Marketing Management - Nestle

MAIN BODY

1. INDUSTRY BACKGROUND

Retail Industry is the most valuable in any market because it shares a large part of it. Retail is all about the selling the products and services to their consumers via multiple channels which are linked with manufacturer, producer and distributors to generate profits. It has proper management of supply chain to satisfy the demands of the public and mange the inventory of the company. In Europe, retail industry has reached on another level in generating revenues which supports the economy of the country (Deepak and Jeyakumar, 2019). Analysis of the market and growth of the retail industry is totally dependent on the consumers demands and their power of purchasing. Many companies are working in this industry, and they really perform well in terms of achieving profits and satisfying the needs of consumers (Haider and et.al., 2017). Nestle company is taken to do further study on the given topic.

2. COMPANY'S BACKGROUND

Nestle is a Swiss multinational company working in retail industry for 154 years. It was founded by Henri Nestle in 1886, its headquarters are situated in Vevey, Switzerland and Vaud. Nestle is operating a wide chain of food and drink products in approximately 189 countries such as China, United States, Europe, Malaysia, India, etc. with production units 447 in 86 countries and employs up to 352,000 (2019) people in their organisation. Currently key people of the company are Paul Bulcke (Chairman) and Ulf Mark Schneider (CEO). Nestle produces baby food, dairy products, coffee, breakfast cereals, ice cream, pet foods, confectionery, etc. products. Company has acquired position number 33 in the list of Forbes Global in 2016 as the largest company for public (Balaji and Roy, 2017). Fortune Global ranked Nestle on position 64 in 2017. So company has good reputation at global level which help them to grow continuously. Company generates revenue CHF91.43 billion in (2018), and only in Europe, it generates the revenue of 24.5 billion euros in 2019 and became leading firm in the country.

3. COMPETITIVE ANALYSIS OF THE COMPANY

To analyse the Nestle's competition in the European market, Porter's five forces model is used to do the deep assessment

Porter's Five Forces model

Competition in the industry: This is the first force which is denoted to the existing number of the competitors in the industry. As the large number of the competitors in the sector, it decreases the power of the company. Nestle if operating in the retail industry in Europe, many other companies are working in their industry which give them tough fight in terms to meet the desire of the consumers. It is dependent on the company that how they gain the competitive advantage in the industry (Peker, Kocyigit and Eren, 2017). For example company provide better quality products at low prices, gives offers, discounts to attract the consumers and many more strategies they follow.

Threat of Substitutes: it directly drives to focus on the substitutes. It is about that if consumers don't find the products reliable, or affordable they go for the substitute of the same product at low price and good quality. It is major force which affect the business in terms to possess threat to the company. Nestle provides baby food, milk products, confectionery, etc. consumers goods at good prices but many other substitutes are available in the market which lower their business.

Threat of new entrants: New entrant in the market possess harm to the existing companies in the industry. If it progresses in less time and earn profit then it may cut the profits of other companies. But there are may barriers to enter into the market and establish their position in it (Simões and Sebastiani, 2017). Nestle is the leading brand in the retail industry in the Europe, so they don't have much impact of the new entrant. Also, they prepare their marketing strategies in such a way which help them to secure their market position.

Bargaining Power of Suppliers: It is major force to be considered, suppliers has great power to affect the cost of the products. As they supply the raw materials to the company, so they are the mains for any industry. It is dependent on the number of the suppliers present in the market for the particular industry which they currently serve, if there is large number of suppliers then their cost of input is less. If, there are fewer suppliers in the industry then they have high power of bargaining (Burke, Van Stel and Thurik, 2016). Nestle does not affect the bargaining power of suppliers due to large number of availability of the suppliers in the market which help them to maintain their supply chain.

Bargaining Power of customers: it is quite high always, as the consumers find better quality products at low price then they will choose the other brand. So it always threats the companies because of their purchasing decision and bargaining power. Nestle's products are affordable and reliable for the public in every country. In Europe, people preferred to buy the food and drinks products of their brand. It imposes the high demand of their products in market, which help them to take the competitive advantage in the market.

