MARKETING REPORT ON Nestl

HISTORY OF NESTLE
The key factor which drove the early history of the enterprise that would become The Nestl Company was Henri Nestl's search for a healthy, economical alternative to breastfeeding for mothers who could not feed their infants at the breast. In the mid-1860s Nestl, a trained pharmacist began experimenting with various combinations of cow's milk, wheat flour and sugar in an attempt to develop an alternative source of infant nutrition for mothers who were unable to breast feed. His ultimate goal was to help combat the problem of infant mortality due to malnutrition. He called the new product Farine Lacte Henri Nestl. Nestl's first customer was a premature infant who could tolerate neither his mother's milk nor any of the conventional substitutes, and had been given up for lost by local physicians. People quickly recognized the value of the new product, after Nestl's new formula saved the child's life and within a few years, Farine Lacte Nestl was being marketed in much of Europe. Henri Nestl also showed early understanding of the power of branding. He had adopted his own coat of arms as a trademark; in Swiss German, Nestl means 'little nest'. One of his agents suggested that the nest could be exchanged for the white cross of the Swiss flag. His response was firm: "I regret that I cannot allow you to change my nest for a Swiss cross .... I cannot have a different trademark in every country; anyone can make use of a cross, but no-one else may use my coat of arms." Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by Americans Charles and George Page, broadened its product line in the mid-1870s to include cheese and infant formulas. The Nestl Company, which had been purchased from Henri Nestl by Jules Monnerat in 1874, responded by launching a condensed milk product of its own. The two companies remained fierce competitors until their merger in 1905. Some other important firsts occurred during those years. In 1875 Vevey resident Daniel Peter figured out how to combine milk and cocoa powder to create milk chocolate. Peter, a friend and neighbor of Henri Nestl, started a company that quickly became the world's leading maker of chocolate and later merged with Nestl. In 1882 Swiss miller Julius Maggi created a food product utilizing legumes that was quick to prepare and easy to digest. His instant pea and bean soups helped launch Maggi & Company. By the turn of the century, his company was producing not only powdered soups, but bouillon cubes, and sauces and flavorings. MISSION STATEMENT Wherever you live, only Nestle can provide the best and most relevant food and beverage products to meet your needs throughout your day, throughout your life. The Nestle Network icon will take you on the journey of discovery through our world of food. CORPORATE STRUCTURE

Head Office
The registered and corporate office of Nestle Milkpak Ltd. Is in Lahore. 308 Upper Mall Lahore PABX: 5757082-95

Fax: 5711820

Factories
There are two factories of Nestle Milkpak Ltd. For dairy products. Sheikhupura: 29th km, Lahore - Sheikhupura Road Sheikhupura, Punjab, Pakistan. Kabirwala: Khanewal Kabirwala Road, Kabirwala District Khanewal, Punjab, Pakistan. There are two plants for Mineral Water situated in: Islamabad : Karachi:

Regional Offices
Company has ten regional sales offices in following cities of Pakistan: Karachi Hyderabad Sukkar Lahore Multan Faisalabad Gujanwala Quetta Islamabad Peshawar Milk Collection Centers

The core raw material of Nestle Milkpak is milk. Over the last thirteen years the company prime concern has been to improve the quality and volume of milk for UHT processing and for other milk base products. So the company has twenty five milk collection centers in Pakistan.

DEPARTMENTS

There are mainly five divisions. In every division there further departments. Production Division Quality Assurance Department Brand Wise Production Departments Packaging Department Human Resource Division Personnel Department Marketing Division Customer Relation Department Sales Department Distribution Department Research & Development Department Finance Division Treasury Department Accounts Department Milk Collection Division Agricultural Services Department Logistic Department PRODUCT LINE

Products
Year Product Name

1981

UHT Milk 1983 Butter

1986 Milk Pak Cream Desi Ghee Frost Juice

Milk Pak UHT Milk 1990 Nido Cerelac 1991 Nestum Lectogen 1992 Everyday Tea Whitener Gloria Maggis Noodles 1994 Milo Neslac 1995 Millo RTD Nescafe 3 in 1 1996 Every day UHT Milk Nestle Orange Juice Nestea Polo Nescafe Classic Maggi Yakhni 1997 Nestle Wheat 1998 Toffo Soothers Nestle Pure Life

1999 Maggi Sauces Fruit Drops Butter Skotch

2000 Tea Cream 2001 MARKET ANALYSIS ROLE OF MARKETING DEPARTMENT As marketing is a game to meet the needs and wants of the customers to satisfy them. Customer satisfaction is the responsibility of marketing department by developing new product, modifying existing product, placing the product at right time at right place. The department also helps in setting prices with respect to competitors and to satisfy customer as well. It functions to promote the product. So in this way it creates an environment where transactions can take place. Nescafe Creamy Flavors

