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Marketing Strategy of Nestle Essay

Executive Summary

Nestle foods was established in 1866. Since then it has continued to provide quality products to its customers with products and packaging innovations. Nestle juices is world wide number one and fastest growing food company. The company is trying their level best to differentiate themselves from other local companies and trying to win the competition in juice industry by adopting the modern trends and technologies in both operational fields as well as in marketing of their products. In this detailed project we covered all most all the topics related to the marketing plan. First of all we presented the companies history and introduction which included the year of formation and certain steps the resulted in the today’s form of Nestle. We describes value chain analysis PEST analysis about nestle juices and our brand competitor .And the next step we do experiment about SWOT analysis who its effect on our brand .so we described MARKET analysis, competitor analysis, analysis buyer behavior , hierarchy of organization goals and the next step to STP of nestle company ,so we explain product strategy , price strategy and distribution strategy ,communication strategy and other things related to a marketing plan such as marketing budget and last of our project sale forecast for last 5 year.. Innovative technology, , Globalization, Matrices, , Financial Review, Porter’s five model, Industrial analysis, Five Ws and Future Plans Of Company.

1. Introduction

1.1 Basic Information Regarding Nestle
Nestleis the largest food and nutrition company in the world, founded and headquartered in Vevey, Switzerland. Nestlé originated in a 1905 merger of Anglo-Swiss Milk Company, established in 1867 by brothers George Page and Charles Page, and FarineLactée Henri Nestlé, 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 people.

AIM:
Nestle (NESN.VX) is aiming for long-term organic growth of 10 percent in its nutrition unit. The aim of manufacturing Nestlé’s product in global market will be earning maximum profit at minimum cost and capture the maximum share of the market.

Goal:
Nestles goal is to manufacture and market the company’s product in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers and business partners. Nestle does not favour short term profit as the expense of successful long term business development.

Market Growth:
In 2009, consolidated sales were CHF 107.6 billion and net profit was CHF 10.43 billion. Research and development investment was CHF 2.02 billion. Sales by activity breakdown: 27% from drinks, 26% from dairy and food products, 18% from ready-prepared dishes and ready-cooked dishes, 12% from chocolate, 11% from pet products, 6% from pharmaceutical products and 2% from baby milks. Sales by geographic area breakdown: 32% from Europe, 31% from Americas (26% from US), 16% from Asia, 21% from rest of the world. \

Objective and Issues:
Taking an objective approach to an issue means having due regard for the known valid evidence (relevant facts, logical implications and viewpoints and human purposes) pertaining to that issue. If relevant valid evidence is denied or falsified, an objective approach is impossible. An objective approach is particularly important in science, and in decision-making processes which affect large numbers of people.

Capital issues:
Nestlé S.A. has set up a new, wholly-owned subsidiary to manage the Group’s pension fund assets, which amounted to some CHF 25 billion at the end of 2005. From 1 January 2007, Nestlé Capital Advisers, the new Swiss-based company, will have a strategic advisory role and be a one-stop-shop for any services required by Nestlé pension funds around the world. Nestlé Capital Advisers’ CEO will be Jean-Pierre Steiner, who will also continue as Nestlé’s corporate pension and risk director. Paul Polman, CFO of Nestlé S.A., will serve as Chairman of the Board. In addition, Nestlé Capital Advisers has established Nestlé Capital Management, an operational asset management arm based in London, fully authorized and regulated by the UK Financial Services Authority. Nestlé Capital Management will start operations from 1 January 2007, with 15 investment managers and a compliance officer. This new Nestlé asset management company will be able to provide cross-border investment and advisory services to any Nestlé pension fund based in Europe or elsewhere. However, each individual Nestlé pension fund will continue to be under the responsibility of the relevant local trustee board. Nestlé’s new, shared-services approach to Group pension fund management aims to lower costs and boost net asset performance while strengthening Nestlé S.A.’s overview of Group pension assets.

