55025545 consumer perception and market strategy in nestle
TRANSCRIPT
PROJECT REPORT
ON
CONSUMER PERCEPTION AND MARKET STRATEGY IN
NESTLE
At
“NESTLE INDIA LTD"
SUMITTEDE TO: SUBMMITTED BY:
(Dr.Manoj Mehrotra) Rakesh Sharma
Roll no: 2008037
NCR BUSINESS SCHOOL MODINAGAR{GHAZIBAD}
Table of Contents
Contents Page No.
Introduction 3
Objective of the Study 13
Scope of the study 14
Nestle India 17
Some Acquisitions & Mergers 55
Swot Analysis 73
Conclusion & Recommendation 78
Limitations 79
Bibliography 80
2
Introduction
Customer Percept ion Theory (CPT)
Customer Percep t ion Theory (CPT) i l l us t ra tes and exp la ins one
method th rough wh ich adver t i s ing i s e f fec t i ve . There a re two
bas ic concep ts tha t need to be accep ted in o rder fo r CPT to be
unders tood : cu l tu ra l f i l t ra t ion , percep tua l rea l i t y .
Cu l tu ra l f i l t ra t ion i s s imp ly the reason tha t peop le perce ive day
to day l i f e d i f fe ren t l y f rom one ano ther . Each person i s un ique
and has had a un ique se t o f l i f e even ts tha t shape the way they
exper ience . An easy way o f unders tand ing cu l tu ra l f i l t ra t ion i s
by compar ing the cu l tu ra l f i l t e r to a pa i r o f sung lasses . When
we wear t in ted g lasses we v iew the wor ld as be ing the co lo r o f
the lens , the same app l ies w i th our cu l tu ra l f i l t e rs . We ga ther
our exper iences on a w ide var ie ty o f top ics (po l i t i cs , educa t ion ,
exper ience , vocabu la ry , t rave l , geograph ic loca t ion , cu l tu ra l
knowledge , t rad i t i on , fami l y , her i tage , race , e thn ic i t y ,
sexua l i t y , hab i t s , e tc ) and fo rm our own un ique cu l tu ra l f i l t e r . I t
i s th rough th is un ique f i l t e r tha t we exper ience every th ing ,
inc lud ing adver t i s ing . In the mode l above the p ink t in ted
rec tang le represen ts the cu l tu ra l f i l t e r .
Wi th cu l tu ra l f i l t ra t ion in p lace , we can p roceed th rough the
s teps o f the mode l wh ich de f ine the theory . The p rocess o f
CPT s ta r ts w i th the consumer : an ind iv idua l toward wh ich the
message i s d i rec ted . The consumer mus t f i r s t have a perce ived
need o r want , and then ac t i ve ly exper ience an adver t i sement in
the p roduc t ca tegory where the need o r want ex is ts . I t i s a
ca ta lys t fo r the mode l i f t h i s adver t i sement occurs a t s t ra teg ic
3
t im ing in the p rocess . A f te r exposure , the consumer fo rms an
op in ion abou t the p roduc t . Th is percep t ion becomes the rea l i t y
o f tha t p roduc t to the consumer . I t i s poss ib le tha t th i s t ru th
cou ld change w i th exposure to compet i t i ve messages f rom a
w ide var ie ty o f sources (o ther med ia , f r i ends , adv ice co lumns
e tc ) . I f , however , the p roduc t i s perce ived , and there fo re
ass igned the t ru th , o f be ing pos i t i ve i t i s then eva lua ted as to
whether o r no t i t f i l l s the need o r want . I f i t does indeed f i t the
need , i t i s l i ke ly tha t the consumer w i l l p roceed to the purchase
s tage o f the mode l . In the purchase s tage the consumer
dec ides to purchase o r no t to purchase the p roduc t . Aga in ,
the re a re a number o f va r iab les sur round ing th is dec is ion , as
sur round each s tep and dec is ion in the mode l .
4
Market ing s t ra tegy
A market ing s t ra tegy i s a p rocess tha t can a l low an
o rgan iza t ion to concen t ra te i t s l im i ted resources on the
g rea tes t oppor tun i t ies to inc rease sa les and ach ieve a
sus ta inab le compet i t i ve advan tage . A marke t ing s t ra tegy
shou ld be cen te red a round the key concep t tha t cus tomer
sa t i s fac t ion i s the ma in goa l .
Key par t o f the genera l corporate s t ra tegy
A marke t ing s t ra tegy i s mos t e f fec t i ve when i t i s an in tegra l
component o f co rpora te s t ra tegy , de f in ing how the o rgan iza t ion
w i l l success fu l l y engage cus tomers , p rospec ts , and compet i to rs
in the marke t a rena . I t i s par t ia l l y der i ved f rom broader
co rpora te s t ra teg ies , co rpora te m iss ions , and corpora te goa ls .
As the cus tomer cons t i tu tes the source o f a company 's
revenue, marke t ing s t ra tegy i s c lose ly l i nked w i th sa les . A key
component o f marke t ing s t ra tegy i s o f ten to keep marke t ing in
l i ne w i th a company 's overa rch ing miss ion s ta tement .
5
Basic theory:
1 ) Targe t Aud ience
2 ) Propos i t ion /Key E lement
3 ) Imp lementa t ion
Sector ia l tact ics and act ions
A market ing s t ra tegy can serve as the founda t ion o f a
marke t ing p lan . A marke t ing p lan con ta ins a se t o f spec i f i c
ac t ions requ i red to success fu l l y imp lement a marke t ing
s t ra tegy . For example : "Use a low cos t p roduc t to a t t rac t
consumers . Once our o rgan iza t ion , v ia our low cos t p roduc t ,
has es tab l i shed a re la t ionsh ip w i th consumers , our
o rgan iza t ion w i l l se l l add i t iona l , h igher -marg in p roduc ts and
serv ices tha t enhance the consumer ' s in te rac t ion w i th the low-
cos t p roduc t o r se rv ice . "
A s t ra tegy cons is ts o f a we l l though t ou t se r ies o f tac t i cs to
make a marke t ing p lan more e f fec t i ve . Marke t ing s t ra teg ies
serve as the fundamenta l underp inn ing o f marke t ing p lans
des igned to f i l l marke t needs and reach marke t ing ob jec t i ves .
P lans and ob jec t i ves a re genera l l y tes ted fo r measurab le
resu l t s .
6
A marke t ing s t ra tegy o f ten in tegra tes an o rgan iza t ion 's
marke t ing goa ls , po l i c ies , and ac t ion sequences ( tac t i cs ) in to a
cohes ive who le . S im i la r l y , the var ious s t rands o f the s t ra tegy ,
wh ich migh t inc lude adver t i s ing , channe l marke t ing , i n te rne t
marke t ing , p romot ion and pub l i c re la t ions can be o rches t ra ted .
Many compan ies cascade a s t ra tegy th roughout an
o rgan iza t ion , by c rea t ing s t ra tegy tac t i cs tha t then become
s t ra tegy goa ls fo r the nex t leve l o r g roup . Each one g roup i s
expec ted to take tha t s t ra tegy goa l and deve lop a se t o f tac t i cs
to ach ieve tha t goa l . Th is i s why i t i s impor tan t to make each
s t ra tegy goa l measurab le .
Marke t ing s t ra teg ies a re dynamic and in te rac t i ve . They a re
par t ia l l y p lanned and par t ia l l y unp lanned. See s t ra tegy
dynamics .
7
Types of s t ra teg ies
Marke t ing s t ra teg ies may d i f fe r depend ing on the un ique
s i tua t ion o f the ind iv idua l bus iness . However there a re a
number o f ways o f ca tegor iz ing some gener ic s t ra teg ies . A
b r ie f descr ip t ion o f the mos t common ca tegor iz ing schemes i s
p resen ted be low:
S t ra teg ies based on marke t dominance - In th is scheme, f i rms
a re c lass i f i ed based on the i r marke t share o r dominance o f an
indus t ry . Typ ica l l y the re a re th ree types o f
marke t dominance s t ra teg ies :
Leader
Cha l lenger
Fo l lower
8
Porter gener ic s t ra teg ies –
s t ra tegy on the d imens ions o f s t ra teg ic scope and s t ra teg ic
s t reng th . S t ra teg ic scope re fe rs to the marke t pene t ra t ion wh i le
s t ra teg ic s t reng th re fe rs to the f i rm ’s sus ta inab le compet i t i ve
advan tage .
Innovat ion s t ra teg ies - Th is dea ls w i th the f i rm 's ra te o f the
new produc t deve lopment and bus iness mode l innova t ion . I t
asks whether the company i s on the cu t t ing edge o f techno logy
and bus iness innova t ion . There a re th ree types :
P ioneers
C lose fo l lowers
La te fo l lowers
Growth s t ra teg ies - In th is scheme we ask the ques t ion , “How
shou ld the f i rm g row?” . There a re a number o f d i f fe ren t ways o f
answer ing tha t ques t ion , bu t the mos t common g ives four
answers :
Hor izon ta l i n tegra t ion
Ver t i ca l i n tegra t ion
D ivers i f i ca t ion
In tens i f i ca t ion
A more de ta i led scheme uses the ca tegor ies :
P rospec to r
Ana lyzer
De fender
Reac to r
9
Market ing war fare s t ra teg ies –
Th is scheme draws para l le l s be tween marke t ing s t ra teg ies and
mi l i t a ry s t ra teg ies .
S t ra teg ic mode ls
Marke t ing par t i c ipan ts o f ten emp loy s t ra teg ic mode ls and too ls
to ana lyze marke t ing dec is ions . When beg inn ing a s t ra teg ic
ana lys is , the 3Cs can be employed to ge t a b road
unders tand ing o f the s t ra teg ic env i ronment . An Anso f f Mat r i x i s
a lso o f ten used to convey an o rgan iza t ion 's s t ra teg ic
pos i t ion ing o f the i r marke t ing mix . The 4Ps can then be u t i l i zed
to fo rm a marke t ing p lan to pursue a de f ined s t ra tegy .
