ACKNOWLEDGEMENT

We are greatly thankful to our Mrs. Preeti Rajpal Singh, our Marketing professor, who introduced us to the nuances of marketing. We are also grateful for her constant guidance and support during the making of the project. Our efforts would not have culminated successfully without the kind cooperation of Mr Sanjay Dhaneja, Mr raj Sexsena at the Nestle India Head office at Gurgaon who responded to all our queries and satisfied all our requests regarding the company’s functioning. The project provided a great learning experience- not only about the company, Nestle but also about how the Marketing theories are actually applied in the Industry.

INTRODUCTION
Henri Nestlé was born in Frankfurt in 1814, and moved to Vevey in his twenties, a merchant and small-scale inventor. He slowly gravitated towards foods and foodstuffs, experimenting with various recipes for baby-food to help mothers who were unable to breastfeed, and eventually came up with a concoction he called farine lactée, based, as

he put it, on “wholesome Swiss milk and a cereal component baked by a special process of my invention”. In 1867, he fed this to a premature baby boy whose mother was dangerously ill herself; the boy survived, and Nestlé’s reputation skyrocketed. The following year he opened an office in London to cope with the quantity of orders, and within five years was exporting to South America and Australia. In 1874 he sold his company for a million francs. Nestlé bought out Anglo-Swiss Condensed Milk in 1905, and chocolatemakers Peter, Cailler and Kohler – pioneers in making milk chocolate – in 1929; although it had always concentrated on milk alone, it started to diversify. Benefiting from massive surpluses of coffee beans in the 1930s, Nestlé launched the world’s first instant coffee – Nescafé – in 1938. More takeovers followed, of processed-food manufacturer Maggi in 1947, Crosse & Blackwell in 1950, and frozen-food giant Findus in 1963, broadening the range even further. By the mid-1960s, Nestlé was Switzerland‘s biggest company, a huge multinational incorporating over 200 factories around the world, with global management still based in Vevey.

Today, having swallowed up cosmetic company L’Oréal in 1974 and British confectioner Rowntree’s in 1991, Nestlé employs almost a quarter of a million people, and buys up more than ten percent of the world’s entire crop of coffee and cacao beans. However, its most controversial product is, strangely, its original one: baby formula. With a marketing policy in developing-world countries that has been deemed by many to be aggressively profit driven at the expense of consumer health, Nestlé has been riding a storm of anger in recent years from children’s organizations and health watchdogs in both the developed and the developing world. Many of these groups continue to lobby for boycotts of Nestlé products unless the company takes a role in helping educate mothers in developing-world countries to breastfeed whenever possible, and to buy formula only as a last resort. The company maintains its ads don’t dissuade mothers from breastfeeding, and are merely offering them a choice. The dispute shows few signs of resolution and, frankly, little chance of toppling such a mighty global industrial entity as

cooking aids..Nestlé. chocolates. bakery products. Switzerland. surgical instruments etc). is one of the leading companies in the global foods industry. Nestle has a presence in 83 countries worldwide. Nassau. processed foods. pharmaceutical products (ophthalmic. 153 in America and 136 in Africa. a wholly owned subsidiary of Nestle Holdings Ltd. The principal activities of the group encompass beverages (with Nescafe as the flagship brand). confectioneries. Asia and Oceania . BACKGROUND Nestle was promoted by Nestle Alimentana. Bahama Islands NESTLE-WORLDWIDE Nestle S A Switzerland. milk products. It has a total number of 509 factories out of which 220 are located in Europe.

noodles. pickles.The parent held 51% stake in the company as at 2003 end.Nestle headquarter . It has FIPB approval to hike stake by 10% and has been gradually acquiring shares from the open market. Over the years. The parent plans to continue hiking stake through open market purchases. the Company expanded its product range with new products in instant coffee. Nanjangad (Karnataka) factory in 1989 Samlakha (Haryana) factory in 1992.8%. Nestle India's operations were restricted to importing and trading of condensed milk and infant food. In 1978. Nestle is one of the oldest food MNC operating in India. for manufacture of infant foods. Cherambadi in Tamil Nadu. The Ponda (Goa) factory started operations in 1995. culinary aids. . sauces. Parent stake in the company as at 2003 end stood at 53. dairy products and mineral water PLANT LOCATIONS       Nestle started its manufacturing operations with Milkmaid in 1962 at Moga factory. Punjab . Bicholim in Goa started operations in 1997 MOGA Factory. with a presence of over a century. Switzerland NESTLE INDIA Nestle was incorporated as a limited company in 1959. For a long time. chocolates and confectionery. Manufacturing of Nescafe started in 1964 at the same factory. to the current name in 1981. the Company issued shares to the Indian public to reduce its foreign holdings to 40%. Its name was changed from Foods Specialties Ltd. coffee etc.

