nestle yogurt

5/26/2018 Nestle Yogurt

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Table of Contents

1. Vision Statement of Nestl ...................................................................... 12. Brief Introduction of Nestl ..................................................................... 23. Introduction to Nestl Fruit Yogurt ......................................................... 34. Nestl Fruit Yogurts Current Marketing Mix ......................................... 6

1. Product ....................................................................................................... 62. Promotion ................................................................................................. 133. Place ........................................................................................................ 164. Price ......................................................................................................... 17

5. Nestl Fruit Yogurts Macroenvironment ............................................. 211. Demographics .......................................................................................... 212. Economics Conditions .............................................................................. 233. Competition .............................................................................................. 244. Social and Cultural Forces ....................................................................... 255. Political and Legal Forces ........................................................................ 266. Technology ............................................................................................... 27

6. Nestl Fruit Yogurts Microenvironment .............................................. 301. Market ...................................................................................................... 302. Suppliers .................................................................................................. 313. Marketing Intermediaries .......................................................................... 31

7. Segmentation ......................................................................................... 338. Target Market and Strategies ................................................................ 40

1. Cost Leadership (Undifferentiated or Mass) Strategy .............................. 402. Differentiation Strategy ............................................................................. 413. Segmentation Strategy ............................................................................. 42

9. Positioning .............................................................................................. 4510. Strategic Direction of Nestl Fruit Yogurt ............................................ 47

Where are we now .......................................................................................... 47Where do we want to go .................................................................................. 4811. Proposed Marketing Mix ........................................................................ 50

1. Product Strategy ...................................................................................... 502. Price Strategy ........................................................................................... 533. Promotion Strategy .................................................................................. 564. Place (Distribution) Strategy ..................................................................... 65

12. Teachers Comments .............................................................................. 67


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1. Vision Statement of Nestl

The strategic priorities of Nestl are focused on delivering shareholder value

through the achievement of sustainable, capital efficient and profitable long term

growth. Improvements in profitability will be achieved while respecting quality and

safety standards at all times.

In line with this objective, Nestl envisions to grow in the shortest possible time

into the number one food company in Pakistan with the unique ability to meet the

needs of consumers of every age group - from infancy to old age, for nutrition

and pleasure, through development of a large variety of food categories of the

highest quality.

Nestl envisions the company to develop an extremely motivated and

professionally trained work force, which would drive growth through innovation

and renovation.

It aspires, as a respected corporate citizen, to continue playing a significant role

in the social and environmental sectors of the country.


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2. Brief Introduction of Nestl

In the 1860s Henri Nestl, 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 Nestl's new formula saved the

child's life, and soon, Farine Lacte Henri Nestl was being sold in much of

Europe.

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, Nestl's production

had more than doubled. The 1920s saw Nestl's first expansion into new

products, with chocolate the Company's second most important activity

Nestl felt the effects of World War II immediately. Profits dropped from $20

million in 1938 to $6 million in 1939. Ironically, the war helped with the

introduction of the Company's newest product, Nescaf, which was a staple drinkof the US military. Nestl's production and sales rose in the wartime economy.

Nestl with headquarters in Vevey, Switzerland was founded in 1866 by Henri

Nestl and is today the world's biggest food and beverage company. They

employ around 250,000 people and have factories or operations in almost every

country in the world.

Nestl Pakistan currently has 1958 employees and has a market capitalization of

41,268,136,000.


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3. Introduction to Nestl Fruit Yogurt

Nestl is committed to offering consumers high-quality food products that are

safe, tasty and affordable. The Nestl Seal of Guarantee is a symbol of this

commitment. Keeping this in mind, Nestl developed a unique healthy product

which is a substitute to sugary junk food like carbonated drinks, ice-creams and

desserts.

Nestl Fruit Yogurt, a value added product, is categorized as a chilled dairy

product which has all the goodness of milk, yogurt and fruit. Such products need

to be refrigerated between temperatures of 0 4 degrees from manufacturing till

it reaches the consumers because they contain live bacteria. Nestl Fruit Yogurt

has a shelf life of 28 days.


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Marketing Ethics and Social Responsibilities

Keeping in mind Pakistans social responsibilities and marketing ethics, Nestl

adopts the following practices in its production of Nestl Fruit Yogurt.

Quality of the product is maintained by foreign quality control supervisorson a random weekly basis.

The product is produced using all Halal foods.

Product wastes are properly treated.

Workers, especially those involved in the production process, are providedwith specially designed clothing/suits.

The price of the product is kept low.


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4. Nestl Fruit Yogurts Current Marketing Mix

The marketing mix comprises of the 4 Ps namely: Product, Place, Price and

Promotion. Following is a detailed study of the contents of Nestl Fruit Yogurts

marketing mix.

1. Product

Products are need-satisfying products of an organization. The idea of a product

as potential customer satisfaction or benefit is very important.

Nestl Fruit Yogurt is a new product in Nestls product line in Pakistan.

Branding

Branding is the use of a name, term, symbol or design or a combination of these

to identify a product.

The fruit Yogurt has well known brand name Nestl which has gain popularity

over years and is known for offering healthy nutritious food items.

Advantages of Branding

a) Identification

Branding has helped Nestl Fruit Yogurt gain a distinctive identification and

has presented an ease of gaining customers. Most people prefer trying fruit

yogurt of familiar trusted brand rather than of the brands they havent heard of

before. It has also helped reduce the costs for designing and implementing

programs for promoting the product.

b) Brand Familiarity

Brand familiarity refers to how well customers recognize and accept a

companys brand.

Nestl has earned brand acceptance with high quality products and their

regular promotion and its high degree of brand familiarity affects the planning


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of the remainder of the marketing mix. Therefore Nestl Fruit Yogurt is placed

in all super markets and general stores of Pakistani market and doesnt

require extensive promotion because of its already built brand familiarity.

c) Brand equity

Since brand equity refers to the value of brands overall position in market we

can safely say that Nestl has higher brand equity on the basis of its satisfied

customers and eagerness of customers to have it in stock.

Manufacturer BrandNestl is a manufacturer brand (national brand) i-e it is created by producers and

is promoted throughout the Pakistani market in addition to markets of other

countries.

Packaging

Packaging concerns with designing and producing the container or wrapper for a

product. Nestl Fruit Yogurt comes in an attractive and convenient to use

package and serves the following purposes of packaging:

Protects the contents on their way to consumer: Its package id well

designed so as to protect it during shipment and prevents tampering with it

in the warehouse or retail stores.

Protects the product after purchase:Nestl Fruit Yogurt is convenient

to use, cleaner and less susceptible to losses from spilling and spoilagebecause of its good quality packaging.

Packaging acceptable to middlemen: Packaging is acceptable to

middlemen because it is suitable for displaying and stacking in stores.

Helps persuade the consumers to buy the product:Packaging is

attractive and colorful with the illustrations of fruits and creamy delicious

yogurt which persuades the customers to taste it.


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Labeling

A label is a part of a product which carries information about the product and the

seller. A label may be a part of the package or a separate tag attached to the

product. Types of labels include:

A brand label

A descriptive label

A grade label

Nestl Fruit Yogurt employs descriptive labelingwhich is a part of its package.It carries information about ingredients, nutritional contents, products weight, and

the fruit flavor.

Product quality and customer needs

Quality is the ability of a product to satisfy a customers needs or requirements.

Since consumers mainly require satisfaction, marketing managers must be

constantly concerned with product quality.

Therefore, Nestl is committed to offering consumers high-quality food products

that are safe, tasty and affordable to cater to the customer satisfaction aspect.

