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Introduction
Nestle began in Switzerland in the mid 1860s when founder Henri Nestle created one of the
first baby formulas. Henri thought the need for a healthy product to serve as an alternative for
those mothers who could not breastfeed their babies. Henri’s first product was a mixture of
cow’s milk, flour and sugar which was called Farine Lactee Henri Nestle. In a few years the
first product of Nestle captured market in Europe.
In 1874 the Nestle’s Company was purchased by Jules Monnerat and developed its own milk
to compete the Anglo-Swiss Condensed Milk Company.
At the start of First World War it was difficult for Nestle to buy and distribute products. But
to maintain up with the high demand for milk and dairy product Nestle purchased many
factories in the U.S via government contracts. At the end of the war the production of the
company was doubled and when the fresh milk came to the market after the war , Nestle was
suffered down into debt.
1905-1918
In 1905 the Company formed merger was called the Nestle and Anglo-Swiss Milk Company.
After getting an agreement with the Swiss General Chocolate Company, Nestle added
chocolate to the food product.
1938-1944
The effects of the onset of World War II were felt immediately by Nestlé. Profits
dropped from $20 million in 1938 to $6 million in 1939. Neutral Switzerland became
increasingly isolated in a Europe at war, and the Company transferred many of its
executives to offices in Stamford, Connecticut.
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The first truly global conflict ended forever the traditional Company structure. To
overcome distribution problems in Europe and Asia, factories were established in
developing countries, particularly in Latin America.
Ironically, World War II helped speed the introduction of the Company's newest
product, Nescafe. After the United States entered the war, Nescafe became a staple
beverage of American servicemen serving in Europe and Asia. Annual production
levels reached one million cases by 1943.
As in World War I, production and sales rose in the wartime economy: Nestlé's total
sales jumped from $100 million in 1938 to $225 million in 1945. As the end of the war
approached, Nestlé executives found themselves unexpectedly heading up a worldwide
coffee concern, as well a company built upon Nestlé's more traditional businesses.
1975-1981
Nestlé’s changed their position after the agreement with L`Oreal in 1974. Nestle got high
growth in the developing country but partially offset a downturn in the traditional marketing
and also take the risk engaging with economic conditions.
Nestle baby milk
The Baby Milk issue
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In 1973 for the first time about Nestle’s marketing strategy was written in New
Internationalist magazine and in a booklet called The Baby Killer, published by the British
non-governmental organisation War On Want in 1974.
There are several problems when some poor mothers start this formula instead of breast-
feeding. Such as baby milk formula must be mixed with water, which was normally happened
in developing countries. These problems were leading to many diseases because of the
illiteracy in the developing countries. Many people claim that this milk formula is a cause of
the death instead of breast-feeding.
Nestle’s mission
General Manager of Nestle, Arthur Furer stated, it is important to develop an effective
counter-propaganda against the baby milk. For this we need the promotion of budget to
$8billion, for the first time Nestle got advantage that produce breast milk.
Nestle is trying to bring those foods for consumers which are of high quality, safe and the
physiological needs. The aim of nestle is to meet the requirements of the customers all the
time with a high quality.
“Nestle is dedicated to providing the best foods to people throughout their day, throughout
their lives, throughout the world. With our unique experience of anticipating consumers'
needs and creating solutions, Nestle contributes to your well-being and enhances your quality
of life.”
Nestle is not only Switzerland's largest industrial company, but it is also the World's Largest
Food Company. The mission statement emphasizes on the fact that Nestle products are
available in nearly every country around the world. Wherever one may live, only Nestle can
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provide the best and a good quality food and drinking products to meet the customer needs
and demands.
They are often reassured that they will find well-known brands out of home.
This statement also reflects the image of high quality products that Nestle offers. Nestle has
the benefit that it offers caterers, fast food chains and other restaurants of high quality, base
products and meal components, as well as consumer brands. Every day millions of people all
over the world
Every day, millions of people all over the world
show their trust in the company by choosing Nestle products. This trust comes from a quality
image that has been built up for over a century. Therefore,
the quality of the products ultimately enhances the quality of the consumer’s life.
