Nestle: A marketing analysis

Nestle A foodstuffing analysisNestl is the worlds leading Nutrition, wellness and Wellness participation (Nestl SA, 2010). As the worlds leading food connection, Nestl is dedicated to provide the best nourishment to people finishedout their lives by understanding consumer needs and coming upon those needs through its global resources. Nestl has grown to become the worlds largest food company providing to a greater extent than 8,500 brands and 10,000 harvests. Nestl has more than 456 factories spread over 80 countries with its headquarters in Vevey, Switzerland and employs more than 283,000 people.The founder for Nestl Group was a Swiss chemist know as Henri Nestl. It started when there was a high infant mortality in Europe refer able-bodied to mal diet, where Henri began experimenting with nutritious food supplements to overcome the situation. During 1867, Henris first success was the development of milk food supplement which had helped a premature infant who was unable to a ccept his mothers milk or other conventional substitute. The growth was then foodstuffed throughout Europe which was known as Farine Lacte Nestl. Henri Nestl adopted his own coat of arms as a trademark in 1867 known as Nestl which means little nest translated from German, and the now-famous symbol is universally understood as it represents nurturing, caring, security, nourishment and family bonding. These attributes be take over the guiding legacy for the company as it fulfills its commitment to Good nutrition, Good Life. During 1905, Nestl Company merged with the Anglo-Swiss Condensed Milk Company, the first condensed milk factory which opened in Switzerland during 1866. In 1904, Nestl entered into milk chocolate line of work when Peter Kohler Swiss General Chocolate Company produced milk chocolate under Nestls trademark and the company then joined Nestl Group in 1929. Nestl grew and diversified its begin of products, through acquisition and mergers with well known brands.N estl started in Malaysia during 1912 as the Anglo-Swiss Condensed Milk Company in Penang. The developing and expansion make a move to Kuala Lumpur during 1939 and with its first factory located in Petaling Jaya in 1962. Now, Nestl Malaysia manufactures its product in 7 factories and operates from its head sanction in Mutiara Damansara with six other sales offices nationwide. The company was public listed on KLSE during 13 December 1989. Today, the company employs 5000 people and markets more than 300 Halal products in Malaysia such(prenominal) as Milo, Nescafe, Maggi, Kit-Kat, Nesvita and etc. Nestl Company still adheres to its founders beliefs and principles providing the best products for every individual.(Source nestle.com.my)SITUATION ANALYSISMarket SummaryThe s low-spirited discombobulate indus try on consists of establishments in the beginning engaged in manufacturing non-alcoholic beverages in the form of carbonated and non-carbonated. These take ins are normally consu med era it is cold. Carbonated drinks are drinks that contain gassy and fizzy feeling while drinking such as soda, cola and many more where as non-carbonated are drinks which do non contain gases such as fruit juices, yoghourt drink, cordial, and etc.In the Malaysia market, cottonyish drink industry has been growing continuously for 5 consecutive years since 2002 (Loh, 2009). In fact, there are a plastered amount of consumers who really enjoys soft drinks as they are cold and refreshing for a hot climate country. Most consumers are normally children and young adults ascribable to their active lifestyle. According to the report entitled Soft Drinks in Malaysia to 2012 by Research and Markets, it states that the market for soft drinks had increased from 2002 to 2007 with a growing annual fair(a) rate of 5.7% (Asia Food Journal, 2009). However, there has been a decline in the sales of carbonates, functional drinks, concentrates and ready-to-drink (RTD) teas where this path ca n be deduced from the growing health awareness which encourages a stronger demand for healthier beverages (Loh, 2009). The consumer market has not changed their main taste in carbonates. However, seeking for alternative and healthier choices is getting popular.In the forecast from 2008 to 2012, there pull up stakes be a continuing but slower progress in the soft drinks industry in terms of quantitative and qualitative sales where the trend is inclining towards healthier drinks that include low-calories and low-sugar products in natural and healthier form such as fruit or vegetable juice (Loh, 2009). Furthermore, the consumption of soft drinks is withal a fairly high consumable product in the market as Malaysia is an Islamic country and therefore the consumption of alcohol per crownita is low as Muslims do not consume alcohol (Malaysia Food Drink Report Q3, 2008).Target MarketThe target market for Nestls soft drink products