NESTLE

Nestlé is a Swiss multinational food and drink processing

conglomerate corporation headquartered in Vevey, Vaud,
Switzerland. It is the largest food company in the world,
measured by revenues and other metrics, since 2014. It ranked
No. 64 on the Fortune Global 500 in 2017 and No. 33 on the 2016 edition of the Forbes Global
2000 list of largest public companies.
Type Public
Industry Food processing
Founded 1866; 153 years ago (as Anglo-Swiss Condensed Milk Company)
1867; 152 years ago (as Farine Lactée Henri Nestlé)
1905; 114 years ago (as Nestlé and Anglo-Swiss Condensed
Milk Company)
Founder Henri Nestlé
Headquarters Vevey, Vaud, Switzerland
Area served Worldwide
Key people Paul Bulcke (Chairman)
Ulf Mark Schneider (CEO)
Products Baby food, coffee, dairy products, breakfast cereals,
confectionery, bottled water, ice cream, pet foods
Revenue Increase CHF91.43 billion (2018)
Operating income Increase CHF13.75 billion (2018)
Net income Increase CHF10.46 billion (2018)
Total assets Increase CHF137.01 billion (2018)
Total equity Decreases CHF58.40 billion (2018)
Number of employees Decrease 308,000 (2018)
 COMPANY HISTORY
1866–1900: Founding and early years
Nestlé's origins date back to the 1860s, when two separate Swiss enterprises were
founded that would later form the core of Nestlé. In the succeeding decades, the two competing
enterprises aggressively expanded their businesses throughout Europe and the United States.
In 1866, Charles Page (US consul to Switzerland) and George Page, brothers from Lee
County, Illinois, USA, established the Anglo-Swiss Condensed Milk Company in Cham,
Switzerland. Their first British operation was opened at Chippenham, Wiltshire, in 1873.
In 1877, Anglo-Swiss added milk-based baby foods to their products; in the following
year, the Nestlé Company added condensed milk to their portfolio, which made the firms direct
and fierce rivals.
In 1879, Nestlé merged with milk chocolate inventor Daniel Peter.
1901–1989: Mergers
In 1905, the companies merged to become the Nestlé and Anglo-Swiss Condensed Milk
Company, retaining that name until 1947 when the name 'Nestlé Alimentana SA' was taken as
a result of the acquisition of Fabrique de Produits Maggi SA (founded 1884) and its holding
company, Alimentana SA, of Kempttal, Switzerland. Maggi was a major manufacturer of soup
mixes and related foodstuffs. The company's current name was adopted in 1977.
In the 1980s, Nestlé's improved bottom line allowed the company to launch a new round
of acquisitions. Carnation was acquired for $3 billion in 1984 and brought the evaporated milk
brand, as well as Coffee-Mate and Friskies to Nestlé. In 1986, Nestlé Nespresso S.A. was
founded. The confectionery company Rowntree Mackintosh was acquired in 1988 for $4.5
billion, which brought brands such as Kit Kat, Smarties, and Aero.
1990–2011: Growth internationally
In December 2005, Nestlé bought the Greek company Delta Ice Cream for
€240 million. In January 2006, it took full ownership of Dreyer's, thus becoming the world's
largest ice cream maker, with a 17.5% market share.] In July 2007, completing a deal
announced the year before, Nestlé acquired the Medical Nutrition division of Novartis
Pharmaceutical for US$2.5 billion, also acquiring, the milk-flavoring product known
as Ovaltine, the "Boost" and "Resource" lines of nutritional supplements, and Optifast dieting
products.
In July 2011, Nestlé SA agreed to buy 60 percent of Hsu Fu Chi International Ltd. for
about US$1.7 billion. On 23 April 2012, Nestlé agreed to acquire Pfizer Inc.'s infant-nutrition,
formerly Wyeth Nutrition, unit for US$11.9 billion, topping a joint bid from Danone and Mead
Johnson.
2012–present: Recent developments
In December 2014, Nestlé announced that it was opening 10 skin care research centers
worldwide, deepening its investment in a faster-growing market for healthcare products. In
March 2017, Nestlé announced that they would lower the sugar content in Kit
Kat, Yorkie and Aero chocolate bars by 10% by 2018.
In May 2018, it was announced that Nestlé and Starbucks struck a $7.15 billion distribution
deal, which allows Nestlé to market, sell and distribute Starbucks coffee globally and to
incorporate the brand's coffee varieties into Nestlé's proprietary single-serve system, expanding
the overseas markets for both companies In October 2018, Nestlé announced the launch of the
Nestlé Alumni Network, through a strategic partnership with SAP & Enterprise Alumni, to
engage with their over 1 million Alumni globally.
In September 2018, Nestlé announced to sell Gerber Life Insurance for $1.55 billion.