Key of Success:
The quality, low price charging and marketing strategy will be the reason of working behind to achieve success of Nestle. Nestle has to focus on the mind of buyer and consumers by which their selling rate. Nestle will be able to achieve maximum profit. Besides taking some extra strategies the company will be able to reduce its cost of the product.

1.2 History Of Nestle

The company dates to 1867, when two separate Swiss enterprises were founded that would later form the core of Nestlé. In the succeeding decades the two competing enterprises aggressively expanded their businesses throughout Europe and the United States. In August 1867 Charles A and George Page, two brothers from Lee County, Illinois, USA established the Anglo-Swiss Condensed Milk Company in Cham. Their first British operation was opened at Chippenham Wiltshire in 1873. In September 1867, in Vevey, Henri Nestlé developed a milk-based baby food and soon began marketing it. The following year, 1868, saw Daniel Peter begin seven years of work perfecting his invention, the milk chocolate manufacturing process; M. Nestlé’s was the crucial cooperation M. Peter needed to solve the problem of removing all the water from the milk added to his chocolate and thus preventing the product from developing mildew. Henri Nestlé retired in 1875, but the company, under new ownership, retained his name as FarineLactée Henri Nestlé. In 1877 Anglo-Swiss added milk-based baby foods to its products, and in the following year the Nestlé Company added condensed milk, so that the firms became direct and fierce rivals. In 1905 the companies merged to become the Nestlé and Anglo-Swiss Condensed Milk Company, retaining that name until 1947, when the name Nestlé Alimentana SA was taken as a result of the acquisition of Fabrique de Produits Maggi SA (founded 1884) and its holding company, Alimentana SA of Kempttal, Switzerland. Maggi was a major manufacturer of soup mixes and related foodstuffs. The company’s current name was adopted in 1977. By the early 1900s, the company was operating factories in the United States, United Kingdom, Germany and Spain. World War I created new demand for dairy products in the form of government contracts; by the end of the war, Nestlé’s production had more than doubled. After the war, government contracts dried up and consumers switched back to fresh milk. However, Nestlé’s management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestlé’s first expansion into new products, with chocolate the company’s second most important activity. Nestlé felt the effects of World War II immediately. Profits dropped from US$20 million in 1938 to US$6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the company’s newest product, Nescafé (“Nestlé’s Coffee”), which was a staple drink of the US military. Nestlé’s production and sales rose in the wartime economy. The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby’s (1971) and Stouffer’s (1973). Diversification came with a shareholding in L’Oréal in 1974. In 1977, Nestlé made its second venture outside the food industry by acquiring Alcon Laboratories Inc.

In 1984, Nestlé’s improved bottom line allowed the company to launch a new round of acquisitions, notably American food giant Carnation and the British confectionery company Rowntree Mackintosh in 1988, which brought the Willy Wonka Brand to Nestlé. The Brazilian president, Lula da Silva, inaugurates a factory in Feira de Santana (Bahia), in February of 2007. The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and world markets developed into more or less integrated trading areas. Since 1996 there have been acquisitions including San Pellegrino (1997), Spillers Petfoods (1998), and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002: in June, Nestlé merged its U.S. ice cream business into Dreyer’s, and in August a US$2.6 billion acquisition was announced of Chef America, the creator of Hot Pockets. In the same time frame, Nestlé came close to purchasing the iconic American company Hershey’s, one of its fiercest confectionery competitors, though the deal fell through. Another recent purchase included the Jenny Craig weight loss program for US$600 million. In December 2005, Nestlé bought the Greek company Delta Ice Cream for €240 million. In January 2006, it took full ownership of Dreyer’s, thus becoming the world’s biggest ice cream maker with a 17.5% market share. In November 2006, Nestlé purchased the Medical Nutrition division of Novartis Pharmaceutical for $2.5B, also acquiring in 2007 the milk flavouring product known as Ovaltine. In April 2007, returning to its roots, Nestlé bought US baby-food manufacturer Gerber for $5.5 billion. In December 2007, Nestlé entered in a strategic partnership with a Belgian chocolate maker Pierre Marcolini.[8] Nestlé agreed to sell its controlling stake in Alcon to Novartis on 4 January 2010. The sale was to form part of a broader US$39.3 billion offer, by Novartis, for full acquisition of the world’s largest eye-care company. On March 1, 2010, Nestlé concluded the purchase of Kraft’s North American frozen pizza business for $3.7 billion.

