Advance Strategic Marketing

Final Presentation
on

Imranullah (6446)
Mba 1.5

HISTORY
Henri Nestle, born Heinrich Nestle on
10 August 1814 was a German who
immigrated to Switzerland.

In the 1860s Henri nestle

developed the first condensed
milk and cereal based infant
food FARINE LACTEE HENRI
NESTLE
(a dry mixture of cows milk, sugar, wheat
flour)

1900 operating factories in the united states,

Germany, Britain Spain.
1905 merger with Anglo Swiss condensed milk
company.
1920s saw nestle first expansion with chocolate .

Since 1996 there have been acquisitions including:

San Pellegrino 1997
Spillers pet food 1998
Ralston Purina 2002
Jenny Craig and uncle tobys 2006
Novartis medical nutrition 2007

LOGO
The Nestl logo was launched by
Henri Nestl in 1868 on the basis of
the meaning of his name in German,
i.e. little nest, and of his family
emblem.

SLOGON
GOOD FOOD, GOOD LIFE

NESTLE WORLDWIDE

Offering more than 8500

brands and 10,000
products.

Head quarter in VEVEY,

Switzerland.
447 factories spread over
194 countries and
employees around
333000 people and in
Pakistan about 2500
employees are working.

NESTLE PAKISTAN
Nestle started its operations in Pakistan back in 1988, by
acquiring a diary company MILKPAK LTD.
Butter, cream, desighee under brand name MILK PAK
Juice drink under brand name FROST
1990 it start producing NIDO, Everyday, CERELAC
1991 LACTOGEN 1 & 2
1994 MILO and NESCAFE 3 in 1
1998 sweet treats (POLO)
1999 fruit drops, NESTLE PURE LIFE
NESTLE fruita vitals

PRODUCT LINE

MARKET SHARE
other
10%

Unilever
30%

Nestle
60%

BRANCHES IN PAKISTAN
Nestle in Pakistan has its
branches in fallowing major cities.
LAHORE
ISLAMABAD
FAISALABAD
SHEIKHUPURA (factory)
KARACHI
Quetta

Vision

The Nestl global vision is to be

the leading health, wellness,
and Nutrition Company in the
world

Mission Statement
Good Food is the primary source of Good Health
throughout life. We strive to bring consumers foods
that are safe, of high quality and provide optimal
nutrition to meet physiological needs. In addition
to Nutrition, Health and Wellness, Nestl products
bring consumers the vital ingredients of taste and
pleasure
1. Customers

Yes

2. Products or services

Yes

3. Markets

No

4. Technology

No

5. Concern for survival, growth, and profitability

No

6. Philosophy

No

7. Self-concept

Yes

8. Concern for public image

No

9. Concern for employees

No

Management

PEST Analysis
Political

and Legal:
Taxation law
Labor law
Laws on hiring and promotion
Environmental protection Laws
Foreign trade Regulations
Attitudes towards foreign companies
Political instability

PEST Analysis
Economic

forces:
Inflation Rate
Economic growth rate

PEST Analysis
Social

factor:
Health consciousness
Demographic trend
Age structure
Environmental concerns
Work life quality
Lifestyle changes

PEST Analysis
Technological

forces:

New Products
Product innovation
Productivity improvement through automation
Total spending on R&D
New communication technology

SWOT Analysis
Strengths

(S)

Socially responsible company

Nestle products enjoy strong brand image
Sales forces as a major physical resource strength
Quality product distribution networks in country
Net profit increased by 94% in 2009
Price earning ration decreased from 38.9 to 18.8
Export sales increased by 48% to PKR 3.3b

 Weakness

(W)

Lack of awareness among target market

Nestle milk always stand at last because of low
advertisement
Revenue from confectionary decreased by 14%
Low credit sales and profit margin to retailers
Weak promotional activities through websites
Cant launch expensive brand due to low income
groups

 Opportunities

(O)

Few and weak competitors in the market

Disposable income increased by 3.6%
Consumer expenditure on food has increased by
3.6%
Population density increased
Credit policy can be adopted to increase sales
Potential in cold diary milk
Pakistan as 7th largest milk producing country
Increased in consumer food industry by 14%

 Threats

(T)

Engro and Shangrila as major competitors

Market segment growth could attract new
entrants
Taste of consumer has already developed
Legal and ethical issues
Economic slowdown can reduce demand
Effect of seasonality upon sales
Strong advertisement by major competitors

 OS

Strategies

More market penetration through effective sales

force ( S3+S1)
Developed and promote cold dairy products
(S2+O6+O8+O3)
Create awareness and promote green marketing
concepts among the people (S1+O4)

