nestle final report
DESCRIPTION
MarketingTRANSCRIPT
History of nestle
Henri Nestle established Nestle in 1867 in Switzerland. He developed a baby formula that could
save life of children .The Company formed by the 1905 merger was called the Nestlé and Anglo-
Swiss Milk Company. By the early 1900s, the Company was operating factories in the United
States, Britain, Germany and Spain. In 1904, Nestlé added chocolate to its range of food
products after reaching an agreement with the Swiss General Chocolate Company. After World
War-I the demand of products was doubled. Two of its factories in Sheikhupura and Kabirwala
are multi product factories.
Sheikhupura factory
The Milk Pak Sheikhupura factory had commenced operations in 1981 as a producer of UHT
milk. In 1988, the existing production facility of Milk Pak in Sheikhupura became a part of
Nestle Milk Pak.
Kabirwala factory
In 1990 KDL merged with Nestle. The factory in Kabirwala is the largest milk plant in the Nestlé
world. Through its effective marketing and a vast sales and distribution network throughout the
country, it ensures that its products are made available to consumers whenever, wherever and
however. It is a food processing company, registered on the Karachi and Lahore stock exchanges
and operating in Pakistan since 1988 under a joint venture with Milk Pak ltd and took over
management in1992. For ten years in a row, the company has won a place among the top 25
companies of the Karachi Stock Exchange.
Mission statement
Wherever you live only Nestle can provide the best and most relevant food and beverage
products to meet your needs throughout your day, throughout your life. The Nestle Network icon
will take you on the journey of discovery through our world of food. Nestle strive to bring
consumers foods that are safe, of high quality and provide optimal nutrition to meet
physiological needs. In addition to Nutrition, Health and Wellness, Nestlé products bring
consumers the vital ingredients of taste and pleasure.
1
Vision statement
The Nestle vision is to be the leading health, wellness, and Nutrition Company in world. Nestle
Pakistan aims to meet the various needs of the consumers by marketing and selling food of a
consistently high quality.
Core values
Respect
Team work
Proactive
Passion
Integrity
Trust
Humility
Ownership
Result focus
Openness
Business objectives
Sell high quality
Making innovation
Satisfy customer needs and wants
Profit maximization
High market share
2
The major objective of the company is to sell high quality, innovative and superior product
which satisfy needs and wants of consumers. Nestle not maximize profit through high market
share but use maximize customer’s satisfaction. Nestle earns profit through satisfaction of
consumer.
Diversification
Nestle is a diversified company because it has many business in all over the world
Nestle company provides good food products only.
Organizational structure
Nestle is decentralized. The reason is that it give its employee a degree of freedom. Non
managerial employee can easily convey their suggestions to the top level manager. There is a
simple network of lose relationship.
Three important points of de-centralized structure
Structure is open and flexible
No clear and precise duties
No strict adherence to explicit job arrangement
Market offerings
In market Nestle company offering different products.
Liquid Group
Powder Group
Maggi Noodles
Cereals and Baby Food
Product Mix
Product Line Liquid Group Powder Noodles Cereals &
3
Group Baby Food
Product Line
Length
Milk Pack Nido Maggi Noodles Cerelac
Water Everyday Koko crunch
Juices Nescafe
Nesvita
Milo
Product Depth
1 Liter 1 Kg Large Packet
Half Liter 0.5 Kg Small Packet
Small Packets
Nestle milk
In 1988, the existing production facility of Milk pack in Sheikhupura became a part of Nestle
Milk pack. The Milk pack Sheikhupura factory had commenced operations in1981 as a producer
of milk.
In 1986 Milk pack Ltd. acquired the services of Kabirwala Dairy Ltd. For co packing of UHT
milk under the brand name milk pack. Nestle Milk pack acquired KDL in 1990.Nestle Milk pack
Ltd. is the market leader in food and beverage industry. They are producing high quality well
known brands. Nestle says we want you to be able to make healthier choices for you and your
family.
Milk pack
1 liter pack
½ liter pack
¼ liter pack
4
Production plant
Production plants of Nestle are in following:
Sheikhupura Factory
Kabir Wala Factory
Milk collection center
The core raw material of Nestle Milk pack is milk. So the company has twenty-five milk
collection centers in Pakistan.
