Nestle Is The Worlds Largest Food Processing Company Marketing Essay

Nestle Is The Worlds Largest Food treat Company Marketing Essay1.0 INTRODUCTIONThe st prescribegic wariness transition is plantd on the belief that organization should continuously monitor internecine and external all the samets and trends so that timely change arseful be make as needed. An organization must be capable of wisely identifying and adapting to change. In this report, I provide choose Nestl S.A, oneness of the most victoryful fodder processing break-danceicipation in the world to discuss its dodge management process.2.0 COMPANY PROFILENestl S.A. is the worlds largest aliment processing guild and is headquartered in Vevey, Switzerland. The phoner was founded by Henri Nestl in 1866. Nestl Company had made several name changes from 1866 to 1947, and eventu radicallyy adopted Nestl S.A. in 1977 as the go withs name. Nestle S.A. has agenties or off drinking glass in to the highest degree every region of the world and intellectual nourishmentstuffs a wid e r distri neverthelessivelying of brands. The company is often described as the most transnational of the multinationals. in the current food for thought assiduity market.Henri Nestl, also know as of the of import originator of condensed milk. In 1867, he dumbfounded the first milk food for infants and a baby who could not be breast-fed was rescued. Nestls trick sufficeed to the need for a nutritionally safe alternative to breast milk. Thus, Nestl S.A has targeted to launch a telephone circuit based on sound human set and thoughts.The key to success of the company is referable to its huge Research and victimisation ne bothrk at heart the food processing fabrication. With RD as the competitive advantage, Nestl has move around the worlds leading nutrition, health, and hygienicness company. The company is devoted in continuing to change the nutritional determine of their convergences magic spell enhancing the flavour. Nestl come throughs this through its brands and with initiatives like the Nutritional clutch and 60/40+. Millions of people choose to consume Nestl ingatherings everyday beca example the company sustain the gauge as the fundamental ingredient in all of its brands. Consumers choose to place their trust in Nestl due to the companys dedication to achieve distinction and turn to Nestl brands to preserve nutritional balance in todays unfluctuating paced world.Switzerland-based Nestl S.A. has the in high spiritsest ranking as the largest player through turn out the entire world in the competitive agency indoors the food industry. The rating reflects the companys competitiveness and market attractiveness. With combined sales of 110 billion (Swiss Franc) in 2008, Nestl states a diversify short letter portfolio, being the market leader in numerous handleroad categories worldwide including bottled water, instant coffee, milk and cheese returns, nutrition and baby food, ice cream, frozen foods, culinary preparations, and co co proceedss. Nestls broad geographic reporting includes northbound America and Europe as tumefy as Asiatic markets.The vision of Nestl RD is capacious term, it helps shape the future of foods making consumer needs into explore priorities and convert new technologies into consumer benefits, and avails.3.0 STRATEGY ANALYSIS3.1 environmental ScanningEnvironmental scanning has the management scan internal environment and external environment. The factor which be the predominant factor for an organization factor is SWOT stand for strengths, weaknesses, opportunities and threats.3.1.1 SWOT abbreviationSWOT epitome is a strategicalal supply method increaseed by Albert Humphrey using data from Fortune ergocalciferol companies in the 1960s and 1970s.3.1.1.1 Internal EnvironmentStrengthsStrengths include anything a company does well and its options and capabilities for developing a competitive advantage.The expectantest strength of Nestl is elaboration that is police squa d foc utilise and an open door policy. Nestl focuses on collectivism and instruction exe cut oution orientation attitude which encourages employees to work harder.Nestl achieves broader swerve of harvestings by improving real and innovating new products. Consumer demands atomic number 18 switched to changes of taste, colours and design that clear been under comportn to products such as Nestls Smarties and Kit Kats.The launch of Kit Kat Chunky has turn up that creativity and innovation can extend the life cycle of a product.WeaknessesThe lack of certain strengths and things a company does not do well ar viewed as weaknesses.Nestl is poor in targeting some of its products.Nestl take outPak is a subvention product targeted to upper middle and high class consumers. Most consumers in Pakistan atomic number 18 from let outer middle and poor class. They are not bear to purchase it due to the premium cost.Nestl has a complex supply range of a function configuration too and tr aceability is a critical issue for Nestl India. High standards of hygiene, quality of edible inputs and manpower are required in the food industry. fragmented nature of the Indian market pull up stakes cause to a greater extent problems.3.1.1.2 outside(a) EnvironmentOpportunitiesThe external environmental analytic hazarding a crockeds new opportunities for arrive at and egression.Nestl in Pakistan has a great opportunity for expanding its milk products because Pakistan is the seventh major milk give awayr in the world with annual output more than 22 billion litres. panicsAdjustments in the external environment present threats to a pixilated. For an example, shifts in consumers favourences.The major threats to Nestls products is Unilevers