Nestlé S.A. is the largest nutrition and foods company in the world, founded and headquartered in Vevey, Switzerland. Nestlé originated in a 1905 merger of the Anglo-Swiss Milk Company, which was established in 1866 by brothers George Page and Charles Page, and the Farine Lactée Henri Nestlé Company, which was founded in 1866 by Henri Nestlé. The company grew significantly during the First World War and following the Second World War, eventually expanding its offerings beyond its early condensed milk and infant formula products. Today, the company operates in 86 countries around the world and employs nearly 283,000 individuals. Nestlé S.A. is the largest food and beverage company in the world. With a manufacturing facility or office in nearly every country of the world, Nestlé often is referred to as “the most multinational of the multinationals.” Nestlé markets approximately 7,500 brands organized into the following categories: baby foods, breakfast cereals, chocolate and confectionery, beverages, bottled water, dairy products, ice cream, prepared foods, foodservice, and pet care.
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Nestlé is often referred to as “the most multinational of the multinationals with a manufacturing facility or office in nearly every country of the world. Nestlé markets approximately 7,500 brands organized into the following categories: baby foods, breakfast cereals, chocolate and confectionery, beverages, bottled water, dairy products, ice cream, prepared foods, foodservice, and pet care. Nestle is a decentralized organization where responsibility for operating decisions is delegated to local units, which have a high degree of autonomy concerning pricing, distribution, marketing, etc. Nestle is organized into seven different worldwide strategic business units (SBU’s). These have responsibility for high-level strategic decisions and engage in overall strategic business development, including acquisitions and market entry strategy. There is a regional organization that divides the world into five major geographical zones, such as Europe, North America, etc. The regional organizations are responsible for developing regional strategies and assist in the overall strategy development process. However, neither SBU nor regional manager gets involved in local operating decisions. Research and Development department is rather important for the company. Nestle spends around 1 percent of its annual sales revenue on R&D and has 3,100 employees dedicated to this function. The R&D function comprises eighteen different groups, which operate in eleven countries all over the world.
For more than 30 years, consumers have been enjoying the healthy benefits of BEAR BRAND Filled Milk Powder. But now, Nestle has introduced a great innovation. Nestle has launched BEAR BRAND CHOCO.
Moms and kids are the target market for this new product. Aside from its irresistible chocolatey taste, BEAR BRAND CHOCO has the goodness of milk. Just like BEAR BRAND Filled Milk Powder, it is fortified with resistance-building Zinc and Vitamin C. These are essential nutrients that help fight sickness and fatigue.
Company Perspectives:
Quality is the essential ingredient in all brands and the reason why millions of people choose Nestlé products every day. Nestles’ consumers have come to trust in Nestlé’s commitment to excellence and turn to Nestlé brands to maintain nutritional balance in a fast paced world.
Marketing Plan of Nestle
In today’s very competitive marketplace a strategy that insures a consistent approach plays an important role. It offers products and services to be competitive. However, marketing strategy must have a well defined methodology for the day to day process of implementing it. It is of little value to have a strategy if there is lack either in resources or the expertise to implement it. Marketing strategy must address some unique considerations. However, many are common to all marketing strategies.
Marketing plan of nestle consists of the following framework:
Purpose and Mission
Situational Analysis
Marketing Strategy and Objectives
Additional Consideration
This marketing plan is aimed at highlighting one of the product line extensions of Nestles’. It mainly focuses on the internal and external environment of Nestle. Apart from that, this plan include the marketing strategies, brand promotion strategies, marketing mix involved and competitive strategies adopted by Nestle. SWOT analysis one of the major content which is included in this marketing plan. SWOT analysis helps in finding out the strength’s and weaknesses of the organization. Apart from that it helps the organization to have a deep knowledge about the opportunities and threats which the organization is likely to face.
Purpose and Mission
The main purpose of this marketing plan is to analyze various aspects of product-line extension by Nestle. Here the chosen product-line extension is BEAR BRAND CHOCO. The mission of this plan is to find out whether this product-line extension has met Nestle-Corporations expectations before launching this product in the market.
