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D E D I C A T I O N

“THIS REPORT IS DEDICATED TO ALL BUSINESS


STUDENTS”

We like to dedicate this report to all business students


who want to become great business professionals and
want to be on the height of the “business World “. We
hope that they would be satisfied from our task and that
would help them in their future life.

We at this point shall not forget the fruitful efforts of our


teacher Prof. Hashim sultan without whom we would have
been unable to accomplish this.

Fundamentals of Marketing 1
ACKNOWLEDGEMENT

All praise to Allah, the entire wisdom and knowledge,


who has given us the opportunity to think, judge and
complete our term project of Fundamentals of Marketing.

We are also thankful to our respectable teacher Prof.


Hashim sultan who has given us the opportunity to
understand the marketing concepts in actual practice and
he is the only source who directed us to apply our
abilities in the required direction.

We are also very thankful to Mr. Usman, Brand Manager


of NIDO in Nestle, who has provided us all the related
information and guidance regarding our project.

Fundamentals of Marketing 2
Marketing Term
Report
NIDO By NESTLE
MISSION STATEMENT:
“We are committed to offering consumers high-quality food
products that are safe, tasty and affordable.”

VISION STATEMENT:
“We care for our consumers because our success depends on
meeting their needs and expectations. Through listening and
understanding, we can make products that they will want to use all
through their lives.”

INTRODUCTION TO NESTLE COMPANY


Nestle International:
Nestle is the name which is very respectable among international
and multinational firm. NESTLE was born in the green plains and
blue streams of SWITZERLAND and has its head office in VEVY.
SWITZERLAND and its first product was Chocolate. The company
has a 126 years old history and had dominated in almost all
segments of market included food, nutrition’s, milk, sweets,
chocolates, cosmetics and many other products. In simple words
they have a product for every one.
Nestle during its old history established it self as a quality
conscious company and become the leading business company in
the world..

Branches:

Fundamentals of Marketing 3
It has its factories in more than 70 countries and market .Its
product in more than 125 countries and the sales of the Nestle is
among the top ten companies of the world.

Nestle In Pakistan:
Nestle international also wanted to expand its business in South
East Asia. For this motive in mind the first signed a venture with
Indian Company and than turned its attention towards Pakistan.
Venture With Milkpak:
Milkpak is a company of Wazir Ali Group and is known for
producing finest quality products like Milkpak Dairy products e.g.
Milkpak Milk, Butter, Desi ghee, Cream etc. and also a market
share leader in juices e.g. Frost.
Seeing the reputation of Milkpak in Pakistan, Nestle signed a
venture in 1987 and from than the company is serving consumers
with the name NIDO.

PRODUCT NIDO
Our product is Nido 1+, 3+, 6+. Now, there is brief introduction of
our product Nido. Nido is a product of Nestle. Basically, it is milk in
the form of powder. Company takes the pure milk from the cows
and dried it in the form of powder and some nutrients, which are
beneficial so that consumer will get it in the form of pure form milk
and children will
Become healthy. NIDO is available in the market in the three
different types for the different age children that are explain
below:

NIDO 1+:
Age:
Nido 1+ is for 1 to 3 years children.
Main Features:
It’s special feature is Prebio’ Protection which means healthy
Tummy. Nido 1+ comes with Prebio Nestle unique natural blend of
fibers, helps to maintain a healthy digestive system of children
from age 1 to 3 years. Nido 1+ also contains Vitamins A, C, E,
Selenium, Zinc and from that yours child immunity to fight
against germs and battery and helping the child to grow strong
and healthy.

Fundamentals of Marketing 4
NIDO 3+:
Nido 3+ is for 3-6 years children.
Main Features:
Nido3+ means Smart Growth. At the age of 3, your child begins
exploring the exciting world of school and friends, eager to group
new ideas. Encourage your child to be active learner and sociable.
Its main feature is o increase the mental abilities of your child.

NIDO 6+:

Age:
Nido 6+ is from the 6-onwards children.
Main Features:
Its main feature is Calci-N means Healthy Bones. From age 6 it is
important that children get enough calcium to make their bones
strong since most of their bone structure is built before reaching
30 years of age. Nido 6+ contains Calci-N Nestle natural calcium
source from milk, which has calcium and vitamin –D in proportion
that helps lock in your child’s bones. With only two glasses of Nido
6+ daily your child will get all the calcium needed everyday to
build bones.