Walls, a famous ice-cream brand. It is distributed nationwide and has total control within the local market.Besides, economic slowdown can centralize demand, and inflation is getting higher and higher causing the purchasing creator of consumers is decreasing day by day.3.1.1.3 General EnvironmentPEST AnalysisPest Analysis is used to illustrate a structure for the summary of macro-environmental factors.PoliticalPolitical factors include a country or governments regulations and reasoned issues and rules which a firm must follow. For example, Nestls famous brand milo.The product stay within the law in all countries including being informed of legislation health and safety, commercial standards, consumer protection and cunning description. economicalEconomic factors such like economic outgrowth, exchange rate and inflation rate will enchant potential customers purchasing power and the firms cash flow.During recession, customers have less disposable income, demand for Milo might drop in the market.SocialSocial factors comprise the cultural facial expressions and demographic of the external macro-environment. These factors influence customer needs and potential markets size.The society are more apprised of health certified nowadays, Nestl can induce up Milo as a new fashionable drink like coke confirmative in the fitness industry. proficientTechnological factors can reduce barriers to entry, make better products quality and influence outsourcing decisions.Advance in science allows Nestl to reform its product such as Milo, the company can add energy and healthy formula to Milo.3.2 Porters Five Forces AnalysisMichael E. Porter developed Porters five forces in 1979. It is a framework that helps marketer to distinctiate a competitive environment.Threat of substitute productsAn synopsis of the threat of substitute products will identify the consumers of a company might switch their purchasing alternative. There is a endeavor for food and beverages manufacturers to produce broad range of products. These products may contest with one another to gain market share and produce substitute for each other.Nestl Koko Krunch Cereal can be the substitute for Nestl Nesvita cereal drink s ince twain of them are intended for breakfast outlay.Nestl is not offering all kinds of food and beverages, those unoffered kinds may act as the substitutes for the Nestls products. For example, Nestl has coffee in its product lines which is Nescaf, the substitute for it can be the soft drinks which are not in the portfolio of Nestl. In this case the substitutes are very broad.Bargaining power of suppliersAn analysis of the bargaining power of supplierswill identify the changing toll, quality and service of suppliers without consequence. Supplier power can be different due to seasonal or economic cycles. Supplier power is increasing as umpteen an(prenominal) of the food processing companies are not producing their own raw fabrics.Nestl itself gets material in the form of raw or semi-processed directly from farmers and trade channels.By considering the number of suppliers in the industry and the switching cost, the dependency to a picky supplier can be reduced. Nestl has oper ations in galore(postnominal) countries throughout the world, if one supplier unable to offer good price for Nestl, it can switch to other suppliers.The bargaining power of supplier depends intemperately on the strength of the companys brand. Big companies such as Nestl can take advantage in bargaining.Bargaining power of buyersFood processing industry is very broad and rivals can come out with numerous product leadions. When the companies step into the maturity stage, they will have even more products provided to tone up the companys brand.Nestl Milo has strong market share and re mains a aeonian favourite amongst Malaysia consumers. In order to elevate streng thuslying the brands image, the company added Milo Gold to its product range to keep the consumers loyalty towards the product.Threats of new entrantsAn analysis of the threat of new entrants will identify entry barriers within an industry. Industries with high barriers to entry will face low risk from new competitors th an an industries with low barriers to entry.The argument of ice cream business in Pakistan is very small. This could make chances for other international ice cream brand to penetrate their products to compete with Nestl in Pakistan. The major substitutes of Nestls ice cream would be Walls ice cream and Hico ice cream.Competitive rivalry within an industry controversy among competing firms is the utmost of the five competitive forces. Firms within the same industry are competing with one another to gain customer share to increase lettuceability. The competitors are of roughly equal size which can make the competition even stiffer. They will attempt to gain dominance over another.Nestl and General mill around have voice endangerd for breakfast cereal market. By having such pin venture these deuce companies can achieve better success sooner of competing with each other.3.3 Value Chain AnalysisValue chain analysis is a development for understanding the general factors and condit ions under which a lever chain and its firms can achieve higher levels of performance.Manufacturing and the environmental footprintNestl has a great commitment to the environment.They put in great efforts to protect the glide path of water and ensure everyones responsibilities as water users.Nestl moves to different burn types to produce their products to improve the environmental performance. i of the significant steps in thevalue chain is transport. Nestl initiated an experiment withSchenker, toevaluate the effectofdifferent