Kellogg’s Australia

Kellogg’s Australia

Situation Analysis: market share, relative market share

1. Market Share Metrics

Table 1: Kellogg’s Australia Market Share Metrics 2013~2017

Source: IBISWorld 2012-2017

1.1 Market Share

As a key indicator of market competitiveness, market share has been used to measure the sales performance of a brand in a given period and in a given geographical area (Nakanishi and Cooper, 2010). In this case, identifying Kellogg’ s market share is an effective way to comprehensive how well the brand is performing in the past five years and to assess their market opportunity and potential. As shown in table 1, the market share of Kellogg’s Australia has been continually declining since 2013. This could be due to a few reasons. One is that the growing number of health conscious consumer in recent years has hurt the demand of Kellogg’s traditional products like Coco Pops. Consumers are slowly moving from cereal breakfast to other more balanced breakfast options (Rolfe, 2015). Secondly, Kellogg’s market share is confronted with threats both from the rise of private-label brands and the increasing cost of raw materials (IBISWorld, 2017). As Kellogg chief executive John Bryant claims, Kellogg is facing more competition from smaller manufacturers that is positioned as ‘healthier alternatives.” These factors has retained the profitability growth of the brand. Thirdly, the drop of Kellogg’s market share is also related to the continued product innovation and aggressive marketing from its major competitors like Nestle. Meanwhile, between the year 2016 and 2017, there is a slightly slump of 0.2% market share of Kellogg’s in Australia market. This can be explained by the brand’s effort in constructing plans for controlling costs  as well as increasing their profit margin(Kellogg’s, 2016). By implementing a zero-based budgeting strategy in 2016, Kellogg’s has lifted the earnings of per share.

1.2 Relative Share

The relative share metrics of Kellogg’s illustrates the brand’s relative market positions compared to its biggest competitor Australian Health & Nutrition Association Limited (AHNA). AHNA also known as Sanitarium is an Australian-owned public unlisted company that manufactures a range of products including breakfast cereals. Its flagship brands in the breakfast food category such as Weet-Bix has given the brand a lead in the ready-to-go cereal segment. Based on Table 1, Kellogg has been over-run Sanitarium for many years and in 2017 its market position dropped to being the  number 2 largest manufacturer in Australia. The boosting of Sanitarium’s market share could due to the ‘skip-breakfast’ trend among young demographics and the popularity of time-saving breakfast. Additionally, Sanitarium has been consistently strengthening its brand perception as “nutritious and convenience’ through marketing campaigns in the the past few years, which has attracted to consumer who concerns about health issues (IBISWorld, 2017). Compared to Sanitarium, Kellogg’s slow speed in terms of innovations and response to the latest trend may also contributes to its underperformance in Australia market.