The marketing activities of nestle

The trade activities of nose1. INTRODUCTIONIn this report we argon elbow greaseing to investigate and analyse the market activities of NESTLE. We lease analysed the marketing strategies of nestle by identification of the Organisation Orientation, go throughing the bear on of the Marketing shuffle, SWOT comp end and Competitive Advantage.1.1 HISTORY OF NESTLE cling to is sensation of the major food and beverages fraternity in the world. It was established in 1867 by Henry snuggle, who was a trained pharmacist. The introduction of the company in the market was through the exploitation of an alternative source of infant victuals for mothers who were unable to breast feed and named it as Farine Lactee go up. He chose his surname come on which means a little nest for his companys name logo.In 1904 hold tight introduced its chocolates in the market. But when the availability of raw materials skipd during the First terra firma state of war, nest purchased lot of pe rformeries in U.S and amplificationd their intersection to tw grump as their pre-war end crosswayion. Immediately, after the end of the war consumers switched back their choice to fresh take out due to which snuggle recorded its first loss. However they stream edged their operations and brought harvest-tideion in line with gross gross revenue and thereby dropping the debts.The thirty-something saw come on introducing several(prenominal) freshly returns like Milo and Nescafe. clutch achieved considerable emergence after the end of Second World War becaexercising of diversification within the food sector. The gross sales of Nescafe instant c completeee quadrupled in the midst of 1960 and 1974.In 1980s hold tight drew flak from many organizations on account of promotion of infant formula over breast feeding which wholly(prenominal)egedly led to death of infants in less civilizeed countries. The ostracise of Nestle harvestings was suspended in 1984 after Nestle agr eed to surveil with the international code.Nestle had major acquisitions of the Italian mineral water company San Pellegrino, Spillers Pet Foods in UK in the year 1990s, and Ralston Purina in 2002. Nestle likewise formed a merger with Anglo-Swiss Condensed Milk guild with the force back of rig its improver range and merged its ice cream byplay with Dreyers in U.S.Since its entrance in the market, Nestle has prospered in various reaping innovations and air achievements due to which it had become the major Food and Nutrition Company in the world. In 2010, Nestle was excessively recognised as the top quaternary Innovative Company among the Innovative companies for food for by the Fast Company Magazine.Nestle has introduced a wide range of harvest-tides like chocolates, soups, coffee, cereals, frozen mathematical crossroads, yoghurts, mineral water, food harvestings, pet foods, pharmaceutical increases and even cosmetics in the family of NESTLE. They diversified beyond f ood indus label by acquiring a major destiny in LOral cosmetics and acquired an Ameri provoke pharmaceutical company, Alcon Industries. In every(prenominal) these overlaps one common outcome is the high up tint of NESTLE.There be several important rules in the companys scheme. Few of them are mentioned belowWhile sustaining a balance in terrestrial activities and harvesting lines, the firms goods are grown through innovation and restoration.The priority is revealn to Long-term prospective rather than to short performance.The aim is to deliver the best and most reliable harvest-times to pot2. bulge outment predilectionThere are contrary types of business tastes2.1 PRODUCTION ORIENTATIONBrassington Pettitt (200612-19) believe that product orientation emphasizes on availability and affordability of the products and thus production oriented companies concentrate on good production and scattering techniques. jobber (2001 4) says that production oriented focal poin t believes in attaining economies of scale as their primary coil goal by producing and a small range of products or defining business by its production facilities. In production orientation their devote out focus is on their real capabilities of production.2.2 PRODUCT ORIENTATION agree to Adcock et, al. (200117) product orientation is punishing on products rather than involve and wants of customers. Companies side by side(p) product orientation are beguileed in the tone of voice, design of products which deport greater value for money. Brassington Pettitt (200612-19) say that these companies assume that the customers are interested in the products and that they are interested in the quality.2.3 gross sales ORIENTATION fit in to Brassington Pettitt (200612-19) sales oriented organizations believes that the products are sold, not bought. They emphasize on personal exchange and other sales techniques, assuming that the consumers are reluctant to purchase. Adcock say that sales orientation concentrates on promoting the products and that this is effective wholly for short metre period.2.4 Marketing OrientationAdcock (2001) says that market orientation occurs when the customers identify the difference in a company and