Professional Documents
Culture Documents
BY
ADELERE, MICHAEL A.
INTRODUCTION TO NESTLE:
Today, Nestle is the world leading Food Company. Nestle headquarters is in
Switzerland. Its international R&D network supports the products made in more than 500
factories in 86 countries. The Nestle factories are operating in the region of:
1. Africa
2. America
3. Asia
4. Europe
5. Oceania
Being a company dedicated to food from the beginning, Nestle remains sensitive to
culinary and eating habits, and responds to specific nutritional problems, whilst also setting and
matching new trends such as growing out-of-home consumption and caring about the well being
of its consumers.
EANING OF NESTLE:
Henri Nestlé endowed his company with the symbol derived from his name. His family coat of
arms, the nest with a mother bird protecting her young, became the Company's logo and a
symbol of the Company's care and attitude to life-long nutrition. The Nestlé nest represents the
nourishment, security and sense of family that are so essential to life.
1918 -1938
After the war Government contracts dried up and consumers switched back to fresh milk.
However, Nestlé's management responded quickly, streamlining operations and reducing debt.
The 1920s saw Nestlé's first expansion into new products, with chocolate the Company's second
most important activity
1938 -1944
Nestlé felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to
$6 million in 1939. Factories were established in developing countries, particularly Latin
America. Ironically, the war helped with the introduction of the Company's newest product,
Nescafe, which was a staple drink of the US military. Nestlé's production and sales rose in the
wartime economy.
1944 -1975
The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated
and companies were acquired. In 1947 came the merger with Magi seasonings and soups. Crosse
& Blackwell followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973).
Diversification came with a shareholding in L'Oréal in 1974.
1975 -1981
Nestlé's growth in the developing world partially offset a slowdown in the Company's traditional
markets. Nestlé made its second venture outside the food industry by acquiring Alcon
Laboratories Inc.
1981 -1996
Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé's improved bottom line
allowed the Company to launch a new round of acquisitions, the most important being American
food giant Carnation.
1996+
The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and world
markets developed into more or less integrated trading areas. Since 1996 there have been
acquisitions including San Pellegrino (1997), Spillers Pet foods (1998) and Ralston Purina
(2002). There were two major acquisitions in North America, both in 2002: in July, Nestlé
merged its U.S. ice cream business into Dreyer's, and in August, a USD 2.6bnacquisition was
announced of Chef America, Inc.
MISSION STATEMENT
“Nestle is dedicated to providing the best foods to people throughout their day, throughout
their lives, throughout the world. With our unique experience of anticipating consumers'
needs and Creating solutions, Nestle contributes to your well-being and enhances your quality
of life.”
Nestle is not only Switzerland's largest industrial company, but it is also the World's
Largest Food Company. The mission statement emphasizes on the fact that Nestle products are
available in nearly every country around the world. Wherever one may live, only Nestle can
provide the best and most reliable food and beverage products to meet his/her needs throughout
the day, throughout the life. Especially, people on the move want to be able to find good food
wherever they are, whatever the time of day. They are often reassured that they will find well-
known brands out of home. This statement also reflects the image of high quality products that
Nestle offers. Nestle has the advantage that it offers caterers, fast food chains and other
restaurants a complete range of high quality ingredients, base products and meal components, as
well as leading consumer brands such as Nescafe. Quality is the cornerstone of the success of the
Nestle Company. Every day, millions of people all over the world show their trust in the
company by choosing Nestle products. This trust comes from a quality image that has been built
up for over a century. Therefore, the quality of the products ultimately enhances the quality of
the consumer’s life. In addition, the mission statement declares that Nestle has the ability to
anticipate “…consumer’s needs and create solutions….” Nestle has proven this ability a number
of times by introducing new products that were required by consumers. Especially, the launch of
Nestle Pure Life in Pakistan proves the accuracy of this fact. In Pakistan, there was a need for
safe and healthy drinking water and Nestle responded to this consumer need by introducing
Nestle Pure Life.
