New Product Development At Kellogg: Project Management Tools And Marketing Strategies Essay.

Introduction - New Product Development at Kellogg

You are required to include a summary personal reflective element in this report (500 words)that will discuss your development in the key skills areas, including communication, numeracy, ICT, problem solving and working with others?

The Kellogg Company is the second largest snack food company established in 1906 by Will Keith Kellogg with operation and production in 18 countries including UK and products sold in more than 180 countries across the globe. Kellogg is the market leader in health and nutrition food processing industry with brands like Corn Flakes, Froot Loops, Frosted Flakes, Rice Krispies, Keebler that divided into five distinct verticals namely Cereal, Toaster Pastries, Biscuits, Bars, Crisps and Fruit Flavored snacks (Kelloggs.co.uk). The current report explores the new product development in the Crisps vertical with ‘Special k’ evaluating the project management tools used by the company in developing this new product and marketing the same with the right marketing mix to attract the target customer in the market segmented for the product.

The current competitive business environment that is changing rapidly with advancement of technology and innovation makes it difficult for the company like Kellogg to forecast the future consumer trend  based on the taste and preferences, the competitors strategy and the marketing condition. The company has to consider these vital factors in the process of creating new products. Further the company needs to make investment decision analysis based on the future returns that involves risk analysis.

The new product development (NPD) process is one of the core activities of the company that comprises of developing a product and testing the product to identify the viability of the products to launch the product successfully (Leonard, 1992). The various stages of new product development are

• Idea Generation
  
  
• Idea Screening
  
  
• Concept development and testing
  
  
• Business Analysis
  
  
• Market Testing
  
  
• Technical Implementation
  
  
• Commercialization
  
  
• New Product Pricing
  
  

[Source www.npd.com]

Idea generation is the regular activity of the research and development wing of the company to collect customer feedback and latent need of the customer and evaluate them to identify the viability of the idea (Rochford, & Rudelius, 1997). The other tool used is the SWOT Analysis and Opportunity analysis and brainstorming with employees, sales team, trade shows and focus group.

The object of idea screening is to evaluate the unviable concepts so that it can be eliminated before proceeding further so that resources of the company are not wasted in developing a wrong idea. It involves questions like

• Will the Customer in the target market accept the product?
  
  
• What is the size and growth potential of the market?
  
  
• Will the new product development increase the profit of the company?
  
  
• Is it technically feasible to produce the product?
  
  

This is third stage of NPD that imvolve the consumers and takes the feedback about the proposed product so that it can be rectified before the actual launch of the product. It helps in adding customer feedback in improving the product for better acceptance.

It deals with market size, product positioning and sales, market share and profit margin of the product. It also designs the marketing mix and marketing budget strategy for the new product.

This is related with launching the actual product in certain selected market to understand the actual performance based on the proposed marketing plan (Ernst, Hoyer, & Rübsaamen, 2010). The trade show is explored for testing the product by most of the company.

Project management tool

This is concerned with the resource estimation, publishing technical communication related with the product, operational planning and department scheduling and supplier and supply chain planning and developing a contingency plan.

This is related with the product launch supported by external communication and planning the distribution channel and evaluating the critical path.

This dealt in the marketing mix of the company that follows.

The company Kellogg is the leading producer of cereal products and convenience foods related with cereals, toaster pastries, biscuits, bars, crisps and fruit flavored snacks with popular brands like Corn flakes, Nutri-Grain and Rice Krispies and company is concerned about the brand image and develop products that can maximize the shareholders value and satisfy the customers (Borden, 1964). In this process of new product development the company evaluates the marketing mix that explains the 4Ps

• Products
  
  
• Price
  
  
• Place
  
  
• Promotion

This evaluates the features and benefit of the product in fulfilling the needs and wants of the customers. The growing concern of customers for healthy foods and healthier lifestyles provides huge scope for Kellogg to develop new products to satisfy these growing needs of customers. The product Special K is developed to meet this.

[Source: www.killoggproduct.com]

The product Special K is a multi grain flake that has ingredients like rice, wheat and  6 essential vitamin B, C, D and Iron and less that 3% fat. It is developed with 10 different flavors in three different forms namely breakfast cereals, sweet snacks and savoury crisps (Kelloggs.co.uk). It combines delicious taste with good health.

The second crucial factor that determines the success of the new products in the market is the pricing strategy (Van et al., 1992). Kellogg is perceived by the customer as a great brand with quality products that helps the company to design a premium pricing for the product Special K.

The place plays a major role in making the product a success in the market. If the consumer product is not available in the place where customers go for purchasing the products like Supermarkets and malls then it will be a lost opportunity for the company. The company ensures the new product Special K is made available in various retail outlet across UK.

The information about the new product has to reach the target customers to make the product a success (Yoo et al., 2000). The company explores the external communication with the ATL and BTL advertisements in Television, on-pack promotion and personal selling.

Every new product developed by the company has to follow the life cycle of the product that signifies four stages namely introduction, growth, maturity and decline. The marketing manager has to take strategic decision to make rigt change to the core products by evaluating the the position of the product in the life cycle (Hayes & Wheelwright,1979). The product special K developed by the company fulfills the current need of the customer in the food and snacks space and the company identified scope to expand the life of the product by revitalizing the product with additional advertisement to extend the growth phase and delay the maturity phase.

Kellogg’s marketing mix

After designing the marketing mix and evaluating the product life cycle of the new product Special K the company designs the STP (Segmentation, Targeting and Positioning).