when all the benefits offered to the customers are measured. fit to Jobber (2001) marketing oriented companies focus on the customer needs and for them the opportunities arise from the changing needs of the customers or market.Brassington Pettitt (200612-19) believe that an organization which is concentrated in its marketing and production activities with the understanding of the customer needs and satisfaction is market oriented. The main utility of a company being market oriented is that it would ready a higher customer value and there would be a conformity in superior performance in the business.Nestle concentrates on their consumers and tries to understand their carnal and emotional desires. They admit a wide range of produc ts and consumed by all age groups. Nestle try to understand the economic, geographic and sociable factors which affects the diets of the consumers and try to concentrate on the nutritional and health value of the products. exercise Nestle have used their research and technological expertise to their ice cream products to lower the calories and fats and yet to have the same taste (http//www.nestle.co.uk/our nocks/productrange/icecream/). They have in any subject introduced lucre free products in their confectioneries like Polo and lower sugar products like Kit Kat Light.Nestle in any case have concentrated on the lower-income consumers and do their products available at affordable prices while providing a diet compensating the local dietary deficiencies and including relevant nutrition.Nestle also try to understand the motivatings, routines, decision fashioning and purchase habits of the customers by spending while with the great deal. Example Nestle employees spent three days living with people in suburbs of Lima in PERU to understand their anyday aspects of their life, and based on their understanding they sold relevant products in the local markets and stalls (http//www.nestle.com/Resource.axd?Id=602C42FE-04D6-4669-BEE1-1027492FE5E8). other example of Nestls consumer focus the launch of Jenny Craigs weight care programme in France on 8th surround 2010 (Press Release 2010, http//www.nestle.com/MediaCenter/PressReleases/AllPressReleases/Jenny_Craig_launch_in+Euro pe.htm? curb=2010) and they offer menus and lifestyle advise in reaction to individual consumer needs. gum olibanum its clear that Nestle is a Market Oriented company since they try to understand the customer or market needs and produce products therefore to achieve the organizations goals. And they believe that people are the main strength of the company. gibe to Narver and Slater (1990) marketing orientation comprises of three main components Customer, Competitor, and inter-functional coordination. Customer orientation includes all the aspects of buyers in the designated area and competitor orientation includes the information astir(predicate) the competitors in the targeted area whereas inter-functional coordination involves the delivery of superior value for the target customers by the efficient use of available resources.3. MARKETING MIXThe Marketing desegregate is a set of controllable, tactical marketing legal instruments that the firm blends to produce the chemical reaction it wants in the target market (Armstrong and Kotler, 2001). This is primarily used by faces to increase the get hold of of their products in the market by understanding the customer wants. close to of the marketing practitioners regard marketing mix as a tool as a tool for transaction marketing and the archetype for practicable marketing planningThe above fig describes how a company could by research and self- do adaptation empennage understand and develop products to grab the customers requirements. According to Baker (1999 303), by understanding and matching the needs of the customers efficient management of marketing mix is possible.3.2 COMPONENTS OF MARKETING MIX Impact, Positive and damaging3.2.1 PRODUCTKotler and Armstrong (2001) define a product as any entity that endure be offered to a market by a company for attention, acquisition, use or consumption that might satisfy the needs of their customers.3.2.1.1. harvest MixProduct mix is the total range of products that are manufactured by a company. The major aspects to be considered in product mix are explained below.Research on the reciprocal effects of brand extensions suggests that failure, poor quality, or low typicality of an extension has an adverse effect on the parent brand evaluations (Kumar, 2005183). In the case of Nestle, the sales of noodles dropped after it introduced Atta noodles in 1996 as the consumer response was adverse.A Nestle brand name on a product is a promise to the custo mer that it is safe to consume, that it complies with all regulations and that it meets high standards of qualityPackaging Packaging involves designing and developing a cover for a product in order to make it attractive to the consumers. Packaging was just a means for protecting the product in the past, but at present increase in competition has resulted in the need to divers(prenominal)iate the product from those of its competitors to attract the customers and to describe