HISTORY OF NESTLE

The key factor which drove the early history of the enterprise that would become The Nestlé Company
was Henri Nestlé's search for a healthy, economical alternative to breastfeeding for mothers who could
not feed their infants at the breast.
In the mid-1860s Nestlé, a trained pharmacist began experimenting with various combinations of cow's
milk, wheat flour and sugar in an attempt to develop an alternative source of infant nutrition for
mothers who were unable to breast feed. His ultimate goal was to help combat the problem of infant
mortality due to malnutrition. He called the new product Farine Lactée Henri Nestlé.
Nestlé's first customer was a premature infant who could tolerate neither his mother's milk nor any of
the conventional substitutes, and had been given up for lost by local physicians. People quickly
recognized the value of the new product, after Nestlé's new formula saved the child's life and within a
few years, Farine Lactée Nestlé was being marketed in much of Europe.
Henri Nestlé also showed early understanding of the power of branding. He had adopted his own coat of
arms as a trademark; in Swiss German, Nestlé means 'little nest'. One of his agents suggested that the
nest could be exchanged for the white cross of the Swiss flag. His response was firm: "I regret that I
cannot allow you to change my nest for a Swiss cross .... I cannot have a different trademark in every
country; anyone can make use of a cross, but no-one else may use my coat of arms."
Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by Americans Charles and
George Page, broadened its product line in the mid-1870s to include cheese and infant formulas. The
Nestlé Company, which had been purchased from Henri Nestlé by Jules Monnerat in 1874, responded by
launching a condensed milk product of its own. The two companies remained fierce competitors until
their merger in 1905.
Some other important firsts occurred during those years. In 1875 Vevey resident Daniel Peter figured
out how to combine milk and cocoa powder to create milk chocolate. Peter, a friend and neighbor of
Henri Nestlé, started a company that quickly became the world's leading maker of chocolate and later
merged with Nestlé. In 1882 Swiss miller Julius Maggi created a food product utilizing legumes that was
quick to prepare and easy to digest. His instant pea and bean soups helped launch Maggi & Company. By
the turn of the century, his company was producing not only powdered soups, but bouillon cubes, and
sauces and flavorings.

MISSION STATEMENT
Wherever you live, only Nestle can provide the best and most relevant food and beverage products to
meet your needs throughout your day, throughout your life. The Nestle Network icon will take you on
the journey of discovery through our world of food.

CORPORATE STRUCTURE

Head Office

The registered and corporate office of Nestle Milkpak Ltd. Is in Lahore.

308 – Upper Mall Lahore

PABX: 5757082-95

Fax: 5711820

Factories

There are two factories of Nestle Milkpak Ltd. For dairy products.

Sheikhupura:

29th km, Lahore - Sheikhupura Road

Sheikhupura, Punjab, Pakistan.

Kabirwala:

Khanewal – Kabirwala Road, Kabirwala

District Khanewal, Punjab, Pakistan.

There are two plants for Mineral Water situated in:

Islamabad :

Karachi:

Regional Offices

Company has ten regional sales offices in following cities of Pakistan:

 Karachi

 Hyderabad

 Sukkar

 Lahore
  Multan

 Faisalabad

 Gujanwala

 Quetta

 Islamabad

 Peshawar

Milk Collection Centers

The core raw material of Nestle Milkpak is milk. Over the last thirteen years the company prime concern
has been to improve the quality and volume of milk for UHT processing and for other milk base
products. So the company has twenty five milk collection centers in Pakistan.

DEPARTMENTS

There are mainly five divisions. In every division there further departments.

