Nestle Fruit Yogurt in the United States - Case Study Example

Nestle Fruit Yogurt in United States Name Course Tutor Date Executive Summary A marketing plan is an essential part of a business plan. It helps in keeping the business in course, towards the business mission, products and service lines. Marketing plan helps in strategizing the best approach based on the financial situation. It helps in identifying business strengths and weaknesses through a thorough analysis of internal and external environment, as well as, opportunities. A marketing plan helps the investor analyze the business with the customers’ perspective and gain insight on what the marketplace needs. The target market, current and potential competition and how marketing resources will be distributed, are also analyzed in the marketing plan (Lavinsky, np). This paper will analyze the soft drink industry in general and the possibility of nestle Company introducing fruit yoghurt in the united states market considering the opportunities and threats. Introduction The aim of this paper is to assess the nestle company, industry, evaluate and understand how the organization expand their strategic objectives for the organization through the analysis of the internal and external business environment in which a new product will be introduced in the market and the strategies relevant for the product realization. Nestle company is classified as the largest Fast Moving Consumer Good (FMCG) company operating all over the world with more than 500 factories in eighty six countries. Nestle is based in Switzerland and mostly produces and develops foods and beverages in three geographical zones Europe, Oceania and Africa and America and Asia. Nestle produces products like, ice cream, dairy products, pet foods, confectionery, baby foods, breakfast cereals, snacks, bottled water and coffee. Nestle company was started in 1886 by Henri Nestle as a condensed milk factory in Switzerland and later in 1905 it merged with Anglo-Swiss milk company. The company grew significantly spreading all over the world (Nestle, 2011). Market description Nestle company has the stipulation to create awareness of the new soft drink by lacing itself as a major leading producer and distributor of the soft drink in the Fast Moving Consumer Goods industry especially the food industry (Nestle, 2011). The soft drinks industry in the United States is mostly comprised of bottled non-alcoholic beverages including beverages that are fruit flavored. In 2010 in the United States, there were 1209 businesses in the soft drinks industry excluding the alcoholic beverages and business that just manufacture the ingredients or distribution of the beverages (Kaczanowska, 2010). 66% of the market share is dominated by three major companies: coca-cola company with 28.6%, PepsiCo with 26.8 % plus Dr Pepper Snapple Group with 8.6%, while the remaining market share of 34% is controlled by numerous soft drink producing companies (Freedonia Group, 2010) The forecast on the soft drink industry in the United States has not been bright and has shown signs of stress due to the changing consumer behavior. According to the Freedonia group (2010), there is an expected increase in the production volume of soft drinks to 22.1 billion gallons which is a 1.4% annual increase in 2014. The soft drink industry has a net worth of $47.2 billion with annual average growth of 1.8% (ABA, 2005). There is an expected increase in consumption volume due to the predicted increase in customer spending at the same time as recession ends, increases in lifestyle which is fast paced which has a demand for products that are convincing, increase in the age group above 55 years and the high demand for functional beverages (Freedonia Group, 2010). SWOT analysis Strengths Nestle is a well known company Preference of healthy diet and obesity concerns Popularity among diverse age groups Quality Weakness Lack of awareness Minimal advertisement Chilling Opportunities Increase in partnership High credibility Potential to expand Threats Threat of substitute products High competitive market SWOT analysis shows that there exist certain strengths and weaknesses as well as opportunities and threats in the soft drink market in the United States. One of the opportunities is that nestle is a global company that is reliable and can be trusted by the consumers and therefore a number of people would prefer to buy nestle dairy products rather than other brands (David, 2009). According to Nestle (2011), the company produces quality foods with the state of the art machinery; therefore they produce products of high quality which are certified by international certification providers like FDA and ISO certifications. Before the release of any products in the market, nestle always makes sure that the product is in no way harmful to the consumers. The increase in the health concerns of the Americans and the need for healthy foods by the consumers is a major strength for the yoghurt market in the United States (David, 2009). One of the major weaknesses is that the product is new in the market and has 0% awareness to the consumers. Another weakness is that the product has to be stored at low temperatures and has a short expiry of about 20 to 28 days. Target market The need to establish a target market for yoghurt consumption in the United States calls for the company to understand the target market for the new product which can be classified by use of segmentation variables with the variables that are relevant to yoghurt consumption in the United States being age, gender, location and the social economic status among others (Bruce & Duane, 2011). For