Village Milk centers 2273
Sub centers 583
Main Centers 23
Designing processes
Milk collection
Reception
Storing of milk
Standardization
De-creaming
Pasteurization
Evaporation
Spray drying
Cooling
Packing
5
Drying
Brand name of products
Milk Dairy and Chilled Dairy Products
1. Nesvita
2. Cerelac
3. Nescafe
4. Milo
5. Nestle yogurt
6. Nestle every day
7. Nestle raita
8. Nido
Nestle pure life
Nestle Pure Life was first launched in 1998
Purpose was to meet the global need for a safe drinking water
Pleasant taste at an affordable price
Mission statement
Nestle believes that research can help them to make better food which can help people to live a
better life.
Vision statement
The Nestle global vision is to be the leading health, wellness and Nutrition Company of the
world
6
Juices
Juices are 100% pure. A delicious and easy way to get refreshment.
Maggi Noodles
Maggi noodles are part of the Maggi family, a Nestlé brand of instant soups, stocks, and
noodles.
In 1982, Nestle Company introduced this Maggi to India and it is going good till now.
In1992, KDL started the production of Maggi Noodles.
Cereals and baby food
Choosing the best nutrition for your baby can be difficult and confusing and you always
wonder if it’s just right.
NESTLÉ KOKO KRUNCH is a delicious cereal with a rich chocolate taste that kids
love.
Product life cycle stages
Almost All products are on maturity stage like
• Nestle milk pack
• Nestle pure water
• Milo
• Nesvita
• Coffee
• Cerelac
• Juices
• Nido
7
One product is on beginning stage
• Crunch
4 P’s
Product
Product is anything that can be offered to a market for attention, acquisition, use or consumption
that might satisfy a want or need. Broadly defined, products include physical objects, services,
events, persons, places, Organizations, ideas, or mixes of these entities. The Nestlé research and
development centers have two main tasks to create new products and manufacturing processes
and to improve those that already exist. These centers play a key role in product safety and
quality and also have their role in conserving resources and protecting the environment.
Quality control
Procedure to avoid maximum limit of expiry/damage
Reduce the sales return
Losses
Quality is the cone competitive priority of Nestle Milkpak Ltd.
Nestle Milkpak Ltd pays special attention for maintaining consistent quality. They have special
sort of equipments and process which facilitates in maintaining a consistent quality. So the each
and every unit of its product equally satisfies its customers.
Packaging
Packaging serves a major role in our daily lives. It protects food products from spoilage and
ensures safety from manufacture through storage, distribution and consumption. Packaging may
also provide tamper-evidence features. It communicates information, including nutritional
information and serving instructions, and provides the convenience demanded by today's
consumers.
8
It is Nestlé's objective to develop safe and wholesome packaged foods using the most efficient
and appropriate packaging materials available, while, at the same time, satisfying consumer
requirements and expectations. For Nestlé, this is particularly important in packaging. Concern
for the effects of packaging on the environment is forcing it to look for new solutions and to
consider their interaction with our biological product food. Packages Pvt. limited is responsible
for the packaging of nestle products.
Price
Prices are set on the basis of
Quality management
Brand position
PPP (popular position product)
Price is the sum of all the values that customers give up in order to gain the benefits of having or
using a product or service. It’s a very powerful tool at the disposal of an organization to
differentiate its offerings.
Pricing strategy
Nestle pricing is an important strategic issue because it is related to products Position. Nestle is
basically using psychological pricing strategy as they are earning huge profits, approximately
30% on their products. People believe in nestle hence this aspect gives nestle a competitive
advantage being a market leader to set its prices high. The main thing behind the success of
nestle is they keep an eye on their customers and accordingly they change the price. People have
trust in nestle that is the reason they are willing to buy nestle products again and again. Nestle
has always tried to enter the market with the right price and then justifying it with high quality
products and by communicating and transferring the maximum value to the customers.
Place/Distribution
Distribution of products from the factory to the customer involves transport and storage.
Efficient management of the distribution system is essential to preserve the safety and quality of
9
Nestlé's products, to ensure a high level of customer service, and to meet its commitment to
environmentally sound business practices.
To this end, Nestlé:
selects appropriate transportation modes, with particular attention given to optimum unit
loads (pallets), vehicle-capacity utilization, route planning, and consolidation with
outside partners, scheduling, and fuel conservation;
optimizes warehouse and distribution center locations and environmentally efficient
operational systems; and
Identifies and implements measures to reduce energy consumption and waste.
