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A

SUMMER TRAINING
PROJECT ON

MARKETING STRATEGIES OF
NESTLE FOODS INDIA LTD. (CHOCOLATE SEGMENT)
AS COMPARED WITH ITS KEY COMPETITORS

(Submitted in the partial fulfillment of the requirement of


MASTER OF BUSINESS ADMINISTRATION
(AFFILIATED TO G.B.T.U., LUCKNOW)

SUBMITTED TO: SUBMITTED BY:


DR.ANITA SAXENA RANJANA KUNTAL
(H.O.D) Roll No.0929170039

i
`STUDENTS DECLARATION

I hereby declare that the project report entitled on Marketing Strategies of Nestle Foods

India Ltd. (Chocolate Segment) as Compared With its Key Competitors. Submitted in

partial fulfillment of the requirement to award the degree of Masters in Business

Administration (Marketing) is my original work and not submitted or the award of

any other degree, diploma, fellowship, or any other similar title or prizes.

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ACKNOWLEDGEMENT

I would like to thank my supervisor AJEET YADAV, Faculty Guide, DIT,


SCHOOL OF ENGINEERING, Gr. Noida, for his valuable guidance, the
enthusiasm and supervision for doing this project work. Special thanks to my parents
and friends who were very keen in my studies and Project work throughout till
completion.

I would like to give my sincere thanks to my teachers & friends for their regular
support & guidance that has helped me in preparing of my report.

Above all I praise GOD that I have been successful in preparing my project..

RANJANA KUNTAL
MBA (III Sem.)
Roll No. 0929170039

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CONTENTS

1. INTRODUCTION

2. LITERATURE PROBLEM FORMULATION COMPANY


• Company profile 10
• Industrial Scenario 19
• Major Products 27
• Marketing Strategies 33
• Distribution network 47
• Brand Loyalty 51
• Market Segmentation and Target Market

3. OBJECTIVES & RESEARCH METHODOLOGY


• Objectives 66
• Methodology 66

4. ANALYSIS & INTERPRETATION OF DATA


• SWOT Analysis 84

5. FINDINGS/RECCOMENDATION/CONCLUSION
• Conclusion 88
• Findings & Recommendations 89

6. BIBLOGRAPHY 93
7. APPENDIX 95

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LIST OF TABLES

Table 1.1 Board of Directors

Table 1.2 Major Products

Table 1.3 Industry Chronology

Table 1.4 Sales by Management responsibilities & geographic area

Table 1.5 Distribution network of NIL

Table 1.6 NIL‘s most liked products

Table 1.7 Reasons to like Nestlé’s product

Table 1.8 Brand loyalty for the products

Table 1.9 should the company improve its products

Table 1.10 Quality-wise comparison of products

Table 1.11 Availability –wise comparison

Table 1.12 Price –wise comparison

Table 1.13 NESTLE’s new launches

Table 1.14 Research methodology adopted

LIST OF FIGURES

Fig.1.1 Chocolate market share of NIL

Fig.1.2 Major Products

Fig 1.3 Reason to like Nestle

Fig 1.4 Quality-wise comparison

Fig 1.5 Availability-wise comparison

Fig 1.6 Price-wise comparison

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2
INTRODUCTION

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FMCG companies have now realized that “India lives in its rural villages”. So much so

that rural marketing has become the latest marketing mantra of most FMCG

majors. The lure of an untapped market has driven the marketers to chalk out bold

new strategies for targeting the rural consumer in a big way.

India is on the move and so are the markets in India. Apart from economic changes,
India is also facing social changes like changes in life style, hobbies etc. New
fashions, Adventures holidays, etc. are in today.
Further, food habits of Indians are changing rapidly. Chocolates which were
believed to be kid’s preference are now being consumed by kids, teenagers, and adults.
Chocolate market in India (Currently 28 000 tones) is growing at a fast rate annually.

To take advantage of the growing market, international confectionery


companies are getting ready to woo the proverbial Indian Sweet tooth. An influx of
worlds leading Chocolate players is expected.

Nestle also piled primarily on the urban consumers. After understanding the
great potentiality rural India possesses, Nestle is also experimenting in big way to bring
the much needed volumes and help itself to bank upon the volume driven growth, in
this severe competitive FMCG sector where the dispersion or market penetration plays
a big role. So Nestle is eying on the market penetration and it is being targeted by
devising different marketing strategies.

The rational behind Nestle going for the market penetration is to acquire new
consumer base by making the products available to the every interior of the country and
increase its sales, to sustain growth. The company is having a marketing strategy to
‘drive penetration through wholesale marketing’. But is it a right marketing
strategy? Or will it prove to be an expensive mistake? If they want to increase their
penetration then how and where they should go for? These are the issues Nestle is
facing today.

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This project is a market research and it touches every aspect of the current
wholesale marketing and predicament associated with it. It also juxtaposition that how
penetration, can be possible through wholesale marketing, what is the cost of doing it
and maintaining it. This project gives an insight into the every feasible aspect that is
associated in “Driving penetration through wholesale marketing, for Nestle.

In the above context, the prime objective of this report is to prepare a marketing
plan for any brand that is planning to enter the India Chocolate Market. Therefore, this
report is generic (broad-based) to the extent that it does not focus on any single brand.
However, this may prove to be a relevant marketing guide for any brand launch in
India.

The FMCG sector has been the cornerstone of the Indian economy. Though, the
sector has been in existence for quite a long time, it began to take shape only during the
last fifty-odd years. To date, the Indian FMCG industry continues to suffer from a
definitional dilemma. In fact, the industry is yet to crystallize in terms of definition and
market size, among others. The sector touches every aspect of human life, from looks
to hygiene to palate. Perhaps, defining an industry whose scope is so vast is not easy.

After witnessing booming sales and flooding markets with innumerable


products, FMCG companies have had to abruptly apply the brakes and look for various
ways to save costs. The MORE THAN RS. 43,000 crore (listed companies) FMCG
industry in India, which has been on a roll for many years, faces tough times ahead,
although many segments still shows good growth.

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REVIEW OF LITERATURE AND PROBLEM
STATEMENT
India is on the move and so are the markets in India. Apart from economic
changes, India is also facing social changes like changes in life style, hobbies etc. New
fashions, Adventures holidays, etc. are in today. Further, food habits of Indians are
changing rapidly. Chocolates which were believed to be kid’s preference are now being
consumed by kids, teenagers, and adults. Chocolate market in India (Currently 20 000
tones) is growing at a fast rate annually. To take advantage of the growing market,
international confectionery companies are getting ready to woo the proverbial Indian
Sweet tooth. An influx of worlds leading Chocolate players is expected. Further, since
Confederation of Indian Industry (CII) is a representative body of the Indian Industry, it
receives its inquiries for pertinent marketing information from various domestic and
international players, who want to invest in India. In the above context, the prime
objective of this report is to prepare a marketing plan for any brand that is planning to
enter the India Chocolate Market. Therefore, this report is generic (broad-based) to the
extent that it does not focus on any single brand. However, this may prove to be a
relevant marketing guide for any brand launch in India.

Improved penetration of brands is an important consideration in the Company’s


vision of sustained growth. Expansion of distribution and reach was a focus area. Some
of the initiatives that are expected to contribute significantly include introduction of
single serve convenience packs at affordable price point, such as NESCAFE Redimix
and MAGGI Hot Cup Soup Powder. The initiative to automate distributor operation has
continued and is expected to be complete during 2003. This will help NIL achieve
greater speed and transparency in the flow of information, ensure better levels of
customer contact and enable faster response to consumer needs.

The Company continued to strengthen initiatives to facilitate availability of


products for out of-home consumption. These initiatives were supported by a number

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of new product launches. The development of NESTEA Instant Tea premix for hot
vending offers consistency and convenience as compared to tea bag preparation;
NESCAFE Frappe premix fort cold vending has been introduced in Quick Serve
Restaurants; Low Sugar NESCAFE premix has been developed for health conscious
consumers; MAGGI Hot Cup Soup dispensed through vending machines is an
innovative and pioneering concept in the market. Large number of Nestle Consumption
Zones including Cafe NESCAFE, Coffee Corners and multibrands stalls were set up
and innovative vending machines were introduced for Iced Tea. Sustained focus on
continuously improving the value to the consumer, helped to introduce vending
machines with eight beverage options to offer consumers a range of specialty beverage
at the same location.
On the manpower development front, programmed during the year continued to be
focused on the operational front more particularly sales and production.
To support the growth plans and distribution strategy, and simultaneously
improve the operational efficiency, the on strengthening chain continued to receive
attention during the year.

SUPPLIE PROCURMENT
SUPPLY SALES &
RS PLAN MARKETING

MANUFACTURER DISTRIBUTOR CUSTOMER CONSUMER

Marketing is based on the principle of satisfying consumer’s needs.


The overall trust of consumers in Nestle’ brands and products comes from a quality
image that has been continuously strengthened foe over 130 years. Nestles strives to
increase this trust through its commitment to environmentally sound business practices.
For this reason nestle: Opposes the shortly-term opportunistic “green marketing”
that can mislead the consumer; Bases environmental claims in advertising promotional

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material’ labeling and corporate communication on solid scientific evidence and
selects materials and printing methods for merchandising materials such as consumer
offers, in-store promotions is play materials, leaflets and printed materials in light of
environmental considerations.
Marketing strategy is the complete and unbeatable plan designed specially for
attaining the marketing objective of the firm.
The marketing objectives indicate what the firm wants to achieve; the marketing
strategy that decides the success at the business unit level which in turn decides the
total corporation’s success. The link between marketing strategy and overall success is
indeed direct and vital. And in this linkage lies the significance of marketing strategy.
Nestle India ltd. has an aggressive marketing strategy which is very well
understood when one goes through the in-depth study of the 4-P’s of the marketing and
price strategies with respect to its products. One comes to the conclusion that NIL has a
well defined roadmap to success i.e. to reach its ultimate objective of realizing
customer satisfaction through value for price products.

Alreck and Settle (1999) in the paper has mentioned six strategies for building
relationship(between a specific brand and a particular customer group - to create a
strong bond between brand and buyer)which are linking the brand to a particular need;
associating it with a pleasant mood; appealing to subconscious motives; conditioning
buyers to prefer the brand through reward; penetrating perceptual and cognitive barriers
to create preference; and providing attractive models for buyers to emulate. The paper
states that the choice of an individual strategy or combination depends mainly on the
nature of the branded product or service and the success of the strategy depends heavily
on the marketer's understanding of the preference building and bonding process.

The article provides results like the six consumer preference-building methods
mentioned require particular kind of product, pricing, promotion and distribution. It
further states that Successful advertising needs clear consistent strategies and also lists
some of the crucial elements without which advertising will not work. The paper helps
us in analyzing the factors which influence the selection of a strategy for building
consumer brand preference.

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The purpose of this study has explored the consequences of various attributes
on brand equity of brands, which vary along selected criteria and attributes and to
investigate the impact of brand equity and the attributes on brand preferences. In the
pretest, subjects were asked to rank the attributes listed in previous studies of Nestle.
The top nine attributes (i.e. brand name, calories, sugar content, sodium content,
caffeine content, fizz/carbonation, flavor/taste, sweetness, and price) were included in
the study, with brand name being one of them. The second phase was a preference task
using the same Nestle products.

PROBLEM STATEMENT
Problem defining is the most crucial aspect of any research. It helps in
understanding the background of the problem by analyzing it in an appropriate
environmental context. This helps in translating the exact problem faced by the
management into marketing research problem.

A wholesaler plays a pivotal role in the distribution channel of any company


especially in a FMCG Company. Wholesalers are important as they carry out the role
of the Conduit in any company’s distribution network and cater to a large pool of
retailers which a distributor of a company cannot cater.

So retailers who come from distant places and whose purchasing power is less are been
taken care by the wholesalers. So ‘wholesalers can be impetus to drive the penetration
in the market’.

The main problems that new product faces is that of getting experienced and
effective channel members. As existing marketing marketer/manufacturer can piggy
back on the existing channel structure. A new company will have to provide greater
incentives convince channel members to stock the product offering. Quick handling of
problems of stockiest & dealers. The biggest problem in distributing a product
category like chocolates is lack of infrastructure. The product needs to be kept in
refrigeration (more so, in summers)-limiting the points at which it is available (ideal
temperature needed for chocolates is 18 to 25 degrees). Hence, summer see sales suffer.
Demand falls by almost two-thirds in the summer months. Nestle' markets infant

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formula according to the principles and aims of the WHO International Code of
Marketing Breast Milk Substitutes, and seeks dialogue and cooperation with the
international health community and in particular with the WHO and UNICEF, to
identify problems and their solution.