types oftransport, distancesdriven and fuel type used to create a better environment.Nestls employeesThe company determined by skilled and inspired workforce for related success.Nestl includes many nationalities, religions, and ethnic groups working together in one single unify corporate culture.Farmers and AgricultureNestl always assist farmers to be successful suppliers.This great effort is helping the entire region to develop a positive long-term impa ct to bring up economic performance.Nestl share good environmental and water management practices with farmers by carrying out agricultural programs.Nestl insist enactment of ethics to maintain good and long-term relationship with their suppliers.Products and consumersNestl strengthens its brands and customers loyalty to respond to consumers changing preferences.Nestl preserves the nutritious in its products while enhancing the flavour and improve the quality of their products.According to Julio Frenk, former Secretary of Health Mexico, from his experience in Mexico, he believes that Nestl is delivering genuine shared value through its products in the society.3.4 BenchmarkingA company should has its benchmark to improve quality of its products.In June 4, 2009, Nestl started make use of ASSET4 to benchmark its environmental, social and governance (ESG) performance.ASSET4 is the top supplier of idea, comparable, and auditable excess-financial information.According to Nestls head of Investor Relations, Roddy Child-Villiers said that Nestl is committed to improve its ESG performance via Creating Shared Value, which build continuous business triumph and the establishment of shareholder value to the earth of value for society at large.4.0 STRATEGY FORMULATIONStrategy prep is the second stage in the strategic management process. In the aspect of corporate outline, the current objectives and strategies of Nestl will be discussed as well as suggestions given on how Nestl to be more successful in the food processing industry. For example, what amendments should be made to achieve the development objectives and strategies of Nestl, the lines of business that Nestl is in now, and how these lines of business fit mutually.There are three main components cliff under corporate scheme. These components include directional strategy, portfolio analysis and parenting strategy.4.1 Directional strategyDirectional strategy refers to a firms overall orientation towards growt h, stability and retrenchment.4.1.1 fruit strategyGrowth strategy has two fundamental categories, concentration within animate industries and diversification into other lines of business or industries. In this report, I will choose to discuss the concentration strategy of Nestl. Concentration strategy can be achieved via merger and acquisition (MA).MA have emerged and are widely used in many industries today. Nestl has been using these form of strategic alliances to link technology gaps and resources, to recruit expertise and obtain market localisations. MA are essential and potentially useful for a company that wishes to go in a new industry and new markets.MergerMerger is be as the combination of companies.In 1905, Nestl S.A was formed by the merger called the Nestl and Anglo-Swiss Milk Company.Nestl stepped outside the food industry for the first time and diversify its business in the cosmetic industry. In 1974, Nestl became a major shareholder in LOral, one of the worlds le ading makers of cosmetics.AcquisitionAcquisition is the act of purchase or takeover of a company that is completely absorbed by the marcher or division of the acquiring corporation.Since 1985, Nestl has made over 50 acquisitions. Nestls growth strategy began with acquisitions to diversify its product offering.In the early 1990s, it used acquisitions to expand geographically. More recently, Nestl has focused its acquisitions on growing a grant number of very attractive businesses in markets where it can achieve leaders positions.For example, Nestl has acquired wintery Food in 2010. The factors of the acquisition are due to Frozen Foods number one position in United Stated and Canada as well as strong growth profile in North America by proving fast recovery in times of economic downturn.Meanwhile, concentration strategy includes two strategies which are vertical growth and crosswise growth. I will choose horizontal growth of Nestls for further discussion. crosswise growth refers t o the expansion of operations into other geographic locations and enlarging the anatomy of products and services offered to current markets. Horizontal growth can be achieved via joint venture. As an example, in 2001, Coca-Cola Company and Nestl S.A. continue their existing joint venture business, Coca-Cola and Nestl Refreshments. This co-operation will be renamed Beverage Partners Worldwide (BPW) to emerge their beverage segments, particularly ready-to-drink tea.4.1.2 Portfolio AnalysisPortfolio analysis is basically a product portfolio in which a company rank their products and where their products are stands in the market. There are two popular portfolio analysis techniques that will be used to analyse Nestls portfolio. There techniques include BCG matrix (Boston Contingency Group) and GE Business Screen. For this report, BCG ground substance is selected to explain the current standing of Nestls brand in India.BCG MatrixIn 1960, Bruce Henderson, president of the Boston Consul ting Group design BCG Matrix to develop business strategy. There are four categories of product position which are stars, cash cows, dogs, and question label.StarsWhen an industry is growing and the share of a firm is high as well, then the firm is the leader in business.Nestls