Nestle project Essay
Our project was aimed at studying the marketing mix of products marketed by Nestlé India there by understanding the concept of 4P’s better. It details how Nestle has marketed its product in India. Nestlé India has divided its product portfolio into four different segments, namely-
Milk Products and Nutrition,
Chocolates and Confectionery,
Maggi (noodles, soups and ketchups).
Separate marketing mixes have been developed for these four different segments. The pricing, promotion techniques used and place of marketing and of course the product of one segment are very different from products of another segment. Therefore, we also decided to divide our project coverage into four different sections to cover the segments separately. Besides this Apart from the secondary research from newspapers, journals and the inter-net, we have interacted with some officials concerned with these things, present at Nestlé India, Gurgaon. All this has helped us in our extensive study of the marketing mix of various Nestlé India products. Acknowledgements
We would like to put our thankfulness across to all those who have put in direct or indirect hard work towards the successful completion of this project. First & foremost, we would like to thank our teacher and mentor Prof. R. Kamble for his able direction
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Ryan Fernandes Brand Franchise Manager
Rohit DograManager, Milk And Nutrition
Rashmi GuptaManager, Maggi
Himanshu ManglikCommunications Manager
A special thanks to Sudip Bandyopadhyay (Creative Consultant), who is handling the advertising for Milk Products and Nutrition division of Nestle India, on behalf of Ogilvy & Mather. As a final point, we would like to thank, “Institute of Management Technology, Nagpur” for providing us the pedestal to do this project.
History of Nestlé
Nestlé S.A. is a multinational packaged food company founded and headquartered in Vevey, Switzerland, and listed on the SWX Swiss Exchange with a turnover of over 87 billion Swiss francs. It originated in a 1905 merger of the Anglo-Swiss Milk Company for milk products established in 1866 by the Page Brothers in Cham, Switzerland, and the Farine Lactée Henri Nestlé Company set up in 1866 by Henri Nestlé to provide an infant food product. The two world wars both affected growth: during the first, dried milk was widely used but the second war caused profits to drop by around 70%. However, sales of the instant coffee Nescafé were boosted by the US military. After the wars, growth was stimulated by acquisitions expanding its range and taking control of several well known brands, so they now include Maggi, Thomy and Nescafé that are known globally. It is the world’s largest food company, with Kraft Foods being second.
Nestlé India is a subsidiary of Nestlé S.A. Nestlé India manufactures products of truly international quality under internationally famous brand names such as Nescafé, Maggi, Rice Mania, Milkybar, Milo, Kit Kat, Munch, Bar-One, Milkmaid and Nestea.
Milk Products and Nutrition
Nestlé India has a wide portfolio for Milk Products and Nutrition. It includes-
Nestlé has a very clear Charter of ethics and responsible behaviour in selling infant nutrition products. Nestlé India follows this Charter and also complies with The Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992 that guides the sale of infant nutrition products in India. Nestlé India does not advertise its Infant Nutrition products. NESTLÉ CEREMEAL
It is for children over 2 years of age, to provide them with NUTRISHAKTI – a nutrient dense formula that has the right quality and quantity of key nutrients that meet at least 20% of your child’s daily nutrient needs in every serve. It is easy to prepare and takes only 3 minutes to cook. NESTLÉ CEREMEAL with ‘Nutrishakti’ benefits from the extensive Research and Development efforts and expertise of the Nestlé Group. NESTLÉ CEREMEAL Wheat Daliya contains the goodness of wheat with the added benefits of Vitamins and Minerals from ‘Nutrishakti’. NESTLÉ CEREMEAL Multi grain Daliya contains rice and ragi apart from wheat with the added benefits of Vitamins and Minerals from ‘Nutrishakti’. NESTLÉ CEREMEAL is available in select outlets in the markets in East and South India. NESTLÉ EVERYDAY DAIRY WHITENER
It is a creamy Dairy Whitener, which is specially made to add a rich, smooth taste to your tea. NESTLÉ EVERYDAY Dairy Whitener was launched in India in 1986 and this innovative product created a separate category of Dairy Whiteners in India NESTLE EVERYDAY PURE GHEE
It is 100% Shudh [pure] Ghee which is untouched by hand and hygienically packed. NESTLÉ CURDS
It is 100% fresh and natural, just like homemade. It is made from high quality pasteurised toned milk. The Cultures in NESTLÉ Curds are good for digestion and for a healthy, active life. NESTLÉ Curds is available in Chennai and Banglore.
It is Partly Skimmed Sweetened Condensed Milk. NESTLÉ MILKMAID is a versatile product and excellent as a dessert ingredient. Lip-smacking desserts can be whipped up in the shortest possible time. NESTLÉ MILKMAID is a globally recognized and popular brand of Nestlé. It has been available in India ever since the Company first started importing and selling its products over 90 years ago. NESTLÉ SET DAHI
It is 100% Fresh and Natural and is made from fresh, high quality pasteurised toned milk. It has all the goodness of natural Calcium and the Cultures used in Nestlé Set Dahi help improve digestion. NESTLÉ Set Dahi is available in all the metros. NESTLÉ FRUIT ‘N DAHI
It is a delicious innovation that combines the goodness of Dahi and the nutrition and taste of real fruits. NESTLÉ Fruit ‘N Dahi is available in all metros in Mango and Strawberry variants.
NESTLÉ JEERA RAITA
It is delicious and has all the goodness of Dahi and Jeera. It is made from double toned milk and has a low fat content. NESTLÉ Jeera Raita is also extremely versatile. You can use it as the base to prepare your own favorite Raita, simply by adding vegetables, fruits or spices of your choice.NESTLÉ Jeera Raita is available in Delhi. NESTLÉ MILK
Nestlé has over 135 years of dairy expertise and NESTLÉ Milk ensures high quality and safety. NESTLÉ Milk goes through Ultra Heat Treatment to provide bacteria-free milk to its consumers. The product also goes through stringent quality checks and can be consumed straight from the pack as no boiling is required. The sealed pack of NESTLÉ Milk has a shelf life of 120 days without refrigeration. However, once opened, it must be refrigerated. The packaging is tamper-proof. NESTLÉ Milk is available in all metros. NESTLÉ SLIM MILK
Nestlé has over 135 years of dairy expertise and NESTLÉ Slim Milk ensures high quality and safety. NESTLÉ Slim Milk has a fat content of less than 0.5%. NESTLÉ Slim Milk goes through Ultra Heat Treatment to provide bacteria-free milk to its consumers. The product also goes through stringent quality checks and can be consumed straight from the pack as no boiling is required. The sealed pack of NESTLÉ Slim Milk has a shelf life of 120 days without refrigeration. However, once opened, it must be refrigerated. The packaging is tamper-evident. NESTLÉ Slim Milk is available in all metros.
Analysis of the 4Ps for this Division
“The essence of all nestle milk products, particularly those targeted towards infants remain same, irrespective of all the cultural nuances. So, our strategy remains more or less consistent in India as compared to rest of the world”, remarks Rohit Dogra, Brand Manager, Milk and Nutrients, Nestle. Nestle is the world’s largest dairy, with an annual turnover of more than U.S. 8billion$. So they understand the dairy business better than anyone else. When they operate in India, the focus is to put to use their vast expertise and knowledge in the diversified domestic market. However, the task is not uphill because their products address all basic needs of human beings. “There is a lot of science that goes while we make our products”, explains Mr. Dogra. This is particularly because of the sensitivity of the matter involved in manufacturing and delivering perishable consumption products. Any margin of error could spell doom for the company’s fortunes. So there comes a lot of responsibility while dealing in such products. Another sensitive area of concern is that a major chunk of its products cater to infants and due to perceived risks involved (like unwarranted objections by certain segments of the public, risk of depreciation in quality due to storage problems or transportation problems, etc.), the challenge is enormous for the company. Nestle realizes the need to constantly add new products to its portfolios to cater to different market segments. This is in tune with a natural tendency to constantly innovate. Over a period of time, we have seen new products being added to its list.
