Introduction of a New Product in the Indian Market by Nestle India - Case Study Example

Course name: Professor’s name: University name: City, State Date of submission: A REPORT ON A RESEARCH TO DETERMINE THE INTRODUCTION OF A NEW PRODUCT IN THE INDIAN MARKET BY NESTLE INDIA EXECUTIVE SUMMARY Nestle company is a global company that has its headquarters in Switzerland. It has a branch in S.A which has a subsidiary in India[Sid09]. Nestle India primary objective is to produce products that are of international standards. It also aims at providing high-quality products to its customers. It committed to ensuring the satisfaction of its shareholders and ensuring a long-term growth. In India, Nestle is the leading company in the quantity of noodles sales per year. It market is about 90 % of the entire market. Nestle India has over the years grown to be the largest food producing company in India. When Nestle India launched, its target customers were employed women. Research later showed that the targeted customers were not the right customers. The results of the study showed that children provided the largest consumer segment. The customersectorthen grew to include the youth, office workers and people who were conscious of their health. INTRODUCTION AND BACKGROUND TO THE COMPANY This is a report on research that I did on a new product for Nestle India. It was to determine the market share of the new product (animal feeds) and how this new product will affect the organization results in terms of profit. This report will provide the body with the required information on pet food production and marketing. Nestle India started in 1961 in Moga, Punjab[Sid09]. These were after the government asked Nestle to develop a milk economy for the country. Some of the products that Nestlé India produces include baby foods, dairy products, beverages, cooking aid and prepared dishes, and chocolates and confectionary. MARKET DESCRIPTION The confectionery market in India had a value of about US$ 1.3 billion in the year 2013. Economic analysts project that these value will increase by 71 per cent by 2018 to reach the value of about US$ 2.2 billion. Due to economic growth in India, there has been a considerable rise in the disposable income of Indian salary earner. This is evident among middle-class wage earners.In a study conducted by a research specialist known as Canadean, this demographic comprises of about 45 per cent of the entire confectionery consumption in India[Can13]. The key players in the confectionery market in India are sugar candy and chocolate and gum confectionery. Sugar holds chocolate and gum hold about 46 percent of the market share and the rest. The two leading companies in the chocolate confectionery market are Cadbury and Nestle. Cadbury is the leader with a market share of about 65-70 percent while Nestle India is the second with a market share of about 20 percent[Mad14]. The confectionery market concentrates in chocolate selling. The target customers are the middle-classearners who in recent years due to economic growth and development have a significant amount of disposable income. SWOT TABLE[MBA14] Strength 1. It has a colossal market share in India 2. It facilitates continuous innovation and creativity 3. It provides job for anenormous population in India 4. Its chain of supply is well-established 5. Its production process is environmental friendly 6. It has a well-established marketing and advertising department 7. It has a wide range of products 8. Maggi is the leading product in India with a market share of about 90 percent Weakness 1. It faces intense competition from other food products producing companies 2. Since it is a multinational company, it is faced with restrictions from branches in other countries Opportunity 1. It aims at introducing new products that are more health in order to attract the health conscious consumers 2. With increase in economic development, it aims at increasing its activities in the country 3. To increase its market share by acquiring other companies and merging with some big companies 4. Producing products that are affordable and relevant to rural markets Threats 1. Raw materials have become very expensive 2. Competition in all product segments has increased 3. Economic inflation in India FINDINGS EXPLANATION OF THE SWOT TABLE 1. In the research, I found that Nestle India has an existing large market for its products. Animal feeds will exploit the already existing large market and thus produce good returns for the company. 2. Since Indian consumers are very conscious of the health of their domestic animals, these will be an excellent opportunity for Nestle India to provide them with animal feeds that are health. 3. The introduction of animal feeds production in India by Nestle may take advantage of merging with animal feed producing company in India. 