A SUMMER TRAINING PROJECT

REPORT
ON
“MARKETING STRATEGIES OF NESTLE FOOD INDIA LTD. AND
ITS COMPARISON WITH ITS KEY COMPETITORS”

Submitted to

U.P. Technical University, Lucknow

IN THE PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

2008-2010

Submitted by

AATIF TANVEER

MBA-3RD Semester

Roll No.0811470002

i
INSTITUTE OF PROFESSIONAL EXCELLANCE & MANAGEMENT
GHAZIABAD

PREFACE

As a Part of M.B.A. Program, Student has to pursue a project duly approved by the

Faculty of Concerned area. I had the privilege of undertaking the project on

“Marketing Strategies of Nestle Foods India Ltd. & its comparison with its key

competitors”. Main aim of the Project is to study how to build a long term

relationship with the customer. And create awareness among the potential customer to

make them more efficient and knowledgeable about the FMCG market.

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 ACKNOWLEDGEMENT

I would like to express my Acknowledgement to those people, without whose

contribution, Support and guidance this Report would not have seen the light of the day.

Notable among them are Mr.Purushottam Kumar (Area Sales Manager Laxmi Nagar),

Mr. Nesar Ahmed (Sales Manager, Ghaziabad), Mr. Vishnu Pradhan (Associate

relationship manager, Ghaziabad), who was my Project Guide and who helped me in a

lot.

I am also thankful to all other employees of NESTLE who guide me during my Project.

I am also thankful and would like to express my Gratitude to the Honorable Director

Coll. A.S.Malhotra, Mr. Abhay Mishra (Placement Officer) and the entire Institute for

giving me a Platform to have this wonderful opportunity and being able to get a

glimpse of the Corporate World.

I am also thankful to Dr. Chhaya Tyagi (Sr. Lecturer M.B.A.) for her constant Support

and valuable suggestion.

With Regards:

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 MR. AATIF TANVEER

M.B.A.-0811470002

DECLARATION

I hereby declare that this project report entitled ““MARKETING STRATEGIES OF

NESTLE FOODS INDIA LTD. & ITS COMPARISON WITH ITS KEY

COMPETITORS.” (Chocolate Segment) is written and submitted by me under the

kind guidance of External Guide Mr. Rishav Mukherjee .and Internal guide Dr. Chhaya

Tyagi ( Sr. Lecturer, IPEM, Ghaziabad ) . The findings and interpretations in the report

are based on both primary and secondary data collection. This project is not copied

from any source or other project submitted for similar purpose.

AATIF TANVEER

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 TABLE OF CONTENTS

1. INTRODUCTION OF ORGANISATION

 BRIEF HISTORY OF ORGANISATION.

 ORGANISATIONAL STRUCTURE.

 VISION, MISSION, PHILOSOPHY OF THE ORGANISATION.

 PERFORMANCE.

 PRODUCT/ SERVICES.

2. OBJECTIVE OF THE STUDY.

3. RESEARCH METHODOLOGY.

4. ANALYSIS (INCLUDING SWOT ANALYSIS)

5. FINDINGS AND EVOLUTION.

6. CONCLUSIONS.

7. LIMITATIONS.

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8. SUGGESTION / RECOMMENDATION.

9. ANNEXURE.

10. BIBLIOGRAPHY

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BRIEF HISTORY

1
 COMPANY PROFILE

NESTLE FOODS INDIA LTD.

Nestle Foods India is a Transnational company (TNC) with its worldwide operations in

over 70 countries. The founder of Nestle was Henry Nestle who from a modest

beginning founded the company in 1866 at Switzerland for manufacturing milk

powders for babies. At that time Switzerland faced one of the highest infant mortality

rates and the milk formula saved the lives of many infants whose mothers were unable

to breast feed successfully.

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 is often quoted by most as "multinational of multinationals." There is a good

reason, as less than 2% of the turnover comes from the domestic market in Switzerland

and rest from its other operations worldwide.

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At present Nestle in the world's largest food company with its international

headquarters at Vevey, Switzerland. With almost 500 factories world wide it employs

many people directly or indirectly.

Nestle is under first 50 companies of Fortune’s five hundred list. It is present over all

five continents of the globe in over 80 countries. It is having 200 operating companies,

one basic research center and 17 technological development centers and around

2,76,000 employees.

Organization History

In 1860’s Henri Nestlé, a Swiss pharmacist, established the world-renowned Nestlé

brand amid a spirit of innovation and goodwill. In 1866 he developed a food for babies

whose mothers were unable to breastfeed. His first success was a premature infant who

could not tolerate his own mother's milk or any of the usual substitutes. The value of

the new product was quickly recognized when his new formula saved the child's life,

and soon, Farine Lactée Henri Nestlé was being sold in much of Europe.

In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early

1900s, the company was operating factories in the United States, United Kingdom,

Germany and Spain. World War I created new demand for dairy products in the form of

government contracts. By the end of the war, Nestlé's production more than doubled.

The first Nestlé factory to begin production in the United States was opened in Fulton,

Oswego County, New York. The factory however was closed in 2001, after the

company decided that the cost of restoring, and updating the factory could not

financially be justified. Employees of the factory were furious, and raised the company

flag upside down the day the closing was announced.

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After the war, government contracts dried up and consumers switched back to fresh

milk. However, Nestlé's management responded quickly, streamlining operations and

reducing debt. The 1920s saw Nestlé's first expansion into new products, with

chocolate the company's second most important activity.

Nestlé felt the effects of World War II immediately. Profits dropped from US$20

million in 1938 to US$6 million in 1939. Factories were established in developing

countries, particularly Latin America. Ironically, the war helped with the introduction of

the company's newest product, Nescafé, which was a staple drink of the US military.

Nestlé's production and sales rose in the wartime economy.

The end of World War II was the beginning of a dynamic phase for Nestlé. Growth

accelerated and companies were acquired. In 1947 came the merger with Maggi

seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus (1963),

Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in

L'Oréal in 1974. In 1977, Nestlé made its second venture outside the food industry by

acquiring Alcon Laboratories Inc.

The Brazilian president, Lula da Silva, inaugurates a factory in Feira de Santana

(Bahia), February, 2007.

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In 1984, Nestlé's improved bottom line allowed the company to launch a new round of

acquisitions, notably American food giant Carnation and the British confectionery

company Rowntree Mackintosh in 1988, which brought the Willy Wonka Brand to

Nestlé.

The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled

and world markets developed into more or less integrated trading areas. Since 1996

there have been acquisitions including San Pellegrino (1997), Spillers Petfoods (1998),

and Ralston Purina (2002). There were two major acquisitions in North America, both

in 2002: in June, Nestlé merged its U.S. ice cream business into Dreyer's, and in August

a US$2.6 billion acquisition was announced of Chef America, Inc. In the same time

frame, Nestlé came close to purchasing the iconic American company Hershey's,

though the deal fell through.[2] Another recent purchase includes the Jenny Craig fitness

firm for US$600 million.

