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The Marketing mix of Nestle discusses the 4Ps of one of the strong FMCG
companies of the world. The Nestle marketing mix shows Nestle has a strong
product line which boosts its marketing mix. Below are the products, price,
placement and promotions of Nestle.
Products - There are 4 different strategic business units within Nestle which are
used to manage various food products.
Beverages One of the most known coffee brands Nescafe, belongs to the house of
Nestle and is one of the cash cows for Nestle. However, it is not the biggest cash
cow. Nestle has a worldwide distribution and has many different variants. Looking at
India, Nestle has also launched Nestea.
Milk and Milk products Nestle everyday, Nestle slim and Nestle Milk maid are some
of the milk and milk based products from the house of Nestle.
Prepared dishes and cooking aides Nestle has a third category of products which
comes into prepared dishes and cooking aides. The major cash cow of Nestle lies in
this segment, which is Maggi Noodles. Probably one of the most widely sold ready to
cook noodle brands is Maggi. Maggi has a fantastic taste and quality. Thus, it was
not a surprise, that Nestle expanded the Maggi brand to create an umbrella of
different products like Maggi pasta, Maggi sauce, Maggi cubes etc. The maggi range
contributes vastly to the bottom line of Nestle.
Chocolates Nestle has some popular chocolate products, most popular being
Nestle Kitkat, Munch, Milky bar, Eclairs and Polo. The newly introduced Alpino is
targeting the gifting segment in response to various chocolates like Dairy milk and
Bournville by Cadbury. The chocolates segment of Nestle is a star, where the
competition is high and the expense is high but at the same time the market size is
huge as well.
As we can see, two major brands of Nestle are a very high contributor to its Brand
equity Nescafe and Maggi. These are two brands sold across India in small as well
as big shops and super markets. There have been many competitors for these
products, like Bru for Nescafe and Top ramen and Sunfeast Yippie against maggi.
The appreciable factor in Nestle is that quality maintenance of products is upto
mark and there are hardly any complaints about Nestles products in the market.
This is a major achievement for a company which relies majorly on food products.
Price
The price is dependent on the market of each individual products. For example,
Nescafe and Maggi being the clear leaders are priced with higher margins for the

company as compared to competition. This is because the product quality is good


enough and a bit of skimming price will not cause the customer to switch brands.
The strength of pricing for Nestle comes from its packaging or consumption based
pricing. For Nescafe as well as Maggi, Nestle offers a lot of sizes and package
options. In supermarkets, you can even find a 16 packet maggi whereas in small
retail shops, you can find 5 rs maggi.

Thus, with the variety available, customer can make his own choice based on his
consumption. In other products like Kitkat and Munch, due to tough competition
from other companies, Nestle offers competitive pricing. You will find that nestle will
be similar priced to many of Cadburys Products in the chocolate segment.
Placement Nestle follows the FMCG strategy of distribution which involves
breaking the bulk. The typical distribution strategy of Nestle is as follows.
Manufacturing >> C & F agent >> Distributors >> Retailers >> Consumer
Manufacturing >> Bulk buyers >> Consumer
These are the two different forms of distribution which Nestle has. It is typical of any
FMCG company. However, the Nestle channel is known to be strong with a good
marketing and sales network for channel distribution.
On top of it, Nestle regularly introduces trade discounts and various tactics to keep
the channel motivated. The major challenge is in the distribution of Maggi which is
the most in-demand product along with Nescafe. Due to these two products, Nestle
is able to drive other products in the market as well. Thus, on purchase of one weak
product, the distributor might get a discount on the stronger product or vice versa.
The challenge for Nestle is in the chocolate segment where it faces stiff competition
from Cadbury and hence selling the chocolates becomes difficult. Kitkat might have
its own brand positioning, but it is not better than Dairy milk. Thus, converting
retailers to sell Nestle instead of Cadbury is the toughest task for Nestle. This is
converted mainly through promotions.
Promotions
One of the most widely known tunes is the Nescafe tune. It was one of the best
advertising campaigns and was launched at least 2 decades back. However, that
campaign brought Nescafe strongly in the market.
On the other hand, Nestles brand was pushed by the excellent product quality of
Maggi and the witty and innovative campaigns of Maggi. Where Nescafe focuses on