1.3 Situation Analysis
First of all nestle company want to know about the market situation. So the company collect information from the market.

Market Description :
All most all of the country consume the product of nestle. They are very careful about the quality and nutrition. There isalmost 6000 brand with a wide range of products. Like- they have Baby foods (Nestlé Cerelac, NAN)

Breakfast cereals (Nestlé Cereals)
Dairy products (Milkpak, NIDO, Nespray, Nestlé Yogurts, Everyday) Ice-creams (Movenpick, Dreyer’s)
Chocolate confectionary (Kit Kat, Smarties, Toffo)
Beverages (Nescafe, Milo, Nestlé juices)
Food service (Nestlé Jumbo Bottle)
Prepared foods (Maggi, Powered Soups)
Bottled water ( Nestlé Pure Life, Nestlé Aquarral)
Pet care (Pro Plan, Purine, ONE, Fancy feast, Dog Chow, Cat Chow, Felix, Alpo) Pharmaceuticals (Ophthalmic drugs, lens-care solutions & optical surgical Instruments)

Competitor Review:
UNILEVER

Nestle’s main international competitors include Unilever and Procter &
Gamble. They also face competition in local markets or product ranges from companies such as Beiersdorf, ConAgra, Danone, General Mills, Henkel, Mars, Inc., Pepsico, Reckitt Benckiser and S. C. Johnson & Son.

LANGNESE:

Langnese is the German Heartbrand subsidiary of the Anglo-Dutch company Unilever. They are the number one producer of ice cream products in Germany, and their main competitor is Nestlé; a reflection of the relative positions of these two giants in the global market.

BRITANNIA INDUSTRIES:

Britannia Industries Limited is an Indian company based in Kolkata that is famous for its Britannia and Tiger brands of biscuit, which are popular throughout the country. Britannia is has an estimated 38% market share. The Company’s principal activity is the manufacture and sale of biscuits, bread, Rusk, cakes and dairy products. Despite this strong competition, Nestle can carve out a definite image and gain recognition among the targeted segments. The products what we are serving to our consumers is the critical point of differentiation for competitive advantage.

2. Marketing Segmentation

2.1Geographical Segmentation
Nestle is the world’s largest food company that did marketing segmentation very well. They also base on the geographic segmentation. Here they consider the world region, country region and rural area.

1) World or country region:-

Nestle understands the geographical different in needs and wants. For example: in Viet Nam, Nestle has the Maggi brand with many kinds of Asia sauce, but Maggi do not exist in England because of the different in the geographical taste. While, Nestle sell pet food in England and some other countries but they do not sell in Viet Nam. So we can easily understand that this company considers geographical segmentation. Maggi Sauce in Viet Nam

2) Rural area Segmentation:-
Nestle also considers the rural area segmentation. For example, in the city supper shopsof Asia keeps Maggi /Nido milk and in rural areas nestle supplies a much less product like Maggi or Nido milk.

2.2Demographical Segmentation
Nestle segments their customer into the different of age, family size, family life cycle, income etc.

1) Age:-
Nestle never offers the same product for the people whose is 30 and whose age is 13. For example, nestle offers Nescafe coffee for adult people and offering Milo for children. Coffee for adult Milo for children

2) Family Size and Life cycle:-
Nestle offers their same product in different size of containers to fulfill the different type of needs according to the size of the family. For example, Nestle chocolate offers different size of containers. The family with many members can buy the large container to satisfy everyone in the family, where a small family can take the small one to do the same.

