Monday, 16 April 2012

Sample of assignment

Table of Contents

Introduction 2

Company Background 2

Objective 3

Vision 3

Mission 3

Internal and External Micro Environment 4

Marketing Environment of Nestle 4

Internal Environment 4

Micro Environment 4

Macro Environment 7

Key success Factors 8

SWOT Analysis 9

Strengths 9

Weakness 9

Opportunities 10

Threats 10

Strategic Trust 11

Marketing Mix (7 Ps) for Nestle Malaysia 14

Action Plan 16

Income Statement 17

References 18



Introduction

In this research work the company chosen by me is Nestle Malaysia. I have tried to cover the brief history of the company, vision, mission and objectives of the company. This brief history and other sub heading under company background is compulsory to be understood and researched well as they form the basis for marketing plan of the company. We have also tried to cover the internal and external micro and macro environments for the company and country for its future growth and further marketing planning strategy. At the end we have proceeded to the 7 Ps of the marketing for Nestle.

Company Background

Today, Nestle is one of the leading Food and Nutrition Company in the world. Nestle has headquarters in Vevey, Switzerland. The business of nestle is supported by its strong network in more than 86 countries with more than 500 factories. Along with that the business also gets the benefit of its international R&D network. The Nestle factories are operating in the different countries of:

1. Asia

2. America
3. Africa

4. Europe

5. Oceania

As the company is in the sector of food and nutrition, it remains sensitive to

Being a company dedicated to food from the beginning, Nestle remains sensitive to culinary and eating habits, and responds to specific nutritional problems, whilst also setting and matching new trends such as growing out-of-home consumption and caring about the well being of its consumers.

Objective

Nestle aim is to become global leader in Food and Nutrition Company in the world and sustain that position. This objective of the company signifies that they need to work hard to stay ahead of Cadbury which is recently being acquired by Kraft food. Kraft is world leader in today's chocolate business and food and nutrition business.

Vision

"Nestlé Norden's aim is to meet the various needs of the consumer every day by marketing and selling food of a consistently high quality."

To achieve this vision Nestle has two steps to follow, first is High quality and collaboration, which is integral part of any food business to flourish and second is Focus on e-business and websites. Nestle has started investing heavy in development of e business and its promotion so as to capture clients in e business sphere also.

Mission

"Nestle is dedicated to providing the best foods to people throughout their day, throughout their lives, throughout the world. With our unique experience of anticipating consumers' needs and creating solutions, Nestle contributes to your well-being and enhances your quality of life."

The mission statement of Nestle is well articulated and reflects the long term objective for doing the business. It has mentioned in the mission statement that the company will provide consistently the best food product with the best quality throughout the life of their customers, which will ultimately enhance the quality of the life of its customers. The mission statement put the emphasis on the presence of the company in nearly every country. It promises in its mission statement that the company will understand the need of its customers and provide the best products to fulfill the needs. The mission also shows the high quality which is maintained in the wide range of products of Nestle. The company reassures that they provide the best range of food products to remain the first preference of its consumers.

Internal and External Micro Environment

Marketing Environment of Nestle

Internal Environment

Nestle has a rich working culture which motivates its employees to serve best to its customers with the help of the variety present in their product range.

Nestle has included the benefits of the employees in the goal statement of the organization as the management of the company strongly believe that the productivity, quality and the dependability will reflect on the product only if the employees will take care of all these factors.

Different departments of the company work to contribute in the growth of the organization and these departments not only keep the customer's needs and demand in mind but also keep the same type of attention for the internal customers of Nestle.

The company believes if the internal market of the company is fully satisfied than only the internal market will be able to serve to its customers and able to understand their needs and able to manufacture the products which can fulfill these needs.

Nestle has a strong top management team which runs on strong values and principles of the company. The values of the company give strong focus to integrity, loyalty and team work. The efficient top management of the company is able to run finance, operation, marketing, logistics, sales, and research and development departments with great success which ultimately leads to the fulfillment of the goal of the organization.