4. There will be production problems for the new product due to high-cost raw materials. RECOMMENDATIONS (a) Target market Animal feed production will mainly target dairy farmers in India. Since these dairy farmers are the key suppliers of milk to Nestle India, which is the main raw material for Nestle India products, they will readily accept to buy animal feeds from Nestle India. The dairy farmers are going to provide anadequate market for animal foods produced by Nestle India. This is an excellent opportunity for Nestle India to tap into the large rural market not only for the animal feeds but also for its other products[Pra12]. With the already existing good relationship between Nestle India and dairy farmers, it is going to be very easy for Nestle India to market this new product to the dairy farmers. Thisreal relationship will also give them the advantage over its competitors in the field of animal products. (b) New product description Animal feeds is a product designed for domestic animals like dairy cows. These animal feeds are going to provide the necessary nutrients to the dairy cows that will increase their daily productivity. Since Nestle India is focused more on health products, this animal feeds will not be an exception. It will ensure that they are safe and healthy for the dairy cows. These animal feeds will differ from those off competitors in that they will provide nutrients that will show anincrease in productivity in a very short period[Due15]. Since Nestle India is a big influential company, it will ensure that it gets it raw material at a cheap price. This will enable it to provide its animal feeds at a lower price to its customers and still make good returns from its sales[Due15]. By selling at a lower price than its competitors, it will acquire a significant market share a very short period and thus see its profits grow. In order to get a big market in a very short time, it is advisable that Nestle should aim at the tyranny of numbers instead of profit per one bag sale. In doing so, it will dominate the market of animal feeds in no time. The target customers of these animal feeds will be the dairy farmers whose location is in the rural areas of India. For easy distribution, Nestle India should open a manufacturing company close to its target customers[Due15]. In doing so, it will have cut down the cost of transporting the animal feeds to the market. These will make the products cheap and easily accessible by the customers. With such kind of strategy, Nestle India will be able to tap into a great number of loyal customers in a very short period. Since there is already an existing partnership between Nestle India and dairy farmers in India, it is going to be very easy for Nestle India to promote theanimal feeds product[Due15]. One way to improve its product may be giving animal feeds to dairy farmers on loan and deduct the money when paying the farmers for their milk supply. These will build more trust between dairy farmers and Nestle India. This kind of partnership will be very beneficial to the dairy farmers in that their animals will not decrease their productivity due to lack of animal feeds. (c) Customer value proposition By introducing theproduction of animal feeds at Nestle India, it will solidify the existing relationship between Nestle India and dairy farmers in India. This relationship will ensure that the dairy farmers remain loyal in supplying Nestle India with milk for an extendedperiod. It will give an available market for animal feeds for many years to come. Introducing animal feeds production will be a great opportunity for Nestle India to tap into rural markets[Pra14]. These will not only be for the animal feeds but also for other products. With these new markets, Nestle India will have increased its market share by a considerable percentage. With an increased market share, the profits of Nestle India will grow at very high rate. Opening a new product line will also provide employment for locals. These new employees will form a new market for Nestle India products. This new product will provide an exceptional customer value to the company in terms of profits and loyalty by customers to the company’s products. (d) Justification of the choice of new products using at least one strategy By introducing theproduction of animal feeds, Nestle India will have opened a new market opportunity for its products in the rural area. Animal feeds whose target market is the dairy farmers of India will ensure theloyalty of these farmers to Nestle India products. This commitment by farmers will enable the company has greatercomputing power than its competitors in the field of food products production. Animal feeds are going to be relevant to the rural markets in India. This will enable the company increases its market share in India by a significant percentage. Opening a new production line in India will provide a lot of people with new job opportunities to apply. It will also enable the company address the threat of increased competition. This will be made possible by the existing partnership between the company and dairy farmers of India. The dairy farmers will provide a ready market for the animal feeds and also other products by Nestle India. Another threat that Nestle will be aiming to address is the increase in theprice of raw materials. This will be addressed by locating the animal feed industry close to the source of raw materials. References Sid09: , (Siddharth, 2009), Can13: , (Canadean, 2013), Mad14: , (Madras, 2014), MBA14: , (MBASkool, 2014), Pra12: , (Prasheet, 2012), Due15: , (Duermyer, 2015), Pra14: , (Prabandhan, 2014), Read More