Ready to Eat Cereal Industry
SCP MODEL
MARKET DEFINITION
 Product Level
The industry for these products is the Ready-to-Eat Breakfast Cereal, but recently some companies attend to extend the reach of its products into snack food.
 Geographic Level
The geographic level for the analysis of this industry is national. All the companies were focus on obtain market share from the whole industry in the United State.
BASIC CONDITION
Demand
1. Price Elasticity
It is an elastic demand because it is influenced for variations in prices; for example, some companies that aggressive use trade of promotion had achieve gains in 2-3% market share. Also these companies usually use promotions such as discount in order to increase the demand. At the beginning this type of product was more inelastic because just a few companies with less differentiated products were playing in the market.
Despite still this market is highly concentrated, through the time new companies enter to the market and actually there are private labels that are obtaining more participation in it. And not just the increase in competitors, also the wide variety of brands have helped to increase the elasticity of its.
2. Market Growth
Since the beginning this market showed an interesting and steadily annual volume growth rate of 3% between 1950 and 1993, and it made this market extremely profitable. But after experiencing decades of continue growth, the demand is slowing its growth; industry sales growth had slowed to under 2%, and it is threatened to the biggest companies.
Supply
1. Technology
Technology plays two important roles in the supply side:
• Differentiation and innovation: despite the production process is general, the differentiation between brands is very important.
• Capacity: technology is crucial to achieve the market share targeted for every single firm, because the demand is big and if one company does not have the capacity to satisfy the demand soon could be out of the market.
MARKET DEFINITION
 Product Level
The industry for these products is the Ready-to-Eat Breakfast Cereal, but recently some companies attend to extend the reach of its products into snack food.
 Geographic Level
The geographic level for the analysis of this industry is national. All the companies were focus on obtain market share from the whole industry in the United State.
BASIC CONDITION
Demand
1. Price Elasticity
It is an elastic demand because it is influenced for variations in prices; for example, some companies that aggressive use trade of promotion had achieve gains in 2-3% market share. Also these companies usually use promotions such as discount in order to increase the demand. At the beginning this type of product was more inelastic because just a few companies with less differentiated products were playing in the market.
Despite still this market is highly concentrated, through the time new companies enter to the market and actually there are private labels that are obtaining more participation in it. And not just the increase in competitors, also the wide variety of brands have helped to increase the elasticity of its.
2. Market Growth
Since the beginning this market showed an interesting and steadily annual volume growth rate of 3% between 1950 and 1993, and it made this market extremely profitable. But after experiencing decades of continue growth, the demand is slowing its growth; industry sales growth had slowed to under 2%, and it is threatened to the biggest companies.
Supply
1. Technology
Technology plays two important roles in the supply side:
• Differentiation and innovation: despite the production process is general, the differentiation between brands is very important.
• Capacity: technology is crucial to achieve the market share targeted for every single firm, because the demand is big and if one company does not have the capacity to satisfy the demand soon could be out of the market.