Strategic Brand

Management

FINAL PROJECT REPORT

NESCAFE PRICING STRATEGY

Student Name Roll No.

Aditi Agarwal 190103010

Aayush Upadhyay 190103003

Arth Pundir 190103037

Charanjeet Singh 190103045

Ahluwalia

Sheetal Kumari Prasad 190101136

Visweshwar Sreekumar 190101133

Anantaraman L.M. 190103023

Table of Contents
Report Framework and Approach..........................................................................................................3
Input Cost and trade Margins:...............................................................................................................3
Marketing Objectives............................................................................................................................6
Target Market........................................................................................................................................7

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 Segmentation (Across India).............................................................................................................7
Geographic....................................................................................................................................7
Demographic.................................................................................................................................7
Psychographic................................................................................................................................8
Behavioral.....................................................................................................................................8
Potential Target Segments.................................................................................................................8
Positioning Strategy of Nescafe...........................................................................................................10
Product Attributes................................................................................................................................11
Competitor Analysis............................................................................................................................13
BRU.................................................................................................................................................13
Product Portfolio.........................................................................................................................13
Pricing Strategy...........................................................................................................................15
Market and Economic Trends in the Coffee industry (India)...............................................................16
Industry Analysis.............................................................................................................................17
Industry Forces............................................................................................................................17
Industry Attractiveness and Success Factors...............................................................................18
Emerging Industry trends.............................................................................................................18
Economic trends affecting coffee industry...................................................................................19
Consumer Demand..............................................................................................................................20
Factors Driving Consumers Demand...............................................................................................21
Recommendations...............................................................................................................................22
References:..........................................................................................................................................23

Report Framework and Approach

Pricing Strategy for any company is formed or changed after analyzing the internal and
external business factors separately.

 Internal business factors include:

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 Input Cost and Trade Margins
Marketing Objectives
Target Audience
Brand Positioning and Product Attributes

 External Business factors include:

Consumer Demand
Competitor Pricing
Overall Market and Economic Trends
Thus, we have analyzed every factor mentioned above separately to come up with the final
recommendations for the pricing strategy of Nescafé.

Input Cost and trade Margins:

Nescafe is a brand owned by Nestle. Nescafe has been known as one of the leading coffee
brands for almost six generations. It is the market leader in India and has Bru from Hindustan
Unilever Limited as its main competitor. It has captured a major portion of the total coffee
drinking market in India. It uses product differentiation and image differentiation to gain a
competitive advantage and provides more utility to the consumers, thus enabling it to become
the major player in India. By communicating their ideology to the consumers, they have been
able to appeal to most consumers. Let us look at the points of parity and difference for
Nescafe:

Points of Parity Points of Difference

Quality Ingredients Well recognized globally with a western

influence

Similar diversity in product lines Healthy coffee

Easy to prepare; Quick and convenient Creates a sense of well-being and uses it to
enhance user experience

Easily available and affordable to most

consumers

Table 1: Points of Parity (PoP) and Points of Difference (PoD) for Nescafe

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Nescafe has excellent Top of the Mind Awareness and Brand Recall which shows how it has
captured the mass market in India. This has enabled Nescafe to generate revenues by
operating on volume.

Figure 1: Financial Statement from Nestle Annual Report

Looking at the financial statement from Nestle India’s annual report, it can be seen that
Nescafe earns Rs.15226.1 Million by selling 27013 metric tonnes of powdered and liquid
beverages. It has seen a 9.78% rise in revenues and a 14.65% rise in the quantum of sales.

In order to reduce input costs, Nescafe has set up manufacturing facilities in 8 cities, namely:
Moga (Punjab), Choladi (Tamil Nadu), Nanjangud (Karnataka), Samalkha (Haryana), Ponda
and Bicholim (Goa), Pantnagar (Uttarakhand) and Tahliwal (Himachal Pradesh). It branches
in 4 cities in India, namely: Delhi, Mumbai, Chennai and Kolkata to help in sales and
marketing activities. This has helped reduce the product distribution costs and result in
improved margins.

