MARKETING REPORT ON Nestlé

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. Kabirwala: Khanewal – Kabirwala Road. DEPARTMENTS . 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. Kabirwala District Khanewal. So the company has twenty five milk collection centers in Pakistan. Punjab. Punjab. Lahore . 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. Pakistan. Sheikhupura: 29th km. Pakistan. For dairy products.Sheikhupura Road Sheikhupura.

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

modifying existing product. Marketing division gets the feed back from the sales person. So in this way it creates an environment where transactions can take place. These can only be achieved when there will be coordination among all departments of the organization. Marketing division doesn't take decision it rather it puts a lot of efforts to get the consensus of all other divisions. The department also helps in setting prices with respect to competitors and to satisfy customer as well.2000 Tea Cream 2001 MARKET ANALYSIS ROLE OF MARKETING DEPARTMENT As marketing is a game to meet the needs and wants of the customers to satisfy them. placing the product at right time at right place. Customer satisfaction is the responsibility of marketing department by developing new product. These can not be performed by a single department. If there is some need of financial resources and workers. It functions to promote the product. So these divisions take actions to fulfill the need of production division. Strong emphasis on customer’s needs and wants enable the Nestle to be market leader in the industry. The production division makes an analysis that how much capacity is available and how much demand is there. is market leader in food and beverage products and competing with its existing competitors effectively. so they have better estimation of the demand of their products. Nescafe Creamy Flavors Marketing Division in Nestle In Nestle. marketing division with its three departments coordinates all other divisions and departments. In this way the marketing division integrates the activities of different department to maintain the overall operations of the company. Then after getting an estimation marketing division communicate to production 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. the production manager communicates these needs to human resources division and finance division. there are three departments in the marketing division. Nestle never develops any product with blind eyes but before developing or launching any product. Product development and launching strategies of Nestle Nestle Milkpak Ltd. Marketing people are directly related to the supply of the goods to the retailers. they go for complete study of market and identify the needs and wants of . In the case of Nestle Milkpak Ltd.

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. 3. Taste of potential market.customers and develop product accordingly. Such sorts of activities are performed by marketing division with its three departments. 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. 5. . 4. the company gets feed back from them and the make. 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. any modification in the product design or quality. Prior to the market test. 1. Secondly. New product development activities In order to get long term success. Nestle has strong financial position which enable it to attract more new investors and help it to raise funds from banks. 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. 6. Primary product Quality test Market test Feed back Modification Commercialization (launching) Primary product is developed in the factory laboratory according to the demand of the market. if necessary. 2. After offering the new product in few samples to small experiments groups of customers. they also believe that these must be sufficient demand (consumption) for the new product. marketing division perform following activities for new product development. the marketing division concentrates on following two aspects before developing new product. In general. 1. 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. 2. If marketing research analysis provide reasonable results on above two aspects then marketing division proceeds following new product development activities.

So in long run. is that its total packaging depends upon Packages (Pvt. Opportunities Nestle can go for “Backward integration” and establish its own diary forms. Purchasing power of people in Pakistan is decreasing day by day and prices of Nestle products are comparatively high. 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.) limited. Because Nestle is operating worldwide and has different strategic business units (SBU). it also has capability to decreased the market share of “Nido”. highly expert human resources which enable it to produce new high quality innovative products. In some products Nestle is facing fierce competition. Threats Followings are the major threats for Nestle Milkpak Ltd. Nestle modern operation facilities are also important strength which enable it to produce high standardized quality products. Currently. CDL has also launched “N’rish” milk powder at lower prices. 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.e. Nestle has no single its own dairy form which provide high quality milk to the firm. Nestle may face problem if such trend continues. 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. Such instable environment may influence the performance of all industries operating in state and Nestle may also be influenced from such trends of instability. For example. Nestle is dependent on the outside Milkmen which sometimes don’t supply high quality milk.Nestle has strong core competencies i. . Nestle should open its own diary forms because Nestle has strong financial position and Pakistan is agricultural state which support this backward integration. COMPETITIORS . Another weakness of Nestle Milkpak Ltd. It can compensate losses. So in long run. if Nestle do not respond to such competitors. Pakistan politics structure is very instable and is depressing economic activities and volatile business environment in the state. they may create a lot of problems in other products also.

