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Nestle: The Infant Formula Controversy

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MKT 631

Kamrul Hasan Shaon

Nestl is a Swiss transnational food and drink company headquartered in Vevey, Vaud,

Switzerland. It has been the largest food company in the world, measured by revenues

and other metrics, for 2014, 2015, and 2016. Nestl. (2017, April 18) Nestl was the

victim of the lack of education of mothers regarding the use of infant formula milk and

bottle feeding for which the company ultimately earned a bad name. Most of the poor

women in the Third World often have dietary deficiency and being dependent on Nestle

resulted in malnutrition of their infants. In addition, Nestl advertisement and promotion

prominently played an important role in the decline of breast feeding in Third World.

Hence, Nestle used native weaning of foods on babies causin g an inevitable damage to the

brand image of the company.

1. What are the responsibilities of companies in this or similar situations?

In this situation, companies like Nestl can take many necessary steps to manage their

brand. First of all, they can provide adequate education towards Third World consumer.

The education will focus on the essence of breast feeding and the way Nestl can

supplement the diet of a children at young age. Also, they can stand against giving up

breast feeding in all their promotion and advertisement. Secondly, Nestl can suspend its

consumers advertising and direct sampling for mothers throughout the World. Thirdly,

Nestl can find a way to become involved with organization to help the baby in various

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Nestle: The Infant Formula Controversy

ways or can send donations as a PR activity. Fourthly, they should be cautious about their

pricing strategy and make sure they are selling their products in third world countries for

reasonable and affordable prices for the people and they should consider selling the

products for even less in these places. Fifthly, Nestl also needs to learn from its mistakes

and not be neglected and they should respond to issues in a reasonable amount of time,

because when they do not, they look irresponsible and careless. Overall, they should

consider about their brand image and reposition itself as a force of good.

These situations can be very critical for a company and for which the internal Nestl

instructions should be kept to the Nestl employees only. Finally, companies should put

all their efforts on social responsibility by sponsoring events at international medical and

nutrition conferences, and events like celebrating the Vietnam year of the Family and

funding research on infant feeding.

2. What could Nestl have done to have avoided the accusations of killing Third

World babies and still market its product?

In third world countries, mothers deem Nestl more 'fashionable' or healthier than breast

milk due to the intense advertisement of Nestl. After taking the formula, babies growth

rates began to drop and malnourishment and sickness started to occur. As a result, Nestl

was accused of killing the babies and faced a lot of difficulties.

Nestle could tackle this problem by finding out the causes of the problem. First of all,

they could ban all their media advertising in all the channels including radio and

television. Then, they could develop health education programs promoting breast feeding.

Thirdly, they could support the WHO code and use media to show their integrity. In

addition, they could distribute free formula in hospital and maternity wards. Overall, the

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Nestle: The Infant Formula Controversy

problem with Nestl was misunderstanding the culture of a country. To avoid the

accusation, they should learn about the countries culture they market. As for instance,

women in the Third World in comparison with the First World have a different body

structure and when it comes to breast feeding, the nutrient content of the breast milk vary.

Thats why the advertisement in the Third World could focus more on the benefits of

breastfeeding or Nestle could encourage using formula for special situation. However,

Nestl could stick to the WHO codes and develop new marketing techniques. Also,

women should get tested for free HIV to prevent the spread to the infants.

3. After Nestls experience, how do you suggest it, or any other company, can

protect itself in the future?

Before nestle or any enterprise enter to the new market, they have to analyze and

understand well about the tradition, life style, economic status and natural condition of

the new area. Marketing will not be universal for all the places as the target market in

different area comes from different culture and may not react the same way. For instance,

if the company operates in the Third World, they should focus on promoting healthy

eating habits for mothers during the pregnancy and then baby. Hence, marketing the

product with different approach in different society is the key to success. It is important

for the company to produce, market and sell products in a complete different way when it

comes to baby products- they need to be more proactive towards product research and

development. They should conduct study to know more about the social and medical

effects of their products. Also, they should do more study about medical effects of their

product and services. Company should make sure that the product is compliance with

rules and regulation bodies and national health organization.

