The Strategic Group Mapping Model Marketing Essay

Published Date: 23 Mar 2015

For the purpose of this report, the industry of choice was the cereal industry. The cereal industry is highly competitive with numerous businesses competing for an increased market share. The cereal industry is influenced by customer spending and customer lifestyle. In recent years, consumer behaviour has altered with customers becoming more health conscious. As a result of this, business within the cereal industry have introduced new products and modified existing products to appeal to health conscious customers.

Based on research conduct, the following trends were identified within the cereal industry:

Consumer behaviour changes

Health conscious customers

The main businesses within the cereal industry are Kellogg's, Nestlé, Weetabix, Flahavan's and Odlums.

Breakfast apart from being a necessity for breaking the fast, it is also seen as a social ritual amongst the majority of cultures around the world. [1] 

Three main trends emerge from an analysis of the industry: Acquisitions, Automation and Consolidation. The nature of the cereal industry is oligopoly as there are just a few firms dominating the industry.

The key players were identified as Kellogg's, Origin Enterprises (Odlums), Nestle, Weetabix and Finegrove Holdings Ltd. (Flahavan's).The breakfast cereal industry can be divided into two categories; hot breakfast cereals and Ready to Eat (RTE). The key drivers to operate in this industry were identified as: Reformulation of nutritional ingredient, Product differentiation, Contracts for raw materials, Economies of Scale and Creative advertising.

The industry as a whole has an abundance external macro environment factors which are clearly seen in the PESTLE.

Porter's five forces identified medium barriers to entry, threat of substitutions and supplier power, but highlighted high buyer power and competitive rivalry. From using strategic mapping it was emphasised that players in the industry modernised /changed their strategies to respond to key trends in the industry. From analysing the five key players in the industry, it is clear that all have similar product diversification, product development (Ansoff growth matrix) Strengths, weaknesses, opportunities and threats(SWOT Framework).

Industry Landscape

There were three key trends found from the players in the cereal industry. Kellogg's have consolidated 42 business websites into one website in order to give a clearer brand identity and to enhance the customer experience. In relation to automation, these players currently use technological advanced machinery to aid them in production and packaging. Finally in May 2012, 60% of shares from the Weetabix Food Company have been acquired by China's Bright Food Group while the remaining 40% is owned by Lion Capital.

From these trends, there are issues that affect these players, in terms of market saturation and fluctuating prices for wheat and oats. These are potential threats for this industry as reported by Business Insights which states; "cereal products have reached a level of saturation in many Western markets, so adding value and following consumer desires will be key to successful product lines". In order to combat this market saturation, businesses need to research, understand and acknowledge consumers requirements.

The fluctuating prices of oats and wheat could affect each business within the cereal industry. The price fluctuations are a result of difficulties experienced during the growing seasonal period.

Rising prices due to increasing costs for logistics and ingredients are primarily going to affect the breakfast cereal industry and its key players in the future. Cereal products could be sourced globally; however, there is a decline in international cereal production due to weather conditions [2] . If this continues, it could lead to cereal prices escalating and increases being passed down the distribution channel.

There is increasing pressure for new product development amongst the industries key players. This could potentially increase market share and enhance revenue for the niche players such as Flahavan's and Odlums, while allowing market leaders such as Kellogg's the opportunity to prevent smaller businesses from obtaining market growth. There is an increase in health conscious customers and in the future, this may define the product lines produced by the key players.

From the acquisition of Weetabix, Bright Food Group has vowed to globally expand the Weetabix business by entering the growing breakfast cereal market within Asia. Changes to food consumption patterns within Asia have resulted in businesses entering Asian regions and selling food and beverages to consumers.

Nationally, the cereal industry is worth €200 million per year with a profit between 40 - 45%.

In relation to the current market position of these players, Kellogg's would be classed as the leader due to a 44% market share. With Nestle and Weetabix as the market followers, these businesses have a sizeable market share and remain competitive within this industry. The niche players, Flahavan's and Odlums, are not as profitable as competitors, particularly Odlums who do not provide an extensive range of products.

Competitive rivalries could arise between these industry players, as all competitors have similar products aiming at similar target markets. The threat of substitutes is also an issue for these players; as there is a rise in own brand products, such as Dunnes Stores and Tesco. These products are being introduced into the market due to the changing consumer spending habits. As this industry could be seen as oligopolistic, the power over suppliers and buyer could potentially increase, however for the niche players, the competition could intensify.

Generally the cereal industry targets family oriented markets. In relation to Kellogg's and Nestle, they could be seen to target children, as these players introduce characters to their brands in order for the children to be attracted to these products. Weetabix, Flahavan's and Odlums target mature audiences which can be seen to be under the family orientated market.

For each key player, they must hold competitive advantage in order to sustain the market. The threshold resources that any player should have to operate within this industry include; finance, customer loyalty, brand awareness and a wide product range. Unique resources, such as Flahavan's and Odlums, are particularly focused on the Irish aspects of the product. This involves the methods of producing the product and jobs that are created within the country. Irish consumers are value driven, however Irish products are important to these consumers.

In previous years, Kelloggs's held a very dominant position within the industry, however this has changed substantially as more competitors have entered the market and have impacted the profit obtained by Kellogg's.

In 2010, there was a net income rise of Kelloggs's, which has since fallen from $1.2 billion to $961 million and emphasises a dramatic decrease. In 2012, the share price of the business was volatile as it declined to $46.33 in July, however increased to an acceptable price of approximately $60 in December. The size of Kellogg's reduces the threat of a takeover occurring and exiting the market would not be foreseeable for Kellogg's.

Kellogg's use of Corporate Social Responsibility (CSR) is at the forefront when communicating with customers. This is highly evident in "Give a child a breakfast" campaign launched in October 2011 as this campaign highlighted the benefits of children eating breakfast. By highlighting this campaign, it improved the public perception of the company.

