Introduction To Contextual Study Of Nestle Marketing Essay

Introduction To Contextual Study Of nestle Marketing EssayNestl Company had started off from a single mans idea, and true into a giant corporation. In 1866 Henri Nestl, a pharmacist, developed a milk food formula for infants who were un adapted to tolerate their mother milk (Nestle.com). His product became a success, and it created a demand d nonpareilout Europe. As Nestls habituality grew more businesses wanted to merge and become partners with Henri Nestls business.From 1866 to 1947 the Nestl Company had gone through several spot changes.In 1905, Anglo-Swiss Condensed Milk Co. and Farine Lactee Henri Nestl merged, and the fraternitys name became Nestl Anglo-Swiss Condensed Milk Co.Then in 1929, Peter-Cailler-Kohler Chocolats Suisses S.A. merged with the company. The name was then changed to Nestl Anglo-Swiss Holding Co. Ltd, on November 27, 1936.In December 1947, Co. acquired both the shares working capital of the Alimentana S.A. company in exchange for fifteen Nestl share s and fifteen Unilac shares for each of Alimentana S.A. share, so this point the name was at Nestl Alimentana S.A. And then finally, the last name change that the company would endure was in 1977, where it adopted the name Nestl SA (Mergent Online).The dairy products at Nestl are a big driving force for the growth of the companys sales. With the health kick of the galore(postnominal) individuals around the world, it pushes the innovator and renovators of Nestl to reach in the buff height in revealing better and healthier products for their consumers. In 1998, the dairy business had accounted for 5% of the companys sales tax revenue (Rodgers, 2000). More recent, in the first half of 2004, Nestl milk-based products, feeding, and ice cream accounted for 60% of Nestl revenuegrowth (Nutraingredients.com). The amount of 60% is a big portion of the companys earnings, so it would be best for Nestl to focus a big portion of their core competencies and resources on the fast growing dair y division. Which leads us into the most recent yoghourt produced by Nestls, which is the LC1.Nestl strives on being innovator and renovators. So their research team in Switzerland discovered a destination called Lactobacillus acidophilus, or La-1. This particular product was chosen because it contains a probiotic agent, which is living microbial feeding supplements that al gloomy the lower intestine to function better (Rodgers, 2000). La-1 helps the small intestine function by improving the bodys repellent system, and in turn helping the body in preventing diseases. Nestl has now found a solution for their health conscious consumers, alone now they need to find away to implement it into one of their products. That when the researchers at Nestl discovered that if they replace one of the mixes in their yogurt with the La-1 the same texture would be maintained. Now with the combination of Nestl yogurt mix and the La-1 Nestl has addicted their yogurt the name of LC1.Decentralizat ionSwitzerland is home to Nestles Swiss subsidiary, its international headquarters and the registered office of Nestles holding company, still Nestle does not meet its Swiss headquarters as the center of the universe. Decentralization is a basic principle of Nestle. Their policy is to adapt as much as contingent to regional circumstances, mentalities and situations. By decentralizing operational responsibility, they create strength and flexibility and are able to make decisions that are better attuned to specific situations in a given country. Policies and decisions concerning personnel, food marketing and products are largely determined locally. This policy creates stronger motivation for Nestles executives and employees and a greater sense of identification with Nestles business. It is not Nestles policy to generate most of its sales in Switzerland, supplemented by a few satellite subsidiaries abroad. Nestle strives to be an insider in every country in which it operates, not an outsider.Research and developmentNestle is probably unique in the food industry in having an integrated research and development program that engages in applied and basic research in the fields of human physiology, health, nutrition and raw materials. Their research and development program gives them the capacity to create new types of products that they cannot even imagine today, especially in the particular area where preventive medicine and food products overlap. In addition, as concern for the environment grows, research will play an important role in overcoming environmental problems. For Nestle this is particularly important in packaging.While Nestl Corporate Business Principleswill continue to evolve and adapt to a changing world, their basic invention is unchanged from the time of the origins of Company, and reflects the basic ideas of fairness, honesty, and a general concern for people.Nestl is committed to the following Business Principles in all countries, taking int o account local statute, heathenish and religious practicesNestls business objective is to manufacture and market the Companys products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners.Nestl does not favor short-term profit at the expense of successful long-term business development.Nestl recognizes that its consumers ache a sincere and legitimate interest in the behavior, beliefs and actions of the Company behind brands in which they place their trust, and that without its consumers the Company would not exist.Nestl believes that, as a general rule, legislation is the most effective safeguard of responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary business principles is beneficial in order to get wind that the highest standards are met throughout the organization.Nestl is conscious of the fact that the success of a corporation is a reflection o f the professionalism, conduct and the responsible attitude of its focus and employees. Therefore recruitment of the right people and ongoing training and development are crucial.Nestl continues to maintain its commitment to follow and respect all applicable local laws in each of its markets.In Nestls view, it must be richly integrated in the social, ethnical and economic fabric of the countries in which it operates. Thus no matter which country it operates in, it is committed to beef up local comm building blockies.VISION AND STRATEGYThe Nestl global vision is to be the leading