Breakfast Food Industry Analysis And Strategic Marketing Essay

Breakfast Food Industry abbreviation And Strategic Marketing showBreakfast, defined as the prime(prenominal) meal of a day, has become a common diet of Americans since the rise of human civilization. 10,000 age ago neolithic farmers learnt how to cultivate and so they cr wasteed beginning a staunch food supply. Romans revolutionized the first meal with a texture version which has dominated the world since with wheat, oats and barleycorn being the main ingredients. Cereal is currently the only major(ip) eat component in the present worlds and has built an 8 billon dollar labor in the 21st century. In 1890 John Harvey Kellogg single handedly built the first modern breakfast-food exertion in greek Michigan. This light-emitting diode to dominion of quadruplet big caryopsis companies namely, Kellogg, General Mills, Post, and QuakerStructureEconomic AnalysisThere are four big texture companies holding 86.4% and a few sm completely companies holding 13.6% of the merchandise s hare. Price competition is nonexistent. In 1993 the industry earned a net profit of 6.7% barriers to entry and numerous g all overnment attempts to finish it have failed. Cereal industry is at $8 billion any approach that can gain 1% increase is substantial for the companies.Porters ModelRivalryThe caryopsis being utmostly unify market. The dominance 1970 by the four companies to 90% of ready to eat cereal, which has dropped belatedly the market, is still consolidatedBuyer PowerDue to the fact that at that place are only a few major companies, consumers do not have a big impact on the industry because they grease ones palms small quantities of cereal weekly. Hence Cereal Companies are not conditional to their views. Grocery stores are their main threats because they decide who buzz offs shelf space and this is what cereal companies need.Supplier PowerThere are a few substitutes to cereal thus they give suppliers in cereal industry a brood of power since they are common and do not swing the consumer precedence. second is there is a capability of suppliers merging with these substitute companies. For example borecole companies trying to merge with cereal accompany.Substitutes In 1970s and 1980s land Tarts and breakfast bars began to compete with cereals and consumers had much to choose from. Consumers need for a healthy diet led to an an new(prenominal)(prenominal) substitute i.e. hot cerealPotential Competitors Cereal Companies has so much power due to overleap of competition, but there are a few barriers which make this impossible. The cereal company takes advantage of the cost and economics of scale. This stems from advertising, in 1993, 1.3 million of advert aired costing 762 million dollars daily .with this amount a sore company can create a new cereal. It there for becomes genuinely difficult to compete with these large markets which have likewise used toon characters which have become related to children therefore fixing their presen ce in consumers minds.Technological milieu Technology creates a barrier in that most(prenominal) companies have spent umteen years developing new proceedss hence this makes it impossible to innovate a new product of cereal . To take for the crispy of cereal in milk is a technology challenge that poses as huge barrier.Macro-Economic Environment With the American economy growing, and inflation steady the average person has more than purchasing power and consumers are stop able to afford cereals.Social Environment Demographics These are very vital in any industry. Currently, 49% of Americans consume cereals in the morning. This shows that the social surroundings has a major influence. With the increase of the median income from $31,341 in 1970 to $32,264 it suggests that income hasnt increased proportionally. This elbow room that consumers are paying more for breakfast. The economic scenario of both working parents has led to the need of a quick breakfast in order to get their kids to school and get to their own work place.Political and Legal Environment In 1970s, the cereal industry rose to90% from 68% in 1940. This apothegm the critics come up with strategy of cooperating and creating a monopoly. The Trade commission started to investigate the alleged cooperation but the cereal industry blocked the allegations. In 1970s, there was a delay in handling of profits which went on until aboriginal 1980s, and FTC found barriers to break the industry. First a great relationship between manufacturers and congress members and the mass advertising budget, this go along for 15 years.Strategies Competitive strategies of the industry cycle include low-cost, differentiation, and focusers. However, The cereal industry, uses two of these strategies, low-cost and differentiation.Low monetary appreciate Strategies The effective tolls of low cost strategies include use of coupon lessening was used in 1994 by general mills this year they slew it by $175million others have followed suit. The industry has turned to streamline trade gist a company marketing a variety of products to reduce marketing cost by using economies of scale the cereal industry also attempted to manufacture low-cost strategy. The companies in this industry use high capital production methods instead of labor intensive methods. This is proved by decreasing the amount of workers and the increasing the capital investments. It is also supported