BMK10103

BMK10103
PRINCIPLES OF MARKETING

ASSIGNMENT 1

MARKETING ENVIRONMENT:
NESTLE

Prepared by:

DARMMINI MARIMUTHU

ID:
2122020020037

Prepared for
MDM IZZATUL SABRIN BINTI HAMSAN

Deadline
st
21 March 2021
 BMK10103

TABLE OF CONTENTS
1.0 INTRODUCTION…………………………………………………[2 - 5]

2.0 CONTENT…………………………………………………………..[5]

2.1 MICRO-ENVIRONMENTAL FACTORS…………………………..[5 – 8]

The company………………………………………………………….[5]
Suppliers………………………………………………….....................[5]
Marketing Intermediaries……………………………......................[6]
Customer markets…………………………………………................[6]
Competitors…………………………………………………...............[6]
Publics…………………………………………………………………...[8]
2.2 MACRO-ENVIRONMENTAL FACTORS………………………..[8 –
10]
Political & Legal………………………………………………………..[8]
Economic……………………………………………………………….[9]
Socio-cultural…………………………………………………………..[9]
Technological………………………………………………………….[10]
Natural…………………………………………………………………..[10]
3.0 CONCLUSIONS………………………………………….............[11]
4.0 RECOMMENDATION…………………………………………….[11]
5.0 RUBRIC……………………………………………………………..[12 -
13]
 BMK10103

1.0 INTRODUCTION
LOGO

Background of the company:

Nestlé Company had started off from a single man's idea, and developed into a giant
corporation. In 1866 Henri Nestlé, a pharmacist, developed a milk food formula for infants who
were unable to tolerate their mother milk (Nestle.com). His product became a success, and it
created a demand throughout Europe. As Nestlé’s popularity grew more businesses wanted to
merge and become partners with Henri Nestlé's business. From 1866 to 1947 the Nestlé
Company had gone through several name changes. In 1905, Anglo-Swiss Condensed Milk Co.
and Farine Lactee Henri Nestlé merged, and the company’s name became Nestlé & Anglo-
Swiss Condensed Milk Co. Then in 1929, Peter-Cailler-Kohler Chocolates Suisse’s S.A. merged
with the company. The name was then changed to Nestlé & Anglo-Swiss Holding Co. Ltd, on
November 27, 1936. In December 1947, Co. acquired all the shares capital of the Alimentana
S.A. Company in exchange for fifteen Nestlé shares and fifteen Unilac shares for each of
Alimentana S.A. share, so this point the name was at Nestlé Alimentana S.A. And then finally,
the last name change that the company would endure was in 1977, where it adopted the name
Nestlé SA (Mergent Online). Along the way Nestlé’s company remain successful, which allowed
them expand to new region and territories throughout the world, making them the world’s
biggest food and beverage company. Nestlé’s headquarters are located in Vevey, Switzerland,
but the Nestlé Company has factories or operation in almost ever country in the world. In
addition, to the increase in the size of the Nestlé Company; Nestlé also has increased the
variety in the different products they offer. In Nestlé’s business strategy they encourage product
growth through innovation and renovation (Nestle.com). This strategy has allowed Nestlé to
develop many different products in the various fields: baby foods, dairy products, breakfast
 BMK10103

cereals, ice creams, chocolates and confectionery, prepared foods, beverages, food services,
bottled water, and pet care.

Introduction of the Company:

Nestlé is the world's leading food company. Since it was set up by Henri Nestlé to provide an
infant food product, it has been associated with providing high quality, customer and consumer
focused products. In recent years it has focused on becoming a nutrition, health and wellness
company. Wellness is about supporting people to live more healthy lives e.g. through the
development of probity yoghurts that help maintain the balance of the digestive system. The
company is a world leader in research and development, and Nestlé's scientists work in all
areas to create healthier and more nutritious foods. Vision: To bring consumers foods that are
safe, of high quality and provide optimal nutrition to meet physiological needs. In addition to
Nutrition, Health and Wellness, Nestlé products bring consumers the vital ingredients of taste
and pleasure. Mission: Make better food so that people live a better life.

