Pringles’ Case Study

        Kellogg Company, the giant cereal for breakfast group, has encountered into a contract to buy potato chips snack brand Pringles from Procter & Gamble (P&G) for the amount at , which is part of the company’s strategy to empower its snack industry. The acquisition would not just supplement for the snack brands of Kellogg, instead, the deal is also expected to approximately triple its worldwide snack industry as well. With this contract, Kellogg will get full control on two industrial projects which located in Tennessee, United States, and also Belgium. John Bryant as the President of Kellogg Company has stated that the company is thrilled to declare this acquisition strategic to the market place. As he said, "Pringles has an extensive global footprint that catapults Kellogg to the number two position in the worldwide savory snacks category, helping us achieve our objective of becoming a truly global cereal and snacks company."

Moreover, the Kellogg Company has a plan to deposit the entire cash agreement throughout the bank's credits, cash on hand, as well as money held by the company’s abroad branches as well. In previous April, P&G has already agreed to hand over the Pringles to Diamond Foods Company for , as well as obligation, and planned as a complex stock-based business deal. The company even had expected for an advantage of  a stake. However, the contract had to get re-appraisal due to the censure that the Diamond Food Company has to face throughout the problematic disbursements to its walnut farmers.

Procter & Gamble or more famous as P&G, which would be totally departing the food industry after dissociating from the Pringles brand, has a plan to concentrate on the beauty and personal care products industry. Pringles is known as the second-biggest brand name in the savoury snacks section along with its record of  in sales for above than  countries as well as industrial plants in the United States, Europe and also in Asia as well. So, approximately around P&G employees will shift over to Kellogg, which already famous with its products such as Special K and Rice Krispies. The cereal company will borrow  to conclude the agreement and anticipates to bind its stake to redeem the plan aimed at roughly two years of period. 
The agreement, due to conclude in the summer, will produce one-off charges of between $160m and $180m for Kellogg Company. In the other hand, the company also mentioned it investments will begin at $10m for this year, increasing to a bigger number in the year of 2013 and ultimately striking between  and  every year.
It will enhance eight to  per stake to incomes in the year of 2012 and  to  in the year of 2013, apart from one-time charges and also the effect of condensed concessions.

The Pringles Company which has famous with its potato chips in whole over the world could get a huge back up with this agreement. The company would able to be more exist and get a good reputation as well in the market industry with the support of Kellogg. For instance, Kellogg which has famous with its reputation with healthy breakfast with cereal would able to fade away the health-related issues which Pringles had to experience in previous days such as obesity. The public already recognized Kellogg as the brand which prioritizing health, so that would definitely influence the public’s opinion on Pringles as well.

Afterwards the acquisition action of Pringles, Kellogg Company is leveraging their proficiency in the snack market industry all over the world. Commercially, Kellogg Company presumes in excess of  of progress to derive commencing the emerging and developing market place, specifically over and done with the formation in overseas places.

Resource:  https://www.bbc.com/news/business-17046698

Strategic Management Approaches of Pringles’ Case Study

Porter’s Five Forces Approach of Pringles’ Case Study

Porter’s five forces approach is categorized as industry-level factors of long-term viability in a company. These financial and practical features are considered to be foundational, the main features to the success of a business and also influence such serious features of the business mentioned as costs, the amount of venture required for effectiveness, market stake, prospective revenues, margins of turnover, and also the measurements of the industry as well. Michael Porter also explained the five forces in this approach which are “rivalry in the industry, threats of substitute products, power of suppliers, power of customers, and threats of new entrants.” These five forces performing in unity contain a viable environment in which the company should operate (Roy, 2011).

To evaluate the case study of Pringles with using Porter’s Five Forces approach, we could explain as below.

Rivalry in the industry of Pringles’ Case Study

The rivalry in the industry of the Pringles brand name could be tackled easily with the contract agreement between Pringles and Kellogg since both names are already famous in the industry market. For this reason, the combination of both names, Pringles and Kellogg would create a great result for the position of both companies in the market industry.

Threats of substitute products of Pringles’ Case Study

        There are numbers of situations and conditions where the pressure or threat from the substitute products might appear even in a big company such as Pringles. The company might have to experience a lot of conditions in the term such as switching prices, product costs, the quality of products, the presentation of products, or maybe substitute availability. In addition to this, Pringles had to face the health-related issue about obesity due to its potato chips. With the acquisition from Kellogg Company, Pringles would get more back up to handle this issue and to get a good reputation in the market industry as Kellogg has famous with its health breakfast brand name.

