Nestle was established by pharmacist Henri Nestle in 1867 on the seaboard of Lake Geneva, Switzerland. After many years of business operations, headquarter of the company is still in Vevey, Switzerland. In current time, Nestle is the biggest food company in all over the world because of its fundamental culture, values of environmental preservation and cleanliness in each country in which it is operating. Currently, the company has 468 Nestle factories in the business operations. This report focuses on the marketing and management concept in the business operations of Nestle. The objective of this study is to critically analyze key marketing activities of Nestle which take place in the local and international market. Along with this, report also focuses on the current marketing strategies and tactics adopted by the company to acquire and retain the customers and make profit in the operating market (Ghauri, 2015). Nestle is definitely one of the most capable food companies which has strong presence in across the world. The employees of the company have skills to keep hold of their standards in terms of strong position level in the market. They ensure the fact that the products provided by the company are definitely best to use for all the customers. Nestle has the collection of the products to provide and all those products are the best in their types. Now days, marketing strategies has great importance in order to progress in the market. This is the reason company Nestle is selected for the discussion as the company is trying to maintain its top position by its effective marketing strategies in the market.
Nestle defines the concept of marketing in its own way. For the company, marketing is all about building the relationship with the customers based on the satisfaction and customer value by the use of modern marketing. There are two fold objectives of Nestle marketing i.e. attract new customers by offering them better quality and value in the products and retain the existing customers by providing satisfaction with its products. Nestle describes marketing as “the social and managerial procedure by which good food and good life can be provided to individual and groups by creating and exchanging the values and products” (Peñaloza, Toulouse & Visconti, 2013).
Today, Nestle is the biggest food and beverage company in all over the world along with worldwide; leader in nutrition, health and wellness. Customers in the world, from village area to big cities are united by promise of Nestle in terms of taste, quality, convenience and nutrition. Company is operating in 86 countries along with 250,000 employees across the world. The products of the company are available in almost every country. The business operations of Nestle are spread across three global zone which cover America, Asia, Europe, Oceania and Africa. By identifying the special needs in every region, the company is operating in these three zones locally but combined by common vision and objectives. The immense popularity of the company comes from its effective efforts to manufacture products that give nutrition and quality benefits at the affordable prices even in the remote region.
The strategic objectives of Nestle Ltd are to focus on providing investor value by the attainment of sustainable, profitable long term growth and capital efficient in the market. Growth in the profitability will be attained by respecting quality and safety standards while manufacturing the products for the customers. By this objective, Nestle has vision to grow in the shortest possible time in each and every company along with the distinctive ability to fulfill the needs of the customers in every group i.e. from infant to old age, for pleasure and nutrition. This objective can be achieved by the development of wide range of food catagories of the highest quality.
Further, mission of Nestle is to develop motivated and professionally trained employees in order to drive growth by innovation and renovation. So, the mission objective of the company is to provide best food and beverage products to the people in all over the world.
It is stated above that Nestle has global vision to be leading company in terms of wellness, health and Nutrition Company in the world. In this manner, there are some core values adopted by the company for the sustainability of the business. Those core values are described below:
There are various marketing strategies adopted by Nestle to stay competitive in all over the world. For the company, marketing strategy is the foundation of a successful marketing plan for the products. This includes set of specific actions required for the successful business for instance, using low cost product to attract the customers. With the low cost product, company is able to establish strong relationship with the customers and enhance the interaction with them in the market. Basic marketing strategies of Nestle are to develop brands for every product (Wong, 2010). There are effective marketing mix strategies adopted by the company and those are as follows:
Nestle has one of the largest and premium range of food and nutrition products in all over the world. The ready food markets have been increasing across the world which is properly and deeply covered by the Nestle. So, Nestle is focused on improving its brand image in the food market and manufacture new products in the organized food area. There are wide ranges of healthy food products for all age groups.
Price range provided by Nestle on its products varies on varieties of the products i.e. very low to very high. Company uses various wrapping materials of lower to superior priced products which is helpful for Nestle to cover all the sectors related to customers including any age and their buying in bulk of a small price. Along with this, it is observed that there is the strong competition in the food and beverage market in terms of prices of the products. But Nestle is never behind this competition as the pricing strategy adopted by the company is capable to attract the customers in the market. So, current pricing strategy is very effective for Nestle and company should keep this in future also (Chakravarthy & Coughlan, 2011).
As Nestle is famous food and Beverage Company in all over the world so, the company has large distributed network of wholesalers, distributors, suppliers and retailers. Along with this, they are connected and loyal for the company. They are key player of the business and their performance is so strong that Nestle never face any kind of problem in the distribution and supply chain network in any part of world. For the new products, company needs to focus on the healthy perception of the products and in case of fresh food products; they should be kept in the suitable environment (Davis, 2012).