Brief History:

In 1866 Henri Nestlé, a pharmacist, developed a food for babies who were unable to breastfeed.
His first Success was a premature infant who could not tolerate his mother's milk or any of the
usual substitutes. People quickly recognized the value of the new product, after Nestlé's new
formula saved the child's life, and soon, Farine Lactée Henri Nestlé was being sold in much of
Europe. In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early
1900s, the Company was operating factories in the United States, Britain, Germany and Spain.
World War I created new demand for dairy products in the form of government contracts. By the
end of the war, Nestlé's Production had more than doubled. After the war Government contracts
dried up and consumers switched back to fresh milk. However, Nestlé’s management
responded by streamlining operations and reducing debt. The 1920s saw Nestlé's First
expansion into new products, with chocolate the Company's second most important activity.
Nestle 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. The end of World War II was the beginning of a dynamic phase for Nestlé.
Growth accelerated and Companies were acquired. Nestlé's growth in the developing world
partially offset a slowdown in the Company's traditional markets. Nestlé made its second
 BMK10103

venture outside the food industry by acquiring Alcon Laboratories Inc. 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.
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 2.6bn acquisition was
announced of Chef America, Inc.

Evolution of Nestlé:
1867: Henri Nestle founded the company in vevey, Switzerland.
1898: Nestle purchases its first factory outside of Switzerland- viking Milk factory in Norway.
1905: Nestle merges with Anglo – Swiss condensed Milk company.
1929: Nestle merges with peter-Cailler kohler chocolates Suisses S.A.
1938: Nestle launches Nescafe – the world’s first instant coffee.
1947: Nestle merges with Alimentana S.A. with the brand Maggi.
1962: Nestle purchases Findus.
1974: Nestle becomes a significant shareholder in the cosmetics company L’Oreal.
1977: Nestle purchases Alcon , manufacture of eye care products and kits.
1985: Nestle purchases the food company carnation.
1988: Nestle purchases the confectionary company Rowntree Mackintosh and pasta company
Buitoni –Perugina.
1992: Nestle purchases the minarel water company Perrier.
1998: Nestle purchases Spillers pet foods business.
2000: Nestle sells the findus brand in all countries except for Switzerland.
2001: Nestle merges with Ralston Purina, the premier petfood company in North America, and
with unique expertise in the dry dog food area.

TYPES OF BUSSINESS

Brands & Products of Nestle: Most people know us through our brands. Our portfolio covers
almost every food and beverage category – giving consumers tastier and healthier products to
enjoy at every eating occasion and throughout life’s stages including times of special nutritional
need. Here is a sample of some of our brands.
Baby foods : Cerelac, Gerber, Gerber Graduates, NaturNes, Nestum
Bottled water : Nestlé Pure Life, Perrier, Poland Spring,
S.Pellegrino Cereals : Chocapic, Cini Minis, Cookie Crisp, Estrelitas, Fitness, Nesquik Cereal
Chocolate& confectionery : Aero,Butterfinger, Cailler, Crunch, KitKat, Orion, Smarties, Wonka
Coffee : Nescafé, Nescafé 3 in 1, Nescafé Cappuccino, Nescafé Classic,Nescafé Decaff,
Nescafé Dolce Gusto, Nescafé Gold, Nespresso Culinary,
chilled and frozen food : Buitoni, Herta, HotPockets, LeanCuisine, Maggi, Stouffer's,
Thomy Dairy : Carnation, Coffee-Mate, La Laitière, Nido Drinks: Juicy Juice, Milo, Nesquik,
Nestea
Food service : Chef, Chef-Mate, Maggi, Milo, Minor’s, Nescafé, Nestea, Sjora,Lean Cuisine,
Stouffer's Healthcarenutrition :Boost, Nutren Junior, Peptamen, Resource
 BMK10103

