May 2015 Edition of BEACON, A Monthly Newsletter by SIMCON. Inside this issue: About Us Our Team INDUSTRY ANALYSIS : Pharmaceutical Industry COMPANY ANALYSIS : Sun Pharma BRAND ANALYSIS : Kellogg's Concept of the month

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Contents
ABOUT US
OUR TEAM
INDUSTRY ANALYSIS
COMPANY ANALYSIS
BRAND ANALYSIS
CONCEPT OF THE MONTH:
BALANCED SCORECARD

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OUR PRESENCE
ABOUT US
VISION
The SIMCON - SIMSREE consulting club is an
initiative started in 2012 for those students in
pursuit of excellence in management consulting
and strategic management. Aimed at creating
awareness among the students about consultancy
as a discipline, the club strives to maintain strong
relations with top consultancy firms and provide
platform to craft highly skilled & competent
consultants from SIMSREE. The club is a resource
for information about consulting and a place for
students to obtain real-world consulting experience.
SIMCON provides an avenue of interaction among
faculty, students and alumni through competitions,
live projects, guest lectures, and conclaves. For
this purpose the club has also been publishing its
monthlynewsletter– BEACON (BE A CONSULTANT)
and maintains a FACEBOOK PAGE where latest
news and development in the consulting industry
are posted.
MISSION
To create awareness amongst the students
about consulting industry & its latest trends.
To maintain strong relations with top
consultancy firms.
To provide platform to craft highly skilled &
competent consultants from SIMSREE.
To provide exposure to students via
competitions, live projects, guest lectures &
conclaves.
Contributions invited:
To make this feature a successful effort, we seek continued involvement and contribution from our readers, that is YOU. We
invite articles, research papers, and trivia on themes related to consulting. Be it industry news, consulting trends, a joke, a
cartoon or feedback, we are eager to hear from you. So go ahead, do your research, pen down your thoughts and mail your
entries to simcon.simsree@gmail.com.
Best Regards,
SIMCON - SIMSREE CONSULTING CLUB

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OUR TEAM
SANANDANDESHPANDE
NIKHILRAO
AMEYAMAHABAL
CHITRAWANI
deepesh jethwani
krishna nain
prathamesh indani
Sushil Gurav

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PHARMACEUTICAL INDUSTRY
INDUSTRY ANALYSIS

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Introduction
The Indian Pharmaceutical sector has seen rapid
growth in the last few years. Many industry reports
show that the pharmaceutical sector has been growing
at the rate of 13-14% every year since the last five years.
The previous financial year was challenging on the
domestic front and witnessed sluggish growth mainly
because of strong competition from unlisted players.
There has been a huge shift in the attitude of people
in India towards healthcare. Exponential rise in
cases of cardiovascular problems, diabetes, nervous
system disorders and many other diseases as well as
disorders has created more awareness in the growing
population about the need of improvement in medical
sector. Hence, there is a great need for pharmaceutical
companies to invest their time and resources in
research and development of new cost effective drugs.
India has its own organized pharmaceutical market
and it is being considered as a potential partner by
other countries. The Pharmaceutical Market in India
is ranked 3rd in terms of volume and 10th in terms
of market value. Indian pharmaceutical companies
are also proving to be global leaders in production of
generics and vaccines.
Market Size
According to India Ratings (a Fitch Group company),
the Indian pharmaceutical industry is estimated to
grow at a compound annual growth rate of 20% over
the next five years and is expected to reach USD 55
billion by 2020.
India's biotechnology industry encompassing
pharmaceuticals, services, agriculture, industry and
informatics is growing at an average rate of about 20%
and may reach the USD 7 billion mark by the end
of FY15. Bio-pharma which comprises of vaccines,
therapeutics and diagnostics is the largest sector
contributing about 62% of its total revenue, amounting
to over USD 2.03 billion.
Besides the domestic market, Indian pharmaceutical
companies also have a large chunk of their revenues
coming from exports. Some are focusing on the
generics market in the USA, Europe and semi-
regulated markets whereas others are focusing on
custom manufacturing for innovator companies.
With increased focus on patents, Indian pharma
companies have raised their R&D expenses. The
companies are spending more to establish niche
product portfolios for the future.
Consolidation has increasingly become an important
feature of the Indian Pharmaceutical Market. The
recent deals which include Sun Pharma acquiring
Ranbaxy, merger between Wyeth and Pfizer, Strides
selling its injectables arm and so on are the classic
cases.
RevenueshareofIndianpharmaceuticalsub-segments:
Indian pharmaceutical market segments by value:
Others
Anti diabetic
Pain/analgesic
Respiratory
Vitamins, minerals
Gastro-intestinal
Cardiovascular (CVS)
Anti-infectives
11%
8%
29%
7%
13%
16%
7%
9%
Porter’s 5 Forces Analysis
1. Bargaining Power of Suppliers:
Low because there are many suppliers and the cost
of switching suppliers isn't very high. Raw materials/
chemicals constitute a major cost and suppliers cannot
opt for higher margins as there are many alternative
options in the market.
Patented Drugs
OC Medicines
Generic Drugs
72%
19%
9%