In December 2005 Nestlé bought the Greek company Delta Ice Cream for €240

million. In January 2006 it took full ownership of Dreyer's, thus becoming the world's

biggest ice cream maker with a 17.5% market share.[3]

In November 2006, Nestle purchased the Medical Nutrition division of Novartis

Pharmaceutical for $2.5B. In April 2007 Nestlé bought baby food manufacturer Gerber

for $5.5 billion.

5
NESTLE OVER THE YEAR

Nestle was established because of Henri’s concern for his fellow citizens. Henri, who

had a passionate interest in pursuing his work ideals, hoped that his efforts would one

day benefit society. He produced the first milk cereal food for children, an achievement

that even today, is recognized as one of the major advances in public health throughout

the world.

While the original business was based on milk and dietetic foods for children,

numerous other food products have been added to the range over the years. These

include chocolate, instant beverages, culinary, refrigerated and frozen products, ice

cream, mineral water and pet food.

Nestlé’s other products include numerous chocolate bars as well as Nescafe coffee and

Perrier water.

INDUSTRIAL SCENARIO

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

6
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.

OBJECTIVES OF NIL

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  Be in every way the leading company in Indian food industry.

 Ensure high quality standards in everything we undertake.

 Provide our consumers with superior quality products.

 Provide our shareholders with rapid growth & fair returns.

 Provide our employees a challenging & satisfying work environment.

 To be a good corporate citizen & contribute positively to the society in which

we operate.

DISTINGUISH CHARACTERISTICS OF THE INDUSTRY

FMCG companies sell their products directly to consumers. Major features which

distinguish this sector from the others are as follows:

 LOW CAPITAL INTENSITY

Most product categories in FMCG require relatively minor investment in plant and

machinery and other fixed assets. Therefore shortage of product for want of capacity

would be a rare phenomenon. The turnover is typically five to eight times the

investment made in a Greenfield plant at full capacity. This is also due to the fact that

the business being marketing driven, players do not integrate backward. Also, the

business has low working capital intensity as bulk of sales from manufacturers takes

place on a cash basis.

 HIGH INITIAL LAUNCH COST

Nonetheless, there is a large front-ended investment made in new products including

cost of product development, market research, test marketing and most importantly its

launch. To create awareness and develop franchise for a new brand requires enormous

8
initial expenditure is required on launch advertisements, free samples and product

promotions. Launch costs are as high as 50-100% of revenue in the first year and these

costs progressively reduce as the brand matures, gains consumer acceptance and

turnover rises. For established brands, advertisement expenditure varies from 5 - 12%

depending on the categories. It is common to give occasional push by re-launches,

which involves repositioning of brands with sizable marketing support.

 TECHNOLOGY

Basic technology for manufacturing is easily available. Also, technology for most

products has been fairly stable. Modifications/ improvement rarely change the basic

process. Nonetheless, major global players spend enormous sums on R&D due to their

ability to spread cost over the wider base of their global operations. Their R&D efforts

are towards:

 Cost effective manufacturing process without compromising on quality and

functional performance.

 Research driven formulations, which give cutting edge.

 High standards of hygiene/ purity for personal care and food products.

 Standardized formulation, which can be used across countries.

 MARKETING DRIVE

In relative terms, marketing function has greater importance in FMCG companies. The

players have to reach out to mass population and compete with several other brands

which essentially offer similar products. The perceived differences are greater than the

real differences in the product.

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 MARKET RESEARCH

Consumers' purchase decisions are based on perceptions about brands. They also keep

on changing with fashion, income and changes in lifestyle. Unlike industrial products,

it is difficult to differentiate products on technical or functional grounds. With

increasing competition, companies spend enormous sums on product launches. Market

research and test marketing become inevitable.

 BALANCE SHEETS ARE MISLEADING

The most critical asset for FMCG companies is represented by its brands and

distribution network. Brands are bought and sold like any other assets. Typically, when

an FMCG business is sold, the value of the brand is several times of that of tangible

assets. However as per the current accounting practices in most countries, investment

made in building of brands are written off as revenue expenditure. This is due to high

risk involved with a new brand, subjectivity involved in its valuation, lack of

consistency and difficulty in separating a brand's value from that of tangible assets

employed in the business. While a successful brand will pay back the investment

several times, in case of brand failure, entire investment has to be written off. High

return on net worth of most established companies is also misleading due to the fact

that the assets sans brands are considerably understated in the balance sheet.

 THIRD-PARTY MANUFACTURING

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Manufacturing of products by third party vendors is quite common. Third party

manufacturing used to give fiscal advantages particularly of excise duties. These have

been considerably diluted in the past 7 years of reforms. In the last budget the

government proposed to change the basis of excise levy to MRP basis. A total of 43

product categories have been brought under the MRP net in the subsequent budgets.

Besides excise benefits, third party manufacturing also provides other benefits .

The industry chronology

YEARS DEMAN RUPEES GROWTH

DS TERMS RATE
1990 12 000 350 crores 2%

tones
March Excise Duty increased to 15 3%

-1995 percent
 Excise duty further increases Drops to 6-7

to 28.75 % %

 Cocoa Prices Zoom

1998  Excise duty reduced to 25 %,

further to 20 percent and finally to

18 %. Import Nestle launches

 Kit-Kat-sets up a new unit.

Production

 Arrangement with

 CAMPCO continues.

 Mars selects production site.

2005 Market zooms up due to greater 2

marketing thrust by players 3%

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 (especially Cadbury's)

 Chocolates-Selected import

Item
2006 Chocolates-Open General License 20 000 2

tones 3%
2007 Quantitative restriction lifted 32000 2

tones 3.6 %

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The Indian Chocolate market can be sliced into four parts.

1. MOLDED CHOCOLATE SEGMENT - comprising slab chocolates like Dairy milk

chocolates, etc. These are made by pouring the ingredients into moulds.

2. COUNT LINE SEGMENT - comprising bars like 5 star, Bar One, Perk, Kit Kat,

etc. These have ingredients other then chocolate and are usually Bar shaped, making for

chunky bites.

3. CHOCO-PANNED SEGMENT - comprising chocolate forms like Butterscotch,

Nutties, Tiffins, etc. Panned varieties have different cores/centers which are covered

with a layer of chocolate.

4. SUGAR-PANNED SEGMENT - comprising chocolate forms such as Gems,

Chocolate éclairs, etc. These generally have a sugar coating on the outside. The

rejuvenation exercise of Cadbury’s, was one of the key reasons behind the churning up

of the country’s Rs.350-crore chocolate market to a growth rate of 32 percent in 2005,

from a mere a few years earlier .

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 Chocolate Market shares

AM ULOTHERS
5% 1%

CADBURY
NESTLE
20% NESTLE

AMUL

OTHERS

CADBURY
74%

NESTLE FOODS INDIA LIMITED- HISTORIAL

HIGHLIGHTS

Incorporated in 1959 as Food specialties, Nest India (NIL) was promoted by Nestle

Alimantana, Switzerland, which presently holds 51% equity stake in the company.

Manufacturing in India began with the start up of the Moga Factory in 1962. Nestlé’s

first unit at Moga, Punjab is manufacturing:

 Milk products

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  Infant milk formulae

 Weaning cereals

 Culinary products

 Beverages

It is the main manufacturing unit of Nestle India Limited. The second factory at

Choladi, Tamil Nadu to produce beverages i.e. 100% EOU for instant tea was set up in

1967.

