Systems And Methods For Automatic Control Of Marketing Actions

Situational Analysis

Discuss about the Systems And Methods For Automatic Control Of Marketing Actions.

The global company Nestle is the largest company in the sector of nutrition, food and beverage industry. Originated in the year of 1905 as merger of Swiss Milk Company, growth of the company has been noticed during the time of First World War and after it when Nestle expanded its product range beyond the product range of food products especially formulated for infants. Presently Nestle operates in the 86 countries across the world with its vast product range. Nestle has its manufacturing units in nearly all countries in order to assure a large product delivery network worldwide (Nestle.com 2018). The company’s significant growth has been able to mark itself as “the most multinational of the multinationals”.

The product range of the company comprises more than 7500 brands under it. The offered products of the company are categorized into several sections such as, cereals, chocolates, baby foods, beverages, dairy products, confectionaries, ice cream, pet care, bottled water and prepared food. In order to ensure smooth business process the company decentralized the power over the local units. The company is organized into seven strategic business units across the world. All of these units are responsible for taking strategic decision in the management level including market entry strategies, acquisition strategy and so on. The regional units of the company based on the geographical segmentation such as Europe, South East Asia, North East Asia, etc (Nestle.com 2018). The regional business units of the company are responsible for taking strategies based on the regional markets. Over 30 years, Nestle has been satisfying its customers with a large range of product and its service.

However, 1% profit of the company goes to Research and Development department of the company in order to ensure that the company retains its position within the industry. In respect to that it is needless to mention that the food and nutrition industry in which the company deals is highly competitive. Therefore Nestle continuously research in the market in order to compete with the rival companies. Thus the objectives of the company is to retain its position in the market, to extend its product range which are not yet explored by other rival companies and marketing the newly developed or to be developed products. Even though the company is considered to be the most reliable baby food brand, one of its product Milo, has been observed to have been experiencing decline in the South East Asian countries (Nestle.com 2018). Hence the report gives an overall analysis of the concerned product so that it can be positioned within the market with an effective marketing strategy.

External Analysis

Any business organisation operates in two environments; the factors of the environment impact the business operations in a significant way. The management of organisations analyzes the business environment to take strategic decisions in order to make sure that the company is striving towards the objectives. The factors of the internal business environment such as assets and resources can be manipulated by the management of the company and can be used in the times of opportunities or to overcome the threats. However, the factors of the external environment are analyzed in order to understand the dynamics of the industry as well as determine the opportunities and threats that are prevalent in the industry. The theories that is going to be used in order to understand the external environment are PESTEL analysis as it will provide a holistic understanding of the Malaysia market for the product that has been selected (Yüksel 2012), on the other hand with the help of Porter’s Five force analysis the competitiveness of the company will be determined in terms of the existing circumstances. The internal analysis will be conducted with the help of McKinsey 7S Framework, this will help in understanding the company and its position from the internal perspective and the Porter’s value chain analysis will help in understanding the resource and capabilities of the company.

This model will help in understanding the business environment of the Malaysian region.

Political: the political condition of the country is stable and the government has several rules and regulations to maintain a healthy foreign relationship with other countries. The government has been recently changed and the current prime minister Mahathir Bin Mohamad is also encouraging trade and commerce in the country (Yüksel 2012). The country has established several agreements with foreign countries to encourage international trade and is also a part of the WTO. The government of the country is focused on providing the people with better opportunities in order to ensure that the standard of living among the citizen of the country. The support from the government has allowed Nestle to build a competitive edge over the other players in the market. Nestle has also won the Halal Excellence Award which establishes the success of the company in the country (Yüksel 2012).

Economy: The economy of the country is anticipated to grow in a positive way. As the government encourages trade and commerce, there is enough opportunities for the business to thrive and Provide support to the economy. Unemployment rate is 3.4 percent which is also in a declining as per the forecast. The GDP of the country has been recorded to be 296.54 in 2016 which is higher than the previous year and the inflation rate that has been recorded in the country is 2.1 percent. Therefore making the economy of the country attractive to the investors is it domestic or multinational (Gupta 2013).  

