NESTLE

BACHELOR IN MANAGEMENT STUDIES (2012-2013) Submitted BY MR. PARESH MANE TBMS-326 SMT. PARMESHWARIDEVI DURGADUTT TIBREWALA LIONS JUHU COLLEGE OF ARTS, COMMERCE & SCIENCE J.B NAGAR, ANDHERI (EAST) MUMBAI-400059

NESTLE
BACHELOR IN MANAGEMENT STUDIES (2012-2013) Submitted In partial fulfillment of the requirements For the Award of Degree of BACHELOR IN MANAGEMENT STUDIES BY MR. PARESH MANE TBMS-326 SMT. PARMESHWARIDEVI DURGADUTT TIBREWALA LIONS JUHU COLLEGE OF ARTS, COMMERCE & SCIENCE J.B NAGAR, ANDHERI (EAST) MUMBAI-400059

CERTIFICATE
PROJECT GUIDE / INTERNAL EXAMINER This is to certify that Mr. PARESH MANE of BACHELOR IN MANAGEMENT STUDIES (2012-2013) has successfully completed the project on NESTLE under the guidance of PROF. MARUTHUVAR ESWARI.

COURSE COORDINATOR

COLLEGE SEAL

PRINCIPAL

EXTERNAL EXAMINER

DECLARATION

I,

Mr.

PARESH

MANE

the

student

of

BACHELOR

IN

MANAGEMENT STUDIES (2012-2013) hereby declare that I have completed project on NESTLE. The information submitted is true and original to the best of my knowledge.

SIGNATURE OF STUDENT Mr. PARESH MANE ROLL NO. TBMS / 326

ACKNOWLEDGEMENT
I would like to thanks the teacher of SMT. PARMESHWARIDEVI DURGAUTT TIBREWALA LIONS JUHU COLLEGE OF ARTS , COMMERCE AND SCIENCE affiliated by University of Mumbai for their excellent suggestions. A special thanks to PROF. MARUTHUVAR ESWARI for her constant encouragement and guidance from the beginning with the never ending patience. Her constant support and efforts helped me to complete my project on time I would like to thanks to some of my respected professors like Dr. Nanda Indulkar Miss. Rakhee Soni , Miss. Seema Horande, and Mr. Shahid Qureshi without whom the project would have to not come to end. I also take opportunity to thank my entire friend for cooperating with me and to all the people who are and indirectly connected to the project. Above all, I thanks to our principle Dr. Trishla Mehta for their cooperation during the time of completion of project.

Mr. PARESH MANE ROLL NO. TBMS / 326 DATE: PLACE: MUMBAI

CONTENTS
CH . NO.
1

TOPIC

PG. NO.
1

INTRODUCTION

OBJECTIVE OF THE STUDY

17

RESEARCH AND METHODOLOGY

19

ANALYSIS AND INTERPRETATION OF DATA

22

SWOT ANALYSIS

26

FINDINGS AND RECOMENDATION

32

CHAPTER. 1 INTRODUCTION

1.1 INTRODUCTION OF NESTLE

FMCG companies have now realized that India lives in its rural villages. So much so that rural marketing has become the latest marketing mantra of most FMCG majors. The lure of an untapped market has driven the marketers to chalk out bold new strategies for targeting the rural consumer in a big way. India is on the move and so are the markets in India. Apart from economic changes, India is also facing social changes like changes in life style, hobbies etc. New fashions, Adventures holidays, etc. are in today. Further, food habits of Indians are changing rapidly. Chocolates which were believed to be kids preference are now being consumed by kids, teenagers, and adults. Chocolate market in India (Currently 28 000 tones) is growing at a fast rate annually. To take advantage of the growing market, international confectionery companies are getting ready to woo the proverbial Indian Sweet tooth. An influx of worlds leading Chocolate players is expected. Nestle also piled primarily on the urban consumers. After understanding the great potentiality rural India possesses, Nestle is also experimenting in big way to bring the much needed volumes and help itself to bank upon the volume driven growth, in this severe competitive FMCG sector where the dispersion or market penetration plays a big role. So Nestle is eying on the market penetration and it is being targeted by devising different marketing strategies. The rational behind Nestle going for the market penetration is to acquire new consumer base by making the products available to the every interior of the country and increase its sales, to sustain growth. The