The third plant in Nanjangud, Karnataka was set up in 1989 to produce

 Instant Coffee

 Health Beverages

The fourth plant at Samalkha, Haryana, was set up in 1993, to produce

 Weaning cereals

 Culinary products

 Health beverages

 Milk products

The fifth plant at Ponda, Goa was set up in 1994 to produce:

 Wafers

 Waffles

The sixth plant at Bicholine, Goa was set up in 1997 for manufacture of culinary

products. Nestle India is now putting up another factory at Pant Nagar in Uttaranchal.

15
Nestle India will invest over Rs 100 crores in the factory. This is the seventh plant of

Nestle India and like the other plants, this plant will also be of international standards.

This factory at Pant Nagar will initially manufacture culinary products including its

very popular MAGGI. The factory will benefit from and will be closely aligned with

the research and Development Facilities of Nestle Group and its proprietary, world

class technology.

Nestle India; the largest food company in the country is continuously looking at new

niches in the market place for its various products.

In milk products Nestle has made a considerable mark. For instance, the company was

the first to introduce a Dairy Whitener with its product 'Everyday'. And till today that

product is a brand leader despite the presence of a host of other brands in the field. IN

the case of Milkmaid condensed milk, Nestle relaunched the product as desert maker

and has seen the sales graph climbing since.

In baby foods, Nestle has made its strong hold with Lactones and Cerelac. Nestle is

also popular in pure ghee segment. Its Everyday pure ghee has gained a quite

satisfactory market share; Nestle has also entered into fitness food products. Nestle

today is a household name. Nestle extended the product line in coffee by bringing in

Dolco, and then Sunrie.

In 1990, NIL entered the chocolate business introducing Nestle Premium chocolate.

Nestlé’s products are sold under brand names such as a Milkmaid, Everyday, Cerelac,

Nescafe, Maggi, Lactones, and Éclairs etc. It launched the world famous Kit Kat

chocolates in 1995. During the year 1996 Milo the world's largest selling chocolate

energy food drink was launched.

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17
MARKETING STARTEGIES OF NESTLE INDIA LIMITED

Marketing strategy is the complete and unbeatable plan designed specially for attaining

the marketing objective of the firm.

The marketing objectives indicate what the firm wants to achieve; the marketing

strategy that decides the success at the business unit level which in turn decides the

total corporation’s success. The link between marketing strategy and overall success is

indeed direct and vital. And in this linkage lies the significance of marketing strategy.

Nestle India ltd. has an aggressive marketing strategy which is very well understood

when one goes through the in-depth study of the 4-P’s of the marketing and price

strategies with respect to its products. One comes to the conclusion that NIL has a well

defined roadmap to success i.e. to reach its ultimate objective of realizing customer

satisfaction through value for price products.

PRODUCTS

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.

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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 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.

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Brand loyalties are very high in categories such as infant food and weaving cereals,

enabling the company to command a price premium.

Other milk products include dairy whiteners (21% market share ) sold under the Every

Day and Tea Make brands, sweetened condensed milk and ready to cook mixes for

traditional Indian sweets sold under the Milkmaid brands. The company also markets

ghee (6% market share) under the Every Day) brand. Nestle' has expanded its milk

product portfolio with the launch of new dairy products such as UHT milk, Curd and

Butter. Huge investments arte being made in building a diversified dairy business and

the distribution infrastructure for the same. Milk products sales registered a 10.6%

growth during 2006. The major competitors are HLL with Milkana , Amul with

Amulya , Britannia with Britannia Dairy Whitener, Kwality with Kream Kountry.

Britannia with 11% of market share, Amul with 19%, and HLL with 8%, Kwality with

4% of it, Rest of the market share lies with local players like Nova, Indiana etc. local

players are very active & some of them are operating under the small scale industries.

Nestle' is still the market leader in the long term & is continuously on the 4-P’s to grow

further.

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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.

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.

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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.

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.

The ice cream cone is the most environmentally friendly form of packaging. A system

from Damascus, Ernest E Hamwi is credited with its invention. Apparently during the

1904 St Luis World’s fair. His waffle booth was next to an ice cream vendor who ran

short of dishes. Hamwi rolled a waffle to contain ice cream and the cone was born.

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

22
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.

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.

Though with much smaller portfolios, Nestle is putting up a touch fight from the treat

for kids, chocolate are now being positioned as near- meal substitute. Thanks to the

initiative taken by Cadbury,s India. The market has become broad based in the sense

that adults are important target segments now. The repositioning of Cadbury,s dairy

milk in 1994 as “real taste of life” grew the entire category of milk chocolates by 20%.

If facilitated the repositioning of Cadbury brands in the basket.

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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 multibrands

Cadbury can naot 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

24
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

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 2006 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

25
turn of the century, Maggi & Company was producing not only powdered soups, but

bouillion cubes, sauces and flavorings.

Maggi merged with Nestle' in 1947.

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

26
prices are also low. The company had adopted a low budget promotional 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

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.

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.

27
(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, 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

28
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.

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.

29
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 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.

ADVERTISING

30
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.

CHILDREN SPORT MEET 98:

31
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 & 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

32
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.

PLACE:

Physical distribution is also called as market logistics. It involves:

Planning Implementing

Controlling the physical flow of the materials and final goods from point of origin to

point of use to meet customer’s requirements at a profit. Over the last several years,

NIL has introduced a number of new products. These include: Kit-ka, Polo, Milo,

Cerelac, Maggie, Dosa Mixes, Bar-one etc.

The success of these products is in part based in Nestlé’s nation wide distribution

system and its strong relation with channel members, which allow it to quickly place

new products in the market.

Channels of distribution tend to be traditional for a number of product categories. For

i.e. in the beverages and food industry, manufacturers normally sell through

wholesalers, who deal with retailers. But the distribution strategy of Nestle' is not a

traditional one. The products manufactured in various production units are passed on to

C&F agents. Practically each C&F agent covers just one state. The products are then

sent to various distributions, the company itself has defined the particular area to be

covered by each distributor. Salesman from the distributor’s office then approaches

various retailers of their area & book the order. The products are delivered to on the

33
next day as against the orders. For instance MILO is manufactured at Karnataka. C&F

agents located at various places collect the product from production unit. In Delhi C7F

is in Mandali Village, Trans Yamuna. The agent in turn send the products to distributor

and then to retailers.

The distribution channel includes 6, 00,000 outlets in 3000 towns throughout the

country, serviced by 39,000 distributors. Practically every shop dealing in consumer

goods is an outlet for Nestle'. This is formulating its marketing strategies.

34
DISTRIBUTION NETWORK OF NIL

MANUFACTURER

C & F AGENTS (1%-3-% Margin)

SUPER STOCKIST (3%-6%)

STOCKIST (3%-5%)

DISTRIBUTOR (4%-7%)

ORGANISED RETAILER (6%-18%)

35
NESTLE’S MOST LIKED PRODUCTS

PRODUCTS PERCENTAGE

CHOCOLATE 10%

COFFEE 28%

MILKMADE 5%

MAGGIE 40%

MINERAL WATER 2%

INFANT FOODS 5%

SOUPS 4%

SAUCES 6%

36
10% people like chocolates as Nestlé’s best product. Among chocolates the Kit-Kat &

Munch are the most liked ones. Munch is the largest selling chocolates in Indian

chocolate market followed by Cadbury’s Dairy milk. Coffee is considered as the best

product of Nestle' by 28% of respondents. They like the taste & aroma as it best quality.

