Distributional Principle First
Distributional channelling is a powerful marketing strategy in the trading and services sector. Brands use different marketing mix strategies : the 4P’s – Product, Price, Place or Promotion) to develop a connection with their customers. Product distribution also termed, as ‘Placement’ is an effective marketing mix helping consumers to buy products (Kumar, Sarang & Amalesh 2015, p. 625). The basic principle utilised under placement is the integration of distribution channels in consumer behaviour and consumption (Barker & Angelopulo 2006, p. 139).
While Face-booking or surfing through the net, have you ever noticed the number of firms registered, or having their own Facebook page or official websites? Frankly speaking, the number is HUGE! Due to market saturation by tech-savvy consumers, firms want to touch them at their fingertips through ONLINE distribution; because they have realised that, touching the minds of more customers goes beyond traditional distribution channels (Business Insider 2015). Reliance on wholesalers or retailers has to be integrated with the social media platform to compete successfully. This blog is focusing on the utilisation of distributional channels by the cereal firm-Kellogg.
Kellogg’s: A bulldozer in the cereal Industry : Agreed !
Product distribution indirectly implies increasing sale opportunity through the expansion of market locations. This is exactly what the international cereal brand Kellogg’s is doing. According to Kellogg’s annual report 2015, one of greatest opportunities for growth is to expand geographically as well as into new, high-potential channels of distribution (Kellogg’s 2016). The launch of Kellogg’s first ever café in Sydney is their latest geographical expansion.
Established in 1906 in the USA, Kellogg’s is one of the leading companies providing food items – breakfast items and convenience food. It has been implementing the intensive distributional strategy to gain control of the market by providing assortment within its product category. Using the philosophy of improved diet and improved health, it covers 40 different types of cereals and snacks, such as Kellogg’s Corn Flakes, Rice Krispies, Special K, Fruit n’ Fibre as well as the Nutri-Grain cereal bars (Kellogg’s n.d.).
Kellogg’s with the ‘BEST’ distributional strategies , Why so?
Designing effective channel distribution is a prerequisite for success in this competitive landscape (Levi & David, pp. 230- 237). Kellogg’s choice of distribution intensity is neither selective distribution nor exclusive distribution, but rather intensive distribution, implying that, all of its products are widely distributed. Kellogg’s has achieved saturation coverage using every available outlet ranging from local corner shops to huge supermarkets i.e. Tesco, Walmart, Dunnes stores and ASDA to college vending machines for their Special K and Nutri-Grain bars.
Consumer’s attestation for Kellogg’s Products : A Living Reality !
“ If Kellogg’s Special K is not stocked in supermarkets where most purchases are made, the giant will lose paramount sales”. Special K is targeted to mainly young girls and women struggling with their weight management.
Kellogg’s strongly believes that reliance on retailers is critically important as it promotes and builds a good relationship between the consumer and its products. To further drive sales, Kellogg’s is involved in initiatives that help add value for retailers. The Shelf Ready Unit developed jointly with Tesco is a vivid example of such initiative. Kellogg’s also implemented the concept of pull strategy i.e. use of coupons, contests and other discounts to boost its purchases.
Logistics – A key driver for enhanced productivity
The marketing Mix-‘Place’ is wrapped around the concept of logistics as well. An overall analysis about Kellogg’s has pointed out that its success is based on outstanding logistic management practices. Kellogg’s possesses well-designed transportation systems as well as an organized and equipped storage system to ensure that products do not spoil and reach the customer in fine quality. They adhere to the lean production system (Just-In-Time production) to streamline processes and eliminate waste. In addition, Kellogg Planning System (KPS) is used to optimise its operations and monitor effectively its inventory and distribution systems (Supply Chain n.d.)
Marketing Online –A Lovely ‘P’
Kellogg’s, like most companies, takes advantage of the Internet to advertise and market its products online, due to the low cost of advertising. Although Kellogg’s does not sell directly to its customers, it uses Facebook, Twitter and Google+ for the promotion and advertisement of its products. Kellogg’s website,www.kellogg’s.com, displays all their products with nutritional information about each one and also information regarding their latest advancements. Their product Facebook pages include Pop-Tarts, Frosted Flakes, Krave and Nutri-Grain and all of them are used to churn out marketing messages on an almost daily basis.
Kellogg’s and Trustworthiness
Ever wondered how much sugar Kellogg’s puts into its cereals? Or how much of its flakes and popped rice are processed?
To gain more trust among consumers and show there’s nothing to hide, Kellogg’s in Australia has embarked upon a transparency push (MSM 2016). The cereal company has created an online platform called Open for Breakfast; where consumers can ask questions such as information about the primary source of cereal ingredients, sugar content or nutrition value; and Kellogg’s says it will answer them honestly. This new marketing strategy of Kellogg’s engaging customers in close interaction, and attempting to bring their product closer to the customers, sustain customer’s satisfaction and increase sales. Distribution channel issues are also being minimized through this way of innovating products in-house and integrating with customers (Iacobucci 2013, p. 86).
Kellogg’s has excelled in terms of its distributional strategies (built an informational website, strong collaboration with externals, and recently launched a new café). Indeed, it has displayed strong leadership in the market.
In a nutshell, distributional channeling is an imperative strategy to help sustain Kellogg’s reputation in the global competitive food business.
Student ID : 215340819
List of References
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Business Insider 2015, America’s latest shopping habit is great news for retail workers, Business insider, retrieved 13th May 2016, <http://www.businessinsider.com.au/e-commerce-sales-leads-to-higher-pay-for-workers-2015-12>.
David & Levi 2008, Designing and managing the supply chain: concepts, strategies, and case studies, McGraw-Hill/Irwin, retrieved 12th May 2016, DEAKIN UNIV LIBRARY’s Catalog.
Iacobucci, D 2013, Marketing Management (MM), 4th Edition, South-Western, Cenage Learning, Mason, OH, 2014.
Kellogg’s 2016, Kellogg Company 2015 annual report (Report no 10 01/160), retrieved 12th May 2016, < http://investor.kelloggs.com/~/media/Files/K/Kellogg-IR/Annual%20Reports/kellogg-2015-AR-10-K-v3.pdf>.
Kellogg’s n.d., Where doing good makes our days great, Kellogg’s, retrieved 11th May 2016, <http://www.kelloggs.com.au/en_AU/who-we-are-landing.html>
Kumar,V, Surang, S & Amalesh, S 2015, ‘Leveraging distribution to maximize firm performance in emerging markets’, Journal of Retailing, vol. 19, no. 4, pp. 627-643, doi:10.1016/j.jretai.2014.08.005.
MSM 2016, Kellogg’s bares to consumers in transparency push, MSM, retrieved 14th May 2016, <http://www.bandt.com.au/marketing/kelloggs-bares-consumers-transparency-push>
Supply Chain 2016, The Kellogg’s secret to supply chain management, Supply Chain, retrieved 13th May 2016, <http://www.supermarket.co.za/SR_Downloads/S&R%202016-4%20Supply%20chain.pdf>.