08mb20 - stim assignment

8/7/2019 08MB20 - STIM Assignment

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TECHNOLOGY & INNOVATION MANAGEMENT

ASSIGNMENT

Strategic Analysis & Comparison of

SUCCESSFUL INNOVATION: Nissins Cup noodles.

FAILURE INNOVATION: Kelloggs Breakfast mates.

Submitted to:

Ms.Gita Srivatsan

Submitted by:

V.Mohana Priya

08MB20

III MBA (PT)

PSGIM


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ABOUT NISSIN FOODS:

Mr. Ando began the company as part of a humble family operation back in 1948 in Japan.

Faced with sparse food sources after World War II, Mr. Ando realized that a quality,convenient ramen product would help to feed the masses. His goal was to create asatisfying ramen that could be eaten anywhere, anytime. In 1958, Nissin introduced"Chicken Ramen", the first instant ramen. At early stage Japanese perceived Ramen to beluxury item. But the concept of ramen seemed simple enough. All users would have to dois simply remove the ramen from its package, place it in a bowl, add boiling water, coverthe bowl, and wait three minutes. The conservative Japanese food industry, however,rejected the product as a novelty with no future but later on by 1958 Ramen became avery good success and filled in all grocery stores in Japan.

CUP NOODLE INNOVATION CYCLE:

In 1971, Nissin Food Products Co., Ltd. invented Cup Noodle, a revolution in theindustry that makes it possible to package, prepare and serve noodles all in the samecontainer. Nissin also added vegetable and meat varieties to its instant ramen noodlelineup.Advantage: By adding a little hot water and go from hungry to happy in record time. It'sthe portable, hot meal that's ideal for camping, a quick lunch at desk, or serving up as aneasy after-school snack

IDEA GENERATION:

Ramen was promoted in United States too and Mr.Ando had been introduced to USsfast-food industry, and particularly the widespread use of paper cups and containers.Ando recognized the potential for developing a new type of packaging for his company'sinstant soup. Also noodles competition was very high in Japan and Nissin in order tostand ahead of the competition started thinking of new innovative products.

By 1971, the company had prepared to launch what was to become the other importantcomponent of Nissin's growth: the Cup o' Noodles brand (later renamed as Cup Noodles)of soup. Nissin's packaging was something of a revolution in the global food industry,presenting a food product that could be distributed, cooked, and eaten all in the samecontainer.

SUCCESFUL INNOVATION


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OPPORTUNITY RECOGNITION:

Cup noodles Nissins cup noodlesInd Noodles industry

As per purchase simplicity and convenience, both normal noodles pack and Nissins cup

noodles offered customers purchase simplicity and convenience. There is no differencein purchase point as noodle pack or cup noodles is purchased in same manner, justpicking up from stores shelf.

Incase of use, normal noodles pack or cup noodles were simple to prepare by adding hotwater to the noodles cake.

In case of cup noodles, it offered customers convenience to carry it to any place and justadd hot water to the cup of noodles and consume it. In case of normal noodles it shouldbe transferred to another container and then hot water to be added. Cup noodles can bebought, prepared, consumed in same container collective productivity to consumers.

Also cup noodles after consumption can be disposed as it is whereas other noodles packneeds cleaning of cooking.

Purchase

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TheSixUtil

ityLayers

Simplicity

Convenience

Risk

Fun and

Image

EnvironmentalFriendliness

The Six Stages of the Buyer Experience Cycle


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IDEA EVALUATION:

On going through their development story it is likely that they employed idea funnel forthis cup noodles innovation. In an ideal funnel, several criterias are considered and theidea which stays for longer period is finally selected to be executed.

Different criterias probably considered:

1.Traveler friendly - New product to offer easy transportation and consumption duringtravel.

2.Design of Cup It should be in such a design to be held easily in all sizes of hands,children, adult.

3. Cup material Cup should be made of material such that it insulates heat andcomfortable to hold in hand even after hot water addition.

4.Noodle cake shape Noodles should be placed in containers in such a way that it willbe cooked deep to the core in 3 minutes.

5.Preservation of taste and colour of vegetables and meat that are added to the cupnoodles.

