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life)
Executive Summary
Marketing is the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services to create exchanges that satisfy individual and
organizational goals. While strategy is the action plan to do something and hence,
Marketing Strategy is the managerial process of developing and maintaining a viable fit
between the organizations objectives, skills and resources and its changing market
opportunities. The aim of marketing strategy is to shape the companys business and
products so that they yield targeted profit growth.
Nestl Pakistan Limited is selected to study that how they have planned their marketing
strategy for Nestl Pure Life (water). Nestl is a multinational food company and offering
Fast Moving Consumer Goods (FMCG). The motto of Nestl is Good Food, Good Life, so
delivering the qualitative products to the customer is their main objective. It is offering 75
brands of bottled waters worldwide. Nestl Pure Life (NPL) is one of them that was first
offered in Pakistan by Nestl Pakistan Limited in 1998. People felt need of Pure, safe and
clean water because of impurities in water especially in the industrialized cities like Karachi,
Lahore, Faisalabad etc. Nestl identified this opportunity and lunched NPL that satisfied the
customer needs and Nestl become market leader in the water industry.
The customers of NPL showed interest on NPL because of trust on Quality of Nestl, at the
heart of which there are qualitative products and its long term commitment to deliver better
products to consumers. Being the market leader, the market share of NPL is 78% that is
much higher than its competitors. NPL is passing through its Growth stage (of Product Life
Cycle) i.e. its sales are increasing tremendously and competitors are entering in the market
like Aqua Fina by Pepsi and Askari Waters.
There are different SKUs of NPL to cover a wide market needs like for Home and office
delivery there are 3gallon and 5 gallon bottles (bulk usage) and for day to day usage easily
carrying light weight like 1.5, 0.5, 0.2 liters bottles are available in the market. Still Nestl
is working on bringing the changes and innovation in this field. For this it has close
relationship with its suppliers and distributors to get their suggestion to improve the quality
of NPL.
Nestl Pakistan also has the Customer Service Department with the logo "Talk to Nestl" in
Lahore to receive the complaints and suggestions from the customers. In this way Nestl
analyze its market and becomes aware of the new market trends.
Marketing strategy include 4 Ps strategy i.e. Product, Price, Place and Promotion strategies.
Product is something that is offered to the market. NPL product strategy studies show that
they are positioning the product with respect to its attributes that NPL is safe, pure,
refreshing and healthy water. Nestl also does product line expansion; recently it has
offered a 0.25 liter bottle of NPL in the market. Its also using the company name with its
product name i.e. Nestl Pure Life. NPL round shape and elegance of the bottle are instantly
recognizable. Quality is cornerstone of NPL success. Nestle people say: Quality is our more
successful product and it is key to our success today and tomorrow.
In Price strategy, Nestle has adopted the strategy of non-price competition. It is offering
one price for NPL to all cities of Pakistan. It also keeps the check on distributors to maintain
single price of NPL. It offers trade discounts to its distributors.
Placement is the distribution of the product to its customers at right time, in right
quantity, at right price and at right place. To ensure this, channel adopted by the Nestl for
distribution of NPL is as follows:
Producer
Wholesaler
Retailer
Consumer
NPL comes under the category of FMCG, so for this the timely supply is very important
thats why Nestl is following intensive distribution strategy.
Promotion is the very important and crucial element of marketing strategy as through it
the company establishes its image in the minds of the customers. NPL is promoted by using
different ways of promotion. Advertisement of NPL is done through TV, radio, billboards,
newspapers and magazines. Current advertising slogans are that NPL is trust, hope and
happiness and JIYO! Kay yahi hay Zindagi. Nestl also conducts the tradeshows,
concerts, events, sponsorships, and discounts for sales promotion. For establishing public
relations, Nestl distributes its newsletters, annual reports, calendars and diaries, lobbying,
donation for charitable and civic events. For the victims of 8 th October 2005 earthquake,
Nestl has donated 90 trucks, which were containing different foods items, and NPL was
one of them which is around Rs. 2 Billion. The Nestle organized its teams to distribute
products to the effected areas and all employees contributed from top to bottm (MD himself
was involved personally to distribute products physically)
2.1 Introduction
Food is core element in our daily lives. Not only does it enable us to survive, but approprate
amounts and quality also help to ensure a better standard of living by contributing to our
health and wellness. Consumer needs and expectations associated with a particular food
product are not fixed, but change with time and according to geographic region, culture and
the various stages of life. Ever since its foundation in 1866, Nestls goal has been to keep in
step with this constant process of change. It reacts to new consumer requirements with
innovative and continually renovated products, and implements new scientific findings in
tasty foods.