company is having a marketing strategy to drive penetration through wholesale marketing. But is it a right marketing strategy? Or will it prove to be an expensive mistake? If they want to increase their penetration then how and where they should go for? These are the issues Nestle is facing today. This project is a market research and it touches every aspect of the current wholesale marketing and predicament associated with it. It also juxtaposition that how penetration, can be possible through wholesale marketing, what is the cost of doing it and maintaining it. This project gives an insight into the every feasible aspect that is associated in Driving penetration through wholesale marketing, for Nestle. In the above context, the prime objective of this report is to prepare a marketing plan for any brand that is planning to enter the India Chocolate Market. Therefore, this report is generic (broad-based) to the extent that it does not focus on any single brand. However, this may prove to be a relevant marketing guide for any brand launch in India. The FMCG sector has been the cornerstone of the Indian economy. Though, the sector has been in existence for quite a long time, it began to take shape only during the last fifty-odd years. To date, the Indian FMCG industry continues to suffer from a definitional dilemma. In fact, the industry is yet to crystallize in terms of definition and market size, among others. The sector touches every aspect of human life, from looks to hygiene to palate. Perhaps, defining an industry whose scope is so vast is not easy. After witnessing booming sales and flooding markets with innumerable products, FMCG companies have had to abruptly apply the brakes and look for various ways to save costs. The MORE THAN RS. 43,000 crore (listed companies) FMCG industry in India, which has been
3

on a roll for many years, faces tough times ahead, although many segments still shows good growth.

1.2

REVIEW

OF

LITERATURE

AND

PROBLEM

STATEMENT
India is on the move and so are the markets in India. Apart from economic changes, India is also facing social changes like changes in life style, hobbies etc. New fashions, Adventures holidays, etc. are in today. Further, food habits of Indians are changing rapidly. Chocolates which were believed to be kids preference are now being consumed by kids, teenagers, and adults. Chocolate market in India (Currently 20 000 tones) is growing at a fast rate annually. To take advantage of the growing market, international confectionery companies are getting ready to woo the proverbial Indian Sweet tooth. An influx of worlds leading Chocolate players is expected. Further, since Confederation of Indian Industry ( CII) is a representative body of the Indian Industry, it receives its inquiries for pertinent marketing information from various domestic and international players, who want to invest in India. In the above context, the prime objective of this report is to prepare a marketing plan for any brand that is planning to enter the India Chocolate Market. Therefore, this report is generic (broad-based) to the extent that it does not focus on any single brand. However, this may prove to be a relevant marketing guide for any brand launch in India. Improved penetration of brands is an important consideration in the Companys vision of sustained growth. Expansion of distribution and reach was a focus area. Some of the initiatives that are expected to contribute significantly include introduction of single serve convenience packs at affordable price point, such as NESCAFE Redimix and MAGGI
4

Hot Cup Soup Powder. The initiative to automate distributor operation has continued and is expected to be complete during 2003. This will help NIL achieve greater speed and transparency in the flow of information, ensure better levels of customer contact and enable faster response to consumer needs. The Company continued to strengthen initiatives to facilitate availability of products for out of-home consumption. These initiatives were supported by a number of new product launches. The development of NESTEA Instant Tea premix for hot vending offers consistency and convenience as compared to tea bag preparation; NESCAFE Frappe premix fort cold vending has been introduced in Quick Serve Restaurants; Low Sugar NESCAFE premix has been developed for health conscious consumers; MAGGI Hot Cup Soup dispensed through vending machines is an innovative and pioneering concept in the market. Large number of Nestle Consumption Zones including Cafe NESCAFE, Coffee Corners and multibrands stalls were set up and innovative vending machines were introduced for Iced Tea. Sustained focus on continuously improving the value to the consumer, helped to introduce vending machines with eight beverage options to offer consumers a range of specialty beverage at the same location. On the manpower development front, programmed during the year continued to be focused on the operational front more particularly sales and production. To support the growth plans and distribution strategy, and simultaneously improve the operational efficiency, the on strengthening chain continued to receive attention during the year.

