The challenge is to introduce a new breakfast cereal and to seek to market it in Australia. In order to do so current marketing theories are briefly examined, and the marketing strategy is developed against the constraints imposed by changes in the following six macro-environments outside the organisation: demographic, economic, natural, technological, political and cultural. Also, having regard to the virtual dominance of the breakfast cereals market by five major companies, attention is focussed on special characteristics of the product which could ensure some market penetration.
Manufacture and Marketing of a New Breakfast Cereal in Australia Introduction The product is a new breakfast cereal called “GoodHealth”, and it differs from those already on the market in two important respects: its ability to remain crisp for longer when milk is added, and its lower salt content (Oakenfull, 2009). The product will be manufactured to complement the existing range of food products already produced by “PolyFoods”, a small company founded in 2001 and located in the outskirts of Canberra. The first intention is to market GoodHealth throughout Australia, and then to expand into the global marketplace. In order to achieve this aim attention will be given to exploiting modern marketing theories as they apply to the appropriate macro-environment outside the organisation.
The application of marketing theory The aim of marketing is to sell the product and over the years a number of theories have been developed to identify the factors which are necessary for the construction and implementation of an effective marketing strategy. Shannon (2000) suggests that traditional practices promoting brand loyalty, as advocated by Kotler et al. (2009), may have limited future success and highlights ‘Salience’, or achieving awareness and use as the key to brand growth.
Linn (2010) offers the thought in “General Theory of Marketing” that the central feature is the ‘Transaction of buying and selling’ based on the perceived ‘value’ of the product by the buyer. This perception, which is underpinned by ‘brand image’, is subject to such fluctuations as needs, financial situation, experience and taste. Linn (2010) offers a dual model of the process ‘Price Asked < Perceived Value’ and states that “The condition for the transaction being performed is, in principle, that the buyer values the product to equal or more than the price asked” (Linn, 2010). It is now appropriate to consider the six main macro-environments which will affect the target market for the product and consequently hte company’s product strategy.
Analysis of the macro-environment Demographic In the late 1990s 49% of Americans ate cereals at breakfast – almost 20% more than any other product or combination (Topher, 1997). Statistics gathered in Australia at about the same time (AUSSTATS, 1999) found that over 65% of the population ate cereals daily, although there was no clear breakdown into easily identifiable products. However, the figures showed that children in the age range 2-15 years consumed more breakfast cereals – as did adults over 45 years – than the age group 16-44 years. These trends indicated some marketing target areas.
Firstly the adolescent group, and the over 65s whom generally preferred ‘something warming’ such as porridge. For the former it is essential to stress that breakfast cereals are not just nourishing but ‘cool’ and for the latter it is important to stress that the added vitamins and nutritional properties of breakfast cereals, and “GoodHealth” in particular can contribute to wellbeing and delay the onset of various diseases such as cancer of the bowel and gut. The fact that the cereal stays crisp – even in hot milk – helps the ‘warming’ scenario.
A change in family patterns in recent years has meant that, with two working parents, breakfast cereals make it easier for the family to get a quick nourishing meal before school or work. Conversely, people in the lower socio-economic band can enjoy a cheaper more nourishing diet. The simplicity of this scenario is, however, becoming eroded by the introduction of “energy bars” containing fruit, nuts and cereals which, it is claimed, can be used as a meal or consumed on the move. To counter this it is necessary to stress that such foods usually are high in sugars, and overindulgence could lead to obesity and diabetes.
“The main manufacturers of breakfast cereals in Australia are: Kellogg’s, The Sanitarium Health Food Company, Uncle Tobys and Lowan Whole Foods [Gograins]. These five companies have a virtual stranglehold on the industry and this, compared with the relative “inelasticity” of the nature of cereal makes competition difficult. The development of new breakfast cereal products is not difficult, but market entry is harder due to the economies of scale and name recognition. Some progress could be made by reducing transportation costs, resuming the inclusion of ‘packet toys’ and competitions, and use of the media to encourage brand and benefit recognition. A less desirable solution for a new product could be to ally the company with one of the majors in producing an attractive subsidiary product.
The growing insistence of the ‘Green Lobby’ for all sectors of industry to make their products ’environmentally friendly’ is introducing new constraints, in many cases, backed by governments. Whilst most people and organisations have a vague idea of what is involved, it should go beyond waste management and the elimination of unnecessary packaging. Leonidou (2006) of the University of Leeds has carried out a formidable literature survey and, as a result, proposed “A Political Economy model of enviro-marketing strategies”. This, it is hoped, will elucidate the profile of a number of enterprises including “the mediating role of the firm’s environmental orientation, as well as the elements of environmentally-based
marketing mix… [and] the consequences of implementing strategy on the firm’s marketing performance” (Leonidou, 2006). There are elements in such an approach which could be of value in the breakfast cereal market, which could be coupled with greater use of the internet and TV so as to indicate that the product uses green resources to promote its marketing. It would also be sensible to consider highlighting the advantages of recycling the packaging. Another solution would be to use ideas from the coffee producers. They offer basic rigid containers – glass or plastic – with refill packages offered at a considerably lower price. In the case of breakfast cereals a plastic container could be provided [with an airtight lid to keep the product fresh]. The pack could be decorated with pictures of cartoons or ‘favourite’ characters. Cheap disposable refills would be available at a much reduced cost.