Micro Environment

The micro environment of Nestle includes three divisions:

a) Suppliers

Suppliers provide the raw material resources, unfinished goods and labors to the company in order to produce goods and services. The effectiveness of suppliers determines the efficiency of the company in terms of producing the goods. In addition to that the quality of the finished product has a strong with the suppliers of the firm especially in case of food products. As the presence of the company is in more than hundred companies, it is a challenge for the company to maintain its standard all over the world and provide the consistency to its customers in the taste and quality of the product.

Further we can divide the supplier of Nestle into two parts: Labor suppliers and material suppliers. Labor suppliers deal with the quantity of labor is required at the optimum level in order to prevent the loss of labor force and prevent the company from the shortage of labor which again can lead building of inventory as a cost for the company. The skills of labor is again maintained by the labor suppliers, wherein the labors of different skills are managed in such a way that the operation of the firm can run smoothly. Labor strikes and labor relations are other factors which we cannot ignore in the current scenario as the efficiency of the business depends largely on the factors like attrition and employee satisfaction.

Material supplies handle all the material required by the firm in order to manufacture the finished product for sale. Nestle is in the food and quality markets and the quality of such item plays an major role in its success in the market.

Nestle has maintained a high quality efficiency in handling the quality and quantity of the two different supplies i.e. labor supplies and material supplies and hence the company has been able to run its business smoothly for more than 100 years in spite of the different business trends in the world market.

b) Marketing Intermediaries

The market intermediaries of the company help to advertize, sell and distribute its product to the end customers. The physical distribution network of the company decides the medium by which the finished product is delivered to the end customer on time and with safety. This department also ensures the proper storage of the firm that prevents the product from getting any king of damage.

The marketing service department of the firm helps in the promotion of the product and acts as a communication channel between the company and customers. It not only communicates the features of the product to its customers but also get the feedback with the help of survey, which helps the research and development department to develop a product according to the need of the customers.

The other intermediaries of the company like banks help to provide the funds to the companies and play an important role in the continuity of the business. Insurance companies insure the property and the goods of the company against the risk involved in various operations, buying and selling of the product.

Nestle has the differential advantage of working in a smooth coordination with all its marketing intermediaries which helps in providing the best and pure food products to its valuable customers in the different parts of the world.

c) Customers

The immediate customers of Nestle are retail and grocery stores which provide the products of the company to the end customers at a reasonable price and a reasonable profit. The end customers of Nestle are the consumers who consume its wide range of product. The company has a bright brand image in its big pool of end customers.

d) Competitors

Although Nestle is leader in packaged food industry of Malaysia but the other competitors who are giving tough competition to Nestle are

• Petra Foods Limited

• Chocoladefabriken Lindt & Spruengli AG

• Yeo Hiap Seng Limited

• Maeil Dairy Industry Co., Ltd

Nestle has a clear advantage over the above mentioned companies is its presence in Malaysia for over a century now. Nestle has been able to setup a good and trusted distribution channel and a huge retail network. The trust worthiness gained by Nestle among the Malaysian people is build in decades on hard work and quality products and varied range of prices, thus even after facing stiff competition with the above mentioned companies in chocolates, dairy products and other packaged food products the company is able to maintain the bottom lines of its profit and loss statements attractive for its investors and good image in public.

e) Marketing

The basic marketing strategy of the Nestle was to develop brands for each their product instead of focusing on making brand value for the entire company, thus never allowing cannibalization of products and gaining multiple brand value for the entire company. The vision of the company could be summarized in following statements

• Be the leading multinational company in food, nutrition and wellness.

• Produce and sell world-class products of the highest consistent quality, reliability and convenience based on business excellence principles throughout our operations.

• Maximise the use of good quality local raw materials

• Be an exemplary employer with a progressive human resource and social policy; with a management style that is based on "Management Commitment and People Involvement"

• Be a responsible corporate citizen, fulfilling all obligations to Government, shareholders, customers, communities and consumers.

• Protect the environment by being committed to environmentally sound business practices, and taking into account the need to preserve natural resources and save energy.

• Guarantee that all products manufactured, imported and distributed by Nestlé Malaysia are certified HALAL by authorised Islamic certification bodies.

