KEY CASE FACTS 1. Post Cereals faces aggressive competition in the cereal market (oligopolistic) which currently has Kellogg's as the leader in the children's cereal market and is gaining market share. Kellogg's has aggressively increased its cereal volume growth by reducing factory selling prices and providing extra funds to encourage retailer promotions. In the first two quarters of 1990, Kellogg's sale volume increased by 17 per cent. It appears that Kellogg's undertook this strategy into order to lure first-time and repeat consumers to its brands. From Post Cereals' viewpoint, Kellogg's can be described as being a strong competitor with a "Tiger Competitor"Ã¯Â¿Â½ reaction pattern, which would react aggressively to any threat or action.
2. Children and parents have considerable influence over cereal purchasing decisions.
3. The trend of Post's cereals market share in the last years has been to increase, for that, it is of special relevance that the marketing department continue with aggressive marketing to keep up with the trend by developing plans for attracting new customers (expand its market share) and to defend its market share.
Should it be part of the solutions? 4. There exist two segments in the children's cereal market. The first market segment is the children's market in which Post has targeted different age groups ranging from three to twelve. The second segment is a growing adult consumer market that Post has not yet subdivided into different age groups. Advertising directed at children but focusing on in-pack premiums was inconclusive. The direct effect on children and adults on trade deals is not known but overall the effect appears to be positive according to our regression analysis and the trade-marketing manager (Appendix A). The effect of advertising, trade deals and in-pack premiums on adults was not available. However, mothers who were price sensitive claimed...