value and the good things in life, Maggi focuses on moments you had with your
Maggi. The recent campaign was completely focused on your maggi story, where
people had to come out with various innovative ways that they had their maggi.
Promotions for other products too is done smartly. Kitkat focuses on Take a break
and has done some good marketing for the same. Kitkats website too is very
innoative and shows nothing but asks the visitor to take a break and have a Kitkat.
The major push expected of a FMCG company is in sales promotions at the ground
level. This is where Nestle really rocks. Nestle focuses on its strength which is
Maggi, Nescafe and Kitkat which are the most
promoted brands in the market on ground level.
Besides this, Nestle regularly uses TVCs and ATL marketing. It is also present online
through some smart creative. Overall, Nestle is a brand which has strong products
as well as strong marketing, and hence the brand has a very high brand recall
value.
We hope that Nestle keeps bringing in good products and keeps maintaining the
quality of the products it already has.

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Nestle is one of the leading FMCG company of the world. It was founded in Switzerland and today it
is present in more than 100 countries of the world. It has been taking care for customers globally by
providing hygienic food and ensuring good life. They have been marketing their products by
satisfying the needs of the all consumers age group. The famous brands include Nescafe, Gourmet,
Kit kat, Maggi, Nestea, and many more are there (Nestle,

2012). It had to market its products by

framing marketing strategies and keeping in mind the taste and preference of consumers based in
different countries. It was a challenging task for Nestle to establish its position when ethnocentric
products are already available in the domestic countries. They have adopted the glocal culture for
gathering information about new countries business environment for going international. It has been
focusing on its brands and entering into market by increasing line extensions of a particular brand.
The leadership position of Nestle is maintained in market by supplying the products and also
opening its outlets inpublic places for the brand reinforcement. Nestle has been focusing and

spending for Research and developmental activities. The success behind Nestle is to operate in
different countries by the form of Foreign Direct Investment.

2.Mode of Entry
In this paragraph we will focus on how Nestle had entered into Indian market on 1912. Today it has
successfully completed 100 years in India. Its head office is located at Gurgaon and manufacturing
units in several states of India. The mode of entry used by Nestle was in form of export to Indian
market in previous years. Later on it entered by modifying the strategy in form of wholly owned
subsidiary on 1959 (Times Internet Ltd,

2012). Wholly owned subsidiary is a mode where the

100% shares are owned by the parent company. There is control of parent company to decide about
all the strategic strategies. It has been enjoying the diversification strategy and dealing with multiple
brands. First plant was set up at Punjab Moga to produce milk. It has been operating into four Infant
Food, Milk products, chocolates and ready to eat items. The reason behind nestle entering strategy
in Indian market were increasing disposable income of the consumers, and the nuclear family
system.
Local Partner
Nestls Local partners are its employees, farmers and shareholders. The company had tie up the
government of Punjab to explore milk economy in India. It has been collaborative Research and
development centers to provide quality products in the market. It has also started first Research and
Developmental center in India on 2010 be a partner of Global Research and development Network
(Nestle,

2010).

4. Segmentation, Targeting & Positioning (STP)


It is defined as the first step in the marketing plan for any of the Company. Segmentation is a process
of classifying the consumers on the basis demographic, psychographic, geographic and Behaviourial
aspects. If we segment as per geographic condition cold coffee is consumed in India during
summers and hot in winters. On the basis of Demographic aspects it is classified on the basis of
age, income, occupation and etc. Nestle has been providing the products for all the age groups such
as baby food to an adult food. It has been producing Lectogen, Cerelac for babies and targeting
them. Maggie and other food are being targeted for the adult group. On the basis of occupation
nestle has been segmenting the working women and targeting them to save their time by using the
Maggie masala (Managementstudyguide.com,

2012). If psychographic factor is considered it can

be segmented on the basis of lifestyle and the personality. We can see that during tension and
anxiety Youths consume more chocolates. Positioning is a process of creating impression of the

products in the minds of consumers. The products are being positioned by nestle such as good to
eat, fast to cook, Maggie in two minutes and etc. It has been positioned by the providing different
falvours and packaging it in different ways. It has been positioning by differentiating it in form of
channel, product, personnel and image based factors. We can also explain it with particular product
such Maggie of Nestle company to have a better understanding of STP Concept. Maggie market has
been segmented by understanding the eating habits of Indian consumers residing in urban areas. It
has been targeting the youths, kids, and the working women. It has been positioning the products in
the minds of Indian consumers by relieving them from hunger (Lars Perner,

2010).