NESCAFÉ. ensuring that all our products are of the highest quality and offer great taste. is based on our image and a reputation for high standards built up over many years. The Company remains committed to delivering good food for good living. From our humble beginnings more than 130 years ago as a Swiss milk processing company. Nestlé has grown into the world's leading food and beverage producer with such favourite brands as MAGGI. Nestlé will create more performance foods. GOOD LIFE is the philosophy that underpins the activities of Nestlé.NESTLÉ PHILOSOPHY GOOD FOOD. Nestlé is one of the largest investors in food technology. Performance and Nutrition As we move towards the future. research and development. This is evident in the Nestlé product range from the nourishment of our infant and milk products to the pleasure and fun of our confectionery and ice cream brands. To best understand the nutritional needs for superior performance. These are foods that positively contribute to our ability to perform physically and mentally. the cornerstone of our success. pleasure and convenience. service and consumer contact . Nestlé is working in collaboration with the Australian Institute of Sport (AIS) nutrition department. MILO and KIT KAT. Nestlé commitment to quality Quality. Today. Every product.

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Nescafé and Maggi. The company has given India it most modern and sophisticated food processing plants.PRODUCT PROFILE With brands like Kit Kat. While about 14% of sales come from domestic market. Nestlé has created leading edge technology in food processing and the resultant quality of these products makes them world favourites today. Nestlé's Nescafe dominates the premium instant coffee segment. tea and health drinks contribute to about 33% of Nestlé’s turnover. among their international brands and several products based on Indian tastes. NESTLE HAS AROUND 5 PRODUCT LINES      Baby Foods Dairy Product Chocolate & Confectionery Beverages Culinary Products BEVERAGES Beverages like coffee. Beverage sales have registered a 15% growth during 2003. exports contribute to about 16% of sales. Nestlé’s other coffee brand Sunrise has also been . under the Milkmaid and Maggi brands. The company employs some of the most high profile professionals in all functional areas and has a top order compensation structure to match. Nestlé India is a premier employer in the Indian market and is currently in a major growth phase which has seen the introduction of Kit Kat. Nestlé India has successfully transferred its international brand image to the Indian market. and a range of brands that holds a large share of the premium foods market. Polo and Bonus.

Poland and Taiwan. Nestle is one of the largest coffee exporter in the country. there has been a decline in sales value as there is a movement from retail packs to bulk packs. Nestle has a dominating market share in the baby weaning foods with its Cerelac and Nestum brands.5bn) of Nestle’s Rs3bn export turnover. a brown-malted beverage was launched in 1996. Nescafe sales to Russia accounts for 80% (Rs2. growth. besides Hungary. This has resulted in price declines in the coffee export segment INFANT FOOD/ MILK PRODUCTS Milk based products and baby food contributes to 24%of Nestle's turnover.relaunched under the Nescafe franchise to leverage on the existing equity of the brand. Nestle has focused on expanding the domestic market through price cuts and product repositioning. Milo. where it has a 30% market share. However it has been losing share in the domestic market. It has an estimated volume share of about 3% in the malted food drink segment. For the export market. Brand loyalties are very high in categories such as . Nestle has developed a network around its Moga factory for collection of fresh milk everyday from the farmers. Key export market is Russia. For ensuring regular procurement of good quality milk. Infant milk powder is sold under the Lactogen and Nestogen brands.

