MARKETING MANAGEMENT

FINAL REPORT

GROUP MEMBERS:

1. Ilsa (35411)
2. Tehreem Muhammad (35363)
3. Tayyaba Jaffar (36630)
4. Shuja ul Agha (35938)
5. Hamza Javed (36805)
6. Syed Saim Iftikhar (32739)
DATE: 27TH APRIL 2019
 CONTENTS

INDUSTRY ANALYSIS ...................................................................................................................... 3

COMPANY DESCRIPTION ............................................................................................................... 6
NESTLE PAKISTAN ........................................................................................................................... 8
SWOT ANALYSIS OF NESTLÉ ........................................................................................................ 9
1. STRENGTH .............................................................................................................................. 9
2. WEAKNESSES ......................................................................................................................... 9
3. OPPORTUNITIES ................................................................................................................. 10
4. THREATS ............................................................................................................................... 11
ANSOFF MATRIX ............................................................................................................................. 12
BRAND PORTFOLIO COLLECTION ........................................................................................... 14
BCG MATRIX .................................................................................................................................... 15
CONCLUSION ................................................................................................................................... 17

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INDUSTRY ANALYSIS
The pestle analysis is a great way for any organization to analyze the possible effects and

consequences that the macro environment will have with the internal environment of the

organizations the factors that are taken into consideration are political, economic, social,

technological, environmental and legal in nature .nestle being an organization that exists in

many different countries needs to possess a certain level of adaptability to succeed but more

so in this analysis we will focus on nestle Pakistan private limited.

POLITICAL

Nestle being a multinational organization faces

many political factors in Pakistan such as the ever

widening threat and challenge of corruption, which

can make operations and more importantly ethical practices difficult to execute. The other

factors being such as the lack of political stability in regards with rapid change in tax policies

of the government which than has to be pushed on to the customers by the organization. The

government also decides upon foreign trade policies that has ramifications on nestle.

ECONOMICAL

The economic factors that come in to play for the creation of external environment of nestle

can be elaborated as the ever increasing rate of inflation and interest rates which means that

due to the local currency being more easily available in the market the value of the currency

goes down which lessens the purchasing power as well as the disposable income of the

population which forces the organization to decrease its prices on product or even change

strategy and innovate. Other economic factors include the unemployment rate how easy or

difficult is it to find the right person for the right job and the economic growth in the country.

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SOCIAL

Nestle as an organization is well aware of the importance of social factors such as the

population growth with in the country, age distribution, the levels of income, people’s life

style and cultural barriers.to this regards the company is completely dependent on the

statistics and information gathered so that the organization can finally decide what strategies

they need to follow to become successful.

TECHNOLOGICAL

Nestle being a multinational organization in Pakistan faces many technological factors as in

order to stay in the market Nestle should diversify the change associated with demand of the

customer and rapid change of trends, which means they should go for new product

development and product innovation for which they needed the advance and latest machinery

for production. The platform of E-commerce provides the organization with the concept of

fast production and supply of numerous product lines associated with the company’s portfolio

but this change of platform requires nestle to conduct training sessions and workshops for

their employees because of the lack of knowledge in technology. Technology can be used on

telephones and on internet, which can increase the value of the organization on particular

levels of achievements with the implementation of changing technology and the path towards

its adaptation.

ENVIRONMENTAL

The environmental factors that come in to play for the creation of external environment of

nestle are such as, they should keep the weather and climate conditions in their minds as it

may affect the packaging of their product and even damage their product. The only way

possible that the environment has an impact on the products of nestle is that the production of

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their products is weak and more over that the packaging material is pour in durability and

protection from the environment. Nestle can make sure that the concept of environmental

safety should be kept in contact with the company by creating environmental friendly

packaging and coming up with products that make lives of people better and easy to live.

LEGAL

Nestle as an organization is well aware of the importance of legal factors such as any changes

in taxation system of Pakistan effects the level of Nestles productivity and its sales. There are

organizations that follow the labor laws, nestle also follows these laws and when the time

comes the government will change the minimum amount of salaries that an average labor

force gets paid by doing so the entire management of nestle changes as labor force decreases

by the new salary structure announced and its tough these days to get good labor.