Power of suppliers of Pringles’ Case Study

        Altering the standard of living along with the distance working hours have condensed the trend of customers to have intricate meals. This came up as the main factor which drives the worldwide potato chips in the market. Growth in the request for packed meals, expansion, growing disposable profits of customers, and also the development in the budget of emerging countries are cooperatively increasing the progress of potato chips in the market. In the other hand, an increase in health awareness amongst the customers has stimulated a switch to healthier eating outlines, like vegetables, fruits and wholegrain snacks as well. This is anticipated to intimidate the universal potato chips market. With the agreement with Kellogg, Pringles will get the financial back up to re-designing its potato chips packaging to enhance the visibility or even also included various new cooking technology.

Power of customers of Pringles

        The power of customers that measures in this agreement could influence the revenue margins of Pringles. Because of Pringles is working in a role market segment, they possibly experience greater bargaining power buy from its consumers. For vendors in specific, this will able to make the industry minus interesting and allows the customer to be more flexibility on the service improvements and price drop of Pringle products. For this reason, the agreement with Kellogg will impact on the ability of Pringles to handle this matter and influence the profit margins as well.

Potential entrants of Pringles

        The agreement with Kellogg will also give the back up for Pringles to tackle the potential entrants in the market industry. The agreement was made as to the company’s strategy to empower its snack industry. Therefore, it is part of the strategy of Kellogg to handle the potential entrants in the market industry and make it easier for Pringles to exist in the market.

Johnson & Scholes Approach of Pringles

        As Kellogg is the second biggest player in the global snacks business; therefore, it is important for the company to buy the cringles because in this way; there could be a benefit. However, a company in this need to implement the seven-stage approach and there should be a focus on the aims, goals and objectives of this approach so that steps could be followed more effectively and so that company could get the advantages through following the approach of the Gerry Johnson and Kevan Scholes. Gerry Johnson and Kevan Scholes approach will help the Kellogg to buy Pringles from Procter & Gamble more effectively, and there could be efficiency in the planning process.

        The Gerry Johnson and Kevan Scholes approach is based on the seven steps example, Reward, Control, Action and tasks, Strategies, Objectives, Goals and Mission etc. (Johnson, et al., 2011).

Reward of Pringles

    The reward approach of Gerry Johnson and Kevan Scholes will help the Kellogg to buy Pringles from Procter & Gamble more     effectively, and the planning process could be efficient; as for the reward, the team more effectively focus on the implementation of the plan or recognize the effort that needs to be taken in order to get the effectiveness. As Pringles from Procter & Gamble and can be more effectively obtained if the reward step is in mind. Reward step will be helpful towards the execution of the plan.

Control of Pringles

        Through a focus on the control process there could be effective as; as control is based on execution and there will be contrast real and the arranged execution. Moreover, through implementing control for the company will help the Kellogg to buy Pringles from Procter & Gamble more effectively based on the planning process as there could be a comparison of the actual with the planned performance.

Action and tasks of Pringles

        For the step action and task; there could effectively focus on the team that it must execute the strategy and more effectively there could be efficiency in the planning process; as this step supports the group must execute the procedure in the proper way and reach towards the goals.

Strategies of Pringles

        For the strategies; which means that the action must be taken in order to achieve objectives; as through the approach of Gerry Johnson and Kevan Scholes and strategies the Kellogg can more effectively buy Pringles from Procter & Gamble; as strategies could be effectively decided in this way, and team could move that strategies must be made so as to accomplish goals.

Objectives of Pringles

        Objectives steps will help the team to analyze the actions that need to be monitor. However, in this step of Gerry Johnson and Kevan Scholes; Kellogg can focus on activities that should be screen.

Goals of Pringles

    Through a focus on the step goals; the steps will help the team that there should be achieving of the objectives according to the organizational mission so that success can be obtained and so that objectives can help to accomplish the authoritative mission that can be important for the Kellogg.

Mission of Pringles

The mission is the step that guides the Kellogg to focus on be a vision that must be achieved.

