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    MARKETING PRINCIPLES

    UNIT 4: (4.1.1)

    Explain the various elements of the marketing process

    As defined by Phillip Kotler, Marketing is a process in which companies create

    value for the customers and build strong relationship with customers and in return capture

    value from them. In old sense marketing is all about making a sale, but today its about

    satisfying consumer needs. Today every successful firm has one thing in common i.e.

    they have highly customer focused and are highly committed to marketing. These firms

    work passionately to understand the needs of consumers and satisfy consumers by

    building strong customer relationship management.

    Nestle is a multinational FMCG (fast moving consumer goods) company. Nestle

    was founded by Henri Nestle in 1867 and headquartered in Switzerland. Nestle was

    founded in Pakistan in 1979 in collaboration with Milk Pak Limited in Lahore and

    known as Nestle Milkpak, Ltd. Its Pakistan head office is located in Upper mall, Lahore.

    Nestle has basic principles which every single employee has to adopt like honesty,

    fairness, and a strong human orientation.

    Nestle business processes have evolved over a period of time and also adaptive

    to changing environment. Nestle offers high quality products. Their departments work

    in greater coordination in order to develop a product according to consumer

    preferences, price, convenience and variety.

    Nestle has decentralized structure, they promote adaptability as much as

    possible to adjust in different states, people with different mentalities and

    circumstances. Nestle has extensive product portfolio in Pakistan. Dairy products of

    Nestle Pakistan are divided into two categories.

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    AMBIANT DAIRY

    Nestle MilkpakNestle Milkpak CreamNestle Nido

    Nestle EverydayNestle Nesvita Plus

    CHILLED DAIRYNestle YogurtNestle Riwayati mazaNestle Acti-plus YogurtNestle Milkpak Yogurt

    Nestle Zeera-RaitaNestle Podina RaitaMilo

    Nestle marketing division has sole purpose to build brands. In fact they say that

    brand building is Nestle way. In Nestle marketing managers put untiring efforts to

    build their brands and gain market share in respective category. Nestls marketing

    team provides services in three basic parts i.e.

    Brand management

    Communication

    Consumer insights

    Brands are managed in a way that consumer preferences are met along with special

    services that help consumer wherever he has problem regarding a product. Marketing

    mix of Nestle comprises of 4Ps including Product, price, placement and promotions.

    Product:

    Products are developed after a thorough marketing research conducted on local

    areas where targeted consumers live. Their behavior is assed regarding a product and

    its development. A product has different benefits associated with it. A product is

    anything that satisfies a consumer need, or a solution to a problem. Products in Nestle

    are developed keeping in mind the consumer requirements regarding a product.

    Marketers work hard to create a product to satisfy the target consumers.

    Price:

    Every product has a market price; a price on which it will be sold to end

    consumer. Widely used method for price is cost plus pricing. Marketers add a certain

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    percentage of profit into cost. But brands like Nestle use value based pricing. Value

    based pricing is the one in which price is set as per value offered by a product. At

    Nestle they create Value based solutions/products for consumers and charge

    accordingly. Every product should be priced rightly because if price is too low, firmsprofitability will suffer. And if price is too high, target segment will not buy it.

    Placement:

    Placing a product in market so that it reaches to end consumer is what placement

    is. There are two ways through which a firm places its product or deliver its product to

    end consumer.

    Some companies deal with consumers directly as in business to business deals.

    Some companies have selling process through retailer.

    Mostly companies in Pakistan follow this route of selling that involves distributors,

    whole sellers and retailers.

    Nestle is using second and third channels for distribution of products. Selling

    through retailer channel is used when they have to distribute to big retail stores likemetro and Hyper-star in Lahore. Nestle use third channel for more than 80% of

    distribution across Pakistan. As Pakistan is under developed country, people prefer to

    buy from small retail shops instead of big malls or lager retailers. Nestle is widely

    available in all rural and urban areas of Pakistan. Nestle has stronger distribution

    Producer Consumer

    Producer Retailers Consumer

    Producer Distributor Wholeseller Retailer End-consumer

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    Strengths:

    Nestle produces high quality products. For Nestle Quality is everything.

    Nestle has earned trust and loyalty from customers worldwide.

    Nestle is leader in providing healthy, tasty and nutritious food.

    Nestle is adaptive to new technology and changes in environment and has ability

    to continuously bring new products in market.

    Nestle Pakistan has greater support from its parent company. Nestle has high

    levels of resources that makes operations to run smooth.

    Nestle has excellent management and staff

    Nestle has strong Research & Development team.

    Nestle product portfolio has diverse range of products ranging from dairy

    products to ready to cook food and confectioneries.

    Nestle has a strong distribution network across Pakistan covering rural and

    urban areas.

    Weakness:

    Nestle does not aim at all product equally. Some brands get more attention than

    others.

    Distributing products across the country is costly, but somehow nestle is

    managing it.

    Supplying the products to end consumer through a long indirect method brings

    less profit as compared to delivering product through a single retailer.

    Following long indirect method gives fewer profit margins to retailers as well

    compared to other competing products. Hence, retailer prefers less to pushNestle products to consumers.

    Nestle has complex supply chain

    Sales division was flat in 2008 and following year, whereas overall industry grew

    8.9%. This is due to launch of Olpers milk and juices.

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    Nestle is competing in many markets at a same time with family branding

    strategies. In some categories it is leader. But some categories are ignored.

    Opportunities:

    Nestle can enter in ice-cream market as internationally nestle has launch ice

    cream brands successfully.

    Nestle can plan on incentive programs for retailers in order to get higher sales.

    In annual budget 2014, government has announced regulations for free markets.

    Nestle can work on it.

    Nestle can open its own retail stores in order to remove whole sellers and

    retailers.

    Nestle can work on expansion strategies. It can expand in existing categories or

    can enter a new category.

    Every year disposable income of households is increasing. It brings more users

    towards buying brands especially in FMCG category.

    Threats:

    High wages brings high inflation too. High inflation leaves no option but to

    compromise on existing usage of brands. If inflation is increasing day by day,

    consumers will not buy brands with value based pricing. They would like to

    purchase cheaper brands.

    Oil prices also increasing worldwide leading to increase operational costs and

    resulting in high prices of products for end consumers.

    Competitors that entered in market after Nestle, has used extra ordinary

    marketing tactics and gained popularity among consumers. Now nestle need to

    put more efforts to promote its products and attract consumers towards it.

    There are some local competitors that are competing with nestle solely on basis

    of cost. They are major threats to Nestle. In Pakistan, consumers are price-

    sensitive.

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    Nestles scope of marketing totally revolves around one concept: brand building is

    Nestle way. Management believes in building strong brands. They work on each

    minute detail of segmentation, targeting and positioning. This will be discussed in later

    part of this assignment.

    UNIT 4: (4.1.2)

    Evaluate the benefits and costs of a marketing orientation for a selected

    organization

    Marketing orientation is philosophy of doing business solely focusing on two

    things; identification of stated or hidden needs of target consumers and meeting them

    effectively. Nestle is a market oriented business. Its business philosophy stresses on

    fulfilling consumer needs by tailoring products according to their requirements and

    expectations.

    Lets look at Nestls mission statement in order to understand that how Nestle is

    incorporating concept of marketing-orientation. Nestle being the one of the worlds best

    nutrition, health and wellness organization follows a mission, saying: Good food,Good life. Nestls mission is to offer its consumers the best food in a variety of flavors

    with best taste from morn