Due to the minimal preparation required for RTE breakfast cereals, they enjoy immense popularity in North America and Europe. Initially, their presence was concentrated in developed economies of North America and Europe, but now they have expanded their presence across Asia Pacific and the Middle East and Africa.
Another factor which has increased the need for a quick breakfast is the fact that many households now have two working parents. Most consumers prefer consuming eggs, smoothies, frozen waffles, yogurt, sausage, puddings, and other traditional breakfasts, which are healthier and are made up of fresh ingredients.
Hot Cereals Major regions analyzed in this research report are: The market is also observing upswing in adoption of cereal bars among kids.
With the lack of supplier power it is easy for an entrepreneurial company to innovate and create a brand of cereal.
Additionally, as cereal producers started to include granola bars and other types of RTE snack food Case A,we assume that producers now compete in a broader RTE cereal product industry than previously. Macro-Economic Environment The macroeconomic environment is presently an opportunity for the cereal industry.
The market is expected to exhibit a steady 4. However, the cereal industry is an eight billio n dollar business. Inflation has remained relatively steady while the national unemployment rate has fallen to 5.
Few hot cereals such as oatmeal does not comprise any other ingredient while other variants may include coloring agents, yeast, salts, minerals, vitamins, sweeteners, and food preservatives.
However, Kellogg has also proven their strength which is held by remaining focused. Often times this stems from the demands of consumers which were stated previously. A second form of power derives from suppliers ability to get along without the buyer. Firms were required to pay slotting allowance to grocers when securing shelf space for new brands and branded companies were more flexible to shuffle their allocation of space amongst brands as compared to private labels.
Changing Lifestyles make Asia Pacific Attractive Market From a geographical standpoint, Asia Pacific is a key region in the global market for breakfast cereals. Breakfast cereals originated and were popularized mainly in the U. The segment generates considerable revenue from developed economies of North America and Europe on account of widespread adoption of internet and mobile phones.
As such, the massive coupons use that occurred in the years preceding strengthened the demand-side substitutability in the industry.
T [sic] Great barriers to entry and the inelastic nature of cereal allow this oligopoly to exist and numerous government attempts to end it have failed. However, the trend developed in this paper is that this is very difficult to due. Moreover, easier availability of convenient low-cost and nutritious meal options is posing a threat to the demand for cereals.
This is because of the rapid pace of industrialization and urbanization that has increased the spending capacity of the people and changed their lifestyles too. The billion dollar cereal companies can take advantage of absolute cost advantages and economies of scale.
Moreover, incorporation of exotic flavors into the product variants, resulting in innovative tastes, is anticipated to rev up the demand, especially among kids. Sweeteners used in the manufacturing of breakfast cereals include malt, which is obtained from barley, brown sugar, white sugar, and corn syrup.
For the cereal companies this means that the average person has more purchasing power and consumers are better able to afford paying four dollars for a box of cereal.
Asia Pacific, on the other hand, sees higher sales of hot breakfast cereals. Snapshot In order to outgun their competitors, keen players in the global market for breakfast cereals are coming up with a different varieties to cater to the different tastes and requirements of customers.
A potential threat to the cereal industry is the power of the grocery stores. Moreover, increasing awareness regarding easy, fast and inexpensive meal options offered by RTE cereal category is boosting the overall market.
The mushrooming supermarkets, hypermarkets, and convenience stores worldwide is also seen to catalyzing growth in the global breakfast cereals market.
As cereals are considered to offer numerous health benefits and are easy to prepare, they are witnessing augmented demand from consumers worldwide. Palm oil is a vital ingredient utilized in the processing stage.
This advertising budget was second only to the auto manufacturers.
Rapidly growing economies in Asia Pacific are leading a widening base of the populace indulged in busy lifestyles. This implies that RTE cereal producers operate in a broader cereal industry as opposed to one for only a specific type, such as puffed or shredded wheat cereals.
A few natural cereals are also sweetened with concentrated fruit juices. Our recommendation for Kellogg is to further diversify and expand into a new but similar industry. Online channels provide better access to branded merchandise and deliver better shopping experience.Additionally, as cereal producers started to include granola bars and other types of RTE snack food (Case A, ), we assume that producers now compete in a broader RTE cereal product industry than previously.
The Rte Cereal Industry in The RTE Cereal Industry in Case Analysis Competitive Strategy Presented by: Raghav Keshav Why has RTE cereal been such a profitable business? The RTE cereal market is a classic oligopoly with the four dominant players controlling 85% of the market.
Fast industry growth rate (RTE Breakfast Cereal Industry) When industries are growing revenue quickly, they are less likely to compete, because the total Bargaining Power of Suppliers High competition among suppliers (RTE Breakfast Cereal Industry) High levels of competition among suppliers acts to reduce prices to producers.
"High competition among suppliers (RTE Breakfast Cereal Industry)" is an easily defendable qualitative factor, so competing institutions will have a difficult time overcoming it.
"High competition among suppliers (RTE Breakfast Cereal Industry)" will have a long-term negative impact on this entity, which subtracts from the entity's value. The RTE Cereal Industry in Case Analysis Competitive Strategy Presented by: Raghav Keshav Ready To Eat Breakfast Cereal Industry Monday, September 09, This is accounted for when performing a Porter’s Five Forces analysis within the industry.
View Homework Help - RTE Cereal Barriers to Entry Table from BADM at University of Illinois, Urbana Champaign. Barriers to Entry Description Economies of Scale Economies of scale are a major97%(70).Download