While products like ceramel and milkmaid doing well, in recent times nestle has come up with products like Lassi, fruit n dahi, etc to cater unexplored segments of Indian market. The example of nestle slim milk is a classic, on how it was positioned and which set benchmarks for others to follow. The pack of Nestle Slim Milk is being positioned as drink for fitness and it is mentioned that it is 99.5 per cent fat free. Apart from conveying that calories are kept in check, the concluding message reinforces the packaged milk health proposition by saying: “So, don’t think twice before making the switch to a healthier alternative.” Breaking the myth of packaged milk (or for that matter milk on the whole) being only meant for being ‘strong’ or to put on weight, the agency specifically conveys the message of being slim and trim through milk. O&M creative consultant, Sudip Bandyopadhyay said, “The brief was to creative awareness about the brand. There seems to be a tendency of ignoring milk for putting on weight and also milk in tetra-packs or packets is being considered as an artificial one. There is also emergence of low-calorie sweeteners and other products. So the whole idea is to reinforce milk as an option for providing a refreshing nourishing boost.” Another interesting example is of variants like nestle Fruit n Milk The company worked on the ‘Tasty bhi healthy bhi’ proposition to gain acceptance among both kids and mothers.
A relatively new addition has been lassi, a classical case of adapting to the local Indian flavor. The company began the test marketing of sweet lassi in Delhi, Haryana and Punjab. “With changing lifestyles, there is a growing need for products that are convenient, tasty and of high quality. In order to cater to such emerging needs, Nestlé sweet lassi has been developed as a ready-to-drink product that provides refreshment, nutrition and wellness,” the Chairman and Managing Director, Mr Carlo M. Donati, said in a statement here. He said the product has been developed after extensive testing for consumer preferences and traditional styles of preparation. It is available in 200-ml packs for Rs 12. With big players like Amul and Mother Diary still ruling the roosts, “tetra pack milk is a good way to have a major slice of market share and go for penetration”, suggests Mr. Dogra. Lectogen is priced h liye
igher but it has more value additions, the product has been quite a hit with those who realize that steep prices can justify quality and good health. This reflects a pricing strategy in which company is charging higher prices in return for claiming superior value-additions. Efforts are underway to penetrate products like Milkmaid and Whitener but people’s stereotype perceptions about them are still major obstacles. In the `Milk Products and Nutrition’ category, the Company continues to focus on introducing products that leverage the Nestle Group’s Know-how and Research and Development competence. During 2003, the Company had launched the NESTLE DEVELOPMENTAL NUTRITION PLAN and CERELAC 123 wheat based weaning food, which is backed by continuous and ongoing research at the worldwide Research and Development facilities of the Nestle Group. This was a major breakthrough in infant feeding. During the third quarter of 2004, the Company has also launched NESTUM123, which is a rice based weaning food, to ensure the right eating experience at the right stage of development for the infant. NESTUM 123 also incorporates Nestle Group’s unique Z-line technology that makes the product easy for the infant to digest. Using its knowledge of infant nutrition and local needs, the Company introduced NESTUM Ragi in the Southern market and LACTOGEN 3 in select geographies, to provide proper nutrition at the appropriate stage. Also, since India has a high incidence of low birth weight infants’, who require specialized nutrition, the Company utilized its access to the technology from the Nestle Group to introduce PRE-LACTOGEN. To sum up, Nestlé’s Product Mix in milk and nutrients category, the company has been continuing to add new products to its portfolio, which are in tune with the local flavour, and is likely to do so. And with its value additions and proven expertise, it continues in its endeavour to become the market leader in other categories. “About five years back, India was predominantly a seller’s market but now there has been a marked difference in the consumers, psychologically and behaviourally. This awakening of Indian consumers brings great challenges to us”, Mr. Dogra observes. Price Mix
The high costs of raw materials and processing are a cause for concern. However, The Company feels that raw material cost inflation could soon be brought under control. The management is implementing programs to control key raw materials costs. The company recorded very low sales growth of 3.7 per cent last quarter as sales were by a non-recurring factor of insufficient availability of milk solids, which restricted production. Due to high prices of solid milk, the use of the milk was allocated to the most profitable business in its product. Also sales to canteen store departments (army sales) and ghee sales were stopped during the period, impacting sales growth. This shortage has now been resolved and is unlikely to recur in 2H, the company said. For the export market, there has been a decline in sales value as there is a movement from retail packs to bulk packs. Overall, in milks, curd and powders, the products are priced higher. But the top brass of the company justify high prices on account of “superior quality”.
In milk segment, nestle is relatively dearer than brands like Amul and Mother Diary but Mr. Dogra explains that the cooperatives generally operate on a no-profit margins so they can afford to lower the prices. He feels that high prices are more than compensated by greater value additions. He cites the example of Lactogen, which although expensive, is still a hit with rural market because of greater benefits attached. “Somehow, consumers have to make a trade-off between prices and quality.” Overall newcomers like Fruit Dahi and Slim Milk are fairly charged, consumers feel. Thus, Nestlé’s pricing strategy is little influenced by competitive moves but more by promising customers more value additions. Place Mix
The company has been very thoughtful about its geographic segmentation. There are many instances of how some products are marketed only in specific areas. NESTLÉ CEREMEAL is available in select outlets in the markets in East and South India because in other parts of the country, there are still stereotype conventions about the product. NESTLÉ Curds is available in Chennai and Bangalore because of relatively high-anticipated profitability in these regions. NESTLÉ Set Dahi, NESTLE MILK and SLIM MILK is available in all the metros and NESTLÉ Jeera Raita is available in Delhi for similar reasons. Supply Chain
With increasing market penetration and larger coverage of geographies, the Company has initiated efforts to ensure that the supply chain and distribution structure remains efficient. In order to strengthen these efforts to improve the distribution of Stock Keeping Units (SKU’s) across retail outlets and to improve the quality of sales and consumer satisfaction, the Company has implemented web related processes to increase efficiencies in supply chain and order planning. During the year, the Company also initiated the rationalization of stocks in order to increase the freshness of stocks available to the consumer. These initiatives are necessary to maintain the high quality that Nestle Guarantees the consumer. In addition to these, there are efforts on to create more awareness among wholesalers and retailers to create storage value and minimize loss of quality or time. Promotion Mix
Overall, there has been a lot of emphasis on packaging, not only to safeguard products, but also to create a distinct brand entity. Nestle India bagged the Best Package Design Award and Portfolio Registering Highest Sales Growth Award at the second Annual Indian Dairy Awards presented at the National Milk Seminar 2003 held at Goa on 17 and 18 January. Hosted by Tetra Pak India, the fourth National Milk Seminar on Strategic Marketing, organized by the Ministry of Food Processing and Ministry of Agriculture was focused around Time to Act – Here & Now. Presentations and panel discussions were held to spotlight on business opportunities, perspectives of international and national speakers from within the dairy industry and outside highlighted the areas of successful government-industry cooperation, business strategy, innovating for category conversion and upgradation, premium branding, new channel development, and value branding. Using the health platform as a proposition for a milk brand is not an alien concept. But Ogilvy & Mather Delhi has used the same USP differently in its new ad campaign for Nestlé’s Fruit n Milk. The agency recently released two television commercials for the new brand. Mothers catching and correcting their children when they are up to mischief is quite common. Of course kids being kids love having fun even if it borders on what their mothers have forbidden them to do. Moms know this and have a habit of keeping tabs on their little ones.
