1) Explain the criteria the company uses to do its market segmentation.

Explain why
the company follows these criteria, mentioning its advantages.

Corporate Mission and Objectives:

What is Nestlé Professional?
According to the website of Nestle Pakistan limited: “Nestlé Professional aims to be an
inspiring growth partner for its Out of Home (OOH) operators and strives to deliver creative,
Branded Food and Beverage solutions enabling the operators to innovate and delight their
consumers. We at Nestlé Professional are committed to providing convenient, cost-effective,
reliable Food & Beverage Solutions for Out-Of-Home establishments. Whether it is a Café,
Restaurant, Office, Airport, University. or Hospital, backed with efficient / timely servicing &
quality products, Nestlé Professional is keen to deliver as per the expectations of the valued
customers.” (Nestlé Professional, n.d.)

Product portfolio:
Following are some of the B2B products and categories that nestle offers in Pakistan:

Target market and environment:

Although, in the global setting, Nestle is the number 1 FMCG company, we are discussing the B2B
division from a local perspective.

The PESTEL analysis of Nestle professionals shows that since the company is operating in food and
beverages sector, it faces strict compliance laws and has strict protocols to follow. In a company like
Pakistan, not every organization can follow these strict protocols which serves as a benefit for Nestle.
Nestle also runs various CSR campaigns in order to maintain a strong position in the market. One of the
most recent examples is the use of Paper straws in its products in a mission to eliminate 400 million
plastic straws. Nestle relies on advanced technology in order to keep up with the modern pace of
markets.
Market structure and competition:
Let me explain this by Porter’s 5 forces model:

Supplier power - Low Competitive Rivalry - Low

Buyer Power - High
Nestle has multiple suppliers In the local setting, the
Nestle holds a strong
and has good relation with competition to Nestle is very
position in the market and
each of them and multiple less as nestle is the market
holds high buying and thus
suppliers reduce their leader when it comes to
bargaining power.
bargaining power quality ingredients.

Threat of substitution - Low

Threat of New Entry - Low
The B2B division of Nestle
The threat of new entry is
Pakistan faces low threat of
also low as new entrants can
substitution because of
only take up a small portion
existing brand positioning in
of the existing market.
the market.

Nestle Channel Structure:

In Lahore, the distribution of the B2B division takes place through 2 distribution centers. Each of this
distribution center caters half of the city. In each part of the city, each distribution center is independent
in serving all the universities, hospitals, restaurants, and cafes.

Internal resources and assets:

Nestle holds the position of market leader because it has a positioning of high-quality manufacturer of
ingredients and coffee products. Although, the price is relatively is higher for Nestle products but then
again the cost put in following all the strict protocols in manufacturing is also higher so it makes sense
for any organization to opt Nestle.

Marketing strategies:
The B2B business of Nestle is a small part of its total portfolio so it efficiently focuses its
strategies by keeping them simple. When it comes to marketing, nestle focuses on developing
personal connections that lead to long-term business. As a result, relationship development is
vital in B2B marketing, particularly throughout the purchase cycle.
The company believes that it allows you the chance to demonstrate what type of business
practices, ethics, and values you adhere to. This ability to interact with your target audience
helps you to differentiate your company or your client's company from the competition while
also building your brand. Lead generation is a significant priority for B2B companies. Because
recurring and referral business is so important, building these human ties may make or ruin a
company.
Branding is an aspect of B2B marketing; however, it is achieved more commonly via connection
development than in the B2C industry. The consistency of the presentation and delivery of your
goods or services is the foundation of branding. In B2B search marketing, being able to express
your market position and allowing your personality to emerge may assist promote brand
awareness and lead creation. Returning to connection building, you must have a strong eye for
market personas. Being able to tailor your brand to your target market can help you increase
brand awareness and lead generation.
Nestle uses re-launching as a tactic when it alters the brand of its goods and has to reintroduce
them as more suited to customer demands. Re-launching also allows the corporation to fix
differences caused by inflation, shortages, and other distribution issues that have allowed rivals
to gain an advantage.
The company also tries to create buzz in the market whenever it launches a new product. The
sales team goes to different restaurants and fuel station stop-shops to launch the product by
making different new dishes from the newly launched nestle product. The event is then shared
on the social media to create further awareness about the launched product.
 2) Elaborate the six stages of the segmentation process as applied to the company. Is
the company following this process? What are the areas of improvement?