Milkmaid is liked by 5% of people & this crowd involves women & surprisingly

children. Maggie noodle is the most loved product by 40% respondents especially

mothers & children as they consider it as the all time dish (Fast to cook, good to eat).

Infant products are liked by 9% of respondents, most of them were mothers but, it is

very interesting to quote that some mothers them & their elder children liked the taste

of cerelac & it increased the purchasing frequency of the product.

REASONS TO LIKE NESTLE’S PRODUCTS

37
 FEATURES PERCENTAGE

COLOR 2%

TASTE 64%

PACKAGING 4%

PRICE 20%

ADVERTISEMENT 10%

Most of the respondent (64%) liked the products because of the great taste of products

like Maggie, Munch , Kit-Kat, Coffee, Frappe’, Slim Milk & sauces. 2% of the

respondents say that they like the color of the product most as it shows the freshness of

the product. 20% people are satisfied with the price.

BRAND LOYALTY FOR NESTLE’S

LOYALTY STATUS CONTRIBUTORS

HARD CORE LOYALTY 53%

SHIFTING LOYALS 19%

SWITCHERS 28%

38
39
 BRAND LOYALTY FOR NESTLE

Brand loyalty is very high for Nestle' as 53% of respondents denied to switch over to

other product, when any gift or scheme is offered by the competitors. Products that

have highly loyal customers are Maggie noodles, coffee, munch & everyday. People

also like & are loyal for sauces and it is showing an increasing trend (Heinz recently

started the Diwali offer to give 500 gm only for Rs. 39. people responded that the offer

wasn’t so interesting to switch from Maggie & also it was a short-term offer. 19%

respondents said that they will some time switch over if they find a really attractive

offer. They also said that Nestle' is the company that uses least of the marketing

gimmicks to promote its products & people believe in quality of Nestle'. 20% people

said that they switch in most of the cases.

SHOULD NESTLE IMPROVE SOME OF ITS PRODUCTS

PRODUCTS OPINION

CHOCOLATES 63%

SOUPS 21%

COFFEE 15%

MAGGIE 1%

40
63% of respondents want the company to work on the taste of Milky bar and Classic.

21% people want the soups to be offered in more flavors, at present

there are 12 flavors. They also want to make the soups creamier.

16% people say that Nescafe’ is the most powerful brand of Nestle', but they say that

prices are too high to afford, although Nescafe’ red mix is a big relief but it is not so

creamy.

QUALITY WISE POSITIONING

Quality wise Nestle' and Amul are the most admired companies. They blamed

Cadbury’s because of the recent issue of worms in the Cadbury’s chocolate. They say

that Nestlé’s quality is trusted.

COMPANY OPINION

NESTLE 37%

BRITANNIA 21%

CADBURAYS 12%

AMUL 30%

41
42
AVAILABILITY

Nestle' produces the products that are part of most of the people’s daily life. So

availability of fresh Nestle' product is smooth.

COMPANY OPINION

NESTLE’ 26%

AMUL 11%

BRITANIA 28%

CADBURYS 35%

43
PRICE:

The pricing policies of Nestle' regarding products like Coffee, Dahi & Milk needs

revision.

PRICE WISE COMPARISON

COMPANY OPINION

NESTLE’ 23%

AMUL 38%

BRITANIA 21%

CADBURYS 18%

44
 MARKET SEGMENTATION AND TARGET MARKET SELECTION

Market segmentation and target market selection have an intimate relationship with

market strategy formulation.

The company may focus on the following factors while laying down the target market.

1. GEOGRAPHIC SEGMENTATION

Geographically the country can be broadly divided into 3 sub segments -Rural,

Suburban and Urban.

In the first phase (after the test launch), Urban parts of the country should be targeted.

The chosen segment is targeted because –

 Lack of infrastructure, like refrigeration-not to venture rural markets.

 The consumption pattern & behavior in Rural India does not fit with the product

attributes and perceived benefits.

 The limitation of disposable income is another factor that hampers entry in rural

areas.

 Semi-Urban may be considered in the second phase. An year after the launch.

Within Urban India, the cities with 1 million + population i.e. top 23 metros will be

targeted. A soft launch of the brand should be undertaken before taking the brand to

these areas. This (test launch) will be undertaken in Bombay, since it (Bombay) is a

high consumption city for chocolates. (Source: Nestle (I) Ltd – infact Nestlé’s sales

peaked out in Bombay, during its initial launch).

45
2. DEMOGRAPHIC SEGMENTATION

The demographic variables have been separately addressed to arrive at the target

audience.

 Age: 12 years + segment of the population is recommended to be targeted. Small kids

may not be targeted, because of the nature of the perceived product benefit by

consumers in that age group, who are inclined towards sweeter and creamier snacks.

Further, it may not be easy to get youngsters off their tuck money. Also, children today

already have an array of cheap domestic and international confectionery (in the form of

chewing-gums, lollipops, rolls, lozenges and toffees).

 Income: The income segmentation may be all households with an annual income

exceeding Rs. one lakh. Targeted audience may be all households that can afford a

television or have access to satellite television.

3. PSYCHOGRAPHIC SEGMENTATION

Social Class: In terms of psychographic the social class targeted is the educated

upwardly mobile urban middle and upper class.

Personality Traits: This segment essentially consists of emulator’s i.e. upwardly mobile,

pioneers, freaky, fun loving type of people. These are the people who like to enjoy life

and believe in traveling and adventure.

Life Style: In terms of lifestyle, it may be aimed at those who favor buying

convenience products. They are also willing to experiment with alternate products in

place of conventional food items, as the universe of chocolate consumption is changing

from occasion led to more casual consumption.

46
4. BEHAVIORAL SEGMENTATION

The moulded segment of the market is perceived to be the growth engine of the market.

Hence, this segment is quite lucrative for a new brand launch. Also, chocolate

purchases have moved from being occasion-led to a casual snack. Hence, anytime

anyplace snack aspect needs to be established. This segment comprises of people who

like to have chances and want to try new things.

5. LEARNING-INVOLVEMENT

The purchase of a chocolate is of a low-involvement category. It is an impulse purchase

and decision to buy is not pre-planned.

6. USAGE RATE

The market may be further segmented on usage rather than attitude-Anytime Anyplace

Snack. This is a group of consumers that find traditional snacks too heavy. Even though

a range of chocolates may be offered, a core brand (concentrated strategy mentioned

later) may be launched in the countline segment. Since this segment is tipped to be the

growth engine of the industry (according to industry sources – Mr. Sanjay Verkey,

Cadbury’s India and Mr. Bohidar) and this segment has a substantial share of the

market (33%).