Situation Analysis
To bring this product, Nestle has applied a lot of innovation in their existing production pattern keeping in view the tastes and preferences of target group mainly kids and moms. Kids mainly prefer tasty food and moms want their kid to be healthy. So, BEAR BRAND CHOCO is a mix of both taste and health. Thus, this product is creating value to its target group.
Internal environment of Nestle
Nestle has well satisfied employees, who strives to attain the goals of the organization with enthusiasm and hard work. They constitute a major part of internal environment of an organization.
Resources of Nestle have been efficiently employed to the maximum extent.
Nestle has created satisfaction among customer. Thus, it has a good reputation among customers.
Nestle has good expertise who are capable of delivering their ideas which can achieves the organizations goals and objectives.
External environment of Nestle
Competition: Nestle is facing competition largely. Nestle has played a good role in facing the competition.
Market: Nestle has very efficiently managed the market demand by proper market research.
Technology: Nestle has adopted the best technology to produce its products.
Thus, all these above mentioned aspects clearly indicate the internal and external environment in which Nestle has been situated. While launching a new product Nestle has to keep in mind all these environments. Nestle has to fore see the environment by adopting the opportunities which is prevailing in the environment. Nestle has to put effort in converting its weaknesses into opportunities and using strength to face the threats present in the environment.
Marketing Strategies
International Strategies adopted by Nestle:
Nestlé’s strategy has been to acquire local companies in order to form a group of autonomous regional managers who know more about the culture of the local markets than Americans or Europeans.
Nestlé has employed a wide-area strategy for Asia that involves producing different products in each country to supply the region with a given product from one country. For example, Nestlé produces soy milk in Indonesia, coffee creamers in Thailand, soybean flour in Singapore, candy in Malaysia, and cereal in the Philippines, all for regional distribution.
Another strategy that has been successful for Nestlé involves striking strategic partnerships with other large companies. In the early 1990s, Nestlé entered into an alliance with Coca Cola in ready-to-drink teas and coffees in order to benefit from Coca Cola’s worldwide bottling system and expertise in prepared beverages.
Nestle employ local staff. Local employees better know and understand the local culture and business procedures. This can result in a more efficient way to respond adequately to local demand conditions, therefore increasing the company’s market share and profitability.
Nestlé’s strategy for business development
Nestle enters in an early stage the emerging markets, in order to establish a network there before competitors.
Nestle simply purchases local brand names which the consumer is accustomed to. This helps the company to overcome cultural barriers and customer resentments to foreign brands.
Nestles’ strategy is to establish a basis and then expand into more niches as demand rises.
Other strategies adopted by Nestle:
Nestlé established its “expatriate army” which is a group of about 700 managers who have a lot of experience in doing management activities in foreign countries. These managers are highly educated and trained in order to enable them a worldwide field of operations.
Another approach is to form SBU’s. These units formulate the high level strategic decisions on a worldwide basis, while each of these SBU’s focuses on a specific segment: chocolate, infant food, cereals, coffee etc.
Overall strategy development such as acquisition and market entry strategy these SBU’s form an important part of the company’s decision making and operating process.
Nestlé’s marketing mix includes the following:
Product
Price
Promotion
Place
Product
Nestle has launched BEAR BRAND CHOCO which is a health drink specially for kids and moms. Aside from its irresistible chocolatey taste, BEAR BRAND CHOCO has the goodness of milk. Just like your trusted BEAR BRAND Filled Milk Powder, it is fortified with resistance-building Zinc and Vitamin C. These are essential nutrients that help fight sickness and fatigue. BEAR BRAND CHOCO is nutritious and delicious with affordable price.
Price
Customers directly relate price to quality, particularly in case of products that are ego intensive of technology based. Nestle, being a company that emphasizes product quality, it tends to sell its products with price affordable to all.
Market Penetration Strategy
Nestle has adopted market penetration strategy since they have to penetrate the market as much as possible and for them income is not so critical and rapid market penetration for eventual market control is desired Thus, the price for such product is very low.
