Statement: Because of no price competition in the breakfast cereal segment, no company has any clear dominance over any of the others. Thus, in order to gain market share over the market leader Kellogg, and improve the company's profits, General Mills came up with its "April 1994" reduction in trade promotions and prices. This strategy was considered risky for several reasons.
Problem: Should General Mills maintain this low cost strategy at the risk of competitor's responses, or should the company differentiate from its competitors? In order to gain market share over the market leader Kellogg and generic and private label brands and improve the profit performance that the company was losing, General Mills should pursue a low-cost strategy by:
-reducing the use of coupon reduction as the company already did
-using streamline marketing to reduce its marketing costs without losing consumer's awareness and
-Practicing economies of scale to reduce costs and thus be financially secure.
[...] The Ready-to-eat Breakfast Cereal Industry in 1994 Definition Issues: Because of no price competition no company has any clear dominance over any of the others. Thus, in order to gain market shares over number one Kellogg and improve the profit performance that the company was losing, General Mills came up with its ‘April 1994' reduction in trade promotions and prices. This strategy is risky for many reasons. Problem: Should General Mills maintain this low cost strategy and risk from competitors' responses or should the company differentiate from its competitors? [...]
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