Mission Statement
Nestl's business mission 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.
Nestl continues to maintain its commitment to follow and respect all applicable
local laws in each of its markets.
1918 -1938
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 -1944
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.
1944 -1975
The end of World War II was the beginning of a dynamic phase for Nestl. 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'Oral in 1974.
1975 -1981
Nestl's growth in the developing world partially offset a slowdown in the Company's
traditional markets. Nestl made its second venture outside the food industry by acquiring
Alcon Laboratories Inc.
1981 -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.
1996+
The first half of the 1990s proved to be favorable for Nestl: trade barriers crumbled and
world markets developed into more or less integrated trading areas. Since 1996 there have
been acquisitions including San Pellegrino (1997), Spillers Petfoods (1998) and Ralston
Purina (2002). There were two major acquisitions in North America, both in 2002: in July,
Nestl merged its U.S. ice cream business into Dreyer's, and in August, a USD 2.6bn
acquisition was announced of Chef America, Inc.
Pakistan with the name of Nestl Milkpak Limited but its name has been changed and now
it is called Nestl Pakistan Limited.
Headquartered in Lahore, the Company operates five production facilities. Two of its
factories in Sheihupura and Kabirwala are multi product factories, while another one at
Karachi is already for production. 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 Pakistan is a subsidiary of Nestle S.A.- a company of Swiss origin headquartered in
Vevey, Switzerland.
Sheikhupura Factory
The production facility, under the name of Milkpak Ltd. at Sheikhupura commenced
operations in 1981 as a producer of UHT milk. By 1988 it had expanded its operations to
producer butter, cream, desighee all under the brand name MILKPAK and fruit drinks
under the brand name FROST.
After Nestl S.A., Switzerland, took a major participation in Pakistan Ltd. In 1988, the
Pakistan factory at Sheikhupura became a part of the joint venture under the name of Nestl
Milkpak Ltd.
Soon afterwards in 1990 the milk powder plant was established to produce powder milk
(NIDO). This was followed in subsequent years by the installation of production lines of
infant formulae (LACTOGENs), tea whitener (EVERYDAY), chocolate drink-powder
(MILO) growing up milk (NESLAC), ready to drink chocolate drink (MILORTD), sugar
confectionery (POLOMint), fruit drinks (FROST), juices (ORANGE, APPLE, PINE APPLE,
MANGO), coffee (NESCAFE), flexible confectionery line (TOFFO and SOOTHERS), bottled
water (NESTLE PURE LIFE), plain and fruit yogurt, specialized infant formulae(NAN 1 &
2).
During these years a variety of variants of different products were also introduced as a part
of expansion of products portfolio.
To meet the needs of safe storage for the ever expanding product range and their increasing
volumes, a National Distribution Center (NDC) was constructed in 2000. Spread over 6614
sq uare meters, it can store up to 8300 pallets, approximately 8000 tons.
Kabirwala Factory
Nestl Pakistan acquired the factory in 1990 as a subsidiary and subsequent to its meger
with Nestl Pakistan in April 1997 it became a fully owned unit of Nestl Pakistan Ltd.
A MAGGI NOODLES plant was installed in 1992, followed by a mil powder plant for NIDO
and GLORIA whose capacity was subsequently increased several times. Then came a new
butter line for producing bulk and cultured butter. A dry milk line was installed for tea
whitener powder (EVERYDAY) and the milk powder plant was modified to produce NIDO
enriched with vitamins and minerals. The desi ghee plant was relocated form Sheikhupura
Factory and its capacity was doubled.
A National Distributions Center and an Occupational Health Center were established and a
new incinerator was commissioned with a scrap yard for proper water disposal.