So the each and every unit of its product equally satisfies its customers. There are a few local competitors of the company in different product item. 1.Nestle is the market leader in food and beverage industry. Nestle is enjoying about 70-75% market share in Pakistan. CONSISTENT QUALITY NM pays special attention for maintaining consistent quality. High performance design Consistent quality Development speed Volume flexibility . 4. CDL and Adar-e-kisan: These two competitors are competing in milk and milk powder products. They are producing high quality well known brands. There no is such competitor that can compete Nestle Milkpak Ltd. in its total product mix. They have special sort of equipments and process which facilitates in maintaining a consistent quality. They provide pure quality products according to them customer requirements. HIGH PERFORMANCE DESIGN NM takes all the required measures to provide the high quality products to its customers. They take quality in two ways. 3. 3. Competitive Priorities: Following are the competitive priorities of Nestle 1. They have a team of very innovative people which consistently focus on the development of new products and to improve the already existing products. Shezan and Bambino: Shezan and Bambino are competing Nestle Milkpak’s local brand “Frost”. QUALITY Quality is the cone competitive priority of NM. DEVELOPMENT SPEED As for as develop speed is concerned NM is the industry leader not only in Pakistan but all over the world. High performance design and consistent quality. In spite of this competition. They have most advanced process design for the production of high quality products. These competitors are: Rafhan: Rafhan is competing Nestle in infant and follow up cereals. 2. 2.

VOLUME FLEXIBILITY Volume flexibility is one of the competitive priority of NM. so this is also target for office use. in general. It is basically economical for tea purpose. 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. Market segmentation Nestle has been segmented its product on demographics basis. In season when there is shortage of milk their production rates dropped. · Everyday · Nido · Milk pack · Nescafe · Mineral water In this section I briefly explain the target market for each product. 4 Ps PRODUCT Target market for Nestle products To satisfy the requirements of term report I select the following products of Nestle.4. where it can be prepared easily and immediately. Target market for Milkpack . 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. it means the user or consumer of everyday belongs to “ A class” because. it is convenient in tea making. So they can adjust their volume of production according to their requirements. perception about everyday is that it is costly but actually it is not too much costly.

Basically everyday has no competitor in the tea whitener. NESTLE PURELIFE WATER Nestle is offering mineral water in three different sizes. vitamin. Milkpak is more pure & hygienic milk. 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. 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. It is made from the best quality fresh milk according to the Nestle International standards that guarantee quality and purity. PRICING EVERY DAY It is one of the most famous products by Nestle. specially formulated to bring out the best taste.Milk pack is targeted for quality conscious people mostly living in the urban areas. Nido is specially designed for the growing children. MILKPAK Milkpak is the product of Nestle. It is ideal for family use. Their prices depend upon sizes in which they are offered. So they need vitamins and calcium for growth of strong bones and teeth. SIZES AND PRICING . Nido is made from pure fresh mil and retains calcium. Target market for Mineral Water Mineral water is targeted for the people who are health conscious. which is available in liquid form. It is sprayed instant dairy whitener. For example in hostels most of the students use haleeb. which says fresh for quite longer time period. Large bottles have relatively low price as compared with small bottles. NIDO Nido if full –cream powdered milk enriched with vitamin A & D . Nestle designed this product because of greater demand of milk. The use of milkpack belongs to all classes. Target market for nido is school going children living in cities. People prefer to use milkpack for tea making only. Mostly educated people and patients are target market for mineral water. proteins and other nutrients. where the fresh milk is not available.

