Nestle in China Research Report 1. objective Our objective is to provide good-tasting foods and beverages, as well as services, bring nutrition, health and wellness to Chinese consumers. 2.
description of the company’s Nestle is the largest consumer packaged goods’ company in the world, founded and headquartered in Switzerland. Nestle originated in a 1905 merger of the Anglo-Swiss Milk Company, which was established in 1866 by brothers George Page and Charles Page, and the Farine Lactee Henri Nestle Company, which was founded in 1866 by Henri Nestle.The company grew significantly during the First World War and following the Second World War, eventually expanding its offerings beyond its early condensed milk and infant formula products. Today, the company operates in 86 countries around the world and employs nearly 283,000 people. Nestle Company had started off from a single man’s idea, and developed into a giant corporation. In 1866 Henri Nestle, a pharmacist, developed a milk food formula for infants who were unable to tolerate their mother milk (Nestle. com).
His product became a success, and it created a demand throughout Europe.As Nestle’s popularity grew more businesses wanted to merge and become partners with Henri Nestle’s business. From 1866 to 1947 the Nestle Company had gone through several name changes. In 1905, Anglo-Swiss Condensed Milk Co. and Farine Lactee Henri Nestle merged, and the company’s name became Nestle ; Anglo-Swiss Condensed Milk Co. Then in 1929, Peter-Cailler-Kohler Chocolats Suisses S. A.
merged with the company. The name was then changed to Nestle ; Anglo-Swiss Holding Co. Ltd, on November 27, 1936. In December 1947, Co. acquired all the shares capital of the Alimentana S. A.Company in exchange for fifteen Nestle shares and fifteen Unilac shares for each of Alimentana S.
A. share, so this point the name was at Nestle Alimentana S. A. And then finally, the last name change that the company would endure was in 1977, where it adopted the name Nestle SA (Mergent Online). Along the way Nestle’s company remain successful, which allowed them expand to new region and territories throughout the world, making them the world’s biggest food and beverage company. Nestle’s headquarters are located in Vevey, Switzerland, but the Nestle Company has factories or operation in almost ever country in the orld. Since the Nestle case was published in 1998, it stated that Nestle had employed 230,000 people worldwide, with $71.
7 billion in sales (Rodgers, 2000).Now moving forward to 2003, Nestle has increased the amount of employees to 253,000 people, with $88 billion in sales (Nestle. com). Nestle is increasing the size of their company year by year. In addition, to the increase in the size of the Nestle Company; Nestle also has increased the variety in the different products they offer. In Nestle’s business strategy they encourage product growth through innovation and renovation (Nestle. om).
This strategy has allowed Nestle to develop many different products in the various fields: baby foods, dairy products, breakfast cereals, ice creams, chocolates and confectionery, prepared foods, beverages, food services, bottled water, and pet care. This brings us to the main focus of our case analysis, the dairy division, and the yogurt product LC1 that lies within that division. Products Introduction Drinks The NESCAFE selection of coffees gives you a wide range of choice, from our cafe style cappuccinos, lattes and mochas, to the rich coffee experience of NESCAFE Gold Blend.We also offer a range of milk drinks that includes Nesquik, Aero and Skinny Cow Hot Chocolate. Nestle also provides a wide range of pure, safe and convenient bottled waters of high quality to meet the increasing and varied needs of consumers around the world. Confectionery Have you ever wondered how chocolate is made? Or how some of the most famous chocolate products started? This section provides lots of information about confectionery, including details across our whole range of products, from the famous, Kit Kat, to our range of chocolate bars and sweets, biscuits, cereal bars and sugar confectionery.We also tell you about the history of chocolate and how chocolate is made, and take a closer look at packaging and preserving.
Cookies ; Cakes Nestle Rowntree produces a range of superb cakes based around some of our most famous confectionery ranges. You will be sure to find one that becomes your favorite… Here we give you just a little “taster” of what these cakes are all about, but it really is no substitute for trying one for yourself! Ice Cream With an awesome selection of treats, all free from artificial colors and flavors, it’s no wonder Nestle Ice Creams are some of the UK’s best–loved.If its fun treats for the kids you’re after, a lip–smacking FAB, Nobbly Bobbly or Toffee Crumble are guaranteed to do the trick, while creamy Smarties, Milkybar, After Eight and Rolo prove all–round family favorites. 3.