SUPPLIE RS

PROCURMENT

SUPPLY PLAN

SALES & MARKETING

MANUFACTURER

DISTRIBUTOR

CUSTOMER

CONSUMER

Marketing is based on the principle of satisfying consumers needs. The overall trust of consumers in Nestle brands and products comes from a quality image that has been continuously strengthened foe over 130 years. Nestles strives to increase this trust through its commitment to environmentally sound business practices. For this reason nestle: Opposes the shortly-term opportunistic green marketing that can mislead the consumer; Bases environmental claims in advertising promotional material labeling and corporate communication on solid scientific evidence and selects materials and printing methods for merchandising materials such as consumer offers, in-store promotions is play materials, leaflets and printed materials in light of environmental considerations. Marketing strategy is the complete and unbeatable plan designed specially for attaining the marketing objective of the firm. The marketing objectives indicate what the firm wants to achieve; the marketing strategy that decides the success at the business unit level which in turn decides the total corporations success. The link between marketing strategy and overall success is indeed direct and vital. And in this linkage lies the significance of marketing strategy. Nestle India ltd. has an aggressive marketing strategy which is very well understood when one goes through the in-depth study of the 4-Ps of

the marketing and price strategies with respect to its products. One comes to the conclusion that NIL has a well defined roadmap to success i.e. to reach its ultimate objective of realizing customer satisfaction through value for price products. Alreck and Settle (1999) in the paper has mentioned six strategies for building relationship(between a specific brand and a particular customer group - to create a strong bond between brand and buyer)which are linking the brand to a particular need; associating it with a pleasant mood; appealing to subconscious motives; conditioning buyers to prefer the brand through reward; penetrating perceptual and cognitive barriers to create preference; and providing attractive models for buyers to emulate. The paper states that the choice of an individual strategy or combination depends mainly on the nature of the branded product or service and the success of the strategy depends heavily on the marketer's understanding of the preference building and bonding process. The article provides results like the six consumer preferencebuilding methods mentioned require particular kind of product, pricing, promotion and distribution. It further states that Successful advertising needs clear consistent strategies and also lists some of the crucial elements without which advertising will not work. The paper helps us in analyzing the factors which influence the selection of a strategy for building consumer brand preference. The purpose of this study has explored the consequences of various attributes on brand equity of brands, which vary along selected criteria and attributes and to investigate the impact of brand equity and the attributes on brand preferences. In the pretest, subjects were asked to rank the attributes listed in previous studies of Nestle. The top nine attributes (i.e. brand name, calories, sugar content, sodium content, caffeine
7

content, fizz/carbonation, flavor/taste, sweetness, and price) were included in the study, with brand name being one of them. The second phase was a preference task using the same Nestle products.

1.3 PROBLEM STATEMENT

Problem defining is the most crucial aspect of any research. It helps in understanding the background of the problem by analyzing it in an appropriate environmental context. This helps in translating the exact problem faced by the management into marketing research problem. A wholesaler plays a pivotal role in the distribution channel of any company especially in a FMCG Company. Wholesalers are important as they carry out the role of the Conduit in any companys distribution network and cater to a large pool of retailers which a distributor of a company cannot cater. So retailers who come from distant places and whose purchasing power is less are been taken care by the wholesalers. So wholesalers can be impetus to drive the penetration in the market. The main problems that new product faces is that of getting experienced and effective channel members. As existing marketing marketer/manufacturer can piggy back on the existing channel structure. A new company will have to provide greater incentives convince channel members to stock the product offering. Quick handling of problems of stockiest & dealers. The biggest problem in distributing a product category like chocolates is lack of infrastructure. The product needs to be kept in refrigeration (more so, in summers)-limiting the points at which it is available (ideal temperature needed for chocolates is 18 to 25 degrees). Hence, summer see sales suffer. Demand falls by almost two-thirds in the
8