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2. Bargaining Power of Buyers:
Medium as the buyers (patients) of the pharmaceutical
products are directly dependent on the influencers
(doctors in this case) for the brand of pharmaceutical
product that they have to buy. However, the
Government has National Pharmaceutical Pricing
Authority which keeps a control on the pricing.
3. Competitive Rivalry:
High because it is a Very fragmented industry where
thetop300of24,000playersinvolvedinmanufacturing
account for a large portion of sales. Top 20 companies
account for 60% of sales in the Indian Pharmaceutical
Industry; which is an indicator of a skewed market.
4. Threat of Substitutes:
Low as the substitutes that exist are alternative
medicines and treatments particularly prevalent
in the eastern culture are of poor quality and their
effectiveness is not well established. Within the
industry, biotechnology could prove to be a threat to
synthetic pharmaceutical products.
5. Barriers to Entry:
High as it is impacted by factors like licensing issues,
distribution network, patents, high initial investment,
getting approval for setting up plants by regulatory
authority, etc.
Government Initiatives
The new Government has led initiatives such as the
Jan Aushadhi, Pharma Vision 2020 and making India
the Drug Discovery and Global Pharma Innovation
Hub by 2020, which has yielded a positive impact on
the sector.
In the domestic market, generic drugs are expected
to fuel growth in this fiscal year in support from the
'Jan Aushadhi' campaign. As part of this initiative,
the Government will make low cost generic drugs
available from 1st July, 2015. It intends to procure
these medicines in bulk from public and private drug
manufacturers and rebrand it as 'Jan Aushadhi'.
The Government of India has come up with the
'Pharma Vision 2020' program which aims to make
India a leader in end-to-end manufacturing of drugs.
It has reduced approval time for new facilities to boost
investments. It has also put in place mechanisms such
as the Drug Price Control Order and the National
Pharmaceutical Pricing Authority to address the issue
of affordability and availability of medicines.
On 1st February 2015, 100% FDI was allowed through
the automatic route for the medical devices segment.
The updated FDI policy covers medical instruments,
diagnostic tools & products and any technology and
products including clinical implants. This initiative
is expected to boost the manufacturing of medical
devices,drive Mergers & Acquisitions and even
collaboration to develop new technologies.
The Department of Pharmaceuticals has assigned 2015
as the 'Year of Active Pharmaceutical Ingredients’ in
order to emphasize the importance of the sector.

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Challenges in the industry
Intellectual Property Rights (IPR)
IPR in the Pharmaceutical space has always been a
bone of contention across the globe. Initially, India was
not in much favor of strong IPR protection as it would
have made healthcare unaffordable for the masses
because of lower household income. As per Indian
Patents Act of 1970, only processes and not products
could be patented which meant that a rival company
could make the same product using a different process.
With time though, the Indian authorities have realized
the importance of strong IPR protection for the overall
development of the pharmaceutical industry. This lead
to an amendment to the Indian Patents Act in 2005
which allowed to patent processes as well as their
products.
Compulsory Licensing
Under Indian patent law, there are certain conditions
for issuing Compulsory License are intended to
prevent a scenario where health of the general public
gets prejudiced by the exclusivity which is granted to
the product that is being patented.
Although compulsory licenses have been viewed as a
necessary evil in the developing world countries, they
have also caused concerns in the industry because of
the revenue loss that they tend to cause.
Trademark
If there is a degree of resemblance between marks from
a design side, or performance side or by sounding
phonetically similar to goods of rival traders, it could
lead to buying issues – especially with purchasers who
are likely to buy goods looking at these factors rather
than the exact name.
Rising customer expectations:
The commercial environment is getting harsher for
the pharmaceutical companies, as healthcare payers
continue to impose new cost constraints on healthcare
providers and scrutinize the value that medicines offer.
The demand for new therapies that are economically
and clinically better than the existing alternatives is
always increasing, together with real-time results that
back any claims about a medicine’s superiority.
Investments
The Union Cabinet in India has given its approval to
amend the existing FDI policy in the pharmaceutical
sector covering medical devices. It has allowed up to
100%FDIundertheautomaticrouteformanufacturing
of medical devices subject to specified conditions.
The drugs and pharmaceuticals sector attracted
cumulative FDI inflows worth approx. USD 12.8
billion between April 2000-December 2014, according
to statistics released by the Department of Industrial
Policy and Promotion.
Prime Minister Narendra Modi’s ambitious ‘Make In
India’ campaign has pharmaceuticals as a key focus
area.
Here are some of the main investments that have
happened/announced in the Indian pharmaceutical
sector:
• Apollo Hospitals plans to add around 2,000 beds
over the next two financial years at a cost of around
USD 24 million
• UK’s development finance institution CDC has
invested around USD 48 million in Narayana
Hrudayalaya hospitals who will now expand to
provide affordable treatment in western, eastern as
well as central India.
• Piramal Enterprises has acquired Coldstream
Laboratories based in the USA for USD 30.6
million in an all-cash transaction.
• Torrent Pharmaceuticals has got into an exclusive
licensing agreement with Reliance Life Sciences
for marketing three its biosimilars in India.
• Indian Immunologicals Ltd. (IIL) intends to
set up a new vaccine manufacturing facility in
Pondicherry with an investment of USD 48.53
million.
The Road Ahead
The Indian Pharmaceutical Market is expected
to grow to around USD 55 billion by 2020. This
growth expectation in Indian domestic market
would be a result of increasing consumer spending,
rapid urbanization, Government initiatives, raising
healthcare insurance and many other factors. Moving
forward, growth in domestic sales would depend
on the company capabilities to align their product
portfolio towards therapies for diseases such as
cardiovascular, diabetes, depressants and cancers.
New SMEs (small and medium enterprises) are also
likely to play a substantial role in the growth of India's
pharmaceutical sector. Global players could explore
opportunities in India by outsourcing research-based
capabilities, licensing to establish a common platform
to create a complete therapy range, franchising and
joint ventures to associate with domestic players and
use local talent and expertise to get quick government
approval and function better.
References
Brand India Pharma, IBEF, Equity Master, PWC, Financial
Express, Make in India, DNB, Pharma Biz