SWOT analysis PEST Analysis:A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors: Political/Economic/Social/Technological. The acronym PEST is used to describe a framework for the analysis of these macro environmental factors. (John, 1965) (1)Political analysisChina’s top legislature approved the Food Safety Law, providing a legal basis for the government to strengthen food safety control “from the production line to the dining table. ” The law, which goes into effect on June 1, 2009, will enhance monitoring and supervision, toughen-up safety standards, recall substandard products and severely punish offenders. (2)Economic analysis Total volume sales of coffee grow by 10% in 2009 to reach over 33,000 tones. The global decline in production increases the purchase of local coffee beans in China in 2009. Fresh coffee beans records the highest total volume growth of 11% in 2009.
The average unit price decreases slightly in current value terms in 2009. Nestle (China) Ltd leads with a 68% share of retail value sales in 2009. Over the forecast period, sales are expected to grow by an 8% total volume CAGR. (3)Social analysis Changing lifestyles and growing urbanization in larger cities have brought in wider acceptance of newer products and thus driven sales for foods like ready meals, pasta and frozen food. Trade sources estimate that per capita coffee consumption has reached around three cups in China. (4)Technology analysis Between 2008 and 2009, the number of Chinese online shoppers grew 45. percent to 108 million, and online sales nearly doubled to ? 250 billion ($36.
6 billion). About 90 percent of total online sales were consumer-to-consumer transactions, though the business-to-consumer model has also been successful in China’s e-commerce market. The PRC government strongly supports the development of e-commerce in the retail sector and aims to have online shopping sales account for more than 5 percent of China’s total retail sales by the end of the Twelfth Five-Year Plan Internal analysis Core competencies are those capabilities that are critical to a business achieving competitive advantage.The starting point for analyzing core competencies is recognizing that competition between businesses is as much a race for competence mastery as it is for market position and market power. Senior management cannot focus on all activities of a business and the competencies required undertaking them. So the goal is for management to focus attention on competencies that really affect competitive advantage. To better understand the activities through which a firm develops a competitive advantage and creates shareholder value, it is useful to separate the business system into a series of value-generating activities referred to as the value chain.
In his 1985 book Competitive Advantage, Michael Porter introduced a generic value chain model that comprises a sequence of activities found to be common to a wide range of firms. The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin. Nestle (China) Ltd retained its number one position in coffee with a 68% share of retail value sales in 2009, followed by Guangzhou Kraft. Nescafe is also ranked number one in RTD coffee in China.The brand’s long-lasting success in coffee in China can be attributed to aggressive marketing, innovations and constant adjustments to development strategies in order to meet changing market conditions. 1? Nestle has a national coverage in China. Most of its products have entered Chinese households.
However, with household incomes rising in more rural areas, the company will enhance its efforts in second- and third-tier cities, although the process will be very slow. 2? Trade source indicated that 98% of Nestle’s products sold on Mainland China are locally manufactured, except for pharmaceutical products.Since its first investment in China 20 years ago, Nestle (China) Ltd has created 19 affiliates and production bases in Guangdong, Tianjin, Heilongjiang, Shanghai, Yunnan, Inner Mongolia, Beijing and Sichuan, Shandong, Jiangsu, Hong Kong, China etc. Trade sources report that the company’s coffee plants in Yunnan province total around 670 hectares, which ensures the stable supply of coffee beans. 3? Nestle continued to dominate coffee in China with a 68% share of retail volume and value sales in 2009. The first mover advantage has seen Nescafe become almost synonymous with instant coffee in China and the company has a large loyal consumer base.Moreover, Nestle has an experienced marketing team and its advertising slogan “The Taste Is Great” is well-known among consumers.
