MARKETING REPORT ON Nestlé

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HISTORY OF NESTLE

The key factor which drove the early history of the enterprise that would become The Nestlé
Company was Henri Nestlé's search for a healthy, economical alternative to breastfeeding for
mothers who could not feed their infants at the breast.
In the mid-1860s Nestlé, a trained pharmacist began experimenting with various combinations of
cow's milk, wheat flour and sugar in an attempt to develop an alternative source of infant
nutrition for mothers who were unable to breast feed. His ultimate goal was to help combat the
problem of infant mortality due to malnutrition. He called the new product Farine Lactée Henri
Nestlé.
Nestlé's first customer was a premature infant who could tolerate neither his mother's milk nor
any of the conventional substitutes, and had been given up for lost by local physicians. People
quickly recognized the value of the new product, after Nestlé's new formula saved the child's life
and within a few years, Farine Lactée Nestlé was being marketed in much of Europe.
Henri Nestlé also showed early understanding of the power of branding. He had adopted his own
coat of arms as a trademark; in Swiss German, Nestlé means 'little nest'. One of his agents
suggested that the nest could be exchanged for the white cross of the Swiss flag. His response
was firm: "I regret that I cannot allow you to change my nest for a Swiss cross .... I cannot have a
different trademark in every country; anyone can make use of a cross, but no-one else may use
my coat of arms."
Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by Americans Charles
and George Page, broadened its product line in the mid-1870s to include cheese and infant
formulas. The Nestlé Company, which had been purchased from Henri Nestlé by Jules Monnerat
in 1874, responded by launching a condensed milk product of its own. The two companies
remained fierce competitors until their merger in 1905.
Some other important firsts occurred during those years. In 1875 Vevey resident Daniel Peter
figured out how to combine milk and cocoa powder to create milk chocolate. Peter, a friend and
neighbor of Henri Nestlé, started a company that quickly became the world's leading maker of
chocolate and later merged with Nestlé. In 1882 Swiss miller Julius Maggi created a food
product utilizing legumes that was quick to prepare and easy to digest. His instant pea and bean
soups helped launch Maggi & Company. By the turn of the century, his company was producing
not only powdered soups, but bouillon cubes, and sauces and flavorings.

MISSION STATEMENT

Wherever you live, only Nestle can provide the best and most relevant food and beverage
products to meet your needs throughout your day, throughout your life. The Nestle Network icon
will take you on the journey of discovery through our world of food.
CORPORATE STRUCTURE

Head Office

The registered and corporate office of Nestle Milkpak Ltd. Is in Lahore.

308 – Upper Mall Lahore

PABX: 5757082-95

Fax: 5711820

Factories

There are two factories of Nestle Milkpak Ltd. For dairy products.

Sheikhupura:

29th km, Lahore - Sheikhupura Road

Sheikhupura, Punjab, Pakistan.

Kabirwala:

Khanewal – Kabirwala Road, Kabirwala

District Khanewal, Punjab, Pakistan.

There are two plants for Mineral Water situated in:

Islamabad :

Karachi:

Regional Offices

Company has ten regional sales offices in following cities of Pakistan:

 Karachi
 Hyderabad
 Sukkar
 Lahore
 Multan
 Faisalabad
 Gujanwala
 Quetta
  Islamabad
 Peshawar

Milk Collection Centers

The core raw material of Nestle Milkpak is milk. Over the last thirteen years the company prime
concern has been to improve the quality and volume of milk for UHT processing and for other
milk base products. So the company has twenty five milk collection centers in Pakistan.

DEPARTMENTS

There are mainly five divisions. In every division there further departments.