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COMPANY DESCRIPTION
The year in which Nestle was founded was 1866 and now it

stands to be the biggest producer of beverage and food in the

world. Through the foundation of the company they only

produced and sold infant cereal and at that time they were most

known for it but they quickly diversified to a level that they had

included countless of other products in their portfolio these

products include chocolate, coffee, soup, yogurt, water and frozen foods.

HISTORY OF NESTLE

In the early 1867 Henri Nestlé, the founder of the company, he worked as an assistant to a

local pharmacist in the early days of his career. He had training in chemistry and science.

Henri’s nature was driven with innovation and keenness towards change, his experiments

consisted from food to cement. In 1867, Henri Nestlé made a combination of a nutritious

milk, wheat, and sugar. This cereal was so healthy that it even saved the life of a child. He

called it Farina lacteal.

In 1905 Nestlé started to merge with the company none other than Anglo-Swiss Condensed

Milk. And by the start of the early 1900s,nestle had started to operate some factories in the

United States, Britain, Germany and Spain. The production of Nestle had been more than just

doubled at the end of the World War I as it started to create a demand for dairy products in

the form of government contracts.

As soon as the war ended the contracts of Government vanished and now the consumers had

once again shifted back to fresh milk. However, Nestle responded quickly with its

management, by re-organizing most of its operations and further more reduced debt. People

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of 1920s saw Nestlé's first expansion into new products, with the introduction of chocolate

which became the Company's second most important activity.

Nestlé soon realized the effects of World War II as the profits dropped from $20 million in

1938 to $6 million in 1939. Factories were established in developing countries, particularly

Latin America. Ironically, the war helped the company to introduce newest product, Nescafé,

which was a staple drink of the US military. The production and sales of Nestle rose in the

wartime economy.

The end of World War II was the beginning of an active phase for Nestlé. Growth accelerated

and companies were acquired. In 1947 they merged with Maggi seasonings and soups. Crosse

& Blackwell followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973).

And their diversification came with a shareholding in L'Oréal in 1974.

GEOGRAPHICAL SCOPE AND SIZE

In 20th century Nestle merged with the Anglo-Swiss Condensed Milk Company to expand its

product range and broader its geographical scope. In the new millennium, Nestlé is the

undoubted leader in the food industry, and it has more than 470 factories around the world

and sales of more than CHF 81 billion. In 2000, Nestlé launched a Group-wide proposal

called GLOBE (Global Business Excellence), aimed at balancing and simplifying business

process planning. The employees in an organization are nearly a quarter of a million people

from 70 different countries. Nestlé operates in almost every part of the world. They have

reached an extraordinary global viewer both through their own efforts and through joint risks

with companies like Coca-Cola. Nestlé’s success has been through a combination of product

innovation and business acquisition. Their motivation for growth and diversity that has

allowed Nestlé to become the key competitor in nutrition that it is today.

Revenues 2018CHF91.439 billion (2018)

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Number of employees 308000 (2018)

Areas Served Worldwide

NESTLE PAKISTAN

Nestle Pakistan is a subdivision of nestle Switzerland. Its head quarter is in Vevey. It’s a food

operating company. And it is registered since 1988 in Karachi and Lahore. Under a mutual

progress with Milk Pak ltd and just in ten years the company made a place among top 25

countries in the world.

Nestle Pakistan is now processing the large amount of milk in Pakistan. They are now

collecting milk from the province of Sindh and Punjab and approximate 190,000 farmers

spread it to different provinces.

Sheikhupura and Kabirwala factories operates numerous products, but the factory which is in

Karachi and Islamabad produce bottled water. Their largest milk operating plant is in

Kabirwala. Nestle Pakistan has a huge sales and distributing networks in all over the country.

They make sure that their products are obtainable for their consumers wherever and

whenever they want.

