Effects of Branding On FMCG Products With Reference To Nestle

Effects of branding on FMCG products with reference to Nestle 1
Effects of branding on FMCG products with reference to Nestle FMCG (Fast Moving Consumer Goods)
Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables (other than groceries/pulses) people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for daily of frequent consumption and have a high return. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion.It has a strong MNC presence and is characterised by a wellestablished distribution network, intense competition between the organised and unorganised segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the foodprocessing industry. Fast Moving Consumer Goods (FMCG) goods are all consumable items (other than groceries/pulses) that one needs to buy at regular intervals. These are items which are used daily, and so have a quick rate of consumption, and a high return. FMCG can broadly be categorized into three segments which are: 1. Household items as soaps, detergents, household accessories, etc, 2. Personal care items as shampoos, toothpaste, shaving products, etc and finally 3. Food and Beverages as snacks, processed foods, tea, coffee, edible oils, soft drinks etc. Global leaders in the FMCG segment are Nestl, ITC, Hindustan Unilever Limited, Reckitt Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi, Gillette etc.
Effects of branding on FMCG products with reference to Nestle Overview

The burgeoning middle class Indian population, as well as the rural sector, present a huge potential for this sector. The FMCG sector in India is at present, the fourth largest sector with a total market size in excess of USD 13 billion as of 2012. This sector is expected to grow to a USD 33 billion industry by 2015 and to a whooping USD 100 billion by the year 2025. This sector is characterized by strong MNC presence and a well established distribution network. In India the easy availability of raw materials as well as cheap labour makes it an ideal destination for this sector. There is also intense competition between the organised and unorganised segments and the fight to keep operational costs low. A look at some factors that will drive growth in this sector:

Increasing rate of urbanization, expected to see major growth in coming years. Rise in disposable incomes, resulting in premium brands having faster growth and deeper penetration.
Innovative and stronger channels of distribution to the rural segment, leading to deeper penetration into this segment.
Increase in rural non-agricultural income and benefits from government welfare programmes.
Investment in stock markets of FMCG companies, which are expected to grow constantly.
Some of the challenges this sector is likely to face are:

Increasing rate of inflation, which is likely to lead to higher cost of raw materials. The standardization of packaging norms that is likely to be implemented by the Government by Jan 2013 is expected to increase cost of beverages, cereals, edible oil, detergent, flour, salt, aerated drinks and mineral water.
Steadily rising fuel costs, leading to increased distribution costs. The present slow-down in the economy may lower demand of FMCG products, particularly in the premium sector, leading to reduced volumes.
Effects of branding on FMCG products with reference to Nestle
The declining value of rupee against other currencies may reduce margins of many companies, as Marico, Godrej Consumer Products, Colgate, Dabur, etc who import raw materials.
PROBLEM OF FMCG COMPANIES
The fast-moving consumer goods (FMCG) companies are faced with a peculiar challenge of maintaining profitable growths in the backdrop of a low inflation rate. As against the high inflation of the early 90s the peak growth season for all FMCG companies the ensuing period of a lower inflation rate dares companies to now play the volume game. As against a growth in profitability, which came with price increase in line with the rising inflation, the FMCG industry will now have to do without this critical factor which has been contributing to almost half of the industrys growth. Volumes will play a critical role now. The number of units sold will be an important metric, as there is very little avenue to drive price growth, said MS Banga, chairman, Hindustan Lever Ltd (HLL), in his keynote address at the 2nd National FMCG Conclave organized by the Confederation of Indian Industry (CII). Since volume will be the key determinant of growth, the industry will be forced to push volume growth. Hence, for those companies which hitherto relied on price increase as an easy way to enhance profitability, there could be a pressure on margins. To tackle the problem there needs to be a relentless focus on cost-cutting. Many companies, which have understood that volumes will be critical, will benefit, added Mr. Banga. According to Mahesh Vyas, executive director, the Centre for Monitoring Indian Economy (CMIE), the year holds a lot of promise, if growth is good and inflation is lower. Volume growth and no price reduction is good for FMCG, said Mr. Vyas. He, however, said fresh investments were critical for sustained growth in the economy. Another serious challenge which the industry is faced with, said Mr. Banga, is consumer promotions where freebies are threatening to lead to the commoditization of the industry. I believe that the industry must take a serious note of it. It is threatening the very premise on which the FMCG industry stands today (i.e. branding), Mr. Banga added. As to how HLL, which is a leading FMCG company, would boost its volumes and maintain its margins, Mr. Banga said the only way out was branding. He denied that HLL was cutting down upon its advertising spends, which he said, was only on a quarter-on-quarter basis. The total advertising

expenditure for HLL declined to Rs 182.74 crore during the third quarter ended September 30, 2003, from Rs 217.80 crore.
One of the reasons is the fact that the Conditional Cash Transfer scheme (CCT) is gathering support as a replacement for myriad welfare schemes. Along with the rural employment guarantee scheme, loan waivers and increase in prices at which agricultural products are bought, the CCT could solve the FMCGs problem of unpredictability of agricultural income and the associated fall in market demand. The mainstay of the rural thrust of FMCG companies is based on the hope that there are disposable incomes lying untapped in the hinterland: if the rural population spends some of this, it will certainly boost demand in the current recession. With urban consumption in decline or stagnating because of the economic slowdown, FMCG companies have been hit hard. The idea is to give a choice to the rural customer to shift to branded products, from traditional, unbranded merchandise from the nonorganised sector. The growth is in rural, says Indias top marketing head, Rama Bijapurkar. Rural India constitutes over 60 percent of the countrys total consumer base. Its estimated that rural markets hold 55 percent of total LIC policies, 50 percent of the market for televisions, fans, bicycles and wristwatches and a massive 70 percent of the market for toilet soap consumption. The Rs 65,000 crore debt waivers announced last year helped 3.6 million farmers and made them eligible to fund the next crop. The Centre continued to provide short-term crop loans at 7 percent interest up to Rs 3 lakh. An upturn in agriculture was seen in the UPAs interim budget of 2009-10, where the annual growth rate of agriculture was posted at 3.7 percent. Added to this was the election-inspired increase in minimum support prices (MSP) in 2008-09. Announced in the season ahead of the general election, the MSP for paddy (Rs 550 per quintal in 2003-04) rose to Rs 900; for wheat, the MSP, which was Rs 630 per quintal, rose to Rs 1,080. It also led to massive procurement of food grains this year.
Factors like this, according to analysts, have created disposable incomes which the rural consumers should be, ideally, keen on spending on consumer goods. THE ECONOMIC SURVEY 2007-08 says rural India spends, on average, 55 percent on food and 45 percent on non-food items like clothing, consumer durables, education and health. And its spend on urban costs of living such as electricity, commuting, fuel and rent is negligible. That level of spending on regular consumables is good news for

FMCG manufacturers. Add to that the fact that, unlike their urban counterparts, rural citizens incomes are relatively better preserved from market fluctuations and real estate shocks. For corporate, the rural hinterland had earlier meant high investment because of poor infrastructure, absence of storage services, no electricity, water or finance facilities. In times of recession, the problems appear surmountable. Its expected that catching the villages fancy should be far easier than that of the infofatigued urban buyer. The rural market already accounts for 50 percent of FMCG products like pressure cookers, tea, branded salt and tooth powder. Companies expect to increase market share and to add products to the rural portfolio. According to ASSOCHAM, which announced early this year that the FMCG sector is pegged to grow at 40 percent in the rural market, rising rural incomes, healthy agricultural growth, boost in demand, rising consumerism and better penetration of FMCG products, are the reasons for this projection. Agrees Deepak Jolly, a director with Coca-Cola India: The rural thrust in India today is huge. In many ways, I would say it is the main driver for the markets. Among the few things that the FMCG companies are seeking from this budget is that the taxes and duties that have been reduced by the government to promote the sector should not be revoked. If only they could have the same impact on the monsoon: any weakening or failure there will considerably affect the purchasing power of villagers and volumes of FMCG products. Its in this context that the gathering support for the conditional cash transfers (CCT) scheme should be seen it proposes that the government deposit an amount in the account of beneficiaries identified according to poverty criteria. The amount is deposited in the name of the woman member of the household and accessed only if children go to school or attend the health centre. Farmers are spending more than ever to cultivate; villagers are spending more than ever to buy food. The government hopes to bring the National Food Security Bill that provides monthly 25kg to BPL families at Rs 3 per kg. It would be interesting to watch if the disposable income left after such subsidies will be used for consumption.
Effects of branding on FMCG products with reference to Nestle HISTORY OF NESTLE

