Tuesday, May 25, 2010

Cereal upstarts III

Continuing with my exploration of new companies breaking into the cereal market...

As we discovered in my last post, the three sample companies are optimistic over their prospects. But, they face many challenges, especially as they compete against large, multi-national cereal companies in an already crowded cereal marketplace. While they recognize the challenges, they seem undaunted in their determination and belief in what they have to offer.

Pro Oats' Maximillian Cascone has the following perspective: "Like any smaller company, we don't have the advantage of the economies of scale that a company like Quaker does. We don't have the luxury of multi-million dollar ad campaigns to brainwash consumers into buying our product. So our goal is to create a product that beats theirs in its healthful properties and make our way into markets that we think will be attracted to our product, even if it is slightly more expensive than the big name brands. As our brand becomes more widely known, we will grow into larger markets."

It is apparent for our upstarts that the strategy is finding a niche that will give them an edge. Pro Oats focuses on a "very-high protein quick oatmeal that is all-natural". Carolyn Creswell from Carman's is also up to the challenge, and is convinced that they have something unique to offer because in their assessment in the U.S. there are "not many companies offering a pure, natural product that wasn't full of sugar or flavourings". She states that many Americans who tried Carman's in Australia contacted them requesting the products in their home country.

But, it's not only having a unique product that gives these companies a fight chance against the big boys. It also has to do with their entrepreneurial culture. Adam Sirois of [me]&goji is convinced it comes down to "innovation and agility" because "It takes longer to turn big ships so smaller, more nimble companies have an advantage when it comes to meeting the needs of consumers." And, with the availability of social media such as Facebook, etc. "it is easier than ever for a small company to gather customer data [and] really gauge consumer needs, at little or no cost."

Tough competition is obviously their biggest challenge, but there are others as well. We'll explore those in my next post.

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