This paper discusses the problem being faced by the product manager Jane Wells of Post children’s cereal and her dilemma in implementing the business plan for the year 1991.
The main Concern for the company was the decline in sales volume by around 12 percent due to competition from Kellogg’s and its significant increase in advertising and trade expenses.
Not only this the product manager was facing problems with the allocation of marketing budget she had, but what mix to go with for various marketing programs to use (in- pack premiums, trade promotions or advertising). To make matters complicated the manager was unsure what marketing mix to go with, ...view middle of the document...
The company had a strong leadership mission and its goal was to achieve excellent overall quality in its operations in order to achieve excellent financial growth.
Children’s cereal market in Canada:
The children’s cereal market in Canada represented around 21 percent of the growing 750 million ready to eat cereal market in 1989.
Post children’s cereal included three major brands (Honey comb, sugar and alpha-bits) and three minor brands (Fruity pebbles, cocoa pebbles and magic crunch). All the above brands together accounted for 40 % of market share and were sold in both supermarkets and convenience stores in different sizes.
The target markets for Post’s children cereal were children between the ages of three and twelve.
Issues faced by the company:
Kraft General Foods Canada Inc (KGFC) had been facing tough competition for its Post children’s cereal brand from its major competitor Kellogg’s, which resulted in KGFC’s business declining by 12 percent for the year 1990 when compared to last year. The main reason for this decline was the Kellogg’s brand strategy of increasing its advertising and trade expenditure.
The primary concern for the product manager of the Post cereals was the limited budget which was being allocated for marketing activities like advertising, trade promotions and in pack premium. There are various factors which influence consumer buying behavior like taste of the product, place were a product is being placed on the shelves of the supermarket , advertising which influences a child and the in pack premiums which are a sort of surprise for kids. This all factors made the manager’s job difficult to choose what marketing mix to use.
Marketing Mix allocation:
Marketing mix is the particular percentage of budget given to different activities like trade promotions, advertising, in pack premiums etc. Post children’s cereal sales volume grew from 27 million in 1985 to 44 million in 1989 as a result of aggressive marketing, which resulted from an increase in marketing budget from 7 to 17 million.
a) In- pack premiums: This are highly perceived because of their ability to provide children an element of surprise. In 1990 Post allocated $ 2.4 million for an average of two in-pack premiums per brand and observed a significant increase in volume during that period.
b) Trade deals: Trade deals are good for the purpose of getting a fair share of market support. It ensures the product are placed properly were consumers can find it easily. It helps on capitalizing on the awareness generated by the advertising investment. This meant the manager might have to increase the spending and provide more than 3 deals per brand to trade, which might not be enough, if any other company offered a better deal, plus the fact the retailers can only promote limited number of brands in any four week period. So, it is kind of tough decision to make about what kind of deals to offer or else go for discounts on your product.