CHAPTER-1

INTRODUCTION OF
THE TOPIC
Introduction of the topic

Food is core element in our daily lives. Not only does it enable us to survive, but approprate amounts
and quality also help to ensure a better standard of living by contributing to our health and wellness.
Consumer needs and expectations associated with a particular food product are not fixed, but change
with time and according to geographic region, culture and the various stages of life. Ever since its
foundation in 1866, Nestlé‟s goal has been to keep in step with this constant process of change. It reacts
to new consumer requirements with innovative and continually renovated products, and implements new
scientific findings in tasty foods.

Business Overview:

Nestlé is the world's leading nutrition, health and wellness company based in Switzerland. It is the
largest food company in the world measured by revenues. Nestlé's sells baby food, breakfast cereals,
coffee, confectionery, dairy products, frozen food, pet foods, yoghurt and snacks. It owns several major
consumer brands such as Stouffers, Nescafe, Kit-Kat, Carnation, Nestlé Water, and many others

Nestlé in India:

Nestlé India Ltd. is a food processing company, which is registered on National stock exchanges. It
established its first production unit in 1988 in Sheikhupura, India with the name of Nestlé Milkpak
Limited but its name has been changed and now it is called Nestlé India Limited.

Headquartered in Haryana, the Company operates five production facilities. Two of its factories in
Delhi, Mumbai, Kolkata, Chennai are multi product factories, while another one at Tahliwal is already
for production. One factory in Delhi and two in Mumbai produce bottled water. Through its effective
marketing and a vast sales and distribution network throughout the country, it ensures that its products

are made available to consumers whenever, wherever and however.

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Nestle India is a subsidiary of Nestle S.A.- a company of Swiss origin headquartered in Vevey,
Switzerland

Name Nestle S.A

Logo

Industries served Food Processing

Geographic area served Worldwide

Headquarters Switzerland

Current CEO Paul Bulcke

Revenue CHF 92.2 Billion (2012)

Profit CHF 10.6 Billion (2012)

Employees 328000 (2012)

Main Competitor Unilever VN, Hershey Foods, Kraft Foods, Cadbury

Schweppes, Group Danoe

• Sheikhupura Factory

The production facility, under the name of Milkpak Ltd. at Sheikhupura commenced operations in 1981
as a producer of UHT milk. By 1988 it had expanded its operations to producer butter, cream, desighee
all under the brand name MILKPAK and fruit drinks under the brand name FROST.

After Nestlé S.A., Switzerland, took a major participation in India Ltd. In 1988, the India factory at
Sheikhupura became a part of the joint venture under the name of Nestlé Milkpak Ltd.

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Soon afterwards in 1990 the milk powder plant was established to produce powder milk (NIDO). This
was followed in subsequent years by the installation of production lines of infant formulae
(LACTOGENs), tea whitener (EVERYDAY), chocolate drink-powder (MILO) growing up milk
(NESLAC), ready to drink chocolate drink (MILORTD), sugar confectionery (POLOMint), fruit drinks
(FROST), juices (ORANGE, APPLE, PINE APPLE, MANGO), coffee (NESCAFE), flexible
confectionery line (TOFFO and SOOTHERS), bottled water (NESTLE PURE LIFE), plain and fruit
yogurt, specialized infant formulae(NAN 1 & 2).

During these years a variety of variants of different products were also introduced as a part of expansion
of products portfolio.

To meet the needs of safe storage for the ever expanding product range and their increasing volumes, a
National Distribution Center (NDC) was constructed in 2000. Spread over 6614 square meters, it can
store up to 8300 pallets, approximately 8000 tons.

• Kabirwala Factory

Nestlé India acquired the factory in 1990 as a subsidiary and subsequent to its meger with Nestlé India
in April 1997 it became a fully owned unit of Nestlé India Ltd.

A MAGGI NOODLES plant was installed in 1992, followed by a mil powder plant for NIDO and
GLORIA whose capacity was subsequently increased several times. Then came a new butter line for
producing bulk and cultured butter. A dry milk line was installed for tea whitener powder
(EVERYDAY) and the milk powder plant was modified to produce NIDO enriched with vitamins and
minerals. The desi ghee plant was relocated form Sheikhupura Factory and its capacity was doubled.

A National Distributions Center and an Occupational Health Center were established and a new
incinerator was commissioned with a scrap yard for proper water disposal.

Mission Statement:-

Nestlé's business mission is to manufacture and market the Company's products in such a way as
to create value that can be sustained over the long term for shareholders, employees, consumers,
and business partners.

Motto of Nestlé is “Good Food, Good Life”.

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Objectives:-

Nestlé does not favor short-term profit at the expense of successful long-term business development.

· Nestlé recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and
actions of the Company behind brands in which they place their trust, and that without its consumers the
Company would not exist.

· Nestlé believes that, as a general rule, legislation is the most effective safeguard of responsible
conduct, although in certain areas, additional guidance to staff in the form of voluntary business
principles is beneficial in order to ensure that the highest standards are met throughout the organization.

· Nestlé is conscious of the fact that the success of a corporation is a reflection of the professionalism,
conduct and the responsible attitude of its management and employees. Therefore recruitment of the
right people and ongoing training and development are crucial.

Nestlé continues to maintain its commitment to follow and respect all applicable local laws in each of
its markets.

History (The story of Nestlé: From nutrition to wellness)

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1866 -1905

In the 1860s 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. High infant mortality rates, and the lack of suitable replacement foods for babies with no
access to breast milk, were the motivation behind Henri Nestlé‟s invention of Farine Lactee. He was also
able to offer his food – to convalescent and elderly people, thus laying the foundations of today‟s
concept of nutrition. He said,“ The thought that my invention could save the lives of so manychildren
counted enormously, the financial gain was not theprime motivation“.

(Henri Nestlé. 1869)

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.

1905-1918

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.

1918 -1938

After the war Government contracts dried up and consumers switched back to fresh milk. However,
Nestlé's management responded quickly, streamlining operations and reducing debt. The 1920s saw
Nestlé's first expansion into new products, with chocolate the Company's second most important activity

1938 -1944

Nestlé felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to $6

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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, Nescafé,
which was a staple drink of the US military. Nestlé's production and sales rose in the wartime economy.

1944 -1975

The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and
companies were acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse &
Blackwell followed in 1960, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification
came with a shareholding in L'Oréal in 1974.

1975 -1981

Nestlé's growth in the developing world partially offset a slowdown in the Company's traditional
markets. Nestlé made its second venture outside the food industry by acquiring Alcon Laboratories Inc.

1981 -1996

Nestlé divested a number of businesses 1980 / 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.

1996+

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 Petfoods (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.

1999

The company has also set up a special cold chain for product distribution in select retail outlets. Nestle
India has entered into a 10-year agreement with Campco in February, 1990 for manufacture and supply
of bulk quantity of chocolates and cocoa products.

2000

Nestle is set to enter the domestic bottled water business and will launch the product under the brand
name 'Pure Life'. - The Company has launched its ultra heat treated liquid milk,'Nestle Pure Milk', in
Bangalore, Chennai, Hyderabad and Kochi. The Company has launched Perrier and will celebrate

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Perrier Invitation Golf-2000. Nestle India Ltd. to launch Nescafe Gold and Nescafe Gold Decaffeinated.

2001

Nestle India Ltd. has launched 'Pure Life', its mass-market bottled water, adding one more premium
brand to the already saturated Rs 600-crore bottledwater segment.

The board of directors of Nestle India on July 27, nominated the Chairman and Managing Director of
NIIT Ltd, Mr Rajendra S. Pawar, on the company board with effect from October this year. The board
of directors of Nestle India on July 27, nominated the Chairman and Managing Director of NIIT Ltd, Mr
Rajendra S. Pawar, on the company board with effect from October this year.