Financial reports released for 2012, illustrated that the Nestle group as a whole had a successful financial year. It shows an increase in profit for the year by $1.8 billion. The cereal range of the business is represented in this figure which displays a positive financial performance for Nestle.

Previously, Nestle has experienced a negative public image; "Nestlé attempts to divert criticism of its baby food marketing activities" [3] . Nestle continuously attempt to improve their CSR identity within the eyes of the public.

Bright Food Group generated revenues of approximately £7.5 billion last year which indicates it has a large resource base to expand the Weetabix brand into more foreign markets. The acquisition of Weetabix would indicate that there is a high demand for cereal products globally as well as within its existing markets.

The Weetabix brand has a long association with the British and Irish markets and has successfully reflected a positive brand image. However, the recent acquisition could have a positive and negative impact as it could be viewed as the loss of another indigenous company to a foreign multinational and may dilute the brand value.

As Flahavan's is a privately owned family operated business and similar to Weetabix, is not listed on any stock exchange. Flahavan's is an established brand and retains the majority of the market share in relation to hot cereal breakfast in Ireland. This brand has a positive image among Irish customers and assisted the expansion into markets such as the UK and US.

Flahavan's is associated with Bord Bia and outlines the nutritional value of eating porridge as part of a healthy balanced diet. As the business is proud of its heritage and is a small player within the industry, the possibility of an acquisition may be unattractive to an established player.

Odlums is part of the Origin Enterprise Group, which is listed on the Irish Stock Exchange and experienced an increased share price within the last year.

The Odlums brand is well known within Ireland, primarily for their baking products. It could be perceived that the public have less recognition for the porridge range. The brand image is viewed positively and is also associated with Bord Bia.

Within the cereal industry, there are certain aspects which could affect key players in the future. In terms of Kellogg's, they have primarily grown through merger and acquisitions. If all the key players follow this trend and grow like Kellogg's, they could possibly maintain market share growth. Further brand building of key players, could allow for growth in new divisions, for example Weetabix introducing a new range of biscuits.

The majority of dominating businesses have a strong portfolio of products with great brand identity amongst its market share. If the key players continue to invest and grow their brand portfolio, it would be expected to have a positive long-term effect on those businesses.

There is a possibility of a new pecking order in terms of the hot breakfast cereal market segment. At present, Flahavan's is the market leader in this category. However, Kellogg's have developed a product, "Kellogg's Corn Flake Porridge" [4] , to compete against Flahavan's porridge. This product has not been launched in Ireland, but could potentially dominate the market in the future.

Currently, the key players are extending the life of their consumer recognisable products rather than removing them from the market place. [5] Customers would be willing to purchase familiar products and be more inclined to purchase new products launched by a trusted brand.

The key players have adopted an extension strategy of their products. From analysis of the Ansoff Matrix [6] on the key players, it was evident that they had the same strategy which included the retention of existing customers and attraction of new customers by means of product development and product diversification.

The key players are currently adopting marketing strategies to ensure that their brands are in the evoked set of their target markets while going through the decision making process and the customer chooses their product.

HRM Strategies

Nestle's mergers and acquisitions provides the business with a wider selection of employees which can be used strategically to further develop the company's competitive advantage. However, this method may not be feasible as employees may feel their opinions to be underappreciated and lack participation with front line decisions.

In the case of Weetabix, their use of motivational goals drives their use of HRM, which furthers their competitive advantage by providing a recognised and admirable work environment, which could be then used strategically to attract additional talented candidates.

In comparison to its competitors, Flavaghans is a considerably smaller company, mainly because of its family ethos. These sorts of companies generally limit new additions of staffing in order to reduce costs. However with the utilisation of their flat hierarchy which enables all departments to work together closely, this allows for a competitive advantage, which does not directly affect necessary recruitment and selection. In a sense Flavaghans has used their limit of recruiting for a more quality staffing experience which then follows through to competitive advantage.

Odlums have used their HRM strategies competitively in order to gain talented managerial staff in the company. This can be seen in their quality staff members, who have all had quality previous employment and education. This is a clear competitive advantage for odlums, and has formed them as an elite group of staff.

Kellogg's, although they use extensive research and development which effectively provides solid results and provides a clear competitive advantage. It has been recognised that although management positions are favourable, their staff motivation and drives are low, therefore we can indicate that HRM strategies are not of concern to Kellogg's.

· Are the Strategic HRM policies of the key players in alignment with its overall strategy?

In essence Nestle's vision of "good food, good life" is very much in alligment with its strategic HRM policies. Through the use of mergers and acquistions, Nestle has managed to collect different types of talent, in order to provide quality behind its overall strategy of "good life, good food" in its product.

External Environmental Analysis

Strategic Group Mapping Model

Strategic Group Mapping Analysis

Nestle is identified with having a high variety of products coupled with a high average price of €3.53per 500g Kelloggs is on par with Nestle however Kelloggs have a larger variety of products and slightly higher average price of € 3.54per 500g. Both breakfast cereal companies are positioned as having a large variety of products with a high retail price targeting the same market segments. Kelloggs target families with products such as cornflakes, rice crispies , frosties , all bran, crunchy nut and coco pops as well as the health conscious adult woman with their special k range [7] . Nestle target families with products such as nestle cornflakes, cheerios. Target kids and teens with nesquick, cookie crisp,cocoa puffs products and their adult with their fitness range. [8] 

Weetabix is more differentiated from Nestle and Kellogg's. Weetabix primarily targets the health conscience consumer market segment whereas Nestle and Kelloggs target a proportion of that segment. Weetabix is identified with having a low variety of products combined with a high average price €3.49per 500g. Weetabix is a market leader with a 12% market share [9] (just behind Kellogg which leads brand sales with a 42% value share) [10] 

Flahavans is a market leader in the hot breakfast market segment with a 65% share of the hot breakfast cereal market [11] and a 7 % share of the overall breakfast market [12] .they have undertaken a hybrid strategy since 2008 by extending their product range and making their product more convenient to the consumer i.e quick oats. flahavans is identified with having a low variety of products (i.e hot oats) coupled with a low average price €1.25 per 500g.flahavans solely targets the health conscience individual/families.

