SECTION A [40 MARKS] Read the case study below and answer ALL questions that follow. Kelloggs new-product development to grow a brand With annual sales of more than 4.5 billion, Kelloggs is the worlds leading producer of cereal products and convenience foods, such as cookies, crackers and frozen waffles. Its brands include Corn Flakes, Nutri-Grain and Rice Krispies. Kelloggs is a global organisation. Its products are manufactured in 19 countries worldwide and sold in more than 180 countries. In an uncertain world where the organisations strategy is to focus on products and brands that are either the market leader or in a strong second position, the company believes that this focus upon core and successful products enables it to provide consistent and reliable returns and rewards for its stakeholders. In considering Special K, the company concentrated on changing the product through new variants. Although Special K was already a well-established brand, its full potential had never been reached. It was viewed as a stand-alone product, and Kelloggs had not created any variants or brand extensions to develop the core product. Although it was a successful product, Kelloggs recognised the opportunity to stretch the brand by investments that would: revitalise it; extend and further develop its growth phase; help to delay the onset of the maturity phase; and Kelloggs was convinced that such investment would help to maintain the brands strength in a rapidly changing market place. Before taking any investment decisions, Kellogg's undertook market research. It wanted to answer these questions: What changes taking place in society are likely to affect the product? How might new technologies affect our business? What are likely to be the future market trends? Where are the opportunities within the market place? What new categories would appeal to the target market? How far do consumers think the brand could stretch into the market for different product categories? Kellogg's had to understand how the product could be extended into a series of variants which would keep the core product strong, but grow the brand as a whole Special K cereal Initial developments came from Kellogg's in France, who introduced red berries into the cereal. This new product performed well. Market research in the UK, including consumer tests, also identified a real opportunity within the UK market. In October 1999, Kellogg's launched Special K Red Berries in the UK. From the outset it performed well, with very little damage to the core brand: most sales were additional and above expectations; consumers did not swap the 'old' product for the new variant. Evaluating the launch revealed further scope for product development. It was, however, important to ensure that any new products tasted different from the original Special K and the Special K Red Berries, so as not to harm their sales. Extensive product development research was carried out by food technologists. Kellogg's then tested the product with quantitative research. Kellogg's launched Special K Peach & Apricot in February 2003. ID 2 Special K bars Kellogg's already knew that women who are keen to watch their weight and shape seek a range of solutions throughout the day - not just at breakfast. With the help of both users and non-users of existing Special K products, market researchers undertook further quantitative tests of product ideas across a range of food categories. The research identified that cereal bars offered the strongest opportunity to develop Special K as a healthy snack. The brief was then developed and the Special K bar was launched in July 2001, with significant television coverage. Consumers were also able to sample the bar through specific promotional activity. The Peach & Apricot variant was added to the portfolio in February 2003. Growing the brand Kellogg's soon came to realise that the variants were responsible for a huge growth in the Special K brand, without a drop in sales of the core cereal product. New product development had transformed the brand within the UK. This in turn gave a great opportunity to roll-out other developments in other markets, including the USA, Australia and Canada. Product research showed that the UK products could be adapted to meet the individual tastes of consumers within those markets. The Kellogg's strategy was truly global; it developed an idea in Europe which it then adapted and applied worldwide. Within the space of 2 years the extensions to the brand had achieved global coverage, and were providing not only significant developments in sales value and volume of Special K products, but also a huge boost to the brand's equity. Supporting such expansion was not always easy for Kellogg's UK. Initially it produced all the Special K variants sold within Europe. The UK company had to increase its manufacturing capacity and also refine supply chain management processes to ensure that the product would be available at the point of purchase. It had opened a portable foods plant at Wrexham, to produce bars. Other capacity was created by commissioning the production of Special K cereal in Spain. Creating a stronger position When contemplating long-term investment decisions, brand managers face two key questions. 1. In what projects should the company invest? 2. What level of investment should be approved? For the Kellogg Company, market research suggested that using funds to develop variants on Special K looked like a comparatively low risk project that offered the prospect of a good rate of return. This was largely because it involved developing and extending a brand that already enjoyed huge consumer support in ways that could be adapted to the market place worldwide. The judgement has proved to be correct, to the benefit of the company and its many stakeholders. Source: LLP, B. (2018). Kelloggs and the marketing mix - Using new product development to grow a brand. [Online] Businesscasestudies.co.uk. Available at: http://businesscasestudies.co.uk/kelloggs/using-newproduct-development-to-grow-a-brand/kelloggs-and-the-marketing-mix.html [Accessed 29 Nov. 2018]. QUESTION 1 (40 Marks) 1.1 Discuss the key brand development strategies employed by Kelloggs. In your discussion assess the possible risks related with Kelloggs brand development strategy identified. (25 marks) 1.2 Evaluate the brand equity of Kelloggs. (15 marks) ID 3 SECTION B [60 Marks] Answer ANY THREE (3) questions in this section QUESTION 2 (20 Marks) Carmen Stevens is South Africas first coloured female winemaker and she has been the winemaker at Amanis Stellenbosch vineyard since 2005. At Amani, Stevens makes a range of wines, including Sauvignon Blanc, Chardonnay, Ros, Merlot, Shiraz, Pinotage, Cabernet Franc and a wine named I Am One, a Bordeaux/Shiraz blend. Stevens recently started her own wine brand, Angels Reserve, with the help of angel investors. Carmen Stevens is now considering international expansion into the United States. Bearing the above caselet in mind, advise Carmen Stevens on the market entry strategies Amanis Stellenbosch vineyard would consider for the expansion. QUESTION 3 (20 Marks) As the marketing research manager of British Airways, you have been assigned to investigate how first-class passengers would rate ultra-high-speed Wi-Fi, and how much extra they would be willing to pay. QUESTION 4 (20 Marks) The Golf is an important model for Volkswagen and since its inception in 1974, it has won the hearts of at least 35 million customers across its 7 (and a half!) generations in as many as 155 countries worldwide. Volkswagen has invested close to R50-billion to develop the new Golf 8 which hits the production line in June 2019. With reference to the above statement, products are sometimes discontinued from the market or they are innovated to continually appeal to the target market. Comprehensively discuss the marketing strategies used by Volkswagen to annually update their Golf model of cars. QUESTION 5 (20 Marks) In the cola wars Pepsi used a specific general attack strategy against Coke by rolling out Aquafina bottled water nationally in 1997 before Coke launched its Dasani brand. Bearing the above statement in mind, diagrammatically discuss the general attack strategies and identify under which general attack strategy would the scenario fall in.