Prepare a management report for webgate managed service.
Nestle S.A. is a Swiss transnational food and beverage company found in the year 1866. The company celebrates its 150 years anniversary in 2016 (Nestle.com, 2016). Nestle is the largest food company in the world with a 23rd Global 2000 Rank (McGrath, 2016). The company is headquartered in Vevey, Vaud, Switzerland (Nestle.com, 2016). The organization has a wide range of products such as medical food, baby food, bottled water, coffee and tea, dairy products, confectionery, breakfast cereals, pet foods, frozen foods, snacks and ice cream (Nestle.com, 2016).
Nestle operates in over 189 countries with over 2000 brands worldwide (Nestle.com, 2016). Nestle has several business units or product areas namely, Nestle Nespresso, Nestle Waters, Cereal Partners Worldwide, Beverage Partners Worldwide, Nestle Professional, Nestle Skin Health and Nestle Health Science (Nestle.com, 2016).
The business area selected from the above list is Nestle Waters. Nestle Waters is one of the biggest bottled water companies in the world with a portfolio of 52 unique brands (Nestle-waters.com, 2016). The product area aims to meet the expectations of vibrant consumers from across the world. Water is a part of daily hydration. The business unit has three categories of water: natural mineral water, spring water and prepared water (Nestle-waters.com, 2016).
Natural mineral water is untouched and protected from pollution risks. It has proportionate mineral salts and is not subjected to any treatment except carbonation. The water may also claim medicinal effects. Spring water comes from a specific underground source and is fit for human consumption. The water has not passed through a community water system and is protected from contamination or pollution. Prepared water originates from any water supply and is treated with microbiological safety requirements. It is purified water depending upon the local legislation (Nestle-waters.com, 2016).
Nestle follows the Nutrition, Health and Wellness Strategy ad supporting people who wish to lead a healthier life. The organization makes constant innovation and renovation in the product portfolio. Nestle cares about their people and assures quality, safety, conserving environment and sustainability. They believe in creating value with the shareholders so that the company prospers in the long term. The strategic roadmap guides the organization for delivering profitable growth and competitive advantages (Nestle.com, 2016). Nestle Waters regularly carries out research for understanding the consumer needs better. The company aims to provide the healthiest bottled water with no calories targeting the public challenges such as obesity. Not only health and quality-wise, Nestle Waters also emphasizes on environmental sustainability for which they reduced the weight of water bottles by 9% from 2010 to 2015 (Nestle-waters.com, 2016). The organization is also raising awareness about recycling and minimizing the environmental impact wherever possible (Nestle-waters.com, 2016).
The six markets framework can be applied for analysing the relationship marketing strategy. The six markets are: customer, employee, supplier, referral, internal and influencer market (Peck, 2013).
Customer Markets- The primary focus of every marketing strategy is the customer. Nestle aims at following relationship marketing rather than transactional marketing. Nestle focuses on quality and retaining its customers. They do not focus on a single sale with limited customer commitment. Nestle Pure Life offered a rewards program for encouraging families to lead healthier lives. The consumers could collect reward points while consuming Nestle bottled water brand that could be redeemed for great rewards such as kids’ sports equipment, coupons, theme park tickets and much more (Prnewswire.com, 2014).
Referral Markets- Certain organizations not just consider customers, but also the referrals such as agencies and intermediaries as a source of future business. Since the customers are price sensitive in the bottled wars, Nestle has an advantage of being a low cost producer. Nestle has Prepared Water that comprises of bottling municipal water. The strategy is a good deal for the company but not for the public. However, Beverage Marketing Corporation considers municipal water bottlers as the intermediaries bringing water at a low cost for the customers (Food & Water Watch, 2011).
