Wednesday, October 20, 2010

Strategy Digest Vol. 4 (October)

Kellogg enters hot breakfast market

With Indians striving for hot breakfasts in the mornings, Kellogg has decided to enter the hot breakfasts market with the launch of Heart to Heart Oats. Kellogg claims that these oats can be prepared in three minutes and should be consumed with hot milk.

This will give Kellogg access to more Indian families where hot breakfast is a tradition. This product will potentially not only increase the sales of Kellogg in India but also reinforce their positioning of a healthy product since oats is considered to be good for the heart.

Maggi becomes healthier

In a move to strengthen its brand image and market leadership position, Nestle has launched another variant of Maggi. The variant is called Maggi Multigrainz, which has healthy ingredients like corn, wheat and millets.

This comes on the back of Maggi Atta noodles which was launched a few years back. Research has showed that consumers today are more aware of health food and this move by Maggi is an effort to attract such customers. Maggi currently has an 85 % market share in the instant noodles market and this should fortify their market position. Also, with competitors like HUL, Knorr and ITC trying to enter the market, Maggi is trying to innovate to fend off competition.

Pfizer acquires King Pharma

In yet another deal in the pharmaceutical industry, the world's largest drugmaker has decided to acquire Kind Pharmaceuticals, a pharma company focusing on pain medications.

Pfizer would be paying $3.6 billion for the deal. The deal is an all-cash deal. After acquiring Wyeth for a massive $68 billion last year, this will be Pfizer's biggest deal.

The deal will help Pfizer expand its product portfolio. Currently, its two primary products for pain remedy are Celebrex for arthritis and Lyrica for nerve pain. Moreover, this acquisition should increase its profits since many of its existing products now have generic counterparts.

Price war likely in small car segment

With the festive season kicking in, companies are aggressively cutting prices to promote their product. Skoda recently reduced the prices of its Fabia hatchback by Rs. 67,000 for the petrol variant and Rs. 1.1 lakh for the diesel variant. This comes on the back of Hyundai reducing prices of i20 by Rs. 40,000 earlier this year and recently launching a new version of i10 with minimal price increase.

Fabia, which was launched in 2008, has not managed to make an impact in India with other competing cars such as Ritz, WagonR, Hyundai i20 etc. having a higher market-share. Even Volkswagen, the parent company of Skoda, priced Polo below Fabia. This decision to reduce prices is expected to increase the market-share of Fabia in the small car segment, which has the highest volumes.

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