Six stages in the segmentation Process:

1. Identify the basis for market segmentation.
Nestle follows this step and opts for different strategies as manufacturing products for already
existing markets but it keeps on expanding its product portfolio and creates a market for its
products. For example: it recently launched a new product by the name of Nestle do cello in
Pakistan. As the major chunk of its B2B product customers is restaurants, nestle always makes
sure that it has the capability to offer new products to offer to the segments it intends to cater.
It efficiently uses its core strengths of quality and taste to align with its goal of serving
customers.
With Pakistan being a country flooded with foodies, this part of the continent serves as a high
growth potential segment for Nestle.
2. Determine the important characteristics of each segment:
Nestle holds the position of monopoly in the B2b sector and thus enjoys the benefits of high
barriers to entry. Major share of the market is present in the hands of nestle professionals.
The high food quality protocols are also followed by the company which is one of the most
important barriers of entry in a country like Pakistan where resources are scarce. The threats of
competition have already been discussed above in porter’s 5-forces model. The buying pattern
of customers in this industry is repetitive as it is FMCG industry.
3. Evaluate the market attractiveness of each segment. (Macroeconomic)
Nestle professionals' PESTEL research reveals that, as a food and beverage firm, it is subject to
stringent compliance standards and must adhere to rigid protocols. Not every organization in a
country like Pakistan can follow these stringent rules, which is a benefit for Nestle. Nestle also
launches a number of CSR programs in order to maintain its market dominance. Paper straws
are one of the most recent instances, as part of an effort to eradicate 400 million plastic straws.
To stay up with the present pace of markets, Nestle relies on new technology.
The profit margin and growth potential are immense in the industry as Nestle is mostly
independent in creating its products and hundreds of small and large organizations always
ready to buy these products.
4. Segment selection:
Nestle professionals in Pakistan, recognizes its position in the market and knows how to
leverage this position inn order to gain more and more market share. Nestle focuses on building
human ties that lead to long-term business when it comes to marketing. As a result, in B2B
marketing, relationship development is critical, especially during the acquisition cycle. The
organization believes it gives you the opportunity to show what kind of business methods,
ethics, and values you follow. This capacity to communicate with your target audience aids in
the differentiation of your company or your client's firm from the competition while also
assisting in the development of your brand. Nestle realizes the importance of selecting
segments which align with the strengths of the company. The segments that the company
recognizes are petrol station tuc shops, cafes, universities, schools, hospitals and corporate
offices.
5. B2B corporate/product positioning.
Out of the 3 positioning strategies, nestle relies on making the product better than the
competitors as discussed earlier that the quality of nestle products is top notch. Not only the
quality but the taste as well is distinctive and desirable.
6. Develop a marketing mix strategy for each targeted segment:
Nestle’s position in market is such that the highest point of focus for nestle is its Product. All
other activities then revolve around developing high quality product. then comes the
placement part which nestle serves through efficient distribution. The price is relatively higher
than the competitors and the communication strategy is discussed as above.

I believe that the company is doing well in following above steps but, on the other hand, it faces
numerous threats, not least of which is its position as a market leader in confectionery. Nestlé
today faces a big challenge in terms of consumer desire for healthy and nutritious alternatives,
with Rowntree, Kit-Kat, and many more well-known confectionery brands under its roof. It can
definitely focus on solving this problem.
 3) Which categories of buying organizations is the company targeting?

Marketing products and services in different B2B buying sectors (and different organizations)
may typically necessitate different marketing tactics, as will selling in different countries around
the world. Private and/or public-sector products and services will necessarily necessitate a
different strategy. The company is targeting private and public organizations with majority of
the focus inclined towards private sector. B2B products in the private sector will be purchased
mainly for functionality, value, service, and price. In case of nestle, the company relies on its
communications through sales team as well as the NAATA platform
Nestle divides its B2B customers into 2 major segments:
These include key accounts which drive most of the B2B business for Nestle and these accounts
include food chains like McDonalds and KFC, Universities like LUMS and LSE and corporate
clients like Fatima Fertilizers and ICI Chemicals.
Apart from this, there are numerous other business who approach the company by placing
orders on NAATA which is a software developed by Nestle for anyone to contact them.
These segments also pass the following test:
- Measurable
- Substantial
- Accessible
- Differentiable
- Stable