DEVELOPMENT:

o In order to preserve heat and insulate Styrofoam containers were chosen. By thisheat is not transmitted to holders hands. Foam bowls are easily portable; they are

convenient for outdoor activities. Foam bowls are inexpensive, disposable, light,and easy to hold, since they insulate heat well and are convenient as an "on-the-go" meal.

o Noodles is packed in such a way that noodles are dense on top and thinned out atthe bottom, suspended in the middle of the container through contact with thesides. This helps in easy cooking of noodles, breakage of noodles while shipping.

o By using Freeze-drying technology, the shrimp, eggs, meat retain their colour,taste, and nutrients.


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COMMERCIALIZATION:

Nissins cup noodles were sold to public by marketing that by selling cup noodles,Nissin was selling them time. It positioned cup noodles among public as the portable, hotmeal that's ideal for camping, a quick lunch at your desk, or serving up as an easy after-school snack.

SUCCESS OF CUP NOODLES:

As the cup noodles was a timely product in growing fast food culture, it was a hugesuccess and brought in more revenue to Nissin. This product was highly preferred bycollege students, office goers, travelers due to its ease of preparation and convenience inconsumption, disposal.

Nissin were pioneer in cup noodles product and they commanded half of the noodlesmarket with this product and even now after 40 years of launch it commands 30% ofmarket in instant noodles in Japan. This innovation by Nissin granted it grandeur successand the product is still more a great success in USA.

Due to the product convenience in transportation and preparation, Nissin cup noodles washighly supplied to natural calamities, war affected regions as a relief measure.

When Soviet Union collapsed in 1991, and food became scarce, the emergency aid infood the Japanese government sent was 1,360,000 servings of cup noodles.

During earthquake in Taiwan, Indonesia Japan government helped by sending millions ofcup noodles as food relief.


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ABOUT KELLOGG:

Kellogg was started in 1906 by W.K.Kellogg in Battle Creek, Michigan only with 44employees and it has now grown into a company with manufacturing units in 18countries and selling in more than 180 countries. Its core products are breakfast andsnacks .

The companies principle guidelines are innovation and commitment to being the best inthe categories in which they compete. From being the first company to offer premiums inits cereal boxes to being the first to fortify its cereals, Kellogg has historically been aleader in industry, innovation and marketing.

With 2003 sales of nearly $9 billion, Kellogg Company (NYSE: K) is the worlds leading

producer of cereal and a leading producer of convenience foods, including cookies,crackers, toaster pastries, cereal bars, frozen waffles, meat alternatives, pie crusts and icecream cones. The companys brands include Kelloggs, Keebler, Pop-Tarts, Eggo,Cheez-It, Nutri-Grain, Rice Krispies, Murray, Austin, Morningstar Farms, Famous Amos,Carrs, Plantation, Ready Crust and Kashi.

ABOUT KELLOGGS BREAKFAST MATES:

Breakfast Mates was a all-in-one cereal kit, a innovative product of Kelloggs launched in1998 in US Market alone. The kit had small boxes of Kelloggs cereals in plastic bowlpackaged with a 4-oz. serving of reduced-fat milk in an aseptic easy-to-pour box and aplastic spoon. To maximize Cereal Mates chances of success, the line included the fourmost powerful Kelloggs brands in the US namely Corn Flakes, Frosted Flakes(Frosties), Fruit Loops, and Mini Wheats.

It is a product innovation by Kellogs and they added a new product to their breakfastcereals line. Feature addition by combining milk packet, bowl, spoon all that needed toprepare a convenient breakfast into a handy kit that can be easily carried anywhere.

It is incremental innovation do it yourself breakfast kit launched to increase the sales inthe growing cereals breakfast market.

THE INNOVATION CYCLE:

IDEA GENERATION:

Kelloggs is a century old company in cereals breakfast production and continuousinnovation of cereal products with respect to nutrition and hygiene is the main goal. Insuch a line comes their cereal mate.

FAILURE INNOVATION


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Keeping in mind of busy American schedule and hectic morning time of working parentsthis convenient innovative idea was generated. All that was needed for morning breakfastalong with the utensil comes handy. This idea made the cereal portable and peopledoesnt find problem eating while travelling to their work place.

The main target customers for this product were working moms who had hectic morningtime to prepare breakfast for their kids. Also parents who didnt want their morning sleepto be disturbed by their children waking them up to prepare morning food also preferredit.