2002

Nestle Group increases holding in Nestle India to 53.27%. Ties up with Nilgiris to co-brand various
dairy products like dahi, paneer, ghee and possibly milk. Launches a throat lozenge branded Acti-V to
compete against Proecter & Gamble's Vicks cough drops.

2003

Rolls out Nestle Development Nutrition Plan for infant weaning and launches its infant food CERELAC
123 as a range of products graded to the needs of infants in each stage of the plan -Nestle India's
executive director Ranjit Raj re-elected to be the Coffee Board member representing instant-coffee
manufacturers. Nestle SA, Switzerland, buys 1.01 million shares in its Indian arm 'Nestle India'. With
this purchase, the parent holding in its Indian arm goes up to 59.8 per cent from 58.7 per cent -Consumer
Body files case against Nestle India in National Consumer Dispute Redressal Commission (NCDRC)
regarding the noncompliance in weight in its 50-gm Nescafe packs -Signs a 100 per cent buyback pact
with Bengal Nestor's India Ltd (BNIL) for its ultra heat treated milk and other dairy products.

2004

Nestle India bags Tetra Pak's annual dairy and beverage industry award . Nestle India has signed on
Bollywood actress Preity Zinta to feature in its latest commercial brand magi . Nestle introduces 'Sweet
Lassi' in Delhi, Punjab and Haryana . Nestle India said on June 24, 2004, it has signed Rani Mukherjee
as brand ambassador for its chocolate brand Nestle Munch and the advertising campaign will be released
on June 25.

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2005

Neslte India launches new variant of Maggi. Delists securities from the Delhi Stock Exchange
Association Ltd (DSE)w.e.f. July 15, 2005.

2007

Nestle India Ltd has Informed that the Board of Directors of the Company at its meeting held on July
31, 2007, inter alia, has appointed Mr. Pradip Baijal as a Non-Executive Director of the Company.

PRODUCTS:-

Milk products and baby food:-

In late September 2008, the Hong Kong government found melamine in a Chinese-made Nestlé milk
product. Six infants died from kidney damage, and a further 860 babies were hospitalized. The Dairy
Farm milk was made by Nestlé's division in the Chinese coastal city Qingdao. Nestlé affirmed that all its
products were safe and were not made from milk adulterated with melamine. On 2 October 2008, the
Taiwan Health ministry announced that six types of milk powders produced in China by Nestlé
contained low-level traces of melamine, and were "removed from the shelves".

As of 2013, Nestlé has implemented initiatives to prevent contamination and utilizes what it calls a
"factory and farmers" model that eliminates the middleman. Farmers bring milk directly to a network of
Nestlé-owned collection centers, where a computerized system samples, tests, and tags each batch of
milk. To reduce further the risk of contamination at the source, the company provides farmers with
continuous training and assistance in cow selection, feed quality, storage, and other areas.In 2014, the
company opened the Nestlé Food Safety Institute (NFSI) in Beijing that will help meet China's growing
demand for healthy and safe food, one of the top three concerns among Chinese consumers. The NFSI
announced it would work closely with authorities to help provide a scientific foundation for food-safety

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policies and standards, with support to include early management of food-safety issues and collaboration
with local universities, research institutes and government agencies on food-safety.

In an incident in 2015, weevils and fungus were found in Cerelac baby food.

Cookie dough:-

In June 2009, an outbreak of E. coli O157:H7 was linked to Nestlé's refrigerated cookie
dough originating in a plant in Danville, Virginia. In the US, it caused sickness in more than 50 people

in 30 states, half of whom required hospitalization. Following the outbreak, Nestlé voluntarily recalled

30,000 cases of the cookie dough. The cause was determined to be contaminated flour obtained from a
raw material supplier. When operations resumed, the flour used was heat-treated to kill bacteria.

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Maggie noodles:-

In May 2015, Food Safety Regulators from the state of Uttar Pradesh, India found that samples of
Nestlé's noodles Maggi had up to 17 times beyond permissible safe limits of lead in addition
to monosodium glutamate. On 3 June 2015, New Delhi Government banned the sale of Maggi in New
Delhi stores for 15 days because it found lead and monosodium glutamate in the eatable beyond
permissible limit. Some of India's biggest retailers like Future Group, Big Bazaar, Easyday, and Nilgiris
had imposed a nationwide ban on Maggi as of 3 June 2015. On 3 June 2015, Nestlé India's shares fell
down 11% due to the incident. The Gujarat FDA on 4 June 2015, banned the noodles for 30 days after
27 out of 39 samples were detected with objectionable levels of metallic lead, among other things.

On 4June 2015, Nestlé's share fell down by 3% over concerns related to its safety standards. On 5 June
2015, Food Safety and Standards Authority of India (FSSAI) orders banned all nine approved variants
of Maggi instant noodles from India, terming them "unsafe and hazardous" for human consumption. On
5 June 2015 Nepal indefinitely banned Maggi over concerns about lead levels in the product. On 5 June
2015, the Food Safety Agency, United Kingdom launched an investigation to find levels of lead
in Maggi. Maggi noodles has been withdrawn in five African nations - Kenya, Uganda, Tanzania,
Rwanda, and South Sudan by a super-market chain after a complaint by the Consumer Federation of
Kenya, as a reaction to the ban in India.

As of August 2015, India's government made public that it was seeking damages of nearly $100 million
from Nestlé India for "unfair trade practices" following the June ban on Maggi noodles. The 6.4 billion
rupee (approximately US$93 million) suit was filed with the National Consumer Disputes Redressal
Commission (NCDRC), regarded as the country's top consumer court, but was settled on 13 August

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2015.The court ruled that the government ban on the Nestlé product was both "arbitrary" and had
violated the "principles of natural justice." Although Nestlé was not ordered to pay the fine sought in the
government's suit, the court ruled that the Maggi noodle producers must "send five samples from each
batch of Maggi [noodles] for testing to three labs and only if the lead is found to be lower than permitted
will they start manufacturing and sale again." Although the tests have yet to take place, Nestlé has
already destroyed 400 million packets of Maggi products.

In India, Maggi products were returned to the shelves in November 2015, accompanied by a Nestlé
advertisingcampaign to win back consumer trust, featuring items such asthe Maggi anthem by Vir
Das and Alien Chutney. Nestlé resumed production of Maggi at all five plants in India on 30 November
2015.

NESCAFE:-.

Nescafé

Product type Coffee

Owner Nestlé

Country Switzerland

Introduced 1938; 82 years ago

Markets Worldwide

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 Tagline It all starts with a Nescafé.

Website Official website

Nescafé is a brand of coffee made by Nestlé. It comes in many different forms. The name is
a portmanteau of the words "Nestlé" and "café".[1] Nestlé first introduced their flagship coffee brand
in Switzerland on 1 April 1938.

HISTORY:-

Nestlé began developing a coffee brand in 1930, at the initiative of the Brazilian government, to help to
preserve the substantial surplus of the annual Brazilian coffee harvest. Max Morgenthaler led the
development project. Nestlé introduced the new product under the brand name "Nescafé" on 1 April
1938. Nescafé is a soluble powdered coffee that became an American staple during World War II.

In 1965, Nestlé introduced a freeze-dried coffee brand called "Nescafé Gold" in Europe.

In 1966, Nestlé developed a freeze-dried coffee brand under the name Taster's Choice.

MARKETING:-

In the United States, Nestlé used the Nescafé name on its products until the late 1960s. Later, Nestlé
introduced a new brand in Canada and the US called Taster's Choice, which supplanted Nescafé for
many years. The company continues to sell Taster's Choice as a separate product, branded as superior to
Nescafé and higher priced.