In case of promotional techniques, Nestle is using variety of advertising tactics for the wide range of products. For the chocolate products, Nestle is using promotional tactics under which free bars are obtainable with the multi bar family packs. Along with this, Nestle has done tie up with Burger King in some countries in order to provide attractive offers to the customers such as meal coupons to its potential customers. For the healthy readymade food products, the promotion team of Nestle also works with the wellbeing and fitness centers like Fitness First and True Fitness to motivate and advise the consumers to consume healthy prepared foods of the company (Vakratsas, Demetrios & Ma, 2005).
To attract the customers for the sale of the products, Nestle is using STP marketing strategy i.e. segmentation, target market and positioning. These are basic concepts of the marketing which are helpful for the companies to identify potential customers for their products. In case of Nestle, company is using demographics as well as behavioral segmentation. It is well known that demographic segmentation divides the market into various groups based on the demographical variables (Bickhoff, Hollensen & Opresnik, 2014). Nestle always launch its products based on some variables like:
Age- Nestle is always launching wide ranges of products for different age’s people. For example, the company has launched Lactogen and Nestle Cerelac for babies for 1 month to 4 years. Along with this, Nestle has launched Nescafe for young people. For different age people, the company has different product offerings like Keylogges Cornflakes, Boost and Milo etc (Gootman, McGinnis & Kraak, 2006).
Family size- Nestle has also launched their products based on family sizes. The company has mini products for small families and big products for big family size such as Maggi family pack for big family, Cornflakes in large and small size.
Occupation- Nestle has various products for the working and occupational people. For instance, the company has Nescafe for those people who have to work a lot. Along with this, company has launched Milo which is an energy drink.
Loyalty status- There is various products by which Nestle has segmented its market based on customer loyalty. There are many customers who are loyal for some products like Maggie, Nescafe and Kit Kat etc (Bruning, Hu, & Hao, 2009)
Nestle is using differentiated marketing strategies for the target market. The company basically targets different market segments and provides various attractive offers to them. The company has also launched various new products to get high level of sales and stronger position in the food and beverage industry within the segments. The company has targeted the markets based on family sizes, ages, occupation, and income and thus the company is launching new and innovative products. Along with this, the company is also targeting the market based on loyalty status so that customers can be loyal towards the specific brands.
This is the process of positioning the brand image in the mind of the customers. In case of Nestle, company wants to provide health and nutritious food products to the customers. By the positioning process, objective of Nestle is to make the products as the part of daily life of the customers by meeting their absolute necessities (Hooley, Saunders & Piercy, 2008).
The supply chain management of Nestle is extremely effective in order to set up big stage for the suppliers in the business operations. The company is able to gain competitive advantage by the useful assistance from the supply chain of the company. Along with the demand and supply planning, there are factors like corporeal logistics, preparation and procurement, and consumer services in the business operations of Nestle. In similar time, supply chain tactics accepted by Nestle are helpful in providing the products based on the market needs of the consumers in timely manner. Basically, supply chain management of Nestle is the arrangement of science and art which are helpful in achieving the corporate objectives in superiorly (Bag, Anand & Pandey, 2016). With the help of supply chain process, Nestle identifies the specific requirements of raw material to produce products and services. Along with this, company also identifies the manufacturers for providing goods developed by the company and offered to the customers. The success of supply chain process of the company depends upon some important parties like distributors, manufacturers, suppliers, retailers, producers and consumers (Dharni & Sharma, 2015). The supply chain process of Nestle is described in the given figure.
Figure 1: Supply Chain Process
(Source: Dharni & Sharma, 2015)
The business operations of Nestle are extremely dedicated in order to maintain safety and superiority in the manufacturing process to ensure safe and healthy products for the customers. Over the years, safety and quality for the customers are key concern for the implementation of main tactics by the company to manage value. So, similar perception is applicable to the complete portfolio of the company in the food and beverage goods by the methods and services. Based on the analysis of the website of the company it is observed that the quality and safety of the products is the core business principles of Nestle. Those principles adopted by the company for the operations at global level (Cullen & Parboteeah, 2013). The excellence management systems and related activities of Nestle are developed by the guidance of quality policy implemented by the company. The strategy includes some important commitments of the company i.e.
It is analyzed that quality management system is effective to operate at the global level for Nestle to follow the definite principles in the countries. There are specific quality principles related to food and beverage goods to make sure benefits for the customers by food products. Apart from this, internal quality management system of the company is basically reviewed by autonomous certification bodies to make sure the compliance to the global principles and regulatory necessities (Park, Ungson & Cosgrove, 2015).
