Question

In the U.S. cereals are taken at breakfast time. Cereal manufacturing is an industry of greatmagnitude. Cereals are manufactured in various shapes, flavours and colours and the advertisement is directed at children. The leading manufacturers are Kellogg’s, General Mills, General Foods, Quaker Oats, and Champion. Kellogg’s share was constantly being eaten away by other manufacturers who were introducing new cereals. Kellogg’s therefore thought of introducing a new cereal, which they had not done for a long time. The cereals were not only consumed by children, but a substantial portion formed the adult market as well. Kellogg’s developed a new plan to come out with a cereal which would be tasty, nutritious, free of sugar and made of grain. The cereal consisting of the above attributes was named “Nutrigrain”. These were available in four types. Nutrigrain Corn, Wheat, Barley and Rye.These were introduced together, and no test marketing was done to avoid competition.These Products were advertised heavily and targeted at adults. To promote the productfurther, discount coupons were freely distributed, which gave a cut of about 30 per cent in theretail price of the product. Coupons were also inserted in the Nutrigrain boxes’ so that customer would return to take advantage of these coupons, andmake repeat purchases. A lot ofinformation and advantages of consuming Nutrigrain was boldly printed on the packages forthe information of the consumers. Proper display in the shelves of stores was also taken care of.Their efforts brought results, and the stores were loaded with orders and most adultsstarted eating these cereals, because of promotion, curiosity, etc. After one year, the salesdeclined because there were very few repeat purchases. This started the extensive thinking asto where they hadgone wrong. Consequently, they withdraw two of their brands—Barley andRye. These were replaced by raisin and wheat varieties.They also found out later, that there was a shortage of time for the adults, which prevented them from having cereals. If theycould get out of bed 10 minutes early and devotethese ten minutes to breakfast , they would probably enjoy the cereals. They also found outthat though people were clamouring for sugarless cereals, yet they loved to satisfy their palateswith sugar coated cereals.

1. How can you comment on the habits of the consumers and their preferences?

2. Suggest methods of increasing the market share of the adult market?

Answer 1

1) The habits and preferences of the consumers keep changing . Consumers  always look for new products which are advertised regularly . Adult consumers prefer to purchase goods which are  advertised and the targeted consumer are adults. Consumers prefer discount coupons which give a reduction in retail prices .Consumers prefer to have information about the product on the package boxes.

2)In order to incraese the market share of the adult market , new products should be introduced in the market which are enjoyed by both children and adults.The new product should be according to the taste of the adults which was free of sugar and nutritious.Advertisement of the product targetting the adults is essential .Discount coupons which reduce prices will attract adults more .Moreover information on the boxes about the nutritious value of the product will attract more adults to purchase the product. Thus promotion of the product is necessary to capture the adult market as adults out of curiosity will purchase the product.Even though adults prefer sugarless cereals their palates are satisfied by sugar coated cereals .So sugar coated cereals will attract adults more.