FROSTED FLAKES Situation Analysis Yoji Suzuki Table of Contents Situation Analysis 1.1. Executive Summary……………………………………………………………………3 ​ ​ 1.2. Introduction…………………………………………………………………………… 3 ​ ​ 1.3. Company/Brand History……………………………………………………………… 3 ​ ​ 1.4. Product Evaluation……………………………………………………………………. 5 ​ ​ 1.4.1. Background 1.4.2. Product Features 1.4.3. Product Advantages 1.4.4. Product Disadvantages 1.4.5. Product Promotion 1.4.6 Product Evaluation Conclusion 1.5. Consumer Evaluation………………………………………………………………….7 ​ ​ 1.5.1. Product Buyers 1.5.2. Product Non-buyers 1.5.3. Where to buy Frosted Flakes 1.5.4. Health-Conscious Consumers 1.5.5. Product Usage 1.5.6. Conclusion 1.6. Competitive Evaluation………………………………………………………………..11 ​ ​ 1.6.1. Competition Overview 1.6.2. Direct Competition: Cheerios 1.6.3. Competition Weaknesses 1.6.4. Competition Strengths 1.6.5. Competitive Analysis Conclusion 1.7. Communication Environment Evaluation…………………………………………….15 ​ ​ 1.7.1. Market Trends 1.7.2. On the Decline 1.7.3. New Cultural Trends 1.7.4. Frosted Flakes Shakes 1.7.5. Social Media 1.7.6. Fitness Focus 1.7.7. Social Media Complications 1.7.8. Conclusion 1.8. S.W.O.T……………………………………………………………………………….18 ​ ​ 1.8.1. Strengths 1.8.2. Weaknesses 1.8.3. Opportunities 1.8.4. Threats 1.8.5. S.W.O.T Conclusion 1 1.1 Executive Summary Throughout the first half of the Spring 2018 semester, Team One - Eye of the Tiger explored secondary research regarding the history and current status of Kellogg’s Frosted Flakes. After delving into various case studies, the company website, and market research, the team determined the product’s history, main competition, and market environment. Upon research, the team discovered the 66-year-old brand’s iconic Tony the Tiger mascot has led to its success in advertising. Looking at sales, it is clear that the main competition is General Mills’ Cheerios. Since the brand is lacking in social media, it was determined there is a large opportunity for this in marketing. The sugary-sweet taste of Frosted Flakes remains one of its main features, which could contribute to consumers’ attitudes regarding the health of the brand. After investigation, the team has constructed three research questions that will guide the primary research in Phase II of the situation analysis. 1.2 Introduction This Phase I Analysis focuses on Kellogg’s Frosted Flakes. Using research of secondary data by Team Eye of the Tiger, a situation analysis and market research study focused on college students were conducted to explore the various features behind Frosted Flakes’ marketing. This analysis includes company and brand history, product evaluation, consumer evaluation, communication environment evaluation, a S.W.O.T. analysis, and research questions the team devised to frame Phase II of the research. The goal throughout Phase I is to research the extensive background of Frosted Flakes, understand the product and consumer market, explore the communication environment, and familiarize the team with the overall brand. By the end of this analysis, the team can develop research questions to lead into Phase II: primary research of Frosted Flakes communication campaigns to the college market. This analysis allows the team to understand where to begin the research journey. 1.3 Company & Brand History Kellogg’s Corn Flakes recipe was born in 1894, after a failed attempt, led by W.K. Kellogg, to make granola. After he accidentally flaked wheat berry, he continued to experiment until the first recipe for Kellogg’s Corn Flakes was created (Kellogg’s History). W.K. teamed up with his ​ ​ brother, and they introduced their newly discovered Corn Flakes to the public in 1898. Eight 2 years later, Battle Creek Toasted Corn Flake Company was founded. The first year bore success for the new company, where they turned out over 100,000 pounds of flakes. A 10 oz box cost 15 cents. For every 60 cents worth of flake production, Toasted Corn Flake Company made $12 in profit. (Kellogg’s History). ​ ​ ​ Toasted Corn Flake Company increased their advertising budget, resulting in growth for the company . In 1905, they were producing $150,000 in sales, which increased substantially with the help of the successful Winkers campaign. Despite the company’s success, a rift formed ​ ​ between the two Kellogg brothers, causing a court case that lost the trademark “Kellogg Toasted Corn Flake Company.” The company was renamed “Kellogg Company,” which is more inclusive, since Kellogg was now home to “Krumbles” and “Bran Flakes” (Our History is Yours). Kellogg’s expansion into Canada and Australia helped increase sales, post WWI. Between the late 1920s and ‘30s, the company’s sales jumped from $4.3 million to $5.7 million a year. Success continued under company President Watson H. Vanderploeg who served until 1957. Due to