In India 70% of population lives in villages and so this population plays a pivotal
role in the turnover figures of any company, especially FMCG Company. As many of
the competitors of Nestle is going rural to increase its consumer base, Nestle is also in
the purview to increase its penetration in the every interiors of the country, so that
every product of Nestle should be available to every part of the country and on the
other hand to increase the consumer base and its sales figures. So the Problem
statement can be summaries as following

• Nestle wants to go rural as many FMCG companies are doing so, including its
competitors.

• Management decision problem is whether to take step to carry out the


penetration through wholesalers or not?

• Management is unaware of the current level of penetration in the up-country


market?

• If Penetration through wholesalers is possible then how to go about it?

• The customers can be tapped directly through the distribution channel or not or
penetration en-route wholesalers would be the optimum solution?

• What is the profile of the customers to have the knowledge regarding the
consumer behavior and their buying behavior?

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COMPANY PROFILE

NESTLE FOODS INDIA LTD.

Nestle Foods India is a Transnational company (TNC) with its worldwide


operations in over 70 countries. The founder of Nestle was Henry Nestle who from a
modest beginning founded the company in 1866 at Switzerland for manufacturing milk
powders for babies. At that time Switzerland faced one of the highest infant mortality
rates and the milk formula saved the lives of many infants whose mothers were unable
to breast feed successfully.

Nestle has been a partner in India's growth for the past nine decades and has
built a very special relationship of trust and commitment with the people of India. The
culture of innovation and renovation within the company and access to the Nestle
Group's proprietary technology/ Brands, expertise and the extensive centralized
Research and Development facilities helps the company to create value that can be
sustained over the long term. Nestle India manufactures products of truly international
quality under internationally famous Brand names such as Nescafe, Cerelac, Maggi,
Milky Bar, Milo, BarOne, Nestea and Kit Kat and in the recent years the company has
also introduced products of daily consumption and use such as Nestle Milk, Nestle
Dahi, Nestle Butter, Nestle Fruit 'n milk ready to drink beverage and Nestle Pure Life
bottled drinking water.

Nestle is often quoted by most as "multinational of multinationals." There is a


good reason, as less than 2% of the turnover comes from the domestic market in
Switzerland and rest from its other operations worldwide.

At present Nestle in the world's largest food company with its international
headquarters at Vevey, Switzerland. With almost 500 factories world wide it employs
many people directly or indirectly.

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Nestle is under first 50 companies of Fortune’s five hundred list. It is present
over all five continents of the globe in over 80 countries. It is having 200 operating
companies, one basic research center and 17 technological development centers and
around 2,76,000 employees.

TABLE 1.1 BOARD


OF DIRECTORS OF
NESTLE INDIA Ltd.

Name Designation

Antonio Helio Waszyk Chairman and Managing


director

Non Executive Director


Pradip Baijia

Ravinder Narain
Non Executive Director

Rakesh Mohan
Non Executive Director

Director (Technical)
Christian Schmid

Name Designation
Director
Shobinder Duggal

Michael W O Garrett Non Executive Director

Richard Sykes Alternate Director

Swati A Piramal Non Executive Director

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Nestlé’s Philosophy
When Henri Nestle introduced the first commercial infant formula in 1867, he
also created a symbol of the Bird's nest, graphic translation of his name, which
personifies the company's business. The symbol, which is universally understood,
evokes security, motherhood and affection, nature and nourishment, family and
tradition. Today it is the central element of Nestlé’s corporate identity and closely
parallels the company's corporate values ad culture.

Mission Statement

At Nestlé, our research makes it possible for everyone to enjoy better food for
a better life.

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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, Nestlé products
bring consumers the vital ingredients of taste and pleasure.

As consumers continue to make choices regarding foods and beverages they consume,
Nestlé helps provide selections for all individual taste and lifestyle preferences.

Research is a key part of our heritage at Nestlé and an essential element our future.
We know there is still much to discover about health, wellness and the role of food in
our lives, and we continue to search for answers to bring consumers Good Food for
Good Life.

• Promote awareness of the effect of our lifestyle both on ourselves and on our
environment.

• Exist as a financially successful, non-hierarchical, democratic organization


where workers participate in the creation and running of their working
Environment, as an example to encourage others to do likewise.

• Provide an environment that encourages and helps people to develop and


achieve their potential.

• Actively support co-operatives, fair trade, environmental issues and community


activities.

Vision Statement
Your VISION defines your long-term dream. It should not be achievable.
That may sound ridiculous, but the objective is for your vision to always be just slightly
out of your reach. It's what you constantly strive to attain, and it becomes your reason
for being.

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ORGANISATION HISTORY
In 1860’s Henri Nestle, a Swiss pharmacist, established the world-renowned
Nestlé brand amid a spirit of innovation and goodwill. In 1866 he developed a food for
babies whose mothers were unable to breastfeed. His first success was a premature
infant who could not tolerate his own mother's milk or any of the usual substitutes. The
value of the new product was quickly recognized when his new formula saved the
child's life, and soon, Farine Lactée Henri Nestlé was being sold in much of Europe.

In 1905 Nestle merged with the Anglo-Swiss Condensed Milk Company. By


the early 1900s, the company was operating factories in the United States, United
Kingdom, Germany and Spain. World War I created new demand for dairy products in
the form of government contracts. By the end of the war, Nestlé's production more than
doubled.

The first Nestle factory to begin production in the United States was opened in
Fulton, Oswego County, New York. The factory however was closed in 2001, after the
company decided that the cost of restoring, and updating the factory could not
financially be justified. Employees of the factory were furious, and raised the company
flag upside down the day the closing was announced.

After the war, government contracts dried up and consumers switched back to
fresh milk. However, Nestlé’s management responded quickly, streamlining operations
and reducing debt. The 1920s saw Nestlé’s first expansion into new products, with
chocolate the company's second most important activity.

Nestlé felt the effects of World War II immediately. Profits dropped from
US$20 million in 1938 to US$6 million in 1939. Factories were established in
developing countries, particularly Latin America. Ironically, the war helped with the
introduction of the company's newest product, Nescafe, which was a staple drink of the
US military. Nestlé’s production and sales rose in the wartime economy.

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The end of World War II was the beginning of a dynamic phase for Nestlé.
Growth accelerated and companies were acquired. In 1947 came the merger with
Maggi seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus
(1963), Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding
in L’Oreal in 1974. In 1977, Nestlé made its second venture outside the food industry
by acquiring Alcon Laboratories Inc.

The Brazilian president, Lula da Silva, inaugurates a factory in Feira de Santana


(Bahia), February, 2007.

In 1984, Nestlé’s improved bottom line allowed the company to launch a new round of
acquisitions, notably American food giant Carnation and the British confectionery
company Rowntree Mackintosh in 1988, which brought the Willy Wonka Brand to
Nestle.

The first half of the 1990s proved to be favorable for Nestle: trade barriers
crumbled and world markets developed into more or less integrated trading areas. Since
1996 there have been acquisitions including San Pellegrino (1997), Spillers Petfoods
(1998), and Ralston Purina (2002). There were two major acquisitions in North
America, both in 2002: in June, Nestlé merged its U.S. ice cream business into
Dreyer's, and in August a US$2.6 billion acquisition was announced of Chef America,
Inc. In the same time frame, Nestle came close to purchasing the iconic American

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company Hershey's, though the deal fell through. Another recent purchase includes the
Jenny Craig fitness firm for US$600 million.

In December 2005 Nestlé bought the Greek company Delta Ice Cream for €240
million. In January 2006 it took full ownership of Dreyer's, thus becoming the world's
biggest ice cream maker with a 17.5% market share.[3]

In November 2006, Nestle purchased the Medical Nutrition division of Novartis


Pharmaceutical for $2.5B. In April 2007 Nestlé bought baby food manufacturer Gerber
for $5.5 billion.

NESTLE OVER THE YEAR

Nestle was established because of Henri’s concern for his fellow citizens. Henri, who
had a passionate interest in pursuing his work ideals, hoped that his efforts would one
day benefit society. He produced the first milk cereal food for children, an achievement
that even today, is recognized as one of the major advances in public health throughout
the world.

While the original business was based on milk and dietetic foods for children,
numerous other food products have been added to the range over the years. These
include chocolate, instant beverages, culinary, refrigerated and frozen products, ice
cream, mineral water and pet food.

Nestlé’s other products include numerous chocolate bars as well as Nescafe


coffee and Perrier water.

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TABLE1.2 OUR BRANDS

Milk Products & Nutrition Chocolates&Confectionery


NESTLÉ EVERYDAY Dairy Whitener NESTLÉ KITKAT

NESTLÉ EVERYDAY Slim NESTLÉ KIT KAT LITE

NESTLÉ EVERYDAY Ghee NESTLÉ MUNCH

NESTLÉ Milk NESTLÉ MUNCH POP CHOC

NESTLÉ Slim Milk NESTLÉ MILKYBAR

NESTLÉ Fresh 'n' Natural Slim Dahi NESTLÉ MILKYBAR CHOO

NESTLÉ Jeera Raita NESTLÉ BAR-ONE

NESTLÉ NESVITA NESTLÉ FUNBAR

NESTLÉ NIDO NESTLÉ Milk Chocolate

NESTLÉ MILKMAID NESTLÉ Éclairs

NESTLÉ MILKMAID Fruit yoghurt POLO

NESTLÉ MILKMAID FUNSHAKES POLO Power mint

NESTLÉ CEREVITA POLO Zero

NESTLÉ TANG EEZ

Beverages Prepared Dishes & Cooking Aids

NESCAFÉ CLASSIC MAGGI 2-MINUTE Noodles

NESCAFÉ SUNRISE MAGGI Vegetable Atta Noodles

NESTLÉ MILO MAGGI Dal Atta Noodles

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NESCAFÉ Mild MAGGI Rice Noodles Mania

MAGGI Sauces

MAGGI Pizza Mazza

MAGGI Healthy Soups

MAGGI Healthy Soup- Sanjeevni

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INDUSTRIAL SCENARIO

The processed foods sector, which currently accounts for less than 2% of total
food consumption in the country, is slated to grow at a fast pace. The Indian
Government has identified Food Processing as a high potential industry and has been
creating a policy environment conducive to its growth. Historically, the policy
framework favoured small and unorganized players while the MNC players were
restricted from adding capacities. This led to the mushrooming of a vast unorganized
sector. Large players with strong marketing network and brand equity were forced to
source from third party producers. During the last few years, however, several food
products have been de-reserved from small-scale sector. MNC’s as well as domestic
players have made aggressive investments in the sector. Quantitative restrictions on
import of several food products have been lifted, leading to greater availability of
imported products. MNC’s are able to offer a wider product range, without the need to
establish a manufacturing base.

COMPETITION
Baby food and Instant coffee are categories where brand loyalties are very
strong and Nestle is the market leader. HLL is a significant competitor to Nestle in
instant coffee; while Heinz is the main competitor in the baby foods market. The
market for culinary products, semi-processed foods such as noodles, ready mixes for
Indian ethnic breakfast and sweets, is largely an urban market. HLL and Indo Nissin
Foods are the main competitors in these product segments. Nestle has also achieved a
significant 25% share in the chocolate/confectionery market. The company has recently
expanded its dairy products portfolio to include, milk, curd and butter. The company
also forayed into the bottled water segment with the launch of its Perrier brand in the
premium mineral segment and Pure Life in the purified water segment.

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OBJECTIVES OF NIL
 Be in every way the leading company in Indian food industry.

 Ensure high quality standards in everything we undertake.

 Provide our consumers with superior quality products.

 Provide our shareholders with rapid growth & fair returns.

 Provide our employees a challenging & satisfying work environment.

 To be a good corporate citizen & contribute positively to the society in which


we operate.

DISTINGUISH CHARACTERISTICS OF THE INDUSTRY


FMCG companies sell their products directly to consumers. Major features
which distinguish this sector from the others are as follows:

 LOW CAPITAL INTENSITY

Most product categories in FMCG require relatively minor investment in plant and
machinery and other fixed assets. Therefore shortage of product for want of capacity
would be a rare phenomenon. The turnover is typically five to eight times the
investment made in a Greenfield plant at full capacity. This is also due to the fact that
the business being marketing driven, players do not integrate backward. Also, the
business has low working capital intensity as bulk of sales from manufacturers takes
place on a cash basis.

 HIGH INITIAL LAUNCH COST

Nonetheless, there is a large front-ended investment made in new products


including cost of product development, market research, test marketing and most
importantly its launch. To create awareness and develop franchise for a new brand

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requires enormous initial expenditure is required on launch advertisements, free
samples and product promotions. Launch costs are as high as 50-100% of revenue in
the first year and these costs progressively reduce as the brand matures, gains consumer
acceptance and turnover rises. For established brands, advertisement expenditure varies
from 5 - 12% depending on the categories. It is common to give occasional push by re-
launches, which involves repositioning of brands with sizable marketing support.