4. Nestle has more than 80,000 coffee bean suppliers and farm households in Yunnan province to guarantee supplies. 5. As the leading player in coffee in China, Nestle has invested millions of US dollars to innovate its products. The two R&D centers in Beijing and Shanghai are used to carry out market research. Nestle will also endeavor to research flavored coffee, with a view to stimulate the maturing demand for coffee in urban areas.SWOT analysis SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture.
It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective. (Albert, 1960) Strengths 1)Globally recognized as one of the largest and powerful food producers, covering almost every country (factories and plants). Employs approximately 280,000 people globally. )Globally, biggest ice-cream producer, having a market share of approximately 25%. 3)It has a vastly diversified product portfolio containing approximately 6000 brands (beverages, ice creams, frozen food items, chocolates and biscuits, pet care nutrition items, etc. ) • It has established joint ventures with giants like Coca Cola, General Mills and L’Oreal that are helpful in providing knowledge on different technological aspects. 4)Strong R&D Nestle Research is a dynamic global network of 29 Nestle centres of excellence in reasearch and product development.
Its scope and reach are global. They have the world’s largest food and nutrition research organization, with about 5000 people working in R&D, as well as corporate venture funds and research partnerships with business partners and universities. Nestle scientists in each market ensure that global R&D is applied locally to meet different consumer needs and preferences. PTC(Product Technology Centres), each aligned with particular Nestle businesses to provide expertise for specific product categories, and together forming a hub for global product and process development.R&D centres working in close collaboration with the PTC to meet regional R&D requirements and provide input to local application groups. Application Groups, these are located in Nestle factories and ensure that products comply with local taste preference. They also work closely with the R&Dcentres and the PTCs to test scientific applications as close to the end consumer as possible.
5)innovation • Strong internal growth and emphasis on innovation internally. • Strong cultural environment, that acts as a loyalty carrier for the employees. CEO, Peter Brabeck.Brabeck emphasizes internal growth, meaning he wants to achieve higher volumes by renovating existing products, and innovating new products. His explanation of renovation is that “to just keep pace in the industry, you need to change at least as fast as consumer expectations. ”(Hitt, 2005) And his explanation of innovation is “to maintain a leadership position, you also need to leapfrog, to move faster and go beyond what consumers will tell you. ” Brabeck has led Nestle into a position to better achieve the internal growth targets with his.
Another strength that Nestle has is that they are low cost operators. This allows them to not only beat the competition by producing low cost products, but by also edging ahead with low operating costs. 6)Wide rage of products Nestle provides quality brands and products and line extensions that are well-known, top-selling brands including: Lean Cuisine, Yoplait, Maggi, Dryer’s/Edy’s, Haagen-Dazs, Stouffer’s, Boost, Dibs, Hot Pockets. Chocolate and Candy: Kit Kat, Toll House, Butterfinger, Baby Ruth, Crunch Bar, the Willy Wonka Candy line.Pet Products: Purina, Alpo, Cat Chow, Fancy Feast, Friskies, Tidy Cat. Drinks: Carnation, Perrier, Nesquik, S. Pellegrino, Nescafe, CoffeeMate, Taster’s Choice, Juicy Juice 7)Strong brand image • Powerful marketer, and never seizes any opportunity to embed the brand image in the mind of the consumer.
The quality of the Nestle products embeds an element of trust in the mind of the consumer that makes Nestle one of the powerful brands to be followed. • Consistently ranked as largest bottled water corporation that operates in an environmental friendly manner. Top 50 list of Fortune’s ‘America’s Most Admired Food Companies’, and ranked on top on Consumer Food Products. • The name Nestle also visualizes the high standard and quality of the product. • Nestle has taken a visionary step as being one of the many companies that represent and encourage globalization that has also become an identity for its logo. 8)High customer loyalty • Customer base loyalty for Nestle is very vast and powerful. • Quality is a vital element regarding nestle products.
• Powerful brand positioning in the consumers mind. • Largest consumer products organization that operates globally. It also sells professional brands to different customers such as colleges, hotels, restaurants etc. • Produces low cost products that give them an edge to their competitors. It also has low operating costs. • The decentralized culture in the organization encourages employees. • It has a dynamic and innovative approach when it comes to new trends regarding the technology.