5. Marketing Mix (4 Ps or 7 Ps)


Marketing mix will explain the types of factors that a company considers to bring a product or service
in the market. It will also clarify how an International Marketing concept is being used to market the
products (Business Case Studies LLP, 2012).
a). Products
It provides a wide range of products with their line extensions in the market. They have been
providing variety with quality to the consumers. Some of the Nestles top brands are Maggie, Nestea,
Nescafe, Kit Kat, and etc.
b). Price
It has been providing the discounts and coupons for their products in the market. The products of
Nestle range from 1 rupee and above. Offers have been provided to the customers for bulk
purchase. We can see that when 6 pack Maggie is being purchased in place of a single pack then in
such case customers are offered cash discounts.
c). Place
Nestle has been displaying its product in the supermarkets and the malls. It has been managing its
own sales and distribution network all over the Indian market to supply their product. It has been also
placing it products in hospitals, canteens of colleges & companies and public places.
d).Promotion
Promotion is done by Nestle India by endorsing the product with the celebrities. It has been showing
the advertisement in the television. The social marketing concept is being used to market and
promote their products in networking sites such as Face book and etc. The advertisements are
designed in such as way that consumers find it as a healthy product to eat.
e).People

Nestle India has been recruiting lakhs of people to join their company. They have been training their
employees to handle the queries of their customers and also provide better customer service.
Various campaigns are organized by their employees for the purpose of the sales promotion in
different states of India.
f).Process
The company has been manufacturing the products by processing it using better technology. The
way Nestle has been using its vending machine to serve the customers easily shows that they have
understood the requirements of the consumers in India.
g).Physical Evidence
Nestle has been creating a better evidence connectivity by setting up the coffee corners with their
logo of Nescafe in vending machines (Dreamstime,

2012).

5. Managing the Marketing Effort


Nestle India has been managing the marketing effort by considering the ethnocentric factor with a
global mindset. They have understood the eating habits, taste and preference of the Indian
consumers. An ethical image has been set up the company in the eyes of Indian that the products
offered by Nestle are hygienic and quality based. They started to explore their business by targeting
the underdeveloped countries where the infants had missed the nutritional gaps in their food. After
Globalization International Marketing has been playing the key role to explore their business from
one country to other countries. Nestle India has been educating the farmers to produce more milk for
the marketing of their products (Marketing Power Inc 2012). It has been managing the marketing
effort by showing the proper advertisement and connecting it emotionally with the consumers. It has
been leader in marketing of coffee. It has been highly supporting its parent company which is located
in Switzerland. It was previously focusing in urban areas but now it has been focusing on rural areas.
Line extensions of the products are managed by the teams of employees who are having a proper
distribution network in India. The products are being repositioned by the company after adding new
flavor and variants to attract them.
6.Conclusion
Nestle is a renowned MNC which has got its presence in more than 100 countries. A proper
marketing plan has been used by Nestle to enter into Indian market. The management of the
company had to understand and conduct the market analysis by considering political, economical,
and demographic aspects. The mode of operation was started by wholly owned ownership basis.
The market was segmented on the basis of demographic, psychographic, behaviouraial and
geographic aspects. It was targeted on the basis of the age and the income group. After

globalization the consumers had better standard of living and higher income for purchasing. Nestle
had identified this factor and it has launched various products in the Indian market. Points of
difference are being created with the taste factor in the market. The products had been positioned in
the minds of Indian consumers by advertisement, sales promotion, and using the social marketing
concepts (Hearst Communications Inc,