In the United Kingdom, a television advertisement campaign, the Gold Blend couple starring Anthony
Head and Sharon Maughan ran in 12 installments between 1987 and 1993. The first 11 episodes were
released as a promotional compilation video called Love Over Gold in 1993. A novelisation of the same
name written by Susan Moody (under the pseudonym Susannah James) was released in the same year.

In 2003, the company reintroduced the Nescafé brand in Canada and the US, and the product is now
known as Nescafé Taster's Choice. It is sold in North American supermarkets in both glass and plastic
packaging.

While the Nescafé brand was created for soluble coffee, it has subsequently been used as an umbrella
brand on a number of instant coffee products, including, in the UK, Gold Blend and Blend 37 freeze-
dried coffees.

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In 2006, Nescafé launched the new coffee machine system "Dolce Gusto" ("sweet taste" in Italian). The
system allows consumers to make various styles of coffees themselves (cappuccino, latte macchiato,
espresso, lungo, etc.). Additionally, hot chocolate and cold drinks can be prepared with the machine.
The machines are now sold in more than 60 countries. Unlike other Nescafé products, most Dolce
Gusto beverages use roasted and ground coffee beans, instead of instant coffee.

In the UK in August 2009, Nescafé unveiled a £43 million ad campaign for Nescafé, focusing on the
purity of its coffee and featuring the strapline "Coffee at its brightest".

Nescafé was ranked 153rd among India's most trusted brands according to the Brand Trust Report 2012,
a study conducted by Trust Research Advisory. In the Brand Trust Report 2013, Nescafé was ranked
230th among India's most trusted brands and subsequently, according to the Brand Trust Report 2014,
Nescafé was ranked 209th among India's most trusted brands. Nestle India has branded instant coffee as

Nescafe Classic and the 70:30 mix of instant coffee and chicory as Sunrise.

In Pakistan, Nescafe launched an annual music show based on the same theme as of Coke Studio,
named Nescafe Basemen

Joint ventures:-

Joint ventures include:

 Cereal Partners Worldwide with General Mills (50%/50%)

 Beverage Partners Worldwide with The Coca-Cola Company(50%/50%)
 Lactalis Nestlé Products Frais with Lactalis (40%/60%)
 Nestlé Colgate-Palmolive with Colgate-Palmolive (50%/50%)
 Nestlé Indofood Citarasa Indonesia with Indofood (50%/50%)
 Nestlé Snow with Snow Brand Milk Products (50%/50%)
 Nestlé Modelo with Grupo Modelo
 Dairy Partners America Brazil with Fonterra (51%/49%)

Board of Directors:-

As of 2017 the board is composed of:

 Paul Bulcke, chairman and former CEO of Nestlé

 Andreas Koopmann, former CEO of Bobst

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 Beat Hess, former legal director/general counsel for ABB Group and Royal Dutch Shell
 Renato Fassbind, former CEO of DKSH and former CFO of Credit Suisse
 Steven George Hoch, founder of Highmount Capital
 Naina Lal Kidwai, former CEO of HSBC Bank India, country head for HSBC in India
 Jean-Pierre Roth, former chairman of the Swiss National Bank
 Ann Veneman, former United States Secretary of Agriculture and director of UNICEF
 Henri de Castries, former CEO and chairman of AXA
 Eva Cheng, former executive vice president of China and Southeast Asia for Amway.
 Ruth Khasaya Oniang‟o, former member of the Parliament of Kenya, current professor at Friedman
School of Nutrition Science and Policy
 Patrick Aebischer, former president of École Polytechnique Fédérale de Lausanne.

Research & Development

Research and Development (R&D) in India is part of NESTLÉ S.A.‟s global R&D network and supports
all markets worldwide with new product development and manufacturing excellence for Noodles. It is
also a Centre of expertise for local Indian cuisine within the NESTLÉ R&D network and offers
assistance to Culinary, Confectionery, Nutrition and Dairy products in the South Asia Region (SAR).
Better nutrition in the region is a perpetual challenge. Its meaning changes with the stage of
development, the degree of social awareness, and scientific advancement. The new NESTLÉ R&D
facility in India will help develop great tasting food solutions that are relevant for consumers in the
South Asia Region, creating products that take the promise of taste and health to a broader economic and
social section than ever before. It will also strengthen NESTLÉ‟s position as the leader in Nutrition,
Health and Wellness in the emerging markets.
NESTLÉ India has always had Research and Development support from the NESTLÉ R&D network
across the world. Now, with the new R&D Centre in Manesar, NESTLÉ South Asia Region will benefit
from a greater „regional consumer‟ focus. Having an R&D Centre in India also brings Research and
Development closer to NESTLÉ India businesses, and reflects the NESTLÉ spirit of R&D-Business
partnership towards developing winning concepts, suited to the local consumer. It will in turn help
NESTLÉ R&D to bring out strong local concepts that are in accordance with the NESTLÉ Group
ambition to provide „affordable Nutrition, Health and Wellness‟.
Ultimately, these concepts will not just be relevant for emerging markets like India, but could be
transferred to NESTLÉ worldwide.

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Food Safety Institute of India

Food safety and hygiene is critically important for improving public health and consumer welfare in
India. A holistic approach including all stakeholders and covering the entire food chain can help reduce
the food-borne disease burden. Food safety, thus, is a shared responsibility.
Nestlé shares the commitment on food safety and the quality and safety of our products is a top priority.
To strengthen the food safety commitment in India Nestlé is establishing the Nestlé Food Safety
Institute, India (NFSI). NFSI India will adopt a holistic and collaborative approach towards ensuring
safe food for consumers that will help meet India's growing demand for healthy and safe food. It is the
local interface of Nestlé‟s global food safety science capabilities, and leverages Nestlé‟s expertise in
food safety for new scientific research partnerships in the country.
Mission

The mission of NFSI India is to “build and share knowledge through collaborative partnerships to help
build trust and improve food safety in India”. Our numerous and extensive research endeavors in food
safety will provide the foundation upon which this mission is guided.
Objectives

 Ensure that the broad competences and knowledge within Nestlé are fully leveraged in India and
the Region.
 Create scientific knowledge to enable the formulation of effective and implementable risk
reduction strategies.
 Engage with concerned stakeholders to share knowledge and information on emerging food
safety issues and support a science based policy framework.
 Support knowledge dissemination and conduct training programs NFSI India will be an integral
part of the global network (NQAC and R&D) of food safety experts within Nestlé. NFSI India
will serve as a local interface of Nestlé‟s global food safety capabilities & research, and as such,
leverage our expertise in food safety science as an incentive for new research collaboration &
partnerships in the country. NFSI will partner with reputable academics, government agencies
and research institutes.
Research Agenda & Activities

The research program / key activities will be comprised of two pillars

1) The Capacity building pillar focuses on:

1. (i) external contracts and collaborations/partnerships, and
2. (ii) training programs (e.g. adulteration toolkit, agricultural hygiene management),

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2) The Analytical Services & Data Science pillar provides in-house research on analytical method
development and data trending and chemical surveillance by testing of materials for contaminants
(heavy metals, pesticides, mycotoxins, adulteration)

CONCEPT OF MARKETING:-

The 'marketing concept' proposes that to complete its organizational objectives, an organization should
anticipate the needs and wants of potential consumers and satisfy them more effectively than its
competitors. This concept originated from Adam Smith's book The Wealth of Nations but would not
become widely used until nearly 200 years later Marketing and Marketing Concepts are directly related.

Given the centrality of customer needs, and wants in marketing, a rich understanding of these concepts
is essential:

 Needs: Something necessary for people to live a healthy, stable and safe life. When needs remain
unfulfilled, there is a clear adverse outcome: a dysfunction or death. Needs can be objective and
physical, such as the need for food, water, and shelter; or subjective and psychological, such as
the need to belong to a family or social group and the need for self-esteem.

