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    MARKETING PRINCIPLES

    UNIT 4: (4.1.1)

    Explain the various elements of the marketing process

    As defined by Phillip Kotler, Marketing is a process in which companies create

    value for the customers and build strong relationship with customers and in return capture

    value from them. In old sense marketing is all about making a sale, but today its about

    satisfying consumer needs. Today every successful firm has one thing in common i.e.

    they have highly customer focused and are highly committed to marketing. These firms

    work passionately to understand the needs of consumers and satisfy consumers by

    building strong customer relationship management.

    Nestle is a multinational FMCG (fast moving consumer goods) company. Nestle

    was founded by Henri Nestle in 1867 and headquartered in Switzerland. Nestle was

    founded in Pakistan in 1979 in collaboration with Milk Pak Limited in Lahore and

    known as Nestle Milkpak, Ltd. Its Pakistan head office is located in Upper mall, Lahore.

    Nestle has basic principles which every single employee has to adopt like honesty,

    fairness, and a strong human orientation.

    Nestle business processes have evolved over a period of time and also adaptive

    to changing environment. Nestle offers high quality products. Their departments work

    in greater coordination in order to develop a product according to consumer

    preferences, price, convenience and variety.

    Nestle has decentralized structure, they promote adaptability as much as

    possible to adjust in different states, people with different mentalities and

    circumstances. Nestle has extensive product portfolio in Pakistan. Dairy products of

    Nestle Pakistan are divided into two categories.

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    AMBIANT DAIRY

    Nestle MilkpakNestle Milkpak CreamNestle Nido

    Nestle EverydayNestle Nesvita Plus

    CHILLED DAIRYNestle YogurtNestle Riwayati mazaNestle Acti-plus YogurtNestle Milkpak Yogurt

    Nestle Zeera-RaitaNestle Podina RaitaMilo

    Nestle marketing division has sole purpose to build brands. In fact they say that

    brand building is Nestle way. In Nestle marketing managers put untiring efforts to

    build their brands and gain market share in respective category. Nestls marketing

    team provides services in three basic parts i.e.

    Brand management

    Communication

    Consumer insights

    Brands are managed in a way that consumer preferences are met along with special

    services that help consumer wherever he has problem regarding a product. Marketing

    mix of Nestle comprises of 4Ps including Product, price, placement and promotions.

    Product:

    Products are developed after a thorough marketing research conducted on local

    areas where targeted consumers live. Their behavior is assed regarding a product and

    its development. A product has different benefits associated with it. A product is

    anything that satisfies a consumer need, or a solution to a problem. Products in Nestle

    are developed keeping in mind the consumer requirements regarding a product.

    Marketers work hard to create a product to satisfy the target consumers.

    Price:

    Every product has a market price; a price on which it will be sold to end

    consumer. Widely used method for price is cost plus pricing. Marketers add a certain

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    percentage of profit into cost. But brands like Nestle use value based pricing. Value

    based pricing is the one in which price is set as per value offered by a product. At

    Nestle they create Value based solutions/products for consumers and charge

    accordingly. Every product should be priced rightly because if price is too low, firmsprofitability will suffer. And if price is too high, target segment will not buy it.

    Placement:

    Placing a product in market so that it reaches to end consumer is what placement

    is. There are two ways through which a firm places its product or deliver its product to

    end consumer.

    Some companies deal with consumers directly as in business to business deals.

    Some companies have selling process through retailer.

    Mostly companies in Pakistan follow this route of selling that involves distributors,

    whole sellers and retailers.

    Nestle is using second and third channels for distribution of products. Selling

    through retailer channel is used when they have to distribute to big retail stores likemetro and Hyper-star in Lahore. Nestle use third channel for more than 80% of

    distribution across Pakistan. As Pakistan is under developed country, people prefer to

    buy from small retail shops instead of big malls or lager retailers. Nestle is widely

    available in all rural and urban areas of Pakistan. Nestle has stronger distribution

    Producer Consumer

    Producer Retailers Consumer

    Producer Distributor Wholeseller Retailer End-consumer

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    Strengths:

    Nestle produces high quality products. For Nestle Quality is everything.

    Nestle has earned trust and loyalty from customers worldwide.

    Nestle is leader in providing healthy, tasty and nutritious food.

    Nestle is adaptive to new technology and changes in environment and has ability

    to continuously bring new products in market.

    Nestle Pakistan has greater support from its parent company. Nestle has high

    levels of resources that makes operations to run smooth.

    Nestle has excellent management and staff

    Nestle has strong Research & Development team.

    Nestle product portfolio has diverse range of products ranging from dairy

    products to ready to cook food and confectioneries.

    Nestle has a strong distribution network across Pakistan covering rural and

    urban areas.

