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SYLLABUS INTRODUCTION TO
MARKETING
SYLLABUS INTRODUCTION TO
MARKETING
SYLLABUS INTRODUCTION TO
MARKETING
The Manager’s Role
EXTRA READING (Source:
https://www.icmrindia.org)

Kellogg's Indian Experience: A Failed Launch

In April 1995, Kellogg India Ltd. (Kellogg) received unsettling
reports of a gradual drop in sales from its distributors in Mumbai.
There was a 25% decline in countrywide sales since March1995,
the month Kellogg products had been made available nationally.

Kellogg was the wholly-owned Indian subsidiary of the Kellogg

Company based in Battle Creek, Michigan. Kellogg Company was
the world's leading producer of cereals and convenience foods,
including cookies,crackers,cereal bars, frozen waffles, meat
alternatives, piecrusts, and ice cream cones.Founded in 1906,
Kellogg Company had manufacturing facilities in 19 countries and
marketed its products in more than 160 countries. The
company's turnover in 1999-00 was $7 billion. Kellogg Company
had set up its 30th manufacturing facility in India, with a total
investment of $ 30 million.
The Indian market held great significance for the Kellogg Company because its US
sales were stagnating and only regular price increases had helped boost the
revenues in the 1990s. Launched in September 1994, Kellogg's initial offerings in
India included cornflakes, wheat flakes and Basmati rice flakes. Despite offering
good quality products and being supported by the technical, managerial and
financial resources of its parent, Kellogg's products failed in the Indian market.
Even a high-profile launch backed by hectic media activity failed to make an
impact in the marketplace.
Meanwhile, negative media coverage regarding the products
Every 100 packets sold
increased, as more and more consumers were reportedly
rejecting the taste. There were complaints that the products Regular customers
2%
were not available in many cities. According to analysts, out of
every 100 packets sold, only two were being bought by regular
customers; with the rest 98 being first-time buyers. Converting
these experimenters into regular buyers had become a major
problem for the company. First-time buyers
98%

By September, 1995, sales had virtually stagnated.

Marketing experts pointed out various mistakes that
Kellogg had committed and it was being increasingly felt
that the company would find it extremely difficult to
sustain itself in the Indian market.
First-time buyers Regular customers
The Mistakes
Kellogg realized that it was going to be tough to get the Indian
consumers to accept its products. Kellogg banked heavily on
the quality of its crispy flakes. But pouring hot milk on the
flakes made them soggy. Indians always boiled their milk
unlike in the West and consumed it warm or lukewarm. They
also liked to add sugar to their milk. When Kellogg flakes were
put in hot milk, they became soggy and did not taste good. If
one tried having it with cold milk, it was not sweet enough
because the sugar did not dissolve easily in cold milk. The rice
and wheat versions did not do well. In fact, some consumers
even referred to the rice flakes as rice corn flakes.
In early 1996, defending the company's products,Managing
Director Avronsart said, "True, some people will not like the way it
tastes in hot milk. And not all consumers will want to have it with
cold milk. But over a period of time, we expect consumer habits to
change. Kellogg is a past master at the art, having fought - and won
- against croissant-and-coffee in France, biscuits in Italy and
noodles in Korea. " A typical, average middle-class Indian family did
not have breakfast on a regular basis like their Western
counterparts. Those who did have breakfast, consumed milk,
biscuits, bread, butter, jam or local food preparations like idlis,
parathas etc. According to analysts, a major reason for Kellogg's
failure was the fact that the taste of its products did not suit Indian
breakfast habits. Kellogg sources were however quick to assert that
the company was not trying to change these habits; the idea was
only to launch its products on the health platform and make
consumers see the benefit of this healthier alternative.
Word Word form Definition

Subsidiary (of a Adj owned or controlled by another company

business
company)

Quality Noun the standard of something when it is compared to other things like it; how good or bad
something is
Media Noun a way of communicating information, etc. to people
websites and software programs used for social
Social media networking

Habit Noun usual behaviour

Middle-class Noun the social class whose members are neither very rich nor very poor and that includes professional
and business people

Failure Noun lack of success in doing or achieving something

Assert Ver to state clearly and definitely that something is true
Platform Noun an opportunity or a place for somebody to express their opinions publicly or make progress in a
particular area
DISCUSSION
1. What is the lesson learn from the Kellogg’s failure in the Indian market?
The lesson learn from the Kellogg’s failure in the Indian market is not be too confident
about the product brand when entering a new market without carefully analyzing and
researching that market.
2. Why do business need to analyze the business environment?
The purpose of the Business Environment Analysis is to identify the potential
influence of particular aspects of the general (economic, political, cultural,
technological, natural, demographic, international environments) and operating
environments (company’s suppliers, customers, competitors, and public) on business
operation. Furthermore, an analysis of business environment facilitates managers to
identify strengths, weaknesses, opportunities and threats that are to be addressed
by them. Thus, such analysis is quite important for the existence and for the progress
of the business entities.
EXERCISE
Exercise 1: Matching these words with the approriate meaning.
Word Meaning
1. Sales a. a statement that somebody makes saying that they are not satisfied

2. Product b. to make a product or service available to the public for the first time; to
become available for the first time
3. Market s.th c. a person who tries or tests new ideas, methods, etc. to find out what effect
they have

4. Turnover d.the total amount of goods or services sold by a company during a particular
period of time

5. Launch s.th e. a thing that is grown, produced or created, usually for sale

6. Complaint f. the number of items sold

7. Marketplace g. a person who buys goods or uses services

8. Consumer h. the activity of competing with other companies to buy and sell goods,
services, etc
9. Experimenter j. to advertise a product in a particular way in order to make people want it
 
Exercise 2: Disscusing the impact of each event in the business environment

Event Impact

1. High unemployment in a region.

2. Good relations between suppliers and a

company

3. The internet has opened up.

4. Vietnames people invest a lot in education.

5. People care more about health issues

 recession Unemployed
Economy people have
lower incomes

financial costs
Unemployment Heath
problems
High
unemployment in
a region

Waste of skills Widespread

poverty

Reduced
economic Political
development instability
 Original
cost
Delivery
Reduced
service
costs

Good relations
Product between Increased
quality suppliers and a efficiency
company
 Using the Expand
Internet for broadcast
Research coverage

Collaborating Reduce
with Other The internet operating
Businesses has opened costs
up

Using Digital Connect with

Advertising suppliers

Marketing to a Rise of
Wider Area telecommutin
g
Informations
sharing and
finding
 Vietnames people invest a lot in education

Improving the general labor standard

Contributing to economic development

People care more about health issues

Modern medical equipment

Development of medical industry

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