ROLE OF MARKETING DEPARTMENT

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

Marketing Division in Nestle

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

Ø Research and development department

Ø Customer relation department

Ø Distribution department

As the function of marketing department is to satisfy the customer and to fulfill

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

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

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

Product development and launching strategies of Nestle

Nestle Milkpak Ltd. is market leader in food and beverage products and competing with
its existing competitors effectively. Strong emphasis on customer’s needs and wants
enable the Nestle to be market leader in the industry.
Nestle never develops any product with blind eyes but before developing or launching
any product, they go for complete study of market and identify the needs and wants of
customers and develop product accordingly. Such sorts of activities are performed by
marketing division with its three departments. The division has an efficient research and
development department with marking information system (MkIS) which helps to
identify the unmeet needs of customers through scientific research or surveys.

In general, the marketing division concentrates on following two aspects before

developing new product.

1. Taste of potential market.

2. Consumption pattern of target market

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

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

New product development activities

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

1. Primary product
2. Quality test
3. Market test
4. Feed back
5. Modification
6. Commercialization (launching)

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

SWOT ANALYSIS OF NESTLE

Strengths

Nestle has following strengths:

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

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

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

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

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

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

Weaknesses

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

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

Opportunities

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

Threats

Followings are the major threats for Nestle Milkpak Ltd. ;

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

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

COMPETITIORS

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

Rafhan:

Rafhan is competing Nestle in infant and follow up cereals.

Shezan and Bambino:

Shezan and Bambino are competing Nestle Milkpak’s local brand “Frost”.

CDL and Adar-e-kisan:

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

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

Competitive Priorities:

Following are the competitive priorities of Nestle

1. High performance design

2. Consistent quality
3. Development speed
4. Volume flexibility
QUALITY

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

1. HIGH PERFORMANCE DESIGN

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

2. CONSISTENT QUALITY

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

3. DEVELOPMENT SPEED

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

4. VOLUME FLEXIBILITY

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

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

4 Ps

PRODUCT

Target market for Nestle products

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

· Everyday

· Nido

· Milk pack
· Nescafe

· Mineral water

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

Market segmentation

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

Ø Age

Ø Occupation

Ø Income group

Ø Family composition

Target market for Everyday

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

Target market for Milkpack

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

Target market for Nido

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

Target market for Mineral Water

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

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

PRICING

EVERY DAY

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

MILKPAK

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

NIDO

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

NESTLE PURELIFE WATER

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

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

SIZES AND PRICING

EVEY DAY MILKPAK NIDO PURELIFE
1000gm (194-Rs) 1-Litre (30-Rs) 1100gm (199-Rs) 1.5-litre (22-Rs)
400gm (85-Rs) ½-Litre (13-Rs) 400gm (88-Rs) ½-litre (12-Rs)
200gm (47-Rs) ¼-Litre (9-Rs) 200gm (56-Rs)
¼ Litre liq (7-Rs) 2500gm (830-
Rs)

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

PLACEMENT

DISTRUBUTION

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

CONTINUOUS IMPROVEMENT (CI)

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

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

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

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

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

MILKPAK

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

The Re-launching of MILKPAK

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

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

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

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

NIDO

Since last year NIDO has seen a consistent and substantial growth in sales volume. The
growth clearly indicates that consumer confidence in processed milks is growing. The
factors that have led to this are rising cost of gawala milk despite its questionable quality,
the growing size of the milk market to rapid urbanization and better awareness about
processed milk.

Nido met its 1999 OPL annual volume targeted on July 15, 1999, when the highest ever
invoicing and retail per day record was achieved in June 1999.

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

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

NESTLE PURE LIFE WATER

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

CONCLUSION

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

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