BEAR BRAND CHOCO is a budget friendly pack available in different pack size. BEAR BRAND CHOCO comes in two pack sizes, namely the 300g pack, which is good for 10 servings and the 60g pack, which contains 2 servings. A serving only costs P7.50*.
Promotion
Nestle is mainly focusing on advertisements which is considered to be a very good medium of promotion. It has a good reach among the customers. Moreover Nestle has adopted various other modes of promotion like magazines etc.
The Push Strategy maximizes the use of all available channels of distribution to “push” the offering into the marketplace. The Pull Strategies involves direct interface with the consumers. It focuses in advertisement rather than various channels of distribution. Thus, Nestle is focusing on both Pull and Push Strategy.
Place
Nestle has targeted almost all the areas including rural areas and urban areas. In almost all the super-market and all other out-lets Nestle products are available. All the customers seem to be very happy with the availability of Nestle product in the market.
Addition Consideration
Based on the above mentioned information, a critical SWOT analysis can be made with the help of available information. SWOT analysis helps an organization to understand their strengths and weaknesses and also to have an idea about what the opportunities available to them outside and what are the likely threats they can face in future.
Strengths
Global food producer, located in over 100 countries. Consistently one of the world’s largest producers of food products, with sales in the USA in 2008 of $10 billion; sales and earnings in 2008 were better than expected, even in a downturned economy.
Repeatedly ranked as the world’s largest bottled water company and have set up facilities to operate water resources in a responsible manner.
Nestlé was named one of “America’s Most Admired Food Companies” in Fortune magazine for the twelfth consecutive year.
Nestlé provides quality brands and products and line extensions that are well-known, top-selling brands including:
Lean Cuisine, Yoplait, Maggi, Dryer’s/Edy’s, Haagen-Dazs, Stouffer’s, Boost, Dibs, Hot Pockets.
Chocolate and Candy: Kit Kat, Toll House, Butterfinger, Baby Ruth, Crunch Bar, the Willy Wonka Candy line.
Pet Products: Purina, Alpo, Cat Chow, Fancy Feast, Friskies, Tidy Cat.
Drinks: Carnation, Perrier, Nesquik, S. Pellegrino, Nescafe, CoffeeMate, Taster’s Choice, Juicy Juice.
General Mills: subsidiary which makes Betty Crocker, Bisquick, Hamburger Helper, Pillsbury, Old El Paso, cereals, fruit snacks, frozen pizza, canned soups, frozen vegetables, ready-made frozen meals.
Gerber: baby formula, prepared baby foods, baby cereals, water, juice, yogurt, foods for infants, toddlers and preschoolers.
Professional brands sold to restaurants, colleges, hotels, and food professionals including Jenny Craig meals, Impact liquid meals for trauma patients, liquid meals for diabetics, and OptiFast weight loss products.
Successful due in part to their unquestionable ability to keep major brands consistently in the forefront of consumer’s minds (and in their shopping carts) by renovating existing product lines, keeping major brands from slipping into saturation/decline and having superior access to distribution channels.
Weaknesses
Their LC-1 division was not as successful as they thought it would be in France. In the late 1980s, Dannon entered the market with a health-based yogurt, and become the top selling brand of yogurt; Nestlé’s 1994 launch was behind the product life cycle curve in an already mature market and could not compete against a strong, established brand.
Growth in their organic food sales division was flat in 2008, even though the industry grew 8.9%.
Since 2004 the breakfast cereal industry has been under fire from the FDA and the American Medical Association, both of which say that false claims of “heart healthy” and “lower cholesterol” need to be removed from packaging and advertising. They have also been forced to reduce the amount of sugar in their products, as parent’s advocates groups claimed they were contributing to the diabetes epidemic among American children.
General Mills is an experienced, established brand and are the market leader in the USA, however, they have been lacking in innovation, have not cashed in on the booming health food craze and have been behind in creating new, niche products, especially in their yogurt division, where Yoplait is the only brand making a profit.
