Nestle SWOT Analysis
Nestle SWOT Analysis
Strengths are one of the internal factor lead the organization to the success pathway and the business which allow you to operate more effectively than your competitors. For example, strength could be your specialist technical knowledge. As Nestle is a well-known brand in the world, so this is good for NESCAFÉ to make any further development and it is believed that NESCAFÉ is the major player in coffee market and it has a strong brand names because of associating with Nestle which has mass market share in the world. The company’s hot drinks portfolio includes a number of high-recognition brands supported by considerable marketing and research and development resources, such as NESCAFÉ and Milo. In addition, NESCAFÉ always provide and maintain the good quality control over the products. Today, experts agree that moderate coffee consumption of up to 4- 5 cups per day is not associated with detrimental effect on health and may thus fit within a balanced and active lifestyle.
Health conscious products are made keeping in mind the nutritious values. NESCAFÉ are good in promotion strategies such as advertisement. The company used direct advertising and hidden advertising on TV .In addition, they have promotion with posters, billboards or various contest in order to find the winner from our company. This is a good promotion strategy of NESCAFÉ because it can increase sales and profitability for our company even more. This is one example of promotions for customers who like playing internet online by website Facebook that has name the game is “NESCAFÉ Gold Cup Goal Challenge Game” by player must kick to the goal.
Weaknesses, it is define as internal environment that place an organization at disadvantage or work against a successful outcome. NESCAFÉ biased low margin profit lead to weaknesses. As common as we know that NESCAFÉ are cheaper enough that customers can be acquired. Meanwhile the cost of production NESCAFÉ and wages range of employees is relatively higher in order to encourage employees to perform tasks efficiency. From that, we can know that NESCAFÉ are not having large amount of profit. Inability to provide consistent quality is one of the NESCAFÉ’s weaknesses. Many NESCAFÉ products had been recalled from trade due to poor quality suppliers. This does not only hurt the firm’s image but also its sale as well as the business is uncontrollable quality of the products. Moreover, coffee consumers have come to expect excellent quality of NESCAFÉ as a basic feature in their coffee.
A critical threat to NESCAFÉ’s brand image and consequently brand shares could create due to the low awareness of NESCAFÉ’s coffee quality. Health-conscious consumers are being disregarded due to caffeine-based products of NESCAFÉ. Formulation of NESCAFÉ is biased towards containing caffeine. A large amount of caffeine consumed can resulting in negative affect on blood sugar levels that influences fat burning that could change into storing fat. Hence, health-conscious consumers avoid caffeine which both instant and regular coffee have been related to increased bladder cancer risk. Besides that, caffeine when consumed in excess can be addictive and stimulate.
Opportunity can be define as a potential favorable condition in which an organization can capitalize on a changing trend or an increasing demand for a product. It also can be said that a time or set of circumstances that makes it possible to do something. The first opportunity for the product NESCAFÉ coffee is the premium trend. In now a day, while the mass-market positioning of NESCAFÉ is an obstacle, the demand for premium coffee products are growing rapidly. This creates opportunities for the company to generate growth in mature markets through the development of brands and extensions, such as Nespresso and NESCAFÉ Dolce Gusto. In addition to developing product lines for the mass and the premium market, the company recognizes the rising consumer trend of eating out and is looking for ways to capitalize on the situation. NESCAFÉ is a well-known brand so awareness is the competitive edge in the coffee market. The health trend also is the opportunity for the product NESCAFÉ coffee. Many people are more take care of their healthy life. While the coffee has not received the positive health-related publicity of tea, its image of coffee became less and less resolutely unhealthy in recent years.
However, there is a general shift toward-consciousness, and NESCAFÉ coffee has done well in that aspect by having some of their products certified as the healthier option by the Health Promotion Board of Singapore. In additional, coffee can help to prevent various diseases, including Parkinson’s diseases. Coffee also used as an enema to treat some diseases such as cancer. Coffee enemas are used as a part of the “Gerson Therapy” that is cancer patient are treated with caffeinated coffee in the form of enemas every four hours on a daily basis. This kind of treatment is continues to be used at the hospital of the Baja California in Tijuana, Mexico. The next opportunity for the NESCAFÉ coffee is the cross-branding. NESCAFÉ coffee had diversified their beverage portfolio offers it the opportunity to develop brands from other categories in hot drinks.