2012). The marketing mix such as product, price, place,

promotion, people, process and physical evidence have been integrated well with the Nestle
marketing strategy to market its products. Thus Nestle products have been part of Indian daily lives
by ensuring the consumers and their family with good health. It has always understood the
requirement and needs of the consumers globally. It has also been following the ethical marketing
strategies to grow the business at national and the international level.
http://marketingstrategy-sai.blogspot.in/2010/03/maggie-noodles.html
Maggie has faced lot of hurdles in its journey in India. The basic problem the brand faced was the
Indian psyche. i.e Indians used to be conservative about the food habits so noodles faced a lot of
problem in promoting sales.
Initially nestle tried to to position the Noodles in the platform of convenience targeting the working
women. However, the sales of Maggi was not picking up despite of heavy Media Advertising.To
overcome this NIL conducted a research,which revealed that it was children who liked the taste of
Maggi noodles and who were the largest consumers of the product.so they came up with Maggi- 2
minute noodles with price of Rs. 2.10 with a close of 100% margin. NIL shifted its focus from working
women and targeted children and their mothers through its marketing. NIL's promotions positioned
the noodles as a 'convenience product', for mothers and as a 'fun' product for children. The noodles'
tagline, 'Fast to Cook Good to Eat'
was also in keeping with this positioning. They promoted the product by
1.Distributing free samples.
2.Giving gifts on return of empty packets.
3.Dry sampling-distributing Maggi packets
4. wet sampling - distributing cooked Maggi.
5.Availability in different packages 50gm,100gm,200gm,etc.. and
6.Effective Tagline Communication.
Through its ads, NIL positioned Maggi as a 'fun' food for kids which mothers could prepare easily.
Taglines like 'Mummy, bhookh lagi hai' (Mom, I'm hungry), 'Bas 2-Minute,' and 'Fast to Cook Good to
Eat' effectively communicated the product's benefits to target consumers.
These ads had become so popular that the tagline 'Bas 2-Minute' immediately reminded Indian
consumers of Maggi noodles even several years after the ads were taken off the TV. Maggi's first
product extension was Maggi instant soups launched in 1988. With the launch of Maggi soups, NIL

had become a pioneer in the organized packaged soup market in India..since then Maggi has been
successful in India and launched ketch ups sauces and soups in India, which was very successful in
grasping market.Though NIL tried to extend to other
ready to eat products like pickles, cooking aids and paste, It was unsuccessful so
dumped those products.Maggi is competing with Heinz Sauces and Ketchup, Knoor Soups, Kissin
Sauces and Ketchup, Top Ramen, Sunfeast Pasta Wai Wai and 2 PM in corresponding categories of
products and variants.
http://www.warc.com/LatestNews/News/Nestl
%C3%A9_redraws_strategy_in_India.news?ID=32452

Nestl redraws strategy in India


15 January 2014

NEW DELHI: Nestl, the Swiss food giant, is rethinking its strategy in India to incorporate a greater
emphasis on the growing numbers of wealthy consumers, a leading executive has said.
"We made a mistake," Nandu Nandkishore, executive vice-president and Zone Director for Asia,
Oceania, Africa and the Middle East, told the Financial Times. "We basically focused on
driving the mass market, and we really ignored a little bit the emerging affluent segment."
The company is now attempting to rectify that oversight while continuing to target the consumer
group that has driven its growth in recent years. "The challenge is developing an organisation that is
able to manage the extremes of going after the rural market and the affluent at the same time," said
Nandkishore.
Considering these two ends of the market, he described rural demand as "robust" and premium
growth as "very strong" but added that "where we have felt pressure is in the middle".
A slowing economy, depreciating rupee and rising prices have all combined to squeeze that
consumer sector. "The whole game for these [consumer goods] companies was to upgrade
consumers regularly to more expensive brands, which is clearly not happening right now," noted
Nitin Mathur, an analyst at Espirito Santo Securities in Mumbai.
At the top end, however, affluent consumers are less affected by economic issues and the need to

rein in spending. One example of an upmarket product that Nestl has introduced is Alpino
chocolates, which compete against Ferrero Rocher and the premium offerings of Cadbury.
The company is also exploring the potential of its premium coffee brands, with Nescaf Gold already
available. "There is opportunity in bringing out our top-end coffee solution Dolce Gusto, which offers
shop experience of coffee at home, something we are definitely looking at," Nandkishore told
Business Line.
As well as reaching upmarket consumers, Nestl is developing products aimed at an increasingly
health-aware population, with, for instance, lower sodium levels or higher fibre content. Nandkishore
cited spice mix fortified with iron and vitamins and whole wheat noodles as items that were
performing well.
"We are looking to transform the company to be almost 100% in areas where we can demonstrate
positive focus on health and wellness," he declared.
Data sourced from Financial Times, Business Line; additional content by Warc staf

http://www.business-standard.com/article/companies/nestle-to-eliminate-more-lowmargin-products-soon-114102901234_1.html