1860-1905 In the 1860s Henri Nestl, a pharmacist, developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his mother's milk or any of the usual substitutes. People quickly recognized the value of the new product, after Nestl's new formula saved the child's life, and soon, Farine Lacte Henri Nestl was being sold in much of Europe. Henri Nestl endowed his company with the symbol derived from his name. His family coat of arms, the nest with a mother bird protecting her young, became the Company's logo and a symbol of the Company's care and attitude to life-long nutrition. The Nestl nest represents the nourishment, security and sense of family that are so essential to life.
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1905-1938 In 1905 Nestl merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestl's production had more than doubled. After the war Government contracts dried up and consumers switched back to fresh milk. However, Nestl's management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestl's first expansion into new products, with chocolate the Company's second most important activity.
1938-1975 Nestl felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to $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, Nescaf, which was a staple drink of the US military. Nestl's production and sales rose in the wartime economy.

The end of World War II was the beginning of a dynamic phase for Nestl. Growth accelerated and companies were acquired. In 1947 came a lot of mergers. Diversification came with a shareholding in L'Oral in 1974.
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1975-1996 Nestl divested a number of businesses1980 / 1984. In 1984, Nestl's improved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. Nestl's growth in the developing world partially offset a slowdown in the Company's traditional markets.
1996-2000 The first half of the 1990s proved to be a favorable time for Nestl: trade barriers crumbled and world economic markets developed into a series of more or less integrated trading areas. The opening of Central and Eastern Europe, as well as China, and a general trend towards liberalization of direct foreign investment was good news for a company with interests as far-flung and diverse as Nestl. While progress since then has not been as encouraging, the overall trends remain positive. Nestl opened the 20th century by merging with the Anglo-Swiss Condensed Milk Company to broaden its product range and widen its geographical scope.
2000-present In July 2000, Nestl launched a Group-wide initiative called GLOBE (Global Business Excellence), aimed at harmonizing and simplifying business process architecture; enabling Nestl to realize the advantages of a global leader while minimizing the drawbacks of size. Nestl was First to Produce: Infant milk, Condensed milk, Milk chocolate, Soluble coffee and Freeze-dried coffee.
Effects of branding on FMCG products with reference to Nestle NOTABLE FACTS

Nestl, based in Switzerland, is the world's largest food company. It manufactures a wide variety of food products, from chocolate to frozen dinners to pet food, and is one of the top four water bottling companies in the world. It controls one-third of the American bottled water market, selling water under 70 different brand names.
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Bottled water contributes to the plastic waste problem and seizes water that should remain a shared public resource. Nestl has been repeatedly sued for the impacts of its bottled water operations on communities and for false advertising of its products. Nestl has been criticized internationally for its aggressive marketing of infant formula in countries where potable water is scarce, leading to a reduction in breastfeeding and increased risk for infants. Nestl is also one of the world's largest chocolate producers, and critics charge that this makes it a contributor to child and forced labor problems in cocoa-growing nations.
Switzerland-based Nestl S.A. manufactures a wide variety of food products from chocolate to frozen dinners to pet food. In addition, Nestl is one of the most prominent bottled water companies in the world, and also produces personal and health care products. Nestl SA employs 247,000.
Effects of branding on FMCG products with reference to Nestle 13 Nutrition, health and wellness
Nestl is more than just the largest food and beverage company in the world. Increasingly,Nestl is becoming the worldleader in nutrition,health and wellness. From the start, nutrition has been at the core of our business. However, today we place far greater emphasis on it and on health and wellness. Our Corporate Wellness Unit and the individual business units are driving forces in bringing Good Food, Good Life to all our consumers.
Nestl. Good Food, Good Life

We use four simple words to describe what we believe in and what we offer consumers around the world: Good Food, Good Life. Food and beverages play an increasingly important role in peoples lives not only because of the enjoyment and social pleasure of eating together, but more and more in terms of personal health and nutrition. Although its important, nutrition is only one aspect of Good Food, Good Life. Consistent quality and safety, as well as value-for-money and convenience, all play a part. Above all, great taste is fundamental to our products and our consumers appreciation of good food.
Research & Development

Its the task of our Research & Development (R&D) to apply nutritional science and expertise to create products that combine great taste with nutritional benefits. We firmly believe that our research can make better food so that more and more people live a better life. Through continuous innovation of new products and renovation of existing products, Nestl is creating and enhancing hundreds of Nestl products, especially in

terms of their nutritional benefits. The Nestl Group invests around CHF 1.5 billion* in R&D every year. Its more than any other food company .
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PROFILE OF THE COMPANY

Nestl with headquarters in Vevey, Switzerland was founded in 1866 by Henri Nestl and is today the world's biggest food and beverage company. Sales at the end of 2004 were CHF 87 bn, with a net profit of CHF 6.7 bn. We employ around 247,000 people and have factories or operations in almost every country in the world.
The Company's strategy is guided by several fundamental principles. Nestl's existing products grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential is never sacrificed for short-term performance. The Company's priority is to bring the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives.
Effects of branding on FMCG products with reference to Nestle BACKGROUND

Nestle was promoted by Nestle Alimentana, Switzerland, a wholly owned subsidiary of Nestle Holdings Ltd., Nassau, Bahama Islands. Nestle is one of the oldest food MNC operating in India, with a presence of over a century. For a long time, Nestle Indias operations were restricted to importing and trading of condensed milk and infant food. Over the years, the Company expanded its product range with new products in instant coffee, noodles, sauces, pickles, culinary aids, chocolates and confectionery, dairy products and mineral water. Nestle was incorporated as a limited company in 1959. In 1978, the Company issued shares to the Indian public to reduce its foreign holdings to 40%. Its name was changed from Foods Specialties Ltd. to the current name in 1981.The parent held 51% stake in the company as at 2000 end. It has FIPB approval to hike stake by 10% and has been gradually acquiring shares from the open market. Parent stake in the company as at 2001 end stood at 53.8%. The parent plans to continue hiking stake through open market purchases.
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Nestle India Ltd, 51% subsidiary of Nestle SA, is among the leading branded food player in the country. It has a broad based presence in the foods sector with leading market shares in instant coffee, infant foods, milk products and noodles. It has also strengthened its presence in chocolates, confectioneries and other semi processed food products during the last few years. The company has launched Dairy Products like UHT Milk, Butter and Curd and also ventured into the mineral water segment in 2001. Nestles leading brands include Cerelac, Nestum, Nescafe, Maggie, Kitkat, Munch and Pure Life.
PLANT LOCATIONS
Nestle started its manufacturing operations with Milkmaid in 1962 at Moga factory. Manufacturing of Nescafe started in 1964 at the same factory. The company set up another factory at Cherambadi in Tamil Nadu, for manufacture of infant foods, coffee etc. For almost