Supplier Markets- The organizations focus on creating a close relationship between customers and suppliers. Nestle engages with its suppliers and expresses concern about industrial and commercial usage of water. The manufacturing facilities of Nestle are contributing to several economies such as California (Nestle.com, 2016). However, there have been controversies for the same as California experiences water scarcity. Nestle argues that their bottled water is a convenient drink where tap-water is not available. The long term success of Nestle depends on the manufacturing facilities of bottling operations and its supplies (Nestle.com, 2016).
Recruitment Markets- Employee or recruitment markets comprises of skilled people that are the most critical element for service delivery. Nestle Waters has over 31,740 employees in 105 factories established in 33 countries (Nestle-waters.com, 2016). Nestle offers a diverse and rich environment to its employees that creates strong relationship with the customers (Nestle.com, 2016). On World Water Day, Nestle Waters employees empowered the children for water. They conducted Project WET for expanding Together 4 Water Events and implementing own water conservation projects (Nestle-waters.com, 2016).
Influence Markets- The organizations focus on additional markets such as finance market or the government as the products impact the economic performance, financial status or employment status. Nestle Waters makes social and economic contributions as they are job and tax providers. Nestle Waters supports local government such as Buxton with implementation of recycle stations, sponsorship and investment. Nestle Waters also contributes to restore infrastructural facilities such as roads and transportation (Nestle.com, 2016).
Internal Markets- The organization having internal markets have two main aspects. Firstly, every employee and department is an internal supplier and customer. Secondly, the employees work together for achieving the organizational strategy and goals. Nestle Waters has a strong performance culture differentiated with rewards and development. They have clearly aligned goals and responsibilities that help them perform strongly and consistently. However, the company faced lawsuit for gender discrimination when they refused to promote qualified female employee (Kumar, 2015).
Part 2: Recommended Course of Action on How to Revise Relationship Marketing Strategy for One of the Six Markets, in Order to Add/Co-create Value More Effectively
Based on the analysis of current relationship marketing strategy of Nestle Waters, it is concluded that they can consider enhancing the customer market out of the six markets. Customers are the centre and prime focus of every marketing strategy. With effective relationship marketing, Nestle Waters must strive to retain its customers. There is a need to lay orientation to customer values. It is critical not just to attract new customers, but also to retain the existing ones and must not be taken for granted. There needs to be a balance between effort that is directed towards the existing and new customers. Nestle Waters needs to understand that every customer is different and they need to devise ways for additional satisfactions by differentiating the offerings (Peck, 2013).
2.1 Customer Relationship Marketing
Customer relationship marketing or CRM is a process in which the customer loyalty, brand value and client relationships can be enhanced using marketing activities and strategies. The strategies or recommendations shall help in building long-term relationships with the customers and add value more effectively. Nestle Water’s strategy can be revised across four dimensions: People, Products, Technology and Communication (Bloom et al., 2014).
Nestle Waters must build a positive orientation among people towards the nutrition value added. The nutrition value can be added in the products for gaining competitive advantage. The technology can be aligned in a manner that shall offer consumer benefits (Bloom et al., 2014). The health dimension must be communicated to the people through effective communication channels and branding strategy. The following steps are recommended as a course of action-
a) Focus on customer needs- Nestle Waters must focus on customer needs by conducting market research. An analysis of their needs and wants must be made to understand what they need and let them know if their needs can be fulfilled. Nestle Waters must listen to its prospects and devise solutions to address all customer needs. It is necessary to focus on customer needs as their needs constantly change with time or other differences in competitive products. Understanding the needs better shall help in retaining existing customers and attracting new customers (Wilson et al., 2012).
b) Keep an open line of communication- Nestle Waters must keep its communication lines open as the customers will be loyal. There are various methods such as newsletters, social media sites such as Facebook, Twitter and Instagram, and emails as the customers can connect with the company in presenting their views. Nestle must always welcome and be available through emails and other means to give their prospects and customers. The customers must seek satisfaction in the fact that they can connect with the company anytime they need (Vernuccio, 2014).
