Date post: | 06-Apr-2018 |
Category: |
Documents |
Upload: | ben-mponzi |
View: | 230 times |
Download: | 0 times |
of 14
8/2/2019 MBA-IB Group 6 Presentation
1/14
Group 6
Group 6presentation
Case
8/2/2019 MBA-IB Group 6 Presentation
2/14
Group Members
Group 6
Benedict Mponzi 1428
Esha Namusanga 1434
Queen Wakasenyi 1446 Jared Mushi 143
Joe Bendera 1202Flora Malla 1421
James Nyamryakunge 1436
Roll number
8/2/2019 MBA-IB Group 6 Presentation
3/14
Group 6
Background
In the mid-1860s, Henri Nestle (Henri), a merchant,chemist, and innovator experimented with various
combinations of cow's milk, wheat flour and sugar. The
resulting product was meant to be a source of infant
nutrition for mothers who were unable to breast-feed their
children.
In 1867, his formula saved the life of a prematurely born
infant. Later that year, production of the formula, named
Farine Lactee Nestle, began in Vevey, and the Nestle
Company was formed. Henri wanted to develop his ownbrands and decided to avoid the easier route of becoming a
private label. He also wanted to make his company a global
company.
8/2/2019 MBA-IB Group 6 Presentation
4/14
Group 6
How Nestle AchievedInternational Expansion
Nestle achieved international expansion through globaldiversification of offerings by having; 7 world wide strategic business units (SBUs)
E.g. Coffee & beverages, Chocolate, powdered milkconfectionery (sweets) & ice-creams.
5 regional organizationsE.g.. Network of factories in the Middle East: ice-cream
in Dubai, soups and cereals in Saudi Arabia, yogurtand bouillon in Egypt, chocolate in Turkey and ketchupand instant noodles in Syria.
Strong R&D Team of; Expatriates army of about 700 managers going
from country to country 18 different groups operating in 11 countries
International training center in Switzerland
8/2/2019 MBA-IB Group 6 Presentation
5/14
How Nestle AchievedInternational Expansion (Contd)
Group 6
They Sourced Assets, Not Just Products
By building plants abroad.
Through purchasing local companies. E.g Goplana in Poland
Through having a Flexible organization structure
Nestle adopts a matrix organization which is highly decentralized in
decision making.
SBU1 SBU2 SBU3 SBU4 SBU5 SBU6 SBU7
North America
EuropeAsia
Africa
Middle-East
SBUs
Regions
8/2/2019 MBA-IB Group 6 Presentation
6/14
Group 6
Nestles Branding strategy
Use ofNestles Brand Equity. Nestle hada brand power derived from the goodwill and
name recognition that it has earned over time
(Family of names strategy).
The Nestle brand itself had played a key role in the
company's globalization efforts. In 1996, about 40%
of the total revenues were generated from products
covered by the Nestle corporate brand. Nestle'slogo was an important part of the company's
corporate identity. The nest' was a graphic
translation of Henri Nestle's name, which meant
"little nest."..
8/2/2019 MBA-IB Group 6 Presentation
7/14
Life before Nestle.
Acquiring of Rowntree Brand When Nestle acquired Rowntree's brands in 1988, the major
challenges before Nestleaquired the company were:- Rowntree had a "one product, one brand" policy this ment that brands like Kit
Kat, After Eights, Smarties and Rolo were marketed with no mention of
Rowntree.
Rowntree's brands were not strongly managed European brands. Even though Kit Kat was a leading brand in UK, it was ignored outside the
country.In the early 1980s, Rowntree established Rowntree Continental Europe,
which handled business responsibilities outside the UK in Europe. However, this
did not benefit Kit Kat, which was launched in Europe by Rowntree Continental
Europe as a multi-local brand
After Nestle acquired the Rowntree brand, it instilled its brandingstrategies that were built around The Nest henceforth strategically
making the kit kat name into a household name consumer brand.
