Star Wars: The Phantom Market. Showing at all good cinemas near you. It's a thrilling chase in which a plucky company chases down a phantom market armed with a lightsaber, only to find that the market is no longer there, and the company has wasted an awful lot of money. Well, not exactly. It's not a real film. Which is a bit of a shame, as if breakfast cereal giant Kellogg had been able to watch it, they might have learnt a bit of a lesson. It would have certainly saved them a bit of cash, as this story will explain.
Back in the early 1990s, Kellogg
was riding high over the crest of a wave made out of cereal and milk. They had $3.8 billion in revenue, in addition to a 40% share of the US ready-to-eat cereal market. With sales in 150 countries, it was a force to be reckoned with. The great cereal giant turned its attention to India, where it hoped to conquer the breakfast market and take another source of revenue. After all, India was home to at least 950 million new possible consumers. What was to stop them picking a box of cereal off of the shelf instead of whatever they usually bought? Even if Kelloggs managed to conquer just 2% of the market, the enormous population would mean that the profit would be greater than that gained by the 40% market share in the US.
Kellogg invested a total of $65 million in order to establish a presence in India, seeing the potential of this huge population. Unfortunately, things didn't quite go to plan, and by 2010, Kellogg still had significantly less than a 1% share of the market in India. Quite simply, slapping the same product into a different packaging and expecting a completely different sort of market to enjoy it was not enough to guarantee its success. Lesson learned, Kellogg?