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Branding Mishaps: Kellogg’s India Venture a Failure

INDUSTRIES HOLD MORE PROMINENCE THAN A BRAND. Phew!! Many of you must have been amazed to read this. There’s at least something, if not everything, that is greater than a Brand’. And I wouldn’t dare to disagree with you! We have been talking a lot about how a Brand overpowers most other tangible and intangible assets of a business, but this one comes with an exception.

Today we talk about how the international breakfast industry leader Kellogg Company often referred to as “Kellogg’s” learnt this the hard way in India. Kellogg’s entered India in 1994 to introduce Corn Flakes into the market, eyeing opportunities right after the Indian economy liberalized.

Kellogg’s, we believe, rode on the globalization horse confidently hoping for a smooth growth and revenue in the Indian economy. The company did everything they usually did while entering new markets without realizing that they were about to enter an emerging economy with strong cultural roots and essentially a very low-priced (moreover universally embraced) breakfast Industry competition which included Hot milk, Idli, Dosa, Vadaa, Bread & Spread, etc depending on various regions.

Kellogg’s believed that its brand equity carried forward from the West would mirror its success in India. So it started building its brand by promoting its quality crispy flakes which were a worldwide success accepted throughout the western countries. But what sounded like a safe strategy, turned out to be drastically daunting for the company.

Firstly, Indians have always preferred their milk hot. When the Kellogg’s crispy flakes are mixed with hot milk, they turned out to be soggy thereby out rightly rejected by the consumers. Kellogg’s later had to modify their products to suit hot milk but the damage had been done.

Secondly, the cost of a 500 gm package of Kellogg’s was itself way higher than its traditional rivals. Kellogg’s brand was mostly meant to be targeted at the middle-class consumer. But the high pricing resulted in the consumers buying their products on one-off basis as a status buy rather than a nutritionally rich breakfast.

 Additionally, Kellogg also managed to overlook the cultural dimensions of India. Something similar to what we saw turned out to be vicious for Pizza Point (see how Pizza point missed out on appealing to the Indian consumers) when they entered India. Apart from the high pricing, it proved to be an unachievable task of convincing consumers about the highly nutritional contents of the corn flakes. The Indian consumer typically holds extremely strong cultural values and refuses to let off traditional (eating) habits. The company should have known and researched well into these factors.

Important lesson to be learnt out of this is that, globalization may be an increasing trend, but regional identities, customs and tastes are distinct as ever. There may be more opportunities in localizing your concept in the market than globalising the market as someone rightly said ‘Think Globally, Act Locally’. What Kellogg’s wrongly tried to do in India was the attempt to turn the consumers against their cultural tastes which wasn’t quite well received.

5 Responses to Branding Mishaps: Kellogg’s India Venture a Failure

  1. Bk Reply

    September 17, 2009 at 9:39 am

    I do not completely agree to Meheer’s view.
    As a parent, majority of us may not be having cereals as breakfast but we do encourage our Kids to have cereals from the view point of health & convinience. In fact the market is nurturing & Kellogg’s has been sucessful in building up the category & holding it’s equity.

  2. Meheer Reply

    September 18, 2009 at 4:35 am

    Hi Bk,

    Thanks for your comment. I wouldnt dare to contradict that you may have been encouraging your kids to have cereals, like many others in India today.

    Infact I would like to put forth further insights to your belief of the Cereals market in India. Kellogg’s entered India in 1994,and is still building its market in India (15 years since in entered). Moreover the company started showing improvements only after they modified their offerings to suit the Indian market. For example, the modification to the Product to suit hot milk; they also had to introduce local flavours like Mango and Coconut based flakes in the guise of their brand Mazza.

    Only when the company started their attempts to connect to the consumer needs in Indian did the Indian consumer start considering Kellogg’s as a HEALTHY and SUITABLE breakfast.

    What I essentially wanted to point out in this article is that only a beloved brand name (that has established well in a developed market) cannot buy you success in India or most other emerging economies. You ought to pitch in to the market with as if you are a startup trying to convince people addressing their needs.

    happy branding,

    Meheer

  3. Pravin Reply

    December 2, 2009 at 2:02 am

    i totally aggree with the info ypu have given. I wanted to know What is Holistic Marketing and how it is used to market a product.. eg Kellogg

  4. Pingback: Holistic Marketing: Taking a Deep-Dive | Posted in Branding Queries | Webalue.com Communications

  5. Meheer Thakare Reply

    December 2, 2009 at 5:08 am

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