TARGET AUDIENCE

Following from the above, it is recommended to target consumers who found

traditional snacks too heavy. Usage rather attitude is being used to segment. This is the

segment that tended to pick up biscuits instead-something they could munch while

continuing with their schedule.

47
There are 181 million urban individuals in India Our target segment is people living in

the top 23 metros (1 million +population), which implies 63 million people. Further,

SEC A-B in these 23 metros with Cable & Satellite at home are targeted (94.4 % of

SEC A-B have a cable & satellite connection) [All these are NRS -VI & IRS ’99

figures].

ADVERTISING & SALES PROMOTION

When a marketer or a firm has developed a product to satisfy market demand

after thoroughly analyzing the market , there is a need for establishing contact

with the target market to eventually sell the product . Moreover, this has to be a

mass contact which means that the marketer is interested in reaching a large

number of people so that his product may receive optimum exposure . Naturally ,

the best way to reach this mass market is through mass communication and

advertising is one of the means of such mass communication along with such

other means as publicity, sales promotion and public relations .Advertising as a

means of mass communication has , therefore, made mass selling possible . It is

perhaps the best known mass communication channel. Marketers and firms engaged in

selling their products and services throughout the country and or in other nations

are fully aware of the necessity and importance of advertising .

As a means of forceful communication , advertising promotes the sale of goods ,

services , images and ideas through information and persuasion .

Advertising is not a panacea that can restore a poor product or rejuvenate a

decline market . It only helps in selling through the art and business of

persuasive communication .

48
The American Marketing Association, Chicago, defines advertising as

“ ANY PAID FORM OF NON PERSONAL PRESENTATION OF IDEAS

GOODS AND SERVICES BY AN IDENTIFIED SPONSOR .”

Advertising aims at drawing attention to a product. It seeks to create an awareness

about the existence of advertised product . It passes on information about the

product in such a way that interest is created in the mind of the prospective

consumer about the product .

49
 DIRECT COMPETITION

NESTLE, CADBURY & AMUL

At present there are three major players Nestle, Cadbury’s and Amul in the Indian

Chocolate market. Campco initially tried to break into market but failed. Brief profile

of the same has been entailed below:

CADBURY’S INDIA LTD.

Cadbury’s India Ltd, has been in India since 1948. Its brands: Dairy Milk, 5 Star, Gems

and Chocolate Éclairs are the households names in India today. In all the segments i.e.

moulded chocolates, count chocolates and panned chocolates, it is undoubtedly the

market leader.

Cadbury’s has its manufacturing units at Thane (Mumbai), Malanpur, Indori(near

Pune), Mithuri and Kolapur. It has a strong distribution network with about 500

distributors in North India and more than 3 lac retail outlets being serviced all over

India.

In 1997, Cadbury planned to pump in Rs.80-crore to up production capacity at a couple

of Cadbury’s factories. This cash is exactly double of what’s been invested in 1996.

The Company launched Perk, a wafer enrobed chocolate in 1995. This was reactionary

to the launch of Kit Kat and has been able to counter competition.

CADBURY’S DAIRY MILK (CDM) - THE FLAGSHIP BRAND

50
CDM, the oldest of Cadbury’s brands was launched in 1956. In the early 90s, a rise in

the prices of cocoa, increase in the excise duty and a fall in the demand inspired the

idea of repositioning. Two years in the process after relaunch Cadbury’s Dairy Milk’s

market share stood at 25 percent with sales rising by an average 40 percent per annum.

Besides CDM Cadbury’s has a number of endorser brands such as Fruit’n’Nut, Nut

Milk etc. Even though contribution of these brands to the company’s bottom-line is

very small, they are required in order to make a complete portfolio of offering.

The Company developed a concentration strategy on CDM, Five Star, Cadbury’ Gems,

Cadbury’s Éclairs, Perk and the latest of its offering Picnic (which has drawn a good

response in the market).

The Company has also identified sugar confectionery, as a growth sector. It’s first

offering Googly.

NESTLE INDIA LTD.

Nestle India Ltd. has been in India for more than 35 years now. The world’s largest

marketer of chocolates (became world number one when it acquired Rowntree

Macintosh of the UK) - Nestle, made its foray in the Indian chocolate Industry in

November 1990. It launched three products - the milk chocolate, the bitter chocolate

and Crackle (a crunchy chocolate) - in the slabs category and Bar One in count lines.

Cadbury’s been quick to react, and launched a whole host of products in succession: All

Silk milk chocolate, Creamy Bar, and a new version of 5 Star.

Nestle, in the beginning did not have its own manufacturing facility. It had an alliance

with Campco to manufacture chocolates. Later, in 1995 a state-of-art manufacturing

51
plant was set up at Ponda, Goa at a cost of Rs. 50 crores. This unit took care of the

entire Kit Kat production. However, the production tie-up with Campco still continued.

LAUNCH OF KIT KAT

Kit Kat, one of world’s most popular chocolate, was launched in India in 1995. Within

months of its launch, it fulfilled every target Nestle had set. Its launch was

accompanied by the launch of Cadbury’s Perk in order to counter Kit Kat and safeguard

the flagship brand – CDM. Kit Kat has been able to define a new segment in the

industry in the form of the wafer enrobed any time snack.

Kit Kat outsells Perk in the outlets where both are available. In the crucial markets of

Bombay and Delhi both are running neck-and-neck. It has even said to have threatened

the mother brand, Cadbury Dairy Milk.

NESTLÉ’S NEW LAUNCHES

BRAND LAUNCH

Allen Splash(Sugar Candies) Select Cities

After Eight Mints Delhi & Mumbai

Lion Wafer Bars Delhi & Mumbai

FUTURE OUTLOOK

Focus will be on chocolates and confectionery followed by culinary products which

include the Maggi range and coffee.

52
AMUL

Gujarat Cooperative Milk Marketing Federation(GCMMF) launched the Amul

Chocolate way back in 1974. With its milk chocolates, Badam Bar, Crunch and Fruit n

Nut has a market share of about 5 %.

Due to lack of focus and with multinationals spending huge amounts on advertisements

its market share has been falling.

GCMMF is involved in a large number of products, of which chocolates constitutes just

1-2 %. The company is not concentrating much on its chocolate business. As of now,

Amul chocolates are not on company’s focus.

Interestingly, Kaira District Cooperative Milk Producers Ltd.(KDCMPL) - the

manufacturer of Amul chocolate - is selling whatever it produces. Limited capacity is

also a reason for the share it has.

However, Amul’s memorable advertising campaign positioning it as a “A Gift for

Someone You Love”, saw the sales graph rising. Amul’s sales grew by 39% then.

Eversince, Amul has maintained a low profile.

It can further be seen that Amul (SEE FINDINGS).

OTHER DOMESTIC PLAYERS

The only other organized player in the market is Campco, which has an insignificant

share of the market. It is supplying its production to Nestle. Apart from this Campco

did come up with its new brands like Treat. But crunch of resources grossly effected the

pace of the company and is hardly to be heard of today.

53
IMPORTED BRANDS

Considering the high growth potential, various multinationals wanted to set up facilities

in India (Mars being one of them). However, shortage of cocoa, seasonality in demand,

and the absence of a proper cold chain deterred them from investing in India. The

government also moved the import of chocolates from special item list to open general

license category. The duty structure was also reduced. This resulted in making import

of foreign brands easier and price competitive.