by high levels of value added in between raw materials and the final productDifferentiation StrategyCereal industry uses the strategy of differentiation. A figure of speech of name brands are produced aiming different market segments.ie for children and adults being health conscious, this is cognise as product proliferation that is pursuing a big product line. In the cereal industry, production of new products leads to completion. Now there are over 75 new brand namesPricing Strategies Historically the company has worked with on e pricing strategy, this being the price discrimination. But some of the let out players now use price competition.Price Discrimination Coupons have been a staple aspect used by cereal companies. They are intentional to give consumers a lower price that is if they take time to arrest and use themPrice Slashing In 1994 share general millis trimmed their prices but with little success. For the cereal industry, price cuts will not be hurting since profits are highTRENDS The cereal business is all about market domination through marketing and promotion budgets causing evolution of four companies barriers to entry and promotional ware has led to market share for small companies unattainable.Consumer Trends Consumers have finally let go the pricy products opting for private labeled products because they are cheaper. Industries are aware of this problem and are pursuing a better solutionTrends in Product teaching This is a strategy that will see the improvement of the product. For ex ample, entirely orgasm up with a new product. New cereal flavor and many more will see to a companys improvementGrowth Trends world(prenominal) expansion as well as operating cost reductions whitethorn ensure success and growth in the Companies. Consumers are gaining a akin taste as a result of technology leading to a market growth.Breakfast Cereals in Canada OverviewMarket DefinitionThe ongoing tenseness on health and wellness as well as on breakfast being the most important meal of the day continued to drive consumer demand. In particular, high fibre has become a growing trend within breakfast cereals due to promotion of the nutritional value of wholegrain by dieticians, government and subsequentlyThe Canadian breakfast cereals market consists of mainly hot cereals and ready-to-eat cereals. The ready-to-eat (RTE) cereal industry is uniquely qualified by a high concentration, a large advertising-to-sales ratio, high price-cost margins and a very battleful entry of new product s.These facts have turned this industry into a toilsome differentiated-products industry where price competition is unanimously cooperative and brand opposition is left to marketing, product promotion and new product development.Due to this bellicose marketing, rapid development of new products and a certain surge in consumer awareness of natural cereals, the sales of breakfast cereals has grown steadily in recent times with the retail sales figures increasing by 3% last year alone. This translates to about C$ 1.4 billion and a mass of 181,000 tonnes of cereal. During this period, the structure of this industry changed dramatically into a more concentrated market from an earlier largely fragmented state.Market Segments analysisAmong adults An equal issue forth of women, 82 part and men, 79 percent aged 20 years and preceding(prenominal) eat cereal daily. Older adults consume cereal more than younger adults. More Caucasian, 82 percent adults aged 20 and above eat cereal than d o adults from all other races combined.19% percent of adults with a 12th grade educational level and below overfly breakfast, compared to 15% of those with college education. About 75 percent of Canadians earning less than C$25,000 eat breakfast compared to 86 percent earning $75,000 and above.Among Children and Adolescent Adolescent Girls are more potential to skip breakfast than boys White children are more likely to eat cereal for breakfast than black or Hispanic children. Children, 36% consume Whole grain cereals more frequently, followed by snacks, 33%, eat and dinner, 15% each and brunch, 1%. Children and adolescents aged two to eighteen years who eat cereals, 30.9 percent, contribute the most to the whole grains diet, followed by corn and other chips at 21.7%, and yeast breads at 18.1%.Strategies To Successfully Market MUESLI In Canada grow an aggressive marketing campaign around the whole grain quality, grapy and a non-traditional breakfast cereal that is MUESLI. Advocat e for an on-the-go MUESLI breakfast option. Suggest pleasant ways such as portable breakfast for MUESLI consumers together with other fun beverages such as 100 percent fruit juice. trade in the MUESLI idea to parents and sensitize them on the importance of being good fictitious character models for children and teens over the breakfast meal. Sell the natural whole grains cereal flakes, dehydrated fruit, nuts and pumpkin seeds by education to weight-conscious consumers on their effectiveness in weight management Since most of Cereal consumers are children, introduce MUESLI on a marketing gimmick that fruits, nuts and seed may genuinely sharpen their performance in school. Since economics is also a major player in cereal statistics, use the platform to launch MUESLI as a new affordable whole grain breakfast option. stick out in the participation of school breakfast programs which may be a very appropriate and cheap market launching pad.