two decades there were no new additions of manufacturing facilities due to restrictive policy environment. The company set up its Nanjangad (Karnataka) factory in 1989 and the Samlakha (Haryana) factory in 1992. The Ponda (Goa) factory started operations in 1995. The Company set up its sixth manufacturing unit in 1997 at Bicholim in Goa
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BUSINESS PRINCIPLES
Since Henri Nestl developed the first milk food for infants in 1867, and saved the life of a neighbors child, the Nestl Company has aimed to build a business based on sound human values and principles.
While our Nestl Corporate Business Principles will continue to evolve and adapt to a changing world, our basic foundation is unchanged from the time of the origins of the Company, and reflects the basic ideas of fairness, honesty, and a general concern for people.
People first
Employees, people and products are more important at Nestl than systems. Systems and methods, while necessary and valuable in running a complex organization, should remain managerial and operational aids but should not become ends in themselves. It is a question of priorities. A strong orientation toward human beings, employees and executives is a decisive, if not the decisive, component of long-term success.
Quality products
Our focus is on products. The ultimate justification for a company is its ability to offer products that are appealing because of their quality, convenience, variety and price -products that can stand their ground even in the face of fierce competition.
Long-term view
Nestl makes clear a distinction between strategy and tactics. It gives priority to the longrange view. Long-term thinking defuses many of the conflicts and contentions among groups -- this applies to employment conditions and relations with employees as well as to the conflicts and opposing interests of the trade and the industry. Of course, our ability to focus on long-term considerations is only possible if the company is successful in the struggle for short-term survival. This is why Nestl strives to maintain a satisfactory level of profits every year.
Decentralization
Switzerland is home to Nestl's Swiss subsidiary, its international headquarters and the registered office of Nestl's holding company, but Nestl does not regard its Swiss headquarters as the center of the universe. Decentralization is a basic principle of Nestl. Our policy is to adapt as much as possible to regional circumstances, mentalities and situations. By decentralizing operational responsibility, we create strength and flexibility and are able to make decisions that are better attuned to specific situations in a given country. Policies and decisions concerning personnel, marketing and products are largely determined locally. This policy creates stronger motivation for Nestl's executives and employees and a greater sense of identification with Nestl's business. It is not Nestl's policy to generate most of its sales in Switzerland, supplemented by a few satellite subsidiaries abroad. Nestl strives to be an "insider" in every country in which it operates, not an "outsider."
Effects of branding on FMCG products with reference to Nestle Uniformity

A very important concern at Nestl has to do with uniformity: how consistent Nestl's principles, policies, rules of conduct and strategies should be, and to what extent they should differ depending on the country, subsidiary, region, branch or group of products. In general, Nestl tries to limit the uniformity of its policy to a requisite minimum. This minimum is then systematically enforced, unless there are compelling reasons in a given market that justify deviation from policy.
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Diversification
Nestl does not want to become either a conglomerate or a portfolio manager. Nestl wants to operate only those businesses about which it has some special knowledge and expertise. Nestl is a global company, not a conglomerate hodgepodge. We regard acquisitions and efforts at diversification as logical ways to supplement our business, but only in the context of a carefully considered corporate marketing policy. Nestl is committed to the following Business Principles in all countries, taking into account local legislation, cultural and religious practices:
Nestl's business objective is to manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners.
Nestl does not favor short-term profit at the expense of successful long-term business development.
Nestl recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and actions of the Company behind brands in which they place their trust and that without its consumers the Company would not exist.
Nestl believes that, as a general rule, legislation is the most effective safeguard of responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary business principles is beneficial in order to ensure that the highest standards are met throughout the organization.
Nestl is conscious of the fact that the success of a corporation is a reflection of the professionalism, conduct and the responsible attitude of its management and employees. Therefore recruitment of the right people and ongoing training and development are crucial.
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Nestl continues to maintain its commitment to follow and respect all applicable local laws in each of its
Research and development

The Nestl research and development centers have two main tasks: to create new products and manufacturing processes and to improve those that already exist. These centers play a key role in product safety and quality and also have their role in conserving resources and protecting the environment. Environmental concerns are an integral part of any development process to ensure that our future commercial operations meet the desired criteria. The Nestl Research Center provides the scientific support needed to prevent and solve environmental problems arising in the development groups as well as manufacturing. In addition, studies are carried out to find new ways of using industrial residues to create valueadded byproducts. This will reduce total emissions and effluents. The Nestl development centers prepare environmental impact studies for new products and manufacturing processes. These cover all aspects, from raw materials, through processing, to the final packed product. These analyses provide additional elements for use in deciding whether to commercialize a new product, or to introduce a new or modified process. Foresight At present, the world faces daunting questions about its ability to provide enough wholesome food for everyone. Malnutrition and poor eating habits are still serious problems in many developing countries. By 2100, the world's population will double. Will it be possible to feed a world with so many inhabitants? At Nestl, the big picture is all about feeding the world and providing food and nutrition for an ever-growing population. Our response to this situation is to intensify research, strive for innovations and improve quality.

Flexibility and simplicity The public's sense of the power and size of a corporation is often inaccurate, for a company's power is limited by a host of factors including legislation, competition, regulatory bodies and publicity. From a business point of view, it is desirable for a firm to achieve the size best suited to a specific industry or mode of production. To be competitive internationally and make significant investments in research and technology, a larger company has an advantage. From a strictly organizational point of view, flexible, simple structures work best and excessively large units should be avoided whenever possible. In both respects Nestl has a natural advantage: Although it is a big company, it is spread out over many countries and each of Nestl's factories has its own management and responsibility.
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Handling of raw materials

The Nestl Group is in principle not directly involved in primary production of raw materials and other food ingredients. In general we use locally available raw materials and purchase them either directly from producers or through existing trade channels. Raw materials have to meet clearly established quality criteria and are checked for possible contaminants including environmental contaminants. Our purchasing specifications comply not only with legal requirements but go further to ensure highest safety and wholesomeness of our products. Whenever possible we give preference to those goods for which environmental aspects have been taken into consideration. In those cases where the required agricultural raw materials are not available locally, but the natural production conditions exist, we encourage local production and provide assistance for cultivation and dairy farm management. We support plant growing and livestock husbandry methods which:
preserve and improve natural soil productivity and economize and protect water resources
allow the lowest, most appropriate and safe use of agro-chemicals use the least energy.
Effects of branding on FMCG products with reference to Nestle Packaging

Manufacturing comprises all unit operations necessary to transform perishable raw materials into finished products, with the aim to make them safe and convenient for the consumers. The manufacturing activities of the Nestl Group:

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respect natural resources by efficient use of raw materials and energy minimize waste generation and emissions ensure environmentally safe disposal of all waste which cannot be recycled.
Regular assessments of processing practices are carried out. These assessments include:
evaluation of individual plant performance with regard to operations which have an impact on the environment
definition of targets for improvement review of plant compliance with local government regulations, company environmental standards, as well as results achieved in comparison with targets for improvement
full investigation of incidents which may affect the environment.
Information on developments in environmental protection technology and practices is disseminated as required to ensure that all plants are using the most effective environmental practices for their type of processing. This applies also for co packers.
Marketing and distribution

Marketing is based on the principle of satisfying consumer needs. This is the foundation also for the environmental marketing approach of Nestl. Environmental product claims in advertising, promotional material and on packaging are in accordance with legal requirements, based on solid scientific evidence and used in a serious and reasonable manner. Our aim is to minimize wastage in communication, publicity and promotional material, in particular through more precise targeting of marketing activities.