The Nestl Seal of Guarantee is a symbol of this commitment. Keeping this in

mind, Nestl developed a unique healthy product which is a substitute to sugary

junk food like carbonated drinks, ice-creams and desserts.


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Product mix

The vast product mix of Nestl among the dairy products consists of

Nestl Milkpak UHT milk

Milkpak Butter

Nestl Plain Yogurt

Nestl Fruit Yogurt

Milkpak UHT Cream

Milkpak Desi Ghee

Nestl Everyday

Nestl Nido

Nestl Nesvita

Product Line

A group of products, intended essentially for similar uses and having similar

physical characteristics, constitute a product line. Product line under

consideration mainly consists of Nestl Plain Yogurt and Nestl Fruit Yogurt.

Product Mix Structure

The structure of product mix has both breadth and depth. Product breadth is

measuredby the no. of product lines carried. Product depthis measured by the

variety of sizes, colors, and models offered with each product line.

Depth (assortment

within a line)

Breadth(different lines)

Fruit Yogurt Plain Yogurt

Strawberry flavored

Peach flavored

Without fruit chunks

With real fruit chunks


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Initially Nestl Fruit Yogurt came without fruit chunks; however, now it comes

with real fruit chunks and is worth same piece i-2 Rs.12.Therefore, it is a value

added product.

Nestl Fruit Yogurt is a consumer product categorized as convenience product.

Since people are not willing to spend much money and time on such products, it

is a low priced product and is clearly stated as a chilled dairy product with all the

goodness of milk, yogurt and fruit.


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Nutritional information

Energy 118kcal-499kg

Protein 5.4g

Carbohydrates 19.6g

of which sugars 19.0g

Fats 2.0g

of which saturates 1.3g

Fiber 0.1g

Sodium 0.1gCalcium 208mg

(%rda) (26.0g%)

Ingredients

Standardized fresh milk (Fat 1.7%, SNF: 8.3 %), Fruit chunks (Strawberry, Peach

or Mango), Sucrose, stabilizer, preservatives, artificial flavor, permitted food

color.

Product Life Cycle

A product life cycle has four categories

Introduction

Growth

Maturity

Decline

Management must be able recognize what stage of life cycle is the product in at

any given time. The competitive environment and marketing strategies that

should be used ordinarily depend on the particular life-cycle stage.

Nestl Fruit Yogurt is in the introductory stage

.


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Nestl Fruit Yogurt: Introductory stage

During the introduction stage a product is launched in a full-scale screening

program. The product may be entirely new or may come out with a novel feature

in an already available product.

When Nestl Fruit Yogurt was launched in market it was not entirely new but it

was well-known (plain fruit yogurt) with a novel feature (i-e fruit flavored) which in

effect created a new product category.

Like all other products at this stage, a lot of money is spent not only for thedevelopment of this product but also to seek consumer acceptance of the

offering. Nestl Fruit Yogurt enjoys the benefit of brand familiarity and its well-

known product line of plain fruit yogurt and is readily accepted by a sufficient

number of customers.


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2. Promotion

Promotion is one of the major tools used in marketing and an essential part of themarketing mix of an organization. Marketers usually use promotion to inform the

public of their product and communicate with customers with respect to product

offerings. Promotion is also however used to influence the marketers target

market usually via:

Advertisements and commercials through interpellation

Streamers

Outdoor billboards

Magazines newspapers and posters

Personal selling

Sales promotion

Public relations etc

Promoting their product as better then any other similar products or by changing

views, awareness, beliefs, and feelings of perspective customers.

Promotional roles

Three essential promotional roles are given below:

Informing

Persuading

And reminding target audiences

Nestl Fruit Yogurt is a new product in Nestls product line in Pakistan. The

products present market constitutes all the citizens that consume yogurt. Nestl

Fruit Yogurts production began in the second quarter of 2005 but due to very

limited budget and the product being an entirely new concept to the existing

market, a discrete analysis of all the entities that would affect the new product


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were taken into consideration. As the product was new, marketers immediately

felt the need of informing the people about it. Providing Information is the first

and the foremost task of promotion because people need to know about the

existence of a product, its benefits, usage and working. The most useful product

will be a failure if no one knows it exists. For the promotion of Nestl Fruit Yogurt

analysis of the scenario was conducted. It revealed that in 2004 there ware 250

brands being advertised on TV; by the start of 2005 the number had doubled and

before the launch of Nestl Fruit Yogurt it reached to about 500 brands. Because

of the flooding of television with advertisements, company decided to promote

the product distinctively and differently using: streamers, posters, magazines,and outdoor billboards as the marketing mediums. The common observation is

that the more the people get to see various advertisements on T.V the less they

pay heed to them. Its human nature to get fed up or become indifferent to things

that go beyond limit I-e the flood of advertisements coming up everyday. To

promote fruit yogurt through means other than mass media was a very wise

decision on the part of the management of Nestl. If Nestls fruit yogurt had

been advertised on T.V, it would have been forgotten or lost its charm very soon.

Another purpose of promotion is persuading. Intense competition among firms in

market provides people with many alternative products for satisfying even basic

physiological needs. As a result, persuasive promotion becomes essential.

Nestl, keeping this into mind, have made billboards, streamers, advertisement

and magazines captivating and attractive enough to play upon the weaknesses

of fruit, dessert lovers and diet conscious people who were since long looking for

some healthy and hygienic alternative to junk food.

Last but not the least is reminding the market of the products availability and its

potential to satisfy. This is done by bombarding the target market with messages,

symbols etc which have the ability not only to retain but also to attract new

customers. Previously Nestls message regarding their fruit yogurt was fruit

yogurt with real fruit chunks which later on changed to imagine the taste. So


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we conclude that Nestls current message of imagines the taste and delicious

cup of fruit yogurt serves both persuasive and reminding roles of promotion.

The message of Nestls fruit yogurt

(This message helps reminding the target market of fruit yogurt)

The captivating fruit yogurt of Nestl

(Persuades the market to buy this product)


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3. Place

Raw yogurt, which is one of the competitors of fruit yogurt, has been into marketsince long. It is not only cheap but also available in quantities of ones choice

(more or less). Management of Nestl Fruit Yogurt correctly figured out that the

perception of raw yogurt of one particular class of Pakistan is hard to change.

They knew that introduction of fruit yogurt, which is of RS.12, delicious, hygienic

and nutritious, among low-income group and low socio-economic status will not

be a wise decision, as they wont readily accept it. They also correctly judged that

less knowledgeable and illiterate people will resist switching from raw to fruit

yogurt because they are either less aware or indifferent to the hygienic factor and

nutritive values of food. They willingly compromise on quality for price and some

among them, without striving to get information, perceive the Nestls fruit yogurt

to be of high price and do not buy it ultimately. Keeping these attitudes and

behaviors of different classes in mind, Nestl decided to start off from the safe

side I-e they introduced their fruit yogurt in Islamabad, Lahore, Karachi and

Peshawar. These cities of Pakistan are thickly populated and have relatively high

awareness and literacy rate. We can safely say that this product is targeting A

class of our country and became popular among them because of the following

characteristics of this class:

A class people are mostly literate, knowledgeable, have awareness and

the resources to try out every new food item that comes into the market.

They are much aware of the nutritive values of food and know the

advantage or edge of fruit yogurt over the raw one. They dont usually compromise on quality, hygiene and delicacy for price.

This amalgamation of flavored yogurt with fruit chunks came as good

news for fruit lovers.