Nestle Pakistan is leading Food and Beverages Company in Pakistan. And their keen concern

is that Health and Nutrition will reach through their products to the people of Pakistan who

consume their product s. Nestle Pakistan also prides itself for playing a vital role in giving

Health and Nutrition by their products. Because consumer are giving more importance on

healthy food, as they aware that food selection affect their life and health.

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SWOT ANALYSIS OF NESTLÉ

1. STRENGTH

 Brand name:

Nestle has a reputed and successful

brand name across the globe. Milk

pack is the trust worthy brand,

which is well recognized all over the country for its nutritious wholesome goodness and

pure natural taste.

 Research and development department:

Nestle has around 5000 employees working in its R&D department, who are constantly

working for innovative methods to produce better food to be provided to the world. They are

constantly working for better and better quality.

 Well-developed strategy:

Nestle has captivated the market with clear developed strategy. Nestle always know about the

perfect time and perfect place for their product, therefore their strategy makes room for

adjustments.

 Large and Qualified workforce:

Nestle is a great company with around 340000 employees, who are constantly providing their

services to make company’s products available in almost all the parts of the world. Nestle

knows about the importance of professional labor force as it helps any organization to remain

its name on the top of the list.

2. WEAKNESSES

 External sources for raw material:

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Milk Pak depends on external environmental sources for raw material, because of that

sometimes they face some issues.

 Tetra Pack:

Tetra pak is a multinational food packaging company. Nestle depends on this company for

packaging of all of its milk related products. Tetra Pack is having monopoly in the packaging

field in Pakistan. That’s why, Tetra pack may charge them higher amount and this ultimately

results in higher cost of production. This may lead to decrease in overall sell and might affect

company’s market share.

 Weak Implementation of CSR:

The company has started its involvement in eco friendly programs and tries to focus upon

improved working conditions of its supplies, but unfortunately the company has to face a lot

of negative reviews about non effectiveness of their program.

3. OPPORTUNITIES

 Develop its own farm:

Nestle has the opportunity of developing its own cattle farms, this might reduce the cost of

the company and ultimately nestle will not have to depend upon external environment for raw

material.

 Strong marketing and advertisement campaign:

By the help of strong marketing and advertisement campaigns Nestle can boost its sales and

eventually increase their overall revenue.

 Strategic Alliances:

Nestle has partnerships with huge giants of local and international markets like Coca-cola and

many other market leaders, that ultimately opens the door of opportunities for nestle

worldwide. Nestle’s shareholder include a largest cosmetic company naming L’Oreal.

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Likewise this, partnering with other numerous food companies will assist this organization in

more and more future growth.

4. THREATS

 Competitor:

Two main competitor of Nestle are Haleebfoods and Engrofoodswhich causes threat for the

company.

 Religious extremist:

Nestle somehow has to face religious extremism in several parts of the world. Some people

do not prefer to use nestle’s product and even tell others to avoid it.

 Inflation:

Inflation is getting higher and higher so purchasing power of people is diminishing day by

day.

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ANSOFF MATRIX

EXISTING PRODUCT NEW PRODUCT

EXISTING

MARKETS

NEW
MARKETS

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MARKET PENETRATION

Nestle has been registered in Pakistan since 1988, under a mutual agreement withmilk pak

ltd., and since then it is producing milk in Pakistan.

MARKET DEVELOPMENT

It refers to the concept of introducing similar products in new markets. Milk was the existing

product, then Nestle came up with milk for the people having calcium and high cholesterol

issue. By this Nestle introduced its existing product with some changes to new market.

PRODUCT DEVELOPMENT

It refers to the concept of introducing new products in existing markets. Nestle has huge

market for milk. It introduced several types of juices under the name of Fruita Vitals and

Nestfuita for the existing market. Nestle has also introduces coffee for its existing customers.

DIVERSIFICATION

It refers to introducing new product for new market. Nestle has introduced meals for children

naming Cerelac, and confectioneries like Smarties and Kitkat. It has also introduced Maggie

for children and adults.