Consumer promotions and merchandising material such as consumer offers, instore promotions, display material, leaflets, printed matter, etc. take environmental aspects into account. This means due consideration of environmental impact in selecting both materials and printing methods. In distribution, energy efficient and pollution controlled methods are encouraged wherever possible.
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Information, communication and education

Nestl's policy is designed to provide correct and coherent information on the activities of the Group. Activities related to the environment benefit from the same treatment and their communication is secured through all currently available means inside and outside the Group. It is furthermore Nestl's duty to create awareness, to train and motivate employees on their personal responsibility with regard to the protection of the environment.
Legislation and regulations

It is the policy of the Nestl Group to strictly comply with all laws and regulations relevant to our activities. We participate in discussions on food legislation and regulations between international organizations, government representatives, industry, the scientific world and consumer associations. We also apply this policy to environment related matters. In doing so, we cooperate with legislators through local industry associations in order to promote laws and regulations in the field of environment which are reasonable, rational, realistic, applicable and enforceable. We oppose unjustified bans and any other discriminatory measures. We favor the harmonization of food regulations in order to remove existing trade barriers and to avoid the creation of new ones. This applies also to environmental issues. We favor the

exchange of information, of experience and of knowledge between the various interested parties. Thanks to all these synergies, we can contribute to valuable discussions and be recognized as an active partner in helping authorities to formulate comprehensive strategies in the field of the environment.
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THE NESTL POLICY ON THE ENVIRONMENT

Nestl respects the environment and is committed to environmentally sound business practices throughout the world, thus taking into account the need to preserve natural resources and save energy. This commitment is put into practice by considering local legal requirements as a minimum standard. If these do not exist, our internal rules, adjusted to local conditions, apply. Research and Development and new investments include an evaluation to ensure environmentally appropriate products, packaging and processes. Management and personnel within the Nestl organization worldwide are encouraged to help resolve environmental problems within their own sphere of influence. NESTLES BRANDS Quality and nutritional value are the essential ingredients in all of the nestles brands. Millions of people prefer Nestl products every day, happy with the addition to their wellness that they bring.
Baby Foods The production of infant food goes right back to the origins of the Nestl Company. Henri Nestl's 'Farine Lacte' was the first product to bear the Nestl name.
In 1867 a physician persuaded Henri Nestl 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. Nestl's new food worked, and the boy survived. From the very beginning, Nestl's 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 factors that made baby foods success in the early days of the Nestl company quality and superior nutritional value are still as valid today for the wide range of infant formula, cereals and baby food made by Nestl. 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. Nestl 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. Nestl's expertise as the world's leading infant food manufacturer, gained over more than 125 years, is put at the disposal of health authorities, the medical profession and mothers and children everywhere. Chocolate & Confectionery The story of chocolate began in the New World with the Mayans, who drank a dark brew called cacahuaquchtl. Later, the Aztecs consumed chacahoua and used the cocoa bean for currency. In 1523, they offered cocoa beans to Cortez, who introduced chocolate to the Old World, where it swiftly became a favorite food among the rich and noble of Europe. Nestle forayed into chocolates & confectionery in 1990 and has cornered a fourth share of the chocolate market in the country.. It has expanded its products range to all segments of the market The Kitkat brand is the largest selling chocolate brand in the world. Other brands include Milky Bar, Marbles, Crunch, Nestle Rich Dark, Bar-One, Munch etc. The sugar confectionery portfolio consists of Polo, Soothers, Frootos and Milkybar Eclairs. All sugar confectionery products are sold under the umbrella brand Allen's. Nestle has also markets 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 confectionery sales registered a strong 21.5% yoy growth in 2001 aided by good volume growth in Munch, Kitkat and Classic sales. Nestle relaunched Bar-One during the year.
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From the beginning, turning raw, bitter cocoa beans into what one 17th century writer called "the only true food of the gods" has been a fine art, a delicate mixture of alchemy and science. Ice Cream There are many myths and stories as to the invention of ice cream: was it Marco 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 houses 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 have 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 Syrian from Damascus, Ernest E Hamwi is credited with its invention. Apparently, during the 1904 St Louis 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. Prepared Foods Convenience foods packaged soups, frozen meals, prepared sauces 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 inventive and capable businessman, to create a vegetable food product that would be quick to prepare and easy to digest. The results two instant pea soups and an instant bean soup helped launch one of the best known brands in the history of the food industry. By the turn of the century, Maggi & Company was producing not only powdered soups, but bouillon cubes, sauces and flavorings.
.Maggi merged with Nestl in 1947. Buitoni, the authentic Italian brand, which has been producing pasta and sauces in Italy since 1827, became part of the Nestl Group in 1988. Beverages Beverages like coffee, tea and health drinks contribute to about 30% of Nestles turnover. Beverage sales registered a 15% yoy growth during 2001. While about 14% of sales come from domestic market, exports contribute to about 16% of sales.
Nestle's Nescafe dominates the premium instant coffee segment. Nestles other coffee brand Sunrise has also been relaunched under the Nescafe franchise to leverage on the existing equity of the brand. Nestle has focused on expanding the domestic market through price cuts and product repositioning. However it has been losing share in the domestic market, where it has a 37% market share. Milo, a brown-malted beverage was launched in 1996. It has an estimated volume share of about 3% in the malted food drink segment. Nestle has launched non-carbonated cold beverages such as Nestea Iced Tea and Nescafe Frappe during 2001. Nestle is one of the largest coffee exporter in the country. Key export market is Russia, besides Hungary, Poland and Taiwan. Nestle has received an award for highest export of instant coffee and highest export of coffee to Russia and CIS for FY00 and FY01. Turnover

contribution from exports registered a 17.5% volume growth in F12/01. Nescafe sales to Russia accounts for 80% (Rs2.5bn) of Nestls Rs3bn export turnover.
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Quality is the cornerstone of our success Every product on the shelf, every service and every customer contact helps to shape this image. A Nestl brand name on a product is a promise to the customer that it is safe to consume, that it complies with all regulations and that it meets high standards of quality. Customers expect us to keep this promise every time.
Under no circumstances will we compromise on the safety of a product and every effort must be made to avoid hazards to health. Likewise, compliance with all relevant laws and regulations is a must and is not negotiable. People, equipment and instruments are made available to ensure safety and conformity of Nestl products at all times. The effort is worth it. Companies with huge quality standards make fewer mistakes, waste less time and money and are more productive. They also make higher profits. Quality is their most successful product. It is the key to their success, today and tomorrow. The customer comes first Nestle want to win and keep customers: distributors, supermarkets, hotels, shopkeepers and the final consumers. They have very different requirements. Trade customers expect excellent service, correct information and timely delivery. Consumers consider taste, appearance and price when they make their choice. Its task is to understand what customers want and respond to their expectations rapidly and effectively. We serve various groups of consumers and there is demand for products at different levels of perceived quality and price. All customers, however, expect value for their money good quality at a reasonable price.
Effects of branding on FMCG products with reference to Nestle Competition 30
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, semiprocessed 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.
Effects of branding on FMCG products with reference to Nestle Quality is a competitive advantage 31
We live in a competitive world and must never forget that their customers have a choice. If they are not satisfied with a Nestl product, they will switch to another brand. Their goal, therefore, is to provide superior value in every product category and market sector in which we compete. The pursuit of highest quality at any price is no guarantee for success, nor is a single-minded cost-cutting approach. Lasting competitive advantage is gained from a balanced search for optimal value to customers, by simultaneous improvement of quality and reduction cost. Success can never be taken for granted. We must watch and learn from our competitors. If they do something better, we must improve our own performance. We can achieve competitive advantage through Quality.
Quality is a joint effort

Operating companies are fully responsible for maintaining agreed quality standards. Not only Production units, but also Marketing, Purchasing, Distribution and Sales have a vital role to play in providing quality to customers. This implies a thorough knowledge of the products and services we offer.
Quality units at different levels of the organization provide specific support, promote quality awareness, assume guardianship and audit the system. Quality departments monitor operations against agreed standards and must intervene in case of nonconformity. Quality policy and principles, the mandatory standards and the

recommended tools for implementation are laid down in the Nestl Quality System which is applicable throughout the group. Further directions are given through instructions, norms and guidelines, often specific to a product.
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Our business products, such as raw material producers, packaging suppliers, contract manufacturers and distributors are expected to share our concern for Quality. They too must set up an adequate quality system, so as to meet our requirements consistently. The quality efforts must be shared by every function and department in the company as well as our business partners.
Quality is made by people