10
Ways to Overcome Market ing Chal lenges Forever
For mos t sma l l bus iness owners , marke t ing i s an overwhe lming
concep t . They need marke t ing so lu t ions tha t ensure a smooth -
runn ing , p ro f i tab le bus iness ye t mos t don ' t know where to
beg in o r how to focus the i r e f fo r t s .
90% o f sma l l bus inesses don ' t even have a marke t ing p lan . I t ' s
d i f f i cu l t to reach your des t ina t ion i f you don ' t know where
you ' re go ing !
I f you ' re a sma l l bus iness owner look ing fo r ease , focus and
marke t ing success , we recommend tha t you focus on jus t
fo l low ing tac t i cs :
Es tab l i sh a memorab le and unmis takab le b rand iden t i t y :
The secre t to bus iness success i s de te rmined by your ab i l i t y to
power fu l l y commun ica te your bus iness w i th laser p rec is ion and
your ab i l i t y to de l i ve r a c lear l y -de f ined and cons is ten t
exper ience .
In a nu tshe l l . . . i t ' s ca l led b rand ing , and , when done r igh t , i t
ensures a th r i v ing bus iness w i th a l l the cus tomers and p ro f i t s
you need . The secre t i s to es tab l i sh a power fu l b rand iden t i t y
tha t s ings d is t inc t ion . And es tab l i sh tha t iden t i t y be fo re you
launch any marke t ing ac t i v i t i es .
1 . Crea te a deep connec t ion w i th your co re ta rge t aud ience -
your po ten t ia l rav ing fans !
2 . Who wants and needs what you have to o f fe r? The on ly
wrong answer i s "everyone . " I f you ' re a ped ia t r i c ian , you
11
may see in fan ts and ch i ld ren . Are they your ta rge t
aud ience? No! They a re your pa t ien ts , bu t i t ' s the paren ts
you need to connec t w i th to ge t the k ids in your door . And
i t ' s no t jus t any paren ts - i t ' s a de f in i te g roup o f paren ts .
3 . In marke t ing , you ge t a lo t more "bang fo r your buck" i f
you focus your spend ing on a we l l -de f ined g roup o f
peop le tha t you en joy work ing w i th . The be t te r you de f ine
th is g roup , the more e f fec t i ve your marke t ing can be .
4 . Des ign compe l l i ng o f fe r ings tha t pu l l cus tomers in l i ke a
magnet .
5 . 80% o f a l l pu rchase dec is ions a re based on emot ion . I t ' s
your job as a marke te r to know how your cus tomers want
to fee l and to ge t them to v isua l i ze how your se rv ices can
meet the i r needs . Peop le want to know, "What ' s in i t fo r
me?" Tap in to the emot ion and c rea te o f fe r ings tha t touch
your cus tomers .
12
Objective of study
1. Prov ide our cus tomers w i th super io r qua l i t y p roduc ts .
2 . Prov ide our shareho lders w i th rap id g rowth & fa i r re tu rns .
3 . Prov ide our emp loyees a cha l leng ing & sa t i s fy ing work
env i ronment .
4 . To be a good corpora te c i t i zen & con t r ibu te pos i t i ve ly to
the soc ie ty in wh ich we opera te .
13
Scope of the study
India is on the move and so are the markets in India. Apart from
economic changes, India is also facing social changes like changes in life style,
hobbies etc. New fashions, Adventures holidays, etc. are in today.
Further, food habits of Indians are changing rapidly. Chocolates which were
believed to be kid’s preference are now being consumed by kids, teenagers, and
adults. Chocolate market in India (Currently 20 000 tones) is growing at a fast
rate annually.
To take advantage of the growing market, international
confectionery companies are getting ready to woo the proverbial Indian Sweet
tooth. An influx of worlds leading Chocolate players is expected.
Further, since Confederation of Indian Industry (CII) is a
representative body of the Indian Industry, it receives its inquiries for pertinent
marketing information from various domestic and international players, who want
to invest in India.
In the above context, the prime objective of this report is to prepare a marketing
plan for any brand that is planning to enter the India Chocolate Market.
Therefore, this report is generic (broad-based) to the extent that it does not focus
on any single brand. However, this may prove to be a relevant marketing guide
for any brand launch in India.
Data analysis
Company profile
FMCG refers to consumer non-durable goods required for daily or frequent use.
Typically, a consumer buys these goods at least once a month. The sector
covers a wide gamut of products such as detergents, toilet soaps, toothpaste,
shampoos, creams, powders, food products, confectioneries, beverages, and
cigarettes
Typical characteristics of FMCG products are:
Individual items are of small value. But all FMCG products put together account
for a significant part of the consumer's budget.
The consumer keeps limited inventory of these products and prefers to purchase
them frequently, as and when required. Many of these products are perishable.
The consumer spends little time on the purchase decision. Rarely does he/she
look for technical specifications (in contrast to industrial goods). Brand loyalties
or recommendations of reliable retailer/ dealer drive purchase decisions.
Trial of a new product i.e. brand switching is often induced by heavy
advertisement, recommendation of the retailer or neighbours/ friends.
These products cater to necessities, comforts as well as luxuries. They meet the
demands of the entire cross section of population. Price and income elasticity of
demand varies across products and consumers.
The FMCG sector has been the cornerstone of the Indian economy. Though, the
sector has been in existence for quite a long time, it began to take shape only
during the last fifty-odd years. To date, the Indian FMCG industry continues to
suffer from a definitional dilemma. In fact, the industry is yet to crystallize in terms
of definition and market size, among others. The sector touches every aspect of
human life, from looks to hygiene to palate. Perhaps, defining an industry whose
scope is so vast is not easy.
15
After witnessing booming sales and flooding markets with innumerable products,
FMCG companies have had to abruptly apply the brakes and look for various
ways to save costs. The MORE THAN RS. 43,000 crore (listed companies)
FMCG industry in India, which has been on a roll for many years, faces tough
times ahead, although many segments still shows good growth.
16
Nestle India
Nestle India is a subsidiary of Nestle S.A. of Switzerland headed by Mr.Martial
G.Rolland, Chairman And Managing Director. With six factories and a large
number of co-packers, Nestle India is a vibrant company that provides
consumers in India with products of global standards and is committed to long
term sustainable growth and shareholder satisfaction. The Company employs
over 4500 people and for the full year 2005 Nestle India recorded net sales of
Rs. 20477 Mio.
Nestle has been a partner in India's growth for the past nine decades and has
built a very special relationship of trust and commitment with the people of India.
The culture of innovation and renovation within the company and access to the
Nestle Group's proprietary technology/ Brands, expertise and the extensive
centralized Research and Development facilities helps the company to create
value that can be sustained over the long term. Nestle India manufactures
products of truly international quality under internationally famous Brand names
such as Nescafe, Cerelac, Maggi, Milky Bar, Milo, BarOne, Nestea and Kit Kat
and in the recent years the company
has also introduced products of daily consumption and use such as Nestle Milk,
Nestle Dahi, Nestle Butter, Nestle Fruit 'n milk ready to drink beverage and
Nestle Pure Life bottled drinking water.
Nestle India Ltd, 51% subsidiary of Nestle SA, is among the leading branded
food player in the country. It has a broad based presence in the foods sector with
leading market shares in instant coffee, infant foods, milk products and noodles.
It has also strengthened its presence in chocolates, confectioneries and other
semi processed food products during the last few years. The company has
17
launched Dairy Products like UHT Milk, Butter and Curd and also ventured into
the mineral water segment in 2001. Nestle’s leading brands include Cerelac,
Nestum, Nescafe, Maggie, Kitkat, Munch and Pure Life. PRODUCT
Quality is the essential ingredients in all of our brands and the reason why
millions of people choose Nestlé’s products every day. Our consumers have
come to trust in Nestlé’s commitment to excellence and turn to Nestle brands to
maintain nutritional balance in a fast paced world.
BABY FOODS
The production of infant food goes right back to the origins of the Nestle
Company. Henri Nestlé’s `Farine Lace’s was the first product to bear the Nestle’
name.
In 1867 a physician persuaded Henri Nestle’ to give his product to an infant who
was very ill—he had been born prematurely and was refusing his mother’s milk
and all other types of nourishment. Nestlé’s new food worked, and the boy
survived from the very beginning, Nestle' product was never intended as a
competitor for mother’s milk.
In 1869, he wrote; “During the first months, the mother’s milk will always be the
most natural nutrient, and every mother able to do so should herself suckle her
children.”
The factor that made baby foods success in the early days of the Nestle'
company—quality and superior nutritional value—are still as valid today for the
wide range of infant of infant formula, cereals and baby food made by Nestle'.
The World Health Organization (WHO) recognizes that there is a legitimate
market for infant formula, when a mother cannot or chooses not to breast feed
18
her child. Nestle' markets infant formula according to the principles and aims of
the WHO International Code of Marketing Breast Milk Substitutes, and seeks
dialogue and cooperation with the international health community and in
particular with the WHO and UNICEF, to identify problems and their solution.
Nestlé’s expertise as the world’s leading food manufacturer
Gained over more than 125 years, is put the disposal of health authorities, the
medical profession and mothers and children everywhere.
Milk based products and baby food contributes to 34% of Nestlé’s turnover. For
ensuring regular procurement of good quality milk, Nestle' has developed a
network around its Moga factory for collection of fresh milk everyday from the
farmers. Nestle' has a dominating 87%market share in the baby weaning foods
with its Cerelac and Nestum brands. Infant milk powder is sold under the
Lactogen and Nestogen brands. Brand loyalties are very high in categories
such as infant food and weaving cereals, enabling the company to command a
price premium.
DAIRY BRANDS
Nestle' has long been a major player in the dairy industry, originally with well
known shelf stable brands such as Nido, Nespray, La Lechera and Carnation,
then building a strong international presence in Chilled dairy and Ice cream under
the Nestle' brand.
19
Innovation and renovation play a major role in the development of milk based
products as well as of breakfast cereals, managed as a joint venture with
General Mills.
