DIAGNOSING MARKETING FAILURE OF KELLOG’S BREAKFAST MATES USING FOUR “A” FRAMEWORK

COURSE TITLE: MARKETING MANAGEMENT COURSE CODE: GR 523–1DA

SUBMITTED TO DR. RAJ SISODIA, PROFESSOR OF MARKETING

SUBMITTED BY KHALED MAHMUD

MCCALLUM GRADUATE SCHOOL OF BUSINESS BENTLEY UNIVERSITY

MARCH 18, 2013

TABLE OF CONTENTS 1. KELLOGG’S AS A COMPANY: ............................................................................................................ 1 2. BACKGROUND OF KELLOGG’S BREAKFAST MATES: ...................................................................... 1 3. KELLOGG’S BREAKFAST MATES’ OFFERING: ................................................................................. 1 4. TARGET MARKET: ........................................................................................................................... 1 5. POSITIONING: ................................................................................................................................... 1 6. FAILURE OF BREAKFAST MATES: ................................................................................................... 1 7. ANALYSIS OF THE FAILURE USING FOUR “A” FRAMEWORK: ...................................................... 2 7.1. A CCEPTABILITY : .................................................................................................................................... 2 7.1.1. F UNCTIONAL A CCEPTABILITY : ..................................................................................................................... 2 7.1.2. P SYCHOLOGICAL A CCEPTABILITY : ............................................................................................................... 3 7.2. A FFORDABILITY : .................................................................................................................................... 3 7.2.1. E CONOMIC A FFORDABILITY: ......................................................................................................................... 3 7.2.2. P SYCHOLOGICAL A FFORDABILITY: .................................................................................................................... 3 7.3. A CCESSIBILITY : ...................................................................................................................................... 3 7.3.1. A VAILABILITY: .................................................................................................................................................. 4 7.3.2. C ONVENIENCE: .................................................................................................................................................. 4 7.4. A WARENESS: ........................................................................................................................................... 4 7.4.1. B RAND A WARENESS: ...................................................................................................................................... 4 7.4.2. P RODUCT K NOWLEDGE : ................................................................................................................................. 4 8. WHAT COULD HAVE BEEN DONE DIFFERENTLY? ........................................................................ 4 8.1. T ARGET M ARKET : ................................................................................................................................. 5 8.2. A CCEPTABILITY : .................................................................................................................................... 5 8.3. A FFORDABILITY : .................................................................................................................................... 5 8.4. A CCESSIBILITY : ...................................................................................................................................... 5 8.5. A WARENESS: ........................................................................................................................................... 5 9. CONCLUSION: .................................................................................................................................... 6

1. KELLOGG’S AS A COMPANY: “Share the power of breakfast - With every morning comes a new beginning. It is an opportunity for all of us to realize the potential of the day. And when we start the morning right, there's no end to what each day can bring.” This is a value and belief1 offered from Kellogg’s. Over 100 years of high quality product offerings made it a must breakfast every morning in most of the households all over US and many other countries. Kellogg is headquartered in Battle Creek, Michigan, United States. Kellogg's produces cereal and convenience foods. The company's brands include Corn Flakes, Frosted Flakes, Rice Krispies, Special K, Pringles, Pop-Tarts and Nutri-Grain. Kellogg's products are manufactured in 18 countries and marketed in over 180 countries.2

2. BACKGROUND OF KELLOGG’S BREAKFAST MATES: Increasing traffic on most of the cities and strict office/ school schedules are making most of the Americans morning a hectic day by day. This leaves very small amount of decent time to fix even the simplest breakfast. Participation in the labor force of mothers is increasing. It is getting difficult day by day for the working mothers to prepare breakfast for their children. More Americans than ever simply skip breakfast, according to new data from NPD Group, an eating-habits researcher3. It seems that people want to get injected the breakfast into them while they are on run. Considering the growing need for convenience, Kellogg launched Breakfast Mates in August 1998.

3. KELLOGG’S BREAKFAST MATES’ OFFERING:

Cereal Mates were small boxes of Kellogg’s cereal (4 ounces) packed with a container of milk (4 ounces) and a plastic spoon. Kellogg’s offered the line with four most powerful and popular brands of them in the US – namely Corn Flakes, Frosted Flakes, Fruit Loops, and Mini Wheats.

4. TARGET MARKET:

Breakfast Mates was originally targeted at working parents with small children.

5. POSITIONING:

It was positioned as a product that children could use themselves without parental help, and something that parents themselves could take from the fridge and eat on the go.

