Kellogg's Indian Experience: A Failed Launch

In April 1995, Kellogg India Ltd. (Kellogg) received unsettling reports of a gradual
drop in sales from its distributors in Mumbai. There was a 25% decline in countrywide sales
since March1995, the month Kellogg products had been made available nationally.

Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in
Battle Creek, Michigan. Kellogg Company was the world's leading producer of cereals and
convenience foods, including cookies, crackers, cereal bars, frozen waffles, meat
alternatives, piecrusts, and ice cream cones. Founded in 1906, Kellogg Company had
manufacturing facilities in 19 countries and marketed its products in more than 160
countries. The company's turnover in 1999-00 was $ 7 billion. Kellogg Company had set up
its 30th manufacturing facility in India, with a total investment of $ 30 million. The Indian
market held great significance for the Kellogg Company because its US sales were
stagnating and only regular price increases had helped boost the revenues in the 1990s

Launched in September 1994, Kellogg's initial offerings in India included cornflakes,

wheat flakes and Basmati rice flakes. Despite offering good quality products and being
supported by the technical, managerial and financial resources of its parent, Kellogg's
products failed in the Indian market. Even a high-profile launch backed by hectic media
activity failed to make an impact in the marketplace. Meanwhile, negative media coverage
regarding the products increased, as more and more consumers were reportedly rejecting
the taste. There were complaints that the products were not available in many cities.
According to analysts, out of every 100 packets sold, only two were being bought by regular
customers; with the rest 98 being first-time buyers. Converting these experimenters into
regular buyers had become a major problem for the company.

By September, 1995, sales had virtually stagnated. Marketing experts pointed out
various mistakes that Kellogg had committed and it was being increasingly felt that the
company would find it extremely difficult to sustain itself in the Indian market.

The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its
products. Kellogg banked heavily on the quality of its crispy flakes. But pouring hot milk on
the flakes made them soggy. Indians always boiled their milk unlike in the West and
consumed it warm or lukewarm. They also liked to add sugar to their milk. or lukewarm.

They also liked to add sugar to their milk. When Kellogg flakes were put in hot milk, they
became soggy and did not taste good. If one tried having it with cold milk, it was not sweet
enough because the sugar did not dissolve easily in cold milk. The rice and wheat versions
did not do well. In fact, some consumers even referred to the rice flakes as rice corn flakes.

In early 1996, defending the company's products, Managing Director Avronsart said, "True,
some people will not like the way it tastes in hot milk. And not all consumers will want to
have it with cold milk. But over a period of time, we expect consumer habits to change.
Kellogg is a past master at the art, having fought - and won - against croissant-and-coffee
in France, biscuits in Italy and noodles in Korea."

A typical, average middle-class Indian family did not have breakfast on a regular basis like
their Western counterparts. Those who did have breakfast, consumed milk, biscuits, bread,
butter, jam or local food preparations like idlis, parathas etc. According to analysts, a major
reason for Kellogg's failure was the fact that the taste of its products did not suit Indian
breakfast habits. Kellogg sources were however quick to assert that the company was not
trying to change these habits; the idea was only to launch its products on the health
platform and make consumers see the benefit of this healthier alternative.
The Coke Pepsi Rivalry: Pepsi Vs. Coke
The cola wars had become a part of global folklore - something all of us took for
granted. However, for the companies involved, it was a matter of 'fight or succumb.' Both
print and electronic media served as battlefields, with the most bitter of the cola wars often
seen in form of the comparative advertisements.

In the early 1970s, the US soft-drinks market was on the verge of maturity, and as
the major players, Coke and Pepsi offered products that 'looked the same and tasted the
same,' substantial market share growth seemed unlikely. However, Coke and Pepsi kept
rejuvenating the market through product modifications and pricing/promotion/distribution
tactics. As the competition was intense, the companies had to frequently implement
strategic changes in order to gain competitive advantage. The only way to do this, apart
from introducing cosmetic product innovations, was to fight it out in the marketplace. This
modus operandi was followed in the Indian markets as well with Coke and Pepsi resorting to
more innovative tactics to generate consumer interestIn essence, the companies were
trying to increase the whole market pie, as the market-shares war seemed to get nowhere.
This was because both the companies came out with contradictory market share figures as
per surveys conducted by their respective agencies - ORG (Coke) and IMRB (Pepsi). For
instance, in August 2000, Pepsi claimed to have increased its market share for the first five
months of calendar year 2000 to 49% from 47.3%, while Coke claimed to have increased its
share in the market to 57%, in the same period, from 55%.