Ø Production Division

· Quality Assurance Department

· Brand Wise Production Departments

· Packaging Department

Ø Human Resource Division

· Personnel Department

Ø Marketing Division

· Customer Relation Department

· Sales Department

· Distribution Department

· Research & Development Department

Ø Finance Division

· Treasury Department

· Accounts Department

Ø Milk Collection Division

· Agricultural Services Department

· Logistic Department

PRODUCT LINE

Products
Year Product Name

1981 UHT Milk

1983 Butter

1986 Milk Pak Cream

Desi Ghee

Frost Juice

Milk Pak UHT Milk

1990 Nido

Cerelac

1991 Nestum

Lectogen

1992 Everyday Tea Whitener

Gloria

Maggis Noodles

1994 Milo

Neslac

1995 Millo RTD

Nescafe 3 in 1

1996 Every day UHT Milk

Nestle Orange Juice

Nestea

Polo

Nescafe Classic

Maggi Yakhni

1997 Nestle Wheat

1998 Toffo

Soothers

Nestle Pure Life

1999 Maggi Sauces

Fruit Drops

Butter Skotch

2000 Tea Cream

2001 Nescafe Creamy Flavors

MARKET ANALYSIS

ROLE OF MARKETING DEPARTMENT

As marketing is a game to meet the needs and wants of the customers to satisfy them. Customer
satisfaction is the responsibility of marketing department by developing new product, modifying
existing product, placing the product at right time at right place. The department also helps in
setting prices with respect to competitors and to satisfy customer as well. It functions to promote
the product. So in this way it creates an environment where transactions can take place.

Marketing Division in Nestle

In Nestle, there are three departments in the marketing division.

Ø Research and development department

Ø Customer relation department

Ø Distribution department

As the function of marketing department is to satisfy the customer and to fulfill organization
objectives. These can not be performed by a single department. These can only be achieved
when there will be coordination among all departments of the organization. In the case of Nestle
Milkpak Ltd. marketing division with its three departments coordinates all other divisions and
departments.

Marketing division doesn't take decision it rather it puts a lot of efforts to get the consensus of all
other divisions. Marketing people are directly related to the supply of the goods to the retailers,
so they have better estimation of the demand of their products. Marketing division gets the feed
back from the sales person. Then after getting an estimation marketing division communicate to
production division. The production division makes an analysis that how much capacity is
available and how much demand is there. If there is some need of financial resources and
workers, the production manager communicates these needs to human resources division and
finance division. So these divisions take actions to fulfill the need of production division.

In this way the marketing division integrates the activities of different department to maintain the
overall operations of the company.

Product development and launching strategies of Nestle

Nestle Milkpak Ltd. is market leader in food and beverage products and competing with its
existing competitors effectively. Strong emphasis on customer’s needs and wants enable the
Nestle to be market leader in the industry.

Nestle never develops any product with blind eyes but before developing or launching any
product, they go for complete study of market and identify the needs and wants of customers and
develop product accordingly. Such sorts of activities are performed by marketing division with
its three departments. The division has an efficient research and development department with
marking information system (MkIS) which helps to identify the unmeet needs of customers
through scientific research or surveys.

In general, the marketing division concentrates on following two aspects before developing new
product.

1. Taste of potential market.

2. Consumption pattern of target market

The marketing executives believe that product success depends upon whether it satisfies the
basis needs and requirements of customers or not. Secondly, they also believe that these must be
sufficient demand (consumption) for the new product.

If marketing research analysis provide reasonable results on above two aspects then marketing
division proceeds following new product development activities.
New product development activities

In order to get long term success, marketing division perform following activities for new
product development.

1. Primary product
2. Quality test
3. Market test
4. Feed back
5. Modification
6. Commercialization (launching)

Primary product is developed in the factory laboratory according to the demand of the market.
Prior to the market test, quality test is applied in quality assurance laboratories in Singapore in
which they evaluate whether the new product inherent the reasonable standard quality as
expected by the customers. After offering the new product in few samples to small experiments
groups of customers, the company gets feed back from them and the make, if necessary, any
modification in the product design or quality. After performing such activities or we can say the
product become 100% percent complete then Nestle goes for commercialization at the large
scale with full energy and commitment.

