Sales Promotion

Activities
In
Nestlé
Bangladesh Ltd
 Table of Contents
Title Page No.
Introduction 1
About Nestlé 1
Nestlé Bangladesh Limited 2
Core Brands in Bangladesh 3
Sales promotion 3
Sales Promotion in Nestlé 4
Bangladesh Limited
Major sales Promotion Tools 4
Trade promotion Tools 4
Consumer Promotion Tools 5
Process of Developing Sales 7
Promotion Program
Communication Medium 8
Factors to consider before 8
launching sales promotion
Conclusion 9
Introduction
Sales Promotion is a most commonly used phenomenon in today’s
business world. It’s two way benefit is that it helps to increase
sales as well as it increases customer loyalty. So most of the
business firms consider it as an important marketing tools. Nestlé
Bangladesh Limited is food and beverage manufacturer. It is the
subsidiary of it’s mother company world’s largest food and
beverage manufacturer Nestlé S.A. Before going to the
discussion of sales promotion in Nestlé Bangladesh Limited we
will first know the company.

About Nestlé
Nestlé is the world's largest food group not only in terms of its
sales but also in terms of its product range and its geographical
presence. Nestlé covers nearly every field of nutrition: infant
formula, milk products, chocolate and confectionery, instant
coffee, ice-cream, culinary products, frozen ready-made meals,
mineral water etc. They are also a major producer of pet food. In
most of these product groups and in most markets, Nestlé is the
leader or at least a strong number two. Nestlé is a very focused
Company, with more than 94 percent of the sales coming from
the food and beverage sector. Nestlé is present around the globe,
on all continents, with around 230,000 people working in more in
an 84 countries with 466 factories and with sales representatives
in at least another 70 countries. Many of its brand names are
world familiar: Nescafé, Nido, Maggi, Polo, Smarties, Milo, Perrier,
Friskies, KitKat, Crunch….Some of its products have broken
records: 3,000 cups of Nescafé are consumed every second. and
KitKat merited an entry in the Guinness Book of World Records as
the world's best-selling chocolate bar with 418 KitKat fingers
eaten every second around the world!
 Key Information About Nestlé S.A.
 World’s Largest food Company
 Founder: John Heinrich Nestle in the year of 1967
 Present in all countries
 Tk. 7,000,00 Crore sales in 2008 ( that is 6.2 times of is year
Bangladesh Budget)
 Over 280,000 employees
 456 factories in 84 countries
Core Brands

Nestlé Bangladesh Limited

Nestlé Bangladesh Limited started its first commercial production
in Bangladesh in 1994. In 1998. Nestlé Bangladesh's vision is to
be recognized as the most successful food and drink Company in
Bangladesh, generating sustainable, profitable growth and
continuously improving results to the benefit of shareholders and
employees.
The factory is situated at Sripur, 55 km north of Dhaka, the
factory produces instant noodles, cereals and repacks milks,
soups, beverages and infant nutrition products.

Today Nestlé Bangladesh Ltd. is a strongly positioned

organization. The Company will continue to grow through the
policy of constant innovation and renovation, concentrating on its
core competencies and their commitment to high quality, with the
aim of providing the best quality food to the people of
Bangladesh.

• First commercial production start from 1994.

• Total Employee 437 nos
• 560 Core taka sales in 2008
• Total # of Distributor 78
• Total # of Outlet 100000+

Core Brands In Bangladesh:

Nestlé Bangladesh Limited divides its core brands into two
categories:

1.Infant category
 Lactogen
 Cerelac
2.Food and Beverage category
 Nido
 Maggi
 Nescafe

Sales Promotion
Sales promotion is the activity that provides special incentives to
bring about immediate response from consumers, distributors and
organization’s sales force.

Sales promotion activities can be divided into two broad

categories: consumer promotions and trade promotions.
Consumer promotions refer to those activities that are designed
to stimulate consumer purchase, in effect to help pull the product
through the distribution channel. Common type of consumer
promotion activities include coupons, free sample offers, contests,
cash-back offers, and a variety of frequent buyer programs. Trade
promotions refer to those activities designed to encourage
distributors to purchase additional volume and provide additional
support to stimulate consumer purchase. In effect, trade
promotions help push the product through the distribution
channel. Common types of trade promotion activities include
price discounts and allowances, co-operative advertising funds,
and point –of –purchase display materials.

Sales Promotion in Nestlé Bangladesh Ltd.

Nestlé Bangladesh Ltd is one of the leading food and beverage
manufacturer in Bangladesh. They consider ‘Quality’ as their most
valuable product. Still they have to face tremendous competition
from their local and global competitors. As a part of their
marketing strategy Nestlé also use sales promotion to
accomplish their objectives. Basically they prefer trade
promotions than consumer promotions, but they use both of them
when it is necessary.

Major Sales Promotion Tools Used By Nestlé

Bangladesh Ltd.
Nestlé Bangladesh Ltd use two types of sales promotion:

1. Trade promotion
2. Consumer promotion

Trade Promotion Tools

Nestlé Bangladesh Ltd. uses trade promotion to persuade its
retailers to carry its brands, give it shelf space, promote it in
advertising and push it to consumers.

Communicates to the
 Figure: Trade promotion in Nestlé Bangladesh Ltd.

In Nestlé Bangladesh Ltd. Product supply chain consists of Nestlé

itself, distributors, retain outlets or traders, and shoppers and
consumers. Distributors collect the product from the Nestlé
factory at net product price. Nestlé has 78 distributors around
the country. Then they sell it to the retail outlets at a price
including their commission. Then the retail outlets or traders sell
the product at maximum retail price.