MISSION
Nestle is the world's leading nutrition, health and wellness company. Our mission of
"Good Food, Good Life" is to provide consumers with the best tasting, most nutritious choices
in a wide range of food and beverage categories and eating Nestlé occasions, from morning to
night.

VISION
To be a leading, competitive, Nutrition, Health and Wellness Company delivering
improved shareholder value by being a preferred corporate citizen, preferred employer,
preferred supplier selling preferred products.
 Nestle Market Analysis and Marketing Strategy
Nestle is one of the largest companies in the world in the drinks, food and snacks
industry. The Swiss company, though renown worldwide for its chocolate, has successfully
transformed itself into a truly global force in the food industry with expansion to other areas of
the industry such as baby foods, beverages and frozen foods. Currently, the company, which
owns more than 2,000 brands, employs around 340,000 employees and operates in more than
180 countries worldwide. The company started out in 1905 from a merger as a milk company
specializing in infant formula products and condensed milk products and has since grown to be
one of the largest international food companies and the clear global leader in the sector in terms
of revenues and profitability.
Nestle is one of the largest companies in the fast-moving consumer goods (FMCG)
sector and is the market leader in several of the sector’s markets, especially with revenues in
consideration. Companies in the snacks, food and beverages industry (Consultancy.uk, 2015)
currently dominate the FMCG sector. These companies include Nestle, Tyson Foods, Coca-
Cola and Kraft Heinz.
The company has seven verticals namely liquid and powdered beverages, confectionary
and cookies, ready prepared and cooked foods, dairy products, chocolate, drinking water and
pet care. Even though the FMCG sector in large, there are many players in the sector of all sizes
and the competition is stiff since there are many international players in the market. In order for
the company succeed in such a highly competitive sector; it must adopt effective marketing
practices (Pride, Ferrell, Lukas, Schembri, & Niininen, 2015). Among the stiffest competitors
facing Nestle are Procter & Gamble, Kraft Heinz, Coca-Cola, Unilever, Kellogg’s, Danone and
PepsiCo.

MARKETING MIX OF NESTLE:8Ps

 PRODUCT
Product mix, also known as product assortment, refers to the total number of products
lines that a company offers to its customers .For example, a small company may sell multiple
lines of products.Sometimes, these products lines are fairly similar, such as dish washing liquid
and bar soap,which are used for cleaning and use similar technologies.Other times, the product
lines are vastly different, such as diapers and razors.the four dimensions to a company'’ product
mix include width, length, depth, and consistency.
Product line – a company/organization creates a group of products, which has in
common most of their main characteristics.
 Product mix-an organization creates many products and, of course, sells them. So, the
product mix is everything organization sells.
Variety: Nestle offers a wide product mix that comprises of food, health and nutrition
products to meet the customer needs. Nestle offers its products in the following categories:
Bottled water, Baby foods, Breakfast cereals, Chocolate and confectionery, Coffee, Dairy
products, Drinks, Ice cream, In the Kitchen, Nestle Professional, Nutrition and Health, Pet care.

Quality: Nestle is well known for the quality and taste of its products. Nestle Believes
that “Success is built on Quality”.

Design: As its variety range, Nestle also has a greater range of design. Nestle make sure
all their new products look different and attractive.

Features: Nestle have made sure that all their products have special features to make it
more attractive to the customers. For example: In case of their ice creams, they have tried to
include the special feature that is the low fat and sugar content.