Using this mother-child peculiarity as a key, the agency worked on the ‘Tasty bhi healthy bhi’ proposition to gain acceptance among both kids and mothers. Says O&M associate creative director Sudip Bandyopadhyay, “There are these do’s sand don’ts for kids. Mothers have their eyes on kids. We have taken situations, where kids normally get caught. But when mothers find children sheepishly having Nestle Fruit n Milk, they don’t find it to be a problem. Instead, they have an expression of acceptance for this.” The first commercial has two mothers looking for their children. They anticipate them to be on the terrace and up to – as you guessed right – some mischief. As their kids see them approaching, they hide something. After a fair deal of urging, they reveal to their mothers what they are concealing: a pack of Nestlé’s new ready to drink milk brand. And their mothers, with a sigh of relief, say this is allowed. The frame then cuts to Nestlé’s new product and positioning statement. The second commercial shows an in-charge of a boarding school catching students in a similar situation with a torch. And the kids face a similar outcome with their headmaster condoning their sipping on their Fruit n Milk. “The campaign is for the 8-15 age-group. We have tried not only a fresh angle from the taste and health proposition but also from the new product launch perspective. We came up with this, when mothers says ‘yeh to allowed hai.’ This has been conveyed through the surprise element. Not only to catch kids but also to empathise with mothers,” says Bandyopadhyay. The commercials have been directed by Red Ice’s Koushik Sarkar. The campaign has been extended to outdoor campaign has rolled out nationally.
One major issue is that Nestlé India does not advertise it’s Infant Nutrition products due to legal obligations. So,quality considerations drive sales volumes in these segments. Nestle India launched a new print campaign for its packaged milk brand Nestle Slim Milk. Created by Ogilvy & Mather, the campaign focused on propagating milk as a proposition for staying healthy and trim with a stylish presentation of the pack amidst a yellow background. The campaign, released mainly in magazines, primarily targeted the socio-economic class A. Breaking the myth of packaged milk (or for that matter milk on the whole) being only meant for being ‘strong’ or to put on weight, the agency specifically conveys the message of being slim and trim through milk. O&M creative consultant, Sudip Bandyopadhyay said, “The brief was to creative awareness about the brand. There seems to be a tendency of ignoring milk for putting on weight and also milk in tetra-packs or packets is being considered as an artificial one. There is also emergence of low-calorie sweeteners and other products. So the whole idea is to reinforce milk as an option for providing a refreshing nourishing boost.” The pack of Nestle Slim Milk is being positioned as drink for fitness and it is mentioned that it is 99.5 per cent fat free. Apart from conveying that calories are kept in check, the concluding message reinforces the packaged milk health proposition by saying: “So, don’t think twice before making the switch to a healthier alternative.” “The whole presentation revolves around first glance, which should immediately strike the slim proposition. That’s why the pack is shown to be curved (portraying a body with slim waist) in the centre.
Instead of using blue colour, we have deliberately chosen yellow colour in the background,” adds Bandyopadhyay. Apart from the print campaign, the agency also worked on outdoor advertising.. Nestle, which had launched ready-to-drink milk market with its Fruit n Milk brand in mango and strawberry flavours earlier, is sourcing its Slim Milk and Fruit n Milk from Dynamix Dairy Industries. “In addition, other promotional tools like consumer contact programs, exchanges with medical personnel and a lot of ground work is involved”, informs Mr. Dogra. Earlier, Nestle only talked to kids but there is an ‘inclusive audience’ that is also being spoken to, these days and that is the mothers, as at the end of the day it is the mothers that are the buyers of the products. So the brand though specifically targeted at kids ‘has’ to speak to the mother too,” says one industry analyst. Against Competition
Perhaps the greatest challenge to Nestle comes from cooperatives like Amul and Mother Diary. Unfortunately for Nestle, it has been unable to be at the top of the ladder, with these domestic players still ruling the roost. Mr. Dogra acknowledged this and admitted that both these cooperatives have extremely efficient operations and a very good marketing set-up. However he points out to the fact that since these cooperatives generally operate on low/no profit margins, they enjoy higher sales volumes due to price slashes. Another interesting point he raised was that these cooperatives have been clever enough to manipulate food laws in the country, which puts them in an advantageous position. In this portfolio, Nestle faces stiff competition in Milk Powders due to availability of competitive and economical substitutes as illustrated below
Perhaps, a major factor, which is a roadblock to the company’s success, has been the “foreigner tag”. Among certain groups, nestle is still some “foreign corporation which is here to take away Indian wealth”.
The portfolio of beverages segment of Nestlé is not so broad, still so strong as to make its presence important for Nestlé’s overall success. It includes some popular brands by Nestlé-It’s not the number of brands in beverages segment of Nestlé that makes it attractive, but the market share that they possess. Beverages account for 38% of the company’s turnover and Nestlé is a market leader in instant coffee with its Nescafé and Sunrise brands. Nestlé Milo also has a strong presence in the market.
It is a 100% Pure Instant Coffee. It has the unmistakable taste of 100% pure coffee and is made from carefully selected coffee beans picked from the finest plantations, blended and roasted to perfection. 100% coffee…100% pleasure…. The beginnings of Nescafé can be traced all the way back to 1930, when the Brazilian government first approached Nestlé. In 1937, after eight years of work, scientists at Nestlé’s research laboratory in Vevey perfected a powdered coffee product that was commercially introduced in Switzerland, on April 1st, 1938 under the brand name Nescafé. Nescafé – a combination of Nestlé and café. It became so popular during World War II that for one full year the entire output of the Nescafé plant in the United States (more than 1 million cases) was reserved for military use only. By the 1950s, coffee had become the beverage of choice for teenagers, who were flocking to coffee houses to hear the new rock ‘n’ roll music. Since then, Nescafé has become one of the world’s best-known brands. With more than 3,000 cups consumed every second, Nescafé is by far the world’s leading coffee brand. In India, Nescafé was introduced in 1964. NESCAFÉ SUNRISE
It is an Instant Coffee-Chicory mixture made from blends of Coffee and Chicory. Coffee 70% and Chicory 30%. The secret of great taste lies in the blend. NESCAFÉ SUNRISE PREMIUM is a blend containing plantation beans to give you an incomparable experience. This unique blend of Coffee & Chicory was introduced in Indian market in 1980s with various variations- Nescafé Sunrise Premium, Sunrise Extra, etc. sunrise Extra has more Chicory in it (40%). Thus it tastes even stronger. NESTLÉ MILO
It is a contemporary, brown health beverage with a delicious chocolaty taste. 1 in 6 cups of chocolate beverage consumed in the world today is NESTLÉ MILO. In India Nestlé Milo was introduced in 1996. It’s a combination of health and taste. It has essentials vitamins also and it gives you extra winning energy. Now it is available in different tastes also. Latest in the series is the Badam Shakti flavour. Analysis of the 4Ps of this Division
“To be successful in this consumer era, a company needs to do anything and everything as per the wants of the consumers.” This much evident fact provides the basis for the success mantra of nestlé. What sets Nestlé apart from its competitors is its ability to reinvent and innovate. The beverages segment of nestlé has always followed the same strategy, i.e., innovation and renovation. It has conducted time-to-time surveys to find out what the potential consumers desire and expect from them and then, from adding those features to repositioning and reintroducing, it has left no stone unturned to satisfy its consumers. The Example of Nescafé
Science has always been a constant input for nestlé. Right from the invention of Nescafé to the regular improvements, research & development has been the basis of success. Before the invention of Nescafé in 1938, the need for a soluble coffee was felt among the consumers. This need was realized by nestlé & after eight years of research Nescafé was finally invented. This was not the end. Overtime, there have been so many innovations and improvements. From making Nescafé by using 100% pure roast coffee beans to the birth of the granule in1967 to capture more aroma and flavours from every single coffee bean, to the ’full aroma’ process which was invented to make the unique quality and character of Nescafé even better in 1994.