Odlums holds a relatively small proportion of the hot breakfast cereal market and is identified with having a low variety of products combined with a low average price of €1.15 per 500g.

Kelloggs and Nestle are the most expensive of the companies, their higher price is justified by their larger variety of product offered. Weetabix, Flahavans and Odlums are the least expensive of the companies with is due to their low product range however their prices may increase in the further due to the perceived customer benefits of their products.

Internal Strategic Capability Analysis

Kellogg's Company Background

The Kellogg's Company was established in 1906 by W.K. Kellogg. By continuing to use the same technique in producing the product since this time, the Kellogg's brand has grown successfully over the last 100 years with products reaching 180 countries worldwide. Kellogg's primarily produce breakfast cereal products, along with toaster pastries and snacks, such as, cereal bars and winders.

In 1922, the Kellogg's company arrived in Ireland with products being sold throughout the country. As Kellogg's now is the leading brand in the breakfast cereal industry in Ireland and the UK, the business was one of the first to introduce nutritional labelling on their packaging, back in the 1930's.

With their successful launch in the 1950's of the cereal products Frosties and Special K, in the 1980's new products, such as Crunchy Nut Corn Flakes, was launched into the Irish market.

The W.K. Kellogg Institute for Food and Nutrition Research was opened in 1997. This is where the engineers, nutritionists and food scientists would investigate the quality of the produce used. This facility also catered for the alternation in the reduction of salt used in breakfast cereals in 2010, along with vitamin D been added for children in 2011.

The Kellogg's Company have various locations worldwide including North America, Europe & Middle East, Asia, Africa, Oceania and Latin & South America. The Headquarters for Kellogg's is located in Michigan.

Kellogg's Cultural Web Model

Kellogg's Ansoff Product / Market Growth Matrix

Market Penetration

By utilising this strategy, this would benefit Kellogg's in terms of continuing to remain competitive within the market and stabilising their position as a market leader within Ireland and UK. Over the years Kellogg's have dramatically increased their product range to cater for a wider customer base. Kellogg's provides cereals for children and adults to accommodate for their different lifestyle requirements.

By continuing to penetration this market at a relatively low risk for the business, Kellogg's would need to implement a strategy in order to maintain their market share by using their existing products while retaining their current customers. This strategy would need to be developed by increasing brand awareness of their products, for example charity events or competitions, in order to remind customer their products.

Product re-launch could be another penetration for Kellogg's in terms of retaining their existing customers. Through customer involvement and push marketing strategies, these methods could help Kellogg's to secure their market share or have the possibility of increasing their customer base.

New Products and Services

As the cereal industry is a competitive market and developing the ability to be distinctive from the existing competitors could be a challenge for Kellogg's. In order to increase the customer base, Kellogg's developed products in the areas if toaster pastries and snacks. These developments allowed the business to explore new products while retaining their existing customers.

Market development

Market development is an important aspect for Kellogg's to grow within the cereal market. Currently Kellogg's offer a porridge product which is available in South Africa however are not obtainable within Ireland and the UK. Gluten free products from the US are also not available within these countries. These products could have a dramatic effect if Kellogg's introduced these products into the Irish and UK market, as it could heighten the competition amongst competitors and attract new customers to their products.

Conglomerate Diversification

In order for Kellogg's to diversify into an unrelated market would be a difficult challenge for the business. A market that Kellogg's have diversified into is the snack food market. This is evident from the acquisition of Pringles in early 2012. This market could be seen to be difficult to operate as it does not relate to the cereal industry and the business may not have the necessary knowledge of the snack food industry.

Nestle

Nestle Company Background

Nestle was founded in 1866. As the company began to grow, it merged with another established company, Anglo-Swiss Condensed Milk Company in 1905. From this merger, Nestle acquired Rowntree's of York in 1988.

Within Ireland and UK, Nestle is one of the key players in the food industry with 19 locations employing over 7000 staff. Nestle is also one of the key exporters for these two countries, with exporting products over £300 million worth to 50 countries worldwide every year.

With the mergers and acquisitions previously mentioned, this gave Nestle the ability to diversify their product portfolio to cater to a wider target audience. Nestle Ireland and UK expanded to sister companies such as Nestle Professional, Nestle Waters, Nestle Nutrition, Nestle Purina Petcare, Lactalis Nestle Chilled Dairy Company Ltd, Cereal Partners UK, Nespresso and Jenny Craig.

With these sister companies, Nestle was able to produce popular brands such as, breakfast cereals Shreddies and Cheerios, Go Cat pet food, Nescafe, Kit Kat and beverages Nestle water and Nesquik.

Nestle have Headquarters in Ireland and UK, with their factories primarily in the UK. Globally, Nestle are located in Africa, Oceania, Europe, and Asia and North and South America.

Nestle Cultural Web Model

Nestle Cultural Web Analysis

Paradigm

Nestles ethos "Good food, good life" is a clear indicator of where nestles drive originates. This can be clearly defined as Nestles collective experience which is applied to situations in order to make sense of strategy. For example nestles acquisition of Alcon Laboratories Inc. provided an increase of food technology competencies behind their foods thus confirming their initial ethos of "good food, good life".

