Analysis of the Commerce Environment of Nestl Pure Life - Report Example

Analysis of the Marketing Environment of Nestlé Pure Life Table of Contents Executive Summary 4 2.Introduction: 4 2 Company Introduction: 4 2.2 Vision, Mission and Value: 4 2.3 Nestlé Pure Life-Product Overview: 5 3.Argument: 5 3.1. External Analysis: 5 3.1.1. Segmentation and KSFs: 5 3.1.2.PESTEL Model: 6 3.1.3. Five Forces Analysis 8 3.2 Internal Analysis: 9 3.2.1 Human resources: 9 3.2.2 Core Competency: 10 3.2.3 Criteria for sustainable competitive advantage (VRIN): 10 3.3 SWOT Analysis: 11 4. Conclusion and recommendation 12 References 13 1. Executive Summary This report analyses the overall marketing environment of the product Nestlé Pure Life. Through a detail analysis, internal and external situation can be judged in order to improve its position in the market. This project will help to understand the business strategies taken by the Nestle Pure Life and in last part of the project recommendations have been given to improve its marketing strategies. 2. Introduction: 2.1 Company Introduction: “Good food, Good Life” – Nestlé is one of the world’s leading food and beverage organization headquartered in Switzerland. The company started its journey in 1866 & since its commencement; it has grown through many leaps and bounds to achieve the world’s biggest food and nutrition organization (http://www.nestle.com, n.d.). Today Nestlé has around 333,000 employees employed in 447 factories in 194 countries worldwide. The organization is also a main stakeholder of the world’s largest cosmetic company L’Oreal. 2.2 Vision, Mission and Value: The vision of this organization reflects the ideas of fairness and honesty. Its mission is to provide tasty and nutritious food and beverages to its consumer throughout the world. This thinking is reflected in the organization’s strategic business principles, which have shaped the company culture and policy for past 140 years. The core value of the company is its people, quality of the product, brand portfolio and its consumer base. All of these help to maintain the sustainable performance in the world market (food & water watch, 2011). 2.3 Nestlé Pure Life-Product Overview: It is a most famous brand in purified bottled water product division of Nestlé (FATOKUN, 2014). It is prepared with an appropriate balance of minerals to deliver the healthy as well as refreshing taste to its consumer. It has started its journey in the year 1992. However, that time it has a different name that is ‘Valvert’. Today it has grown in 130 countries worldwide. In the year 1998, it has named its bottled water as ‘Nestlé Pure Life’. It offers an ideal balance of the necessary minerals and refreshing taste. 3. Argument: 3.1. External Analysis: 3.1.1. Segmentation and KSFs: For getting the maximum of the market share and brand loyalty the mother, organization segmented the market. Nestlé pure life can be segmented on the following basis: Demographic segmentation: Nestle pure life is such kind of product, which can be used by all. Anybody can use the product as per the need (Kotler and Keller, 2012). Geographic segmentation: The Company has divided its market according to its presence as a brand in different region of the world. First, they have segmented the target country as a whole. After that from each provincial city or capital, they divided the areas into north, south, east and west (Helper, n.d.). So that it becomes easy for the organization to work efficiently and have a strong supply chain management system. Target Market: After segmenting the market, management need to decide on the target market for the each of the segment of the market. Consumer base of the Purified water market can be divided into the following target market according to Nestle Pure Life (life), n.d.). People from middle to Elite class who believe that tap water is unhygienic.. Tourists Business beside railways, airway and highway. Business beside school, college or university. Departmental stores, general stores or other. Restaurants or hotels Competitors: It has two very strong competitors in the marketplace. These are ‘Aquafina’ by the company PepsiCo and the other is Dasani of the Coca Cola Company. However, Nestle pure Life brand is quite different from the other brands in the market. The packaging of the bottle is made by polyethylene terephthalate, which is a 100% recyclable material and does not contain Bi-sphenol A. In addition, of that the bottles are around 30% lighter than any other package drinking water bottle in the market. Key Success Factors: Market positioning strategy of Nestle pure life Pricing strategy Publicity and sales promotion Operational performance: considering environmental influence and improving the cost efficiency Integrated business model: managing various business units, technologies, effective value chains. 