It became popular among teenagers of this class because it is a healthy

alternative junk food etc


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4. Price

The ultimate aim of any organization is to set a price that satisfies both the

consumers and the manufacturers.

Nestl Fruit Yogurt comes in a small sized pack of 12 Rupees which is affordable

to every socioeconomic status. The competitors of Nestl Fruit Yogurt include:

Olpers

Prime yogurt

& Raw yogurt mainly

In order to outweigh the competition of raw yogurt which is very cheap and a

preference of price-conscious people, Nestl Fruit Yogurt comes in a small pack

which is reasonably priced keeping in consideration its fruit-contents which make

it nutritious and tasty. This has been achieved by working on price strategy which

starts by reducing the production costs so as to reduce the sales costs.

Low price feature of the product targets the lower and middle classes too. It is

now commonly used as a substitute to mashed foods for kids and also to junk

sugary foods and as a dessert, all because it combines the benefits of taste,

quality and low price and is gaining popularity due to these multiple features.

Price Level Policies over Product Life Cycle

Price level policies vary according to the life cycle stage product is in at any given

time. Therefore pricing policies are different in introductory, growth, maturity and

decline stage. Since Nestl Fruit Yogurt is in introductory stage we discuss the

pricing policies of introductory stage as under:


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Introductory stage

Pricing strategies used at introductory stage or market entering price strategiesare:

Skimming

Penetration

In preparing to enter the market with a new product, management decides

whether to adopt a skimming or a penetration price strategy.

Market-Skimming Pricing

Skimming defines the pricing strategy of entering market at a high price with high

quality products. This strategy is applied in case of less elastic or inelastic

demand of products.

Market-Penetration Pricing

This strategy involves introduction of products at low prices. This strategy is

applied in case of products with more elastic demand and particularly for

consumer goods.

Nestl Fruit Yogurt: Market-Penetration Pricing

The pricing strategy adopted by Nestl Fruit Yogurt is market-penetration pricing

since it is a consumer product and has entered market with price as low as Rs.

12 and also because it fulfills following conditions of market-penetration pricing.

A large market exists for the product.

Demand is highly elastic.

Economies of scale are possible i-e substantial reductions in the unit

cost of the product can be achieved through large-scale operations.


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Competition for this product already exists in market i-e Raw yogurt

which presents a fierce competition.

Price Objective

Every marketing activity including pricing should be directed towards a goal.

Thus management should decide on its pricing objective before determining the

price itself. Nestl like a few other firms has consciously established a pricing

objective for fruit yogurt. Following are the common pricing objectives:

Profit-oriented:

To achieve a target return

To maximize profit

Sales-oriented:

To increase sales volume

To maintain or increase market share

Status quo-oriented:

To stabilize prices

To meet competition

Nestl priceobjective: Status-quo oriented

The pricing objective taken up by Nestl Fruit Yogurt is status quo which is

intended simply to maintain the firms current situation that is the status quo. With

either of the goals of this objective a firm seeks to avoid price competition. Price

stabilization is often the goal in industries where one large firm such as Nestl

acts as a leader in setting prices. Smaller industries tend to follow the leader

when setting their prices or simply price the products to meet the prevailing

market price. This pricing policy gives management an easy means of avoiding

difficult pricing decisions.


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Nestl also adopts this strategy to avoid price competition. It focuses more on

using other marketing mix elements such as product distribution and product

rather than price.

Nestl Fruit Yogurt is concentrating more on innovation that is introducing new

flavors and previously introduction of real fruit chunks rather than changing

prices.


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5. Nestl Fruit Yogurts Macroenvironment

Nestl Fruit Yogurts External Macroenvironment includes:

1. Demographics

a) Age

Briefly, we can say that fruit yogurt is popular among every age group. This is

because its delicious, nutritious, hygienic and the best alternative junk food.

People for a long time were looking for one such yogurt that is energizing,

creamy, thick, and full of fruits. Once this product came, it took the Pakistani

market by storm. Because of its low fat contents it came as good news for the

diet conscious people. Mothers and wives, who have always been the most

considerate for their kids and families, preferred to buy fruit yogurt as it is of

high quality and distinct taste. It has loads of flavors suited to the taste of

almost every member of the society. Previously it was taken with meals only

but now it has become an all time favorite dessert as well.

b) Sex/gender

It has been a common observation that men have never been much into

eating yogurts but with the launch of this product scenario changed. Men who

used to be most reluctant to eat yogurt, enjoy this product as much as they

can. So we can safely say that fruit yogurt is popular among men and women

alike.

c) Location of residence

Nestl Fruit Yogurt is not available everywhere right now. It has been first

introduced in Karachi, Lahore, Islamabad and Peshawar where education and

awareness level is relatively high and people willingly go for the hygienic,

nutritious and high quality products irrespective of their prices.


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d) Socioeconomic status

Previously, people used to prefer khula yogurt. The reason was that it used to

be cheap, available in large quantities and worth a compromise on quality for

price. To target such people, Nestl came up with a 12 rupees economical

fruit yogurt which is within the affordability of every income group of Pakistan.

With this introduction low income people switched to fruit yogurt as it provided

them with high quality, nutrition, and delicacy at a very reasonable price.

e) Religion

With religion comes the concept of Halal, Haram products primarily. If youtake a look at the above-mentioned ingredients of fruit yogurt .youd know that

they are all Halal according to our religion Islam. This is because one of the

foremost strategies of Nestl Fruit Yogurt is to take well into consideration the

countrys legislatures and religious constraints of the country before the

introduction of a product. In addition to this, fruit yogurts of Nestl are of high

quality, they are nutritious and hygienic as well.

f) Education

Education and knowledge bestow a person with awareness which actually

effects the buying decisions of individuals. Only the educated people know

the importance of nutritious and hygienic foods and such people never

compromise on quality for price. They prefer to buy expensive products but in

return expect the highest possible quality n wide variety. Keeping this aspect

into consideration, Nestl launched its fruit yogurt initially in Karachi,

Islamabad, Lahore and Peshawar where the literacy rate is relatively high and

people have the urge to know more and beware of their surroundings.


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2. Economics Conditions

The economic conditions prevalent in the country did affect the investment inthe Nestl Fruit Yogurt industry.

Some common restrictions and barriers that prevented the investment of

capital in this project included:

a) Operations Restrictions

Restrictions on procurement, hiring foreign personnel, or locating businessactivities, as well as the efficiency and honesty of officials with whom

business executives must deal and the effectiveness and integrity of the

judicial system. To deal with problems like these Nestl Fruit Yogurts board

of directors lessened the use of the middle-man and did most of the sale by

their own department.

b) Labor PoliciesGovernment policies, trade union activity, and productivity of the labor force

that create either high or low costs for businesses. Apart from this Nestl Fruit

Yogurt team discourages the use of child labor in its plants. This comes at a

cost. The labor expenses for the company raised more than forecasted.

c) Domestic Economic Problems

A country's ranking according to its most recent five-year performance record

in per capita GDP, GDP growth, inflation, unemployment, capital investment,

and budget balance. During the year 2005-06 the country did experience

inflation, a low GDP and unemployment all these factors contributed in a low

investment by the investors into this fruit yogurt project

Nestl Fruit Yogurt used the process of strategic planning. Strategic planning

involves identifying future trends and analyzing how the corporation can take

advantage of those trends. Such analysis traditionally concentrated heavily on


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economic trends, but since political decisions and events substantially

influence these trends, planners now incorporate political risk analysis.