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SUN PHARMA
COMPANY ANALYSIS

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Company Overview
Sun Pharmaceutical Industries Ltd is a multinational
pharmaceutical company incorporated in 1983
as a partnership firm by Mr. Dilip Shanghvi & his
family. Headquartered in Vadodara, Gujarat, Sun
manufactures and sells APIs (Active Pharmaceutical
Ingredients) and pharmaceutical formulations. It
has a highly complementary and diverse portfolio
of generic and specialty products that target various
segments like cardiology, neurology, ophthalmology,
oncology, psychiatry and various others. Sun
Pharma has a market share of 9.1% and sales growth
of 13% versus the average industry growth of 10%.
The recent acquisition of Ranbaxy has made Sun
Pharma the largest pharmaceutical company in
India and 5th largest generic company globally.
Journey Of The Company
Top Management
Name Designation
Israel Makov Chairman
Dilip Shanghvi Managing Director
Sudhir V. Valia Executive Director
Sailesh T. Desai Executive Director
Hasmukh S. Shah Non-Exec Ind Director
Keki M. Mistry Non-Exec Ind Director
Ashwin Dani Non-Exec Ind Director
S. Mohanchand Dadha Non-Exec Ind Director
Rekha Sethi Non-Exec Ind Director
Shareholding Pattern
Others
Private Corporate Bodies
Banks/ Financial Institutions
General Public
Foreign Institutions
Promoters
64%
22%
5%
4%
3% 2%
(As on 31st March, 2014)
Competitor Analysis
(All figures in Rs billion as on 31st March 2014)
Name Market
Cap
Revenue Net
Profit
Total
Assets
Sun
Pharma
2273 166 31 294
Lupin 730 114 18 102
Dr. Reddy's
Labs
598 98 19 120
Cipla 552 103 14 134
Aurobindo
Pharma
395 81 12 95
Competitor Profiles
1. Lupin
• Founded in 1968 and headquartered in Mumbai,
Lupin is a transnational pharmaceutical company
ranked 3rd largest (by revenue) in India that
produce wide range of generic formulations,
biotechnology products, APIs.
• Lupin showed a growth of 40% in profits in the
year 2014 as compared to profits of Rs 13141.6
million in 2013.
• It has recently announced acquiring 100% stake in
Medquímica, a Brazilian pharmaceutical, which
marks its foray into the Brazilian markets and had
also acquired Laboratories Grin in Mexico last
year.
2. Dr. Reddy’s Labs
• It is a Hyderabad based multinational
pharmaceutical company that provides medicines
and services in Europe, North America and
emerging markets of South America, Asia and
Africa.
• Generic formulations being their biggest business,
they also offer APIs, pharmaceutical services,
biosimilars and proprietary products.

