Breakfast cereal market analysis

The term eat textures c overs a wide variety of corpuscle produces that atomic number 18 ordinarily cooked or polished to improve their texture, flavor and digestibility. Although these returns are oft made from flours, they differ from breads and early(a) parched goods in that they are non usually leavened instead they may be toasted to crispiness like crackers. The refreshing-fashioned ready-to eat breakfast textures are only if some 100 classs old.They owe their development to the Seventh Day Adventists, an American religious sect for whom Dr. JH Kellogg invented a granola-like ready-to-eat breakfast texture/ later Dr.JH Kellogg and his brother WK Kellogg founded the texture company which still bears their mark. Interestingly that a nonher pioneer of the labor was CW come in who had been a patient and ate Dr. JH Kelloggs metric grain and was inspired by it affluent to make his own version of the product.The modelation of the breakfast food grain labo r came about the time the United States began a spiritual rebirth from a predominantly agricultural golf-club to a to a greater extent industrialized urban culture. A strong selling turn on of the ready-to- eat caryopsis was and still is, is their widget (Ensminger, Konlande, 1993, p.261-262). There seems to be indication that at that place will be cockeyed add-on in the consumption of commercial food grain products around the world as the evolution countries attempt to feed their burgeoning population. The present motif presents an analysis of the eat cereal grass sedulousness as well as commercialise. Characteristics of the Breakfast cereal exertion Brand memoir Breakfast cereals are non a homogenous product. The ready-to-eat breakfast cereal pains may be characterized by comparatively hapless economies of scale and relatively low levels of technology.In other words, the entry into this exertion is easy. between the 1950s and the 1970s there was no entry of f reshly firms in the pains even though all the superjacent firms much(prenominal) as Kellogg, public mill about, universal Foods and Quaker Oats, made significant net profit. later on however, there was the entry of new low-end companies in the trades and the number of stags sold by these firms in addition increased substantially from 25 to more(prenominal) than 80, and this number is still on a rise (Cabral, 2000, p. 265-266). Pricing trends For decades the breakfast cereal marketplace was one of the most(prenominal) lucrative in the United States.The industriousness had a consolidated structure dominated by Kellogg, general Mills and Kraft Foods with its channel brand. Strong brand loyalty, coupled with assure over the allocation of supermarket shelf space, helped to rig the potential for new entry. Meanwhile the steady demand harvest of around 3% per annum kept the industry revenues expanding. Also Kellogg, which accounted for over 40 part of the market share, acted as the scathe leader in the industry for years in the industry. Every year Kellogg increased cereal wrongs, its rivals followed and industry profits in addition remained high.However, this tender structure started to multifariousness in the early 1990s when the growth in demand slowed and whence stagnated as the lifestyle and therefrom food recitations changed and the market saw the rise of powerful discounters such(prenominal) as Wal-Mart that started promoting their own brand of cereal. As sales of cheaper store-brand cereals began to take-ff, supermarkets no longer were as dependent on brand names to bring in traffic and hence they started to demand lower prices from the mark cereal manufacturers.Initially, the branded cereal manufacturers tried to condition a meetst these adverse trends. However, in 1996 Kraft which was therefore owned by Philip Morris aggressively have it off prices by 20 % for its Post brand in am attempt to gain market share. Kellogg son f ollowed with a 19 share price cut on two-third of its brands and General Mills quickly did the same. However, this too did not change the consumption pattern the growth rates of which remained flat and revenues then started going down for all the branded cereals (Hill, Jones, 2009, p. 52).The trend continued in 2000s besides and the situation worsened with the personal-label sales keep to make inroads, gaining over 10 percent of the market. To top it all off, the sales of breakfast cereals started to contract at 1 percent per annum and the period between 1998-2001 saw the market leader Kellogg sliding down to the second position for the first time in its history since its inception in 1906, by General Mills that continued to tack together big-ticket(prenominal) price and promotion campaigns. To treat the rising cost General Mills raised prices in 2001 and competitors soon followed the trend.However, some(prenominal)(prenominal) Kellogg and General Mills tried to flow furt her away from price rival in the industry by diversifying and think on brand extensions such as finicky K on the behalf of Kellogg and new varieties of Cheerios. Special K was instrumental and fortune Kellogg recapturing its market leadership position from General Mills and this renewed focus on non-price opposition halted years of damaging price warfare (Hill, Jones, 2009, p. 52). Target markets The breakfast cereal industry targets several diverse markets further focuses upon two coarse ones namely the ball up boomers and their children.Since a high proportion of the treat boomers are highly educated, health appeals are paramount. Thus many brands have fixed emphasis on various types of oat-bran cereal. The other sizeable market, targeted to children is also highly developed. several(a) brands have favoredly used sports character and trade characters such as Tony the tiger to attract the children towards their products and go on brand loyalty. The breakfast cereal indu stry has been adept at target market segmentation and promoting favorable brand images.The strategy of the overall industry especially Kellogg, the market leader, has been to provide a comprehensive assortment for the retailers targeting specific market segments (Michman, Mazze, 1999, p. 109-111) Competition Breakfast cereal industry faces competition from hand-held breakfast products such as bagels, muffins, doughnuts etc. These have in fact led to a decrement in the growth of the breakfast cereal industry. The industry also faces competition from nippy waffles, pancakes, and French toast brands which have prove to be a concern both in the past and the present.Many analysts consider that the competition is due to the change in dietetical habits, though some also suppose that this has been due to th increase in cereal prices for the branded segment (Michman, Mazze, 1999, p. 112-113). Advertisements and promotional activities From the time of WH Kellogg, the breakfast cereal ind ustry has been dependent on marketing strategies and expensive promotions. In fact in 1909 itself the ad budget of Kellogg had reached 1 million per annum. free to say this is a major hassle in the industry which has become price sensitive in present times.This military action has led to a decrease in profits and considering that the market share has not increased since the 1990s, this has become even more of a problem. There were also many insufficiencies generated by coupons and in-store promotions. For instance, more than 95 percent of the cereal coupons were thrown away and not redeemed and approximately half of the promotional expenditures did not reach the consumers in the form of lower prices. Because of these inefficiencies, as well as congressional investigations and competitive treats, the breakfast cereal industry has moved to lower prices.As the returns make by the cereal manufacturers exceed most other grocery products, there is robustious competition among manufa cturers (Michman, Mazze, 1999, p. 113-114). Factors contributing to success and tribulation There are a crew of variables that contribute to the successes and failure of the breakfast cereal industry. These variables and strategies include innovation, target-market segmentation, image, physical environment resources, and compassionate resources. Such factors must be have in various degrees for success. The breakfast cereal industry has shown innovation in product and packaging strategies.In addition to this, breakfast eat bars are a new innovation. The image of the breakfast cereal industry has been positive enough to withstand the dishonor of private-label brand sot a large extent. Also cereal manufacturers with their successful grade records and huge advertisement budgets do not have much difficulty in convincing retailers to give their new product introduction a chance. In 1970s, Kellogg knowing shelf space allocation programs for supermarkets. innovative computers and p rograms developed by members of the breakfast cereal industry now help to deal shelf space according to turnover.The breakfast cereal industry has also been successful in designing packaging for exile and for display purposes. To sell their product brands and retain the company brand value, the breakfast cereal manufacturers have developed the strategy that colligate the brand name to the company name instead to identifying brand products by their one-on-one brand names. For instance, Kelloggs Rice Krispies and Special K, as well as General Mills Total Raisin Bran and Total feed Flakes use this strategy. To fend off private brand competition by crack product line depth and high brand identification (Michman, Mazze, 1999, p. 114-115).