In Nestlé trade promotions are directed towards the retailers.

They persuade them to sell more and more and receive special
benefits. Then retailers encouraged to purchase more and more
products and push them to the ultimate shoppers or consumers.
Following techniques they most frequently use as trade
promotion:

 Cash discount
In this method retailers are encouraged to purchase a large
volume of product at a discounted price. Nestlé set the
conditions to get the discount. When a retailer purchase a fixed
amount of product then he becomes eligible for the discount. For
example, Normal price of per case MAGGI noodles is TK. 600.
They may ask retailers to buy 5 cases at a time at TK. 550 per
case.

 Free products
By following this technique Nestlé offers retailers free product on
a fixed amount purchase. Retailers are asked to purchase a fixed
amount of product to get the free product. For instance, they may
asked to the retailers to purchase five cases of MAGGI noodles to
get two packets extra with each case.
  Special Drive
In this technique Nestlé encourage the retailers to sell more and
more product throughout the season. In return they attractive
benefits to them. Sometimes they offer special trip, and other
attractive prizes.

Consumer Promotion
Nestlé Bangladesh Ltd. uses consumer promotion urge prompt
purchase from the customer and create long term relationship
with the customers.

Communicates directly to the

Figure: Consumer promotion in Nestlé Bangladesh Ltd.

In consumer promotion Nestlé communicate directly to its target
market then the purchasers come to the retailers and demand the
product. So it is a pull process for them. In this promotion
distributors and retailers don’t get any benefit. All benefits
enjoyed by the consumers. Most commonly used consumer
promotion tools for Nestlé are following:

1. Premium
Sometimes Nestlé offers special gifts to the purchasers to
encourage prompt purchase. This gifts may be related to the
product or may not be related to the product. For example,
sometimes they offer ‘Coffee Mug’ with NESCAFE or small bowl
with MAGGI soup.

2. Contest
In this method Nestlé calls for consumers to submit an entry –
essays, drawings, or other creative activities to be judged by a
panel that will select the best entries. Often the condition is that
an empty pack of that particular product have to be attached with
the entry.

3. Cash discount
In consumer sales promotion Nestlé also offers cash discount for
the consumers. In this technique they reduce the price of the
product to get the higher sales volume or new customers for the
product. For example sometimes the reduce the price of MAGGI
noodles for a particular period of time.

Process of Developing Sales Promotion

Program in Nestlé Bangladesh Ltd.
Before launching a sales promotion ‘sales team’ of Nestlé
Bangladesh Limited do a number of calculations. The terms they
frequently use are following:

SKU = Store Keeping Unit

AMS = Average Monthly Sales

Incremental Sales = Projected Sales – AMS

Marginal Contribution (MC)=Sales- Product Cost ( Cost of goods

sold + distribution Cost + other fixed costs)

ROI ( Return On Investment) = on average 20% - 50%

For example,

Say, AMS for MAGGI Noodles is 30,000 cases

Price per case = TK. 600

Marginal Contribution = 20%

In a particular month company’s SKU comes to 60,000 cases

In this situation if the company think of a trade promotion to

launch where it would cost TK. 20 per case then they do the
calculation as following:

Projected Sales during promotion = 50,000 cases

Incremental Sales = 40,000 – 30,000 = 10,000 cases

Value of Incremental Sales = 10000 × 600 = TK. 60,00,000

Marginal contribution = 20%

So, Incremental Marginal contribution = 60,00,000 × 20% = Tk.

12,00,000
Cost of Promotion = 40,000 × 20 = TK. 8,00,000

ROI ( Return On Investment)

Incremental Marginal contribution = Tk. 12,00,000

Less Cost of Promotion = TK. 8,00,000

Profit = Tk. 4,00,000

Communication Medium
Nestlé Bangladesh Limited use different mediums to
communicate the sales promotion. Mediums they use are
following:

 News paper
 Magazine
 Television
 Radio
 Posters
 Bunting
 Dangler etc

Factors To Consider Before Launching a Sales

Promotion Program

1. Preparation
Nestlé Bangladesh Limited takes proper preparation before
launching a sales promotion which leads to the success of the
program. Specially consumer promotions takes long time to
prepare. Normally it takes one month to six month to prepare for
a sales promotion.

2. Media Support
Media support is vital for the success of a sales promotion
program. Nestlé Bangladesh Limited always manage to get proper
media support. Before launching a sales promotion they contact
with the media and book air time paper space.

3. Channel Members Support

Nestlé Bangladesh Limited believe that without channel members
help it is not possible to run a sales promotion program. Both in
trade promotion and consumer promotion co-operation from the
channel members are necessary.

4. Packaging
For consumers promotion special packaging is necessary. Nestlé
Bangladesh Limited prepare different packages for the product
they are going to promote.

5. POSM( Point of Sales Materials)

To make a sales promotion program successful Point of sales
materials is necessary. It will inform a well as support the
promotion. Nestlé Bangladesh Limited prepare different point of
sales materials and place it rightly during sales promotion.
Conclusion
Finally we can say that Nestlé Bangladesh Limited is using sales
promotion activities perfectly. By using valuable marketing tools
they are creating competitive advantage for themselves which
ultimately helping them to reach their marketing as well as
organizational objectives. Again their successful sales promotion
program are making profit as well as customer base for their
company.