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SYNOPSIS

This is a semester project (Research Report) regarding a baby food product named Cerelac of Nestlé. It

starts with an introduction about Nestlé followed by the history of Nestlé. It gives a briefing about all the

brands of Nestlé.

This report also includes the marketing mix of the product. All the 4P’s of marketing mix for the product

has been discussed and explained to reveal the significance of its product, pricing, placing and

promotional activities.

BCG matrix has also been included in this report to know about the current standing of brand in local

culture.

Segmentation and target marketing will help to understand the criteria of Nestlé marketing for the

specific product.

In the end, there are some recommendations for the company to enhance their profitably according to

our research. After that, report has been concluded.


INTRODUCTION
Today, Nestlé is the world leading Food Company. Nestlé headquarters is in Switzerland. Its
international R&D network supports the products made in more than 500 factories in 86 countries. The
Nestlé factories are operating in the region of:

 Africa
 America
 Asia
 Europe
 Oceania

Being a company dedicated to food from the beginning, Nestlé remains sensitive to culinary and eating
habits, and responds to specific nutritional problems, whilst also setting and matching new trends such
as growing out-of-home consumption and caring about the well being of its consumers.

Meaning Of Nestlé
Henri Nestlé endowed his company with the symbol derived from his name. His
family coat of arms, the nest with a mother bird protecting her young, became
the Company's logo and a symbol of the Company's care and attitude to life-long
nutrition. The Nestlé nest represents the nourishment, security and sense of
family that are so essential to life.

BRIEF HISTORY OF NESTLÉ


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. 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
million in 1939. Factories were established in developing countries, particularly Latin America. Ironically,
the war helped with the introduction of the Company's newest product, Nescafe, which was a staple
drink of the US military. Nestlé's production and sales rose in the wartime economy.

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 Magi seasonings and soups. Crosse &
Blackwell followed in 1950, 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 businesses1980 / 1984. In 1984, Nestlé's improved bottom line allowed the
Company to launch a new round of acquisitions, the most important being American food giant
Carnation.

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 Pet foods (1998) and Ralston Purina (2002). There were two major
acquisitions in North America, both in 2002: in July, Nestlé merged its U.S. ice cream business into
Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef America, Inc.

Mission Statement

“Nestlé is dedicated to providing the


best foods to people throughout their
day, throughout their lives, throughout
the world. With our unique experience
of anticipating consumers' needs and
creating solutions, Nestlé contributes to
your well-being and enhances your
quality of life.”
MARKETING MIX
(Cerelac)

PRODUCT
“Product stands for goods and services
that the company offers to target
market.”

Cerelac is a brand of cereal made by Nestlé. It is marketed as a snack for the whole family but is popular
for infants.

Sizes
CERELAC is available in three sizes: 350g & 175g box packaging and a 25g sachet packaging for your
convenience.

Shape and color


The shape and the color of the Cerelac are quite attractive for the customers.

Labeling and packaging


The labeling, packaging includes the Nestlé brand and logo. The packaging includes an expiry date and
time along with a manufacture date. Second part of labeling includes the quantity of product in grams
along with ingredients and contents.

Competitive advantage
NESTLÉ Cerelac is the only popular and quality baby food in Pakistan, Its unique 'Stay Fresh seal and a
long lasting shelf life gives the brand a formidable competitive advantage. Not only it is easy to make but
also it is completely made considering the digest system and requirement for infants on different stages
of age. The factors that make Cerelac successful is quality and superior nutritional value

PRICE
“The amount of money charged for a
product or service, or sums of the
values that consumers exchange for the
benefits of having or using the product
or services.”

Price of product
Nestlé Cerelac sets prices of their products according to the market demand as low as possible because
Nestlé is the trend setter in the market.

Profit margin
The profit margin is usually high because of the high quality of the product.
Stability of the price
Its prices generally trend to fluctuate according to the changes in required ingredients.

Scale of prices
The price of Cerelac is fixed on a reasonable scale so that majority of public can afford.

Effect of competitors on prices


Nestlé Cerelac has no effect on prices by their competitors because they set their own.

Price discounts
On special occasions and festivals, Nestlé Cerelac keeps giving different kind of price discounts.

Price refund policy


Nestlé Cerelac never returns the paid money back. If the claim is valid then they can replace the
product.

