The Breakfast Cereal Market

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Executive Summary

Experts worldwide agree that breakfast is the most important meal of the day. Breakfast cereal is the best way to kick of a healthy start to a day as it contains low-fat, nutrient-dense food with many essential vitamins and minerals. Not only is cereal healthy, it is usually a very reasonable price and extremely easy to put together on a day to day basis. Kellogg’s is one of the most successful Australian cereal brands on the market today with a diverse range of cereals.

One of the most recent cereals to the Kellogg’s product line is “Smart Start Healthy Heart” (SSHH). SSHH focuses mainly on the idea of a consumers having healthy, well balanced and tasteful start to each morning. Although with an alarming level of sugars and other trans fats, it is quite hard to believe that this cereal is “smart for the heart”. This marketing plan will focus on developing a newly reconstructed look at the way SSHH is put together in order for the cereal to be a more healthy breakfast option.

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As well as modifying the cereal, the marketing plan will look to introduce an advertising campaign focusing on a target market of Adults (mainly parents) and children.


Kellogg Company was created by Dr. John Harvey Kellogg and Will Keith Kellogg, his younger brother and business partner. In the late 19th Century, they accidentally discovered a brand new breakfast cereal. They could not imagine that they had the potential to create a multi-national, huge global industry that would change the eating habits of people all over the whole World.

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In modern day, Kellogg’s consumers want a cereal that is healthy and convenient for their lifestyle. Kellogg Company then continued their exploration and development untill they produced a new product line call “Smart Start Healthy Heart” in 2006. Although Kellogg is one of a limited number of top “Breakfast Brand”, but it still far behind the rest in terms of healthful ingredients.

Situation Analysis

The situation analysis incorporates both the internal and external marketing environments for the new product line “Smart Start Healthy Heart”. A SWOT analysis can identify the strengths and weaknesses of internal, and the opportunities and threats of the external market. The market is focusing on the goals which are identifying and developing the best of product marketing strategies, lead and find out how to please the customers in a better way than other competition (Hill & Westbrook, 1997). Hess and Lucas (2004) stated that allocating resources between marketing research and manufacturing, which required us doing the right thing or doing the thing right. Therefore, as a manufacturer, we need to deeply understand our current situation.



A Pest analysis can layout the external environments of the product.

Goals and Objectives

Corporate Strategy

Kellogg’s promise that they constantly provide their consumers with high quality nutritious foods that were enjoyable to eat. But it is one of the biggest companies which use a lot of artificial sweeteners and Tran’s fats in their product. This is not ideal for a cereal with the brand name “Smart Start Healthy Heart”.


Because “Smart Start Healthy Heart” is not as popular as other brands on the product line, so this marketing plan is trying to rebuild the healthy image and increase the market share for the product line. Also the product’s ingredients do not embrace the brand name “Smart Start Healthy Heart”, which is also not healthy enough for the consumers, so the ingredients need to change as well. The purpose for this marketing plan is trying to make the product match to its name and build the words “Smart Start Healthy Heart” in the minds of the many Kellogg’s consumers.

Target Markets(S) & Segmentation

Target Market(s)

For the purpose of this marketing plan we will define what Target Markets entail; it is a market segment that has been purposefully picked by a corporate(s), with the intention of focusing their marketing efforts and or a group of customers with similar needs and wants (Elliott, G. et al;2012). More importantly, for this plan, the breakfast cereal industry in Australia, particularly the Kellogg’s Nutrigain and Special K with its “Start Smart healthy heart” concept we have analyzed that both adults and children will be the key elements’ within the demographic variables ‘mainly adults’, therefore this will be our main target market. This is as a result of the two key aspects; the fact that adults (parents) have the buying power (income) therefore they control the decision making (initiators), and on the other hand, the kids (ages from 2-12) years are the main consumers as they have a high usage rate.

Benefits of the product to the target market

There is a position of the health factor just like most cereals, either passive (low-sugar, organic, etc.) or active (functional heart health, gut health) (Innova Market Insights, 2010), and this is critical in creating a positive brand in the market that caters for all demographics in general, but children in particular for the purpose of this plan. Cereal in Australia and Queensland in general is regarded as an affordable product, although, there are some generic brands. Kellogg’s’ Nutrigain has been a strong competitor in terms of its taste, however research has shown it needs repositioning as a healthy product. In addition as a cold cereal it can be offered and packaged in other forms or as a snack style pack for on the going eating.