the features of the product in order to gain consumer recognition. hapless designs can be one of the reasons for decrease in sales of a product due to less customer satisfaction. Nestle uses very attractive incase as one of their main marketing strategies.For its efforts, Nestle has won several accolades such as the Silver Star and Best in category as Best Packaging Innovation leading to a significant reduction in household waste by the British Institute of Packaging for the Dairy Box biodegradable tray whi ch is manufactured by using re unexampledable resources.3.2.1.2. Product offshoot StrategiesThe emphasis in product portfolio analysis is on managing an real set of products in such a way as to maximise their strengths, but companies also need to case to bran-new products and markets for future growth (Jobber 2007405).The most efficient way for analysing the opportunities for growth in an organization is the Ansoff Matrix.3.2.1.3. Market PenetrationMarket penetration is the form of increasing its customer base in the living market by winning over the customer base of its competitors for get along growth by means of advertisements, promotion, price cutting, divergentiation and seeking new segments.This can be achieved by acquisitions in the case of Nestle, when it acquired Kit Kat from Rowntree in 1988 (http//www.thetimes100.co.uk/case-studykit-kat-revitalising-brand-leader7-52-2.php) and kraft paper Foods frozen pizza business in March 2010 (http//www.nestle.com/MediaCenter/ PressReleases/AllPressReleases/Kraft+pizzas.htm). Nestle became the 2009 processor of the year by growing sales in Nestles SAs operations in the various operations through growth and acquisitions.3.2.1.4. Product nurtureProduct using involves the development of new product ranges for an already existing market for further growth. One way of product development is replacement the old product with a newer magnetic variation. Another means of achieving this is to expand its product line thereby providing more choices to the customers.Nestle has opened a world-wide Research and Development Centre in January 2010 for developing a new propagation of Cereal based snacks and Biscuits3.2.1.5. Market DevelopmentMarket development entails the promotion of new uses of existing products to new customers or the marketing of existing products (and their current uses) to new market segments.Nestle has launched the Jenny Craig weight management programme which is an existing business for the p ast 10 years in the United States, Australia, Canada and New Zealand to the new market in France in March 2010.3.2.1.6. DiversificationDiversification can be achieved either with related products and markets or unrelated products that are totally unconnected with the existing products and markets.Nestls Product Diversification is clearly evident from its product portfolio where they have pet foods which are different from the other products.3.2.1.7. New Product DevelopmentDevelopment of new products is vital for the sustenance of any organization as it is essential for their growth. In order to develop a successful product, a company must(prenominal) have an understanding of its customers, the markets in which they operate and its competitors. The figure below shows the key steps involved in a new product development process.Idea GenerationThe new product development cycle starts with the agentration of an bringing close together of the product. The major sources of new product imaginations may be familiar sources such as the research and development team of the company or external sources like competitors, brainstorming sessions for customers, the suppliers and distributors of the company etc. who can all act as sources of ideas for the organization.Idea ScreeningThis leg involves the careful scrutinizing of the ideas from idea generation stage to select the good ones and drop others by evaluating them against definite general criteria.Concept Development and TestingIn this stage a concept of the screened idea is developed. A product concept is the comprehensive version of the idea stated in meaningful consumer terms (Armstrong and Kotler 2001269). Concept scrutiny involves the evaluation of the performance of the product concept by presenting it to the consumers.Marketing outline DevelopmentThis stage involves the development of a primary marketing strategy based on the product concept before introducing the product into the market. vocation Analysi sThis stage comprises of an analysis of the sales, costs and the projection of profits for the new product to find out whether it satisfies the needs of the company. If it does, then the product moves on to the next stage.Product DevelopmentIf the product satisfactorily passes the business analysis then it is sent for product development which involves the development of a physical product by the research and development wing of the company. Then this product may undergo rigorous testing to ensure the safety and power of the product.Test MarketingIn this stage, the product developed is introduced into a practical(prenominal) market segment. Test marketing lets the company test the