You are on page 1of 13

Nestle S.A.

1
Marketing Management

Contents
1 Introduction..............................................................................................................................2

1.1

Background Nestle.........................................................................................................2

1.2

Vision................................................................................................................................3

1.3

Mission..............................................................................................................................3

1.4

Objectives..........................................................................................................................3

Competitors..............................................................................................................................3
2.1

Company Performance......................................................................................................4

2.2

Market Share.....................................................................................................................4

2.3 Competitive Advantage..........................................................................................................5


3

Segmentation, Targeting and Positioning.................................................................................5


3.1 Segmentation..........................................................................................................................6
3.2 Targeting.................................................................................................................................6
3.3 Positioning.............................................................................................................................8

Nestle Differentiation............................................................................................................9

Conclusion................................................................................................................................9

References..............................................................................................................................11

Nestle S.A. 2
Marketing Management

Introduction

This purpose of this research is to analyze the internal and external marketing factors in order to
identify that how well the organization is doing in its competitive environment. This study is
performed on a globally renowned brand Nestle S.A. which is headquartered in Vevy,
Switzerland. The research comprised of the background of the organization, which included the
vision, mission, values and objectives. After that the previous financials of Nestle was analyzed
in order to identify the market position of the company. The market share of Nestle clarifies its
current position in the global food and beverage industry and its competitive advantage over its
rivals. In the end the segmentation, targeting and positioning of Nestle are analyzed in order to
identify that what differentiates the company from its competitors
1.1 Background Nestle
Nestl S.A. is a largest multinational Food and Beverage Company measured by revenue and it is
headquartered in Vevey, Switzerland. Nestls products comprises of the mineral water, cereals,
coffee, baby food, confectionary, dairy products, ice cream, snacks etc. (Nestl.com, 2014).
Nestl is engaged with the employment of around 330,000 people in more than 150 countries and
have more than 460 factories in 86 countries (Nestl Financial Report, 2014). In 1866 Nestl
history starts, when the first European condense milk production-line opened by the Anglo-Swiss
Condensed Milk Company in Switzerland. In the town Vevey, Switzerland Nestl originator by
Henri Nestl, a drug specialist in Germany, dispatched his Farine lactee, a mix of milk, wheat
flour and sugar, sparing the life of a neighbor's kid. Nourishment has been the foundation of
Nestle ever since (Nestle.com, 2014). The Anglo-Swiss Condensed Milk Company, established
by the Americans Charles and George combined with Nestl in 1905. The business rose
considerably during World War I and yet again subsequent World War II, increasing its
contributions beyond its initial condensed milk and baby formula products. Nestl was listed
Number 1 in the Fortune Global 500 in the year 2011 as the worlds most profitable company
(Nestl Financial Report, 2013). The Business Principles of Nestl are at the base of the
organizations culture, developed more than 140 years, which imitates the ideas of justice,
morality and long-term rational. Nestl have confidence in that not only conceivable to produce

Nestle S.A. 3
Marketing Management

long-term value for their stockholders if their behavior strategies and operations as well produce
value for the societies where they operate, for their business partners and for their consumers.
(Nestl Financial Report, 2013)
1.2 Vision
Nestl vision is to come across the numerous necessities of the consumer on daily basis by
marketing and retailing foods of a steadily high quality (Nestl.com, 2014).
1.3 Mission
Nestl mission is to endeavor to produce consumer foods that are harmless, of great quality and
deliver optimum nutrient to fulfill physiological needs (Nestl.com, 2014).
1.4 Objectives
Nestl objective is to provide harmless, delicious, expedient and nourishing foods to increase
health and welfare of customers of all eternities around the globe. To encounter the requirements
and desires of todays and tomorrows consumers, Nestl is intensely dedicated to R&D to
enhance products and develop new food with precise health benefits (Nestl.com, 2014).