nestle fruit yogurt, the target market in the United States is among people who are between the age group of 18 to 44 due to its delicious, hygienic, nutritious and an alternative for junk food. According to American Beverage Association (2005) Yogurt is consumed in large quantities in the United States by young people because in contrast to the older generation, the young people grew up with it and the older generations are reluctant to adopt yogurt consumption. This trend of yogurt consumption has increased by 6 % from 2007 and therefore it is profitable to target the group (ABA, 2005). Product description Product The nestle fruit yoghurt will be offered in three different flavors strawberry, apricot and mango in 100g, 300g and 500g cups. The strawberry flavor is a high consumption rate and is more popular than the other two flavors. The quality of the nestle fruit yoghurt is very satisfactory and the consumption rate is acceptable. The fruit chunks add flavor, value and taste to the yoghurt (Nestle, 2011). Price This is the amount of money charged for the product. Setting the right price for a new product is always challenging. The price used for the nestle fruit yoghurt should be capable of covering the cost that has been used in production of the yoghurt and leaving a profit margin. For nestle fruit yogurt to penetrate the market, the appropriate pricing strategy has to be utilized. There are several pricing strategies that can be used in the market. To make the proper pricing policy, there is need to consider the type of product, the available competition, demand in the market and cost of production. Nestle fruit yoghurt is priced by means of cost plus approach (Sharp, 2013). This is a method that involves adding a certain percentage as a profit on the cost of production. This can only be determined by first accessing fixed and variable prices that have been utilized production of nestle fruit yoghurt (Roger, 2008). Place This refers to the channels used for the product to reach the end user. Nestle fruit yoghurt is distributed using the existing nestle company distributors available in most parts of the country hence the product is available nationally making it available to a large portion of the population (Bruce & Duane, 2011). Promotion Promotion is an important P of marketing strategy. Promotion refers to the sequence of events followed to inform and persuade the customers to buy a certain product with a view to introduce the product, create awareness and educate the consumers on the benefits of the new product. Considering the new nestle fruit yogurt is a new entrant in the market with 0% awareness, after designing the new product, the company will use their resources to aggressively promote the yogurt and persuade people to buy the nestle fruit yoghurt (Duncan, 2005). Customer Proposition value Nestle offers food products that are of high quality, safe, affordable and tasty. The nestle fruit yoghurt is a healthy product with high nutritional value which can be used as a replacement for the junk foods that are sugary, desserts, ice cream and carbonated drinks. The nestle fruit yoghurt is a dairy product with added value and provides the goodness of yogurt, fruits and milk. The yoghurt contains live bacteria which provide health benefits to the consumers (Nestle, 2011). Justification The introduction of nestle fruit yogurt in the United States will be successful, the main reason being the health benefits of the products combined with the fact that nestle is a well established international company that produces quality products. Producing fruit yoghurt with health benefits with different flavors will be a success for nestle company and the consumers. Through accomplishment of this goal, understanding will be formed that will be promote desire and interest. The objective is set with a close consideration to the SWOT analysis discussed earlier (Bruce & Duane, 2011). Conclusion In conclusion, to develop new products, the company should always start with approaches based on customer needs. Being a global organization, it is necessary that Nestle develops new fruit yogurt using the approaches of customers across cultures and markets. This will make sure that the yogurt is relevant to a great number of American consumers in addition, it will deliver the highest returns when commenced. References American Beverage Association 2005, Soft Drink Facts, Retrieved on September 1, 2014 from http://www.ameribev.org/variety/facts.asp Bruce R. B and Duane. I 2010, Entrepreneurship: Successfully Launching NewVentures, (3rd ed.), Upper Saddle River, NJ, Prentice Hall. David, F. R 2009, Strategic management: concept and cases (12th ed), NJ, Pearson Prentice Hall. Duncan, T 2005, Principles of Advertising & IMC (2nd ed.), McGraw-Hill/Irwin, New York. Kaczanowska, A 2010, Soda Production in the U.S. IBIS World Industry report, 31211. Retrieved on September 1, 2014 from www.ibisworld.com/industry/default.aspx?indid=285 Lavinsky, D 2013, Marketing Plan Template: Exactly What to Include, Accessed on August 30, 2014 from http://www.forbes.com/sites/davelavinsky/2013/09/30/marketing-plan-template-exactly-what-to-include/ Nestle 2011, The World’s Leading Nutrition, Health and Wellness Company Annual Report 2011, accessed on august 31, 2014 from www.nestle.com Roger, B 2008, Market‐Based Management, 5th ed., Pearson Publishing. Sharp, P 2013, Marketing: Theory, Evidence Practice, Pearson Australia. The Freedonia Group 2010, Freedonia Focus on Soft drink production, Accessed on September 1, 2014 from www.freedoniagroup.com/FocusDetails.aspx?DocumentId=502104&AspxAutoDetectCookieSupport=1 Read More