CHAPTER 6 * GLOBAL INFORMATION SYSTEMS AND MARKET RESEARCH 217
CASE 6-1 conriNuEn (REFER TO PAGE 188)
Nestlé’s Middle East Investment in Market Research
Jn2222 Nese wie Essa revenue rom ange o 60 pros | Stacton of the nade of snares fom “emesing consum-
cts, as mentioned earl, accounted for $1.4 billion. Nestlé gains
consumer trust not only by considering serious concerns over the
quality of food and the varity it serves to its consumers, but also by
Investing in research labs to ensure they exceed the food safety quality
requirements. Nestlé Middle Eat isan important market globally, and
has been identified as @ potential growth market with a lot of oppor-
tunities. In 2009, Nestlé state-of-the-art Regional Microbiological
Laboratory located in Dubai, United Arab Emirates became well-
known for carying out a wide range of tests forthe analysis of sal-
‘monella. The new faclty is also used for training several government
bodies. Another recent investment i the advanced Sensory Lab Unit
{or Renovation-Innavation of Products (SLURP), also located in Duba
This lab is fitted with high-end technological facilities to serve as &
center of expertise for advanced sensory profiling analyses on shelf-
Stable dairy coffee and confectionery products.
Nestlé alieves investing in factories is very important because they
‘support and faciitate research in various ways. Manufacturing prod-
cts locally allows Nestlé to adapt to the cultural needs and prefer-
ences of the local market, and accelerate the delivery of fresher prod-
cts to the market and the consumer. Thus, new information gathered
from the market can be implemented effectively in a timely manner
According to Nestle, doing so gives them a prime advantage over their
competition, a practice they have followed for many of ther manufac-
turing plants in the Middle East n 2010, Nestlé announced its com
mitment to investing US. $136 million in anew manufacturing facility
in Dubai aiming to serve Nesté markets across the region. in addition,
‘nother investment to expand operations in the Midale East to meet
the growing regional demand and eventualy export to other regions is
in the pipelines ~ Nestlé Midale East bult anew Nestlé confectionery
factory whichis set to be the thi largest Kitkat plant worldwide.
‘The UAE is not the only country where Nestéis interested in
Investing, In 2010, Nesté created the first and only factory outside
Europe for the production of Movenpick Super Premium ice cream
in Egypt. It will also be a base for products such as Cereac infant
cereal and Maggi soups and bouillons. Nestlé believes that Eqypt—
with a large population, diverse and energetic, of $0 milion—s a
‘00d market. The ice cream produced is distributed locally as well
4&5 exported to countries like Jordan, Libya, Lebanon, and Tunisia and
‘Malaysia. n future, mixing, processing, chocolate-coating and cone-
filing equipment will be added tothe factory.
Nestle continues to expand in the emerging markets and is cur-
rently using a Popularly Positioned Products (PPP) model as a growth
diver for the region. For targeting emerging consumers who are
entering the cash economy and buying branded goods for the first
time, Nestl’s PPPs are adapted to meet their needs in terms of price,
‘accessibility and format, such as single-serve packets. In Egypt,
Nestlé’ research conducted on behalf of the food service industry
's applied to Nestlé Professional strenathening ~ since consumption
‘on-the-go and hence, out-of-home is steadily on the rise, there is
scope for developing Nestle’s coffee machine vending business,
5 to those looking for premium products,” isthe topmost priority
and Nestlé aims to fil this gap. The Egyptian Revolution, aso known
as the Revolution of January 25th, did not stop Nestlé investment,
' week after the uprising it publicized @ $160-millon program for
improvements across its manufacturing and distribution, and invest-
‘ment in skis over the next three to five years. Nestlé Egypt aims to
attract and adapt to the cultural change in an innovative way ~ for
instance, a new nutttion initiative called the “Healthy Kids" program
aims to engage the target audience in the company's identity It is
an educational scheme with almost 30,000 children in $0 secondary
schools around Egypt.
Finally, to emphasize the importance of marketing research,
Nestié is very keen on understanding the nutritional needs of its
consumers so as to accelerate the development of products with
an improved nutrition profile atthe right price in emerging mar-
kets. For example, in South Africa, a new research partnership
with South African scientists is being coardinated by the Council
for Scientific and Industrial Research (CSIR), a part of the govern-
rment’s Department for Science and Technology (DST). It will allow
scientists to explore and make use extensively of Nestlé’ research
Capabilities and expertise in nutrition, food science and food safety
‘Moreover, part of Nestle's global R&D efforts focuses an discovering
new bioactive ingredients. Biodiversity s very important; some of the
researches will work on studying how to make use of the locally
sourced ingredients to create foods that provide health benefits.
Researchers would examine “how well these ingredients target dif-
ferent tissues in the body ance ingested, as well as their effectiveness
in helping to promote heath.”
Discussion Questions
6-10. Crtal examine Nestle’ postoning mode
6-11. Discuss the importance of investment in research with
regards to the Nest case.
6-12. Explain the diferent ways in which market research can be
applied to satisfy consumers.
‘Source: A word rm the Chiman and CEO, Nestlé Mile East, waenesteme
comveniabouts; Fact Sheet, Nestlé Mile East 2010), vaste corvasset-
Toren/Decumentsubra/Events200snevgurstion-oF-neurfactoryin-Duba!
Fact Sheet 2010, Neste-Middle Fast EN FNAL pdt, “FMCG companies tap
Mile East grow,” Ware (Nay 8, 2073), ware com/ContensNewsFMICG
Companies tap_Middle East growth content7ID=efe6d4de-bd8e-4ab7-3e1b-
1970005123718; "Nese opens new USD 136 millon factor in Dba,” Neste
(@o10), sen.nesti commmedianensanafesture/nesle- opus newfactry-daba
Nexis CHF 160m ard estes SOO new bs in Egypt.” Nese 2010), ww
neste commedalnewsandestres/nest vest and-aeates $0000
Iebssneayp, "Neste Egy The new Egypt.” Sunes Exclence, (Novernbet 25
2011), wn buven conarifnst?NCsaS-gypt “Nestle partners wth South
‘can serie,” New Food Magscine (Mech 6, 2012), wv naoaragsane
com/70SSinewsinestie-parters-wihsouth-atican-scentist, “Ey factory n-
‘estan a appetie force ceo sot,” Neste 2013), west comMediay
NewsandFesturetce Creamy