SWOT ANALYSIS OF NESTLE

Strengths

Nestle has following strengths:

Nestle is world reputed and recognized organization which has positive impact on people
perception about it.

Nestle has strong financial position which enable it to attract more new investors and help it to
raise funds from banks.

Nestle has strong core competencies i.e. highly expert human resources which enable it to
produce new high quality innovative products.

Nestle modern operation facilities are also important strength which enable it to produce high
standardized quality products.

Because Nestle is operating worldwide and has different strategic business units (SBU). It can
compensate losses, if incur in any one SBU through other profitable SBUs.

Nestle has its own distribution network which make it easy to provide Nestle products at all
possible places on time.

Weaknesses
Raw material is basic input for every organization and milk is core raw material of Nestle for
which it is dependent on the outside Milkmen. Nestle has no single its own dairy form which
provide high quality milk to the firm.

Another weakness of Nestle Milkpak Ltd. is that its total packaging depends upon Packages
(Pvt.) limited.

Opportunities

Nestle can go for “Backward integration” and establish its own diary forms. Currently, Nestle is
dependent on the outside Milkmen which sometimes don’t supply high quality milk. Nestle
should open its own diary forms because Nestle has strong financial position and Pakistan is
agricultural state which support this backward integration.

Threats

Followings are the major threats for Nestle Milkpak Ltd. ;

Purchasing power of people in Pakistan is decreasing day by day and prices of Nestle products
are comparatively high. So in long run, Nestle may face problem if such trend continues.

In some products Nestle is facing fierce competition. For example, in Milkpak Nestle is facing
competition from Chauhdary Dairies Limited who has launched “Dairy Queen” at lower prices
which has decreased market share of Milkpak. CDL has also launched “N’rish” milk powder at
lower prices, it also has capability to decreased the market share of “Nido”. So in long run, if
Nestle do not respond to such competitors, they may create a lot of problems in other products
also.

Pakistan politics structure is very instable and is depressing economic activities and volatile
business environment in the state. Such instable environment may influence the performance of
all industries operating in state and Nestle may also be influenced from such trends of instability.

COMPETITIORS

Nestle is the market leader in food and beverage industry. They are producing high quality well
known brands. There no is such competitor that can compete Nestle Milkpak Ltd. in its total
product mix. There are a few local competitors of the company in different product item. These
competitors are:

Rafhan:

Rafhan is competing Nestle in infant and follow up cereals.

Shezan and Bambino:

Shezan and Bambino are competing Nestle Milkpak’s local brand “Frost”.

CDL and Adar-e-kisan:

These two competitors are competing in milk and milk powder products.

In spite of this competition, Nestle is enjoying about 70-75% market share in Pakistan.

Competitive Priorities:

Following are the competitive priorities of Nestle

1. High performance design

2. Consistent quality
3. Development speed
4. Volume flexibility

QUALITY

Quality is the cone competitive priority of NM. They take quality in two ways. High
performance design and consistent quality.

1. HIGH PERFORMANCE DESIGN

NM takes all the required measures to provide the high quality products to its customers. They
provide pure quality products according to them customer requirements. They have most
advanced process design for the production of high quality products.

2. CONSISTENT QUALITY

NM pays special attention for maintaining consistent quality. They have special sort of
equipments and process which facilitates in maintaining a consistent quality. So the each and
every unit of its product equally satisfies its customers.

3. DEVELOPMENT SPEED

As for as develop speed is concerned NM is the industry leader not only in Pakistan but all over
the world. They have a team of very innovative people which consistently focus on the
development of new products and to improve the already existing products.

4. VOLUME FLEXIBILITY

Volume flexibility is one of the competitive priority of NM. When the availability of Milk is
high in winter season they increase their production as the milk cannot be stored for longer
period of time. In season when there is shortage of milk their production rates dropped.
So they can adjust their volume of production according to their requirements.