Fundamentals of Marketing 5
PRODUCT EVALUATION
Type of Product:

As NIDO has physical existence, so it comes under the head of


tangible goods.

Level Of Product:

Nestle planned this product on three levels before launching in the


market. These three levels are Core Benefit, Actual Product and
Augmented Product.

In Core Benefit stage, Nestle has scrutinized the basic need


introducing in the 21st Century regarding health. Nowadays,
everyone is very conscious about his health. So, Nestle determined
to introduce the new product “milk” in the form of powder milk,
which will fulfill the need of thirst and hunger and provide healthier
dirt to the children.

In the second stage, Actual Product, Nestle decided the brand


name. The brand name of the product is Nido. It itself does not
mean anything. The product has also its own grand mark. Its brand
name and brand mark are legally protected. The product is
marketing under the manufacture brand name. The brand name
Nido is easy to spell, pronounce and remember and thus has
positive effect upon the marketing of the product. Then decide
quality level which is high in the case of NIDO.

Fundamentals of Marketing 6
Then decide highly attractive packaging which is according to law.

In the third stage, Augmented Product, Nestle has given the


customers (parents) the solution of the health issue regarding their
children. Now, parents can give their children healthier diet
without any ambiguity. Nestle has also told the parents other tips
as to how to keep their children healthy and active in different
campaigns and Nestle has also provided a toll free number to
call if anyone has a problem or questions.

Consumer Products:

NIDO is a consumer good targeted to end consumers for ultimate


consumption Among different types of consumer products, NIDO
lie under Convenience product because NIDO is frequently
purchased with minimum comparison and buying efforts. Price is
low and NIDO is widely distributed all over the country.

Product Life Cycle


There are four stages in the life of a product depends on the time
span, the product & the growth level of the product that in which
states it lies.
1. Introduction
2. Growth
3. Maturity
4. Decline

In case of NIDO, we can say that the NESTLE NIDO lies in its
GROWTH stage for the following reasons.
• Huge shares in market.
• Maximum profit
• It lies in star category in BCG matrix
• Due to changing in culture of Pakistan people switching to
DRY MILK from FRESH MILK (OPEN). This will increase in
the sale of NIDO.
The diagram is shown below:
<

Introduction Growth Maturity


Decline

Fundamentals of Marketing 7
MARKETING ENVIRONMENT

MICRO ENVIORNMENT:

“The factors close to the company that affects its ability to


serve its customer”

According to Marketing Manager, they are trying their best to


control all the forces that can effect our company such as :

Company:
The Company’s internal and management operations can effect
the overall production of Nido. In our company, all the departments
have an intranet system so that they can communicate with each
other and have latest information about each other. In the same
way, all the departments help each other to perform different tasks
easier. For example, in Nestle, our Marketing department works
with Finance department, R & D department, Purchasing
department etc all work together and focus on the needs of the
Customers in order to perform well and meet out objectives and
give our customers satisfaction. In the same way, Nestle also rely
on team based work, free environment between the sub-ordinates
and bosses, decentralized authority to the managers and get
feedback also from the employees in decision making.

Suppliers:
As Nestle has an high standard for their milk, and other basic
needs which are needed to produce dried milk “NIDO”. So, Nestle
feels that most of the suppliers cannot able to fulfill their need
according to their standard, at last Nestle has arranged their own
system of suppliers and now they have their own farms, cows and
from their farms, Nestle has own system to bring Raw Material
“Milk” to the Plant. So, in this way, Nestle has controlled impact of
external suppliers by arranging their own internal system.

Fundamentals of Marketing 8
Intermediaries:
They are also using marketing intermediaries by owning their own
distributors, providing their goods to final buyers and consumers.
They are selling Nido through wholesalers, retailers and marketing
agencies.

Customers:
Customers are very important for every company because by
attracting those customers, company brand will only succeed. So,
in case of Nido, Nestle main customers are:
 Consumers,
 Wholesalers,
 Retailers and
 International customers.

Public:
Publics are the people that are associated with the company due
to some benefit or company is associated to them for their
benefit.. The benefit can be monetary or social. Company give the
benefits to its shareholders if the company flourishes, the
shareholders are the financial public who attain benefit in the form
of dividends. In the same way, TV channels and print media are
media public because they help the Nestle in their advertisement..
General people are also the general public of the company such as
customers and customers are those who buy company brand.
Compensation is also given to the employees, so these are the
internal public.