The area of nutrition, with its benefits to health and wellbeing, is having a
significant impact on the development of our business. A wide range of proven,
science based solutions such as starter and follow-up formulas, growing-up
milks, cereals, eternal diets, oral supplements and performance foods are
actively developed and successfully brought to market under the Nestle' brand.
BREAKFAST CERAELS
although cereals have been with mankind in form or another for millennia, it was
not until the mid 19th century that scientific research, technological innovation
and then influence of a group of American health reformers, gave rise to the
currently foodstuff we know today as breakfast cereal.
Nestle' has a joint venture with General Mills outside North America, Cereal
Pardoners Worldwide, which is active in more than 80 countries.
The joint venture began in 1990 and its rapid growth has been characterized by
branding and lately the launching of breakfast cereal brands into the fast-growing
cereal bar market.
ICE CREAM
There are many myths and stories as to the invention of ice cream: was it Macro
Polo who brought it back from China (along with pasta)? Probably not,
considering he most likely never visited China.
20
The story of its popularity is however connected with the invention of technology
to make it on an industrial scale and to keep it cold once made. Before
refrigeration techniques, food was frozen with the aid of ice mixed with salt which
was either stored in ice house or shipped from cold countries. But then at the end
of the 19th century, both making and freezing it became easier and together with
the invention of the ice cream cone made the product boom.
Today the United States is the absolute leader in terms of volume consumed but
the highest per head consumers are in New Zealand. Flavors you’d never
thought of and yet they’re commercially available:
Sorbets- Smoked Salmon, Tomato, Cucumber Ice-Creams – Garlic, Avocado,
Sweet Corn.
CHOCOLATE & CONFECTIONARY
The story of chocolate began in the New World with the Mayans, who drank a
dark brew called cacahuaquchtl. Later, the Aztecs consumed chacahoua and
used the cocoa bean for currency. In 1523, they offered cocoa beans to Cortez,
who introduced chocolate to the Old world, where it swiftly became a favorite
food among the rich and noble of Europe.
From the beginning, turning raw, bitter cocoa beans into what one 17 th century
writer called “the only true food of the gods” has been a fine art, a delicate
mixture of alchemy and science. Centuries ago it was discovered that by
fermenting and roasting the beans, an almost otherworldly flavor could be
created.
21
In 1875, after years of trying, a 31-year old candy madder in Vevey named
Daniel Peter figured out how to combine milk and cocoa powder. The result –milk
chocolate.
Peter, a friend and neighbor of Henri Nestlé’s started a company that would
quickly become the world’s leading maker of chocolate. For three decades the
company called Peter, Cailler, Kohler relied on Nestle for milk and marketing
expertise. In 1929, the almost inevitable merger took place as Nestle’ acquired
Peter, Cailler, and Kohler.
Indian chocolate market is growing day by day. Premium segment is opening
upon. The companies like Cadbury’s are launching indigenous product made to
international standards of the 20,000 tonnes chocolates market worth about Rs
400 crore, Cadbury’s accounts for around 65% of market share followed by
Nestlé’s around 23%. Amul has 5% of the share, with the minor players taking
the Rest.
5 STARS: As energy bar, earlier targeted to teenager, before launch of perk 5
star energy bar positioning made it snacking chocolate with Nestle' pitching Bar-
one in 1993 gaian it “For those in between times”.
MUNCH: Munch is the market leader in the chocolates. It is the largest selling
chocolate in India & is followed by Cadbury’s Dairy Milk.
E’CLAIRS: competing in the chewable toffee segment, E’clairs was relaunched
by Cadbury’s during the mid-90 with a new name milk-e’clairs. Its worth is 4000
tones now. Nestle' also presents here NESTLE' E’CLAIRS. Due to launch of
22
multigrain’s Cadbury can not pay attention to brands like Mr. Pop Candy
Lollypop.
KIT-KAT: Kit- Kat which was launched in India in 1995, today leads the
chocolate coated wafer bars category. It has 11.5% share of chocolate market.
But Cadbury’s perk is with9%.
PRODUCT PRICE WEIGHT
KIT- KAT Rs. 14 36 gm.
PERK Rs. 10 2x17.5 gm.
Nestle' forayed into chocolate & confectionary in 1990 and has cornered a fourth
share of the chocolate market in the country. The category contributes 14% to
Nestlé’s turnover. It has expanded its products range to all segments of the
market the Kit-Kat brand is the largest selling chocolate brand in the world. Other
brands include Milky Bar, Marbles, Crunch, Nestle Rich Dark, Bar-one, Munch
etc.
Amul is also competing in this category especially in western regions of India. But
Nestle' still has its own position in the market. The sugar confectionary portfolio
23
consists of Polo, Soothers and Frootos. All sugar confectionary products are sold
under the umbrella brand Allen’s. Nestle' has also markeys some of its imported
brands like Quality Street, Lions and After Eight. New launches such as Nestle’
Choco Stick and Milky Bar Choo at attractive price points to woo new consumers
chocolate confectionary sales registered a strong 21.5% of growth in 2005 aided
by good volume growth in Munch, Kit-Kat and Classic sales. Nestle' relaunched
Bar-One during the year 1993.
PREPARED FOODS
Convenience foods—packaged soups, frozen meals, prepared souses and
flavorings----date back more than a century. With the industrial revolution came
factory jobs for women and less time to prepare meals.
The problem was so widespread that it became the object of intense study in
1882 by the Swiss Public Welfare Society, which offered a series of
recommendations, including an increase in the consumption of vegetables.
The society commissioned Julius Maggi, a miller with a reputation as an
invention and capable businessman, to create a vegetable food product that
would be quick to prepare and easy to digest. The results –two instant pea soups
and an instant bean soup --- helped launch one of the best known brands in the
history of the food industry. By the turn of the century, Maggi & Company was
producing not only powdered soups, but bouillion cubes, sauces and flavorings.
Maggi merged with Nestle' in 1947.
24
Buitoni the authentic Italian brand, which has been producing pasta and sauces
in Italy since 1827, became part of the Nestle' Group in 1988.
Ready to cook food/ cooking aids are sold under the umbrella brand name
Maggie. Culinary product account for about 14% of Nestlé’s turnover. Maggie is
the market leader in the noodles (45% market share), the Ketchup (43% market
share) and soups (41% market share) categories.
Other products sold under the umbrella brand Maggie, are ready-to-cook
gravy/sauces, soups, seasonings, as well as traditional Indian foods such as
pickles and instant snack mixes (dosa mixes). New taste variants are
continuously launched to add variety to the product offerings.
HLL, Heinz, Knor & Indo Nissin Foods are Major competitors in this category.
Gits mixes, Top Raman, Hot serve, are some products that are in competition to
products under Maggie brand. But Maggie has used Quick and Easy cooking as
its Unique Selling Preposition that worked to distinguish the Nestle' to lie ahead
than all brands. HLL as brand Wagon is the part of our daily life uses creative
selling prepositions to maintain its position as the top FMCG firm in India. Its
marketing strategies (including launch, pricing & distribution strategy are good
enough to shatter the competition, so Nestle' is working as an early worker to
remain and lead in the market.
The distribution network of Indo Nissin food is strong enough & it has covered a
large portion of market in very short time. Its distribution network is not very long
& the prices are also low. The company had adopted a low budget promotional
25
strategy and is very fine at merchandising. These all are working together for the
good of the company.
Nestle' has the advantage of great brand image & it is actually working for
maintenance and growing it.
BEVERAGES
In 1937, Nestle' scientists perfected a powered coffee product that was
introduced in 1938 under the brand name Nescafe’- the world’s first
commercially successful soluble coffee.
It became so popular during World War II that for one full year the entire output of
the Nescafe’ plant in the United States (more than one million cases) was
reserved for military use only. Since then, Nescafe’ has become one of the
world’s best-known brands. In addition, Nestle' is a major producer of chocolate-
based and malted drinks.
Its leading brands, Nesquik, Milo and Nescau are very popular with a growing
number of young people around the world. Nestle' ready-to-drink beverages
Nestea and Nescafe’ are sold in various forms (cans, bottles). These are
distributed by Nestlé’s join-venture with the Coca-Cola Company, Beverages
Partners Worldwide. Nestle' is also present in fruit juices (Libby’s) as well as
espresso coffee in capsules (Nespresso).
Beverages like coffee, tea and health drinks contribute to about 30% of Nestlé’s
turnover. Beverages sales registered a 155 yoy growth during 2005. while about
14% of sales come from domestic market, exports contribute to about 16% of
sales.
26
Nestle' Nescafe’ dominates the premium instant coffee segment. Nestlé’s other
coffee brand Sunrise has also been relaunched under the NESCAFE’ franchise
to leverage on the existing equity of the brand. Nestle' has focused on expanding
the domestic market through price cuts and product repositioning. However it has
been losing share in the domestic market, where it has a 37% market share.
The major competitors are Coca-Cola, which launched coffee & tea under brand
name Georgia in 2002. Its tea in four flavors which are classic, Adark, Masal &
Elaichi and coffee in three variants Classic, Cappuccino & Mochaccino to suit the
taste of customer. They adopted the strategy to distribute vending machine to
even small retailer so as to cover a large market. Tata coffee also Works against
Nestle'. But n is still the market leader in terms of market share, Customer’s
choice & quality.
Milo, brown-malted beverages was launched in 1996. It has an estimated
volumes share of about 35 in the malted food drink segment.
Cadbury’s Bournvita & HLL with Boost are the major players in
the market along with Milo. Bournvita is with largest market share of 35%. The
promotional strategies of Nestle' for Milo are working fast for the good of Milo.
Nestle' has launched non-carbonated cold beverages such as Nestea Iced Tea
and Nescafe’ Frappe during 2002.
BEVERAGES
Nestle' Food Services provides food and beverages professionals with a wide
selection of branded products. Our solutions meet the growing opportunities to
service consumers in out-of-home channels.
27
Beverages solutions featuring well known consumer brands such as Nescafe’,
Nestea and Nesquik as well as host professional brands including Minor’s,
Chief and Davigel are part of the diverse portfolio of Nestle' Food Services.