 TECHNOLOGY

Basic technology for manufacturing is easily available. Also, technology for


most products has been fairly stable. Modifications/ improvement rarely change the
basic process. Nonetheless, major global players spend enormous sums on R&D due to
their ability to spread cost over the wider base of their global operations. Their R&D
efforts are towards:

• Cost effective manufacturing process without compromising on quality


and functional performance.

• Research driven formulations, which give cutting edge.

• High standards of hygiene/ purity for personal care and food products.

• Standardized formulation, which can be used across countries.

 MARKETING DRIVE

In relative terms, marketing function has greater importance in FMCG


companies. The players have to reach out to mass population and compete with several
other brands which essentially offer similar products. The perceived differences are
greater than the real differences in the product.

 MARKET RESEARCH

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Consumers' purchase decisions are based on perceptions about brands. They
also keep on changing with fashion, income and changes in lifestyle. Unlike industrial
products, it is difficult to differentiate products on technical or functional grounds.
With increasing competition, companies spend enormous sums on product launches.
Market research and test marketing become inevitable.

 BALANCE SHEETS ARE MISLEADING

The most critical asset for FMCG companies is represented by its brands and
distribution network. Brands are bought and sold like any other assets. Typically, when
an FMCG business is sold, the value of the brand is several times of that of tangible
assets. However as per the current accounting practices in most countries, investment
made in building of brands are written off as revenue expenditure. This is due to high
risk involved with a new brand, subjectivity involved in its valuation, lack of
consistency and difficulty in separating a brand's value from that of tangible assets
employed in the business. While a successful brand will pay back the investment
several times, in case of brand failure, entire investment has to be written off. High
return on net worth of most established companies is also misleading due to the fact
that the assets sans brands are considerably understated in the balance sheet.

 THIRD-PARTY MANUFACTURING

Manufacturing of products by third party vendors is quite common. Third party


manufacturing used to give fiscal advantages particularly of excise duties. These have
been considerably diluted in the past 7 years of reforms. In the last budget the
government proposed to change the basis of excise levy to MRP basis. A total of 43
product categories have been brought under the MRP net in the subsequent budgets.
Besides excise benefits, third party manufacturing also provides other benefits.

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TABLE 1.3 THE INDUSTRY CHRONOLOGY

YEARS DEMAN RUPEES GROWTH


DS TERMS RATE
1990 12 000 350 crores 2%
tones
March Excise Duty increased to 15 3%
-1995 percent
• Excise duty further increases Drops to 6-7
to 28.75 % %
• Cocoa Prices Zoom
1998 • Excise duty reduced to 25 %,
further to 20 percent and
finally to 18 %. Import Nestle
launches
• Kit-Kat-sets up a new unit.
Production
• Arrangement with
• CAMPCO continues.
• Mars selects production site.
2005 Market zooms up due to greater 2
marketing thrust by players 3%
(especially Nestlé’s)
• Chocolates-Selected import
Item
2006 Chocolates-Open General License 20 000 2
tones 3%
2007 Quantitative restriction lifted 32000 2
tones 3.6 %

The Indian Chocolate market can be sliced into four parts.

1. MOULD CHOCOLATE SEGMENT- comprising slab chocolates like Dairy milk


chocolates, etc. These are made by pouring the ingredients into moulds.

24
2. COUNT LINE SEGMENT - comprising bars like 5 star, Bar One, Perk, Kit Kat,
etc. These have ingredients other then chocolate and are usually Bar shaped,
making for chunky bites.

3. CHOCO-PANNED SEGMENT- comprising chocolate forms like Butterscotch,


Nutties, Tiffin’s, etc. Panned varieties have different cores/centers which are
covered with a layer of chocolate.

4. SUGAR-PANNED SEGMENT - comprising chocolate forms such as Gems,


Chocolate éclairs, etc. These generally have a sugar coating on the outside. The
rejuvenation exercise of Nestlé’s, was one of the key reasons behind the churning
up of the country’s Rs.350-crore chocolate market to a growth rate of 32 percent in
2005, from a mere a few years earlier .

Chocolate Market shares

AMULOTHERS
5% 1%

CADBURY
NESTLE
20% NESTLE

AMUL

OTHERS

CADBURY
74%

Fig.1.1

NESTLE FOODS INDIA LIMITED- HISTORIAL


HIGHLIGHTS

25
Incorporated in 1959 as Food specialties, Nest India (NIL) was promoted by
Nestle Alimantana, Switzerland, which presently holds 51% equity stake in the
company. Manufacturing in India began with the start up of the Moga Factory in 1962.
Nestlé’s first unit at Moga, Punjab is manufacturing:

• Milk products

• Infant milk formulae


• Weaning cereals
• Culinary products
• Beverages
It is the main manufacturing unit of Nestle India Limited. The second factory at
Choladi, Tamil Nadu to produce beverages i.e. 100% EOU for instant tea was set up in
1967.

The third plant in Nanjangud, Karnataka was set up in 1989 to produce


• Instant Coffee
• Health Beverages
The fourth plant at Samalkha, Haryana, was set up in 1993, to produce
• Weaning cereals
• Culinary products
• Health beverages
• Milk products
The fifth plant at Ponda, Goa was set up in 1994 to produce:

• Wafers

• Waffles

The sixth plant at Bicholine, Goa was set up in 1997 for manufacture of
culinary products. Nestle India is now putting up another factory at Pant Nagar in
Uttaranchal. Nestle India will invest over Rs 100 crores in the factory. This is the
seventh plant of Nestle India and like the other plants, this plant will also be of
international standards. This factory at Pant Nagar will initially manufacture culinary
products including its very popular MAGGI. The factory will benefit from and will be

26
closely aligned with the research and Development Facilities of Nestle Group and its
proprietary, world class technology.

Nestle India; the largest food company in the country is continuously looking at
new niches in the market place for its various products.

In milk products Nestle has made a considerable mark. For instance, the company was
the first to introduce a Dairy Whitener with its product 'Everyday'. And till today that
product is a brand leader despite the presence of a host of other brands in the field. IN
the case of Milkmaid condensed milk, Nestle relaunched the product as desert maker
and has seen the sales graph climbing since.

In baby foods, Nestle has made its strong hold with Lactones and Cerelac.
Nestle is also popular in pure ghee segment. Its Everyday pure ghee has gained a quite
satisfactory market share; Nestle has also entered into fitness food products. Nestle
today is a household name. Nestle extended the product line in coffee by bringing in
Dolco, and then Sunrie.

In 1990, NIL entered the chocolate business introducing Nestle Premium


chocolate. Nestlé’s products are sold under brand names such as a Milkmaid, Everyday,
Cerelac, Nescafe, Maggi, Lactones, and Éclairs etc. It launched the world famous Kit
Kat chocolates in 1995. During the year 1996 Milo the world's largest selling chocolate
energy food drink was launched.

27
MAJOR PRODUCTS

28
RECENTLY LAUNCHED PRODUCTS

• Set Dahi
• New Tomato and Curry Flavors in Maggie Noodles
• New Dal and Atta in Maggie Noodles
• A new confectionery – Nestle Chocó Stick
• Soft Chewy fudge Milky bar Choo
• Nestle` recently launched products Tea Iced Tea
• Nestle slim milk

The company is also setting up ‘CAFÉ NESCAFE’ and ‘COFFEE CORNERS’


across metros and mini-metros in India.

NESTLÉ: 4.6% ORGANIC GROWTH IN FIRST QUARTER

• Group-wide organic growth of 4.6%

• 6.3% sales increase at constant exchange rates

• Swiss franc sales down 7.5% as a result of a 13.8% negative foreign exchange
impact

The overall organic growth of 4.6% in a difficult quarter, aggravated by late


Easter, is mainly due to our successful drive for innovation and our strong market
positions. Our consolidated sales clearly took a hit from the strong Swiss franc, but we
expect this effect to taper off in the course of the year. “We are confident that the rest
of the year will bring an acceleration of growth and that we will therefore achieve our
stated objective of improving the Group's performance in constant currencies for 2007."

The Nestlé Group's consolidated sales for the first three months of 2007
amounted to CHF 19.7 billion. In constant currencies, sales increased by 6.3%,
reflecting organic growth of 4.6% (real internal growth 2.5%, pricing and others 2.1%),
as well as a small contribution from acquisitions, net of divestitures. As a result of the
strong Swiss franc, the adverse foreign exchange effect was 13.8%.

29
Foreign exchange factor held back consolidated sales, and real internal growth was
impacted by the late Easter date and the competitive situation in Japan. Additionally, in
keeping with the Group's policy of ensuring margin improvements, Nestlé raised prices
in several product categories to reflect cost increases. Nevertheless, the Group expects
its strong brands, its broad distribution network and its capacity for innovation to lead
to an improvement in sales growth as the year goes on.

TABLE 1.4 SALES BY MANAGEMENT RESPONSIBILITIES AND


GEOGRAPHIC AREA

Jan.-
Jan.-March Organic Growth RIG
March
2007 2006 Jan-March 2007 Jan-March 2007
In CHF million % %

Zone Europe +1.8 -0.4


6'778 '628

Zone Americas +4.8 +1.9


5'978 '154

Zone Asia, Oceania and


+3.2 +1.9
Africa 3'291 '633

Nestlé Waters +10.9 +10.7


1'719 '740

Other Activities * +9.4 +8.4


1'947 '156

Total 9'713 1'311 +4.6 +2.5

The growth rate in Western Europe reflects the importance of chocolate and ice cream
to that Zone, both of which were impacted by the late Easter date. There should be
some improvement, therefore, in the first half. Canada and the US performed well, but
there was some slowness in Latin America. Importantly, however, the key markets of

30
Brazil and Mexico both achieved positive RIG and organic growth. Most Asian
markets are growing at a good rate, with Greater China outperforming its ambitious
target of double-digit RIG. In Japan measures were taken to improve the quality of
sales in the ready-to-drink business. The water business and Alcon again delivered
good growth, capitalizing on their leadership positions in their respective markets.

31
SALE In CHF million

2006
2007

Among the product groups, beverages, especially soluble coffee and coffee
mixes under the Nescafe brand, and powdered beverages, under brands such as Milo
and Mosque, did well, as did the specialty roast & ground coffees. There was good
progress also in the chilled and the frozen culinary sector; the recently acquired Chef
America achieved double-digit growth. The performance of chocolate and
confectionery was impacted by the late Easter, as well as by price increases.

32
MARKETING STRATEGY

• IMPROVED PENETRATION

Improved penetration of brands is an important consideration in the Company’s


vision of sustained growth. Expansion of distribution and reach was a focus area. Some
of the initiatives that are expected to contribute significantly include introduction of
single serve convenience packs at affordable price point, such as NESCAFE Redimix
and MAGGI Hot Cup Soup Powder. The initiative to automate distributor operation has
continued and is expected to be complete during 2005. This will help NIL achieve
greater speed and transparency in the flow of information, ensure better levels of
customer contact and enable faster response to consumer needs.

• OUT-OF-HOME CONSUMPTION
The Company continued to strengthen initiatives to facilitate availability of
products for out of-home consumption. These initiatives were supported by a number
of new product launches. The development of NESTEA Instant Tea premix for hot
vending offers consistency and convenience as compared to tea bag preparation;
NESCAFE Frappe premix fort cold vending has been introduced in Quick Serve
Restaurants; Low Sugar NESCAFE premix has been developed for health conscious
consumers; MAGGI Hot Cup Soup dispensed through vending machines is an
innovative and pioneering concept in the market. Large number of Nestle Consumption
Zones including Cafe NESCAFE, Coffee Corners and multibrands stalls were set up
and innovative vending machines were introduced for Iced Tea. Sustained focus on
continuously improving the value to the consumer, helped to introduce vending
machines with eight beverage options to offer consumers a range of specialty beverage
at the same location.

On the manpower development front, programmed during the year continued to be


focused on the operational front more particularly sales and production.

To support the growth plans and distribution strategy, and simultaneously improve
the operational efficiency, the on strengthening chain continued to receive attention
during the year.

33
• INNOVATION, RENOVATION AND TECHNOLOGY FROM
NESTLE
The continuous efforts on product innovation and renovation during the year has
contributed significantly to the performance of the Company during the year and would
remain a key element even in the future to sustain leadership and profitable growth,
especially in a market that is becoming increasingly competitive under the General
License Agreement with Nestle Group, NIL has the license for know- how, patents,
brands and other intellectual property, in relation to the products manufactured and/or
sold by your Company. Access to proprietary technology of Nestle and the fruits of
extensive centralized Research and Development is available on a continual basis. The
excellent performance of the Company over the years has been greatly influenced by
these inputs.