    Weakness:

    Nestle does not aim at all product equally. Some brands get more attention than

    others.

    Distributing products across the country is costly, but somehow nestle is

    managing it.

    Supplying the products to end consumer through a long indirect method brings

    less profit as compared to delivering product through a single retailer.

    Following long indirect method gives fewer profit margins to retailers as well

    compared to other competing products. Hence, retailer prefers less to pushNestle products to consumers.

    Nestle has complex supply chain

    Sales division was flat in 2008 and following year, whereas overall industry grew

    8.9%. This is due to launch of Olpers milk and juices.

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    Nestle is competing in many markets at a same time with family branding

    strategies. In some categories it is leader. But some categories are ignored.

    Opportunities:

    Nestle can enter in ice-cream market as internationally nestle has launch ice

    cream brands successfully.

    Nestle can plan on incentive programs for retailers in order to get higher sales.

    In annual budget 2014, government has announced regulations for free markets.

    Nestle can work on it.

    Nestle can open its own retail stores in order to remove whole sellers and

    retailers.

    Nestle can work on expansion strategies. It can expand in existing categories or

    can enter a new category.

    Every year disposable income of households is increasing. It brings more users

    towards buying brands especially in FMCG category.

    Threats:

    High wages brings high inflation too. High inflation leaves no option but to

    compromise on existing usage of brands. If inflation is increasing day by day,

    consumers will not buy brands with value based pricing. They would like to

    purchase cheaper brands.

    Oil prices also increasing worldwide leading to increase operational costs and

    resulting in high prices of products for end consumers.

    Competitors that entered in market after Nestle, has used extra ordinary

    marketing tactics and gained popularity among consumers. Now nestle need to

    put more efforts to promote its products and attract consumers towards it.

    There are some local competitors that are competing with nestle solely on basis

    of cost. They are major threats to Nestle. In Pakistan, consumers are price-

    sensitive.

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    Nestles scope of marketing totally revolves around one concept: brand building is

    Nestle way. Management believes in building strong brands. They work on each

    minute detail of segmentation, targeting and positioning. This will be discussed in later

    part of this assignment.

    UNIT 4: (4.1.2)

    Evaluate the benefits and costs of a marketing orientation for a selected

    organization

    Marketing orientation is philosophy of doing business solely focusing on two

    things; identification of stated or hidden needs of target consumers and meeting them

    effectively. Nestle is a market oriented business. Its business philosophy stresses on

    fulfilling consumer needs by tailoring products according to their requirements and

    expectations.

    Lets look at Nestls mission statement in order to understand that how Nestle is

    incorporating concept of marketing-orientation. Nestle being the one of the worlds best

    nutrition, health and wellness organization follows a mission, saying: Good food,Good life. Nestls mission is to offer its consumers the best food in a variety of flavors

    with best taste from morning to night.

    Everything pursued by an organization in its main functions has some benefits

    and costs attached to it. Benefits of implementing market-orientation are mentioned

    below:

    Benefits of implementing market-orientation

    Improved objective performance i.e.o higher profits,o market share, ando optimum utilization of resources

    Leads to continuous development of products and business processes.

    Helps to build strong customer relationship and customer life-time value. If

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    consumers are satisfied with Nestls products they will buy products repeatedly. Itleads to increase in customer loyalty.

    It helps in firm to have greater responsiveness to consumer wants and insights.

    It also helps in gaining competitive advantage by analyzing consumer insights and

    competitors offerings.

    Sometimes organizations are unable to get desired results from marketing orientation.

    There are some factors that inhibit the firms ability to effectively utilize market

    orientation.

    Factors inhibit Implementation of Market-Orientation (MO)

    Marketing orientation requires high levels of investment and costs. In order to know

    the consumer insights and feedback regarding an existing product or a new product,firms need to have market intelligence. Conducting marketing research and

    gathering consumer opinions is resource consuming.

    Firms often get low return on investment due to certain factors like higher

    competition. Ineffective technology may also contribute to inhibit growth of an

    organization.

    Group cohesiveness: when groups/ teams work with greater synergy and

    cooperation, it means their efforts are cohesive. Less cohesiveness leads to lower

    profitability and inability to execute market orientation.

    If departments are not inter-functionally coordinated, MO (market-Orientation

    cannot be applied).

    If marketing personnel do not possess necessary skill, and experience to perform, it

    will inhibit development of everything within marketing domain of an organization.

    Employee behavior within an organization is an important concern. Employees need

    to be responsive and open to changes. They should maintain good relationship

    among themselves and with their bosses. Managers should encourage them to work

    with creativity and bring innovative approaches capture consumer value.

