266693553 Marketing Analysis of Nestle PDF

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2014 Principles of Marketing: Final project

Faizan Zahid FA13-DDP BBA-012 Laraib Ansar FA13-DDP BBA-024 Maryam Razaque FA13-DDP BBA-019 1

Acknowledgements Praise and thanks to Allah, the lord of universe who is either of all knowledge and wisdom to mankind. We bow our head in gratitude to almighty Allah who blessed us with the capability to complete our project, which was a challenge for us.“We the group members would like to avail this opportunity to thank our course instructor of Principles of Marketing, Miss Tahira Umair for his cooperation and support as a teacher.” We feel pleasure in expressing heartfelt gratitude to our families for their encouragement affection, support, constant help and prayers at all times without which it was not possible for us to achieve this target

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Table of contents: Acknowledgements Executive summary______________________________________________________4 Company Introduction (history, mission, vision etc)__________________________________5 Company’s Marketing Department Hierarchy_______________________________________7 Company Business Portfolio_____________________________________________________8 Chosen Brand (Name, Logo, Launching Time, Slogan, Target Market, Value proposition)_____9 Current Marketing mix_________________________________________________________12 Customer – driven Marketing strategy (Which your Product follow)_____________________13 Apply BCG Matrix and Product market expansion grid on your chosen brand._____________14 External & internal factors affecting the brand ____________________________________17 SWOT analysis_______________________________________________________________20 Product classification, company Product line & product lifecycle_______________________23 Pricing Strategy ( Launching Period)______________________________________________24 Brand Positioning, Personality & brand strategy_____________________________________24 Channel of distribution_________________________________________________________27 Competitive advantage & Competitor Analysis_____________________________________29 Tools of promotion mix / IMC used by company for selected brand_____________________31 Current Advertising campaign (Preferably electronic Media Commercial)________________35 Conclusion__________________________________________________________________37 References__________________________________________________________________39.

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Executive Summary: This is an informative report in nestle Pakistan private limited, in this report we have described how nestle came into being internationally and in Pakistan. Through our research we found out how much Nestle cares about its customers. Good food Good life is the principal they always follow. We have described the marketing strategies nestle uses and we have explained their performance of nestle. Nestle Pakistan limited formally known as nestle Milkpak limited is a subsidiary of nestle a company of Swiss origin headquartered in Vevey, Switzerland. It is listed on Karachi and Lahore stock exchanges. For 5 years in a row the company has successfully placed itself amongst top 25 companies of KSE. Its principal activities are to manufacture process and sell food product

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Noodles, baby food, and infant formula milk and breakfast

cereals in Pakistan. Nestle is a low cost leader with its efficient operations hence it provides its customers with high quality products and sells them at a premium price. Therefore it is earning good profits. Nestle has set its manufacturing plants at in Karachi, Lahore, Islamabad and Kabirwala. The milk processing plant at Kabirwala district is the Nestlé’s world largest milk processing plant. When nestle introduced its products in Pakistan people were neither aware nor accustomed to them. Therefore nestle ran an extensive marketing campaign to educate people and create a need for its products. In this report we did several types of marketing analysis on Milkpak such as SWOT analysis, external and internal factors, brand personality, brand positioning, brand strategy etc.

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NESTLE MILK PAK Introduction: Nestlé Pakistan is proud of its commitment to excellence in product safety and quality and to providing value and aims to be the leading Nutrition, Health and Wellness Company. As a socially responsible corporate, we always focus on environment friendly operations, ethical business practices and our responsibility towards the communities. Nestlé in Pakistan is operating since 1988 under a joint venture with Milk Pak ltd and took over management in 1992. The company’s strategy is guided by Nestlé’s Corporate Business Principles which are in line with internationally accepted best practices and ethical performance culture. Nestlé’s existing products grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential is never sacrificed for short-term performance. The Company’s priority is to bring the best and most relevant products to people, wherever they are, whatever their needs are, and for all age groups. Nestlé Pakistan today is the leading Food & Beverages Company in Pakistan with key focus on Nutrition, Health and Wellness and reaching the remotest of locations throughout Pakistan to serve the consumers. Nestlé Pakistan also prides itself in being the leaders in Nutrition, Health & Wellness. Ever since 1867, when Henri Nestlé invented the first infant food, nutrition has been in our DNA. Today more and more consumers mirror our emphasis on nutrition, as they realize that food choices affect their health and quality of life. Nestlé Pakistan operates in many ways but people, products and brands are the main flag bearers of the Company’s image, and we continue to enhance the quality of life of Pakistanis.

History: 1860-1905 In the 1860s Henri Nestlé, a pharmacist, developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his mother's milk or any of the usual substitutes. People quickly recognized the value of the new product, after Nestlé's new formula saved the child's life, and soon, Farine Lactée Henri Nestlé was being sold in much of Europe. Henri Nestlé endowed his company with the symbol derived from his name. His family coat of arms, the nest with a mother bird protecting her young, became the Company's logo and a symbol of the Company's care and attitude to life-long nutrition. The Nestlé nest represents the nourishment,security and sense of family that are so essential to life.

