Case Study: NESTLE

SUMMARY:
Nestle is pouring its creative energies into building credibility around its products and its company,
rejecting the traditional and often suicidal approach of mass advertising and mass discounts in favor of
relationship-based marketing strategies. Nestle offers a prime example of new packaged goods marketing
strategy which it calls interactive marketing. It is one of the companys key aspects of marketing to gain
significant market share, sales and moving into challenging position of global market. Interactive
marketing is the establishment of quality databases which involves personalized and direct-mail packages
to consumers in order to earn more trust and satisfaction of valued consumers to the company.

Question 1: Whatmarketing management problems have led Nestle to establish these

types of databases?
Answer

There are few specific reasons which seem to be the marketing management problems which have led
Nestle to establish these types of databases (Quality Databases). Given below are some major marketing
managements problems of Nestle:

There is not much margins for retailers to prefer its sales.

They need to improve the facilities like chillers.
The distribution cost is high as compared to the competition in the local and/or global market.
Company mostly advertises its milk products, advertisement of confectionary products is not so
better.

Figure: A chiller is a machine that removes heat from a liquid via a vapor-compression or
Absorption refrigeration cycle.

Question 2: Whattypes of marketing management questions may these types of

databases help provide answers for?
Answer

In order to present a genuine showcase of brand image the following questions may these types of
databases help provide answer:

What kind of interaction the company has with the consumer (direct vs. indirect) and the
frequency of that interaction (high or often vs. low or infrequent).
Does the company have any plan to create special programs or events to collect as much
customer information as they can.
With the expansion in the number of possible channels or touch points where customers can
have contact with the company, does the company maintain databases to track behavior like what
type of product consumers purchase or what are the preferences.
How the company is monitoring the response information like respond to prior direct-marketing
activities, promotional offers, or other traceable marketing activity.
How the company is focusing on the development of relation building with consumers that will be
customized both in content and intensity, depending upon the value of consumers to the firm.

Question 3: Whatare the technical requirements and costs associated with the
development of these types of databases?
Answer

Technical requirements:

Nestle maintains and constantly updates a database of 220,000 new mothers with names and
addresses extracted from maternity records.
There is also a new feature added in the mailing system to consumers which contains a reply
card on which the new mother can fill in babys name and indicate interest in receiving further
mailings.
The record file (name, address, etc.) against each consumer will then be used as direct-mail
packages, personalized with the first name of the baby.
Packages are sent at ages 3 months, 6 months, 9 months, 1 year, 18 months, 2 years and eack
package bulging with goodies and information cards with tips of babys development stages.

Associated cost:

The establishment of these quality databases, a process which has become increasingly cost-effective as
hardware and software technology has improved while their respective prices have dropped.

Question 4: How should a marketing decision support system (an MDSS) interface with
these types of databases?

Answer
A marketing decision support system (MDSS) is a decision support system for marketing activity. The
system helps businesses explore different scenarios by manipulating already collected data from past
events. A MDSS should interface with these types of database by supporting the software vendors with
planning strategy for marketing products. It can help to identify advantageous levels of pricing, advertising
spending, and advertising copy for the firms products.

Question 5: Arethere any ethical questions raised by Nestls having this database? If
yes, what are they?
Answer

Yes, there might be some ethical questions raised by Nestls having these databases.

1. Will this approach be able to keep customers loyal?

2. Will this approach be able to maintain competitive edge based on some features?

3. Will this approach be able to keep consumer satisfaction by providing hygienic products to their
consumer?

CONSEQUENCE:
Establishment of these kinds of databases helps company to balance key factors like sales margins for
retailers, distribution cost, etc. This approach will play a vital role on building good impression on brand
image and earn consumers satisfaction on products. Using these types of databases will also ensure
what could be the best planning and strategy for advertisements of the companys products.