IDEA EVALUATION:

Cereals breakfast was a fast growing food segment in US. So Kelloggs going in forinnovation of a combo cereal kit was a good idea. John McMillin, an analyst at PrudentialSecurities commented as "Clearly Kellogg is trying to make cereal more portable, in thisday and age of people eating a bagel on a bicycle," "I'm not sure if this particular product

will work, but at least they're thinking in the right direction."

On taking a idea funnel for idea evaluation, following criterias would have beenconsidered by Kelloggs:

Technical competence of kelloggs to produce the product yes it has.

Business competence of kelloggs to produce the product it has 90 years ofexperience in cereals breakfast & snacks industry.

Customer base & preference USA has a big customer base for breakfast cerealsmarket and in most of the homes both parents are working. So a convenientproduct like breakfast mates which reduces parents breakfast preparation time,self preparation by children would increase the demand for such a product.

Breakfast cereals, milk, plastic bowl, spoon was a very great combination ofconvenient breakfast hit. So it would have a promising welcome in US Markets.

OPPORTUNITY RECOGNITION:

The product was launched in USA, a country where most of the parents are working andthey found little time to prepare breakfast. Also cereal bars, grab and go breakfast culturewas fast growing in US.Handy, portable packaging of the product allowed consumers to take Breakfast Matesaway from home, which brought a quirk of American culture into the picture.During surveys many college students felt Breakfast Mates was worth the money. They

were willing to pay to gain a few extra minutes sleep in the morning and still have cerealto conveniently eat on the run.


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Klgs Kelloggs Breakfast matesInd Breakfast cereals industry

Cereals breakfast industry in USA offered simplicity, convenience to buyers on purchase,simplicity on use.

Kelloggs by its new product breakfast mates tried to provide value by collectiveproductivity to buyers. By purchasing this product they get all needed to consume thatbreakfast instead of collecting milk, utensil, cereals separately. It is ready to be consumedon purchase. So reduces customers preparation type for cereal breakfast.

On use, breakfast mate offers same collective productivity and convenience as it can betransported to any place by its handy pack, whereas in normal cereals cases one has tocarry milk, bowl, spoons separately. Also parents can put a pack of breakfast mates intheir childrens bag to consume it themselves while travelling / on the way to school.On back panels of packs they planned to print games to excite kids. This offered fun andimage.

Purchase

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Klgs klgs klgs

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Fun and

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EnvironmentalFriendliness

The Six Stages of the Buyer Experience Cycle


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DEVELOPMENT:

Kelloggs had its own successful cereal breakfast lines as Corn Flakes; Fruit Loops; MiniWheats; and Frosted Flakes. I t combined this with aseptically packed milk and eatingbowl.

COMMERCIALIZATION:

Kelloggs spent $30bn in TV and print advertisement to promote this cereal mates kit.Pull-top boxes of Breakfast Mates carried alternating games andpromotions for kids inside the top cover, to serve the promotional function of back panelson containers. The product was first pushed to all big supermarkets. The pack was placedin refrigerators of Donnon, Yogurt giant, by allying with them to bring the product out.Customers were educated about the new product that was placed in refrigerators.

REASONS FOR FAILURE OF BREAKFAST MATES:

Breakfast mates had very disappointing sales and kelloggs pulled in the product byAugust 1999.

On analysing the reasons for its failure:

Factor one: warm milk. As each container of milk was aseptically packaged, it didntneed refrigeration. However, consumers didnt like the idea of warm milk.

Factor two: cool milk. In order to accommodate for the consumers preference for coolmilk, Kelloggs eventually decided to place Cereal Mates in refrigerators to imply thatconsumers should have the milk cold. But this led to more confusion. This decisioninevitably caused a problem in that Cereal Mates was not in a location where peoplewould generally expect to find breakfast cereal. The expense of trying to re-educate theconsumer to look for cereal in the dairy case proved too enormous way beyond,apparently, what Kelloggs wanted to spend on selling the new line.

Factor three: advertising. As if the consumer wasnt confused enough, Kelloggscomplicated matters further with the advertising campaign for Cereal Mates. The TV adsfeatured young kids helping themselves to the product, while their parents lay snoringcontentedly in bed. However, the packaging of the product was far from child-friendly,and if they left their kids to help themselves, the parents would have found more stressover spilt milk.

Factor four: the taste. Even when picked up from a refrigerator, the product was oftenconsumed at work or away from home. In other words, when the milk was warm andtasted terrible.