In 2008, although their products did not carry the recalled pistachios, several of their ice cream brands, Dryer’s, Edy’s and Haagen-Dazs, were still plagued with bad PR and loss of sales.
Opportunities
In today’s health conscious societies, they can introduce more health-based products, and because they are a market leader, they would likely be more successful.
Provide allergen free food items, such as gluten free and peanut free.
They launched a new premium line of higher cacao content chocolates dubbed Nestlé Treasures Gold, in order to cash in on the “recession economy” in which consumers cut back on luxury goods, but regularly indulge in candy and chocolate. Americans want luxury chocolates, and high-end chocolate is immune to the recession (so far), because it is an inexpensive indulgence.
Opened Nestlé Café’s in major cities to feature Nestlé products.
Threats
Any contamination of the food supply, especially e-coli. Their Toll House brand cookie dough was recalled in March of 2009 because of e-coli. Outbreaks were linked to 28 states and the product had to be recalled globally. Nestlé has yet to find out how this happened, and is still investigating.
They were affected by the pet food recall in 2007, in which 95 different brands of dog and cat food was recalled due to contamination with rat poison. Also in 2007, FDA learned that certain pet foods were sickening and killing cats and dogs. FDA found contaminants in vegetable proteins imported into the United States from China and used as ingredients in pet food.
Raw chocolate ingredient prices are soaring; dairy costs alone rose 50% in 2008, this cuts heavily into their profit margins and often gets passed on to consumers, by shrinking the packaging in a way that is almost unnoticeable-therefore the consumer is paying the same prices for less product.
They have major competitors, like Hershey’s, Cadbury-Schweppes (owned by Pepsi), Lindt and Ghirardelli, Kellogg’s, Post, Starbucks, Beech-Nut, Quaker, Kraft Foods, Dannon, Del-Monte, Iams, Earth’s Best, Heinz, Frito-Lay (owned by Pepsi).
Conclusion
Nestle can earn greater return from its distinctive competencies, i.e. unique strengths that allow a company to achieve superior efficiency, quality, innovation and customer responsiveness. By applying those competencies, and the products they produce, to foreign markets where indigenous competitors lack similar competencies and products, Nestle can realize enormous returns.
Furthermore, Nestle can take advantage of location economies. Location economies arise from performing a value creation activity in the optimal location for that activity, anywhere in the world. The optimal location for a value creating activity lowers the costs of value creation therefore helping the company achieve a low-cost position. Nevertheless, Nestle must evaluate basic entry decisions before entering an emergent market. The company has to make a choice among different foreign markets on the basis of their long-run profit potential. Nestle has to balance the benefits, costs.
INDIVIDUAL CRITICAL REFLECTION
Nestlé S.A. is the largest nutrition and foods company in the world, founded and headquartered in Vevey, Switzerland. Nestlé originated in a 1905 merger of the Anglo-Swiss Milk Company, which was established in 1866 by brothers George Page and Charles Page, and the Farine Lactée Henri Nestlé Company, which was founded in 1866 by Henri Nestlé. Nestlé is often referred to as “the most multinational of the multinationals with a manufacturing facility or office in nearly every country of the world. Nestlé markets approximately 7,500 brands organized into the following categories: baby foods, breakfast cereals, chocolate and confectionery, beverages, bottled water, dairy products, ice cream, prepared foods, foodservice, and pet care.
Quality is the essential ingredient in all brands and the reason why millions of people choose Nestlé products every day. Nestles’ consumers have come to trust in Nestlé’s commitment to excellence and turn to Nestlé brands to maintain nutritional balance in a fast paced world.
Nestle has always delivered high quality products with reasonable prices and in different quantities and sizes. This tells us the way it is marketing its products. Even consumers from low level can have access to the product. This is one of the best features of Nestle.
Even though, Nestle has undergone various problems in the past with regard to the contamination of food product which has created bad impression in the minds of the consumers and has affected its reputation in the market. Still Nestle has put great effort in overcoming all its pitfalls by developing products of high quality and good nutritional value.