There is a chain of command that extends from upper organization levels to the lowest
levels and clarifies who reports to whom. The orders move from upward to downward and
suggestions move downward to upward direction. The continuous improvement section is
made for this purpose. It encourages employees to give their suggestions and share the new
ideas. The jobs are formalized; there are explicit job descriptions, numerous organizational
rules, and clearly defined procedures covering work procedures. But in spite of formal rules
and regulations, Nestl keeps on changing to keep a pace with the changing environment.
So, it is strict but not rigid organization. In effort to be more flexible and responsive, there
has been distinct trend in this organization toward decentralizing decision-making.
Markets are made up of current and prospective customers, defined as any person or group
with whom a marketer has an existing or potential relationship.
3.3.3 Positioning
After identifying the segments and then selecting oneor mor to target, the marketers must
next decide what position to pursue.
A position is the way a firms product, brand, or organization is viewed relative to the
competition by current and prospective customers. When positioning a product the
marketer wants to convey benefits most desired by the target market.
essential role of good hydration before and after exertion to maintain certain water level in
body.
You are what you drink!
Drink a glass of water20 minutes before your meals and you will not eat as much. Or, when
you feel tired, or have a craving for sweets, a glass of water will do the trick. This is a simple,
healthy and effective way to lose those extra pounds!
Drink to Health
Pure, safe water is essential to good health. Water helps maintain your energy, vitality and
prevents fatigue. Make sure your children drink plenty of pure, safe water every day.
Nestl wants to win and keep customers: distributors, supermarkets, hotels, and
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. Nestl task is to
understand what customers want and respond to their expectations rapidly and effectively.
It serves various groups of consumers and there is demand for NPL at different levels of
perceived quality and price. All customers, however, expect value for their money good
quality at a reasonable price.
Nestl is offering quality to customers. It also means environmental quality. Nestl shares
societys concern for the environment and is committed to environmentally sound business
practices throughout the world. Customers are central focus of Nestl and it must always
respect their needs and preferences.
Quality is a competitive advantage
This is competitive world and must never forget that customers have a choice. If they are not
satisfied with a Nestl Pure Life, they will switch to another brand. Its goal, therefore, is to
provide superior value in every product category and market sector in which they compete.
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 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. 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 requirements.
Every function and department in the company as well as Nestl business partners must
share the quality efforts. Nestle people says,
At Nestl, Quality is our first priority. Let us practice it every day.
Askari water
There are also other small competitors as well e.g. Classic, Nova etc which have very low
market segements.
Nestl is committed to the following Business objectives in all countries, taking into account
local legislation, cultural and religious practices:
Its basic foundation is unchanged from the time of the origins of Company, and reflects the
basic ideas of fairness, honesty, and a general concern for people.
Maturity:
During first part of the maturity stage, sales continue to increase, but at a decreasing rate.
When sales level off, profits of both producers and middlemen decline. The prime reason is
intense competition.
Decline:
In this stage sales volume decreases and losses become grater than the profits. Small
competitors normally quit from the market at this stage and only large and strong remain
moderately successful in decline stage.
NPL is at the growth stage of the product life cycle. Large and small both kinds of
competitors are entering in the market. Sales volume and market share is increasing
rapidly. Last year, the sales of water were 8000 tons and now this figure is raised up to
14000 tons.
4.2.4 Branding
A brand is a name and/or mark intended to identify the product of one seller or group of
sellers and differentiate the product from competing products. Branding reduces the price
competition.
Nestl is using following branding strategies:
The company name combined with a product name:
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.
Branding for Market Saturation:
NPL is categorized as NPL Home and Office (HOD) in bulk (in gallons) and NPL for
retailers i.e. easily carrying bottles of small sizes. These multiple brands are necessary to
penetrate separate target markets.
4.2.5 Packaging, Design, Color
Packaging consists of all the activities of designing and producing the container or wrapper
for a product. Packaging is intended to serve vital purposes:
Packaging connotes pleasure and attraction. By adding value to the product, the shape of the
bottle contributes to building brand identity. NPL round bottle and the classic elegance of
bottle are instantly recognizable. Constant research into materials and styles generates
innovative packaging in ever more attractive shapes, textures and colors. Renovation in
design, graphic identity and labels helps set new standards and energize brands by
anticipating trends in consumer tastes. By adopting a new dynamic design, a renovated and
modernized square bottle is lunched by Nestl. Packaging practicality is a key factor for
success.