Ø Production Division

· Quality Assurance Department

· Brand Wise Production Departments

· Packaging Department

Ø Human Resource Division

· Personnel Department

Ø Marketing Division

· Customer Relation Department

· Sales Department

· Distribution Department

· Research & Development Department

Ø Finance Division

· Treasury Department
· Accounts Department

Ø Milk Collection Division

· Agricultural Services Department

· Logistic Department

PRODUCT LINE

Products

Year Product Name

1981 UHT Milk

1983 Butter

1986 Milk Pak Cream

Desi Ghee

Frost Juice

Milk Pak UHT Milk

1990 Nido

Cerelac

1991 Nestum

Lectogen

1992 Everyday Tea Whitener

Gloria

Maggis Noodles

1994 Milo

Neslac

1995 Millo RTD

Nescafe 3 in 1

1996 Every day UHT Milk

Nestle Orange Juice

Nestea

Polo

Nescafe Classic

Maggi Yakhni

1997 Nestle Wheat

1998 Toffo

Soothers

Nestle Pure Life

1999 Maggi Sauces

Fruit Drops

Butter Skotch

2000 Tea Cream

2001 Nescafe Creamy Flavors

MARKET ANALYSIS

ROLE OF MARKETING DEPARTMENT

As marketing is a game to meet the needs and wants of the customers to satisfy them. Customer
satisfaction is the responsibility of marketing department by developing new product, modifying existing
product, placing the product at right time at right place. The department also helps in setting prices with
respect to competitors and to satisfy customer as well. It functions to promote the product. So in this
way it creates an environment where transactions can take place.

Marketing Division in Nestle

In Nestle, there are three departments in the marketing division.

Ø Research and development department

Ø Customer relation department

Ø Distribution department
As the function of marketing department is to satisfy the customer and to fulfill organization objectives.
These can not be performed by a single department. These can only be achieved when there will be
coordination among all departments of the organization. In the case of Nestle Milkpak Ltd. marketing
division with its three departments coordinates all other divisions and departments.

Marketing division doesn't take decision it rather it puts a lot of efforts to get the consensus of all other
divisions. Marketing people are directly related to the supply of the goods to the retailers, so they have
better estimation of the demand of their products. Marketing division gets the feed back from the sales
person. Then after getting an estimation marketing division communicate to production division. The
production division makes an analysis that how much capacity is available and how much demand is
there. If there is some need of financial resources and workers, the production manager communicates
these needs to human resources division and finance division. So these divisions take actions to fulfill
the need of production division.

In this way the marketing division integrates the activities of different department to maintain the
overall operations of the company.

Product development and launching strategies of Nestle

Nestle Milkpak Ltd. is market leader in food and beverage products and competing with its existing
competitors effectively. Strong emphasis on customer’s needs and wants enable the Nestle to be market
leader in the industry.

Nestle never develops any product with blind eyes but before developing or launching any product, they
go for complete study of market and identify the needs and wants of customers and develop product
accordingly. Such sorts of activities are performed by marketing division with its three departments. The
division has an efficient research and development department with marking information system (MkIS)
which helps to identify the unmeet needs of customers through scientific research or surveys.

In general, the marketing division concentrates on following two aspects before developing new
product.

1. Taste of potential market.

2. Consumption pattern of target market

The marketing executives believe that product success depends upon whether it satisfies the basis
needs and requirements of customers or not. Secondly, they also believe that these must be sufficient
demand (consumption) for the new product.

If marketing research analysis provide reasonable results on above two aspects then marketing division
proceeds following new product development activities.

New product development activities

In order to get long term success, marketing division perform following activities for new product
development.

1. Primary product

2. Quality test

3. Market test

4. Feed back

5. Modification

6. Commercialization (launching)

Primary product is developed in the factory laboratory according to the demand of the market. Prior to
the market test, quality test is applied in quality assurance laboratories in Singapore in which they
evaluate whether the new product inherent the reasonable standard quality as expected by the
customers. After offering the new product in few samples to small experiments groups of customers, the
company gets feed back from them and the make, if necessary, any modification in the product design
or quality. After performing such activities or we can say the product become 100% percent complete
then Nestle goes for commercialization at the large scale with full energy and commitment.