Stories:

Nestlé's is regarded as the largest food business company in the world; this has been experienced through the use of mergers and acquisitions and primary food nutrition values. Nestle acquired Crosse & Blackwell in 1950 and Rowntree Mackintosh in 1988 to name a few. It operates in 86 countries and is the largest shareholder of L'Oreal. It has also been ranked at 1 in the fortune global 500.

However, Nestle cereals received bad press in 2011, with the accusations of incorrect nutritional information on their cereal products. This apposed their believes of nutritional value in good food.

Symbols:

Nestle is a Swiss made multinational country which strives in power and direction. It is a professional company, which has used mergers and acquisitions to its advantage in its early years and continues in this fashion today. Nestle receives great admiration publicly.

Power:

Nestles power structure is very hierarchical, many field employees feel like progression is limited and not balanced for all employees. However when we consider their previous paths to this power (mergers and acquisitions) we can interpret their power drive as continuous and dedicated. Also another interesting fact is that Nestle is primarily a Male dominated organisation, which creates the concerns of the "glass ceiling" effect for women, which can be regarded as discouraging and an imbalance on gender equality.

Organisational structure:

Nestles Organisational structure is revolved around innovation and expansion. Innovation through their ethos of "good food, good life", this can also be seen in their portfolio of innovating products such as baby formula and instant coffee. Their constant collaboration makes their company quiet segmented, however this approach has proven to be successful. In addition to this organisational structure, employees felt that quick decision making is not a competency of Nestles senior managers. This could potentially bring up the issue of potential lose in employee involvement, which can in most circumstances be valuable.

Control systems:

Nestle offer attractive pension plans in order to control employee systems. This is a lot more attractive for long term employees who are in the office. However, a majority of employees expressed that there is no work life balance plans to keep employees motivated and balanced in home and work activities. In contrast to their attractive pension plans, it can be assumed that Nestle is clearly monitory focused with employees.

In addition we found that Nestle do not micro manage their employees, although this is more enjoyable for the employee, it can be interpreted that nestle need to grasp control systems in order to keep employee focus in activities.

Routines & Rituals:

On a day to day basis, Nestle offer flexible working schedules for their staff. This communicates a laid back working environment, however due such hierarchical stances, strategy and direction is driven from headquarters. This tells us that on field employees are not driven on performance, as that type of belief is left to the senior managers in the company.

It can be widely assumed of how advantageous it is for all employees to have access to Nestlé's international training centre in Switzerland. This can be seen as a prestigious opportunity for all Nestle's employees to excel in. "Creating Shared Value and meeting our commitments" is Nestlé's view on expansion into different countries and reaching further customer segments globally.

Nestle Ansoff Product / Market Growth Matrix

Market Penetration:

Like all cereal brands, Nestle is no different in wanting to expand further within markets such as the UK and Ireland. In order to do this they face a major obstacle in that they are the second largest behind Kellogg's who have a 45% market share of the breakfast cereal market. However, as revealed late last year, the company is looking to expand its brand further within the region of Northern Ireland and in order to help achieve its objectives they have enlisted the services of GM marketing to help expand the brand through the use of online technologies and refined marketing strategies. The first phase within the marketing strategy will see the core brands used to help identify the Nestle brand as well as using pre priced cereal boxes which may be cheaper or the same price as their competitors.

Even though this is a low risk strategy the level of success of such a strategy can also be miniscule. If this strategy vastly increases the market share of Nestle it will have an impact on the market share of their competitors but at the same time it may not increase the market share of Nestle sufficiently to have a major impact on their competitors. It may take a considerable amount of time and may cause an impact within other areas that Nestle focus time and resources on. This strategy should be taken with a prudent approach in mind so as not to harm other categories that Nestle positions its brand.

New Product & Services:

Research and development is an integral part within the Nestle company as they look to introduce product development within all of the categories that it positions its brand. This is clearly evident within the company as they employ 4,500 people globally within its R&D departments as well as using external research provided by scientists, doctors who work within world renowned universities. This aspect of building bridges externally allows the company to further innovate within the area such of nutritional and healthy foods as well as numerous other categories.

A core belief that exists within the Nestle group is to "think global - act local". When looking for new ways in which to introduce new products within existing markets they place the customer at the core of the product. This is recognisable in the way that they cater to various customer groups with breakfast cereal brands such as Nestle Multi Grain Cheerios focusing on all members of the family, Nesquik for teenagers and children and Nestle Fitness for people who place a high importance on keeping in shape. Nutrition is a vital element within the Nestle core beliefs and values but they also put a lot of effort into ensuring that good quality taste is never sacrificed in the cereals that they provide.

Product development is a strategy that Nestle have continuously looked to improve upon since it identified that nutrition, health and wellness was to be the core strategy that it developed its products upon. Although it is a costly strategy the financial benefits on a global scale seem to outweigh the costs for Nestle.

Market Development:

"Organisations would ideally like to operate as if the world were one large market, ignoring superficial regional and national differences but still making sure that marketing activities fit to the practices and cultural characteristics of genuinely different markets" (Lee and Carter, 2008)

The Nestle brand is recognised on a global scale and has a vast portfolio as it does not primarily focus on cereals which can be identified due to its large divergence into similar but also unrelated areas such as baby food, chocolate bars, beverages and many other various categories. However, they do not focus each of these categories on a global scale as not all of their products would be successful within each of the segmented markets.

Even though each of the categories are not launched on a global scale it does not mean that they would not be successful within different markets as alterations could be made in relation to;

How the product is packaged and designed

The type of marketing communication strategy adopted to identify the brand within different markets and the people within those markets

What values are important within the different market

Given that Nestle is already a recognised brand name on a global scale and offers different categories of products in most domestic countries it would suggest that logistical structures are already in place which would be a major saving in terms of time, money and risk would be reduced due to existing structures within the global market.