    Over more than thirty years of operations in Pakistan, Nestle is successful in gaining trust

    and loyalty of consumers. Nestle gives priority to its consumer insight. Nestle not only gives

    product to satisfy need but it gives value based solution. Customers are given high level of

    importance, for that nestle has efficient systems to gain consumer satisfaction. Customer

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    relationship management in Nestle entails attracting new customers, and retains them for a life

    time by delivering them superior services. Customer relationship management (CRM) is a

    growing concern for big organizations like nestle.

    Nestle Pakistan has various platforms where consumers can interact with

    company and get help in case of any query or problem. Nestle website provides its

    consumers with opportunity to contact the organization or record their complaints

    about a products and can give complement about their performance.

    This snapshot is taken form Nestle Pakistan website. It presents easy and different

    convenient modes. Nestle consumer services are known as Nestle NAATA. Naata

    (relationship) word is taken from Urdu dictionary, an excellent example of adapting to

    regional situations. Website provides

    o a 24/7 toll free helpline number (0800-62282)

    o email:[email protected]

    o

    links to face book and twitter

    Nestle make use of up to date technology and social media platforms to give ease to

    consumers if they want to contact with organization. Such consumer complaints,

    mailto:[email protected]:[email protected]:[email protected]:[email protected]
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    Intermediaries:

    Intermediaries are the whole sellers, distributors or retailers that come in between

    company and end consumer. Managing intermediaries can help in effective distribution

    of products. If problems arise in intermediariesnetwork, then it would lead to lower

    sales and switch behavior from consumer side. Therefore company must ensure reliable

    network of intermediaries.

    Competitors:

    Competitors have products that are either alternate or substitute of your product.

    Nestle Diary products have plenty of competitors in market. With milkshakes, Nestle

    has first mover advantage. Therefore there are products that come under category of

    direct competitorslike

    i. Nurpur flavored milk having four flavors:

    o chocolate,o strawberry,o ice-cream,o mango ando Banana.

    ii.

    Goodmilk Oolala(flavored milk)o Chocolate

    o Mango

    o Strawberry

    o Banana

    Indirect competitorscould be

    o Milo and Nestles cold coffee (Latte) and

    o

    omung lassi from Olpers.

    o Cafes serving diary related products.

    o KFC Krushers

    o Mcdonald milkshakes

    o Hardees

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    o Coffee tea company (CTC), cold coffee

    o Star-bucks cold-coffee

    o Gloria jeans

    o

    Jammin java Caf

    Macro Factors involve economic, political, technological and legal environment of

    organization.

    Economic environment:

    Economic factors involve income, current prices, debts, savings and purchasing powerof a targeted consumer. In Pakistan economic situation is critical since 2007. Inflation is

    increasing and affects purchasing power directly. Marketers have to pay attention

    towards economic factors. What is disposable income of targeted consumers, what price

    he affords, and how to increase demand knowing the economic situation.

    Political and legal environment:

    Pakistan has instable political environment. Political instability affects businessoperations badly. Nestle has to look upon the political system of Pakistan and make

    strategies in order to prevent losses.

    Technological environment:

    Advancement in technology has changed the way of doing business now a day.

    Companies having higher technologies and upgraded systems are more successful than

    those who do not use technology. Nestle systems and processes are having advancetechnology and monitor these trends

    o The speeding pace of change,

    o Bringing creativeness and innovation

    o Ever changing R & D budgets

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    Unit 4: (4.2.2)

    Propose segmentation criteria for products in different markets

    Dividing markets into different groups of people on basis of some characteristics

    is called market segmentation. Markets are divided into groups because its not

    possible for any firm to fulfill needs of every type of consumers with a single product.

    Segmentation helps marketers to understand consumer needs closely and make

    products accordingly. There are different levels of market segmentation. Mass

    marketing is mass production, mass distribution and mass promotion of a single

    product. Coca colaused mass marketing when it had only one kind of product.

    Niche marketing is targeting a small group of consumers having distinctive

    needs. Like Nestle has cold-coffee, only for those who like to have cold coffee. Colgate

    launched herbal for a specific group of consumers. Individual marketing is the most

    customized form of marketing, also called one to one marketing. United Bank Pakistan

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    launched its customized Galleria credit cards where individuals can get their own

    picture on their personal credit cards.

    Nestle Milkshakes also have special category of consumers which can be selected

    on basis of geographic, demographic, psychographic and Behavioral aspects of

    individuals.

    Geographic segmentation:based on dividing consumer markets with respect to

    geography like states, regions or countries, cities (rural or urban areas) etc. For Nestle

    milkshake we will be targeting consumers of Lahore, Karachi and Islamabad. If

    milkshake concept is appreciated by these markets, then it will be launched nationwide.