3) Income:-
The people with small income can buy nestle product. They produce that product which will save money. Like, Nescafe coffee has a mini pack for instant coffee which saves the money of limited income people.

2.3Psychographic Segmentation

Nestle offers their product considering customers psychographic segment, like, social class, lifestyle and personality.

1) Social class:-
Many products of nestle company are highly affordable by different the people of different social class.

2) Lifestyle and personality:-
Nestle Breakfast Cereals is the best choice for busy people and Nescafe also help them more alert in working. Besides, there are some people who love to eat can eat every time and everywhere. Confectionery such as Smartest, Aero, Butterfinger, and Orion can be called their best friends.

2.4Behavioral Segmentation
Behavioral segmentation base on the different in knowledge, attitudes or responses to a product.

Benefits:-
Nestle offers us the best quality, taste and price for baby food, coffee and chocolate. Customers may buy other companies baby food/coffee/chocolate, but no other company can provide the quality and flavor that Nestle provides.

Readiness stage:-
Nestle is one of the most well known company in the world. A very few people can found who don’t know about this companies product. Nestle figure out the stage of their customer and make them more aware about their foods and nutrition.

Attitude Toward product:-
Nestle is always concern about the attitude of people toward their product. The considers the feedback of their customers and the other people and make their product more better to get the positive opinion of their customers.

User Status:-
A market has all types of customers. Nestle tries to measure user status to take more customers into their segment, so that all types of customer get opportunity to buy the product of Nestle. All the following criteria are followed by the Nestle Company for their segmentation.

3. Market Targeting
Market segmentation reveals the firm’s market segment opportunities. It now must evaluate the various segments and decide how many and which segment it can serve best. We now look at how the company evaluate and target segments.

Fig: Porters Five Forces
3.1.Right size and growth:-
Nestle company collets information about different type of customer from market segmentation. Then analyze to select a target market. They complete this task considering the size and growth of the target market. Nestle mostly focus on the geographic and demographic segmentation because, their product is made based on this two segments.

3.2.Structural Attractiveness:-
Most of the companies have their similar competitors. Nestle also considers its competitors so that, they can attract their target market. They try to make a better product in a good price then their competitors. But now a days there no close competitor of nestle company. Nestle is also concern about the buyers power and the suppliers power. To achieve the target market Nestle need to satisfy the buyers as well as the suppliers. To avoid the bargaining problem that is created by the buyers, Nestle companies all products are at a fixed price. There is another problem of substitute product. But because of the high quality and affordability Nestle don’t need to be worried about that problem.

3.a. Selecting target market

After evaluating different segments, Nestle Company decides which and how many segment it will target. Buyers have unique need and want. So, nestle divided their products according to the different segments of market. Nestle company wants to use differentiated marketing strategy and the company decides to target several market segments and designs different offers for each segment. It decides to produce different types of products based on age, family life cycle, social class and lifestyle. Nestle tries to know what type of products are needed for which type of people. At first, nestle company produces a product for testing and experimenting for a specific segment and if it is wanted by the target market, it changes the product types.

Nestle wants to offer some kind of product that is mainly based on demographic segmentation.

No.
Different consumer
product
1
Age: 6 months and onwards
Cerelak, Nido, Nan
2
Coffee lovers
Nescafe, Coffee Mate, 3 in 1
3
Chocolate lovers
Kitkat, Crunch, Galak
4
Age: 8 years and onwards
Maggi, p’tit pot
5
Age: teenagers
Milo, Aero, Turtles

These are some of the different types of products that Nestle Company offers for different types of customers. They offer these different types of product because there are different types of demand in the market.

