The Times 100 Business Case Studies Edition 15

1. The Times 100 Business Case StudiesEdition 15 New products from market research Kellogg’s

2. Introduction to Kellogg’s • The world’s leading producer of breakfast cereals • Manufactures in 18 countries • Products sold in more than 180 countries • Supportive of health and nutrition for over 100 years • A market-orientated business • Focuses on consumer needs • Aims for sustainable growth by expanding its product portfolio • Market research is critical to making these decisions

3. Market research • Finds out what consumers think and want today and in the future • Helps businesses to make informed choices • Aids forward planning • Adds value • Ensures new products will meet consumer needs • Improves competitive advantage

4. Types of market research • Primary • Gathered first hand for specific project, e.g. through interviews, focus groups, questionnaires • Time-consuming and expensive but focused • Secondary • Existing data from published sources, e.g., market research reports, government statistics • Cheaper and quicker to collect but less specific and open to competitors • Qualitative • Conveys opinions, feelings, attitudes • Quantitative • Provides hard numerical data for statistical analysis

5. Breakfast cereals is an established market Little room to increase overall sales Kellogg’s continues to strengthen its product portfolio New product development and launch is costly and high risk Product/brand extension is lower risk by trading on existing brand Introduces new consumers to the brand Extends the life of the brand New product development

6. Kellogg’s market research process • Crunchy Nut Cornflakes is one of Kellogg’s most important brands • Launched 1980; total sales value £68 million • To extend the brand, Kellogg’s undertook market research • A four-stage process • Discovery • Selecting the best idea • Crafting the best idea into a product • Using research to forecast sales • Order in which information is gathered is as important as the type of information

7. Secondary market research provided data On market and innovation trends New products, flavours, foods from around the world Kellogg’s created new cereal prototypes based on these Focus groups tested the prototypes Reported opinions on texture, flavour etc Several ideas appealed Discovery

8. Selection the idea • Most liked ideas from Discovery stage put on picture boards • Boards shown to representative group of consumers • Rated ideas against a scale to identify which liked best and which least • Gave indication of sales potential • Statistical data showed a Crunch Nut Bites idea was most appealing

9. Crafting the product • Qualitative data on the ‘eating experience’ • Helped to explore texture and taste of recipe • Crunchy Nut Bites prototype refined • Four alternative recipes produced • Further focus groups tested new prototypes • Quantitative data enabled Kellogg’s to select the preferred option • New pack design also tested with consumers

10. Forecasting sales • Final test – ‘in-home usage’ • How consumers interact with the product for the first time • Questionnaire to evaluate opinions • Measures how appealing the product is and how likely consumers will be to buy • Data used to construct sales forecast for years 1 & 2 in market • Allows budgets to be set • Supply chain and production organised

11. Brand extension • Market research techniques used throughout the Kellogg’s process • Brand extension – Crunchy Nut Clusters • Launched 2003; now with two varieties • Enables the brand to reach a wider group of consumers • Now worth £21 million in annual sales value