Due the above, Mars Inc.-the US giant, who had decided to set up facilities in 1995(the

site for which was also selected), decided to postpone its investment plans.

An alternate strategy was formulated to import Mars chocolate brands into India

through Sarura Business (I) Ltd. Sarura, which came into existence about an year ago,

imports Mars brands and sells through its own distribution network. Highlights of the

strategy being followed are mentioned below:

 Imports Mars brands every 40 days, after careful demand analysis. Takes 20 to 22

days to reach India.

DUTY STRUCTURE

Customs Duty 40 %

Counter-vailing Duty( a form of excise) 2%

Special Duty(Surcharge) 3%

The import duty on finished product is expected to come down to 20-25 percent in a

phased manner.

OTHER FOREIGN BRANDS

54
Nestle has also recently launched its foreign brands by importing them into India.

These include Lion and After Eights.

FUTURE OF THE IMPORTED BRANDS

The future of this segment is highly dependent on extraneous factors like, government

policies regarding import of chocolates and the duties structure therein. Any movement

can make these players price competitive. In December 1997, a no. of products

reaching expiry are said to have been dumped into India due to favorable import policy

(this is when foreign brand imports like Sarura’s products came into the market).

INDIRECT COMPETITION

Since the target audience includes, consumers of not only chocolates but also of

biscuits and confectionery, it faces indirect competition from these product categories.

Also, other confectionery products like toffees, candies etc have proved to be indirect

competition (however would be limited since we are targeting small kids segment).

55
ORGANISATIONAL STRUCTURE

56
 VISION, MISSION, PHILOSOPHY

Vision Statement

Your VISION defines your long-term dream. It should not be achievable. That may

sound ridiculous, but the objective is for your vision to always be just slightly out of

your reach. It's what you constantly strive to attain, and it becomes your reason for

being.

Mission Statement

At Nestlé, our research makes it possible for everyone to enjoy better food for a better

life.

Good Food is the primary source of Good Health throughout life. We strive to bring

consumers foods that are safe, of high quality and provide optimal nutrition to meet

physiological needs. In addition to nutrition, health and wellness, Nestlé products bring

consumers the vital ingredients of taste and pleasure.

As consumers continue to make choices regarding foods and beverages they consume,

Nestlé helps provide selections for all individual taste and lifestyle preferences.

Research is a key part of our heritage at Nestlé and an essential element our future. We

know there is still much to discover about health, wellness and the role of food in our

lives, and we continue to search for answers to bring consumers Good Food for Good

Life.

57
 Promote awareness of the effect of our lifestyle both on ourselves and on our

environment.

 Exist as a financially successful, non-hierarchical, democratic organization where

workers participate in the creation and running of their working Environment, as an

example to encourage others to do likewise.

 Provide an environment that encourages and helps people to develop and achieve

their potential.

 Actively support co-operatives, fair trade, environmental issues and community

activities.

Nestlé’s Philosophy

When Henri Nestle introduced the first commercial infant formula in 1867, he also

created a symbol of the Bird's nest, graphic translation of his name, which personifies

the company's business. The symbol, which is universally understood, evokes security,

motherhood and affection, nature and nourishment, family and tradition. Today it is the

central element of Nestlé’s corporate identity and closely parallels the company's

corporate values ad culture.

58
 PERFORMANCE

Nestle India; the largest food company in the country is continuously looking at new

niches in the market place for its various products.

The Nestlé Group's consolidated sales for the first three months of 2007 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%.

59
PRODUCTS

60
61
 OUR BRANDS

Milk Products & Nutrition

NESTLÉ EVERYDAY Dairy Whitener

NESTLÉ EVERYDAY Slim

NESTLÉ EVERYDAY Ghee

NESTLÉ Milk

NESTLÉ Slim Milk

NESTLÉ Fresh 'n' Natural Slim Dahi

NESTLÉ Jeera Raita

NESTLÉ NESVITA

NESTLÉ NIDO

NESTLÉ MILKMAID

NESTLÉ MILKMAID Fruit yoghurt

NESTLÉ MILKMAID FUNSHAKES

Beverages
NESCAFÉ CLASSIC

NESCAFÉ SUNRISE

62
NESTLÉ MILO

NESCAFÉ Mild

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

63
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 2007."

The Nestlé Group's consolidated sales for the first three months of 2007 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%.

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.

SALES BY MANAGEMENT RESPONSIBILITIES AND GEOGRAPHIC AREA

Jan.-
Jan.-March Organic Growth RIG
March
2007 2006 Jan-March 2007 Jan-March 2007
In CHF million % %

Zone Europe +1.8 -0.4

6'778 '628

Zone Americas +4.8 +1.9

5'978 '154

64
Zone Asia, Oceania and
+3.2 +1.9
Africa 3'291 '633

Nestlé Waters +10.9 +10.7

1'719 '740

Other Activities * +9.4 +8.4

1'947 '156
Total 9'713 1'311 +4.6 +2.5

The growth rate in Western Europe reflects the importance of chocolate and ice cream to that

Zone, both of which were impacted by the late Easter date. There should be some

improvement, therefore, in the first half. Canada and the US performed well, but there was

some slowness in Latin America. Importantly, however, the key markets of Brazil and

Mexico both achieved positive RIG and organic growth. Most Asian markets are growing at a

good rate, with Greater China outperforming its ambitious target of double-digit RIG. In

Japan measures were taken to improve the quality of sales in the ready-to-drink business. The

water business and Alcon again delivered good growth, capitalizing on their leadership

positions in their respective markets.

SALE In CHF million

65
 2006
2007

Among the product groups, beverages, especially soluble coffee and coffee mixes under the

Nescafe brand, and powdered beverages, under brands such as Milo and Mosque, did well, as

did the specialty roast & ground coffees. There was good progress also in the chilled and the

frozen culinary sector; the recently acquired Chef America achieved double-digit growth. The

performance of chocolate and confectionery was impacted by the late Easter, as well as by

price increases.

66
 OBJECTIVES

For every problem there is a research, as all the researches are based on some

objectives and my study is also based upon some objectives and these are as follows:

 To study the Marketing Strategies of Nestle in competitive market.

 To find out the competitive activity of Nestle’ in Indian market.

 To analyze the key competitors of Nestle Food India Ltd.

67
 RESEARCH METHODOLOGY

As mentioned earlier, the objective of the study is to formulate a Marketing Strategy for

any new entrant in the Indian Chocolate Industry. While recommending the said

strategy detailed information from both primary and secondary sources was collected

and analyzed. This included:

PRIMARY SOURCES

Four level primary information collections were undertaken. These were:

1. In order to get relevant information regarding competition, executives of the

following chocolate players in the market were interviewed: To analyze buying

behavior and in order to gain an insight into the buyer need-satisfaction level, a

questionnaire was formulated. These included pan shops, grocery shops, bakeries,

departmental stores, etc.

SECONDARY SOURCES: A number of secondary sources of information were used.

These were:

 Confederation of Indian Industries reports, PHDCCI & FICCI library.