Talking particularly about India, from time-to-time, surveys have been done to judge the consumer wants. Introduction of new products, renovation, and repositioning- everything has been done accordingly. After introduction of Nescafé Classic in India in 1964, as the need was felt, company came out with a mixture of coffee & chicory, Nescafé Sunrise. Nestlé has come out with new variations of its products, Nescafé Sunrise Extra, Nescafé 3-in-1 readimix, to name a few. The new Nescafé 3-in-1 coffee readimix is actually a relaunch. Its previous attempt to instant coffee mix five years ago had come a cropper. Today Nescafé coffees are available to suit all tastes. In short, all its success is because of its strategy to make the product, as the consumers want it to be. It is easily one of Nestlé’s star performers. The Example of Nestlé Milo
In India Nestlé Milo was introduced in 1996. With its launch, nestlé was faced with the challenge of presenting Nestlé Milo as a worthy competitor in the Indian energy drink market that was dominated by Cadbury’s Bournvita and SmithKline Beecham’s Boost. So it was important to bring Milo as something different from others. A research campaign was launched to analyze consumer needs. The research following the campaign revealed the need for Milo to be perceived as a drink with 2 strong deliverables- Energy and Taste. This was just the beginning. Nestlé Milo was so many times repositioned, reintroduced in the market, which clearly reveals the Nestlé’s strategy for Milo, i.e., aggressive and alive. Milo was also relaunched in Dec 2001. On the other hand, the company has been offloading products too. Nestlé India was in the process of withdrawing its chocolate health drink brand Milo from southern markets. The brand did not stand up to the company’s expectations during the last several years; there were indications that it might be phased out. In fact, Nestlé India had also begun rationalizing its product portfolio. Once again in the near future, Milo is being relaunched by re-energizing it with ‘Badam Shakti’. Both examples clearly suggest the Nestlé’s product mix and the secret behind its success. The product mix started before the invention of the product and continued without any end. Even today the renovations are on. Price Mix
The secret behind the price mix of Nestlé is the scale of production. In the
beginning, it may have been thought that the products are being priced higher, but as the market segments increased and economies of scale were reached, no one could complain about Nestlé’s prices at least in beverages. Nestlé has taken the Indian conditions in mind while deciding its price mix. Initially when Nescafé was launched, it was considered quite expensive. However, Nestlé has focused on expanding the domestic market share through price cuts and product repositioning. It is therefore no surprise that today Nestlé’s Nescafé dominates the premium instant coffee segment. Nestlé Milo also justifies its price. Its pack of 500-gms priced at Rs.96, which can in no way be dissatisfying and is comparable with other brands. Another example is of Nestlé 3-in-1 readimix, which is priced at Rs.5 per sachet, which is definitely justified keeping the benefits it gives in mind. Nestlé has so many outlets in India now to compete with Barista and Café Coffee Day. There is a clear difference between the prices of these coffee shops and Nestlé. Nestlé is a winner by a great margin. Where, these coffee shops are affordable to a very small section of market, Nestlé targets at a far greater market segment in term of its prices. To conclude, one cannot hold grudges about prices of Nestlé beverages. Nestlé has surely taken the spending capability of the domestic market in view. Place Mix
As regards the place, they are available on almost all the outlets that are selling such products. Nescafé’s USP is its easy availability. One could find it in any departmental store big or small. It is also available at all small shops in an area. Nestlé has been using its vast distribution network to push into the market its chocolate-and coffee formulation Choc Café and Frappe (both under the Nescafé umbrella). Easy availability is one of the factors for Nestlé having a 44% share in the coffee market. About Sunrise, Milo, or, Nescafé 3-in-1, all are easily available at the shops near you. With the opening of its own outlets to compete with coffee shops, the distribution of the beverage segment of Nestlé has become even stronger. The location of these outlets make then even more important. Distribution is definitely a strong point for Nestlé beverages. Promotion Mix
The rise in competition has made the promotion mix even more important. A company needs to show how its products are different from what is being
provided by its competitors. Nestlé beverages have done well in this regard also. From TV advertisements to sponsoring TV programmes, events like MTV Youth Icon of the Year 2005and even movies like ‘Koi Mil Gaya’, it has done everything to woo the customers. The Case of NESCAFÉ
Till a few years ago, life with Nescafé was exotic. You could enjoy the aroma of the dark coffee beans, feel the nip in the air, overcome hurdles, win acclaim, bond with friends and peers with laptops, as the catchy Western jingle played in your mind. Remember, “The taste that gets you started up…”? This was how the Nescafé was promoted in the beginning. While talking about the ads, lets look at an interesting fact: Let’s watch out the Top 5 Coffee brands advertised on TV during the last three quarters of 2008. This table is a proof of the aggressive advertising adopted by Nestlé. One of the most memorable and popular campaigns of all times is the ‘Open Up’ advertisement of Nestlé. One thing, the world over, which helps people to take time out, to listen to each other and to open up is a cup of coffee. “Open Up” is the global campaign for Nescafé to celebrate the part that coffee plays in people’s lives. To capture the enormous diversity of experiences and emotions associated with coffee drinking the commercials were shot, over several months, all over the world. And they will also be seen worldwide. The noticeable difference between Nescafé’s old campaigns and the latest arranged marriage advert (and also the earlier train ad, featuring VJ Gaurav) is the latter’s bid to familiarise itself to the Indian middle class. This is evident from the subject of the story, which is spun around the most common of all cultural aspects of the Indian society – an arranged marriage. It’s also apparent that Nestlé and McCann-Erickson’s choice of protagonists – actors Kashish (Aamna Shariff) and Sujal (Rajeev Khandelwal) from STAR Plus’ popular serial ‘Kahin To Hoga’ – was driven by the single objective of making the brand popular with the masses. The serial is among the top four serials on STAR and even after a run of one year, still enjoys a TVR above 10. Clearly, with this particular ad, Nescafé is making a very conscious effort to bond with the masses. Lets look at the ad. The 30-second ad by McCann-Erickson opens with the prospective groom and his parents coming to see the girl. With an objective to get familiar with each other, the boy and the girl step out into to garden. Noticing that