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• It has recently launched Somazina in India, used
for treatment of stroke or cerebral infarction.
3. Cipla
• Incorporatedin1935,Ciplahasover1500products
in various therapeutic categories and presence in
over 150 countries. It is the largest manufacturer of
antiretroviral drugs in the world and had launched
World's first oral iron chaletor in 1994.
• In 2014, its revenue increased by about 22% but
witnessed a drop in profits by 10% as compared to
the previous year.
4. Aurobindo Pharma
• Founded in 1986, Aurobindo Pharma has its
presence in therapeutic segments like anti-
retrovirals, neurosciences, anti-diabetes,
cardiovascular, gastroenterology, etc. It exports
its products to over 125 countries and generates
around70%revenuefromInternationaloperations.
• In 2014, its consolidated revenue increased by
38.3% and made a profit of Rs.11729 million
showing a growth of about 300% over the previous
year.
Business Segment Analysis
1. US Generics
• Revenues from this segment showed a growth
of 59% in the year 2014 which was mainly due
to full year consolidation of the DUSA and URL
acquisitions and increased contribution from
Complex Generics.
• Revenue contribution increased to 60% in 2014
compared to 54% in 2013.
• The strong pipeline of 134 ANDAs will be a key
contributor to future growth.
2. India Branded Generics
• In spite of implementation of new pricing policy,
revenues from India branded generics witnessed a
growth of 25% from Rs. 29657 million in 2013 to
Rs. 36918 million in 2014.
• Revenue contribution from India reduced over the
past year from 26% to 23% because of remarkable
growth in the US business and favorable currency
that helped boost the export revenues.
• It is the 2nd largest domestic drug maker by market
share and launched 16 products in FY14.
3. International Generics (Except US)
• Revenues increased to Rs 19084 million in 2014
showing a growth of 25% compared to 2013.
• Segmental revenue contribution declined
marginally from 14% in 2013 to 13% in 2014
despite good overall growth because of strong US
revenues which increased the US contribution
remarkably.
• Sun supplies its products to 48 international
markets and plans to replicate its product portfolio
in emerging markets as well.
4. Active Pharmaceutical Ingredients (APIs)
• Revenues from this segment witnessed a growth
of 6%, from Rs. 7549 million in 2013 to Rs. 8148
million in 2014. Revenue contribution from this
segment fell to 5% in 2014 as compared to 7% in
2013.
• Sun Pharma manufactures over 170 specialty APIs
and scales up over 25 processes annually. The API
business provides competitive advantage to the
company's formulations business, especially for
the US market.
Swot Analysis
Key Financials
The consolidated revenues for the year 2014 grew
to Rs. 162 billion showing a growth of 42% over the
previous year while the EBITDA grew by 45% to Rs.
71 billion. As per Sun Pharmaceuticals Industries
Ltd Annual Report 2013-14, this strong performance
was a result of increased contribution from complex
generics, strong profitability at Taro and favorable
pricing of some products. The acquisition of Ranbaxy
is likely to enhance the performance of Sun Pharma in
the key markets.
• Global footprint- Products sold in
over 150 countries across 5 conti-
nents
• Expertise in relatively complex
generic pharmaceuticals
• Low cost generic portfolio
• Brand recognition in emerging
markets
• Successful add-on acquisitions
• Sales and marketing force of
12000+
• Limited presence in European
countries
• Implementation of the new pric-
ing policy and related trade channel
disruptions.
• Further increase their growth by
leveraging on the acquisitions
• Increasing health awareness in
both rural and urban India
• Growing health insurance cover-
age and rising spend on health care-
Health expenditure was 2.67% of
GDP in 2011 which increased to
4.1% of GDP in 2014
• Stiff competition in generic mar-
kets from other low-cost rivals like
Lupin, Dr. Reddy's Labs, Cipla that
allow limited market share growth
• Exposed to foreign currency
fluctuations- Sun being an exporter
of pharmaceutical products, its
profitability could decline because
of adverse currency movements
Strengths Weaknesses
Opportunities Threats