Adequate equipment, procedures and systems are needed to make Quality; so are involved and dedicated people. Each and every Nestl employee must do his best to provide quality products and services. Training and teamwork are crucial to the successful implementation of high quality standards. Continuous training ensures that everyone understands his tasks and has the necessary skills to carry them out. Teamwork allows us to achieve results that are greater than the sum of individual efforts. We motivate employees by demonstrating management commitment to Quality, by setting challenging goals and by giving them responsibility and recognition. It is through employee involvement that goals and targets can be achieved in the shortest time. Quality must be a way of life for everyone in the company.
Quality is action
Quality is the result of deliberate action. It is the responsibility of senior managers to communicate the quality objectives and to provide the resources necessary for their implementation. It is then up to all employees to make Quality happen throughout the company. Progress is followed by listening to our customers and by measuring our performance. Shortcomings and mistakes must be analyzed and corrected. Problems must be anticipated and prevented before they occur. We also must identify and take advantage of opportunities.To stand still is to fall behind. So we must strive for continuous improvement in every area. It is through many small improvements as well as through major breakthroughs

that we will achieve excellence. At Nestl, Quality is our first priority. Let us practice it every day.
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Consumer Services
At Nestl, we are committed to offering consumers high-quality food products that are safe, tasty and affordable. The Nestl 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 consumers' questions and concerns. When Henri Nestl 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 Nestl" expresses the same commitment.
This is why we have a worldwide Nestl 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 Nestl. In addition, we teach them talk with consumers and above all, to listen. Listening helps us to understand what people want. Nestl uses the insights gained from relationships with consumers to drive product development. At Nestl, 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.

STRATEGIES FOR INTERNATIONAL BUSINESS OPERATIONS
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Effects of branding on FMCG products with reference to Nestle SWOT Analysis of Nestle Strength : BRAND IMAGE Marketing strategies established by the company are innovative and lure customers. Financial, marketing and sales strategies are formulated by gauging the Periodic research carried out to judge market trends.
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Weaknesses : The target market of Nestle MilkPak is upper middle and high class because lower middle and poor class cannot afford to buy UHT milk due to its premium price. It is a main weakness of MilkPak that there are different companies of milk but
the name of nestle MilkPak is always stand in the last because of low advertising and marketing.
Opportunities : To expand the cold dairy products range, Nestl fruit yogurt is the latest addition to this group. The cold dairy market offers many opportunities for the company which can capitalize these products by banking on its superior quality milk. The coffee brand also offers many opportunities for the company to expand by tuning the taste of the masses towards coffee. Credit policy can be adopted to increase sales
Threats : Price fluctuations due to rupee devaluation as raw material are imported. The uncertainty of economic conditions poses a great threat as the major funds invested in the country come from outside India. The present economic crisis in the world, led to the withdrawal of foreign
management from the company and the investment has come to a halt. Effect of Seasonalitys upon sales.
4 Ps of Nestle
Ps of Marketing Mix are divided into 4different Parts. 1:- Product 2:- Place 3:- Price and 4:- Promotion Any Product has to get through these 4Marketing Mix stages to survive and tomake an place in the Potential consumermarket.Nestle also have these MarketingMix(4 Ps) which can b describedbelow.
1:- Product In Marketing a product is anything thatcan be offered to a market that may satisfy a needor want.it can be of Two types:1) Tangible(Physical) or 2) In-tangible(Non-Physical). Since services havebeen the forefront of all modern marketingstrategies, some intangibility has become theessential part of marketing offers. It is thereforethe complete bundle of satisfaction or benefits thata buyer perceive they will obtain if the purchasethe product. Nestle Product
Nestle is the world's largest food manufacturer, operatingin 77countries with 480 factories. Naturally, Nestls range of productsvaries greatly from one area of the world to anotherMilo (A healthy malt extract powdered chocolate drink) Other Products: Smarties (Bite size milk chocolates with a crisp coating of sugar) Milkybar (Smooth creamy white milk chocolate) Chokito (Caramel fudge bar coated in rice crisps andchocolate)

Pollywaffle (Wafers and marshmallow covered inchocolate) White Knight (Chocolate bar with a hard mint flavouredcentre) Peppermint Crisp (Chocolate bar with a crispy mintcentre) Crunch (Rice crisps and creamy milk chocolate) Club ("Rich Dark Chocolate" - comes in a bar or a block)Golden Rough (Shreds of roasted coconut in milkchocolate
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Place Nestle again has spread worldwide. Nestle when entering a new market does not goingalone but it looks for partners and mergers. Till nown e s t l e h a s c o l l a b o r a t e d w i t h c o m p a n i e s m a n y MNCs etc. It is because of this world wide spread that now it i s c o m i n g u p w i t h Advertisements which can bebroadcasted in the different nations in the world. T h e r e c e n t example with would be the Neste a d v e r t i s e m e n t s h a v i n g D e e p i k a P a d u k o n e a s i t brand ambassador.
Promotion Promotion is one of the four aspects of marketing.Promotion comprises four subcategories: 1:Advertising 2:Personal selling 3:Sales promotion 4:Publicity and public relations The specification of these four variables creates apromotional mix or promotional plan. Apromotional mix specifies how much attention topay to each of the four subcategories, and howmuch money to budget for each. A promotionalplan can have a wide range of objectives,including: sales increases, new productacceptance, creation of brand equity, positioning,competitive retaliations, or creation of a corporateimage.Nowadays nestle going in

for Brand Ambassadorsto promote their product. These brandambassadors are famous people who usuallypeople idolize and people can relate to them.
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Nestle launches new campaign for KIT-KAT;usesanimation for the first time in india.this is aadvanced promotional activity used by Nestle inIndia.
Pricing Nestle again decides it price onthe basis of competition. The best think about thecompany nestle is that it is very flexible and it cancome down with the price veryquickly. The company is renowned to bring theprice down even up to half if needed. But this risktaking attitude has also earned nestle losses. Though lowering the price would attract thecustomers but it would not help them cover up thecost incurred in production hence causing themlosses. This was the situation earlier but now nestle is afull-fledged and growing company.It has covered allits losses and is now growing at a rapid rate
Introduction to Branding :Brands are like human beings. They are born, fed and nurtured, made strong and responsible so that they can be faithful friends of the people (customers), form mutually beneficial and satisfying relationships with them and become their companions for life. Such brands, make their parents (organization or corporate) proud of them. The best brands are the ones who help in forming and sustaining strong long term parent-brand-people relationships. These brands form the potential for present growth and future expansion. They help the organizations conquer peaks at the time of booms and stay afloat and swim at times of depression. We come across a number of brands in our daily lives. Our morning starts with using a toothpaste (Colgate, Pepsodent or Close-up), using a bathing soap (Lux, Fairglow or Cinthol) and shampoo (Clinic All Clear or Vatika), wearing clothes ( Allen Solly, Levis or Raymonds), breakfast bread (Britannia or Modern) and butter (Amul) or jam (Kissan), lunch and dinner (Nature Fresh or Pillsbury flour and Safal vegetables), morning and evening tea

and coffee (Tetley, Nescafe or Bru), going out in a car (Hyundai Santro, Honda Accord or Mercedes Benz). Talking on the cell phone (Motorola, Nokia, Siemens or Samsung), watching television in the evening (LG, Sony or Philips) or listening to music (Philips or Apple) etc. But how often do we think of what all a company does to put a positive imprint (fight for a shelf space) in the mind of the customer? Today nearly all the companies are focusing more and more on building strong brands. The concept of brand equity and its management has come to the fore like never before. More and more companies are refocusing on select strong brands. This project is thus a timely stuffy of the importance of brands, what it takes to build them, what benefits do they give to different stakeholders (organization, distributors and customers), how can they be leveraged, what is the impact of modern technology on branding, branding on the web, branding in mergers and acquisitions etc. examples have been given and cases discussed at every suitable point to bring out an application oriented understanding of building and managing brands.
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BRAND
The word Brand owes its origin to the Norwegian word brand which means to burn. Farmers used to put some identification mark on the body of the livestock to distinguish their possession. Products are what companies make, but customers buy brands. Therefore marketers resorted to branding in order to distinguish their offerings from similar products and services provided by their competitors. Additionally, it carries an inherent assurance to the customers that the quality of a purchase will be similar to earlier purchases of the same brand.
A brand is a name, term, sign, symbol or design or a combination of one seller or a group of sellers and to differentiate them from those of competitors.
Effects of branding on FMCG products with reference to Nestle BRANDING

