Sachith Marketing Task 1 PDF

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Executive Summary International expansion can be identified as one of the key objectives of the multinational companies in order to expand their business operations worldwide while increasing its business performance. Marketing Audit can be identified as a process of searching for window of opportunities in foreign market in terms of business expansion. Nestle can be identified as one of the global brands in the world which carrying out profitably operations in Sri Lanka for more than a century since its listing in the local market in 1983. Nestle is the leading Nutrition, Health and Wellness Company and enhances lives with science-based nutrition and health solutions for all stages of life, helping consumers care for themselves and their families (Nestle, 2017).

The main purpose of this report is to conduct a marketing audit for introducing Nestle Boost in Sri Lanka. Thus, author has done the situational analysis, while highlighting on major theories such as PEST, Porter’s Five Forces and SWOT to conduct internal and external business environment.

Moreover, Author has conducted a secondary research and referred to academic books, journals, and valid websites in order to gather information and statistics to make the marketing plan effective. The major findings can be identified as follows. ● There is a window of opportunity in Sri Lankan market for Nestle Boost to expand its business operations. ● The political environment can be identified as a threat for the business operations. ● There is an intense competition exist in the Sri lankan market.

Table of Content Executive Summary

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Table of Content

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1.0 Introduction 1.1 Background to the Company 1.2 Product portfolio 1.3 Terms of Reference 1.4 Source of evidence 1.5 Assumptions and Limitations

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2.0 Situational Analysis 2.1 Window of Opportunity 2.2 The Product/Service 2.3 Market Analysis 2.3.1 Primary Method

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3.0 Competitor Analysis 3.1 Porter’s Five Forces Analysis

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4.0 External Environment 4.1 Pest Analysis

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5.0 Internal environment 5.1 SWOT Analysis

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Conclusion

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References

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Appendices Appendix A

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1.0 Introduction 1.1 Background to the Company “Nestlé” is a Swiss based multinational company which was listed in local market in 1983 has been carrying out its activities successfully in Switzerland for at least more than a century (Nestlé, 2017). The company has a vast variety of products embedded in Switzerland market with a range of 64 different products. Nestlé has focused on enriching the lives of people via contribution of healthy and highest quality foods and beverages (Nestlé, 2017). By considering the influence it will have on the Sri Lankan local market in relation to the consumer consumption patterns. As a result of healthy living, purchasing patterns of customers have been varying

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significantly throughout the year. This has led the country to acquire a trend of social health consciousness followed by people of all ages. As stated by Lanka market research bureau, 43% of household income is spent on food and beverages (Department of Census and statistics, 2016). Moreover, the economic growth of the country has been increased by 7.5% in 2015 (Department of Census and statistics, 2016). Thus economic growth affects the purchasing patterns of consumers as they will experience an actual rise in their income. This can be clearly seen in consumers with middle level income. Accordingly, it is confirmed that customers in Sri Lanka are willing to spend more money on food and beverages leading the country to be one of the best places to establish food and beverage companies as it has a high demand among customers. Hence the author is planning to initiate an Importing business which imports an energy drink from Switzerland to Sri Lanka.

1.2 Product portfolio Shown below are the varieties of products available at Nestle.

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Source: (Nestle, 2017) Out of above mentioned brands, the one which promotes the healthy lifestyle is the boost energy drink and also it has been a successful product worldwide. Thus Boost was selected as the product to be launched in Sri Lanka as it fulfills the demand created among the middle class consumers.

1.3 Terms of Reference It is the purpose of this marketing audit to launch and promote Boost energy drink in Sri Lankan market for middle class consumers. Furthermore, the plan will also consist of a micro and macro analysis, which will deliver an insight in to Sri Lankan energy drink market along with its impacts.