Diversification:

Diversification is a strategy that an organisation can use to help influence the growth of the organisation on a large scale platform. It is a strategy that Nestle has closely adhered to as they have diversified into unrelated markets such as pharmaceuticals, beverages, pet care, health care in order to cover losses sustained within other parts of its portfolio while also growing its market share within these markets.

Nestle has depended heavily on diversification to sustain its market leadership as the world's largest food company. Another reason for Nestle choosing to diversify throughout different markets is identifying what customers want now as well as in the future. By engaging within markets that are in an introductory stage it allows them to save money from been involved at the start than entering a market when competition is highly competitive. Early entry into unrelated markets also allows them to gain a higher market share now than they would at a later stage.

Within the cereal industry Nestle has had to significantly alter the products which it provides to its customers. This was highly evident in October 2012 when they vowed to reduce the proportion of sugar and sodium content that exists within the cereal category aimed at children and teenagers. Nestle say they are taking into account what their customers are saying and that this is a strategy which they have focused on within the last decade. This is evident in that they have removed 9,000 tonnes of sugar and 900 tonnes of salt that previously existed within its previous cereal formulas.

Weetabix

Weetabix Company Background

In the 1928, a product called Weetbix was produced in Australia by Bennison Osbourne. The product was introduced to Australia, South Africa and New Zealand. It quickly became a popular breakfast product. Osbourne went to the UK, in 1932, with his business partners and made modifications to the Weetbix product recipe. These modifications resulted in the creation of Weetabix.

In 1932, the Weetabix Food Company was integrated under the name British and African Cereal Company. A Weetabix factory was set up in Burton Latimer, Kettering in Northamptonshire and the production of the products began. In 1936, the business name was altered to Weetabix Limited.

Weetabix Limited expanded into the Canadian market in 1967 and then into the American market in 1968. With the expansion into foreign markets, Weetabix turned its attention towards creating more products for breakfast consumption. In 1971, the business launched Alpen Muesli and in 1991, Weetabix acquired Ready Brek from Lyons Tetley.

In order to remain competitive within the market, Weetabix introduced a new range of Alpen products in 2002. The new Alpen Bars allowed Weetabix to access the existing market while also trying to attract new customers.

Weetabix was a family owned business until Lion Capital purchased the business in 2004

In 2006, Weetabix further improved the breakfast bar range by introducing Alpen Light Bars. 2006 also saw the introduction of new breakfast cereals called Oatibix and Oatibix Bites.

From 2007 to 2010, Weetabix expanded their product range by introducing more breakfast cereals such as Oatiflakes, Ready Brek Chocolate, Weetos and Oaty Bars. Weetabix has won a number of awards for their products.

In 2012, it was announced that China Bright Food had purchased a 60% stake of Weetabix. This purchase gives China Bright Food a controlling share of Weetabix.

Weetabix Cultural Web Model

Weetabix Cultural Web Analysis

Paradigm:

While Weetabix do pride on sourcing locate produce for their product, protecting the environment is a key factor in how the business operates. Through working with professional schemes in meeting targets, for example carbon footprint, water and waste usage, Weetabix strive to achieve these goals with minimal impact on the environment.

Stories:

From the research conducted in relation to Weetabix's employees, it was evident that the employees have positive experiences from working with the business. Weetabix state that working with the business is "more than just a job". Employees find that working in Weetabix is "rewarding" and a "great place to work". Employees also state they receive "good pay and pride of being a part traditional branded company".

Customer feedback is also an element that affects the culture of Weetabix. Negative feedback could potentially affect how employees operate and preform within the business. However, Weetabix obtained positive feedback from customers online, outlining their satisfaction with the nutritional benefits of the product.

As well as these positive aspects, Weetabix have various manufacturing plants, which attracts current and new employees to work with the company as accessible to these plants are greatly beneficial.

Symbols:

As the logo for Weetabix is a clear indicator of the product the business uses, it also focuses on the aspect of the suppliers. The relationship with the suppliers, for this core product of wheat, is the essence of the businesses operational function. The balance between this relationship is vital for the business to progress and grow for the demanding environment.

The brand image of Weetabix illustrates how the business is primarily family orientated and recognises that nutrition is an important part of the household's daily dietary requirements.

Power:

The Head Office of Weetabix controls the operations of the departments within the businesses. These departments include sales, marketing, finance, operations and human resources. With the recent acquisition, the power structure between these companies may alternate as both companies will have different operational views for the business.

Structure:

Weetabix is a formal multinational organisational structure. This format focuses on the global coordination in the geographical areas, with the aid of the Latimer Group manufacturing plants, in Canada, South Africa and the US. Distribution of these products is available in eighty countries from South East Asia, South America, Middle East and Europe.

With this structure in place it allows Weetabix to localise their products to suit the relevant cultures and responsible respond to the laws and regulations of that culture.

Team work is another aspect that helps to develop the Weetabix brand. As one line operator employee stated that "working together in a small team in a high pressure environment" was key to success for the company.

Finally, as stated previously, the collaboration of acquisition of Weetabix would have a dramatic effect on how the business would operate on a daily basis, as both companies would have different managerial styles in running the business. The effect could damage the culture of the business if these managerial styles are filtered down the organisational structure.

Control:

In order for Weetabix to meet their target of production, the following are some controls which are in place to facilitate in making this target; audit procedures, performance management, production speed control and risks assessments. These controls are utilised to ensure that the business remains consistent with their production line and that the employees are catered with an efficient work place.

Routines and Rituals

The culture of Weetabix is focused on working hard and achieving goals; however though promotion and advertising helps to diversify the culture in focusing on the community surround the business. Promotions through online, advertisements and events create brand awareness for Weetabix while involving their key target audience of families.