Fundamentals of Marketing 9
MACRO ENVIRONMENT:
Macro forces are the force that can have impact on the
performance of the company. Some of these forces are discuss
below:

Demographic Environment:
Demographic environment is the geographical study of humans.
According to manager, Nido 1+ is for the children of 1 to 3 years,
Nido 3+ is for the children of 3 to 6 years and Nido 6+ is for the 6
to onwards children. So, increasing or decreasing children
population, giving children fresh milk instead of dried milk etc can
affect the brand.

Technological Environment:
Nido plant has latest technology to create more attraction towards
their products. However, technology is increasing day by day, they
have to improve their technology with time.

Economic Environment:
Economic environment is the combination of people’s income &
spending patterns. As far the economic environment’s concerned
is not good
Political Environment
Political factors have a great impact on Nido because if the sales
increases more tax would be applied on the whole company.
Similarly, if the charges of tax will change, then it will also effect
on the brand and it is also a political factor.
Natural Environment:
Natural environment can also effect Nido quality or taste. Because
if the cows from which milk is obtained, become ill and a disease
will spread among them such as then it ha a great impact on Nido.

Fundamentals of Marketing 10
Responding to the Marketing Environment
There are three kinds of companies:
1. Those who make things happen
2. Those who watch things happen, and
3. Those who wonder what’s happened.
Nestle is one of those things who make things happen. That is why,
Nestle is one of the leading company and most of the companies
follow its criteria and trend.

COMPETITORS ANALYSIS
Competition:

NIDO NESTLE follows Differentiation method for the competition in


the market, by providing somewhat different features of the
product.

A company’s competitor’s environment obviously is a major


influence on its marketing system. Skillful executives constantly
gather intelligence and otherwise monitor all aspects of
competitors marketing activities, their product pricing distribution
system and promotional programs.

A firm general competition from their different sources:


1. Brand competition from marketers of directly similar products.
2. Substitute products that satisfy the same needs e.g. other
powder milk, fresh milk etc.
3. In the third type of competition more general in nature every
company is a rival for the customers’ limited buying power.

NIDO is concentrating more on the first two types of competition


then the third one.
NIDO being the full cream powdered milk, facing an intense
competition in foreign market and somewhat in local market.

Local Market Competitors:

Fundamentals of Marketing 11
NIDO has no local market competitors, as there is no good
powdered milk locally produced available in the market and
NESTLE NIDO is the only firm producing good quality powdered
milk. Secondly NESTLE is the only firm producing powdered milk
and is market share leader in all respects.

International Competitors:
At the time when NESTLE introduced NIDO in the Pakistan market
it was facing a intense competition with the following brands:

♦ MILLAC
♦ RED COW
♦ SAFETY
♦ DANO
♦ KLIM
Major competitors among these were Millac and Dano at that time
but span of time NIDO with its quality overcomes them and
become a market share leader.

SWOT ANALYSIS
Strengths:
The company has more advantage in the Pakistan market
because they are market leaders having 95% market shares in
Pakistan. Nestle is only one company producing dry milk which is
its strength .Now this NIDO has the monopoly in the Pakistan. Nido
plant has the latest technology then any other company in
Pakistan.

Weakness:
Distribution channel is the weakness of the company because it’s
only focus in the urban areas. Nido can be affordable in urban
areas and Company cannot focus on villages, towns etc.

Opportunities:
The company has the lot of opportunity to expand their business in
the Pakistani market because there are no other competitors in the
Pakistani market. The company also got the 90% share in the
Pakistan market.

Fundamentals of Marketing 12
Threat:
If any other Pakistani or International competitor comes in the
future that can be the first threat for Nido.

Competitive Advantages:
 Nido has best Quality among the Competitors.
 Excellent taste of Nido
 Providing the superior value
 Nido is unique in Pakistan
 Nido Contains Iron, Proteins, Calcium, Vitamins for the health
of children.
 Nido is most pure milk available in the market in the market.
 Fully automated machinery and laboratory system are fitted
in the Plant to check and maintain the purity, quality and
taste of Nido.
 Powder milk with some thickness
 Tastes better than milk
 Customer loyalty is high and more people trust on brand
name.
 Nido has strong market and financial position than its
competitors.
 Nido is available in different sizes for the benefits of its
customers.