• COMMUNITY DEVELOPMENT
Initiatives by the Company, for community development continued to be focused
on programmed in the areas where the factories are located. These programmed gives
importance to providing drinking water facilities in schools, supporting and
participating in immunization programmers, providing basic facilities to local schools
and arranging medical camp.

• SUPPLY CHAIN (DISTRIBUTION STRATEGY)


Thrust on strengthening the supply chain continued to receive attention during the
year and the Company advanced towards becoming the Best in Class Supply Chain in
the FMCG sector. Distribution costs were contained by increase and efficient use of
railways for primary dispatches. Simultaneously, the vehicles transporting raw and
packing to factories were used for finished goods dispatches too, thereby saving freight
costs. Efforts in collaborative logistics with other companies and third party services
providers have begun to yield benefits.

In order to improve response to customer demand, forecasting was given


considerable attention. This has led to an empowered demand planning role that
ensures optimized inventory as well as satisfaction of consumer demand. Initiatives in

34
e-connectivity with the distributors and also with the suppliers are further aligning our
efforts in this direction.

MARKETING STARTEGIES OF NESTLE INDIA


LIMITED
Marketing strategy is the complete and unbeatable plan designed especially for
attaining the marketing objective of the firm.

The marketing objectives indicate what the firm wants to achieve; the marketing
strategy that decides the success at the business unit level which in turn decides the
total corporation’s success. The link between marketing strategy and overall success is
indeed direct and vital. And in this linkage lies the significance of marketing strategy.

Nestle India ltd. has an aggressive marketing strategy which is very well
understood when one goes through the in-depth study of the 4-P’s of the marketing and
price strategies with respect to its products. One comes to the conclusion that NIL has a
well defined roadmap to success i.e. to reach its ultimate objective of realizing
customer satisfaction through value for price products.

PRODUCTS

Quality is the essential ingredients in all of our brands and the reason why
millions of people choose Nestlé’s products every day. Our consumers have come to
trust in Nestlé’s commitment to excellence and turn to Nestle brands to maintain
nutritional balance in a fast paced world.

BABY FOODS

The production of infant food goes right back to the origins of the Nestle
Company. Henri Nestlé’s `Farine Lace’s was the first product to bear the Nestle’ name.

In 1867 a physician persuaded Henri Nestle’ to give his product to an infant


who was very ill—he had been born prematurely and was refusing his mother’s milk
and all other types of nourishment. Nestlé’s new food worked, and the boy survived

35
from the very beginning, Nestle' product was never intended as a competitor for
mother’s milk.

In 1869, he wrote; “During the first months, the mother’s milk will always be
the most natural nutrient, and every mother able to do so should herself suckle her
children.”

The factor that made baby foods success in the early days of the Nestle
company—quality and superior nutritional value—are still as valid today for the wide
range of infant of infant formula, cereals and baby food made by Nestle. The World
Health Organization (WHO) recognizes that there is a legitimate market for infant
formula, when a mother cannot or chooses not to breast feed her child. Nestle' markets
infant formula according to the principles and aims of the WHO International Code of
Marketing Breast Milk Substitutes, and seeks dialogue and cooperation with the
international health community and in particular with the WHO and UNICEF, to
identify problems and their solution. Nestlé’s expertise as the world’s leading food
manufacturer

Gained over more than 125 years, is put the disposal of health authorities, the
medical profession and mothers and children everywhere.

Milk based products and baby food contributes to 34% of Nestlé’s turnover. For
ensuring regular procurement of good quality milk, Nestle has developed a network
around its Moga factory for collection of fresh milk everyday from the farmers. Nestle'
has a dominating 87%market share in the baby weaning foods with its Cerelac and
Nestum brands. Infant milk powder is sold under the Lactogen and Nestogen brands.
Brand loyalties are very high in categories such as infant food and weaving cereals,
enabling the company to command a price premium.

Other milk products include dairy whiteners (21% market share ) sold under
the Every Day and Tea Make brands, sweetened condensed milk and ready to cook
mixes for traditional Indian sweets sold under the Milkmaid brands. The company also
markets ghee (6% market share) under the Every Day) brand. Nestle has expanded its
milk product portfolio with the launch of new dairy products such as UHT milk, Curd
and Butter. Huge investments arte being made in building a diversified dairy business
and the distribution infrastructure for the same. Milk products sales registered a 10.6%

36
growth during 2006. The major competitors are HLL with Milkana, Amul with
Amulya, Britannia with Britannia Dairy Whitener, and Kwality with Kream Kountry.
Britannia with 11% of market share, Amul with 19%, and HLL with 8%, Kwality with
4% of it, Rest of the market share lies with local players like Nova, Indiana etc. local
players are very active & some of them are operating under the small scale industries.
Nestle is still the market leader in the long term & is continuously on the 4-P’s to grow
further.

DAIRY BRANDS

Nestle' has long been a major player in the dairy industry, originally with well
known shelf stable brands such as Nido, Nespray, La Lechera and Carnation, then
building a strong international presence in Chilled dairy and Ice cream under the Nestle'
brand.

Innovation and renovation play a major role in the development of milk based products
as well as of breakfast cereals, managed as a joint venture with General Mills.

The area of nutrition, with its benefits to health and wellbeing, is having a
significant impact on the development of our business. A wide range of proven, science
based solutions such as starter and follow-up formulas, growing-up milks, cereals,
eternal diets, oral supplements and performance foods are actively developed and
successfully brought to market under the Nestle brand.

BREAKFAST CERAELS

Although cereals have been with mankind in form or another for millennia, it
was not until the mid 19th century that scientific research, technological innovation and
then influence of a group of American health reformers, gave rise to the currently
foodstuff we know today as breakfast cereal.

Nestle' has a joint venture with General Mills outside North America, Cereal
Pardoners Worldwide, which is active in more than 80 countries.

The joint venture began in 1990 and its rapid growth has been characterized by
branding and lately the launching of breakfast cereal brands into the fast-growing
cereal bar market.

37
ICE CREAM

There are many myths and stories as to the invention of ice cream: was it Macro
Polo who brought it back from China (along with pasta)? Probably not, considering he
most likely never visited China.

The story of its popularity is however connected with the invention of


technology to make it on an industrial scale and to keep it cold once made. Before
refrigeration techniques, food was frozen with the aid of ice mixed with salt which was
either stored in ice house or shipped from cold countries. But then at the end of the 19th
century, both making and freezing it became easier and together with the invention of
the ice cream cone made the product boom.

Today the United States is the absolute leader in terms of volume consumed but
the highest per head consumers are in New Zealand. Flavors you’d never thought of
and yet they’re commercially available:

Sorbets- Smoked Salmon, Tomato, Cucumber Ice-Creams – Garlic, Avocado, Sweet


Corn.

The ice cream cone is the most environmentally friendly form of packaging. A
system from Damascus, Ernest E Hamwi is credited with its invention. Apparently
during the 1904 St Luis World’s fair. His waffle booth was next to an ice cream vendor
who ran short of dishes. Hamwi rolled a waffle to contain ice cream and the cone was
born.

CHOCOLATE & CONFECTIONARY

The story of chocolate began in the New World with the Mayans, who drank a
dark brew called cacahuaquchtl. Later, the Aztecs consumed chacahoua and used the
cocoa bean for currency. In 1523, they offered cocoa beans to Cortez, who introduced
chocolate to the Old world, where it swiftly became a favorite food among the rich and
noble of Europe.

From the beginning, turning raw, bitter cocoa beans into what one 17th century
writer called “the only true food of the gods” has been a fine art, a delicate mixture of

38
alchemy and science. Centuries ago it was discovered that by fermenting and roasting
the beans, an almost otherworldly flavor could be created.

In 1875, after years of trying, a 31-year old candy madder in Vevey named
Daniel Peter figured out how to combine milk and cocoa powder. The result –milk
chocolate.

Peter, a friend and neighbor of Henri Nestlé’s started a company that would
quickly become the world’s leading maker of chocolate. For three decades the company
called Peter, Cailler, Kohler relied on Nestle for milk and marketing expertise. In 1929,
the almost inevitable merger took place as Nestle’ acquired Peter, Cailler, and Kohler.

Indian chocolate market is growing day by day. Premium segment is opening


upon. The companies like Nestlé’s are launching indigenous product made to
international standards of the 20,000 tonnes chocolates market worth about Rs 400
crore, Nestle’s accounts for around 65% of market share followed by Nestlé’s around
23%. Amul has 5% of the share, with the minor players taking the Rest.

Though with much smaller portfolios, Nestle is putting up a touch fight from
the treat for kids, chocolate are now being positioned as near- meal substitute. Thanks
to the initiative taken by Nestlé’s India. The market has become broad based in the
sense that adults are important target segments now. The repositioning of Nestlé’s dairy
milk in 1994 as “real taste of life” grew the entire category of milk chocolates by 20%.
If facilitated the repositioning of Nestle brands in the basket.

5 STARS: As energy bar, earlier targeted to teenager, before launch of perk 5 star
energy bar positioning made it snacking chocolate with Nestle' pitching Bar-one in
1993 gaian it “For those in between times”.

MUNCH: Munch is the market leader in the chocolates. It is the largest selling
chocolate in India & is followed by Nestlé’s Dairy Milk.

E’CLAIRS: competing in the chewable toffee segment, Éclairs was relaunched by


Nestlé’s during the mid-90 with a new name milk-éclairs. Its worth is 4000 tones now.
Nestle' also presents here NESTLE' E’CLAIRS. Due to launch of multibrands Nestle can
not pay attention to brands like Mr. Pop Candy Lollypop.

39
KIT-KAT: Kit- Kat which was launched in India in 1995 today leads the chocolate
coated wafer bars category. It has 11.5% share of chocolate market. But Nestle’s perk
is with9%.

PRODUCT PRICE WEIGHT

KIT- KAT Rs. 14 36 gm.

PERK Rs. 10 2x17.5 gm.

Nestle forayed into chocolate & confectionary in 1990 and has cornered a
fourth share of the chocolate market in the country. The category contributes 14% to
Nestlé’s turnover. It has expanded its products range to all segments of the market the
Kit-Kat brand is the largest selling chocolate brand in the world. Other brands include
Milky Bar, Marbles, Crunch, Nestle Rich Dark, Bar-one, Munch etc.

Amul is also competing in this category especially in western regions of India.


But Nestle' still has its own position in the market. The sugar confectionary portfolio
consists of Polo, Soothers and Frootos. All sugar confectionary products are sold under
the umbrella brand Allen’s. Nestle has also markeys some of its imported brands like
Quality Street, Lions and After Eight. New launches such as Nestle Chocó Stick and
Milky Bar Choo at attractive price points to woo new consumers chocolate
confectionary sales registered a strong 21.5% of growth in 2006 aided by good volume
growth in Munch, Kit-Kat and Classic sales. Nestle relaunched Bar-One during the year
1993.

PREPARED FOODS

40
Convenience foods—packaged soups, frozen meals, prepared souses and
flavorings----date back more than a century. With the industrial revolution came
factory jobs for women and less time to prepare meals.

The problem was so widespread that it became the object of intense study in 1882 by
the Swiss Public Welfare Society, which offered a series of recommendations,
including an increase in the consumption of vegetables.

The society commissioned Julius Maggi, a miller with a reputation as an


invention and capable businessman, to create a vegetable food product that would be
quick to prepare and easy to digest. The results –two instant pea soups and an instant
bean soup --- helped launch one of the best known brands in the history of the food
industry. By the turn of the century, Maggi & Company was producing not only
powdered soups, but bouillon cubes, sauces and flavorings.

Maggi merged with Nestle in 1947.

Buitoni the authentic Italian brand, which has been producing pasta and sauces in Italy
since 1827, became part of the Nestle' Group in 1988.

Ready to cook food/ cooking aids are sold under the umbrella brand name
Maggie. Culinary product account for about 14% of Nestlé’s turnover. Maggie is the
market leader in the noodles (45% market share), the Ketchup (43% market share) and
soups (41% market share) categories.

Other products sold under the umbrella brand Maggie, are ready-to-cook
gravy/sauces, soups, seasonings, as well as traditional Indian foods such as pickles and
instant snack mixes (dosa mixes). New taste variants are continuously launched to add
variety to the product offerings.

HLL, Heinz, Knor & Indo Nissin Foods are Major competitors in this category.
Gits mixes, Top Raman, Hot serve, are some products that are in competition to
products under Maggie brand. But Maggie has used Quick and Easy cooking as its
Unique Selling Preposition that worked to distinguish the Nestle' to lie ahead than all
brands. HLL as brand Wagon is the part of our daily life uses creative selling
prepositions to maintain its position as the top FMCG firm in India. Its marketing
strategies (including launch, pricing & distribution strategy are good enough to shatter
the competition, so Nestle is working as an early worker to remain and lead in the
market.