    Demographic segmentation:is done on basis of gender, age and life-cycle stage,

    income, occupation, family structure and size etc. some products are gender specific

    like clear men and clear women. Some products are age specific like Colgate junior for

    kids (2-12 years) and other variants for elders and Ponds Age miracle (females 30+

    ages). Income group (social classes: lower, lower middle, upper middle, elite class). For

    Nestle Milkshake we suggest that

    o

    Gender (does not matter, males as well as females both can use it).o Age group (any- younger and older people, every one like to have milkshakes)

    o Income group (we will target upper middle and elite class (high income group)

    Psychographic segmentation is based on consumer psychological behavior.

    Consumers who have high resources and high innovative behavior are the ones who

    will try these milkshakes first. Moreover, change in lifestyle systems and increased

    awareness people are motivated to have healthy life style. This motivation also

    influences them to buy milkshakes.

    Behavioral segmentation: consumer buying decision is often changed in

    changing situations. Markets can be divided into light, medium or heavy users. In

    summers people like to have more chilled drinks like shakes. In summers usage rate

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    would be enhanced but in winters, it may fall. This behavior would help to manage

    supply and demand within an organization.

    Unit 4: (4.2.3)

    Targeting strategy for selected product/service

    Every firm has limited resources. Organizations cannot tie with all consumers in

    outsized and diverse markets. Hence, big consumer markets are divided into segments

    with consumers having similar and distinctive needs. After dividing markets into

    segments, firms analyze that which segment needs they can fulfill. If marketers want to

    develop an effective marketing plan, they should have understanding of factors that

    make each segment unique and different from others. Decisions for segmentation are

    critical for organization because marketers have to study the behavior of consumers

    closely.

    Segmentation has many benefitsfor marketers and organization. Complete marketing

    plan and feasibility depends on this factor. South Asian Markets (include Pakistan) are

    considered to be heterogeneous and diverse from European markets because of

    o Population sizeo Occupationso Income criteriao Social-cultural factorso Behavioral factorso Availability of advertising mediao Accessibility

    For rural and urban areas need separate strategy for marketing the product and making

    product to accessible to every single user. For effective targeting strategy, firm must

    follow the following steps.

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    There are various segments that firms can target depending on the expertise and

    resources a firm has. Firms can target a single segment like Mahindra tractors,

    primarily targeting agricultural market. Selective specialization is used when a firm

    decides to target on selective segments, each different from other and measureable in

    terms of size. Procter & Gambles Crest targets different segment of consumer with

    different products. Crest kids (kids). Crest toothpaste (cavity protection, Pro-health, 3D

    White, sensitivity); mouthwash; Oral B toothbrush; Crest white strips etc. each product

    and variant has distinct consumer set, but all are related to teeth health.

    Product Specialization is used by firms which deal in a single specialized

    product and in B2B markets like microscope only purchased commercial laboratories

    and educational institutional. Market specialization is used by firms which caters

    different consumers for same market. For example Nestle juices (apple, pineapple,

    mango chaunsa, pomegranate, guava, grapes etc.). There are firms which have full

    market coverage like Microsoft (software market). Only large firms can optimize this

    strategy to target a whole market with different products like Coca-cola has coke (diet

    coke, sprite, sprite 3G, and sprite lemon), minute maid pulpy (lemon, orange), kinley

    (drinking water).

    identify the martket segment opportunities

    decide on how many and which segmeant to target

    design an effective segmentation criteria.

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    Segment selected for targeting should be measureable with respect to size, segment

    characteristic and purchasing power. Segment should be sustainable i.e. it must be

    large enough to cater for a long time and profitable. Segment selection also depends on

    accessibility, that can we deliver products to all consumers efficiently. A segment

    should be differentiable as well as actionable (consumers can be attracted through

    different marketing plans and they should respond differently to different promotional

    strategies).

    As far as Nestle is concerned for Milkshakes it is focusing on Market specialization. This

    segment is measurable, accessible (easily through existing distribution channels), large

    enough to bring profits and differential.

    Geographically:Lahore, Karachi and Islamabad

    Demographically: gender (any), age (any, above 2-years but mostly covering youth),

    income (high income group), and social class (upper-middle and upper class)

    Psychographic segmentation: consumers who like to have a healthy lifestyle and are

    out-door oriented

    Behavioral Segmentation: behaviorally nestle juice targeted people who are

    enthusiastic, positive and like to have high quality and service products.

