Kellogg`s Company: Analytics of Ethical Behavior in the Market

Introduction

The sector in which I’ll be discussing about in this report is the food sector. The company in which I’ll be discussing about is Kellogg’s. They were opened in 1906 by the founder Will Keith Kellogg. Kellogg’s originally entered the market as a cereal-based product but was able to expand. Kellogg’s are very well known for their breakfast products which include the cereal Special K, crunchy nut, coco pops, Krave, Frosties, rice crispies, and many more. They are the title holders for the ‘Breakfast Club Award 2019’, which also explains their growth in products and customer preferences when it comes to breakfast bars and cereals.

Explanation and examples of one type of unethical practical identified:

Despite this, several news articles and reports appraise towards Kellogg’s ethical standards and their ability to maintain the reputation of being the ‘most ethical’ year after year. However, in a recent news report, it came to a $20million settlement for Kellogg’s having to pay for a lawsuit which claimed that Kellogg’s was falsely advertising their products. Kellogg’s has been well branded for their health low sugar products, especially with Special K and the reduction in sugar in their breakfast bar and cereals. However, they were criticized heavily for having a large amount of sugar in products. It was noted that there was 11g of sugar for every 30g of serving. With Kellogg’s being a global business, it was noticed that consumers were buying in countries where diabetes rates are scorching through the scale. This has such an unethical effect on customers. The false images that are being promoted by Kellogg’s this will continue to encourage obesity and further diabetes rates in certain countries. Since the report, Kellogg’s has been said to have been seeking ways to minimize the problem or they could be in for another big-money shock as health concerned customers are seeking progression.

Discussion on current (or potential) social or environmental impacts the practice is having. Evidence of different perspectives:

False advertisement is a social impact due to the ongoing increase in diabetic cases rising especially in countries such as the UK and USA. Many customers will be down with the perception of the reduction in sugar in products. In relation to customer consumption, it was clearly noticed that the US is the main seller. As good as that sounds it is very crucial that Kellogg’s assess all areas of promotion since America has the highest growing diabetic rate in the world which seems to be increasing drastically. With a target market of children aged 3-12 and seniors over 65, it seems to be a favorite with teenagers and young adults due to their sweet and exciting taste. The reason why this is a problem is because of the health problems and the pricing. Kellogg’s products such as their breakfast bars and cereals are very affordable which makes it easy for every family to be able to purchase the product regardless of their financial status. Another reason why this has become a problem for consumers is the well-executed promotion. The UK market has various breakfast products which most are under Kellogg’s. The UK government saw into high rate in child obesity and diabetic rate, and with the recent prime minister and health, the secretary has now set to reduce sugary consumption by 20% in 2020. The reason for the reduction is because in 2017 the figure was 2% but by the end of the year, it crept up again towards a 2.9% increase and has been growing steadily since. With more sugary consumption. In 2018 UK households had a staggering increase in their sugar buying products. Figures go from 723,000 tonnes to 743,000 tonnes. With the rate that sugary products are going, it could be a worse encounter with children’s health.

This is where UK businesses are performing unethically despite their food having a major health issue on customers. They are not realising the health of consumers that can be at risk of a worsened condition. UK customers turn a blind eye to the sugar amount in the product due to the low pricing. And this is what UK companies are using to their advantage.

Kellogg’s can apply the triple bottom line theory to help them balance out their profit, social and environmental factors. The reason I chose TBL (triple bottom line) is because of how Kellogg’s is one of the leading companies in the breakfast club market worldwide. A company as big as successful as Kellogg’s they assess success through the number of products bought and the profit. However, through the TBL they will be able to keep a sustainable business and have a better flow of business meaning they will be able to carry out the same concern for other areas of the business. For example, the importing of raw materials like Palm oil is environmental which could mean ensuring workers are being paid correctly for them to sell.

