International Marketing Strategy of Nestle Company - Case Study Example

International Marketing Strategy s Submitted by s: 0 Executive summary Nestles is the biggest company in the world that deals with food products operating factories in about sixty nine countries with a worldwide global strategy (Johson, 2009). In 1994, almost half of the revenues of the company were realized from Europe, while South and North America accounted for thirty six percent and other countries for the remaining eighteen percent. Apart from chocolate, which is a product that the company is best recognized for, Nestle manufactures pet food, beverages as well as pharmaceuticals. At some point, the company was under the ownership of Stouffer’s Hotels but it was divested in the early 90s (Eating The Road, 2009). The company whose headquarters are in Switzerland has embraced an international marketing program partly because its local market is too small to address its projections (Nestle.com, 2014). Nevertheless, the program has had associations with different matters. There was a boycott that was started in the 80s against the marketing of the infant formula that is manufactured by the company in the developing countries and has progressed from time to time (Multinationalmonitor.org, 1987). In the present times, the company has had to deal with issues associated with its growth through acquisitions. This paper will evaluate Nestles international marketing strategy with specific emphasis on the strategies it uses in Europe. Contents 1.0Executive summary 2 Contents 3 2.0Introduction 4 3.0Nestle Marketing 5 4.0Dynamic expansion 6 5.0Nestlé’s marketing mix 6 6.0Recommendation 9 7.0Conclusion 9 8.0Bibliography 10 2.0 Introduction The present set up of Nestle was established in the early 1900 when a company that has American owners and was based in Switzerland merged its operations with a company of Swiss origins (http://www.nestle.com.eg, 2014). Initially, the American company had been employing canning technology to process milk while the Swiss company had employed technology that had fruitfully marketed infant formula (Wilkins, 2004, p. 27). The company adopted the Swiss name and started a run of acquisitions as well as a global expansion program. The initial expansions, including in to the United States, took place as the First World War progressed (Encyclopedia.com, 1999). Even though the company was largely unaffected by the war particularly because of the neutrality of Switzerland, its main markets as well as sources of milk were heavily affected (Referenceforbusiness.com, 2014). This made the owners of the company to look for diversification so that they could make sure the company could survive this and other shakeups that may be faced in the market. After the war ended, the company continued its global expansion, creating new categories of products through acquisition as well as development of new products such as instant coffee (Chong, 2013, p. 64). Other critical introductions of products included the Crunch bar that was introduced in 1938, the Quik drink mix which was introduced in 1948 as well as the Tasters Choice coffee that was established in 1966 (Courses.ecolechocolat.com, 2009). Majority of the expansion of the company took place in the 70s and the 80s when it acquired Beringer Brothers wines, Carnations, and Stouffer among other companies (Growthportpartners.com, 2014). A hostile bid for Source Perrier was launched by Nestle in 1992 and after vigorous negotiations, the acquisition was completed. However, European community regulations forced the company to sell off several water brands that were associated with Perrier. Regardless of the European recession that was experienced in 1993 and 1994, the company prospered as it had streamlined its operations by reducing the products that were not fetching profits, increasing sales in its new markets as well as aggressive marketing. Nestle acquired Alpo that manufactured pet foods from Grand Metropolitan in 1994. Starting in the 90s, Nestle committed itself to retaining key products while divesting the subsidiaries that were not part of its main mission (Brevolutionconsulting.com, 2012). Consequently, Stouffers hotel was sold and the company refocused on packaged foods, confectionary as well as beverages (McDowell, 1993). The product lines as well as the brands that are associated with the company are the same all over the globe with very little dissimilarity, if any, from one nation to the other (Czinkota and Ronkainen, 2013, p. 315). This allows the company to benefit from economies of scale as far as production is concerned while encouraging the consumers who are aware of the products in a particular location to purchase the same products when they are in a different location. 