 Wants: Something that is desired, wished for or aspired to. Wants are not essential for basic
survival and are often shaped by culture or peer-groups.

 Demands: When needs and wants are backed by the ability to pay, they have the potential to
become economic demands.

Marketing research, conducted for the purpose of new product development or product
improvement, is often concerned with identifying the consumer's unmet needs.Customer needs are
central to market segmentation which is concerned with dividing markets into distinct groups of
buyers on the basis of "distinct needs, characteristics, or behaviors who might require separate
products or marketing mixes." Needs-based segmentation (also known as benefit segmentation)

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 "places the customers' desires at the forefront of how a company designs and markets products or
services."Although needs-based segmentation is difficult to do in practice, it has been proved to be
one of the most effective ways to segment a market.In addition, a great deal of advertising and
promotion is designed to show how a given product's benefits meet the customer's needs, wants or
expectations in a unique way.

MARKETING MIX:-

Marketing may refer to the process of value exchange that is facilitate by the 4 Ps. The term 'marketing
mix' is a foundation model for businesses, historically centered around product, price, place, and
promotion (also known as the "4 Ps"). The marketing mix has been defined as the "set of marketing
tools that the firm uses to pursue its marketing objectives in the target market". Thus the marketing mix
refers to four broad levels of marketing decision: product, price, place, and promotion.

Marketing practice has been occurring for millennia, but marketing theory emerged in the early
twentieth century. The contemporary marketing mix, or the 4 Ps, which has become the dominant
framework for marketing management decisions, was first published in 1960. In services marketing, an
extended marketing mix is used, typically comprising 7 Ps, made up of the original 4 Ps extended by
process, people, and physical evidence. Occasionally service marketers will refer to 8 Ps, comprising
these 7 Ps plus performance.

In the 1990s, the model of 4 Cs' was introduced as a more customer-driven replacement of the 4
Ps. There are two theories based on 4 Cs: Lauterborn's 4 Cs (consumer, cost, convenience,
and communication), and Shimizu's 4 Cs (commodity, cost, channel, and communication).

Given the valuation of customers towards potential product attributes (in any category, e.g. product,
promotion, etc.) and the attributes of the products sold by other companies, the problem of selecting the
attributes of a product to maximize the number of customers preferring it is a computationally
intractable problem.

The correct arrangement of marketing mix by enterprise marketing managers plays an important role in
the success of a company's marketing:

1. develop strengths and avoid weaknesses

2. strengthen the competitiveness and adaptability of enterprises
3. make the internal departments of the enterprise work closely together

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4 P’s of marketing:-
The four Ps of marketing are the key factors that are involved in the marketing of a good or service.
They are the product, price, place, and promotion. Often referred to as the marketing mix, the four Ps are
constrained by internal and external factors in the overall business environment, and they interact
significantly with one another.

The 1st P: Product

Product refers to a good or service that a company offers to customers. Ideally, a product should fulfill a
certain consumer demand or be so compelling that consumers believe they need to have it. To be
successful, marketers need to understand the life cycle of a product, and business executives need to
have a plan for dealing with products at every stage of their life cycles. The type of product also partially
dictates how much businesses can charge for it, where they should place it, and how they should
promote it in the marketplace.

The 2nd P: Price

Price is the cost consumers pay for a product. Marketers must link the price to the product's real and
perceived value, but they also must consider supply costs, seasonal discounts, and competitors' prices. In
some cases, business executives may raise the price to make a product seem more like a luxury or lower

19
the price so more consumers can try the product.
Marketers also need to determine when and if discounting is appropriate. A discount can sometimes
draw in more customers, but it can also give the impression of the product being less exclusive or less of
a luxury than when it is at a higher price.

The 3rd P: Place

Place decisions outline where a company sells a product and how it delivers the product to the market.
The goal of business executives is to get their products in front of the consumers most likely to buy
them.
In some cases, this may refer to placing a product in certain stores, but it also refers to the product's
placement on a store's display. In some cases, placement may refer to the act of placing a product on TV
shows, films or web pages to garner attention for the product, but this placement overlaps with the
promotion.

The 4th P: Promotion

Promotion includes advertising, public relations, and promotional strategy. This ties into the other three
Ps of the marketing mix as promoting a product shows consumers why they need it and should pay a
certain price for it. In addition, marketers tend to tie promotion and placement elements together so they
can reach their core audiences.

20
For example, In the digital age, the "place" and "promotion" factors are as much online as offline.
Specifically, where a product appears on a company's web page or social media, as well as which types
of search functions trigger corresponding, targeted ads for the product.

Distribution of products:-
A distribution channel is a necessity in business. This lesson will discuss these channels, the types of
distribution systems, and the goods and services that move along these channels.

Distribution Channel:-

The distribution function of marketing is comparable to the place component of the marketing mix in
that both center on getting the goods from the producer to the consumer. A distribution channel in

21
marketing refers to the path or route through which goods and services travel to get from the place of
production or manufacture to the final users. It has at its center transportation and logistical
considerations.

Business-to-business (B2B) distribution occurs between a producer and industrial users of raw
materials needed for the manufacture of finished products. For example, a logging company needs a
distribution system to connect it with the lumber manufacturer who makes wood for buildings and
furniture.

Business-to-customer (B2C) distribution occurs between the producer and the final user. For instance,
the lumber manufacturer sells lumber to the furniture maker, who then makes the furniture and sells it to
retail stores, who then sell it to the final customer.

Typical intermediaries involved in distribution include:

 Wholesaler: A merchant intermediary who sells chiefly to retailers, other merchants, or industrial,
institutional, and commercial users mainly for resale or business use. The transactions are B2B
(Business to Business). Wholesalers typically sell in large quantities. (Wholesalers, by definition, do
not deal directly with the public).
 Retailer: A merchant intermediary who sells direct to the public. There are many different types of
retail outlet - from hyper marts and supermarkets to small, independent stores. The transactions in
this case are B2C (Business to Customer).
 Agent: An intermediary who is authorized to act for a principal in order to facilitate exchange.
Unlike merchant wholesalers and retailers, agents do not take title to goods, but simply put buyers
and sellers together. Agents are typically paid via commissions by the principal. For example, travel
agents are paid a commission of around 15% for each booking made with an airline or hotel
operator.
 Jobber: A special type of wholesaler, typically one who operates on a small scale and sells only to
retailers or institutions. For example, rack jobbers are small independent wholesalers who operate
from a truck, supplying convenience stores with snack foods and drinks on a regular basis. 

Differences in B2B and B2C marketing

The different goals of B2B and B2C marketing lead to differences in the B2B and B2C markets. The
main differences in these markets are demand, purchasing volume, number of customers, customer
concentration, distribution, buying nature, buying influences, negotiations, reciprocity, leasing and
promotional methods.

22
 Demand: B2B demand is derived because businesses buy products based on how much demand
there is for the final consumer product. Businesses buy products based on customer's wants and
needs. B2C demand is primarily because customers buy products based on their own wants and
needs.
 Purchasing volume: Businesses buy products in large volumes to distribute to consumers.
Consumers buy products in smaller volumes suitable for personal use.
 Number of customers: There are relatively fewer businesses to market to than direct consumers.
 Customer concentration: Businesses that specialize in a particular market tend to be geographically
concentrated while customers that buy products from these businesses are not concentrated.
 Distribution: B2B products pass directly from the producer of the product to the business while B2C
products must additionally go through a wholesaler or retailer.
 Buying nature: B2B purchasing is a formal process done by professional buyers and sellers, while
B2C purchasing is informal. 
 Buying influences: B2B purchasing is influenced by multiple people in various departments such as
quality control, accounting, and logistics while B2C marketing is only influenced by the person
making the purchase and possibly a few others.
 Negotiations: In B2B marketing, negotiating for lower prices or added benefits is commonly
accepted while in B2C marketing (particularly in Western cultures) prices are fixed. 
 Reciprocity: Businesses tend to buy from businesses they sell to. For example, a business that sells
printer ink is more likely to buy office chairs from a supplier that buys the business's printer ink. In
B2C marketing, this does not occur because consumers are not also selling products.
 Leasing: Businesses tend to lease expensive items while consumers tend to save up to buy expensive
items. 
 Promotional methods: In B2B marketing, the most common promotional method is personal selling.
B2C marketing mostly uses sales promotion, public relations, advertising, and social media.