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    Unit 4: (4.2.4)

    Demonstrate how buyer behavior affects marketing activities in

    different buying situations

    Basis of effective targeting strategy is identifying the needs of consumers and

    understanding of consumer behavior, attitudes towards using a product. Marketers

    who know behavioral aspects of targeted consumers are successfully launch new

    products and build strong brands. Consumers respond to situations differently. Their

    buying decision may change with different promotions or from opinion of people. For

    understanding behavior of consumer towards using or buying a product can be affected

    by various factors. Some are explained below:

    Occasions: some product sales are enhanced with the special occasions. Like

    Cadbury promote its products with special occasions too like Valentines Day,

    weddings, Eid, Diwali etc. Nestle Milkshakes can be promoted by participation in

    Health related events in institutes, sports day, funfairs etc.

    Benefits:consumers can be classified on basis of benefits they seek in products.

    Benefits associated to milkshake could be health and wellness, nutrition andrefreshment.

    User-status:there could be different user status for consumers of a product. There

    are non-users, ex-users, potential users, first time users and existing users. For marketer

    it is important to know answer of following question:

    o Why non-users and ex-users are not using the product?

    o How potential consumers should attract in order to make then first time users and then

    regular users?

    o What improvements should be made in existing marketing plan to enhance repeat

    purchases and gain consumer loyalty?

    o What should the Advertisement or promotions objectives: inform, persuade or remind. If

    consumers lack knowledge, how advertisement message should be design to make them

    aware of the product and its benefit.

    o How to modify deeply held attitudes or behaviors related to buying a product?

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    Usage rate:user can be classified into three classes: light, medium and heavy user.

    Heavy users of a product exist in a very small percentage but this segment gives higher

    sales and profits. Sometimes promotional message are designed in a way that persuade

    consumers to buy/use more of a product. For example Sunsilk bottle has usageinformation i.e. For daily use in addition to information about benefits and features

    and components. Similarly Nestle milk shakes will be promoted using this strategy.

    Advertisement will contain message related to usage and situations. Sometimes

    discounts and sale promotions are given in order t enhance usage and sales. We often

    come by signs like get one buy one free, 5% discount, now in Rs. 20 instead 25,

    buy 6 and get one free etc. these are called price cues. If price cues are effectively

    used, it can bring tremendous growth is sales.

    Promotions on retail store play important role. Consumer might not have

    planned to buy the product, but sales promotions and certain tactics influence his/her

    behavior and they buy the product. Sometimes such buying behavior also called

    impulse buying.

    Consumers go through a five step process before buying any product. And people

    around in family or social circle influence this decision through their input and roles

    (initiator, influencer, decider, buyer and user).

    i. Need recognitionneed or a problem arise

    ii. Information searchbuyer search for information to satisfy need

    iii. Evaluation of alternatives- information search brings alternative solutions for a

    need or problem and evaluate on criteria

    iv. Purchaseone most appropriate alternate is selected and purchased

    v. Post-purchase evaluation- consumer satisfaction or dissatisfaction comes after

    using a product. If product satisfies needs, repeat purchase will occur. Otherwise

    user will switch to other products.

    Nestle milkshake purchase decision is given in following figure.

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    Unit 4: (4.2.5)

    Propose new positioning for a selected product (Nestle Milkshakes).

    Positioning is defined as creating an image of product or service offered in mind of

    consumer against competitive products. Every company has to create a distinct image

    of its offering. Otherwise it would be difficult for consumer to differentiate products

    and evaluate them. Positioning is done on basis of four factors:

    o Product-what is the product which needs to be positioned?

    o Benefits- what is the value proposition (benefits attached to a product in form of

    value)

    o Target market- who are the targeted consumers and what are their belief and

    attitudes

    o Competitors- what are the competing brands and how they are positioning

    themselves.

    i am thirsty

    i want to have milkshake, flavored milkneed recognition

    share of mind (certain product or brands cme to mind first in orderof preference)

    which one is readily accessibleinformation search

    Nestle Milkshakes

    goodmilk oolala

    nurpur flavoed milk

    evaluation of alternatives

    i prefer to buy Nestle because of high quality and nutrition factor

    purchase

    i am satisfied and feeling refrehed/ it was not good as i expected.

    post-purcahse attiude

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    Positioning leads to enhanced brand image and create Competitive advantage.

    Competitive advantage (CA) is anything distinctive a firm has in comparison to its

    competitors. Competitive advantage can gained through various factors like

    a)

    Personnel differentiationb) Channel differentiation

    c) Image differentiation

    Personnel differentiation is having well trained and satisfied employees. For

    any firm, employees are valuable assets just like money. Companies which have high

    turnover rate are unsuccessful in long run. Nestle is lucky to have strong management

    and motivated employees.

    Channel differentiation can lead to reduction in operating costs. It is important

    to have good relationships with the intermediaries so that distribution runs smoothly

    and product is available to end consumer. Channel differentiation is source of

    competitive advantage for ZARA. Nestle also has strong channels of distribution but

    improvements are needed.