focuses more to a healthier drink and a target group th at ranges from children to adults depending on the type of drinks. For instance, Yoco Cultured Drink targets more to the children segment, RTD Milo in UHT targets more on children to young adults segment, RTD Milo canned and RTD Nescafe targets more on young adults segment and Nestl satisfaction Yogurt Drink are more to young adults to adults segment. In addition, target customers who acquire these products often prefer devisal as these drinks are ready to be consumed straight away.Market Attractivenessworld(a) uncertainties had brought an impact to Nestl performance. Although with the problematical economic environment that Nestl Malaysia faces, the Nestls management group took actions to help hear the company delivers a strong performance reaching a double number growth of 13.5% together with a total sales turnover of RM3.9 billion in 2008 (Nestl Corporate Report, 2008). Nestl has in addition made a move towards the expansion of touristed Positioned Product (PPP) which off ers Malaysians nutritionally balanced products at affordable legal injurys (Nestl Creating Shared Value Report, 2008).Still, there is besides strong competition in the soft drinks industry that has contributed to challenges in terms of worth due to economic factors. Furthermore, strong companies like FN Sdn Bhd and Pemanis Sdn Bhd switch higher awareness in this industry as they focuses mainly on soft drinks. In fact, this industry is seemingly non-attractive for forward-looking entrants as there are many companies plus strong existing companies in this segment. However, Nestl only focuses on drinks which benefits health and wellness of the people and has a competitive differentiation as consumers nowadays are seeking for healthier alternatives.In terms of political factor, Nestl shares the concern of the Ministry of health on the state of the nations health such as supporting the efforts of the National Plan of Action for Nutrition Malaysia II (NPANM II) to address health is sues related to nutrition affecting Malaysians (Nestl Creating Shared Value Report, 2008). Nestl similarly focused on the Centre of Excellence for Halal in Malaysia that offers Halal products which has gained even more ground and greatness not only in the local market but also the export market (Nestl Creating Shared Value Report, 2008). According to The Star, Nestl Malaysia expects its out-of-home food and beverage market to double to RM7.84bil in five years as Malaysians spend more money eating out which is known to be a social trend. The companys out-of-home market was 35% from the current share of RM11.2bil due to increase number of partnerships the company had and an increasing amount of people eating out (The Star, 2009). Besides that, Nestl Malaysia also pose an importance and is committed towards environmental issues by practicing to preserve natural resources and minimise waste (Nestl Creating Shared Value Report, 2008) where Nestl has come up with Nestl Environmental Ma nagement formation (NEMS) which is to improve management cycle and manages the companys environmental performance in alignment with the requirements of international standard ISO140012004.PositioningIn response to the current consumers need for health, nutrition, gubbins and well-being, Nestl had positioned its products by providing a full range of clarified nutritional balanced products that are trusted brands among the Malaysians.Differential AdvantageNestl Malaysia has a certain differential reward especially in terms of providing healthier and trusted brands as it has existed for a commodious period of time in the Malaysia market. For instance, Nestl received a positive feedback from consumers by offering full range of drinks product with No Artificial Colouring in meeting of minds with Some Things are Best Left Natural weigh (Nestl Corporate Report, 2008). Nestl Malaysias credibility and positioning as the Centre of Excellence for Halal deep down the Nestl group has gai ned importance by successfully launching wide range of Halal products as these products are not only being marketed locally but also to the export market (Nestl Corporate Report, 2008). Besides, these products have gained trust and impudence among the Muslim consumers (Nestl Creating Shared Value Report, 2008). Due to increasing out-of-home food and beverage market, Nestl has also evolved the Food Services Business Unit into Nestl Professional to manage business globally for independent business that caters for the needs of out-of-home operators which ranges from five-star hotels to mamak stalls (The Star, 2009) where the company focuses on consistency in the market. This give also be an added advantage for the companys long-term, profitable growth as it aims to be an inspiring growth partner by delivering creative and branded solution that exit enable operators to operate and create customer