Brand name: A strong brand name is important for both the company and the consumers
as it adds to the value of the company, differentiates the products from those of its competitors
and affects the consumer discernment of the company (Jobber 2007:328). A strong brand name
also acts as a source of quality certification and can influence consumer preferences of products.
Nestle, through its strong brand name and market presence has captured the heart of the
customers worldwide. In the present health- conscious society, Nestle has captivated a loyal
customer base through its focus on nutrition and health requirements and consumer preferences
at a competitive price and it has enhanced the reputation of the company.
 Place
In the marketing mix, the process of moving products from the producer to the intended
user is called place. In other words, it is how your product is bought and where it is bought. This
movement could be through a combination of intermediaries such as distributors, wholesalers
and retailers. In addition, a newer method is the internet which itself is a marketplace now.
Through the use of the right place, a company can increase sales and maintain these over a
longer period. In turn, this would mean a greater share of the market and increased revenues and
profits.
 Nestle has been displaying its product in the supermarkets and the malls. It has been
managing its own sales and distribution network all over the Indian market to supply their
product. It has been also placing it products in hospitals, canteens of colleges & companies and
public places.
 Price
Pricing plays a key role in the marketing mix. The reason for this importance is that
where the rest of the elements of the marketing mix are cost generators, price is a source of
income and profits. Through pricing, the organization manages to support the cost of
production, the cost of distribution, and the cost of promotion.
The cost is dependent on the market of each single product. For example, Nescafe and
Maggi being the clear leaders are priced with higher gross profits for the company as compared
to the competitor. This is because the product quality is good enough and a act of skimming
price will not induce the client to change brands.
The intensity level of pricing for Nestle comes from its packaging or consumption based
pricing. For Nescafe as well as Maggi, Nestle offers a bunch of sizes and package options. In
supermarkets, you can even find a 16 packet Maggi whereas in small retail shops, you can find
five Rs Maggi. Thus, with the variety available, customer can make his own choice based on
his consumption. In other products like KitKat and Munch, due to tough competition from other
companies, Nestle offers competitive pricing. You will find that nestle will be similar priced to
many of Cadbury’s Products in the chocolate segment.
 Promotion
Promotion refers to any type of marketing communication used to inform or persuade
target audiences of the relative merits of a product, service, brand or issue. The aim of promotion
is to increase awareness, create interest, generate sales or create brand loyalty. Promotion is also
one of the elements in the promotional mix or promotional plan. These are personal selling,
advertising, sales promotion, and direct marketing publicity and may include event marketing,
exhibitions and trade shows. A promotional plan specifies how much attention to pay to each of
the elements in the promotional mix, and what proportion of the budget should be allocated to
each element. Promotion covers the methods of communication that a marketer uses to provide
information about its product. Information can be both verbal and visual.
One of the most widely known tunes is the Nescafe tune. It was one of the best
advertising campaigns and was launched at least 2 decades back. However, that campaign
brought Nescafe strongly in the market.
 On the other hand, Nestlé’s brand was pushed by the excellent product quality of Maggi
and the witty and innovative campaigns of Maggi. Where Nescafe focuses on value and the
good things in life, Maggi focuses on the moments you had with your Maggi. The recent
campaign was completely focused on your magic story, where people had to come out with
various innovative ways that they had their magic.
Promotions for other products too is done smartly. KitKat focuses on “Take a break”
and has done some good marketing for the same. KitKat website too is very innovative and
shows nothing but asks the visitor to take a break and have a KitKat. The major push expected
of an FMCG company is in sales promotions at the ground level. This is where Nestle really
rocks. Nestle focuses on its strength which is Maggi, Nescafe and KitKat which are the most
Promoted brands in the market on ground level.
Besides this, Nestle regularly uses TVC’s and ATL marketing. It is also present online
through some smart creative. Overall, Nestle is a brand which has strong products as well as
strong marketing, and hence the brand has a very high brand recall value.
We hope that Nestle keeps bringing in good products and keeps maintaining the quality
of the products it already has.
 People
People are the most important element of any service or experience. Services tend to be
produced and consumed at the same moment, and aspects of the customer experience are
altered to meet the individual needs of the person consuming it. Most of us can think of a
situation where the personal service offered by individuals has made or tainted a tour, vacation
or restaurant meal. Remember, people buy from people that they like, so the attitude, skills and
appearance of all staff need to be first class. People have an important role in service delivery,
they are relied upon to deliver and maintain transactional marketing and people play an
important part in the customer relationship.
Nestle India has been recruiting lakhs of people to join their company. They have been
training their employees to handle the queries of their customers and also provide better
customer service. Various campaigns are organized by their employees for the purpose of the
sales promotion in different states of India.
 Process
Process is another element of the services marketing mix. There is a number of
perceptions of the concept of process within the business and marketing literature. Some see
processes as a means to achieve an outcome, for example – to achieve a 30% market share, a
company implements a marketing planning process.
The company has been manufacturing the products by processing it using better
technology. The way Nestle has been using its vending machine to serve the customers easily
shows that they have understood the requirements of the consumers in India.
 Physical Evidence
Services as we know are largely intangible when marketing. However, customers tend
to rely on physical cues to help them evaluate the product before they buy it. Therefore,
marketers develop what we call physical evidence to replace these physical cues in a service.
The role of the marketer is to design and implement such tangible evidence. Physical evidence
is the material part of a service. The physical environment is the space by which you are
surrounded when you consume the service. Therefore, for a meal, this is the restaurant and for
a journey, it is the aircraft that you travel inside. The physical environment is made up from its
ambient conditions; spatial layout and functionality; and signs, symbols, and artefacts (Zenithal
2000).
Nestle has been creating a better evidence connectivity by setting up the coffee corners
with their logo of Nescafe in vending machines.
 Packaging
Packaging is what shows off your product in the best light, displays the price and value
of the product, communicates the product’s benefits to consumers, and it what physically
appears in your various distribution points. Your product may be the very best on the market,
but its packaging needs to be the main tool that represents this. It’s the first thing people see,
and it has the ability to catch or divert their attention within seconds.
Packaging involves designing and developing a cover for a product in order to make it
attractive to the consumers. Packaging was just a means for protecting the product in the past,
but today increase in competition has resulted in the need to differentiate the product from those
of its competitors to attract the customers and to describe the features of the product in order to
gain consumer recognition. Poor designs can be one of the reasons for reduction in sales of a
product due to less customer satisfaction. Nestle uses very attractive packaging as one of their
main marketing strategies. For its efforts, Nestle has won several accolades such as the Silver
Star and “Best in category” as “Best Packaging Innovation leading to a significant reduction in
household waste” by the British Institute of Packaging for the Dairy Box biodegradable tray
which is manufactured by using renewable resources.
 PRODUCT
PRICE PROMOTION