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Particulars FY11 FY12 FY13 FY14
Net Profit
(in Rs m)
18161 26567 29831 31414
ROCE (%) 20.3 23.8 26.7 27.6
ROE (%) 21.0 23.8 25.7 30.9
EBITDA
Margin (%)
34.1 40.6 43.7 44.5
D/E Ratio 0.04 0.02 0.01 0.13
Dividend (in
Rs m)
2847.3 3523.7 4401.2 5175.4
Dividend
payout ratio
0.1568 0.1326 0.1475 0.1647
EPS (in Rs) 17.5 25.7 28.8 15.2
As can be seen from the graph, there is a consistent
improvement in the gross margin which reflects the
company’s ability to manage its operations in an
effective manner. This performance is also visible from
the increasing EBITDA margin.
The dividends paid have increased over years which
is a sign of the company’s strength and that the
management has positive expectations for the future
earnings.
Earnings per share decreased in 2014 as compared to
the previous year in spite of increase in PAT since the
company issued bonus shares to the shareholders in
the ratio of one equity share of Re. 1 for every share
held.
New Developments
• Sun Pharma bought Ranbaxy from Daiichi
Sankyo, the 2nd largest pharmaceutical in Japan,
for $3.2 billion in April 2014 and as a part of the
deal, Daiichi Sankyo got 8.9% stake in the new
entity. Recently, Daiichi Sankyo has decided to exit
from Sun Pharma by selling entire or part of its
stake for around Rs. 18000 crore in block trades
at the stock market. After this sale, Daiichi Sankyo
will no longer remain a major shareholder in Sun
Pharma but its existing business partnership with
Sun will remain the same.
• After the acquisition, Sun Pharma is reportedly
considering an investment of about $300 m in
R&D this year and that the integration would
deliver synergies of worth about $250 m.
• According to bankers and analysts, Sun Pharma is
most likely to opt for a biomedical deal as it lags
behind in this field as compared to its domestic
rivals Dr. Reddy's Labs and Biocon Ltd.
• Sun Pharmaceutical Industries Ltd and the
Technion- Israel Institute of Technology have
formed a research collaboration for developing
new class of oncology drugs. This step is one of
the many initiatives that Sun Pharma has taken in
order to enhance its specialty pipeline
• Sun Pharma announced in March'15 of buying
GSK's Opiates business in Australia. This
acquisition is a part of their strategy towards
building their portfolio of opiates and also to
access strong capabilities in this segment.
References
Sun Pharma, NDTV Profit, Economic Times, Annual Reports -
Sun Pharma; Lupin; Dr. Reddy's Labs; Cipla; Aurobindo Pharma,
Sun Pharma Press Releases, Hindustan Times, Asian Scientist,
IBEF
0
10
20
30
40
ROE ROCE
FY14FY13FY12FY11
20.3
23.8
26.7
30.9
21.0
23.8
25.7
27.6
The upward trend in ROCE shows that the company
is effectively and efficiently using the employed capital
as compared to the previous year. The increasing
ROE should make the company more lucrative for
stockholders.
Margin Comparison (%)
0
10
20
30
40
50
60
70
80
90
FY14FY13FY12FY11
34.1
79.5
81.5
82.6
74.4
40.6
43.7 44.5
31.7 33.2 31.2
35.4
Gross Margin
EBITDA Margin
Net Profit Margin

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KELLOGG'S
BRAND ANALYSIS

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Kellogg’s was the outcome of a failed attempt at making
granola bars. Today, after more than a century, the
brand still stands tall, amidst all the competition,
leaving a significant mark in the breakfast & packaged
foodsindustry,witha$23.5BNmarketcapitalization(as
of May 2015.)
Kellogg’s Origin & Growth Over The Years
In 1989, W.K.Kellogg along with his brother, Dr. John
Harvey Kellogg was attempting to make granola bars.
Thisledtotheinventionofflakedcerealsthroughflaked
wheat berry. Consequestly this laid the foundation for
W.K.Kellogg’s constant endeavor to flake corn, & thus
was created Kellogg’s Corn Flakes.
In the year 1914, Kellogg’s expanded its base beyond
the United States boundaries & stepped into the
neighboring Canada. Kellogg’s were able to succeed
well in both US & Canada, despite stiff competition
from many other cereals available back then. It was
during this time, when Kellogg’s steered away from
the trademark Corn Flakes, & ventured into making
Bran Flakes, followed by Kellogg’s All Bran.
During 1920’s it started supplying flakes to England &
built a plant in Sydney, Australia as well. It was during
the 50s & 60s that the company launched multiple
cereals such as Kellogg's Corn Pops, Kellogg's Frosted
Flakes, Kellogg's Honey Smacks, Kellogg's Cocoa
Krispies, Kellogg's Special K, Kellogg’s Froot Loops,
Kellogg’s Apple Jacks, Kellogg’s Frosted Mini-Wheats,
Kellogg’s Bran Buds, to name a few. These years also
were the expansion years with Kellogg’s expanding
into Mexico, New Zealand along with opening
facilities in South America, Canada, Scandinavia,
Europe & Asia. (Click here to watch one of the first
few TV commercials circa 1964)
Through the 80s, 90s & 2000s, the brand grew leaps
& bounds to reach around 180 countries, with
manufacturing facilities in 18 countries.
W.K.Kellogg: Inventor & Founder of Kellogg’s
Around 1906, the company was founded by the name
of “Battle Creek Toasted Corn Flake Company”, &
along with 44 hired employees, the first ever batch of
Kellogg’s Corn Flakes was created. Brand Portfolio
With over a century behind it, the brand has multiple
Brand Extensions & Line Extensions to its credit. The
Below image shows the current brand portfolio of
Kellogg’s across the globe:
One Of The Original Packages of Kellogg’s Corn Flakes