satisfaction. Furthermore, Nestl has also launched a range of products known as Popularl y Positioned Products (PPP) in 2008 by providing products at an affordable set range to consumers (Nestl Creating Shared Value Report, 2008) to be price competitive in the market and at the same time providing quality products to consumers.The MicroenvironmentCompetitorsThe soft drink industry in the Malaysia market faces many competition and challenges. Among the few soft drink manufacturers in Malaysia are FN Sdn Bhd, Pemanis Sdn Bhd, Yeo Hiap Seng (M) Bhd, Malaysia Milk Sdn Bhd, Lam Soon (M) Sdn Bhd, Pokka Ace Sdn Bhd, Dutch Lady Milk Industries Bhd and etc. One of the leading soft drink manufacturers in Malaysia is FN Sdn Bhd (Asia Food Journal, 2009) where the main product for FN Sdn Bhd in Malaysia is Coca-Cola which is known to be the leading soft drink brand around the world and rank first in the Best Global Brand 2000-2009 (Interbrand, 2010). Furthermore, FN Sdn Bhd also produces the main selling isotonic drink which is 100Plus. However, the direct competitions faced by N estl Malaysia are as stated in the table where these competitors are known to have product which have similarity in relation to Nestls beverage product.ProductNestls productCompetitorsCompetitors productChocolate malt drinkMiloMaestro Swiss Corporation (M) Sdn BhdVicoRTD coffeeNescafe (canned)Pokka Ace Sdn BhdPokka (canned)Yogurt drinkNestl Bliss Dutch Lady Milk Industries Bhd Dutch Lady Yogurt DrinkCultured drinkYoco Malaysia Milk Sdn Bhd MDD (M) Sdn Bhd VitagenNutrigenSoya bean milkNestivaFN Sdn BhdYeo Hiap Seng (M) BhdLam Soon (M) BhdSeasonsYeosDrinho(Source Malaysia Food and Beverage Directory Online)DistributorsNestl distributes its product through its National Distribution Centre to its wholesalers and retailers like jumbo, Tesco, Carrefour, Jusco, KK Supermarket, 7-Eleven, 99-Speedmart and many more which go forth then be sold to end users.(Source Nestl Report, 2008 behemoth Hypermarket Shah Alam Tesco Hypermarket Shah Alam Carrefour Subang Jaya Jusco Bukit Tinggi, Klang K K Supermarket Section 9, Shah Alam 7-Eleven Section 9, Shan Alam 99-Speedmart Section 25, Shah Alam)SuppliersIn order for Nestl to produce its product, materials such as packaging and ingredients are obtained through trustworthy suppliers. Furthermore, it is very gainsay for Nestl Malaysia to ensure a steady supply of material at competitive cost. Nestl Malaysia currently has about a total of 150 suppliers which include 40 that are local companies and these 40 local companies supply and contribute only 10% of its raw materials and ingredients to Nestl Malaysia (hdcglobal.com, 2009).SWOT Analysis(Source Malaysia Food Drinks Report Q3 2008)StrengthsOne of the strongest and well known brand names in the marketAn immensely dominant parent company in Malaysia as it is one of the most important Asian markets to ensure the subsidiary continues to receive investment fundsActs as an important regional hub in Malaysia and as such production facilities remain revolutionaryWeaknessesPrice-sen sitive Malaysian consumers specify strong growth opportunities at the ultra-premium end of the marketConsumer p author for fresh foods brings a large challenge towards the processed product portfolioOpportunitiesHaving Malaysia established as its Global Centre for Halal Excellence where it is on the edge to capitalise on growth in this global industry as Halal foods have contributed curiously strongly in Nestl Malaysia export growthRegional health and hygiene scares have led to increased interest in processed foods, especially from an established and recognised manufacturerHealthier option of instant food exploit consumer interest in the fields of contraption and healthy-livingThreatsContinue to feel its margins pressurized by increasing commodity expenditure and a desire to maintain consumer loyalty by keeping prices lowMarketing MixProductCanned DrinksMilo snapshot N Go (Original, Mocha, Hi-Cal)Nescafe (Black Roast, Original, Mocha, Latte, Ice)UHT(Tetra Pak)MiloNesvita Soya B ean Milk (Original, Calcium, Honey, Aloe Vera, Gula Melaka)Cultured DrinksNestl Yoco (Strawberry, Orange, Blackcurrant, Mixed payoffs)Yogurt DrinksNestl Bliss (Orange, Strawberry, Kiwi, Guava, Blackcurrant, Mango, Tropical Fruit, Passion Fruit Orange, apple Kiwi, Lime Cucumber)(Source nestle.com.my)PriceProductPriceMilo Grab N Go (canned)RM1.40 (Original 240mL), RM1.61(Hi-Cal 240mL), RM1.69 (Mocha 240mL)Milo (UHT)RM4.29 (1.0L), RM7.29 (6 x 250mL), RM3.73 (4 x 125mL)Nescafe (canned)RM1.69 (240mL), RM9.39 (6 x 240mL)Nestiva (UHT)RM5.89 (6 x 250mL)Nestl YocoRM3.49 (5 x 120g)Nestl BlissRM4.19 (750g), RM1.99 (300g), RM4.19 (5 x 125g)(Source Tesco Hypermarket Shah Alam)PlaceNestl produces its products in 7 factories and impart then distribute its product through its National Distribution Centre to its retailers like hypermarket and supermarket such as Giant, Tesco, Carrefour, Jusco, KK Supermarket and convenience stores such as 7-Eleven, 99-Speedmart and many more which will then be sold to consumers which is available throughout the whole nationwide of Malaysia.