Finally, it is quite evident that the organization has actually implemented its mission
statement in the business practices that it carries out. Also, the mission statement has been an
important guideline for any SBU that the firm has started and this is portrayed by the success that
each SBU of Nestle enjoys.
III- Coffee:-
i. Nescafe Classic:
It is one of the world’s most popular coffee brands. Nescafe global campaign “open up” was
launched in Pakistan in October, introducing a new brand framework and increased emphasis
behind coffee sales in Pakistan. Nestle Milkpak locally packs imported coffee and markets it
in 225 and500gm.
IV- Fruit Drinks:-
i. Frost:
It is a well-known brand launched in 1986 and has the largest market share. Positioned as a cold
drink and an alternate to cola drinks, its strength lies in the convenience attached to its usage.
v) Neslac:
Neslac is a growing up milk, formulated specially for 1 to 4 years old. This was launched in
1994. It contains a right balance of proteins, calcium, iron, vitamins and essential minerals in
order to cater nutritional needs of growing children.
VI-Culinary Products:-
i) Maggi 2-minute Noodles:
Fast to cook, good to eat – Maggi 2-Minutes Noodles were launched with local production in
1992, and doing so Nestle pioneered the category of instant noodles in Pakistan. It offers flavors
like chicken masala, chili and chatkhara.
ii) Maggi Cold Sauces:
Nestle entered the Cold Sauces category early in the year with the launch of Maggi ketchup,
Maggi mirch maza and Maggi khatti meethi – the firstEmily sauces in Pakistan. The innovative
taste of Khatti meethi together with the more traditional tastes of Ketchup and Mirch maza, were
receivedwell by the consumers.
VII- Confectionery:-
In view of the impressive potential for confectionery sales in the country, Nestle Milkpak
established an independent sales and distribution network for confectionery products. From three
main cities in 1996, it has grown into a nation-wide network. The initial product range includes
locally produced PoloMint, Kitkat, Smarties, Lion Bar, and Fox’s, Allen’s Toffo and Allen’s
Soothers. Both Toffo and Soothers are produced on a new confectionery line-based on a new
state-of-the-art technology that provides an extremely flexible process for production of wide
range of high and low boiled candies. This will enable the company to introduce varieties of new
sweet flavors over the next few years.
VIII- Water:-Nestle Pure Life:
The launch of Nestle Pure Life in December 1998 was a truly historic event. This marks the
Nestle Pure Life’s entry into the country’s fast growing water market. At the same time Pakistan
became the first country where Nestle launched the new brand. Nestle Pure Life is a premium
drinking water, produced to the highest standards of safety and purity. It is ideally balanced with
essential minerals. It is available in two convenient sizes of 0.5 and 1.0 liters. Capitalizing on its
strong brand recognition, aggressive pricing and supported by a strong marketing campaign,
Nestle Pure Life has made very strong inroads into the water market in Pakistan. Nestlé PURE
LIFE is available around the globe today in Canada, USA, Mexico,Brazil, Argentina, South
Africa, Saudi Arabia, Jordan, Egypt, Lebanon, Turkey, Russia, Uzbekistan,
Pakistan, China, Thailand, and the Philippines. Launched on the North American
market in 2003, Nestlé PURE LIFE is destined to become the world’s leading and
most widely distributed brand by 2010.
STARS:
The two Sbu’s, Mineral water and Confectioneries fall into this category of the BCG. These
SBU’s have high market share and high industry growth rate. These Sub’s are requiring lots of
investment to compete in the growing market. For example, lots of money is being spent and
aggressive marketing strategies have been implemented for the Mineral water to
build and maintain market share. Nestle Pure Life has captured 50 % of the
bottled-water market in Pakistan since it was introduced in 1998. Its approximate
sales for 1999 are RS. 70, 401000. This sales figure is quite impressive as the sales
rose quite high in only one year. It is predicted that there will be additional growth in the mineral
water category in coming years. The sales of the confectioneries rose to RS. 106,559
000 from RS. 87,758 000. The huge increase of RS. 18, 801 000 puts this SBU in
the stars category and shows its increasing market share. There is a growing market for the
products in confectioneries for example Kitkat (even though it’s imported), Polo S marties etc.