Media reports claimed that the rivalry between Coke and Pepsi had ceased to
generate sustained public interest, as it used to in the initial years of the cola brawls
worldwide. They added that it was all just a lot of noise to hardsell a product that had no
inherent merit.
Teaching Approach:
Caselets are an important teaching aid for the faculty to adapt the teaching style to
the needs of the situation. While discussing the topic of management teaching and learning,
experts distinguish between the 'Sage on the Stage' approach and the 'Guide on the Side'
approach. Comprehensive cases are quite useful while following the 'Guide on the Side'
approach of facilitating a collective learning experience. However, a faculty member may
choose the 'Sage on the Stage' approach due to topic-specific, class-specific, or faculty-
specific factors. In such situations, comprehensive cases can be replaced with caselets to
help the learner in applying the concepts gathered from the lectures. In short, while cases
may be used as a substitute for lectures, caselets may be used as a supplement to lectures.

Logic and Opinion vs. Facts

A discussion leading to managerial decision-making is based on the interplay of
facts, logic, and opinion. A comprehensive case study encourages the learner to sift through
the information provided and identify the relevant facts, and then use logic and opinion to
arrive at a set of decisions. A caselet, being brief and focused on the core issue, usually
provides only the relevant facts. This forces the learner to add value during the case
analysis by logically arguing his/her position based on stated opinions, rather then spend
time in identifying and summarizing the relevant facts. However, it should also be made
very clear to the learners that in real life, such a precise statement of a problem would be
an exception rather than the rule.

Comparative Study
Caselets are also useful in comparative study as the faculty can give a set of caselets
on a particular topic or industry to illustrate the variations in approaches adopted by
different organizations. For instance, a set of three caselets on segmentation could cover
three different sectors consumer goods, industrial products, and services.

Specificity and Timeliness:

A caselet helps the student to relate abstract models and theories to concrete
situations and practical experience, and this makes the job of a faculty in the classroom
easier. Due to its specificity, the faculty can lead the students to focus on narrow issues
within the topic for example, in a marketing class, the use of buzz marketing as a
promotional tool. Due to its smaller size, a caselet does not eat into the classroom schedule
or faculty's time and yet accelerates the learning process. Another advantage that the
caselet offers is its ease of development. To develop a caselet for classroom discussion, the
faculty need not spend much time due to its focused approach and brevity. For instance, if a
faculty member intends to focus only on the finer nuances of the bidding process in e-
procurement, a caselet can be quickly developed on reverse auctions in the steel industry.

Cases and Caselets: A Portfolio Approach

The session plan for a B-School course is likely to be more effective when there is a
balanced mix of cases and caselets. Let us say an elective course on Sales and Distribution
Management has four modules, Introduction to Sales and Distribution, Planning and
Organizing the Sales Effort, Distribution and Channel Control, and Channel Institutions and
Future Trends. For each module, the session plan may include one or two cases, and about
three caselets.

Guest Lectures and Special Situations

There would be occasions where the audience in the classroom is quite
heterogeneous, with learners of varying academic/ industry backgrounds with different
levels of competence and exposure to various teaching methodologies. Or, the faculty may
not have sufficient familiarity with the audience, as in the case of a guest lecture. In such
situations, a comprehensive case study may not be able to achieve the intended results.
Caselets are a convenient teaching aid in such special situations.
Executive Education
When a faculty member or trainer conducts executive education programs, there is a
need to condense the entire learning experience into the limited time available. Moreover,
there may be a need to customize the teaching aids, keeping in mind the target audience.
Caselets are quite suited to fulfill these requirements. Also, a caselet can be innovatively
used as an ice-breaker at the beginning of the program, achieving the dual objectives of
'working in a group' and 'sensitization to the broader theme of the program'.

Conclusion
It is important to realize that the teaching approach has to be adapted to the situation under
consideration, and that the faculty should use a mix of teaching aids to suitably tailor a course or a
training session for the learner's benefit. Variations in the case method of teaching should be explored
and utilized more widely if they lead to a better learning experience for the student. The use of caselets
is one such attempt to broaden the horizons of the case method.