Societal marketing

A number of scholars and practitioners have argued that marketers have a greater social responsibility
than simply satisfying customers and providing them with superior value. Marketing organizations that
have embraced the societal marketing concept typically identify key stakeholder groups such as
employees, customers, and local communities. Companies that adopt a societal marketing perspective
typically practice triple bottom line reporting whereby they publish social impact and environmental
impact reports alongside financial performance reports. Sustainable marketing or green marketing is an
extension of societal marketing.

23
DIGITAL MARKETING MIX:-

Digital marketing mix is fundamentally the same as Marketing Mix, which is an adaptation
of Product, Price, Place and Promotion into digital marketing aspect. Digital marketing can be
commonly explained as 'Achieving marketing objectives through applying digital technologies'.

Product

Thanks to the interaction and connection of the Internet, Product has been redefined as 'virtual product'
in the digital marketing aspect, which is regarded as the combination of tangibility and intangibility.
Through the form of digital, a product can be directly sent from manufacturers to customers. For
example, customers could buy music in the form of an MP3 rather than buy it in the form of a physical
CD. As a result, when a company is making strategy for Internet marketing, it is necessary to understand
how to vary their products in the online environment. Here are some indications of adapt the product
element on the Internet.

 Modifying the core product: In this case, it particularly refers to the products that can be remodeled
into digital forms including movies, music, books and other publishing etc. Take Netflix as an
example. The wide use of Internet has changed its form of products from selling and renting DVDs
through retail stores into selling and renting video online.
 Providing digital products: In order to gain market shares in the Internet, companies need to widen
its product range. For example, a psychological counseling could offer online consultation via video
calls. 
 Building the whole product: Apart from selling products online, Amazon.com also provides a paid
subscription service called Amazon Prime, with which customers could enjoy free delivery and
videos on Amazon.

24
 Conducting online research: The Internet offers a low-cost and convenient way of making marketing
researches, which is helpful for companies to find out what products or services do customers prefer. 

Price

Price concerns about the pricing policies or pricing models from a company. Due to the wide use of the
Internet, many applications could be found in both consumer's and producer's perspective. From
consumers' side, the Internet enables people to make a comparison to real-time prices before they make
a consumption decision, which is time-saving and effort-saving for the consumers. As for the suppliers,
they can adjust prices in the real-time and provide higher degree of price transparency with customers.
Besides, the Internet is more likely to ease the pressure on price because online-producers do not have to
put budget on renting a physical store. Hence, making new or adjusting pricing strategies is essential for
the company that wants to enter the Internet market.

Place

With the application of the Internet, place is playing an increasingly important role in promoting
consumption since the Internet and the physical channels become virtual. The major contribution from
the Internet to the business is not only making it possible to selling products online, but also enabling
companies to build relationships with customers. Furthermore, since the convenience of navigating from
one site to another, place from the digital marketing perspective is always linked with promotion,
which means retailers often use third-party websites such as Google search engine to guide customers to
visit their websites.

Promotion

Promotion refers to selecting the target markets, locating and integrating various communication tools
in the marketing mix. Unlike the traditional marketing communication tools, tools in digital marketing
aim at engaging audiences by putting advertisements and content on the social media, including display
ads, pay-per-click (PPC), search engine optimisation (SEO), influencers etc. When creating online
marketing campaigns, Chaffey and Smith suggested that they can be separated into six groups:

 Search marketing, including search engine optimisation(SEO), pay-per-click(PPC).

 Online PR, encouraging positive comments about one's products or services while reducing negative
comments.
 Online partnerships, building relationships between third-party webs to promote products or
services. 
 Interactive advertising

25
 Opt-in e-mail advertising
 Social media marketing, starting and participating in customer to customer, customer to company
interaction through social media.

The 4Cs

In response to environmental and technological changes in marketing, as well as criticisms towards the
4Ps approach, the 4Cs has emerged as a modern marketing mix model.

Outline

Consumer (or Client)

The consumer refers to the person or group that will acquire the product. This aspect of the model
focuses on fulfilling the wants or needs of the consumer.

Cost

Cost refers to what is exchanged in return for the product. Cost mainly consists of the monetary value of
the product. Cost also refers to anything else the consumer must sacrifice to attain the product, such as
time or money spent on transportation to acquire the product

Convenience

Like "Place" in the 4Ps model, convenience refers to where the product will be sold. This, however, not
only refers to physical stores but also whether the product is available in person or online. The
convenience aspect emphasizes making it as easy as possible for the consumer to attain the product, thus
making them more likely to do so.

Communication

Like "Promotion" in the 4Ps model, communication refers to how consumers find out about a product.
Unlike, promotion, communication not only refers to the one-way communication of advertising, but
also the two-way communication available through social media.

26
THE MARKETING PLAN:-

The area of marketing planning involves forging a plan for a firm's marketing activities. A marketing
plan can also pertain to a specific product, as well as to an organization's overall marketing strategy. An
organization's marketing planning process is derived from its overall business strategy. Thus, when top
management are devising the firm's strategic direction/mission, the intended marketing activities are
incorporated into this plan.

Process

Within the overall strategic marketing plan, the stages of the process are listed as thus:

 Mission Statement
 SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis
 Marketing Objectives
 Targeted Marketing Strategy
 Marketing Mix
 Implementation

Levels of marketing objectives within an organization

As stated previously, the senior management of a firm would formulate a general business strategy for a
firm. However, this general business strategy would be interpreted and implemented in different
contexts throughout the firm.

At the corporate level, marketing objectives are typically broad-based in nature, and pertain to the
general vision of the firm in the short, medium or long-term. As an example, if one pictures a group of
companies (or a conglomerate), top management may state that sales for the group should increase by
25% over a ten-year period.

27
A strategic business unit (SBU) is a subsidiary within a firm, which participates within a given
market/industry. The SBU would embrace the corporate strategy, and attune it to its own particular
industry. For instance, an SBU may partake in the sports goods industry. It thus would ascertain how it
would attain additional sales of sports goods, in order to satisfy the overall business strategy.

The functional level relates to departments within the SBUs, such as marketing, finance, HR,
production, etc. The functional level would adopt the SBU's strategy and determine how to accomplish
the SBU's own objectives in its market. To use the example of the sports goods industry again, the
marketing department would draw up marketing plans, strategies and communications to help the SBU
achieve its marketing aims.

28
 CHAPTER-2
METHODOLOGY

29
RESEARCH METHODOLOGY

Scopeof the study:-

Marketing research is the systematic and objective search for the analysis of the information relevant to
the identification and solution of any problem in the field of marketing. The objective behind this project
was to get a deep insight into the answers to the questions, “How distribution channel is processed in
nestle?”

Methodology Used:-

The data was collected through both the primary as well as secondary sources. The primary source of
data is the consumers of nestle products. . The sources of secondary data are websites and company
catalogues.

Problem Formulation:

This refers to the transferring of the management problem into a research problem. The management
problem was “to gauge the distribution setup in respect of NESTLE COMPANY.