Nestle, as a company, does not release separate financial reports for Nescafe and does not
provide much data based on specific geographies country-wise. So, we use Nestle group
worldwide data and analyze the overall margins and profitability and the powdered and liquid
beverages section from the data available.

In 2019, Nestle reported and EBIT (Earnings before Interest and taxes) margin of 14.8%.
Comparing this figure with the segmental margins of Hindustan Unilever’s food and
beverage segment of 17.2%, it is slightly lower. But it has to be noted that HUL does not
provide individual financials of Bru and thus it makes it difficult to accurately compare the
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margins for these companies. From Tata Coffee’s annual report, the EBIT margin is 7.80%
which makes Nescafe’s ratio to look much better than its other competitor.

Figure 2: EBIT Margin of Nestle Group Worldwide

Region-wise, in Asia, EBIT as a percentage of sales is found to be 18.6%. So, the Asian
subcontinent has a better EBIT with respect to sales when compared to the same parameter
globally.

Figure 3: EBIT of Nestle by Segment as a Percentage of Sales

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Marketing Objectives

Nescafé acts on a global scale while making themselves relevant to the many markets they
reside in. It is achieved by being consistent in the symbols they use, i.e. brand name while
altering their product offering and tone of advertising to suit the tastes of the consumers
within each country.
In India, regular advertising with smart promotions has given Nescafé a strong position in the
instant coffee industry. It is trying to redefine the small meetings, get together of
friends/family, endless talks people do, and usually, the way people interact by aiming to start
it all with Nescafé. It also focuses on producing high-quality products and experiments with a
lot of variants, which is mainly aimed to satisfy the taste buds of consumers.

Emotional Modifier Descriptive Modifier Brand Function

(Points of Difference) (Point of Parity) (Value)
Bringing people together Great tasting coffee Well-being

Nescafé brands come at different prices depending on the quality of the material and how
they are made. But Nescafé has estimated other cost factors such as labor and considered
mass production to make it more affordable in India. It uses the discounting tactic by offering
various flavors of Nescafé coffee available in varying quantities, and their prices are set
according to the packing.
In terms of distribution, Nescafé has adopted the strategy of non-price competition. It ensures
that traders don’t increase prices by maintaining almost uniform pricing for all its products. It
offers generous discounts to its distributors.
The marketing mix pricing strategy of Nescafé is also dependent upon its competitors and
demand. However, being one of the premium brands, it enjoys acceptability at a
comparatively higher cost than its nearest competitors.

Target Market

The primary target audience of NESCAFÉ are coffee drinkers, especially those who are in in
need for a quick solution to high-quality coffee. Nescafe provides a hassle-free coffee

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experience, all in the comfort of one’s own home. The brand offers coffee which can be
enjoyed anywhere and everywhere at one’s convenience. It provides a quick solution for
people who intend to enjoy a cup of coffee at home or work; accordingly, the brand targets
each of them in different ways. Focusing on the target segments of students or working
individuals, Nescafe aims to awake them in the mornings, sober up in the afternoons and to
keep them awake in the late evenings.

Segmentation (Across India)

Geographic
Country India
Regions Southern, Western, Eastern, Northern
Density Rural, Urban

Demographic
Age All age groups
Gender Male & Female
Family Size Both nuclear and joint families
Family Life Cycle Young & Single/Married & no
children/Married with children/Single
parents/Unmarried couples/Older & married
Income All income classes
Occupation Students, Working professionals,
Homemakers
Generation Baby boomer, Gen X, Gen Y, Millennials

Psychographic
Social Class Middle Class, Lower uppers, Upper uppers,
Upper middle class
Lifestyle Assiduous, Westerner, Sophisticated,
Occupied
Personality Aspiring, Cordial, Determined

Behavioral
Occasions Seasonal, Regular
Benefits Convenience, Speed, Quality, Concentration
User Status Non-user, Ex-user, Potential user, First-time
user, Regular user
User Rates Light, medium & heavy users
Attitude towards product Positive, negative, indifferent
Loyalty Zero, medium, strong