Notably, it will be further develop its confectionery brands in other products along the lines of existing. Besides that, the company had also tried out some cross brand promotional activities like promoting NESCAFÉ coffee and Coffee Mate together in the NESCAFÉ dream couples contest. Worldwide NESCAFÉ coffee is the largest profit making category with different ranges of coffee starting from instant coffee specialties. With the effort, analyzing and learning from this huge and successful multinational corporation.
The term “threat” in SWOT analysis defined as the elements in the environment that could cause trouble for the business. The threat that existed that could affect the sales of NESCAFÉ is, firstly, the competition of the other companies that existed in the same industry. NESCAFÉ’s products are mostly coffee’s product. Thus, the products such like Old Town White Coffee, and some other tasty coffee such like Old Town Hazelnut White Coffee that produce by OLDTOWN™ strong competitor to NESCAFÉ in Malaysia. Beside this, the biggest competitor to NESCAFÉ could be Super Group Ltd from Singapore that is producing a several of coffee product, such as 3 in 1 brown sugar coffee, 3 in 1 rich coffee and 2 in 1 Kopi O. The price of products of Super Group Ltd also slightly lower than NESCAFÉ products, for example the NESCAFÉ 3 in 1 mild (30 x 20g) are sell in RM 10.99 in most case, but Super coffee 3 in 1 regular (30 x 20g) are sell in RM 10.50. As a consumer, they will go for the product that is cheaper usually. For OLDTOWN™, although their products are the highest price as compare to NESCAFÉ and Super Coffee, but the coffee that produces by this company is very rich, so as a consumer that chase for a rich taste of coffee, they will go for Old Town Coffee products.
Thus, if can be clearly state that NESCAFÉ is in a large competition with other companies in this industry. The threat for NESCAFÉ could also be the changing of consumer trend. Now a day, people are more concern of the health, so the coffee that contains caffeine will cause consumer to avoid it for the well-being of healthy life. Caffeine can consider as a kind of drug that it will cause addiction to it and fast or irregular heart beat rate. Other than that, 3 in 1 coffee also contain sugar that will cause diabetes (if high intake). So, as a consumer, that pay attention on personal and family health will avoid consuming the coffee. Other than that, consumer nowadays also prefer to enjoy a relaxing and luxury life, so they would rather sit under Starbuck or Coffee Bean or some other Café, enjoy a rich coffee such like cappuccino that made by professional machine, under a comfortable environment, than just make an cheap ordinary instant 3 in 1 coffee at home that without any milk foam on it.
The inflation in economy environment could affect the sales of NESCAFÉ products. This is due to the inflation will lead to increasing in cost of the coffee bean, sugar and milk which is the important raw materials for NESCAFÉ products. With the rose of the price of raw materials of NESCAFÉ, the cost of production of NESCAFÉ product will increase as well. Beside this, the rose of the price of fuel which just happen recent in Malaysia (increase of RM0.20 per liter), could bring a huge impact on NESCAFÉ products. This is because of the increasing in price of fuel lead to increasing of transportation cost as well, which will eventually increase the cost of NESCAFÉ products. Based on a consumer opinion, inflation that leads to rise of expenses will cause consumers to reduce their expenses on coffee product. Relationship between strength, weaknesses, opportunity, and threat Based on SWOT study, strengths and weaknesses are internal factors of NESCAFÉ that give advantages or disadvantages, and opportunity and threat are the external factors. It requires flexibility use between this four internal and external factors to maintain a brand perform excellent at the market.
The internal strength of NESCAFÉ can use to against the external threat. For example, strong brand name (Nestle) and mass market share because of high recognition of NESCAFÉ, this is what makes this brand win over all other competitor such as Old Town. Other than this, NESCAFÉ tend to provide and maintain good quality of its product (expertise agreed on 4-5 cups per day doesn’t affect the health state of a person), which can adapt to the changing consumer trend to a healthier life style. NESCAFÉ also good in promotion strategies which can continuously increase the sale of NESCAFÉ products which allow it adapt to the situation where inflation happen (increase of sales- increase of profit- cover the rise of cost during inflation).
The external opportunity of NESCAFÉ can be used to against its internal weaknesses. For example, NESCAFÉ as a premium trend allow the demand to its products to growth in a mature market (opportunity), with the base of high sales, the low margin profit of NESCAFÉ (weaknesses) wouldn’t cost losses in order to cover up the cost and expenses during the production of NESCAFÉ. Other than that, having coffee product to certified as a healthier option now a day (opportunity) can reduce the society health conscious on the caffeine which contain in the coffee (weaknesses).