3.1.2. PESTEL Model: PESTEL analysis is a tool to analyze the political scenario, environmental circumstances, socio political state, technological scenario and legal scenario of the macro environment perspective of the business (Bivolaru, Andrei and Purcaroiu, 2009). It examines the effect of the events, which can influence the performance of the organization (Saavedra-Rivano, 1979). This analysis will be conducted keeping in mind the target market throughout the world. Political: Unstable political condition and variety of government regulation can affect its business. Nestle is a brand which is always trying to met all the standards prescribed. Government stability also plays a vital role for the company where they want to get in especially in the countries where political stability is in a position of risk. There is also a possibility of threat from the concerning state and local laws and regulations for foreign brands. Economic: Inflation rate, economic growth rate have a wider effect on the business of Nestle. Economic condition varies from country to country Therefore the company also needs to change its strategy according to its specific requirement (Paliwoda, Andrews and Chen, 2012). Global economic turmoil has its influence on the business, as because consumers are spending less and therefore management need to adopt different strategies. Social: Social as well as cultural environment has a great impact on the product of Nestle. Change in social background of people involves change in the attitude and lifestyle. Different countries have different custom, taste, culture and lifestyle, which have enormous effect on the consumer behavior of a specific region. Therefore, Nestle has to take care of the cultural factors to sustain in the market. Corporate Social Responsibility is another major factor in this industry (Y\"uksel, 2012). Technological: It has the most rapid and persistent effect on the product. It creates opportunity for the new product development as well as making opportunities for the new marketing strategies. Nestle uses updated technology in product development as well as in various marketing activities. Environmental: Bottled water market has environmental compliance, which are extremely essential to cater for. It includes the process by which purification of water is done, quality of the plastic use, chemicals use to purify the water etc. As Nestle operates in the food and nutrition, industry Therefore they need to maintain all regulations related to it. Legal: Legal aspect involves laws related to the health and safety issues. It is essential for the company Nestle pure life to align their process with legal standing of the government of respective country. Consumer laws, employee laws and other laws related to operation in foreign country also need to be analyzed before doing business. 3.1.3. Five Forces Analysis Porter’s Five Forces model is an important marketing tool, which is used to analyze different industrial parameters to develop necessary business strategies (Kamran, 2013). In the following table, five different factors of the model would be discussed: Threat of new entrants Middle (entry barriers are rather high): Nestle operates in the market for a century almost and Nestle pure life is doing its business for more than a decade now. Therefore, we can say that the threat of new entrants is moderate. Bargaining power of suppliers Middle to High Bargaining power of suppliers is one of the most important factors for any organization to sustain in the industry. Nestle is acknowledged for maintaining good relation with its suppliers. However, They may enjoy a technological advantage regarding particular process of purification or parts of the related equipment. The product itself has many competitors, so it is another reason for the high bargaining power of the supplier. Bargaining power of buyers Middle Buyers or consumer carries a huge bargaining power (Pan, 2013). Although there are many competitive products in the market, still the quality of Nestle Pure Life has made it successful among its user. Threat of substitute products/services High: Packaged drinking water is a very common product and it has many substitutes present in the market. Therefore, substitute threat is very high for this product of Nestle. Competitive rivalry within the industry Middle: Nestle has a very strong foothold in the industry. It has many rivals but all of them have a healthy competition with each other. 3.2 Internal Analysis: 3.2.1 Human resources: Human resources are considered as the asset of this company (Dessler, 2000). To maintain a global corporate standard the company always looking for talented workforce who can be aligned with the organizational objective (Acquaah, Amoako-Gyampah and Jayaram, n.d.). Workforce diversity is not entertained in the organization. Nestle management does not show any kind of complexity for employees and have an excellent relation with them. Human resource policy of Nestle is transparent. 