product and its intact marketing programme- targeting and set strategy, populaceise, diffusion, determine, branding and packaging and budget levels.commercializationCommercialization of the product involves the introduction of the product into the market. The major factors to be considered in this s tage are the timing of launching of the product and the choice of markets to introduce the product.Nestle has been at the forefront of developing new customer- centric health products and their researches are aligned with consumer and business needs. For example, Nestle has made the vital breakthrough in Nutrigenomics, a study of effects of food and the constituents of food on gene expression. The researches in the field have enabled Nestle to achieve targets for developing a diet to manage canine osteoarthritis in an improved manner.3.2.1.8. sp refineliness Cycle of a ProductThe life cycle of a product consists of four stagesProduct developmentProduct introductionGrowth due dateDeclineProduct development stage starts with the generation of an idea for a new product by the company. Product introduction is the phase where the product is introduced into the market. For example, consider the case of Maggi noodles. Nestle India Ltd. (NIL) introduced Maggi noodles in India in 1982. With its introduction, NIL created an all in all new food category instant noodles in Indian market. Nestle attained the market leadership with this product in its category because of its uniqueness.Maggi NoodlesGrowth stage involves the period of the product being accepted by the customers and increase in profits of the company. The introduction of a new product can alter the structure of the market by creating new benefits (Shocker, Bayus, Kim 200429). At the time of its introduction in India, Maggi noodles enjoyed around 50 percent market package in its segment. Maturity stage is denoted by a fall in sales growth of the product. The profit also falls due to increase expenses incurred for marketing the product efficiently against its competitors. Decline is the stage where the sales of the product decreases and the profits fall drastically. In 1990s, Maggi faced a decline in sales owing to the increase in popularity of its competitors. It was also because of the change in formula of Maggi noodles. NIL reinstated the old formula in 1999 and also launched soups and grooming aids under Maggi Brand name after which the sales increase3.2.2. PROMOTIONStanton and Futrell (1987418), describe promotion as an important element of marketing mix which aims in informing and persuading the market about the products and services of the company.According to Baker (1999, 310) the mode of communicating the product offer which is made by a company to match the needs of the customers and to persuade them to try the product is Promotion. They feel that the significance of promotion increases when the distance between the producers and customers increase and as the arrive of customers increase. Promotion activity does not front on the demand even if the demand is high promotional activities should go on in order to keep the manufacturers name before the customers.Nestle uses promotion as one of the major source to reach their customers to make them aware of the different product s introduced in the market and the value of the products introduced.Promotion Mix according to Armstrong and Kotler (2001387) also called as marketing communication mix consists of all the promotion tools in a perfect blend which an organisation uses to promote its products.Nestle ad favors a promotion mix with a perfect blend of several different promotion tools to promote the value of its product and make the customers aware of their different products.3.2.2.1. Promotion ToolsPERSONAL SELLINGAccording to Stanton and Futrell (1987 418), personal selling is in the first place used when the market is geographically concentrated (Few customers) and when the products are custom made. It is define as a face to face communication with buyers in the aim of pursuing the customers to purchase by Simon(). Its a one to one marketing. Tele marketing, admittance drops inserts, Door to door selling are all techniques used in personal selling. advertAdvertising according to Groucutt (2005215) is to communicate to a peculiar(prenominal) audience to stimulate action and its success is in the way the right information reaches the right person at the right time. Majaro (1993) say that advertize is any paid form f non-personal communication of products, services or ideas through a commercial media. (Stanton and Futrell, 1987) Promotion through advertising is mainly done when the market is geographically dispersed or when the product is standardised.Nestls advertisements are puff up known in the market and they have made sure that the advertisements are attractive through all the possible media. lucre is one of the latest media used by nestle to promote their products, where they have different websites hosted for different products. Different strategies for each product like online competitions and distribution.HOW ADVERTISING WORKSTim Ambler and Demetrios Vakratsas have