PRICING ASSIGNMENT

Evolution of Pricing of Nestle Products

Submitted by – GROUP3:
Abhishek P James – 18020841043
Siddesh Kurlekar – 18020841081
Sonal Singh – 18020841082
Sukanya Sengupta – 18020841037
Kunika Pandey – 18020841165
Aditi Singh – 18020841094
Ishika Deb – 18020841013
Farzad Patel - 18020841026
 1. Price Analysis of Nestle KitKat:

Historical Prices of KitKat:

Year Price
Kitkat Perk Munch Average
1995 10 5 5 6.666667
2000 10 5 5 6.666667
2002 10 5 5 6.666667
2004 20 5 5 10
2008 20 10 10 13.33333
2012 20 10 10 13.33333
2015 20 10 10 13.33333
2018 25 10 10 15
2019 25 10 10 15
Overall Average 11.11111

Calculation of EVC

EVC 25
Reference Value 15
Differentiation Value 10
Taste (Premium quality wafer
AD
Vertical Differentiation and chocolate coating) Campaigns
Texture (More crunchy) 45% 4.5
Packaging (Double coated
packeging, with silver foil and Portions
a plastic wrapper) 30% 3
Portions (A unique aspect of
this product which makes it Packaging
worth sharing with your
peers also offers better
quantity than its closest Texture
Horizontal Differentiation competitors)
Ad Campaigns (They also
provide the product a Taste
superior brand image, thus
creating a positive
differentiation value) 25% 2.5
Total Differentiation Value 10
 2. Price Analysis of Nestle Maggi
Historical Prices of Maggi:

Year Price Quantity

1982 ₹2.10 100g

1995 ₹5 100g

2000- ₹7 95g
05
2005- ₹10 90g
15
2015 ₹12 85g

2016 ₹11 80g

2017 ₹10 70g

Calculation of EVC
The first competition when maggi was introduced- came from the ready-to-eat snack segment, that
were usually ‘the bought out’ type. Eg Samosa. - “unhealthy” and “uhygienic” option.

Today, if we calculate the EVC, we can take the reference price to be a raw noodle packet which can
be cooked at home to prepare noodles/chowmein.
 3. Price Analysis of Nestle Milkmaid

Calculation of EVC
The direct reference for milkmaid would be raw milk used for preparing tea/coffee.
1L milk makes 250ml of Condensed milk. Milkmaid has 400ml of condensed milk. Therefore it
is made by 1.6L of milk.
Evolution of Pricing overtime
The change in prices overtime is due to:

• Change in macroeconomic factors like increase in disposable income with the consumers,
change in inflation rates
• Increase in the production and distribution costs.
• Adoption of competitive pricing.

Suggestions on Future Pricing Strategies

1. Nestle KitKat – Today, the chocolate industry is flooded with many established players as well
as local homemade chocolates. Nestle has tried to increase the prices in the past from ₹5-₹25.
But in this competitive scenario today, playing just with the price won’t work for the company.
Rather the company must try differentiating its offering and adding a new value to the product
be it in a form of a different flavour (example- white chocolate or bring nuts and dry fruits to
the chocolate). Therefore, with this the company can modify its strategy from a competitive
pricing to a value-based pricing.
2. Nestle Maggi – The product is currently charged equal to the EVC calculated by us. Maggi has
a huge potential in the Indian Market. They have in the past tried to increase their prices above
the EVC but as a result have lost sales. Therefore, recommendation for them would be to
continue with the competitive pricing and be a price leader in its own category.
3. Nestle Milkmaid – The EVC calculated by us is less than the MRP by approximately ₹20. This
means that the product is slightly overpriced in the market. It is also found that the consumers
do not find value in the product in the way Nestle tries to communicate or position the brand.
Therefore, if Nestle wants to achieve volumes it must reduce the price to make the Indian
average customer accept the product.