Weetabix also prides itself in providing the best employment opportunities for their employees. Weetabix seeks to understand their employees and their ambitions to develop within the company. Weetabix offer their employees the chance to re-train or obtain a promotion for a specific role. This displays that Weetabix, with their employees, are highly motivated and goal orientated in achieving set targets for the business.

Weetabix Ansoff Product / Market Growth Matrix

Market Penetration:

This strategy would involve Weetabix aiming to retain or increase its existing market share through achieving an increase in sales by continuing to produce and sell its current products. This strategy can be implemented as a way to secure dominance of the business in a growth market. This can be done by removing the competition from the market.

As Weetabix now compete against businesses such as Nestle and Kellogg's, it must increase its efforts in securing a high market share. Achieving a higher market share may prove difficult for Weetabix as a result of strong competition within the market. An increase in market share will allow Weetabix to have an advantage over its competitors.

Weetabix have increased its product lines in recent years which will assist the market penetration. The wide variety of products offered by Weetabix means the business can target a wider customer base. Weetabix could also specifically attract customers associated with its competitors which would result in Weetabix gaining an increase in market share at the expense of these competitors.

The use of advertising can help Weetabix to attract customers who normally do not purchase its products. Effective advertisement campaigns can target and encourage new customers to purchase the Weetabix products. Advertising can also encourage its current customers to increase the frequency in which they purchase the products.

The risks of implementing this strategy are relatively low but the success level can also be low if Weetabix do not establish a growth increase within the market.

New Product & Services:

Product development would involve Weetabix developing new products for its current market. Weetabix could introduce innovative product ranges which would replace the existing products. Weetabix could make improvements to existing products. The business could also introduce newer products which complement the current products on offer.

As a result of competitors, such as Kellogg's and Nestle, continuously introducing or changing their products, Weetabix need to partake in product development in an order to have a better selection of products available for customer consumption.

The continuous changes and growth within the breakfast cereal market have resulted in the need for Weetabix to compete against popular branded businesses and to keep up to date with the rapid adjustments associated with the market. All businesses must conduct research and development in relation to their market and customers. Weetabix must ensure to conduct research and development in order to gain valuable customer input regarding the products offered by Weetabix. Valuable customer input could also be gained in relation to competitors and Weetabix could attempt to discover why customers purchase products from competitors.

Based on the research conduct on Weetabix, it was identified that Weetabix do not provide gluten free cereal. Introducing gluten free products would be advantageous to Weetabix ad it would allow the business offer new products to its existing customer base. These products could improve Weetabix competitive advantage and increase the market share.

For Weetabix, product development would involve an element of risk as the business would incur expenses but the information gathered could be beneficial to the business in developing products, competing against popular branded competitors and satisfying customer's wants and needs.

Market Development:

Market development would involve Weetabix aiming to enter a new foreign market and sell its current products to a new segmentation of potential customers. The purpose of this is to attract potential customers who would like to purchase products from the Weetabix range. This would assist Weetabix in gaining customers and allow the business the opportunity to become dominate within a new market.

As a result of entering a new foreign market, Weetabix will have to amend its current strategy for marketing. The amendments would be in relation to areas such as pricing, distribution channels and promotional campaigns. Weetabix may decide to expand into a previously unexploited market where there is potential for the business to be successful. Also Weetabix may decide to enter a market where the distribution channels are sufficient to ensure the products are available for purchase within the new market.

As a result of Bright Foods, a Chinese business, recently purchasing a share of Weetabix, the business may wish to expand to the Chinese market in an effort to increase its global standing. With Bright Foods now having a significant input in Weetabix and its product ranges, the business might gain access to the appropriate channels required to enter the new market.

For Weetabix, market development would involve an element of risk as the business is unfamiliar with unexploited foreign markets and the customers. However, Weetabix would have exceptional knowledge of their products and could use this knowledge to attract new customers and be a success within the market.

Diversification:

Diversification in regards to Weetabix would entail the business developing innovative products for markets which the business has not entered to date. It would also involve developing these innovative products for new potential customers. If Weetabix were to partake in diversification, it would have to ensure that the products and the intended market are selected with the opportunity of market growth for the business.

Diversification can be either related or unrelated. In relation to Weetabix, related diversification has proven to be a recent development for the business. In January 2013, Weetabix introduced a new range of breakfast biscuits in an attempt to attract customers who do not eat a traditional breakfast daily. The introduction of the biscuits is also a way to remain competitive with Kellogg's who also released breakfast biscuits within the last year.

For Weetabix, diversification would involve a high level of risk as the business will be operating with unfamiliar aspects of the market.

Flahavan's

Flahavan's Company Background

The business was founded by the Flahavan family in the late 1700's. The history of the family has been traced back to 1785. Flahavan's is believed to be the oldest privately owned family business in Ireland. The business operated from a mill in Kilmacthomas which was powered from the Mahon River. The Mahon River also supplied power to another four different mills.

Originally, the business used the mill to process oats from farmers for a fee. The mill was expanded, in 1935, to include a facility for oatflaking and helped the business to produce a flake that cooks more rapidly.

In 1995, Flahavan's made their products available to the Northern Irish market. In 2003, Flahavan's products were introduced in the UK market. In 2005, as a result of Flahavan's continuous exporting, the business won an award for exporting from the Irish Exporters Association. In 2006, Flahavan's won two more awards for their products, the Waterford Chamber Award and the Cork Environmental Forum Award. In the following years, Flahavan's continued to win numerous awards for their products. In 2010, Flahavan's introduced the new oatmeal product range into the US market.

To this day, Flahavan's still use the same mill which houses the different equipment the business uses to produce a range of products. Flahavan's produce a variety of products, for example porridge oats, ready to eat cereals and biscuits.