Nestle is struggling to maintain the position as in the past. For this purpose Nestle is going to
launch a new product and gain the value once again in the marketing in coming days.
In addition, the mission statement declares that Nestle has the ability to anticipate “…
consumer’s needs and create solutions….” Nestle has
proven this ability a number of times by introducing new products that were required by
consumers. Especially, the launch of Nestle Pure Life in
Pakistan proves the accuracy of this fact. In Pakistan, there was a need for safe and healthy
drinking water and Nestle responded to this consumer
need by introducing Nestle Pure Life.
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SWOT Analysis
Strengths
The biggest strength of nestle is it includes team focused and good policy. Nestle looks on
collective and oriented employees to work hard. And second thing is Nestle has a big brand
name because of their high level of market share and the trust of the people from all over the
world. Nestle is trying all the time to achieve bigger volumes by renovating existing products
and innovating new products. Because of low cost operators by which Nestle not only
compete with others but also taking ahead.
Strengths are internal factors. For example, strength could be your marketing expertise.
Weaknesses
One of the major weaknesses of Nestle is Nestle Baby Milk because those babies who fed on
baby milk are become sick. And so many babies were died because of nestle baby milk and
then people boycott to buy nestle.
Weaknesses are internal factors. For example, a weakness could be the lake of new product.
Opportunities
Opportunities are external factors, for example developing a distribution channel such as the
Internet; change in the lifestyle of consumer is possible to increase the demand for a
company’s products.
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Threats
A threat could be a new competitor in an existing market or a technological change that
makes existing products possible out of date.
PEST Analysis:
The main theme of PEST analysis is to measure market potential and situation, by indicating
growth or decline. PEST analysis can be used for marketing and business development
assessment and decision-making, and the PEST analysis encourages proactive thinking,
rather than relying on habitual or instinctive reactions.
Political analysis:
Nestle’s baby milk can be affected by political change in several different ways i.e. political
change can influence public priorities and funding arrangements. Nestle has to operate within
the framework of laws set by Parliament, and that’s why it depends on political
considerations.
Government plays vital role by imposing the law and regulation on the companies.
Government set standard laws for companies that has to met otherwise they have to pay fines.
Nestle is trying to met all the standard laws which are set by the government. For example
Health and Safety Act, Disability Act but unpportunetly Nestle break the law. Government
laws and regulation in accounting standards, taxation requirements, including tax rate
changes, new tax laws and revised tax law interpretations are highly influenced on Nestle
business.
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Nestle is also very keen about stability of government stability in countries where they are
trying to get in (especially in underdeveloped countries where political stability is at
risk).They are also subject to state, local, foreign environmental laws and regulations.
Economical Environment:
Nestle needs to have enough information about the country inflation rate, economic growth
rate, and national per person capital income, in which they are willing to start their business.
Economic condition varies from country to country. Before starting the baby milk has focus
on the above factors. These are the factors that Nestle has to consider before setting corporate
objectives. Global economic turmoil has major influence on Nestle business because
customers are spending less and they have to adopt different strategies in order to run
business smoothly.
Social analysis
Social or cultural environment had great impact on Nestle. The main focus of social/ cultural
includes the Social change involves changing attitudes and lifestyles. The social and cultural
environment is constantly changing. Different countries had different culture (language,
religious beliefs, food, family, clothing and their lifestyle). Nestle has to developed strategies
which are according to belief and culture in multicultural country like UK. Every country has
different consumer taste and lifestyle and Nestle has to develop effective strategies in order to
met different lifestyle consumer behaviour. Company is totally dependent on the consumer
lifestyle and their attitude. Product or services cannot be successful until company has
enough information about the consumer lifestyle. Nestle has to take social and cultural factors
under consideration in order to achieve their strategic objectives.