SWOT ANALYSIS OF NESTLE

Strengths

Nestle has following strengths:

Nestle is world reputed and recognized organization which has positive impact on people perception
about it.

Nestle has strong financial position which enable it to attract more new investors and help it to raise
funds from banks.

Nestle has strong core competencies i.e. highly expert human resources which enable it to produce new
high quality innovative products.

Nestle modern operation facilities are also important strength which enable it to produce high
standardized quality products.

Because Nestle is operating worldwide and has different strategic business units (SBU). It can
compensate losses, if incur in any one SBU through other profitable SBUs.

Nestle has its own distribution network which make it easy to provide Nestle products at all possible
places on time.

Weaknesses
Raw material is basic input for every organization and milk is core raw material of Nestle for which it is
dependent on the outside Milkmen. Nestle has no single its own dairy form which provide high quality
milk to the firm.

Another weakness of Nestle Milkpak Ltd. is that its total packaging depends upon Packages (Pvt.)
limited.

Opportunities

Nestle can go for “Backward integration” and establish its own diary forms. Currently, Nestle is
dependent on the outside Milkmen which sometimes don’t supply high quality milk. Nestle should open
its own diary forms because Nestle has strong financial position and Pakistan is agricultural state which
support this backward integration.

Threats

Followings are the major threats for Nestle Milkpak Ltd. ;

Purchasing power of people in Pakistan is decreasing day by day and prices of Nestle products are
comparatively high. So in long run, Nestle may face problem if such trend continues.

In some products Nestle is facing fierce competition. For example, in Milkpak Nestle is facing
competition from Chauhdary Dairies Limited who has launched “Dairy Queen” at lower prices which has
decreased market share of Milkpak. CDL has also launched “N’rish” milk powder at lower prices, it also
has capability to decreased the market share of “Nido”. So in long run, if Nestle do not respond to such
competitors, they may create a lot of problems in other products also.

Pakistan politics structure is very instable and is depressing economic activities and volatile business
environment in the state. Such instable environment may influence the performance of all industries
operating in state and Nestle may also be influenced from such trends of instability.

COMPETITIORS

Nestle is the market leader in food and beverage industry. They are producing high quality well known
brands. There no is such competitor that can compete Nestle Milkpak Ltd. in its total product mix. There
are a few local competitors of the company in different product item. These competitors are:

Rafhan:

Rafhan is competing Nestle in infant and follow up cereals.

Shezan and Bambino:

Shezan and Bambino are competing Nestle Milkpak’s local brand “Frost”.
CDL and Adar-e-kisan:

These two competitors are competing in milk and milk powder products.

In spite of this competition, Nestle is enjoying about 70-75% market share in Pakistan.

Competitive Priorities:

Following are the competitive priorities of Nestle

1. High performance design

2. Consistent quality

3. Development speed

4. Volume flexibility

QUALITY

Quality is the cone competitive priority of NM. They take quality in two ways. High performance design
and consistent quality.

1. HIGH PERFORMANCE DESIGN

NM takes all the required measures to provide the high quality products to its customers. They provide
pure quality products according to them customer requirements. They have most advanced process
design for the production of high quality products.

2. CONSISTENT QUALITY

NM pays special attention for maintaining consistent quality. They have special sort of equipments and
process which facilitates in maintaining a consistent quality. So the each and every unit of its product
equally satisfies its customers.

3. DEVELOPMENT SPEED

As for as develop speed is concerned NM is the industry leader not only in Pakistan but all over the
world. They have a team of very innovative people which consistently focus on the development of new
products and to improve the already existing products.

4. VOLUME FLEXIBILITY

Volume flexibility is one of the competitive priority of NM. When the availability of Milk is high in winter
season they increase their production as the milk cannot be stored for longer period of time. In season
when there is shortage of milk their production rates dropped.

So they can adjust their volume of production according to their requirements.

4 Ps

PRODUCT

Target market for Nestle products

To satisfy the requirements of term report I select the following products of Nestle.

