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It is a food processing company, registered on the Karachi and Lahore stock exchanges. For five years in a row, the company has won a place among the top 25 companies of the Karachi stock exchange. Headquartered in Lahore, the company operates five production facilities. Two of its factories in Sheikhupura and Kabirwala are multi product factories. One factory in Islamabad and two in Karachi produce bottled water. Through its effective marketing and a vast sales and distribution network throughout the country, it ensures that its products are made available to consumers whenever, wherever and however. Nestle has the unique ability to provide a complete range of food products, services and well-known brands to meet the needs of consumers around the world. It is not a faceless corporation catering to faceless consumers, but a human company providing a response to individual human needs. It respects the cultures of the countries it operates in and recognizes for the need for quality of life of their people. In line with Nestlé’s global philosophy, Nestle Pakistan is proud of its commitment to excellence in product safety and quality and to providing value and services to its consumers. On the social front it is very responsible when it comes to environmentally sound business practices and corporate social responsibility. Nestle Pakistan operates in many way but people, products and brands are the main flag bearers of the Company’s image.
History of Nestle
1866 -1905 In the 1860s Henri Nestlé, 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 Nestlé's 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, 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, Nestlé's production had more than doubled. 1918 -1938 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 1938 -1944 Nestlé 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, Nescafé, which was a staple drink of the US military. Nestlé's production and sales rose in the wartime economy. 1944 -1975 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 1960, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in L’Oreal in 1974. 1975 -1981 Nestlé's growth in the developing world partially offset a slowdown in the Company's traditional markets. Nestlé made its second venture outside the food industry by acquiring Alcon Laboratories Inc. 1981 -1996 Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé's improved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation.
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 Pet foods (1998) and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002: in July, Nestlé merged its U.S. ice cream business into Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef America, Inc.
2- Vision Statement Of Nestle Pakistan Limited
The Nestle vision is to be the leading health, wellness and Nutrition Company in the world. Nestle Pakistan subscribes fully to this vision and of being the number one health, wellness and nutrition company in Pakistan. In particular, we envision to; Lead a dynamic, motivated and professional workforce proud of its heritage and bullish about the future. Meet the nutrition needs of consumers of all age groups from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverages products of the highest quality. Deliver shareholders value through profitable long term growth, while continuing to play a significant and responsible role in the social, economic, and environment sectors of the country.
3- Importance of Water:
Overview: Case Studies: Water is essential for life. It represents about 60% of an adult's body weight. While at first sight, there would seem to be enough water on our blue planet, in fact, barely 1% of the world's water is available for human and environmental needs. And this against a growing world population that has expanded by approximately 2 billion in the last 30 years. As the world’s leading food and beverage company, and the world leader in bottled waters, Nestlé has a responsibility towards the sustainable use of water resources. This responsibility is embedded in our Corporate Business Principles and in our strategy for sustainability. The case studies illustrated here demonstrate how water sustainability, protection and stewardship are integrated throughout all areas related to our activities.
We ensure proper stewardship practices both inside and outside Nestlé. Water management training programmes have been implemented at our offices and sites. We consult with local communities on water issues. In many countries, support for water education has been extended to non-governmental organizations. Finally, the fact that we have continuously reduced the quantity of water used to manufacture each kilo of Nestlé product, even with a considerable growth in our bottled water business, clearly shows that our commitment to sustainable use of water resources is given the utmost attention throughout our Company. We intend to make sure that this continues in the future.
Nestlé PURE LIFE already present on almost every continent Launched in Pakistan in 1999, Nestlé PURE LIFE illustrates the multisided concept perfectly. Created first to meet the need for safe water in emerging economies, Nestlé PURE LIFE is now available around the globe in countries as widespread as China, Nigeria and Mexico. Launched on the North American market in 2003, Nestlé PURE LIFE is destined to become the world’s leading and most widely distributed bottled water brand by 2010. Nestlé PURE LIFE is already Nestlé Waters’ leading brand in volume.