(Source Nestl Report 2008 Giant Hypermarket Shah Alam Tesco Hypermarket Shah Alam Carrefour Subang Jaya Jusco Bukit Tinggi, Klang KK Supermarket Section 9, Shah Alam 7-Eleven Section 9, Shan Alam 99-Speedmart Section 25, Shah Alam)PromotionNestl Malaysia has done all sorts of promotions in order to promote their products such as by holding events, sampling, consumer battles, advertising, offering lower prices for their products and many more to attract customers into purchasing their brand.(Source Nestl Creating Shared Value Report 2008 Nestl Corporate Report 2008)PeopleSince 1912, Nestl has built the trust among Malaysian consumers through its variety of products which are now well-known household brands. According to the Corporate Brand Monitor Study conducted by Nestle during 2008, the first company that came into opinion was Nestl when being asked to think about food and beverage companies (Nestl Creating Shared Value Report, 2008). In 2008, there was a significant increase towards the awareness of Nestl among the consumers in the Nestl database. A majority of those vignetteed have a good impression of the company (Nestl Creating Shared Value Report, 2008).In Nestl Malaysia, it is important for employees to contribute towards their corporate vision which is the leading reference company in Nutrition, Health and Wellness. Nestl believes that a healthy workforce can contribute to happy employees and improve productivity (Nestl Creating Shared Value Report, 2008). According to the Organisational humour survey conducted by Nestl during 2007, the company is known to be the preferred benchmark against other High Performing Global Companies with a participation rate of 91% (Nestl Creating Shared Value Report, 2008).ProcessConsumers can easy secure Nestl drinks products from Nestl distributors such as hypermarkets, convenience stores and etc to obtain the products.Physical evid enceThe beverages size ranges are as stated belowProductSizeMilo Grab N Go (canned)240mLMilo (UHT)125mL, 250mL, 1.0LNescafe (canned)240mLNesvita (UHT)250mLNestl Yoco120gNestl Bliss125g, 300g, 750g(Source As printed on the packet of the drinks)(Source product images interpreted from nestle.com.my)MARKETING STRATEGYObjectiveTo create brand awareness for raw and current productTo create satisfied customers towards product and servicesTo increase redundant sales profit for the companyAnsoff MatrixExisting ProductNew ProductExisting MarketMarket PenetrationPrice making price affordable for this productPromotion having let go of samples and creating added value for customersPlace making product available and accessibleProduct DevelopmentProduct creating an addition natural product for the drinks segmentNew MarketMarket DevelopmentPeople creating a wider target marketDiversificationProduct Development (creating a new beverage product for Nestl)Product A new product will be created as an addition to Nestl drinks segment in the existing market. This product created will be a fruit drink called NesFruits which is a healthier alternative of fruit drink that will be available in the market as it contains less sugar and also no unsubstantial colouring and seasoner is added into the drink. Creating a healthier alternative drink will help boost up company sales as consumer are more health conscious nowadays and want more choices and options while they seek healthier alternative in drinks due to the increasing numbers of illnesses that is arising with unhealthy lifestyle.Market Penetration (penetrating to competitors market)Price This new drink will be priced at an affordable price and move in the market under the Popularly Positioned Product (PPP) by the company in conjunction with available ongoing promotions where customers alship canal like their products with quality and within an affordable range for them to acquire.Promotion This drink will be placed under promotion by giving out unfreeze sampling with every purchase of Nestl product, holding consumer contest and events when it is newly launch. Furthermore, offering a lower price promotion or giving out some freebies with every purchase of the product can help to penetrate competitors market. By doing so, it can help to create an added value and satisfaction within customers when purchasing the product as customers extol great value for money and offers.Place This product will also be made available and accessible for everyone where it can be easily gettable nationwide. It will not only be made available in hypermarkets and supermarkets but can also be easily purchased through vending machines, convenience stores, fast food outlets and petrol kiosks when the consumer has a sudden desire of having the drink.Market Development (creating a wider target market)People This new drink should be able to have a wider segment since it is meant for everyone as it is a healthy drink. However, this drink is not just targeting people who are health conscious but also for people who desires and enjoys having fruit juices all the time. Furthermore, having a wider market can help boost extra sales and profit.Target MarketThe target market for NesFruits would be more for consumers who are health conscious especially the baby-boomers generation. This product is created in such a way where it is less sweet with no added artificial flavouring and colouring. In addition, this product will also be targeting people who want convenience and enjoy drinking pure fruit juice.PositioningThis product will be positioned as a healthier choice of fruit juice which contains less sugar and no artificial colouring and flavouring is added into the drink. Furthermore, this fruit juice also contains high vitamin C as it is made from real fruits. The purpose of having this product to be less sweet is due to increasing numbers of diabetics in Malaysia (The Star, 2010). As people are aware of the ri sk of consuming too much sugar, this will lead them to purchase healthier alternative drinks. Besides that, artificial content is also unimportant in Nestl products with the supporting run theme of Some Things are Best Left Natural. In fact, colouring and flavouring does not play an important obsession to adults as they know that artificial content is a chemical which will harm the body if consumed on a long term basis (Heather, 2007). On top of this, it is not the colour of the drink that matters but the original quality content of the drink which is more important such as the purity and freshness of the juice with a combination of fruity good taste. In addition, this drink is also more refreshing and thirst extinction because there is less sugar added as sugar will tend to make a person thirstier after consumption. This drink also helps bring convenience for fruit juice lovers where they do not need to go through the process of blending fruits to get the juices as this product r eally taste like juice out from the blender. Moreover, this product can be consumed on a daily basis as it is made from natural fruits with less sugar and no added artificial content and therefore suitable for everyone.Competitive AdvantageThese new juices are high in vitamin C as they are extracted from real fruits. Furthermore, this drink also contains less sugar compared to other fruit juices that is available in the Malaysia market. In addition, artificial content is also not added into the drink with supporting campaign theme Some Things are Best Left Natural.Competitive TargetThe direct competitive target for this new product will be FN Sdn Bhd Fruit Tree and Malaysia Milk Sdn Bhd Marigold Peel Fresh (food-beverage.com.my). This is because both of these brands are the main key players in the fruit drink segment. Furthermore, they are also competitive dispute in terms of price as this new product will be priced higher compared to them in the market. However, with the excelle nt quality and the benefit of the new drink, it will somehow attract consumers that is seeking healthy drinks in the market as this new drink is something different compared to the fruit juices that competitors are having.StrategiesProductNesFruits is a new fruit juice product from Nestl that will be an addition to the drink segment for the company. This product comes in an assorted range of flavours which includes orange, apple, grape, mango and tropical mix. It will also be packed in various pack sizes which include handy pack size of 250mL for convenience and large pack size of 1.2L and 2.0L for volume consumption.PriceThe price for NesFruits will be slightly more expensive than other brand of fruit juices that is available in the market as it is made purely from fruits in comparison with the quality at an affordable price. The price will be range from RM6.99 to RM10.99. The 250mL pack of 6 will be price for RM8.99, RM6.99 for the 1.2L and RM10.99 for the 2.0L.PlaceNesFruits wil l go through channel integration which will be sold through intermediaries using conventional marketing channels such as supermarkets, hypermarkets, convenience stores and vending machines. This product will be easily available at all supermarkets and hypermarkets such as Giant, Tesco, and Carrefour plus easily accessible through convenience stores such as 7-Eleven, petrol kiosks and Nestl vending machines.PromotionIn order to promote NesFruits in Malaysia, these are the following ways that the promotion should be doneEventNesFruits will be introduced and launched through an event by the Malaysia Health Ministry and Malaysia Natural Resources and Environment Ministry.The purpose of this event is not only to introduce a healthy fruit juice in the market but also to create