Working to meet the need of Food Service operators across a wide spectrum of
business channels such as quick service restaurants supports our commitment to
giving consumers the brands and quality they come to expect and rely on in the
home as well as out of the home.
BOTTLED WATER
Nestle' brgan its entry into the water business in 1969 with a 30% stake in the
owners of the Soci’e’te’ Ge’ne’le Des Mine’rale’s De Vittal. It acquired a
controlling interest in SGEMV in January 1992, and went on in May of the same
year to buy the entire Perrier Group.
In 1992, Nestle' was the first company to dare to launch a mineral water, Valvert,
in five different countries at once. It’s originally lied in the use of an all-new
plastic, P.E.T. (Polyethylene teraphthalate), which is stronger and more elastic
than the PVC used since 1968. Besides P.E.T. is recyclable.
By the end of 1997, the group was present on every continent, and the purchase
of San Pellegrino gave it the leadership in the Italian market. In 1998 f or the
first time in its history, Nestle' associated its name with bottled water: Nestle’
Pure Life.
The brand was launched in Pakistan and soon appeared in Brazil, followed by
Argentina, Thailand and Philippines, China and Mexico in 2000. in 2001 India,
28
Jordan, and Lebanon followed and in 2002, Egypt, Uzbekistan and then United
States.
Nestle’ Pure Life is drinking water that has been treated and rematerialized
using a standardized industrial process to ensure purity and quality and is
marketed in emerging countries.
A second product with the Nestle' name was launched in May 2000, this time in
six European countries: Nestle’ Aquarelle. A natural spring water currently from
nine different springs in France, Germany, Belgium, Hungry, Italy and Spain,
Nestle' Aquarel also uses the multi-source concept to satisfy new consumer
expectations, especially for water with a low mineral content that the whole family
can drink.
In April 2002, the group changed its name to Nestle' Water’s, a token of Nestle'
decisive commitment to the bottled water market, which now represents 9% of its
sales. Today, Nestle' Water’s is established in 130 countries and markets about
70 different brands. The group is able to offer top quality brands ad innovative
packaging to meet the individual needs of the water consumer all over the world,
whenever, wherever and however thanks to the wide variety of its offer in terms
of distribution and product mix.
PETCARE
Nestle' entered the pet care business with the purchase of carnation in 1985, and
we consolidated our position in Europe with acquisition of the spillers brand in
1998, and further with the acquisition of Ralston-Purina in 2001 creating Nestle'
Purina Pet Care.
29
Carnation for its part developed the Friskies brand in the United States in the
1930s and in selected markets in Europe and Asia since the 1960s. Today
Nestle' is well-positioned with a balanced portfolio of internally developed and
recently acquired brands.
Technologies to develop and add value continually for pets and their owners are
engineered into our current product range. These include state-of-the-art
nutritional innovations, such as products which help maintain feline urinary tract
health or innovations for the most discriminating of pets and their owners. Nestle'
has already become an industry leader and we continue to develop our
international presence.
CONSUMER SERVICES
At Nestle' we are committed to offering consumers high-quality food products that
are safe, tasty and affordable. The Nestle' seal of guarantee is a symbol of this
commitment.
We also believe in maintaining regular contact with our consumers. This applies
both to how we present our products and to how we address our consumer’s
questions and concerns. When Henri Nestle' prepared his first boxes of infant
formula for sale, he put his address on the packages so people would know
where to go if they had questions. Today our consumer relationship panel with
the words “Talk to Nestle'” expresses the same commitment.
This is why we have a worldwide Nestle' consumer services network devoted to
caring for our consumers. Our people have expertise in a wide range of areas
30
such as nutrition, food science, food safety and culinary expertise. They provide
the prompt, efficient and high quality service that consumers expect from Nestle'.
In addition we teach them talk with consumers and above all, to listen. Listening
helps us to understand what people want. Nestle' uses the insights gained from
relationships with consumers to driver product development.
At Nestle' we care for our consumers because our success depends on meeting
their needs and expectations. Through listening and understanding we can make
products that they will want to use all through their lives.
PROMOTION
Promotion is an attempt to influence customers. Its aim is inform & remind the
prospective consumers of the company’s offer & to advocate the cause of its
production in the minds of its audience. Thus informing, reminding & advocating
about the company’s product are real purpose of the promotion component of the
mix.
NIL has rightly understood the production of a good product is not enough to
ensure success in the market, unless target customers are aware of its
existence, features and products. So company has framed a very strong and
very wide communication plan.
31
ADVERTISING
NIL is associated with MUDRA advertising company in India. It has properly
studied the market and developed the commercials in several languages. NIL
has booked spot for the advertising in almost all the channels.
EXHIBITIONS & TRADE SHOWS
It also participates in trade shows & exhibitions.
IN 1997, at Jawaharlal Nehru Stadium in an exhibition NIL displayed its all old
and new products. This was the time when MILO was launched in India.
AHARA 97, Here Nestle' India Ltd. presented its wonderful world of Nestlé’s
recipes along with its products. It also exhibited the various to make Maggie
tastier. This shows that Nestle' never leave its product even if it is market leader
& is the good source of its revenue.
FOOD EXPO 98, organized by CII & attended by over 100000 people. The
Mumbai branch of NIL ensured high visibility for its products like products under
Maggie brand, MILO & chocolates by setting the venue ablaze with Nestlé’s hues
Vic banners, umbrellas posters & product displays.
INTERNATIONAL FOOD CONFEDERATION 1998: IFCON provided opportunity
for the leading, international food scientists, technologists & research institutes to
reflect massive change sweeping across the food processing sector.
FOOD EXPO 1999:
In October in Chicago NIL participated there also.
32
CHILDREN SPORT MEET 98:
At DPS R. K. Puram children between age group of 4-13 years put their best foot
& arm forward. Attired in colorful MILO T-Shirts & Caps they participated in 12
events.
FREE GIFTS
Like giving school Kit i.e., pen scale etc, with Maggie.noodles & chocolates, Free
Cricket bag or a sport watch, badminton racket, bag etc on the payment of a very
minimal amount of Rs. 10 with Milo.
OTHERS
Some other examples of exhibition in which NIL participated are:
India international trade fare (IITF).
Nestle' Hungama 1998.
Maggie Display Contest.
Splendor 1999.
Boarding School Development Campaign.
Moga Summer School Camp.
The competitors of NIL are also very Active and they also participate in these
events and sponsor some event in there own ways & methods. HLL participates
in most of the regional trade shows through its retailers. It displays its new
products at large. HLL is the 1st largest company of India in terms of advertising &
33
promotional expenditure. It also invents largely on window display contests retail
level.
Amul promotes its products by using emotional appeal in order to
use the emotional aspects if Indian citizen. It uses kiosks and hoardings to
promote its product range. The promotional expenses of Amul are not so big as
that of the MNC’s but still it is a respected firm in our eyes.
Cadburys under its promotional campaign that are designed by Ogilvy & Mather
the adv shows the power of positioning with emotional benefits and it really works
for Cadburys & leaves it with dramatic increase in sales.
NESTLE IN THE RACE OF TOP BRANDS
A 50 country A.C. Nielsen survey finds out which brands have been successfully
extents across categories across the globe. Business today presented an
exclusive cross-section of the findings with a slant on India. Nestlé’s the topper
among Top mega foods & Beverages Brands.
CADBURY SCHWEPPES NESTLE
GLOBAL RANK 329 31
COUNTRY Britain Switzerland
MKT. VALUE (US $ MILLION) 11962 82997
PROFIT (US $ MILLION) 1049 5805
34
The brand value of Nestle is greater than $ 1 billion. In global Brand scoreboard
Nestle has got 60th Rank (2005) with:
BRAND VALUE % RANK
2005($ billion) 2004($ billion) CHANGE 3 2
Nestlé India
4.46 4.43 +1 60 ………
From chocolates to baby formula the Swiss food giant keeps the world pantry
stocked.
Nestle India is ranked 6th top ad spender of the year in 2002. It spended Rs.
129.92 crores on TV&AD.
BUSINESS TODAY
The 4th BT Stewart study reveals that NIL is the 9th largest wealth creating
company in India with Money value added (MVA) of 4681 & High positive
Economic value added (EVA) of 100.
MVA is the difference between capital invested & its market valuation. EVA is the
economic profit after deducting the cost of all the capital employed (both Debt &
Equity) in all the business to generate operating profit.
35
A RESEARCH BY BUSINESS INDIA OF TOP 100 SUPPER BRANDS
IN TERMS OF SALES
Nestle' India is ranked 49th among super hundred companies for the year 2004 &
2005 in terms of sales.
2007 (in crores) 2008 (in crores) % change
NESTLE INDIA 1820.50 1936.30 6.36%
CADBURYS & AMUL WERE NOT THERE IN THE LIST OF TOP 100
IN TERMS OF PROFIT
Profit is the major objects of every organization. In terms of profit sample list
Nestle' India is ranked 32nd in 2005 & 37th in 2004 with profit of 259.60 crores in
2005 & 173.20 crores in 2004 with a change of 46.88%.
Cadbury was ranked 90th with 73.60 crores in 2003 & 59.70 crores in 2002.
PROFIT RANK
2005 (In crs.) 2004 (In crs.) 2005 2004 Change
Nestle'
India
259.60 173.20 2 7 9.88
Cadburys
India
73.60 59.70 0 0 3.28
36
IN TERMS OF MARKET CAPITALISATION
Market capitalization is an important barometer of Indian incorporation’s
performance. And many a management today is very concerned about market
capitalization & how it compares with that of its peers. Hence there is a growing
concern among promoters to see how they can reward their shareholders and
see that the stock prices reflect the performance. Nestle' was ranked as followed.
MARKET CAP. RANK
2005 (in crs.) 2004 (in crs.) 2004 2005 Change
Nestle' India 1707.12 70.81 1 6 26%
IN TERMS OF ASSETS
With the current management focus on efficiently, the asset to turn over ratio
assumes importance because Corporate India has undertaken a major
restructuring exercise, resulting in trimmer balance sheet & improved sales &
profitability on smaller assets bases.