6. FAILURE OF BREAKFAST MATES:

Kellogg’s tried its best to promote the product. But despite all of its efforts, the breakfast mates turned out as one of the marketing failures in Kellogg’s history. As a result, in 1999 Kellogg’s pulled the product from the shelves after a year of launching.

1

http://www.kelloggs.com/en_US/home.html

2 http://en.wikipedia.org/wiki/Kellogg_Company 3 http://www.thedailybeast.com/newsweek/2000/02/13/crunch-time-at-kellogg.html

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7. ANALYSIS OF THE FAILURE USING FOUR “A” FRAMEWORK:

Customers can play four distinctive roles in the market place: seekers, users, payers and buyers. Four “A” framework is derived from all of these customer value perspectives. This approach is organized around the values that matter most to customers: Acceptability (matters as user), Affordability (matters as payer), Accessibility (matters as buyer) and Awareness (matters as seeker)4. To ensure success, any marketing campaign has to secure high points in every “A”. I am going to analyze how Kellogg’s Breakfast mates performed in each category and why the product was a failure in the market.

7.1. ACCEPTABILITY:

Acceptability has two dimensions: functional acceptability and psychological acceptability. Kellogg’s Breakfast Mates offering failed to meet both functional and psychological acceptability.

7.1.1. FUNCTIONAL ACCEPTABILITY:

a. Convenience: The product offered in such a way that children could have their breakfast without parental help. But, in reality the packaging was too difficult for children to open all by themselves. The product had tow additional packaging inside one outer packaging and required considerable effort to eat. They had to open the outer package, open the cereal, open the milk, pour the cereal in, and then sit down and eat it with a spoon. This was far form convenience. b. Warm Milk: Breakfast Mate tried to introduce the concept of warm milk. It contained aseptically packaged milk, which didn‘t need refrigeration. Many Americans who have tried drinking aseptically packaged milk before have complained that it tastes disgusting. So, they eventually didn’t accept the idea of warm milk offered by Breakfast Mates. c. Cold Cereal: In response, Kellogg started putting the product in the refrigerator section, which caused the cereal to be cold. So customers had two unappetizing choices: warm milk and warm cereal or cold cereal and cold milk. d. Mobility: While promising greater convenience, the product was anything but convenient, especially compared to the portable breakfast bars that could be eaten with one hand on the driving wheel. e. Amount offered: They were offering the product as a package of 4 ounces of cereal and 4 ounces of milk together in one package. So, if a customer needs more than 4 ounces, then he or she has to open another pack of cereal or milk. In that case, the rest of the pack will be opened and might go into waste. On the contrary, if anybody wants less amount, the full package is already open with

4 “The

4 A’s of Marketing: A Customer Perspective” by Jagdish N. Sheth and Rajendra S. Sisodia. The book was first Published in 2012. DIAGNOSING M ARKETING F AILURE O F K ELLOG’S B REAKFAST M ATES

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the milk container. The rest of the product might be of no use at that time. While, in consuming conventional way, each person can take their required amount of cereal and pour required amount of milk to eat. f. Milk Options: They offered their products in four most popular lines in US. But there were no options left for customers for the milk. Customers could not choose the type of milk to be included in the package (e.g. 1 percent, 2 percent or skim).

7.1.2. PSYCHOLOGICAL ACCEPTABILITY: a. Nutrition: Americans believed that vacuum-sealed milk was artificial and might not be equally nutritious. b. Packaging: The product’s high level of packaging was unacceptable to consumers concerned about the packaging’s impact on the environment.

7.2. AFFORDABILITY: Affordability has two dimensions: economic affordability (ability to pay) and psychological affordability (willingness to pay). I will discuss both the issues for Kellogg’s Breakfast Mates how they performed below the anticipated level.

7.2.1. ECONOMIC AFFORDABILITY:

The cost per serving for 4 ounces of cereal and 4 ounces of milk was $1.39 ~ $1.69 depending upon the store chain, which was way high than the market price of that amount of milk and cereal. While cost of one ounce of cereal was 21 cents and cost of one ounce of milk was 3 cents only.

7.2.2. PSYCHOLOGICAL AFFORDABILITY:

This affordability is the willingness to pay. Customers were not willing to pay this high for the product, as it was not giving them the level of convenience it promised. On top of that, the taste of warm milk in breakfast with cereal and concern about the nutrition of the milk made customers willingness lower. Product Per ounce price Amount (in ounce) Cereal $0.21 4 Milk $0.03 4 Price of 4 ounce of cereal and 4 ounce of milk together Price of Kellogg’s Breakfast mates Subtotal $0.84 $0.12 Total

$0.96 $1.39

7.3. ACCESSIBILITY:

Accessibility describes the extent to which customers are able to readily acquire and use the product. It has two dimensions: availability and convenience.