· Everyday

· Nido

· Milk pack

· Nescafe

· Mineral water

In this section I briefly explain the target market for each product.

Market segmentation

Nestle has been segmented its product on demographics basis, specially on:

Ø Age

Ø Occupation

Ø Income group

Ø Family composition

Target market for Everyday

Everyday is basically prepared for people living in cities who belong to the high income group. it means
the user or consumer of everyday belongs to “ A class” because, in general, perception about everyday
is that it is costly but actually it is not too much costly. It is basically economical for tea purpose. it is
convenient in tea making, so this is also target for office use, where it can be prepared easily and
immediately.

Target market for Milkpack

Milk pack is targeted for quality conscious people mostly living in the urban areas. The use of milkpack
belongs to all classes. People prefer to use milkpack for tea making only. For example in hostels most of
the students use haleeb, where the fresh milk is not available.

Target market for Nido

Nido is generally targeted at the growing specially school going children because children are fond of
playing as they do in growing age. So they need vitamins and calcium for growth of strong bones and
teeth. Target market for nido is school going children living in cities.

Target market for Mineral Water

Mineral water is targeted for the people who are health conscious. Mostly educated people and patients
are target market for mineral water.

Target market for Nescafe

The target market of Nescafe is people who switch from tea to café and mostly people belonging to
upper classes and middle-middle class.

PRICING

EVERY DAY

It is one of the most famous products by Nestle. It is sprayed instant dairy whitener, specially formulated
to bring out the best taste. It is made from the best quality fresh milk according to the Nestle
International standards that guarantee quality and purity. Basically everyday has no competitor in the
tea whitener.

MILKPAK

Milkpak is the product of Nestle, which is available in liquid form. Nestle designed this product because
of greater demand of milk. Milkpak is more pure & hygienic milk, which says fresh for quite longer time
period. It is ideal for family use.

NIDO

Nido if full –cream powdered milk enriched with vitamin A & D . Nido is made from pure fresh mil and
retains calcium, vitamin, proteins and other nutrients. Nido is specially designed for the growing
children.

NESTLE PURELIFE WATER

Nestle is offering mineral water in three different sizes. Their prices depend

upon sizes in which they are offered. Large bottles have relatively low price as compared with small
bottles.

SIZES AND PRICING

EVEY DAY MILKPAK NIDO PURELIFE

1000gm (194-Rs) 1-Litre (30-Rs) 1100gm (199-Rs) 1.5-litre (22-Rs)

400gm (85-Rs) ½-Litre (13-Rs) 400gm (88-Rs) ½-litre (12-Rs)

200gm (47-Rs) ¼-Litre (9-Rs) 200gm (56-Rs)

¼ Litre liq (7-Rs) 2500gm (830-Rs)

Pricing Strategy

Nestle is offering different prices depending on the size of the product. They are trying to capture
different income groups by offering different prices depending in the size of product. To include low-
income group in their target market, Nestle offered small packs with low price, while for high-income
group they are offering large packs i.e. 1-litre/1000gm. In large packs they offer low price as compare to
small packs depending on the size.

PLACEMENT

DISTRUBUTION

The distribution is carried out effectively and economically with a fleet of 3-wheelers which average 12-
re-fill trips a day. Each trip is a one man operation, with the driver also serving as a salesman, a loader,
HH operator and manual record keeper. To ensure economical and efficient operation the distribution
center is constantly engaged in updating the revising rout planning.

CONTINUOUS IMPROVEMENT (CI)

The term “continuous Improvement” is not new for progressing factories. In the Nestle system, this
gives a common platform to all improvement teams. It is a participatory approach to problem solving
with a very defined and structured process. CI helps in changing the mindset of the people so that they
should always be thinking of improvements, by challenging the old procedures and perceptions.