Market Sizes and Competition

Relative to Australia and similarly , In more developed countries as well as other states including NSW and WA, breakfast cereal markets, particularly the US and UK, where they tend to be the predominant breakfast choice, the market is extremely competitive, with high levels of product activity and promotional expenditure.(Innova Market Insights, 2010) Over three-quarters of global breakfast cereal launches recorded over the past year had a health positioning of some kind, rising to over 92% in Australia and 85% in the US (Food & Beverage Process 2010). In Australia the introduction of innovative functional cereals, with launches over the years including Nestlé’s Uncle Toby’s Plus Omega 3 Lift and Health wise for Bone Wellbeing, Kellogg’s Just Right Antioxidant (


In the breakfast cereal market we perceive that because there are so many products with many similarities, we have decided to position our products using a brand position strategy. Companies within the same sectors segment the market in different ways for differing objectives. Using Kellogg‘s Special K and its cereals – the following diagram highlights the experiences (attributes) that we position the product. In the diagram below we have used segmentation based on experiences within various ages or demographics (kids, teens and adults).

Positioning Map

The breakfast cereal segment has the most diverse product range within the industry life stage’s segmentation and Kellogg’s can increase its market size by refocusing its promotional activities and advertising onto its all-bran brand as it targets parents and therefore promoting an image which helps maintain a healthy digestive system, managing blood glucose levels and maintaining a healthy heart because of its high fibre levels. (Digestion & Food, all

Marketing Mix

The product name “Smart Start Healthy Heart” itself describes the aim of Kellogg’s. Research provided by ‘American Heart Association’ and ‘BEACH’ (Bettering the Evaluation and Care of Health) indicate that “Smart Start Healthy Heart” is the only product in the cereal market which helps reduce the chances of increasing blood pressure and Cholesterol levels. This is very beneficial for kids at a younger age as it reduces the chances of heath illness in their adult period. As the product is going through a development stage, the major advantage will be its reduced levels of sugar, which originally contained 38% of the overall nutrition. This change in “Smart Start Healthy Heart” will reduce the amount of calories produced, making it a better breakfast cereal.

According to Dr. William Dietz (director of the Division of Nutrition and Physical Activity), ‘Parents need to be in charge of what food is served’ to their kids. This is particularly important as it helps maintain health standards. The product designs attract more mature audiences as you refer to words like ‘Smart’ and Healthy’. Parents in this case are the major audience as the product contains features, which helps kids to make a ‘healthy start’ to their day. The product brand is also considered as a key point for parenting selection. Kellogg’s is one of the leading brands in the cereal industry.


When it comes to distributing product, an important factor is to consider whether the product will be distributed directly or indirectly. For a newly established business it is hard to raise awareness of brand through direct selling. Since Kellogg’s is already a well know brand in the Australian market it has potential to distribute in both direct and indirect markets, however indirect distribution through retail industry would be a beneficial selling point. The retail industry is made up of 3 major distribution areas which include grocery stores, convenience store and other special categorised stores. The grocery sector is the most dominant distribution channel for the cereal market. According to the 2006 ABS data (Figure 1), 52% of the turnover of the food and drinks industry was earned through grocery stores. Kellogg’s should continue to distribute the product to its major grocery distributers, such as Woolworths, Coles and other grocery outlets, due to the faster volume growth rate in the grocery channel (Table 2).

Contact with the retailers should be maintained on weekly basis, this helps both parties to keep up to date with the supply of stock as well as helps resolve any issues relating to the product. Since cereal products are demanded in grocery stores, competition will be much tougher as there will be many other different brands, however the features contained in “Smart Start Healthy Heart” makes it special to stand out in front of other products displayed. Kellogg’s will be able to raise quicker awareness of SSHH through the grocery stores as nutritious snacks are demanded in the industry (Table 2). Another selling point would be through the innovation of technology. In today’s era technology is a daily need, as both parents and kids browse through internet every day. This gives Kellogg’s opportunity to sell products online through its own website thus creating an opportunity for direct selling.


The primary function of pricing is to specify how much money will be received in exchange for the product supplied. Each customer needs a unique, compelling and profitable reason to purchase a product. A change in a product often involves change in a price however Kellogg’s “Smart Start Healthy Heart” should aim to keep their price same. The reason for this is because Kellogg’s is already a well develop brand. For some, price will always be a major determinant, whereas for others, it may come down to the product quality and the benefits of the product. Price is also conducted through the design of the cereal box. The design and layout of “Smart Start Healthy Heart” cereal drags the attention of mature audiences.