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Potential Target Segments

Segment 1 Segment 2 Segment 3

Occupation Students Professionals Managers

Age 15-23 years 23-31 years 46-60 years
Density Urban Urban Urban
Lifestyle Busy Western Hard worker
Occasion Seasonal Mornings Regular
Benefits Convenience Focus Speed
User Status First-time user, Regular Regular user Regular User
user, Potential User

User rate Light User Medium User Heavy User

Loyalty Medium None, medium, Strong
strong

Personality Ambitious, Determined Cordial, Ambitious

Ambitious
After careful examination of Nescafe’s Integrated marketing communications, the brand finds
the highest potential in Segment 2.

 The focus is on urban young professional cosmopolitans with contemporary lifestyles.

 Aroma, Quality and Taste are key concerns of this segment.
 The brand emphasizes to keep this segment active throughout the day.

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Positioning Strategy of Nescafe
Nescafe has focused on following points in its positioning strategy

 Combination of taste and quality

 A perfect start for perfect morning
 Drink that gives strength to face any challenge

Over the years in all the communication from the Nescafe brand these 3 things have remained
constant. The focus is on showing linkage of Nescafe products with a person in different
ways. Earlier advertisements have focused on the purity and quality aspect of the Nescafe
coffee beans. The combination of taste and quality serve a perfect morning starter to
consumer and gets them going throughout the day. The positioning was more focused on
family consumers.

This positioning can be summarized in the following statement

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Fresh coffee prepared from finest coffee beans that promises best quality and taste, a
perfect start for the morning to get things going throughout the day

Recently, positioning of Nescafe coffee has evolved from functional benefits to emotional
benefits. In recent advertisements Nescafe is seen inspiring people to get out of their bed and
achieve something or change the world. The visual imagery that remains constant is the red
mug of Nescafe. The red mug has been used to create an associative network for easy recall
of the brand. The positioning has been targeted towards the youth.

This positioning is clear in the following positioning statement of Nescafe as well

To people who are inspired and outgoing in the need of starting each morning with and
enjoyable taste and original smell of coffee Nescafe gives the best taste and quality .

Product Attributes

Product attributes can be classified in 2 broad categories

 Tangible attributes – Tangible attributes include product characteristics such as size,

colour, taste, smell, quality, quantity and material composition. Nescafe has different
products under its brand that offer varied taste, aroma, quality to the consumers.

Coffee Product attributes Grammage Price Points

Nescafé Classic Medium dark roasted 25 gms Rs. 70
beans with advance
double filter
50 gms Rs. 140
technology. Prepared
from robusta beans
100 gms Rs. 290

200 gms Rs. 460

500 gms Rs. 1100

Nescafé Sunrise Slow roasted coffee

beans with blend of 50 gms Rs. 75
Arabica and chicory
beans

100 gms Rs. 150

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 200 gms Rs. 350

Nescafé Gold
Caramel flavoured 50 gms Rs. 290
dark roasted beans
prepared with a blend
of robust and Arabica 100 gms Rs. 475
beans

200 gms Rs. 900

Nescafé Gold
Cappuccino White thick milky
foam prepared from
100% Arabica coffee, 116 gms Rs. 899
foam and sugar

Nescafé Latte
A blend of Arabica and
Robusta coffee beans
with dairy foam and 156 gms Rs. 799
sugar

Tangible product attributes also include the packaging of the product. Across all products the
font of Nescafe is consistent and easily visible. The packaging also differs from one product
to other. Nescafe classic, gold and sunrise are mainly packaged in glass bottles and sachets
and Cappuccino and latte are packaged in tetra packs. Also, there is a considerable difference
in the pricing of these products.

 Intangible product attributes - These include product characteristics such as ease of

preparation, convenience, availability and the satisfaction or emotional value derived
from the product.
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 The positioning of the Nescafe has also been changed to capture the benefits derived
from the intangible product attributes. As discussed earlier the communication of
Nescafe products focuses on achieving the greater good.

