Lack of Innovation: Lessons learnt from Kellogg’s Indian adventure

by | Jun 8, 2012

In the early ‘90s, Kellogg’s was the market leader in the American ready-to-eat cereal market. It had a huge 40 per cent market share and raked in $3.8 billion in revenue. It already had a presence in 150 countries, and it decided to dip a toe into the Indian market. After all, Kellogg’s would only have to penetrate 2 per cent of India’s 950 million people to turn over more than the entire US market. What could go wrong?

Photo: miguelangelyeah/Flickr.

Photo: miguelangelyeah/Flickr.

Kellogg’s spent $65 million in setting up marketing and operations in India. One year after entering the market, it could only claim to have less than 0.01 per cent of the 950 million people. Fifteen years after its debut in India, in 2010, it could only claim less than 1 per cent and was only generating $70 million in revenue.

If Kellogg’s had done its homework, the cereal giant would have discovered that the Indians, like the Chinese, think having cold milk first thing in the morning is a shock to the system and rather prefer starting their day with warm milk and hot food.

In an interesting case of a global giant getting it wrong when entering a new market and emphasises the need for agile market and customer experience research.

Jeffrey Tobias

About Jeffrey Tobias

Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well-known startups.

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Managing Director, The Strategy Group

Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well known startups. Jeffrey’s corporate background includes leading global innovation strategy at Cisco, working with large corporates such as Adobe, Westpac, Telstra, Woolworths, and Perpetual.

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