4 Ps

PRODUCT

Target market for Nestle products

To satisfy the requirements of term report I select the following products of Nestle.

· Everyday

· Nido

· Milk pack

· Nescafe

· Mineral water

In this section I briefly explain the target market for each product.

Market segmentation

Nestle has been segmented its product on demographics basis, specially on:

Ø Age

Ø Occupation

Ø Income group

Ø Family composition

Target market for Everyday

Everyday is basically prepared for people living in cities who belong to the high income group. it
means the user or consumer of everyday belongs to “ A class” because, in general, perception
about everyday is that it is costly but actually it is not too much costly. It is basically economical
for tea purpose. it is convenient in tea making, so this is also target for office use, where it can be
prepared easily and immediately.

Target market for Milkpack

Milk pack is targeted for quality conscious people mostly living in the urban areas. The use of
milkpack belongs to all classes. People prefer to use milkpack for tea making only. For example
in hostels most of the students use haleeb, where the fresh milk is not available.

Target market for Nido

Nido is generally targeted at the growing specially school going children because children are
fond of playing as they do in growing age. So they need vitamins and calcium for growth of
strong bones and teeth. Target market for nido is school going children living in cities.

Target market for Mineral Water

Mineral water is targeted for the people who are health conscious. Mostly educated people and
patients are target market for mineral water.

Target market for Nescafe

The target market of Nescafe is people who switch from tea to café and mostly people belonging
to upper classes and middle-middle class.

PRICING

EVERY DAY

It is one of the most famous products by Nestle. It is sprayed instant dairy whitener, specially
formulated to bring out the best taste. It is made from the best quality fresh milk according to the
Nestle International standards that guarantee quality and purity. Basically everyday has no
competitor in the tea whitener.

MILKPAK

Milkpak is the product of Nestle, which is available in liquid form. Nestle designed this product
because of greater demand of milk. Milkpak is more pure & hygienic milk, which says fresh for
quite longer time period. It is ideal for family use.

NIDO

Nido if full –cream powdered milk enriched with vitamin A & D . Nido is made from pure fresh
mil and retains calcium, vitamin, proteins and other nutrients. Nido is specially designed for the
growing children.

NESTLE PURELIFE WATER

Nestle is offering mineral water in three different sizes. Their prices depend
upon sizes in which they are offered. Large bottles have relatively low price as compared with
small bottles.

SIZES AND PRICING

EVEY DAY MILKPAK NIDO PURELIFE

1000gm (194-Rs) 1-Litre (30-Rs) 1100gm (199-Rs) 1.5-litre (22-Rs)
400gm (85-Rs) ½-Litre (13-Rs) 400gm (88-Rs) ½-litre (12-Rs)
200gm (47-Rs) ¼-Litre (9-Rs) 200gm (56-Rs)
¼ Litre liq (7-Rs) 2500gm (830-Rs)

Pricing Strategy

Nestle is offering different prices depending on the size of the product. They are trying to capture
different income groups by offering different prices depending in the size of product. To include
low-income group in their target market, Nestle offered small packs with low price, while for
high-income group they are offering large packs i.e. 1-litre/1000gm. In large packs they offer
low price as compare to small packs depending on the size.

PLACEMENT

DISTRUBUTION

The distribution is carried out effectively and economically with a fleet of 3-wheelers which
average 12- re-fill trips a day. Each trip is a one man operation, with the driver also serving as a
salesman, a loader, HH operator and manual record keeper. To ensure economical and efficient
operation the distribution center is constantly engaged in updating the revising rout planning.

CONTINUOUS IMPROVEMENT (CI)

The term “continuous Improvement” is not new for progressing factories. In the Nestle system,
this gives a common platform to all improvement teams. It is a participatory approach to problem
solving with a very defined and structured process. CI helps in changing the mindset of the
people so that they should always be thinking of improvements, by challenging the old
procedures and perceptions.
During the NPT project, a continuous improvement drive was launched in Sheikhupura in March
and in Kabirwala in April, with a presentation to department heads. To convey the message to
everyone at floor level, separate presentations were made to executives, supervisors and workers.
Everyone in the factory can be a part of this process either by contributing ideas or by becoming
a member of the problem solving team. The continuous improvement is not only focused on cost
reductions but takes into account ideas that improve process, quality, safety, hygiene or
environment.