This can be proven from the fact that Nestle keeps introducing new products in this category for
example Allen’s Soothers were launched during the last quarter of 1998.
CASHCOWS:
Milk products, Coffee and Dietetic and Infant food have a high market share and are doing
business in mature industries. Since the customers of this product category are loyal, the
marketing costs of these SBU’s is quite low and as a result a large amount of cash can be
generated. Customer Loyalty is a must for these Cashcows to maintain their market share. The
sales of the Milk products have increased to RS. 108,430000 from RS. 87,758000. This huge
increase in sales reflects the high market share of this SBU. However, its growth rate is low
because in general this category is in its maturity stage – that is – a number of milk products
have been launched by Nestle, most of which are quite old. An innovation has not really been
made in this category. The same conclusion can be made about Coffee. There is an already
existing market for Coffee which is not increasing further by a large amount. The sales of
Coffee were Rs. 46,89 000 in 1999 and Rs. 392,00 000 in 1998. This huge
difference shows that a great amount of cash is being generated from this SBU. Sales of
Dietetic and Infant food rose to Rs. 60,935 000 from Rs. 52,655 000. The infant foods unit of
Nestle is operating in a mature industry. Like the milk products, the infant foods have been
around for a long time without barely any new product line being started in this category.
QUESTION MARKS:
Included in this section is the culinary products of the organization. The products such as Maggi
2-minute Noodles and Maggi coldsauces have a low market share and a high growth rate. These
products especially the cold sauces are operating in a highly competitive market. The
approximate sales were Rs. 79,919 000 in 1999 and Rs. 60,818 000 in 1998. This figure
represents a great potential for growth in future. However, in contrast, the market share of the
products in this category is not very high currently. A reason for this is that Nestle just recently
introduced cold sauce such as “Emily sauce” etc. However the enthusiasm with which the
customers received the different flavors of sauces, portrays a very high potential for future
growth. The firm needs to focus on differentiating its products in the competitive market to gain
customers.
DOGS:
Chocolate and Fruit drinks fall into this category and they possess a low market share and a low
growth rate. Chocolate drinks had sales of Rs.19639000 in 1999, which rose from Rs. 19541000
in 1998. This is quite a small increase considering the rise in the sales of other SBU’s. However,
the chocolate drinks are still profitable so the firm does not have to worry about liquidating or
getting rid of this SBU. The sales of Fruit drinks rose to Rs.40,620 000 in 1999 from Rs. 38,103
000 in 1998. There has been a small amount of increase; however it is not a lot compared to
other SBU’s. Firstly, there is not a huge market for chocolate drinks in Pakistan.
People usually tend to buy light juices like apple or orange juice or Pepsi instead
of chocolate drinks. Secondly, regarding the fruit juices, there are not a lot of flavours available
currently in this category. Nestle needs to introduce new flavours such as apple, grape etc.
to capture the market that prefer these flavours. This will not only increase the
sales of the SBU, but it will also increase its market share. At the moment, additional
amount of money is not being invested in these SBU’s, as they are not very profitable. Nestle is
currently trying to maximize profits from this category by minimizing expenditures and by
differentiating the product to build market share.
Objectives of Nestle Pure Life:
The main objective for the SBU was to be number one selling bottled-mineral water in Pakistan.
This objective was hoped to be accomplished by setting the following further sub-objectives.
i) Safety:
To provide the consumers with a safe drinking water: Consumers want reassurance. The Nestle
name on the product is an assurance of quality for the consumer. Also related to safety is the fact
that the water is captured in a safety environment and undergoes rigorous treatment to meet
universal quality standards. The water is de-mineralized by distillation. Mineral salts are then
added, in accordance with a strict formula developed. The bottling line is also subject to strict
sanitary regulations: an air-controlled room houses the filing machine, and the bottles and caps
are sterilized. Quality is a continual process and is monitored during each production phase -
some 200 controls. Packaging also receives special attention. Each Nestle Pure Life bottle and
the 5-litre PET jug have a special cap and tamper-resistant band. This way, the consumer can tell
immediately whether the bottle has come straight from the plant or if it has been tampered with.