There are different processes in the organization of Nestle by which company uses its synergies for the effective business operations. There are various methods used by the company for the effective business operations between diverse cross-businesses which are described below:
By implementing of Global business excellence system, company is able to share the information and knowledge by using the innovative information technology and system. This is a comprehensive information system by which Nestle is able to do business together along with common technology infrastructure. Under this system, company collects standardized data by the systematic management if information in order to create knowledge and share it among the customers (Das, 2015).
Nestle has model of ‘open-innovation’ which is the system encompassed from more than 300 external research units and collaborating them with the global level. In this network, more than 5000 technologists and research establishment and other companies are brought together. By the knowledge of both internal and external researchers, Nestle is able to improve the product range from open-innovation framework (De Witt & Meyer, 2010).
There are many new and innovative products provided by R&D team of Nestle at the international level. This is ‘innovation management team’ by which company is able to create fast and innovative product introduction in the market. The team includes various R&D and supply chain management experts. Along with this, they have responsibilities and tasks to improve and fasten the launches of new products in various markets.
Nestle is largest FMCG company operating in all over the world. For the successful business operations, there are skilled employees who recognize the requirements and needs of the customers in the market. Company focuses on effective HR activities for hiring and recruiting skilled workforce for the business operations. There are some HR activities adopted by Nestle and those are as follows:
It is observed that the employees are engaged in various activities of Nestle. Employees in the company are hired by the effective recruitment process. As a dynamic flexible organization, Nestle is famous for its workforce or human assets which are one of the most important characteristics which differentiate the company in the market. Identifying, recruiting and retaining the talent are priorities of the company. The human resource teams develop the culture by the employee learning and sustain the growth by ensuring passion of the employees so that they can achieve the organizational goals.
In the organized work environment, the labor and employee relations functions of HR are handled by the HR specialists in every area. The positive relations with the employees are basically considered as HR discipline which is important to strengthen the employer-employee relationship by providing job satisfaction, resolving workplace conflicts and employee engagement in the company (Oke, 2016).
Like labor and employee relations, HR department of Nestle provides various benefits and compensations handled by HR specialists with dual expertise. In terms of compensation for employees, the functions of HR includes evaluating competitive pay practices and setting compensations structures.
For the effective and sustainable business, Nestle is committed to some business principles in all the countries focusing on legal legislation, cultural and religious practices. Those business practices are described below:
Nestle observes with the laws and regulations valid in various countries in which the company is operating. Company makes sure that the policies related to ethical practices are fulfilled in the business operations. By doing business in the responsible manner with the business principles, company is able to establish relationships with the customers in all over the world. Along with this, company is aware globalization is important for the growth and development at the global level. For this manner, Nestle is following some suggestions as ILO basic rights, and international code of marketing of Breast-milk Substitutes in the sustainable policies. Basically, company supports obligations and references for the self regulations and sustainable development.
The key objective of Nestle is to create values for the customers that can be sustained by providing wide range of high quality and safe food products at the reasonable prices. The company assumes that communication and other promotional techniques have significant role in motivating the customers to select right products according their needs and requirements. For fulfilling this role in the responsible manner, Nestle makes determined efforts in terms of advertising i.e.
Along with the above discussed principles, Nestle does not sponsor radio and TV programs whose only strategy is to attract viewers that lie clearly about the use of offensive attitudes and gratuitous violence to minority or majority groups.
In the sustainable business practices, Nestle as developed some principles for children. Those principles include communications including events, advertising and sponsorships to the children so that children should not be disguised. Further, company has principle that advertisements to children should not portray them unsafe situations and they should not accept the invitation from those people they do not know. Along with this, according to Nestle, food and beverage communication should not show the advertisements related to unsafe and irresponsible consumption (Lee & Lien, 2015).
In the sustainable business, Nestle has adopted corporate business principles in the business operations. Company is committed for the sustainable corporate culture in the business practices. It is discussed before that Nestle is one of the most famous companies in the food and beverage industry. The company has employees from the different and diverse backgrounds. Nestle respect the diverse culture, traditions and mentality of each employees in each country. Aim of Nestle is to incorporate its own culture into the employees without changing the culture and identity of employees. In Nestle, there is the existence of distinctive work culture among the employees and management. Employees are highly motivated towards their work as managers and higher authority send motivational messages to the employees (Gilligan & Hird, 2012).
It is described above that Nestle is operating in 83 countries with the help of 461 factories. Nestle basically operates in the developing countries and 50% of its plants are operating in the developing countries. Company has adopted principles and policies which are concerned with actions related to customers, employees, human rights and labor practices, suppliers and the environment (Lantos, 2001).