Competitor Analysis
The major competitor of Nescafe in the instant coffee category is BRU, with around 48-49%
of market share. There are several other competitors like Tata Coffee and Davidoff which do
not own a significant market share in this category.

Hence, we will be analyzing the product portfolio and pricing strategy of BRU as it is the
major competitor.

BRU
It is owned by the parent company Hindustan Unilever. It is the only coffee product of the
company and started in 1969 under the beverage category. The brand is popular among
masses owing to its exotic flavours and rich aromas. The brand is positioned as “coffee that
makes special moments of genuine warmth and happiness”.

Product Portfolio
COFFEE TYPE WEIGHT PRICE
Bru Instant 0.7gm, 2.6gm, Rs 1, Rs 2, Rs 3, Rs
3.4gm, 5gm, 10gm 5, Rs 10

50gm Rs. 85

100gm Rs 165

200gm Rs 290

500gm Rs 320

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 Bru Gold 6gm Rs 10

25gm Rs 70

50gm Rs 111

100gm Rs 245

500gm Rs 925

Bru Select 100gm Rs 45

200gm Rs 100

Bru Green Label 50gm Rs 17

100gm Rs 35

200gm Rs 75

500gm Rs 165

Apart from the above products, Bru also manufactures large economy packs of premixes for
hot coffee, filter coffee, etc.

Pricing Strategy
To understand Bru’s pricing strategy, first let us have a look at a comparative analysis of
Bru’s and Nescafe’s prices in two categories:

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 Coffee Type Weight Bru Nescafe
Bru Instant/Nescafe 50gm Rs. 85 Rs 140
Classic
100gm Rs 165 Rs 290

200gm Rs 290 Rs 460

500gm Rs 320 Rs 1100

Bru Gold/Nescafe 50gm Rs 111 Rs 290

Gold
100gm Rs 245 Rs 475

200gm - -

500gm Rs 925 -

Bru follows multiple pricing policies for all of its products:

From the above table it is quite clear that Bru has much lower and affordable prices than
Nescafe and is trying to follow a cost leadership strategy. The two major pricing policies
undertaken by Bru are as:

 Penetration pricing policy: As per this policy, Bru essentially kept the initial prices
of the products considerably lower than Nescafe to capture the urban markets and
increase its sales along with giving a tough competition to Nescafe. It strategically
keeps the prices of its sachets low to catalyse trials and make the consumers familiar
with the new variants and flavours. It also helps consumers to move into premium
segments of the brand by giving economic pouches to induce trials.

 Competitive pricing policy: Given the already established strong competitor in this
sector like Nescafe, Bru has deliberately kept its prices lower and very competitive to
expand and tap on a large consumer base, especially in a country like India which is
largely cost-sensitive. Nescafe hasn’t been able to compete on the competitive prices
with Bru, but that might also be a strategy that Nescafe chooses to follow.

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Market and Economic Trends in the Coffee industry
(India)

Coffee industry has always been prevalent in the country, especially when it comes to its
production. In the years 2000 to 2002, India was producing some 301,200 MT of coffee,
104,400 MT (35%) of which is the Arabica coffee variant and 196,400 MT (65%) of Robusta
coffee variant. More recently, of the 8.46 million metric tonnes of the coffee produced in the
world, 0.30 million metric tonnes comes from India (FAO, 2011).

But what has changed is the consumption pattern of the indian population. Due to a number
of factors coming into play, the growth in coffee consumption has grown by a significant
amount. Some of the most notable factors are increasing global exposure, influence of the
west and penetration of established coffee brands into the indian market. (Grand View
Research, 2018).

Traditionally, even though South India has been predominantly responsible for indian coffee
consumption, due to an increase in industrialisation and growth of the IT industry, the
people's lifestyles have improved tremendously, and it has brought about the growth in the
consumer base of youth, corporate officials & businessmen which has led to coffee becoming
the beverage of choice instead of tea in the urban cities of India.