 Internet websites Of Cadbury’s, Nestle and indiainfoline.com, askjeeves.com

 Extensive use of secondary information in the form of

magazines/journals/newspapers clippings, such as Business World, Business Today,

Business India, A&M, Economic Times, etc.

68
 DATA TYPE

In this research the type of data collection is:

 Primary data

DATA SOURCE

The sources of collection of Primary Data are:

 Questionnaire

 Observation

 Face-to face interaction

SAMPLING PLAN

It is very difficult to collect information from every member of a population. As

time and costs are the major limitation that the researcher faces.

The sample size consisted of males/females between the age group 15-40 years.

The segment was selected from upper middle class, upper class and middle

class.

The sample was drawn on random basis from different areas covering gurgaon,

NCR

SAMPLE DESIGN

 Convenience & stratified random sampling methods was used to collect the data

about the features, expectations, satisfaction, problems etc. the customers.

69
 Size of sample:

A final sample of 50 prospective consumers is taken from gurgaon, NCR.

70
THE METHODOLOGY ADOPTED WAS AS FOLLOWS:

INDUSTRY SCENARIO SKETCH (UTILIZING SECONDARY INFORMATION)

EXTENSIVE INTERVIEWS HELD WITH PRIMARY/SECONDARY SOURCES

(COMPANIES/CHOCOLATE MANUFACTURERS ASSOCIATION)

INTERVIEW WITH EX-DISTRIBUTOR OF NESTLE INDIA LTD

EXTENSIVE RETAILER INTERVIEWS IN NARAINA INDL. AREA

FORMULATION AND ADMINISTRATION OF A QUESTIONNAIRE

FORMULATION OF THE RECOMMENDED STRATEGY ON THE BASIS OF THE

ABOVE MENTIONED PRIMARY AND SECONDARY INFORMATION

71
 ANALYSIS

The Analysis shows the relationship between critical variables of the company. The

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.

72
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.

SWOT ANALYSIS

STRENGTHS

 High brand equity ……… consumer & dealer regarding Nestle' as company

delivery quality product.

 Company processes an extensive powerful distribution network.

 Company processes a dedicated & experienced sales staff.

 Strong base in monitoring & controlling market.

 Distributions are highly dedicated towards performance & experience.

 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.

 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.

 NIL - State of the Art Technology and production systems ensuring high

technological/high value and optimum cost advantage to its product portfolio.

 Idealization of products to suit local tastes are critical for success and NIL is

converting its international products into Indian tastes products.

73
  Nestle has altogether 570000 outlets in more than 3000 towns. This is one of the

major strengths of the company.

 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.

WEAKNESSES

 Company takes time in handling return claims on authorized whole seller.

 Warehousing norms are not followed which account for increased breakage.

 Restricted website minimizes marketing opportunities.

 Yearly initiatives are not so motivating.

 A high percentage of turnover and profits coming from a few products

categories like Coffee/Maggi.

 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.

 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.

 NIL factories are not to meet the demands of products with the supply.

74
  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.

 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.

 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.

OPPORTUNITIES

 Great quality.

 Mass market is growing with established performances.

 Growing middle class is increasing opportunities.

 Great taste.

 Low differentiation in market brands.

 Credit facility given to dealers.

 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.

75
  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.

 Food industry is the second highest growing industry in India and offers a lot of

opportunities for NIL in India.

THREATS

 Tough competition especially in premium segment.

 Characteristics of premium segment that it is never brand loyal.

 Tough competition (indirect) with barista, café coffee day.

 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.

 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.

 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.

 Because of the present Swadesi prime and changing public opinion towards

MNCs will affect NIL's future

76
AWARENESS - PURCHASE PREFERENCE

TOP OF MIND AWARENESS

90

80

70

60

50

40

30

20

10

0
CDM

Perk

Amul
Picnic

Break

Nestle
KitKat

5 Star

Crunch

Cadbury's
Bar One
Fruit n' Nut

Foreign brands

Basically most of the customers influenced by the highly effective advertisement

impact of any particular brand. But sometime they prefer quality, taste and other

attributes. Here we can see that people aware about the kitkat and least about break.

77
PURCHASE PREFERENCE: WHAT INFLUENCED YOU TO BUY THE

SELECTED BRAND

90

80

70

60

50

40

30

20

10

0
Advertising Word of Mouth Attractive Dealer Shop Display Family, friends,
Packaging relatives

Most of the custumers are influenced by the advertising, but sometimes they also

influenced by other means like attractive packaging, word of mouth, shop display and

information provided by the relatives and dealers.

78
 PURCHASE BEHAVIOUR : WHAT ARE THE DIFFERENT REASONS

FOR PURCHASING ?

70

60

50

40

30

20

10

0
Occasion led As a gift Casual Purchase Energy Snack

The highest number of purchase is done casually, sometimes it is done by the

customers as a gift, sometime occasionally basis, and few customers purchases it as

energy snack.

79
I OFTEN PICK UP CHOCOLATES WHILE I MAKE OTHER PURCHASES

REINFORCING IMPULSE PURCHASE

No
24%

Yes
76%

In the concept of purchasing a chocolate brand mostly people purchase it

when they purchase the other items, very less no. of people purchase it

specifically.

80
ON THE BASIS OF TASTE & PREFERENCE, SIZE USAGE WHAT SIZE OF A

CHOCOLATE YOU NORMALLY BUY----

70

60

50

40

30

20

10

0
15/25 gms 35/40 gms 80 gms Super saver - 105 200 gms
gms

Normally customers purchase medium size chocolates which are available in 30 to 40

gms. Pack. In very rare cases customer like to purchase very small pack and very large

pack of chocolates.

81
SUITABLE PRICE FOR A 40 GMS CHOCOLATEPRICE PERCEPTION. THE

PRICE OF MOST PREFERRED BRAND IS----

Below Rs. 10/-

14%

Between Rs. 14/-&

Rs. 20/-
29%

Between Rs. 10/-

& Rs. 14/-
52% Greater than Rs.
20/-
5%

Most of the customers approx 52% like to purchase 40 gms. Chocolate in Rs. 10 to 14,

and very least no. of customers like to purchase it below Rs. 10.

82
PRICE SENSITIVITY (ELASTICITY). IF PRICE OF YOUR FAVORITE BRAND IS

REDUCED, YOU WILL BUY MORE OF IT

There is a mixed response but majority of the customers prefered to purchase more

chocolates when its price had been reduced.

83
PRICE SENSITIVITY. IF THE FAVORITE BRAND IS FEW RS. EXPENSIVE

WOULD YOU TO GO FOR IT

Mostly customers purchase their favourite brand, if it becomes few rs expensive.They

dont want to change their brand because it had become expensive very few customers

think beside it.

84
MOST LIKE ADVERTISEMENTS

250

200

150

100

50

0
Perk KitKat CDM Picnic Amul 5 Star

Mostly customers like the advertisement of kitkat & cadbury dairy milk.very few

customers like the advertisement of amul & 5 star.

85
WHETHER, SALES PROMOTION WOULD AFFECT YOUR PURCHASE

DECISION

Sales promotion technique hepls in increasing the sales of the product & it definitely

influences the purchase decision of the customers.

