Marketing: Defined, Planned And Delivered (MKT1MDP) Assignment 

Executive Summary for Breafact Cereal Industry Analysis

The report focused on the breakfast cereal industry and its macro-environmental factor influencing the industry. It highlighted the industry attractiveness for the company to study market outlook for investing in the breakfast cereal market. The report addressed the consumer behavior and marketing theories to assess the suitability of product and industry feasibility. Urbanization has increased dependence on ready to eat items. Through using effective advertisement and product quality breakfast cereal is increasing market penetration .The mobility of packaged food shows consumer shift to the industry with ease in feasibility set up in Australia.

Table of Contents

Introduction.

Market segmentation and product promotion.

Macro environmental analysis.

PESTLE analysis.

Threat and opportunity analysis.

Porter’s five force model

Consumer behavior impact on breakfast cereal industry.

Critical assessment of consumer behavior.

Conclusion.

Recommendation

Reference.

Introduction to Breakfast Cereal Industry Analysis 

The breakfast cereal industry includes the sale of cereals. It is segmented by hot cereals and ready to eat breakfast cereal. The market includes consumption by urban households. The report address key factors for market segment identification and understanding consumer behavior towards breakfast cereal industry. Distribution channels and product integration with industry is depicted for growth forecast and profitability matrix for industry setup. The report highlights the study of the breakfast cereal market to assess the market structure, current trend and investment outlook.

The Australian breakfast market has annual revenue of AUD 1000 million, depicting the annual growth rate of 4 percent during 2015 to 2018 (IBIS World 2020).The cereal products that are popular are Muesli, breakfast cereals. Australia ranks among the top 16 countries in global revenue with average consumption price consumption growth of 2 percent every year (Statista 2020).The report depicts the market segmentation and industry outlook of the breakfast cereal industry.

Market segmentation and product promotion

Breakfast cereal the market is advertised to appeal for increasing its reach to the target audience. The cereal market is segmented on the basis of flavor, nutritional aspects. The product is advertised and distributed through distribution channels. Young adults focus on exercise regime intakes protein substitutes like an egg that are influenced by information availability and the external influence of the peer group. The industry trend shows purchasing snacks and cereals through suburbs have increased to 65percent (KPMG 2020).Marketing of products from cereal through effective packaging. Below is the segmentation and key factors determined for behavior

Market segmentation and product promotion

Macro Environmental Analysis

PESTLE analysis

PESTLE is a marketing tool used to analyze the key factors (Political, Economic, Sociological, Technological, Legal and Environment) that influence an industry. The external factors of the breakfast cereal industry will help to determine the firm’s business and strategic operation with respect to the macro environment. These factor relate to specification and industry analysis for marketing and pivot of company through screening and analysis (Moore 2019).

  • Political factors – Trade regulations and implementation of regulated practice with respect to packed goods shows political risk in Australia. Labor and industry forum are set up to promote uniformity in all industries.
  • Economic factors- Australian economy is growing at stable rate. The inflation rate adversely affects the purchase of cereal (Austrade, 2020).The availability of a skilled workforce assists in product packaging and development.
  • Social Factors – A new firm entering into the breakfast cereal industry needs to understand the demographic outlook of the country. In Australia percent of the urban population consumes breakfast cereal. It has led to the growing demand for breakfast options (Moore 2019).
  • Technological factors – Technology impacts product offerings and supply chain of packed products. Strong research and tool system of ERP in Australia supports seamless working (DAWE 2019).
  • Environmental factors- Environmental standards for waste management are set up by Australia for promoting a green product for manufacturing units (DAWE 2019). These sectors are granted the permit on product and plant set up.

The government support with technology advancement in the cereal industry shows brands to look for sustainable development. The breakfast cereal industry is focusing on nutritional and health aspect in line with prevalent norms which makes Australia an attractive location. ERP and product innovation tool for supply cycle innovation and factoring is included in systematic reform cycle to encourage new technology and existing industry standards improvement (DAWE2019).

Threat and Opportunity Analysis

Threat and opportunity analysis is used for assessing the industry position in the marketplace by measuring and evaluating current factors determinant to the organization to establish competitive advantage.

Opportunities- Focus on health and quick preparation and ready-to-use options are seeing surge in growth. These options require the development of the company’s product line to gain new products.

Threats- Change in consumer preference and availability of substitute products possess threats to the breakfast cereal industry from expansion. The surge in the convenience food industry possess a threat to in house development.

Developing of cereal as an important part of breakfast through focusing on hot cereals and ready to eat market are key measures for development.Focus on nutritional product high fiber, strong growth for specific need for mobility of ready to eat cereal is the platform for diversification and opportunity ahead.Distribution channels and product integration with industry is untapped for growthand profitability.

Porter’s Five Force Model

Porter‘s five force model provides insight on the external and internal competitive environment of an entity .The profitability of the business are affected by these forces-

  • Competitive rivalry
  • Threats of new entrant
  • Threat of substitute
  • Bargaining power of suppliers
  • Bargaining power of customers

This model explores the external and internal environment affecting a business. The model focuses on evaluating conditions specific to potential industry forces (Belton 2017) Competitive rivalry is strong as global player dominance is broken by supermarkets who have developed their own cereal product. The preference of buyer tapped by key availability of product decline substitute product purchase .The bargaining of suppliers is strong because of the large consumer’s availability and product differentiation. The industry is in the growth stage and new entrants are using product differentiation and product line extension for increasing shelf place in suburbs and convenience stores as a distribution mechanism (Benton 2017). Large pool of suppliers and product differentiation is necessary for existential growth and industry forecast

Below is the pictorial description of Porter’s five force model.