It is the responsibility of Nestle to create values for the stakeholders along with enriching the nature. This concept basically refers a creating shared value including international laws, codes of countries along with the principles of the company. Nestle gives special focus on creating values in nutrition, water and development of rural areas. These are important for the corporate activities and for its value chain.
Figure 2: CSR Practices
(Source: Bawa, 2016)
Water- It is well-known that water is the life line for the people living in the society. Along with this, it is also important for the company for the production purpose (Melo, & Garrido, 2012).
Rural development- Most of raw material and inventories are supplied by the rural areas. So, Nestle is focused on the initiatives for well-being of farmers, workers, countryside communities, contractors and minor businesses for the long term success of the business activities.
Nutrition- It is understood that healthy food and nutrition are the foundation of health of the societies. So, Nestle is focused on making the customers aware about Nutrition, wellness and healthy food products (Verain, Dagevos & Antonides, 2015).
The major areas of contribution of Nestle towards society are very vast and it is differentiated into five catagories. Those catagories are as follows:
|
Areas |
Initiatives |
|
Water |
· Raising awareness about water conservation and improve, · Working to achieve water efficiency and sustainability for the business operations, · Treating the water society discharge effectively, · Advocating for effective water stewardship and policies, · Engaging with the suppliers who are in the occupation of agriculture (Servaes, & Tamayo, 2013) |
|
Rural development |
· Executing responsible sourcing in the supply chain, · Continuously advancing the green coffee supply chain, · Following countryside framework of growth to understand the requirements of famers in rural areas, · Rolling out the cocoa plan of nestle with cocoa farmers |
|
Environmental sustainability |
· Providing climate change leadership, · Improving resource efficiency in operations, · Promoting proactive and transparency for the long term engagement in climate policy, · Improving the performance of environment in terms of packaging, · Optimizing and assessing the environmental impact of the product, · Providing meaningful and accurate information related to information, · Preventing natural capital including forests |
|
Human rights, people and compliance |
· Eliminating child labor in the business activities, · Addressing human rights and their impact on the business operations and supply chain, · Improving gender balance in the workforce, · Ensuring that the staff and stakeholders can report on compliance violations, · Ensuring all Nestle employees are under the certified health and safety and management systems, · Providing effective training based on the corporate business principles, environmental and nutrition sustainability, · Operating against bribery and corruption (Vachani & Post, 2012) · Rolling out global youth initiatives in all over business operations |
|
Nutrition |
· Reducing the level of sodium (salt) in the products, · Reducing the risk related to nutrition by micronutrient fortification, · Building knowledge leadership in the nutrition of children, · Providing products full of nutrition designed especially for children (Sikiwa & Basera, 2012), · Leading in the industry in terms of health and nutrition research by the collaboration, · Reducing level of sugar in its products, · Motivating for the consumption of vegetable and whole grains (Tang, Sodhi & Formentini, 2016), · Reducing saturated fats and removing trans fats in Nestle products, · Providing nutrition information to customers and providing advice on all the labels, · Providing important guidance to the customers |
It is observed that the information on the food packaging labels is sometimes so small that people have to struggle to read it. So, Nestle started to use barcodes which can be scanned by Smartphone that make the information related to nutritional and product lifecycle instantly accessible. This is called ‘beyond the label’ initiative taken by Nestle. The company uses quick response or QR codes with the mobile application or website. This process has been started in UK by the company with its best selling products i.e. Kit Kat and chocolate biscuits (Eden, 2011). The website basically looks at raw material, production, packaging and distribution. For example it shows that two key ingredients of Kit Kat are cocoa and sugar which are from fair-trade-certified farms. The company has trained over 20,000 farmers in the sustainable farming practices of cocoa. Further, Nestle has been operating with the dairy farmers to source the milk product. The company is engaged with the farmers to reduce the environmental impact. Since 2011, farmers have reduced greenhouse gases by 6%. The website also includes some details about the environmental achievements of Nestle. For instance, Kit Kat factory in New York along with more six factories in the country are verified by Bureau Veritas in terms of zero waste to landfill. Apart from the environmental sustainability, Nestle is also supporting the food charity FareShare. Nestle donates over a million meals which is the result that over 450 tons of waste was reduced to landfill.
Conclusion
This report discusses about core business practice of famous food company Nestle including three concepts i.e. marketing, management and sustainability. From the above discussion, it is analyzed that Nestle is the leading company in the food and beverage industry. The company has strong marketing principles and core values for the business so that healthy and quality food products can be provided to the customers. Apart from effective marketing, there are various steps taken by the company for the sustainable business operations. The company is concerned about the environment in which it is operating and focused on making people aware about the healthy food products.
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