summer months. Nestle' markets infant formula according to the principles and aims of the WHO International Code of Marketing Breast Milk Substitutes, and seeks dialogue and cooperation with the international health community and in particular with the WHO and UNICEF, to identify problems and their solution. In India 70% of population lives in villages and so this population plays a pivotal role in the turnover figures of any company, especially FMCG Company. As many of the competitors of Nestle is going rural to increase its consumer base, Nestle is also in the purview to increase its penetration in the every interiors of the country, so that every product of Nestle should be available to every part of the country and on the other hand to increase the consumer base and its sales figures. So the Problem statement can be summaries as following Nestle wants to go rural as many FMCG companies are doing so, including its competitors. Management decision problem is whether to take step to carry out the penetration through wholesalers or not? Management is unaware of the current level of penetration in the up-country market? If Penetration through wholesalers is possible then how to go about it? The customers can be tapped directly through the distribution channel or not or penetration en-route wholesalers would be the optimum solution? What is the profile of the customers to have the knowledge regarding the consumer behavior and their buying behavior?

1.4 COMPANY PROFILE

NESTLE FOODS INDIA LTD. Nestle Foods India is a Transnational company (TNC) with its worldwide operations in over 70 countries. The founder of Nestle was Henry Nestle who from a modest beginning founded the company in 1866 at Switzerland for manufacturing milk powders for babies. At that time Switzerland faced one of the highest infant mortality rates and the milk formula saved the lives of many infants whose mothers were unable to breast feed successfully. Nestle has been a partner in India's growth for the past nine decades and has built a very special relationship of trust and commitment with the people of India. The culture of innovation and renovation within the company and access to the Nestle Group's proprietary technology/ Brands, expertise and the extensive centralized Research and Development facilities helps the company to create value that can be sustained over the long term. Nestle India manufactures products of truly international quality under internationally famous Brand names such as Nescafe, Cerelac, Maggi, Milky Bar, Milo, BarOne, Nestea and Kit Kat and in the recent years the company has also introduced products of daily consumption and use such as Nestle Milk, Nestle Dahi, Nestle Butter, Nestle Fruit 'n milk ready to drink beverage and Nestle Pure Life bottled drinking water. Nestle is often quoted by most as "multinational of multinationals." There is a good reason, as less than 2% of the turnover comes from the domestic market in Switzerland and rest from its other operations worldwide.
10

At present Nestle in the world's largest food company with its international headquarters at Vevey, Switzerland. With almost 500 factories world wide it employs many people directly or indirectly. Nestle is under first 50 companies of Fortunes five hundred list. It is present over all five continents of the globe in over 80 countries. It is having 200 operating companies, one basic research center and 17 technological development centers and around 2,76,000 employees. BOARD OF DIRECTORS OF INDIA Ltd. Name NESTLE

Designation

Antonio Helio Waszyk

Chairman and Managing director Non Executive Director

Pradip Baijia Ravinder Narain Rakesh Mohan

Non Executive Director Non Executive Director Director (Technical)

Christian Schmid Name Shobinder Duggal Michael W O Garrett

Designation Director Non Executive Director

Richard Sykes

Alternate Director

11

Swati A Piramal

Non Executive Director

1.5 VISION MISSION STATEMENT

1. Mission Statement At Nestl, our research makes it possible for everyone to enjoy better food for a better life. Good Food is the primary source of Good Health throughout life. We strive to bring consumers foods that are safe, of high quality and provide optimal nutrition to meet physiological needs. In addition to nutrition, health and wellness, Nestl products bring consumers the vital ingredients of taste and pleasure. As consumers continue to make choices regarding foods and beverages they consume, Nestl helps provide selections for all individual taste and lifestyle preferences.

Research is a key part of our heritage at Nestl and an essential element our future. We know there is still much to discover about health, wellness and the role of food in our lives, and we continue to search for answers to bring consumers Good Food for Good Life. Promote awareness of the effect of our lifestyle both on ourselves and on our environment. Exist as a financially successful, non-hierarchical, democratic organization where workers participate in the creation and running of their working Environment, as an example to encourage others to do likewise.

12

 Provide an environment that encourages and helps people to develop and achieve their potential. Actively support co-operatives, fair trade, environmental issues and community activities.

2. Vision Statement
Your VISION defines your long-term dream. It should not be achievable. That may sound ridiculous, but the objective is for your vision to always be just slightly out of your reach. It's what you constantly strive to attain, and it becomes your reason for being.