neither of the two is able to initiate a conversation, the concerned parents wonder how to shake them up. “Arrey inhe jagao,” (Wake them up) says the father of the girl. And, Nescafé is served to the couple. With just a few sips, the initial awkwardness, quite surprisingly, disappears. What follows is a chat with an allusion to movie titles. So when the boy asks, “Toh Hum saath saath hain?” (So, are we together?), the girl replies, “Qayamat se qayamat tak.” (From one apocalypse to another.) The ad ends with the super “Jagao, Nescafé pilao.” (Arouse them by serving Nescafé.) The creative and the one before that were decided after Nestlé told McCann-Erickson that the FMCG major was to expand the market. So, it was time for a makeover. And, drinking Nescafé had to become a relatable experience for the masses. If that literally meant repositioning Nescafé, so be it. With this advert and the one before (the train ad), the once-elitist Nescafé has begun talking the language of the masses. In the train ad, for example, the tag line, voice-over, the train attendant, and the model all looked and sounded Indian. Except for the train and the location, which definitely looked ‘phoren’. Perhaps, the only traces of aspiration. But then, Nestlé’s attempt to include Nescafé in the Indian every-day life seems justified since the promise of good times is firmly in the territory of urban, hip coffee hubs – Barista and Coffee Cafe Day these days. In words of Mr. Prasoon Joshi, regional CD, South & South East Asia, McCann-Erickson, “While we are trying to make Nescafé a regular feature in the lives of many, we are also giving a very specific reason for that. Nescafé stimulates the mind, relieves mental fatigue; it is a very invigorating experience. And that’s what precisely differentiates coffee drinking from tea.” Besides this Nestlé regularly comes up with various promotional offers like free jars, extra quantity for the same price etc. Talking about the packaging, Nescafé’s come a long way since 1938. However their logo and packaging has changed little over the years. They continue to use the coffee beans and a red coffee mug on their packaging. The use of colours and the simple elegance of the package appeal to all. Nescafé is also available in a variety of sizes with the option of easy to store sachets and pouches to the airtight and reusable jars. The Case of NESTLÉ MILO
With the launch of Milo, Nestlé was faced with the challenge of presenting
Milo as a worthy competitor in the Indian energy drink market that was dominated by Cadbury’s Bournvita and SmithKline Beecham’s Boost. This work was handed over to Mudra. The agency had to begin from zilch, right from gaining customer confidence to building its brand image. This is how Mudra and Nestlé handled all this together. ‘Milo’ the energy drink Nestléd into the Indian market in 1996. The responsibility of launching the drink in a market dominated by time tested Bournvita and Boost was no easy task for Mudra. Being the fifth player in the brown beverage market, the drink was up against Bournvita, which had an enviable market share of 40%, and SmithKline Beecham, a strong contender, especially in the south. Using the consumer insight that mothers are driven by a need to support their sons’ hard work and help them succeed when under pressure, the agency launched an impressive ad campaign. The research following the campaign revealed the need for Milo to be perceived as a drink with 2 strong deliverables- Energy and Taste. Thus a strategy was adopted wherein the agency targeted children belonging to the age group of 7-12 years and through them their mothers. The strategy worked and led to a 40% volume growth, with the market share growing to 8.8%. After establishing Milo as the world’s number one energy drink and its taste benefits, the attention shifted to presenting its emotional benefits too. The focus was now on revamping the brand image from being a tasty energy drink to one that provided extra energy to ‘win’. The agency once again came up with commercials addressed to children as the target audience and mothers as the secondary audience. The campaign proved to be successful with the drink emerging as the No. 2 brand in 3 out of 4 zones, and its market share growing to an impressive 11.4%. Not satisfied, the agency undertook another research, which revealed two issues that needed to be addressed immediately. Firstly the pester power, which in this category was not very high and secondly, the fact that Milo’ s brand promise of winning was unfortunately being perceived as an advertising/ marketing claim. Hence they embarked into yet another campaign, this time with the intention of improving the brand image by overcoming a mother’s apprehensions and getting her to subscribe to the brand promise. The brand was thus re-launched with the same promise but with a strong support in the form of ‘extra B-vitamins’ in the product. This re-launch which took place in Dec 2001 proved beneficial as it boost the drink’s market share to 13%
making it the leading brand in the East, No. 2 brand in the north and west and No. 3 brand in the south.. Again in 2004, Nestlé India repositioned Milo. In Milo’s new avataar, Nestlé planned to define and claim ownership of the ‘school going kids’ category, more precisely the class 7 to class 11 segment, rather than the broad based ‘kids’ segment. This, sources add, will be done by sharpening Milo’s positioning as a drink for a school going kid who’s a champion in mind and body. That time, Nestlé India had been aiming to increase penetration by following a multi-pronged strategy of expanding the product basket, increasing sales turnover by reducing the shelf life of products and lowering price points by making smaller packs. This was decided when market leader Glaxo SmithKline Beecham Consumer Healthcare (GSK), repositioned the Horlicks brand from health drink to a fun drink for young people. Apart from seeking a new positioning, and thereby a new target audience, Milo’s relaunch included a new packaging, new stock keeping units (SKUs) at lower price points and, for the first time new flavours as well. The product was launched in a flat-bottomed Stabilo pouch pack instead of its current cardboard pack. The relaunch of Milo, which has otherwise kept a low-key profile, was also supported by an aggressive media campaign. These were just some of the promotion techniques adopted by Nestlé Milo. Milo has always included gifts with it to attract its young customers. And finally, here is the latest advancement in this row: Nestlé’s Milo with ‘Badam Shakti’
Nestlé is relaunching its chocolate health food drink Milo by re-energising it with ‘Badam Shakti’. According to company sources, Milo is all set to get a new lease of life with a new packaging, formulation and a distinct positioning. Currently, Milo is available in a SKU of 500gm priced at Rs 96. By giving Milo a new distinct local positioning and introducing the brand in convenient sachets at lower price point, it is clearly moving away from being a very urban-focused player and targeting newer markets and driving rural demand.
Prepared Dishes & Cooking Aids
“What Xerox is to photocopier and Colgate to toothpaste, Maggi is to noodles
As clearly visible from the previous page Maggi’s culinary portfolio is quite diversified, offering different varieties of prepared food and dishes ranging from soups to sauces from noodles to taste enhancers. But the prime thing which accounts for a large part of Maggi’s revenue is Maggi noodles. Analysis of the 4Ps of this Division
Nestle has a lot of products under its brand MAGGI. Some of them are : Maggi noodles
Maggi vegetable Atta noodles
Maggi sauces and ketchups
Maggi magic cubes
MAGGI 2-MINUTE NOODLES
Maggi noodles were launched in 1983 in India. And today is one of the largest snack food brands in the country and define the Instant Noodles category in the country. Fast food and maggi are synonymous in India. It’s a two minute preparation dish. The noodles are wheat flour based. Other than that the basic ingredients of Maggie noodles are wheat gluten and guar gum. The vegetable oil fried form of the noodles is available extensively here in India as the air dried form available across the world did not do well here in India. A tastemaker pouch is present in all the packs to add spices etc. thus adding to the taste of the noodles. The basic contents of a tastemaker are sugar, mixed spices, onion powder, and edible starch. In terms of its PLC cycle, this product is perhaps in maturity stage, with stable prices, peak profits and soaring revenues. Nestle revised the nutrition content of maggi noodles in 2004 keeping in mind the R.D.A(RECOMMENDED DIETRY ALLOWANCE) of an normal Indian child (7-9 YEARS). Another factor for this revised content was the guidelines for nutritive value of Indian food by ICMR (Indian Council For Medical Research). This is an excellent example of a responsible company adapting to changing legal environment and complying with changed norms. MAGGI noodles are available in 5 types, namely:-
-Vegetable Atta- Masala
MAGGI VEGETABLE ATTA NOODLES & RICE MANIA