Current planning activities made by Nestl involve an attempt to assess the

impact of political and economic trends, but strategic planners can find it

difficult to incorporate political analysis into their traditional economic and

business research. Political analysis, by its nature, is qualitative, dealing with

more abrupt and sweeping factors. Many planners have found systematic risk

ratings particularly useful because they allow for the cross country

comparisons that are an integral part of their analytical approach. Most firms

use risk information for many reasons and in several different offices.

Another important reason for the low investment of capital in the Nestl Fruit

Yogurt project was the increased interest rates. Fewer investments were

made which created a need for capital. This affected the companys

marketing strategy and the number of advertisements made was decreased.

3. Competition

Nestl Fruit Yogurt has three main competitors namely:

1. Olpers

2. Prime Yogurt

3. Raw Yogurt

Competitive strategies of Nestl

In order to counter the present competition, Nestl Fruit Yogurts marketingteam adopts the following measures:

Innovations in their products (yogurts) so that the market never gets

fed up.

Fruit yogurt of high quality and a distinct taste.

Low fat contents to target the diet-conscious section of the market.


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Low price of 12 rupees that is affordable to every socioeconomic

status.

Nutritious, hygienic and the best alternative to junk food.

Attractive packaging and use of imported seals.

High budget, advertisement of this new product (fruit yogurt) on mass

media.

Advertisement through streamers, posters, magazines and outdoor

billboards.

Different fruit flavors in the yogurt that specifically attract kids and

fruit lovers.

4. Social and Cultural Forces

First of all, we have to define what society is. Society is all about people in

general, living in communities. Then we have to know what culture is. Culture

is basically the customs, beliefs, way of life, and social organization of a

particular country or group.

Now we have to see how and in what ways the cultural and social forces

affect the marketing of our chosen organization, Nestl in Pakistan. The first

aspect that will be brought under consideration is:

a) Family

In a country like Pakistan, family plays a pivotal role in the everyday life of an

individual. Where there is a family, there is food, and where there is food

there are accessories e.g. raita, pickles, salad, packed or raw yogurt. This is a

part of our culture. Nestl provides the families with the dairy products like

packed simple yogurt, raita, and fruit yogurt. Besides having it as an

accessory of food, simple yogurt is also used as a raw material for cooking,

which is again a part of our tradition, our culture. Nestl provides the

Pakistani families with all that they require purity, taste, hygiene everything.


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b) Customs and Behaviors

The normal custom is that this particular product is usually consumed in the

summers. As previously mentioned, the country runs on traditions and

culture, and it tells us that it gives the body a cool effect; therefore, people

prefer having yogurt in the summers.

Here in Pakistan, the majority of the people are either illiterate or live below

the line of poverty, so how this edible product is packaged does not really

matter as it has to be consumed anyway.

The behavior of the customers changes at certain points in a year where the

demand of this particular product increases e.g. Moharram, Ramadan, Eid

etc.

5. Political and Legal Forces

Political and legal forces also influence every companys conduct. Political

and legal forces on marketing would be categorized into:

a) Trade policy

Taxes(state and local taxes) delivery services result in higher taxes due to

increase in number of vans since Nestl mostly relies on its self service for

transportation so that the chilling capacity and other such requirements can

be observed. Increase in vans for transportation is thus an uncontrollable

factor and demands tax payments.

Quotas and tariffs when importing seals Nestl also faces import barriers

in the form of quotas and tariffs which also limit the imports.

b) Quality Control


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Since Nestl is an ever increasing food company quality control also presents

a problem which has to be observed. Nestl Milk related products have

established an Extension Service, staffed by qualified veterinary doctors, who

assist farmers in vaccination and treatment of livestock, improved breeding,

good animal husbandry practices, provision of high yield fodder seed etc so

as to come up with highest quality food products.

c) Open/close economy:

Its an open economy facilitating foreign investments and allowing free trade.

6. Technology

Nestl, the world's biggest food Group is also the global leader in the industry

with regard to Research and Development (R&D), No other food company

dedicates so many human and financial resources to R&D: an international

staff of 3500 engaged in the search for innovative new products and the

renovation of existing ones. Year after year, Nestl invests some 800 million

Swiss francs into R&D as a major driving force of its double strategy: to

strengthen the Companys brands worldwide and to continue to support future

long- term growth and competitiveness through innovation and renovation. At

the threshold of this new millennium, Nestl Fruit Yogurts objective is to

consolidate and strengthen its leading position at the cutting edge of

innovation in the food area, in order to meet the needs and desires of

consumers around the world, for pleasure, convenience, health and well

being.

Nestl Fruit Yogurt-processing industry has special concerns about the health

and safety of the consumers. This is the reason why abundant and productive

agricultural sources, conducive climate conditions, and modern technologies

are all important factors for providing Nestl Fruit Yogurt-processing industry


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with ample and high quality raw materials. For the most part, Nestl food-

processing facilities are located close to their agricultural source.

Nestl uses the term "clean technologies" to describe its working

environment. This term is defined as "manufacturing processes or product

technologies that reduce pollution or waste, energy use, or material use in

comparison to the technologies that they replace."

Nestl Fruit Yogurt is Mass-processed by heating concentrated milk, or milk

fortified by skim milk powder, to about 90 C (194 F) for a few minutes, thencooling it to about 44 C (111 F), at which point a controlled culture of

Lactobacillus bulgaricusand Streptococcus thermophilusis added. These two

lactic organisms produce the required acidity and the delicate yogurt flavor.

Souring and thickening take place in about 3 hours at 44 C (111 F), and

stop when the mixture is cooled to 5 C (40 F).At this stage chunks of fruit

are added to give the yogurt the desired taste. Because the milk has been

heated and soured, and due of its high acidity, pathogens cannot grow in

yogurt, and it is probably the safest of all perishable foods. Well-made yogurt

made by Nestl industries of any type should last for 14 days if kept at 5 C

(41 F).

Improved Packaging

Nestls fruit yogurts main aim is the use of less excessive and more

environmentally friendly packaging products. It uses special packaging

techniques that minimizes and eliminates loss by leakage or evaporation and

reduces spoilage and contamination by dirt, insects, bacteria, mold, moisture

or oxygen.

Another important technique used in the packaging of Nestl Fruit Yogurt is

that of Aseptic packaging. Aseptic packaging sterilizes the fruit yogurt and


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then packages it in a sterilized container. The typical aseptic containers

include foil-lined cartons, plastic cups, and plastic bags. These containers

cost and weigh less than the metal cans or glass bottles traditionally used in

packaging. Another advantage of aseptic packaging is better flavor. Cans or

bottles require much longer heating time for sterilization. The longer foods are

heated, the more the flavor changes. In the aseptic process, foods can be

heated rapidly outside of the container. Therefore, aseptically packaged

foods have a more natural flavor as well as more nutrients.

Above everything to keep up with the quality standards Nestl used importedseals specially designed for packaging dairy products. All this makes Nestl

Fruit Yogurt a flavored product with only a few calories per serving and is

popular for low calories diets.


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6. Nestl Fruit Yogurts Microenvironment

1. Market

In marketing, the term market refers to the group of consumers or

organizations that is interested in the product, has the resources to purchase

the product, and is permitted by the law and other regulations to acquire the

product.

In marketing any given good or service, three specific factors need to beconsidered:

People or organizations with needs,

Their purchasing power, and

Their buying behavior

Nestl Fruit Yogurt is an indulger for all males, females and adults who are

health conscious people and who want healthy alternative to junk food but

with good taste.

This product is unvaryingly for all fruit-lovers and fans of desserts. However

the main target market of this product is not only kids, who are appealed to a

variety of fruit flavored yogurts with real fruit chunks i.e. Peach, Strawberry,

Pineapple etc because of their delicious tastes, but are also a choice of

mothers because they are safe and because of their nutritive values.