Beyond the basic requirements strength, water tightness, etc. ease of daily use is a
subject of regular research. Innovation in this area can focus on transportation convenience,
making the pack more comfortable to carry the bottle.
Packaging is an essential protection. It guarantees product safety and quality from
manufacturing through warehousing and distribution up until the end consumer. It is
particularly crucial in preserving waters original purity over time. Several of Nestl Waters
research programs aim to optimize material performance, while a battery of tests and ever
more innovative capping techniques guarantee consumer safety on a daily basis.
In addition to this primary role, packaging fulfils several complementary functions,
including product identification and enhancement, practicality, consumer information,
functionality to suit changing lifestyles, and so on. Given greater diversity in packaging
types and quality, along with the emergence of new consumption patterns, packaging must
also meet new ecological challenges. In this context, Nestl Waters continue its efforts to
develop more environmentally friendly bottles.
This responsible corporate policy relies on a dual approach: reducing both packaging weight
and energy requirements during the manufacturing process while considerably increasing
the quantity of material recycled.
4.2.6 Labeling
A grade label is used in case of NPL. Grade label identifies the products judged quality with
a letter, number, or word. Nestl is using different phrases words to show the quality of the
product. Like Trust, Happiness, Pure, Pakistans favorite water, safe, healthy and Premium
drinking water.
4.2.7 Quality
Theres no agreement on a definition of product quality, even though it is universally
recognized as significant. Quality is a relative term and it varies from person to person due
to the personal interests; what one likes, another may dislike. But one thing is common that
when an organization fulfills the expectations of the customers through its products then
the image that organization is established as a quality-delivering organization. The same
case is with NPL it is satisfying the needs and expectations of the customers through its
standardized products.
Everyday, millions of people all over the world show their confidence on Nestl by choosing
Nestl Pure Life. This confidence is based on quality image of Nestl and a reputation for
high standards that has been built up over many years.
Nestl commitment to product quality remains the corner stone of its business philosophy.
In Pakistan too the Company has all along been committed to achieving the highest quality
of its products. As a part of this effort, in 1993, the Company embarked upon the farm to
tablequality concept the guarantee about the quality of Nestl products up to the time of
consumption by the consumer. Nestl expect this concept to result in its product becoming
theproduct of choice for its consumers.
4.3 Price
Price is the amount of money and/or other items with utility needed to acquire a product.
and utility is an attribute with potential to satisfy the wants.
A product price influences wages, rent, interests, and profits. Some prospective customers
are interested in low prices, where as another segment is more concerned with other factors,
such as service, quality, value, and brand image. Consumers perception of quality may be
influenced not just by price but also by such factors as store reputation and advertising.
Pricing objectives may be:
Profit- oriented:
To achieve a target return
To maximize profit
Sales-oriented
To stabilize prices
To maintain or increase market share
Status quo-oriented:
To stabilize the prices
To meet competition
In developing a marketing program, management has to decide whether to compete
primarily on the basis of price or the non-price elements of the marketing mix.
Nestl has adopted following for setting the pricing of NPL:
4.3.1 Non-price Competition
Nestl is trying to maintain stable prices of NPL and attempt to improve its market
positions by emphasizing other aspects of their marketing programs. Of course,
competitors prices still must be taken into considerations, and price changes will occur over
time. Nevertheless, the emphasis of Nestl is on something other than price. To maintain
this non-price competition Nestl is developing distinctive, hopefully unique, products and
to create a novel, appealing promotional program. In addition, it emphasizes the variety and
quality of the NPL, which they are offering to customers.
Market Entry Strategies
The price of NPL is maintained constant over the period as the base for this is
qualitative product which over the time period has reaped more market by
keeping price constant.
4.3.2 Discounts and Allowances
Discounts and allowances result in a deduction from the base (or list) price. The deduction
may be in the form of reduced price or some other concession, such as free merchandise or
advertising allowances. Discounts and allowances are common in business dealings.
Nestl (NPL) offers the Trade Discounts to it customers. Trade discounts sometimes
called functional discounts are deductions from the list price offered to buyers in payments
for marketing functions the buyer will perform. The examples of these functions are:
storing, promoting, and selling the product.
