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The competitive environment of Kelloggs would be studied by means of Porter's 5 forces analysis which would highlight the degree of rivalry in the market.
Presently we can see that the adhesive market has a high growth potential due to the presence of fragmented sections with Kelloggs enjoying management and a combined market share of 75% with 2 other market gamers, Eastman and Permabond. While industry competition between these gamers could be called 'intense' as the consumer is not brand name mindful and each of these gamers has prominence in terms of market share, the reality still stays that the market is not filled and still has a number of market sectors which can be targeted as potential niche markets even when releasing an adhesive. Nevertheless, we can even explain the fact that sales cannibalization may be causing industry rivalry in the adhesive dispenser market while the marketplace for instantaneous adhesives offers development capacity.
Bargaining Power of Buyer: The Bargaining power of the purchaser in this market is low specifically as the buyer has low understanding about the product. While companies like Kelloggs have actually handled to train suppliers regarding adhesives, the last customer is dependent on suppliers. Around 72% of sales are made straight by producers and distributors for instantaneous adhesives so the purchaser has a low bargaining power.
Bargaining Power of Supplier: Provided the reality that the adhesive market is controlled by three players, it could be said that the provider delights in a higher bargaining power compared to the purchaser. The reality remains that the supplier does not have much influence over the buyer at this point particularly as the buyer does not reveal brand acknowledgment or rate sensitivity. This indicates that the supplier has the higher power when it pertains to the adhesive market while the maker and the purchaser do not have a major control over the real sales.
Threat of new entrants: The competitive environment with its low brand commitment and the ease of entry shown by foreign Japanese competitors in the immediate adhesive market shows that the marketplace permits ease of entry. Nevertheless, if we look at Kelloggs in particular, the business has dual capabilities in terms of being a maker of adhesive dispensers and instant adhesives. Possible risks in devices dispensing industry are low which shows the possibility of developing brand name awareness in not just immediate adhesives however also in dispensing adhesives as none of the industry gamers has managed to place itself in double abilities.
Risk of Substitutes: The hazard of substitutes in the immediate adhesive market is low while the dispenser market in particular has substitutes like Glumetic suggestion applicators, inbuilt applicators, pencil applicators and sophisticated consoles. The fact remains that if Kelloggs introduced Bond-A-Matic, it would be enjoying sales cannibalization for its own products. (see appendix 1 for framework).