Marketing Division in Nestle

In Nestle, there are three departments in the marketing division. Research and development department Customer relation department Distribution department As the function of marketing department is to satisfy the customer and to fulfill organization objectives. These can not be performed by a single department. These can only be achieved when there will be coordination among all departments of the organization. In the case of Nestle Milkpak Ltd. marketing division with its three departments coordinates all other divisions and departments. Marketing division doesn't take decision it rather it puts a lot of efforts to get the consensus of all other divisions. Marketing people are directly related to the supply of the goods to the retailers, so they have better estimation of the demand of their products. Marketing division gets the feed back from the sales person. Then after getting an estimation marketing division communicate to production division. The production division makes an analysis that how much capacity is available and how much demand is there. If there is some need of financial resources and workers, the production manager communicates these needs to human resources division and finance division. So these divisions take actions to fulfill the need of production division. In this way the marketing division integrates the activities of different department to maintain the overall operations of the company. Product development and launching strategies of Nestle Nestle Milkpak Ltd. is market leader in food and beverage products and competing with its existing competitors effectively. Strong emphasis on customers needs and wants enable the Nestle to be market leader in the industry. Nestle never develops any product with blind eyes but before developing or launching any product, they go for complete study of market and identify the needs and wants of

customers and develop product accordingly. Such sorts of activities are performed by marketing division with its three departments. The division has an efficient research and development department with marking information system (MkIS) which helps to identify the unmeet needs of customers through scientific research or surveys. In general, the marketing division concentrates on following two aspects before developing new product. 1. 2. Taste of potential market. Consumption pattern of target market

The marketing executives believe that product success depends upon whether it satisfies the basis needs and requirements of customers or not. Secondly, they also believe that these must be sufficient demand (consumption) for the new product. If marketing research analysis provide reasonable results on above two aspects then marketing division proceeds following new product development activities. New product development activities In order to get long term success, marketing division perform following activities for new product development. 1. 2. 3. 4. 5. 6. Primary product Quality test Market test Feed back Modification Commercialization (launching)

Primary product is developed in the factory laboratory according to the demand of the market. Prior to the market test, quality test is applied in quality assurance laboratories in Singapore in which they evaluate whether the new product inherent the reasonable standard quality as expected by the customers. After offering the new product in few samples to small experiments groups of customers, the company gets feed back from them and the make, if necessary, any modification in the product design or quality. After performing such activities or we can say the product become 100% percent complete then Nestle goes for commercialization at the large scale with full energy and commitment. SWOT ANALYSIS OF NESTLE Strengths Nestle has following strengths: Nestle is world reputed and recognized organization which has positive impact on people perception about it. Nestle has strong financial position which enable it to attract more new investors and help it to raise funds from banks.

Nestle has strong core competencies i.e. highly expert human resources which enable it to produce new high quality innovative products. Nestle modern operation facilities are also important strength which enable it to produce high standardized quality products. Because Nestle is operating worldwide and has different strategic business units (SBU). It can compensate losses, if incur in any one SBU through other profitable SBUs. Nestle has its own distribution network which make it easy to provide Nestle products at all possible places on time. Weaknesses Raw material is basic input for every organization and milk is core raw material of Nestle for which it is dependent on the outside Milkmen. Nestle has no single its own dairy form which provide high quality milk to the firm. Another weakness of Nestle Milkpak Ltd. is that its total packaging depends upon Packages (Pvt.) limited. Opportunities Nestle can go for Backward integration and establish its own diary forms. Currently, Nestle is dependent on the outside Milkmen which sometimes dont supply high quality milk. Nestle should open its own diary forms because Nestle has strong financial position and Pakistan is agricultural state which support this backward integration. Threats Followings are the major threats for Nestle Milkpak Ltd. ; Purchasing power of people in Pakistan is decreasing day by day and prices of Nestle products are comparatively high. So in long run, Nestle may face problem if such trend continues. In some products Nestle is facing fierce competition. For example, in Milkpak Nestle is facing competition from Chauhdary Dairies Limited who has launched Dairy Queen at lower prices which has decreased market share of Milkpak. CDL has also launched Nrish milk powder at lower prices, it also has capability to decreased the market share of Nido. So in long run, if Nestle do not respond to such competitors, they may create a lot of problems in other products also. Pakistan politics structure is very instable and is depressing economic activities and volatile business environment in the state. Such instable environment may influence the performance of all industries operating in state and Nestle may also be influenced from such trends of instability.