3.0 Nestle Marketing Creating customer connections founded on customer value and satisfaction is at the center of modern marketing (Seligman, 2012, p. 13). The two fold objectives of Nestle marketing is the attraction of new customers through the provision of superior value while maintaining and increasing the current customers by making sure they are satisfied (Gillespie, 2011). According to Nestle, marketing is a social and managerial undertaking that allows individual and groups to acquire good food as well as a good life through the creation and exchange of product along with values. The company operates under a number of principles with its main goal being the manufacturing and marketing of products in a manner that creates value that will have continued sustenance for the shareholders, workers, consumers as well as business partners. The company does not emphasize on short term profits, as it prefers business development that will bring long-term success (The Economic Times, 2005). It also acknowledges that the consumers of its products have a sincere and legitimate interest in the conduct, activities and beliefs held by the company in regard to the brands they trust and without these loyal customers, the company would not be in existence. According to Nestle, legislation is the most efficient protection of responsible behavior, however, in particular areas, extra regulation to staff in terms of voluntary business principles is advantageous so that the company can make sure that high standards are maintained throughout the company. The company is aware of the notion that the success of the form symbolizes the professionalism, behavior and attitudes associated with its management as well as workers. Thus, recruiting the correct individuals together with progressive training and development is important. The company maintains its commitment to following and respecting all the local laws that are applicable in the markets they operate in all over the globe. 4.0 Dynamic expansion Nestlé’s history includes the development of numerous different products as well as acquiring other companies as well as merging and the purchase of shares in corporations mostly abroad (Tagliabue, 2014). Through the course of its development, the company has been able to increase the products it takes to the market while diversifying its operations and at the same time making its economic foundations stronger. The most important acquisitions associated with Nestle are Carnation in Los Angeles that deals with milk as well as food products and pet food, and the Row tree Mackintosh based in New York that mainly deals with chocolates and confectionaries. Currently, almost ninety eight percent of Nestlé’s business is outside Switzerland, with interests in cosmetics through a large shareholding in L’Oreal along with ophthalmic products even though the company’s priority remains to be food products (Ethicalconsumer.org, 2006). 5.0 Nestlé’s marketing mix Marketing mix can be defined as a set of well-regulated marketing instruments which are combined by an organization to create the reaction it seeks in the target market (Barker and Angelopulo, 2006, p. 132). This mix comprises of all the activities the organization can take part in to increase the demand associated with its products (Pride, Hughes and Kapoor, 2012, p. 344). The numerous possibilities may be combined into four groups of variables referred to as the four P’s that are mentioned below: a. Product Since Nestle is the largest company that deals with food and nutrition in the globe, nearly six thousand products are associated with the company internationally (Shah, 2012). The company’s product range is broad covering almost all the daily use products along with the products that are occasionally used. All the items associated with the company are further subdivided based on the diverse choices of the consumers that include varying shapes and flavorings. Before products can be introduced into the market, they are assessed and evaluated through high profile research as well as development that entail food processing micro-analysis together with suitable delivery of functionalities in the products that promises healthy foods for the customers. The key raw resource that is used in its milk goods are processed through UHT and boxed in tetra-packs that are appealing and enduring. Since cleanliness is the simple ethical requirement for eatable products, Nestle directs a lot of attention and emphasis on this area. It also avails the product