When gauging consumer expectations, Nestle has had its focus on learning which product categories will do well with a particular consumer. Their test samples and surveys all reveal that Nestle has a strong reputation amongst consumers on a global scale. Nestle brands are well known and they are recognized as having good products and new products which meet consumer expectations. Nestle has also demonstrated that it is generally interested in the buying behaviors of its consumers.
It has done this via marketing research projects which are tasked with the responsibility of surveying various populations demographically and determining what gets a certain person to buy a certain product in the grocery. The marketing teams provide statistically data back to the management level which indicates what the consumer has indicated and helps guide the direction of the companies innovation of products. Buyer power in Porter’s Five forces is important to the consumer because they might have brand loyalty which could be obtained.
Nestle will also need to be sensitive to the pricing of their products because they do not want to out price themselves in the market. By differentiating their product(s) Nestle will also be able to conduct their business with a stronger consumer
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They must also consider that their products must appeal to different cultures and ethnic groups therefore they must have a variety of products. For instance, some cultures do not eat pork so their pizza toppings should have the option of not having pork. Pasta opportunity Overall, because Pizza and Pasta are regarded as fast food people prefer them because it saves them time from having to cook themselves. In western and some Asian countries, the general consumer is going to restaurants for a quick meal of pizza or pasta.
Commercially produced pizzas in North America and specially manufactured “pizza” cheeses, sell easily because there is a variety of cheeses and toppings being used. The Nestle case identified that in 1987 Nestle outbid one of its international rival’s Draft, in the purchase of a company called Lamberts Pasta & Cheese which was a gourmet stores in New York City which sold freshly made pasta and imported cheeses. When local supermarkets were asked to stock Lambet’s products, the company was able to develop a special process which extended the shelf life of their products from the usual 2-3days to 40 days.
The technical yet innovative process basically relaxed the residual oxygen in the pasta package with nitrogen. The 38 day extension of shelf life introduced a good distribution system which did not affect product quality. While fresh pasta was available in gourmet stores and restaurants, it was not commonly sold in grocery stores. Dry pasta sold regularly like mac and cheese or various spaghettis. Via the emergence of this new pasta product line, Nestle would need to identify a brand name for its product and increase awareness of its market potential.
This would also allow Nestle to accept that the pasta opportunity would be felt in all areas of the United States and potentially on the global scale as well. This made the Contadina brand an ideal candidate. The Contadina name itself reflected as an image of authentic Italian cookie, and was associated with old fashioned traditional foods rather than convenience products. Therefore, Nestle must use its balance sheet values and market value to increase its overall value in the industry (http://www. enterprise-ireland.com/NR/exeres/C182CD20-86DE-429C-8D95-AB2F2C31ECF3. htm).
The Process Here are the seven product development processes generated by Nestle. 1. Idea generation. Creation and brainstorming of new idea by the researcher 2. Concept screening. Practically testing of the idea by the researchers for marketing results 3. Product development. Start product processing on a trail bases and test check in the target market. 4. Quantification of volume. Financial aspect of the newly developed item with potential profits and sales volumes 5. Test market
Where should be offer and what is the target market, target customer and age group etc. 6. Commercial evaluation To be offer for all general public or only for specific demographic group of population 7. Introductory tracking Delivering into the market for a specific time period so that check out the market potential over the new product (www. nestle. com) Launching the pizza Nestle noticed an 11% increase in first-half sales for such pizza and pasta items. Nestle said that the increase in reported sales was mainly by above target organic growth of 6.4%, resulting from a historically hath real internal growth of 4. 8%. There was a strong growth in the Americas and in Asia which showed that the whole fast food industry and pizza industry was growing.
Decision Tree Decision tree is one of the most important tools in financial management shows different alternative investment or brand capability based on customer choice. The following decision tree was taken from the Excel sheet. The most recommended figure as calculated in spread sheet (Excel) by a decision tree above are 3.16 million units for Pasta that is calculated by the adjusted Trail Rate that 80% of the sample population would buy the brand with the repeat rate of 44% gives most appropriate figure of Pasta units. Recommendations and Alternatives NRFC needs to do further testing before launching their new product line into the market. When they finally launch they will need to start with the Pizza Kit & Topping selection as compared to the Pizza Only selection which would open up a new customer base for them. By starting with a wider selection of products they can appeal to a wider range of individuals.
They do need to launch as soon as possible in order to build the refrigerated good category as well as to get the market share with first mover advantage as it did in the Contadina pasta. Financial research has indicated that consumers are willing to pay between $6 to 7 dollars which is lower than other prices because the average retail price is $8. (http://www. investorglossary. com/market-share. htm) Furthermore, as the selection of meats being used in the toppings is limited to pork and vegetables it would be advised for Nestle to have a greater selection of toppings, such as beef, which would be more widely accepted.
Many issues do need to be considered for Nestle to compete in the global market place such as cost and financing of processing and froze facility and equipments, availability and cost of packaging materials etc. They will need to focus on identifying new food items for development to increase their marketshare on a global scale. Their specific products will need to be accessed against market potential for increasing their sales as well. Closing summary Contadina is positioned in the market, because of its achievements and quality products, so they must take advantage of this opportunity.
If Kraft introduces its product then Contadina should take the first-mover advantage based on its positioning and reputation within the pizza/pasta/sauces consumers. Works Cited Trout, Jack (2007). Product Positioning. Retrieved November 28, 2008 from Website http://www. quickmba. com/marketing/ries-trout/positioning/ Nestle. Nestle At a Glance. Retrieved November 29, 2008 from Website http://www. nestleusa. com/PubAbout/NestleAtGlance. aspx Wikipedia. Marketing Research. Retrieved November 26, 2008 from Website http://en. wikipedia. org/wiki/Marketing_research
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