Industry Analysis

Industry Forces
The first step in performing an industry analysis is to assess the impact of Porter's five forces.
Here's a quick overview of the Porter's analysis of the coffee industry in India.

 Ease of entry: Gaining entry into the line of coffee production is not that recurrent
because of the complexities of the process at every step, be it production or roasting.
Between Nestle and Hindustan Unilever Ltd, the Indian packaged coffee industry
doesn't find enough opportunities for other players. They dominate the industry with
both having 51% and 49% (approx.) share each with Nestle being the leader (Naik,
2018).

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  Power of suppliers: The coffee production is extremely fragmented. This is
impossible on 2 counts. Not only does a supplier or a few of them hold enough power
to influence too many decisions, because there's always more where the coffee came
from, the suppliers won't think about entering the market themselves because of the
huge capital requirements.
 Power of buyers: This, on the other hand, definitely doesn't work in the big players'
favor. Not only is coffee not the only source of caffeination in India, it's a highly
competent market with direct as well as direct competitors always ready to take the
share a company will give away. It's a highly price sensitive market.
 Availability of substitutes: Again, coffee has a number of substitutes, especially in
India. Not only has tea been the favored mode of caffeination for the country, the
country tends to stick to a lot of naturally prepared beverages like lemonades, freshly
squeezed juices and coconut water. Not to mention, for instant coffee producers like
Nestle and HUL, ready-to-go coffee as well as coffee retail chains pose a very strong
threat when it comes to substituting them with another alternative.
 Competitors: Instant coffee industry has both direct as well as indirect strong
competitors. With HUL's Bru already being a strong competitor to Nestlé's Nescafe,
entry of Tata Grande has only increased the competition further. This is because of
especially high advertising costs and capital requirements. As for indirect
competition, coffee retail chains like Starbucks, Cafe Coffee Day and Barista as well
ready-to-go coffee in all sorts of different flavors and variants pose a real competition.

Industry Attractiveness and Success Factors

The Indian coffee industry though attractive when it comes to rising interest of the Indian
population in trying out coffee as their choice of beverage due to the changes in lifestyle and
the western influence, poses a few threats for the current as well as potential players.

 The complexity of the whole production process wards off new entrants from trying
their hand at it. And, the fact that Nescafe has been established as a market leader
when it comes to instant coffee industry, is a proof that they are headed in the right
direction.
 The power the suppliers can exert is minimal which is extremely beneficial for Nestle.
Not only is there no threat of backward integration due to the complexities of the

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 process, there is no threat of forward integration either because of the expensive
requirements to walk the road ahead.
 Buyers are another scene altogether. Because of how easy it is to influence the buyer's
mind about consuming coffee with a few well placed articles about the harmful
effects it can have, and the availability of number of healthier options, buyer's loyalty
needs to be acquired as well as conditioning needs to happen. This is a weak link for
Nescafe.
 With the availability of a number of substitutes in the Indian market, again, Nescafe
can be at a loss because buyers might switch if prices rise by even a tiny amount. Not
only are they against the instant coffee producers, but against all the stores which
serve unique flavors and variants of coffee like the frappe, latte, mocha.
 When it comes to the competition, even though Nescafe retains its position as the
market leader, it faces threat from all over. Other than Bru and Tata Grande, there are
not only the established chains like Starbucks out go get a piece of the pie, but the
emerging trend of cafés popping up all over the landscape that serve freshly brewed
coffee at much cheaper rates than Starbucks. Not to mention, all the new ready-to-go
coffee drinks with all the variants. Nescafe definitely needs to work on their offerings.

Emerging Industry trends

Some of the major trends that have emerged in the coffee industry in the past few years have
been:

 With the changing times, and the integration with the rest of the world, people's focus
has now shifted to having the experience more than their consciousness for the price.
For most of the population today, drinking a cup of coffee is a lifestyle choice rather
than a compulsory necessity to get on with their day.
 What the customer wants is a fast service, convenience of experience and variety in
their daily lives. Because of this, they generally want things done for them without
them becoming boring. So, if it suits their pocket, they like to grab a cup of coffee in
different variants from either an established chain store like Starbucks or CCD on
their way to work, or they tend to drop by for a relaxing cup of coffee at their local
coffee shop.