41
The distribution network of Indo Nissin food is strong enough & it has covered
a large portion of market in very short time. Its distribution network is not very long &
the prices are also low. The company had adopted a low budget promotional strategy
and is very fine at merchandising. These all are working together for the good of the
company.

Nestle has the advantage of great brand image & it is actually working for maintenance
and growing it.

BEVERAGES

In 1937, Nestle scientists perfected a powered coffee product that was


introduced in 1938 under the brand name Nescafe’- the world’s first commercially
successful soluble coffee.

It became so popular during World War II that for one full year the entire output
of the Nescafe’ plant in the United States (more than one million cases) was reserved
for military use only. Since then, Nescafe’ has become one of the world’s best-known
brands. In addition, Nestle' is a major producer of chocolate-based and malted drinks.

Its leading brands, Nesquik, Milo and Nescau are very popular with a growing
number of young people around the world. Nestle' ready-to-drink beverages Nestea and
Nescafe’ are sold in various forms (cans, bottles). These are distributed by Nestlé’s
joint-venture with the Coca-Cola Company, Beverages Partners Worldwide. Nestle' is
also present in fruit juices (Libby’s) as well as espresso coffee in capsules (Nespresso).

Beverages like coffee, tea and health drinks contribute to about 30% of Nestlé’s
turnover. Beverages sales registered a 155% growth during 2007. While about 14% of
sales come from domestic market, exports contribute to about 16% of sales.

Nestle Nescafe’ dominates the premium instant coffee segment. Nestlé’s other
coffee brand Sunrise has also been relaunched under the NESCAFE’ franchise to
leverage on the existing equity of the brand. Nestle' has focused on expanding the
domestic market through price cuts and product repositioning. However it has been
losing share in the domestic market, where it has a 37% market share.

The major competitors are Coca-Cola, which launched coffee & tea under brand
name Georgia in 2002. Its tea in four flavors which are classic, Adark, Masal & Elaichi
and coffee in three variants Classic, Cappuccino & Mochaccino to suit the taste of

42
customer. They adopted the strategy to distribute vending machine to even small
retailer so as to cover a large market. Tata coffee also Works against Nestle'. But n is
still the market leader in terms of market share, Customer’s choice & quality.

Milo, brown-malted beverages was launched in 1996. It has an estimated


volumes share of about 35 in the malted food drink segment.

Nestlé’s Bourn vita & HLL with Boost are the major players in the market
along with Milo. Bourn vita is with largest market share of 35%. The promotional
strategies of Nestle' for Milo are working fast for the good of Milo. Nestle' has
launched non-carbonated cold beverages such as Nestea Iced Tea and Nescafe’ Frappe
during 2004.

BEVERAGES

Nestle' Food Services provides food and beverages professionals with a wide
selection of branded products. Our solutions meet the growing opportunities to service
consumers in out-of-home channels.

Beverages solutions featuring well known consumer brands such as Nescafe’,


Nestea and Nesquik as well as host professional brands including Minor’s, Chief and
Davigel are part of the diverse portfolio of Nestle' Food Services.

Working to meet the need of Food Service operators across a wide spectrum of
business channels such as quick service restaurants supports our commitment to giving
consumers the brands and quality they come to expect and rely on in the home as well
as out of the home.

BOTTLED WATER

Nestle' brgan its entry into the water business in 1969 with a 30% stake in the
owners of the Soci’e’Te’ Ge’ne’le Des Mineral’s De Vittal. It acquired a controlling
interest in SGEMV in January 1992, and went on in May of the same year to buy the
entire Perrier Group.

In 1992, Nestle' was the first company to dare to launch a mineral water,
Valvert, in five different countries at once. It’s originally lied in the use of an all-new
plastic, P.E.T. (Polyethylene teraphthalate), which is stronger and more elastic than the
PVC used since 1968. Besides P.E.T. is recyclable.

43
By the end of 1997, the group was present on every continent, and the purchase
of San Pellegrino gave it the leadership in the Italian market. In 1998 f or the first time
in its history, Nestle' associated its name with bottled water: Nestle’ Pure Life.

The brand was launched in Pakistan and soon appeared in Brazil, followed by
Argentina, Thailand and Philippines, China and Mexico in 2000. in 2001 India, Jordan,
and Lebanon followed and in 2002, Egypt, Uzbekistan and then United States.

Nestle’ Pure Life is drinking water that has been treated and rematerialized
using a standardized industrial process to ensure purity and quality and is marketed in
emerging countries.

A second product with the Nestle' name was launched in May 2000, this time in
six European countries: Nestle’ Aquarelle. A natural spring water currently from nine
different springs in France, Germany, Belgium, Hungry, Italy and Spain, Nestle'
Aquarel also uses the multi-source concept to satisfy new consumer expectations,
especially for water with a low mineral content that the whole family can drink.

In April 2002, the group changed its name to Nestle' Water’s, a token of Nestle'
decisive commitment to the bottled water market, which now represents 9% of its sales.
Today, Nestle' Water’s is established in 130 countries and markets about 70 different
brands. The group is able to offer top quality brands ad innovative packaging to meet
the individual needs of the water consumer all over the world, whenever, wherever and
however thanks to the wide variety of its offer in terms of distribution and product mix.

PETCARE

Nestle' entered the pet care business with the purchase of carnation in 1985, and
we consolidated our position in Europe with acquisition of the spillers brand in 1998,
and further with the acquisition of Ralston-Purina in 2001 creating Nestle' Purina Pet
Care.

Carnation for its part developed the Friskies brand in the United States in the
1930s and in selected markets in Europe and Asia since the 1960s. Today Nestle' is
well-positioned with a balanced portfolio of internally developed and recently acquired
brands.

44
Technologies to develop and add value continually for pets and their owners are
engineered into our current product range. These include state-of-the-art nutritional
innovations, such as products which help maintain feline urinary tract health or
innovations for the most discriminating of pets and their owners. Nestle' has already
become an industry leader and we continue to develop our international presence.

CONSUMER SERVICES

At Nestle' we are committed to offering consumers high-quality food products


that are safe, tasty and affordable. The Nestle' seal of guarantee is a symbol of this
commitment.

We also believe in maintaining regular contact with our consumers. This applies
both to how we present our products and to how we address our consumer’s questions
and concerns. When Henri Nestle' prepared his first boxes of infant formula for sale, he
put his address on the packages so people would know where to go if they had
questions. Today our consumer relationship panel with the words “Talk to Nestle'”
expresses the same commitment.

This is why we have a worldwide Nestle' consumer services network devoted to


caring for our consumers. Our people have expertise in a wide range of areas such as
nutrition, food science, food safety and culinary expertise. They provide the prompt,
efficient and high quality service that consumers expect from Nestle'.

In addition we teach them talk with consumers and above all, to listen.
Listening helps us to understand what people want. Nestle' uses the insights gained
from relationships with consumers to driver product development.

At Nestle' 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.

PROMOTION

Promotion is an attempt to influence customers. Its aim is inform & remind the
prospective consumers of the company’s offer & to advocate the cause of its production
in the minds of its audience. Thus informing, reminding & advocating about the
company’s product are real purpose of the promotion component of the mix.

45
NIL has rightly understood the production of a good product is not enough to
ensure success in the market, unless target customers are aware of its existence,
features and products. So company has framed a very strong and very wide
communication plan.

ADVERTISING

NIL is associated with MUDRA advertising company in India. It has properly studied
the market and developed the commercials in several languages. NIL has booked spot
for the advertising in almost all the channels.

EXHIBITIONS & TRADE SHOWS

It also participates in trade shows & exhibitions.

IN 1997, at Jawaharlal Nehru Stadium in an exhibition NIL displayed its all old and
new products. This was the time when MILO was launched in India.

AHARA 97, Here Nestle' India Ltd. presented its wonderful world of Nestlé’s
recipes along with its products. It also exhibited the various to make Maggie tastier.
This shows that Nestle' never leave its product even if it is market leader & is the good
source of its revenue.

FOOD EXPO 98, organized by CII & attended by over 100000 people. The
Mumbai branch of NIL ensured high visibility for its products like products under
Maggie brand, MILO & chocolates by setting the venue ablaze with Nestlé’s hues Vic
banners, umbrellas posters & product displays.

INTERNATIONAL FOOD CONFEDERATION 1998: IFCON provided


opportunity for the leading, international food scientists, technologists & research
institutes to reflect massive change sweeping across the food processing sector.

FOOD EXPO 1999:

In October in Chicago NIL participated there also.

CHILDREN SPORT MEET 98:

At DPS R. K. Puram children between age group of 4-13 years put their best
foot & arm forward. Attired in colorful MILO T-Shirts & Caps they participated in 12
events.

FREE GIFTS

46
Like giving school Kit i.e., pen scale etc, with Maggie. Noodles & chocolates,
Free Cricket bag or a sport watch, badminton racket, bag etc on the payment of a very
minimal amount of Rs. 10 with Milo.

OTHERS
Some other examples of exhibition in which NIL participated are:

India international trade fare (IITF).

• Nestle' Hungama 1998.

• Maggie Display Contest.

• Splendor 1999.

• Boarding School Development Campaign.

• Moga Summer School Camp.

The competitors of NIL are also very Active and they also participate in these
events and sponsor some event in their own ways & methods. HLL participates in most
of the regional trade shows through its retailers. It displays its new products at large.
HLL is the 1st largest company of India in terms of advertising & promotional
expenditure. It also invents largely on window display contests retail level.

Amul promotes its products by using emotional appeal in order to use the emotional
aspects if Indian citizen. It uses kiosks and hoardings to promote its product range. The
promotional expenses of Amul are not so big as that of the MNC’s but still it is a
respected firm in our eyes.

Nestles under its promotional campaign that is designed by Ogilvy & Mather the
adv shows the power of positioning with emotional benefits and it really works for
Nestles & leaves it with dramatic increase in sales.

PLACE:

Physical distribution is also called as market logistics. It involves:

Planning Implementing

47
Controlling the physical flow of the materials and final goods from point of
origin to point of use to meet customer’s requirements at a profit. Over the last several
years, NIL has introduced a number of new products. These include: Kit-ka, Polo,
Milo, Cerelac, Maggie, Dosa Mixes, Bar-one etc.

The success of these products is in part based in Nestlé’s nation wide


distribution system and its strong relation with channel members, which allow it to
quickly place new products in the market.

Channels of distribution tend to be traditional for a number of product


categories. For i.e. in the beverages and food industry, manufacturers normally sell
through wholesalers, who deal with retailers. But the distribution strategy of Nestle' is
not a traditional one. The products manufactured in various production units are
passed on to C&F agents. Practically each C&F agent covers just one state. The
products are then sent to various distributions, the company itself has defined the
particular area to be covered by each distributor. Salesman from the distributor’s office
then approaches various retailers of their area & book the order. The products are
delivered to on the next day as against the orders. For instance MILO is manufactured
at Karnataka. C&F agents located at various places collect the product from production
unit. In Delhi C7F is in Mandali Village, Trans Yamuna. The agent in turn send the
products to distributor and then to retailers.

The distribution channel includes 6, 00,000 outlets in 3000 towns throughout


the country, serviced by 39,000 distributors. Practically every shop dealing in consumer
goods is an outlet for Nestle'. This is formulating its marketing strategies.

48
TABLE 1.5 DISTRIBUTION NETWORK OF NIL

MANUFACTURER

C & F AGENTS (1%-3-%


Margin)

SUPER STOCKIST (3%-6%)

STOCKIST (3%-5%)

DISTRIBUTOR (4%-7%)

ORGANISED RETAILER (6%-


18%)

49
TABLE1.6 NESTLE’S MOST LIKED PRODUCTS

PRODUCTS PERCENTAGE

CHOCOLATE 10%

COFFEE 28%

MILKMADE 5%

MAGGIE 40%

MINERAL WATER 2%

INFANT FOODS 5%

SOUPS 4%

SAUCES 6%

40%

35%

30%

25%

20%

15%

10%

5%

0%
PERCENTAGE

CHOCOLATE COFFEE MILKMADE


MAGGIE MINERAL WATER INFANT FOODS
SOUPS SAUCES

50
10% people like chocolates as Nestlé’s best product. Among chocolates the Kit-
Kat & Munch are the most liked ones. Munch is the largest selling chocolates in Indian
chocolate market followed by Nestlé’s Dairy milk. Coffee is considered as the best
product of Nestle' by 28% of respondents. They like the taste & aroma as it best
quality. Milkmaid is liked by 5% of people & this crowd involves women &
surprisingly children. Maggie noodle is the most loved product by 40% respondents
especially mothers & children as they consider it as the all time dish (Fast to cook,
good to eat). Infant products are liked by 9% of respondents, most of them were
mothers but, it is very interesting to quote that some mothers them & their elder
children liked the taste of Cerelac & it increased the purchasing frequency of the
product.