1.6 HISTORY OF NESTLE

In 1860s Henri Nestle, a Swiss pharmacist, established the worldrenowned Nestl brand amid a spirit of innovation and goodwill. In 1866 he developed a food for babies whose mothers were unable to breastfeed. His first success was a premature infant who could not tolerate his own mother's milk or any of the usual substitutes. The value of the new product was quickly recognized when his new formula saved the child's life, and soon, Farine Lacte Henri Nestl was being sold in much of Europe. In 1905 Nestle merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, United Kingdom, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestl's production more than doubled.

13

The first Nestle factory to begin production in the United States was opened in Fulton, Oswego County, New York. The factory however was closed in 2001, after the company decided that the cost of restoring, and updating the factory could not financially be justified . Employees of the factory were furious, and raised the company flag upside down the day the closing was announced. After the war, government contracts dried up and consumers switched back to fresh milk. However, Nestls management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestls first expansion into new products, with chocolate the company's second most important activity. Nestl felt the effects of World War II immediately. Profits dropped from US$20 million in 1938 to US$6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the company's newest product, Nescafe, which was a staple drink of the US military. Nestls production and sales rose in the wartime economy. The end of World War II was the beginning of a dynamic phase for Nestl. Growth accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in LOreal in 1974. In 1977, Nestl made its second venture outside the food industry by acquiring Alcon Laboratories Inc.

1.7 OUR BRANDS

Milk Products & Nutrition
14

Chocolates&Confectionery

NESTL EVERYDAY Dairy Whitener NESTL EVERYDAY Slim NESTL EVERYDAY Ghee NESTL Milk NESTL Slim Milk NESTL Fresh 'n' Natural Slim Dahi NESTL Jeera Raita NESTL NESVITA NESTL NIDO NESTL MILKMAID NESTL MILKMAID Fruit yoghurt NESTL MILKMAID FUNSHAKES NESTL CEREVITA

NESTL KITKAT NESTL KIT KAT LITE NESTL MUNCH NESTL MUNCH POP CHOC NESTL MILKYBAR NESTL MILKYBAR CHOO NESTL BAR-ONE NESTL FUNBAR NESTL Milk Chocolate NESTL clairs POLO POLO Power mint POLO Zero NESTL TANG EEZ

Beverages NESCAF CLASSIC NESCAF SUNRISE NESTL MILO NESCAF Mild

Prepared Dishes & Cooking Aids MAGGI 2-MINUTE Noodles MAGGI Vegetable Atta Noodles MAGGI Dal Atta Noodles MAGGI Rice Noodles Mania MAGGI Sauces MAGGI Pizza Mazza MAGGI Healthy Soups MAGGI Healthy Soup- Sanjeevni

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CHAPTER. 2 OBJECTIVES OF THE STUDY

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2.1

OBJECTIVES OF THE STUDY

Be in every way the leading company in Indian food industry. Ensure high quality standards in everything we undertake. Provide our consumers with superior quality products. Provide our shareholders with rapid growth & fair returns.
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 Provide our employees a challenging & satisfying work environment. To be a good corporate citizen & contribute positively to the society in which we operate.
.

CHAPTER. 3 RESEARCH METHODOLOGY

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19

3.1 RESEARCH METHODOLOGY

As mentioned earlier, the objective of the study is to formulate a Marketing Strategy for any new entrant in the Indian Chocolate Industry. While recommending the said strategy detailed information from both primary and secondary sources was collected and analyzed. This included: PRIMARY SOURCES Four level primary information collections were undertaken. These were:
1. In order to get relevant information regarding competition, executives

of the following chocolate players in the market were interviewed: To analyze buying behavior and in order to gain an insight into the buyer need-satisfaction level, a questionnaire was formulated. These included pan shops, grocery shops, bakeries, departmental stores, etc. SECONDARY SOURCES: A number of secondary sources of information were used. These were: Confederation of Indian Industries reports, PHDCCI & FICCI library. Internet websites Of Nestls, Nestle and indiainfoline.com, askjeeves.com Extensive use of secondary information in the form of

magazines/journals/newspapers clippings, such as Business World, Business Today, Business India, A&M, Economic Times, etc.

