In this report we shall be covering our digital first approach to growing the current market share of the Kellogg’s Krave brand within UK & Ireland from 33.6 million to 50+ million by 2024. We shall begin by critically looking at an overview of the breakfast cereal industry in both UK & Ireland, then drill down into the Kellogg’s historical performance in that category and further zoom into Krave’s expansion in the same market. We shall also do a competitive overview of both Kellogg’s and Krave to understand the various market forces which drive sales volumes and brand growth. We shall explore our research methodology, both primary and secondary to gauge consumption behaviour and what to focus our marketing efforts on to impact consumer behaviour on a mass level.
Subsequently, with these consumer driven insights and our marketing priorities set, we shall deep dive into the strategic implementation of several marketing campaigns which shall drive up sales volumes of Krave cereals to hit the target market share by 2024.
Research Methodology
Our approach to completing the project was to divide it up into three major components.
A. Market Analysis Phase
In this Phase we would be analysing the key players in the breakfast cereal industry, the competitors, consumer behaviour and market trends (including covid). This was largely based on secondary research from verified sources including Statista and Kellogg’s own provided resources.
B. Primary Research Phase
In this Phase we would be conducting primary research in the form of Interviews and Focus groups to gain qualitative insights into actual consumer behaviour from real people. We would also be deep diving into analysing the data we got from the secondary data to derive insights. Once aware of the current opportunities and limitations our research yielded, we would then design our marketing strategy.
C. Strategy Phase
In the strategy phase we would put a hard stop on the primary and secondary research gathering and focus on the implementation of the marketing strategy. This phase would involve calculating the marketing and advertising budget, picking potential distribution channels with high ROI, marketing campaigns and slogans, and what implementation would look like in reality, both offline and online.
Part A: Market Analysis
Market Overview
The breakfast cereal industry in the United Kingdom amounts to US$2,813m in 2021. The market is expected to grow annually by 1.18% (CAGR 2021-2025). The Breakfast Cereals segment includes muesli and other grain-based breakfast products such as corn flakes and oats. Although preferences across Europe and North America vary, breakfast cereals are usually eaten with milk or yogurt. (Statista, 2021)
In Figure 1, On observing the revenue changes over the years for the breakfast cereal industry from 2013 to projected revenues in 2025, we can observe that while there was a huge 12.6% percentage growth from 2019 (US $2583m) to 2020 (US $2908m). This can be attributed to the fact that as more people were quarantined indoors there was a subsequent rise in breakfast cereal purchase. However, there was a % drop of 3.2% from 2020 to 2021, as the outbreak spread and impacted retail production of cereals all around the world. However, things have improved and there is continual projected growth till 2025. (Statista, 2021)
Figure 1
As of 2019, if we observe the key market players in the industry, we can see that Kellogg’s is the most dominant player in the market by brand preference (Statista, 2021).
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 through providing consumers with a wide variety of food products. These are designed to be part of a balanced diet and meet the different tastes of consumers. Kellogg’s focuses on sustainable growth.
This is helped by the fact that on a global stage, in 2020, Kellogg’s was the fifth most valuable food brand worldwide, hitting $6789 Million in revenue that year (Figure 2). (Finance, 2020)
Figure 2
Overall, cereals are up £103.5m thanks to lockdown and the resulting increase in at-home breakfasts.
PESTLE
This pestle analysis of Krave explains how various political, economic, socio-cultural, technological, legal and environmental factors that affect it in the current global market.
Political
Ireland in general has a stable government. However, when it comes to the UK, Brexit has led to several changes in the laws governing industrialization. According to the NHS in the UK and HSE in Ireland, healthy breakfast cereals are those which contain low quantity of sugar, fat and salt.
Economic factors:
In spite of the governments of both UK and Ireland are working hard to support all individuals and families who lost their job or saw a reduction in their salaries, COVID-19 have had an impact on the consumption behaviour of these individuals.
Social factors:
The social factors that can have an effect on Krave include an immediate impression of the general public that Karve works in, and includes culture, conviction, frames of mind and qualities that most of the population may hold as a network.
Technological Factors:
The company will focus on sustainable development in the next few years, and the innovation of recyclable packaging will also create more advantages and benefits. These benefits can be reinvested in the company’s R&D department to develop future diversified progress. With the advancement of technology, digital marketing has exponentially increased the growth of turnover.
Environmental Factors:
Because of the higher rainfall that the UK & Ireland face, it can affect the storage and transportation of the goods being manufactured by Kellogg’s. Kellogg’s also requires a large quantity of water for the food processing laws concerning safe disposal of water and other Waste food resources should be taken care of.
Legal Factors:
According to the UK & Ireland consumer laws, the rate of enforcement and the attitude of authorities towards consumer protection laws, which places various quality standards so as to safeguard the consumers. UK & Ireland date protection and copyright, patens/intellectual property law that has helped Krave maintain a competitive edge over other firms in the market.