Weaknesses 1. Limited presence in organic foods market • Hovering over the stats of 2008, the food industry grew 8. 9% but Nestle lacked the potential to raise their sales in the organic food division that lay flat. . Unwillingness to divest weaker brands Regulators like FDA and AMA (American Medical Association) are pressing on the firm for removing tags that hold no ground such as ‘low cholesterol’ or ‘heart healthy’. Parents have also reported diabetic epidemic due to the consumption of such goods, in children especially. Promoting infant milk products comparing to breastfeeding.
Slaves in African countries that are working under it. It holds up a negative effect regarding the whole brand. 3. Lack in retail presence • Retailers do not get to set high margins to indulge more in sales. Logistics cost is quite high. 4. Didn’t promote fully their new product • Many products are not understandable in different countries.
It did not make much of an impact in France with their LC-1 (food commodity). • Coordination between country specific plants with the Center, due to which some plants are running exceptionally smooth while operations in other countries lack effectiveness. • Transportation as well as storage (proper warehousing) problems. • Supply Chain having a complex stature (India plant transitional traceability). The immense diversification portfolio of the firm makes it impossible to run every division smoothly. • Russia being an unstable market for Nestle which cuts a big chunk from Nestle’s bite. • It is also perceived that Nestle puts profit first.
Opportunities 1. Transition to a “nutrition and well-being” company • Due to the high intensity of the health conscious awareness in the society, more health based products are required especially with incompromisable quality. • Can go into the anti-allergy products that are very common, such as peanut free or gluten free products. They can also invest in snacks that would further diversify its product portfolio. • Provide incentives to the retailers to increase sales volume. 2. Fair Trade agreements for cocoa and other products produced in third world countries • Open cafes that would exclusively provide Nestle products.
• LC-1 having the opportunity of having a greater impact in Germany (2 years had them go for 60% of the market share), and being the established market leader, they can establish more brands in the market. 3. Growth in international ; emerging markets Middle class share in most of the economies are growing much larger. • Nestle India may hold the position of being the export hub due to the low cost of labor comparatively to developed countries. • In Asian countries like India, Pakistan, Bangladesh; consumers are mostly price conscious rather than health conscious. Nestle has an opportunity to have extensive strategies implemented to gain the market in such countries. • Developing countries have a higher rate of GDP than those of developing countries, Nestle should enter in such markets as well.
Recession has created such an impact that the market is struggling and has almost got out of that recession that will surely increase the cycle of cash flow which will be profitable for Nestle to cash in on such a time. Threat 1)FDA regulations • Contamination of products should be regarded strictly (Cookie Dough, March 2009). The company has a not so pretty history with the FDA. Pet Food contamination 2007 (imported from China, the vegetables contained rat poison).They were affected by the pet food recall in 2007, in which 95 different brands of dog and cat food were recalled due to contamination with rat poison. Also in 2007, FDA learned that certain pet foods were sickening and killing cats and dogs. FDA found contaminants in vegetable proteins imported into the United States from China and used as ingredients in pet food.
2)Some markets they are entering are already mature. Danone had an established leadership position in the yogurt market in France. Since Danone was the first to arrive in the market, they have always been the market leader there.Also consumers in France liked the taste of LC-1, but researchers believe they did not repurchase the yogurt because they preferred the taste of Danone products better 3)Inflation rise is giving birth to high prices. Raw chocolate prices are jumping, along with the Dairy costs; which leaves heavy cuts in the margin in order to make the customers brand loyal. They have also shrink the packaging which is not really noticeable, so the customers are paying the same amount for a lesser product. 4)fierce competition Competitors like Cadbury Schweppes, Hershey’s, Quaker, Heinz, Del Monte, Kellogg’s, and Kraft Foods are also well established.
It’s a tough market with a tougher competition for gaining market share. • Market is quite mature and the competitors specialize in a certain product that can hit hard on Nestle. (Yogurt Market US: General Mills) • In the Indian market, fresh food is preferred than ready-to-eat meals. • In still developing countries as well as underdeveloped countries, Nestle will face a large competition in market both domestic and unorganized sectors. • Poverty sector in developing countries is also a lacking that must be watched over for. Malnutrition and obesity are yet another burden faced by the developing countries. The competitor’s analysis •Kraft Foods —–coffee and chocolate •Unilever —–ice cream •Mengniu —–milk and ice cream •Yili —–milk and ice cream Unilever Within the industry of ice cream, there are many players in the market.