The STP is a strategic project management tool explored by the company to identity the right segment for the company to launch the product  and target the customer to sell the product. It further enhances the market share in the target segment with right positioning of the product (Moskowitz & Hartmann, 2008). In the current project Kellogg needs to identify the market for its product special K that is launched in 10 different flavors in three different forms namely breakfast cereals, sweet snacks and savoury crisps. The three component of STP are explained below:

• Segmentation
  
  
• Targeting
  
  
• Positioning

This is project management tool that helps the marketing manager to divide the customers into groups based on demography, geography and other characteristics factors that can be the potential customer for the new products of the company (Deisingh & Badrie, 2005). The market segmentation helps the promotional strategy to more focused and reach the target customer in the choosen segment with single message. It comprises of two fold activity namely

• Identifying and dividing customers into homogenous groups know as segments.
  
  
• Deciding the right segment to target for the new products of the company.

In case of Kellogg the new product is Special K that is healthy breakfast cereal that can be need of the health conscious customers who prefer healthy breakfast in the morning.

The benefits of segmentation are gaining competitive advantage with proper communication strategy highlighting the product differentiation strategy. It is not only an effective strategy to distinguish the product Special K from competitors but also helps in making one product stand out from others.

After the segmentation is executed the next step is identifying the target market from the defined segment to market the product. The company can either market the product to the entire market segment or select one or more target market based on the financial capacity and features and benefit of the products (Deisingh & Badrie, 2005). The current product of Kellogg Special K is breakfast product that can fulfill the need of customers wanting to have a healthy breakfast every morning. Therefore the target market for the product is based on lifestyle and age factor. It is basically customers who practice healthy lifestyle and comprise the age group of 18 to 35. The company will now market the product to this target segment.

This is last component of the STP strategy that deals with the positioning of the product to capture the target market successfully and reaching the maximum customers.

I got an opportunity to gain an in-depth understanding of the business strategy and the project management tool used by Kellogg by doing this project. I observed the company developed the new product with help of the new product development (NPD) strategy that explained  the seven stages namely idea generation, idea screening, concept development and testing, business analysis, market testing, technical implementation, commercialization and new product pricing. The company further used the marketing tool of marketing mix that highlighted the product, price, place and promotion strategy that was used. I found the marketing mix helped the company to reach the customers identified with the help of the STP (Segmentation, targeting and positioning) for the new product Special K that is cereal for breakfast providing healthy life style.

Product Life cycle

I observed that the NPD strategy had helped the company to identify the need for developing a product that fulfills the taste bud and health need of the customers who want to have a healthy breakfast. I found it interesting how the company priced and promoted this product and made it available at the right place like super markets and malls where the customer search for such products. Similarly the promotional and communication exploring the ICT (Information and communication technology) of electronic and ecommerce media to reach the target customer was something I got fascinated with. It effectively used the ATL (above the line) and BTL (below the line) advertising in the television, health magazine and sampling and on-pack. I found developing of the marketing budget another interesting part of the learning from this project. It was numeracy that started with the development of the idea involving a number of brainstorming decision and R&D conducting product survey, customer survey and need analysis and designing and developing the product that was all part of the production and product development budget. Once the product reached the test market stage the marketing expenditure started with awareness campaigning for the new product. It was followed by the product information that explained the product features and product benefits to the target customer both in the ATL and BTL advertisement. I found the company need not stop with advertisement alone but it participated in many trade shows and events to promote the product Special K and reach the customers. I found the company well utilized the marketing budget in various external communication like advertisement, promotion and events to create the hype in the market for the product to give the right launch.

My personal learning enhanced with the execution of this project that helped to improve my communication in the course of the project and helped me to understand the numeracy and use the ICT in evaluating data related with the project. It also helped to enhance my problem solving skill in the process of executing the project based on the learning and how the project management team handled various issues in the process of launching the product.

References

Borden, N. H. (1964). The concept of the marketing mix. Journal of advertising research, 4(2), 2-7.

Deisingh, A. K., & Badrie, N. (2005). Detection approaches for genetically modified organisms in foods. Food Research International, 38(6), 639-649.

Ernst, H., Hoyer, W. D., & Rübsaamen, C. (2010). Sales, marketing, and research-and-development cooperation across new product development stages: implications for success. Journal of Marketing, 74(5), 80-92.

Hayes, R. H., & Wheelwright, S. C. (1979). Link manufacturing process and product life cycles. Harvard business review, 57(1), 133-140.

Kelloggs.co.uk,. 'Kellogg's UK|Breakfast Cereals, Healthy Recipes And Snacks'. N.p., 2015. Web. 20 Sept. 2013.

Leonardâ€ÂBarton, D. (1992). Core capabilities and core rigidities: a paradox in managing new product development. Strategic management journal, 13(S1), 111-125.

Moskowitz, H., & Hartmann, J. (2008). Consumer research: creating a solid base for innovative strategies. Trends in Food Science & Technology, 19(11), 581-589.

Rochford, L., & Rudelius, W. (1997). New product development process: stages and successes in the medical products industry. Industrial marketing management, 26(1), 67-84.

Van Waterschoot, W., & Van den Bulte, C. (1992). The 4P classification of the marketing mix revisited. The Journal of Marketing, 83-93.

Yoo, B., Donthu, N., & Lee, S. (2000). An examination of selected marketing mix elements and brand equity. Journal of the academy of marketing science,28(2), 195-211.