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Kelloggs Case Study Help

The competitive environment of Kelloggs would be studied by means of Porter's five forces analysis which would highlight the degree of competition in the market.
Kelloggs Case Study Solution

Degree of Rivalry:

Currently we can see that the adhesive market has a high development potential due to the existence of fragmented sections with Kelloggs enjoying leadership and a combined market share of 75% with 2 other industry players, Eastman and Permabond. While market competition between these players could be called 'intense' as the customer is not brand mindful and each of these players has prominence in regards to market share, the fact still stays that the market is not saturated and still has several market sectors which can be targeted as prospective niche markets even when introducing an adhesive. However, we can even mention the reality that sales cannibalization might be causing industry competition in the adhesive dispenser market while the market for instantaneous adhesives uses development potential.

Bargaining Power of Buyer: The Bargaining power of the purchaser in this industry is low specifically as the buyer has low knowledge about the item. While business like Kelloggs have managed to train suppliers regarding adhesives, the final customer depends on distributors. Around 72% of sales are made directly by manufacturers and distributors for immediate adhesives so the buyer has a low bargaining power.

Bargaining Power of Supplier: Provided the reality that the adhesive market is controlled by three gamers, it could be said that the supplier takes pleasure in a greater bargaining power compared to the purchaser. The reality remains that the provider does not have much influence over the purchaser at this point especially as the buyer does not show brand recognition or cost sensitivity. When it comes to the adhesive market while the purchaser and the producer do not have a major control over the real sales, this shows that the supplier has the higher power.

Threat of new entrants: The competitive environment with its low brand name loyalty 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 double capabilities in terms of being a producer of adhesive dispensers and instantaneous adhesives. Possible dangers in devices giving industry are low which reveals the possibility of creating brand awareness in not only immediate adhesives but likewise in dispensing adhesives as none of the industry gamers has actually managed to place itself in dual capabilities.

Danger of Substitutes: The risk of replacements in the instantaneous adhesive industry is low while the dispenser market in particular has alternatives like Glumetic idea applicators, built-in applicators, pencil applicators and advanced consoles. The fact stays that if Kelloggs presented Bond-A-Matic, it would be delighting in sales cannibalization for its own items. (see appendix 1 for structure).

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