PROMOTION

Comparable progress has been achieved within our logistics, sales and distribution structure,
where stronger distribution and more impact merchandising have certainly made a major
contribution to our high growth rates. The strategic BECA project became functionally
operational by the end of the year.

With regard to new products, you are all aware that we had the privilege of being the first in the
world to introduce the strategic new product, NESTLE PURE LIFE. By the end of the year,
NESTLE PURE LIFE is firmly established with market share over 50% and is well placed to
consolidate its position in 2000.

In 1998, the brand positioning was further strengthened, using the purity platform. A major
campaign was developed to highlight purity as the most important attribute in milk, strongly
associating MILKPAK with purity and quality.

MILKPAK

“Khalis Hi Sub Kuch HAI” was burst used to outwit the competition and induced
consumer to switch over NESTLE Milkpak UHT milk. It was launched on April 23 in
Nishat & Mariam colonies and later in Pir & Farooq colonies. This campaign directly
involved consumers and retailers and spanned over a period of six month.

The Re-launching of MILKPAK

The new marketing effort was based on a change in packaging design in order to communicate
the new positioning and the image of an old and trusted brand.

ATV campaign was developed to focus on key message e.g., Nestlé is behind MILKPAK,
assurance is purity through Nestle and Nestle being No.1 Food Company with 130 years of milk
experience. This message was further propagated through print media and outdoor
advertisement. The campaign was supported through flier,

temporary hoarding, street banners, and shop banners, posters, buntings and trade letters.

The promotion targeted our core market of young adults between 18-25 years, with prizes having
been selected to appeal to this group.

NIDO

Since last year NIDO has seen a consistent and substantial growth in sales volume. The growth
clearly indicates that consumer confidence in processed milks is growing. The factors that have
led to this are rising cost of gawala milk despite its questionable quality, the growing size of the
milk market to rapid urbanization and better awareness about processed milk.

Nido met its 1999 OPL annual volume targeted on July 15, 1999, when the highest ever
invoicing and retail per day record was achieved in June 1999.

Finally, to create goodwill amongst mothers, NIDO launched the NIDO Quiz Contest covering
75 schools of Karachi, Lahore and Islamabad.

Nestle celebrates NIDO mother’s Day each year for sales Promotion.

NESTLE PURE LIFE WATER

Murree Hills draw enormous crowds from all over Pakistan in summers. Those who came to
Murree this summer were in for pleasant surprise. They were greeted by NESTLE PURE LIFE.
The brand and sales promotion teams of the North Zone had put together an effective outdoor
campaign. The road to Murree was awash with billboards, shops signs, shops boards, brand
umbrellas,stands,shops paintings, wall paintings,POS materials, regular merchandising, cross
road signs, product sampling and sticker sampling. The activity created a remarkable impact and
the visitors were impressed.

CONCLUSION

Analyzing all the data we obtained from the organization, we concluded that Nestle is basically a
dairy/food company. The good thing about Nestle is that, they are familiar with their actual
target market. One emerging industry i.e. MILK, is being captured by Nestle through its quality
products. They have developed depth in Milk line, i.e. starting from growing babies to old age
tea lovers. Sales promotion activities are effectively carried out. Important thing about Nestle is
that they have placed their products at customer’s doorstep.
Weakness of Nestle lies in many products where they are not promoting them effectively or
weak marketing like Nescafe. Another factor of failure is consumer taste like Nescafe is
specifically for higher class. Few years ago, they were offering products only for health
conscious or high income groups but now they have included low income group in their target
market by offering small packs like Every Day in liquid form.