the product has been soft-launched in select towns of Tamil Nadu and Andhra Pradesh The company also markets ghee (6% market share) under the EveryDay brand. Nestle has expanded its milk product portfolio with the launch of new dairy products such as UHT milk. which restricted production. the company said. This shortage has now been resolved and is unlikely to recur in 2Q. sweetened condensed milk and ready to cook mixes for traditional Indian sweets sold under the Milkmaid brand. the use of the milk was allocated to the most profitable business in its product. enabling the company to command a price premium. Due to high prices of solid milk. biscuits and so on. rotis. Curd and Butter.7 per cent last quarter as sales were by a non-recurring factor of insufficient availability of milk solids. The Milkmaid umbrella brand is being extended to a tube format as a sweet. Being marketed as Milkmaid Squeezy. Also sales to canteen store departments (army sales) and ghee sales were stopped during the period. . Huge investments are being made in building a diversified dairy business and the distribution infrastructure for the same. The company recorded very low sales growth of 3. flavoured spread for breads. impacting sales growth.infant food and weaning cereals. Other milk products include dairy whiteners (21% market share) sold under the EveryDay and Tea Mate brands.

All sugar confectionery products are sold under the umbrella brand Allen's. Lions and After Eight. Crunch. . CHOCOLATES & CONFECTIONERY Nestle forayed into chocolates & confectionery in 1990 and has cornered a fourth share of the chocolate market in the country. putting pressure on margins. Marbles. Other brands include Milky Bar. Nestle has seen volume growth in chocolates slow down after the worm infestation controversy around Cadbury surfaced this year . Nestle also markets some of its imported brands like Quality Street. It has expanded its products range to all segments of the market The Kitkat brand is the largest selling chocolate brand in the world. Munch etc. The sugar confectionery portfolio consists of Polo. The category contributes 14% to Nestle ‘s turnover. The milk and nutrition segment recorded a stronger volume growth (+8. which came into force in January 2004. Nestle India's current market share within chocolates is 32 % . Nestle Rich Dark. Raw material prices peaked during the year. Frootos and Milkybar Eclairs. Soothers.4 per cent) in spite of the advertising ban on infant nutrition.The company has also been affected by a rise in raw material prices. Bar-One.

Over a period of time. Maggi is the market leader in the noodles (45% market share) and the ketchup (43% market share) categories. including Maggi pickles and jam. Nestle has realized that unless it continuously innovates in an endeavour to provide value-for-money to consumers. New taste variants are continuously launched to add variety to the product offerings. seasonings. . 37 per cent are semi-impulse purchases.30 per cent confectionery products are planned purchases. soups.Nestle India has already indicated that it intends to foray into the biscuits market soon. sold under the umbrella brand Maggie. are ready-to -cook gravy/sauces. Other products. Culinary products account for about 14% of Nestlé’s turnover. Nestle India is the fastest growing company in chocolates in India CULINARY PRODUCTS Ready to cook food/ cooking aides are sold under the umbrella brand name Maggi. Milkmaid dessert mixes. Nestle has restructured its brand portfolio to phase out several products with slow offtake. as well as traditional Indian foods such as pickles and instant snack mixes. and 33 per cent are pure impulse buys. the company's bottomline may be impacted in the long run.

Raksha Bandhan. the company introduced economy packs and Attractive Gift packs. Christmas demand for chocolates is more for presenting it as gift. thus enabling affordability to a wide section of the population. During Diwali. During the same period.while completely abandoning its packaged water business through launch of smaller SKU’s. Similarly during winters the demand for coffee is more. . so it can cash on this demand by increasing prices. PRICING STRATEGY The pricing strategy depends upon various factors like Seasonal variations  Input cost  Situational factors  Govt. policies THE PRICING STRATEGY IS NOT ONE PARTICULAR STRATEGY BUT IT IS A COMBINATION OF DIFFERENT SUPPORTIVE STRATEGIES THAT INFLUENCES THE PRICES OF PRODUCTS SEASONAL VARIATIONS Demand of chocolates is largely influenced by the different seasons.