NFA RANK
2008 (In crs.) 2007 (In crs.) 2008 2007 % Change
Nestle' India 4.92 5.06 68 63 0.15%
Cadburys
India
4.93 4.37 67 75 0.56%
37
IN TERMS RETURN ON CAPITAL EMPLOYED
So, Nestle' India continues to deliver strong top line and bottom line growth
driven largely by domestic foods business. A diversified product portfolio coupled
with continues new launches should see the growth momentum continuing into
the foreseeable future. The parent company has been increasing its commitment
to the Indian subsidiary via launch of new products and is also increasing its
stake at progressively higher levels. Already in first half of 2006its holding has
increased by further 1% by more than 5% over the last12 months, all through
open market purchases. The high growth to NIL is coupled with High ROCE
……. What more can an investor want? Impressing percprmance of NIL in the
past is likely to continue due to several reasons:
Consumption of its main categories in the foods business is even now,
largely an urban phenomenon .there is enough scope to increases consumption
of its products in the larger towns before thinking about tapping the semi urban
and rural areas.
Trends like nuclear families, working couples and general paucity of time
in urban areas coupled with increasing awareness about health and hygiene will
drive the growth of convenience products in the processed foods industry.
The company has been gaining market share in certain categories lid
chocolate and malted beverage .this trend many well continue as Nestles share
even now in this categories is very low.
WELL DIVERSIFIED PRODUCT PORTFOLIO INNOVATIVE APPROACH
38
The company predict portfolio is well diversified and management is always
loading for new categories of new products in exiting categores.also the
company a my has been at the forefront launching new price points for existing
predicts such as chocolate and new innovations such as y to drink coffee
sachets.
PRODUCT PROFILE
“POLO”
Background
POLO is one of Nestlé’s key strategic confectionery brands worldwide, and
represents Nestlé’s first entry into the large 50,000 tonne p.a. (organized sector)
Indian Sugar confectionery market.
While mint leaves are widely used as a culinary ingredient, and the taste is well
liked and accepted, the mint confectionery habit is a very limited one. NINTO, the
only national brand, has a volume of 250 tons p.a. There are also a couple of
small regional brands: GOLD and ZERO. And of course, smuggled POLO sold
for between Rs. 8/- to Rs. 12/- for 26 g roll (samples available in your market as
well)
The underdeveloped state of this market is perhaps due to the almost complete
absence of any sustained, national level, marketing inputs. A related market
39
which has responded well to marketing inputs in mentholated sweets
(Vicks/Halls/Strepsils etc.) which is estimated at over 5000 t.p.a.
POLO will therefore, have to pioneer the development of the market for mint
confectionery. This is an opportunity for us to firmly establish ourselves and
dominate this market over the long run.
Marketing Plan
Objective: Minimum tonnage of 700 tons in 1995
Product & Positioning: POLO will be launched in two packs:
1. A 25 g roll containing 16 sweets; 20 rolls to a shrink wrapped display outer; 30
display outers to a shipping carton: Net weight 30x20x25g = 15 kg
Standard case : 15 kg
2. A single piece flow pack containing one sweet. To be packed into polybasic
and shipping cartons. Sizes not yet finalized. This pack has been very successful
in Thailand as a low unit cost trail/sampling/impulse purchase pack.
Each sweet will be white in color and round in shape with a hole in the middle,
and will carry "POLO" branding in raised letters on one side. The mint flavor will
be mild and refreshing. The attempt will be to be as close a possible to the
international product while using local (vegetarian) raw materials.
POLO is small convenient enough to fit in almost any pocket or handbag and can
be taken anywhere. The discreet nature of POLO makes it very acceptable.
Once the tube is opened, it is easy to reseal to keep the product fresh. POLO is
40
enjoyable and social: to offer someone a POLO does not suggest they need a
breath freshener.
Different people have different ways of eating POLO: some people crunch
POLO, others suck them until they disappear on the tongue. The tongue can play
games with POLO, and this, combined with the hole, provides a unique and very
personal eating experience. POLO should never be eaten in a hurry: its mild
refreshing mint flavor should be savored.
While POLO is targeted at people of all ages (in metros/mini metros, A&B SEC)
the target for POLO advertising will be adults, 15-35 who are warm, sociable,
friendly, with a sense of humor.
The advertising will seek to position POLO as "the mild, refreshing mint sweet
with the hole that's universally acceptable" and do this in a manner which is
appealing, attractive, and above all, liked by consumers, because consumers will
be attracted to the personality of the brand.
GENERATE IMPULSE
It is a startling fact that 70% of confectionery is bought on impulse?
Purchases of confectionery (for self consumption as well as for gifts) are not in
general, pre-planned.
Peoples are attracted by seeking something known to delicious
They recognize a familiar brand and buy on impulse.
41
How can we obtain maximum impulse sales?
By having:
1. A popular brand
2. An eye catching pack
3. Good advertising
4. The most prominent display position
GENERATE EXCITEMENT
1. Breaking away from our normal retailers' margin of 10% and 12.5%, they offer
the retailers a wholesome margin of 20%, and a TPP of 5% adding up to a 25%
margin!! For the first time in Nestle history.
2. To encourage faster movement and therefore greater profits for the retailers,
they have:
A very attractive packaging and a low price
Attractive POS and Dispensers for key outlets
Each grey box is printed and shrink wrapped, to act as a dispenser!
3. Grab the hottest spot in any outlets:
The cash counter
The front counter
42
The check out counter
4. Their selling in Norms are:
'A Class - 2.5 grey boxes
'B' class - 1 grey box
Their emphasis is on wide distribution, without loading anyone outlet.
CRUX OF THE MATTER
For the first time they have a product, which is affordable by everybody at Rs. 3/-.
It is convenient to carry and eat; where no barriers are put on distribution. So,
let’s show the world what widespread distribution is all about.
Nestle have done it in the past. There is an opportunity to reassert their
supremacy. A recent survey by A&M Magazine rated Nestle as having the best
relations with the trade in India. Now use this strength for POLO
To recap:
Go all out to sell POLO: the mint with a hole.
70% confectionery sells on impulse
For success they have:
- a good product at affordable prices
- Wholesale retail margin
43
- an eye catching pck
- good advertising
What they need:
- a prominent display
- widest possible distribution
Their objectives:
- Each and every Nestle outlet
- Unconventional outlets
How do they get to these outlets?
- Cycle boys
- Wholesalers
2008 Sales Volume: POLO (In standard cases)
October -995
November - 755
December - 850
44
ON TEAMMATE
It consists of an ORG synopsis, its analysis and a report on the various studies
present within the organization to come out with facts and hypotheses which may
be helpful in facilitating the launch of Teammate.
The findings are:
1. Total milk powder market size - 66200 tons (including IMF)
2. Size of the market for tea whitening = 26000 tons.
Factors working for Teammate
1. Price index of 93. This should expand the market and corner a huge
chunk of the expanded market.
2. Higher value for money perception of such a brand
3. Industry likely to be increasingly price competitive due to increasing
availability of liquid milk in future
4. High growth of economy segment
5. Whitener market growing rapidly (Due to switching from IMF's whitening
tea/coffee to dairy whiteners)
6. 65% of non IMF milk powders used for tea whitening
7. Great distribution strength of Nestle
8. High on proteins (An attribute considered important by consumers).
45
Factors working against Teammate:
1. Increasing availability of liquid milk
2. Danger of odd smell/taste (Ref. Customers have complained of odd
smell/taste in Everyday Dairy Whitener (EDW). Necessary to be very careful
in a soya based whitener).
3. None enhanced with vitamins/minerals this. (This is an attribute
considered important by users of Amulspray)
4. Single purpose product
5. Danger that EDW may be cannibalized
6. High brand loyalty to existing brands
7. People switch to milk powders after having used an IMF (Where does
Teammate fit in this natural progression).
Facts gleaned from ORG data
EDW losing market share heavily due to entry of Amulya.
EDW is the market leader (if Amulspray misuse is exlcuded) in Metors, class I, II,
III and IV towns (This implies great distribution strength). However, EDW is losing
market share in metros, class II and III towns. It is gaining in class I and IV towns.
46
EDW is the leading brand outlet wise with highest sales through grocers, general
stores and chemists. However, it is losing market share in groceries and general
stores.
East and south are the largest markets.
West Bengal, Kerala, UP and Madhya Pradesh register the highest sales in the 4
zones.
South and West zone are the fastest growing with North Zone declining
Andhra Pradesh, Maharasthra, West Bengal and Rajasthan are the fastest
growing states in the 4 zones. Madhya Pradesh, Punjab and Haryana are
declining.
500 gram refill pack registers the highest volumes
Calcutta and Madras are the highest volume metros followed by Delhi, Bombay
and Bangalore. However, Bangalore is the fastest growing market followed by
Calcutta.
a) Amongst the metros EDW is the market leader in Bangalore, Bombay,
Calcutta & Delhi with Amul WMP leading in Madras
b) Sapan Dairy special & Amulya have registered the fastest growing overall in
the 5 metros.
EDW has registered declines in North, East and South Zones but has registered
growth in the West Zone.
47
Before launching Teammate, a survey was conducted by Nestle India Limited so
that it could launch Teammate at the right target market at the right time at the
right price and to the right people.
Estimation of size of market for tea whitening
Two separate studies judged that size of market for tea whitening is 39% of total
milk powder sales and 65% of milk powder (non IMF) sales. Both are close
enough and the size of the market for tea whitening is 26000 p.a.
Characteristics of the market
a) Economy segment - 47000 - 51000 tons
Premium segment - 15000-19000 tons
b) Non IMF market has been growing at 10% p.a. with the economy segment
growing at a faster rate than the premium segment.
c) Nestle has a 78% of the premium segment but only an 18% share of the
economy segment
d) Dairy Whiteners comprise the fastest growing segment. Thus, the time is ripe
for a brand like Teammate to be launched in the market as a whitener in the
economy segment.
