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Analysis of Kellogg's Customer Service and Satisfaction

Essay details

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Table of Contents

  • Introduction
  • Findings
  • Analysis
  • Place
    Price
    Promotion
  • Conclusion

Introduction

With an annual sales over 4.5 billion pounds it is easy to say that Kellogg’s is the world’s leading producer of breakfast cereals. Its products are manufactured in 18 countries and sold in more than 180 countries. For more than 100 years, Kellogg’s has been a leader in health and nutrition. It has done this by providing consumers with a wide variety of food products.

Kellogg’s suffered its seventh successive drop in quarterly sales in the third quarter of 2016. The cereal manufacturer blamed the figures on poor demand for its products in the US and a challenging market in the UK. According to food dive, their sales had dropped by 2.3%.

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Recently in our industry trends have changed. Today customers are looking for more healthier selections and convenient choices. In this case, I intend to explore new marketing strategies which will help boost Kellogg’s sales. I have included three supporting documents which of them include customer review, financial report and newspaper article. By using marketing mix, SWOT analysis and Boston Matrix it will help Kellogg’s have higher sales.

Findings

  1. Customer review, tells us that Kellogg’s doesn’t diversify their products as a multinational company they should develop their products more. Hence, has been unable to satisfy their customers. In the documents customers, have been complaining about various aspects in which Kellogg’s can improve their products in.
  2. Financial information, shows how Kellogg’s over the past several years has been gradually decreasing in income and sales. This is just confirming to us how Kellogg’s can improve in many any aspects. To conclude, they are a multinational company they should have better financial records.
  3. The newspaper article produced by BSBC on august 2,2018 is a analysis of how Kellogg’s has been decreasing in sales rapidly over the past years, it has been stated that it decreased by 3.8% however it is expected to get an increase.

Analysis

Kellogg’s has a range of cereals such as All-Bran, Chocos, Chocolate Corn Flakes, Cinnamon and Nut Feast Crackers including Cereal Bars Frozen Waffles Cookies Toaster Pastries Snacks having flavors of fruit and Vegetarian Foods. Cereals are Kellogg’s most popular product due to the wide variety they offer.

Place

Kellogg’s is a multinational company its products are manufactured in 18 countries including Canada, UK, Australia, and Latin America.it operates in over 180 counties globally and is the largest cereal producer.

Price

Kellogg’s pricing is very strong wise and competitive. They have discounts and promotions sometimes around the year. They scale a variety of prices depending on areas or country. Areas where manufacturing costs are high, their products are priced at a higher price and same goes when areas are low.

Promotion

Kellogg’s has a very strong marketing strategy. It has been using media and comics as a strong source to attract younger kids and their audience in general. Since 1990 Kellogg’s has been coming up with many sponsorships and promotional campaigns. One of the several sponsorships include their sponsorship from 1993 through 2006 with ‘Terry Labonate” a popular kid’s television series.

Question marks: Kellogg’s have many products which have low market share however have a high possibility to grow or are growing rapidly. Some of those, products include their rice kipsies. Rice kipsies a snack produced by Kellogg’s is one of their consumer’s favorite, its growing rapidly. It has a low market share and a high growth rate.

Dogs: Are products that have a low industry growth rate and low market share. Their waffles and pop tarts aren’t very popular. Including their Asia/Pacific segment of Kellogg’s. Liquidation strategies should be focused on those products.

Stars: are the rising, products which are very acceptable to grow and increase sales easily and have a high possibility be successful, some of their rising products include all of their special k cereals and healthy products.

Dogs: are products like pop tarts and waffles those products have low market share and growth rate they aren’t likely to have an increase in sales and are struggling with trying to make profit.

Kellogg Co reported lower-than-expected quarterly profit margins on Thursday as the cereal maker spent more on marketing and transportation and had to cut prices on snack foods after it stopped distributing them directly to U.S. retailers. The Battle Creek, Michigan-based company switched to its more widely used warehouse model last year to reduce expenses at its U.S. snacks business. But delivering its Pringles and Special K cereal bars directly to stores meant that it could charge retailers higher prices. Second-quarter adjusted gross margin fell to 35.7 percent, below the 37.6 percent analysts expected, according to Thomson Reuters I/B/E/S. Margins were also hurt by higher transportation costs that have been plaguing Kellogg and other packaged goods companies all year.

Kellogg shares fell as much as 3.8 percent, weighed by margin concerns even after the Corn Flakes maker topped Wall Street’s net sales estimates for the fifth straight quarter and raised its full-year sales and profit outlook. ‘Kellogg’s profit margins are below peers, which leads us to believe there is significant room for improvement,’ Edward Jones analyst Brittany Weissman said, adding that the market had expected more from Kellogg going into the quarter.

First-half organic sales growth was pulled down by about 2 percentage points because of last year’s direct store delivery exit, Chief Financial Officer Fareed Khan told analysts on a post-earnings call. That drag should lessen through the third quarter because the warehouse model will have been in place for a full year, he said.

Kellogg, struggling with shifting trends as more people opt for low-sugar options, protein bars and yogurt for breakfast over cereals, has been buying smaller snack brands aimed at health-conscious consumers and expanding in emerging economies.

The company, which bought protein bar RXBAR for $600 million last year, raised its full-year outlook betting on this acquisition and its investment in Nigeria’s Multipro. Kellogg said it expects net sales to rise 4 percent to 5 percent in fiscal 2018, and earnings per share to rise 11 percent to 13 percent, both on a currency-neutral basis. The company had previously forecast a sales rise of 3 percent to 4 percent and earnings per share growth of 9 percent to 11 percent.

Net income rose to $596 million, or $1.71 per share, in the quarter ended June 30. Excluding items, Kellogg earned $1.14 per share, beating analysts’ average estimate of $1.05. Net sales rose 5.8 percent to $3.36 billion versus expectations of $3.30 billion. (Reporting by Richa Naidu in Chicago and Nivedita Balu in Bengaluru Editing by Saumyadeb Chakrabarty and Meredith Mazzilli)

Conclusion

To conclude Kellogg’s clearly has been unable to satisfy their customers and keep in touch with the changing trends in the market. The three tools I have chosen will help identify Kellogg’s problems and embrace solutions for them apply. SWOT Analysis will help Kellogg’s improve their weaknesses and will identify their strengths, threats and opportunities. The Boston matrix will give Kellogg’s a broader image of their products and which of them needs improvement. Lastly the marketing mix, which will guide the business into the areas of improvement needed in their product, place, price and promotion. By applying these strategies, it will guide Kellogg’s into receiving an increase in sales.

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