The most dominant brand name players inside China is Unilever. Unilever is an Anglo-Dutch multinational corporation that owns many of the world’s consumer product brands in foods, beverages, cleaning agents and personal care products. Competitive forms: desire competitor, strategy competitor •Target market: promising target market, Great Ability in Production •Competitive strategies: product differentiation strategy •Market behavior reaction: selection competitor Kraft Foods Kraft Foods Inc. is the largest confectionery, food, and beverage corporation It markets many brands in more than 155 countries. 11 of its brands annually earn more than $1 Billion worldwide: Kraft, Cadbury, Oscar Mayer, Maxwell House,Cream Cheese, 40 of its brands are at least 100 years old. •Competitive forms: common competitor, brand competitor Target market: youngster •Competitive strategies: product differentiation strategy and improve design low cost strategy •Market behavior reaction: irregular competitor Mengniu Dairy Mengniu Dairy is a manufacturing and distribution company of dairy products and ice cream in China. In July 2009, it sold a 20% stake to a consortium led by state-owned China National Oils, Foodstuffs and Cereals Corp, China’s largest importer and exporter of food.
That sale made the state the single largest shareholder •Competitive forms: product form competitor •Target market: milk products market Competitive strategies: simplify products low cost strategy and region concentration strategy •Market behavior reaction: irregular competitor Yili Group Yili Group is a privately-owned company of dairy industry in China. It is engaged in processing and manufacturing of milk products, including ice-cream, milk powder, milk tea powder, sterilized milk and fresh milk. •Competitive forms: product form competitor •Target market: milk products market •Competitive strategies: simplify products low cost strategy and region concentration strategy •Market behavior reaction: irregular competitorEvaluate the SWOT analysis: Our problem 1. Problem from New Entrants. Multinational brands dominated the coffee category as it is not a traditional Chinese hot drink. The leading multinational brands, Nescafe and Maxwell House, accounted for an 83% share of retail value sales in 2009. However, trade sources indicate that domestic coffee bean suppliers are also trying to launch their own instant coffee brands, which might endanger the coffee bean supply to these players.
2. Problem from Power of Suppliers.In 2008, Yunnan Dehong Hougu Coffee Co Ltd, Asia’s largest coffee bean supplier to Nestle SA, announced that it would promote its own coffee brand throughout China, and gradually stop providing coffee beans to Nestle. The company has supplied coffee beans to the Swiss food giant for more than a decade. However, Nestle believes Yunnan Dehong Hougu ‘s move will not have a major impact on its business because it has more than 80,000 coffee bean suppliers and farm households in Yunnan province to guarantee supplies. 3.Problem from Power of Buyers.
Nestle continued to dominate coffee in China with a 68% share of retail volume and value sales in 2009. The first mover advantage has seen Nescafe become almost synonymous with instant coffee in China and the company has a large loyal consumer base. So the power of buyers is little. 4. Problem from Availability of Substitutes. Chinese consumers are starting to appreciate better tasting coffee in a pleasant environment. This is reflected in the boom in multinational chained specialist coffee shops in China.
Therefore, fresh coffee and standard instant coffee packed in glass bottles will become more popular in the forecast period. These coffee products are believed to offer a better taste than 2-in-1 or 3-in-1 instant coffee, and are therefore considered more suitable for more sophisticated consumers, instead of entry-level coffee drinkers. Coffee machines are generally available in hypermarkets and shopping malls, with prices ranging from as low as RMB100 per unit to over RMB1000 per unit. Thus, most households can afford a coffee machine.This will affect Nestle a lot. 5. Problem from Competitive Rivalry.
