A Major cereal manufacturer produces and markets standardised breakfast cereals to countries around the world. Minor modifications in attributes such as sweetness of the product are made to cater to local needs. However, the core products and brands are standardised. The company entered the Chinese market a few years back and was extremely satisfied with the results. The company’s sales continue to grow at a rate around 50% a year in China and other Asian countries, and based on the market reforms taking place, the company started operations in India by manufacturing and marketing its products. Initial response to the product was extremely encouraging, and within one year the company was thinking in terms of rapidly expanding its production capacity. However, after a year, sales tapered off and started to fall. Detailed consumer seemed to suggest that while the upper-middle social class, especially families where both spouses were working to whom this product was targeted adopted the cereals as an alternative meals (i.e. breakfast) for a shot time, they eventually returned to the traditional Indian breakfast. The CEO’s of other firms in the food industry in India are quoted as saying that non Indian snacks products and restaurant business are the areas MNC’s can hope for success. Trying to replace a full meal with a non-Indian product has less of a chance of succeeding. You are a senior executive in the International divisions of this food MNC having post-graduate qualification in management from IIMT and several years of experience of operating in various countries in a product management function. You have been appointed head of the fact finding commission to determine answers to these specific questions?
(1) Was entering the Indian market with a standardised product a mistake? Justify
(2) Was it a problem of the product, or the way it was positioned?
(3) Given the advantages to be gained through leveraging of brand equity and product knowledge on a global basis, and the disadvantages of different local tastes, what would be your strategy for entering new markets?