OW

Strategies

Development of quality products to target the

middle class (W6+O2+O3)
Increase the sales of confectionaries items through
more credit sales to retailors to increase their profit
margins (W3+W4+O5)

 TS

Strategies

Strong logistics to help counter the competitors

through market development (S4+T2)
Related diversification to help in more global
expansion (S7+T3)

TW

Strategies

Strong advertisement campaigns to communicate

the value of nestle products to the target
customers better than competitors (W1+W2+T7)
Increase promotional activities with more web
development to lead the industry (W5+T1)

Space Matrix

Y axis=FS+ES
X axis=CA+IS

Y axis=4+(-1.75)= 2.25
X axis=4.5+(-1.75)=2.75

BCG Matrix

BCG

General Electric Model

BUSINESS UNIT STRENGTH
RATE

Nestle

Sale

margin profit

primary demand

brand image

quality

product innovation

market share

35

27

TOTAL
Total Percentage

77.142857

MARKET ATTRACTIVNESS
competition

historical profit margin

environmental situation

economic situation

customer specification

size of market

profit margin

impact of technology

environmental impact

market share

management profile

R&D

quality of service

branding & promotion

69

52

TOTAL
Total Percentage

75.362319

Total Average Percentage of Neslte

76.252588

Market Attractiveness

GE/McKinsey Matrix

High
Medium
Low

Business Unit Strenths

High
Medium Low
Neslte

QSMP
Acquisitions
Shangrilla &
Youngs food

No Aquisitions

Weights

AS

TAS

AS

TAS

Few and weak competitors in the market

0.12

0.48

0.24

Disposable income increased by 3.6%

0.07

Consumer expenditure on food has increased by 3.6%

0.09

0.27

0.09

Population density increased by 2.18% (per sq.km)

0.05

0.15

0.10

Credit policy can be adopted to increase sales

0.03

Potential in cold dairy market

0.02

All companies contribute only 2% to processed milk market

0.12

0.12

0.05

0.20

0.10

Key factors
OPPERTUNITIES

7th

Pakistan as
largest milk producing country with milk output of 200 billion
liters
Increase in consumer food industry by 14%

THREATS
Engro and Shakarganj as major competitors

0.14

Market segment growth could attract new entrants

0.04

0.12

0.48

Taste of the consumer has already developed

0.02

0.02

.08

Legal & ethical issues

0.01

Economic slowdown can reduce demand

0.01

0.02

Effect of seasonality upon sales

0.05

Strong advertisement by major competitors

0.08
1.00

.03

QSPM (Continued)
Acquisitions
Shangrilla &
Youngs food
Weights

AS

Socially Responsible Company

0.03

Nestle products enjoy strong brand image

0.07

Sales force as a major physical resource strength

0.05

Quality product distribution networks in country

0.08

Net Profit increased by 94% in 2009.

0.20

0.60

0.20

Price earnings ratio decreased from 38.9 to 18.8

0.05

0.10

0.05

Export Sales increased by 48% to PKR 3.3 billion

0.18

0.54

0.18

0.04

0.09

Revenue from confectionary decreased by 14%

0.08

Low credit sales and profit margin to retailers

0.05

Weak promotional activities through websites

0.05

Cant launch expensive brand due to low income groups

0.03

Total

1.00

Key factors

TAS

No Aquisitions

AS

TAS

STRENGHTS
0.14

0.07

WEAKNESSES
Lack of awareness among target market
Nestle milk always stands at last because of low Advertisement.

0.05

0.15

0.06
2.75

0.12
1.89

Matrix Analysis
Alternative Strategies

Space

BCG

Back ward integration

Forward integration

Horizontal integration
Product Development

X
X

Market Penetration

Market Development

X
X

GE

Count

2
3

Related Diversification

Unrelated diversification

Retrenchment
Divestiture

Liquidation

Decision

This seemed to an important step where we had to

choose either to go for a horizontal integration or
more product development. The interesting fact was
that from 2008-2009 Nestle Pakistan introduced three
new products into the market
The major new product launches the year 2009
Included: NESQUIK milk enhancer, NIDO BUN YAD,
LACTOGEN GOLD, and CERELAC fruit cereals.

Our Recommendation:
Considering this fact now we recommended Nestle
Pakistan to Acquire Shangrila foods and youngs food
to excel as a market leader for the year 2010.

sources
http://markets.ft.com/research/Markets/T

earsheets/Financials?s=NESN:VTX
http://en.wikipedia.org/wiki/Nestl%C3%A9
http://www.nestle.com/assetlibrary/Documents/Library/Documents/An
nual_Reports/2009-Annual-Report-EN.pdf
www.google.com
http://www.nestle.pk/