Nestle is well-established brand in the market of the Europe, it shares large part of economy in the country. Its main competitors are Unilever and Danone in the country (Maulana, Munawar and Nurjanah, 2019). They are the giant companies which provide the food products and beverages to the consumers at affordable prices. This creates the barriers for the company to sell their products in the country but Nestle give tough competition them and take the competitive advantage in the market.

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Unique Selling Proposition

Unique selling proposition is denoted to the uniquely exhibited benefits by the products, services, company, brand which enable them to hold the position in the market by standing out from existing competitors. It is mainly a feature which focuses the product's relevance to the consumers (Fehér and Németh, 2017). It differentiates the company's product from other brands which make the audience to change their buying decision.

Unique selling proposition (USP) is also known as unique selling point which help the business to grow. USP is communicated to the public through branding, as they company advertise about their products and services, it makes an image in the mind of audience and help to attract them.

Method to create the USP

Describing the target audience: Businesses have to describe their target audience so that they can implant their products and service into their heads. Segmenting the audience according to the demographic, geographic, etc. basis. Nestle holds good position in the global market, in Europe company segmented public according to the age, income, and many other factors wise. So they launch their baby food products for infants, beverage and milk products for all age groups. This helps them to prepare their advertising slogans for their products like chocolates.

Explaining the problems which needs to be solved: company needs to define the barriers in the market to achieve the required growth in the business (Chen and Chi, 2017). Nestle always works according to their strategies to solve the problems they face.

Listing the benefits: Businesses main motive is to earn profit and sustaining future in the market. Nestle launch their products according to the demands of the public, and they also design their products uniquely, so it would be identified easily by the audience. It benefits them in maintaining their image in public and profit earnings.

Defining the promise: companies have to define their promises which they made with public and fulfil them. Nestle always make their promise and complete them in terms of the quality of their products and prices.

Combining them and rework: businesses need to consider these points and follow them to achieve the success. They have to work in the particular direction. Nestle work in the direction to maintain their quality of the products and fulfilling the requirements of the consumers.

4. MARKETING AUDIT

Marketing audit is about the review of the plan, objectives and strategies they prepare to achieve their target. Internal and external factors affect the business activities and help to make the review bout the company's present condition in the market.

SWOT Analysis

Strengths

• Research and development: Nestle has unmatched research and development criteria in which they innovate new products. As they do the market research, it helps them to know the requirement of the products and services. So, they do the work in the given direction and make the research on it. From the sourcing of the raw material to selling the products to the costumers. They do whole research about the scope. Also, they find the product's relevance at primary stage, so they can invest in their research and development.
• Strong Presence: Nestle possess strong presence in the global market by their marketing strategies. They do the branding of their products at wide level which help them to be identified easily by the audience (Choi and et.al., 2019). Company's geographic presence is also very good, as they keep an eye on the market fluctuation which help them to gain competitive advantage. Advertising is dependent on the products they prefer and their slogans are very innovative. Each and every product is advertised according to their category. Company invest a lot to maintain their market presence.
• Brand value: Company is operating in approximately 189 countries, it provides wide range of food and dairy products to the consumer. People in every country identify their products easily as they have strong market presence as well they have brand value. In Europe, Nestle has gained huge revenue in 2019 and it acquires the largest brand value (Varma and Ravi, 2017). People have faith on their brand, so their primary choice is their products for their infants and children. Young generation prefers to eat the breakfast cereals produced by the Nestle.
• Concern for environment: company is concerned for the environment, they do their research and development by following the environmental laws. They don't break the rules and laws associated with it (Ogedengbe, 2017). Also, they don't damage the nature for their sake.
• Ownership of famous brands: many brands like Nescafe, Kitkat, Purina, Nestea and other famous consumer brands are acquired by the Nestle. It earns huge profits because most of the people prefer these brands to eat and drink.

Weaknesses

• Criticized for consuming high water: Company has suffered form the allegation for high water usage which enhance the scarcity of water. Nestle's manufacturer units do the wastage of the water which is against the environmental law.
• Anti unionism: company does not bare union at workplace. So it creates damage to their image, and they have no proper communication with other brands on which they have ownership.
• Contaminated food: Nestle was alleged for providing contaminated food products which harms the health of children. It imposed great effects on the company's reputation. People denied using the products of this brand (Adelopo, 2016). It losses the company, inventory losses, lowered the market share.
• Unethical practices: Nestle company is accused of the child labour which is breakage of the law and justice. Company also found in other unethical practices. It loss the company in terms of breaking of law and order. In Europe 2016 company had faced bad phase due to economic crises.

