Principals of Marketing

GROUP MEMBERS

FARHAN JALIL– B-18532

MUJAHID IQBAL– B-18560

Marketing Project on Nestle

 ORGANIZATIONAL HISTORY:

NESTLÉ IS A MULTINATIONAL PACKAGED FOOD COMPANY FOUNDED AND HEADQUARTERED IN SWITZERLAND.

IT RESULTED FROM A MERGER IN 1905 BETWEEN THE ANGLO-SWISS MILK COMPANY FOR MILK PRODUCTS ESTABLISHED IN 1866 AND THE FERINE LACTÉE HENRI NESTLÉ COMPANY SET UP IN 1867. 

Nestle Company in Pakistan

THE COMPANY, FORMERLY KNOWN AS NESTLE MILKPAK, LTD., WAS FOUNDED IN 1979 AND IS BASED IN LAHORE, PAKISTAN. NESTLE PAKISTAN LIMITED IS A SUBSIDIARY OF NESTLE S.A. IT OPERATES IN SHEIKHUPURA, KABARIWALA, ISLAMABAD AND KARACHI.

The BCG Growth share Matrix

ANALYZE ITS CURRENT BUSINESS PORTFOLIO AND DECIDE WHICH BUSINESSES SHOULD RECEIVE MORE OR LESS INVESTMENT,

“AND”

DEVELOP GROWTH STRATEGIES FOR ADDING NEW PRODUCTS AND BUSINESSES TO THE PORTFOLIO, WHILST AT THE SAME TIME DECIDING WHEN PRODUCTS AND BUSINESSES SHOULD NO LONGER BE RETAINED. HOW TO PREPARE THIS MODEL?

THIS CATEGORIZES THE PRODUCTS INTO ONE OF FOUR DIFFERENT AREAS, BASED ON:

MARKET SHARE – DOES THE PRODUCT BEING SOLD HAVE A LOW OR HIGH MARKET SHARE?

MARKET GROWTH – ARE THE NUMBERS OF POTENTIAL CUSTOMERS IN THE MARKET GROWING OR NOT

The four categories can be described as follows

DOGS / SHRINKERS (LOW MARKET SHARE / LOW MARKET GROWTH)

CASH COWS / BANKERS (HIGH MARKET SHARE / LOW MARKET GROWTH)

STARS / GROWERS (HIGH MARKET SHARE / HIGH MARKET GROWTH)

QUESTION MARKS/MAYBES/PROBLEM CHILDREN (LOW MARKET SHARE / HIGH MARKET GROWTH)

Star Category Nestle Milkpak

Pure life

Nido

Cerelac

Nestle Fruita Vitals (Necter Juices)

Question Mark Category? Everyday

? Milkpak Cream

Cash Cow Category$ Nestle Dahi

$ Maggi

$ KitKat

$ Polo

Dog Category

Nestle Koko Crunch

Nestle Cornflakes

Milo

Nestle Raita

SWOT Analysis of Nestle, the popular food brand:

Since its formation, Nestle has made a number of corporate acquisitions and

is also listed as the top most profitable corporation in the world. So, keeping

these points and impressive figures in mind, let’s do a SWOT analysis of

Nestle, to get a better perspective of the strengths, weaknesses, opportunities

and threats to this popular food brand.

Strengths The multinational company is successfully operating in more than 100

countries and has an unmatchable distribution channel around the world.

To maintain its leading position in the market, Nestle has not only been forming partnerships with other leading companies, but is also acquiring several others, resulting in remarkable growth.

Nestle is a reputable brand and is well-known almost everywhere, as its products are used by millions of people each day.

Weaknesses

The next step to SWOT analysis of Nestle is its weaknesses:

Perhaps the biggest weakness is their inability to provide consistency in the quality of their food products, as Nestle often has to call in many products due to poor supplies or contamination, hurting the image of the company.

Nestle has faced a lot of criticism on a variety of issues, such as the horsemeat scandal and child labor, which it has not been able to avert.

Opportunities STARTING WITH THE EXTERNALS TO SWOT ANALYSIS OF NESTLE,

LET’S TAKE A LOOK AT THE OPPORTUNITIES THE COMPANY HAS:

THE INCREASING DEMAND FOR HEALTHY FOOD PRODUCTS HAS OPENED UP AN IMMENSE MARKET FOR COMPANIES. NESTLE IN RESPONSE TO THE HEALTH TREND TRIES TO INTRODUCE HEALTHIER FOOD PRODUCTS.

NESTLE IS ALREADY ENGAGED IN PARTNERSHIPS WITH A NUMBER OF MAJOR COMPANIES, SUCH AS COCA-COLA, AND SEVERAL OTHERS, OPENING DOORS OF OPPORTUNITIES FOR THE COMPANY

Threats AND FINALLY, THE FINAL PART TO COMPLETING SWOT ANALYSIS OF

NESTLE IS THE THREATS:

THE BRAND’S IRRESPONSIBILITY TO RUN THOROUGH QUALITY ASSURANCE ON ITS PRODUCTS RESULTED IN PROVIDING CONTAMINATED FOOD AND OTHER PRODUCTS ON THE MARKET, WHICH CAN HURT THE REPUTATION OF THE COMPANY AND LEAD TO LOSSES.