• Deliver shareholder value through the achievement of sustainable and profitable long-term growth.

Adhering to the above vision statements the company has been able to maintain the marketing and branding unique and ahead of the competitors.

Macro Environment

Macro environment include following environment of the country

Political Environment: government of Malaysia has never imposed any political pressure in fact they have always supported foreign investment and foreign businesses to grow in Malaysia. As the company is into food and nutrition business they have to just adhere to the laws of food and nutrition policies of government and constantly provide good quality which is the vision and mission of the company thus Nestle never faces any problems on political front.

Cultural Environment: Malaysian culture is no doubt of having light food at constant intervals and young crowd of Malaysia likes to have good nutritional food thus Nestle has great scope there.

Economical Environment: the disposable income of country and the high living standard of Malaysia always give better bigger business opportunities for Nestle.

Technological Environment: Malaysia is technologically rich country both in terms of availability of technology and also the technological work force the highly skilled and educated manpower is abundant in Malaysia.

In case of Nestle and the product offered by the company these factors do not create much impact in general scenario. However as we have seen the major events like World War had created a positive impact on the sale of confectionary products of the company. The culture has some impact in this company as whether the country has most people as vegetarian or non vegetarian the consumption of milk products is always there. However the countries where the people are more dependent on milk products are profitable market for Nestle.

Key Success Factors

• Consumer Insight: To sustain success the company must have insight of the customers changing needs, you have to be dynamic and innovate and Nestle has been able to do this for last couple of decades.

• Continuous Improvement Programs: Continuous improvement includes innovation in launching new products but equally important is improvement in quality to be better than competitors, improvement in distribution channel which will help Nestle to be at the top.

• Regionalization: the regionalization means the regionalization of products and raw resources procurement which means that the company will run like independent entity in each divided region with its own targets and resources.

• Development of People: Every company's responsibility is the development of its employees as that brings good will factor among the employees and which results into lower attrition and higher productivity.

• Social Responsibility: this is about creating good will among the people where you operate, about the society which helps and allows you to grow and use its resources and at last the protection and responsibility regarding environment.

SWOT Analysis

Strengths

The company has a big pool of loyal customers due to its long history in the food and nutrition market

Big brand name maintain a high standard in its product consistently for more than 100 years of its business

Its product are economical, natural and nutritious, hence captures customers of all the segments

Strong network all over the world enable the company to provide its product to its customers throughout the year.

Early mover advantage in the food and nutrition sector

Consistently numbered as number one largest bottled water company in the world

Advance setup facilities which provide the quality in the food products and the purity in the bottled water in a consistent manner.

Weakness

Even though the company is in existence for more than 100 years, it is not able to market its product to the extent of its near competitors, which reflects its weaker communication to its customers.

The LC-1 division of the Nestle was not a success and shorter product life cycle was termed as the reason behind it.

The company has increased the range of products, however it is lagging behind in innovation as compared to other competitors.

The Growth of the company in the organic food sales division was flat in the year 2008, even though the industry has shown a jump of 8.9 per cent.

Opportunities

There has been an increase in the preference of the people towards dairy products. In many of the countries people are becoming vegetarian from non-vegetarian. This has opened up a new market for Nestle.

Nestle has the opportunity to enter into other smaller niche markets in the food and yogurt market.

Nestle can increase the product line in the yogurt market till the time it is their main source of income.

Threats

Many companies are diversifying and trying to gain the advantage of increasing yogurt market which can eat up the market share of Nestle.

The decrease of cattle in many countries can impact the profit margin and the revenue for the company.

Intense competition in the yogurt and food market in almost all the country

New entrants and smaller companies and producing the similar product that of Nestle which is again eating up the market shares of the company.

Changing customer trend which is the lesser spending on FMCG products is a building threat for the company.