Bowman’s Strategic Clock of Pringles

In the case study of Pringles, we also could evaluate it with using Bowman’s Strategic Clock which is a model that discovers the choices for strategic positioning which explain how the Pringles product must be located or positioned to give it the furthermost reasonable position in the market (West, et al., 2015). Basically, the objective of the Bowman’s Strategic clock is to demonstrate that a company would have a number of options of how to locate a product which using the foundation on two scopes which mentioned as . The Bowman’s Strategic Clock could be explained from the figure below.

Low Price and Low Value Added (1^st position) of Pringles

The Pringles product is not separated, and the consumer observes quite slight importance, regardless of the low price.

Low Price (2^nd Position) of Pringles

Pringles Company should consider the strategy of cost minimization as it is required to get success in the market industry.

Hybrid (3^rd Position) of Pringles

Hybrid position includes various elements of the low price which linked to the competition. The objective is to motivate the customers and convince them that there is product added-value throughout the collaboration of two companies which are Kellogg and Pringles.

Differentiation (5^th Position) of Pringles

Pringles should use the opportunity of this agreement to make a unique strategy to provide the best level of [perceived added value to the customers. Since branding is a key point in this strategy, then it would be easier for the Pringles to win the competition as Kellogg is also already a famous brand name as well. All they have to do now is to create the best quality product to achieve the compare prices as well as added-value which is required from a differentiation strategy.

Focused Differentiation (5^th Position) of Pringles

This strategy proposed to locate the product at the greatest price stages, where the consumers purchase the product due to the high perceived value. Kellogg and Pringles brands are already famous as luxury brands. Therefore, both companies could get the benefits by highly embattled division, advertising, as well as supply and distribution.

Risky High Margins (6^th Position) of Pringles

Kellogg associated with Pringles could use this business strategy to set up high prices without have to providing any addition in perceived value. The reason behind this is that Kellogg and Pringles are already famous with their own brand name. Therefore, the loyal customers will keep on buying their products even at the highest prices. And for this matter, both companies will able to increase their profits as well.

Monopoly Pricing (7^th Position) of Pringles

Pringles and Kellogg still need to concern around the values that the consumers perceive in the products since monopoly pricing means that there are no alternative products. In the other hand, as we know that there are numbers of alternative brand names which offering the products with equal or nearly the same quality as Pringles offering.

Loss of Market Share (8^th Position) of Pringles

Both Kellogg and Pringles should also consider the standard price for their product with a low perceived value which is questionable to win from numbers of alternative products with better choices out there.

SWOT Analysis of Pringles

The SWOT Analysis (Sarsby, 2016) also could be used to evaluate the acquisition of Pringles by Kellogg Company as explained below.

Strengths of Pringles

Universal manifestation: 

The products of Kellogg are factory-made in 18 states and promoted in above than 180 countries. Kellogg has turned out to become the world’s second-biggest snack company by buying the Pringles potato chips brand from Procter & Gamble (P&G) intended for .

Extraordinary Responsiveness:

 Kellogg is popular in generating responsiveness in established financial prudence. The company has famous as the world’s biggest cereal manufacturer from its sales. Therefore, the Pringles brand name became more famous with the acquisition by Kellogg.

Weaknesses of Pringles

Problematic advertising campaigns:

 A number of Kellogg’s advertising has been asked within the media, provoked by growth in customer consciousness of the divergence in the middle of the advertising messages and the products which lead to adverse Word of Mouth or WOM

Slow Innovation: The acquisition of Pringles by Kellogg was considered to be slow in innovation as both of the companies still have not figure out to make any innovation products.

Opportunities of Pringles

Altering trend and lifestyle:

Along with the growth of the metropolitan people, their hectic, trend, and altering lifestyle has made the people nowadays searching for a number of quick and easy meals to handle their hunger and also save their time which is also considered as the motivating potency for the progress of the potato chips industry.

Market diffusion:

Diffusion advance in the present market as well as pointing further increasing market place would support both Kellogg and also Pringles to growth the sales.

Threats of Pringles

Government rules: Government rules connecting to the substances and also ingredients which used in the manufacturing process of potato chips is generating a great obstacle in their development.

Health-related issue:

Health-related issue around obesity definitely becomes a quite significant threat for the Pringles to be survived in the market industry.

Tough competition:

A number of other brand names which offering potato chips with nearly equal quality is definitely creating a tough competition for Pringles in the market industry.