Wholesaler
Retailer
Consumer
This is an economically feasible choice. Nestl Pakistan Limited has a strong network of
distribution and has a separate supply chain department. This comes under the term:
2. Bulk Consumer
a. Home
b. Office
1. Consumer Retail Channel
Company
Wholesaler
Retailer
Wholesaler
Consumer
Consumer
2. Bulk Consumer
Company
distribution. By using this timely distribution many benefits the Nestl (NPL) is receiving,
such as:
Improve customer service, which directly affects the demand.
Effective physical distribution management opens many revenues for company.
The strong and effective distribution channels has added value to product by both time
utility and place utility.
The Nestl brands are another strategic asset for Nestl Waters. They originated in the
global need for a safe family drinking water with a pleasant taste, affordable price and
tailored to local preferences. This need gave rise to a new multi-site production process for
bottled water based on a simple idea: a single brand of water produced at a variety of sites,
thus reducing costly logistical, warehousing and transport constraints which are
particularly high in the bottled water sector enabling consumers to enjoy the product at a
more attractive price under a strong brand identity.
Careful Management of distribution channels has resulted in helping for Nestl to keep the
stable prices of the Nestl Pure Life.
4.5 Promotion
It consists of a diverse collection of incentive tools, mostly short term, designed to stimulate
quicker or greater purchase of particular products or services by consumers or the trade.
From marketing point of view, Promotion informs, persuades, and reminds prospective and
current customers and other selected audiences about a company and its products. The
most useful brand is failure if no one knows it is available.
4.5.1 Promotional Mix
A promotional mix is an organizations combination of personal selling, advertising, sales
promotion, and public relations. An effective promotional mix is a critical part of all
marketing strategies.
Promotion, in whatever form it takes, is an attempt to influence. Nestl is using following
methods for promotion of NPL:
4.5.1.1 Advertising
It is non-personal communication paid for by a clearly identified sponsor promoting ideas,
organizations, or products. The most familiar outlets for ads used for the advertisement of
the NPL by Nestl are the broadcast (TV and Radio) and print media (news papers and
magazines). The Nestl also uses other advertising vehicles like billboards, T-shirts and,
more recently the Internet. Nestl has its own website which is giving the information about
the different brand of the company.
Nestl is doing the selective demand advertising that is intended to stimulate demand for
individual brands. In the advertisement the message is given that,
There is one water, which gives you, hope, happiness and trust and that water is Nestl
Pure Life. It is pure, safe, and healthy water.
And in recent advertising campaign, their slogan is,
JIYO! Kay yehi hay zindagi.
On billboards the pictures of NPL advertisement seems so attractive, especially in summer
season across the roads that it motivates the customer to purchase it immediately.
The company has initiated a tube well and hand pump installation scheme in selected rural
areas.
It donates computers to schools for disadvantaged children run by NGOs and charitable
organizations.
To support the spread of education in rural areas, it undertakes Refurbishment Program of
Govt. operated primary and middle schools.
The Company regularly sponsors sports and cultural events, such as the International Polo
Tournament and SAF Games in the recent past.
The company gives the extra gifts, calendars and diaries to the employees and customers for
public relations.
4.5.1.4 Publicity
Publicity is also a promotional method used by the Nestl. Publicity is specific form of
public relations that involves news stories about organization or its products. Like
advertising, it consists of an impersonal message that reaches a mass audience through the
media. But several features distinguish publicity from advertising. The company does not
pay for it and it has little or no control over this and it appears as news and therefore has
grater credibility than advertising. The company seeks for good publicity and frequently
provides the material for it in the form of news releases, press conferences, and
photographs. When a picture of a companys CEO appears on the cover of business
publication and it accompanied by a flattering article in the magazine, it is often attributable
to the efforts of the firms public relations department.
4.5.2 Integrated Marketing communication
Nestl is using the integrated marketing communication system. In this, company is trying
to coordinate all promotional efforts make an effective impact on the customer mind and to
deliver a consist message. The Nestl has incorporated several different promotional
campaigns. Depending upon the objectives and available funds, it undertakes simultaneous
local, regional, national, and international programs.