Group 6
8/2/2019 MBA-IB Group 6 Presentation
8/14
Does The company Nestle need to
have many brands? It doesnt have to have many brands, but it needs to manage how it roll outs
new products. Some of the benefits of having many brands include It makes acceptance of new product easy.
It increases brand image.
The risk perceived by the customers reduces.
The likelihood of gaining distribution and trial increases. An established brand name increases
consumer interest and willingness to try new product having the established brand name.
The efficiency of promotional expenditure increases. Advertising, selling and promotional costs are
reduced. There are economies of scale as advertising for core brand and its extension reinforces eachother.
Cost of developing new brand is saved.
Consumers can now seek for a variety.
There are packaging and labeling efficiencies.
The expense of introductory and follow up marketing programs is reduced.
There are feedback benefits to the parent brand and the organization.
The image of parent brand is enhanced.
It revives the brand.
It allows subsequent extension.
Brand meaning is clarified.
It increases market coverage as it brings new customers into brand franchise.
Customers associate original/core brand to new product, hence they also have quality associations.
Group 6
8/2/2019 MBA-IB Group 6 Presentation
9/14
Nestle Brands
Some of the Nestle Brands include;
Nescafe instant coffee
Perrier bottled water
Breakfast cereals including CheeriosKit Kat bars
Stouffers prepared meals
Bouitoni pasta and Maggi cooking sauces.
Pet food like friskiesBaby food like Nido
Group 6
8/2/2019 MBA-IB Group 6 Presentation
10/14
Nestle Brands (Contd)
Group 6
8/2/2019 MBA-IB Group 6 Presentation
11/14
Problems Associated with having
many Brands
Brand extension in unrelated markets may lead to loss of reliability
if a brand name is extended too far. An organization must research
the product categories in which the established brand name will
work. There is a risk that the new product may generate implications that
damage the image of the core/original brand.
There are chances ofless awarenessand trial because the
management may not provide enough investment for the
introduction of new product assuming that the spin-off effects fromthe original brand name will compensate.
If the brand extensions have no advantage over competitive brands
in the new category, then it will fail
Group 6
8/2/2019 MBA-IB Group 6 Presentation
12/14
How to strategically reduce many
brands in a company
Nestle had 7500 brands, they easily could cut down to 1300 by applying the following method ofbrand classification;
The above table with brand classification has both a one to one relation from one column to another
and has a one to many relation originating from Brand location based classification which has the
one relation to many classifications on column 2.
Using the above method of classification, if Nestle decide to cut-down its brands from 7500 brands
up to 1300 brands . All they need to do is cut from outside of the two sides of extremes i.e from
Local product brand and Global corporate brand and start working their way backwards.
That is cut from Local Product, Local Family ,Local corporate to Regional product
And also cut from Global Corporate ,Global Family, Global Product, Regional Corporate to
Regional Family.
Through using this method Nestle will be able to greatly reduce the massive number of brands that
they carry and just remain with the more important brands such as Regional product, regional family
and regional corporate that will be appealing to a particular region that has the same market trends.
Group 6
Brand Location basedclassification
Brand need basedclassification
Local Product
Regional Family
Global Corporate
8/2/2019 MBA-IB Group 6 Presentation
13/14
What companies should do if they
want to reduce number of brands
Relinquishing of the brand name rights. This is a
legal agreement to allow other parties to use your
brand name
Through Mergers which is basically, when two
companies become one. This decision is usually
mutual between both firms.
Through Acquisitions which is a corporate action inwhich a company buys most, if not all, of the target
company's ownership stakes in order to assume
control of the target firm.
Group 6
8/2/2019 MBA-IB Group 6 Presentation
14/14
Conclusion
Nestle management philosophy is to develop asmuch as can be decided locally, but the interestof the corporation as a whole has priority
Due to the industry Nestle is in, it is perhaps
undesirable for it to become fully global however. Nestles aim is to customize to the local tastes and
leave a lasting impression of The nest alwaystaking care of you.
GOOD FOOD, GOOD LIFE
Group 6