Use of milk powder:
1. As a milk substitute when real milk is in short supply
2. As an additive/thickening agent
3. As a taste enhancer in tea/coffee
48
Value for money perceptions of consumers (based on):
1. Lesser quantity required for whitening
2. Thicker milk constancy
3. Larger, economy packs (1 kg packs preferred by many consumers).
4. A sweet taste which mean lesser sugar consumption.
ATTRIBUTES CONSIDERED IMPORTANT
ATTRIBUTES % OF RESPONDENTS IN FAVOR
Dissolves easily 89%
Tasty milk 59%
Vitamins/Proteins 59%
No smell in milk 56%
Variety of uses 51%
Economical to use 51%
Sweet taste 48%
49
Before launching Teammate following attributes have to be considered.
to save on excise, they do not enhance the product with vitamins
12% of consumers have found EDW to have an odd smell/taste. They
shall have to ensure that the taste is good and that there is no smell to ensure
acceptability (especially since it is a soya based product)
Variety of uses that a product can be put to 'was as important
consideration'. Teammate may fall short here. However, if Bonus is a
success, then it is possible that Teammate could be used to make soya milk
or soya curd.
Teammate would have a price index of 97-99 and it is recommended that
it has a sweet taste so that consumers have to use less sugar thus enhancing
their value for money perceptions.
Competitors of Teammate
EDW
Amulya
Anikspray
These brands are used mainly for tea whitening, are easy to dissolve and
perceived as brands for modern people.
Dangers of cannibalization
With EDW being the market leader in the tea whitening category, the danger of
cannibalization by Teammate is great. One possible way out is to position EDW
50
as a multi purpose powder and Teammate as a brand specifically for tea
whitening. However, this may lead to diffused positioning of EDW and depressed
sales of Teammate.
PRICE INDICES OF THE EXISTING BRANDS
BRAND PRICE INDEX
Amulspray fix 100
Amulspray tin 108
Amulya WMP tin 121
Amulya fix 105
Sapan D. Special Fix 115
Sapan D. Tin 125
EDW bag 113
EDW tin 133
Everyday Goldfix 158
Sagar 97.5
Milkcare IF 158
Milkcare FP 158
Lactodex FP 158
Dexolac IF 164
51
Glacto tin 128
LFP flx 143
LFP tin 153
LIF tin 153
NSTG flx 114
NSTG tin 114
MILO
BACKGROUND
Milk additive market in India in formally here for the last three to four decades.
Over 2 decades, there have been only two large players in the beverage
segment - Bournvita and Boost. Horlicks and Complan are traditionally more
strong brands in the South. Mumbai, being the base for Cadbury India Limited,
Bournvita has been the strong brand here. Cadbury's aggressive sales
distribution in Western Region is largely responsible for this. On communication
front, Bournvita has had changed in positioning twice, Milk additive brands are
traditionally positioned on three benefits - Taste, Nutrition or Energy.
Bournvita is positioned closer to taste and energy benefit while Horlicks,
Complan are closer to nutrition associated with the needs of growing children. As
per an article in A&M magazine published in October 1995, brown beverage
52
market was nearly under saturation with diminishing growing rate, and the
possibility of a new entrant in this field was minimal.
MARKETING PLAN
Objective: Launching of international brand 'Milo' in India.
PRODUCT AND POSITIONING
In August 1996, Nestle launched its internationally known Milo brand in India.
Initially, launch was limited to Tamil Nadu. Estimated market of brown beverages
in 1995 was 15,000 tons and market was growing with 6% per annum growth
rate. Milo was launched with a pricing index of 100, 99 and 94 respectively of
Milo. Boost and Bourn vita. With a slogan that said "Win with Milo" and its
association with energy and sports, it was launched in an attractive pack of green
color.
In February 1996, Milo was launched in the city of Mumbai. The launch was a
rather simple one with lease media hype. Instead of this, sampling was done in
schools and at the places where direct trial to the end user could be included.
There are few sports competitions also organized in schools as a launching
strategy for Milo.
After the months of launch of Milo, it was necessary to understand how Milo in
doing on the retailer front and what is the retailer's response on various issues
associated with distribution of Milo. At the same time, it was necessary to
understand the awareness of Milo in consumers and their purchase and
53
consumption habits of milk additive brands. Milo being a relatively new brand in
India, Nestle carried out a research on its own.
Recall of different brands - All the brands had similar overall recall if the TOM
spontaneous aided recalls are added. However, in total spontaneous recall (TOM
and unaided added), Bournvita had a 100% recall, followed by Boost with 76%.
60% retailers had a spontaneous recall of Milo and no one recalls Maltova.
PROMOTION
Retailers most preferred option was of 'On pack Incentive'. This is followed by
price-offs and extra quantity. Practically no retailer like redemption's discount
coupons or contests kind of options. As consumers are not really concerned
much if 4 to 5 rupees off is given or 20 to 50 gms is given extra, gifts turned out
to be the best incentives. Bournvita and Maltiva is considered to be giving
highest promotion and Milo had not offered any promotion since its launch. Milo
should have been launched with a heavy promotion offer so as to induce trial, but
it is not so. Milo had a biter taste, so it is not preferred as a drink for children. Milo
had offered trade promotion only during the time of its launch. This is in the form
of Rs. 5/- against display for a week.
INDUSTRIAL SCENARIO
54
The processed foods sector, which currently accounts for less than 2% of total
food consumption in the country, is slated to grow at a fast pace. The Indian
Government has identified Food Processing as a high potential industry and has
been creating a policy environment conducive to its growth. Historically, the
policy framework favoured small and unorganized players while the MNC players
were restricted from adding capacities. This led to the mushrooming of a vast
unorganized sector. Large players with strong marketing network and brand
equity were forced to source from third party producers. During the last few
years, however, several food products have been de-reserved from small-scale
sector. MNC’s as well as domestic players have made aggressive investments in
the sector. Quantitative restrictions on import of several food products have been
lifted, leading to greater availability of imported products. MNC’s are able to offer
a wider product range, without the need to establish a manufacturing base.
COMPETITION
Baby food and Instant coffee are categories where brand loyalties are very
strong and Nestle is the market leader. HLL is a significant competitor to Nestle
in instant coffee; while Heinz is the main competitor in the baby foods market.
The market for culinary products, semi-processed foods such as noodles, ready
mixes for Indian ethnic breakfast and sweets, is largely an urban market. HLL
and Indo Nissin Foods are the main competitors in these product segments.
Nestle has also achieved a significant 25% share in the chocolate/confectionery
market. The company has recently expanded its dairy products portfolio to
include, milk, curd and butter. The company also forayed into the bottled water
segment with the launch of its Perrier brand in the premium mineral segment and
Pure Life in the purified water segment.
SOME ACQUISITIONS & MERGERS
55
1866: Company Foundation.
1905: Merger Between Nestle' & Anglo-Swiss Condensed Milk Company.
1929: Merger with Peter Cailer-Kohler Chocolate Suisse S. A.
1947: Merger with Alimentana SA (Maggie).
1969: Vittel (equity interest)
1971: Acquisition of Ursina-Franck (Swiss).
1974: Acquisition of L’ Oreal (France).
1977: Acquisition of Alcon (2002: partial IPO).
1985: Acquisition of Carnation (USA).
1988: Acquisition of Buitoni-0-Perugina (Italy).
1988: Acquisition of Rowntree
1992: Acquisition of Perrier (France)
1998: Acquisition of San Pellegrino and Spillers Petfoods
2000: Acquisition of PowerBar
2001: Acquisition of Ralston Purina
2002: Acquisition of Scholler and Chef America
2004: Acquisition of Movenpick , Powwow and Dreyer’s
2007: Acquisition of Valio (ice cream activities)
2008: Acquisition of Wagner, Proteika, Musashi
SOME STRATEGIC ALLIANCES
56
1981: Galderna
1989: With Clintec (USA).
1989: CPW (USA) (Cereal Partner World Wide).
1990: Nestle' – Walt Disney (USA).
1991: Cooperation with Coca Cola (USA).
LAUNCH STRATEGY
Let us begin by recalling a few basic principles of Confectionary distribution.
Selling to cost much. Confectionary is easy every one buy’s it because:
It tastes great.
It does not cost much.
It is all bought frequently.
All this is true. It is also a fact that 70% of confectionary is bought on impulse.
Therefore, whosoever taps the impulse takes the major part of the business.
HOW TO TAP THE IMPULSE?
Buying consumers are usually form one of the three different frames of mind:
First, Mr. Positive, He knows what he wets to ask for.
Second, Mr. Peck-ish. He wants ht confectionary but, makes up his mind after
seeing the displays.
Third, Mr. Impulse he does not go to buy the confectionary but is drawn by the
display & buys on impulse.
HOW CAN WE OBTAIN MAXIMUM SALES?
A popular Brand.
57
Eye catching Pack.
Good advertising.
The most prominent display position.
DISTRIBUTION STRAGEGY
The aim of Nestle India Ltd. is to cover & open the largest possible number of out
lets in every nook & corner of the country.
HOW IT IS PROCEEDING?
Confectionary can be sold almost any where. In our regular outlets also. Some of
the major and most approachable outlets are:
A school & college canteen.
Airport terminal.
Cinema hall.
Pan/cigrates kiosks.
Railway station/train vendors.
The company is looking to ensure that:
Any where the people congregate the aim is the representation in all these
outlets as their distribution objective. Exclusive retail coverage is to focus to on
whole seller, where endless stock could be dumped and from where stock
reaches almost all outlets in the country.
The whole seller channel could give us representation in outlets especially pan
shops where they are not present.
58
DISTRIBUTION NETWORK OF NIL
MARKETING STARTEGY
The marketing strategies of NIL are aggressive enough and are designed
keeping in mind.
59
DISTRIBUTOR (4%-7%)
C & F AGENTS (1%-3-% Margin)
SUPER STOCKIST (3%-6%)
MANUFACTURER
STOCKIST (3%-5%)
ORGANISED RETAILER (6%-
18%)
The changing taste and preferences of consumers.
Attached cost structure.
Working capital management.
Broad based wide products offering is preparing NIL for paradigm shift from Low
Growth Premium Products to High Volume Based Growth Portfolio that will take it
to a strong double digit sales growth with improved profitability.