Competitors

Nestl is key driver in the food industry likewise Kraft Foods, Sara Lee, and Unilever. The
company was confronting fierce competition at the international and national level. These
organizations, amongst the rest, are in a continuous combat to leave behind one another. Nestl
was all the time facing more competition as numerous food manufacturing competitors had
attained substantial improvements in their operational efficiency. Competition is ferocious in the
food industry, and this is a worthy thing for the consumers. As long as these organizations
continue endeavoring to one up one another, buyers will carry on relishing ever-enhancing
product lines. (Scribd Inc., 2012)
Kraft Foods is one of the major competitor of Nestl as it functions in several of the similar
segments, which includes crackers, drinks, cheese, convenient meals etc. A few prominent

Nestle S.A. 4
Marketing Management

trademarks are Oreos, Tang etc. Kraft has an extensive history of acquiring companies. Cadbury
is one prominent current acquisition. Cadbury formed in 1824 and was sovereign until 2010,
when it was acquired by Kraft. (Scribd Inc., 2012)
2.1 Company Performance
Nestl had CHF 83.6 billion (b) sales in financial year (FY) 2011, when contrasted with CHF
93.0b FY 2010. Cost of sales dropped from CHF 45.8b in FY 2010 to CHF 44.1b in FY 2011.
The organization spent CHF 3.8b less on marketing in FY 2011 when contrasted with FY 2010.
Generally, Nestl's earning dropped from CHF 14.8b in FY 2010 to CHF 12.5b in FY 2011,
barring remarkable things in FY 2010. Earning Per Share from proceeding with operations
enhanced in FY 2011 when contrasted with FY 2010, moving from CHF 2.60 to CHF 2.97 per
share. In FY 2010, Novartis practiced an alternative to buy Nestl's 52% offer of Alcon at $181
per share. Nestl got CHF 27.7b in exchange (Nestl Financial Report, 2013).
Net income in the chocolate, confectionery and bread section has fallen relentlessly since 2007,
incompletely because of the evolving environment. In that year, it had offers of CHF 12.2b. In
FY 2011, the organization delivered income of CHF 9.0b in this segment. Operating earnings
enhanced from 14.8% to 16.8% from FY 2010 to FY22011 (Nestl Financial Report, 2013).
2.2 Market Share
Below is the global Food market share graph, where Nestle is at the top (Bar et al., 2013)

Nestle S.A. 5
Marketing Management

2.3 Competitive Advantage


According to Hanson, D. (2011), each product on the rack, each service and each client contact
serves to shape this image. A Nestl brand name on a product is a guarantee to the client that it is
sheltered to consume, that it consents to all regulations and that it meets elevated expectations of
quality. Clients anticipate that Nestl will keep this guarantee against all odds. By no means will
the organization bargain on the safety of the product and each exertion must be made to avoid
hazards to wellbeing. Similarly, consistence with all significant laws and regulations is an
unquestionable requirement and is not debatable. Individuals, instruments and equipment are
made accessible to guarantee health and conformity of Nestl products at all times.
Organizations with tremendous quality measures commit less error, squander less time and
money and are more productivity. They additionally make higher earnings. Quality is Nestl's
best product. It is the way to their prosperity, today and tomorrow (Castelar Articles, 2011).
We live in the world of competition and must always remember that the consumer have a choice.
If the products of do not satisfy them, they will change to an alternate brand. Nestl is hence
giving prevalent esteem in every product classification and market sector in which they compete.
The quest for most good quality at any cost is no guarantee for success, nor is a cost cutting
approach. Enduring competitive advantage is extended from a balanced search for optimum
value to consumers, by simultaneous enhancement of quality and saving cost. Accomplishment
can at no time be taken for granted. Nestl must lookout and learn from their competitors. If they
do a bit better, they must increase their own performance. Nestl can attain competitive
advantage through their Quality (Hanson, M., 2012).
Nestle has competitive advantage on the base of its matchless geographic existence globally as
well. Launched from the Swiss cultures, the organization grew and coped to create a presence
worldwide. Nestle has established firm relationships with the suppliers with the development of
management teams, R & D and manufacturing (Nestl, 2012).