Branding is a process, a tool, a strategy and an orientation. Branding is the process by which a marketer tries to build long term relationship with the customers by learning their needs and wants so that the offering (brand) could satisfy their mutual aspirations. Branding can be used as a differentiation strategy when the product cannot be easily distinguished in terms of tangible features (which invariably happens in case of many services, durables etc.) or in products which are perceived as a commodity (e.g. cement, fertilizers, salt, potato chips etc.). Brand building is a conscious customer satisfaction orientation process. The brand owner tries to retain customers to its fold over their competitors by a mix of hardware software because when a customer feels satisfied he / she develop a kind of loyalty for the same.
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History of Branding
Brands in the field of marketing, originated in the 19th century with the advent of packaged goods. Industrialization moved the production of many household items, such as soap, from local communities to centralized factories. These factories, generating mass-produced goods, needed to sell their products in a wider market, to a customer base familiar only with local goods. It quickly became apparent that a generic package of soap had difficulty competing with familiar, local products. The packaged goods manufacturers needed to convince the market that the public could place just as much trust in the non-local product. Many brands of that era, such as Uncle Ben's rice and Kellogg's breakfast cereal furnish illustrations of the problem. The manufacturers wanted their products to appear and feel as

familiar as the local farmers' produce. From there, with the help of advertising, manufacturers quickly learned to associate other kinds of brand values, such as youthfulness, fun or luxury, with their products. This kick started the practice we now know as "branding". We tend to think of branding as a modern day phenomenon. Certainly, during the late 1990s and the early 2000s, branding emerged as a significant area of emphasis not only for companies and their products, but also for municipalities, universities, other non-profit organizations and even individuals. Branding became ubiquitous. Many of us also know that Proctor & Gamble and other consumer product companies began branding their products in earnest in the mid-to-late 1800s. But more interesting to me is how far back in time branding goes. For instance, companies that sold patented medicines and tobacco began branding their products as early as the early 1800s. Around the same time, some fraternities and sororities branded their pledges (literally) during initiation rites as a form of identification and bonding, a practice that has long since been identified as hazing and therefore abandoned. But that is still recent history -- relatively. Between the 1600s and 1800s, criminals were branded (again literally) as a form of punishment and identification. For instance, in England, they branded an S on a person's cheek, while in France; they branded a fleur de lis on the shoulder. As repugnant as it may be to us today, slaves were also branded roughly during the same time period to connote ownership. In the 1200s, England required bread makers, goldsmiths and silversmiths to put their marks on goods, primarily to insure honesty in measurement. In the Medieval times, printers also used marks as did paper makers (watermarks) and various other craft guilds. But branding goes back even further. As far back as 1300 BC, potter's marks were used on pottery and porcelain in China, Greece, Rome and India. Branding of cattle and livestock go back as far as 2000 BC. And archaeologists have found evidence of advertising among Babylonians dating back to 3000 BC. So, how far back does branding go? At least 5000 years.
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What is more interesting to me are underlying needs from which branding originated: to insure honesty, provide quality assurance, identify source or ownership, hold producers responsible, differentiate, as a form of identification and to create emotional bonding. Interestingly, people value brands for many other same reasons today. Clearly, history provides some insight and perspective on modern day branding.
Branding in Todays Markets

A central function of branding is the facilitation of the consumer choice process. Due to the complexity of having to select a product amongst thousands of similar offerings, consumers will instinctively attempt to simplify their choice process by selecting brands that have satisfied them in the past. Thus, one can conclude that pleasant past experiences is highly conducive to consumers associating benefits to a brand. One can conclude that a central function of branding is its ability to negate the need for a consumer to seek out information when a need or a want has been recognized, but rather, lead him to a brand that has been satisfying in the past.
One must acknowledge however, that frequent purchasing of a brand cannot always be linked to previous experiences, but can alternatively be formed by embedded perceptions. A consumer might strongly favour a brand with no prior purchasing experience. This type of consumer behavior is based on stimulus provided by direct exposure to advertising campaigns, a companys PR efforts or even a high concentration of local distribution in an area that is in close proximity to a consumer.

In terms of companies views on branding, it can induce the natural differentiation of their offerings, which ultimately, will produce a state of competitive advantage. Differentiation can only allow for competitive advantage if the cost of differentiating is significantly lower than the revenue earned by the sales. Differential advantage allows companies to showcase their offer in respects to other competitors in the same marketplace.
Importance of Branding
Principle of branding - A set of related products that are manufactured by a company and are sold as a family of products under the marquee or banner of a brand have a certain recognition and a place of respect within that very market. Branding the product thus, is a means of creation of identification and recognition in the market. It is not just a process of getting a trademark and logo, but it is process of evolving as a well reputed name on the market and field. A very well known brand that has become the identity of the market itself is the office equipment manufacturer 'Xerox'. Though it is a company's name, the act of photocopying is termed as 'Xeroxing'.
Effects of branding on FMCG products with reference to Nestle Importance of Branding in Marketing 46
Marketing primarily involves the study of demand in a market and creating a response in the form of supply. In the field of marketing, the brand name plays an important role as it helps the people to promote the brand name and its merits quite easily. Apart from that, it also becomes possible for the marketing people to generate intelligence information about the brands popularity and also what people exactly want from the brand owning company. As a result of a brand loyal group of consumers, it also becomes easier for marketing department to asses regular and promised demand. Apart from that, schemes such as free gifts and discounts often boost the sales as the brand is an important icon of the market.
Importance of Branding in Advertising
Advertising is often considered to be a part of marketing however; branding a particular product helps the advertisers to provide catchy logos and advertisements. As a brand name can never be copied, advertisers face lesser heat from unauthenticated advertisements, effectively, their advertisement creation gets protected. Apart from that advertisers can initiate fearless and independent advertising as due to the process of branding, the consumers are already well aware of the product, its identity and nature.
In short, the importance of branding can be summed up in simple words 'successful branding is a process that generates revenue that cannot be counted, it creates a reputation that is felt not seen, and it is an asset that one cannot show on a balance sheet.
Effects of branding on FMCG products with reference to Nestle 47 Development of Brand Equity
The amount of clout controlled by different brands will vary. Some are deeply embedded in global culture and are thus, highly recognizable, whilst other are virtually unknown to consumers. When attempting to place a value on a brand, one refers to brand equity. Chay (1991) defines brand equity as a set of associations and behaviors on the part of a brands customers, channel members, and Parent Corporation that permits the brand to earn greater volume or greater margins than it could without the brand name and that gives the brand a strong, sustainable, and differential advantage over competitors. This explanation creates a clear link between a products values, be it financial or intangible, and a brand name.
Using the financial perspective, one measures brand equity by determining how much more consumers are willing to pay in direct relation to the brand name. This gives marketers essential insight into the financial value of the brand. When viewing brand equity from this perspective, one must naturally consider overhead, such as costs of advertising. Using the consumer-based perspective entails considering how the attitude strength of consumers is directly influenced by the brand name. This perspective operates under the assumption that the consumer has had extensive experience with the product in question.