While milkmaid is priced at Rs 44 for a 400-gm tin. is priced at Rs 38 for the same tin size. Nestle is adopting a wait and watch policy right now. It was GCMMF's pricing strategy that led market leader Nestle to reduce the prices of its Milkmaid brand. This affects the pricing strategy of company. Imports of goods leads to the expansion of product-range in the market. SITUATIONAL FACTORS They are the most important ingredients of the pricing policy. Therefore the price of chocolate bar should be up. .g. pricing strategy of finished goods.Nestle has a dominant market share (around 42%) in ketchup’s (maggi ketchup).g : These days the prices of raw materials like sugar .INPUT COSTThe prices of raw materials are very crucial for considering the prices of finished goods. GOVERNMENT POLICIES The government policies are a critical component in deciding the Pricing Strategies of the company. For e. Gujarat cooperative milk marketing federation's MithaiMate brand. So if govt. The availability of raw – materials is very important for co. For e. cocoa. oils are increasing. Recently Heinz reduced its price and increased its market share to around 3%.

g. condensed milk. can better access products to the consumers. that's why it introduced the Rs 2 sachet. For e. Nestle India ltd. taking into account Nescafe. But sometimes Nestle has to suffer because of its high price. Imports various varieties of goods to expand the range of goods like FOX’S This is how various factors affect the pricing strategy of Nestle.policies regarding custom duties. & other expenses are liberal then co. .g. For e. However Nestle is an expensive company that tries to give the best quality. VOLUME v/s PROFIT In NESTLE the various product lines have different motives DEPENDING upon their market position and brand loyalty SALES MOTIVE CHOCOLATES CONFECTIONARIES MILK PRODUCTS REASONS Tough Competition Large Number Of Competitors PROFIT MOTIVE BABY FOOD KETCHUP NOODLES REASONS Strong Market Share High Brand Loyalty NESTLE prices have not increased for the last four years in general. tomato ketchup and noodles. it was difficult for a consumer to spend Rs 96 for a bottle of ketchup. They have more or less been stable.

it has decided to push the smaller pack of Maggi 2-minute noodles aggressively.The consumer trades functionality for quality. the market leaders in the bottled water drinking market. just like it had used for Nescafe coffee. which is Rs 2 more than the price of Parle’s Bisleri and Coke’s Kinley. Nestle is extending Maggi into new product categories. As a result Nestle is still struggling in its mineral water business. So they prefer to pay Rs 10. rather than Rs 12 for Pure Life. by launching Nescafe Redimix in Re 1 and Rs 10 packs .Nestlé’s Pure Life is priced at Rs 12 for 1 litre.

Product Lines having Sales motive: The objective here is to increase the Sales volume across the market. The process may include various intermediaries in the form of wholesalers. For e. agents.PLACE Place refers to the process through which goods are made available to the final consumer. .e. Chocolates. in case of BABY FOODS. in case of northern India the entire manufacturing comes from plant in MOGA (PUNJAB).g. e. Therefore in adjoining areas of Punjab the distribution channel is very small i. retailers.g. NESTLE’S DISTRIBUTION CHANNEL Nestle implements different strategies for different product lines : MOTIVE BASED DISTRIBUTION CHANNEL: 1. Product Lines having Profit motive: in contrast to sales motive the objective is to increase profit margin.KETCHUP’S and NOODLES GEOGRAPHICAL BASED DISTRIBUTION STRATEGY     The distribution strategy may also depend on proximity of the market to the manufacturer. etc. Confectionary fall in this category 2. The gap between producers and final consumers is minimized. MANUFACTURERSWHOLESALERSRETAILERSCONS UMERS. Therefore they have a large number of intermediaries. Therefore the company tries to marginalize intermediaries. even as they sacrifice margins.

GENERAL DISTRIBUTION CHANNEL AT NESTLE MANUFACTURING WAREHOUSING DISTRIBUTOR AGENT BUYER SOURCE AGENT IN DESTINATION WHOLESALER IN . MANUFACTURERAGENTSWHOLESALERSRETAILER SCONSUMERS So the farther-off the market the more are the number of intermediaries required DISTRIBUTION PRODUCTS STRATEGY BASED ON NATURE OF In Nestle.e. products can be classified as  Basic – Less degree of Perishability – In these cases. Nestle sources close to the producer. etc.    Sometimes If retailers ARE OPERATING ON A LARGE SCALE THEN EVEN WHOLESALERS are removed from this chain Whereas in case of HARYANA.  Processed . Example includes chocolates. Baby food. Examples of such goods include Maggi noodles.High degree of Perishablity – Here nestle sources closer to the markets where the products are to be sold. DELHI the distribution channel is very long i. etc.

