In economics, product markets are described as the final place in which goods and services are made available to the consumers. It is thus a meeting point for sellers to interact with the buyers for a given commodity or service. One such example of a product market is that of breakfast cereals. Breakfast often constitutes one of the most important meals of the day and as such, the wide variety of products available for this particular meal. The market works in a seemingly simple way where there are the farmers of the raw produces who can either be corporate farmers or individual farmers. A growth in demand and the need to cut down on production costs has encouraged most producers under this market to self-plant and manage their raw products. However, individual farmers of wheat can still sell to the manufacturing company. After manufacturing, the product is ready to be sold either directly or through a retailer. The latter is often the go-to choice of distribution point for both the sellers and buyers of the products.
There are millions of buyers in this market both under local and global perspectives. This is to mean that the market serves the majority of the country’s residences and because of globalization, the market share tends to increase drastically. In respect to sellers, it can be said that there are those who dominate the market. According to Mordor Intelligence, this market has witnessed several mergers and acquisitions such that only the biggest sellers are recognized on the global market. The most renowned sellers in this market include Nestle, Kellogg, General Mills, PepsiCo and Coca-Cola (Mordor Intelligence).
The breakfast cereal market does have middlemen whose main role is to help in the distribution and supply of the products. This role is of great importance because of the location of the manufacturing plants. Most of them are not within town centers and as such, they are a distance away from the consumers. The middlemen in this market are the supermarkets, convenience stores, and even kiosks. They tend to stock on different products based on their capacity and distribution capabilities.
From the role they play, these middlemen as mentioned above help to lower transaction costs for both the buyers and the sellers. From the buyer’s perspective, the middleman lowers the cost of travel to obtain the product. By bringing it close to them; they make it easier and affordable in terms of time for the consumer to gain access to the cereals. On the other hand, the sellers get to lower their distribution costs. By agreeing to buy at a lower price from the manufacturer, the middlemen get to incur the cost of distribution and this lessens the transactional costs of the previous.
There are several products sold under this market most of which are produced through wheat, rice paddy, and maize grains. For instance, there are cereals that come in form of rice, cornflakes or Weetabix biscuits (you can check and order it here). There is also the oats porridge that has maintained a high demand in the market over the years. The products will also cater for food items suitable for infants in different years of growth. In terms of price, the market on its own has a regulatory limit that ensures both the consumer and producer are satisfied with the price. However, other aspects such as brand and product demand also help to determine how different sellers set the market price for their products.
Given that price goes hand in hand with the quality, the latter is set with respect to market demands. The consumer’s wants and tastes determine the quality the manufacturer has to maintain. This is why even when specific brands set high prices for their produce, the market still buys because of the equivalence in quality. To ensure such high-quality demands are met, innovation is of the essence in this market. Creativity in producing breakfast cereal has to do a lot with the demographic aspects of the target population. For this reason, elements of taste and usage of organic ingredients plays a major role in how innovation is implemented. The more creative a manufacturer is in terms of creating flavors that appeal to a specific age group, the more their product will sell. The same principle applies to how organic ingredients are incorporated within the products. The easier it is for the manufacturer to combine a variety of ingredients into one product to improve on its nutrients supply, the common that product will be in the market.
The breakfast cereal market has thus managed to survive years of intense competition from other food-related markets because of their ability to remain relevant by supplying healthier options. This is important in an industry that is constantly witnessing growth in the supply of product that can be termed as unhealthy. Therefore, the continual creativity in ingredients mixture and flavor combination is what makes this market competitive within its industry.