Nestle Australia - Company's Goals and Objectives, Market Share, Positioning, Market Analysis, Buyer Behavior - Example

Nestle Australia Name Instructor Subject Date Introduction Companies need to be aware of the environment at which they are performing their business, so they carry out PEST analysis and SWOT analysis as well. However, in order for more accurate information, a company may conduct a situation analysis that is more detailed and precise; it shows the company’s place in the whole industry. The following is a situation analysis of Nestle in the Australian foods and confectionery industry. Company analysis Goals and objectives Like the main company, Nestle Australia is an extension of the desires of the shareholders. Its main agenda s capital utilization and the realization of profit, however, a corporation this enormous does not only wish to make profit but also to better the lives of other stakeholders that are part and parcel of the corporation. This includes its employees, its customers and the general public and this is why CSR is a major part of the corporation’s main agendas. The company believes in the devolvement of task and revenue in order to better the lives of its contractors and outsourced personnel. Source: (Tipton, Loon, & Nestlé Nutrition Institute. 2013, p. 45) Fig 1. Clealy stipulates the core values that nestle considers vital in their long terma nd short term goals. The relaization of these goals will keep them in the fore front of the foods and confectionery indusrty. Market share The larger picture will show that nestle is the largest food company in the world in terms of market capitalization and market share; these boast a total of 233 billion US dollars and a 17% respectively (State Library of New South Wales., & Nestlé Australia. 2004, p. 67). These numbers are not as far from the real case in Australia, fortunately, the nation is wide and boasts as the single continent that is also a nation. This gives the company a large playing ground for their products, however this has been a very competitive industry but nestle has remained either in position one or two in all their products expect for chocolate which it is in third place. Positioning The company seeks to find a balance between profitability and market share, market sales have reduced a little and this prompts action from the management. In the current market price reduction does not mean an automatic increase in sales, the company must put the long term objectives as the priorities since short term adjustment in their sales and strategy can end up robbing the company the chance to realize their long term goals. The position in which the company is taking is a more calculated strategy in implementation of their short term and long term goals. Market analysis Size The most advantageous factor about Nestle is that all its products can be affordable for all market; this includes the high and low end markets; this is evident in that the company has been known to make sales even in low income nations. The size of the Australian confectionery market is expanding, it has been dominated by nestle after it took over the other competitors in the late 1980s. The company got a 7.5% of the market share back then and as said earlier, this has been increasing. In 2012 alone the company generated total revenue of 2,204,397,000 dollars including sales and other revenue. Growth The performance of the company has been sluggish over the past four years, with certain sectors of their products showing stagnating growth. However, the management assured the general public that the company was expecting a 5% increase in their revenue excluding expansions in terms of mergers and acquisitions. The company experienced a low in the previous year which has a 4.6% growth following in the weakest growth that was 2009’s 4.1%. The management seeks to increase its organic use that is expected to spark increase in sales. Customer needs The needs of the general public have to be considered by all companies, especially multinationals such as Nestle. The Australian market has middle income earners who need their desires in terms of the quality of drinks to be met, despite the adverse market factors that might make the company raise their prices (Kumar, & Steenkamp, 2007, p. 162). Since Nestle is well known for its quality in chocolates, coffees and baby products, when its prices rise the customers are forced to go for lower priced alternatives that might not meet their desired quality, putting their customers at such position will not enhance brand loyalty. Buyer behavior In the Australian market consumers react to price changes according to the rules of demand and supply. Nestle noted that price changes like the reduction of their prices due to competition factors did not yield increased sales and hence increased profits. So the buyer behavior can be termed as quality based since the market shows loyalty to the brands they like and are used to. The main thing this company would do is focus on acquiring loyalty form their consumers, this would enable them to make sales even when the markets are facing recession and down turns. Customer segmentation One of the areas Nestle specializes in is the making of baby products and this is one of the market segments they have capitalized in Australia. The coffee market has also been performing well with the promotional campaigns of Nescafé being on the forefront. Other products such as Kit Kat have also had a good reception among the youths, teenagers and children. The markets segments most responsible for the success of Nestle can be said to be the adult segment, since they are the ones who purchase most of the units for coffee and they are also responsible for purchasing baby products. Environmental analysis Political analysis The political analysis that prevails in a given nation is the determinant of many aspects in its development. This is so because for social and economic developments to take place a nation must be having political stability. In Australia, the political stability needed for business has been achieved, however, there are some regulations that do not allow for effective business ventures, like the banning of night flights to the nation’s capital, Sydney, this is just an example of how the government takes measures that affects businesses directly (Hooijberg, 2007, p. 372). The constitution provides power between the national government and the state which makes matters such as the relationship between the government and the state on financial relationship and politics an on going concern. Earlier this month, the government was accused of putting profits ahead of the priority that is community and the people. Such allegations reflect differently on people and if consumers tend to connect a company’s performance with the government’s actions, then their perception on the overall image of a company may change. It is vital to mention that the political atmosphere of Australia has continued to favor the endeavors of nestle. Economic analysis The economy of Australia is one of the largest capitalist economies in the world. The nation is a middle income nation that is tending to the status of high income. In the last three months of 2014 the nation has experienced stimulated growth in its economy since people have been spending more and saving less; this has further led to a better than expected growth in the GDP of Australia (Nestle Australia. 