The consideration and development of brand equity is vital as its benefits are wide reaching. One can consider brand equity as an asset, as it can increase cash flow via the widening of a 48 companys market share and the allowance of higher pricing policies.
The Competitive Advantage of Brand Loyalty

There is a palpable correlation between the efficient branding of a product or service, and the display of brand loyalty in consumer purchasing patterns. In this instance, loyalty is defined as a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior".
Brand loyalty is a direct consequence of the ability to better satisfy the desires of a customer that main competitors do. It now becomes clear that a modern day marketers principal objective is to build sustainable forms of loyalty between a company and its consumers, instead of focusing solely on the individual sale of products. Brand Loyalty is the consumer's conscious or unconscious decision, expressed through intention or behavior, to repurchase a brand continually. It occurs because the consumer perceives that the brand offers the right product features, image, or level of quality at the right price. Consumer behavior is habitual because habits are safe and familiar. In order to create brand loyalty, advertisers must break consumer habits, help them acquire new habits, and reinforce those habits by reminding consumers of the value of their purchase and encourage them to continue purchasing those products in the future. The image surrounding a company's brand is the principal source of its competitive advantage and is therefore a valuable strategic asset. Unfortunately, many companies are not adept at disseminating a strong, clear message that not only distinguishes their brand from the competitors', but distinguishes it in a memorable and positive manner. The challenge for all brands is to avoid the pitfalls of portraying a muddled or negative image, and instead, create a broad brand vision or identity that recognizes a brand as something greater than a set of attributes that can be imitated or surpassed. In fact, a company should view its brand to be not just a product or service, but as an overall brand image that defines a companys

philosophies. A brand needs more than identity; it needs a personality. Just like a person without attention-grabbing characteristics, a brand with no personality can easily be passed right over. A strong symbol or company logo can also help to generate brand loyalty by making it quickly identifiable.
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Understanding Consumer Buying Behavior

Definition Consumer behavior refers to the mental and emotional process and the observable behavior of consumers during searching, purchasing and post consumption of a product or service
Consumer behavior involves study of how people buy, what they buy, when they buy and why they buy. It blends the elements from psychology, sociology, socio psychology, anthropology and economics. It also tries to assess the influence on the consumer from groups such as family, friends, reference groups and society in general.
Buyer behavior has two aspects: the final purchase activity visible to any observer and the detailed or short decision process that may involve the interplay of a number of complex variables not visible to anyone.
Effects of branding on FMCG products with reference to Nestle Factors Affecting Consumer Buying Behavior
Consumer buying behavior is influenced by the major three factors: 1. Social Factors 2. Psychological Factors 3. Personal Factors.
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Social Factors Social factors refer to forces that other people exert and which affect consumers purchase behavior. These social factors can include culture and subculture, roles and family, social class and reference groups. Example: By taking into consideration Reference group, these can influence/ affect the consumer buying behavior. Reference group refers to a group with whom an individual identifies herself/ himself and the extent to which that person assumes many values, attitudes or behavior of group members. Reference groups can be family, school or college, work group, club membership, citizenship etc. Reference groups serve as one of the primary agents of consumer socialization and learning and can be influential enough to induce not only socially acceptable consumer behavior but also socially unacceptable and even personal destructive behavior. For example, if fresher student joins a college / university, he/she will meet different people and form a group, in that group there can be behavior patterns of values, for example style of clothing, handsets which most of group member prefer or even destructive behavior such as excessive consumption of alcohol, use of harmful and addictive drugs etc. So, according to how an individual references him / her to that particular reference group, this will influence and change his/her buying behavior. Psychological Factors These are internal to an individual and generate forces within that influence her/his purchase behavior. The major forces include motives, perception, learning, attitude and personality.
Example:

Attitude is an enduring organization of motivational, emotional, perceptual and cognitive processes with respect to some aspect of our environment. Consumers form attitude towards a 51 brand on the basis of their beliefs about the brand. For example, consumers of Sony products might have the belief that the products offered by Sony are durable; this will influence those customers to buy Sony products due to this attitude towards the brand.
Personal Factors These include those aspects that are unique to a person and influence purchase behavior. These factors include demographic factors, lifestyle, and situational factors.
Example: Lifestyle is an indicator of how people live and express themselves on the basis of their activities, interests, and opinions. Lifestyle dimension provide a broader view of people about how they spend their time the importance of things in their surroundings and their beliefs on broad issues associated with life and living and themselves. This is influenced by demographic factors and personality.
Consumer Buying Decision Process

Consumer buying decision process is the processes undertaken by consumer in regard to a potential market transaction before, during and after the purchase of a product or service.
Consumer decision making process generally involves five stages:
A. Problem Recognition
Purchase decision making process begins when a buyer becomes aware of an unsatisfied need or problem. This is the vital stage in buying decision process, because without recognizing the need or want, an individual would not seek to buy goods or service.
There are several situations that can cause problem recognition, these include: Depletion of stock Dissatisfaction with goods in stock Environmental Changes Change in Financial Situation Marketer Initiated Activities Its when a person recognizes that she cannot make a call from her mobile phone thats when she recognizes that her phone has been damaged i.e. the phone has hardware problems and needs to be repaired or buying a new piece.
B. Information Search
After the consumer has recognized the need, he / she will try to find the means to solve that need. First he will recall how he used to solve such kind of a problem in the past, this is

called nominal decision making. Secondly, a consumer will try to solve the problem by asking a friend or goes to the market to seek advice for which product will best serve his need, this is called limited decision making.
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Sources of information include: Personal sources Commercial Sources Public sources Personal experience
C. Alternatives Evaluation Consumers evaluates criteria refer to various dimension; features, characteristics and benefits that a consumer desires to solve a certain problem. Product features and its benefit is what influence consumer to prefer that particular product. The consumer will decide which product to buy from a set of alternative products depending on each unique feature that the product offers and the benefit he / she can get out of that feature.
D. Purchase Action
This stage involves selection of brand and the retail outlet to purchase such a product. Retail outlet image and its location are important. Consumer usually prefers a nearby retail outlet for minor shopping and they can willingly go to a far away store when they purchase items which are of higher values and which involve higher sensitive purchase decision. After selecting where to buy and what to buy, the consumer completes the final step of transaction by either cash or credit.

E. Post-Purchase Actions
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Consumer favorable post-purchase evaluation leads to satisfaction. Satisfaction with the purchase is basically a function of the initial performance level expectation and perceived performance relative to those expectations. Consumer tends to evaluate their wisdom on the purchase of that particular product. This can result to consumer experiencing post purchase dissatisfaction. If the consumers perceived performance level is below expectation and fail to meet satisfaction this will eventually cause dissatisfaction, and so the brand and/ or the outlet will not be considered by the consumer in the future purchases. This might cause the consumer to initiate complaint behavior and spread negative word-of-mouth concerning that particular product.
Brandings Influence on Consumer Purchasing Behavior

The preceding section of this literature reviewed has sought to define the term branding and explain its functions and values as an instrumental marketing tool used in attaining differential and competitive advantage.
The following section of this literature review will seek to enlighten the impact branding has on the consumer decision-making process.
First however, one must gain clear insight into the definition of consumer buying behavior in order to understand the impact branding has on it. In defining consumer buying behavior, one may refer to Assael (1987) who distinguishes four types of consumer buying behaviors. He bases these four consumer types on the varying degrees of involvement and the degree of differentiation amongst the brands in question.
Consumers who are described as displaying complex buying behavior will expand their beliefs regarding a particular product as a starting point. This stage will eventually lead them to develop positive attitudes regarding the product. These intermediary stages lead them to the final stage of their behavioral pattern, where they consciously make the choice of purchasing the product. Referring to the Assaels model; one will notice this type of consumer engages in highly involved purchasing experiences being fully aware of the range of brands available and their levels of differentiation.