Fig.1.2 REASONS TO LIKE NESTLE’S PRODUCTS

REASONS TO LIKE NESTLE' PRODUCTS

ADVERTIS
EMENT COLOR
PRICE

PACKAGIN
TASTE
G

Fig1.2

51
TABLE 1.7

FEATURES PERCENTAGE

COLOR 2%

TASTE 64%

PACKAGING 4%

PRICE 20%

ADVERTISEMENT 10%

Most of the respondent (64%) liked the products because of the great taste of
products like Maggie, Munch , Kit-Kat, Coffee, Frappe’, Slim Milk & sauces. 2% of
the respondents say that they like the color of the product most as it shows the
freshness of the product. 20% people are satisfied with the price.

TABLE 1.9BRAND LOYALTY FOR NESTLE’S

LOYALTY STATUS CONTRIBUTORS

HARD CORE LOYALTY 53%

SHIFTING LOYALS 19%

SWITCHERS 28%

B R AN D LOYAL T Y F OR N E S T L E
SWITCHERS

28%
SHIFTING
LOYALTYLOYALS

19% C ONTRIB UTORS


HARD CORE

53%

Fig.1.3

52
BRAND LOYALTY FOR NESTLE
Brand loyalty is very high for Nestle' as 53% of respondents denied to switch
over to other product, when any gift or scheme is offered by the competitors. Products
that have highly loyal customers are Maggie noodles, coffee, munch & everyday.
People also like & are loyal for sauces and it is showing an increasing trend (Heinz
recently started the Diwali offer to give 500 gm only for Rs. 39. people responded that
the offer wasn’t so interesting to switch from Maggie & also it was a short-term offer.
19% respondents said that they will some time switch over if they find a really
attractive offer. They also said that Nestle' is the company that uses least of the
marketing gimmicks to promote its products & people believe in quality of Nestle'.
20% people said that they switch in most of the cases.

TABLE 1.9 SHOULD NESTLE IMPROVE SOME OF ITS


PRODUCTS

PRODUCTS OPINION

CHOCOLATES 63%

SOUPS 21%

COFFEE 15%

MAGGIE 1%

53
PRODUCTS THAT NEEDIMPROVEMENT

70%
60%
50%
40%
30% OPINION
20%
10%
0%
S
E

IE
S
T

E
P

G
A

F
U

G
L

F
O
O

A
O
S
C

M
C
O
H
C

63% of respondents want the company to work on the taste of Milky bar and Classic.
21% people want the soups to be offered in more flavors, at present

there are 12 flavors. They also want to make the soups creamier.

16% people say that Nescafe’ is the most powerful brand of Nestle', but they
say that prices are too high to afford, although Nescafe’ red mix is a big relief but it is
not so creamy.

TABLE 1.10 QUALITY WISE POSITIONING

Quality wise Nestle' and Amul are the most admired companies. They blamed
Nestle’s because of the recent issue of worms in the Nestle’s chocolate. They say that
Nestlé’s quality is trusted.

COMPANY OPINION

NESTLE 37%

BRITANNIA 21%

CADBURAYS 12%

AMUL 30%

54
QUALITY WISE COMPARISON OPINION

AMUL
NESTLE

CADBURA
YS BRITANNIA

Fig 1.4

55
TABLE 1.11 AVAILABILITY WISE COMPARISON

Nestle' produces the products that are part of most of the people’s daily life. So
availability of fresh Nestle' product is smooth.

COMPANY OPINION

NESTLE’ 26%

AMUL 11%

BRITANIA 28%

NESTLES 35%

AVAILABILITYWISE COMPARISON

40%
35%
30%
25%
20%
15%
10%
5%
0%
NESTLE’ AMUL BRITANIA CADBURYS

OPINION

Fig.1.5

The pricing policies of Nestle' regarding products like Coffee, Dahi & Milk needs
revision.

56
TABLE 1.12 PRICE WISE COMPARISON

COMPANY OPINION

NESTLE’ 23%

AMUL 38%

BRITANIA 21%

NESTLES 18%

PRICE WISE COMPARISON

40%
35%
30%
25%
20% OPINION
15%
10%
5%
0%
IA

S
L
E

Y
TL

AN

R
M
S

U
A

IT
E

B
R
N

D
B

A
C

Fig.1.6

57
MARKET SEGMENTATION AND TARGET MARKET
SELECTION
Market segmentation and target market selection have an intimate relationship
with market strategy formulation.

The company may focus on the following factors while laying down the target market.

1. GEOGRAPHIC SEGMENTATION

Geographically the country can be broadly divided into 3 sub segments -Rural,
Suburban and Urban.

In the first phase (after the test launch), Urban parts of the country should be
targeted. The chosen segment is targeted because –

• Lack of infrastructure, like refrigeration-not to venture rural markets.

• The consumption pattern & behavior in Rural India does not fit with the product
attributes and perceived benefits.

• The limitation of disposable income is another factor that hampers entry in rural
areas.

• Semi-Urban may be considered in the second phase. An year after the launch.

Within Urban India, the cities with 1 million + population i.e. top 23 metros will
be targeted. A soft launch of the brand should be undertaken before taking the brand to
these areas. This (test launch) will be undertaken in Bombay, since it (Bombay) is a
high consumption city for chocolates. (Source: Nestle (I) Ltd – in fact Nestlé’s sales
peaked out in Bombay, during its initial launch).

2. DEMOGRAPHIC SEGMENTATION

The demographic variables have been separately addressed to arrive at the target
audience.

• Age:

12 years + segment of the population is recommended to be targeted. Small kids


may not be targeted, because of the nature of the perceived product benefit by

58
consumers in that age group, who are inclined towards sweeter and creamier snacks.
Further, it may not be easy to get youngsters off their tuck money. Also, children today
already have an array of cheap domestic and international confectionery (in the form of
chewing-gums, lollipops, rolls, lozenges and toffees).

• Income:

The income segmentation may be all households with an annual income


exceeding Rs. one lakh. Targeted audience may be all households that can afford a
television or have access to satellite television.

3. PSYCHOGRAPHIC SEGMENTATION

Social Class: In terms of psychographic the social class targeted is the educated
upwardly mobile urban middle and upper class.

Personality Traits: This segment essentially consists of emulator’s i.e. upwardly


mobile, pioneers, freaky, fun loving type of people. These are the people who like to
enjoy life and believe in traveling and adventure.

Life Style: In terms of lifestyle, it may be aimed at those who favor buying
convenience products. They are also willing to experiment with alternate products in
place of conventional food items, as the universe of chocolate consumption is changing
from occasion led to more casual consumption.

4. BEHAVIORAL SEGMENTATION

The moulded segment of the market is perceived to be the growth engine of the
market. Hence, this segment is quite lucrative for a new brand launch. Also, chocolate
purchases have moved from being occasion-led to a casual snack. Hence, anytime
anyplace snack aspect needs to be established. This segment comprises of people who
like to have chances and want to try new things.

5. LEARNING-INVOLVEMENT

The purchase of a chocolate is of a low-involvement category. It is an impulse


purchase and decision to buy is not pre-planned.

6. USAGE RATE

59
The market may be further segmented on usage rather than attitude-Anytime
Anyplace Snack. This is a group of consumers that find traditional snacks too heavy.
Even though a range of chocolates may be offered, a core brand (concentrated strategy
mentioned later) may be launched in the count line segment. Since this segment is
tipped to be the growth engine of the industry (according to industry sources – Mr.
Sanjay Verkey, Nestlé’s India and Mr. Bohidar) and this segment has a substantial
share of the market (33%).

7.TARGET AUDIENCE

Following from the above, it is recommended to target consumers who found


traditional snacks too heavy. Usage rather attitude is being used to segment. This is the
segment that tended to pick up biscuits instead-something they could munch while
continuing with their schedule.

There are 181 million urban individuals in India Our target segment is people
living in the top 23 metros (1 million +population), which implies 63 million people.
Further, SEC A-B in these 23 metros with Cable & Satellite at home are targeted (94.4
% of SEC A-B have a cable & satellite connection) [All these are NRS -VI & IRS ’99
figures].

ADVERTISING & SALES PROMOTION


When a marketer or a firm has developed a product to satisfy market
demand after thoroughly analyzing the market , there is a need for establishing
contact with the target market to eventually sell the product . Moreover, this has
to be a mass contact which means that the marketer is interested in reaching a
large number of people so that his product may receive optimum exposure .
Naturally , the best way to reach this mass market is through mass
communication and advertising is one of the means of such mass
communication along with such other means as publicity, sales promotion and
public relations .Advertising as a means of mass communication has , therefore,
made mass selling possible . It is perhaps the best known mass communication
channel. Marketers and firms engaged in selling their products and services

60
throughout the country and or in other nations are fully aware of the necessity
and importance of advertising .

As a means of forceful communication , advertising promotes the sale of


goods , services , images and ideas through information and persuasion .

Advertising is not a panacea that can restore a poor product or rejuvenate


a decline market . It only helps in selling through the art and business of
persuasive communication .

The American Marketing Association, Chicago, defines advertising as

“ ANY PAID FORM OF NON PERSONAL PRESENTATION OF IDEAS


GOODS AND SERVICES BY AN IDENTIFIED SPONSOR .”

Advertising aims at drawing attention to a product. It seeks to create an


awareness about the existence of advertised product . It passes on information
about the product in such a way that interest is created in the mind of the
prospective consumer about the product .

61
DIRECT COMPETITION
NESTLE, NESTLE & AMUL

At present there are three major players Nestle, Nestle’s and Amul in the Indian
Chocolate market. Campco initially tried to break into market but failed. Brief profile
of the same has been entailed below:

NESTLE’S INDIA LTD.


Nestlé’s India Ltd, has been in India since 1948. Its brands: Dairy Milk, 5 Star,
Gems and Chocolate Éclairs are the households names in India today. In all the
segments i.e. moulded chocolates, count chocolates and panned chocolates, it is
undoubtedly the market leader.

Nestlé’s has its manufacturing units at Thane (Mumbai), Malanpur, Indori(near


Pune), Mithuri and Kolhapur. It has a strong distribution network with about 500
distributors in North India and more than 3 lac retail outlets being serviced all over
India.

In 1997, Nestle planned to pump in Rs.80-crore to up production capacity at a


couple of Nestlé’s factories. This cash is exactly double of what’s been invested in
1996.

The Company launched Perk, a wafer enrobed chocolate in 1995. This was
reactionary to the launch of Kit Kat and has been able to counter competition.

NESTLE’S DAIRY MILK (CDM) - THE FLAGSHIP BRAND

CDM, the oldest of Nestlé’s brands was launched in 1956. In the early 90s, a
rise in the prices of cocoa, increase in the excise duty and a fall in the demand inspired
the idea of repositioning. Two years in the process after relaunch Nestlé’s Dairy Milk’s
market share stood at 25 percent with sales rising by an average 40 percent per annum.

Besides CDM Nestlé’s has a number of endorser brands such as Fruit’n’Nut,


Nut Milk etc. Even though contribution of these brands to the company’s bottom-line is
very small, they are required in order to make a complete portfolio of offering.

The Company developed a concentration strategy on CDM, Five Star, Nestle’


Gems, Nestlé’s Éclairs, Perk and the latest of its offering Picnic (which has drawn a
good response in the market).

62
The Company has also identified sugar confectionery, as a growth sector. It’s
first offering Googly.

NESTLE INDIA LTD.


Nestle India Ltd. has been in India for more than 35 years now. The world’s
largest marketer of chocolates (became world number one when it acquired Rowntree
Macintosh of the UK) - Nestle, made its foray in the Indian chocolate Industry in
November 1990. It launched three products - the milk chocolate, the bitter chocolate
and Crackle (a crunchy chocolate) - in the slabs category and Bar One in count lines.

Nestlé’s been quick to react, and launched a whole host of products in


succession: All Silk milk chocolate, Creamy Bar, and a new version of 5 Star.

Nestle, in the beginning did not have its own manufacturing facility. It had an
alliance with Campco to manufacture chocolates. Later, in 1995 a state-of-art
manufacturing plant was set up at Ponda, Goa at a cost of Rs. 50 crores. This unit took
care of the entire Kit Kat production. However, the production tie-up with Campco still
continued.

LAUNCH OF KIT KAT


Kit Kat, one of world’s most popular chocolate, was launched in India in 1995.
Within months of its launch, it fulfilled every target Nestle had set. Its launch was
accompanied by the launch of Nestlé’s Perk in order to counter Kit Kat and safeguard
the flagship brand – CDM. Kit Kat has been able to define a new segment in the
industry in the form of the wafer enrobed any time snack.