compliance such as legal supports to the consumers who use its products. The nutritional quality of the foods it produces is first determined and is provided on the packaging of the products to allow the customers to confirm their preferences together with when the goods will expire. The company also responds to complaints in a timely manner while taking into consideration the suggestions that they consumers may come up with. b. Pricing Prices that are not rigid are the main element in regard to the triumph of Nestle in the worldwide markets. For instance, Milkpak, which is the biggest selling product, sells at a similar price as other products in the market of relatively lesser quality. Nestlé’s marketing strategy includes a broad pricing strategy that allows the company to maintain the rates of their products at sustainable positions. The prices associated with the company’s products are affordable to most types of consumers as it has a variety of single products in regard to beverages, fruit juices that can easily be afforded by the lower economic classes as well as more pricy tin packed beverages in the market. Nestle also allows discounts on bulk purchases in the whole sale market and at the market stores where its goods are stocked. The company also has periodic fluctuations in prices particularly in relation to chocolate goods either through up-sizing the prevailing prices or decreasing the trade prices. c. Place The main area of business for Nestlé’s products is in Europe where the company attains almost ninety percent of its revenue from sales (Corporatewatch.org, 2010). The company has a global presence and runs operations in almost a hundred countries making the sales that are done all over the world, impulsive. Its products are not directly introduced into the market; instead, the company uses an entire procedure that included all the fundamentals from the manufacturer all the way to retailer before it finally reaches the end consumer. The company’s products can be found in all their variety at the maximum outlets since the company is always seeking to increase the outlets that deal with its products. d. Promotion Strategies for promotion associated with the company are meticulously planned and they always pay multiples of the amounts that are expected. Advertisements that are done in the form of electronic media as well as print media and sign boards that have temporary figurations associated with particular brands work in favor of the brand. In some occasions, a limited economy provides a boost of the popularity of the brand particular in the event of making a new induction in to the market. 6.0 Recommendation As a global company, Nestle has a very elaborate setup of how it operates and the manner in which it carries out its marketing. However, the company should focus in enhancing its public image as a company that has corporate responsibility as well. The company is among those that have experienced the widest boycotts in the globe as a result of certain notions that it commits corporate crimes in regard to environmental practices (Krasny, 2012). The company must ensure that this specific perception is altered. Furthermore, the products of the company that are not doing well in specific markets should be pulled out instead of consistently increasing the capital spent on them to ensure they become valuable (Marketingmixx.com, 2011). Some products experience difficulties in regard to success in the markets as a result of the cultures of the markets that Nestle operates in and thus should be avoided to make sure that sunk costs are not incurred. 7.0 Conclusion It can be safely concluded that Nestle has numerous positive attributes that support its larger than life range and thus the company has been able to maintain its position among the Fortune 500 companies in the world. Through employing efficient management processes, being innovative, capital infusion as well as research and development, the company has been able to continue expanding its portfolio therefore serving as an example of an outstanding company that provides food and nutrition products, and an actual multinational corporation. There have been numerous lawsuits against the company and it is also perceived to be among the globe’s most boycotted companies (Blogs.baruch.cuny.edu, 2013). Regardless of all this issues that are faced by the company, its revenues continue to rise and have hardly been negative since the company was established. This is a true testimony of its creations of the value chain along with streamlined processes that make sure that Nestle is a part of the livelihood of persons in the almost a hundred and thirty nations where it has its presence. 