Executive Summary
The product to be marketed is a store brand cereal. The segmentation could be based on age, gender, income (the most important) and location. The cereals are consumed by people of all ages, by both men and women but a store brand cereal could be easier to purchase for a mid to low income household, therefore the pricing is a critical factor and the company should follow cost based pricing. It is presumed that the store is a huge chain having its outlets all over the country due to which it would have greater market coverage.
The promotion may not be the most difficult part as the cereal products are already well known and consumers do not have to go through 5 stages of brand awareness, a proper shelving in the store is needed and it could generate good sales by being placed next to the market leaders with having price making huge difference among the two.
A Store Brand Cereal
In case of a store brand cereal, the first thing to identify is who would buy such a cereal when the market is having giants like Kellogg’s? As soon as the answer is discovered it can be presumed that people might not be willing to pay more money for the same quality stuff that although is not a supreme brand but yet can be a perfect substitute. The price is a key factor and hence a store brand cereal can trigger those people who are price conscious or who are regular users of cereals but need to taste something new and different. The major segment can therefore be people who voluntarily form budgets for their spending. The cereal could also be consumed by the kids (depends on the kind of cereal) but the buyers would be the parents.
The basis of such segmentation could be age, gender, income and location. The age is a key factor as a cereal consisting of simple cornflakes may be consumable by the weight watchers who want to stay fit, such people may usually be in their 30s or plus, however a cereal like frosties may be consumed by kids and teenagers who like a bit of sugar with the corn. The gender may also be an important factor as usually the women are more weight conscious and so simple cornflakes may be targeting women initially. A cereal consisting of nuts and fruits may interest both men and women to great extent, but perhaps not kids.
The income could be the most important of all as the idea to buy a store brand cereal may remain good if it is cheaper than the market’s popular brands. The middle or low class could be more happy to buy such a brand that could be competitive to a market leader brand and yet cheap. There could be income bands formed that could help forming a sequential list of most attracted segments, the efforts can then be directed more towards that group, while other promotional activities could attract the others.
The segmentation based on the location is also important as the product should be having greater market coverage to attract the real targeted segments. Such a product should be made available throughout the country for higher sales as greater number of people in the east of the country could be rich enough to prefer the expensive cereal while the people in the north may get happier to find the same stuff at lower rates.
The other thing of key importance is the reach of such a product, a store brand cereal could only be limited to that particular store or store chain and most probably cannot be sold somewhere else, which is suggesting that it is exposed to every visitor of that particular store and so anyone visiting the store can be the potential customer. It could be ideal if the store manufacturing the cereal is penetrated deeper into the market (Wal-Mart) or has got a greater coverage in demographical terms, in which case the product would be available at most of the locations.
The pricing element is critical as you simply cannot make such cereal compete the market leaders from pricing perspective, in fact one of the main reasons for launching such product is low pricing, the idea is to have a little profit margin, and also the product does not require any huge distribution efforts as the store itself be handling it. Therefore it is suggested that the pricing should be cost based pricing instead of any other forms of pricing (such as competition based pricing), however psychological pricing could also be a good idea as long as it remains cheaper for the customers to buy it (for instance a cereal for only 99 cents).
Promotional activities will play a key role in communicating what the cereal is about and who could benefit from it. An interesting fact is that the store brand cereal is manufactured to compete the market leaders and everyone is aware of what the market leaders offer. Therefore, it might not require the store to make a huge effort to communicate WHAT is being offered as people may simply be able to identify it as they must have been consuming the similar cereal produced by the giants (like Kellogg’s).
The promotional efforts may also be very simple as the store just need to do good shelving, a good location allocated to any new brand cereal is somewhere next to the old/popular cereals or at a place where customers can access easily. Hence the company may be able to save costs through appropriate shelving. The pricing would it self play a promoting role as it would distinguish the store brand with the other cereal brands in the store and people may then decide to buy and try, while rest is up to the quality.
Reference
Blythe, J. (2007). Consumer Behaviour. London: Thompson Learning.
Kotler, P. (1991). Principles of Marketing. New York: Prentice Hall.
Michman, R.D., Mazze, E.M., Greco, A.J. (2003). Lifestyle Marketing: Reaching the New American Consumer. Westport, CT: Praeger.
Ratneshwar, S., Mick, D.G., Huffman, C. (2000). The Why of Consumption: Contemporary Perspectives on Consumer Motives, Goals and Desires. London: Routledge.