COMPETITIORS

Nestle is the market leader in food and beverage industry. They are producing high quality well known brands. There no is such competitor that can compete Nestle Milkpak Ltd. in its total product mix. There are a few local competitors of the company in different product item. These competitors are: Rafhan: Rafhan is competing Nestle in infant and follow up cereals. Shezan and Bambino: Shezan and Bambino are competing Nestle Milkpaks local brand Frost. CDL and Adar-e-kisan: These two competitors are competing in milk and milk powder products. In spite of this competition, Nestle is enjoying about 70-75% market share in Pakistan. Competitive Priorities: Following are the competitive priorities of Nestle 1. 2. 3. 4. QUALITY Quality is the cone competitive priority of NM. They take quality in two ways. High performance design and consistent quality. 1. HIGH PERFORMANCE DESIGN NM takes all the required measures to provide the high quality products to its customers. They provide pure quality products according to them customer requirements. They have most advanced process design for the production of high quality products. 2. CONSISTENT QUALITY NM pays special attention for maintaining consistent quality. They have special sort of equipments and process which facilitates in maintaining a consistent quality. So the each and every unit of its product equally satisfies its customers. 3. DEVELOPMENT SPEED As for as develop speed is concerned NM is the industry leader not only in Pakistan but all over the world. They have a team of very innovative people which consistently focus on the development of new products and to improve the already existing products. High performance design Consistent quality Development speed Volume flexibility

4. VOLUME FLEXIBILITY Volume flexibility is one of the competitive priority of NM. When the availability of Milk is high in winter season they increase their production as the milk cannot be stored for longer period of time. In season when there is shortage of milk their production rates dropped. So they can adjust their volume of production according to their requirements. 4 Ps PRODUCT Target market for Nestle products To satisfy the requirements of term report I select the following products of Nestle. Everyday Nido Milk pack Nescafe Mineral water In this section I briefly explain the target market for each product. Market segmentation Nestle has been segmented its product on demographics basis, specially on: Age Occupation Income group Family composition Target market for Everyday Everyday is basically prepared for people living in cities who belong to the high income group. it means the user or consumer of everyday belongs to A class because, in general, perception about everyday is that it is costly but actually it is not too much costly. It is basically economical for tea purpose. it is convenient in tea making, so this is also target for office use, where it can be prepared easily and immediately. Target market for Milkpack

Milk pack is targeted for quality conscious people mostly living in the urban areas. The use of milkpack belongs to all classes. People prefer to use milkpack for tea making only. For example in hostels most of the students use haleeb, where the fresh milk is not available. Target market for Nido Nido is generally targeted at the growing specially school going children because children are fond of playing as they do in growing age. So they need vitamins and calcium for growth of strong bones and teeth. Target market for nido is school going children living in cities. Target market for Mineral Water Mineral water is targeted for the people who are health conscious. Mostly educated people and patients are target market for mineral water. Target market for Nescafe The target market of Nescafe is people who switch from tea to caf and mostly people belonging to upper classes and middle-middle class. PRICING EVERY DAY It is one of the most famous products by Nestle. It is sprayed instant dairy whitener, specially formulated to bring out the best taste. It is made from the best quality fresh milk according to the Nestle International standards that guarantee quality and purity. Basically everyday has no competitor in the tea whitener. MILKPAK Milkpak is the product of Nestle, which is available in liquid form. Nestle designed this product because of greater demand of milk. Milkpak is more pure & hygienic milk, which says fresh for quite longer time period. It is ideal for family use. NIDO Nido if full cream powdered milk enriched with vitamin A & D . Nido is made from pure fresh mil and retains calcium, vitamin, proteins and other nutrients. Nido is specially designed for the growing children. NESTLE PURELIFE WATER Nestle is offering mineral water in three different sizes. Their prices depend upon sizes in which they are offered. Large bottles have relatively low price as compared with small bottles.