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Technological:
Technological change has the most rapid, persistent and profound effect. It creates
opportunities for new products and product improvements and of course new marketing
techniques- the Internet, e-commerce. Technology creates opportunities for new product or
product improvements and new techniques of marketing such as internet and e-commerce.
Technology has great influence on business operations and overall decisions. Nestle uses
technology by taking orders via telephone and online by internet. Moreover, Nestle uses
technology in various business activities such as record of their customers and employees.
Corporate Objectives
For any firm it is important that corporate objectives are consistent with the overall marketing
objectives. Taking corporate objectives and strategy, a company might want to give a
description to the Ansoff’s Matrix, Boston Matrix to establish that where the company is and
in which way it wants to lead.
Nestle’s corporate objective is one of the world best and largest branded food industry. It is
very important that the corporate objectives are fully practical for each product line with the
overall objectives of the firm as a whole.
Marketing Objectives
Nestle can set marketing objectives in the business for their product and also for their profit
centres. The primary objectives for baby milk to improve its position as the world’s number
one selling product. To achieve this position Nestle has to develop a marketing strategy,
product development, distribution and promotion. For the improvement of a baby milk these
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strategies must be flexible and at the same time it is important to take care and avoid the
damage of the product.
Ansoff’s Matrix
In the business Ansoff’s Growth matrix helps to decide the growth of product and market
strategy. We can suggest by Ansoff’s Growth that product or market depends on whether in
new or existing markets.
Market Penetration
Market penetration means that a growth strategy where the business emphasis on selling
existing products into existing markets.
By market penetration main objectives can be achieved.
1: By maintaining and increasing the current product’s market share, this can be achieve by a
mixture of attractive pricing strategies, e.g. sales promotion, advertising
2: Secure production of genetic feature of growth market.
3: Spread usage of regular customer, for example by loyalty schemes
Market Development
In marketing development we can sell the existing products into new markets. To approach
this strategy there are so many ways, including
For example exporting to a new country, new packaging, new distribution channels, pricing
policies to create new market segments.
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Product Development
Introducing a new product into existing marketing is known as product development. This
strategy may require the development of new competencies and requires the business to
develop modified products which can appeal to existing markets.
Diversification
Diversification is the name given to the growth strategy where a business markets new
products in new markets.
This is an inherently more risk strategy because the business is moving into markets in which
it has little or no experience.
For a business to adopt a diversification strategy, therefore, it must have a clear idea about
what it expects to gain from the strategy and an honest assessment of the risks.
Competitive Strategies
1: Cost Leadership Strategies
Companies can acquire competitive advantage via a cost leadership strategy. This is usually
gained by companies that are able to achieve economies of scale in production and
marketing. Such companies buy raw materials in bulk and they produce on a large-scale.
They are thus able to market at low prices and this is usually to the mainstream food retailers.
France and the UK have organic juice companies that have gained market leadership via this
strategy. Conventional juice companies undertake this strategy in the organic juices market
because of their large production capacity and established contacts.
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This strategy is not viable for new entrants that have low financial resources and specialised
products.
2: Differentiation Strategy
A differentiation strategy involves companies marketing a product that is clearly
distinguishable from others in the marketplace. In the market, this means the product has
attributes that are distinct from others, which can be in the form of flavour, juice type or other
characteristics.
Examples of companies undertaking this strategy are those that specialise in Not From
Concentrate (NFC). Competitive advantage is gained by these products positioned differently
from those that compete on price (-Cost Leadership Strategy).
3: Focus Strategy
Whereas the previous two strategies are industry-wide strategies, this involves a segmentation
approach. This strategy involves companies focusing on specific segments of the market, and
segments can be in terms of flavours, juice type, or marketing channels. Competitive
advantage is gained via a Cost Focus or a Differentiation Focus.