4. Positioning
“A company must differentiate its offers by building a unique bundle of benefits that appeal to a substantial group within the segment.”—— Nestle knows this pretty well. It has many advantages over competitors by offering different types of quality products. To create a profitable relationship with the different types of customers, Nestle stays alert and finds different ways to differentiate itself in the eye of every customer. Marketers often prepare a perpetual positioning map to plan strategies. It shows consumer perceptions of their brands versus competing products on important buying dimensions. Nestle company always tries to maintain a better position in consumer minds than others.

PriceNestle
Unilever
Britannia
Lengnese

Benefit
4.1 Positioning Map

The figure below shows a positioning map for the world’s leading food brand-Nestle. The position for each circle of the map indicates the brand’s perceived positioning on two dimensions – price and quality.

4.2 Choosing Positioning Strategy

It’s very easy for Nestle to find its positioning strategy. Since it’s a very well known company, it tries to have the same position in a different segment. Nestle differentiates its offers by building a unique bundle of benefits which is appealing to a substantial group within a segment.

Nestle follows three steps for its positioning task:
a) It identifies a set of possible competitive advantages to build a position.

b) Then, it chooses the right competitive advantage.
c) And selects an overall positioning strategy

After these steps, nestle communicates and delivers the chosen position to the market effectively.

Identifying possible value difference and competitive advantage:

Nestle understands the importance of understanding customer needs better than the competitors and delivering more value. It’s very important to build a profitable relationship with the customers. Nestle has positioned itself to the extent of providing superior value, by this it has gained competitive advantage. But, solid position cant be built by false promises. Nestle delivers the quality and service it promises. Thus nestle has differentiated the company in the market.

Nestle thinks through the customers’ entire experience with the company product to find the point of differentiation. It has successfully found ways to differentiate at every customer’s point of view.

Nestlé’s strategies for differentiation are:

Service:Nestle wants to make sure that their service is better than other competitors. They print the nutritional values and other health facts related to the product on the packet of the product. They also provide contact number and mailing addresses etc. for queries or any other facts. For example, in the image Nescafe Tasters Choice the arrow indicated area has all the information about this product.

Product: Nestle provides the best products and they are quite self-confident about it. They know very well that they have a very few competitors which makes it easy for them to capture the market.

Image: Nestle knows that a company cannot develop an image in public mind overnight using only a few advertisements. Nestle has a different image in public eye which it has earned over the years.

People: Their number of target people is very high because they have much demand for baby food and nutrition products.

Positioning strategy

For a new product, firstly they decide to use more for less positioning strategy. Nestle gives more benefit than the other competitors but their price is low, because in this case, they can attract the customers easily.

4.1Positioning strategy:
Nestle company generally use more for more strategy. Compare to other company they are charging higher price than other. But on the other hand they not only charging higher price they are also provide benefit to the customer.

4.2 Developing a positioning statement
In positioning statement the summarization of company and brand positioning are followed. The concept is TO (Target segment and need) OUR (company) IS( product) THAT ( point of difference). By this way Nestle make positioning statement.

PRICE
MORE THE SAME LESS
SFig : Positioning Strategy

Developing a positioning statement
In positioning statement the summarization of company and brand positioning are followed. The concept is TO ( Target segment and need) OUR (company) IS( product) THAT ( point of difference). By this way Nestle make positioning statement.

Developing 4p’s
5.1Product:All most all of the country consume the product of nestle. They are very careful about the quality and nutrition. There are almost 6000 brand with a wide range of products. Like 1. Baby food- Cerelak, NatureNes, nestum

2. Cereals- Chocapic, Fitness, Cini Minis
3. Water- Nestle Pure Life, Perrier, Poland Spring
4. Dairy- Cornation, Coffee Mate, Nido
5. Coffee- Nescafe 3-1, Nescafe Classic, Nescafe Decaf
6. Drinks- Milo, Juicy Juice, Nestea
7. Sports nutrition- Power Bar
8. Ice cream- Maxibone,Drumstick, Sorbetes
9. Diet foods- Jenny Craig
10. Healthcare nutrition- Boost, NutrenJunior,Resource
11. Frozen foods- Buitoni, Herta, Hot Pocket, Maggi.
12. Chocolate-Auro, Crunch, Kitkat, Butterfinger
13. Pet care- Purina Alpo, Bakers Complete, Cat Chow
5.2Price:people never wanted to compromise on quantity. So they adapted value based pricing. Nestle specially want to capture different segment of the market. So its price are based on its effective value of customer selective to their product. However its price is comparatively higher than the price of other product.