NESTLE IS THE LEADING SUPPLIER OF CHOCOLATE AND COCOA PRODUCTS. THE INCREASING TREND TOWARDS HEALTHY EATING WILL RESULT IN MAJOR DECLINES IN DEMAND.

THE DEMAND FOR RAW FOOD IS EXPECTED TO INCREASE AS POPULATION AND ECONOMY GROWS. AS A RESULT, NESTLE WILL HAVE TO FACE HIGHER COSTS AND TIGHTER MARGINS.

Market Segmentation:

THE MARKETING CONCEPT ASKS FOR UNDERSTANDING CUSTOMERS’ REQUIREMENTS AND SATISFYING THEIR REQUIREMENTS AND NEEDS BETTER THAN THE OTHERS DO. BUT MANY CUSTOMERS HAVE DIFFERENT REQUIREMENTS AND IT HARDLY CHANCE TO SATISFY ALL CUSTOMERS BY TREATING THEM SAME JUST LIKE. MARKET SEGMENTATION IS THE SEARCHING OF PART OF THE MARKET THAT ARE NOT SIMILAR FROM OTHER.

Users markets can be divided on the basis of these customer characteristics.

1. Geographic

2. Demographic

3. Psychographic

4. Behavioral

Geographic Segmentation:

THE GEOGRAPHICAL VARIABLES HAVE BEEN USED TO SEGMENT MARKETS IN FOLLOWING WAYS:

AREA

CITY

REGION

Demographic Segmentation

In demographic segmentation, the market is divided into groups on the basis of variables such as age, gender, income, occupation etc. These demographic variables are so popular with marketers so that they are often associated with the consumer’s needs and wants. Segmentation variables are easily measurable. Here are the demographic variables have been used to segment markets.

Nestle Slim Milk categorizes its target on the following criteria.

Age

Gender

Occupation

Income

Psychographic Segmentation: LIFESTYLE

PERSONALITY

OCCASIONS

BENEFITS:

USER STATUS:

USAGE RATE:

LOYALTY STATUS:

READINESS STAGE:

ATTITUDE TOWARD PRODUCT

TARGETING

IN GEOGRAPHIC SEGMENT THEY TARGET CITIES WITH A RAMPANT IT CULTURE.

IN DEMOGRAPHIC SEGMENT THEIR MAIN TARGET IS YOUNG WORKING PROFESSIONALS (20 TO 40 YEARS).

IN PSYCHOGRAPHIC SEGMENTATION THEY TARGETED A2, B1 AND B2 SOCIO-ECONOMIC CLASSES.

IN BEHAVIORAL SEGMENTATION IT WAS FOUND THAT THEY WERE TARGETING THE FIRST TIME USERS AND ALSO THEIR REGULAR USERS.

POSITIONINGPoint Of Difference Higher price (Rs.80) Lower price (Rs.45)

Differentiated

: NESTLE ALSO CHOOSE THE DIFFERENTIATED MARKETING. IT PROVIDES DIFFERENT PRODUCT FOR MANY SEGMENTS BASED ON DIFFERENT AGES, OCCUPATION, SEASON AND CLIMATE .

Marketing Mix(4Ps)The Marketing environment at Nestle focuses on the principle of satisfying consumer needs. The overall trust of consumers in Nestlé’s brands and products comes from a quality image that has been continuously strengthened for over 130 years.

Nestlé strives to increase this trust through its commitment to environmentally sound business practices. For this purpose Nestle:

Bases environmental claims in advertising, promotional material, labeling and corporate communications on solid scientific evidence;

• selects materials and printing methods for merchandising materials such as:

• consumer offers,

• in-store promotions,

• Displaying materials, leaflets and printed materials in light of environmental considerations.

Product

• NESTLE ORANGE JUICE

• FLAGSHIP BRAND (NUMBER 1 BRAND IN JUICES)

• 100% PURE, NO PRESERVATIVES, NO ARTIFICIAL FLAVOR ADDED

Price• 1000 ml Rs. 175

• 200 ml Rs. 25

PlaceAvailable at all major cities such aso Lahoreo Islamabado Multano Faisalabado Gujranwalao Karachi

Promotion:• In order to promote their products Nestle Juices uses the following medium.o Bill boardso Above The Lineo Below The Line

Target market:The target market of Nestle juices includes:• Both male and female between the age group of 19-31• Health conscious people• Socio eco class SEC A and B• Urban areas• Career oriented and life starters

Competitors• Shezan All Pure• Haleeb Good Day

Sales GrowthNestle orange juice has been a flagship brand of Nestle juices since years. However, their sales declined to -1 % as compared to last year.

Last year growth in sales This year growth in sales20% 19%

• As per the meeting with the Brand manager juices, we got an insight about customer attitude, competitors, product development etc.• Total contribution of orange juice is 20% to revenue in the juices category; however the overall market share of juices is 60%.

Customer AttitudeThe main concern that the consumers of Nestle Orange juices have regarding the juice is related to the purity of the juice. The factor and the feature that they are most concerned with is that is the juice 100% pure and healthy?

The responses of prior studies reveal:• People actually think that fruit juices are not that great for them because of the fructose (fruit sugar). They think that when this fructose is processed its pure sugar gets TERRIBLE for their health. So the solution to them is that if they want to have a taste of orange they should try having an actual orange because the fiber in the pulp skin and roughage will slow the absorption of the fructose.