2. To offer consumers a healthy product:
Remineralization let Nestle offer consumers a balanced, refreshing and healthy product, the
product's second key objective. The formula developed for Nestle Pure Life contains minerals
such as calcium, which is essential for bone development; magnesium, which is recommended
for muscles and the central nervous system; bicarbonates, which are particularly useful for
digestion; and sodium, which helps regulate hydration in the human body. Overall mineralization
is light (200 mg per liter) and suitable for the whole family.
Publicity:
Nestle Pure Life was launched on 14 December, 1998 in Karachi with a huge amount of
enthusiasm and positive response shown by the locals. The successful story of its launch
was printed in all the local newspapers the next day. This greatly helped in
creating awareness of the brand and gave its introduction a good start.
Sales Promotion:
Specific promotions of Nestle Pure Life were arranged in some of the key outlets of Lahore.
Elaborate shelf space was acquired for product display and specially designed POS material was
extensively used to promote sales. On a 12-bottle purchase of 1.5 ml, one 1.5 ml bottle was
offered free to consumers. Similarly on a 6-bottle purchase of 1.5 ml, one 0.5 ml bottle was
offered free. Regarding trade promotion, the retailer was also given an additional discount of 4 %
during this sales promotion. Not only did the sales of Nestle PureLife grow tremendously during
the promotion, these continued at a higher pace even after it was over. Product sampling and
sticker sampling activities were carried out in Murree in summer of 1999. Nestle marketing team
has also undertaken a major education campaign on water use and its importance in daily life.
Mothers of school children were sent an invitation to attend a Water Show demonstrating the
benefits of safe water and were asked to fill out a questionnaire. The questionnaire
refined the team's knowledge of consumer perceptions. At the end of the show, visitors
received a promotional kit offering a chance to sample Nestle Pure Life and opportunity to enter
a photo contest on the theme “Nestle Pure Life and You.” The contest offered 10,000 rupees in
prize money. This helped boost the brand's image in the minds of consumers. Another contest
took place in October 2001by the name of “Cricket Hangama.” This contest provided a chance to
win a thousand of tickets, signature posters, VIP Tickets, and a chance to dine with the cricket
stars. Besides this, Nestle Pure Life also sponsored the following events: a high profile, national
level hockey match played at Ayub Stadium, Quetta on April 18,2003 and a cycle race on March
9, 2000 in collaboration with the Baluchistan Cycle Association.
Public Relations:
As far as the public relations is concerned, The organization releases an annual report which
includes the company's financial statements along with the sales of all product categories. The
annual report is mainly aimed at the stockholders. However, another very important form of
public relations are the newsletters and bi-monthly magazines issued by the organization. A huge
amount of information is found in these regarding the products and their promotion. In the same
way, Nestle Pure Life was given quit a bit of importance in the newsletters issued after its
launch, which obviously helped in creation of the awareness of this brand. Besides these
promotional methods, word of mouth, a major factor in Pakistan proved to be very effective in
the increasing sales of Nestle Pure Life.
MARKET SEGMENTATION:
To occupy a clear distinctive & desirable place related to competing mineral water in the minds
of the target customers Nestle Pure Life segments its market on two bases:
Geographic segmentation
Demographic segmentation
GEOGRAPHICAL SEGMENTATION:
The Company segments its market geographically on divisional basis. They divide each division
in different zones and every distributor is restricted tosale its products only in his own zone. E.g.
Lahore is divided into five zones like East, West, South, North, and South west.
DEMOGRAPHICAL FACTOR:
If we look nestle pure life's demographic segmentation than we will find that our product is for
every one. People from any area, any culture, any age,any sex, any belief and any income will
drink water. It is not any luxury item which is used by a specific people.