1905-1938 5

In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, 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 Governmentcontracts dried up and consumers switched back to fresh milk. However, Nestlé’s management responded quickly, streamlining operations andreducing debt. The 1920s saw Nestlé's first expansion into new products, with chocolate the Company's second most important activity.

1938-1975 Nestlé felt the effects of World War II immediately. Profits dropped from$20 million in 1938 to $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, Nescafe, which was 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 a lot of mergers. Diversification came with a shareholding in L’Oreal in 1974.

1975-1996 Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé'simproved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. Nestlé's growth in the developing world partially offset a slowdown in the Company's traditional markets.

1996-2000 The first half of the 1990s proved to be a favorable time for Nestlé: trade barriers crumbled and world economic markets developed into a series of more or less integrated trading areas. The opening of Central and Eastern Europe, as well as China, and a general trend towards liberalization of direct foreign investment was good news for a company with interests as farflungand diverse as Nestlé. While progress since then has not been asencouraging, the overall trends remain positive. Nestlé opened the 20th century by merging with the Anglo-Swiss Condensed Milk Company to broaden its product range and widen its geographical scope.

2000-present: In July 2000, Nestlé launched a Group-wide initiative called GLOBE(Global Business Excellence), aimed at harmonizing and simplifying business process architecture; enabling Nestlé to realize the advantages of a global leader while minimizing the drawbacks of size. Nestlé was First to Produce: Infant milk, Condensed milk, Milk chocolate, Soluble coffee and Freeze-dried coffee.

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Company Mission and Vision Nestlé’s mission, in the words of our founder Henri Nestlé, is to: “...positively influence the social environment in which we operate as responsible corporate citizens, with due regard for those environmental standards and societal aspirations which improve quality of life.” -- Henri Nestlé, 1857. Lead a dynamic, passionate and professional workforce – proud of our heritage and positive about the future.

Meet the nutrition needs of consumers of all ages – from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage products of the highest quality.

Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic, and environmental sectors of Pakistan.

Hierarchical details of Marketing Department Nestle is a big name and it is one of the best brand of the country having the largest market share in milk industry in Pakistan. It is not only one person who is marketing the milk pack everyone who is part of Nestle is marketing it. If we make the hierarchy of the marketing of Nestle Milk pack we will find out that there is a brand manager who is responsible for all activities that will take place in the marketing department under him is sub brand manager who is responsible in the absence of the brand manager. They are the top management and mostly decide what to do and how to do. What steps should be taken to do the marketing. Under them there is a whole marketing team who work according to the instructions which they have got from the top management. This team is further divided into sub teams. All the decision regarding the T.V commercials, radio, news paper and billboards are decided by the brand manager on the advice and on the bases of statistical calculations. For example for placing a bill board all calculations are made that what size of billboard will be suitable, where should be it place so that is well seen, how much should be spend on it either it is in our budget or not. All these things are taken in account and a lot of thinking is done before applying the idea.

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Business Portfolio Nestlé is committed to the following Business Principles in all countries, taking into account local legislation, cultural and religious practices: 1.   

Ambient dairy Milkpak Nido Every day

2.    

Chilled dairy Nestle plain yogurt Nestle Dahi Nestle zeera raita Nestle podina raita

3. Bottled water  Nestle pure life mineral water 4. Culinary and food  Maggi 5.  6.    

Baby food Cerelac Breakfast cereal Nestle koko crunch Nestle milo Nestle corn flakes Nestle fitness

7.   

Coffee Nescafe classic Nescafe gold Nescafe 3in1 coffee

8. Confectionary 8

 Nestle crunch  Nestle kitkat  Chosen Brand:

Milkpak.

Brand Logo: Brand logo is a stick drawing of a home with MILKPAK written under it, which totally indicates that

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Launching time: Milkpak was therefore incorporated in January 1979 and began commercial production in November 1981. In 1984 Milkpak started marketing the Frost line of fruit juices which had been introduced a few years earlier by Packages Ltd. Nestle Milkpak was launched almost three decades back and since then it shares the most market share.

Slogan: “yehi hai Doodh ka khalis maza”

Target Market: Geographic Segmentation: Geographic segmentation approach markets are divided into different units these units may include nations states, countries or even may neighborhood consumer often have different buying habits depending upon where thy reside Geographically Nestle has been very successful in 10

targeting those areas where its competitors are not easily available. So Nestle Delight will have an advantage over its competitors in this case of all purpose milk. Nestle can use its current supply chain to deliver the milk Fto its target markets. A large segment belongs to the northern and rural areas of Pakistanwill be covered by Nestle because of strong distribution network. There is a gap in the supply cycle of milk in some critical situations when shortage occurs due to short of raw material supply. Province wise Segmentation:    

SINDH PUNJAB BALOCHISTAN NWFP

Demographic Segmentation: Dividing the market in the basis of demographic variables such as age sex, family size, education, income, and social classes are called demographics segmentations. Nestle is currently targeting house wives, people of all ages especially growing children on basis of its purest form of milk. Young mother’s segment should be addressed for the better growth of their children because the purest form of milk. So, Nestle fulfill the need of complete healthy and nutritious food for everyone in family. Youth is to be addressed with respect to the energy they need to perform their daily tasks.