DESTINATION RETAILER CONSUMER NESTLÉ’S SUPPLY CHAIN POLICY In India. and the packaging. the cold chain. The supply chain in Nestlé is defined as “From the vendor to the customer.” True to this definition. . as elsewhere. the truckers. sourcing is mainly done locally for milk. Nestlé goes right down to the vendors of all kinds – the milk. That is what it meant by traceability in Nestlé – where from and where to. packaging and so on. Nestle want to monitor entire chain to ensure quality throughout so that they can trace the path of materials from manufacture to sales.

The objective of this endorsment is to increase awareness about this Maggi Chota pack. In recent years. her star appeal cuts across age.PROMOTIONAL MIX At Nestle. Rani Mukherjee as the brand ambassador complements the popularity of the Munch brand. LOCAL PROMOTION Under local promotion local themes and languages are used to promote the brand. nestle has introduced Maggi noodles in smaller packs at the Rs 5 price point to make it more easily available and affordable. the entire promotional activities are first of all divided into A. Preity Zinta endorses Nestle Maggi To create awareness for its new Rs 5 Maggi 2-minute noodles pack. town and class .g during summer season there is less demand for coffee. The pro motional efforts are undertaken in consultation with local distributors. Nestle India has signed on Bollywood actress Preity Zinta . LOCAL PROMOTION NATIONAL PROMOTION Products that have a nationwide appeal like chocolates are promoted on national basis. NATIONAL PROMOTION B. For e. NESTLE India has signed Rani Mukherjee as brand ambassador for its chocolate brand Nestle Munch. Nestle Munch at Rs 5 is already the largest selling SKU in the chocolate and wafers category with sales in metros as well as smaller town.wholesalers and retailers. For example. Like the brand. .

Bombay  Attractive packing is provided at reasonable cost  E. samples.Hapur etc  It includes coupons. gifts  Wholesalers and retailers work together in designing these promotional strategies  Nestle does not directly participate but keep an eagle eye on all these promotional campaigns.  Another form is by offering placement incentives to superbazars or supermarkets for providing ‘shelf space’ RECENT DEVELOPMENTS The company has started marketing its infant nutrition products directly to doctors to counter restrictions on advertising.Therefore instead of promoting it nationwide it is promoted only in selected region. Under national subdivison and local promotion there is further PRICE PROMOTION PROMOTION NON PRICE PRICE DISCOUNTS  FOLLOWED in big cities like Delhi.g economy pack of chocolates NON PRICE DISCOUNTS  Mostly used in small cities like Rohtak. Nestle is also planning to hire medical representatives to undertake direct marketing of infant nutrition products to paediatricians The company has added 15 regional sales offices in its sales and distribution structure from Januray 2004 to drive product reach into the smaller towns and cities across the country .

This is to secure the maximum value for Punjab milk producers through induction of world-class private sector marketing and processing expertise represented by Nestle This will help in in further developing and expanding Nestlé’s milk processing capacity in the state. .The Punjab Government is considering a joint prospect with Nestle India to improve milk yielding potential of the state’s cattle population by adopting the latest technological packages.

It is difficult to find the accurate Target Market. It is imperative for Distribution solution vendors to create a credible and broadbase network to overcome this problem. Lack of understanding of Retailers among the Wholesalers is the critical hurdle. BIBLIOGRAPHY INTERNET . The other hindrance is the unsuitable locations for specific business needs. The other hindrance is the amount of money involvd in the setting up of the Distribution system for specific locations. Notably. So company can be wrong in finding the markets or locations for its products. This is especially true for small distributors or wholesalers who are unable to drive Economies of Scale on Distribution Investment.THE HURDLE RACE Considering the level of penetration of distribution of Products. The last Problem area mentioned is the lack of awareness among the users. It takes a lot of time to create a friendly environment for full understanding between the Retailers and Wholesalers. Inadequate support of Effective Wholesalers is the major obstacle. Nestle India also tried to pinpoint the hurdles in implementing the Distribution Plans. that is the main impediment. It affects the sales of products and finally affects the distribution of products. it is the non-availability of Support rather than non-availability of good Wholesalers or Agent buyers.

o www.com MAGAZINES o BusinessWorld o Business Today .com o www.economictimes.com o o www.nestle.indiainfoline.com o www.com www.google.hindubusinessonline.

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