PESTLE Analysis of Pringles

Pringles is famous as a brand of potato chips which formed and distributed by Pector & Gamble (P&G) in the year of 1967 and were initially named with “Pringles Newfangled Potato Chips.” The Kellogg’s Company acquired Pringles for . They provide a variation of diverse flavor potato chips that are promoted in an exclusive packaging which lets them to survive in the tough competition.

To recognize the external macro features related with the Pringles a PESTLE analysis is a framework used to figure out the political, economic, social, technological, legal and also environmental aspects that would influence the company (Perera, 2017).

The political aspect could be recognized as growth in healthy eating promotions which covered by the government mentioned such as the “change4life” promotion which has directed to the innovative regulation on banning the potato chips which contain extraordinary levels of obese at many schools.

The economic aspect will also influence Pringles mentioned such as the price increases rate striking an unsurpassed low of which reported in the Office for National Statistic, at 2015. This typically pulls down the budget of manufacture and give the opportunity for Pringles to get the benefit from bigger profit margins.

The social aspect could be seen from the tendencies and lifestyle of the customers to have a healthier standard of living.

The technological aspect could be seen as the progressions in technology nowadays mean that accessibility of technology devices such as cell phones has massively enlarged.

        The legal aspect from this acquisition is the Kellogg Company authoritatively acquired Pringles for the amount of   billion as a measure of the company’s strategy to develop its global snacks industry. The acquisition of Pringles has to make Kellogg turn out as the second-biggest snack company in whole over the world.

        The environmental aspect is related with the advance in technology has created a larger and wider target of business environment which allows Pringles to progressively market the products with online shopping, for instance by improving their supremacy on the social media websites.

        Next, we also need to identify the internal micro aspects (Lyons, 2012) which influencing Pringles, one of which is the mass media and also how the business has profited as of the enlarged use of the social media to promote as well as market its products. Along with this acquisition, Kellogg has been able to exclude one of their biggest entrants which is kettle crisps. In the other hand, they still must have to face the competition with Doritos and also Walkers (aka Lays) which are possessed by the leading market place stakeholder in the business which is PepsiCo. Pringles also still have to deal with the altering customer tendencies of healthier eating. The company could consider tackling this matter by bringing out a new and innovative variety of multigrain chips. All this time, Pringles have focused on constructing resilient and reliable relations within its providers through delivering the upfront effective guiding principle and procedures as well. Ensuring the acquisition of Pringles, Kellogg has made a decision to maintain the workers which shows expectation and also inspiring them to preserve the high productivity. The company also has proven itself as it is able to retain the stakeholder satisfied by way of growing up the market segment of the savory industry in the market up to .

Recommendations and Implementation of Pringles

        Obviously, it can’t be denied that Pringles as a product is available for customers without any type of limitations. However, Pringles now should be focusing on markets that have more opportunities in terms of market than others for improving their brand image. After all, there has been a health issue in which the company has been involved. The issue of obesity greatly impacts middle-aged people and adults. There are many criticisms present which concern the fast-food fries of McDonald’s. It means that this issue related to health cannot be solved by Pringles easily because it also makes fried potato. An important recommendation is to concentrate on improving what can be done better by Pringles. The strength of the company is a unique and tasty flavour that it created, and youth market is always a significant sector for all types of snacks as young people are not concerned about obesity issues as compared to older people. That is why the strategy of Pringles should be about targeting more young people. If the company concentrates more on the young audience, particularly in between the ages of 5-25, it will help them in expanding their business internationally. Gradually, it will lead to increased sales.

        Besides the development of umami ingredients, Pringles can be even more effective by adding more content of slat to chips because many kids now may prefer lip smacking and salty taste. Once a product is launched by Pringles, it will conduct research on the market where progress can be tracked for helping them in making the necessary changes or adjusting the production scale.

        Other than the health issue, brand packaging is still one of the strengths of Pringles as children are attracted by the variety and unique designs that the company produces. There are countless ways of making new designs for the products of Pringles with pictures and colours based on the tastes of teenagers from different cultures and nations. For instance, diversity in packaging and flavour of Pringles will continue to concentrate on the youth market of Japan as children of Japan seemed to love eye-catching products. Moreover, for promoting products, an opportunity can be given to a lucky consumer who will receive a message inside a random packet for customizing the package of Pringles. Then, that customer uploads the image and order a product to get that image on the product’s cylindrical packaging. Pringles can also try to develop more flavours and styles according to different cultures and market areas. Considering the fact that Kellogg’s along with Pringles operate internationally, it is beneficial for the main organization to consider packaging and flavours which are considered tastier and attractive than before in different international markets.