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Positioning:
1) In India, Kellogg’s has not been positioned as a mass
product. It appeals to cater to the upper middle class
& the upper class, especially the working adults or the
two-working parents & two children family.
2) It was initially positioned as a breakfast item, but
never clicked in India to that extent. Eventually it
found a place in the Indian home & has been trying
to positioning itself as an evening snack for children
when returning from school or a healthy alternative
for hunger pangs.
Marketing by Kellogg's
Kellogg’s has traditionally been using TV & print for
spreading word about its products. Listed below are
a few different methods adopted for marketing their
products along with ATL & BTL activities undertaken:
I) Kellogg’s Special K:
Despite being in the market for a long time, Kellogg’s
Special K seemed to have lost its touch with the
younger generation. In order to reach out to the new
generation & renew Special K as a significant “diet
cereal”, Kellogg’s reached out to women around
United States. The brand wanted to go beyond being a
brand that promoted certain body figures & aimed at
making women realize the significance of a nutritious
diet. The Ads were shown to various women & it was
very well received & globally launched. (Click here to
watch 2 ads showing special K).
II) Crunchy Nut Restaurant:
In 2012 & 2013, Kellogg’s decided to open a Crunchy
Nut Restaurant in Manchester Arndale Shopping
Centre in UK. In 2013, the restaurant served 9,049
consumers over a 12 day period. Most of the stuff was
free & around 8000 50% off coupons were distributed.
Customers were invited to leave a feedback on social
media channels (Click here to learn about the same).
0
3000
6000
9000
12000
15000
2010
Brand Value Kellogg’s($Mn)
2008 20092007 2011 2012 2013 2014
9431 9710
10428
11041 11372
12068
12987
13442
Kellogg’s has spread across from packaged breakfast
flaked corns, to snacks & frozen food. Though all the
above mentioned products are not available across
the globe in various countries, they are spread out
depending upon the geographical region.
Currently Kellogg’s is ranked at rank 32 for the year
2014 by Interbrands. Its brand value can be seen in the
graph:
STP
Segmentation:
1) Kellogg’s, although a standard product across
United States, in India, is viewed as an Upper Middle
class or Upper Class product owing to its price range.
The company thus, does not have multiple product
options within each product.
2) Though across the globe, Kellogg’s was available
in small package SKUs, it was launched years after its
entry into India.
Targetting: Kellogg’s has distinctly divided the Indian
audience as below:
1) Children: With products like Chocos & Fruit Loops,
the target audience was children.
2) Working Adults : For most working adults, breakfast
being the crucial meal which is always taken on the
run, Kellogg’s launched many a flavoured variety of
Kellogg’s( such as Strawberry, Vanilla+Chocolate) etc.
to cater to the Indian sweet tooth.
3) Special K: With the younger generation moving
towardsahealthierlifestyle,Kellogg’slaunchingSpecial
K as a product to replace staple food as a healthy meal
came as a good move. The target audience was shown
to be the young working generation.
4) Oats & Muesli: This product caters to the health
conscious & is the alternate for cornflakes as provided
by the company.