c) Understand the stages of customer loyalty- Nestle Waters must know the stages of customer loyalty- Suspect, Prospect, First-time customer, Repeat customer, Client, Advocate. It shall be easier for Nestle to reach from suspect to advocate stage. The marketers need to entice people and convert them into customers of the company while nurturing the relationship. The business executives of nestle Waters can educate the customers and build relationship so that they have positive word of mouth and advocate the products of company to their friends, family and acquaintances (Nguyen, Leclerc and LeBlanc, 2013).
d) Offer customer ongoing support- The marketing specialists at Nestle Waters shall provide the customers with support that would help in nurturing relationships. There are instances in which the customers purchase products and they have questions or concerns regarding it. Nestle must offer informative support through email or phone to address their concerns. Nestle should not disappear once the customers makes it purchase as they must strive to build loyalty. The customers should feel valuable and needed by the organization. The customers must feel that Nestle is taking measures and going an extra mile to address their concerns (Bhattacharya, Gupta and Hasija, 2014).
e) Ask for customer opinions- The best way to make the customers feel valued is to ask for their opinions. Nestle can gain insight via online discussion questions, in-person meetings, surveys and personal phone calls. Nestle Waters must reach out to its customers and give them a way to get invoked. They must feel that they are a part of the company and that their opinions are changing the company’s marketing strategies and business plans. By making a concentrated marketing effort toward current customers, Nestle Waters will have a higher ROI on the marketing dollars and will strengthen their customer relationships. They can use a variety of marketing tactics on the clientele, including free consultations and personalized service (Payne and Frow, 2013).
f) Be honest with customers- Sometimes in the eagerness of making a sale, organizations tend to abandon the truth. Nestle Waters must always be honest with their customers and never make promises that they cannot fulfil. They must never claim something that they cannot live up to. If customer has some preferences, alternative options must be discussed and advice companies that can fulfil their needs (Peck, 2013).
g) Adapt business plan- The marketing specialists of Nestle Waters must keep the business current. The company must change and add products seeing the latest economic climate and industrial trends. The tactics to target customers shall be changed. The business plan of Nestle Waters must be refreshed annually and the seasonal changes must be addressed as required. The customers must be assured and reassured that the company is worth their investment. The organizational structure of the company shall also be managed. To address such changes, the marketing managers must undergo training (Bejou and Palmer, 2013).
Relationship marketing is based on the tenets of customer experience management (CEM), which focuses on improving customer interactions to foster better brand loyalty. The relationship marketing programme can be implemented using 7S framework.
Actions to implement the changes
Strategy- The strategy can be set for a long-term focusing on operational efficiency, innovation in practices and service delivery. The company can consider adding nutritional value to its products and shift to a higher volume based growth portfolio (Grieves, 2013).
Structure- Nestle has a decentralized form of organization in which the decisions are made by the middle or lower level managers. These managers shall focus on enhancing customer values and aim at aligning departmental goals to customer satisfaction and respecting them (Král and Králová, 2016).
System- Nestle must follow a system for recruitment, selection and performance appraisal for employees. This shall help in maintaining a diverse group of employees that would be able to satisfy customers greatly. The performance appraisal shall motivate the employees to continually satisfy the customers (Teh and Corbitt, 2015).
Style- Nestle Waters must follow a democratic style of management where the leaders encourage people to share their ideas. The management at Nestle Waters must consider every option for improvement as it offers a great deal of flexibility to adapt to better ways of doing things (Grieves, 2013).
Staff- Nestle Waters can train the existing staff in a way that would enhance relationship with customers. While recruiting new staffs, they must ensure that the staffs are talented and tactful in meeting customer needs and enhancing value. Marketing specialists may be hired for addressing personal needs of the customers and listening to their grievances of the product area.
Skills- Nestle Waters can consider equipping with manufacturing plants with latest equipments, technologies and work processes for addressing customer needs. They must ensure high quality of products delivered to customers by meeting the standards at the organization (Teh and Corbitt, 2015).