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Tools analysis Observation and descriptive survey methods was used to collect the data about the features, expectations, satisfaction, problems etc. the customers. Size of sample: The present study was conducted on a sample size of 80.

THE METHODOLOGY ADOPTED WAS AS FOLLOWS:

INDUSTRY SCENARIO SKETCH (UTILIZING SECONDARY INFORMATION)

EXTENSIVE INTERVIEWS HELD WITH PRIMARY/SECONDARY SOURCES

(COMPANIES/CHOCOLATE MANUFACTURERS ASSOCIATION)

INTERVIEW WITH EX-DISTRIBUTOR OF NESTLE INDIA LTD

EXTENSIVE RETAILER INTERVIEWS IN NARAINA INDL. AREA

FORMULATION AND ADMINISTRATION OF A QUESTIONNAIRE

FORMULATION OF THE RECOMMENDED STRATEGY ON THE BASIS OF THE ABOVE MENTIONED PRIMARY AND SECONDARY INFORMATION

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CHAPTER. 4 ANALYSIS AND INTERPRETATION OF DATA

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4.1 ANALYSIS AND INTERPRETATION OF DATA

AWARENESS - PURCHASE PREFERENCE

90 80 70 60 50 40 30 20 10 0 CDM Perk Picnic Amul Break Bar One Crunch Fruit n' Nut Foreign brands Cadbury's Nestle KitKat 5 Star

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PURCHASE PREFERENCE: WHAT INFLUENCED YOU TO BUY THE SELECTED BRAND

80 70 60 50 40 30 20 10 Foreign Brands Fruit n' Nut Bar One CDM Picnic KitKat Perk Nestle 5 Star Amul 0 Cadbury's Crunch

90 80 70 60 50 40 30 20 10 0 Advertising Word of Mouth Attractive Packaging Dealer Shop Display Family, friends, relatives

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PURCHASE BEHAVIOUR:
REASONS FOR PURCHASE:-

70

60

50

40

30

20

10

0 Occasion led As a gift Casual Purchase Energy Snack

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CHAPTER. 5 SWOT ANALYSIS

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5.1 SWOT ANALYSIS

The SWOT Analysis shows the relationship between critical variables of the company. The SWOT matrix has a wider scope. The TWOS matrix is a conceptual framework for a systematic analysis that facilitates the external threats and opportunities with the internal weaknesses and strengths of the organization. It has been common to suggest that companies identify its strengths and weaknesses as well as opportunities and threats in the external environment. But what is often overlooked is that combining these factors may require distinct strategies choices. To systematize these choices, the TWOS matrix has been proposed. T stands for threats, W stands for weaknesses, O stands for opportunities and S stands for strengths. A marketing opportunity is aware of buyer need in which a company can perform profitably. An environment that would lead, in the absence of defensive marketing action, to deterioration in sales or profit. An ideal business is high in both major opportunities and low in major threats. threats. A mature business is low in opportunities and high in threats. A speculative business is high in both major opportunities and

The TWOS matrix starts with the threats because in many situations a company undertakes strategic planning as a result of a perceived crisis, problems or threats.

STRENGTHS High brand equity consumer & dealer regarding Nestle' as company delivery quality product.

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 Company processes an extensive powerful distribution network. Company processes a dedicated & experienced sales staff. Strong base in monitoring & controlling market. Distributions are highly dedicated towards performance & experience. Nestle India Limited (NIL) has a very strong parent company Nestle S.A. support with 51% of equity share holding, which is the world's largest food company. NIL's milk products sold under Milkmaid and Everyday brands are market leaders. NIL has strong brand value in other products like Kit-Kat, Polo, Milo, Maggi and Nescafe. NIL - State of the Art Technology and production systems ensuring high technological/high value and optimum cost advantage to its product portfolio. Idealization of products to suit local tastes are critical for success and NIL is converting its international products into Indian tastes products. Nestle has altogether 570000 outlets in more than 3000 towns. This is one of the major strengths of the company. NIL most of the products are being produced according to Indian tastes, priced within Rs. 25/- so that they are afforded by most of the people easily, advertised and promoted according to regional culture and values and is available to most of the consumers easily, at their nearby shops.