CHANGED PRODUCT PORTFOLIO
According to Mr. Donati, MD of NIL, “The raising profits will not be zeroed down.
Sales growth is important but achieving higher profit is even more important. So
products that don’t make money would be axed out. Nestlé’s product portfolio
has been pruned (macaroni for instance was withdrawn) and it has revamped its
supply chain.”
TEST MARKETING
NIL tests marketed many of its products before launching them in the market, so
as to nullify the risk of failure and large sunk cost. Some of the products that
were test marketed are:
1. Maggie Chinese noodles.
2. Maggie imli sauce.
3. Nestle' Maxi munch.
4. Nestle' Kream-o-cook.
5. Nestle' Fruitips Pagtilles.
6. Nescafe’ Redimi
7. Nestle' Dairymaid.
8. Nestle' has developed special machine for Nestle' Iced tea.
60
ROLE OF MAJOR PRODUCTS IN MAKING NIL A GRAND SUCCESS
Nestle' India Limited works a lot before launching a product. It does a lot of test
marketing & other marketing efforts for making its product & thus a company a
grand success. Nestle' believes in renting mind space by creating perception for
the brand in the prospects mind so that it stands apart from the competing brand
& approximates much more closely to what the customer wants. It covers that
space in the customer’s mind as if they have won a long term lease and always
keep out ‘squatters’. The market conditions before & after the launch of some
major brands of Nestle' are given as under.
MAGGIE NOODLES
Maggie Noodles were launch in 1983, where their was a latent need for the
Indian market to make foray into the fast food segment. Previous there was no
trend of instant noodles in India, most of the people were aware of Chinese
noodle only.
In 1982 when Food Specialized Ltd. (associated with Nestle' considered
launching Maggie instant noodles, the company had the option of choosing from
several alternative positions. The product could have been launched, for the sake
of argument, as the means of cooking tasty Chinese dishes at home, or as a “TV
Dinner”, or as a ‘mini meal’.
Through consumer research the company felt that the most profitable position
would be as a tasty, instant snack, made at home & initially aimed at children.
The target market was the in-home segment of the very substantial snack
category. This positioning decision automatically determined the competition
which included all snack products in general. These would range from ready to
61
eat snacks-biscuits, wafers & peanuts-to ready prepared snacks such as
samosas. All were bought out items.
Maggie noodles were launched in Delhi in January 1983 and it became an
overnight success. The annual target for that market was increased from 50
tones to 600 tones. The Indian market was tipped to became the second largest
Nestle' market for this product worldwide, next only to Malaysia.
Maggie Noodles, as market results show, found a vacant, strong position and sat
on it as “TASTE TO COOK, GOOD TO EAT” any time snack.
RICH SOUPS (1989): traditionally at home the soup was made from Boiled
vegetables & was used as filler. Maggie soups were convenient, healthy, tasty &
notorious. In first half of the decade the soup market of Maggie grew up to 2500
tones, a large enough size to attract competition in a short time & in 1995
competition sets in.
The company’s market research team gets the latest information regarding the
changing taste and preferences, and suggested steps to improve the product.
Aggressive consumer benefit strategy propelled the market, to touch the 500
tones in subsequent 2-3 years.
MILK MAID
Milkmaid was launched in 1962 by Nestle' as a creamer or whitener for tea and
office. The most interesting thing about Milkmaid is that it has been repositioned
4 times without any considerable changed in packaging & product remained
62
totally unchanged. But off course it is the illustration & headlines that really
determines the position which the consumer will give the brand in her mind.
This repositioning strategy proved to be a great success for Nestle' each time the
volume of sales got an upward shift & that too by a large denomination. They
believe that the perceived image of the product belongs not to the product but
rather is the property of the consumer’s mental perception. So the strategy
should be:
“Looks beyond the Product at the Customer & Use Knowledge to
Repositioning the Brand”
Five important rules for a successful repositioning:
Renovation.
Innovation.
Customer communication
Product must be a low cost & highly efficient operator.
Product availability: wherever, whenever & however.
Some time later milkmaid was positioned as “Tastiest milk maid”.
The concept was that you can get 1.6 liters of sweetened milk by adding water in
that condensed milk. This positioned was visualized as it had relevance at a time
when fresh milk was in short supply in some parts of India.
Once again, we saw Milkmaid in yet another position as a topper on fruits, cakes,
jelly etc. and then last time through a natural evolution-backed by consumer
research & sound marketing judgment - we saw Milkmaid’s Present position: Milk
maid for desert Recipes. In due course, the packaging was smartened up &
changed to reflect the ‘recipe’ on culinary products; the label depicts a desert,
gives the recipe on the reverse side & announces a ‘free recipe booklet’.
63
From the time of the dessert recipe positioning (1982), milkmaid achieved a sales
volume increase of 116% by 1988. Sales growth has been relatively steady tear
after year (an average growth about of 20% annually), suggesting that more
households are responding to this position. It is significant that even in traditional
milk shortage areas, Milk maid usage now is largely in line with the culinary
(dessert) positioning. This implies that housewives, who may have earlier
perceived Milkmaid as a substitute for milk, have now given it a different place in
their “frame of reference”. Recently Nestle Has Launched Milkmaid in a easy
squeeze tubes which is attracting children also.
Positioning above all, is a matter of the perception of your brand that we wish to
do the product and more what we do to the product and more what we do to the
consumer’s perception of the product.
NESCAFE (1918-1938)
After the end of world war 1st their were crises for Nestlé’s Government contracts
dried up following the hostilities, and the civilian consumer, who had grown
accustomed to condensed & powdered milk during the War switched back to
fresh milk when it became available again. In 1921 company recorded its 1st loss.
Nestle management responded quickly and brought in Swiss Banking export,
Louis Dapples to recognize the company. He streamlined the operations to bring
production in line with sales and reduce the company’s outstanding debt. The
manufacturing of chocolates became the company’s second most important
activity.
New products appeared steadily:
Malted milk
Milo
Powdered butter milk for infants &
64
Nescafe (1938)
The Brazilian coffee institute approached Louis Dapples in 1930, seeking new
product to reduce Brazil’s large coffee surplus. Eight years of research produced
a soluble powder that revolutionized coffee drinking habits world wide.
The most interesting thing to talk about Nescafe is its Brand personality. It is the
personality that marketer wishes to attach to his brand & which actually enters
the targets customer’s mind.
In March 1989, the students of IIMC, conducted a small scale survey on
personality of some major brands & and Nescafe was one among them Nescafe
was compared to gold café-both were 100% pure instant coffees, both heavily
advertised & both premium priced. Gold café was a successful competitor of
Nescafe. The respondents were asked to describe the personality of the brands
in terms of ‘Mr. Nescafe’ & ‘Mr. Gold café’. The respondent in one group based
there observation on the advertisements of two brands. While other group made
observations on the basis of other factors such as ‘history of the company’,
‘marketing strategy’, etc. one might describe them as the first group’s findings
better because those reflected the consumer’s point of view better.
65
MAJOR PRODUCTS & YEAR OF INCEPTION
NIL is running with about 80 brands in India. Some major products under those
brands are till the year 2003 is as follows:
PRODUCTS YEAR OF INCEPTION
MILKMADE 1962
NESCAFE 1964
LACTOGEN 1968
MAGGI NOODLES 1983
MAGGI SAUCES 1985
SUNRISE 1983
EVERY DAY 1986
MAGGI SOUPS 1989
ECLAIRS 1991
BARONE 1993
NESTLE BONUS CHOCOLATE 1995
KIT-KAT 1995
POLO 1995
MILO 1996
NES TEA 1996
NESTLE SLIM MILK 2003
66
67
RECENTLY LAUNCHED PRODUCTS
Set Dahi
New Tomato and Curry Flavors in Maggie Noodles
New Dal and Atta in Maggie Noodles
A new confectionery – Nestle Choco Stick
Soft Chewy fudge Milky bar Choo
Nestle` recently launched products Tea Iced Tea
Nestle slim milk
The company is also setting up ‘CAFÉ NESCAFE’ and ‘COFFEE CORNERS’
across metros and mini-metros in India.
NESTLÉ: 4.6% ORGANIC GROWTH IN FIRST QUARTER
Group-wide organic growth of 4.6%
6.3% sales increase at constant exchange rates
Swiss franc sales down 7.5% as a result of a 13.8% negative foreign exchange
impact
The overall organic growth of 4.6% in a difficult quarter, aggravated by late
Easter, is mainly due to our successful drive for innovation and our strong market
positions. Our consolidated sales clearly took a hit from the strong Swiss franc,
but we expect this effect to taper off in the course of the year. “We are confident
that the rest of the year will bring an acceleration of growth and that we will
therefore achieve our stated objective of improving the Group's performance in
constant currencies for 2006."
The Nestlé Group's consolidated sales for the first three months of 2006
amounted to CHF 19.7 billion. In constant currencies, sales increased by 6.3%,
reflecting organic growth of 4.6% (real internal growth 2.5%, pricing and others
2.1%), as well as a small contribution from acquisitions, net of divestitures. As a
result of the strong Swiss franc, the adverse foreign exchange effect was 13.8%.
68
Foreign exchange factor held back consolidated sales, and real internal growth
was impacted by the late Easter date and the competitive situation in Japan.
Additionally, in keeping with the Group's policy of ensuring margin improvements,
Nestlé raised prices in several product categories to reflect cost increases.
Nevertheless, the Group expects its strong brands, its broad distribution network
and its capacity for innovation to lead to an improvement in sales growth as the
year goes on.
OBJECTIVES OF NIL
1. Be in every way the leading company in Indian food industry.
2. Ensure high quality standards in everything we undertake.
3. Provide our consumers with superior quality products.
4. Provide our shareholders with rapid growth & fair returns.
5. Provide our employees a challenging & satisfying work environment.
6. To be a good corporate citizen & contribute positively to the society in
which we operate.
69
MICHAEL PORTER’S MODEL FOR COMPETITIVE ADVANTAGE
There should be continuous efforts towards competence by drawing down
costs and improving product quality. According to Michael Porter’s 5-point
model for competitive edge, any corporate entity needs to counter threats
posed by the following five market forces.