formulated a framework for studying how advertising works for a company.They have considered the inpu t to be advertising own and rivalrous brands. Scheduling the media and message contents are the motivation factors or triggers the consumers response. Cognition, the thinking dimension of a persons response, and affect, the feeling dimension, are portray as two major intermediate advertising effects (Ambler, Vakratsas, 199926)SALES PROMOTIONSales promotion represents non- media campaigns such as sampling displays, shows, exhibitions and contests (Majaro, 199335). Stanton and Futrell (1987418) believes that sales promotions one of the fastest growing promotional methods these days. Free samples, Money off coupons, extra value offers buy one get one free, bundling, perquisite points are all different methods used in sales promotion. Nestle also uses sales promotion as one of their promotion tools by offering programmes like every day eating coupon codes and discounts and offers for online obtain on nestle products.PUBLICITYPublicity is a promotional method where the organisation is not paying for the communication about its products and is benefiting from it (Stanton and Futrell 1987419). This occurs either through a non-personal news story appearing in a destiny medium or is delivered by a person in an consultation or a speech. Publicity is achieved mainly through public dealing activities. According to Jobber (2007) sponsorship provides more opportunities for publicity in the media.Nestle is a well known brand in the market and its fame describes its publicity and the further publicity occurs during various interviews of officials of nestle. Publicity for nestle also occurs during the launch of every new products and when the annual sale reports are published. This publicity obtained by nestle is not by paying any of the media.PUBLIC RELATIONS According to Groucutt (2005224) public relations is a means of communication used by organisations to deal flat with the customers and vice versa. There are different departments in organisations which deal with a ll issues or concerns of the company with any other organisation or individuals.Nestle, public relation activities is evident from how they try to communicate with judicature organisations as well as the customers about the different issues that they face. Through public relations nestle try to bring to the attention of all the customers and organisations interested about the various issues or concerns and the current approach they are pickings towards these concerns.3.2.3. PRICEPrice is defined as the value of a product that we get in return for all the effort that was taken for its production and also for marketing of the same product. Price is the revenue earner so it is considered as the odd one in the marketing mix. It is also considered as an important market tool which is visible to both customers and competitors (Baker 1985). The price of a product depends on a number of factors like, changes in technology, effect of suppliers, competitive pressure and the increasing price sensitivity of the customers. Price is also directly dependent on the demand of the product. If the demands increase the price will also increase and vice versa.Consumers generally show a keen interest in tracking the prices of the products which they usually purchase. This enables them to analyse the attractiveness of the product and be vigilant about the changes in price of the product, thus enabling them to comparability the prices of the product in various stores (Vanhuele and Dreze 200272)3.2.3.1. Pricing of the ProductCompanies usually do not set a single price, but rather develop a determine structure that reflects variations in geographical demand and costs, market-segment requirements, purchasing timing, order levels, delivery frequency, guarantees, service contract, and other factors (Kotler, Keller, Brady, Goodman and Hansen 2009). According to David Jobber, set of a product mainly depends on 3 factors cost, competitor and the market.COST point determineThe most comm on method of pricing of a product is cost oriented pricing, in which it is divided into full cost pricing which involves the calculating of cost of all labour and materials and direct cost pricing which involves the calculation of only those costs that are likely to rise as output increases.COMPETITOR ORIENTED PRICINGThe approach to pricing which only depends on the competitor rather than costs when framing a business is called competitor oriented pricing. Every consumer will judge the price of a product by comparing it with a similar product in the same range which is produced by their competitor (Kotler, Armstrong, Saunders and Wong 2001).MARKET ORIENTED PRICINGMarket oriented pricing is one of the important area which depends on competiveness of a product in the market. For a new product the positioning strategy controls the pricing and for an existing product price will depend on the strategic objectives.3.2.3.2. Price-Quality RelationshipsPrice is directly dependent on the qual ity of the product. As the quality of a product increases the price also goes up. Nestle is a quality