Nestle S.A. 6
Marketing Management

2.3 Core Offering

Core Products of Nestle S.A. (Financial Report 2014)


Coffee

Nescaf, Tasters Choice, Ricor, Ricoffy, Nespresso, Bonka, Zogas, Loumidis

Water

Nestl Pure Life, Nestl Aquarel, Perrier, Vittel, Contrex, S.Pellegrino, Acqua Panna,
Levissima, Arrowhead, Poland Spring, Deer Park, Ozarka, Hpar, Ice Mountain, Zephyrhills

Other beverages

Nestea, Nesquik, Nescau, Milo, Carnation, Libbys, Caro, Nestomalt, Nestl

Shelf stable

Nestl, Nido, Nespray, Ninho, Carnation, Milkmaid, La Lechera, Moa, Klim, Gloria, Svelty,
Molico, Nestl Omega Plus, Bear Brand, Coffee-Mate,milk pak,yougart

Ice cream

Nestl, Antica Gelateria del Corso, Dreyer's/Edy's, Drumstick/Extrme, Maxibon/Tandem,


Mega, Mvenpick, Sin Parar/Sem Parar/Non Stop

Infant nutrition

Nestl, Nan, Lactogen, Beba, Nestogen, Cerelac, Neslac, Nestum, Guigoz, Good Start

Performance nutrition

PowerBar, Pria, Musashi

HealthCare nutrition

Nutren, Clinutren, Peptamen, Modulen

Chocolate and biscuits

Nestl, Crunch, Cailler, Galak/Milkybar, Kit Kat, Smarties, Butterfinger, Aero, Polo

Cereals
Cheerios & Honey Nut Cheerios, Cinnamon and Golden Grahams ,Clusters, Cookie Crisp
Shreddies , Fibre 1,Fitnesse ,Force Flakes
Fruitful ,Golden Nuggets ,Nesquik cereal
Shredded Wheat including: Bite size, Fruitful, Honey Nut ,Shred dies: Coco and frosted

Nestle S.A. 7
Marketing Management

Segmentation, Targeting and Positioning

According to David, F. R. (2009), market segmentation involves combining of potential buyers


into groups, or segments that have common needs and will respond similarly to a marketing
action. Nestle provide a wide range of nutritious food and beverages for everyone to practice a
balanced and healthy diet and lifestyle. There are four types of major segmentation variables for
consumer markets which include geographic, demographic, psychographic and behavioral.
Segment marketing has given the company a clearer picture of their customers and competitors
so that the company can come up with a more fine-tuned products and services that satisfied
customers needs. Through market segmentation, targeting and positioning, Nestle can reach out
to their customers more easily and serve their customers more effectively and efficiently. (Nestl,
2012)
3.1 Segmentation
It is found out that Nestle classify the market by means of geographic, demographic and
psychographic segmentation based on consumer characteristics (Ireland, R. D., 2011). In
geographic segmentation, Nestle has divided their market into urban areas (cities) and rural areas
(villages). Besides that, Nestle uses demographic factor to segment its market as well, it
comprises on the level of income and education. The education and income level can be
categorized as low, middle and high level customers. Apart from that, Nestle uses psychographic
aspect to differentiate the market. The segmentation variables that Nestle uses are personality,
social class and lifestyle. Nestle can groups individuals according to their personalities such as
extrovert, self-disciplined or energetic. Nestle divides their customers into low social class,
medium social class and high social class (Castelar Articles, 2011).
3.2 Targeting
A target market is a potential market that a company has decides to concentrate its marketing
efforts and resources to enter those markets (Hitt, M., 2011). Nestle segments its market by
regions, income level, educational level, personalities, social class and lifestyle. By applying the
information and observations one can simply identify the target market of Nestle. In this case, we
found out Nestle focuses on urban areas rather than rural areas. The consumption of Nestle

