Kellogg is a universal firm with a dedication for acquiring excellence in the field of production and sale leading to a very large profit percent resulting to a leading position in the sector of better quality nourishing products in the world market. Kellogg is one of the largest manufacturers of ready-to-eat cereals and convenience foods like cookies and snacks around the globe.
Kellogg is recognized worldwide after its launch with manufacturing units in 17 countries and markets in about 180 countries across the earth. But studies prove that the major part of profit, about two third portions of the total profit, of the company comes from North America.
Kellogg is facing competitions in the marketing of each of its products. The chief rival in the field of ready-to-eat cereals is General Mills. The other competitors of Kellogg in the same field are Post unit of Kraft Foods and the Quaker Oats unit of PepsiCo. General Mills’ Cheerios is the universally top marketed cereal which is the real threat to Kellogg cereals.
The convenience food marketing of Kellogg has to compete primarily with the Frito Lay unit of PepsiCo and the Nabisco unit of Kraft Foods. Frito-Lay is leading the market of salty snacks with its products like Lay’s potato chips, Doritos whereas Nabisco leads in the sector of cookies and crackers.
Kellogg’s largest customers are cost-conscious discount merchandisers such as Wal-Mart and Target. Since Wal-Mart and Target are much larger than Kellogg, they can exert pricing pressure on Kellogg. Wal-Mart accounted for 14 percent of Kellogg’s sales in 2004, up from 12 percent in 2002.
Another major threat is from the customers of Kellogg who are much cost alert. The major customers of Kellogg are Wal-Mart and Target which are bigger than Kellogg, occupying 14 percent of Kellogg’s total sales in 2004. This results in the pricing pressure on the marketing of Kellogg.
Another important threat is the age old products of Kellogg which is the major source of its profit. Newer products in market can diminish them easily. The Trans fat free products face a shortage in the resource for the oil from Soya. So tie ups in the field are very much essential for Kellogg to flourish in this advanced marketing sector.