Pestel Analysis

Societal: As the economy of the country is on the developing end, the citizen of Malaysia is adhering to a higher standard of living. There is greater acceptance of change and new and improved products and services. The rate of education is improving in the country thus increasing the standard of living among the people. There is a demand for the nestle products that are available in the market. Health drinks have also become popular in the country and people accept the product to be useful as there is intense competition for the same in the market.

Technological: People have accepted the advancement of technology and its involvement in the day to day lives of the people. There is increase use of internet connectivity; telecommunication, acceptance of e-commerce as a mode of transaction etc prove that people accept technological growth. The government also provides infrastructure for the people to use new and developed technology as there are a number of domestic and multinational technological organizations operating in the market. Moreover there are research and development form the government authorities as well in order to provide the people with better technical opportunities (Ho 2014).

Environmental: The country has its rules and regulations regarding the environment for the companies that operate in the country (Gupta 2013). There are CSR a regulation that has to be followed by the companies of specific segment has to adhere to the regulations stated by the government (Ramita 2013).

Legal:  The trade and commerce regulations are comparatively lenient and ensure that there is smooth flow of business in the country. The tax laws and the other legal aspects of that impact the business environment are regulated. There are several agreements and treaties for foreign investment in the country.  Thus a multinational company like Nestle has been operating in the country for a long time without facing hurdles in the way. Rather the country has encouraged the company by awarding honorary positions (Gupta 2013).

This framework was introduced by Michael Porter in 1979 (Cheng 2013). This model will help in the determination of the competition that is present in the market.

Threat of new entries: The health drink industry in the country has gained momentum and has established itself firmly in the market, thus making the market attractive for the investors. The trade and commerce facilities that the government of Malaysia provides ensure that that there is support in order to establish a business. Therefore for a new company to invest in the health drink category is feasible. However, there are also challenges like resources and brand image that Nestle have may not be available at the disposal of a new company. But an established organisation which is domestic may come up with similar products and can take away the market for Milo.  Therefore the threat of new entrants is high in this product line (Cheng 2013).

Porter’s five force Analysis

Competition in the industry: There is intense competition in the industry; some of the direct competitors of the products are the health drinks like kinohimitsu Superfoods, Pediasure, Horlicks, Diko, Vico, Ovaltime etc. There are also other organisations that are present as the target market is available in abundance in the country. The intensity of competition makes the market lucrative and ensures that there is abundance of opportunity of growth and expansion in the industry (Yunna and Yisheng 2014).  

Bargaining power of the buyers: The switching cost of the consumers in terms of choosing other brands as there is tough competition in the market. The bargaining power of the buyer is high due to the same reason. Therefore the company has to put in continuous efforts in order to be in the focus in order to gain a leading position in the market.

Bargaining power of the suppliers: The suppliers of the product have contracts with Nestle as the and the bargaining power of these suppliers are low as nestle has a number so suppliers and distributors in the market therefore the company can choose easily from the abundant suppliers of the product (E. Dobbs  2014).

Threat of substitute: There are a number of substitute to the health drink, parents can choose to make milk shakes and other health beverages for their children over chocolate Malt drinks. This increases the threat and gives it a high position (Cheng 2013).

The framework is like a diagnostic tool developed by Tom Peters and Robert Waterman during the 1980s. This is a tool that helps in analyze efficiency and effectiveness of the internal business environment of a company. There are seven aspects of the model which are divided in two parts “soft and hard”.

The hard elements are strategy, system and structure these are the aspects that can be easily identified and are under the control of the management of the company  

• Strategy:  The strategy that Nestle incorporates to device the decisions related to Milo have not changed over the years, however the product has been made available on the internet platforms is a major change in the distribution strategy for the product.
• Structure: Nestle follows a hierarchal organisation culture, there is segments that are established according to the area of operation and country. There are various divisions in the structure which results in accountability of the operations of the organisation. The South East Asian region is responsible to look after the operations in Malaysia (Singh 2013).
• Systems:  The operations of manufacturing the product and making it available to the customers are the factors that are responsible for the sale of the product (Ravanfar, 2015). The company not only uses strategic management decisions to push the sales of the product but also incorporate marketing strategies to ensure the popularity is maintained. Milo is associated with a number of events for kids and is associated with a number of CSR activities as well.