Following are the sources which clearly determine the way in which Nestle has delivered value to the customers:
Nestle has well satisfied employees, who strives to attain the goals of the organization with enthusiasm and hard work. They constitute a major part of internal environment of an organization.
Nestle has good expertise who are capable of delivering their ideas which can achieves the organizations goals and objectives.
Nestle has very efficiently managed the market demand by proper market research.
Nestle has adopted the best technology to produce its products.
Nestle has made available their products in all most all the geographic areas of the world.
Suggestions for Nestle to have improvement in delivering the value to customer:
Nestle can have improvement in its R&D department, so that the products produced by them are efficient to satisfy the needs of the consumers and deliver maximum value to the consumers.
Nestle should have a through market research and identify the changing pattern in the market so that it can ensure greater value to its customers.
Nestle should strive to produce environmental friendly products which are totally harmless and are capable of giving value to customers.
Applying the above mentioned suggestion help Nestle to create a good reputation in the market and deliver greater value to the customers.
Value created by advertisement
Advertisement plays an important role in promotion of products. It creates a direct link between the product and end users and there by deliver a long lasting impact on consumers. Consumers can feel the products with the help of advertisements. They can understand the feature of the products before buying. Nestle has used both channels of distributions and advertisement for the promotion and distribution of the products.
Nestlé’s marketing mix includes the following:
Product
Price
Promotion
Place
Product
Nestle has launched BEAR BRAND CHOCO which is a health drink specially for kids and moms. Aside from its irresistible chocolatey taste, BEAR BRAND CHOCO has the goodness of milk. Just like your trusted BEAR BRAND Filled Milk Powder, it is fortified with resistance-building Zinc and Vitamin C. These are essential nutrients that help fight sickness and fatigue. BEAR BRAND CHOCO is nutritious and delicious with affordable price.
Price
Customers directly relate price to quality, particularly in case of products that are ego intensive of technology based. Nestle, being a company that emphasizes product quality, it tends to sell its products with price affordable to all.
Market Penetration Strategy
Nestle has adopted market penetration strategy since they have to penetrate the market as much as possible and for them income is not so critical and rapid market penetration for eventual market control is desired Thus, the price for such product is very low.
BEAR BRAND CHOCO is a budget friendly pack available in different pack size. BEAR BRAND CHOCO comes in two pack sizes, namely the 300g pack, which is good for 10 servings and the 60g pack, which contains 2 servings. A serving only costs P7.50*.
Promotion
Nestle is mainly focusing on advertisements which is considered to be a very good medium of promotion. It has a good reach among the customers. Moreover Nestle has adopted various other modes of promotion like magazines etc.
The Push Strategy maximizes the use of all available channels of distribution to “push” the offering into the marketplace. The Pull Strategies involves direct interface with the consumers. It focuses in advertisement rather than various channels of distribution. Thus, Nestle is focusing on both Pull and Push Strategy.
Place
Nestle has targeted almost all the areas including rural areas and urban areas. In almost all the super-market and all other out-lets Nestle products are available. All the customers seem to be very happy with the availability of Nestle product in the market.
Thus, Nestle has a good marketing mix, in which each component is capable of delivering value to the customers to the maximum extent.
Marketing Strategies
International Strategies adopted by Nestle:
Nestlé’s strategy has been to acquire local companies in order to form a group of autonomous regional managers who know more about the culture of the local markets than Americans or Europeans.
Nestlé has employed a wide-area strategy for Asia that involves producing different products in each country to supply the region with a given product from one country. For example, Nestlé produces soy milk in Indonesia, coffee creamers in Thailand, soybean flour in Singapore, candy in Malaysia, and cereal in the Philippines, all for regional distribution.
Another strategy that has been successful for Nestlé involves striking strategic partnerships with other large companies. In the early 1990s, Nestlé entered into an alliance with Coca Cola in ready-to-drink teas and coffees in order to benefit from Coca Cola’s worldwide bottling system and expertise in prepared beverages.
Nestle employ local staff. Local employees better know and understand the local culture and business procedures. This can result in a more efficient way to respond adequately to local demand conditions, therefore increasing the company’s market share and profitability.