Potential Entrants Competitors Activities
Suppliers Buyers
Substitutes
THE CORPORATE ENTITY
70
POTENTIAL ENTRANTS
With the increase in growth rate of the market and wide spread acceptance of
chocolates in Indian Market, companies like Mars, Sara Lee etc. are eyeing
the chocolate market. American Hershey foods etc., also plans to enter in it.
Though these companies would facilitate further growth of the market, they
would also want a share of the pie further; a favorable duty structure would
facilitate import of international products than new manufacturing units being
set up.
SUPPLIERS
A Bar of chocolate on an average contains about one-third cocoa, and the
remaining includes malt, milk and sugar (Milk and malt are readily available in
India). Hence, it becomes extremely important to manage the key raw
material supplies well, in order to have a competitive advantage over the
other players in the market. Corresponding to the chocolate capacity of 24000
tonnes (1999-estimate), the production of cocoa in the country has remained
stagnant at 6000 tonnes. Therefore, cocoa is being imported to meet the
industry requirement. Hence, cost effective sourcing of cocoa becomes of
paramount importance. Various measures such as identifying cocoa growing
areas, village adoption programmed, etc, can prove to be extremely beneficial
in providing a sourcing advantage over competition.
COCOA PRODUCTION-FUTURE
Since, Cocoa is an inter crop, it does not require additional land. Hence, with
proper policy measures, its production can be beefed up. The Government of
India has been taking keen interest in order to provide a boost to cocoa
production. The Budget ’97 had a provision of about Rs. 20 crores for cocoa
71
production development. Measures adopted to give a fillip to cocoa
production include the following:
Cocoa Board merged with Cashew Board on the request of the
Confectionery’s Manufacturer’s Association. A 10 fold increase possible with
proper policy measures.
Other Measures- Village adoption programmes, training programmes for field
people in order to increase yields in the old cocoa gardens, better pest control
measures, etc.
BUYERS
As far as buyers are concerned, there is sufficient demand growth (growing at
22.6%). Further, entry into the chocolate industry would further augment the
growth of the chocolate market.
SUBSTITUTE
Indian sweets and confectionery items are the nearest substitutes for
chocolates. However, there is a shift away from heavy sweets towards lighter
sweet offerings like chocolates. Proper segmentation and positioning can
make a brand distinctively different from other confectioneries available in the
market. (E.g. Kit Kat).
72
SWOT ANALYSIS
The SWOT Analysis shows the relationship between critical variables of the
company. The SWOT matrix has a wider scope. The TWOS matrix is a
conceptual framework for a systematic analysis that facilitates the external
threats and opportunities with the internal weaknesses and strengths of the
organization.
It has been common to suggest that companies identify its strengths and
weaknesses as well as opportunities and threats in the external environment.
But what is often overlooked is that combining these factors may require
distinct strategies choices. To systematize these choices, the TWOS matrix
has been proposed. ‘T’ stands for threats, ‘W’ stands for weaknesses, ‘O’
stands for opportunities and ‘S’ stands for strengths. A marketing opportunity
is aware of buyer need in which a company can perform profitably. An
environment that would lead, in the absence of defensive marketing action, to
deterioration in sales or profit. An ideal business is high in both major
opportunities and low in major threats.
A speculative business is high in both major opportunities and threats.
A mature business is low in opportunities and high in threats.
The TWOS matrix starts with the threats because in many situations a
company undertakes strategic planning as a result of a perceived crisis,
problems or threats.
73
STRENGTHS
1. High brand equity ……… consumer & dealer regarding Nestle' as
company delivery quality product.
2. Company processes an extensive powerful distribution network.
3. Company processes a dedicated & experienced sales staff.
4. Strong base in monitoring & controlling market.
5. Distributions are highly dedicated towards performance & experience.
6. Nestle India Limited (NIL) has a very strong parent company Nestle
S.A. support with 51% of equity share holding, which is the world's
largest food company.
7. NIL's milk products sold under Milkmaid and Everyday brands are
market leaders. NIL has strong brand value in other products like Kit-
Kat, Polo, Milo, Maggi and Nescafe.
8. NIL - State of the Art Technology and production systems ensuring
high technological/high value and optimum cost advantage to its
product portfolio.
9. Idealization of products to suit local tastes are critical for success and
NIL is converting its international products into Indian tastes products.
10.Nestle has altogether 570000 outlets in more than 3000 towns. This is
one of the major strengths of the company.
11.NIL most of the products are being produced according to Indian
tastes, priced within Rs. 25/- so that they are afforded by most of the
people easily, advertised and promoted according to regional culture
and values and is available to most of the consumers easily, at their
nearby shops.
74
WEAKNESSES
1. Company takes time in handling return claims on authorized whole
seller.
2. Warehousing norms are not followed which account for increased
breakage.
3. Restricted website minimizes marketing opportunities.
4. Yearly initiatives are not so motivating.
5. A high percentage of turnover and profits coming from a few products
categories like Coffee/Maggi.
6. NIL has been in India since last 39 years yet its growth has been very
slow. After the opening up of the economy, it has started growing but
till then it did not launched much products.
7. The profits of NIL are also reduced because of increased Royalty
payments that NIL is making to its parent Nestle, Switzerland. The
higher royalty payments are made on account of new international
brands launched by NIL in India.
8. NIL factories are not to meet the demands of products with the supply.
9. NIL's products range is so large that it is not able to give proper
attention to all the products, their marketing strategies are not properly
worked out as many of its products are dieing. There was an
embarrassing starter like Nestea an iced tea, Nesfit - a glucose rich
energy drink, Bonus, Milo is not given much of promotion.
10.Recently, there are difference between the Nestle S.A. parent
company and Nestle India Limited and because of this there are in the
top management of the NIL. Even its M.D Daravis E. Ardeshin has also
resigned.
11.Proof financial distribution as the NIL is unnecessarily giving its
shareholders high dividend, which could be avoided and be used for
investment in plants for their capacity expansion.
75
OPPORTUNITIES
1. Great quality.
2. Mass market is growing with established performances.
3. Growing middle class is increasing opportunities.
4. Great taste.
5. Low differentiation in market brands.
6. Credit facility given to dealers.
7. India being the second most populated country in the world, NIL has lot
of opportunities of launching and selling new products and earning a
record profit from this country.
8. As NIL has been in India since last 39 years, it has understood the
culture, values, tastes and psychology of the Indian consumer and so it
can easily develop Indianised products that will be acceptable to the
Indian consumer.
9. Food industry is the second highest growing industry in India and
offers a lot of opportunities for NIL in India.
76
THREATS
1. Tough competition especially in premium segment.
2. Characteristics of premium segment that it is never brand loyal.
3. Tough competition (indirect) with barista, café coffee day.
4. Mere availability of best sellers from the parent’s portfolio does not
guarantee a winner. Since most of these products would be fighting it
out with their global competitors and then Indian counterparts on the
Indian turf.
5. It faces fierce competition in almost all the segments it participates in
like. It duels with Top Ramen in the instant noodle market, Kit-Kat vs.
Perk, Polo vs. Minto, Milkmaid vs. Mithai Mate (launched by Amul at a
staggering 60% discount to the market leader), Milo vs. Horlicks,
Complan and Bournvita.
6. Recent turmoil and increased internal politics together with lack of
apathy from their parent company is going to affect the performance of
the company in the short to mid term.
7. Because of the present Swadesi prime and changing public opinion
towards MNCs will affect NIL's future.
77
CONCLUSION & RECOMMENDATIONS
1. Although product line is very good & has good width & depth, but NIL
should try to make stronger brand equity in Dairy products, Amul is still
leader.
2. It should work more on concept of CRM (Making new customers &
retaining old ones.
3. Cash discounts must be given.
4. More competitive pricing to be done in the premium segment.
5. Increase their sales force to make more frequent visits to the sales
person.
6. Should also look for rural markets.
7. Quick handling of problems of stockiest & dealers.
8. Online ordering facility & electronic payment through website can save
a lot of time.
9. Due to sluggishness in a FMCG market, most of the companies are
under pressure to maintain volume & market share. NIL should draw
out an action plan to improve sales through new product launches.
10.Company should concentrate on all round cost saving & productivity
gain, to neutralize the adverse impact of increased excise of
confectionary.
11.The market strategy of the firm is a complete and unbeatable plan or
an instrument designed specially for attaining the marketing objective
of company. The formulation of the marketing strategy consists of two
steps:-
12.Segmentation & target market selection.
13.Assembling the marketing mix.
78
Limitations
A Project that is undertaken, any research that is carried out or any venture
that is to be accomplished is not without its share of limitations. Limitations
are present irrespective of the scale of intensity of the research undertaken. I
was no exception. I too came across limitation but was not discouraged.
Nearly all the companies maintain a certain degree of secrecy. There were
hesitations while providing an outsider with the information & feedback
regarding the company’s strategies & even financial data. To overcome this
shortcoming secondary sources were tapped for required information. These
sources were checked for ensuring their Authenticity bias. Numbers of visits
were made for procuring a single appointment.
Though sample size is large enough it is cost so diversified to be called as
exact.
Inadequacy of time & other resources proved to be a strong limitation. The
data collected from consumers may not be exactly what they think & use as
they might have misinterpreted the objective of research.
Throughout the study utmost care has been taken to avoid biases, errors so
as to ensure authenticity and accuracy. But there is possibility for some
discrepancies to come in between due to following limitations:
Respondents may give their biased opinion, as they know the identity of
interviewer.
My study is based on responses of executives of mentioned companies of
concerned department only, which may not give a true picture.
Last but not the least and the most deciding factor paucity of time.
But I have put in my honest efforts to make this project a useful one for every
one who reads it.
79
BIBLIOGRAPHY
INTERNET SITES
www.nestle.com
www.google.com
www.yahoosearch.com
MAGAZINES
BUSINESS TODAY
BUSINESS WORLD
BUSINESS STANDARD
MARKETING MANAGEMENT BY PHILIP KOTLER
80