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Factor five: the price. Retailing at way over a dollar, Cereal Mates was considered tooexpensive by many consumers. These factors, working in conjunction, caused the CerealMates brand to fail. And so, after two years on the shelves (or in refrigerators), Kelloggspulled the plug on the product.

Cereal Mates may have enabled people to take their cereal with them, but they still had topour the milk over it, and spend valuable time eating the cereal with a small spoon.Indeed, where Kelloggs has had success in the convenience food market it is withbreakfast bars such as Nutri-grain. Unlike Cereal Mates, these bars can be consumed inseconds, and on the move. Moreover, they dont involve warm milk.

Lessons from Kelloggs Cereal Mates

To avoid Mixing of messages. On the one hand, Cereal Mates was an eat anywhereproduct. On the other, Kelloggs was implying it needed to be stored in a refrigerator.Sell the brand in the right place. Cereal Mates was, essentially, a cereal rather than a milk

product. Consumers would have therefore expected to see it on the shelves next to theother cereal products.

To be the best in at least one thing. As a cereal product Cereal Mates failed becausethere were tastier and equally healthy alternatives. As a convenience product it failedbecause breakfast bars proved to be a faster, more flexible option.

Not to price too high. Consumers did not expect to pay as much as they did for a fourounce box of cereal.

Nissins Cup Noodles Kelloggs Breakfast Mates

1.Nissin clearly understood thecustomers and their need. Noodles werehighly liked and eaten by Japanese.Due to industrialization and higherworkforce and less time availability topeople, Nissin went for innovation in

packing and presenting the food withoutchanging any taste that was highly liked bycustomers. Freeze dry technology adoptedtoo preserved the ingredients taste.Also by careful designing of cup and takingcare of heat insulation, Nissin hasaddressed customer needs.

1.Kellogg on first hand was not clearabout customer preference. Though itdeveloped Breakfast mates as on the gomeal, the basic thing it failed to understandwas that once milk is taken away fromrefrigeration it will turn warm and decay.

Though it spent huge amount in R&D tofind aseptical milk, it failed to address theproblem of warm milk. Customers did notlike warm milk on cereals. Kelloggs didhuge R&D developing aseptic milk withoutknowing whether customers wanted it orwill like it. This was the basic reason for itsfailure.

Difference in Nissins and Kellogg s innovative products:


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2. It is simpler, only hot water additionneeded.

2.It is not so simple as milk packets to beopened and poured to bowl. Patientpreparation needed.

3. Supplement availability: Hot water thatis easily available elsewhere is the only

addition. Also it is not perishable and canbe kept for longer time in flasks orprepared at any instant.

3. Supplement availability: Milk needs tobe kept in cool place and it cannot be kept

outside for longer time, as it will decay.Though Kelloggs developed aseptic milkeliminating refrigeration, it changed thetaste of milk.

4.There is no change in taste betweennormal and cup noodles as the sameprocess of preparation is involved, eitherprepared at home or anywhere else duringtravel, it is only hot water.

4.When Kellogg is consumed at home, coldmilk gives good taste. But the asepticallypacked milk that comes with Kelloggmates turns warm when taken in travel andalso people do not like the R&D developedmilk taste.

5.In grocery stores, cup noodles is placed

in same section as other noodles, fooditems are placed. Clear message waspassed to customers.

5.A breakfast mate is placed in the

refrigerated section where other dairyproducts are kept and where peoplenormally dont look for instant food item.It was mixing of messages and confusingpeople. People failed to recognizebreakfast mates as an instant / portablefood product.

6.Nissin was clear in their targetaudience and it chose to focus on workingadults, travellers, and college students whowere really short of time and wanted on the

go meals, foods with easy preparation &readily available.

6. Kelloggs was not clear in its targetaudience, and it tried to seek the attentionof working mothers, children. But theproduct was not so friendly to be self

operated by children or mixed whiletravelling as milk would probably spillover and mess up all. So elders assistanceis always needed, failing it to be a makeyourself food.

Strategies that decided success:o Identification of target customers and their need clearly.o Clear positioning of product & communication of message.


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o Studying the current scenario and understanding what value can be added forcustomers money and more over survey about customer like for the new productand taste and what all attributes involved in it. Eg: dislike of warm milk on cereal.

o Ease of availability of supplement products and its characteristics that influencefinal product are be clearly studied before going in for commercialisation.

oOoOo

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