Nestle to eliminate more low-margin products


soon
India will continue to eliminate low-margin products from its portfolio in the coming
quarters as the company rationalises its products in order to improve profitability.
Nestle India Managing Director Etienne Benet, in a statement on Tuesday, said the
culling exercise would continue and low-margin products that were not in line with
Nestles current growth strategy focussing on nutrition, health and wellness would be
eliminated.
In India, about 45 per cent of Nestles revenues come frommilk products and nutrition,
another 30 per cent from prepared dishes and cooking aids, 13 per cent from chocolates
and the rest from beverages. But the contribution by milk products and nutrition has
declined in the past couple of quarters.
In that time, Nestle has withdrawn Nestle Eclairs, Nescafe Mild and milk sachets, as they
were low-margin and low-growth products. While Maggi is also a low-margin product,
the company has been increasing its offerings of instant noodles under the Maggi brand.

Analysts are unsure which products the company will eliminate. "While the tone and
tenor of their statement yesterday (while announcing results) seemed to suggest that
the culling exercise would continue, it is difficult to gauge what they will do next," said
Amnish Aggarwal, FMCG analyst at brokerage Prabhudas Lilladher.
My sense is that the company is moving towards the end of the culling exercise. They
exited the B2B space where they were supplying coffee and milk to offices. They have
also got out of milk sachets and Eclairs. They are unlikely to touch prepared dishes
because that is a small and growing business. Similarly, Maggi will be kept out of the
culling exercise, said Abneesh Roy, associate director of research for institutional
equities at Edelweiss Securities.
Benet, in his statement, also said that Nestle would remain cautious as it was yet to to
sense buoyancy in the external environment. Like it had done in the recent past, a
Mumbai-based equity analyst said, Nestle was likely to take tough decisions as it
moved to build a premium portfolio.
In the July-September quarter, Maggi Oat Noodles, Maggi Vegetable Atta Noodles, Maggi
Masala-ae-Magic, Kit Kat chocolates, Nescaf, Milkmaid and Everyday were the products
that performed well. The company has seen a two per cent dip in the sales volume of
chocolate and confectionery products. Besides, milk and nutrition products also dropped
about 1 per cent in sales volume in the quarter.
With ITC entering the instant coffee market early next year, Nestle will face stiff
competition in the segment apart from Hindustan Unilevers Bru. It is also facing
competition in chocolates from Cadbury.
Coffee and chocolates are the two segments where the company may look at
rationalisation. Also, these do not fit well in Nestles strategy of health and wellness,
said an analyst with a global brokerage firm.
There has been no change in the companys strategy with a continued focus on
portfolio rationalisation and margins. We do not see recent new launches such as Maggi
Oats as material innovations which can move the needle, Credit Suisse said in a note.
On the other hand, Barclays noted that Nestle needed a strong pick-up in urban
consumption to revive growth in its largely city-focused product portfolio.
Product elimination or culling is not restricted to Nestle. The country's largest consumer
goodscompany, Hindustan Unilever, is also undertaking a similar exercise. This year,

we had taken on a big exercise to cull the non-performing SKUs. And we are tracking
well against the objective we had set, which is culling 25-30 per cent of the SKUs by the
end of this calendar year. This exercise is across product categories, said Sanjiv Mehta,
managing director and chief executive of Hindustan Unilever, while announcing the
company's second-quarter results on Monday.

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Middle East should be able to sell throughout the region, thereby realizing scale
economies. In anticipation of this development, Nestl has established a network of
factories in five countries in hopes that each will someday supply the entire region
with different products. The company currently makes ice cream in Dubai, soups
and cereals in Saudi Arabia, yogurt and bouillon in Egypt, chocolate in Turkey, and
ketchup and instant noodles in Syria. For the present, Nestl can survive in these
markets by using local materials and focusing on local demand. The Syrian factory,
for example, relies on products that use tomatoes, a major local agricultural
product. Syria also produces wheat, which is the main ingredient in instant noodles.
Even if trade
barriers dont come down soon,
Nestl has indicated it will remain committed to the region. By using local inputs
and focusing on local consumer needs, it has earned a good rate of return in the
region, even though the individual markets are small. Despite its successes in
places such as China and parts
of the Middle East, not all of Nestls
moves have worked out so well. Like several other Western companies, Nestl has
had its problems in Japan, where a failure to adapt its coffee brand to local
conditions meant the loss of a significant market opportunity to another Western
company, CocaCola. For years, Nestls
instant coffee brand was the dominant coffee product in Japan. In the 1960s, cold
canned coffee (which can be purchased from soda vending machines) started to
gain a following in Japan. Nestl dismissed the product as just a coffee flavored
drink, rather than the real thing, and declined to enter t