During the NPT project, a continuous improvement drive was launched in Sheikhupura in March and in
Kabirwala in April, with a presentation to department heads. To convey the message to everyone at
floor level, separate presentations were made to executives, supervisors and workers. Everyone in the
factory can be a part of this process either by contributing ideas or by becoming a member of the
problem solving team. The continuous improvement is not only focused on cost reductions but takes
into account ideas that improve process, quality, safety, hygiene or environment.

PROMOTION

Comparable progress has been achieved within our logistics, sales and distribution structure, where
stronger distribution and more impact merchandising have certainly made a major contribution to our
high growth rates. The strategic BECA project became functionally operational by the end of the year.

With regard to new products, you are all aware that we had the privilege of being the first in the world
to introduce the strategic new product, NESTLE PURE LIFE. By the end of the year, NESTLE PURE LIFE is
firmly established with market share over 50% and is well placed to consolidate its position in 2000.

In 1998, the brand positioning was further strengthened, using the purity platform. A major campaign
was developed to highlight purity as the most important attribute in milk, strongly associating MILKPAK
with purity and quality.

MILKPAK

“Khalis Hi Sub Kuch HAI” was burst used to outwit the competition and induced consumer to switch
over NESTLE Milkpak UHT milk. It was launched on April 23 in Nishat & Mariam colonies and later in
Pir & Farooq colonies. This campaign directly involved consumers and retailers and spanned over a
period of six month.

The Re-launching of MILKPAK

The new marketing effort was based on a change in packaging design in order to communicate the new
positioning and the image of an old and trusted brand.

ATV campaign was developed to focus on key message e.g., Nestlé is behind MILKPAK, assurance is
purity through Nestle and Nestle being No.1 Food Company with 130 years of milk experience. This
message was further propagated through print media and outdoor advertisement. The campaign was
supported through flier,

temporary hoarding, street banners, and shop banners, posters, buntings and trade letters.

The promotion targeted our core market of young adults between 18-25 years, with prizes having been
selected to appeal to this group.

NIDO

Since last year NIDO has seen a consistent and substantial growth in sales volume. The growth clearly
indicates that consumer confidence in processed milks is growing. The factors that have led to this are
rising cost of gawala milk despite its questionable quality, the growing size of the milk market to rapid
urbanization and better awareness about processed milk.
Nido met its 1999 OPL annual volume targeted on July 15, 1999, when the highest ever invoicing and
retail per day record was achieved in June 1999.

Finally, to create goodwill amongst mothers, NIDO launched the NIDO Quiz Contest covering 75 schools
of Karachi, Lahore and Islamabad.

Nestle celebrates NIDO mother’s Day each year for sales Promotion.

NESTLE PURE LIFE WATER

Murree Hills draw enormous crowds from all over Pakistan in summers. Those who came to Murree this
summer were in for pleasant surprise. They were greeted by NESTLE PURE LIFE. The brand and sales
promotion teams of the North Zone had put together an effective outdoor campaign. The road to
Murree was awash with billboards, shops signs, shops boards, brand umbrellas,stands,shops paintings,
wall paintings,POS materials, regular merchandising, cross road signs, product sampling and sticker
sampling. The activity created a remarkable impact and the visitors were impressed.

CONCLUSION

Analyzing all the data we obtained from the organization, we concluded that Nestle is basically a
dairy/food company. The good thing about Nestle is that, they are familiar with their actual target
market. One emerging industry i.e. MILK, is being captured by Nestle through its quality products. They
have developed depth in Milk line, i.e. starting from growing babies to old age tea lovers. Sales
promotion activities are effectively carried out. Important thing about Nestle is that they have placed
their products at customer’s doorstep.

Weakness of Nestle lies in many products where they are not promoting them effectively or weak
marketing like Nescafe. Another factor of failure is consumer taste like Nescafe is specifically for higher
class. Few years ago, they were offering products only for health conscious or high income groups but
now they have included low income group in their target market by offering small packs like Every Day in
liquid form.