1.4 Source of evidence Primary and secondary methods of research will be used to gather effective and accurate information. Primary methods will consist of having one to one sessions with potential

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consumers and also through carrying out surveys. Secondary methods will consist of reports of Sri Lankan consumer buying habits, Nestlé official website along with other suitable reports. 1.5 Assumptions and Limitations Assumptions identified of marketing plan are that it will aid in launching the Boost energy drink effectively and successfully in Sri Lankan Market. It will also assist in identifying the potential risks and benefits of the launch. It is identified that the limited time of one year to launch the product and also the influence of government and its regulations will be the limitations aroused in this plan.

2.0 Situational Analysis A situational analysis is carried out to identify the internal and external environment which the new brand should be sold in. 2.1 Window of Opportunity Purchasing habits of Sri Lankan are gradually shifting towards healthier choices. Consumers adopted vastly and quickly to healthier choices of products like green tea, fat free food items, diet cola’s, sugar free brews etc. Nevertheless, the flavors and taste of these products are

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problematic. (Liyanage, 2015) Nestlé’s Boost energy drink which includes 26 minerals and vitamins, proteins and antioxidants intent to keep you fit through the whole day in addition its chocolate flavored milk offers a better aftertaste. Nestle contradicts the Widespread fact that healthy foods lack good taste and it serves a niche market with it product boost. (Nestlé, 2017) This specific product was selected to be launched in Sri Lankan market because It will deliver the needed daily energy requirements at great taste. Boost is the precise product to fit the presented market Gap since nutritional drinks such as Nestomolt, Milo etc. does not contain the amount of vitamin and mineral that boost have. Thus the report intents to identify the most suitable marketing plan to launch boost in Sri Lankan market. A business to consumer model (B to C) based business plan will be developed. It is more feasible to import Nestlé’s boost to Sri Lanka as there are no manufacturing facilities to Produce the drink in Sri Lanka according to Nestlé’s nutritional ingredients standards. Thus when considering the above facts, it is evident that there is a market gap for a nutritious energy drink which delivers the daily energy requirements in an easy carrying container for both physically active individuals and also for busy office workers. Consequently, it the most innovative business idea to import boost drink from Switzerland to Sri Lankan market. 2.2 The Product/Service The “Boost Complete Nutritional drink” contains 26 vitamins and minerals, proteins and antioxidant making it an energy pack that can be consumed at any period of the day. (Nestle, 2016). It Is highly possible for boost to have the advantage of been the first mover of natural nutritional energy drink with a variety of ingredients packed. Boost also has different features to satisfy different consumer requirements. Given below is the Product portfolio of Boost. ● Boost Drink – extra plus energy for an active day ● Boost Plus Drink – supplemental nutrients for fast weight gaining purposes ● Boost High Protein Drink – increases your protein intake for the day ● Boost Glucose Control – best snack for consumers with diabetes ● Kid Essentials – a fully nutritionally complete drink

Moreover, through analyzing the market for energy drinks in Sri Lanka, it was identified that shops are loaded with drinks that has many harmful preservatives and chemicals to boost the metabolism for a short period. (DailyFt, 215) Furthermore, drinks such as Wild Elephant and

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Red Bull consist extreme levels of caffeine and taurine which will cause dreadful diseases in the long run. Milo, nestomalt and other milk beverages delivers a good taste but lacks nutritional benefits. Hence the demand for boost will be high as it can match with customer needs while providing nutritional benefits. 2.3 Market Analysis 2.3.1 Primary Method Description

Poor

Very Bad

Bad

Good

Very Good

Excellent

Customer Awareness Customer Satisfaction After Sales Service Product Quality Product taste Product Design Product Availability Flavors Availability Product Price Source: (Author’s work based on Survey)

The above table was created through the information gathered by selected set of 600 customers based on their consumption habits, income levels and also their ages. The ratings are given to each category by calculating the average likeness and perception of these individuals. Furthermore it was identified that most of the customers had an excellent satisfaction through the product Boost but the customer awareness was a slightly low when analyzed. After sales services were also satisfactory as the customers perceived it. It was identified that product quality was also very good and taste was exceptional. Product design and its availability were not bad but average. Flavors availability was also very good and product price is also agreeable (Refer to Appendix A for the Questionnaire).

