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Nestle Is The Worlds Largest Food Processing Company Marketing Essay

COMPANY PROFILE
Nestl S.A. is the worlds largest food processing company and is headquartered
in Vevey, Switzerland. The company was founded by Henri Nestl in 1866.
Nestl Company had made several name changes from 1866 to 1947, and
finally adopted Nestl S.A. in 1977 as the companys name. Nestle S.A. has
factories or office in almost every region of the world and markets a wide range
of brands. The company is often described as "the most multinational of the
multinationals." in the current food industry market.

Henri Nestl, also know as of the main originator of condensed milk. In 1867,
he developed the first milk food for infants and a baby who could not be breastfed was rescued. Nestls invention responded to the need for a nutritionally
safe alternative to breast milk. Thus, Nestl S.A has targeted to build a business
based on sound human values and thoughts.

The key to success of the company is due to its huge Research and
Development network within the food processing industry. With R&D as the
competitive advantage, Nestl has become the worlds leading nutrition, health,
and wellness company. The company is devoted in continuing to improve the
nutritional value of their products while enhancing the flavor. Nestl achieves
this through its brands and with initiatives like the Nutritional Compass and

60/40+. Millions of people choose to consume Nestl products everyday


because the company sustain the quality as the fundamental ingredient in all of
its brands. Consumers choose to place their trust in Nestl due to the companys
dedication to achieve distinction and turn to Nestl brands to preserve
nutritional balance in todays fast paced world.

Switzerland-based Nestl S.A. has the highest ranking as the largest player
throughout the entire world in the competitive position within the food industry.
The rating reflects the companys competitiveness and market attractiveness.
With combined sales of 110 billion (Swiss Franc) in 2008, Nestl states a
diversified business portfolio, being the market leader in numerous product
categories worldwide including bottled water, instant coffee, milk and cheese
products, nutrition and baby food, ice cream, frozen foods, culinary
preparations, and coco products. Nestl's broad geographic coverage includes
North America and Europe as well as Asian markets.

The vision of Nestl R&D is long term, it helps shape the future of foods
making consumer needs into research priorities and convert new technologies
into consumer benefits, and services.

OBJECTIVES
Nestls purpose is to offer safe, tasty, convenient and nutritious foods to
improve health and well-being of consumers of all ages all over the world. To
meet the needs and desires of todays and tomorrows consumers, Nestl is

strongly committed to Research and Development (R&D) to improve existing


products and develop new foods with specific health benefits.

Nestle India
Nestl India is a public listed company
Nestl SA holds 62.76% share
Market capitalisation INR 402 bn

Balanced portfolio with leading brands

Milk products and


nutrition (45%)

Prepared Dishes and


Cooking Aids (29%)

Chocolates and
Confectionery (13%)

Beverages (13%)

Market Segmentation
For getting the maximum market share and respect of the product in
the minds of the consumer, as per observation it is been concluded that
Nestle segmentation is based on two points.
-Geographic Segmentation
-Demographic Segmentation
- Geographic Segmentation
The company has divided its geographic segmentation in several regions.
First they have the segmentation of a whole country and from each
provincial capital, they divided its areas into north, east, west, south. So
that it could be easy for the company to work efficiently on its supply
chain management.
- Demographic Segmentation:

Nestle isnt a supreme quality product that only the high class uses. The
product is for all classes. Infant to seniors. There is no age, sex, income
and any other kind of limitation on use of the product. The product is for
all. Anyone can use the product as per need.

Products of Nestle
Milk Products
Nutrition Products
Prepared Dishes and Cooking Aids
Beverages
Chocolate
Confectionery
Energy Drinks
Instant Noodles

SWOT ANALYSIS IN NESTLE

Environmental scanning has the management scan internal environment and


external environment. The factors which are the predominant factor for an
organization factor is SWOT standing for strengths, weaknesses, opportunities
and threats.

Internal Environment
Strengths : BRAND STRENGTH: Quality brands and products ; Top selling brand:
Nescafe, Maggi, Kit Kat, Honey Stars, Pepsi and etc.