Ice cream : Dreyer’s, Extrême, Häagen-Dazs, Mövenpick, Nestlé Ice Cream

Petcare: Alpo, Bakers Complete, Beneful, Cat Chow, Chef Michael’s Canine Creations, Dog
Chow, Fancy Feast, Felix, Friskies, Gourmet,Purina, Purina ONE, Pro Plan

1.0 CONTENTS
2.1 MICRO-ENVIRONMENTAL FACTORS

Suppliers

Suppliers provide the raw material resources, unfinished goods and labors to the company in
order to produce goods and services. The effectiveness of suppliers determines the efficiency of
the company in terms of producing the goods. In addition to that the quality of the finished
product has a strong with the suppliers of the firm especially in case of food products. As the
presence of the company is in more than hundred companies, it is a challenge for the company
to maintain its standard all over the world and provide the consistency to its customers in the
taste and quality of the product.

Further we can divide the supplier of Nestle into two parts: Labor suppliers and material
suppliers. Labor suppliers deal with the quantity of labor is required at the optimum level in order
to prevent the loss of labor force and prevent the company from the shortage of labor which
again can lead building of inventory as a cost for the company. The skills of labor is again
maintained by the labor suppliers, wherein the labors of different skills are managed in such a
way that the operation of the firm can run smoothly. Labor strikes and labor relations are other
factors which we cannot ignore in the current scenario as the efficiency of the business depends
largely on the factors like attrition and employee satisfaction.

Material supplies handle all the material required by the firm in order to manufacture the finished
product for sale. Nestle is in the food and quality markets and the quality of such item plays a
major role in its success in the market.

Nestle has maintained a high quality efficiency in handling the quality and quantity of the two
different supplies i.e. labor supplies and material supplies and hence the company has been
able to run its business smoothly for more than 100 years in spite of the different business
trends in the world market.
 BMK10103

Marketing Intermediaries

The market intermediaries of the company help to advertize, sell and distribute its product to the
end customers. The physical distribution network of the company decides the medium by which
the finished product is delivered to the end customer on time and with safety. This department
also ensures the proper storage of the firm that prevents the product from getting any king of
damage.
The marketing service department of the firm helps in the promotion of the product and acts as
a communication channel between the company and customers. It not only communicates the
features of the product to its customers but also get the feedback with the help of survey, which
helps the research and development department to develop a product according to the need of
the customers.
The other intermediaries of the company like banks help to provide the funds to the companies
and play an important role in the continuity of the business. Insurance companies insure the
property and the goods of the company against the risk involved in various operations, buying
and selling of the product.

Nestle has the differential advantage of working in a smooth coordination with all its marketing
intermediaries which helps in providing the best and pure food products to its valuable
customers in the different parts of the world.

Customers

The immediate customers of Nestle are retail and grocery stores which provide the products of
the company to the end customers at a reasonable price and a reasonable profit. The end
customers of Nestle are the consumers who consume its wide range of product. The company
has a bright brand image in its big pool of end customers.

Competitors

Competitors Nestle's largest competitors are Kraft Foods, Unilever, Mars Incorporated and
Danone. Although Nestle is leader in packaged food industry of Malaysia but the other
competitors who are giving tough competition to Nestle are
 BMK10103

• Petra Foods Limited

• Yeo Hiap Seng Limited

• Maeil Dairy Industry Co., Ltd

Publics

The company’s competitors are also important inorder to gain a greater market share. When a
competitor makes a mistake Nestcafecan show that they have better quality produce and
service than anyone else. Nestlewould also have a number of different publics such as financial
publics who have aninterest to see if they can pay back loans, media publics to see if there is
any newsabout then which they can write about, government publics to see if laws
areimplemented and business is carried out correctly according to the law, citizen publicswho
will react on certain actions carried out by the company and local publics whoare interested in
the locality of the company.