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3.0 Competitor Analysis 3.1 Porter’s Five Forces Analysis Porter’s five forces analysis is used in order to define the rivals and obstacles for Boost to enter in to Sri Lankan market.

Five Forces Intensity of Rivalry

Current Marketplace Milo which is the most selling nutritional drink arouses competition. Direct competition aroused from artificial energy brews in Sri Lankan market. Ex: Wild elephant

Bargaining Due to middle class consumers are highly power of price sensitive they have buyers high power.

Influence on product Major threat for Boost will be Milo Conversely creating and developing a positive perception towards Boost brand image might take time

Huge supermarkets such as Cargills, Keells and Arpico will most probably sell boost rather than small

Strategy Used Boost is currently the only nutritional drink consist of 26 vitamins and mineral. Thus businesses have the ability to market the product as the best and no.1 nutritional energy drink in Sri Lankan market Businessperson can deploy terms and conditions with their outlets to support Boost to promote it among

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Even though the market consist of several alternatives at lower prices, none of these provides the nutritional value that boost deliver Bargaining As it is an importing business, maintaining Supplier good relationship with Power the supplier will be essential.

Threat of new Entrants

Sri Lankan marketplace is soaked with many commodities from small singular importers.

retailers as they may not be certain if the product will sell just after it is launched in the market

customers and increase sales

Formulas prepared for the beverage are produced in laboratories in bulks; therefore any variation in a single element in production will effect in a price upsurge.

Business person can sign agreements with their dealers; the firm is well established in many countries thus manufacturing can be subcontracted to different countries.

Consumers might find cheaper substitutes for Boost which does not deliver the similar nutritious needs.

Business person ought to practice economies of scale in importing; thus they can use pricing tactics and marketing promotions to discourage entering of minor competitors into the marketplace.

Source: Author’s work based on (Kotler and Armstrong, 2008)

4.0 External Environment 4.1 Pest Analysis The external environment comprises of all the external factors which are Political, Economical, Social, Legal and Technological aspects that can apply significant direct and indirect forces on both local and international marketing activities. (Worthington and Britton, 2006).

Factor

Impact on Nestle

Implications

Rating

Nestle could set up manufacturing plant in Sri Lanka and benefit from this subsidized prices.

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Political Environment Creating an economy that is self- Higher taxes should pay to the government sustained Low interest rates (11%) Health regulations imposed

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Government Rules

Rules related to trading in Sri Lanka will be harsher to safeguard local products

Can be identified as a threat

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Economical Environment Rising middle income households 11.2% increase in 2016 Economic stability - increase in consumers real income

Opportunity to improve sales Revenue of LKR 30.9 5 revenue by targeting billion with a growth of products focused at these 8.2% in end of 2015 target markets. Diversify Consumption habits provides more opportunities. Socio- Cultural Environment

Significant increase among health and nutrition products Improved Consumer Knowledge in provides an opportunity for Nestle terms of the ingredients Growing trend in a healthy lifestyle

Nestle should take this 5 opportunity to focus on healthy nutritional products such as Boost in order to build the tarnished image due to controversial incident happened due to Maggie.

Technological Environment Infrastructure (Ex: Machinery) Nestles research and available in the local market development laboratories are Online interaction of consumers highly invested in technology.

Positive impact on the 5 company. Technology may reduce costs in the long run.

Source: (cbsl.gov.lk, 2016) and (Nestle, 2017) Therefore, it can be identified that Nestle should effectively manage the external environmental factors in order to significantly improve revenue with the launch of Nestle Boost in Sri Lankan market.