Shared Values- Nestle Waters must not focus on short-term profit and emphasize on long-term development. Nestle Waters must be aware of the fact that success is a reflection of ethical practices, codes of conduct and responsible attitude of the organization (Grieves, 2013).
The implementation of relationship marketing strategy shall involve a significant investment. Certain financial considerations must be made in the marketing plan. For conducting the research and gaining customer research, Nestle Waters must consider or estimate research fees. The research shall include payment to the firm as well as web research. For branding and communications, promotional brochures, television, web and radio budget shall be estimated. For networking, subscriptions shall also form a part of the marketing strategy. For sales promotion, Nestle Waters may distribute free samples. Additionally, it may conduct public relations and tradeshows for enhancing relations with the customers. Nestle Waters can make investments in marketing and enhancing its value for customers. Social media investment shall also grow as a significant amount of customers connect using social media (Kuei Huang, 2012).
There are risks involved with the implementation of relationship marketing as there is no guarantee that value shall be created. Additional risks involve the following:
Financial inefficiency- The financial investment made in marketing may not necessarily materialize. This would lead to loss if the customers are not loyal to the organization (Egan and Harker, 2015).
Redundancy- The marketing executives may not be willing to reinvent the company. Despite receiving customer opinions and feedback of the products, the company may not be willing to make any changes in its business plan or its strategy (Egan and Harker, 2015).
Anti-competitive behaviour- If the relationships between the customers and the organization are too close, there is a chance that Nestle Waters shall lose its competitive behaviour with other brands manufacturing bottled water. With a greater focus on managing customer relationships, they might lose their focus from gaining competitive advantage (Strohmeier, 2013).
Loss of independent skills- In the process of creating and enhancing value with the customers, there is a risk of Nestle Waters losing its independent skills. The organization has its own strategy for product, marketing and the entire business. If it focuses too much on individual customers, it may lose its originality and independent skills (Wang and Feng, 2012).
Compromise on price- Nestle Waters has a financial structure and budget set for the product pricing. The prices of its products are fixed considering multiple variables. While focusing on the customer needs and grievances and making changes accordingly, the price structure of Nestle Waters may be disrupted (Egan and Harker, 2015).
The above report is the most engaging and interesting topics I have ever done. Honestly, at first I did not know much about the concepts of relationship marketing. Going through the electives, I simply gained theoretical knowledge. This assignment gave me an opportunity to apply the concepts and theories into practice. The organization I selected was Nestle that is a transnational company. Applying the concepts on this company helped me gain a wide array of perspectives. In the beginning, I thought it would be difficult to apply concepts as Nestle is a huge company with millions of loyal customers. However, while conducting research and getting involved with my peers in discussion, I came to realization that there is always a scope of improvement whatever the size of corporation may be.
I have gained significant experience in applying marketing concepts to a real case scenario. I strengthened my problem solving skills and viewing the same case from multiple perspectives. The report helped me in brainstorming and come up with new ideas. The elective covered various chapters helping me to develop an in-depth and critical analysis of the sections. I also gained strong demonstration skills and critical understanding of modules in a better manner as I gained the opportunity to apply materials into practice. The peers and mentors helped me in drawing insightful conclusions of the practical situation. The paper not only considered concepts of marketing, but also the principles of planning while implementing relational strategies. I examined how relationship marketing marks a change from discrete to continuous exchanges that occur between parties with a history as well as plans for the future.
However, I faced difficulty in addressing the third section that consisted of the implementation of relationship marketing project. I had to conduct a lot of research on preparing the financial considerations as it is a critical resource for the company. I invested a lot of time for creating a solid plan that may help Nestle to not just enhance one business area, but all the other business units too. Besides, I appreciate the help of my lecturers who have been a part of this elective. They strengthened and encouraged morale and guided me in delivering the report.
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