TARGET MARKET OF PURE LIFE WATER:
A specific demographic target market was not chosen for Nestle Pure Life, instead the goal was
to develop a product to be used by consumers of allages - from infants to seniors. It was intended
as a family product especially for families living in large, polluted urban agglomerations that
experience increasing difficulties finding safe, healthy drinking water. In fact, Nestle Pure Life's
0.5 L bottle is targeting to be also an alternative to soft drinks. Basically the target market of
nestle water is those areas where the consumers having more awareness about pure life. As the
people in villages having less information about Nestle Pure Life. So targeting marketing
depends on the awareness of the consumers.
POSITIONING STRATEGY:
There are some competitive advantages or important attributes of Nestle Pure Life drinking
water, occupying in consumer's mind relative to competing mineral waters are as follows:
PURE DRINKING WATER:
Nestle Pure Life is only drinking water product in the market. Their competitors are selling
mineral water which contain extra chemicals which are harm full for human body, but as for as
pure life is concerned it is made by keeping in mind the chemicals which human body requires.
NESTLE LOGO & FAMILY BRAND:
Pure life use Nestle brand name and the logo of nestle pure life is also showing family care to
consumer which is enough to attract the customer. That'swhy customer gives it preference on
other products.
COMMUNICABLE:
Nestle pure life is a brand of nestle which shows a big sign of quality to customer. Due to its
brand name it is very easy to communicate.
MARKETING ENVIRONMENT:
1) Internal environment
2) Micro environment
3) Macro environment
1) Internal Environment:
In Nestle Internal environment ensures
•Employees are on side with the goals of an organization.
•They have direct impact on product quality, dependability and overall productivity.
•They are internal market, which impact every department within an organization; a satisfied
internal market will be better able to satisfyexternal market.
Nestle under the supervision of top management runs the departments of finance, operations,
accounting, sales and marketing, research anddevelopment to achieve the goals of organization.
2) Micro Environment:
In Nestle microenvironment includes:
a) Suppliers: Suppliers provide the resources like labor and material resources to produce
goods and services. They add to customer overall value delivery system.
Labor supplies include handling of
•Quantity of labor
•Quality of labor
•Labor strikes
•Labor relations
Nestle efficiently handles the quality, quantity, price and stability of both material and labor
supplies. Management maps out the strategies for labor strikes, supply shortages and delays to
avoid increasing the cost of production, which can badly affect sales in short run and customer
satisfaction in long run.
b) Marketing Intermediaries:
It includes the firms that help the company to promote, sell and distribute its goods to final
buyers.
•The physical distribution firms determine the ways to store and ship goods to reach their
destination.
•Marketing service agencies including marketing research firms, advertising agencies and media
firms are also hired to target and promote product to right market.
•Financial intermediaries like banks, insurance companies helps to finance transactions and
insure against risks associated with buyingand selling of goods.
Nestle works in coordination with marketing intermediaries to make its product Pure Life Water
available and visible to its valuable customers.
c) Customers:
Nestle deals with the reseller customers who buy the product Pure Life to resell at a reasonable
profit.
3) Macro Environment:
Macro environment include political, cultural, economical factors but as for as Nestle Pure Life
Water is concern none of above factors affect on it.Because it is not at luxury item they are
selling necessities of life which can never be affected.
Demographic Environment:
Demographic environment including age, sex and income also not effect Nestle Pure Life water.
Because Water is for every gender, every age and for every class.
WEAKNESS
•Communication is weak
•Lack of Awareness
OPPORTUNTIES
•Concentrating on these areas can increase sales
•Increase in product line.
THREATS
•Segments are being shared by competitors
•Uncertain conditions will effect the sales (diseases of animals)
•Under cutting by competitors.
MESSAGE TO AUDIENCE:
In every advertisement of pure life water the company tries to convey their message like: They
provide health food and health drinking water for caring their customers. We work for society
welfare.
FUTURE FORECASTING OF NESTLE PURE LIFE WATER:
In future two competitors of Pure Life are going to launch their water in the market which are
Pepsi & Coca Cola. As their competitor will advertise their product at very high stage so people
will get awareness about drinking water and nestle pure life can achieve a great market share in
future Becausepeople can see that our water is getting rough day by day and there is a need for
pure drinking water to survive in the world. For these opportunities company is going to launch
an other plant for drinking water next year.