MARKETING MIX
PACKAGING
PLACE

PHYSCIAL PROCESS
PEOPLE
EVIDENCE

MARKETING ENVIRNOMENT

Internal Environment

Nestle has a rich working culture which motivates its employees to serve best to its
customers with the help of the variety present in their product range. Nestle has included the
benefits of the employees in the goal statement of the organization as the management of the
company strongly believe that the productivity, quality and the dependability will reflect on
the product only if the employees will take care of all these factors.
 Different departments of the company work to contribute in the growth of the
organization and these departments not only keep the customer’s needs and demand in mind
but also keep the same type of attention for the internal customers of Nestle.The company
believes if the internal market of the company is fully satisfied than only the internal market
will be able to serve to its customers and able to understand their needs and able to manufacture
the products which can fulfill these needs.

Nestle has a strong top management team which runs on strong values and principles
of the company. The values of the company give strong focus to integrity, loyalty and team
work. The efficient top management of the company is able to run finance, operation,
marketing, logistics, sales, and research and development departments with great success
which ultimately leads to the fulfillment of the goal of the organization.
 a) Suppliers

Suppliers provide the raw material resources, unfinished goods and labors to the
company in order to produce goods and services. The effectiveness of suppliers determines the
efficiency of the company in terms of producing the goods. In addition to that the quality of
the finished product has a strong with the suppliers of the firm especially in case of food
products. As the presence of the company is in more than hundred companies, it is a challenge
for the company to maintain its standard all over the world and provide the consistency to its
customers in the taste and quality of the product.