the continued focus on advertising and modernization plans, new plants were created throughout the U.S. and globally, increasing net fixed assets from $6.6 to $20.6 million. Kellogg’s sat as the world’s largest cold cereal manufacturer, and produced 35 percent of the world’s cold cereal (Kellogg’s History). Throughout the 1950’s, some of Kellogg’s most notable types of cereal were born. Among them were Corn Pops, Cocoa Krispies, Frosted Flakes, and Special K, which was the first ever high protein cereal offered to customers from any brand. The creation of Frosted Flakes also saw the creation of Tony the Tiger (Kellogg History, 2016). Over the next 30 years, Kellogg’s introduced a more nutritional advertising technique, which they still use today, and also a new emphasis to “on-the-go foods.” Their shift in focus to on-the-go foods bore success, as Pop-Tarts became the company’s top selling product (Markel, 2017). The company continued its growth by purchasing Keeblers Food Company in 2001, which helped diversify their brand. “Snack foods” now makes up 32 percent of Kellogg’s products (Kellogg History, 2016). While Kellogg saw a net income increase of 13 percent up to $694 million in 2016, the company saw a revenue drop of 4 percent, down to $13 billion. Moving forward, one of Kellogg’s main focuses is shifting away from their “old reliable cereal lines.” This is because they are not producing needed sales due to a health conscious consumer base. Kellogg’s is looking to expand and reposition their brands moving forward (Kellogg Company at a Glance, 2016). 3 1.4 Product Evaluation 1.4.1 Background Kellogg’s introduced their company’s first sugary cereal to the world in 1952, with Frosted Flakes. Along with their product addition, the company welcomed the brand’s iconic mascot, Tony the Tiger, to the game. For 66 years, Tony’s orange face has smiled at consumers on the brand’s blue box. The cereal’s original name was Kellogg’s Sugar Frosted Flakes. In 1983, as America was becoming more health-conscious, the company dropped “sugar” from the label, and left consumers with what they know today: Frosted Flakes (Kellogg, 2016). The well-known voice of Tony the Tiger, Thurl Ravenscroft, was heard by audiences for more than 50 years as it proudly stated the brand’s slogan, “They’re gr-r-reat!” This catchphrase can still be heard today within the brand’s commercials. (IMDB, 2018) 1.4.2 Product Features Beginning with one original flavor, Frosted Flakes has expanded over its 66 years in production; now with four flavors, the product offers a variety of options to its consumers, ultimately expanding its audience range. These flavors are original Frosted Flakes, Cinnamon Frosted Flakes, Chocolate Frosted Flakes, and Frosted Flakes with Marshmallows. All four of these break-out brands feature Tony the Tiger on their boxes, continuing with the famous icon brand recognition. (Kellogg’s Products, 2016) While focusing on the original flavor, Kellogg’s Frosted Flakes, the cereal offers consumers a sugary breakfast crunch that can be enjoyed from the cardboard box, or on the go in a smaller, portable container. This portable design makes the cereal easy to enjoy in quick settings. Its ingredients leave breakfast-lovers with sweet milk in the bowl. Frosted Flakes not only stands out from its competitors because of its brand trustworthiness and notability, but also because of its sugary delight. As their company website mentions, “The corn makes it crunch. The sweet milk makes it Gr-r-reat!” (Kellogg’s Frosted Flakes cereal, 2016) Figure 1: Portable Frosted Flakes Container 4 One serving size of Frosted Flakes is ¾ of a cup. Within this serving are 110 calories, containing zero calories from fat. There are zero grams of fat in the cold cereal. Also included are 150 milligrams of sodium, and 10 grams of sugar. It contains vitamins A, C, D, B6, and B12, as well calcium and iron. (SmartLabel, 2018) 1.4.3 Product Advantages Frosted Flakes has provided its consumers with various advantages throughout its brand lifetime. One large benefit is its major player status in its industry; Frosted Flakes is one of the top four selling ready-to-eat cereal brands in the United States. (Grocery Headquarters, 2017) Factors that contribute to this position are the brand’s iconic design, brand reliability, and its nostalgia factor. Figure 2: Sales of Leading Ready-to-eat Cereal Brands (Statista, 2017) Frosted Flakes employs a major tool in the success of their brand: Tony the Tiger. His cartoon image appears on each box of cereal, allowing buyers to recognize the product before they can see the name. It can be assumed that adult customers remember eating this cereal in their childhood. As customer age progresses, consumers can return back to this brand as a memorable taste from their youth.