health, wellness, and nutrition company in the world. Nestl Pakistan subscribes fully to this vision. In particular, we envision toLead a dynamic prompt and professional workforce proud of its heritage and bullish about the future.Meet the nutritionary ask of consumers of all age groups from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage p roducts of the highest quality.Deliver shareholder value through lucrative long-term growth, while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country.Our brands are the preferred choice in their categories. Consumer insight drives all aspects of our marketing and communication efforts.Our communications to the consumer are relevant, cutting-edge, and adhere to the highest standards of responsible communication.Our company is seen as the No. 1 career destination for talented, motivated and ambitious professionals.Our result-oriented organizational structure ensures effective communication and empowered self-management.Our milk collection and agri services will continue to play the primary role in development of the dairy sector in rural Pakistan.Our proactive innovation and renovation culture is the key to our success in the marketplace.Fully integrated systems (Nestl Pakistan, suppliers, customers) ensure efficient business processes.Non-strategic activities and products are outsourced or discontinued.HeadquartersGreenwich, CT, USABrands14Related toNestl Waters, Paris, France, a subsidiary of Nestl, S.A., Vevey, SwitzerlandProductsNestl has a wide range of products across a number of markets including coffee (Nescaf), bottled water, other beverages, chocolate, ice cream, infant foods, performance and healthcare nutrition, seasonings, frozen and refrigerated foods, confectionery and pet food.Business segmentsBeveragesMilk Products, Nutritional, and Ice pickaxPrepared Dishes and Cooking AidesConfectioneryOther Food BeveragesPet CarePharmaceutical ProductsNestle Pakistan MilestoneIn 1912 Nestle begins its long birth with South Asia when the nestle Anglo-Swiss condensed Milk company starts importing and selling finished products in the Indian market.Nestle makes clear a distinction between scheme and tactics. It gives priority to the long-range view. Long-term thinking defuses many of the con flicts and contentions among groups this applies to employment conditions and relations with employees as well as to the conflicts and opposing interests of the trade and the industry. Of course, ability to focus on long-term examineations is only possible if the company is successful in the struggle for short-term survival. This is why Nestle strives to maintain a satisfactory level of simoleons every year.Nestl describes itself as a food, nutrition, health, and wellness company. Recently they created Nestl Nutrition, a global business organization designed to strengthen the focus on their core nutrition business. They believe strengthening their leading in this market is the key element of their corporate system. This market is characterized as one in which the consumers primary motivation for a purchase is the claims made by the product based on nutritional content.In order to reinforce their competitive advantage in this area, Nestl created Nestl Nutrition as an autonomous global business unit within the organization, and charged it with the operational and profit and loss responsibility for the claim-based business of Infant Nutrition, HealthCare Nutrition, and Performance Nutrition. This unit aims to deliver superior business performance by offering consumers trusted, science based nutrition products and services.The Corporate Wellness Unit was designed to integrate nutritional value-added in their food and beverage businesses. This unit will drive the nutrition, health and wellness organization across all their food and beverage businesses. It encompasses a major communication effort, both internally and externally, and strives to closely align Nestls scientific and RD expertise with consumer benefits. This unit is responsible for coordinating horizontal, cross-business projects that address current customer concerns as well as anticipating future consumer trends.Nestl is a global organization. Knowing this, it is not surprising that internationa l schema is at the heart of their competitive focus. Nestls competitive strategies are associated mainly with foreign direct investment in dairy and other food businesses. Nestl aims to balance sales between low risk but low growth countries of the developed world and high risk and potentially high growth markets of Africa and Latin America. Nestl recognizes the profitability possibilities in these high-risk countries, but pledges not to take unnecessary risks for the sake of growth. This process of hedging keeps growth steady and shareholders happy.When direct in a developed market, Nestl strives to grow and gain economies of scale through foreign direct investment in big companies. Recently, Nestl licensed the LC1 brand to Mller (a large German dairy producer) in Germany and Austria. In the developing markets, Nestl grows by manipulating ingredients or processing technology for local conditions, and employ the appropriate brand. For example, in many European countries most chill ed dairy products contain sometimes dickens to 3 times the fat content of American Nestl products and are released under the Sveltesse brand name.Another strategy that has been successful for Nestl involves striking strategic partnerships with other large companies. In the early 1990s, Nestl entered into an alliance with Coca Cola in ready-to-drink teas and coffees in order to benefit from Coca Colas worldwide bottling system and expertise in prepared beverages.European and American food markets are seen by Nestl to be flat and fiercely competitive. Therefore, Nestl is setting is sights on new markets and new business for growth.In Asia, Nestls strategy has been to acquire local companies in order to form a group of autonomous regional managers who know more about the culture of the local markets than Americans or Europeans. Nestls strong cash flow and comfortable debt-equity ratio leave it with ample muscle for takeovers. Recently, Nestl acquired Indofood, Indonesias largest nood le producer. Their focus will be primarily on expanding sales in the Indonesian market, and in time will look to export Indonesian food products to other countries.Nestl has employed a wide-area strategy for Asia that