Considering the changes being faced and the margin trends in the global market nestle India launched another variation in its noodles category known by vegetable atta noodle. The main constituent as suggested by the name is atta in the making of these noodles. This variation was introduced because in India many people believe Maida as a hinder to good health and all the noodles made by Maggi before this was of Maida. Nestlé India used the Group’s extensive Research and Development expertise to develop MAGGI Vegetable Atta Noodles which contain whole wheat and real vegetables. A 100 gm pack of MAGGI Vegetable Atta Noodles provides the goodness of 3 rotis (energy, carbohydrates, dietary fiber, protein and calcium). “A lot of research has been undergone before the launch of Atta noodles, and it is believed to be a successful project”, said Rashmi Gupta (Brand Manager, Maggi). This brings home the point as how a successful company needs to constantly monitor the changing consumer demands and come out with new variants repeatedly. According to the company, the new Maggi variant is targeted at consumers who want to include health and wellness in their food in a convenient manner. The company says the product has been developed to address the concern that children as well as adults lack sufficient fiber in their diet. The success of Maggi atta noodle has also illustrated that how all new additions to a company’s portfolio can reap the benefits of a good brand name. MAGGI HEALTHY SOUPS
Another product of Maggi is its soups. Nestlé pioneered the dehydrated soups market in India and was the first to introduce tasty and convenient packaged soups. Maggi launched soups in India in 1989. The new MAGGI Healthy Soups have been carefully prepared through the Research and Development efforts of Nestlé Group and are even more delicious, quick to prepare, convenient and healthy. As the tag line “taste bhi, health bhi” suggests the main focus of Maggi is on two things taste n health of people. Today there are above ten different variants available in the market, of these soups such as Tomato, Mixed Vegetable, Mushroom, Chicken, Sweet Corn Chicken, Hot & Sour Vegetable
and the Sanjeevni range. Maggi soups are examples of product diversification being specifically targeted at different consumer profiles. SAUCES AND KETCHUPS
Sauces and Ketchups are relished for their high quality and taste and are considered ‘good value for money’ by consumers. MAGGI offers a wide range of products that appeal to various segments including traditional ketchups, Indianized sauces and specialty sauces. There are 8 variants in the MAGGI Sauces range: MAGGI MAGIC CUBES
Maggi magic cubes are taste enhancers. As the tag line “Chutki bhar Jadoo!” Suggests these cubes just needed to be sprinkled over the food items to get the taste. MAGGI MAGIC Cubes are available in two flavors – Vegetarian Masala and Chicken. Currently these cubes available in the southern part of India-which reflects the fact that the company is aware of differences in tastes, preferences brought about by geographical differentiation. Price Mix
A 50 gram pack is available for Rs. 5.The 100 gm priced at Rs.10. The bigger packs- the 400 gm, 800 gm & the 7.2 kg pack, are available at a proportionately lesser price at Rs. 36, 65 & Rs. 550 respectively. If we take an insight into noodles market we will find that almost all the products are priced more or less the same. Given below are the list of products and their prices. It is testimony to the fact that the industry product life cycle is in maturity stage and companies can no longer charge higher prices in the name of differentiation. -Maggi atta noodles and Rice Mania- Rs 15- Maggi Masala – Rs 10 -Top Ramen mug noodles – Rs 10- Wai Wai noodles – Rs 12
Soups and Ketchups
Sauces and ketchups are priced on the basis of their flavours and quantity. While all the standard size of the soups are priced at a same price. The 56 gram pack of soup which serves 4 (each serving =150 ml approx.) is priced at Rs. 20 (inclusive of taxes) now to gain advantage of point pricing. It was previously priced at Rs. 22. Maggi’s main competitor in the soup category is
I.T.C’s brand annapurna knorr soups which have been priced at Rs.25 Again, prices are kept keeping in mind competitor’s moves. Promotion Mix
Extensive promotion through advertisements on TV. The ads have always featured kids and never a celebrity since the people at Nestle believe that as long as the celebrity ad is on TV kids want the product & thereafter it is gone. In ads the kids are shown come back from play or school asking for Maggi: “Badi gazab ki bhookh lagi, Maggi chahiye mujhe abhi.” In another advertisement, a kid jumps out of bed and gets ready for school as soon he knows there is Maggi in Tiffin :Aaj Khane mein kya hai ? Large scale promotions are also undertaken at school level:
KG-Nursery Smiley Contests: Here, kids are judged on the basis of cleanliness, punctuality etc. The kid with maximum smileys at the end of the stipulated period gets a Maggi Gift Hamper. Maggi Quiz contests: Interschool Quiz contests are held and the winners get Maggi bags full of noodles. The audience gets prizes of 1 or 2 100 gram packs of Maggi noodles. Also do wet sampling in small markets unaware of fast food culture such as UP or remote North-East. Garlic flavor of Maggi was also launched in 1998 but did not fair well in the market and was withdrawn and the old flavor was reintroduced with the phrase “Sab kuchh pehle Jaisa”or “It’s back. Nestle choose PRIETY ZINTA as its brand ambassador for Maggi noodles, keeping her bubbly and childish attitude in mind. She appeared in the T.V. commercial with some of kids promoting Maggi noodle’s small pack. Thus Nestle chooses its brand ambassadors carefully keeping in mind the intended positioning and target market for the product. With the introduction of Maggi vegetable atta noodles, nestle has done every thing possible to promote this brand, as the company believes a lot in this product. This is clearly visible from the following analysis. The table below shows the Top 5 Brands in Noodles/Pasta category on Television, along their Advertiser, in the 1st half of 2005.
Almost the entire advertising share (100%) is contributed by Top 5 brands ‘Maggi Vegetable Atta Noodles’ grabs 50% of the advertising share in the 1st half of 2005 Soups
The soups have been promoted extensively through TV advertisements. Place Mix
The main pillar on which the palace of Nestle’s revenue stands is easy and vast availability of its products. As regards the PLACE- Perfect Location for A Customer Exchange, they are available on almost all the outlets that are selling such products. If you visit any departmental store, big or small one thing you can always be sure of getting is Maggi noodles. It is also available at all small shops in an area. The vast distribution channels of Nestle Maggi noodles even acts as one of its successful marketing strategies. The vast availability of this product to the consumers is one of the factors for which nestle enjoys an undisputed market share in this category.
Chocolates & Confectionery
Nestlé forayed into chocolates & confectionery in 1990.At the time of introduction, Nestlé marketed Milky bar and Kit-Kat chocolates in India. In the confectionery range, it had products like Soothers and Polo. Today, it has cornered a third share of the chocolate market in the country. The category contributes 14% to Nestle ‘s turnover. It has expanded its products range to all segments of the market.
From the interviews, we learnt that the people at Nestlé acknowledge the fact that chocolates are an impulse buy. Accordingly, Nestlé India markets chocolates at affordable prices for various age groups. Nestlé chocolates are less heat-sensitive compared to the others in the market. Nestlé has a very clear Charter of ethics and responsible behavior in selling chocolates and confectionery. It has reinforced the guidelines for market hygiene for its chocolate brands. The exercise is aimed at ensuring that storage of its chocolate brands at retail outlets meet with adequate hygiene standards. TABLETS CATEGORY
This is the indulging chocolates category. These are block type chocolates. MILK CHOCOLATE
This is the new name which ahs been given to the leading milk chocolate of the country-Milky bar. This chocolate is targeted at children below 12 years. Milky bar was the chocolate with which Nestlé entered Indian markets.
It has been in the running ever since the beginning. Milky bar has a very big market in south India. This chocolate has seen the decline of Cadbury’s Milk-Treat, which was launched at a lower price but could not match the satisfaction, the taste which eating a Milky bar gave.
In simple words, these are the caramel chocolates.