Nestle company distributes their products in the market through distributers. Company use
financially strong distributors, who know the business values.
Distribution channels
Nestle uses indirect distribution channels to bring its products to the customers.
Producers→ Distributors→ Retailers→ Consumers
Nestle does not involve wholesalers in its distribution channel. Nestle products are distributed to
the customers mostly through distributors. They buy the distributors on contractual base. Nestle
usually do not go for retail selling. Home delivery service is also provided by Nestle Pure Life.
You can buy Nestle Pure Life from any shop in any area. Nestle uses vertical marketing system.
Nestle distributes its products through the strong supply chain management strategies and
efficient marketing logistics.
5 handling agents over all Pakistan
1. Islamabad
2. Karachi
3. Faisalabad
4. Peshawar
10
5. Multan
Regional offices
Karachi
Hyderabad
Sukkhar
Lahore
Multan
Faisalabad
Gujranwala
Quetta
Islamabad
Peshawar
Services
Different carriage companies provide services to Nestle Pakistan
Promotion
It is not enough for a business to have good products sold at attractive prices. To generate sales
and profits, the benefits of products have to be communicated to customers. In marketing, this is
commonly known as "promotion".
In promotion we involves the
(1) Advertising
Any paid form of non-personal communication of ideas or products in the "prime Media": i.e.
television, newspapers, magazines, billboard posters, radio, cinema etc. Advertising is intended
to persuade and to inform
11
(2) Personal Selling
Door to door selling exist e.g.
Now a day’s wet sampling of noodles is going on
(3) Sales Promotion
Providing incentives to customers or to the distribution channel to stimulate demand for a
product. From last 1 year no sales promotion is done because of over full demand.
Sales core objectives
Our product should always be at eye level on the shelves
Our product should always b block displayed
Our product should be at high traffic areas
Our stock dept should be sufficient at shelves product should be displayed according to
FIFO method
Competitors of Nestle in different products
Engro Foods
• Dairy products
PepsiCo and Coke
• They are competitors of water
Shezan and Coke
• juices
Knoor
• Maggi Noodles
12
The products of Engro foods
Olpers
Omung
Tarang
The products of PepsiCo and coke
Kinley
Classic
Blu
Sufi
The products of Shezan
Fresher
Fruity
The products of Knoor
Knoor noodles
Knoor Cubes
SWOT Analysis
Strength
Good Will
Strong financial position
Strong core competence
Strong laws enforcement
High quality
Standardized products
13
Use of latest techniques
Weakness
Raw material is basic input for every organization and milk is core raw material of Nestle
for which it is dependent on the outside Milkmen
Nestle has no single its own dairy farm which provide high quality milk to the firm
Another weakness of Nestle MilkPak Ltd. is that its total packaging depends upon
Packages Pvt. Limited
Opportunity
Moving in new market segment
Developing new marketing campaigns
Threats
Economic threats and Inflation rate
Low purchasing power of people
Milk pack competitors
Changing consumer trends
Increase in trade barriers
BCG Matrix of Nestle .
The BCG Matrix made a significant contribution to strategic management and continues to be an
important strategic tool used by companies today. The matrix provides a composite picture of the
strategic position of each separate business within a company so that the management can
determine the strengths and the needs of all sectors of the firm.
Stars.
14
Stars are high growth, high share businesses or products. They often need heavy investment to
finance their rapid growth. Eventually, their growth will slow down and they will turn into cash
cows.
Cash Cows.
Cash cows are low growth, high share businesses or products. These established and successful
SBUs need less investment to hold their market share. Thus they produce a lot of cash that the
company uses to pay its bills and to support other SBUs that need investment.
Question Mark.
Question Mark are low share business units in high growth markets. They require a lot of cash
to hold their share. Management needs to think hard about which question marks it should try to
build into stars and which should be phased out.
Dogs.
Dogs are low growth, low share businesses and products. They may generate enough cash to
maintain themselves but do not promise to be large sources of cash.
