On April 4, 1994, General Mills, the number-two cereal manufacturer in the United States, announced a per-box price reduction between $0.30 and $0.70 on eight brands that accounted for 40% of its cereal volume. The case focuses on Kellogg's possible responses to the General Mills price cut, providing opportunities to discuss various strategies for responding to private-label and store-brand competition. Specific responses discussed in the case include price cuts, couponing, other promotional vehicles, and advertising. Of particular interest is Kellogg's use of advertising to shift consumer attention from the per-box price of cereal to the per-bowl price of cereal. Also see the B case (UVA-M-0472).