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III) Crunchy Nuts Granola 2-Stage Door-Drop
Sampling Campaign:
In 2013, the Crunchy Nuts Oat Granola product was
promoted in UK using a 2-stage door-drop sampling
campaign. The first stage consisted of door-drop of
branded bags to 907435 targeted homes in 1014 postal
sectors (carefully selected as to target an audience of
18-45 age group). These bags offered the consumer a
free pack of CNOG, and to accept they had to tick a box
and leave the bag on their door-step for the following
morning. The second stage of the campaign consisted
of filling the bags (of households who had chosen to
opt-in) with a free full-size packs of Crunchy Nut Oat
Granola. The campaign was a success with the below
figures justifying the same: 6.4% repeat purchase by
existing customers, £155.500 of extra sales & 64.800
in units.
Social Media Presence
Kellogg’s has been using Twitter, Pinterest & Facebook
profusely for promotions & campaigns. On Facebook,
Kellogg’shasmultiplepagesformultipleofitsproducts,
rather than a single page for the brand. Hence it uses
the various pages to achieve its sales and promotion.
On Twitter & Pinterest Kellogg’s has been running
various campaigns. A few successful & a few which
had to be retracted. Listed below are a few of the
campaigns.
A) Pay For Eats With Tweets:
Kellogg’s Tweet Shop was opened in SoHo in London.
It sold Special K Cracker Crisps. The shop employed
girls dressed in the same red colour dresses as the
ones shown in the advertisements, thus keeping with
their brand consistency. The catch here was that the
customers didn’t have to pay for the crisps with cash.
They could tweet one out the three tweets listed below
in return for the crisps.
Tweet 1: Guilt-free snacking with new, moreish Special
K Cracker Crisps. Only 95 calories per bag #tweetshop
#spons
Tweet 2: Special K has gone savory! 3 flavors to try: sea
salt and balsamic vinegar, sweet chili, sour cream and
chives #tweetshop #spons
Tweet 3: Love new Special K Cracker Crisps-
everything you want from a crisp, nothing you don’t
#tweetshop #spons
(Click here to view the video).
B) Open For Breakfast Campaign: (Click here to view
the video)
Kellogg’s launched the Open for Breakfast campaign
in the US earlier this year.
The company describes the initiative as an "open
forum in the digital and social media space to
hear what’s on peoples’ minds and share stories
about Kellogg’s branded food, its commitments to
communities around the world and its pledge to care
for the environment."
The company is inviting consumers to engage with
the brand by asking questions through social media
& openforbreakfast.com. The company is also using
this platform to highlight facts & statistics about the
nutritional benefits of their products.
C) “Kellogg’s Waale Guptaji Ki Family” Campaign:
The campaign has a series of short videos displaying
100+ customized recipes that use Kellogg’s Corn
Flakes. It caters to various dishes, in turn catering
to various audience & customer age groups. It
incorporates the ability to customize cereals into any
recipe & eventually find a niche spot in the Indian
breakfast menu. It is a 360 degree digital campaign
leveraging Youtube, Facebook & Twitter. These ads are
also showcased in digital TVs such as Tata Sky, thus
increasing the outreach. (Click here to view various
videos for this campaign).
Kellogg’s In India
With the GOI opening India for foreign investments
in India around 1992-93, in 1994 Kellogg’s invested
$65 million to tap into a completely untapped market
of 250 million middle class population. It was said
back then by Bhagirat B Merchant (the then director

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0.0
0.5
1.0
1.5
2.0
2.5
3.0
2010
Brand Philanthropy Kellogg’s($Mn)
2011 2012 2013 2014
2.9
2.5
2.1
2.6
2.1
are equipped & trained to hand sanitizers & scissors to
the customers too. The campaign was a huge hit owing
to the combination of Right Target Audience, Right
Intervention & Right Partnership.
Kellogg’s Failed Attempts
Apart from the well-known debacle of Kellogg’s in
India in its initial years, one of the most talked about
failure for the brand is of “Breakfast Mates”.
Trying to hitch a ride on the packaged easy combo
meals in 1998, Kellogg’s decided to launch Breakfast
Mates, a portable cereal+milk combo. Breakfast Mates
were small boxes of 4oz servings of Milk in an aseptic
box along with cereals & a plastic spoon. The principle
behind this was to improve convenience for kids to
fix breakfast all by themselves. With $30million spent
on ads (both TV & print), the product was launched.
(Click here to view the breakfast mates ad ).
The product ad left many unanswered questions. It
didn’t speak about the milk being warm if kept outside
(US, unlike India, preferred cold milk with its cereals
as it was that which kept the cereal flake crispy longer),
how does it fare compared to regular cereals, etc. The
ad showed kids making the breakfast at home & not
on the run or at school, thus sending out mixed &
wrong messages in their ad.
Thus Kellogg’s could never market Breakfast Mate as a
convenience product.
Social Responsibilty
Mentioned below is the Brand Philanthropy as stated
as by the Kellogg’s Corporate Resposibility Report:
of Bombay Stock Exchange & an Indian Economic
Expert) that, “Even if Kellogg’s has only a two percent
market share, at 18 million consumers they will have a
larger market than in the US itself.”
With a big media launch, initial sales portrayed a
promising image for the company. But these turned
out to be novelty purchases & didn’t result in repeat
purchases. The idea of eating a cold breakfast without
any vegetables etc. was completely new in India. Apart
from this, the price being exorbitantly over the regular
grocery purchase cost lead it to be a one-time buy
with no repeat purchases. This along with cultural
unacceptance of a cold & bland breakfast left Kellogg’s
to ponder its India strategy.
In 1997, Kellogg’s finally grabbed the Indian pulse &
launched Frosties (sugar coated sweet cereals). Even
the company was taken aback with dismay at the
sheer change of its sales. After this, Kellogg’s reduced
the prices along with introducing wider SKUs to cater
to the customer needs. Apart from this, the brand
decided to reposition itself as a regular fun breakfast
choice rather than the previous niche, premium
product. It tried to cater to the difficult Indian palette
by suggesting accompaniments such as yogurt &
pistachios, almonds etc. for the cornflakes. This lead
to Kellogg’s customizing the century old product to
cater to Indian tastes and consumers.
With a near about market share of 70% & growth
rates of nearly 30%, Kellogg’s has established itself
as a major cereal manufacturer in India. Presently it
sources all its raw material, including the packaging
materials all from India itself. In order to give a fight to
international competitors like Dr. Oetkar & PepsiCo in
India, Kellogg’s has expanded its distribution network
by nearly 50%.
Over a span of years, owing to the changing trend of
people to move towards reduction of carbohydrates &
sugars, Kellogg’s has reduced the sugar content in its
products in comparision to their original formulations
to an average to 20-25%.
References
Forbes, Warc, Kellogg's CSR, Business Insider, TranslateMedia,
UIOWA, About Kellogg's, Kellogg's History, BusinessCaseStudies
- Kellogg's Marketing Mix, Kellogg's New Product Development,
MediaPost, MainStreetHost Blog, InsideIIM
Recently in collaboration with Meru cabs, Kellogg’s
launched “Anaaj Ka Nashta” campaign. This was a
BTL activity run only through cab advertising. It was a
free anaaj ka nashta packs for any cab pick-up between
5AM till 9AM. The pack consists of a Kellogg’s Muesli
packet along with 100 ml milk carton. The cab drivers