CONSUMER ANALYSIS
Consumers are the most important body in the market, as all the
products manufactured in the market are with the analysis of the
consumer’s need & wants. Thus, the behavior of the consumer is
most important in the success of the company.

CONSUMERS BUYING BEHAVIOR:


In order to understand the consumer behaviour, first of all we will
discuss the following things explained below:

Fundamentals of Marketing 13
Basic Stimuli For the Consumer
The stimuli are the factors, which become the main source for
buying the product. The company to create the response for the
product creates these stimuli. The basic stimuli for which the
company in the case of NIDO is catering are.
 Product
The company is providing more features to the product for the
customers. For the better
response, the company is having a ‘More for less’ type of theory.

 Economic Condition
The economic conditions of our country are not so good. The
people in Pakistan respond to the less priced goods. Thus, the
economic conditions of the country are not stimuli for NIDO.
 Consumer Equity
NIDO has a strong customer’s equity. Most people use it
frequently. The demand of NIDO is very strong in market & it
captures more than 90% shares of coffee market.
 Brand Recognition
The brand recognition of NIDO is very strong. NIDO has strong
brand equity. NIDO is becoming famous in Pakistan day by day.
Now, parents, which are health conscious about the children,
started giving their children NIDO.

BCG MATRIX

HIGH (MARKET SHARE) LOW

HIGH

DOGS
STARS
Fundamentals of Marketing 14
(GROWTH
RATE)
QUESTION
CASH COWS MARKS
“?”
LOW

NIDO lies under the STARS due to the following reasons.


 The market share of NIDO is almost about 90%.
 The growth rate of NIDO is very high and bright in Pakistan.

Characteristics affecting consumer behavior::


There are certain factors which can affect the consumer behavior.
Some of them are given below:

Factors Influencing Consumer Buying Behavior:

1. Cultural Factors:
The major cultural factors influencing the buying behavior of
customers of NIDO are:
 Culture: Parents having health conscious of their children
are heading towards requiring greater intake of NIDO by
their children, which in turn increase the demand of the
product.

 Social Class: Need for the product exists among upper


and middle class educated individuals who have greater
exposure and awareness, and are readily adopting the
product to take care of their children’s health.
2. Social Factors:
The major social factor influencing the target customer
buying behavior is:
 Reference groups: These include celebrities and models
in advertisements that greatly influence the decisions of
the buyers, primarily mothers (decider), of NIDO.

Fundamentals of Marketing 15
 Family: Family, most influential primary reference group,
is of paramount importance in NIDO consumption by
children. Parents (Family of orientation) have a major
influence on the consumption pattern of NIDO by children.
Both of parents have an equal role in the purchase of
NIDO.

3. Personal Factors:
The major personal influencing the buying behavior of target
customers is their family life cycle.
 Family Life Cycle: Consumption of NIDO varies as children mature
over their lifetime. For example, mothers use NIDO 1+ for their children
aging 1 year to 3 years, NIDO 3 + for their children 3 to 6 years and
NIDO 6 for their children above 6 years. In addition, Housewives, if not
for small children, also use as Nido as milk and in making many desserts
e.g. Kheer, Rasmalai, Custard etc.

 Economic Situation: The economic conditions of our country are not so


good. The people in Pakistan respond to the less priced goods. Thus, the
economic conditions of the country are not stimuli for NIDO.
A person’s economic situation affects the product choice.
NIDO Marketers watch trends in personal income, savings
and interest rates. If economic indicators point to recession,
marketers can take steps to redesign, reposition and reprise
their products closely

4. Psychological Factors:
 Motivation: Nestle has promote NIDO by moving
campaigns regarding health of children. It has told that
NIDO is better then the fresh milk for the health of their
children through campaigns. One of the examples of this
campaign is NIDO Sehat Kahani in ARY Digital Channel.
So, Nestle is trying to develop the need in the people that
NIDO is best for their children.

 Perception: Parents usually get the information


regarding NIDO through advertisements on TV, radio etc.
So, Parents get information regarding NIDO and form
perception through Selective Attention.

 Learning: Most of parents are learning good experience


by giving NIDO to their children.