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  Because of the sugar content, people are shying away from soft drinks and processed
juices. But they are leaning towards the concept of ready-to-drink coffee. Nowadays,
the grab-and-go coffee is available in the form of bottles, boxes, or cans, and it comes
in multiple flavours. Major brands like Starbucks and Dunkin Donuts are already
catching on.

Economic trends affecting coffee industry

There are certain economic factors and trends which affect the coffee industry. Some of the
more significant ones are:

 Increase in the disposable incomes

With the rise in the income consumers have at their disposal, they tend to consume things not
because they are a necessity but because they are things they can consume. These include tea,
coffee, and other such luxury beverages which they wouldn't have felt the need to consume
with lower incomes. This increase in income also makes them spend on higher quality
products such as better-quality coffee.

 Future increase in prices and hoarding up

This has happened in the past and it has the possibility of repetition if the situation so arrives.
When people become used to consuming things, they don't want to stop consuming them. So,
whenever there is a threat of bad harvest and future increase in prices for a commodity,
people tend to stock up. They practically hoard things because of the fear of rise in prices in
the future or the commodity not being available at all. In the past, when there was fear of a
bad harvest in 2009 for coffee, people stocked up too much because they were so used to
consuming it. They were addicted.

 Coffee production is more than the demand

The quantity of coffee produced is approximately 1 billion kgs more than the quantity of
coffee consumed. So, the demand for it is less than the supply. Because of this, the coffee
industry can't charge too high a price because of excess supply.

Nescafe (India)

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When talking about Nestlé's Nescafe, Nestle India’s market share in instant coffee increased
by about 3 percentage points to 50.2% in the first six months of 2018. Nescafe also had a spot
on the All India Brand Trust Ranking 2014. Needless to say, it's a brand which is here to stay
in the Indian market.

Consumer Demand

The instant coffee market in India is exhibiting healthy growth. According to “India Coffee
Market Outlook, 2021”, the packaged coffee market is expected to grow at a CAGR of
around 12% over the next five years. The coffee segment has steadily gained a share of total
consumer spending on beverages over the past few years. The coffee market consists of two
categories, packaged coffee and coffee shops. Demand for instant coffee is growing in the
packaged coffee segment. However, filter coffee is also expanding its presence among Indian
consumers. The market for filter coffee is primarily in South India and the competition from
local/regional players is cutthroat.

The channel contributing most to sales in branded, packaged coffee segment is traditional
retail, i.e., Kirana stores, which account for roughly 70% of total sales by value. The market
for packaged coffee consists of different variants as shown below.

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As mentioned, the market for filter coffee is predominantly South India with formidable
competition from local and regional players. These local players usually sell pre-packed or
sometimes customized variants of pure coffee or a mix of coffee-chicory in various
proportions. Organized players like Café Coffee day have tried to replicate this model in an
attempt to carve out a share from the existing market. On the other hand, there is a high
demand for instant coffee in all regions of the country, which has resulted in brands like
Nestlé to innovate and launch packaged variants of coffee beverages in ready-to-drink (RTD)
formats, e.g. instant cappuccino packs.

Factors Driving Consumers Demand

Rising Disposable Income

One of the major factors driving consumer demand is the rapid urbanization and the increase
in disposable income which can be attributed in turn to the increase in dual-income
households. Considering the majority of the country are generic tea consumers, and coffee is
viewed as a pricey alternative, this increase in disposable income of the rising middle class
has contributed significantly to consumer demand for coffee.

Enhanced Accessibility
Increased number of outlets in tier 2 and tier 3 cities have resulted in an increase of market
penetration. This has resulted in the number of coffee drinkers in the rural areas as well as
opposed to concentration in the urban centres. The increase in coffee vending machines in
offices and educational institutes have also helped in this regard.