4- Product Line of Nestle:
The company has the following products line in Pakistan. i. • • • • • • • Beverages
Nescafe Classic Nescafe 3 IN 1 Nescafe Gold Milo Powder Milo RTD (ready to drink) Frost Nestle Juices: The flavor are Orange, Red Grapes, Orange Mango (Mix), Apple Nectar, Pine Apple
Water: • • • Nestle AVA Fontalia
Price of Nestle Water: The water is available in the following sizes, • • • • 330ml/ bottle for Rs 11 0.5ml/ bottle for Rs 13 1.5 ml/ bottle for Rs 24 12 litre bottle for Rs 350
ii. • • • • • • • • • • • • • •
Nestle Milk Pack High Calcium Low Fats Milk Milk Pack Cream Nestle Nido Milk Pack Pure Desi Ghee Nestle Nido 1 Nestle Every Day Nestle Every Day Liquid Nestle Plain Yogurt Nestle Cream Yogurt Nestle Fruit yogurt Nestle Nesvita High Calcium Low Fats yogurt Nestle Raita Nestle Easy Whip
iii. • • • • •
Lactogen Nan Cerelac Nestle Rice Neslac
iv. • • • •
Confectionary and Culinary:
Polo Nestle Kit Kat Nestle Kit Kat Chunky Maggi 2 Minute Noodles
5- Our New Product:
“Nestle Fruity Splash” The Best of Both Worlds Slogan is: (REFRESH YOUR BUDS (R QUENCH YOUR THIRST)
6- New Product Concept:
The main concept behind introducing flavored water is to provide a flavored and a healthy way to help people maintain their body’s water requirements. Nestle Flavored Water will be the perfect option because it combines the goodness of pure refreshing water with the delicious taste of real fruit. It will also be the ideal drink for fat-conscious people as it is a non-carbonated water beverage with zero calories and zero carbohydrates. Nestle Pure Life Natural Fruit Flavors is a non-carbonated water beverage with zero calories and zero carbohydrates that is sweetened with SPLENDA Brand Sweetener. It will hit store shelves in four refreshing flavors: Lemon Splash, Orange Splash, Raspberry Splash and Strawberry Splash.
"Seventy four percent of Americans regularly consume bottled water, and this new beverage provides the best of both worlds, an exciting, flavorful alternative to plain water and a healthier alternative to soda and other sugary beverages," said Angela Vradenburgh, senior marketing manager, Nestle Waters North America. "Consumers are looking for healthier options and Nestle Pure Life Natural Fruit Flavored Water Beverage is the perfect option because it combines the goodness of pure refreshing water with the delicious taste of real fruit." Nestlé® Pure Life® Natural Fruit Flavored Water Beverage is the delicious way to refresh your taste buds without the guilt of calories or carbs. Tempt your taste buds with the pure, unexpected delight with a splash of fruit flavor in every bottle!
Q: How is natural fruit flavor in Fruit2O® when the product contains no fruit juice? A: Fruit2O is made with natural fruit essence. As such, it contains only those natural elements which produce the fruit's flavoring. It does not contain fruit particles or fruit juice.
This product is introduced so that people get a healthy way to clinch their thirst, and maintain their body’s water requirements in a flavored style, so the first and most basic need it satisfies is the Health need. Secondly, Nestle Flavored Water also a beverage option for people who are looking for a soft drink to suit their taste and mood. Hence, it also satisfies the psychological needs of people. Physiological Needs: Our Target Markets are the elite and upper middle class of the population in which our focused will be on: As explained in the previous topics, Nestle Flavored Water is a solution to a variety of needs, so our target market is not entirely specific to any age group or class. Our target customer is everyone who drinks water, but we will rate youngsters and sportspersons a bit more. This is because youngsters are more mobile (moving from one place to another) and consume soft drinks and juices more than any age group, so Nestle Flavored Water will be a attractive option for them. Sportspersons are another segment which is important, because, they need to maintain a healthy water level for their optimal performance, so Nestle Flavored Water will be a excellent option. ♦ Youth ♦ Wanna Be’s 10
♦ Fat conscious peoples ♦ Every one who drinks water
7- MARKETING OBJECTIVES
• • • • • • To achieve and maintain market share. Our business will attempt to gain a maximum Market Share or a percentage of a market. To increase our product line or to develop range of products. To increase profitability and revenues. To prevent losses and declining sales. To favorably position a product. It is concerned with the way in which consumers view our products relative to competitors. To create competitive advantage
8- Competitors Analysis:
Indirect Competitor are. 1- PakCola: They have the following products in the market. • • Apple Sidra: (500 ml) Rs 15/ bottle and (1.5 litre) is of Rs 60/ bottle. Ice Cream Soda: (500 ml) Rs 15/ bottle and 1.5 litre is of Rs 60/ bottle.
2- Tops: They have the following products in the market. • • Orange, Apple, Mango: 250 ml for Rs 10/ bottle. Pine Apple, and Liche (Bottle): 250 ml for Rs 12/ bottle.
3- Murree Brewery: They have the following products in the market. • • • Big Apple: 250 ml Rs 15/ bottle, 500 ml Rs 20/ bottle and 1.5 Litre is of Rs 50/ bottle. Cindy: 250 ml Rs 15/ bottle. Malt: 250 ml Rs 15/ bottle.