Following are the soft elements in the company which are responsible for the development and initiation of the product:

• Skills:  There are skilled people associated with the development of the product as well as development of the marketing and strategic planning for the product. Nestle has a large human resource which is one of the major strengths of the company.
• Staff:  Recruitment, training, motivation and reward are some of the factors associated with the Human resource of the organisation (Ravanfar 2015).
• Style:  The way in which the management of the company deals with the operations of the business staying true to the values and principles of the organisation is the style that is being referred to. The company has incorporate transformational leadership in the company in order to develop and create new products and process.
• Shared Values: The organisation culture is the foundation of the strategic management decisions taken by the company. As mentioned above the company has a number of CSR activities associated with the product in promoting the health conditions of the children, conducting and proving them with sports opportunities etc (Ravanfar, 2015).

Primary activities:

The company has a number of aspects associated with the production and distribution of the product in the South Asian market.  The inbound logistics of the company are strong as the company has a strong distribution system all over the world; similarly the distribution is strong in South-East Asian region.  The operations of the business, outbound logistic and services that are associated with the product are available with the company and are strong to ensure that there is no gap in the process of demand and supply. On the other hand, the Segment that needs a boost is the marketing and sales of the product. The company has to focus on the marketing elements of Milo as the product has been available in the market for a long time and over the years has reached a position of maturity and is now in the declining end of the product life cycle curve (Savino et al. 2015).

Support activities:

The human resource, infrastructure, technology and procurement of Nestle are responsible for supporting the primary activities that has been discussed above. The company has skilled human resource who works upon the products and the process of the business in order to ensure steady growth and expansion of the business. Milo is an old product in the portfolio of Nestle and has some iconic aspect associated with the brand. With the help these secondary activities the company has established the elements of strengths that can be used in order to initiate some changes in the products marketing strategies in order to bring the product back in track (de Souza and Márcio de Almeida, 2013).

The objectives of the marketing strategy are:

• To ensure there is a rise in the sale of products
• To revive the popularity of the product among the target market
• To educate the people regarding the introduction of a new product in the same brand

Marketing Mix alludes to the set of action that is used by companies in order to promote its products. Price, Product, Place and Promotion are considered as the essential 4ps of marketing mix. However, there are several other components presently that are nowadays considered under the marketing mix such as People, Process and Physical Environment (Khan 2014). In order determine the marketing strategy; each of the 7p’s of marketing will be discussed below:

As the decline of the product has been observed in mainly Malaysia and other South East Asian countries, the marketing strategy will aim to increase the sale and promotion of Milo in those regions (Jain 2013). The marketing strategies will take under consideration of Malaysian food and nutrition market and its requirement. The promotional campaign will be designed as per the requirement of Malaysian customers and other countries of South East Asian region while assuring that the marketing strategy successfully target the customer based in these regions.

The product which will be marketed is Milo. The product Milo falls under the category of health drink that is the mix of chocolate and malt powder. Milo is consumed along with hot water or hot milk. As several other brands of health drink are available in the market the marketing campaign will must highlight the product specifications and the key success factors in order to assure the increased sale of the product (Armstrong et al., 2015). As Milo falls under the category of heath drink, the marketing and promotional campaign will include the activities that will highlight it health benefits as well as other aspects which will differentiate it from other similar products. part from that Nestle can also introduce Milo’s version of snack bar in Malaysia and other countries of South East Asian countries.

Since the sale of the product has been observed to have declined; low price strategy will be adopted in order to assure increasement in terms of sale of the product within this region. In addition of low price strategy, offers and discounts might enhance the product sale (Jain 2013). The current price of Milo in is RM 30 for 1.5kg where as the price of Horlicks Original is RM 21.90. Therefore in order to increase sales rate than other health drink brands, it is required to lower the price of the product. Offers such as ‘buy 1 get 1’ offer or special discount offers 10 -15% can be given in order to increase the sale of the product. However, it must be noted that the quality of product is not compromised only to assure product sale.

The promotion of the product will include both the traditional way of marketing as well as social media based marketing. Initially, the promotional campaign will long for a time span of 8 months. Under the traditional way of marketing, several activities will be held such as airing advertisements over television, banners, and billboards and so on. Separate plans will be designed for each of the marketing events (Khan 2014). In addition to that, public events will be sponsored featuring the advertisements of the product. Beside of traditional way of marketing, social media marketing will also be held ensuring maximum customer base is reached out. In order to promote and market the product, different contents consisting of videos, text, pictures, etc will be published. The social media marketing will be proactively interacting with the customers while allowing them to give feedbacks. The promotional and marketing campaign will be divided into two parts. At the first place, it will be carried out for 8 months and then after a follow up and depending on the current situation, the second phase will long for 6 months (Armstrong et al., 2015). Both traditional and social media marketing strategies will be aiming the highlight the key success factors of the product.