Fundamentals of Marketing 16
 Beliefs And Attitude: It is difficult to change the
customer’s attitude, so, Nesltle is trying to change the
public beliefs regarding using fresh milk and making them
aware about advantages of powder milk.

Buying Roles

Five keys roles affecting buying decision are:


 Initiator: Primary Group and Company itself
 Influencer: Mainly parents
 Decider: Mainly Mothers
 Buyer: Both/either Fathers/Mothers
 User: Children/Family

Consumer Buying Behaviour:


The consumer’s behavior for NIDO is ‘Variety-Seeking’ as for the
following reasons.
• The consumer has a low involvement in the product.
• Significant perceived brand differences.
• The product is a Convenience good.
• Marketing strategy is differing from others.
• Its a FMCG product
• Customer can easily switch in the case of other competitor.

MARKETING STRATEGIES

MARKET SEGMENTATION
In order to identify the correct target market, NIDO Nestle use the
market

Geographic Segments
ountry:
Nestle NIDO is focusing on Pakistan.
Country Region:
Punjab, Sindh, N.W.F.P. and Boluchistan.
City:

Fundamentals of Marketing 17
NIDO is mainly targeting to metropolitan cities such as Lahore,
Karachi and Islamabad. But its also distributing at small cities
such as Faisalabad, Gujranwala, and Multan but its main
target is Metropolitan Cities
Density:
Urban areas

Demographic Segments
In demographic segments market divided into different segments
like age, gender, family size, family life cycle, income level,
occupation, education, religion & nationality. Demographically the
target market of NIDO is the middle and upper class. Some of the
factors are given below:

 Age
. According to manager, Nido 1+ is for the children of 1 to 3
years, Nido 3+ is for the children of 3 to 6 years and Nido 6+
is for the 6 to onwards children. So, increasing or decreasing
children population, giving children fresh milk instead of
dried milk etc can affect the brand.

 Gender
There is no discrimination while using the NIDO

 Family Size
Whatever the family size is, NIDO is for every child.
 Income Level
The target market of NIDO includes those people having an
income of 20000 and above.

On the other hand, occupation, education, religion, race and


Nationality play no part in the case of NIDO.
.

Psychographic:

 Social Class
In social classes section, company targets upper class, upper
middle, middle class.
 Life Style

Fundamentals of Marketing 18
In case of NIDO, strivers, which are mostly young children, are our
actual consumers who take NIDO as a milk.

Behavioral:

Occasion:
Nido is usually bought frequently, so it lies under Regular
occasion category.

Users:
Regular users, potential users.

Loyalty Status:
Loyalty status is high..

Readiness Stage:
People are aware, inform, interested, desirous and
intending to buy.

Attitude toward Product:


The positive attitude exist among the people for the
NIDO.

TARGET MARKET
Before the introduction of Nido in the market, the company has
gone the statistical calculations about the population and the
consumption of the product and also do market segmentation.
They found that they have an opportunity of their product in upper
middle class and upper class. They also estimated the
consumption level and demand for the product and found that an
average of upper middle class and upper class needs Nido to feed
their children between 3 to 12 years old. NIDO also targets Nido
towards housewife as many functions can be perform by using
Nido.

The target market of Nido is those people who want to buy


relatively better quality milk which is good for their children health.
This target group specially includes people living in cities. Nido is

Fundamentals of Marketing 19
also targeting each and every member of a family i.e. all age
groups.

WORDS BY PRODUCT MANAGER MR. USMAN WAHEED

We want the mothers to feed that Nido is best for their children.
Housewives also contributes in the target market as Nido is used in
making many desserts e.g. Kheer, Rasmalai, Custard etc.

Selecting Target Market Strategies:


There are four types strategies which are:
1. Undifferentiated Marketing
2. Differentiated Marketing
3. Concentrated Marketing
4. Micromarketing

Nestle follow the undifferentiated marketing in which Nestle


provide NIDO for the whole market.

Position Statement:
“Bahtareen Nashonoma ki Majboot Serhi”

PRODUCT STRATEGIES:
.

Product Decisions:

Nestle make NIDO decisions at the levels:


1. Individual Product Decision
2. Product Line Decision
3. Product Mix Decision (It is not discussed here)

Individual Product Decision:

Fundamentals of Marketing 20
Nestle focus on NIDO attributes, brand name, packaging, labeling
and product support services in order to make important product
decisions. Now, they are discussed one by one:

 Product Quality:
Nestle take great care to maintain good quality of NIDO and keep
consistency in their quality. There are laboratories in the factories
in which quality of NIDO is checked and then it is send to the
market.