    Creating a strong image (image differentiation) is important now a day.

    Marketers are using celebrities for many brands. Advanced marketing suggest using

    celebrity image in building image of your product. Some products are known as having

    cool image. Pepsi represents youth with youngistan ads showing Ranbir Kapoor and

    Priyanka Chopra. Nike use footballers in promoting brands and continuously

    maintaining sports image.

    Sometimes brands are positioned keeping in mind the product life cycle (PLC)

    stage. Nestle milkshakes are on introductory stage and need stronger positioning

    backing up with strong promotional activities.

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    For Nestle milkshakes, for improved positioning first we need to consumers about the

    product and induce product trail in malls or big retail stores. Positioning suggested for

    milkshakes will base on four factors

    o Quality

    o Nutrition

    o Taste of real fruits

    o

    Variety

    Positioning statement for milkshakes will be have wonderful sips of Nestle milkshakes

    with great taste and variety and stay tuned to freshness and nutrition.

    Unit 4: (4.3.1)

    Nestle product development for gaining sustainable competitive

    advantage

    Market needs are changing gradually so in order to compete with the current

    situation and with the changing taste of customer development of product is needed. In

    development process following steps are involved

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    A proper research should be conducted to know about customer specifications

    Creating samples a and taste

    When you have done with your sample creation than feedback and observation

    is required

    Nestle preferred the media for catering update before 6-8 weeks of the launch. In

    order to maintain consumer satisfaction you need to evolve the portfolio of your

    project. Qualitative and quantitative research should be conducted with a view to

    company brand equity. Customer perception about the product is also another

    important factor, evolving needs of customer enables one to make innovation in their

    product. Nestle succeeded to retain the customer for long term by making gradual

    changes rather the market is despite changing.

    Competitive advantageis the advantage of company over its competitors to retain the

    customers by its sales. Competitive advantage includes those things that help any

    company to take an edge over its competitor like

    Nestle competitive advantage

    Due to their product development strategy Nestle get the leading competitive

    advantages which are as follows

    o Research and development phase allows company to lead the company in a

    way of innovation and gives maximum flexibility in product portfolio

    o Nestle provide significant economies of scale due to their large scope

    o Nestle is much concerned about their employees when they are their work

    place

    o Nestle made a promise with its customers to give them best and high

    standards

    o Nestle is consumer based company that really cares about its customers by

    providing the best quality food as their tagline represent GOOD FOOD,

    GOOD LIFE.

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    o Nestle have Strong Research and development as they are focusing on

    nutrition, health and wellness

    o Nestle is focusing on every segment and ensuring their availability of

    product in every area and this is all just because of their best managemento Nestle is using advance technology by opening laboratories in their

    industries studying food pathogens that are harmful for human health. They

    are using the technology in all operations of management that increases the

    efficiency of employees as well as increasing the sales ratio

    Sustainable Competitive advantage

    Every company is working for attaining the sustainable competitive advantageto retain the customer for long term. All this is done by understanding the customer

    perception and creating value based strategies. If you have created your value for

    customer than you should be able to get benefit over customer for a long term.

    Unit 4: (4.3.2)

    Nestle and its distribution networks

    Distribution means how product reaches from manufacturing unit to the end consumer.

    Distribution involves the following steps

    o From manufacturing unit product is sent to distributors

    o

    Distributors makes sure that the product is available in his areao Distributors and re-distributors provide the product to the whole sellers and

    retailers

    o At last retailers make sure that product is available to the end consumer

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    As we discussed above Nestle is consumer based company so they make sure that their

    product is available at every retail store worldwide. Nestle distribution network is

    equipped with advance transportation facility. Distribution table of Nestle taken from

    www.slideshare.netis as follows

    When the product is converted into finished good than it reaches to the

    distribution center and then distributed across the country.

    Incentives should also be given to the retailer because when the product reaches

    to the retailer the profit margin becomes minor and due to this retailers will sale

    their product at high price to keep their margin.

    http://www.slideshare.net/http://www.slideshare.net/http://www.slideshare.net/
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    Unit 4: (4.3.3)

    Pricing strategy: reflection of organizational goals and objectives

    Selecting a price for any product is important as Nestle has adopted non pricecompetition. Nestle keeps check and balance on distributors to retain single price of No

    profit Loss (NPL)

    Price is the amount of money and/or other items with utility needed to acquire a product and

    utility is an attribute with potential to satisfy the wants.