4- Tropico: They have the following products in the market. • Apple, Mango, and other: 250 ml for Rs 10/ tetra pack and 1 litre for Rs 35/ pack.
5- Amrat Cola : All brands of Amart Cola: 500 ml for Rs.16. bottle, 1 ½ litre for Rs 40/ Bottle and 2 litre for Rs 50/ bottle. 6- Shezan: Twist: Rs 15 of 500ml. Other Brands: Rs 20 / bottle for 500 ml and Rs 60 / bottle for 1 litre 7- Nurpur Juice: Mango 1 litre cost is Rs 55 and Orange 1 litre cost is Rs 57. 8- Haleeb Juice: 250 ml cost Rs 15 and 1 litre cost Rs 60. 9- Asses: 500 ML Cost Rs 15, 2 litre cost Rs 45 and Rs 110 for 5 litre Bottle. 10-Coca Cola and Pepsi: We know that these two are different companies but the prices of there products are approximately same the prices are, Rs 11 for 250ml/ bottle, Rs 30 for 1 litre glass bottle and Rs 50 for 1 ½ litre Disposable bottle. Indirect Competitors in Bottle Industry: 1- Sparklet: The products that are available in the market are in the following sizes, 0.5 litre is of Rs 13, 1.5 litre is of Rs 24 and 6 litre is of Rs 55. 2- Oasis: The products are of the following sizes 1.5 litre is of Rs 24 and 625 is of Rs 12 3- Pepsi Aqua Fina:
This product is not manufactured here completely how ever the prices of the product are, 0.5 ml is of Rs 15 and 1 ½ litre is of Rs 24. 4- Askari Water: The products sizes are, 1.5 litre is of Rs 22 and 0.5 ml is of Rs 10. 5- Aqua: The products sizes are, 0.5 ml is of Rs 10 and 1.5 ml is of Rs 20. 6- Saudi: The products are in the following sizes, 0.5 ml for Rs 10 and 1.5 ml for Rs 20. 7- Sufi: The products are in the following sizes, 0.5 ml for Rs 10 and 1.5 ml for Rs 20. 8- Qurshi: The products are in the following sizes, 0.5 ml for Rs 10 and 1.5 ml for Rs 20. 9- Ozontated Natural Mineral Water: 1 ½ litre is of Rs 24 MARKET SITUATION: With the current market situation we don’t have any direct competitor targeting or catering in the same market. But comparatively the industries that can effect are product is the drinking water and juices. There are around 26 players in the bottled water sector.
According to the market figures, the Nestle pure life brand dominates the retail market with market share of 50%. The Sparklet holds 10% of the market share and BSW brand of M/s Wah Valley Corporation has share of 5%. The rest of the market consists of small players. 10- Why people will buy our product: • • • Providing water and the taste of juice is one product. Providing quality and being only product of such kind. Providing the consumer in see through Bottles.
Product Quality Quality will be emphasized at each step right from the beginning to the marketing of the product. Over the years, an image of high quality products will be cultivated.
11- MARKET STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS, OF THE VENTURE:
Strengths: • • • • With new product in the market, this helps the company to be market leader in terms of sales and market share. Further this will help the company to established brand loyalty and the strong company identity. Effective promotions. Constant R&D leading to new ideas.
Weakness: • No experience; as this product is introduced for the first time in Pakistan
Opportunities: • • • Being the pioneer we have opportunity to capture max. market share and to be leader as well Expansion into newer markets as per demand increases and market. Expansion into new geographical areas.
Threats: • • • Similar new products may penetrate. Imported products will also enter the market. Fall of the price of indirect competitor’s product.
12- BCG Analysis:
We are going to place our new product in Cash Cow in the BCG Matrix.
Nestle Flavored Water is the modification in Nestlé’s product Nestle Pure Life. And the market it is targeting is the same, so the strategy they will be following is the Market Development Strategy.
13- Product Life Cycle
Nestle Pure Life has been in this market since 1998, over these years this product has gained more than 50% of the market share. With numerous competitors in the market and more entering, the market of mineral water is on the verge of saturation and Nestle Pure Life has matured, hence to counter this competition and to extend the life cycle of the product, this modification in the product has been planned.
14- Company Life Cycle
The Nestle Company has been in the Pakistani market since 1960, over the years Nestle has developed an image that reflects trust and quality. Now the Nestle Company has significantly matured in Pakistan, as all of its products have stable sales.