2.2 MACRO-ENVIRONMENTAL FACTORS

Political Environment

The company is into food and nutrition business they have to just adhere to the laws of food and
nutrition policies of government and constantly provide good quality which is the vision and
mission of the company thus Nestle never faces any problems on political front. The political
environment consists of laws, rules, regulations, government agenciesand pressure groups
which can limit the activities of a company. The Braziliangovernment introduced new laws to
protect the Amazon rainforest, Before these lawswere implemented Nestle had plans to cut
down a section of the rainforest which hadperfect conditions to grow coffee, they were not
allowed to do so as their plans wererejected on the grounds that the region was now protected.
This could have severeconsequences for the company as they wanted to gain a greater market
share andproduce more sales and profit. Nescafe now had to come up with another plan
afterspending so much time and money. These laws are a huge implications for Nestle asthey
depend so much on regions that are now becoming rarer to find and harder to getpermission to
do anything on them
 BMK10103

Cultural Environment

Culture is no doubt of having light food at constant intervals and young crowd likes to have good
nutritional food thus Nestle has great scope there. People all over the world grow up in different
was and demand different things thanothers might from a different region. Peoples values,
perceptions, preferences andbehaviours are all shaped by the location in which the live and
grow up in. Peoplemay view an organisation different to others in a different region depending
how theorganisation affects them. For example the people in the western world believed
thatfarmers who work for Nestle produce the crops may have had a negative view of
theorganisation before as they believed the farmers had to work in poor conditions withminimal
pay whereas the actual farmers liked working for them as they worked for afairtrade company
which treated the employees in the correct way giving them fairwages and conditions to work in.
People in the western world automatically presumethat a growing county would have poor
working conditions just because of its locationwhich is why Nestle now promote the fact that
they are now a fairtrade company

Economical Environment

The disposable income of country and the high living standard always give better bigger
business opportunities for Nestle. .Economic environmentThis consists of the factors that affect
spending patterns and purchasing power. Themarketers at Nescafe must pay a lot of attention
to the market to identify purchasingpatterns to identify how the market actually buys their
products and possible reactionsto future products. The marketers can classify the market into
sub categoriesdepending on their purchasing power. They would identify what price they can
chargefor their products and who they can aim the product at, known as target market, thereis
no point aiming a premium priced product at lower class people within the marketas they
wouldnt have the buying power to purchase it. An example of this would bethe Nespresso
range. This range consists of premium priced quality coffee and coffeemachines that range from
€100 to €500 with the pods/coffee selling at 69cent each.They identified that this would be a
 BMK10103

premium product that not all of their marketwould be able to afford, but to actually make sales
they would position their productin prestigious stores around the world due to the fact that the
people who shop there would expect to be charged a premium price, such stores as Brown
Thomas andAvoca

Technological Environment

Technologically rich country both in terms of availability of technology and also the technological
work force the highly skilled and educated manpower is abundant.

In case of Nestle and the product offered by the company these factors do not create much
impact in general scenario. However as we have seen the major events like World War had
created a positive impact on the sale of confectionary products of the company. The culture has
some impact in this company as whether the country has most people as vegetarian or non
vegetarian the consumption of milk products is always there. However the countries where the
people are more dependent on milk products are profitable market for Nestle.

Natural

Natural forces"The natural environment involves the natural resources that are needed as
inputs bymarketers or that are affected by marketing activities. Thisbasically means what can
affect Nescafe from producing and selling their products tothe market due to the natural
environment. " the environment consists of a largenumber of non-controllable variables
Nescafes main rawmaterial is the coffee bean, these are difficult to grown as they only grow in
certainparts of the world normally tropical areas where there is a lot of rain, warm conditionsand
no frost. The coffee needs to be grown at high altitude to prevent animals fromdestroying the
crops. Due to this the coffee can only be grown in regions like theMinas Geras region in Brazil
where the weather meets the requirements to grow thecrop. This can hinder the amount of
coffee that is produced by Nescafe globally andmay reduce sales. The high cost of running the
plants that produce the coffee can alsoaffect the production of the coffee. Many of the plants
that produce the coffee are runon non-renewable resources such as oil and coal. These cost
quite a lot of money tokeep running and due to the implications that greenhouse gasses are
causing to ourenvironment. According to top scientists, governments all over the world are
 BMK10103

chargingand sanctioning plants which are creating too much toxic gasses from their
factories.Nestle were fined in China for creating too much pollution in 2010. China in
recentyears has been known for having incredibly bad conditions due to air pollution, as aresult
factories are given quotas to the amount of CO2 gasses they can produce, ifthey go over this
they are fined.