The dairy industry is one of China’s key industries in the food manufacturing sector. In recent years the annual average growth rate of the dairy industry has exceeded 20 percent, and there are over 700 large-scale dairy manufacturing enterprises around China (People’s Daily, 2009)Nestle (China) Ltd retained its number one position in coffee with a 68% share of retail value sales in 2009, followed by Guangzhou Kraft. Nescafe is also ranked number one in RTD coffee in China. 4.Customer Market Nestle is world famous for its instant coffee and chocolate bar. Description of the consumer market The target consumer of Nescafe are those stay-at-school students and salaried person who are young ,enthusiastic ,energetic and fashion . They have strong entrepreneur spirit ,on the other hand ,they have to face a lot stress and continuous challenges.
They pursue fashionable, delicious drink and need energizing drink to refresh them. Segmentation of the market 1. Consumer behavior segmentation: Consumption motivation 2. Consumer segmentation he masses:They aged from 25 to 35 , do not want to be style leaders and have low loyalty towards a brand ,and ads have little influence on them . Conservatives: The majority of them are between 35 and 45 years old . They are not concerned with romance or fashion. Youthful type: from 18 to 35 years old .
They have a taste for ads and pay attention to fashion trend, and would like to be with special style. 3. Attitude of consumer Think Nescafe has a famous brand and is reliable (55. 89%) Like the special design of the outlook (8. 33%) Have a high cost performance(8. 3%) Drink to refresh (28 . 67%) Just an incidence to choose Nescafe (2.
78%) From above we can target our customers as salaried person who are young and energetic ,between 18 and 30 years old . They choose our coffee for the good taste, the relief image , the fashion style, its function to refresh ,its convenience to drink and also the famous brand of Nestle is attractive Through the world, chocolate and confectionery has always been one of the most favorable food among people . In fact, enjoying chocolate and confectionery one of the biggest joy in one’s life.Male, female, old and young can not resist its tempters taste. Almost in every country ,Nestle is a nick name of chocolate and confectionery ,and as one of the biggest producers, Nestle sticks to its tradition to innovate, for the sake of happiness and entertainment of people world wide . So the target market are all the people who seek for happiness and joy . Almost everyone likes chocolate and confectionery, so our target is to produce favorable chocolate and confectionery with different taste to appeal to different people .
Factors affect consumptionCulture—–Nestle is famous for its slogan “good food ,good life” Brand value —–Nestle is a world famous brand with more 47. 7 billion dollars revenue each year Psychograph—–Nestle create a image of warmness and leisure and healthy Quality—–Nestle provides a wide range of tasteful products and their raw material is chosen carefully chosen. Currently there are Starbucks, Alpenliebe and Dove as the competitors of coffee confectionery and chocolate respectively. They are all very successful and customers like them a lot .But they are very unitary and what we look for is different from them . We combine all of them together ,and get consumer’s affection. 5.
Marketing Mix strategy The content of the marketing mix refers to the marketing mix some of the factors must be considered 4ps: product, price, place and promotion. In 1987, the Swiss Nestle Coffee entered the Chinese market is a successful combination. Their marketing mix strategy is: (1) Product strategy “Nestle” Through the investigation found that influence people to buy the main factor is the taste of coffee.The taste of International coffee mainly including bitter tastes of British coffee, both bitter and sour tastes of the United States coffee, and mild tastes of Japanese coffee. (2) Pricing strategy. In the U. S.
market, “Nestle” is a famous brand, while in the mainland of China, its competitor– Maxwell House coffee is an inferior brand, the difference price between them is nearly 30%. Is in the mainland of China still maintain this price differential? The company decided to maintain this price differential, meanwhile, cooperate it with the corresponding promotion strategy. (3) Location strategy.In order to show the quality of products, “Nestle” products are only available offer to the mid-grade shops, not small ones. Through above marketing strategies, “Nestle” quickly entered the China market and achieved a great success. (4) Sales Promotion. “Nestle” choose Beijing, Tianjin and Shanghai as close, make use of local television advertising in the stations while broadcast advertisements on China Central Television, through centralized, unified, distinctive and intensive publication, transmit the good image of the “Nestle” coffee, which is “tastes very well” to all the people.