Research Method:

It involves choosing either experimental or non-experimental research. This research was non-
experimental.

Research Design:

It is the specification of the methods and procedures for acquiring the information needed. It is the
overall operational pattern or framework of the project that stimulates what information is to be
collected, from which sources & by what procedure. The three types of design used are exploratory,
descriptive & causal. For this research the descriptive design was used. This is because it is marked by
the prior formulation of specific research questions. It has a preplanned and structured design.

For descriptive study proposed data analysis and project output are critical aspects. It was decided that
the data would be used as the primary source of data.

30
Selection of Data Collection Techniques:

For this research the data was to be collected was of primary as well as secondary nature. The source of
primary data was the distributers of nestle. Thus, the data collection was done through a survey by
usingQuestionnaire technique. This consisted of an interview and questionnaire. The questionnaire
contained the questions related to transportation and distribution of products. The questionnaire was first
pre tested and later it was modified by making certain necessary changes in it.

Sample Design:

A sample chosen has to be representative of the population. For this survey cluster and stratified
sampling was used. The sample size was more than 10 distributors.

Data Collection:

At this stage the data is actually collected according to the decided technique of data collection. The
questionnaire is the main source for the collection of data.

Analysis and Interpretation:

Data which has been obtained are seldom useful to anyone, if it is not analyzed and interpreted in the
order, the breaking down of constituent parts and the manipulating of the data and to obtain answer to
the research questions. Interpretations involve taking the result of analysis, making inferences relevant
to the research relationship studied and drawing conclusions about these relationships.

Research Report:

The culmination of research process is research report. Methodology, results and recommendations for
courses of action are presented. The two critical attribute of report are completeness and conciseness.
Therefore these attributes are conflicting; a balance has to be stuck between the two. The management
should be able to take decision on recommendations and conclusions of research.

Steps in Sampling Design:

Type of Universe:

The first step in developing any sample design is to clearly define the set of objects, technically called
the Universe, to be studied. Universe can be infinite or finite. In this research the universe taken was
finite.

31
Sampling Unit:

A decision has to be taken concerning a sampling unit before selecting sample. Sampling unit in case of
this research study were the present and prospective distributors of Meerut, Ghaziabad, Delhi region.

Source List:

It is also known as „sampling frame‟ from which sample is to be drawn. It contains names of all items
of a universe. In this case present clients‟ database and prospective clients‟ database were used as source
list to pick the required sample.

Size of Sample:

This refers to the number of items to be selected from universe to constitute the sample. The size of
sample should neither be excessively large, nor too small. It should be optimum. In this research study
the size of sample were 10.

Parameters of interests:

In determining the sampling design, one must consider the question of the specific population
parameters which are of interests. In this research study the parameters of interests were the distribution
setup of nestle company.

Sample

In this report, the time constraint was that it has to be done in 02 months with a restricted budget.

Sampling Procedure:

Finally, the researcher must decide the type of sample he will use i.e., he must decide about the
technique to be used in selecting the item for the sample. In fact the technique or procedure stands for
the sample design itself. In this research study probability or random sampling is used.

Tools for Data Collection:-

The task of data collection begins after research problem has been defined and research design/plan
chalked out. While deciding about the method of data collection to be used for study, the researcher
should keep in mind two types of data- primary and secondary.

32
Sources of data:-

Primary Data:

We collect primary data during the course of doing experiments in an experimental research but in case
we do research of the descriptive type and perform surveys, whether sample surveys or census surveys,
then we can obtain primary data either through observation or through direct communication with the
respondents in one form or another or though personal interviews. Since the research is of descriptive
type in which data is collected through direct communication with respondents. Sample survey is carried
out during this project. The survey was performed through a structured questionnaire.

Secondary Data:

Secondary data means data that are already available i.e., they refer to the data which have already been
collected by someone else. The sources of secondary data in this project were the websites of the
company and the company catalogues.

Method adopted in Research:

The survey method was used for this research project. A general survey was conducted to gather the
required data.

Research Tool Used:

Questionnaire was used to collect the data from the distributors of nestle company.

Method of Population Selection:

The population for this survey was selected with the help of cluster and stratified techniques. In cluster,
we divided the city area wise and then we applied stratified under which we used demographic factors,
mainly being income and occupation.

Method of Interaction with the Population:

Personal visit method is used for this research project. The respondents were the distributors and
prospective distributors of nestle company. These respondents were approached and requested to give
their opinion on the product providers by answering the questions in the questionnaire.

Distribution of products:-
A distribution channel is a necessity in business. This lesson will discuss these channels, the types of
distribution systems, and the goods and services that move along these channels.

33
Distribution Channel:-

The distribution function of marketing is comparable to the place component of the marketing mix in
that both center on getting the goods from the producer to the consumer.

A distribution channel in marketing refers to the path or route through which goods and services travel
to get from the place of production or manufacture to the final users. It has at its center transportation
and logistical considerations.

Business-to-business (B2B) distribution occurs between a producer and industrial users of raw
materials needed for the manufacture of finished products. For example, a logging company needs a
distribution system to connect it with the lumber manufacturer who makes wood for buildings and
furniture.

Business-to-customer (B2C) distribution occurs between the producer and the final user. For instance,
the lumber manufacturer sells lumber to the furniture maker, who then makes the furniture and sells it to
retail stores, who then sell it to the final customer.

Typical intermediaries involved in distribution include:

 Wholesaler: A merchant intermediary who sells chiefly to retailers, other merchants, or industrial,
institutional, and commercial users mainly for resale or business use. The transactions are B2B
(Business to Business). Wholesalers typically sell in large quantities. (Wholesalers, by definition, do
not deal directly with the public).
 Retailer: A merchant intermediary who sells direct to the public. There are many different types of
retail outlet - from hyper marts and supermarkets to small, independent stores. The transactions in
this case are B2C (Business to Customer).
 Agent: An intermediary who is authorized to act for a principal in order to facilitate exchange.
Unlike merchant wholesalers and retailers, agents do not take title to goods, but simply put buyers
and sellers together. Agents are typically paid via commissions by the principal. For example, travel
agents are paid a commission of around 15% for each booking made with an airline or hotel
operator.
 Jobber: A special type of wholesaler, typically one who operates on a small scale and sells only to
retailers or institutions. For example, rack jobbers are small independent wholesalers who operate
from a truck, supplying convenience stores with snack foods and drinks on a regular basis. 

34
 CHAPTER-3
FINDINGS AND ANALYSIS

35
FINDINGS AND ANALYSIS

Analysis and Interpretation of Data:-

1) Do you face any problem in company’s transportation system?

TABLE-1 ANALYSIS OF DISTRIBUTOR FACING PROBLEM IN TRANSPORTATION

SYSTEM:-

OPINION NO. OF PERCENTAGE

FREQUENCY

YES 3 30%

NO 7 70%

GRAPH-1ANALYSIS OF DISTRIBUTORS FACING PROBLEM IN

TRANSPORTATION SYSTEM:-

12

10

8
Column1
6 PERCENTAGE
NO. OF FREQUENCY
4

0
YES NO TOTAL

36
 Analysis:-
From above graph we can see that 30% of the distributors are facing problem in transportation
system.
Interpretation:-
Everyone is using transportation system.

2) What type of distribution setup you have?

TABLE:-2 TYPE OF DISTRIBUTION SETUP

TYPE NO. OF
FREQUENCY

THROUGH 03

WHOLESALERS

THROUGH RETAILERS 04

02
PARTIALLY THROUGH
WHOLESALERS
01
DIRECTLY TO
CUSTOMERS

37
 GRAPH:-2 TYPE OF DISTRIBUTION SETUP

4
3.5
3
2.5
2
1.5
1 Column2
0.5
0 Column1
NO. OF FREQUENCY

Analysis:-
Through above graph we can see that 3 distributors are seeling the products to wholesalers, 4 to
retailers, 2 to partial wholesalers and only 1 directly to customers.