Kit Kat outsells Perk in the outlets where both are available. In the crucial
markets of Bombay and Delhi both are running neck-and-neck. It has even said to have
threatened the mother brand, Nestle Dairy Milk.

63
TABLE 1.13 NESTLÉ’S NEW LAUNCHES

BRAND LAUNCH

Allen Splash(Sugar Candies) Select Cities

After Eight Mints Delhi & Mumbai

Lion Wafer Bars Delhi & Mumbai

FUTURE OUTLOOK
Focus will be on chocolates and confectionery followed by culinary products
which include the Maggi range and coffee.

AMUL

Gujarat Cooperative Milk Marketing Federation (GCMMF) launched the Amul


Chocolate way back in 1974. With its milk chocolates, Badam Bar, Crunch and Fruit n
Nut has a market share of about 5 %.

Due to lack of focus and with multinationals spending huge amounts on


advertisements its market share has been falling.

GCMMF is involved in a large number of products, of which chocolates


constitutes just 1-2 %. The company is not concentrating much on its chocolate
business. As of now, Amul chocolates are not on company’s focus.

Interestingly, Kaira District Cooperative Milk Producers Ltd.(KDCMPL) - the


manufacturer of Amul chocolate - is selling whatever it produces. Limited capacity is
also a reason for the share it has.

However, Amul’s memorable advertising campaign positioning it as a “A Gift


for Someone You Love”, saw the sales graph rising. Amul’s sales grew by 39% then.
Ever since, Amul has maintained a low profile.

64
OTHER DOMESTIC PLAYERS
The only other organized player in the market is Campco, which has an
insignificant share of the market. It is supplying its production to Nestle. Apart from
this Campco did come up with its new brands like Treat. But crunch of resources
grossly effected the pace of the company and is hardly to be heard of today.

IMPORTED BRANDS
Considering the high growth potential, various multinationals wanted to set up
facilities in India (Mars being one of them). However, shortage of cocoa, seasonality in
demand, and the absence of a proper cold chain deterred them from investing in India.
The government also moved the import of chocolates from special item list to open
general license category. The duty structure was also reduced. This resulted in making
import of foreign brands easier and price competitive.

Due the above, Mars Inc.-the US giant, who had decided to set up facilities in
1995(the site for which was also selected), decided to postpone its investment plans.

An alternate strategy was formulated to import Mars chocolate brands into India
through Sarura Business (I) Ltd. Sarura, which came into existence about an year ago,
imports Mars brands and sells through its own distribution network. Highlights of the
strategy being followed are mentioned below:

• Imports Mars brands every 40 days, after careful demand analysis. Takes 20 to 22
days to reach India.

DUTY STRUCTURE

Customs Duty 40 %

Counter-veiling Duty( a form of excise) 2%

Special Duty(Surcharge) 3%

65
The import duty on finished product is expected to come down to 20-25 percent in a
phased manner.

OTHER FOREIGN BRANDS


Nestle has also recently launched its foreign brands by importing them into
India. These include Lion and After Eights.

FUTURE OF THE IMPORTED BRANDS

The future of this segment is highly dependent on extraneous factors like,


government policies regarding import of chocolates and the duties structure therein.
Any movement can make these players price competitive. In December 1997, a no. of
products reaching expiry are said to have been dumped into India due to favorable
import policy (this is when foreign brand imports like Sarura’s products came into the
market).

66
DATA
ANALYSIS
&
INTERPRET
ATION

67
OBJECTIVE 0F THE STUDY

 To do in depth study of marketing strategy Of NIL which has a very strong

brand equity & loyalty in so much competitive market.

 To find out the competitive activity of Nestle’ in Indian market.

 To study the Marketing Strategies of Nestle in competitive market.

RESEARCH METHODOLOGY
As mentioned earlier, the objective of the study is to formulate a Marketing
Strategy for any new entrant in the Indian Chocolate Industry. While recommending
the said strategy detailed information from both primary and secondary sources was
collected and analyzed. This included:

PRIMARY SOURCES

Four level primary information collections were undertaken. These were:

1. In order to get relevant information regarding competition, executives of the


following chocolate players in the market were interviewed: To analyze buying
behavior and in order to gain an insight into the buyer need-satisfaction level, a
questionnaire was formulated. These included pan shops, grocery shops, bakeries,
departmental stores, etc.

SECONDARY SOURCES:

A number of secondary sources of information were used. These were:

• Confederation of Indian Industries reports, PHDCCI & FICCI library.

• Internet websites Of Nestlé’s, Nestle and indiainfoline.com, askjeeves.com

• Extensive use of secondary information in the form of


magazines/journals/newspapers clippings, such as Business World, Business
Today, Business India, A&M, Economic Times, etc.

68
Tools analysis

Observation and descriptive survey methods was used to collect the data about
the features, expectations, satisfaction, problems etc. the customers.

Size of sample:

The present study was conducted on a sample size of ‘80’.

TABLE 1.14 THE METHODOLOGY ADOPTED WAS AS


FOLLOWS:

INDUSTRY SCENARIO SKETCH (UTILIZING SECONDARY INFORMATION)

EXTENSIVE INTERVIEWS HELD WITH PRIMARY/SECONDARY SOURCES

(COMPANIES/CHOCOLATE MANUFACTURERS ASSOCIATION)

INTERVIEW WITH EX-DISTRIBUTOR OF NESTLE INDIA LTD

EXTENSIVE RETAILER INTERVIEWS IN NARAINA INDL. AREA

FORMULATION AND ADMINISTRATION OF A QUESTIONNAIRE

FORMULATION OF THE RECOMMENDED STRATEGY ON THE BASIS OF


THE ABOVE MENTIONED PRIMARY AND SECONDARY INFORMATION

69
0
10
20
30
40
50
60
70
80
90
Picnic

Fruit n' Nut

CDM

Foreign brands

KitKat

Perk

70
Amul

5 Star
AWARENESS - PURCHASE PREFERENCE

Bar One

Break

Crunch
ANALYSIS AND INTERPRETATION OF DATA

Cadbury's

Nestle
PURCHASE PREFERENCE: WHAT INFLUENCED YOU TO BUY
THE SELECTED BRAND

80

70

60

50

40

30

20

10
Foreign Brands
Fruit n' Nut

Cadbury's
Crunch
0

Bar One
CDM

Picnic
KitKat

Perk

Nestle
5 Star
Amul

90

80

70

60

50

40

30

20

10

0
Advertising Word of Mouth Attractive Dealer Shop Display Family, friends,
Packaging relatives

71
PURCHASE BEHAVIOUR:

REASONS FOR PURCHASE:-

70

60

50

40

30

20

10

0
Occasion led As a gift Casual Purchase Energy Snack

CHOCOLATES –

1. A GIFT TO A LOVE ONE

2.AS A GIFT IT IS FOR IMPULSE DRIVEN

No
10%

Yes
90%

72
3.MOST OF MY CHOCOLATE PURCHASES ARE PREPLANNED

Yes
10%

No
90%

4.I OFTEN PICK UP CHOCOLATES WHILE I MAKE OTHER


PURCHASES ----REINFORCING IMPULSE PURCHASE

No
700 24%

600

500

400 Yes
76%

300

200

100

0
Taste Quality Price Flavour Packaging Add-ons Brand Image

73
PRODUCT RELATED

90

80

70

60

50

40

30

20

10

0
CDM

Cadbury's
Perk
Fruit n' Nut

Crunch

Nestle
Bar One

Break
Picnic

Amul
KitKat
Foreign brands

5 Star

TASTE & PREFERENCE SIZE USAGE. WHAT SIZE OF A CHOCOLATE GO


YOU NORMALLY BUY.

74
70

60

50

40

30

20

10

0
1 5 /2 5 g m s 3 5 /4 0 g m s 80 gms S u p e r s a v e r - 1 0 25 0 0 g m s
gms

75
PRICE RELATED

SUITABLE PRICE FOR A 40gms.CHOCOLATEPRICE


PERCEPTION.
Below Rs. 10/-
14%

Between Rs. 14/-&


Rs. 20/-
29%

Between Rs. 10/-


& Rs. 14/-
52% Greater than Rs.
20/-
5%

THE PRICE OF MOST PREFERRED BRAND IS

High Ex pe nsive
19%

Chea p
5%

Re asona bly OK
76%

76
PRICE SENSITIVITY (ELASTICITY). IF PRICE OF YOUR
FAVORITE BRAND IS REDUCED, YOU WILL BUY MORE OF IT

NO YES
48% 52%

PRICE SENSITIVITY. IF THE FAVORITE BRAND IS FEW RS.


EXPENSIVE WOULD YOU TO GO FOR IT

YES
NO

77
ADVERTISING/PROMOTION RELATED

ADVERTISEMENT RECALL TEST – (UNAIDED)

80

70

60

50

40

30

20

10

0
Perk KitKat CDM Picnic Amul 5 Star

MOST LIKE ADS – (UNAIDED)

250

200

150

100

50

0
Perk KitKat CDM Picnic Amul 5 Star

78
WHETHER, SALES PROMOTION WOULD AFFECT YOUR
PURCHASE DECISION

YES
NO 43%
57%

BRAND LOYALTY IF A PARTICULAR BRAND IS NOT


AVAILABLE, YOU WILL:
IDEA RETAILER
ANOTHER DROP THE ANOTHER
GO TO

29%

19% Series1
BRAND

52%

79
IF YOU WANT TO BUY A WAFER CHOCOLATE, SAY KITKAT
AND IF IT IS NOT AVAILABLE, YOU WOULD SETTLE FOR A
BAR/MOULDED CHOCOLATE SAY 5 STAR OR CDM

NO
33%

YES
67%

CHOCOLATE BRANDS IN INDIA

80
ARE YOU HAPPY WITH THE KIND OF CHOCOLATE BRAND
AVAILABLE

NO
24%

YES
76%

81
PLACE RELATED----OUTLET PREFERENCE

600

500

400

300

200

100

0
P an shop Sweet Shops Gift shops Stationary Ice-cream F ast F ood M ilk booths R estaurants Exclusive R oad-side
shops parlours joints chocolate Kiosks
parlours

82
DEMOGRAPHIC PROFILE OF THE RESPONDENTS

AGE

Between 25 yrs & Betw een 35 yrs &


35 yrs 45 yrs
19% 19%

Between 2 yrs &


Betw een 18 yrs & 17 yrs
25 yrs 29%
33%

SEX

FEMALE

MALE

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MARITAL STATUS

MARRIED
33%
UNMARRIE
D
67%

OCCUPATION

OC C U PATION

OTHERS P ROFESS I
BUS INESS ONAL

S TUDENT

84
MONTHLY INCOME

Less than Rs.


5000/-
10% Between Rs. 5000/-
& Rs. 8000/-
14%

More than 12000/- Between Rs. 8000/-


52% & Rs. 12000/-
24%

85
SWOT ANALYSIS

The SWOT Analysis shows the relationship between critical variables of the
company. The SWOT matrix has a wider scope. The TWOS matrix is a conceptual
framework for a systematic analysis that facilitates the external threats and
opportunities with the internal weaknesses and strengths of the organization.

It has been common to suggest that companies identify its strengths and
weaknesses as well as opportunities and threats in the external environment. But what
is often overlooked is that combining these factors may require distinct strategies
choices. To systematize these choices, the TWOS matrix has been proposed. ‘T’ stands
for threats, ‘W’ stands for weaknesses, ‘O’ stands for opportunities and ‘S’ stands for
strengths. A marketing opportunity is aware of buyer need in which a company can
perform profitably. An environment that would lead, in the absence of defensive
marketing action, to deterioration in sales or profit. An ideal business is high in both
major opportunities and low in major threats.

 A speculative business is high in both major opportunities and threats.

 A mature business is low in opportunities and high in threats.

The TWOS matrix starts with the threats because in many situations a company
undertakes strategic planning as a result of a perceived crisis, problems or threats.

STRENGTHS

• High brand equity ……… consumer & dealer regarding Nestle' as company
delivery quality product.

• Company processes an extensive powerful distribution network.

• Company processes a dedicated & experienced sales staff.

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• Strong base in monitoring & controlling market.

• Distributions are highly dedicated towards performance & experience.

• Nestle India Limited (NIL) has a very strong parent company Nestle S.A.
support with 51% of equity share holding, which is the world's largest food
company.

• NIL's milk products sold under Milkmaid and Everyday brands are market
leaders. NIL has strong brand value in other products like Kit-Kat, Polo, Milo,
Maggi and Nescafe.

• NIL - State of the Art Technology and production systems ensuring high
technological/high value and optimum cost advantage to its product portfolio.

• Idealization of products to suit local tastes are critical for success and NIL is
converting its international products into Indian tastes products.