Flahavan's Cultural Web Model

Flahavan's Cultural Web Analysis

Paradigm:

Proud and wholesome element reverberates throughout the company

Irish heritage and traditions fully utilised to help dominate hot cereal market share in Ireland and possibly used abroad (UK & USA) to help identify itself with generations of Irish decent.

Stories:

Flahavans is one of the oldest family owned companies based in Ireland. Members of the Flahavan' family have worked throughout all different levels of the organisation for the last six generations which spans in excess of 200 years. In 2009 marketing manager John Noonan was nominated and won marketer of the year for successfully repositioning the Flahavan's brand. This was a major success and helped the brand to be ranked narrowly inside the top 100 checkout list of Ireland in 2009. The company has also grown sizeably both in terms of market share and employees working within the company.

Symbols:

Flahavan's per say does not have a recognised symbol, however the name Flahavan's itself is an iconic brand that is highly recognisable within the Irish market. The tag line "Sets you up for life" helps to convey a meaning of nutritional and healthy value that would be of high importance to the health conscious consumer.

Power:

People within the Flahavan structure are clearly identified within the departments they preside over. For example, the sales teams representatives responsible for sales throughout the different regions are clearly stated on the Flahavan website as well as who is responsible for marketing, production and other important departments within the company.

Structure:

Although the structure identified within the Flahavan organisation identify personal who are responsible for the duties that their department are empowered with, the structure within Flahavan's is functional as the managing director is in touch with all heads of departments and allows for input into the strategy that the company per sues.

Controls:

Due to the small size of the company the hierarchy that exists within the Flahavan company appears to be quiet flat with a lot of departments working closely together in relation to product development, research and innovation. Control within the company has been tightly protected as generation after generation of the Flahavan family have worked throughout all levels of the organisation.

Routines & Rituals:

Flahavan's is a very traditional yet innovative firm as they look to their past to learn from methods that have been used over the last 200 years and use current technology to help improve on past methods. The milling process that Flahavan's undertakes when producing their oats ensures that all oats are cooked twice to give a unique taste when compared to competitors.

Flahavan's Ansoff Product / Market Growth Matrix

Market penetration:

Initially Flahavans, concentrated on its local and regional market in the south east but with the emergence of imported 'cold' cereals, such as Kelloggs cornflakes, in the 1950s, Flahavans had to up its game significantly.By 1962, the company decided to increase its penetration of the Dublin market through small independent retailers,within the year Flahavans had captured 2% of the Dublin market.flahavans continued to promote its cereal brands and despite the intensification of competition from international competitors between the 1970s,to 1990s.The early 1990s was a particularly difficult time for the business , however when health benefits associated with porridge became more main stream in the 1990s, the company capitalised on this healthy eating trend by re-branding and re-packaging its product.

Since the beginning of the recession in five years ago, consumption of 'cold' cereals has decreased and consumption of porridge has increased, driven primarily by its value offering.Today, Flahavans is the fourth largest cereal brand in Ireland and uses sports and celebrities such as Paul O'Connell and Naomi Campbell to promote the health benefits of its product.

New Product & Services:

Initially flahavans consisted of one main product a heavy textured oatmeal which is heavier than the Flahavan's "flaked" oatmeal that can be bought in the shops today. Retention of existing loyal consumers to the brand was the an objective for flahavans. To implement this strategy new product development was undertaken to meet the needs of the loyal customers. Needs of the customer were changing and flahavans had to grow and change with the times in order to retain their existing customer base. Flahavan's developed porridge products to meet the needs of various customers as well as retaining repeat purchasing consumers. This was achieved by brand extention of the parent product.. Flahavans now have a variety of options available to the consumer, from the Progress, Real Fruit and Organic ranges to the convenient Quick Oats range, including the single serving pots and the microwaveable sachets, which now includes an Organic option.

Market development:

Moving the product with the times is essential for flahavans as consumers are growing time poor and increasingly health conscience. By Highlighting and reinforcing the health benefits of the product as well as offering different products to different customer profiles and also ensuring the product is quick and easy to prepare allows flahavans to develop the hot breakfast cereal market even further.

Diversification:

Recruitment of new consumers to the brand was the main objective for flahavans to grow their market. To implement this strategy successfully new product development was essential to capture different customer profiles. Flahavan's developed porridge products to meet the needs of various customers in order to capture a larger portion of the market share. Flahavans now have a variety of options available to the consumer, from the Progress, Real Fruit and Organic ranges to the convenient Quick Oats range, including the single serving pots and the microwaveable sachets, which now includes an Organic option. Each option is specifically targeted to new customer profiles but all have an equal trait (the growing health conscience consumer)

Odlums

Odlums Company Background

Odlums was founded in 1845, by the Odlum family, when a flour mill was opened by William Odlum in Portlaoise, County Laois. The easily recognisable Odlums logo of an owl is based on the crest associated with the family name. In 1960, Odlums was the first flour manufacturer to use small bags as packaging for flour.

In the 1960's, Odlums were operating nine mills in various different locations. However in the following years, in an effort to remain competitive, Odlums reduced the number of flour mills to three, which were situated in Portarlington, Cork and Dublin. Until 2009, Odlums also operated an oat mill which was located in Sallins, County Kildare. In 2009, the Cork mill was closed as a result of an increase in competition from the UK.

Odlums remained owned by the Odlum family until 1988 when it was sold to Greencore. Greencore then sold 50% of the business to IAWS. In 2007, Odlums was purchased by Origin Enterprises PLC, who gained full control of the business.

Odlums produces a different selection of products, ranging from a wide variety of flour and baking mixes to porridge.