3) How many days does it take to receive the delivery of product s after placing the order?

TABLE:-3 TIME OF RECEIVING THE PRODUCT:-

NO. NO. OF
OF FREQUENCY
DAYS

1 DAY 03

1-3 02

DAYS

4-7 04

DAYS

MORE 01

THAN
7
DAYS

38
 GRAPH:-3 TIME OF RECEIVING THE PRODUCT:-

NO. OF FREQUENCY

1 DAY
1-3 DAYS
4-7 DAYS
MORE THAN 7 DAYS

Analysis:-
From above graph we can see that 3 distributors are receiving the product within 1 day of placing
order, 2 are getting within 1-3 days, 4 are getting within 4-7 days while 1 is getting after 7 days
of placing order.
Interpretation:-
All of the distributors are placing order of the product.

Findings:-

Physical Distribution Management

Who is responsible for designing and setting up channel?

There are various authorities who are responsible for designing and setting up channel. The authorities
are sales head, head of field operation, marketing head, area head and sales officer.

How the ware housing is managed? Is there a CF agent?

The warehouse varies from product to product in Nescafe. Any distributer who wants to take the
authority of warehousing the product has to satisfy certain protocols which are assigned by Nestle. Like

39
if anyone want to take warehousing they should have own their own building. That building is called as
product zone which consists of wooden racks as well as refrigerated section for storage of products.
Yes, there is a CF agent in the whole process of delivering the product from manufacturer to consumer
in Nescafe. Like they have RD (Regional distributor) who used to distribute the products on the small
scale over a certain region of a particular city.

Logistics and its cost?

Logistics means having the right thing at right place at right time in a right cost also.
Logistics covers three sections.
Inventory management
Storage and ware housing
Transportation
1. Inventory Management
Nescafe uses the SAP (system application and products) software, inventory management software
(highly confidential) the distributer, the branch manager, the area manager, the branch head, sales
officer, CEO, BOD are connected with the link .Everybody have a separate user name and password, so
that anybody at any instance of time can get all the information like the total number of sales within a
particular region, total inventory within the particular region, the total number of goods that are under
process. This software also helps in order to keep track of current status of the products, condition of
product, shortage, excess, total number of specific product etc. in Nescafe basically what they used to do
is they first see the total number of sales for a particular item in last 4-5 month, and on the basis of that
data they predict the future sales for the upcoming 5month and then they on an average used to stock the
product in advance so that it can suffice the requirement of consumer at any instance of time. And due to
this reason the product shortage chances becomes so less approximately zero.
2. Storage and Warehousing:
The warehouse varies from product to product in Nescafe. Any distributer who wants to take the
authority of warehousing the product has to satisfy certain protocols which are assigned by Nestle.
Likeif anyone want to take warehousing they should have own their own building. That building is
called as product zone which consists of wooden racks as well as refrigerated section for storage of
products.

3. Transportation
For transportation in Nescafe the distributer basically has their own vehicles while the super stockiest
generally hire the third party logistics which taking care of transfer of goods. As an example the Nescafe
in UK had hired Aceme 3p logistics services for 5 years in order to serve their product.
40
Distribution cost
The distribution cost of Nescafe varies with respect to the intermediaries. The company itself has to bear
the distribution cost in transferring the product from manufacturer to distribution centre as well as to
cash distributer. From cash distributer to wholesaler, the cash distributer has to pay the distribution cost.
When product moves from wholesaler to retailer the wholesaler has to bear the distribution cost
similarly in next lever the retailer has to bear the distribution cost.

Payment terms and Debater control

In Nescafe there is no hard and fast rule but basically they adopt three strategies for payment terms and
debater control. In the first strategy when the company is giving their product to distributer/customer
they have to sign a cheque that agrees to pay the money within certain days (max 10 days). While in
second strategy one has to make the payments within 6 to 15 days, if it‟s needed then they can extend
the policy. In third strategy the customer can take the product by paying 5% on the spot by agreeing that
they will pay the balance after selling the products. But company used this strategy very rarely.
The payment term basically depends on certain factors like regularity of the customers, also the amount
of quantity they are taking, past record of the customer.

Communication/Information flow

Inventory Data
Nescafe uses the SAP(system application and products) software, inventory management
software(highly confidential) the distributer, the branch manager, the area manager, the branch head,
sales officer, CEO, BOD are connected with the link . Everybody have a separate user name and
password, so that anybody at any instance of time can get all the information‟s like the total number of
sales within a particular region, total inventory within the particular region, the total number of goods
that are under process. This software also helps in order to keep track of current status of the products,
condition of product, shortage, excess, total number of specific product etc. in Nescafe basically what
they used to do is they first see the total number of sales for a particular item in last 4-5 month, and on
the basis of that data they predict the future sales for the upcoming 5month and then they on an average
used to stock the product in advance so that it can suffice the requirement of consumer at any instance of
time. And due to this reason the product shortage chances becomes so less approximately zero.

41
Sales Data
Sales data basically comprises of order placement, total number of sales for a particular product in
particular region, what are the quantities that sold in particular region in previous times, billing order,
profit for particular product or overall profit. Since we have discussed that Nescafe uses the inventory
control software, in that software one block is there with the name reports. In that block one sub block is
there with the name sales. By visiting that sub block we can gather all the information about sales.

Payment Data
It basically comprise of mode of payments like credit, cash, invoice. Same as like we gathered the sales
data there is a sub block named payment options in which we will get all the information regarding the
total payment for a particular region, total due, total canceled payment for particular region or overall.

Critical Analysis

Supply Chain Management:

Supply chain management (SCM) is the management of a network of
interconnected businesses involved in the provision of product and Service packages required by the end
customers in a supply chain. Supply chain management spans all movement and storage of raw materials
work-in-process inventory, and finished goods from point of origin to point of consumption.

Order Fulfilling Time

The most important feature of Nescafe is that they have a very fast order fulfilling time. The average day
for a particular product to be delivered from the day of order is 1-2 day. Nescafe can deliver the product
on the same day in which they had got the order or on the very next day, and this variation basically
depends on the transportation.
Minimum Order Quantity
There is no specific limitation for the minimum order quantity at Nescafe, but like others they love to
take the bulk quantity order and serve them up to its best.

Payment/Outstanding
At Nescafe the period of payment basically depends on various factors. some of the factors like from
what time you are associated with the company, you are a regular customer or a visiting type of
customer, what is your total requirement, if you are an old customer then they might check your
previous record in order to check that whether you are paying the payments on time or not.
42
Generally the average payment time ranges from 6-15 days.

DEMAND MANAGEMENT
Nescafe uses the SAP(system application and products) software in order to keep track of current status
of the products, condition of product, shortage, excess, total number of specific product etc. in Nescafe
basically what they used to do is they first see the total number of sales for a particular item in last 4-5
month, and on the basis of that data they predict the future sales for the upcoming 5month and then they
on an average used to stock the product in advance so that it can suffice the requirement of consumer at
any instance of time. And due to this reason the product shortage chances becomes so less
approximately zero.

Speed of processing for complaint regarding supplies

Nescafe trying to keep their trust trough all aspect of their services. Even in the case of sale if they are
getting any complaint they will try to resolve it on the very same day they got that particular complaint
or they will solve it within coming 24 hrs.