PLACE
“Placing stands for company's activities
that make the product available to the
target consumer.”

Outlets of product located


Nestlé Cerelac is available / distributed all over in Pakistan regardless of big and small cities.

Direct sales
Nestlé Cerelac is not sold directly to the customers because of the extensive consumer groups. It is the
reason they sale the product through distributors for easiness of company.

Warehousing facilitation
Nestlé Cerelac has its own warehouses for the storage of products as well as it has also hired some
warehouses.

Transportation modes
Usually Nestlé’s mode of transportation is road which is also used for Cerelac.

PROMOTION
“Advertising is any paid form of non-
personal presentation and promotion of
ideas, goods and services through mass
media such as newspapers, magazines,
television or radio by an identified
sponsor.”
Channels adopted for promotion
Nestlé Cerelac has adopted the channels for promotion through TV, News papers, magazines Doctors
and hoardings etc.

Advertisement budget
Nestlé has preplanned to start the financial year but it is kept secret b the company.

Sponsors
Nestlé Cerelac does not have any sponsors.

Share of promotion
Share of promotion is set on percentage base, it keeps changing every year. Usually it is 40% of the
product.

Nature of marketing
The product is marketed aggressively in the market.

Online promotion methods


Nestlé Cerelac has not yet adopted online promotion methods in Pakistan but in future it may be
possible.

BCG MATRIX

Pure Life Water


Confectioneries Culinary products

Milk Products
Coffee Chocolate Drinks
Dietetic & Infant foods Fruit Drinks
Above BCG matrix is defining the current standing of Nestlé’s products. If we compare Cerelac in baby
food industry in Pakistan Cerelac would be standing still in cash cow because neither there is market
growth in this industry nor any good competition. I couldn’t find any other baby food product which is
producing in Pakistan. If there is any so that product would be standing in question mark or in dog
section.

Stars
The two SBU’s, Mineral water and Confectioneries fall into this category of the BCG. These SBU’s have
high market share and high industry growth rate. These SBU’s are requiring lots of investment to
compete in the growing market. For example, lots of money is being spent and aggressive marketing
strategies have been implemented for the Mineral water to build and maintain market share. Nestlé
Pure Life has captured 50 % of the bottled-water market in Pakistan since it was introduced in 1998. Its
approximate sales for 1999 are RS. 70401000. This sales figure is quite impressive as the sales rose quite
high in only one year.

It is predicted that there will be additional growth in the mineral water category in coming years. The
sales of the confectioneries rose to Rs.106559 000 from Rs.87758000. The huge increase of
Rs.18801000 puts this SBU in the stars category and shows its increasing market share. There is a
growing market for the products in confectioneries for example Kitkat (even though it’s imported), Polo
Smarties etc. This can be proven from the fact that Nestlé keeps introducing new products in this
category for example Allen’s Soothers were launched during the last quarter of 1998.

Cash cows
Milk products, Coffee and Dietetic and Infant food have a high market share and are doing business in
mature industries. Since the customers of this product category are loyal, the marketing costs of these
SBU’s are quite low and as a result a large amount of cash can be generated. Customer Loyalty is a must
for these Cash cows to maintain their market share.

The sales of the Milk products have increased to Rs.108430000 from Rs.87758000. This huge increase in
sales reflects the high market share of this SBU. However, its growth rate is low because in general this
category is in its maturity stage – that is – a number of milk products have been launched by Nestlé,
most of which are quite old. An innovation has not really been made in this category.

The same conclusion can be made about Coffee. There is an already existing market for Coffee which is
not increasing further by a large amount. The sales of Coffee were Rs.4689000 in 1999 and Rs.39200000
in 1998. This huge difference shows that a great amount of cash is being generated from this SBU. Sales
of Dietetic and Infant food rose to Rs. 60,935 000 from Rs. 52,655 000. The infant foods unit of Nestlé is
operating in a mature industry. Like the milk products, the infant foods have been around for a long
time without barely any new product line being started in this category.

Question marks
Including in this section are the culinary products of the organization. The products such as Maggi 2-
minute Noodles and Maggi cold sauces have a low market share and a high growth rate. These products
especially the cold sauces are operating in a highly competitive market. The approximate sales were
Rs.79919000 in 1999 and Rs.60818000 in 1998. This figure represents a great potential for growth in
future. However, in contrast, the market share of the products in this category is not very high currently.
A reason for this is that Nestlé just recently introduced cold sauces such as “Emily sauce” etc. However
the enthusiasm, with which the customers received the different flavors of sauces, portrays a very high
potential for future growth. The firm needs to focus on differentiating its products in the competitive
market to gain customers.