 Features:
Nestle unique natural blend of fibers, helps to maintain a healthy
digestive system of children. Nido 1+ also contains Vitamins A,
C, E, Selenium, Zinc and from that yours child immunity to fight
against germs and make the children bones and mental
capabilities strong and healthy.

 Branding:
The brand name of the product is “NIDO”. Also the brand mark
of the product is same, i.e. NIDO, but its distinctive way of writing,
design and color make it distinctive from competitors’ products
and easily identifiable to its customer. The brand mark of NIDO is:

CHARACTERISTICS OF A GOOD BRAND NAME


The brand name “NIDO” has the following characteristics, which
make it a good brand name:
 The name “NIDO” itself speaks for the characteristics
and benefits of the products.
 Brand name “NIDO” is easy to pronounce and
remember.
 It is distinctive from other brands.
 Capable of registration and legal protection.
 The brand name “NIDO” relates to future products in a
sense that more products of different forms can be
introduced under the assortment of “NIDO” as evident by

Fundamentals of Marketing 21
the fact that company introduces NIDO in afterwards in
liquid form.

 Packaging:
The powder form is packed in aluminum foil, which is further
protected in cardboard cartons. Packaging of NIDO protects the
product on its way to retailers and also to end consumers.
Packaging of Nido is attractive and good to look. At the same time,
there are three reasons for packaging:

1. Packaging serves several safety and utilitarian purposes.


2. Packaging helps identify and differentiate it from other product. At
the time of
purchase the package can serve as silent sales persons.
3. Packaging may increase profit and sales volume
4. The aluminum wrapping of powder milk prevents the
product from dampening due to moisture and helps
maintaining the quality of the product and preventing it
from bacteria.

 Design
NIDO packaging is designed with special care with unique
features and attractive design so that it can attract the customers
including parents and children.
 Features
Introduce new features like in size and give new varieties
such as NIDO1+,
NIDO 3+, NIDO 6+.

Socio Economic (Ethical) Packaging


The packaging of milk powder NIDO is biodegradable. Thus
packaging of NIDO is environmental friendly and prevents
pollution.

 Labeling:
NIDO has a descriptive label with its pack describing the
objectives of the product, information about the use care,
performance and its pertinent features which are explained above
in the introduction of NIDO.
It is also advised on packaging of NIDO to keep powder milk in an
airtight jar and store in a cool dry place once in use. The label also

Fundamentals of Marketing 22
states the nutritional information of the product along with tips on
preparation for customers’ children.

 Product support Services:


Nestle has special Customer Care and R&D department which
takes the complaint/suggestions about the NIDO and asses the
value of current quality, value and satisfaction NIDO is providing to
them. On the labeling, a tool free number is given for the
convenience of their customers so that Nestle can get the
feedback.

Product Line Decisions:


Nestle follows the “Line Filling” by providing the NIDO in three
different varieties which are NIDO 1+, 3+ and 6+ which are for
different ages and are also having same prices. So, Nestle filled
the line by providing its in different varieties.

Building Strong Brands:


.

Nestle has made the brand NIDO by following strategies:


Positioning
Among the positioning strategies followed by the company are
1. Target Market Positioning:
NIDO has been positioned in relation to its target market. It
is targeting health/diet conscious parents about their
children. In addition, the NIDO is also positioned as best for
youth seeking fitness and slimness.

Attribute Positioning:
NIDO is also positioned as providing the benefit of healthy
diet for their children because it contains Proteins, Calcium,
Zinc, and Selenium. It provides its users the appropriate
content of proteins and calcium necessary for normal bodily
activities.
Brand Development:
Nestle has extended the line of NIDO by providing it in
three different forms with minor modification in
ingredients. So, NIDO is following the Line Extension
Concept.

Fundamentals of Marketing 23
<

PRICING STRATEGY:
PRICING
Meaning Of Pricing

Price is the value placed on goods and services. Price is the


amount of money and / or goods needed to acquire some
combination of another and its accompanying services.