focused company and hence to compete with current market it need to carry out the pricing process of the product very carefully. Nestle is a very successful company and all its products are at affordable prices.PRODUCT LINE PRICING just about of the companies usually develop product lines rather than single products. In product line pricing the management must decide on the pricing steps to set between various products in a line (Kotler, Armstrong, Saunders and Wong 2001). In product line pricing, cost difference between the product in the line, evaluation of customers and also the competitors products with small price difference is also taken in to account.EXPLICABILITYExplicability is defined as the capability of sales people to explain a high price to customer. In market customer demands the economic justification of product prices. If the sales people fail to give a clear idea o f the product development stages, it will reduce the value of product. As Nestle is very innovative it needs a high financial support for its RD and it is not easy to give idea about the product development costs to an ordinary customer.COMPETITION aspiration plays an important role in the cost consideration of a product in a business. The main competitors of Nestle are Heinz, Kraft, ConAgra, Mars Incorporated, Hershey, Cadbury, public mills etc. Since all their main competitors are also well branded, they cannot price a product without analysing the competitors pricing. But the main advantages behind their successful pricing are that they are very superior in its market position.NEGOTIATING MARGINSIn certain market customer expects a price reduction in some products. Competitive discounts, fast payment discounts an annual bulk bonus and other promotional allowances come under this category. Nestle and its negotiations with its suppliers made them to gain a good reasonable margin in all its goods.EFFECT OF DISTRIBUTORS/RETAILERSWell qualified suppliers and efficient retailers is also a factor which affects the price of a product. If a distributor supplies a product with high price or a retailer sells a product in high margin it will cause the variations in price of the products. Nestle itself agreed that their distributors are well developed and hence the company can control the price of its products.POLITICAL FACTORSNestle sometimes blames the policies of governments for its poor manifestation on the exports. Some of the government policies which results in increase in packaging cost makes the product less competitive in the global exportation market.3.2.4. PLACEArmstrong and Kotler (2001) describes place as the activity of a company to make the products available to the customers.3.2.4.1. Place StrategiesThe major factors to be considered while formulating a place strategy are Channels, Coverage, Assortments, Locations, Inventory, Transportation, and Logi stics.Channel distribution strategies deal with the decisions on making the products available to the target customers in usable condition. A channel of distribution is the combination of institutions through which a seller markets the products to the user or eventual(prenominal) consumer (Peter, Donnelly 2004145). As the time and finances required for setting up a channel of distribution are comparatively high, the place strategies are ofttimes critical for the success of a firm.The channels of distribution can be of two different types on the basis of the targeted consumer. It may differ when the end user of the product is a consumer or an organization, the Consumer Marketing Channel and the line of work Marketing Channel.Nestle adopts the consumer marketing channel where the products from the producer reaches the consumer through the wholesalers or retailers. Nestle has e-marketing for some of its products where the products reach the consumers directly from the producer.Accord ing to Donnelly (2004150), the channel of distribution strategic decisions are determined on the basis of the following factors. dispersion coverage requiredDegree of control desiredTotal distribution costChannel flexibilityDistribution coverage may deepen based on the features of the product, the market and the target customers. The company may opt for intense distribution, selective distribution or scoop shovel distribution.In the case of intensive distribution, the company tries to sell the product through the maximum number of retailers and wholesalers. In selective distribution, the company may limit the number of wholesalers and retailers which are the best in that market while in the case of exclusive distribution the manufacturing company may provide exclusive rights for distributing the product to only one or a few distributors.Nestle has adopted intensive distribution strategy in order to make its products available to a large customer base. Nestle products are availabl e through a large number of retail outlets. Besides this, Nestle has also launched an e-shop for promoting its confectionary in Japan which allows the consumers to buy Kit Kat chocolates online.The coverage of Nestle is world-wide as it has a wide distribution channel and several manufacturi