86
BRAND LOYALTY IF A PARTICULAR BRAND IS NOT AVAILABLE, YOU WILL :

If particular brand of a particular product is not available then most customer shift to

another brand , some customer o to another dealer for that brand & some drop the idea

to purchase that product.

87
IF YOU WANT TO BUY A WAFER CHOCOLATE, SAY KITKAT AND IF IT IS

NOT AVAILABLE, YOU WOULD SETTLE FOR A

BAR/MOULDED CHOCOLATE SAY 5 STAR OR CDM

Most people purchase the bar/moulded chocolate if their favourite brand of their wafer

chocolate is not available.

88
 PLACE RELATED----OUTLET PREFERENCE

600

500

400

300

200

100

0
P an shop Sweet Shops Gift shops Stationary Ice-cream Fast Food Milk booths Restaurants Exclusive Road-side
shops parlours joints chocolate Kiosks
parlours

Mostly customers prefer to purchase chocolates from exclusive chocolates parlour &

then the no. came of those customers who would like to purchase from ice cream

parlours & fast food joints & very few customers wants to purchase from milk booths.

89
DEMOGRAPHIC PROFILE OF THE RESPONDENTS

AGE

Between 25 yrs & Between 35 yrs &

35 yrs 45 yrs
19% 19%

Between 2 yrs &

Between 18 yrs & 17 yrs
25 yrs 29%
33%

According to demoraphic profile, the highest no. of customers is from the age group of

18 to 25 years i.e.33% & least from the age group of 25 to 35 yrs & 35 to 45 yrs i.e.

19%.

90
 According to sex

MALE

FEMALE

According to gender, females consume more chocolates than males.

91
MARITAL STATUS

As we can see acc. to marital status unmarried peoples consumes more chocolates

i.e.67% in comparision to married people i.e. 33%.

92
OCCUPATION

According to the occupation, highest no. of people who consumes chocolates are

students & then the professionals .

93
 MONTHLY INCOME

Less than Rs.

5000/-
10% Between Rs. 5000/-
& Rs. 8000/-
14%

More than 12000/- Between Rs. 8000/-

52% & Rs. 12000/-
24%

According to monthly income, 52% people are those who have salary more than rs

12000 & 10% people comes from who have salary less than rs 5000.

94
 FINDINGS

 Nestle wants to go rural as many FMCG companies are doing so, including its

competitors.

 Management decision problem is whether to take step to carry out the

penetration through wholesalers or not?

 Management is unaware of the current level of penetration in the up-country

market?

 If Penetration through wholesalers is possible then how to go about it?

 The customers can be tapped directly through the distribution channel or not or

penetration en-route wholesalers would be the optimum solution?

 What is the profile of the customers to have the knowledge regarding the

consumer behavior and their buying behavior?

In line with the Company's objective to provide superior value in every product

category and market sector, efforts were focused to provide quality products to

customers at attractive price points. While the Company continued to generally

maintain price points across all the product categories, the pricing of some products

were also reduced to meet consumer expectations.

Nestle’s domestic sales registered a 18.5% volume growth during the first 9 months of

2006. Exports registered a 31% yoy volume growth. In value terms, domestic sales

grew by 15.8% yoy to Rs12.1bn, while Exports grew by 26.4% yoy to Rs2.4bn

95
 .RECOMMENDATION

 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.

 It should work more on concept of CRM (Making new customers & retaining old

ones.

 Cash discounts must be given.

 More competitive pricing to be done in the premium segment.

 Increase their sales force to make more frequent visits to the sales person.

 Should also look for rural markets.

 Quick handling of problems of stockiest & dealers.

 Online ordering facility & electronic payment through website can save a lot of

time.

 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.

 Company should concentrate on all round cost saving & productivity gain, to

neutralize the adverse impact of increased excise of confectionary.

96
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:-

1. Segmentation & target market selection.

2. Assembling the marketing mix.

97
 LIMITATIONS

1. The study was limited in its scope because of the relatively short time available

(Two months ) for completing the whole study including literature survey, collection of

data, analysis of data. Due to constraints of time and opportunity, the sample for the

study had been collected from few selected areas. For the sake of simplicity few

variable were taken into account.

2. The Data which has been collected from Consumer might not be very correct to take

strategic decision as they may hide a lot of information.

3. Lack of interest in giving responses by Consumer.

4. The sample size which was taken is too small to make a universal statement.

5. The conclusion can be affected by some of the extraneous variables like

Promotional offer and new launch of product.

6.Lack of sufficient information about the company because we cannot access

confidential data of company.

7. Lack of the instruments to find out the reasonable outcome.

8. Lack of proper experience.

98
 ANNEXURES

QUESTIONNAIRE

1. Do you consume chocolates?

YES / NO

2. If yes, what all brands do you normally buy?

3. How often do you buy chocolates?

(No.) chocolates per day / week / month (please tick)

4. What brands of chocolates are you aware of?

5. Please rank the following attributes in a chocolate on a scale of 1-7 according to

their importance to you? (1-most important, 7-least important)

□ Taste

99
 □ Quality

□ Packaging

□ Price

□ Flavor

□ Add-ons (Wafers, nuts, etc.)

□ Brand Image

6. I often pick up a chocolate while I make other purchases.

YES / NO

7. What influenced you to buy the above stated brand(s)?

□ Advertising

□ Word of mouth

□ Attractive Packaging

□ Dealer

□ Shop Display

□ Family/Friend/Relatives

□ Any Other (Pls. Specify)

100
8. How do you rate the idea of chocolates being made available at the following

outlets.(Please rate on a scale of 1-5, where 1 is most preferred and 5 is

least preferred).

□ Pan Shops

□ Sweet Shops

□ Gift Shops

□ Stationary Shops

□ Ice-cream Parlors

□ Fast Food Joints

□ Milk Booths

□ Restaurants

□ Exclusive Chocolate Parlors

□ Road-side Kiosks

9. If a particular brand is not available with the retailer, you will -

□ Drop the idea of buying a chocolate

□ Go to another retail outlet

□Try another (competitor’s) brand

10 From where you mostly want to purchase chocolate ?

101
  General stores

 Retail outlets

 Shoping mall

11 How much you want to spend to purchase the chocolates?

 5—10

 10—25

 35--50

102
 BIBLIOGRAPHY

Books

 Kotler Philip (2004); ‘Marketing Management’ ;Pearson Education Pvt. Ltd.

 Ramaswamy V.S. and Namakumari S. (2002); ‘Marketing Management Planning

Implementation and Control’; McMillan India Pvt. Ltd.

 Al Ries (1996), “FOCUS”, Harper Collins Publishers Ltd.

 David A. Aaker (1991), “Managing Brand Equity”, The Free Press.

 David A. Aaker (1996), “Building Strong Brands”, The Free Press.

 Jean-Noel Kapferer (1994), “Strategic Brand management”, Macmillan Publishing

Co.

Internet Sites

 Www.Nestle.Com

 Www.Google.Com

 Www.Yahoosearch.Com

Magazines

 Business Today

 Business World

 Business Standard

103
104