Types	Costs	Time
Online marketing	RM 48000.00	8 months
Social media marketing	RM 22000.00	8 months
Banner ads	RM 5100.00	6 months
TV ads	RM 45000.00	7 months
Public events	RM 20000.00	3 months

In order to discuss people segment, the target market for the product needs to be discussed first (Jain 2013). The marketing and promotional strategy will be primarily the children between the age group of 8-15. Since the product falls under the category of health drink, children who are associated with sports will be targeted. However, the young adults can also be secondary group of target audience on order to promote the product Milo. Apart from the target audience, the efficient employees will be appointed assuring the success of the marketing and promotion.

The whole process of the marketing will be pre preplanned so that the execution of the whole process can be done successfully. The well tailored process will assure any means of disruption during the promotion.

The packaging in terms of physical evidence however will remain same since it carries a brand value. Nestle follows one single color and style of the packaging of Milo across the globe (Nestle.com 2018). This adds to the value of brand as well. Hence the packaging will remain. Since the product is available is in different size with different price range, no changes will be required in the physical evidence.

 In accordance with Weinstein (2013), the marketing must be targeting the children of the age group of 8-12. Along with them, young adults will also be targeted. The common segmentation from the two age groups will be sports enthusiasts since the product partially acts as energy booster. The propositional campaigns will be designed in a way that it convinces the teenagers along with their parents that Milo is a more beneficial health drink comparing to other health drink brands at a lower price rate. The primary target customer will be the teenagers and the young adults residing in Malaysia. Meanwhile the other target customers will be the same target group of other countries of South East Asia. While other health drink brands offers different products for different customer segments, Nestle will feature its product Milo as a single product for all groups of target customer.

Nestlé’s health drink brand Milo is presently struggling hard to survive in the industry where giant, renowned health drink makers are already holding market (Tanner and Raymond 2015). In order to discriminate itself from other health drink makers, the Nestle need to campaign on the uniqueness of Milo; the taste of the product, the composition, the packaging, the price and most importantly the health benefits of the protein powder, Milo. In addition to that Milo’s version of snack bar which is available in other countries can also be introduced in Malaysia and other countries of South East Asian countries.

The company needs to monitor the progress of the marketing plan and in order to do so the company has to follow some of the metrics and has also develop some strategies to determine the process of progress. Following are some of the monitoring measures that can be undertaken by the company in order to understand the progress of the marketing strategies:

Market research:  in order to understand the impact of the marketing strategies the company should undertake market research. The impact of the strategies is upon the customers and hence the primary research population should be the customers of the company. On the other hand, the company should also ensure that the distributors and the suppliers of the products are also considered as they will are in constant touch with the customers and the demand of the product will be determined by them.

Customer response: There are several ways in which the company can connect with the customers and create valuable relations with the customers. The use of social media to market the product has been introduced; this also allowed the company to be in direct contact with the customers and also gather information and feedback regarding the same. The customer response and feedback can also be derived with the help of the market research that has been mentioned above.

Sales number: This is one of the metrics that the company can analyze in order to understand the implementation of the strategies. The increase in the number will denote that the marketing strategies that have been employed are working positively and are achieving the objectives (Eyal and Reichert 2014).

Conclusion and Recommendations 

It can be concluded form the above discussion that Nestle has over the years have build a good reputation among the internal as well as stakeholders of the organisation. The company is in sync with the rules and regulation of Malaysia making the market profitable. However, it has been observed that the product Milo has been facing sales issue in the region owing to a number of factors. Firstly the product has reached a stage of maturity and is on the verge of decline as the company has not incorporated any new elements to the marketing strategies of the product. There is also intense competition in the market; moreover there are also a number of substitutes available in the Malaysian market that has made the sales of Milo even decline. Some of the recommendations for the company are: use of social media in promotion along with traditional media, introduction of Milo bar which is one of the hit products of the company in the international market.

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