According to Nestle, the relative market share and market growth rates of different products
are given below:-
Name Relative Market Share Market Growth Rate
Ceralac 31.2% 45%
Nestle Milk 21% 39%
Maggi Noddles 18.76% 64%
Nestle Yogurt 3% 12%
BCG Matrix Figure
15
Mar
ket
Gro
wth
Star
Cerelac
??? Nestle Milk
Cash Cow
Maggi Noddles
Dog
Nestle Yogurt
Relative Market Share
Cerelac
Cerelac is one of the leading baby food products. It has witnesses quite a long hold on market
share and it s a major contributor for Nestle.
Nestle Milk:
Relative market share of Nestle milk is low as compared with its growth that’s why they are
lying under head Question mark.
Maggi Noddles:
Growth rate of Maggi Noddles is low as compared with its Relative market share that’s why they
are lying under head Question mark.
Nestle Yogurt:
Its both relative market share and growth rate are low as compared with other product that’s why
it is lying under head Dog.
PESTEL Analysis
16
The main theme of PEST analysis is to measure market potential and situation, by indicating
growth or decline. PEST analysis can be used for marketing and business development
assessment and decision-making, and the PEST analysis encourages proactive thinking, rather
than relying on habitual or instinctive reactions.
Political/ legal analysis
Nestle baby milk can be affected by political change in several different ways e.g political
change can influence public priorities and funding arrangements. Nestle has to operate within the
framework of laws set by Parliament, and that’s why it depends on political considerations.
Government plays vital role by imposing the law and regulation on the companies. Government
set standard laws for companies that has to met otherwise they have to pay fines.
Nestle is trying to met all the standard laws which are set by the government. For example
Health and Safety Act, Disability Act but unfortunately Nestle break the law. Government laws
and regulation in accounting standards, taxation requirements, including tax rate changes, new
tax laws and revised tax law interpretations are highly influenced on Nestle business.
Nestle is also very keen about stability of government stability in countries where they are trying
to get in (especially in underdeveloped countries where political stability is at risk).They are also
subject to state, local, foreign environmental laws and regulations.
Economical Analysis
Nestle needs to have enough information about the country inflation rate, economic growth rate,
and national per person capital income, in which they are willing to start their business.
Economic condition varies from country to country. Before starting the baby milk has focus on
the above factors. These are the factors that Nestle has to consider before setting corporate
objectives. Global economic turmoil has major influence on Nestle business because customers
are spending less and they have to adopt different strategies in order to run business smoothly.
Social Analysis
17
Social or cultural environment had great impact on Nestle. The main focus of social/ cultural
includes the Social change involves changing attitudes and lifestyles. The social and cultural
environment is constantly changing. Different countries had different culture (language, religious
beliefs, food, family, clothing and their lifestyle). Nestle has to developed strategies which are
according to belief and culture in multicultural country like UK. Every country has different
consumer taste and lifestyle and Nestle has to develop effective strategies in order to met
different lifestyle consumer behavior. Company is totally dependent on the consumer lifestyle
and their attitude. Product or services cannot be successful until company has enough
information about the consumer lifestyle. Nestle has to take social and cultural factors under
consideration in order to achieve their strategic objectives.
Technological Analysis
Technological change has the most rapid, persistent and profound effect. It creates opportunities
for new products and product improvements and of course new marketing techniques- the
Internet, e-commerce. Technology creates opportunities for new product or product
improvements and new techniques of marketing such as internet and e-commerce. Technology
has great influence on business operations and overall decisions. Nestle uses technology by
taking orders via telephone and online by internet. Moreover, Nestle uses technology in various
business activities such as record of their customers and employee.
Suggestions and Recommendations
Nestle can go for backward integration and establish its own diary farms
Nestle should not depend on Packages Pvt. for the sake of packaging its products. It
should do packaging itself.
Nestle should diversify its product portfolio and introduce ice creams and some other
products which can cut the competition of major players in Pakistan. Dog items should be
back up by the cash generated by cash cows and renovate them.
Nestle should increase the distribution network and diversify their portfolio.
It should sell better quality products in Pakistani market also just like it sells in first world
countries because consumer in Pakistan is much aware today than it was a decade ago. It
18
would help to rectify the feelings of discontent that prevail among the Pakistani
consumers against nestle.
Nestle should bring other flavors in breakfast cereals like fruit and nuts corn flakes to
Pakistan since consumers are becoming more demanding day by day. Moreover Kellogs
is offering a wide range of breakfast cereals with far better quality.
Nestle should increase the promotional campaigns magnitude since strong competitors
are taking over the industry especially in dairy products.
19