Distribution Channel of Nescafe

Effectiveness of Supply Chain Management of Nescafe:

After analyzing all the processes of Supply Chain Management of Nescafe we have identified that their
supply chain management is very much effective. The reasons behind our perception are as follows:

Collection of raw material:

Nescafe is collecting raw materials from the suppliers who can guarantee about quality. Nescafe is
always conscious about the quality that‟s why they are encouraging the suppliers not to use more
fertilizer and insecticides. These things are helping Nescafe to deliver quality products.

Processing of raw material:

In case of processing the coffee beans Nescafe is very much careful about quality. They are not using
any kind of preservatives which ensures better quality.

Packaging:

43
Their packaging is not only attractive but also helps to keep the coffee fresh for long time. Nescafe is
also helping their packaging suppliers to improve the packaging quality.

Distribution:

With their strong distribution network they are making Nescafe available all over the country. They can
reach any corner of the country with their distribution network but others like

Mac coffee may not be able to do so.

44
CHAPTER-4
CONCLUSION

45
CONCLUSION

As seen above that the consumer goods in India usually use a distribution network that has few number
of intermediaries in between as these are fast moving goods and need some middlemen to make it
possible to reach far away locations in minimum time possible.
For a company like HUL the products are not perishable and a delay by one or two days can be
tolerated. But when it comes to a company like PepsiCo and Nestle they have certain perishable food
and beverage items that need to be transported quickly and safely. Hence this means food and beverage
firms have their warehouses located nearby so that transport doesn‟t take much time or they may even
use faster modes of transport such as railway, etc. but for a company like HUL the warehouses may be a
little far away with slower modes of transport. Hence according to the needs of the firm and the type of
products or services a distribution network is well chosen to be competitive and better serve the

customers. The main aim always is to deliver the products safely in the minimum cost possible.

After scrapping up and intense analysis of data we reach out with important informations regarding the
supply chain management of Nescafe. Our information clearly reveals that Nescafe‟s supply chain
management has both positive and negative faces.

The positive aspects are like it has a very strong brand name backup of Nestle. Nescafe‟s products are
diversified in various flavors. They are making their products by keeping in mind that the products
should be of nutritious values.

Nescafe has a very great research and development team. In FMCG sector Nescafe is the only one
company using software (highly confidential) for inventory management. They have a very strong
strategy for conflict management. They are very fast in delivering products as well as taking suitable
action on complaints regarding supplies. The customer can opt best payment option from companies
payment terms and conditions.

If we are pointing out the negatives then we can say Nescafe has no that much grip in rural areas. They
are following price point portfolio system. Company always tries to emphasis the product‟s science side
than food side.

PROBLEMS FROM DISTRIBUTORS:-

a. 16% of distributors want to leave distributorship. This is a problem for the company. As the
company have to lose an experienced distributor. A new distributor may be getting. But that will

46
 be inexperienced and that will take time to well capture over the market. Hence till that time the
company‟s sale may be hampered
b. Order/supply imbalance from company: That means they cannot get their ordered products from
the company timely, as a result of which they can‟t supply to their retailers timely.
c. Employee problem: employees are coming to work regularly. Hence, though they are having
sufficient stocks still they become unable to reach them to retailers. Besides the above said
couple of the problems, distributors are facing some more problems like less demand and sale of
the products, which can‟t return them enough on their investment.

47
 CHAPTER-5
RECOMMENDATIONS AND
SUGGESTIONS

48
SUGGESTIONS

It will be better for company if they reduce the price of products according to the areas they are serving.
Also if they can extend the business for rural areas it will increase their profit.
After reviewing all the things I would like to make the following recommendations to Nestle India Ltd:

• Coffee for rural areas of India:

For the product Nescafe Nestle India limited can target the huge rural population of India. Because they
have a very strong distribution network and they also have different product categories of Nescafe. They
can introduce the Sachet of 0.9gm to the rural population.

• Establishment of Coffee processing plant and Packaging materials industry:

Nestle basically import Coffee bulk and other finished products of Nescafe from Nestle Malaysia. They
also rely on the outside suppliers for packaging materials. But I think that, they can establish their coffee
processing plant and packaging materials industry in Bangladesh because of cheap labor price in
Bangladesh and Nestle Bangladesh ltd also get good support from the parent company.

It is very negligible things for us to give constructive suggestion towards a multinational company
having wide range and great skill person are there. Being a part of worker in Nestle for the significant
two month we learn a lot towards company, customer opinion about the company, distributor and
outlets. After study of above we are getting some lacking some point that I am going to discus as follows

1- Quality improvement:
Taste and flavor of maggi and chocolates should be improved to drag the consumers.

2- Innovative product:
Innovate some product with nutrition added. Like glucose and iron for Indian women.

3- Concentrate on TQM:-
During production the total quality should be checked. So that the complaints from consumers like
dust particles, mosquito, tobacco packet inside the bottle, can be avoided

49
4- Training and development:
Proper training and development program should be conducted for the salesmen, so that they will
be more productive.

50
 CHAPTER-6
LIMITATIONS OF
THE STUDY

51
LIMITATIONS

1) Findings are based on the views expressed by the distributors. So it may suffer from biased
prejudices.
2) Weather conditions were not favorable.
3) Some of the respondents were not co-operative & many seem to be having no interest.
4) The study has not been intended on a very large scale, have the possibility of errors, which cannot be
ruled out.
5) It is extremely difficult to persuade distributors to respond to questionnaire.
6) The distributors knows us as people from Nestle there by the responses could have been biased.

52
BIBLIOGRAPHY

53
BIBLIOGRAPHY

WEBSITES

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4. www.business-standard.com/india/news/coca-cola-tosts-india-

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5. www.catrade.org

6. www.commodityindia.com

7. www.dx.doi.org/10.1108/07363769610147929

8. www.economywatch.com

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14. www.market-bridge.com

15. www.ojica.fiu.edu/index.php/ojica_journal/article/viewfile/19/18,

16. www.researchandmarket.com

17. www.researchandmarket.com

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62
ANNEXURE

63
QUESTIONNAIRE

64
 QUESTIONNAIRE

Store name:-

Dealer’s name:-

Location:-

1. For how long you have been doing business with nestle?
Ans.

2. According to you which product of nestle are more demanded by the customers?
a. Milk products
b. Chocolates
c. Maggi
d. Coffee

3. If you are to consume any product for yourself or your family which product would you
normally prefer?
a. Maggi
b. Chocolate
c. Coffee
d. Milk products
e. Others

4. What or which size of chocolates, according to you are normally more demanded by the
customers?
Ans.

5. How many days does it take to receive the delivery of products after placing the order?
a. 1 day
b. 1-3 days
c. 4-7 days
d. More than 7 days
65
6. What product of nestle is sold the most?
a. Chocolates
b. Coffee
c. Milk products
d. Maggi

7. According to you, for which product the co. nestle does more advertisement and sales
promotion?
a. Milk products
b. Chocolates
c. Maggi
d. Coffee

8. Is the company flexiable in terms of payment and credit policy?

a. Yes
b. No
c. Sometimes

9. Does the co. take back the products which have some complaints?
a. Yes
b. No

10. Are the expences of travellinf and distribution born by the company?
a. Yes
b. No

11. Advertising affects the sales figure of the company?

a. Strongly agree
b. Agree
c. Disagree

66
12. Distributors and retailers play an important role in the success of the organization in terms
of sales of the product and profit?
a. Strongly agree
b. Agree
c. Disagree

13. How do you rate supply norms of the company?

a. Good
b. Average
c. Poor

14. What type of distribution setup you have?

a. Through wholesalers
b. Through retailers
c. Partially through wholesalers
d. Directly to customers

15. Are you satisfied with the distribution channel of the company?
a. Yes
b. No

16. Do you face any problem in company’s transportation system?

a. Yes
b. No

17. Please give any suggestion for improvement regarding distribution setup of nestle.
Ans.

67