Category Overview
Krave is a chocolate cereal made by the Kellogg Company, launched in the UK in 2010 and marketed under the slogan “Taste Unleashed”, later “Here Choccy Choccy” or “It’s Time To Melt”. The advertisements feature the cereal pieces hunting blocks of chocolate. The cereals are sold in Europe under the name Trésor or Tresor depending on where exactly it’s sold. Isolating Krave’s main characteristics as a breakfast cereal so we can identify possible competitors, we conclude its unique food features are:
1. Crunchy Multigrain Cereal Shells
2. Fillings made with real chocolate (Variations include Chocolate Hazelnut, Milk Chocolate, Chocolate Caramel, White Chocolate Brownie, Dark Chocolate)
Using these metrics to classify competitors, we shall split them into two different segments.
1. The number of cereals which directly compete with Krave within its parent company Kellogg’s.
2. The number of cereals which directly compete with Krave made by Kelogg’s competitors.
Figure 3 is how Krave performs alongside Kellogg’s chocolate-based cereals within the UK. (Media, 2020).
Coco Pops has a huge market share, followed by Krave and then Crunchy Nut Nutty. In our marketing recommendations we cannot suggest changes to Kellogg’s existing products, so this is just for observation purposes.
Here is how Krave performs with respect to its competitors’ products comprising Nestle Nesquik, Nestle Choco Shreddies, Tesco Choco Pillows and Weetabix Chocolate. (Figure 4) (Media, 2020).
Figure 4
An interesting side note, we observed that Tesco, while a major market retailer for distribution of Kellogg’s Krave also houses a product that is near equal in terms of taste and design of product called Tesco’s Choco Pillows. Even the price is 50 % of the Krave brand. While there was insufficient data to find the user consumption in the UK, it is important to point out possible in-store competition within Tesco Stores for Krave.
Krave is distributed in the UK, US, France, Germany, Ireland, Italy and India.
- It was introduced in the UK and Ireland in 2010.
- It was introduced in France and Germany as ‘Tresor’ in 2010.
- It was introduced in the US in 2012.
- It was introduced in India as ‘Kellogg’s Choco Fills” in 2017.
Figure 5
Figure 5 is a graph about the penetration of Krave across various markets. An interesting point to note was that even within the European market, Krave was very popular in France. A possible approach was to discern the reasons behind this and deconstruct what we could adapt for the UK/I market.
Consumer Trends
A significant impact of Covid 19 on the breakfast cereal industry within the UK are a diversification of consumer consumption patterns into two broad categories.
One segment has prioritized healthier breakfasts (Ex. Kellogg’s Fruit & Fibre) while the other has doubled down on more indulgent and unhealthier options for breakfast (Ex. Kellogg’s Crunchy Nut). (Weinbren, 2020).
Some significant statistics from a 2019 survey among the UK population shows their current attitudes towards food. (Statista, 2019)
1. 27.48% of respondents prioritize the nutritional information while 26.79% prioritize the ingredients involved in their cereals.
2. 40.42% of respondents eat a healthy and balanced diet “very often”, while 10.1% eat it “always”, thus showing a huge preference for healthy food.
Also, on looking at the data supplied by Kellogg’s on Krave (Figure 6) we segmented the current Krave consumers into the following.
Table 1
Precautions: Though children cover a huge part of the market, we have to take major precautions to not advertise to children below 12 years as it violates Kellogg’s policies. In essence, the major players who influence the purchasing of Krave cereals is teenagers (15+) and parents (20 – 34). Further on we shall be designing our marketing efforts to increase purchase behaviour among both these segments.
Channel Strategy
Kellogg’s retailer distribution strategy is a multi-pronged approach to increase volume sales across the UK and Irish market. The components of this distribution channel comprise large stores, convenience stores, bargain stores, online e-commerce and Supermarkets/hypermarkets. This graph outlines the growth of each channel in terms of Krave Cereal purchases.
Figure 6
On a retail industry sales breakdown in the UK we see that non-specialized food stores dominate the highest share of all retailing at 38.3%. (Statista, 2020) Let us breakdown the major components.
Large Stores – Large stores are the cash cow of the breakfast cereal retail chains and contribute to 70% of the Krave cereal purchases in 2020. However, there seems a slight shift towards a decrease in sales at a CAGR (Cumulative Annual Growth Rate) of -1.6%. While this is a slightly concerning development, it can be attributed to Covid restricting purchase behaviour. The top retailers inside the UK are represented as such:
Figure 7
As observed in Figure 8, Tesco holds a high market share of 48.5 % sales among the top 5 retailers and thus we should be careful about the vested interest Tesco has in pushing its Tesco Choco Pillows in direct competition with Krave Cereals.
Convenience Stores – Convenience stores contributed to 10.6% of the Krave cereal purchases in 2021 and have been on a slight decline. This includes store names like Londis, Best-One, Costcutter, Spar, etc.
Bargain Stores – Bargain stores contributed to 10.6% of Krave cereal purchases as well but at an accelerated CAGR of 21.17%, hence showing an inclination for customers to go out of their way to seek affordable pricing or discounts.
Supermarkets – Discount Supermarkets offer products at cheaper prices. They include Aldi, Iceland and Lidl.
UK Speciality Supermarkets offer a more specialized experience with respect to food offerings. They include Marks & Spencer Foodhall and Whole Foods.
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