STRATEGIC THRUST CHART

The 3 basic strategies adopted by the company is as mentioned below

1) Innovation

Nestle has been capable to launching new products in market in time to time in all its categories of products in Malaysia. The product list category wise of Nestle is as below

Milk Beverages: Prepared Foods: Cereals: Chilled Dairy:

Growing Up Milk Instant coffee powder Noodles Children Cereals Cultured Drinks

Full Cream / Filled Milk Health drink mixes Sauces Adult Cereals Ice Cream

Adult Milk Meal Solutions Family Cereals Confectionery

Hot Cereals Chocolates

Healthcare Nutrition

Performance Nutrition

Water

.

Any new innovations in products will have impact on following Ps or marketing

Product: Definitely product will change or add up in line. New manufacturing setup may be required for launching the new product or even changes will be required in change in product.

Price: New product or changes in product may change price or even it could remain constant will dependent on the market demand. Say if the new bigger size of a particular product is launched the cost me be lower compared to smaller size packets because of economies of scale.

Promotion: The change in any product or any innovation must be promoted and brought in front of the customers, thus promotion strategies will definitely change.

2) Differentiation

The quality of products on its nutritional value, convenience of availability, world class standards, the certification like Halal from Islamic bodies have always created differential advantage for Nestle products over the other competitors and helped to get ahead in market.

Nestle also know for the different areas that they compete, so the new healthy prepared food will improve the image as versatile organization.

Product: If company goes for improvement or creating differentiation the product may or may not change. It will depend upon the differentiation created by the company in the particular product.

Price: The change in prices may or may not happen, it will depend upon cost of product and additional cost occurred because of the differential advantage created.

Promotion: Differential advantage will be real advantage only when communicated with the customers and thus must be changes in the promotional strategies.

Place: The distribution network change or product availability could also be a differential advantage thus strategy of placing could also change.

3) Branding

The real differentiation created by the Nestle was in right branding at right time for its products, and branding for each and every product not for the company entire. Thus this strategy has helped Nestlé's brands to acquire independent image and thus not affecting the other products of same company. Two clear examples could be Milo and KitKat which itself are multimillion dollar brands and Milo's creation are a nutritional health drink was made at the time when Malaysian food industry was in crisis and was facing problems in nutritional value of the food items.

Price: premium or non premium pricing is also a kind of branding thus the pricing may or may not change in branding strategy.

Promotion: promotion will be a vital part of any branding strategy and will create brand image in public and will attract more customers.

Marketing Mix (7 Ps) for Nestle Malaysia

Product: Nestle has one of the biggest and finest product range in food and nutrition in Malaysia. The prepared food market has been rising in Malaysia which was correctly and elegantly captured by the Nestle. So I recommend for nestle to continue its dominance in the prepared food market and produce new products in prepared foods area which can be assumed as healthy food such as chicken-salad, tuna-salad and other food with salad

Price: Price range offered by the Nestle on its products has a huge variety from being very low to very high. The packaging of lower to higher priced products helps Nestle to capture all sectors of customers with any age and any buying preferences in bulk of a small price. The market is very intense competitive in pricing and Nestle is never behind in it.so we recommend to use current nestle pricing strategy.

Place: as the Nestle is in Malaysia for more than 100 years they have a vast distributed network of distributors, wholesalers, retailers and suppliers. The loyalty and association with the company of the entire channel player is so strong that Nestle never face any problem in distribution network in any part of Malaysia. As for our new products we need to focus on the healthy perception, so the expire date should be within 5 days so it can be assumed as fresh food and it should be kept in suitable environment.

Promotion: Nestlé has used a variety of promotional strategies for its long range of products. In chocolate section Nestle has offered promotions strategies under which free bars will be offered in the multi bar family pack. The company has also had tie up with Burger King in recent past in order to win exciting prices such as meal coupons to its customers. As for the healthy prepared food Nestle promotion team will work with health and fitness centers like fitness first and true fitness to encourage and recommend their customers to eat nestle healthy prepared food.

Nestle should also setup a small stand in the big malls and offer customers a taste of the new products.

People: The employees benefit programs and environmental strategies adopted by Nestle differentiates them from the other competitors and thus gives them a unique advantage of holding their employees and lower attrition rates. Experienced employees are always added advantage for the company.