A Cost Focus strategy involves a company gaining competitive advantage by being the low
cost provider to the segment.
A Differentiation Focus strategy involves companies marketing a distinct or unique product
in the target segment.
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Application of 7P’s
1: Product: A product must provide value to a customer but does not have to be tangible at
the same time. It introduces a new product or improving the existing products. New product
development refers to the ability of an organisation to introduce new products into the market
sometimes referred to as innovation.
A new product takes time to find acceptance and there is a slow growth in sale. Until cost is
high because of low output and process may be high to cover production and sales promotion
costs. The company needs to spend heavily on promotion to inform the target market about
the product existence and benefits.
At decline stage many producers are reluctant to leave the market despite falling profit. When
the demand is greater for the product sell it in international market.
2: Price: This implies that the price should be set based on what the competitor are charging
in the market. The method for setting prices should based on demand, because when demand
is high the price will be high and low demand may lead to a low price. Pricing strategy for a
new product for the first time lead to a high price for those buyers who are ready to pay a
higher price and then after some time reduce the price.
3: Place: It refers to the place where the customer can buy the product and how the product
should be reach there. This can be done through different channels like wholesalers, Internet
and retailers. The channels of distributions based on intermediaries and middlemen who serve
as links between the user of the product and the manufacturer.
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4: Promotion: It is about the benefits of using a service and a particular product. It includes
many ways to dealing with customers for which the company has to offer. The purpose of
promotion is explained by the best way which is DRIPE model.
Differentiate- it means that the product must be unique from others.
Remind- the customers have short memory so in this case we should remind those customers
who use it before means the regular customers.
Inform- who are not using the product and unaware about the benefits of the product and
have never used before we will inform those people.
Persuade- it means convinces and motivate the people about the product.
Engage- in the last part of the dripe we will maintain a long term relationship with our
customer.
5: People: People refer to the management, employees, customers and everyone who are
involved in it. In this part of 7p’s the selection of employees should be done with careful and
also the selection of policies is very important so all the members should be aware of these
information. And establish effective policies and effective motivational programmes.
6: Process: It talks about the process of providing a service in which the marketer’s task is
achieved and should have the knowledge about the service which provide to the customer, are
helpful to the customer, the time of delivery and the customers are informed about the
service.
7: Physical Evidence: It refers method of using a service and product. The physical evidence
relates to those aspects that customers can feel and see. For example pamphlets, logos, labels,
packaging, colours
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Action
After doing marketing strategies and tactics, it becomes necessary to turn them into action
plans.
For each strategy outline the steps involved in actioning the strategies, and allocate
responsibility with a time frame (start date and completion date).
GANTT CHART
Marketing Activities Time
JFM AMJ JAS OND
Responsibility Budget
Advertising ↔ ↔ Advertising Executive 30000
Product Launch ↔ Production Council 40000
Sales Promotion ↔ ↔ Sales Director 20000
Market Development ↔ Market Researcher 30000
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Monitoring and Control
After the implementation of marketing plan the duty of managers are to monitor and control
what is going on.
Outline controls that need to be put into place prior to executing your marketing plan. These
controls will monitor your strategies to ensure you are meeting your set objectives and
financial targets.
In monitoring it is to be checked that everything is going in the right direction according to
the plan. In control the correction of the wrong plan as early as possible.
Individual Critical Reflection
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www.englishteastore.com/nestle-history.html - United States
www. nestle .com/Resource.axd?Id=4FF18A81-0D77-43B4-949D .
en.wikipedia.org/wiki/Nestlé
projectsera.blogspot.com/2009/.../marketing-plan-of-nestle.html
info.babymilkaction.org/pressrelease/pressrelease23apr10 -
www.articlealley.com › Baby & Child
www.thetimes100.co.uk/case-study--long-term-maintenance-classic-brand-name--7-92-4.php -
ivythesis.typepad.com/.../writing-marketing-plan-assignment-essay-instructions.html -
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