Further we can divide the supplier of Nestle into two parts: Labor suppliers and material
suppliers. Labor suppliers deal with the quantity of labor is required at the optimum level in
order to prevent the loss of labor force and prevent the company from the shortage of labor
which again can lead building of inventory as a cost for the company. The skills of labor is
again maintained by the labor suppliers, wherein the labors of different skills are managed in
such a way that the operation of the firm can run smoothly. Labor strikes and labor relations
are other factors which we cannot ignore in the current scenario as the efficiency of the business
depends largely on the factors like attrition and employee satisfaction.

Material supplies handle all the material required by the firm in order to manufacture
the finished product for sale. Nestle is in the food and quality markets and the quality of such
item plays an major role in its success in the market.

Nestle has maintained a high quality efficiency in handling the quality and quantity of
the two different supplies i.e. labor supplies and material supplies and hence the company has
been able to run its business smoothly for more than 100 years in spite of the different business
trends in the world market.

b) Marketing Intermediaries
 The market intermediaries of the company help to advertise, sell and distribute its
product to the end customers. The physical distribution network of the company decides the
medium by which the finished product is delivered to the end customer on time and with safety.
This department also ensures the proper storage of the firm that prevents the product from
getting any king of damage.

The marketing service department of the firm helps in the promotion of the product and
acts as a communication channel between the company and customers. It not only
communicates the features of the product to its customers but also get the feedback with the
help of survey, which helps the research and development department to develop a product
according to the need of the customers.

The other intermediaries of the company like banks help to provide the funds to the
companies and play an important role in the continuity of the business. Insurance companies
insure the property and the goods of the company against the risk involved in various
operations, buying and selling of the product.

Nestle has the differential advantage of working in a smooth coordination with all its
marketing intermediaries which helps in providing the best and pure food products to its
valuable customers in the different parts of the world.

c) Customers

The immediate customers of Nestle are retail and grocery stores which provide the
products of the company to the end customers at a reasonable price and a reasonable profit.
The end customers of Nestle are the consumers who consume its wide range of product. The
company has a bright brand image in its big pool of end customers.

Competitors
 Although Nestle is leader in packaged food industry of Malaysia but the other
competitors who are giving tough competition to Nestle are

• Petra Foods Limit

• Yeo Heap Sang Limited

• Mail Dairy Industry Co., Ltd

Nestle has a clear advantage over the above mentioned companies is its presence in
Malaysia for over a century now. Nestle has been able to setup a good and trusted distribution
channel and a huge retail network. The trust worthiness gained by Nestle among the Malaysian
people is build in decades on hard work and quality products and varied range of prices, thus
even after facing stiff competition with the above mentioned companies in chocolates, dairy
products and other packaged food products the company is able to maintain the bottom lines
of its profit and loss statements attractive for its investors and good image in public.

MACRO ENVIRONMENT

 Political environment

Nestle must consider many political factors in its different markets. These include
taxation, laws, regulation, and compliance with various laws and regulations from different
regions, governments and regulatory bodies and various import and export duties among other
factors. Additionally, it must also account for global changes in the political landscape and
regulations as well as regional political stability in its market.

Since Nestlé operates in more than 190 countries, any shift in regulatory environments
can massively affect operations. Multinational firms like Nestlé have a greater risk of
production bottlenecks because of governmental policies and changes. The more countries a
business operations in, the greater the chance of policy changes that may interrupt operations.
Although political changes often affect the company, moving operations out of the country
affects the unstable environment for Britain. Losing Nestlé means a loss of over 300 jobs,
affecting the already controversial political British climate. Keep in mind, not many companies
can affect political stability, but Nestlé can.

Nestlé also has to abide by the changing of food standards and regulations. Each country
has its own set of regulations. If Nestlé does not abide by them, they will be cut off; the products
will not be purchasable, nor edible, in the eyes of the government.

 Economic factors

Economic factors are important in determining the viability of both current and new
markets, given that most of their target market is the middle and upper classes with enough
disposable income to buy branded products. Additionally, economic factors play a huge role in
price determination for their various products, which is critical in determining revenues,
profitability and competitiveness of the products. Given the large scale of the company’s
operations, changes in the prices of various inputs and expenses and market conditions like fuel
cost and inflation also have a huge impact on the company’s bottom line and must be accounted
for when strategizing and planning.

