Corn Flakes is a strong brand with the
highest market share, market penetration and brand loyalty. It also has the
highest level of sole loyalty. The brand has been found to function in a
repertoire market environment where the level of sole loyalty is significantly
low. On the marketing approach, the report justifies the company’s approach to
marketing based on the 20/80 Pareto rule on the basis that it is cost effective
and likely to guarantee the success of the organisation.
Brand salience is described as crucial
in the buying situation. It is described as a mental function triggered by cues
that correspond to the needs that the customers tend to have as the basis for
making purchases. These cues are recommended to be included in the advertising
messages. Some of the cues suggested for a Corn Flakes advertisement are: Easy
to prepare; Cost effective; Fun to eat; Cholesterol free, and Tasty among
others.
The customer profile for Corn Flakes is
quite unique and is characterised by low numbers of couples, fewer females, and
fewer high income earners. This uniqueness can be a basis for market
segmentation. However, when the level of deviation from the average is considered,
it was found that only segmentation based on income levels is justifiable. This
forms the thrust of this report that marketing strategies be implemented to
exploit the unique needs at different levels of income.
1. Introduction
Marketing research is very crucial for
purposes of generating strategies that can make an organisation more
competitive and effective in attracting and retaining customers. Focus on the
brand facilitates the evaluation of the brand strength, an understanding of the
nature in which the organisation operates, and consumer characteristics. These
pieces of information are crucial for the planning and execution of marketing
programs. The Corn Flakes brand is a well-known brand in the market with a very
high level of brand awareness and the highest level of sole loyalty in the
industry. The brand also has the largest market share at 37%. This report
evaluates market research data and provides an interpretation of the same as
well as the implications they have on future marketing plans at Corn Flakes.
2. Brand performance analysis
2.1 Statistical analysis of data
When compared to other competitors, Corn
Flakes has the highest market share with 37% followed by Weetbix at 24% and
Special K at 19%. This shows that is has a strong brand. The strength of the
brand is further elaborated by the market penetration rate. Market penetration
is the ratio of the number of customers using a product to the total number of
consumers in a market (Burmann, Zeplin and Riley, 2009). Stronger brands tend
to have much higher market penetration rates than the weaker brands. With a
market penetration rate of 73% (which is much higher than that of competitors)
Corn Flakes can be said to have the strongest brand in the market.
Brand loyalty is measured by the
frequency of purchasing of a product and where the frequency of purchase is
high, a customer can be said to be loyal to a given brand. In this case, Corn
Flakes has the highest average purchase frequency in the market. This shows
that it has a larger loyal customer base than the rest of the players. The
category buying rate is lowest where an organisation has a monopoly and it
increases marginally as the consumer adopts a larger assortment of brands to
shop from (Banelis, Rungie, Riebe and Meyer-Waarden, 2005). With the category
buying rate of Corn Flakes being the lowest in the industry, it signifies that
it is a strong brand that has the capacity to inspire loyalty.
2.2 Repertoire versus subscription markets
A repertoire market is one where the
average customer maintains a preference for a certain number of brands (Mallik,
2009). The customers alternate their preferences and consumption among the
selected brand. In other words, loyalty is to the assortment of brands with the
customer alternating between the brands singled out quite frequently (Kapferer,
2012). The main feature of a repertoire market is the ease with which a
competitor’s customer can be reached out to. Given that the customer can easily
switch to a different brand within the range already singled out, it becomes
quite easy for such customers to be enticed and to switch loyalties. Retaining
them is equally difficult. A typical repertoire market would have very low
levels of sole loyalty; often lower than 50% (Banelis, Rungie, Riebe and
Meyer-Waarden, 2005). In subscription markets, the average customer is loyal to
a particular brand and never switches. They are characterised by 100% sole
loyalty to a given brand.
In the case of Corn Flakes, the rate of
sole loyalty is at 24%. This is much lower than the threshold needed for
subscription markets. Corn Flakes therefore operates in a repertoire market.
This means that Corn Flakes is mostly just a constituent part of the assortment
of preferable brands and this means that the likelihood of their customers
choosing other brands is as high as it is for Corn Flakes to entice customers
of other brands to buy their products.
2.3 Pareto 20/80 rule
The Pareto rule states that 80% of
purchases are made by 20% of the customers of an organisation (Christiaans,
2013). This 20% is comprised of heavy users that would mostly purchase in bulk
and marketers tend to concentrate on keeping this customer segment very
satisfied. This 20% also tend to be quite loyal to the organisation. The
marketing efforts spent on them are therefore mainly on ensuring that they are
retained or introduced to new products represented by the brand. It is a common
belief that it costs much lower to retain a loyal customer than to attract a
new one (Berthon, Ewing and Napoli, 2008). Applying the Pareto rule in
marketing therefore helps in ensuring that resources are used effectively. On
the opposite end of the argument is that these are already loyal customers and
little value is added by concentrating marketing resources on them. In this
argument, the organisation would benefit more by bringing in new customers. Nevertheless,
the 20/80 rule has been proven to be effective. The 20% customers that bring in
80% of the revenues are extremely important to the business and marketing to
them is very justified (Berthon, Ewing and Napoli, 2008).
