its website and facebook group, as forms of interactive marketing, to connect with its customers. SK by allowing consumers to access the brand’s value added services on its attractive website aims to engage its customers and encourage repeat visits.

Price: As cited earlier, SK is priced higher than any of its industry competitors [7] (displayed in figure 1.16) which is in sync with its premium brand positioning. The brand’s high quality is buttressed by its high price. SK’s growing brand share despite its higher pricing appears to support the consumer perception that a high value compensates for a high price. But as discussed in the SWOT analysis, SK’s future product demand may decline if the consumers opt to purchase the cheaper private health cereals due to the economic recession (Worth, 2009). Moreover its future demand may also be impacted by the marketing tactics of supermarkets such as placing their cheaper cereals on the shelf next to the SK brands [8] .

Marketing recommendations:

From the above analysis, it is evident that SK is effectively managing its marketing mix elements to strengthen its market positioning. However since the brand is in the maturity stage of its product life cycle (represented diagrammatically in figure 1.17) it needs to defend its market share to avoid the onset of the decline stage. Hence the following recommendations have been offered:

Firstly using its exposure of a high advertising budget, SK can enhance its promotional activities by aptly launching additional innovative promotional challenges. And increase consumer participation in these challenges by providing opportunities to win prizes such as designer wardrobes or free SK cereal vouchers. Secondly by using real [9] slimmer size women in its advertisements it will not only distinguish itself from the other product manufacturers who stereotype women’s body shape but also may generate increased consumer confidence in the product’s market message. Alternatively by taking inspiration from its website, SK can incorporate the success stories of its consumers in its advertisements to reinforce the product’s effectiveness. Lastly owing to the growing popularity of health foods it can extend its product line to introduce other weight assistance products such as SK nutrition drinks which may complement rather than compete with the cereal. Such product introductions will also reflect the brand’s commitment to delivering the healthy weight management needs of its consumers.

The above recommendations will not only augment SK existing strong market positioning but will also discourage possible brand switching due to the economic recession.

Conclusion:

This assignment acknowledges that the marketing choices made by Special K, quite like its name, prove to be special for the brand. Perceptive of its consumer needs and behaviour, Special K effectually segmented its customers and selected a profitable and sustainable target market in a flourishing cereal industry. This target market selection has immensely contributed to the special status acquired by this brand. However the true success of the brand lies in how it differentiated itself from its competitors by relying on the SHAPE positioning that also acts as the value proposition for its consumers. Though the brand astutely manages the product, place, promotion and price attributes of its marketing mix to support its positioning, the reality of its product life cycle stage cannot be escaped. Hence recommendations to improve SK’s advertising, promotional activities and brand line extensions have been made to avoid the onset of the decline stage for the product.

Appendix:

Kellogg brand list:

Kellogg offers a vast product line catering to the needs of different customer segments. Kellogg brands include All bran, Coco Pops, Cornflakes, Crunchy Nut, Frosties, Fruit n Fibre, Winders, Nature’s Pleasure, Optivita, Country Store, Honey Loops, Just Right, Ricicles, Start, Pop tarts, Rice Krispies, Frosted Wheats and Special K.

Special K product variations:

Special K Packaging:

As shown in the above images, Special K’s packaging conveys that it is a low fat cereal and provides information on the personal plan and its benefits and cereal nutrition figures. The red color is synonymous with the Special K branding and labeling which not only shows it strong connection with the Kellogg’s brand but also symbolizes confidence and excitement (Kellogg’s Special K, 2009) that a consumer will enjoy after achieving the shape desired by them. The packaging supports easy and convenient usage through the cardboard box and plastic bag, which help in storage and preservation of the quality of the cereal.

Special K in supermarkets:

The observations on the shelf space occupied by Kellogg’s Special K were made by visiting two large supermarkets, Tesco and Morrison’s. A large section of the middle shelf space in the cereal section of the supermarkets was devoted to Special K cereals and its sub-brands. This shelf positioning helps attract customer attention and expedite the purchase process. Another observation made was that both Tesco and Morrison’s placed their cheaper cereals next to Special K which may deter the purchase decision of a cash strapped consumer. Infact Tesco has also extended this marketing gimmick to its online shop as displayed in the below images.

Links to advertisements:

http://www.specialk.co.uk/special-k-news.aspx – Latest advert

h ttp://www.tvadmusic.co.uk/2009/06/kellogs-special-k-shape-up-for-summer/