Foreign exchange swings are an economic issue for Nestlé. As a multinational firm, the
company is easily impacted by the sway of foreign-exchange rates and prices. If the currency
weakens, it may lead to profit loss, depending on the location. It could also result in the reverse
a profit increase. Or cheaper options for the importing or exporting of goods.

Within the last couple of years, Nestlé has been in an upswing for profit. In fact, in
2018, the company’s profits increased by more than 40 percent. According to the company,
profits changed from $7.6 billion to $10 billion. Much of this success is thanks to three things:
The United States market, the Chinese market, and selling off its confectionery business.

 Social factors

The social environment, including the attitudes, buying behaviors, and changing
demographics, all affect a business. What’s truly affected food and beverage companies like
Nestlé is the public’s obsession with healthy eating. People want to consume less sugar and
lower calorie foods.
 Nestlé knows this. If it didn’t, the company would be in a world of trouble. Nestlé is
focusing on reducing sugar, salt, and saturated fat in some of its products. This requires
reformulating existing products, but it also opens the door for new versions of classic foods
and drinks Nestlé consumers love.

Although the food is still adored, the company is held less favorably. Over the last
couple of years, Nestlé ran into controversy regarding the extraction and usage of drinking
water. Nestlé takes spring water from the land, leaving nothing or polluted water behind in its
wake. This has affected indigenous Canadian land, and locations like Flint, Mich.

When the company does pay to take this water, the price is next to nothing. Combine
this with what previous Nestlé CEO Peter Brabeck-Letmathe said about the rights to water
being “extreme”, people have become weary of Nestlé. Some are even boycotting the company,
although this can be difficult since Nestlé owns so many food products.

 Technological factors

Nestlé needs to spend more money on research and development. It has more
technology at its disposal to achieve greater feats in the R&D department; social media, digital
surveys, email marketing, discounts the list goes on. It’s much easier to connect with audiences
all over the world thanks to evolving technology. It also means Nestlé has more options to
increase production, food quality, and food availability to consumers.

Some companies are adopting block chain technology to have full informational access
to products — from development to delivery. This is also an option for Nestlé, as it can decrease
production time. Now, it is still a costly venture, and would need to be introduced slowly to
each of Nestlé’s production lines.

 Legal factors

Legal factors have a very important bearing on the operations of any business since it
determines at the very least of a business can carry out its operations in a given jurisdiction.
Such factors include licensing, obtaining various required permits, auditing and compliance
with various standards. Additionally, business in food industry not only have to comply with
rules and regulations that affect other business but also comply with regulations set by other
governmental and controlling bodies like food and health safety laws and regulations. All these
factors play an important role in determining how favorable or unfavorable the operating
conditions directly attributable to the actions and policies of external stakeholders with
authority are for the industry in general and a business in particular are.

Legal factors involve the legal environment of a company and its influence on the
operation to meet the demand and minimize the cost. For instance, Nestle has to follow the
health and safety laws for their employees and to produce hygiene products for the customers.
Nestle need to focus on these too while operating in different regions of the world.

 Environmental factors

Environment factors can also be favorable on detrimental to a business’ operations.

Some of the factors like extreme weather conditions can have impact on several areas of
business operations e.g. by making inputs or transportation costs more expensive,
environmental regulations affecting business operations for example in packaging or affecting
sales as customer preferences change with the weather. Additionally, consumers the world over
are increasing more environmentally conscious and using their purchasing power to reward
and punish businesses based on the environmental practices. Nestle must also take into account
the diversity in the physical environment they operate in and the different rules and regulations
of different regions.

Today the world is more conscious to have clean environment. Nestle need to focus on
these rules and regulations also to produce healthy food with environmental friendly
operations. Several countries set different rules, so to increase the acceptance of the products
by the targeted segment the rules are significant to follow. Nestle has also been taking into
account the considerable attention towards the social contribution. The other related concerns
are the realm of recycling and the issues pertaining to the packing.