he market. Nestls local partner at the time, Kirin


Beer, was so incensed at
Nestls refusal to enter the
canned coffee market that it broke off its relationship with the company. In
contrast, Coca-Cola entered the market with Georgia, a product developed
specifically for this segment of the Japanese market. By leveraging its existing
distribution channel. Coca-Cola captured a canned coffee in Japan. Nestl, which
failed to enter the market until the 1980s, has only a 4 percent share. While Nestl
has built businesses from the ground up in many emerging markets, such as Nigeria
and China, in others it will purchase local companies if suitable candidates can be
found. The company pursued such a strategy in Poland, which it entered in 1994 by
purchasing Goplana, the
countrys second largest chocolate manufacturer.
With the collapse of communism and the opening of the Polish market, income
levels in Poland have started to rise and so has chocolate consumption. Once a
scarce item, the market grew by 8 percent a year throughout the 1990s. To take
advantage of this opportunity, Nestl has pursued a strategy of evolution, rather
than revolution. It has kept the top management of the company staffed with locals

as it does in most of its operations around the world

and
carefully adjusted Goplanas product line to better
match local opportunities. At the same time, it has pumped money
into Goplanas marketing,
which has enabled the unit to gain share from several other chocolate makers in the
country. Still, competition in the market is intense. Eight companies, including
several foreign-owned enterprises, such as the market leader, Wedel, which is
owned by PepsiCo, are vying for market share, and this has depressed prices and
profit margins, despite the healthy volume growth
MANAGEMENT STRUCTURE
Nestl is a decentralized organization. Responsibility for operating decisions is
pushed down to local units, which typically enjoy a high degree of autonomy with
regard to decisions involving pricing, distribution, marketing, human resources, and

so on. At the same time, the company is organized into seven worldwide strategic
business units (SBUs) that have responsibility for high-level strategic decisions and
business development. For example, a strategic business unit focuses on coffee and
beverages. Another one focuses on confectionery and ice cream. These SBUs
engage in overall strategy development, including acquisitions and market entry
strategy. In recent years, two-thirds of
Nestls growth has come from acquisitions,
so this is a critical function. Running in parallel to this structure is a regional
organization that divides the world into five major geographical zones, such as
Europe, North America, and Asia. The regional organizations assist in the overall
strategy development process and are responsible for developing regional
strategies (an example would
be Nestls strategy in the Middle East, which was
discussed earlier). Neither the SBU nor regional managers, however, get involved in
local operating or strategic decisions on anything

other than an exceptional basis. Although Nestl makes intensive use of local
managers, to knit its diverse worldwide operations together the
company relies on its expatriate army. This
consists of about 700 managers who spend the bulk of their careers on foreign
assignments, moving from one country to the next. Selected primarily on the basis
of their ability, drive, and willingness to live a quasi-nomadic lifestyle, these
individuals often work in half a dozen nations, during their careers. Nestl also uses
management development programs as a strategic tool for creating an
esprit de

corps
among managers. At RiveReine, the companys international
training center in Switzerland, the company brings together managers from around
the world, at different stages in their careers, for specially targeted development
programs of two to three weeks duration. The objective of these programs is to give
the managers a better understanding of
Nestls culture and strategy and to

give them access


to the companys top management.
The research and development operation has a special place within Nestl, which is
not surprising for a company that was established to commercialize innovative
foodstuffs. The R&D function comprises 18 different groups that operate in 11
countries throughout the world. Nestl spends approximately 1 percent of its annual
sales revenue on R&D and has 3,100 employees dedicated to the function. Around
70 percent of the R&D budget is spent on development initiatives. These initiatives
focus on developing products and processes that fulfill market needs, as identified
by the SBUs, in concert with regional and local managers. For example, Nestl
instant noodle products were originally developed by the R&D group in response to
the perceived needs of local operating companies through the Asian region. The
company also has longer-term development projects that focus on developing new
technological platforms, such as non-animal protein sources or agricultural
biotechnology products.
Case Questions - Answers
1.