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5.0 Internal environment 5.1 SWOT Analysis Internal environment comprises of the analytical assessment of an organization's inner environment with respect to its goals, tactics, performance, allocation of assets, structural sorts and political atmosphere. (Cherunilam, 2010) Weaknesses (W)

Strengths (S) ● Boost has high financial power because of its parent company Nestle. (Fortune, 2015) ● Nestle has strong brand image in Sri Lanka ● High global presence and large Market share

Opportunities (O) ● Purchasing patterns of Sri Lankans are shifting towards healthy living. ● Launching Boost in Sri Lanka will increase profits for Nestle

Threats (T) ●

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Global competition is high with brands such as Gatorade. Substitute products such as energy drinks.

“SO Strategies”

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Price is moderately high Sri Lankan consumers are moderately price sensitive

“WO Strategies”

Boost can use its strong financial strength and strong Nestle can manipulate prices brand name to enter the Sri through achieving economies of scale for products. Lankan beverage market. Nestle has created a brand image that suggests their products are healthy. Consumers strongly believe in this, therefore they are brand loyal.

“ST Strategies”

“WT Strategies”

Nestle should manage the selling Packaging locally through local price of Boost in according to suppliers. the amount consumers willing to Nestle can invest more on the pay. company’s online presence

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Depreciation of local Nestle can use its financial thereby overcoming the threat of currency, appreciation in strength to help widely distribute completion. US dollar. its products thereby reducing global competition.

Source: Author’s work based on (Nestle, 2017)

Conclusion The purpose of this marketing audit was to analyze the micro and macro environment in terms of introducing Nestle Boost to the Sri Lankan marketplace with the intention of aiming the rising middle class customers. Therefore, situational Analysis has been conducted, while highlighting on major theories such as PEST, Porter’s Five Forces and SWOT to conduct internal and external business environment. In conclusion, it can be identified that there is window of opportunity in Sri Lankan market for Nestle Boost to expand its business operations.

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References Cherunilam, F. (2010). Business environment. Mumbai [India]: Himalaya Pub. House. Ferrell, O. and Hartline, M. (2005). Marketing strategy. Mason, Ohio: Thomson/SouthWestern. Foster, R. (2016). Top 20 Consumer Market Research Questions | Inquisium. [online] Survey.cvent.com. Available at: http://survey.cvent.com/blog/best-practices-forconductingsurveys/top-20-consumer-market-research-questions [Accessed 12 Aug. 2017]. Liyanage, U. (2016). Sri Lanka's new mod-tradi consumer. Business Times. Mail Online, (2014). Energy drinks do as much harm as drugs, says health expert. [online] Available at: http://www.dailymail.co.uk/news/article-2542769/Energy-drinks-packed-sugarcaffeinedangerous-drugs-banned-schools-government-adviser-warns.html [Accessed 12 Aug. 2017]. Nestle.com, (2017). [online] Available at: http://www.nestle.com/brands/allbrands/boost [Accessed 10 Aug. 2017]. Sengupta, S. (2005). Brand positioning. New Delhi: Tata McGraw-Hill. Smart Insights, (2013). The Segmentation, Targeting and Positioning model. [online] Available at: http://www.smartinsights.com/digital-marketing-strategy/customersegmentationtargeting/segmentation-targeting-and-positioning/ [Accessed 14 Aug. 2017]. Stone, P. (2001). Make marketing work for you. Oxford: How To Books. Wedel, M. and Kamakura, W. (2000). Market segmentation. Boston: Kluwer Academic. Wood, J. and Wood, M. (2010). Michael Porter. Vol. 1. London: Routledge. Worthington, I. and Britton, C. (2006). The business environment. Harlow: Financial Times Prentice Hall. Jobber, D. (2010). Principles and Practice of Marketing. 6th ed. Berkshire: McGraw-Hill Education, p.260. Kotler, P. and Armstrong, G. (2008). Principles of marketing. 12th ed. Upper Saddle River, N.J.: Pearson Prentice Hall, pp.376,377,378.

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Appendices Appendix A

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