Amrita Nenvani FT13106 Chandrakant R FT13119 Gowtham Bandi FT13131 Maitreyee Apte FT13143 Puneet Rastogi FT13157 Shivani

Narang FT13169 Swati Sharma FT13181 Vinay Alexander FT13194

Objectives
Whether decision of centralization or decentralization is productive for

Some Elements of Marketing Mix Some Countries over others

Internal and External factors which influence centralization or decentralization?

Nestle Organization - Center

Marketing PDMS was created for monitoring and

promoting policies, goals and standards across geography.

Robin believes Marketing function should be more decentralized in comparison to other divisions

Finance division managed both the controller and

treasurer functions
Technical division ensured commitment to product

quality

Research and Development

Nestle Organization - Country

75 operating companies Headed by a Country Manager Marketing Manufacturing Finance Administration Local Product Managers Marketing objectives, positioning and programs

Internal Factors
CENTRALIZATION

Worldwide efficiency and communication of Ideas. Nestles goal of reducing cost (economies of scales) and

increasing profits. Less complexity in terms of organizations functions

DECENTRALIZATION

Generation of new ideas of products by local managers

(Mouseline in France), brand names (Bollino in France). Knowledge of local markets and customers by local managers. Better relationship with local stakeholders.

External Factors
CENTRALIZATION

Demographic convergence between countries. Consumer tastes and preferences From joint to nuclear family Spill over Effect Conflict in product positioning Cultural convergence between countries. Travel Cultural interchange
DECENTRALIZATION

Product Differentiation. Differences in Consumer Languages. Difference in Consumer Perceptions (advertising, branding). Differences in Consumer tastes.

Centralization based on Product Mix

Place Product division manager understands local market better. So this decision should be kept with local Product Manager
Price Identify Local price points and setting the price should

restrict with product manager Strategic decision to cut costs and have price advantage can be referred to Center.

Bolino (France) 13 million units sold Reduction in Cost of production needed from existing 20% Local Competition from Knorr. 5Minuten Terrine : 40 Million Units sold 30% of total cost from COP

Centralization based on Product Mix ( Contd. )

Product For taste products decision making should be decentralized as local managers understands better the taste of public For durable goods decisions can be centralized Promotion Local manager best understands the local market. So brand positioning, promotion should be kept decentralized. Cross fertilization among countries should be promoted by Center

Centralization based on Countries

Cross Cultural Understanding between different Countries Demographic and cultural Trends Consumer Tastes and Preferences
Spill Over National Boundaries Contribute to conflicts in product positioning. 65% of the programming watched in French Speaking part of Switzerland emanated from France. Satellite Television centralized coordination planned to

break down cultural barriers Offers advertising Cost effectiveness in Europe as in US. Consorted Product Positioning, Packaging, Promotion and Pricing. Break even should occur for Fixed Costs of $200million/Satellite

Thank You