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7.3.1. AVAILABILITY:

Kellogg’s breakfast mate was available in every retail stores that were selling Kellogg’s products earlier.

7.3.2. CONVENIENCE:

In order to accommodate customers demand for cold milk, Kellogg’s eventually decided to place Breakfast Mates in refrigerators. However, this led to even more confusion. The Breakfast Mates was not in a location where anyone would generally expect to find breakfast cereal. As a result, Kellogg’s had to pay the price of creating inconvenience to the customers by withdrawing the product even form the refrigerators.

7.4. AWARENESS:

Awareness explains the extent to which customers are informed about product and are persuaded to try it. It has two dimensions: brand awareness and product knowledge.

7.4.1. BRAND AWARENESS:

Kellogg was a well-known and established brand at that time. So, they didn’t have to do much for their own rand. But, to introduce the new product, they had engaged quite generous amount of effort and money. They had launched 30 million worth of campaign to introduce breakfast mates including two television commercials.

7.4.2. PRODUCT KNOWLEDGE:

Kellogg’s didn’t do well in delivering the product knowledge. The TV ads suggested that Breakfast Mates allowed kids to serve breakfast themselves. In one spot of the commercial, sleepy parents were telling their small children to let them “sleep in”. Apparently, the kids could go downstairs, get Breakfast Mates out of the refrigerator, and set out their own meal. But, in opening aseptically packaged liquid containers, many times young hands squeeze the soft-sided containers hard enough to spill the liquid all over the breakfast table, floor, or themselves. They didn’t show how young hands can open the packaging successfully. So, the product knowledge they offered was kind of not fulfilling in real life.

8. WHAT COULD HAVE BEEN DONE DIFFERENTLY? Kellogg’s was trying to play in the product category, which was beyond their core competenciessuch as milk product. They were pioneer in the breakfast table with their cereals. So, at the time of designing the product, they should have studied more about the consumer preferences. They might have tied up with some major players in the milk category to offer the combo or could have hired someone from that industry to design the best offering. They should have done sample testing before going for mass production to get the customer insight of the product.
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8.1. TARGET MARKET:

Kellogg’s targeted working parents with children. They could have easily targeted young executives, living alone or with partners having no children, as their offer is convenience at breakfast.

8.2. ACCEPTABILITY:

• Kellogg’s should have offered more product options with different types of milk (e.g. 1 percent, 2 percent or skim, chocolate). • Kellogg’s should have designed the milk packages in such a way that it would have reduced the risk of spilling the liquid by young children. • They should have conveyed clear message about the nutrition facts of the milk they were offering to remove the misconception of low nutrition facts of aseptically packaged milk. • They also should have offered different sizes (e.g. 4 ounces, 6 ounces, etc.) so that people can buy their packets according to their need and requirement. • Instead of three packaging, they should have introduced two packaging (one for milk and another foil pack for cereal) and an outer ribbon type packaging, strong enough to hold the two packaging but easy to remove. They could have put the spoon inside the cereal packet.

8.3. AFFORDABILITY: • They should have considered current costs of the customers before fixing the price of the new product. The difference should not be high enough to make the customers reluctant to pay for the product according to its value offering. • They also could have been offered bundle pricing (e.g. 4 packs together, 8 packs together, etc.). • They also could have tied their product with any related social/ environmental cause (e.g. 2 cent for each sold packets will be donated to charitable funds), which might have increased the willingness of socially and environmentally concerned customers.

8.4. ACCESSIBILITY: • Kellogg’s should have put the breakfast mates both in the cereal selves and in the refrigerator section to increase its accessibility.

8.5. AWARENESS: • Kellogg’s should have launched awareness ads before launching the product to educate and to make customers mentally ready for the product. • They should have been delivered clear message about product knowledge in the television commercials. (e.g. how to pill off the plastic of the milk container without spilling the liquid)

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9. CONCLUSION:

Kellogg’s Breakfast Mates was a failure despite of its $30 million worth of marketing campaign. Kellogg’s should have allocated marketing budget carefully for creating right awareness to ensure acceptability, affordability and accessibility. They should have focused on scoring maximum in all “A”s to achieve highest Market Value Coverage (MVC). But, as they did very poorly in acceptability and affordability, their MVC became so low that they eventually had to withdraw their product from the market. Prior to offering combined product (including milk) other than their core competency (cereal), they should have done extensive market research and test marketing to lessen the risk.

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