Process: According to Nestlé's CEO, Paul Bulcke, the major strength of the company is its long presence (FLEXNEWS 2008). Nestle Malaysia has an existence that dates back to 1912. It has had a first mover advantage on most of the product lines and hence it cannot at this point sacrifice the chance of being the leader in the market. And as the healthy consciousness and awareness increased in the recent years people prefer to eat healthy food.

Physical Evidence: Nestle has adopted some of the newly and eye catching strategies as done by the Pepsi and Coke to invite people to their factories and check the quality and hygiene of the products produced by the company. Nestle also adopted this strategy and was able to capture people and thus increase their markets by many fold. Also Nestle started getting medical teams associations to get them accredited and better their images in their customers.

Action plan

Marketing mix Strategies Time frame

Product Launching the Prepared healthy food 10th March 2011

Price The price of the burger will be set before the launch 17 February 2011

Place Placing new refrigerator to the supermarkets and mall centers 20th march 2011 to 30 April 2012

People Recruitment 20 new workers in the production and packaging section,50 works for promoting 2nd February 2011

Launching in house training & salary increment 4th February 2011

Process Company need to buy packaging system 10th march 2011

Physical evidence invite people to their factories and check the quality and hygiene of the products 14th July 2011

Promotion Sales promotion 10th February 2011

Advertising on TV3 12th February to 10th April 2011

Advertising on RTM TV1 15 May 2011 to July 2011

Advertising on The Star 20th August to December 2011

Advertising on the Strait Times 15th February 2012 to 30th March 2012

Advertising on RapidKL buses and train contract will be signed. 1st April 2012 to 30th April 2013

Working with fitness first to add the Veg burger in the diet program 10th June 2012

Introducing endorsement from David the Menara axis fitness first manager, and testimonials from the gym members. 30th September 2012

Income statement

Year 2011 2012 2013

Note RM'000 RM'000 RM'000

Revenue 4,479,649 4,585,708 4,759,809

Cost of sales (3,695,848) (3,743,934) (3,818,342)

Gross profit 783,801 841,774 941,467

Distribution costs (223,099) (209,308) (201,904)

Administration and marketing expenses (294,467) (332,883) (342,973)

Other operating expenses (46,911) (24,329) (30,786)

Operating profit 219,324 275,254 365,804

The revenue of the company will continue to increase in the next three years from RM 3,479,649 in 2011 to RM 4,759,809 in 2013. The gross profit also increases from 783,801 in 2011 to 941,467 in 2013. The company's expenses are projected to rise in the next three years due to administrative and other expenses like advertising and marketing, while the operating profit increases from RM 219,324 in 2011 to RM 365,804 in 2013.  

References

1. Company background, vision, mission and objectives of company from http://www.nestle-nordic.com/corporate/no/nestle+_nordic/vision/

2. Nestle media relation in Malaysia, http://www.nestle.com.my/Nestle+Insights/Media+Relation/Latest+News/news+in+Malaysia/NESTL%C3%89+Malaysia+Streamlines+Product+Portfolio.htm

3. Nestle Investor relation http://www.nestle.com.my/Nestle+Insights/Investor+Relation/

4. Nestle Malaysia enhances customer service and sales performance with Motorola and Newspage mobility solution, http://www.motorola.com/web/Business/_Documents/static%20files/Nestle%20Malaysia%20case%20study-low_New.pdf

5. Award bagged by Nestle Malaysia, http://www.nestle.com.my/nestle%20insights/corporate%20information/awards.htm

6. Muhammad Salihin Jaafar, Anisha bt Ramli, Nur Adilah bt Md Zain and Nurul Zamieza by Ahmad Marketing Report - Nestle Milo, http://www.scribd.com/doc/26214574/Marketing-Report-Nestle-Milo

7. Marketing mix strategies for Nestle, http://mba.virtual-pranav.com/assignments/Exam%20Answer.html

8. Alfyan Adnan, L. K. (2008). "Nestlé Professional Established to Cater to Company's Role in Meeting New Consumer Trends." WestCoast Communications Sdn Bhd.

9. Berhad, N. M. (2007). "Creating Shared Value Report."

10. Brabeck, P. (2004). "Breaking the Rules, Stretching the Rules."


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