Briefly Nestl Fruit Yogurt has a wide range market including all age groups

and income groups with price Rs.12 per yogurt.


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2. Suppliers

The people or firms that supply the goods or services required by a producerto make what it sells and also the firms that provide the merchandise, a

wholesaler or retailer resells are the suppliers and are a vital part of a firms

marketing success.

The core raw materials of Nestl Fruit Yogurts are milk and fruits. Driven by

its commitment to quality and having realized that only self collection could

eliminate its dependence on poor quality milk from outside sources, the

company successfully established its own collection system and expanded its

operations over a very large milk shed area in Punjab. Milk is collected

through a vast network of village milk centers (VMCs), sub-centers and

centers. At these centers chillers have been installed to lower milk

temperature to 4 degree centigrade for preventing bacteria development

during long hauls to factories, which are undertaken by a fleet of specially

insulated tanks.

Initially Nestl Milkpak ltd. Acquired services of Kabirwala Dairy ltd. But now

with the merger of this factory with Nestl Milkpak in April 1997, Kabirwala

factory is a fully owned unit of Nestl Milkpak ltd.

3. Marketing Intermediaries

Marketing intermediaries are independent business organizations that directly

aid in the flow of goods and services between a marketing organization and

its markets.

There are two types of intermediaries:


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a) Middlemen, wholesalers and retailers

As for Nestl Fruit Yogurt wholesalers are given license (i.e. those with best

chillers).However middlemen are less involved because it mostly done by

their self owned departments.

b) Channels of distribution

They operate between a company and its markets and between a company

and its suppliers. These are the facilitating organizations that provide services

such as transportation, warehousing, and financing that are needed to

complete exchanges between buyers and sellers.

Milk collected by Nestl is low on Sodium high on fat and solid-non-fats and

has reduced bacteria count. This was achieved through a comprehensive

strategy and sustained efforts to overhaul the milk collection process,

intensive education program for the farmers and the milk collection staff, up

gradation of milk loading and transportation system, increase in the chilling

capacity and above all, adherence to the highest acceptance standards at all

milk collection points, including the factories.


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7. Segmentation

Market segmentation is one of the steps that go into defining and targeting

specific markets. It is the process of dividing a market into a distinct group of

buyers that require different products or marketing mixes.

A key factor to success in today's market place is finding subtle differences to

give a business the marketing edge. Businesses that target specialty markets will

promote its products and services more effectively than a business aiming at the

"average" customer.

Opportunities in marketing increase when segmented groups of clients and

customers with varying needs and wants are recognized. Markets can be

segmented or targeted using a variety of factor. The bases for segmenting

consumer markets include:

Demographical bases (age, family size, life cycle, occupation) Geographical bases (states, regions, countries)

Behavior bases (product knowledge, usage, attitudes, responses)

Psychographic bases (lifestyle, values, personality)

A business must analyze the needs and wants of different market segments

before determining their own niche. To be effective in market segmentation keep

the following things in mind:

Segments or target markets should be accessible to the business

Each segmented group must be large enough to provide a solid customer

base.

Each segmented group requires a separate marketing plan.


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Large companies such as Nestl segment their markets by conducting extensive

market research projects. This research is often too expensive for small

businesses to invest in, but there are alternative ways for to a small business to

segment their markets.

There are many reasons for dividing a marketing into smaller segments. Any time

one suspect there are significant, measurable differences in the market he/she

should consider market segmentation.

Market segmentationis the process in marketing of dividing a market intodistinct subsets (segments) that behave in the same way or have similar needs.

Because each segment is fairly homogeneous in their needs and attitudes, they

are likely to respond similarly to a given marketing strategy. That is, they are

likely to have similar feeling and ideas about a marketing mix comprised of a

given product or service, sold at a given price, distributed in a certain way, and

promoted in a certain way.

Small segments are often termed niche markets or specialty markets.

The process of segmentation is distinct from targeting (chosing which segments

to address) and positioning (designing an appropriate marketing mix for each

segment). The overall intent is to identify groups of similar customers and

potential customers; to prioritise the groups to address; to understand their

behaviour; and to respond with appropriate marketing strategies that satisfy the

different preferences of each chosen segment.

The requirements for successful segmentation are:

Homogeneity within the segment

Heterogeneity between segments

Segments are measurable and identifiable

Segments are accessible and actionable

Segment is large enough to be profitable


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These criteria can be summarized by the word SADAM:

S - Substantial: the segment has to be large and profitable enough

A - Accessible: it must be possible to reach it efficiently

D - Differential: it must respond differently to a different marketing mix

A - Actionable: you must have a product for this segment

M - Measurable: size and purchasing power can be measured

Currently a college student studying the marketing mix is now introduced to the

Four Ps of the Marketing Mix; Product, Place, Promotion, Price. Product (service)

is whatever it may be that is being sold/marketed. Price refers to not only the

actual price but also price elasticity. Place has evidently replaced distribution

simply by where or what area the marketing campaign is going to cover. Today

the idea of place is not limited to geographic profiling but also demographics and

other categorizing variables. This has only occurred over the last ten years with

the expansion of internet use and its ability to target specific types of people and

not just people in a geographic area. Promotion simply refers to what medium will

deliver the message and what the overall marketing strategy is offering as abenefit.

The variables used for segmentation include:

Geographic variables

o region of the world or country

o country size

o climate

Demographic variables

o age

o gender

o sexual orientation

o family size

o family life cycle


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o income

o occupation

o education

o socioeconomic status

o religion

o nationality/race

Psychographic variables

o personality

o life styleo value

o attitude

Behavioral variables

o benefit sought

o product usage rate

o brand loyalty

o product end use

o readiness-to-buy stage

o decision making unit

When numerous variables are combined to give an in-depth understanding of a

segment, this is referred to as depth segmentation. When enough information is

combined to create a clear picture of a typical member of a segment, this is

referred to as a buyer profile. When the profile is limited to demographic

variables it is called a demographic profile (typically shortened to "a

demographic"). A statistical technique commonly used in determining a profile is

cluster analysis.

The most successful small businesses understand that only a limited number of

people will buy their product or service. The task then becomes determining, as


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closely as possible, exactly who those people are, and 'targeting' the business's

marketing efforts and dollars toward them.

As a manufacturer of dairy products, Nestl knew that there were plenty of other

companies operating in the local market with their own product lines. So they

decided to offer something different something unique to their customers, they

came up with the Nestl Fruit Yogurt. In doing this they eliminated a percentage

of the market- but it also gave them a niche that they could capitalize on, and

expanded their market in a way that other manufacturers could not take

advantage of.

One needs to understand that people purchase products or services for three

basic reasons:

To satisfy basic needs.

To solve problems.

To make themselves feel good.

You'll need to determine which of those categories your product or service is the

solution to, and be prepared to market it accordingly. Your product or service

may fit more than one category

The next step in creating an effective marketing strategy is to zero in on the

target market. Zeroing in on the target market is done by using Market

Segmentation.

The primary market of Nestl is local or regional. The first thing they did was to

research the 'demographics' of the community, and divide it into market

segments:

Age: children, teens, young, middle, elderly

Gender: male, female

Education: high school, college, university


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Income: low, medium, high

Marital status: single, married, divorced

Ethnic and/or religious background

Family life cycle: newly married, married for 10 20 years, with or without

children.

This information was available to them through the local town, hall, library, or

Chamber of Commerce.