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BRAND PORTFOLIO COLLECTION

Ambient Dairy Chilled Dairy

 Nestle Bunyad  Nestle Butter

 Nestle Milo  Nestle Original Yogurt

 Nestle Milkpak  Milkpak Yogurt

 Nestle Acticole  Nestle Raita

 Milkpak Cream  Nestle Easy Whip

 Nestle Nido

 Nestle Nesvita calcium plus

 Nestle Everyday

Culinary food Bottled Water

 Nestle Maggi Noodles  Nestle Pure Life.

Baby foods Breakfast Cereals

 Nestle Cerelac  Nestle kokokrunch

 Nestle Milo Cereals

 Nestle cornflakes

Coffee Confectionary

 Nescafe  Kikkat

 Nescafe gold  Smarties,

 Nescafe 3 in 1  Lion bar

 Toffo

Juices

 Nestle Fruita Vitals

 Nestle Nesfruita

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 BCG MATRIX
Market Share
High Low

High
Market Growth Rate

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STAR

The products placed in star quadrant have high market growth and high market share.

Nestle Pure Life was initially launched in Pakistan and now it is globally leading the market.

Today, it takes pride in being the lead player in the industry of bottled water, globally as well

as in Pakistan. Whereas Nestle Milk Pak and Nestle Fruita Vitals are showing growth in

market with an increasing market share.

According to Nestle Press Release on August 16, 2018 Nestle offers a wide variety of range

of its products and services to its current customers in Pakistan, which includes more than

2000 brands of which Milk Pak, Pure life and Fruita Vitals are their customer’s favorite.

QUESTION MARK

The products placed in Question mark quadrant have high growth rate and low market share.

Nestle report of nine-month sales for 2018, Maggi, Nescafe and KitKat have delivered mid-

single digit growth and strong momentum in Pakistan.

As Unilevers’s Knorr, instant noodles have a largest market share in instant noodle industry,

whereas some growth has been observed in Nestle Maggi noodles.

The market for Nescafe coffee is growing rapidly since past few months but Starbucks coffee

is still the market leader in term of market share.

Nestle KitKat is also facing a high competition by and small market share.

Nestle is investing a lot of money in these products but they should really consider the option

of either keeping on with its investment or not, considering the part that it’s not getting any

high returns.

CASH COWS

The products placed in cash cow quadrant have low growth rate and high market share.

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Nestle Cerelac is the market leader in baby food industry. It does not require much

investment and the revenue generated from this category will be reinvested in star and

question mark quadrant.

However, Nestle should not completely neglect this quadrant and should bring innovation

and changes in its Cerelac to maintain its position in market.

DOGS

The products placed in dog quadrant have low market growth and low market share.

Nestle Milo and Nestle KocoKrunch have a very low growth rate and market share. Very few

people like these products and they are not according to the taste of people. Moreover, Milo

was launched with the purpose of generating high revenue for the company but it doesn’t

create any significant impact on business.

Nestle should invest their money in cashcow and question mark quadrant in order for them to

attract more customers.

CONCLUSION

 The conclusion arises that Nestle needs to focus on products that aren’t generating

much revenue and by making a decision that weather they’re going to improve their

current performance by investing more or by discarding the product as it isn’t

generating much returns for Nestle.

 They need to clear the negative thoughts of those individuals in our society that

believe that Nestles product at some point may be harmful for them, what nestle can

do is conduct free factory tours for their customers so that the part which lacks in

understanding the background and trust issues is cleared and ultimately Nestle will

attain those customers that responded negative towards their product and

simultaneously retrieving that part of revenue that they were so dearly lacking behind

on.

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  Nestle needs to focus more on their CSR performance as it is also a big part of

marketing their products and organization.

 They need to come up with an alternative packaging for their Milk as the tetra pack

costs them a lot and thus their manufacturing cost increases twice with the tetra

packaging, so it’s better to come up with an alternative method of packaging that

results in low cost and simultaneously is considered as environmental friendly.

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