It is a luscious nougat and caramel with delicious choc layer. Chocolate for the young people which began its advertising with Aftab Shivdasani in his teens. The chocolate had a national presence till 2004 but over time, has been withdrawn and is now aggressively marketed in south India and east India. The chocolate was re-launched in 2004 but still could not match up to meet its competitor in this segment, Cadbury’s 5-Star. This chocolate constantly reminding us that it is the ’Time for Action’ lost out to ’mera 5-star’. WAFERS CATEGORY
The category with frozen chocolates over crispy-crunchy wafers. KIT-KAT
It is one of the most successful brands of the world. In India, it was the second largest chocolate before the launch of Nestlé Munch. It is the thin wafer chocolate coming with two fingers and four fingers and a unique ‘breaking’ ritual attached to it. It is targeted at young adults ageing from 18-24 years. This good-flavoured chocolate always gives us the message ’Happy ho ja’. In 1998, Nestlé India had launched a variant of this chocolate-Kit-Kat Orange. Unfortunately, this variant did not do very well in the market and was soon withdrawn. Now, the company is planning to launch the chocolate with new flavours- cumin and ‘masala’ – both staple spices used in Indian curry dishes. MUNCH
Nestlé Munch is a wafer layer covered with delicious choc layer. This chocolate was launched in India in the last quarter of 1999 and has become the market leader in its category. It is second only to Cadbury’s Dairy Milk in the Indian chocolates market. The chocolate is meant for people aged above 13 years. This chocolate alone accounts for $1million of Nestlé India’s total revenues. This chocolate gives larger value for lesser money
as ’Munch Maha hota jaaye’ and the product’s taste assures that ’ab to MUNCHing ruk na paaye’. This is the chocolate having the highest penetration in the Indian market. The popularity of the Munch brand cuts across age, town, culture and socio-economic classes as it says “Mera MUNCH mahaan”.
These are the chocolates targeted exclusively at kids.
It is a relatively new chocolate brand at an affordable price point of only Rs2. Meant for the children below 12 years; it has a small packaging so that the parents are also not bothered by their kids’ consumption of chocolate. Consequently, this chocolate is very famous among the children especially in south India. Apart from the above, Nestlé now also markets some of its imported brands like Quality Street, Lions and After Eight.
All sugar confectionery products are sold under the umbrella brand Allen’s. The sugar confectionery portfolio consists of-
It was launched in the Indian market in 1994. It is popularly described as a ‘Refresh mint’. It is unique in the category – ‘The Mint with the hole’. A variant of this product, called Polo Saunf was launched in 1997 but it did not do well in north India. This variant is still sold in other parts of the country but Polo continues to have a nationwide presence. ECLAIRS
These are the toffees marketed by Nestlé in competition to the Cadbury’s Dairy Milk Éclairs. These were introduced in India in 1998. They come in chocolate, milky bar and coconut flavours. ACTI-V
It is a herbal throat soother with a unique liquid center with Anticol that provides effective relief. It is available in Honey Lemon and Menthol Eucalyptus SOOTHERS
Soothers help to soothe a dry or a sore throat. These provide soothing relief from everyday irritations (e.g. caused by excessive talking, shouting or air conditioning) Eucalyptus & Menthol. These are available in the following ’interesting’ flavours- Blackcurrant
Honey & Lemon
Lemon & Lime Liquid Centers
Orange & Mango Liquid Centers
Analysis of the 4Ps of this Division
As Mr. Ryan Fernandes, Brand Franchise Manager, Chocolates and Confectionery, Nestlé India put it, “It is the result of an experience of 135 years that Nestlé gives us ‘Good Food, Good Life‘.” Nestlé primarily focuses on the areas where it can be the market leader. It believes that one cannot take a competitor head-on where the latter already has considerable competitive advantage. So the focus is to explore other areas. It develops new products like Munch, which are somewhat new in concept and take Nestlé to the leading position. Nestlé India has its own local application laboratories to be able to access modern technology and to check that the chocolates meet certain quality standards. Nestlé chocolates are more heat-resistant than the other chocolates in the market. After the worms controversy involving Cadbury India’s chocolate brands had impacted Nestlé’s sales as well, Mr. Carlos Donati, Chairman and Managing Director, Nestlé India says, “Any controversy that shakes the consumer’s confidence is not good for the category.” The company having such beliefs ought to have the second highest market share in the Indian as well as the world chocolates and confectionery market. It is consistently bridging the gap between its position and the leader’s position, with the help of its flagship brands Nestlé Kit-Kat, Nestlé Munch and Nestlé Milk Chocolate (Nestlé Milky bar). In India, where even the Nestlé officials agree that chocolates is synonymous to Cadbury’s, they are focusing more on brands like Nestlé Munch (in the Wafers Category). With their amazing focus on the development and production of Munch, which has more crispy and crunchy wafers than the competitor’s brand, they have been able to make it the second largest selling chocolate in India. To stay safe on a bicycle, you need to keep paddling. Similarly, to stay in business and meet the competition, the company needs continuous product innovation. In 2004, Nestlé India launched two variants-Milky bar Choo, Strawberry Choo and
Milky bar Starz. Nestlé Milky bar Choo is a soft chewy fudge with white choc layer that kids love to ‘Choo’. Nestlé had actually launched these chocolates as a limited editions chocolate but seeing the commendable response to the launch of these chocolates, it was decided that Nestlé India should continue marketing these chocolates. Now, Nestlé India is planning to launch the Kit-Kat chocolate with new flavours- cumin and ‘masala’ – both staple spices used in Indian curry dishes. The variants being tested are savoury varieties. Other new flavours may include saffron and passion fruit. These may be launched soon in the Indian markets. Thus like some of the other products, there is a conscious effort to adapt to local flavour. Price Mix
Nestlé India markets chocolates and confectionery at low prices with compromising on neither the quality nor the quantity. According to Mr. Carlos Donati, Former Chairman and Managing Director, Nestlé India, “We give more value for lesser price.” Here the consumers do not need to make a trade-off between prices and quality. Nestlé Munch getting more and more Maha day by day with the same price of only Rs.5 is a glaring example of this. Nestlé is increasing the quantity of this chocolate without increasing the price. Recently, Nestlé has brought to the market, a Bada Nestlé Munch with the quantity of four Munches and the price being Rs.19, which is an economy pack for the consumers as they get more in lesser price than buying four individual units of the chocolate. Over the years it has also been analyzed that pricing the chocolates at rounded figures is the best strategy. Nestlé chocolate Kit-Kat was priced at Rs.12 for four fingers and at Rs.6 for two fingers. In 2004, Nestlé decided to lower the prices of these to Rs.10 and Rs.5 respectively. The response was so tremendous that the increase in sales volume after this price fall compensated for the fall. When Polo was launched in 1994, it was priced at Rs.3 and over the years, there has not been much hike in prices as now a slightly bigger pack is sold for Rs.5 and a smaller pack of Rs.2 is available. Even today, the focus is on rounded prices such that the customer is just taking out a coin out of his pocket and gets the chocolaty benefits being Choco-Stick sold for only Rs.2. This can be managed out of the pocket money of the child below 12 years of age also. The focus is also to price the chocolate only a bit
lesser than the competitor because there cannot be a very aggressive price wars in case of chocolates and confectionery. Bar-one was priced at Rs.5 whereas its competitor Cadbury’s 5-Star was priced at Rs.6 for the same quantity. In contrast, although Cadbury’s Milk-Treat, which was priced at Rs.10 whereas Nestlé Milky bar was marketed for Rs.12 for the same quantity, could not match the latter’s quality and ultimately died out. The product Nestlé Éclairs gives the consumer the taste of a chocolate at the price of a toffee bar. In the words of Mr. Ryan Fernandes, Brand Franchise Manager, Chocolates and Confectionery, Nestlé India, “These surely offer a chocolate eating experience at a candy price point.” On the other hand, the management is implementing programs to control key raw materials costs. The high costs of raw materials and processing are increasingly becoming a cause of concern. However, The Company feels that raw material cost inflation could soon be brought under control. Place Mix