Convenience/ Ease of Use

Instant coffee as a beverage is easy to prepare as it can be done by adding hot water or milk
to the instant coffee powder. The availability of sachets for one-time use has made drinking

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coffee a hassle-free experience even for young adults who are staying away from home. The
availability of different flavors has also made it easier for individuals to try different variants
with ease.

Increased number of variants

There has been an increased acceptance and appreciation for coffee as a beverage, in almost
every part of the country. This has encouraged the various established brands to launch exotic
ranges of gourmet coffee which provides consumers with a heightened experience of
different cultures. Hindustan Unilever has launched different flavours with its brand Bru, e.g.
Bru Exotica Columbia, Bru Exotica Brazil and Bru Exotica Kilimanjaro to capitalize on the
demand for a premium range of products. To further capitalize on the growing demand, HUL
and Nestlé now have a wide range varying from Nescafé Gold (priced between INR 4000-
4500 per kg) to Bru (Green Label, at INR 250-275 per kg) to cater to all types of consumers.

Increased health awareness

The market for decaffeinated coffee is garnering attention as a result of the growing number
of health-conscious consumers. The increasing awareness about health and wellness and an
emphasis on the good quality of life has pushed the attention of health-conscious consumers
to decaffeinated coffee. Nestlé has launched its Gold Blend decaffeinated coffee to tap into
this growing market.

Recommendations

Indian consumers palette is evolving with an increasing number of consumers embracing and
experimenting with coffee and there has been discretionary spending rise in coffee industry in
India and especially in the upper middle class, which is also open to try regional varieties
along with international flavors.

After careful examination of Nescafe’s Target Audience, the brand can find the highest
potential in Segment where:

 The focus is on urban young professional cosmopolitans with contemporary lifestyles.

 Aroma, Quality and Taste are key concerns of this segment.

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  The brand emphasizes to keep this segment active throughout the day.

Keeping these in view, Nescafe can follow a mix of pricing strategies for its premium
variants too. To add to its current pricing strategy, it should follow a value-based pricing
policy where they develop buyer personas for each of their product variants and charge a
price basis what the customer is willing to pay. This will ensure that the brand always
remains in tune with its target group and it will also help developing loyal customers, given
the increasing competition in the coffee industry as a whole including coffee chains as
indirect competitors which might take away its customer base.

Nescafé follows a price leadership strategy, and it is because it fulfills all the requirements of
successful price leadership. But as it's a highly price sensitive industry, keeping in mind the
competition and availability of substitutes, we would recommend Nescafe to tread very
lightly with the price. People are still adapting to coffee being the beverage of choice and
they are open to exploring other options if coffee doesn't work for them.

Thus, Nescafe should continue with its discounting tactic but at prices slightly lower than
today, especially for its premium variants.

References:

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https://www.nestle.in/aboutus/presenceacrossindia
2. Positioning Strategy, https://mervegulnazerdem.wordpress.com/positioning-strategy/
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by operating segment. Statista. Statista Inc.. Accessed: March 25, 2020.
https://www.statista.com/statistics/524492/nestles-ebit-as-a-percentage-of-sales-
worldwide-by-segment/
4. Nestlé. (2020). Nestlé Group's EBIT margin worldwide from 2010 to 2019, by
product category. Statista. Statista Inc.. Accessed: March 25, 2020.
https://www.statista.com/statistics/268901/nestle-groups-ebit-margin-by-product-
category/

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 5. Nestlé. (2020). Net profit of the Nestlé Group worldwide from 2005 to 2019 (in
million CHF). Statista. Statista Inc. Accessed: March 25, 2020.
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6. Nestle Annual Review 2019, Retrieved March 25, 2020,
https://www.nestle.in/investors/stockandfinancials/annualreports
7. Hindustan Unilever Limited Annual Report 2018-19, Retrieved March 25, 2020,
https://www.hul.co.in/investor-relations/annual-reports/

Tata Coffee Financial Results for the year ended 31st March, 2019, Retrieved March 25,
2020, https://tatacoffee.com/investors/overview

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