5.3Place:Nestlé began in Switzerland in the mid 1860s when founder Henri Nestlé created one of the first baby formulas. Henri realized the need for a healthy and economical product to serve as an alternative for mothers who could not breastfeed their babies. Mothers who were unable to breastfeed often lost their infants to malnutrition. In 1874 the Nestlé Company was purchased by Jules Monnerat. Nestlé developed its own condensed milk to contend with its competitor, the Anglo-Swiss Condensed Milk Company.

5.4Promotion:Promotion is the very important and crucial element of marketing strategy as through it the company establishes its image in the minds of the customers. NPL is promoted by using different ways of promotion. Advertisement of NPL is done through TV, radio, billboards, newspapers and magazines. Current advertising slogans are that NPL is trust, hope and happiness and Good Food Good life. Nestlé also conducts the tradeshows, concerts, events sponsorships, and discounts for sales promotion. For establishing public relations, Nestlé distributes its newsletters, annual reports, calendars and diaries, lobbying, donation for charitableand civic events. For the victims of 8th October 2005 earthquake, Nestlé has donated 90 trucks, which were containing different foods items, and NPL was one of them which is around Rs. 2 Billion. The Nestle organized its teams to distribute products to the affected areas and all employees contributed from top to bottom.

Example:-

Buy-One-Get-One-Free (BOGOF) – if a loaf of bread is priced at $1, and cost 10 cents to manufacture, if you sell two for $1, you are still in profit – especially if there is a corresponding increase in sales. This is known as a PREMIUM sales promotion tactic. Customer Relationship Management (CRM) -incentives such as bonus points or money off coupons. There are many examples of CRM, from banks to supermarkets. Free gifts- Subway gave away a card with six spaces for stickers with each sandwich purchase. Once the card was full the consumer was given a free sandwich. Free samples- Red Bull (a caffeinated fizzy drink) was given away to potential consumers at supermarkets, in high streets and at petrol stations (by a promotions team).

Conclusion

Nestlé is one of the only companies to have developed an information disclosurepolicy. But the policy includes no good practice principles. To strengthen their capabilities forensuring consistent public disclosure of information across the company Nestlé should identifynarrowly defined conditions for non-disclosure and commit to responding to information requestswithin a defined period of time. In participation, Nestlé only make a general commitment to engagingwith those outside the company through their Corporate Business Principles. They should go furtherand develop a detailed policy on external stakeholder engagement that identifies the conditions underwhich stakeholder can expect to be engaged in company decision-making and commits toincorporating stakeholder input into decision-making else providing an explanation. Furthermore,Nestlé needs to strengthen their complaints and response capabilities; the company needs to put inplace a complaint mechanism that covers more than a single product and allows both internal andexternal stakeholder to submit complaints for issues of non-compliance in relation to all the company’spolicies and practices.

References
1. Allied Stores was originally formed in 1929 to act a the group’s purchasing arm.

2. http://www.nestle.com/Pages/Nestle.aspx

3. http://www.nestleusa.com/

4. http://en.wikipedia.org/wiki/Nestl%C3%A9

5. http://www.verybestbaking.com/

6. http://www.purina.com/

7. http://www.nestle.pk/

8. http://www.nestle-nutrition.com/Public/Default.aspx

9. Newspaper

10. Www. Google.com

11. Friends


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