3.2.2 Core Competency: Nestle bottled water has different brands in the market. However, consistency helped them to be a giant in this industry (Peter and Olson, 2010). Consistency can be measured on safety, quality and overall reliability of the product Nestle Pure Life, which have gained the loyalty from the consumer throughout the world. Water that is the main product here is processed through modern quality control process to remove impurities and microorganisms (Gower, 2014). Good quality of material is used to make the package, which is 100% recyclable. 3.2.3 Criteria for sustainable competitive advantage (VRIN): VRIN is a resource-based analysis, which is used to analyze the strategic importance of the features of a product or resource to make the product (Galbreath, 2004). Valuable: Resources used to make the product collectively bring value to the product as a whole, which will further provide competitive advantage to the product. Rare: Resources used for the Nestle Pure Life are not rare. However, technology used for the making of product has a competitive advantage over others. Inimitable: Packaged drinking water is a very common product in the market. But the quality and technology can be inimitable for the competing organization as Nestle assure to provide best quality product to its consumer. Non-Substitutable: Other than the technology, resources are easily available to make the product. Therefore, we can say resources are substitutable. 3.3 SWOT Analysis: SWOT analysis is a tool to analyze strategic planning process (Bertelsen, 2012). This analysis measures an organization or business of a particular product from two perspectives that is internal as well as external. Business strengths and weaknesses are the part of the internal environment and opportunities and threats are the part of external environment of the firm (Plesničar and Zaletel-Kragelj, n.d.). Strengths: Biggest strength of Nestle is its brand image The company has enormous financial support to invest in new market or product development Talented work force Geographic presence and effective distribution channel R&D capabilities and constant development of product Maintaining laws related to packaged drinking water. Weaknesses: Lack of awareness about the purity of bottled water in the developing and underdeveloped countries Branding and promotional issues related to the product Pure Life mineral water, which give the chance to its competitors to penetrate the market. Opportunities: Pure water can be promoted for the health conscious people of the developed and developing countries. Those countries or regions can be targeted where drinking water is not easily available. Nestle Pure Life can be launch with some new flavors and can be categorized according to the demographic segments. Threats: Threats from the rival companies Rising price of raw materials and technology Political and legal issues related to package drinking water. 4. Conclusion and recommendation Nestle Pure Life has a very established foothold in the market. However, the company needs supervision on the environmental practices (Wilhelm and Becker, 2000). The company needs to pull out the product from certain markets where the product is not doing business well. The organization need to avoid decision, which will result in sunk cost. The company can work on improving the product life cycle in order to create a good image in the market. It needs extensive promotional and marketing campaigns for the under developed and developing countries. In conclusion we can say that Nestle as a brand, it has many positive attributes through which the organization has managed to sustain its position in the industry. References Acquaah, M., Amoako-Gyampah, K. and Jayaram, J., n.d. The Effects of Human Resource Management, Manufacturing and Marketing Strategies on Competitive Strategy and Firm Performance in an Emerging Economy: A Comparative Analysis of Family and Nonfamily Firms. Bertelsen, B., 2012. Everything you need to know about SWOT analysis. 1st ed. [Newmarket, Ont.]: BrainMass Inc. Bivolaru, E., Andrei, R. and Purcaroiu, G., 2009. Branding Romania: a PESTEL framework based on a comparative analysis of two country brand indexes. Management \& Marketing, 4(4), pp.101--112. Dessler, G., 2000. Human resource management. 1st ed. Upper Saddle River, NJ: Prentice Hall. FATOKUN, A., 2014. MARKETING CONCEPT AS A STRATEGY FOR EFFECTIVE COMPETITION (A CASE STUDY OF NESTLE FOODS NIGERIA PLC). food & water watch, 2011. Hanging on for Pure Life. 1st ed. [ebook] Available at: [Accessed 12 Aug. 2014]. Galbreath, J., 2004. Determinants of firm success: a resource-based analysis. 1st ed. Curtin University of Technology, Graduate School of Business. Gower, K., 2014. Nestle international business strategy. [online] Academia.edu. Available at: [Accessed 12 Aug. 2014]. Helper, S., n.d. Nestle Marketing Plan. [online] Academia.edu. Available at: [Accessed 12 Aug. 2014]. http://www.nestle.com, n.d. Home. [online] Available at: [Accessed 12 Aug. 2014]. Kamran, Q., 2013. 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