Nestle S.A. 8
Marketing Management

products is often in cities as compared to villages. This may be due to income and educational
level. The people in rural area mostly could not afford the products of Nestle as it is considered
as luxuries. They do not have strong sense of health consciousness due to educational
background. This makes them the less attractive buyers. For segmentation by income level,
Nestle has been targeting on those consumer who earn middle income and high income. People
will purchase healthy and nutritious food and beverages when they have enough monetary
resources to back up them. Those consumers with higher income tend to be the potential buyers
for Nestle because they bring most profit into the company (Jones, S., 2012).
Furthermore, for educational level Nestle tends to pay more attention to those consumers who
has an educational background. They will be more concern of their health and they will do more
to maintain it. Through education, we can improve our knowledge and develop life skills which
can contribute to individual and community health. Those people with an education background
are more likely to practice and maintain a healthy and balanced diet as they know health is more
important than wealth (Turpenien, J. 2010).
For personality segmentation, Nestle is targeting consumers who are more outgoing and
outdoorsy. It is because they entail additional energy and nourishment that they have vanished
through their activities. By become accustomed to the nutritional input to physical essentials,
they can get the most from their body. These people wish to maintain their energy level and
quick recovery after a hectic day by adapting a balanced diet that provides them with essential
nutrients and energy (Bar, D. 2010).
In addition, from the social class and lifestyle segments, Nestle is targeting consumers who are
belong to the higher social classes. They have high purchasing power so that they can afford
more luxuries such as Nestls products. These people are the target market of Nestle because
they tend to be more health conscious. Nestls products often emphasize on nutritional value
and health benefits that can improve ones lifestyle and health issues. (Turpenien, J. 2010)
As conclusion, Nestle is able to reach out to their customers that it can serve best and most
profitably. Through segmentation and targeting market, Nestle can enhance the profits for their
company and increase effectiveness in their marketing campaigns.

Nestle S.A. 9
Marketing Management

3.3 Positioning
Product positioning denotes to the place a contribution occupies in consumers minds on
significant attributes relatives to competitive products (Ireland, R. D., 2011). Nestle positioned
itself as the world leader in Nutrition, Health and Wellness, trusted by all its stakeholders, and to
be the reference for financial performance in its industry. Nestle uses the slogan Good Food
Good Life to improve lives, through life, with good food and beverages. Nutrition content in
their products is the main focus to strengthen their leadership in nutrition industry. To remain
their position in that industry, they must identify their competitive advantages against their
competitors. Nestle has listed out four competitive advantages of their company that may help
their company to compete with their competitors, that are unmatched product and brand
portfolio, unmatched research and development (R&D) capability, unmatched geographic
presence and lastly people, culture, values and attitude (Pinheiro, 2011).
For unmatched product and brand portfolio, Nestle provide the largest range of food and
beverages among all the food company. Their products range from global icons to local
favourites that can adapt to consumer needs, tastes and preferences, making Nestle as a global
brand that relevant to everyone and everywhere. Besides that, it is supported by unmatched R&D
capability that improves the products through innovation and renovation so that it can meet
consumer needs and enhances consumer benefits. Nestle spent over billions of dollar on its R&D
just to ensure its consumer gets the essential nutrition that their body needed. Nestle has an
unmatched geographic presence competitive advantage due to the number of countries where
they presence. They have been in most countries for over decades and successfully created a
strong relationship between their brands and their consumers. This also means that they have has
plenty of time to study about the local preferences and behaviors to improve their products taste
to match the locals preferences. The most important competitive advantage for Nestle is their
people, culture, values and attitude. The Nestle culture created a strong bond between their
people with a shared set of behaviors and values into a single way of doing business. Their
people are determined to deliver their goals as while as creating value to the public (Pinheiro,
2011)

Nestle S.A. 10
Marketing Management

To gain enhanced market position and consumer relations, one of Nestl's flaws was the fact that
they also have unwholesome products. This can clash with their goals and objectives, so it is
recommended for Nestle that they should look into those products that have extremely pointless
sugar, fats, and ingredients that are unhealthy and see how they can enhance their product so that
they can create their brand more influential (Bar, 2011).

Nestle Differentiation

According to David, F. (2009), to stance Nestl products against the competitors, the
organization will be utilizing differentiation strategy which won't just differentiate their own
from others additionally give an edge over others. Nestl core product will be extremely
beneficial particularly as far as quality is concerned, health, and cleanliness and most critical
customer satisfaction. Nestl augmentation of the products will include customer satisfaction,
guarantee to retailers regarding expiry, conveyance and after sales services.
By providing the superior quality products Nestl is using the product differentiation strategy.
Their key emphasis is to keep the loyalty of the customers. They bought rack space in many
super stores to get the customers attraction. They strained to touch each group of people in which
they have prospered. Moreover, customer satisfaction is the important point for the organization.
They deliver hygienic products to their customers. Products are also confirmed by health and
safety measures and global quality standards (David, F. R., 2009).