2002, p. 321). However some industries have been falling in the past decades; for instance the manufacturing industry which has been reducing significantly from the late 1960s. This can be accrued to the fact that manufacturing has become cheaper in other nations, like china which has made outsourcing cheaper. This is the industry that Nestle is in and the maximization of this market has proved to be getting easier due to such factors as the increased spending habits. Fig 2. Source: Australia Beaural of Statistics Social analysis. Australia is a multi-cultural nation which has in the previous encouraged the migration of other people to its nation. This is meant to improve the nation’s work force, the nation has over the last three decades worked toward changing the perception of the people into them perceiving them as a multi-cultural and multi religious nation. The benefits that accrue a multicultural nation include factors like, cheap and affordable labor, diversified tastes and preferences and the increased expenditure that has always had a significant impact in the progress of any nation. Technological analysis The numbers of internet users in Australia has continued to grow in the past decade with the numbers rising from 1.2 million to 4.7 million active members. This is a clear measure of how internet and technological advancements are of great importance in the nation, such advancements are vital to the nation since they help in advertising and marketing. Studies have shown that social media marketing is cheaper than main stream media advertising, marketers can therefore take advantage of this platform ad maximize on it in order to make better profits and realize the company’s profits. Nestle is a globally recognized brand, but even such strong brands require marketing for them to stay relevant and vivid in their customers’ minds, such brands include coca cola and Pepsi which continually advertise themselves regardless of their recognition. Competitive analysis Major competitors In every industry, a corporation’s bound to face competition, for nestle the major competitors are Cadbury, Unilever, PepsiCo, Kraft foods and mars Incorporated. However local food companies also tend to pose a major threat for the company’s market share and hence its profitability. The positive thing that faces nestle is that the industry has many players and so competition is tough, thus the differentiation of products and brand loyalty are the key things that set it apart from the rest. Their goals and major objectives Just like nestle, their competitors are also in pursuit of the largest market share in the market while some are in pursuit of profitability while remaining the underdogs. The objectives of a company like Cadbury may differ from the objectives of PepsiCo since their market capitalization is different, for Cadbury, their management might settle for a specific target group while for PepsiCo they will definitely go for the larger piece of the pie. One thing that is common in both strategies is that the company’s goals and major objectives are set to have the company acquire a larger profitability. The latest trends in Australia is the acquisition of the new markets from immigrants that are settling in the nation, corporations use the social analysis stipulated earlier to strategize on their next service and product actions. Fig 3. This chart is meant to emphasize the importance of information in the future of the company and it competitors. Currently these companies are engaging in search of new consumers but in the future the preferences of these consumers is what will matter most. Market place behavior Due to the large number of players in this industry, price changes always trigger action from the consumers, however as stated earlier on, brand loyalty is a significant factor that consumers have been seen to utilize and this makes the competing firms adapt new means of retaining their customers. Therefore the most common market place behavior in Australia in the foods industry is the high differentiation of products and services. The foods companies engage in aggressive promotional activities that are meant to keep them relevant in the minds of the consumers. In order to reduce competition, mergers and acquisitions have also been seen to occur; for instance the nestle acquisitions of smaller firms in 1990 (Dussauge, & Garrette, B.1999, p.176). Market share The competing food brands have had a highly competitive market share when it comes to the sales of their products. Due to the large amounts of different products form each company, it is difficult to establish which corporation is the major leader in all the products sales. However, since nestle appears in most of the second and third places the company can be termed as a leader in the market share. Below is an illustration of the estimated market share in this industry. Fig. 4 illustrates how the austrlian market share is distributed. Source: Sethi, 2013, p. 32 Source: Sethi, 2013, p. 21 Fig. 5 this shows the coocoa utilization by companies in australia, nestle comes in secoond place as stipulated earlier, however their dominance in coffee sales is not covered in the chart. Conclusion The confectionery industry will remian to have one of the most competitive structures, Nestle which has been the major focus of this situation analysis has proved to be a major leader in the australian industry. In order to remain this way, the company has to adopt new methods that give it a leap forward and ahead of their competition; I would recommend the integration of information and marketing since it is the future as shown earelier. References Dussauge, P., & Garrette, B. (1999). Cooperative strategy: Competing successfully through strategic alliances. New York: John Wiley. Hooijberg, R. (2007). Being there even when you are not: Leading through strategy, structures, and systems. Amsterdam: Elsevier JAI. Kumar, N., & Steenkamp, J.-B. E. M. (2007). Private label strategy: How to meet the store brand challenge. Boston: Harvard Business School Press. Nestle Australia. (2002). Nestle write around Australia: 2002 story collection. Sydney: Nestle Australia. Nestlé Australia., & Australian Institute of Sport. (1999). Survival for the fittest. Ultimo, N.S.W: Murdoch Magazines. Rahman, K, & Areni, C. (n.d.). Service brand relationship matrix: Brand strategy for services. World Business Institute, Australia. Sethi, S. P. (2013). Multinational corporations and the impact of public advocacy on corporate strategy: Nestle. S.l.: Springer. State Library of New South Wales., & Nestlé Australia. (2004). Nestle Write Around Australia: Celebrating 10 years : tenth anniversary story collection. Rhodes, N.S.W: Nestle' Australia Limited. State Library of New South Wales., Nestlé Australia., & Victoria. (2004). Nestle Write Around Australia: Anthology of Victorian winners' stories 1995-2004. Melbourne, Vic.?: Dept. for Victorian Communities?. Tipton, K. D., Loon, L. J. C., & Nestlé Nutrition Institute. (2013). Nutritional coaching strategy to modulate training efficiency. Basel: Karger. Read More