One of main question which comes to mind when deciding a cereal brand is, is this product healthy? According to the American Heart Association “Smart Start Healthy Heart” is the only approved breakfast cereal proven to reduce high blood pressure and cholesterol. Breakfast cereals on average cost around $4.50 Plus, Kellogg’s “Smart Start Healthy Heart” should be priced at $4.00. When products are sold at a lower prices it often results in higher sales, especially when launching a new or improved product because people want to try it and see how the product works.


Promotion is an essential element in the marketing mix. It is used as an important tool by businesses to inform, remind and persuade customers about the products and services they have to offer. Most competition can be taken out through proper promotion strategies, especially in the breakfast cereal industry. “Smart Start Healthy Heart” has the ability to be advertised in many different promotional areas as it is a product operating under Kellogg’s brand. According to the Kellogg’s annual report, it has a turnover of over $13.2 Billion. Keeping in mind of the turnover, it allows “Smart Start Healthy Heart” to be advertised across many different TV channels to reach out to mature audience and little kids. Advertisements of “Smart Start Healthy Heart” should be aired mostly during early morning and evening when children’s are watching cartoon and kids program’s.

Direct promotion involves part of pull strategy through discounted offers. Coupons are the best way to approach audiences who like purchasing cheaper products. This can be done through newspaper advertisements and kid’s magazines. A major selling point through promotion is the use of trade promotions, which involves push strategy such as ‘point-of-purchase display’. This can help portray the ‘Healthy Eating’ image through store displays and free samples of “Smart Start Healthy Heart”. Personal Selling is also another option to consider as Kellogg’s can send company reps to different areas to promote the cereal.

Evaluation & Control Procedures

The purpose of having control procedures is to ensure that current objectives are being completed and ensuring that there is a contingency plan in place if the objectives fail to meet the appropriate standard. To measure whether the objectives are being met, it is shown in the above Gantt Graph that there is a Campaign Evaluation being undertaken once every three months, this will measure product profitability, store demand and customer feedback. To measure product profitability, during the 2 month period where no evaluation is undertaken, there will be a set goal set by management of the amount of cereal boxes ordered from supermarkets, convenience stores and individual stores, if the goal is not met, all departments must rethink their strategy of how to appeal this cereal to customers. This method will also be used to measure store demand. For customer feedback, the research department will hire extra workers to conduct a survey on potential customers from a variety of supermarkets and convenience stores. All the negative feedback will go back to the required departments to further improve this cereal.

Conclusions and recommendations

To conclude, Kellogg’s will need to focus on restructuring the “Smart Start Healthy Heart” cereal in the two main areas of production; Reducing the amount of sugars in the cereal to maintain its reputation of being a cereal that is healthy for the heart, and start a promotion campaign focusing on advertising at the beginning of school periods so that the major target market will be aimed toward Adults (parents) and children. By changing a few simple characteristics in the cereal, the company will have the possibility to remain strongly committed to communicating with children and their parents regarding the role of an active lifestyle and appropriate food choices (Elliot, 2012).

Bibliography/Reference List

  1. Atkin, C. K. Observation of parent-child interaction in supermarket decision-making, Journal of Marketing, 42(4), 41-45 Bainbridge, J. (2010, Mar 17). Off to a healthy start. Marketing, , 28-29.
  2. Elliott, G., Rundle-Thiele, S., and Waller, D., 2012. Marketing. John Wiley & Sons, Australia. Hess, J. D. & Lucas, M. T. (2004), Doing the Right Thing or Doing the Thing Right: Allocating Resources between Marketing Research and Manufacturing, Management Science, 50(4), 521-526. Retrieved from
  3. Hill, T. & Westbrook, R. (1997), SWOT Analysis: It’s Time for a Product Recall, Long Range Planning, 30(1), 46-52, via Science Direct database
  4. Lee, C. M., & Moskowitz, H, R., & Lee,S-Y. (2007). Expectations, needs and segmentation of healthy breakfast cereal consumers. Journal of Sensory Studies, 22(5), 587-607.
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The Breakfast Cereal Market. (2016, Mar 24). Retrieved from

The Breakfast Cereal Market

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