Age

Gender

Social Class

Occupation

Income Range

4-20

Teen Ages

Middle & Upper

N.A

N.A

20-50

MALE

Upper Upper, Upper Middle, Upper Lower,

Self-employed, Job Holders

50,000-250,000 per month

20-50

MALE

Middle Upper, Middle Middle

Job Holders, Self-employed

10,000-50,000 per month

20-50

FEMALE

Upper Upper, Upper Middle, Upper Lower,

Housewives, Job Holders

50,000-250,000 per month

20-50

FEMALE

Middle Upper, Middle Middle

Housewives, Job Holders

10,000-50,000 per month

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Behaviorist Segmentation: Dividing consumer into groups according to their uses loyalties or buying responses to a product is behaviorist segmentation for example product of brand usage degree of usage are combined with demographics and psychographic criteria to develop profiles of market segments Nestle has an advantage that they have already got a strong brand image. People are loyal to this brand, making use of which Nestle can specially target this segment & offer them any new product or highlight any feature into marketing campaign to sell more.

Customers Profile: Families, children, Females House wives between the ages of 25-35 who are conscious about health of their children. NESTLE is focusing People as a whole regardless of demographic, psychographics and geographic. The main target of the firm is PEOPLE. This can be seen from their media and hoardings. Even on the packing design one can see the FAMILY, which focuses all the age groups.

Current Marketing Mix:

Product: Quality product, Product style and logo, Product life cycle.

Price: Competition based pricing. Milkpak is holding a large share in the market due to its quality at same price as compared to competitors.

Place: Milkpak is not sold directly to consumers and the complete distribution process is followed. It uses indirect channels for distribution like:  Manufacturer  Distributor  Wholesaler  Retailer  Consumer 12

Promotion: Nestle focuses on health conscious people in their advertisement. Marketing Strategies: Marketing programs of Nestle Milkpak Ltd. are very influential one. Whenever new products or new packaging of existing product is launched; it is properly communicated through an orchestrated promotional plan like events or sponsors, music programs are sponsored, point of purchase and point of sales materials are properly displayed at visible places of retail outlets. In this way, proper awareness about the project are created and the sales are stipulated. Supporting Activities In supporting activities Nestle Milkpak Ltd. is having competencies in procurement, technology development, human resource management and infrastructure. So far as technological development is concerned, Nestle Milkpak Ltd. has the advantage of technical knowhow got from Nestle V.A. Switzerland. Management of human resources at Nestle Milkpak Ltd. is very good. Newly recruited employed are trained as per requirement. Quality control and information management are contributing a lot in making the infrastructure of Nestle Milkpak Ltd. very effective and efficient. Capacity Increase of Milk Powder Line at Kabirwala Factory Kabirwala Milk Powder Plant which began production in September 1996, doubled its capacity in February 1999. A new NIRO evaporator was installed to meet increased processing requirements during the coming years.

Customer driven Marketing strategy: Nestlé is an organization working globally. As the operations of the organization areextended in almost all countries, it is not doubtless at all the competitive focus must be at the heart of the company’s international strategy. Nestlé’s competitive strategies are closely affected with foreign direct investment (FDI) in milk, dairy, beverages and other food businesses. Nestlé has an objective to balance sales obtained from low risk and low growthc ountries of the developed world with high risk and potentially high growth markets of underdeveloped or developing countries i.e. Africa and Latin America. Nestlé identifies the potential profits from these high-risk countries, but doesn’t take unnecessary risks just for the sake of growth. This strategy and process of circumventing keeps growth steady while maximizing shareholders‟ value.

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BCG Matrix:

Stars: The products with high market share and high market growth are categorized as star products of the company. This means that star products can be seen as market leading products. These products will need a lot of investment to retain their position, to support further growth as well as to maintain its lead over competing products.

Cash Cows: The products with high market share and less market growth are categorized in cash cows. This is due to less competitive pressures with a low growth market and they usually enjoy a dominant 14

position that has been generated from economies of scale. Cash cows are still generating a significant level of income but are not costing the organization much to maintain.

Question marks: These products prove to be tricky ones for product managers. These products are in a high growth market but does not seem to have a high share of the market, hence are labeled as question marks.

Dogs: Product classified as dogs always have a weak market share in a low growth market. These products are very likely making a loss or a very low profit at best. These products can...