Next, they needed to segment the market as much as possible using

'psychographics' as their guide:

Lifestyle: conservative, exciting, trendy, economical

Social class: lower, middle, upper

Opinion: easily led or opinionated

Activities and interests: sports, physical fitness, shopping, books

Attitudes and beliefs: environmentalist, security conscious.

In addition, they wanted to find out how they purchased: seasonally, locally, only

in volume, who makes the decisions? It is important to note that businesses,

unlike individuals, buy products or services for three reasons only: to increase

revenue, to maintain the status quo, or to decrease expenses. If Nestl filled one

or more of these corporate needs, then they might have had found a target

market.

By now they had a picture emerging of who they thought their 'ideal' customer

was or who they wanted him to be. Depending on the nature of their business,

Nestl might even be able to write a description of their customer.

"My target customer is a middle-class woman in her 30s or 40s who is married

and has children, and is environmentally conscious and physically fit."


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Based on the numbers Nestl uncovered in their research, above, they may even

know, for example, that there are approximately 9000 of those potential

customers in their area! It may well be that 3000 of them are already loyal to a

competitor, but that still leaves 6000 who are not, or who have not yet purchased

the product from anyone.

Lots of times prospective customers don't know about the company Nestl or

their product the fruit yogurt, or can't tell the difference between Nestl and

others. It is the job of people at Nestl, once to know who their best customers

are, to 'target' the group that they've identified even if they have competition.In addition, they may decide, using the example above, that Nestl would like to

extend their target market to include women from 50 60 years of age. If they go

back to the basic reasons why people purchase goods or services, and can find

ways to target their efforts to that age group, they may be successful in capturing

a bigger share of the market!

On the other hand, what if Nestl 'specialized' the product or service and then

researched the target market, only to discover that there are probably less than

75 people who will buy from them?

First of all, if those 75 are corporate customers who will spend hundreds on your

product or service annually, then Nestl has nothing to fear. But if those 75 are

only going to spend Rs.600 every decade on your product or service then

Nestl needs to go 'back to the drawing board' of planning the business and

perhaps determining a wider target market but at least they would be armed

with all the information they need to start again, or go in a different direction.

Let's face it there's a market, and a target market, for everything.


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8. Target Market and Strategies

After a company has defined market segments, it can enter one or many

segments of a given market. Target marketing involves evaluating each market

segments attractiveness and selecting one or more segments to enter, these

selected segments are called targetmarkets. A company should target

segments in which it can profitably generate the greatest customer value and

sustain it over time.

TargetMarketing involves concentrating your marketing efforts on one or a few

key segments. Target marketing can be the key to a businesss success.

The beauty of target marketing is that it makes the promotion, pricing and

distribution of your products and/or services easier and more cost-effective.

A company with limited resources might decide to serve only one or a few special

segments or market niches. Such niches specialize in serving market

segments that major competitors overlook or ignore. Alternatively, a companymight choose to serve several related segments perhaps those with different

kinds of customers but with the same basic wants. Nestl Fruit Yogurts

marketing team could choose from either of the following strategies:

1. Cost Leadership (Undifferentiated or Mass) Strategy

This strategy emphasizes efficiency. By producing high volumes of

standardized products, the firm hopes to take advantage of economies of

scale and experience curve effects. The product is often a basic no-frills

product that is produced at a relatively low cost and made available to a very

large customer base. Maintaining this strategy requires a continuous search

for cost reductions in all aspects of the business. The associated distribution

strategy is to obtain the most extensive distribution possible. Promotional


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strategy often involves trying to make a virtue out of low cost product

features.

To be successful, this strategy usually requires a considerable market share

advantage or preferential access to raw materials, components, labour, or

some other important input. Without one or more of these advantages, the

strategy can easily be mimicked by competitors. Successful implementation

also benefits from:

process engineering skills products designed for ease of manufacture

sustained access to inexpensive capital

close supervision of labour

tight cost control

incentives based on quantitative targets.

Examples include low-cost airlines such as EasyJet and Southwest Airlines,

and supermarkets such as KwikSave.

2. Differentiation Strategy

Differentiation involves creating a product that is perceived as unique. The

unique features or benefits should provide superior value for the customer if

this strategy is to be successful. Because customers see the product as

unrivaled and unequaled, the price elasticity of demand tends to be reducedand customers tend to be more brand loyal. This can provide considerable

insulation from competition. However there are usually additional costs

associated with the differentiating product features and this could require a

premium pricing strategy.

To maintain this strategy the firm should have:


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strong research and development skills

strong product engineering skills

strong creativity skills

good cooperation with distribution channels

strong marketing skills

incentives based largely on subjective measures

be able to communicate the importance of the differentiating product

characteristics

stress continuous improvement and innovation

attract highly skilled, creative people

3. Segmentation Strategy

In this strategy the firm concentrates on a select few target markets. It is also

called a focus strategy or niche strategy. It is hoped that by focusing your

marketing efforts on one or two narrow market segments and tailoring your

marketing mix to these specialized markets, you can better meet the needs of

that target market. The firm typically looks to gain a competitive advantage

through effectiveness rather than efficiency. It is most suitable for relatively

small firms but can be used by any company.As a focus strategy it may be

used to select targets that are less vulnerable to substitutes or where a

competition is weakest to earn above-average return on investments.

The following diagram illustrates the use of each target marketing strategy

accroding to its market scope and compentency.


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Due to the nature of the product ( uniquely traditional yet contemprary ) and the

available market segments, Nestl Fruit Yogurts marketing team chose to

combine multiple strategies. The team combined marketsegmentation

strategywith productdifferentiationstrategywhich was an effective way of

matching Nestl Fruit Yogurts product strategy (supply side) to the

characteristics of its target market segments (demand side). But before any

further decision was made, the marketing team evaluated the market segments.

In evaluating segments to target, Nestls marketing team observed three

factors:

Segment size and growth

Segment structural attractiveness

Company objectives and resources

The team collected and analyzed data on current segment sales, growth rates,

and expected profitability for various segments. It was observed that due to

Pakistans uneven income distribution and education level, it would be difficult for

consumers to accept a product of price Rs.12 (although low) and realize the


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health benefits and nourishment the product provides. Only developed cities

such as Karachi, Lahore and Islamabad had an even income distribution level

and literacy rate that was adequate. For this reason, only A class citizens of the

major developed cities of Pakistan including: Islamabad, Lahore and Karachi

were chosen as first target segment.

A survey also underlined that the changing consumer patterns of young males

and females mainly due to diet awareness, health consciousness and eating out

habits has increased the rate of consumption of ready to go (fast food) food

products. Hence a product, such as Nestl Fruit Yogurt itself, that offerscombined benefits of a healthy diet in addition to being ready to go, would

definitely catch the eye of the youth population. This led the marketing team to

choose all health conscious males, females and adults to be put up as the

second target segment of Nestl Fruit Yogurt.

On the basis of this information, Nestl Fruit Yogurts marketing team identified

Nestl Fruit Yogurts target market to constitute class Acitizensof Karachi,

Islamabadand Lahore all males, femalesand adultswho are health

conscious people and who want healthy alternative to junk food but with good

taste.


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9. Positioning

Positioning can be defined as how your target market defines you in relation to

your competitors. A good position makes the product unique and is considered a

benefit by the target market. Now we will talk about how our chosen organization

Nestl is positioned in Pakistan.

There are many factors that we will be taking into consideration. The first and

foremost factor that we will be considering is the number of competitors.