Odlums Cultural Web Model

Odlums Cultural Web Analysis

Paradigm:

Irish heritage- Odlums has been milling and packing flour in Ireland for nearly 170 years. The business was originally established by the Odlum family in 1845 when they opened their first flour mill in Portlaoise and then in 1920 Odlums industrial-sized flour mill on Alexandra Road, Dublin was opened, as well as mills in cork and an oatmeal mill in Sallins Kildare

Brand recognition- The Odlums Brand is instantly recognisable amongst Irish consumers and is one of the most recognised Irish brands in Ireland.

In 2009 Odlums obtained a silver Globe award for "Best effective long term marketing campaign". Continual advertisement and promotional activities have helped Odlums achieve brand recognition amongst Irish consumers

Stories:

Positive consumer feedback: Odlums reviews on all their products received positive feedback consumers are extremely satisfied with the quality of their products" Good quality products "

History: Odlums has been milling and packing flour in Ireland for nearly 170 years. The Odlums brand was initially established by the Odlum family in 1845 when they opened their first flour mill in Portlaoise co Laois. Even today they continually produce flour products for retailers, home bakers and cooks nationwide.

 

Odlums specialise in delivering a delicious, hearty range of porridge which has been well known and loved in Ireland for many years.

Symbols:

Odlums logo consists of an image of an owls face, cleverly and simply consists of four components to offset the owl image there are the two eyes a nose and forehead. With Odlums in large italic font beneath the image.

There are three main colours used for the logo white, orange and brown these colours are warm and homely and reflect the image Odlums is trying to portray.

Odlums is committed to working with local communities and support a wide variety of groups primarily through sponsorship at both an educational and sporting level.

Power structure:

Odlums tend to use a hierarchical organization structure, starting with a CEO at the top then beneath is the board of directors followed by senior management (i.e. finance, HR, marketing as well as operations), factory managers, supervisors and line workers.

Organisational structure:

Formal structure - Valeo foods have a formal structure in place and the structures are created by the CEO , board of directors and senior management to ensure the company reach their stated objectives .The organisation has a formal risk assessment processes in place to identify obstacles the company may face and to overcome them before they become a issue.

Encourages collaboration - Valeo foods (Odlums) encourages all departments to work together to achieve the objectives of the company. This involves the marketing department working closely with new product development to develop a product which meets the needs of the consumer. This gives employees from different sectors a greater understanding of how other department works and therefore helps the organisation achieve their objectives

Control systems:

Risk assessments - Significant time and resources have been invested in identifying specific risks across the Group and in developing a culture of balanced risk, minimisation. To assist this, origin enterprises have a formal risk assessment processes in place through which risks and mitigating controls are evaluated.

Quality controls - From the time the grain enters the mill until it is distributed to the retailer or bakery, it isn't touched by hand. It simply passes routinely from one stage to the next, carefully supervised by skilled/experienced employees. Samples of the product are tested in a laboratory at various stages to make sure the flour maintains a high standard of quality. 

Organized work structure - Odlums Carry out laboratory tests accurately and follow strict methodologies to carry out analyses. Maintaining and operating laboratory equipment, for example milling wheat samples using a buhler mill, determination of moisture content of wheat and flour samples using a brabender oven, determination of hagberg falling number using , farinograph testing of flour, extensograph testing of flour, testing samples for damaged starch, near infra red spectroscopy, determination of protein content using leco

tracking and translating results to present to senior colleague.

Routines & rituals:

Ensure quality - quality assurance is a necessity for Odlums to keep its brand name held with the highest regard within the eyes of the consumer.

Customer satisfaction - consumers are extremely satisfied with the odlums product which is evident from the Odlums social media pages " I have coeliac disease and use your Tritamyl flour getting excellent results every time especially sponges."

Odlums Ansoff Product / Market Growth Matrix

Market Penetration:

Odlums have recently closed down two mills in order to reduce cost and stay competitive with U.K. cereal producers. Therefore penetrating the market with may not be a viable direction to take as higher levels of production may not be applicable.

New Product & Services:

In order to stay competitive in a changing market, Odlums could develop products into trending areas such as on-the-go porridge products and porridge cereal bars to further develop the product range. In addition they may consider a sweeter porridge with additional flavourings such as chocolate and banana for the younger audience.

Market Development:

Odlums do not currently export their products overseas. In order to develop a new market, Odlums could potentially export products to the U.K. This would create a new line of distribution which could be used as a potential strategy for Odlums. However this again raises issues about their mill closures and whether they would have capacity do fulfil this type of strategy.

Conglomerate Diversification:

Odlums is a traditional company at heart with main focus and priorities on baking, and wholesome goodness in food. Diversifying into additional products and services may be difficult for the company to compete with. This type of strategy would be difficult to forecast and would need the help of an external body, or an external perspective in order for it to be successful.

Strategic Choices & Challenges

Kellogg's and nestle share differentiation strategy as both are high price products and both have a differentiated focus on strategy in comparison to their competitors.

Kellogg's for instance focuses on family orientation and providing goodwill to the community. They provide a high perceived product at a high price.

While Nestle focus on all different segments of life (children, teens, adults) in addition to creating events which gather high awareness on social matters. In addition to high price and high perceived value.

Flavahans have a hybrid strategy seen through their low cost and high perceived value. This can also be seen in their convenient quick oat cereals, for the on the go health conscious consumer. This provides a high value cereal at a reasonable cost, thus enabling a hybrid strategy.

Weetabix have a focused differentiation strategy (2 o'clock), this is due to their high price and focused differentiation on health conscience consumers as opposed to their competitors. There is high perceived value in the Weetabix range which is different from traditional breakfast cereals.

Odlums has a low price strategy, this is from their medium perceived value in combination with low price. This can be seen from Odlums limited wholesome cereal porridge range in addition with customers medium perceived value from their core profession of baking goods.

Conclusion & Recommendations

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