    A product price can have impact on customer perception. Some customers are

    interested in price while some are concerned with the quality and service of theproduct. The objectives of organization is relation to price are as follows

    o First pricing strategy is to achieve target and maximize profit

    o Second related with sales to stabilize the prices and increase the market share

    o And the last one is to have surety that their product must be available and price

    must be reasonable

    Price is one of the most influential factors while deciding the price of product and threesteps must be kept in mind which is as follow

    o Knowing about customers need

    o Knowing about your needs

    o Research on similar product

    When we talk about the customer need than we should be careful that what

    customer want rather he is conscious about price or quality all factors must be kept inprice while deciding the price. Because your strategy is different in different cases, that

    price will be taken in consideration which is beneficial for customer as well as for

    yourself in earning the revenue and profit. When we talk about our needs than you

    should consider what are you charging for your product. Accessing your need and your

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    Above the line (ATL) and below the line (BTL) technique can also be used for

    advertisement, Nestle is using both techniques let me explain something to you what it

    ATL and BTL. When a company is using the ATL technique then it means you are

    advertising on Mass medialike TV, Bill boards radios etc. But when we talk about BTLit means company is developing a direct relation with the customer it involves demos

    and sampling. While doing the promotion three steps must be kept in mind. First of all

    you have to consider whether customer is informed about the product or not? If

    informed than you have to convince the customer. And keep reminding the customer

    through different promotional strategies. Promotional campaigns are conducted like on

    festivals, references and concerts by giving them awareness and provide free samples

    about the project.

    Unit 4: (4.3.5)

    Analyzing the additional elements of marketing mix

    Marketing mix includes following element

    i. Product

    ii.

    Priceiii. Place

    iv. Promotion

    v. People

    vi. Packaging

    vii. Process

    viii. Physical environment

    As far as we talk about packaging Nestle have an influential effect on their customer

    about their packing material they are using. They attract the customers through theirpacking material, plastic and metal papers.

    Nestle uses the best packing material so that their product will remain fresh till they

    reach to the end user. Lets us discuss some points that must be taken in consideration

    while Packaging

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    Nestle is using can keep the food hygienic for long term. Before packaging the

    product is checked by team of scientists to check the hygenity than it gone

    through the packaging process.

    Nestle keeps one thing focus that while doing the packaging of the product oneshould clear that every age person can open the product easily.

    They can use special designing tools keep ensure that product should easily be

    used by the consumer. Design of packaging is the thing that attracts the customer

    towards itself.

    Processes

    Processes include all those activities involved to manufacture the product and reachesto end consumer. It may be a, Manufacturing process, distribution process, sales process

    and promotional activities. Efficient management is required to take the product from

    initial stage to end stage.

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    Unit4: (4.4.1)

    Marketing mixes for two different segments

    First of all the marketing mix for two different segments is explained in table below

    Existing product Proposed product

    Product: Right now they are providing

    milk and many other products

    Product : If Nestle launches ice cream

    than it should have a great impact on the

    current market situation

    Place: Products are available in almost

    every retail store

    Place : Nestle should ensure the

    availability of their product in every retail

    store

    Price: Nestle is offering reasonable price

    that is afforded by every class of the

    economy

    Price: Price of that ice cream will be 90 Rs/

    liter

    Promotion: Nestle is following Above the

    line (ATL) and below the line (BTL)

    promotional strategy

    Promotion: Nestle will follow Above the

    line (ATL) and below the line (BTL)

    promotional strategy.

    People: Their products are used by any

    age person( kids, teenagers, young and

    old)

    People: Their products are used by Kids

    and teenagers mostly

    Packaging: Their product is packed in

    plastic packs

    Packaging: Their product is packed in

    plastic boxes

    Physical environment: Outside the retail

    stores they are setting the corners withtheir logos

    Physical environment: Promotions

    outside the big retail stores having thecorner with their logo

    No product can be launched without having proper planning so there is a need

    of appropriate planning to launch any product in the market for this research must be

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    conducted. Nestle right now is manufacturing dairy products and the most abundant

    one is milk which is offered at a reasonable price and used by all classes of the economy

    and they are also setting corners with their logos outside the retail stores. Their

    products are not directly launched into the market but a proper procedure is followedFrom Manufacturer to Distributor, then to retailers from consumers.

    Proposal to launch a new product

    If Nestle launch a new product like ice cream and make it available at every retail

    store than they can capture the market easily as this product is not offered by anyone of

    their competitor. By setting the corners outside retail stores in order the people to know

    about their product. Attractive packaging material is used to attract the children andyoung people. And Promotion should be on the social media like face book as face book

    is the most abundantly used media by the young people. It will be easier for Nestle to

    launch an ice cream as it is already dealing with the dairy products.

    For planning you must be aware for following things

    How much budget you have?

    What is your target market As you have done with the positioning of product?

    Behavior of the customer in the existing market?

