The micro level examination is generally made in various enterprises by implementing Porter’s five forces. “Porter’s five forces are the:
- Bargaining power of suppliers;
- Bargaining power of buyers;
- Threat of new entrants;
- Threat of substitutes;
- Rivalry among competitors.
The bargaining from the suppliers comes into picture when Kellogg opts for lesser number of suppliers. So the suppliers get a grip over the firm which helps them to bring the firm’s marketing under their control to a great extent. The major customers of Kellogg are price conscious companies like Walmart and Target which are larger than Kellogg taking up to 15 percent of Kellogg’s sales.
So, they are able to put thrust over the pricing of the products. The bargaining power of buyers becomes a real factor affecting the pricing because the lower costs and discounts are more preferred over the costlier goods. Since the best selling company products like Corn Flakes, Rice Krispies, Bran Flakes, etc are those which were manufactured from about 50 years ago with the last product Pop-Tarts developed in 1960s, the entry of new products will pose a threat to Kellogg to a larger extent.
The new entrants can have much advancement than the products of Kellogg. The threats imposed on the firm by the products of same type with zero advertising cost are very high. Since those substitutes can lower the price to a greater extent, Kellogg falls under the pressure of lower pricing. The competitors of Kellogg are identified for each of its products. General Mills, Post unit of Kraft Foods, Quaker Oats unit of PepsiCo, Frito Lay unit of PepsiCo and the Nabisco unit of Kraft Foods are the major competitors of Kellogg.