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BALANCED SCORECARD
CONCEPT OF THE MONTH

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Introduction
Today businesses are in a mode of transition as
they transform themselves for information based
competition. In such a scenario, a firm’s ability to
exploit its intangible assets has become more decisive
than its ability to manage & invest in its physical
assets.
Balanced Scorecard is a framework which is used for
tracking vital components of a firm’s strategy as well
as facilitating organizational improvement or change.
The balanced scorecard framework was created so
as to supplement traditional financial measures with
certain criteria’s that measured performance of three
perspectives in addition to the financial aspect –
• Performance of customers
• Performance of Internal business processes
• Performance of Learning & Growth
By measuring metrics other than the typical financial
metric, the framework helps companies to keep focus
on long term strategic goals and spot problems before
they appear in the financial statements. The scorecard
is not a replacement for the traditional financial
measures but is its complement.
Companies are using Balanced Scorecard for –
• Clarifying & updating strategy
• Communicating the strategy throughout its
workforce
• Aligning the individual & team’s goal with the
strategy
• Linking strategic objectives to annual budgets &
long term targets
• Identifying & aligning strategic initiatives
• Conducting regular performance review, helping
in improving the strategy
The managers who use the balance scorecard do
not have to rely on short term financial measures
as the only indictor of their firm’s performance.
The scorecard enables them to introduce four new
processes of management that, in combination as well
as separately, contribute to linking short term actions
with long term strategic objectives.

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Translating The Vision
• The first process helps the manager to build a
consensus around the company’s strategy & vision.
• Despite the best of intentions of the key decision
makers in a firm, lofty statements like becoming
the ‘number one’ or ‘best in class’ does not easily
translate into operational terms that can provide
useful guide to action at the local level.
• These statements must be expressed as a set of
measures & objectives that describe the long term
drivers of success
Communicating & Linking
• This process lets managers communicate their
strategy across the organization as well as link it to
individual & departmental objectives
• The scorecard gives managers a way to ensure that
the long term strategy is understood by all levels of
the organization and the individual objectives are
aligned with the long term strategy
Business Planning
• This process enables companies to integrate their
financial and business plans. Majority of the
organizations have a variety of change & training
programs for senior executives. But the executives
find it difficult to effective integrate these diverse
initiatives to achieve their strategic goals
• However, when managers use the ambitious goals
set for the scorecard measures as the basis for
setting priorities and allocating resources, only
those initiatives which take them towards their
long term strategic objectives can be undertaken
by them.
Feedback & Learning
• This process gives capacity for strategic learning to
the companies
• Withthisscorecardatthecentreofthemanagement
system, monitoring short term results from tree
additional perspective — customers, internal
business processes, and learning and growth—
can be done by the company & it can evaluate its
strategy with respect to the recent performance
• Thus the balance scorecard enables companies to
modify strategies to reflect real time learning.
Today, with the evolution of the balanced scorecard,
companies have started employing it as the foundation
of an integrated & iterative strategic management
system. Few of the renowned companies which use
Balanced Scorecard are Philips Electronics, Wells
Fargo Bank, UPS, Ricoh, amongst others. It enables a
company to align its management processes and focus
the entire workforce on implementing the long term
strategy. The balanced scorecard gives us a framework
for effectively managing the strategy’s implementation
at the same time allowing the strategy itself to evolve
in response to the changes in the organization’s
competitive, technological & market environments.
References
HBR: July-August 2007, Harvard, Bain