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Nestle: The Infant Formula Controversy

The company should make sure the consumer knows about the product well and avoid

misuse. Its all about educating the customers as the product is dealing with infants.

Hence company have to provide enough information of how to avoid misuse of the

products. Ultimately making profit should not be the first priority when doing business

but caring about the consumer is the key.

4. Assume you are the one who had to make the final decision on whether or not to

promote and market Nestls baby formula in Third World countries. Read the

section titled Ethical and Socially Responsible Decisions in Chapter 5 as a guide to

examine the social responsibility and ethical issues regarding the marketing

approach and the promotion used. Were the decisions socially responsible? Were

they ethical?

There are difficulties arise in making decisions, establishing policies and engaging in

business operations in five broad areas:

i. Employment practices and policies


ii. Consumer protection
iii. Environmental protection
iv. Political payments and involvement in political affairs of the country
v. Basic human rights and fundamental freedoms

In my opinion, the decision made were not socially responsible. First of all, the company

distribute free samples to the public that influenced lot of women to opt in using the

formula. Distributing free samples without explaining the proper method of use is

improper. Secondly, Nestl was marketed in a wrong way to the target market in their

global operation especially in the Third World country. To elaborate, Nestl infant

formula products were marketed to people who were incapable to fulfill the minimum

requirement for giving formula safely to the baby. As a result, the infant suffered from

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Nestle: The Infant Formula Controversy

improper nutrition resulted in malnutrition and weight-loss. Thirdly, the price of the milk

powder was too high in the market where they should keep their profit margin lower. In a

Third World county if a family spend 1/3 of their money of Nestl and still the little kid

suffers from malnutrition, then its an unethical pricing. Last but not the least, the

advertisement and posters of Nestl used idealistic imagery showing white children rather

than ethnicity of the country they were marketing their product, implying that using milk

powder is a western way, therefore a right way of doing things.

5. What advice would you give to Nestl now in light of the new problem of HIV

infection being spread via mothers milk?

The newest problem to arise is the 3.8 million children around the world that have

contracted HIV from breast milk. 90 percent of the child infections occur in developing

countries (Murray, n.d.). Since mothers have no idea if they are infected or not, some

strictly use formula as a precaution even though breast milk is the superior option. Nestl

can solve it by investing on awareness campaign and promoting simultaneously about

this HIV issue. For the high cost, they can subsidize or donate free packs to needy

mothers. Nestl can promote breast feeding. In addition, Nestl can contribute towards

research on how to reduce the risk of mother-to-child transmission and provide education

and empowerment for women, especially in third world countries. The education

programs especially for mothers may help to use formula for only special situation and

reinforce the concept that breastfeeding is the best option. Also, Nestl should recognize

that consumer must use clean water while they use the formula for which Nestl can

avoid the problem of unclean water by providing clean water with their milk powder.

Lastly, to overcome the new issue of HIV being transmitted to children through breast

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Nestle: The Infant Formula Controversy

milk, Nestl can begin to offer free testing to mothers. The problem is that the mothers

are unsure about their HIV which can be transmitted to their baby through breast feeding.

If Third World mothers have easy, affordable access to finding out if they are positive or

not, then many infants can be saved from the disease. Furthermore, if they are positive,

Nestl should provide free or discounted formula since they will need to supplement

breast milk throughout their childs infancy. If the mothers know that they are infected,

then they would not spread it and HIV will not be transmitted to the infant.

Conclusion

It is all about global marketing going wrong when a company like Nestle do not research

on their target market. A false unethical advertising can cause a lot of death and be an

ultimate victim of the downfall of a company. It is important that companies take

responsibilities and own up for their actions.

References:

"Nestl: The Infant Formula Controversy." McGraw Hill Education. N.p., n.d. Web. 15

Mar. 2015. <highered.mheducation.com>.

Murray, J. A. (n.d.). Nestle: The Infant Formula Controversy [PDF].

Nestl. (2017, April 18). Retrieved April 18, 2017, from

https://en.wikipedia.org/wiki/Nestl%C3%A9