Opportunities

• Transparency: Nestle can maintain the transparency in developing food products and material sourcing for the public. It helps the company to win the hearts of the consumers. Also, this will help to rectify their mistakes.
• Small start-ups in Silicon valley: company can invest in small start-ups of the food products in the Silicon valley, it helps them to achieve more profitability. People can easily access their products at affordable prices.
• Ready to drink products like tea and coffee: Nestle should focus on the ready to eat and ready to drink products. It already provides some ready to food products, so now the can think to serve the ready to drink beverages products which are less time-consuming for the people and healthy for their healths (Raghunandan, 2019). Most people like to drink tea and coffee, it will be proved good decision for the company.
• Clear and perfect labelling for products: company can clearly label the warning on the packaged food, so it may easer the use of products. Also, they have to give the correct information along with instruction to prepare the food item. So it will not create any kind of confusion in the customers mind.

Threats

• Bad quality of water: company use the poor quality of the water to manufacture of the food items, it may damage the health of the audience. Scarcity of water is major issue, so they have to control the usage of water in their manufacturing units. Otherwise, it may create threat for the business.
• Increment in competitors: In retail industry, majorly in food and beverages products many competitors and new entrants are arising daily. It threats the company's position and it distributes their profit share as well.
• Prices of raw materials is risen: suppliers bargaining power is getting high due to many competitors are available in the industry. They easily make new deals with other businesses and sell their raw materials. Also, the cost of labour is increased. It imposes great effects on the company's investment and funding. It less their profit amount and increases their expenses.

PESTEL Analysis

Nestle company operates in Europe and shares large market part in this country. So the external environment affect the business a lot in many ways. To assess the external factors which affects the company's position and competitive advantage (Petrova and Pokivailova, 2019). PESTLE analysis

Political factors

Europe supports the free trade in their country. It helps to improve the country's economic condition and give the opportunities to man businesses for their globalisation. Nestle company has the opportunity to do their business activities in the country, as they have to pay only small amount for the import and tax duties. They can sell their products in the stores at cheap prices. It helps them to earn high profitability. But due to some political decisions of the government like UK decides to leave the European Union, it imposes negative effect on the company in terms to import and export and disturb the business activities (Mehra, 2017). It slows the supply chain in the country.

Due to Brexit, tariffs and trade regulations changed, so it affects the many business sectors. Retail industry has to face numerous loss due to trade rules, it results in increased cost of the products for the costumers. So Nestle had to rise the cost of the products for the public to earn the profit margins.

Economic Factors

Economic Condition of European Union is quite stable. It has positive impact on the retail industry, people can afford the consumer goods easily. But there is large competition in the industry on the prices of the products. So Nestle company have to focus on lowering the cost of their products. It helps them to get the stability in the market. Otherwise, public can go for the substitutes or other brands. It minimises their market value if the company do not take the essential steps on time.

Socio Cultural factors

People in EU countries are every educated and active, they mostly refer the qualitative products for their usage. So the company have the advantage to be the first choice to the public. Buyers purchase the products of the Nestle company for the children and for themselves. But due to fining of the contaminated food, they denied accepting the products which losses the reputation of the company. They do protest against the food and beverages products and boycott it completely (Vergassola, 2019). But company spread awareness about their products that they are harm free and good quality, it brings them back in the market.

Technological factors

In EU countries approximately 90% public uses the mobile phones. So the company have to think about shifting on the digital platform. It helps to enhance their reach towards potential audiences. Online shopping is in trend, most of the public prefer to buy the online products. It saves the timing and money for the travel to public. This is the opportunity for the Nestle to provide their food and milk products by doing home delivery. Also, they have to propose the self checkout facilities in stores and online shopping.

Environmental factors

Environmental laws in the country are very strict, so the businesses have to follow these rules. They have to consider them on priority basis but Nestle has high water usage and waste it, so they were accused by the government and had to pay the penalties for it.