Importance Of Price

Price is considered to be the key activities within the free enter


price system. A products price influences wages, rent, interest and
profit. That is the price of the product influence the price paid for
the factors of production.

Nido’s price is a major determinant of its market demand. Its price


represents the firm’s competitive position and its market share. Its
price has a considerable bearing on the Nestle’s revenue and net
profit because it is only through price that money comes into an
organization.

Relationship To Product Quality

Consumers rely heavily on price as an indicator of a products


quality especially when they must make purchase decision. The
higher price of Nido is a perception for it to be the better quality.

Pricing Objectives

The objectives of Nestle for pricing Nido are as follows :


1. Maximum Profit Oriented
• To achieve a target return.
• To maximize profit.

2. Status quo-oriented:
• To stabilize prices.

Fundamentals of Marketing 24
• To meet competition.
3. Market share Leadership
4. Product Quality Leadership

1. Maximum Profit Oriented:

 To Achieve A Target Return:

Target return pricing is typically used by industry leaders because


they can set their pricing goals more independently of competition
that can other firms in the industry.

Nestle has priced Nido to achieve a certain percentage return on


its sales. Nestle has settled the price of Nido so that it can earns a
net profit of 15% on its net sales.

 To Maximize Profit

According to the economic theory or business practices there is


nothing wrong with profit maximization because a profit
maximization goal for Nestle is far more beneficial to it and also to
the public if it is practiced over the long run. To do this Nestle
sometimes had to accept short run losses.

2. Status Quo-Goals:

The primary intention of Nestle is to adopt these goals to avoid any


form of price competition. Major reason for seeking the price
stability is to avoid price wars. This pricing policy gives the Nestle
management an easy means of avoiding difficult pricing decisions.

3. Market Share Leadership

Fundamentals of Marketing 25
This is related to current situation in short return and not to long
run. Nestle select that price which gives it maximum current profit.

4. Product Quality Leadership

In this high price of Nido is charged for its superior quality this is
done to cover the cost of producing the best quality milk powder in
the market. Consumers tend to think that if the price is high than
the product quality must be high.

6. Selecting A Pricing Method

 Cost Plus Pricing Method:


Nestle has adopted a cost plus pricing method for Nido. In
which a certain markup is added to the cost of the product.
Nestle follow the popular markup pricing on cost. Nestle
charge a 15 % profit on the total cost of Nido.
Markup = Total Cost * Desired Rate
Total Cost = Cost price + Packaging price +
Transportation Cost
+Proportional Funds + Government Taxes + All
Middlemen’s Profit
Desired Rate for Nido = 15 %
Selling Price = Total Cost + Markup

Company has cut down the total cost of Nido by cutting


down the packing cost of Nido as in imported Nido tin is used
which is expensive but in locally manufactured Nido soft
packing i.e. packing Nido into a sachet packing and then into
soft pack.

Final Price

This is the price of Nido which is in agreement with different


people such as government, customers, distributors, dealers and
Nestle’s sales department.

Fundamentals of Marketing 26
The final price for Nido is Rs. 130 per 1000 Gms. This price
satisfies the quality and standards of Nido.

PRICE ADJUSTEMENT STRATEGIES


Geographical Pricing

Nido has a vast geographical market. In order to cover the long


distances and transportation it has to adjust its price. Therefore, it
adjusts its price through uniform delivered pricing strategy. In this
strategy average transportation costs are measured and a uniform
cost is charged from all the customers to cover the average
transportation cost. So in this strategy all the customers of Nido
will pay the same cost irrespective of their location.

PLACING
NIDO has no individual distribution system. It is pushed with other
companies’ product line. Company has appointed its distribution
offices
In all major cities of Pakistan.

REGIONAL SALES OFFICES

KARACHI

1. Lackson square building No. 1 5th floor, Block - C, R.A. Lines.


2. Sarwar Shaheed Road Karachi Cantt. Pakistan.
Phone : 5689815, 5689217.
Fax : (021) 522775

MULTAN

Near Al-Shifa Poly Clinic, Chungi No. 1 Multan, Pakistan.


Phone: 515061
LAHORE

40 - A Zafar Ali Road, Gulberg V, Lahore II.


Phone: 870887

Fundamentals of Marketing 27
ISLAMABAD

74 - W Yasin Plaza 1st Floor Blue Area, Islamabad, Pakistan.