Nestlé’s strategy for business development
Nestle enters in an early stage the emerging markets, in order to establish a network there before competitors.
Nestle simply purchases local brand names which the consumer is accustomed to. This helps the company to overcome cultural barriers and customer resentments to foreign brands.
Nestles’ strategy is to establish a basis and then expand into more niches as demand rises.
Other strategies adopted by Nestle:
Nestlé established its “expatriate army” which is a group of about 700 managers who have a lot of experience in doing management activities in foreign countries. These managers are highly educated and trained in order to enable them a worldwide field of operations.
Another approach is to form SBU’s. These units formulate the high level strategic decisions on a worldwide basis, while each of these SBU’s focuses on a specific segment: chocolate, infant food, cereals, coffee etc.
Overall strategy development such as acquisition and market entry strategy these SBU’s form an important part of the company’s decision making and operating process.
Components of a professional marketing plan
The Marketing Plan is a highly detailed, heavily researched and, hopefully, well written report that many inside and possibly outside the organization will evaluate. It is an essential document for both large corporate marketing departments and for startup companies. Essentially the Marketing Plan:
Forces the marketing personnel to look internally in order to fully understand the results of past marketing decisions.
Forces the marketing personnel to look externally in order to fully understand the market in which they operate.
Sets future goals and provides direction for future marketing efforts that everyone within the organization should understand and support.
Is a key component in obtaining funding to pursue new initiatives?
The Marketing Plan is generally undertaken for one of the following reasons:
Needed as part of the yearly planning process within the marketing functional area.
Needed for a specialized strategy to introduce something new, such as new product planning, entering new markets, or trying a new strategy to fix an existing problem.
Is a component within an overall business plan, such as a new business proposal to the financial community?
In this project Following components are used:
Purpose and Mission
Situational Analysis
Marketing Strategy and Objectives
Additional Consideration
Prior knowledge with regard to the learning outcomes
If the market is very attractive and enterprise is one of the strongest in the industry you then the organization should invest best resources in support of their offering.
If the market is very attractive and the enterprise is one of the weaker ones in the industry then it must concentrate on strengthening the enterprise, using their offering as a stepping stone toward this objective.
If the market is not especially attractive, but the enterprise is one of the strongest in the industry then an effective marketing and sales effort for their offering will be good for generating near term profits.
If the market is not especially attractive and the enterprise is one of the weaker ones in the industry then the organization should promote their offering only if it supports a more profitable part of your business or if it absorbs some of the overhead costs of a more profitable segment. Otherwise, the organization should determine the most cost effective way to divest the enterprise of this offering
Comments on the learning process undergone
While undergoing learning process, I was able to apply various concepts which were taught in the classrooms to the practical situations which Nestle has under went in their way of doing business.
I could analyze the importance of various factors which were directly related to the success of the business like the appropriate mix of marketing components called product, price, promotion and place.
I could relate various marketing concept which were studied in the text books like pull and push strategy and pricing strategies like price skimming and price penetration.
I could understand the market mix in dept and it was a great experience to find out what happens when there is a slight change in the marketing mix of an organization.
I could understand the strategies which Nestle has followed from time to time in order to sustain and gain competitive advantage.
I could understand how organizations take strategic decisions in the long run and what the effects were if the strategic decision does not work well.
Questions and answers with regard to the learning outcomes
How will an organization develop a clear idea about the changes in the consumers change in tastes and preferences?
Answer: An organization can have a clear idea of changes in the consumer’s tastes and preferences by having a detailed marketing research in all most all the aspects of market.
How can an organization make changes in their marketing mix?
Answer: An organization can make changes in their marketing mix by gaining a detailed idea about what consumer’s tastes and preferences are.
How does an organization fix its pricing strategies?
Answer: Organizations usually fix there prices as per the cost incurred to them plus the profit margin. Sometimes pricing strategy greatly depends on the target group for whom the product is produced.
Thus, we can identify how different marketing functions and marketing concepts are inter-related and how a slight change in one affects the other.
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