        There are some specific solutions that Pringles can implement for raising their popularity in Chinese areas where they have yet to gain success. Chinese citizens usually purchase Pringles which are made there due to the concerns of health. Additionally, in some areas, original Pringles are prohibited. Furthermore, managers of Pringles are facing an issue of cost as their products cost two times more than normal fried potato. It will give the beneficial for the company to move a factory to China for penetrating the market as this way, their products will be perceived as healthier. At the same time, they will also be able to evade extra-cost and sales taxes. They might also adjust their production according to the Chinese culture, particularly by attempting to study the culture like adoption policy of Kit-Kat for the market of Japan. The situation will not be improved by only the price change, but discounting might help in reducing profit. It is also true that teenagers are not concerned with issues of obesity, but they prefer products which are cheap. Therefore, it is beneficial for Pringles to keep its current pricing strategy even after being bought by Kellogg’s. Pringles has to make a strategy like different seasonal and quantity offers which can make teenagers purchase more Pringles. Overall, it can be said that Pringles should adopt a market penetrating strategy for enhancing its image and sales.

        In terms of marketing communications, Pringles seems to keep advertising products through social media and television to their young audience including both kids and teenagers. Since kids and teenagers have hobbies like watching the television and using the Internet at present, Pringles will keep on innovating and improving the design of its website which makes young consumers more attracted and excited to eat the cans of Pringles. Pictures of athletes or football players along with renowned celebrities can be used by Pringles for attracting this young segment of the market. Furthermore, the use of pictures of athletes can improve the perception of families about issues related to health. Actually, Pringles has created various pages on social media platforms such as Twitter and Facebook where in almost every teenager who likes football can experience the digital dance of a famous football player, Peter Crouch. This strategy of Pringles has proved to be quite beneficial because the predicted percentage of the target was 35 per cent of fans, but it catered almost 63 per cent which was almost the double of expected rate.

        For sure, Pringles as a product can be sold without any limitations on the location because it is a product which is based on a global strategy of marketing. Pringles has proved to be effective in creating a formula which is suitable not only for the young audience but also for every kind of segmenting customers over the globe. With the strategy associated with the production of different flavours, the company still keeps the same packaging design that gives a sense of familiarity about the tasty product. Kellogg’s decision about purchasing Pringles has proved to be successful because Pringles can use indirect channels for distributing products for a high targeting sale. It appears more in grocery and retail stores where teenagers are often present along or with their family. This way, Pringles catches eyes and the attention of customers by being arranged at the right place where teenagers arrive normally.

Resource: https://www.reuters.com/article/us-kellogg-pringles/kellogg-to-buy-pringles-for-2-7-billion-idUSTRE81E0S620120215

Competitive strategy of Kellogg of Pringles

The  difference strategy of Kellogg bring about a small number of hazards as well. Kellogg Company has confirmed to remain stay i ton the adverse providence of being “stuck in the middle” by constanthe t improvement that preserves them as the worldwide leader in the snack market industry.

        Branching out of the Kellogg Company has been greater than before due to the modification as of the main cereal leader into a chief of snack competitor in all over the world. Rendering to the CEO, John Bryant, Pringles was acquired by Kellogg in order to develop the company by increasing the outline of the brand itself. John Bryant views the Pringles as the main power into numbers of the market place. The company at the moment able to purposefully locate its further brand, Keebler, in the market place that Pringles has taken over. For instance, the famous cereal brands mentioned such as Special K, is also able to expose the entrance for dissimilar snack products to correspond with Special K Cracker Chips.

        Kellogg Company had applied a large quantity of assets when it decided to acquire Pringles, acquired industrial ventures in another country such as Russia, as well as the acquisition of Keebler. Through using the personal assets of the company, Kellogg Company at this moment already mentioned to attain  industrial plants international which make it at ease to generate the products and then supply them to the international open market place. For the reason that their strategy is considered as low cost and difference, their supply chain is fixed to set comparable products collected together that are claimed to be a lower cost compared with the products from other competitors, due to they do not depend on other producers. Products are completed and gathered together in one site.

Resource: http://newsroom.kelloggcompany.com/2012-05-31-Kellogg-Company-Completes-Pringles-Acquisition