Nescaf is one of the leading coffee brands in the Indian market.It has the strong position in the market which is incomparable by other brand within the country. Nescaf has high market share in the industry as well as the growth rate is significantly high.In addition, the name of Nescaf has become generic with coffee. change CowsWhen the industry growth is low but the firm has high market share, then the firms products are considered Cash Cows.Nestls Maggie Noodles has more households of consumption in India and has become the first preference of Indian children in terms of instant food, yet it is still considered as Cash Cows, not a star.It has a significantly high market growth rate in the Noodles market i n India, but the market growth rate of Noodle consumption is not very high.Question marksQuestion marks refer to products with the potential to penetrate into the market and succeed but will require a lot of cash for development.Maggie Pickles has moderate variety especially in this taste crazy country, India.Maggie Pickles is doubted for two main reasons. The first reason price and wadding of the product is high, which seems to target customer from upper class.The second reason is it lack of significant number of alternative, and so it is a challenge to maintain itself in the market. Thus, it is suggested that Maggie Pickles to review its packaging and price so every citizen in India can afford to purchase the product.DogsIf the industry growth is low and a firms share is instability or low, then the products of the firm is considered dog.Nestls Dahi is considered Dog because people in India was unaware that Nestl offers a Dahi.The product is facing competition from Amuls Masti Dahi.The concept of Dahis packaging is not fortunate by the consumer who prefer to play it safe with the local manufacturer. Nestl Dahi is placed in as a Dog due to lack of growing market. It is recommended that Nestl has to think on what it can do to make everyone in India recognize Nestl Dahi.4.1.3 somatic Parenting StrategyCorporate parenting strategy is developed to examine each business unit in terms of its strategic factors, areas in which performance can be improved, and analyze how well the parent company fits with the business unit.Horizontal strategyTo expand a business to another geographic location, extra cost such as import duties, logistics and other packaging requirements will weigh down a products launch in the targeted region. Hence edifice an overseas plant or subcontract the manufacture of the product to a licensed local manufacturer.Nestls has many manufacturer in almost every country in the world to manufacture its products. This strategy has helped Nestl to cut down the extra costs as I have mentioned above.Multipoint competitionMultipoint competition refers to a multinational organization compete against other multinational organizations in a number of markets.Nestl competes in a wide range of geographic areas in addition of broad range of product categories. thence it faces competition from multinational companies such as Unilever and Philip Morris with similar product lines that cross regional bounds. Since Nestl is facing this type of competition, it is suggested that Nestl must compete briskly crossways its worldwide customer base.5.0 STRATEGY IMPLEMENTATIONStrategy implementation is the tertiary stage in strategy management. In order to carry out the formulated strategies, Nestl needs to establish annual objectives, planning policies, motivation employees and assign resources. This stage is also known as the action stage of strategic management and it is often considered to be the most complicated stage. It needs the quislin gism from all the employees at all levels in Nestl in terms of ad hominem discipline, commitment, and sacrifice. In this stage, I will discuss several issues that will assume to Nestl during the process of strategy is being implemented.5.1 Management IssuesManagement changes are essentially more extensive when strategies to be implemented move a firm in a major new direction. I will select several factors from the management issue to discuss how are they going to accept Nestls organizational performance.Annual ObjectivesAnnual objectives are especially all-important(a) in strategy implementation, whereas long-term objectives are particularly important in strategy formulation. Annual objectives represent the basis for allocating resources.ResourcesNestl need at to the lowest degree four types of resources in order to achieve desired objectives.Financial resources. One of the major strengths of Nestl is its RD which contribute a lot in supporting the companys strategy implementa tion. In 2006, Nestl invested CHF 1.73 billion in RD and over CHF 1.5 billion in make believe Capital. Thus, the company needs sufficient financial resources in order to continue its RD.Physical resources. Nestl has a committed sales force which is the major resource strength in terms of physical resources. It is very important as part of the companys success particularly after the strategy is implemented, and the employees able to develop markets and sell its products. homophile resources. Human resources is one the significant concern while implementing strategy because it is the screenbone of any organization. The fact that Nestl is more people and product than system oriented reflected in the way HR is functioning and is organized.Technological resources. RD at Nestl is an international group of science and technology centres of excellence. Its RD has a long tradition of building its own machines based on extensive in-house plan experience. Proprietary technological cl purpor ts in all products