Nestle offered small packs with low price.EVEY DAY 1000gm (194-Rs) 400gm (85-Rs) 200gm (47-Rs) ¼ Litre liq (7-Rs) Pricing Strategy MILKPAK 1-Litre (30-Rs) ½-Litre (13-Rs) ¼-Litre (9-Rs) NIDO 1100gm (199-Rs) 400gm (88-Rs) 200gm (56-Rs) 2500gm (830-Rs) PURELIFE 1. with a presentation to department heads. PLACEMENT DISTRUBUTION The distribution is carried out effectively and economically with a fleet of 3-wheelers which average 12. by challenging the old procedures and perceptions. this gives a common platform to all improvement teams. separate presentations were made to executives. supervisors and workers. while for high-income group they are offering large packs i. Everyone in the factory can be a part of this process either by . with the driver also serving as a salesman. CONTINUOUS IMPROVEMENT (CI) The term “continuous Improvement” is not new for progressing factories.re-fill trips a day. To ensure economical and efficient operation the distribution center is constantly engaged in updating the revising rout planning.5-litre (22-Rs) ½-litre (12-Rs) Nestle is offering different prices depending on the size of the product. 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. Each trip is a one man operation. To convey the message to everyone at floor level. HH operator and manual record keeper. 1litre/1000gm. a loader. They are trying to capture different income groups by offering different prices depending in the size of product. In large packs they offer low price as compare to small packs depending on the size. During the NPT project. To include low-income group in their target market. In the Nestle system. a continuous improvement drive was launched in Sheikhupura in March and in Kabirwala in April.e.

NESTLE PURE LIFE is firmly established with market share over 50% and is well placed to consolidate its position in 2000. sales and distribution structure. The growth clearly indicates that consumer confidence in processed milks is growing. posters. where stronger distribution and more impact merchandising have certainly made a major contribution to our high growth rates. By the end of the year. The promotion targeted our core market of young adults between 18-25 years. . This campaign directly involved consumers and retailers and spanned over a period of six month. hygiene or environment. quality. ATV campaign was developed to focus on key message e. NESTLE PURE LIFE. The strategic BECA project became functionally operational by the end of the year. With regard to new products. buntings and trade letters. with prizes having been selected to appeal to this group. Nestlé is behind MILKPAK. NIDO Since last year NIDO has seen a consistent and substantial growth in sales volume. the brand positioning was further strengthened. The continuous improvement is not only focused on cost reductions but takes into account ideas that improve process. safety. you are all aware that we had the privilege of being the first in the world to introduce the strategic new product.contributing ideas or by becoming a member of the problem solving team. In 1998. The factors that have led to this are rising cost of gawala milk despite its questionable quality.1 Food Company with 130 years of milk experience. using the purity platform.g.. A major campaign was developed to highlight purity as the most important attribute in milk. the growing size of the milk market to rapid urbanization and better awareness about processed milk. temporary hoarding. This message was further propagated through print media and outdoor advertisement. street banners. 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. strongly associating MILKPAK with purity and quality. It was launched on April 23 in Nishat & Mariam colonies and later in Pir & Farooq colonies. PROMOTION Comparable progress has been achieved within our logistics. and shop banners. assurance is purity through Nestle and Nestle being No. MILKPAK “Khalis Hi Sub Kuch HAI” was burst used to outwit the competition and induced consumer to switch over NESTLE Milkpak UHT milk. The campaign was supported through flier.

Weakness of Nestle lies in many products where they are not promoting them effectively or weak marketing like Nescafe. wall paintings. i. they are familiar with their actual target market.shops paintings. The good thing about Nestle is that. Finally. cross road signs. shops signs. They were greeted by NESTLE PURE LIFE. when the highest ever invoicing and retail per day record was achieved in June 1999. to create goodwill amongst mothers. regular merchandising. NESTLE PURE LIFE WATER Murree Hills draw enormous crowds from all over Pakistan in summers.POS materials. . Few years ago. One emerging industry i. The road to Murree was awash with billboards. Those who came to Murree this summer were in for pleasant surprise.e. The brand and sales promotion teams of the North Zone had put together an effective outdoor campaign. MILK. starting from growing babies to old age tea lovers.Nido met its 1999 OPL annual volume targeted on July 15. They have developed depth in Milk line. product sampling and sticker sampling. Nestle celebrates NIDO mother’s Day each year for sales Promotion. The activity created a remarkable impact and the visitors were impressed. shops boards.e. CONCLUSION Analyzing all the data we obtained from the organization. 1999. is being captured by Nestle through its quality products. Important thing about Nestle is that they have placed their products at customer’s doorstep. we concluded that Nestle is basically a dairy/food company. brand umbrellas. Another factor of failure is consumer taste like Nescafe is specifically for higher class.stands. Sales promotion activities are effectively carried out. 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. Lahore and Islamabad. NIDO launched the NIDO Quiz Contest covering 75 schools of Karachi.

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