According to what the studies show there are three main competitors of Nestli.e. Olpers, Prime yogurt, and raw yogurt. As stated above, the first requirement

of good positioning is that the product should be unique. When we relate this

factor to the Nestl Fruit Yogurt we see that the product indeed is unique, as no

competitor before introduced yogurt that was flavored. But being unique is not

enough. The product has to be beneficialfor the target market and we see that

Nestl Fruit Yogurt is very much liked by kids and the fruit lovers.

When we are comparing one thing with another we have to look at all the

competitive factors that make the product conspicuous and prominent among

the others. The next factor is flavor. Nestl Fruit Yogurt is available in different

flavors with a tinge of originality which boosts up the level of quality. And as

mentioned previously this product is not subjected to high amounts of heat

therefore it retains the original taste. This high quality product is available at a

very affordable priceor PKR 12. A price that is affordable to almost anyone. In

a country like Pakistan, price does play a pivotal role in helping the target market

to decide which product to buy. Besides this, according to our culture,

accessories of food include lots of things. One of them is raita. Nestl has been

innovative enough to introduce the Nestl raita in order to stand out in the row of

competitors.


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The next factor that were going to discuss is quality packaging.Packaging is

another factor by which Nestl Fruit Yogurt stands out in the row of competitors.

According to the studies, it has been seen that most of the sales are in the major

urban areas of Pakistan. Rural areas and minor urban areas still use the

conventional raw yogurt. So its basically the people of the urban areas who are

more literate, knowledgeable, and hygiene conscious, whereas the people in the

rural areas neither know this stuff nor care about this. The packaging is

composed of imported seals and a sterilized plastic container.

The next factor is thehigh budget advertising activities. Nestl spends hugeamounts in the ATL and BTL activities in order to become the prominent

members among the competitors and to have a good image in the eyes of the

target market.

All these positioning factors are then subjected to the perceptual map. The

perceptual map is a two dimensional map used by marketers in order to perceive

the comparative importance of each point of every brand available.


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10. Strategic Direction of Nestl Fruit Yogurt

Setting strategic direction involves answering two questions: Where are we now?

And, where do we want to go?

Where are we now

A detailed approach of assessing where we are now includes SWOT analysis

and environmental scanning. Each is explained in detail below:

SWOT Analysis

STRENGTHS

Their brand recognition. The employees want to achieve

higher volumes by renovatingexisting products and innovatingnew products.

Nestl is a low cost operator whichallows them to beat the competition

by producing low cost products andalso edging ahead with lowoperating costs.

They have a great research anddevelopment team.

WEAKNESSES

They have not entered into manylocal cities.

Packaging is not that attractive.

OPPORTUNITIES

Health-based products arebecoming more popular in the worldincluding Pakistan.

Because they are a market leader

(42.9%), they can introduce morehealth-based products without anydoubts.

Sponsorship can be gained throughdifferent means, such as sportingevents.

THREATS

There is a potential intensecompetition amongst the top playersin the competition.

Competitors can use aggressive

marketing strategies like cuttingprices.

Along with this comes increasedcompetition to gain market share.


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Where do we want to go

Knowing where the organization is at the present time enables managers to set adirection for the firm and start to allocate resources to move towards that

direction. Two techniques to aid in these decisions are: Portfolio and Market

Product analysis.

The Portfolio of Business: BCG Matrix


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Market Product Analysis

Firms can also view growth opportunities in terms of four combinations of current

and new markets and current and new products. As Nestl attempts to increase

the sales of its fruit yogurts business, it must consider all four of the alternative

market-product strategies.


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11. Proposed Marketing MixOn the basis of current sales and consumer response to Nestl Fruit Yogurt, we

feel that the current product line needs change. Nestl Fruit Yogurt is a product

that was essentially made to target adult males and females but consumer

behaviors show that the product is being consumed more by children. An

addition to that is the fact that the targeted literate and health conscious

segments of the market arent consuming this product as forecasted due to the

fact that with the products high nutrition value it has relatively high fat content.

To face these issues, we propose that a new product should be introduced in the

existing product line. The new product will overcome the limitations of the current

Fruit Yogurts and allow further penetration into the market and increase market

share.

The components of each marketing mix element are combined to provide a

cohesive marketing program which is explained as follows:

1. Product Strategy

Nestl Fruit Yogurt is a new product of Nestls product line in Pakistan.

Nestl is rightly reputed to offering high-quality, tasty and healthy food items.

Keeping that in consideration proposed Nestl Fruit Yogurt has been made

on same lines and is a substitute to sugary junk food items. This product hasall the goodness of milk, fruit and yogurt and to add to it, the product has

extremely low fat content (99% Fat Free).

The product is expected to gain popularity and momentum in market due to

the distinctive features of taste and health combined together along with

following features:


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Size and Package:After the popularity of fruit yogurt with kids, the proposed

product now comes in a family size package so as to be utilized equally by

family as a whole. Therefore three different sizes will be introduced, ranging

from small, medium and large. Following is a hand made large package

sample of the proposed product.

Nestl Pineapple Fruit Yogurt Prototype

Fat content:The fat content of the product has been reduced to 99 percent

which makes it .2 g on fats as opposed to 2.00 g of the existing product in

small size.

Flavor:Fruit yogurt currently comes in flavors as Strawberry, Peach and

Apricot in Pakistani market. However, to give vastness to the flavors it offers

to fruit lovers the new product introduced is Pineapple flavored. This gives

novelty to current flavors being offered and more choice to consumers.


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Target Market:Due to the above mentioned new features Nestl Fruit Yogurt

now targets adults who are health conscious on the same basis as the

existing product targets kids as well as adults. Due to its reduced fat-content it

is now a best choice for health-conscious people. People can now use it

readily as a dessert without worrying about its fat content affecting their

dietary plans.

Where the existing fruit yogurt targets only individuals with its small sized

pack, it now targets the whole family with its new packaging and attracts awhole lot of new pineapple-lover consumers.


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2. Price Strategy

Setting price of a product is one of the most challenging decisions. As thisproduct is relatively new in the market, due to the fact that there are fruit

yogurts in the market but none with low-fat content; Nestl could choose from

either of the following pricing strategies:

1. Creaming or skimming

Selling a product at a high price, sacrificing high sales to gain a high profit,

therefore skimming the market. This strategy is employed only for alimited duration to recover most of investment made to build the product.

To gain further market share, a seller must use other pricing tactics such

as economy or penetration.

2. Limit pricing

This is a strategy of pricing adopted by firms in a contestable market in

order to 'limit' the ability of new entrants to take advantage of economies

of scale where by costs are low enough for them to become competitive.

3. Market oriented pricing

Setting a price based upon analysis and research compiled from the

targeted market.

4. Penetration pricing

Setting an initial low price at the stage of deployment of the product to

attract initial customers. The price is likely to rise later as the product gains

a market share.


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5. Contribution Margin-based Pricing

Contribution Margin-based Pricing maximizes the profit derived from an

individual product, based on the difference between the product's price

and variable costs (the product's Contribution Margin per Unit)

6. Psychological pricing

Pricing designed to have a positive psychological impact. For example,

selling a product at 4.95 rather than 5.

But before we decide on the pricing strategies, a pricing objective needs to be

established to achieve required goals. For this to be useful, the pricing

objective management selects must be compatible with the overall goals set

by the firm and the goals for this marketing program. Nestl could adopt the

following pricing objectives:

Profit Orientation

Sales Orientation

Status quo Orientation

For Nestl Pineapple Fruit Yogurt to be successful the company first needs to

capture a large market share and to do so the sales volumes need to be

increased; thus, the objective is sales orientation. In order to achieve these

objectives Nestl needs to commit time and money to this marketing program

in the form of a budget. The budgeting process starts with a sales forecast

based on estimates of units expected to be sold-by month, quarter and year.