Nestlé has its own distribution channels and does not use many intermediaries. After being produced in the factory in Mogha (Punjab), the chocolates are taken to the Nestlé C.N.S. Workhouse. After this, the chocolates go to the distributors, who take them to the shops. At some places in India, Nestlé workforce directly delivers the chocolates and confectionery products to the shops. In addition to these, there are efforts on to create more awareness among wholesalers and retailers to create storage value and minimize loss of quality or time. Although Nestlé, at some places, delivers the stock itself, still Nestlé Munch is the highest penetrated brand in the Indian chocolates and confectionery market. This chocolate alone, primarily because of its deep penetration accounts for $1million of Nestlé India’s total revenues. This brand has a nation wide presence. Another one of the confectionery items, Nestlé Polo has a nation wide presence and may be found having equal sales in the mountains as in the plains. If some chocolate is not doing well in one geographical boundary, it is withdrawn from that market and then aggressively sold in the other markets to maintain the sales. Accordingly, Nestlé Bar-One, which was withdrawn from north India and west India, is being aggressively sold in other parts of the country. When asked from MR. RYAN whether there are any plans to shorten distribution chains, he replied in the negative. In a
market like India, companies have to forsake some amount of profit margins but there are less possibilities of shortening the distribution channels. Promotion Mix
As quoted by Mr. Ryan Fernandes, Brand Franchise Manager, Chocolates and Confectionery, Nestlé India, “Chocolates are an impulse buy. Therefore, we need to make sure that the customer coming to a confectionery has the impulse to buy them.” Therefore, Nestlé has decided to focus on the promotion of Chocolates and Confectionery at the point of purchase. Chocolates and Confectionery items, if beautifully packaged, attract the customers’ eyes at the point of purchase in a confectionery shop or a general store. Therefore, officials at Nestlé train the distributors of these items, so that they further train the shopkeepers so as to window display the products and arrange them in arrays. This is a classical example of relationship marketing and system’s approach of management which focuses attention on a holistic viewpoint. Even if the customer did not initially have any plan of buy the chocolate, he may see the attractive packaging and get attracted and has the urge to buy the chocolate. The small children going to a grocery shop or a general store move around the shop and find the chocolates and the Nestlé Éclairs and come back and tell their mothers who are busy buying the ration, to buy them the chocolates and the other confectionery items. This is surely targeted more at the children than the adults. This kind of a display increases the sales of chocolates and other confectionery items manifold. Looking at the conventional promotion techniques such as advertising, among all the chocolates sellers in the market, Nestlé was the topper in terms of advertisement expenditure. To this, it was said that Nestlé’s gain is Cadbury’s loss as by increasing the expenditure on flagship brands like Munch, Nestlé has been able to take it to the number 2 position. But, in 2005, the advertising expenditure for television advertisements, done by Nestlé India was surpassed by Cadburys India Limited. Although, Nestlé’s advertising expenditure is less than half of that of Cadburys India Limited, it still is the number 2 chocolates manufacturer in India.
Nestlé has been able to use its brand ambassadors successfully although it
does not advertise all of its products. Famous Bollywood actress Rani Mukherjee is the brand ambassador of Nestlé India’s flagship chocolate brand Munch. In advertisements made by J Walter Thompson, Rani is spotted donning different characters just to eat more and more of the irresistible Munch, saying “Ab to Munching Ruk Na Paaye!” Rani Mukherjee for roped in for bringing the brand recall. The ad film airs across television channels all over. The same advertisement showing Rani Mukherjee driving an auto and telling everybody in the village that the chocolate is getting bigger and bigger, can be seen in different languages on different television channels. “I am happy that the brand ambassador Rani Mukherjee complements the popularity of the Munch brand. Like the brand, her star appeal cuts across age, town, class and SEC,” the Former Chairman and Managing Director, Mr. Carlos Donati, once said in a statement.
Famous Bollywood actress Rani Mukherjee is the brand ambassador of Nestlé India’s flagship chocolate brand Munch. In advertisements made by J Walter Thompson, Rani is spotted donning different characters just to eat more and more of the irresistible Munch, saying “Ab to Munching Ruk Na Paaye!” Rani Mukherjee for roped in for bringing the brand recall. The ad film airs across television channels all over. The same advertisement showing Rani Mukherjee driving an auto and telling everybody in the village that the chocolate is getting bigger and bigger, can be seen in different languages on different television channels. “I am happy that the brand ambassador Rani Mukherjee complements the popularity of the Munch brand. Like the brand, her star appeal cuts across age, town, class and SEC,” the Chairman and Managing Director, Mr. Carlos Donati, once said in a statement. For Nestlé Kit-Kat, there is no particular brand ambassador. Over the years, the advertisements have shown one person teaching the other how to break the fingers of the chocolate and derive the ultimate pleasure and telling everybody to “Have a Break and Have a Kit-Kat!” this punch line was associated with the brand for 47 years. Now, Nestlé has decided to do away with it and the new punch line says “Kit-Kat kha, Happy ho ja!” Internationally the punch line for this chocolate is “Make the most out of your break. ” As seen above, Nestlé does not release television ads or print ads for all its chocolates and confectionery items. This is how the total advertisement expenditure on
chocolates and confectionery items, made by Nestlé India is shared among different products.
When asked about the customizations needed in packaging the chocolates for Indian markets, Mr. Ryan Fernandes, Brand Franchise Manager, Chocolates and Confectionery, Nestlé India, that the Indian market requires that chocolates have a smaller packaging of about 36 grams and even 20grams whereas the same chocolate may be sold abroad in a packing of 5grams and even 100 grams. Nestlé chocolates have a more strengthened packaging as compared to the chocolates of other brands. This ensures that the chocolates reach the consumer intact and do not break or are spoiled by air, insects, rodents or any other such factors. Thus, packaging plays the dual role of promotion and safeguarding products against damage, leakage, etc. Conclusions
Nestlé India has a very wide portfolio of products ranging from Maggi Hot n Sweet Tomato Sauce to Nestle Fruit n Dahi. Although, Nestlé does not advertise much about its products in India, still it is the world market leader in the milk market and Maggi noodles is the product we have all grown up eating. On the whole, Nestlé India focuses mainly on the areas where it is a potential leader. They may not try to replace the leader but surely their product becomes the second best product in the market. For example, they do agree that Cadburys is synonymous to chocolates in India and therefore they did not necessarily try to replace their flagship brand Cadburys Dairy Milk but have developed a product in the other chocolates segment and therefore Nestlé Munch is the second best chocolate in India today as showed by the sales figures. They have tried to price their products at lesser than the price of the competitors, for example, Nestlé Bar-One was sold at Rs.5 whereas the same quantity of its competitor chocolate Cadburys 5-Star was sold at Rs.6. In some areas, Nestlé has been able to outperform its competitors and rather, for products like Maggi noodles, it has no substantial competitors. When magi noodles came into the market, there were other players like Top Ramen, whose presence counted but now it makes no difference to the leader-Maggi. Anybody looking for a good, refreshing coffee would like to drink a Nestlé Nescafe coffee and may not even at times give a second thought to the competitor Bru coffee.
To conclude the project, following is the SWOT Analysis of Nestle: Strengths:
* Access to the Nestle Group’s proprietary technology/brands, expertise and the extensive centralised Research and Development facilities under the General Licence Agreement. * High quality, safe food products at affordable prices, endorsed by the Nestle Seal of Guarantee. * Strong and well differentiated brands with leading market shares. * Ongoing product innovation and renovation, to convert consumer insights. * Well-diversified product portfolio.
* Efficient supply chain.
* Distribution structure that allows wide reach and coverage in the target markets. * Capable and committed human resources.
* Exports of coffee to Russia constitute substantial part of overall exports. * Complex supply chain configuration.
* Indications of shift in consumer spending towards asset building and non-food related life style changes, diverting consumer demand for FMCG products. * Rising prices of raw materials and fuels.
* Change in fiscal benefits.
* Potential for expansion in the smaller towns and other geographies. * Potential for growth through increased penetration.
* Growing trend for `out of home’ consumption.
* Leverage Nestle Technology to develop more products that provide Nutrition, Health and Wellness. References