PRODUCT INNOVATION:
Continuously introducing new products & manufacturing is efficiency.
Strengths include anything a company does well and its resources and
capabilities for developing a competitive advantage. The greatest strength of
Nestl is culture that is team focused and an open door policy. Nestl focuses on
collectivism and performance orientation attitude which encourages employees
to work harder.
Nestl achieves broader range of products by improving existing and innovating
new products. Consumer demands are switched to changes of taste, colours and

design that have been undertaken to products such as Nestls Smarties and Kit
Kats. The launch of Kit Kat Chunky has proven that creativity and innovation
can extend the life cycle of a product.
Strengths Parent support
Company Image
High Quality Products
Well-developed strategy
Market Share
Good marketing skills and services
Brand strength
Research & Development Team
Product innovation
HR department
RESEARCH & DEVELOPMENT CAPABILITIES: have the largest
R&D network of any food company in the world, with 32 R&D centres
and over 5,000 people directly involved in R&D
MARKET SHARE: high level of market share and that people all over
the world trust and recognizes Nestle as a big brand name.
Weaknesses
The lack of certain strengths and things a company does not do well are viewed
as weaknesses. Nestl is poor in targeting some of its products.
Nestl MilkPak is a premium product targeted to upper middle and high class
consumers. Most consumers in India are from lower middle and poor class.
They are not afford to purchase it due to the premium price.
Nestl has a complex supply chain configuration too and traceability is a critical
issue for Nestl India. High standards of hygiene, quality of edible inputs and

workforce are required in the food industry. Fragmented nature of the Indian
market will cause more problems.
Less Proactive : Nestle being a company is less proactive they create changes
but usually unless competitor doesnt change they doesnt adopt a change.
Limited Distribution Channel : Nestles major & bad factor is the limited
distribution channel because they distributes their products to whole seller in
their own factory vehicles as compare to their major competitor they have
limited distribution channel but they are maintaining to penetrate the market as
far.
Mature markets : Nestle is entering into markets that are already mature and
can give a tough competition to new entrants
Supply Chain : complex chain management

External Environment
Opportunities
The external environmental analysis a firms new opportunities for profit and
growth. Nestl has a great opportunity for expanding its milk products because
India is the seventh major milk producer in the world with annual output more
than 22 billion litres.
Support from Foreign Investors :- Government support foreign investors to
invest in India which eventually is the opportunity for Nestle.

Enhance Distribution Channel :- Nestle should be working on the distribution


network to enhance the companys network against its competitor.
Changing Social Trend :- Consumers in urban areas now adopt Western
lifestyles, especially the younger generation which is hugely influenced by the
Western media. Younger consumers tend to follow Western life style. There was
an increase in demand for Nestle products over the review period.
Health conscious :- Increasing health and hygiene awareness among people has
greatly increased sales of nestle products. Both the government and the media
have started health awareness campaigns to make Indians realizes that
consumption of Nestles hygienic products is as essential as eating food. Fruit/
juices & eatable products are doing very well in both urban and rural areas.
Market growth :- Nestle market expands very fast. A new research proves that in
future every person use 85.5 liters juices per years & uses more hygienic
products because of the low hygienic conditions of the environment.
Health-based products- transition to Nutrition Company
Threats
Adjustments in the external environment present threats to a firm. For an
example, shifts in consumers preferences. The major threats to Nestls
products is Unilevers Walls, a famous ice-cream brand. It is distributed
nationwide and has total control within the local market. Besides, economic
slowdown can reduce demand, and inflation is getting higher and higher causing
the purchasing power of consumers is decreasing day by day.
-

Government Regulation :- They face problem if government employ


taxes on them which force them to raise the price of their product.

Increase in Competition among Competitor :- Competition among


competitors is major threat to Nestle which can be controlled by the help
to retaining more customers & making more loyal ones.

No Entry Barrier :- There are no many entry barriers so a large numbers


of local companies enter in various Nestles product market.

Unfavorable Changes in Consumer Demand :- With the increase in the


competitors there will be a increase in the number of related products
which eventually harm the Nestles market. Due to which the consumers
demand pattern fluctuate.

Loss of Market Share :- When the market saturates the loss of the market
share of Nestles products is there major threat to Nestle.

International Marketing Standards; Changing Consumer Trends

Sector Woes :- Rising prices of raw materials and fuels; Increasing


packaging and manufacturing costs