SIZES AND PRICING

EVEY DAY 1000gm (194-Rs) 400gm (85-Rs) 200gm (47-Rs) Litre liq (7-Rs)
Pricing Strategy

MILKPAK 1-Litre (30-Rs) -Litre (13-Rs) -Litre (9-Rs)

NIDO 1100gm (199-Rs) 400gm (88-Rs) 200gm (56-Rs) 2500gm (830-Rs)

PURELIFE 1.5-litre (22-Rs) -litre (12-Rs)

Nestle is offering different prices depending on the size of the product. They are trying to capture different income groups by offering different prices depending in the size of product. To include low-income group in their target market, Nestle offered small packs with low price, while for high-income group they are offering large packs i.e. 1litre/1000gm. In large packs they offer low price as compare to small packs depending on the size. PLACEMENT

DISTRUBUTION
The distribution is carried out effectively and economically with a fleet of 3-wheelers which average 12- re-fill trips a day. Each trip is a one man operation, with the driver also serving as a salesman, a loader, HH operator and manual record keeper. To ensure economical and efficient operation the distribution center is constantly engaged in updating the revising rout planning. CONTINUOUS IMPROVEMENT (CI) The term continuous Improvement is not new for progressing factories. In the Nestle system, this gives a common platform to all improvement teams. It is a participatory approach to problem solving with a very defined and structured process. CI helps in changing the mindset of the people so that they should always be thinking of improvements, by challenging the old procedures and perceptions.

During the NPT project, a continuous improvement drive was launched in Sheikhupura in March and in Kabirwala in April, with a presentation to department heads. To convey the message to everyone at floor level, separate presentations were made to executives, supervisors and workers. Everyone in the factory can be a part of this process either by

contributing ideas or by becoming a member of the problem solving team. The continuous improvement is not only focused on cost reductions but takes into account ideas that improve process, quality, safety, hygiene or environment. PROMOTION Comparable progress has been achieved within our logistics, sales and distribution structure, where stronger distribution and more impact merchandising have certainly made a major contribution to our high growth rates. The strategic BECA project became functionally operational by the end of the year. With regard to new products, you are all aware that we had the privilege of being the first in the world to introduce the strategic new product, NESTLE PURE LIFE. By the end of the year, NESTLE PURE LIFE is firmly established with market share over 50% and is well placed to consolidate its position in 2000. In 1998, the brand positioning was further strengthened, using the purity platform. A major campaign was developed to highlight purity as the most important attribute in milk, strongly associating MILKPAK with purity and quality. MILKPAK

Khalis Hi Sub Kuch HAI was burst used to outwit the competition and induced consumer to switch over NESTLE Milkpak UHT milk. It was launched on April 23 in Nishat & Mariam colonies and later in Pir & Farooq colonies. This campaign directly involved consumers and retailers and spanned over a period of six month.
The Re-launching of MILKPAK The new marketing effort was based on a change in packaging design in order to communicate the new positioning and the image of an old and trusted brand. ATV campaign was developed to focus on key message e.g., Nestl is behind MILKPAK, assurance is purity through Nestle and Nestle being No.1 Food Company with 130 years of milk experience. This message was further propagated through print media and outdoor advertisement. The campaign was supported through flier, temporary hoarding, street banners, and shop banners, posters, buntings and trade letters. The promotion targeted our core market of young adults between 18-25 years, with prizes having been selected to appeal to this group. NIDO Since last year NIDO has seen a consistent and substantial growth in sales volume. The growth clearly indicates that consumer confidence in processed milks is growing. The factors that have led to this are rising cost of gawala milk despite its questionable quality, the growing size of the milk market to rapid urbanization and better awareness about processed milk.

Nido met its 1999 OPL annual volume targeted on July 15, 1999, when the highest ever invoicing and retail per day record was achieved in June 1999. Finally, to create goodwill amongst mothers, NIDO launched the NIDO Quiz Contest covering 75 schools of Karachi, Lahore and Islamabad. Nestle celebrates NIDO mothers Day each year for sales Promotion.

NESTLE PURE LIFE WATER

Murree Hills draw enormous crowds from all over Pakistan in summers. Those who came to Murree this summer were in for pleasant surprise. They were greeted by NESTLE PURE LIFE. The brand and sales promotion teams of the North Zone had put together an effective outdoor campaign. The road to Murree was awash with billboards, shops signs, shops boards, brand umbrellas,stands,shops paintings, wall paintings,POS materials, regular merchandising, cross road signs, product sampling and sticker sampling. The activity created a remarkable impact and the visitors were impressed. CONCLUSION Analyzing all the data we obtained from the organization, we concluded that Nestle is basically a dairy/food company. The good thing about Nestle is that, they are familiar with their actual target market. One emerging industry i.e. MILK, is being captured by Nestle through its quality products. They have developed depth in Milk line, i.e. starting from growing babies to old age tea lovers. Sales promotion activities are effectively carried out. Important thing about Nestle is that they have placed their products at customers doorstep. Weakness of Nestle lies in many products where they are not promoting them effectively or weak marketing like Nescafe. Another factor of failure is consumer taste like Nescafe is specifically for higher class. Few years ago, they were offering products only for health conscious or high income groups but now they have included low income group in their target market by offering small packs like Every Day in liquid form.