• Nestle has altogether 570000 outlets in more than 3000 towns. This is one of the
major strengths of the company.

• NIL most of the products are being produced according to Indian tastes, priced
within Rs. 25/- so that they are afforded by most of the people easily, advertised
and promoted according to regional culture and values and is available to most
of the consumers easily, at their nearby shops.

WEAKNESSES

• Company takes time in handling return claims on authorized whole seller.

• Warehousing norms are not followed which account for increased breakage.

• Restricted website minimizes marketing opportunities.

• Yearly initiatives are not so motivating.

• A high percentage of turnover and profits coming from a few products


categories like Coffee/Maggi.

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• NIL has been in India since last 39 years yet its growth has been very slow.
After the opening up of the economy, it has started growing but till then it did
not launched much products.

• The profits of NIL are also reduced because of increased Royalty payments that
NIL is making to its parent Nestle, Switzerland. The higher royalty payments
are made on account of new international brands launched by NIL in India.

• NIL factories are not to meet the demands of products with the supply.

• NIL's products range is so large that it is not able to give proper attention to all
the products, their marketing strategies are not properly worked out as many of
its products are dyeing. There was an embarrassing starter like Nestea an iced
tea, Nesfit - a glucose rich energy drink, Bonus, Milo is not given much of
promotion.

• Recently, there are difference between the Nestle S.A. parent company and
Nestle India Limited and because of this there are in the top management of the
NIL. Even its M.D Daravis E. Ardeshin has also resigned.

• Proof financial distribution as the NIL is unnecessarily giving its shareholders


high dividend, which could be avoided and be used for investment in plants for
their capacity expansion.

OPPORTUNITIES

• Great quality.

• Mass market is growing with established performances.

• Growing middle class is increasing opportunities.

• Great taste.

• Low differentiation in market brands.

• Credit facility given to dealers.

88
• India being the second most populated country in the world, NIL has lot of
opportunities of launching and selling new products and earning a record profit
from this country.

• As NIL has been in India since last 39 years, it has understood the culture,
values, tastes and psychology of the Indian consumer and so it can easily
develop Indianised products that will be acceptable to the Indian consumer.

• Food industry is the second highest growing industry in India and offers a lot of
opportunities for NIL in India.

THREATS

• Tough competition especially in premium segment.

• Characteristics of premium segment that it is never brand loyal.

• Tough competition (indirect) with barista, café coffee day.

• Mere availability of best sellers from the parent’s portfolio does not guarantee a
winner. Since most of these products would be fighting it out with their global
competitors and then Indian counterparts on the Indian turf.

• It faces fierce competition in almost all the segments it participates in like. It


duels with Top Ramen in the instant noodle market, Kit-Kat vs. Perk, Polo vs.
Minto, Milkmaid vs. Mithai Mate (launched by Amul at a staggering 60%
discount to the market leader), Milo vs. Horlicks, Complan and Bournvita.

• Recent turmoil and increased internal politics together with lack of apathy from
their parent company is going to affect the performance of the company in the
short to midterm.

• Because of the present Swadesi prime and changing public opinion towards
MNCs will affect NIL's future.

89
CONCLUSION

In line with the Company's objective to provide superior value in every product
category and market sector, efforts were focused to provide quality products to
customers at attractive price points. While the Company continued to generally
maintain price points across all the product categories, the pricing of some products
were also reduced to meet consumer expectations.

Nestlé’s domestic sales registered a 18.5% volume growth during the first 9
months of 2006. Exports registered a 31% yoy volume growth. In value terms,
domestic sales grew by 15.8% yoy to Rs12.1bn, while Exports grew by 26.4% yoy to
Rs2.4bn

Advertising plays an important role in creating brand awareness, brand recall


and brand recognition which are important in helping a customer make purchase
decision of that brand.

Nestle has been a partner in India's growth for the past nine decades and has
built a very special relationship of trust and commitment with the people of India. The
culture of innovation and renovation within the company and access to the Nestle
Group's proprietary technology/ Brands, expertise and the extensive centralized
Research and Development facilities helps the company to create value that can be
sustained over the long term. Nestle India manufactures products of truly international
quality under internationally famous Brand names such as Nescafe, Cerelac, Maggi,
Milky Bar, Milo, BarOne, Nestea and Kit Kat and in the recent years the company has
also introduced products of daily consumption and use such as Nestle Milk, Nestle
Dahi, Nestle Butter, Nestle Fruit 'n milk ready to drink beverage and Nestle Pure Life
bottled drinking water.

90
FINDINGS & RECOMMENDATIONS

FINDINGS

• In the age group of 16-20 and 21-30, the average monthly spend is not influenced
by the place of residence/ social class but rather on, where a person studies/works
i.e. by the social] circle of his friends and colleagues.
• The consumers by and large are satisfied with the present choices available in
chocolates i.e. there are no complaints of consumers as regards to existing varieties
of chocolates.
• However there are many new wants and demands of consumers in terms of new
flavors and ingredients of chocolates which the present brands of chocolates have
not introduced into the Indian markets.
• There is a substantially low margin of difference in terms of people who are
sensitive to price of chocolates and hence it cannot be proved conclusively that
introducing a chocolate at a lesser price than the prevailing price will lead to
capturing of market share.
• Consumers attach more value to the brand of the chocolates as well as the
packaging i.e. the quality of the chocolates.
79% of chocolate sales happen through kirana shops i.e. mom and pop shops which
says that chocolate is a commodity which has to be available to the consumer when
and where he wants it. The sales of chocolates largely depend on its availability to
the consumer at his convenience.

The chocolate confectionery market elicits conscious and unconscious feelings of


passion, loyalty and enthusiasm. Almost 80% of chocolate purchases are made on
impulse. Buyers generally decide quickly which confectionery product to buy with
almost half of purchase decisions made within 10 seconds of arriving at the
confectionery fixture in the store. Brands play an important role in the chocolate
confectionery industry. A brand is a name, mark, or feature, which distinguishes one

91
product from another. A good brand effectively guarantees that it will deliver all of
the qualities that the consumer associates with it.

For many people, chocolate is Nestle, and no other brand will do. This consumer
loyalty is critical because of the value of the chocolate confectionery market and
because, in all markets, a small number of consumers account for a large proportion
of sales. Loyal customers are the most valuable customers to have because they will
buy your product over and over again. Research data shows that the Nestle brand
equity is highly differentiated from other brands with consumers. Brand equity is the
value consumer loyalty brings to a brand, and reflects the likelihood that a consumer
will repeat purchase.

This is a major source of competitive advantage. The Nestle umbrella brand has
endured in a highly competitive market, and has established the link, in the mind of
the consumer, that Nestle equals chocolate. The Nestle brand is associated with best
tasting chocolate. Marketing managers at Nestle are working to ensure this
association is continually developed through their 'Choose Nestle' marketing
strategy. Key concepts of quality, taste and emotion underpin the Nestle brand.
These core values help to differentiate Nestle from other brands and ensure its
competitive advantage.

The Nestle brand has proven itself to be a leader in a highly volatile and
competitive market because it has successfully established, nurtured and developed
its umbrella brand and growing portfolio of products. Perhaps very few product
categories in India have seen as much excitement generation, widening of appeal and
repositioning as chocolates. Nestle India's" has been successful in revamping its
brand portfolio and its repositioning efforts. It has reinvented and revamped its brand
portfolio, strengthened its distribution network and relied heavily on promotions and
advertising - while launching and relaunching brands.

Nestlé’s strategy to attract consumers is somewhat unique in a sense, instead of


focusing on the product; it seeks to tap into emotions normally associated with

92
chocolates. They have also adapted their strategies to the unique demands of the
Indian retail sector. The strategy has clearly proved successful, as they have been
able to build and maintain a leadership position in the market with many loyal
customers.
Nestle introduced a new global marketing strategy called 'Choose Nestle'. This
strategy came about as a result of extensive research into consumer behaviors and
perception. It is a campaign that perfectly illustrates how a brand can evolve and how
different messages can be communicated without losing the core strength and brand
values that are already established

New product development has played a key role in developing markets as


brands strive to offer something to a consumer that is truly different The Nestle
product range addresses the needs of each and every consumer, from childhood to
maturity, from impulse purchase to family treats. For example an analysis of the 'gift'
sector highlights the importance of developing innovative products to address
specific markets. Nestle designs products to coincide with Diwali, rakshabandhan, ,
Mother's and Father's Day.

The chocolate confectionery market is full of brands that need to fight for our
attention. The role of advertising is to keep a brand in the mind of the consumer. We
are constantly presented with countless brand images and messages on a daily basis.
During the lifetime of a brand, companies will develop marketing strategies that
communicate brand identity and core values to gain our attention. In order to keep its
product competitive and contemporary, these messages need to change over time.
Nestle provides one of the most successful examples of how an advertising
message can be modified from one campaign to the next to attribute new values to a
brand giving consumers more reasons to buy Nestles. Nestle employs all types of
advertising from the internet to posters, from TV, radio and cinema to print media.
This same creative message is then communicated through point of sale,
merchandising, package design and public relations. Besides advertising and sales
promotion, brand perception by consumers gets affected by several other factors like
packaging, distribution efficiency, after-sale service (where applicable), speed of

93
response to customer complaints. Shopping experience and delivery of the value
proposition are also among the contributing factors. Nestle India has also worked &
is still working on these factors to successfully position its brand as the topmost
brand of chocolate. Nestle India expects strong growth in India in future. The
company plans to increase the franchise of its existing brands and continue to
explore new product opportunities including adjacent market opportunities. Nestle
India is also looking for more opportunities in the SAARC region.

RECOMMENDATION
• Although product line is very good & has good width & depth, but NIL should
try to make stronger brand equity in Dairy products, Amul is still leader.

• It should work more on concept of CRM (Making new customers & retaining
old ones.

• Cash discounts must be given.

• More competitive pricing to be done in the premium segment.

• Increase their sales force to make more frequent visits to the sales person.

• Should also look for rural markets.

• Quick handling of problems of stockiest & dealers.

• Online ordering facility & electronic payment through website can save a lot of
time.

• Due to sluggishness in a FMCG market, most of the companies are under


pressure to maintain volume & market share. NIL should draw out an action plan to
improve sales through new product launches.

• Company should concentrate on all round cost saving & productivity gain, to
neutralize the adverse impact of increased excise of confectionary.

The market strategy of the firm is a complete and unbeatable plan or an instrument
designed especially for attaining the marketing objective of company. The formulation
of the marketing strategy consists of two steps:-

94
1. Segmentation & target market selection.

2. Assembling the marketing mix.

BIBLIOGRAPHY

95
Books
 Kotler Philip (2004); ‘Marketing Management’; Pearson Education Pvt. Ltd.

 Ramaswamy V.S. and Namakumari S. (2002); ‘Marketing Management


Planning Implementation and Control’; McMillan India Pvt. Ltd.

 Al Ries (1996), “FOCUS”, Harper Collins Publishers Ltd.

 David A. Aaker (1991), “Managing Brand Equity”, the Free Press.

 David A. Aaker (1996), “Building Strong Brands”, the Free Press.

 Jean-Noel Kapferer (1994), “Strategic Brand management”, Macmillan


Publishing Co.

Internet Sites
• www.Nestle.Com
• www.Google.Com
• www.Yahoosearch.Com

Magazines
• Business Today
• Business World
• Business Standard

96
ANNEXURE

97
QUESTIONNAIRE

1. Do you consume chocolates?


YES / NO

2. If yes, what all brands do you normally buy?

3. How often do you buy chocolates?


(No.) chocolates per day / week / month (please tick)

4. What brands of chocolates are you aware of?

5. Please rank the following attributes in a chocolate on a scale of 1-7 according to


their importance to you? (1-most important, 7-least important)
□ Taste
□ Quality
□ Packaging
□ Price
□ Flavor
□ Add-ons (Wafers, nuts, etc.)
□ Brand Image

6. I often pick up a chocolate while I make other purchases.


YES / NO

7. What influenced you to buy the above stated brand(s)?


□ Advertising
□ Word of mouth
□ Attractive Packaging
□ Dealer
□ Shop Display

98
□ Family/Friend/Relatives
□ Any Other (Pls. Specify)
8. How do you rate the idea of chocolates being made available at the following
outlets.(Please rate on a scale of 1-5, where 1 is most preferred and 5 is least
preferred).
□ Pan Shops
□ Sweet Shops
□ Gift Shops
□ Stationary Shops
□ Ice-cream Parlors
□ Fast Food Joints
□ Milk Booths
□ Restaurants
□ Exclusive Chocolate Parlors
□ Road-side Kiosks

9. If a particular brand is not available with the retailer, you will -


□ Drop the idea of buying a chocolate
□ Go to another retail outlet
□Try another (competitor’s) brand

99

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