Estimated expenses for the marketing mix activities comprising the marketing

program are estimated and balanced against expected revenues to estimate

the programs profitability. This budget is really the sales document

presented to top management to gain approval for the budgeted resources to

implement the marketing program.


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Now that the pricing objectives are set, the pricing strategy needs to be

decided on the following grounds:

Nestl Pineapple Fruit Yogurt has low fat content which is a strong

desired feature by target customers.

As the product is unique in its characteristics, its demand is fairly

inelastic.

A large market exists for the product.

Substantial reductions in unit costs can be achieved through large

scale production (economies of scale).

The product is protected from competition through patents and high

plant and equipment costs.

Given the conditions neither a complete market-skimming pricing strategy nor

a strict market-penetrating pricing strategy would best suit the pricing

objectives of Nestl Pineapple Fruit Yogurt. Instead, a carefully selected price- neither too low nor too high would allow us to harness all of the products

market potentials. The price would be higher than the market-penetrating

price level but would still accomplish in penetrating the mass market

immediately and, in doing so, generate substantial sales volume and a large

market share. The price will not be too high either so as to only generate lump

sums of profit, but will serve its purpose of profit generation. But for this

Mesh pricing strategy to achieve its goal Nestl needs to reduce its selling

costs by minimizing its production costs which can be achieved through

economies of scale (limit pricing). We recommend the price to be:

Rs.39 for Large size

Rs.25 for Medium size

Rs.10 for Small size


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3. Promotion Strategy

It would be safe to say that most companies engage in some form ofpromotional activity every day of the year. Promotion is one of the four Ps of

marketingprice, product, place, and promotion. Promotion is generally

thought of as a sequence of activities designed to inform and convince

individuals to purchase a product, subscribe to a belief, or support a cause.

All of the various tools available to marketing managers for promotional

activities constitute what is known as the promotional mix. Launch of a new

product into the market is usually accompanied by an aggressive promotional

campaign. The objective is to make people aware of the new product, its

distinctive features and want satisfying capability. It also aims at outshining

the competition and forcing the customers of the existing brands to switch to

this new product.

After designing our new pineapple yogurt, we set out with the task of

promoting its distinctive features. It is an addition to the Nestls fruit yogurt

series but is better then the earlier introductions in the following ways:

Pineapple flavor (a new one)

99% fat free.

Available in the packs of varying sizes (small Rs.10, medium Rs.25,

and large Rs.39).

An attractive and convenient packaging.

Reasonable prices of all yogurt packs.

Promotional mix of pineapple yogurt

Marketing managers use different components of the promotional mix as tools

for achieving company objectivesadvertising, personal selling, public

relations, and sales promotion. Each of these elements can be further divided

into additional subcomponents or strategies. The majority of a company's

promotional resources are usually spent on these four elements for a simple


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reason: Companies perceive these methods as the most effective means to

promote their products. In the introductory stage of the life cycle of a product,

the promotional campaign should serve the following purposes:

Informative

Aggressive

To accomplish these goals, we have planned to utilize every possible and

available media of promotion because this will help ensure the success of our

innovation.

Advertising

An identified sponsor often thinks of advertising as the paid, non-personal

communication used in the promotion of a cause, idea, product, or service.

The various advertising delivery methods include banners at sporting events,

billboards, Internet, web sites, logos on clothing, magazines, newspapers,

radio spots, and television commercials. Among the common forms of

advertising are advocacy, comparative, cooperative, informational,

institutional, persuasive, product reminder, point-of-purchase, and specialty.

For the selection of an appropriate advertising media for our new product, we

will carry out a media analysis which is defined as:

"An investigation into the relative effectiveness and the relative costs of using

the various advertising media in an advertising campaign"

We believe that before committing an advertising budget it is necessary to

carry out marketing research on:

Potential customers.

Their reading habits, television-watching habits.

How many times do we wish the potential customers to see an

advertisement?

How great a percentage of the market we wish to reach, etc.


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These elements all need to be considered and balanced to plan a campaign

that will effectively reach its target audience at a reasonable cost. After the

analysis, we will resort to the following two media.

Published media

Following are the forms of published media we suggest to be used for

advertising the new product.

National daily newspapers

Sunday newspapers

Local and regional newspapers

Consumer magazines

Specialist magazines

Catalogs

Trade and professional press

Internet

We will make sure that our posters and advertisements have their place in

every ordinary or famous magazine and catalog as we are targeting every

age group and people belonging to every income-level and socio-economic

status. Also, there is no active website of Nestl Pakistan, we recommend

that a website of Nestl Pakistan should be launched which includes the all

product lines of Nestl available in Pakistan. Following is a poster designed

by us for the promotion of our new product Nestl Pineapple Fruit Yogurt.


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Visual and aural media

Visual and aural media promotion will include:

Television (terrestrial and digital)

Radio

Cinema

Billboards

Transport

Direct mailing

Our message regarding the pineapple yogurt

Our logo

Sales promotion

Sales promotions are marketing practices designed to facilitate the purchase

of a product that do not include advertising, personal selling, or public

relations. Companies use sales promotion for a variety of reasons; (1) to

attract new product users who will hopefully turn into loyal consumers who

keep buying the product; (2) to reward existing consumers with a price

reduction, thereby maintaining their loyalty; and (3) to encourage repeat sales

from occasional consumers. Companies use a variety of sales promotion

tactics to increase sales, including advertising specialties, cash refund

offers/rebates, contests and sweepstakes, coupons, patronage rewards,

point-of-purchase displays, premiums, price packs/cents-off deals, samples,

and trade shows.


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Trade shows

Most industries hold conventions and trade shows each year to show off new

technology, assess consumer trends, and review other issues important to

the industry. Trade shows provide firms that sell to a particular industry an

excellent opportunity to promote new products, make new contacts, renew

existing business relationships, maintain or build a reputation, and distribute

promotional materials. Considering this means an effective way of promotion,

we set out to become a part of an extravaganza organized by Bahria

University. On this occasion renowned fast food chains, national and

international airlines, consumer goods and service companies will bepromoting and selling their products and services. We have already bought a

stall and now are busy making captivating posters and charts for the

presentation of our innovation. We are hopeful that this mega event will turn

out to be an effective promotional platform for us. People in scores will come

because of the big names (sponsors) associated with this trade show and will

actually get to experience the taste of our pineapple yogurt.

Samples

We have decided to distribute free samples of our innovation to the visitors of

the extravaganza. We will also use delivery methods, which include mailing

the product, passing the product out in stores, or door-to-door delivery. The

largest drawback of free samples is their high cost. However, we expect that

the associated sales will offset the initial cost of the free samples.

Advertising specialties

We will frequently create and give away everyday items with our printed name

and logo such as caps and coffee mugs on the extravaganza and elsewhere.

Premiums

A premium is a good offered free or at a low cost to encourage consumers to

buy a particular product. In order to stimulate the demand of our product on


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special occasions such as ramzan, extreme summers, eid-ul-fitr and azha, we

will offer products for free with it e-g if we consider the smallest pack of

rupees 10 then the offers accordingly will be:

In Ramzan - Pineapple Fruit Yogurt with the pack of pakora mixes

R.20 only (5 Rupee discount).

On Eid-ul-Fitr - Pineappl

nestle yogurt

Documents

brief introduction of

vision statement of

segmentation strategy

product strategy

mass strategy

differentiation strategy

proposed marketing mix

marketing intermediaries