3.0 Conclusion
Several factors affect Nestlé in its international operations among them political, economic,
social, technological, as well as environmental and legal factors, which are significant influences
determining the success of operations in modern business environment. Three particular
challenges are identified as having substantial impact on Nestlé’s operations and business
potential. They include: quality of products and supplies which portends loss of confidence in
product; the company’s weak implementation of eco-friendly initiatives which are essential not
only to check the environmental impact, but also serve as proof for goodwill to society; and, the
increasing trend towards healthy eating which is a concern for future competitiveness of the
company’s products. These challenges should be addressed to guarantee success of products
in markets, as well as overall competitiveness. Nestlé is the world's leading food company.
Since many decades it has been associated with providing high quality, customer and consumer
focused products. Our company Nestle (ice-cream) will be focused on becoming number one in
nutritious, health and Wellness Company. We will take pride by setting consumer satisfaction
our first priority and we will be successful in the upcoming years.

4.0 Recomendation
 The are few recommendations that recommended if the project isto be conducted again
in future.
 Employees should be trained according to the changingstandards of theorganization.
 Company should conduct survey from time to time to according to which changes can be
introduced in the organization to stay updated in themarket.
 They should introduce creativity into the work, so that the employees can dotheir work
active mindedly.
 BMK10103

 Employess should be given compensation in order to keep them loyal.

 Employees should be more involved in decision makingto become moredifferentiated.
 Company should provide incentives to shop keepers.

5.0 RUBRIC ON REPORT (30%)

SKILLS CRITERIA MARKS
Excellent Good Average Needs
(5) (4) (3) improvement
(2)
The introduction The introduction All the points are The introduction is
covers all the covers all the covered however, incomplete.
INTRODUCTION important points important points the points are _____/ 5
and the and however, the entirely copy and x 10% =
importance of question on vision pasted. Lack of
(10%)
vision and and mission coherency
mission to the needs to be between the
company related to the paragraphs.
correctly company selected
described. and/ or some
Student had parts are copy
rewritten the and pasted from
findings in own the website.
words without any
plagiarism.

A compelling and A compelling A brief analysis of There is no

CONTENT critical analysis analysis has the factors that discussion
(40%) has made on the made on the have made. Good provided. ____ /5 x
company. A very company. A very explanations and 40% =
good good explanations discussions
explanations provided on provided on
provided on strategy chosen strategy chosen
strategy chosen by the company. by the company.
by the company.
A very good
discussion has
been made.

A very good Good Some There is no

recommendation recommendation recommendations recommendation
RECOMMENDATION has been made. has been made. are acceptable. and conclusion.
& CONCLUSION The conclusion is The conclusion The conclusion is ----- /5 x
strong and it tieds ties up and brings recognizable, but 30 % =
up and brings together the does not tie up
(30%)
together the introduction, introduction and
 BMK10103

introduction content and well content.

content and well summarized.
summarise.

Report tells a Report is clear Report has some Report is poorly

very clear, and tells a gaps in story, organized, missing
FORMAT coherent story coherent story, some weak key sections. No ---- /5 x
& QUALITY OF with excellent strong throughout. sections. minutes is set. 20% =
INFORMATION transitions. Some part of the Audience has Sequence of
Overall report is report is neat. difficulty in information is
neat and free Information in following work difficult to follow.
(20%)
from errors. logical sequence. because the
Information in agenda jumps
logical, interesting around.
sequence.  
 
           

TOTAL  /100