Dogs
Chocolate and Fruit drinks fall into this category and they possess a low market share and a low growth
rate. Chocolate drinks had sales of Rs. 19639000 in 1999, which rose from Rs. 19541000 in 1998. This is
quite a small increase considering the rise in the sales of other SBU’s. However, the chocolate drinks are
still profitable so the firm does not have to worry about liquidating or getting rid of this SBU. The sales
of Fruit drinks rose to Rs.40620000 in 1999 from Rs. 38103000 in 1998. There has been a small amount
of increase; however it is not a lot compared to other SBU’s. Firstly, there is not a huge market for
chocolate drinks in Pakistan. People usually tend to buy light juices like apple or orange juice or Pepsi
instead of chocolate drinks. Secondly, regarding the fruit juices, there are not a lot of flavors available
currently in this category.

Nestlé needs to introduce new flavors such as apple, grape etc. to capture the market that prefer these
flavors. This will not only increase the sales of the SBU, but it will also increase its market share. At the
moment, additional amount of money is not being invested in these SBU’s, as they are not very
profitable. Nestlé is currently trying to maximize profits from this category by minimizing expenditures
and by differentiating the product to build market share.

SEGMENTATION
“A market segment consists of a group
of customers who share a similar set of
needs and wants.”

To occupy a clear distinctive & desirable place related to competing baby foods in the minds of the
target customers Nestlé Cerelac segments its market on following bases:

 Geographic segmentation
 Demographic segmentation
 Psychographic segmentation
 Behavioral segmentation

Geographic segmentation

“Geographic segmentation calls


for division of market into
different geographical units.”

Cerelac segments its market geographically on divisional basis. They divide each division in different
zones and every distributor is restricted to sale its products only in his own zone. E.g. Lahore is divided
into five zones like East, West, South, North, and South west.
Demographic segmentation

“Demographic segmentation is
about dividing the market into
various groups based on
different variables.”

Age
Regarding this variable, Nestlé Cerelac has segmented the market from early age infants to 5 years old
children and has launched different flavors and kinds of cereal according to their requirements, On the
other hand Nestlé Cerelac has made this product for infants but has actually targeted the mothers who
can either be very old or very young. Mothers are very conscious about their children’s health and they
prefer to use products that help them maintain good health.

Income level
This is also an important variable on which segmentation can be carried out. People belonging to the
lower income groups cannot afford to buy readymade baby foods so Nestlé will target that segment
whose income puts them in the upper middle and higher income groups.

Social stratification
Buyers are divided into different groups based on social class and life style. Many consumers live a
simple life style and belong to lower class; they don’t spend on buying artificial food for their children
and people belong to middle class or upper class can definitely opt for this.

Psychographic segmentation

“Psychographic segmentation is
a sense of using psychology and
demography to better
understand consumers.”

Class consciousness
Nestlé Cerelac has also segmented the specific class of mothers who doesn’t want to give breastfeed to
their children so Cerelac is the most preferable and best nourishing food for infants as proxy of chest
food.

Level of education
Nestlé Cerelac makes promotional strategies keeping in view the customer’s level of education. If the
percentage of education is high in a country then through advertisements people can be made well
aware of their product and can convey their message easily. Promotion and education has a direct
relationship.
Behavioral segmentation

“In behavioral segmentation,


marketers divide buyers into
groups on the basis of their
knowledge of attitude towards,
use of, or response to a
product.”

Benefits
Buyers are classified according to the benefits they seek. Nestlé Cerelac has launched different flavors
and types of cereals according to the benefits are required by children of different stages of early age.

TARGET MARKET
“Target market is a particular
market segment at which a
marketing campaign is
focused.”

Nestlé Cerelac’s primary target market is infant of 0-5 age and the secondary target market is the
mothers. The only first P(product) of the marketing mix is designed by keeping in mind the requirement
of infants on the other hand rest of the three P’s (Price ,place and promotion) and to some extent the
PRODUCT too are designed by focusing on the mothers’ preferences.