Does it make sense for Nestl to focus its growth efforts on emerging markets?
Why?
There has been increased emphasis on local and farm-to-table products in
developed economies like North America and Western Europe. Moreover, the pricewar and consumer bargaining threats due to the generic brands have definitely hurt
market
shares and margins for companies like Nestle. With nearly 3/5s of the worlds
population living in emerging markets, it definitely should be the market space that
Nestle should focus on. Also, the increasing standards of living, the familiarity of the
brand due to globalization and due to the lack of large nationwide supermarkets
with generic brands in developing economies
make them the ideal targets for Nestles
growth prospects.
2.

What is the companys strategy with regard to business development in

emerging markets? Does this strategy make sense?


The core of the companys strategy when it comes to emerging markets is
Customization rather than globalization
. They take the time to research and develop
products suitable to the specific market, thus making them accessible to the target
market on both a functional and emotional level. Having personally worked for
Nestle India (specifically in their instant-nood
le & soup brand Maggi division), I have first
-hand witnessed how meticulous the company is with their implementation steps.
The flavors of the InstantNoodle are closely matched the familiar masala taste & spice. The brand Maggi
has become synonymous
to instant-noodles in the country due to
the SBUs continued due
-diligence. Every few years, the company evaluates the flavors and tries to
introduce product variations and flavor profiles. They constantly manage to interact
with the target influencers (school students) by having partnerships with several big
private schools throughout the country. The top management for the Nestle India
division comprises primarily of local executives reducing any resistance or hostility
from the employees and customers. They trained the employees on both the global
as well as the local perspective of the country and had several incentive programs
to encourage involvement. I have always admired

their strategy implementation techniques, then as an employee and now as an


analyst.
3.

From an implementation perspective, what is required for this strategy to work


effectively?

Research, Develop & Customize:

For continued success, the organization requires to concentrate more on


customizing the products to suit the local markets. Slowly they can pool tastesimilar markets and develop and market them together. For eg. the tastes of the
middle-east countries could be largely overlapped and marketed within the pool of
countries. For any firm to succeed globally, it has to abandon its success strategies
from one market and develop
new plans in every new market it tries to enter. The reason McDonalds has
been having sustainable growth in several countries is due to the customized
product selection it has carefully developed using in-depth research to match the
needs of the local population.

Evaluate & Re-evaluate:


While research can only take them a certain distance, experience takes them the
rest of the way. They must be willing, especially in the newer markets to experiment
and continuously evaluate & re-evaluate the reception and growth the products
have in the market. This helps them alter the products at different stage of market
maturities.

Partner, Merge & Acquire:


To overcome the financial and opportunity costs of developing new products &
brands, they should continue to identify potential buyout/partnership opportunities
to leverage existing brands that might populate the market. Such strategic
acquisitions could also prevent future competitor threats.
4.

Is Nestls mana
gement structure and philosophy aligned with its overall strategic plan given the
markets and countries that Nestl participates in? Why?
Nestles philosophy, since its inception has been to bring q
uality food products that make life convenient to people everywhere in the world.
Their current management structure has executives native to local regions, heading

and managing the markets quite autonomously from the main company. There is a
flow of information and responsibilities from the SBUs to the R&D to the product
developers to the managers and thus to retailers. This interwoven structure ensures
that the philosophy of the
company perfectly coincides with the firms strategic plan and execution

NEWS
http://www.ft.com/cms/s/0/acd089da-7c2b-11e3-b51400144feabdc0.html#axzz3SPBEXoCn
http://profit.ndtv.com/stock/nestle-india-ltd_nestleind/reports-directors-report
http://www.moneycontrol.com/company-article/nestleindia/news/NI

http://www.exchange4media.com/2832_renovation-innovation-the-latest-mantra-ofnestle-india.html
http://www.academia.edu/5598619/Nestle_international_business_strategy