Phone: 211874 - 75, 819686 - 87
Fax : (051) 855608

PESHAWAR
2nd Floor State Life Building, the Mall Peshawar Cantt.
Phone: 276274, 274954
Fax : (0521) 276274

In case of NIDO the company is using Indirect Wholeseller


distribution channel e.g. Wholesalers are agents of the company
and they take commission to sell NIDO to retailers and then
retailers sell it to ultimate consumers.
Company has appointed sales officers to monitor the performance
of the agents. Every sales officer visits an average of 50 shops a
day. In a territory assigned by company he checks that product is
available at every shop, improve the displays and check the stock
position. The Sales officer prepare a daily sales report and also at
the end of the month and submit it to the Head office in Lahore.
These Sales officer are guided by a Regional Sales Manager who is
a manager of Regional Sales Office. List of regional sales offices is
given above. There are four distributors in Lahore and four Sales
Officers are assigned to each distribution to monitor the
performance of the distributor.

INDIRECT WHOLESELLER DISTRIBUTION CHANNEL

Manufacturer _______ Wholesaler ______ Retailer _____


Consumer

FUNCTIONS OF DISTRIBUTION CHANNELS


The company’s distribution channel provides the following
functions
1. Time Utility
2. Place Utility

Fundamentals of Marketing 28
3. Gathers and Provides information about the changes,
development in the marketing environment.
4. Tries to find and communicate with the prospective buyers.
5. Distribution helps in promotion.
6. Helps in negotiation.
7. Helps in transporting and storing goods.

Intensity Of Distribution:

In the case of NIDO, Nestle follow the intensive distribution in


which it tries its best effort to distribute the product in as many
outlets as possible.
Conventional Verses Vertical Marketing System:
Nestle NIDO is following Conventional Marketing System
because in indirect distribution system, company itself,
wholesellers/distributors, retailers are separate entities
and works as individual. So, Nestle do not following VMS,
PROMOTION
NIDO Nestle uses promotion intensely to inform, persuade and
remind the market of the organizations and / or its products.
Promotion is the most important factor in the marketing mix..
Promotional Mix
The promotional mix is the combination of the personal selling,
advertising, sales promotion, publicity and public relations that
helps an organization to achieve its marketing objectives.

1. Advertisement:
Advertisement is an essential part of moderate ad so much that it
is not possible for an entrepreneur to even imagine a world without
advertising. The advertisement page of a news papers, magazines
etc. is like a modern novel which gives a “slice from life”.
For this purpose NIDO NESTLE is going heavy advertisement on TV,
Newspapers, Magazines, and advertisements boards.

2. Sales Promotion:

It is designed to supplement advertising and coordinate personal


selling, Short term incentives are given to encourage quick sales
e.g. Samples, Coupons, gift schemes etc. Promotion is a critical

Fundamentals of Marketing 29
ingredient of many marketing strategies. Peoples have general
appreciation about milk powder so that’s why NIDO NESTLE is
doing sampling of its products.
However, when company finds some break in sales, advertisement
is started and some ads are placed on TV but this is not done on
permanent basis.
Company is satisfied from its promotional programs because it is
getting results to its wishes, but now in the near future company
has many ambition plans about the promotion of NIDO.

3. Public Relations:

NIDO Nestle also has Customer Care Department, which can


receive feedback from the customers. For the help of
customers, a Toll Free number and E-mail address has also
been provided.

Push & Pull Strategy:


NIDO NESTLE follows a Push Strategy for NIDO since initially
there was limited awareness about the product and the producer
focused entirely on its channel of distribution for promotion. To
motivate retailers to promote sales of skimz, incentives like key
chains, mugs, discounts etc. are given to retailers a kind of sales
promotion.

Also the company is targeting the end customers through different


types of advertisements ov TV, print media, etc. in order to
concince them of their product’s benefit and quality so that they
demand the NIDO from the reatilers  a startegy called Pull
Strategy.

Promotional Budget

NIDO Nestle is following Percentage-of-Sales methods in which


Nestle determine a specific percentage for promotion. Promotional
budget is totally based on the budget available for promotion of
the products. NIDO NESTLE spends 20 % of the budget to promote
NIDO.

Fundamentals of Marketing 30
REFERENCE LIST

Mr. Usman Waheed, NIDO Brand Manager, Nestle


Company

Fundamentals of Marketing 31

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