    Planning starts with the research phase and ends when you have done with the

    understanding the customer behavior and satisfaction. If successful Research and

    development is conducted than you are able to know about consumer attitude towards

    your product.

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    Unit 4: (4.4.2)

    Illustrate difference in marketing products and services to businesses

    rather than consumers.

    Consumer markets are different in nature and scope.

    Companies make products for consumers, sometimes these consumers are businesses

    itself, called Business to Business markets. B2B markets are different from B2C markets

    in different aspects.

    Business to Business Business to Consumer

    Buyers Companies/ businesses Single consumer

    Focus Understanding organizational

    needs and buying behavior

    Consumer segment insights

    are focused

    Distribution channel Direct dealing and distribution

    of products

    Demands lengthy channel of

    distribution for convenience

    Purchase Seek efficiency and expertise Rational and logical

    Content required Need detailed content about

    products

    Low involvement and less

    content required, usuallythey are influenced by

    buzzwords used in ads.

    Selling technique Personal selling Purchase through retailers

    Value through

    service

    Require some times value added

    services like salespersons in big

    retail stores are from

    manufacturer companies

    Not really required

    Profit margins Higher because of absence ofintermediaries Lower because of lengthychannel

    For Nestle to deal in B2B requireseffort to first gather the

    information about targeted businesses located in Lahore, Islamabad and Karachi. In

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    case of Lahore there are big retail stores where all big FMCG companies deal directly.

    We have AL-FATEH store, Jalal Sons, Hyperstar, Metro, Makro and various retailers

    covering the whole market. In metro, Nestle has already racks and shelves where its

    products are displayed to an eye level. Near cash counter , nestle refrigerators areplaced , so that consumer who are exhausted after buying grocery can grab a milkshake

    and re-boost the energy and get refresh.

    Maintaining good relationships with the key accounts is important for sales growth.

    B2B also offers an opportunity to manufacturing firm to promote their products, put

    standees and fliers on areas where consumer can see it. But here still consumers like to

    buy from the retailer who is closer and convenient. Therefore, for Nestle milkshake we

    have to follow the traditional route 2 and 3 as explained in 1.1.

    Unit 4: (4.4.3)

    Show how and why international marketing differs from domestic marketing

    International marketing is different from domestic marketing because of globalization,

    cultural differences, diverse religions and values, level of competition, marketing

    intelligence, international laws, political and legal systems etc.

    Globalization:

    Globalization means boundary less trade. The whole world is a global village now.

    Globalization is good for any business but it has challenges too. Like with globalization,

    now people have more options and alternates to choose form. Marketers job is tough

    now.

    Cultural differences:

    For MNCs (multinational companies), there are cultural barriers. South Asian market is

    different from other markets. Here people have diverse ethnic group, strong cast

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    systems and different cultural dimensions. For any domestic firm which want to

    operate internationally has to face many challenges related to culture.

    Level of competition:

    Domestically firms know about the strength and weaknesses of competitors and

    market products accordingly. Internationally, marketers face greater competition.

    Marketing intelligence:

    More market intelligence is needed. Consumers from different countries have different

    taste preference may be due to climate or any other factor. Marketer has to gain

    consumer insights and develop products accordingly.

    Political and legal system:

    For any domestic firm, its easy to operate under one political and legal system. When

    firms go in international markets, they must have to understand and follow the political

    and legal requirement to operate and make sure nothing go against that.

    International law:

    Domestic and international laws must be followed while trading internationally. Every

    country has trade laws and work ethics defined, consumer rights etc. any wrong step is

    harmful for firms image and can lead to disastrous results.

    Technology:

    Degree of technology may vary in international companies. In case of developed

    country, technology can be managed but if a firm is expanding its operations to

    developed company higher adaptability and technology requirements have to be met.

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    Media:

    For expanding international, marketers must have information about the media

    targeted consumers use. Whether they watch more tv, read magazines or social

    networking sites.

    Conclusion:

    Marketing is an important division within an organization. It is important to

    know the basic marketing mix (Product, price, placement, promotion) in order to

    understand the marketing process. SWOT analysis helps the managers to understandthe internal capabilities, strengths, areas of weakness and external opportunities and

    threats for organization. SWOT analysis of competitive firms also helps in making

    effective marketing plan.

    Market orientation is an important aspect of Nestls business philosophy. This

    section is helpful in understanding the importance of MO for any organization and also

    explains the factors that reverse MO effects. Marketers have to understand these factors

    and apply them in right way under right circumstances. If marketers lack ability and

    skills to understand this phenomenon, it would result in lower performance and lower

    productivity.

    Bibliography

    kotler, P. (2014).Marketing Management.pearson: Dorling Kindersley.

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