In the business promotion,” Nestle “is not use the strategies which commonly used by European and American countries such as discounts, price cuts, etc. we use some more welcome strategies for consumers of the mainland of China, that is, buy one get one free, buy a coffee get one partner and other forms. 6. Analysis the marketing mix strategies (1) Products and brands a. Product innovation. Nestle is a positive product innovator. It is the first in Asia to employ local expertise in food technology experts is the family chef cooking restaurant.
And then improve it to the level of mass production.Meanwhile, the company training them in 2 to 3 years let them communicate with other institutions of Nestle. b. The quality of strategy and productivity. Products, once launched, the company is committed to improving the long-term unremitting, to improve product quality. For example, Asians began to tend to the natural aversion but man-made sauces and spices, so the company would not hesitate to spend 25% of research budget to develop such fermentation by biological processes, such as meat extract spices. The company has manufacturing aspects of the skill, effort to maintain its cost the lowest in the industry.
. Product line extensions. Nestle, the production of different specifications, different forms of the different brands to meet consumer preferences. This allows Nestle brands on the shelves occupy more space, which will effectively prevent the invasion of competitors. d. Multi-brand strategy. Nestle believes that a carefully planned brand will benefit the company for life.
In each market, the Nestle brand to be its strategic portfolio of 11 brands in 8000 2 to 3 selected brands. This is to reduce risk and focus on attack power. (2) Sales channels to establish good relations of cooperation.Nestle believes trading partners in Asia, are important factor in success. Therefore, it has always been a close relationship with them. Nestle in Japan, the first to use the sales network marketing activities, with the local wholesale and retail system is fully integrated. At the same time promotional activities also transferred certain sales channels and distributors to organize.
In Thailand, the local supermarket in order to build strong relationships, Nestle, to provide them with the latest inventory management system, and teach them how to use. (3) Communication and promotion mix a. Target communication.For example, when entering the Japanese market Nestle Coffee, tea drinking habits for the elderly, the situation of deep-rooted traditional concepts, the taste of Nestle coffee flavor strongly molded into the image of Japan, Japan’s traditional cultural expressions taste of coffee; for the young generation of Japanese, Nestle companies deliberately create an atmosphere of joy, to trendy, fashion, sensibility and love for the performance of the theme, so that they feel Nescafe transnational spirit of the times; for mature, stable, successful career and social status of middle-aged, the Coffee with a gold medal to advertise to them, suggesting that successful people should be the gold medal match of coffee, only commensurate with their status. Although the three different classes and ages to communicate using the target strategy, but Nestle brand in its shape, and has shown a consistent feature, it is “high-grade style, modern drinks. ” b. A lot of advertising.
In creating strong brand awareness and consumer preference, the Nestle never begrudge spending money. This allows the company quickly gained a high market share. For example, in Korea, Nestle won only 7 years to 35% market share, beating the Kraft (Kraft) General Foods has long dominance. This depends mainly on large-scale advertising campaign. c. With aggressive sales people. Nestle has a high level of sales force, their proficiency in English, college graduates (or even MBA), to effectively secure shelf space, and with retail customers in the field shows and promotions.
In Thailand, they were known as the “red-hot sales Commando” nickname. 7. Product Statement Product classes Nutrition, Health and Wellness is Nestle’s strategic direction.We want you to be able to make healthy choices about your food and beverages. We also believe that good food sometimes means treating yourself! We aim to make your life more pleasurable because our products not only taste better; but they are also more nutritious. Here we have listed some of the local sites that will provide you good local information about Nutrition, Health and Wellness. Product depth Product widthCoffeeNescafe Cappuccino, Nescafe Classic, Nescafe Decaff Breakfast CerealsCheerios, Cini Minis, Cookie Crisp Ice CreamExtreme, Drumstick, Haagen-Dazs Chocolate & ConfectionerySmarties, Aero, Butterfinger ?Coffee Treat yourself to the smooth, creamy flavor and rich, milky froth of Nescafe Cappuccino.