Porter’s five force model

Figure -1 –Porters five force model. (Walder 2017)

Consumer Behavior Impact on Breakfast Cereal Industry

Breakfast cereal companies have used nutrition as a key driver to enhance sales. The segment targeted by manufacturers are kids, aging citizens, and young adults. The fast tracked growth accounts for revenue generation to focus on key qualities primarily design of attraction (Kim, 2015).

  • The demographic aspects are made on the analysis of consumer behavior towards health and quick breakfast. A simple ad healthy breakfast has resulted in a reduction of over-processed foods.Large pool of suppliers and product differentiation is necessary for industry growth and consumer first approach
  • Urbanization and health consciousness have shown a shift of consumers towards cereal products. Safety and quality of product affect buyer purchase as consumer satisfaction is in perceived value form the product purchase. Easy and quick preparation of ready to eat cereal drives their sales as per consumption (MENAFN 2019).
  • The products have penetrated in the market with effective consumer branding and the price offered with the growth of breakfast cereals in Australia to 12 percent over 2019(Statista 2020).Advertising as dietary need for staying healthy and productdistribution through convenience store is key shift in behavior to create new distribution cycle in the mapping area and skill factorization to tap the market.

Critical Assessment of Consumer Behavior

In the breakfast cereal industry, it is not necessary for a marketer to consider consumer behavior. Consumer behavior is vital for identifying product opportunities and ensuring sales of the product. The demographic and behavior patterns increase focus on product usability. The need for the product as “nutrient” can be delivered by traditional products providing composite nutrient value.The industry is in the growth stage and new entrants are using product differentiation and product line extension for increasing shelf place in suburbs and convenience stores as a distribution mechanism. The digital business environment as a new practice will help in the understanding of consumer behavior through social media analysis and informational data analytics for marketing products (MENAFN 2019). Young adults focus on exercise regime intakes protein substitutes like an egg that are influenced by information availability and the external influence of the peer group (Ipsos 2016). Creating ideas and modifying product appeal based on consumer perspective will yield improved results.

Conclusion on Breakfast Cereal Industry Analysis 

From the above discussion and analysis, it can be concluded that the breakfast cereal industry is growing at a fast pace. The assessment of a company seeking investment will have a favorable outlook as the current industry and the market situation is showing growth prospects. In Australia ease of doing business is increasing investment for new companies set up. Pestle Analysis and Porter's five forces model shows industry and supply chain integration with major players influencing consumer buying decisions with new entrants in a favorable position to market its product. Buying behavior is described as key matrix for development of product and assessing. Buying behavior trend isdiscussed for identifying product opportunities and revenue stream of existing product. The existent patterns increase focus on product durability and quality. The need for the product as healthy alternative in composite value is explained.

Recommendation after Breakfast Cereal Industry Analysis 

The breakfast cereal industry is growing with an increase in accessibility and change in buying behavior. The external factors of the breakfast cereal industry will help to determine the firm’s business and strategic operation with respect to the macro environment. Urbanization has increased dependence on ready to eat items. Breakfast cereals with ready to eat cereal as a front runners are tough competition in the breakfast segment. The mobility of packaged food shows consumer shift to the industry, which will benefit the company set up and investment in ready to eat market. The consumption pattern is discussed to set up products for children and young teens as category entrant in the cereal industry. These operating trend creates industry attractiveness .

Reference for Breakfast Cereal Industry Analysis

Austrade. 2020. Setting up business in Australia. [Online]. Available at https://www.austrade.gov.au/International/Invest/Guide-to-investing/Setting-up-a-business. Accessed on [May 6, 2020].

Belton, P. 2017.Competitive strategy: A technique for analyzing industries and competitors. Macat international house

DAWE. 2019. Local government and Australian environmental law. [Online].Available at https://www.environment.gov.au/resource/local-government-and-australian-environment-law .Accessed on [May 6, 2020]

IBIS world. 2020. Industry report cereal grain wholesaling. [Online].Available at https://www.ibisworld.com/au/industry/cereal-grain-wholesaling/341/ .Accessed on [May 6, 2020]

Ipsos.2016.Australia s most comprehensive study of integrating consumer attitudinal trends with consumption behavior change. [Online].Available at https://www.ipsos.com/sites/default/files/2017-07/Food_CHATs_report_6_May_2016.pdf .Accessed on [May 7, 2020]

Kim, C.W. Mauborgne, R. 2015.Blue ocean strategy: How to create uncontested market space and make the competition irrelevant. Harvard publishing house

KPMG .2020.Australia retail outlook. [Online].Available athttps://home.kpmg/au/en/home/insights/2020/02/australian-retail-outlook-2020.html.Accessed on [May 9, 2020]

MENAFN.2019.Breakfast cereal market is estimated to translate to revenue of US $43Billion by 2019. [Online].Available at https://menafn.com/1100121683/Breakfast-Cereals-Market-is-Estimated-to-Translate-to-a-Revenue-of-US-43-Bn-by-2019 .Accessed on [May 7, 2020]

Moore, F.M., McConnell. A., Cassetari, T. Petcoz, P. 2019. Breakfast choice is affected with nutrients, food groups and discretionary intakes in Australian Adults both breakfast and the rest of the day. Nutrients Open Journal, 12(1), 243-272

Statista.2020. Breakfast cereal Australia. [Online].Available at https://www.statista.com/outlook/40090100/107/breakfast-cereals/australia#market-pricePerUnit. Accessed on [May 6, 2020]

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