8.0 Bibliography Barker, R. and Angelopulo, G. 2006, Integrated organisational communication. Juta, Cape Town. Blogs.baruch.cuny.edu, 2013, Nestle – International Strategy » Nestle Profile. [online] Available at: http://blogs.baruch.cuny.edu/mgt4880nestle/2013/04/08/nestle- international-strategy/ [Accessed 3 Nov. 2014]. Brevolutionconsulting.com, 2012, Ben & Jerry’s Merger with Unilever | B Revolution Consulting, Inc.. [online] Available at: http://www.brevolutionconsulting.com/articles/ben-and-jerrys-unilever-merger/ [Accessed 3 Nov. 2014]. Chong, L. 2013, Managing a Chinese partner, Palgrave Macmillan, Basingstoke. Corporatewatch.org, 2010, Nestlé SA : Who, Where, How Much?. [online] Available at: http://www.corporatewatch.org/content/nestl%C3%A9-sa-who-where-how-much [Accessed 3 Nov. 2014]. Courses.ecolechocolat.com, 2009, History of Chocolate in Timeline. [online] Available at: http://courses.ecolechocolat.com/lobjects/curriculum1/oldcurric/pp_mod_2/timeline.h tm [Accessed 3 Nov. 2014]. Czinkota, M. and Ronkainen, I. 2013, International marketing, South-Western Cengage Learning, Mason, OH. Eating The Road, 2009, History of Stouffers Resturants & Hotels. [online] Available at: https://eatingtheroad.wordpress.com/restaurant-list/history-of-stouffers-resturants- hotels/ [Accessed 3 Nov. 2014]. Encyclopedia.com, 1999, Nestle S.A Facts, information, pictures | Encyclopedia.com articles about Nestle S.A. [online] Available at: http://www.encyclopedia.com/topic/Nestle_S.A.aspx [Accessed 3 Nov. 2014]. Ethicalconsumer.org, 2006, Ethical Consumer on ethical company takeovers. [online] Available at: http://www.ethicalconsumer.org/commentanalysis/factsvgreenwash/ethicalcompanyta keovers.aspx [Accessed 3 Nov. 2014]. Gillespie, A. 2011, Foundations of economics, Oxford University Press, Oxford. Growthportpartners.com, 2014, Tony Burnham. [online] Available at: http://www.growthportpartners.com/tony-burnham/ [Accessed 3 Nov. 2014]. http://www.nestle.com.eg, 2014, Nestle Worldwide History. [online] Available at: http://www.nestle.com.eg/en/aboutus/nestleworldwidehistory [Accessed 3 Nov. 2014]. Johson, I. 2009, Nestl?: the worlds biggest food company and one of the most boycotted – Telegraph. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/news/worldnews/africaandindianocean/zimbabwe/623556 6/Nestl-the-worlds-biggest-food-company-and-one-of-the-most-boycotted.html [Accessed 3 Nov. 2014]. Krasny, J. 2012, Every Parent Should Know The Scandalous History Of Infant Formula. [online] Business Insider. Available at: http://www.businessinsider.com/nestles- infant-formula-scandal-2012-6?op=1 [Accessed 3 Nov. 2014]. Marketingmixx.com, 2011, Nestle Marketing Mix | Marketing Mixx. [online] Available at: http://marketingmixx.com/marketing-basics/marketing-mix/150-nestle-marketing- mix.html [Accessed 3 Nov. 2014]. McDowell, E. 1993, COMPANY NEWS; Nestle to Sell Its Stouffer Hotel Unit. [online] Nytimes.com. Available at: http://www.nytimes.com/1993/04/01/business/company- news-nestle-to-sell-its-stouffer-hotel-unit.html [Accessed 3 Nov. 2014]. Multinationalmonitor.org, 1987. Corporate Crime and Violence. [online] Available at: http://multinationalmonitor.org/hyper/issues/1987/04/formula.html [Accessed 3 Nov. 2014]. Nestle.com, 2014, [online] Available at: http://www.nestle.com/aboutus/mediavideos/nestle- headquarters [Accessed 3 Nov. 2014]. Pride, W., Hughes, R. and Kapoor, J. 2012, Business, South-Western Cengage Learning, Mason, OH. Referenceforbusiness.com, 2014, Nestlé S.A. Company Profile, Information, Business Description, History, Background Information on Nestlé S.A.. [online] Available at: http://www.referenceforbusiness.com/history/Mi-Nu/Nestl-S-A.html [Accessed 3 Nov. 2014]. Seligman, J. 2012, Customer experience in modern marketing. [S.l.]: Lulu. Shah, D. 2012, Nestlé: Good Food, Good Life | Industry Leaders Magazine. [online] Industryleadersmagazine.com. Available at: http://www.industryleadersmagazine.com/nestle-good-food-good-life/ [Accessed 3 Nov. 2014]. Tagliabue, J. 2014, NESTLE, LOOKING FOR SAFETY,CONTINUES BROAD SHIFT TO U.S.. [online] Nytimes.com. Available at: http://www.nytimes.com/1984/09/24/business/nestle-looking-for-safetycontinues- broad-shift-to-us.html [Accessed 3 Nov. 2014]. The Economic Times, 2005, Nestle focus on long-term growth. [online] Available at: http://articles.economictimes.indiatimes.com/2005-04- 04/news/27492829_1_innovation-and-renovation-incomes-long-term [Accessed 3 Nov. 2014]. Wilkins, M. 2004, The history of foreign investment in the United States, 1914-1945, Harvard University Press, Cambridge, Mass. Read More