Legal factors

Laws and legislation of justice are very strict in EU countries, business have to follow the legal procedures to establish their company in the country. This process is very time-consuming for them. Nestle took all the permissions for their business but it was found that they are doing some unethical practices, so it would stop their business for sometime (Pereira, 2016). As they get the clearance from the government they restart their business again.

Potential Market Growth

According to the internal and external factors assessment of the Nestle company in Europe, it is cleared that they have high potential for the market growth. Also, company can plan to spread their business in the uncovered area of EU countries. This helps them to earn high profitability. Company can involve new products in their production range which will be beneficial for their stability in market.

5. 4 P MODEL

Nestle sells different brands for food product and beverages in which its major products are milk products, confectionery, ice cream, confectionery, liquid and powdered beverages, pet foods. Company can introduce new product like ready-to-drink coffee and tea products. Nestle market strategy and plans for the new products can be defined by 4P model in which product, price, promotion and place are discussed.

Product: Product of the company is the core thing which help them to meet their objective. Businesses do the market research before launching any new products in the market which meets the needs of the public and satisfy them (Enkhtaivan and Davaadorj, 2020). It is find that people need energy during the work time, or in leisure time they prefer tea coffee.

So, Nestle find the opportunity for the new products in beverages are ready to drink coffee and tea. These products are beneficial for the health because it contains the organic substances. So company can serve the customers this product by giving knowledge about unique selling proposition through promotion. This is necessary to give the proper information about the products, its benefits so the buyer choose it. It helps them to take competitive advantage among the competitors like Starbucks, McDonalds etc. companies. According to their current brand value in the market, public buy their products easily due to their trust on the brand name.

Price: Cost of the product is necessary to set after deciding the product. It is reliable and affordable to the end user. Otherwise, the products would not be sold out and the first priority of the consumers. If the cost of the products is low then it makes the higher sells in the market. Mostly people prefer to buy the qualitative products at cheap prices. So the companies have to decide the cost of the final product by analysing the production cost and margin profit amount.

Nestle costs their products very affordable and does not exceed to the buying capacity of the public. It helps to sustain their future in the market. Company plans to launch the new product which is ready to drink coffee and tea, they fix low prices of them. So people can easily access it (Falcão, Masiero and Campomar, 2017). Threat of price of coffee beans are rising, so firm have to maintain the cost of the final product. Threat of the competitors like Starbucks, they need to low the cost of the ready to drink coffee and tea.

Promotion: Promotion of the products and services offered by the businesses are very necessary because it creates awareness among people. They get to know about the products along with their brands. So, it helps the organisation to easily identified by the audience, and they purchase the items.

Nestle invest a lot in advertising and promoting their brand products because they majorly produce food products and beverages which are easily identified by the children and adults as well. Company need to promote their new products in unique way by applying new slogans and tag lines for the remembrance in the buyer. They can use their strong presence in the market to handle the threat of competitors.

Place: Location is very important where the firm plan to launch their products and services. Place is easy to access by the public where the products and services are availed by the company. It also decided by the business for the easy access of raw materials, manufacturing, production and distribution chain (Varma and Ravi, 2017). So businesses get basic facilities like water supply, electricity to run the units.

Nestle prefer the place to produce their new products and sell it in EU countries. As the trading rules and regulations, tariffs are reliable for the retail industry in the country. It helps them to manage their asset properly. Also, they can easily maintain the supply chain. As the prices of the coffee beans are rising they have to contact the suppliers and make agreements which would be reliable for both.

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CONCLUSION

According to the discussion on the marketing management concepts, theories in the report by taking the retail industry, it improves the knowledge about it. This creates deep understanding about the working of the businesses in different sectors. Nestle is the biggest company which provides food and milk products to the consumers to satisfy their requirements. Company is operating at international level, so it needs proper management of the business activities which are done by the firm to achieve their target. This report discussed the marketing audit for the company in which the internal and external factors are analysed which help the company to take potential growth in market. Also, it carries, how the new products are launched in the market and which factors affect them like its competitors, prices, products etc. by properly assessing the strengths and opportunities available to them. Market research is proved to be very helpful in terms to launch the new products, company identify the demands of the public and then plan their new item. It helps the firm to take the competitive advantage in the market.  You can get the answer: Marketing Management - Nestle

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