Conclusion

In conclusion it is convenient to say that Nestle has a lot of optimistic traits backing its greater
than life product line and therefore the organization has succeeded to withstand its position in the
fortune five hundred companies. The organization through the use of effectual management
measures, innovation, capital infusion and R&D endures to inflate its product portfolio and also
assists as an example of not just a an remarkable food and beverage providing company but also
a real multinational organization.

Nestle S.A. 11
Marketing Management

The initiation of consumer food products has carried an enormous change in the field in the
consumers food tradition. Nestle has done good to augment its consumers loyalty operational as
a market challenger in the food industry. Nestle is one of the major food processing organization.
Their products and quality largely hinge on their capability and efficiency. Nestle have
confidence in quality that leads to respectable business and respectable development. It has
segmented the market grounded on definite clustered preferences deploying multi-stage
segmentation approach to meet individual needs of the customers. Proposing new products
would also close its existing products gaps to a great extent confirming satisfaction and loyalty.

Nestle S.A. 12
Marketing Management

References

Book:
David, F. R. (2009). Strategic management: concept and cases (12th Edition). NJ: Pearson
Prentice Hall.
Hanson, D., Hitt, M., Ireland, R. D., & Hoskisson, R. E. (2011). Strategic Marketing:
Competitiveness and globalisation (Asia-Pacific 4th Edition). South Melbourne: Cengage
Learning Australia.
Electronic Media:
Bar, D., Pinheiro, S., Rebiero, P. & Turpenien, J., 2004. The Future in the Food Markets: Nestle
vs Unilever. Project. UBI.
Castelar

Articles,

2005.

Nestle's

Competitve

Strategy.

[Online]

Available

at:

http://articles.castelarhost.com/nestle_competitive_strategy.htm [Accessed 28 January 2015].


Hanson, M., 2012. Nestle Waters: Water Delivery Service Review, Competitors & Coupon Code.
[Online] Available at: http://water-delivery.knoji.com/nestlewaters-review-and-promo-couponcode/ [Accessed 29 January 2015].
Nestle

UK

and

Ireland,

2014.

About

us.

[Online]

Available

at:

http://www.nestle.co.uk/aboutus/Pages/about-us.aspx [Accessed 29 January 2015].


Nestl Waters North America Inc., 2011. Nestl Pure Life. [Online] Nestl Waters North America
Inc. Available at: http://www.nestle-watersna.com/pdf/NPL_BWQR.pdf [Accessed 29 January
2015].
Nestl Waters, 2011. Nestl Waters 2011. [Online] Available at: http://www.nestlewaters.com/Content/pdf/2011_yearbook.pdf [Accessed 30 January 2015].

Nestle S.A. 13
Marketing Management

Nestle,

2012.

About

us.

[Online]

Available

at:

http://www.nestle.com/AboutUs/Pages/AboutUs.aspx [Accessed 30 January 2015].


Nestl,

2014.

Global

Presence.

[Online]

Available

http://www.nestle.com/AboutUs/GlobalPresence/Pages/Global_Presence.aspx

[Accessed

at:
30

January 2015].
Nestle,

2014.

History.

[Online]

Available

at:

http://www.nestle.com/AboutUs/History/Pages/History.aspx [Accessed 30 January 2015].


Jones, S. (2012). Strategic Management at Nestle.
Retrieved February 2, 2015, from http://www.articlesbase.com/management-articles/strategicmanagement-at-nestle-5907881.html
Nestle (2014), Nestl Good Food, Good Life.
Retrieved February 2, 2015, from http://www.nestle.com
Nestle (2014). The worlds leading Nutrition, Health and Wellness Company Annual Report2011.
Retrieved February 2, 2015, from http://www.nestle.com
Scribd Inc. (2012). Competitive Advantage of Nestle. Retrieved February 2, 2015, from
http://www.scribd.com/

You might also like