Target market’s profile

Urban
Geographic Dispersion
Suburban

Full nest – I
Family life Cycle
Single parents

Upper – upper class


Social Stratification Lower – upper class
Upper – middle class

Infants (0 – 5)
Age Segments
Mothers (18 – 45)

Average
Income Above Average
(50K to 100K Per month)
BRANDING

“Brand is the single idea of consumer’s


mind.”

Or

“Set of promises is called brand.”

Or

“A brand is name, term, sign, symbol or


design, or combination of them,
intended to identify the goods or
services of one seller to differentiate
them from those of competition.”

Brand building strategy


Brand development strategy of Cerelac has been far reaching and has managed to remain in the
limelight ever since it became a favorite with their nutritious ingredients for infants.

The brand development strategy of Cerelac comprised redesigning of its brand development
policies and techniques to keep up with the changing mindset and requirements of its
consumers.

Brand image
“Impression in the consumers' minds of
a brand's total personality (real and
imaginary qualities and shortcomings).”

Almost all of the mothers must know the name of Nestlé Cerelac, since it is a leading name in infant’s
food that’s why Cerelac has created a strong brand image. Millions of mothers around the world
consider Nestlé Cerelac as the best food for their children.

Brand image is the significant factor affecting Cerelac’s sale. Cerelac brand name is very well known all
over the world

Brand personality
“Brand personality is the way a brand
speaks and behaves means assigning
human personality traits to a brand so
as to achieve differentiation.”

Cerelac’s brand personality reflects the positioning of its brand. When researching the positioning of a
product, consumers are often asked how they would describe that product if it were a person. This can
ensure that consumers have a clear view of the brand values that make up the brand personality, just
like the values and beliefs that make up a person. Many people see Cerelac as a mother because it takes
care of children and understand their requirement same as mother it is also shown by the new slogan of
Cerelac is:

BEROONI TAHAFFUZ DEN AAP OR ANDROONI TAHAFFUZ CERELAC

Brand differentiation strategies


Nestlé Cerelac is known as an only infant’s food in Pakistan; the Company has differentiated its brand in
number of way as

Performance quality
“Performance quality is the level at
which the product’s primary
characteristics operate.”

The company has put great effort to maintain the quality level of the brand which is the main factor of
Nestlé’s success.

Conformance quality
“Conformance quality is the degree
which gives the assurance of quality of
the brand.”

Nestlé Pakistan has been declared an ISO 22000 company in recognition of its continuing excellence in
quality and food safety, ISO certification gives high level of conformance to the quality of all Nestlé’s
brands including Cerelac.

Features
“Features show the different
characteristics which supplement their
basic function.”

Nestlé Cerelac doesn’t only focus on providing the basic nourishing food for the infants but the main
factor of its popularity is that that it keeps adding different features in their product according to the
changes and requirement which supplement the product

LABELING & PACKAGING

“Packaging consists of all activities of


designing and producing the container
for a product.”

“Labeling is a display of information


about a product on its container,
packaging or on the product itself.”
Container
Nestlé sachets are made of aluminum foil packing and boxes are packaged by tin packs to give the
product a long lasting shelf life.

Brand and logo


The labeling, packaging includes the Nestlé brand name and logo which is enough to
attract the customer.

Brand Character
A blue colored teddy bear as a brand character is also tagged on
the container of Nestlé Cerelac.

Dates
The packaging includes an expiry date and time along with a manufacture date.

Quantity
Second part of labeling includes the quantity of product in grams.

Ingredients
Ingredients are also placed on the packaging for the convenience of consumer to trust the product.

RECOMMENDATIONS

 Keep maintaining the quality as a competitive edge.

 Increase advertising & show your competitive edge.

 Increase loyalty of customer with brand through attractive packages and extra features.

 Try to target lower class too.

 Increase its distribution network.

 Give keen interest to CRM

 Increase incentives & promotional activities

 Training courses / workshops for team

 Conduct training sessions of salesmen at least once a month at regional level.


CONCLUSION
According to data analysis people do not believe that competitors of Nestlé are shrinking its share
because:

 Nestlé Cerelac has strong brand image on the basis of quality.

 Nestlé Cerelac always segments the exact customers.

 Care pharmacy doesn’t not believe that till now any of

 Competitors of Nestlé Cerelac are successful to compete on the basis of quality

 Nestlé Cerelac has positioned among people as health provider brand for infants.

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