involves producing unlike products in each country to supply the region with a given product from one country. For example, Nestl produces soy milk in Indonesia, coffee creamers in Thailand, soja bean flour in Singapore, candy in Malaysia, and cereal in the Philippines, all for regional distribution.As a matter of fact a good strategy is not the only necessary prerequisite for operating successfully in foreign markets. In markets of transitory nations or even less developednations there could be a risk in terms of political instability harming the political economy such as the security of property rights, macroeconomic and cultural uncertainties are as well an issue. To a certain extent environmental changes occur with the notion of endangering the basic strategy. In order to avoid these influences and to counter answer on these a company needs the ability of gaining steady learning process which needs ultimately to be implemented with a cross-functional attitude among all functional levels.Flexibility is another distinctive competencies a company must be able to achieve to react as quickly as possible to changing environments. As a consequence, the company must implement mechanisms allowing it to respond to changes in local demand, cultural barriers and political fluctuation. Ethnocentric behaviour must be avoided in any circumstances in order to approach the market in the appropriated way. A company must as well learn to consider decisions under the long-run perspective, because markets can be conquered within short period, but the successful implementation of a strategy needs more time than that. entree a new market requires some pre-math. The company must estimate the perspectives it has in that new market with regards to threats and oppo rtunities formulating the profile of that country.Basing on this profile the company is able to figure out the strategical approach. One important part of the strategy must be the cultural awareness, which means a company should employ locals in order lower cultural barriers and resentments established by the foreigner. Hence, this results in a better insight and handling of local demand conditions and knowledge about the customer. In order to guarantee flexibility the functional level units must have their own responsibility and must have freedom in decision making, which allows a quick response towards market fluctuations. To relate these statements to this case Nestles business process in Nigeria gives a good example. An entirely new marketing approach, distribution road and network had to be set up due to changingdemands, lacking infrastructure and a lack of security. Nestle managed these threats successfully by understanding the culture and the being aware of the lack of essen tials.Joint jeopardizesNestl holds 26.4% of the shares of LOral, the worlds largest company in cosmetics and beauty. The Laboratoires Inneov is a joint venture in nutritional cosmetics between Nestl and LOral, and Galderma a joint venture in dermatology with LOral. Others include Cereal Partners Worldwide with General Mills, Beverage Partners Worldwide with Coca-Cola, and Dairy Partners Americas with Fonterra.SWOT analysisStrengthsNestles LC1 division has many strengths. Their first is that they have a great CEO, Peter Brabeck. Brabeck emphasizes internal growth, meaning he wants to achieve higher volumes by renovating existing products, and innovating new products.Another strength that Nestle has is that they are low cost operators. This allows them to not only beat the competition by producing low cost products, but by also edging ahead with low operating costs.WeaknessesThe main weakness of the LC-1 division of Nestle is that they were not as successful as they thought they woul d be in France. The launch in France was in 1994, but since the late 1980s, Danone had already entered the market with a health-based yogurt.The second weakness is that LC-1 was positioned as too scientific, and consumers didnt quite understand that LC-1 was a food and not a medicineNestle also has multiple critical resources. They have a great research and development team.OpportunitiesAn opportunity that Nestle has is that health-based products are becoming more popular in the world, including in the United States.Nestle also has an opportunity of being even a larger market leader in Germany with LC-1. Within two years of launching the product in Germany, they had captured 60% of themarket. This was due to the fact that they differentiated the product, and Germans simply preferred the taste.Another opportunity of LC1 is that, because they are a market leader, they can introduce more health-based products in Germany.ThreatsA threat to Nestle is the fact that some markets they are entering are already mature. Danone had an established leadership position in the yogurt market in France. Since Danone was the first to arrive in the market, they have always been the market leader there. Also consumers in France care the taste of LC-1, but researchers believe they did not repurchase the yogurt because they preferred the taste of Danone products better.Another threat to Nestle is that there is intense competition in the United States yogurt market. General Mills Yoplait division is the leader in the yogurt market in the United States. Yoplait has been the leader for years and is constantly innovating new health products.CompetitorsGeneral Mills has been a strong competitor of NestleUnilever NV (UN) A Dutch company that produces packaged foods and products for the home and personal care markets. Unilever is one of Nestles largest international competitors.Kraft Foods (KFT) A U.S. company that produces packaged foods products. Kraft is one of Nestles largest U.S. based competitors. On January 19, 2010, Kraft bought Cadbury Schweppes (CSG) for $19.5 billion, creating the largest candy company in the world and strengthening Krafts international presence.Cadbury Schweppes (CSG) is a U.K. company that produces products for the confectionery and non-alcoholic beverages markets they compete with Nestles beverage and confectionery products internationally and in the U.S.GROUPE DANONE (DA) A French company that produces packaged foods and beverages. Groupe Danone competes with Nestle internationally and in the U.S.Hershey Foods (HSY) A U.S. company that produces chocolate and sugar confectionery products. Hershey Foods competes with Nestles confectionery brands mostly in North America.