Discussion on how organizations in the chosen supply chain are changing their practice to respond to the ethical or sustainability issues raised:

The ways in which Kellogg’s is changing their aspect towards the ethical issues are meaningful. There is a reason why Kellogg’s has faced this issue is because of the loyalty of customers. Kellogg’s is aware that customers will continue to purchase regardless of the false advertisement because they are expecting the same exact product as described in their ads. Kellogg’s being so global with main branches in all the continents of the world, they are expected to keep standards expected by customers. The reason why this has happened is because of their advantage over competitors. They lead in this field so Kellogg’s will use customer loyalty to advertise they proceed. So, Kellogg’s has been very transparent in showing the public how they are creating products and treating customers to ensure they have the right fuel for the day. Kellogg’s has clearly stated on their website they supply chain they use to import products; they also stand against child labor in the cornfield as well as making sure pay is correct for the daily productivity.

Another change Kellogg’s should imply is the feedback from consumers. This will be a very effective source of feedback. The reason behind this is that Kellogg’s will be able to gather all the essential feedback they acquire from consumers and suppliers in order to mend any issues, so it doesn’t allow their competitors an advantage over them. These gaps in their business will expose them to other competitors such as Weetabix hence why they need their consumers to respond and speak up on their products.

Conclusion

To conclude, I can see where Kellogg’s social impact has stood out as an error within the business, with their unethical promotion for customers. Within the report I identified which appropriate framework to use which could help balance the business. Which includes focusing on other aspects to build further the business and create more a margin between them and their competitors. Always to include consumers to be more involved within the business.

References 

1. AB Sugar. 2018. AB Sugar | World Leading Sugar Business | UK Sugar Sector. [online] Available at: [Accessed 20 March 2020].
2. 2016. [online] Available at: [Accessed 21 March 2020].
3. Kelloggcompany.com. 2020. [online] Available at: [Accessed 22 March 2020].
4. Company, K., 2019. Kellogg Company Named One Of The 2019 World's Most Ethical Companies® By Ethisphere For The 11Th Time. [online] Prnewswire.com. Available at: [Accessed 18 March 2020].
5. company, k., 2020. [online] Kelloggs.co.uk. Available at: [Accessed 23 March 2020].
6. Company, K., 2019. Kellogg Company Named One Of The 2019 World's Most Ethical Companies® By Ethisphere For The 11Th Time. [online] Prnewswire.com. Available at: [Accessed 21 March 2020].
7. Davies, R., 2020. Firms Such As Kellogg's, Unilever And Nestlé 'Use Child-Labour Palm Oil'. [online] the Guardian. Available at: [Accessed 23 March 2020].
8. Gallagher, J., 2019. Efforts To Cut Sugar Out Of Food Way Off Target. [online] BBC News. Available at: [Accessed 22 March 2020].
9. Holder, M., 2020. Kellogg's Bows To Pressure On Palm Oil, Deforestation. [online] GreenBiz. Available at: [Accessed 21 March 2020].
10. Kellogg, T., 2017. Target Market For Kellogg | 3 Dollar Essay. [online] 3 Dollar Essay. Available at: [Accessed 21 March 2020].
11. kenton, w., 2020. How There Can Be Three Bottom Lines. [online] Investopedia. Available at: [Accessed 20 March 2020].
12. Murray, S., 2017. Kellogg's Spent Millions To Attack Calls To Limit Sugar - But Are Cereals That Unhealthy?. [online] TheJournal.ie. Available at: [Accessed 14 March 2020].
13. Naorem, A., 2018. Ethical Analysis Of Kellogg’S. [online] Slideshare.net. Available at: [Accessed 18 March 2020].
14. Ryan, L., 2016. US Has The HIGHEST Diabetes Rates Among Developed Countries. [online] Mail Online. Available at: [Accessed 20 March 2020].
15. Bizvibe. 2020. Top 10 Breakfast Cereals Brands In The World: 2018 Overview. [online] Available at: [Accessed 21 March 2020].
16. Watson, E., 2019. Kellogg Agrees To Settle Sugary Cereal Class Action With $20M Fund. [online] foodnavigator-usa.com. Available at: [Accessed 16 March 2020].