Assael (1987) classifies consumer who exhibit Dissonance-reducing behavior as consumer 56 who are highly involved in the purchasing experience, however see few differences between brands. For this reason, the consumer will seek information on the differentiation of the product offerings and will not be particularly price sensitive when seeking functionality. In the event that this consumer finds him or herself in a market that displays low levels of differentiation, the consumer might result to purchasing influenced by convenience. Like consumers who display complex buying behavior, consumers with dissonance-reducing behavior will seek to establish personal beliefs regarding the product. If fostered adequately, these beliefs with eventually transform into attitudes regarding the product offerings. These attitudes, if favourable, will lead to a thoughtful purchase. Assael (1987) considered consumes displaying habitual buying behavior as consumers who did not experience the same sequence as the previous two behavioral types. Instead of basing their decision-making process on seeking product information pertaining to functionality or characteristics, this type of consumer will purchase based on information gathered passively, via the companys promotional efforts, by it through the medium of television, radio or print advertising. This behavioral type, as can be seen on Assaels (1987) model, with low-level involvement products. Differentiating this consumer type is the fact that they being the process with beliefs already embedded in their mind, which they have learnt passively, rather than actively. Variety-seekers are the last behavioral type contained in Assaels (1987) model. Their typical buying situation is summarized by low-level involvement in a market that displays high levels of product differentiation. Common to this type of consumer, is brand switching, in order to satisfy their need for diversification. In order to fully ascertain the effects that branding has on the consumer decision making process, the Howard-Sheth Decision-making model by Howard and Sheth (1969) is used that explains not only the process of consumer decision-making during purchasing activities, but one that facilitates the understanding of pre and post purchasing activities as well.
The models core assumption lies in that the key to determining behavior exhibited by consumers is to fully understand the consumer thought process. The Howard-Sheth model illustrates that cognitive decision-making is the process in which consumers mentally process information that influences his or her selection of brands.
Brand Positioning
It should be remembered that positioning is more a reflection of a product and that it stifles the rich meaning of the brand without taking into account all its potentialities. Positioning applies to the process of emphasizing the brands distinctive and motivating attributes in the light of competition. It is based on the analysis of response to the following four questions. POSITIONING

Why? For whom? When? Against whom?
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Elements of Positioning
Evidence has shown that there are four distinct variables that affect the position of a given product. These are:a) b) c) The product itself, The company behind it, The competition,
1. The Product: - How important the product is or what meaning it has for the consumer & how he relates to it. The fact that a product involves better ingredients or processes is a matter of indifference unless this knowledge offers distinct advantages to the consumer.
2. The Company: - A product comes from a company & every company has its own history. Generally, the stronger the companies profile the better the image of its products. For instance, consumers may perceive a better the image of a product if it comes from a reputed house like Tatas.
3. The Competition: - Product positioning is invariably done in relation to various competitive offerings. In most cases, the consumers have a tendency to judge a product in comparison to the dominant brand, e.g., all photocopiers are compared with Modi Xerox, all PCs with HCL, toothpastes with Colgate & so on. Leading brand enjoys some edge over others.
4. The Consumer: - It should be reiterated that positioning is essentially based on consumer perception rather than factual evaluation. Hence, it becomes necessary to examine how the consumer views a product. Here, it becomes necessary to examine how the consumer views a product. Here, the consumers self-perception comes into play along with his cognitive & connotative factors.

Buying Experiences Popularity of reality television speaks volumes about the heart beat of the consumer. Insecurity and a shyness and a new perspective about the outside world cause people to enjoy vicarious adventures enacted by ordinary souls. Family values become more important. Historical movies that present plot lines about overcoming danger and winning against greater odds connect us to our past. Women are being drawn to plots with warm and fuzzy endings men to macho excitement. People are watching more newscasts and making a bigger effort to understand current events. Marketers and businesses alike need to focus on these consumer trends and make a detailed outline as to how they need to innovate to cater to the masses and not just a niche crowd as thats where the major business lies and the brand image gets identity in the marketplace. Innovation, promotion and marketing a brand is essential, but only after one understands the psychology of the marketplace and develops products that match it.
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FUTURE PROSPECTS / CONCLUSION Nestle is focused on product expansion and improvement of distribution efficiency. The Dairy business is being expanded and is expected to drive growth in the long run, although short-term profitability may be impacted in the investment stage. The companys entry into the mineral water segment is a concern, as the segment is already overcrowded and the company faces stiff competition especially from the Cola manufacturers. Acquisition of an established brand could catapult Nestls position in the segment. In categories like beverages, culinary products and chocolate confectionery, the company is looking at driving growth through launch of smaller SKUs, thus enabling affordability to a wide section of the population.
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Questionnaire (Tick whichever applicable) CONTACT INFORMATION: Name: Mr. ________________________________________ Address: _________________________________________________ City: ____________________________________________________ Phone :( O) __________________ _________________________ (R) Ms.
OTHER INFORMATION: Age: Marital status: Single Married
Occupation: (tick one) Businessman Executive Academics House-Wife Government Service Student
Self-employed
Others ________________________ (Please Specify)
Monthly Household Income:
<10000
10000-15000 15000-20000 >20000
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1. Which of the following FMCG brands are you aware of? Nestle Dabur HUL Marico P&G Emami
2. Factors you consider while purchasing any FMCG product? RANK THEM ACCORDING YOUR PRIORITY: Cloth type Fashion/Trend Color Price Brand Availability
3. Who influence you to purchase the brand? Family Self Friends Other Advertisement
4. In which media you have seen the advertisement of these brands TV Newspaper Other Magazine Internet
5. Which media do you prefer more for ads (in order of your 63 preference)? TV Newspaper / pamphlets boards Any other (specify) Magazines Radio Hoardings / bill
6. If TV, is it because It is an audio - visual medium Overall presentation Entertainment value
7. If magazine, is it because of It is a good source of latest trends Longevity of message Overall presentation Any other (specify)
8. If Newspaper / pamphlets, if it because of Inexpensive source of Information Available in many languages Mass coverage Any other (specify)
9. If Radio, Is it because Audio medium Medium for travellers and car riders Entertainment value Any other (specify)
10. If Hoardings, is it because It is an attention gaining medium message Colorful and attractive Conveys direct
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Any other (specify)
Bibliography
65
www.wikipedia.com www.nestle.com www.slidshare.com www.managementparadise.com

Effects of Branding On FMCG Products With Reference To Nestle

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Effects of branding on FMCG products with reference to Nestle 1

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Effects of branding on FMCG products with reference to Nestle Overview

Some of the challenges this sector is likely to face are:

Effects of branding on FMCG products with reference to Nestle

PROBLEM OF FMCG COMPANIES

Effects of branding on FMCG products with reference to Nestle

Effects of branding on FMCG products with reference to Nestle

Effects of branding on FMCG products with reference to Nestle HISTORY OF NESTLE

Effects of branding on FMCG products with reference to Nestle

Effects of branding on FMCG products with reference to Nestle NOTABLE FACTS

Nestl. Good Food, Good Life

Research & Development

Effects of branding on FMCG products with reference to Nestle

PROFILE OF THE COMPANY

Effects of branding on FMCG products with reference to Nestle BACKGROUND

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Effects of branding on FMCG products with reference to Nestle Uniformity

Effects of branding on FMCG products with reference to Nestle

Research and development

Effects of branding on FMCG products with reference to Nestle

Handling of raw materials

Effects of branding on FMCG products with reference to Nestle Packaging

full investigation of incidents which may affect the environment.

Marketing and distribution

Effects of branding on FMCG products with reference to Nestle

Information, communication and education

Legislation and regulations

Effects of branding on FMCG products with reference to Nestle

THE NESTL POLICY ON THE ENVIRONMENT

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Effects of branding on FMCG products with reference to Nestle

Effects of branding on FMCG products with reference to Nestle Competition 30

Quality is a joint effort

Effects of branding on FMCG products with reference to Nestle

Quality is made by people

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Effects of branding on FMCG products with reference to Nestle

Effects of branding on FMCG products with reference to Nestle

Effects of branding on FMCG products with reference to Nestle

Effects of branding on FMCG products with reference to Nestle BRANDING

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Branding in Todays Markets

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Importance of Branding in Advertising

Effects of branding on FMCG products with reference to Nestle

The Competitive Advantage of Brand Loyalty

Effects of branding on FMCG products with reference to Nestle

Understanding Consumer Buying Behavior

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