15- Market Life Cycle:
The need for mineral water is more than ever before, but with that customer buying power has not increased. Now there are a numerous companies in the market that are producing mineral water, this is causing market saturation. So as the MLC shows, the market for the mineral waters has matured. So this would be the ideal time for Nestle to introduce Flavored water.
16 - Marketing Mix
Our product is the combination of water and artificial flavor. H2O is specifically made to give the best taste and quality and satisfaction to our customer and consumer. • Good Quality • Variety of flavors in the long run. • Product is formulated that it can be stored at the ambient temperature. • At every stage of production (from boiling to packaging) product quality assurance has been kept in mind. Unique selling preposition: • • • Best quality at affordable price. Water and taste of juice at the same time. Providing the consumer in see through-plastic bottles
Bottles Sizes that will be introduced will be, 500 ml 330 ml Cost that the company will incurs will be as follows, Cost of 500ML Bottle: Rs 4 Cost of Packaging (Rapping’s)= Rs 0.15 Cost of water= Rs 2.3 app Cost of Transport= Rs 1 app Cost of Carton: Rs 0.208 app Cost of flavor Distribution Cost: 1 Distributor buys at: 11.625 Retailer buys at: 12.625 Final (Customer) Price:13 – 15
Place: Nestle Flavored Life shall be distributed on a very large scale using its huge distribution network through out Pakistan. The market of Nestle Pure Life has been segmented on the basis of consumer life style, targeting the whole market.
Promotion: The promotion of Nestle pure life shall be conducted using various means, which include Newspapers, TV, Radio, Magazines and Billboards. The total amount of viewers to be targeted by this campaign shall be approximately 1,965,000 and this campaign is to be carried over a period of 6 months. The promotion budget required to carry out such a campaign is approximately Rs. 254 million. A promotional plan needs to be devised to ensure proper positioning of the product and to create awareness in the consumers mind. Since the product has been modified and awareness needs to be created among the consumers of the product, initially the product needs to be aggressively advertised, to ensure that every potential customer sees and knows about the product. The advertisement campaign shall be a series of high tides and low tides, initiating from aggressive advertising in the beginning, during the months in which the weather is favorable towards the demand of the product, everyone needs and demands water during the peak summer time, which can be generally classified a period from June thru September. Secondly, the aggressive advertising is being used when the sales of the product might begin to decrease due to the cold weather and, secondly due to its competition with hot beverages. However, our analysis clearly indicates that the competition no doubt would 21
have an effect on the sales of flavored water but since nestle flavored water focuses on provision of health and a differentiated taste to its consumers, the aggressive advertisement would help in influencing the psyche of the consumer. A consumer needs to be continuously hammered with ads in order to convince them of the benefits of the product and influence their decision. Per minute costs of running an ad on a Television Channel On an average a channel with a significant number of viewers the charges vary between Rs. 60,000 per minute thru Rs. 150,000 per minute. The variation in charges is due to the variety of times one can advertise at. Per minute costs of running an ad on a Radio Channel On an average a radio channel with a good number of listeners, the charges vary between Rs. 2,000 per minute thru Rs. 3,500 per minute. The variation is signified by the expected number of listeners at a particular time, the more the listeners the more the charges. Per annum costs of placing an advertisement on a billboard
The available sizes of billboards vary from 40ft * 20ft up to a maximum of 90ft * 30ft. The costs per annum of placing advertisements on these billboards vary from a minimum of Rs. 2.2 million per year up to a maximum of Rs. 6 million per year. Advertisements in Newspapers Advertisements in newspapers are a good medium of reaching a lot of consumers all over Pakistan effectively, it reaches far flung areas which give it an advantage over electronic media.
The Nestle water management company has been in business for about 8 years now and has established a significant brand equity and image in the consumer mind. The modification we have done in its water product “Nestle Fruity Splash” basically aims at catering to the water requirement of individuals who prefer beverages instead of water. The Nestle Fruity Splash is a beverage providing a refreshing fruity flavor combined with the thirst quenching power of water. An analysis has been conducted to estimate the cost that is to be incurred on the production of this product. The marketing mix has been clearly identified with special given to promotion of the product. We expect “Nestle Fruity Splash” to capitalize on the opportunity of being launched in a favorable season, with out any direct competition initially and capitalizing on Nestle Brands Equity.
1- Nestle fruity splash can be produced in a variety of flavors like cherry, lemon, apple, pine apple etc. 2- Initially a low amount of production is recommended later on as competition intensities production can be increased. 3- This product can be later on modified in to providing additional food supplement such as extra vitamins, basically a product providing instant energy, along with a fruity flavor and still be just water.
1- Nadeem Aftab Regional Sales Manager 2- Humair Bin Humayun Area Sales Manager Islamabad.
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