Enjoy also our different flavored cappuccinos such as Vanilla, Hazelnut or Caramel Cappuccino. ?Ice Cream A carefully constructed balance of diverse tastes, textures and colors, culminating in an intense chocolate tip ? Breakfast Cereals With cool swirls on every piece, Cini Minis breakfast cereal has a delicious cinnamon taste that you can see! Made with the goodness of whole grain, Cini Minis breakfast cereal provides eight essential minerals. ?Chocolate & Confectionery Nestle Confectionery delights consumer’s everyday and brings happiness to people all over the world. It represents the perfect treat to be enjoyed as part of a well balanced diet and an active lifestyle. 1. 12 The PackagingWe offer a range of paper coffee cups / hot drink cups ideal for coffee houses and cafes. In a range of sizes from 4 to 16oz and in two stylish designs including an insulated weave-wrap design to keep hands from being burnt.
We also offer the domed sip-thru lids to fit the 8, 12 and 16oz cups as well as the insulating sleeves for the single walled cups. We offer a range of paper bags in a variety of different shapes and sizes. Positioning Statement Our target market is the driver who goes to the gas station, so we choose the nearest place to it as our location. The concrete reasons are: ? Drivers, who have kept driving for a long time is surely to be tired. And as we all know, one of Coffee’s effect is eliminating fatigued.It can also improve short-term memory and speeds up reaction times by acting on the brain’s prefrontal cortex. ?Drivers also supposed to be hungry.
Those shops that attract people who are in a hurry or just stop at the shop to buy a single item, like a chocolate bar or a drink is our expouecting ones. We are planning to place our products on a good place on the shelf so people going into the shop can pick a chocolate bar that stands out instead of the one at the back of the shelf, it saves so much time. Since food are hot and ready when you come to pick it up. For those drives that are willing to leave at once, this will tend to be an option to choose more often than not. As for the motorway service shops, they can even afford to charge a lot for coffee and other kinds of products because if people really want these food they can’t shop around very easily for a cheaper food shop because there aren’t very many shops on the motorway. Pricing Strategy Our food, drinks, and entertainment options are priced to give us an attractive margin while at the same time offering value to the consumer. We want repeat business.
We also want the experience to remain fresh. Therein lies why the food, beverages, will be relatively flexible. A sample menu is showed here:. productpriceproductprice Coffee? 1. 5 per cupNestle Rolo Ice Cream 1 Litre ?4. 0 NestleKit Kat Chunky Bar ? 2 -? 9. 8Nestle Aero Bubbles ?1.
5 Nestle Nesquik Strawberry Powder ?1. 00 – ? 5. 98 Nestle Smarties Hexatube ?2. 5Nestle Yorkie Ice Cream ?3. 5Nestle Quality Street ?3 – ? 4. 5 Some supplemental materials are not available for this sample plan. These prices show that they are all quite close to the RRP.
We can afford to sell our products for more than the RRP because we are shops that are on roads and so if people want a chocolate bar they won’t mind about paying a few extra pence. All the prices are within 3p of the RRP so this shows that the shops do actually consider the prices that Nestle is being sold at. The price is similar to other products of similar type. The products satisfy the need for a casual, all-in-one dining and entertainment experience. Promotion StrategyWe will promote our company name and label almost more than the product itself, because to be successful we have to stand for brand-name integrity, excellent menu offerings, and first class entertainment and fun. Therefore, our promotion strategy includes focusing on events and messages that match: ? Our participation in the Chocolate Soul and Funk Jazz Kafe’ special promotions and the Sweet Auburn and spring festivals is important because these are events that bring our target market together. ?We participate in local radio,specifically in traffic broadcasting on the local stations.
Public relations programs concentrate on the live traffic broadcasting. ?Advertising placed carefully, in mostly-alternative channels like newspapers, etc. ConclusionNestle is the world’s largest food products company with factories in 69 countries and a truly global marketing strategy. However, Nestle is not complacent about its position; it still means to go forward, developing new policies and initiatives on eco-efficiency, responsible business practice and sustainability. Nestle will also work with national and international bodies to improve sustainability. On the 2002 World Summit on Sustainable Development, Nestle set a target to decrease by half the number of people without access to safe drinking water by 2015: Nestle will share its knowledge with others to help reach this goal. Nestle will continue pursuing good food, good life.
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