Cereal Presentation

Front 1

Cereal: Major Players

Back 1

1. Kellogg's (23.9%)
2. General Mills (16.2%)
3. Post (14.2%)
4. Quaker Oats (13.3%)

Front 2

Cereal: Model?

Back 2

Betrand with homogeneous products

Front 3

Cereal: The Market

Back 3

- All four firms offer a range of ready-to-eat cereals in response to the demands of consumers in regards to taste and health benefits (which makes their products homogenous)
- 90's: companies reduced sugar content for more health conscious society
- Both convenience and health benefits are equally important to consumers
- Prices are high b/c small # of firms in market and lack of competition
- Consumers have low market power.

Front 4

Cereal Model cont'd

Back 4

- strat var.: price (firm 1 sets price p1; firm 2 sets price p2)
- price decisions by firms take into account substitution when setting their prices
- in '96, Post reduced prices by 20%, forced other firms to lower prices to stay in competition.
- Firms are non-cooperative and set prices simultaneously

Front 5

Future of the Market

Back 5

- Decline in revenue recently
- Predict future declines as consumers opt for alternative breakfast choices

Front 6

Future of the market (barrier to entry)

Back 6

- Advertising
- large firms have less advertising expenditures b/c they've already established relationships with supermarkets (they get good shelf spaces)
- all firms produce variety of brands, cover every niche of the market...therefore, no room for unknown competitors.