3. Awareness and salience
3.1 Defining brand salience
Salience can be described as the ability
of an object to stand out from its background. In relation to the brand, it is
the ability of the brand to stand out from other brands (Hervé and Lockshin,
2009; Beard, 2012). General consumer attitudes such as brand awareness simply
distinguish whether a consumer would generally be aware of a brand or are able
to recognise it. Attitudes are a lasting evaluation and are often not recalled
and this means that their influence on purchasing decisions of consumers is
very limited (van der Lans, Pieters and Wedel, 2008; Romaniuk and Sharp, 2004).
It is the brand salience that is most useful in a buying situation. Brands with
a higher brand salience are more likely to be settled upon where the consumer
is in the buying situation. Brand salience is characterised by having a certain
attribute of the brand standing out and becoming the dominant representation of
the brand.
3.2 Analysing brand salience statistics
The level of brand awareness for Corn
Flakes is very high at 82%. This means that virtually all consumers in the
market know and can identify the Corn Flakes brand. It also has the highest
percentage in the top of mind awareness at 38%. The brand leads in the measure
of brand salience at 37% for the whole sample. There is a significant
difference between Corn Flakes and the rest of the rivals with the gap between
them being as high as 17%. This is however not the case for brand salience
among their customers where Corn Flakes is only 1% ahead of the closest rival.
Salience among the users is higher than that among the general consumers. This
could mean that the branding message that highlights the brand attitudes has
been understood better by the specific customers than by the whole market in
general. This could be a cue to intensify branding campaigns in the market.
3.3 Implications for marketing strategies
The level of brand awareness is much
higher than the level of brand salience. This means that more people know about
the brand than those who would know something that stands out about it. The key
to building brand salience is by understanding the psychology of the consumer
and what they would be looking for in the product. This is what is referred to
as the memory structure which focuses on the buying situation. Consumers in the
buying situation are believed to be driven by mental ‘cues’ that trigger their
thoughts on the brands to settle on. The marketing message should therefore be
structured in a manner that would provide the consumer with such cues at the
time that they will be in the buying situation. The cues should be many to
cater for the multiplicity of consumer preferences. They should also be quality
in relation to their ability to match up to the specific needs or be of good quality.
This is what should characterise good advertisements. They anticipate what the
customer is likely to need in the product and then incorporate the same into a
cue that the customer can later draw from when in the buying situation. The
following 10 cues could be applicable for Corn Flakes:
- Easy to
prepare
- Cost
effective
- Fun to eat
- Cholesterol
free
- Tasty
- Favourite
for children
- Healthy
- Energising
- Sharing
meal as a family
- Easy to
preserve
Anyone intending to buy the cereals
would certainly have a need that corresponds to any of the cues provided above.
This would certainly increase the level of brand salience and lead to increased
purchases.
4. Demographics and segmentation
4.1 Customer profile
An examination of the tables 3-5 reveals
that the customer profile for Corn Flakes has a number of distinct
characteristics. On the relationship status, Corn Flakes is above the industry
average for customers who are single. It has the second highest proportion of
single customers in the industry. The converse is true in the married category
where it has the lowest portion. Among the divorced/separated, Corn Flakes
falls slightly above average and it can be argued that there is no distinct
difference on this category. The average deviation on relationship status is
2.2. This is insignificant and doesn’t warrant segmentation based on
relationship status.
On the income levels, Corn Flakes
customers tend to be the lower income earners. In the category of below $50,000
annual income, it scores above average at 23 as compared to industry average of
20. The same applies to the middle category of $50,000-$70,000. However, when
it comes to higher income earners, Corn Flakes is significantly below the
industry average. The level of deviation is significant at 5.5. This means a
segmentation approach based on income can be successfully pursued. In spite of
this, the company still has a significant proportion in the categories where it
doesn’t score highly. The description of the customer profile can therefore
only be done in relative terms where it can be said that Corn Flakes is more
popular among the singles and among the low-middle income earners than the rest
of the brands in the industry. It is also more popular among the males as
compared to the females across the industry. However, it may be unnecessary to
pursue segmentation based on gender since the deviation index is relatively
low.
4.2 Implications for marketing
Having examined the statistics,
segmentation can only be done based on income levels. The rest of the
demographics contain deviation levels that do not justify the pursuit of such a
strategy. Given that the products appear more popular among the lower income
earners, a marketing proposition targeting cost effectiveness themes should be
introduced. Advertisements should also be modified to reflect the lifestyles of
the persons being targeted. Ease of preparation of the meals can also be a
plausible selling proposition. Care should however be taken to avoid projective
the products as low price-low quality products as the middle income earners
could opt to shun the brand.
5. Conclusion
Marketing research ought to serve the
purpose of empowering the marketer to make the right choices for marketing. In
this case, analysis of data leads to the conclusion that price based marketing
approach that is strategically designed targeting the lower and middle income
groups would be suitable for the success of the company. This is however based
on the assumption that the heavy users are drawn from these groups.
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