awareness that Nestl Malaysia is a sustainable company towards the environment where the fruit waste from the product will be further used to make enzyme that can be use for household cleaningDuring this time, free samples will be done to let the people try out the new product and to collect feedback about the new drink.This product will also be placed under promotional sale for customers to purchase.In addition, this event will definitely have good publicity as it will be advertised through the media since it is supported by the Ministry of Malaysia.Product brochureNesFruits can also be introduced using Dear Nestl Programme by sending product brochures to introduce this new product to Dear Nestl members.On top of this, a coupon add-in for a free NesFruits 250mL and discount voucher will also be given for the members to prompt them in trying this new product which is easily obtainable at participating retailers.SamplingA coupon card for 2 free sample of NesFruits 250ml (customer gets to choose any 2 flavours) will be given out with every purchase of RM20 and above on Nestl products at participating retailers to introduce this product to the market. By filling in their particulars on the coupo n card and submitting it to participating retailers, customers will have a chance to try out the new product for free.This product can also be promoted by having free samples in supermarkets and hypermarkets during weekends when most people do their grocery shopping.gross revenue promotionA sales promotion of buy 2 free 1 or giving out some nice freebies with every purchase of the product will also be done at different period of time to create added value for customers.20% discount promotion on price (PPP) will also be done during certain period of time.ContestA contest will also be held in conjunction with the launching of this product which will be held for 2 months by just answering 3 simple questions on the contest form.Entitlement for this contest 4x250mL 1 contest form, 1.2L 1 contest form, 2.0L 2 contest formWinners RM50,0001 RM10,0003 RM1,00010 RM500x50AdvertisementAdvertisement for this product will be done on billboards, newspapers and health magazinesThis is to remind, reinforce and at the same time create awareness for this newly launched product and available on-going promotions.In order to launch this promotional campaign, Nestl Malaysia will have to hire a specialist agency to organize the development of this campaign for this new product.PeopleThe following are ways to sell this product to retailersIn order to have working productivity among the employees in the key account management division, Nestl Malaysia must follow the cycle of motivation as stated in the diagramThis product is a low involvement purchasing behavior product among customers. Therefore, it is better to create awareness by having trial for this product and to collect feedback from customers to make amelioration according to customers needs and wants in order to have repeat purchase in the future.ProcessPurchases of this product can be easily made by way of payment at the place of distribution.Physical EvidenceNesFruits will be packed in a tetra pak form in which the 1.2L and 2.0L comes with bottle cap to open and close the drink easily so that the drink will not spill where as the 250mL will come with a straw and a sealed lid for convenience to drink straight away from the pack.Marketing ResearchProductFree sampling will be done during weekends at hypermarkets and supermarkets to get direct feedback from customers about the new product.PriceMonitoring competitors through environmental scanning, and gathering, buying, soliciting information about competitors by comparing the prices of other competitors and setting the product at a reasonable price for customers under the Popularly Positioned Product once there is a high demand.PromotionUsing email survey to collect feedback from customers about the product that they obtained from retailers using the coupon card and customer who answer the survey will get a discount voucher to purchase Nestl products.Directly ask for customers feedback and record it during sampling in retailer outlets and customers wh o gives feedback will obtain a small giftPlaceRegular site visits to retailers to enlistment on the availability. The visitation will be done on a weekly basis at different locations for 1 to 3 years depending on how well the new product sells.KEY AVTIVITY PLANNERMARKETING ACTIVITY BUDGETOverall StrategiesStrategiesCostEvent to launch NesFruits in support with the Ministry of MalaysiaRM200,000 large-minded out product brochure to introduce NesFruits to Dear Nestl members with coupon card and discount voucher for members to try out the productRM250,000Giving out free samples of NesFruits with a purchase of RM20 and above on Nestl productsRM600,000Sampling in hypermarkets and supermarketsRM200,000Buy 2 free 1 sales promotion