categories assist Nestl to maintain and improve its position as market leader.Rewards and IncentivesThe Real Rewards in Nestl USAs investment in you is a comprehensive package for waged employees. Compensation is a key part issue of Nestl USAs Real Rewards package to help to attract, motivate, and retain a workforce of top performance. There are three types of compensation of the Real Rewards package. seat Pay. Based Salaries are designed to be competitive which based on data specific to different position as measure in marketplace. High performance over time is recognized by base pay that is higher than the market.Short-Term Incentives. Short-Term Incentives Pay is designed to reward employees (typically yearly) for their accomplishments and contribution to Nestl USAs success.Long-Term Incentives. Nestl USAs Long-Term Incentives Plan are designed to motivate and reward those in eligible leadership position for the companys sustained success for a longer period, o ften three years or more.Human ResourcesNestl Human Resources Policy encompasses those guidelines which represent a sound basis for rough-and-ready and efficient HR management in the Nestl Group around the world. encyclopaedism is part of the company culture in Nestl. Employees at all levels is conscious of the need to upgrade constantly his or her skills and knowledge to achieve personal and organizational goal.5.2 Marketing IssuesMarketing variables can determine the success and hardship of strategy implementation.Market SegmentationMarketing divider is the process in selling of grouping a market to identify different groups of customers with different needs or responses to marketing activity. Consumer can be segmented on the following characteristics.I will use Nestl Juices to discuss how Nestls marketing team is going to target the market segmentation.Geographic Segmentation, Region. People would prefer to drink juices during the hot weather or summer season. The marketing team can segment the market on the basis of high temperature zones. To boost the demand of its juices products, they can focus more in the region where the consumption remains almost the same all the year around.Demographic Segmentation, Gender. Women will be the trump targeted customers as they usually shop for their family. When they are win over that the juices will be good for the health for their family, they will eventually purchase.Psychographic Segmentation, career style. People belonging to luxury life style tend to pass on more on luxuries as compared to people in the lower class.In strategy implementation, market segmentation is an important variable. It allows Nestl to operate with limited resources due to unnecessary of mass production, mass advertising and mass distribution. The market segmentation decision directly affect the marketing mix variables.Marketing meldProduct strategy. Nestl juices main competitive advantage is its quality leadership. The company aim provide the original and best quality to their customers and fulfill their need.Place strategy. In Pakistan, Nestl established the distribution channels for its juices products in famous cities such as Karachi, Lahore and Gujranwala. Then they acquired maximum two to three suitable distributors in these cities to block up from their own competition.Promotion strategy. The marketing team of Nestl use various sources to crusade their target marketing. Sources used such like TV, Newspaper and Billboard to elevate their products. When Nestl launches new juice, the marketing team will use the promotion strategy that are mentioned to spread the awareness of their brand.Price Strategy. Nestl juices are available sise flavored and two size. The packing of 200ml size is targeted for individual customer while 100ml packing is targeted for whole family. They charge price premium since they provided high quality and 100% clear juices other than competing low cost with their competitors. Nes tl juices contain maximum profit margin compared to their rivals.Product PositioningAfter segmenting markets, Nestl can target particular customer groups, the next step is to find out what customers wants and needs. In 2009, Nestl launched two fortified juice drinks for children, gentle Juice Brain Development and Juicy Juice Immunity.Customer wants. Children are targeted easily targeted for these two juice drinks because they can choose three flavours that are available including apple, berry and grape flavours in these two juice drinks.Customer needs. Parents are very concerned with their kids development. Therefore, these two juice drinks are specifically targeting brain and immune development in under five age group.5.3 Research Development IssuesRD is an investigative activities that a business choose to conduct with the purpose of discovering new products and to improve the existing products. Nestl is the global leader in the food processing industry with realise to RD. The RD expert team in Nestl have provided best practices and help in the companys implementation. For example, the RD structure offers the flexibility to use the huge sources of local ideas, bring them back and develop them for the global implementation.The major advantages of Nestl RD includeThe company attract the best scientist and engineers from top-level universities who want to work and partner with them.To build plants, expand, grow, and market products and services more efficiently.6.0 CONCLUSIONIn a nutshell, it is not easy to maintain the position as the world leader in food processing industry like Nestl. A company must be able fuck with any unexpected changes in order to survive and compete in the world of business.(Word Counts 4435 words)