Special K Product Life Cycle

1 January 2017

The company has gradually introduced a range of flavors and varieties such as Special K bars apple & Pear, chocolate, and Red berry. The parent company for special K is Kellogg’s and it’s a worldwide company for producing cereals. In 2010 sales reached nearly $12 billion, Kellogg Company is the world’s leading producer of cereal and a leading producer of convenience foods, including cookies, cereal bars, and fruit-flavored snacks, with leading brand such as Pop-Tarts® and Nutri-Grain®.

My assessment of Kellogg’s Special K is that they are doing well at managing the product line, particularly in the area of advertisement, which has lead to the brand become a household name in the category of healthy snack bars. Despite this still improvement that could be made. Product Life Cycle (PLC): The life expectancy of a product is thought to be finite; the product life cycle diagram is used to describe the change in sales during various stages of the product life. The first stage is Introduction where the product is launched into the market and the sales will most likely start low.

The second stage is Growth this means the product is becoming successful and sales will start to grow rapidly as it becomes established. Moreover, the third stage is Maturity; this occurs when the product is at its peak and has displaced the previous market leader for example replacement of CD’s with MP3. The final stage is Decline this is when the product sales begin to fall, this is usually due to lack of successful innovation or creation of new varieties to keep consumer interest or expand the target market.

Source: Mintel The graph of percentage market share below shows Special K bars has maintained a steady hold of the market share at 10-11 % over the past 3 years, this lack of change in sales suggests that Special K bars is in the Maturity stage. They hold a position of number 2 in the market leader board in healthy snack bars after Go ahead! ‘United Biscuits’. Future trends: Throughout the international economics crisis for the last couple years, special K cereal bars maintain the market share.

In addition the parent company Kellogg’s also as remain constant 3 years with regard to the net sales, although there was a slight decline in 2010, the 2011 year-to-date result from the October 1st shows an increase in net sales from $9,537 to $10,183 shows that the market is growing stronger. In fact Kellogg’s believe that they can “ build long-term momentum in 2012, internal net sales are expected to rise 4-5 % above the long-term annual target” (Kellogg’s Q3 REPORT, 2011). Its look positive that the market will regain in strength and profit will continue to rise.

Association with a parent company that has strong sales and seen as successful in the market place can affect the Special K cereal bars positively; in addition perhaps more money from the parent company can be invested into the brand to help more and more product to be developed. Over the last ten years the life style of people has changed and convenience food has become more readily available and the cost of sweets and chocolate has become cheaper, this added to the fact that our jobs are less active and people are now facing obesity.

This led people to become more interested in healthy eating and health snacks; the likelihood is that this interest will only increase. Overall my assessment that the company will increase sales and revenue with good management and putting in place my recommendations Source: Kellogg’s annual report, 2010 Using the BCG growth share matrix it will appear that Special K cereal bars is a Cash Cow, according to the Market share graph show the last 3 years the brand has remained steady with out any significant changes, yet the market share remain high with brand being second on the leader board.

According to Baker & Hart it is recommended that the cash cow is ‘harvested’ this means that the company is being managed efficiently on producing good sales without needing too much input in management. However, refereeing back to the PLC and the fact that the brand on the stage of maturity when many products slip into decline or become a dog it is recommended to manage the product and introduce new varieties of products. The result of this the company can increase the market share and growth, will move to become a star and the leader of the market.

SWOT analysis: Kellogg’s is the parent company of Special K, which means it can lean on Kellogg’s brand strength and quality. This can help in terms of marketing as people positively associate the bars with their favorite cereals brand. The resources are already available in terms of innovation and research & development, the raw materials such as wheat and sugar will be cheaper because of the purchasing power due to buying in bulk along side the parent company.

Special K knows their target market well and are great at knowing how to attract them for example by introducing the Special K Plan to help them lose weight with advice and recipes (My special K, 2011). Also by sponsoring popular women’s TV show like Desperate housewives (Sarginson, 2010). They’re innovative and great at mixing taste flavors for example Chocolate with apricot. However, the cost per unit of the bars can seem expansive to some customers compared to other brand such as Jordan’s, 1. 99 pound for a 5 bar Multipack compared to 1. 8 pound for 6 bar multipack from Jordan’s.

This is particularly a problem because of economic climate where people have less money to spend on premium products. It also shows a decline with older people partly because of health issues may restrict a high sugar in take and have less desire for sweet snacks. Special K can increase their market share by reducing the cost of the snack by introducing innovative products to extended the growth phase, and slow it maturity phase by appealing to areas of the market its never focused on before, such as kids and men.

Potential issues may arise due to further hits to the economy which lower spending and create higher ingredient costs; stringent regulations in health and environment and peoples’ growing awareness of nutrition and ethics of where ingredients come from ‘Fairtrade’. According to Kellogg’s Convenience there was a drop in snacks that has ingredients considered as bad, whilst nutritional snack sales increaed 6. 4 %. Other threats could be intense competition from other companies. Any of these could be an opportunities. Recommendation:

Special K can grow their market share by expanding their target market, specifically in the area of men and children. For men introduce a snack bar full of energy and protein, the red bull of the cereal bar world. Kellogg’s™ Special K™ Protein Bars showed a 45% increase in sales from 2009 to 2010 (Kellogg’s connvenience, 2011). This shows an area of opportunity to develop. This could be marketed towards men by changing the packaging maybe changing the color to black keeping the red K logo, these colors will attract men because they associate them with power and sexiness.

Moreover, it can be advertised between high adrenaline sporting program such as Formula 1 and men magazines, both sport and health magazines. As similar products are already produce by the company significant changes factory capacity and to product distribution should not be needed. Another recommendation is to focus on children. Special K already has a range of Mini Breaks, which are small packets of bite size bars. These could be made in partnership with Disney, like creating cartoon character visuals on the product packaging.

In addition, smaller individual bars could be made for children, perfect for their lunch boxes, again with Disney promotions, maybe with tokens to collect for Disney merchandise. These could be created with child friendly flavors like strawberry yogurt or milk chocolate. Children are a powerfull influence on what products and brand parents choose particularly in decisions for breakfast cereals and snack food (Mangleburg, 1990, p: 813-815). My final recommendation is to create a variety of flavors in one pack so the family can share their snacks happily, each getting their favorite flavor and getting the opportunity to try others.

This can expand the special k market for the whole family not just for the woman. Each of these should helped to build a large market share and help it become the market leader head of United Biscuit’s go ahead! Innovation and new ideas are the key factors to keeping public interest and to extend the growth phase.

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