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WEAKNESSES Company takes time in handling return claims on authorized whole seller. Warehousing norms are not followed which account for increased breakage. Restricted website minimizes marketing opportunities. Yearly initiatives are not so motivating. A high percentage of turnover and profits coming from a few products categories like Coffee/Maggi. NIL has been in India since last 39 years yet its growth has been very slow. After the opening up of the economy, it has started growing but till then it did not launched much products. The profits of NIL are also reduced because of increased Royalty payments that NIL is making to its parent Nestle, Switzerland. The higher royalty payments are made on account of new international brands launched by NIL in India. NIL factories are not to meet the demands of products with the supply. NIL's products range is so large that it is not able to give proper attention to all the products, their marketing strategies are not properly worked out as many of its products are dyeing. There was an embarrassing starter like Nestea an iced tea, Nesfit - a glucose rich energy drink, Bonus, Milo is not given much of promotion.

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 Recently, there are difference between the Nestle S.A. parent company and Nestle India Limited and because of this there are in the top management of the NIL. Even its M.D Daravis E. Ardeshin has also resigned. Proof financial distribution as the NIL is unnecessarily giving its shareholders high dividend, which could be avoided and be used for investment in plants for their capacity expansion.

OPPORTUNITIES Great quality. Mass market is growing with established performances. Growing middle class is increasing opportunities. Great taste. Low differentiation in market brands. Credit facility given to dealers. India being the second most populated country in the world, NIL has lot of opportunities of launching and selling new products and earning a record profit from this country. As NIL has been in India since last 39 years, it has understood the culture, values, tastes and psychology of the Indian consumer and so it can easily develop Indianised products that will be acceptable to the Indian consumer. Food industry is the second highest growing industry in India and offers a lot of opportunities for NIL in India.

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THREATS Tough competition especially in premium segment. Characteristics of premium segment that it is never brand loyal. Tough competition (indirect) with barista, caf coffee day. Mere availability of best sellers from the parents portfolio does not guarantee a winner. Since most of these products would be fighting it out with their global competitors and then Indian counterparts on the Indian turf. It faces fierce competition in almost all the segments it participates in like. It duels with Top Ramen in the instant noodle market, KitKat vs. Perk, Polo vs. Minto, Milkmaid vs. Mithai Mate (launched by Amul at a staggering 60% discount to the market leader), Milo vs. Horlicks, Complan and Bournvita. Recent turmoil and increased internal politics together with lack of apathy from their parent company is going to affect the performance of the company in the short to midterm. Because of the present Swadesi prime and changing public opinion towards MNCs will affect NIL's future.

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CHAPTER 6 FINDINGS & RECOMMENDATIONS FINDINGS

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6.1 FINDINGS & RECOMMENDATIONS

FINDINGS
In the age group of 16-20 and 21-30, the average monthly spend is not influenced by the place of residence/ social class but rather on, where a person studies/works i.e. by the social] circle of his friends and colleagues. The consumers by and large are satisfied with the present choices available in chocolates i.e. there are no complaints of consumers as regards to existing varieties of chocolates. However there are many new wants and demands of consumers in terms of new flavors and ingredients of chocolates which the present brands of chocolates have not introduced into the Indian markets. There is a substantially low margin of difference in terms of people who are sensitive to price of chocolates and hence it cannot be proved conclusively that introducing a chocolate at a lesser price than the prevailing price will lead to capturing of market share. Consumers attach more value to the brand of the chocolates as well as the packaging i.e. the quality of the chocolates. 79% of chocolate sales happen through kirana shops i.e. mom and pop shops which says that chocolate is a commodity which has to be available to the consumer when and where he wants it. The sales of chocolates largely depend on its availability to the consumer at his convenience. The chocolate confectionery market elicits conscious and unconscious feelings of passion, loyalty and enthusiasm. Almost 80% of chocolate purchases are made on impulse. Buyers generally decide quickly which confectionery product to buy with almost half of purchase decisions made within 10 seconds of arriving at the confectionery fixture in the store. Brands play an important role in the chocolate confectionery industry. A brand is a name, mark, or feature, which distinguishes one product from another. A good brand effectively guarantees that it will deliver all of the qualities that the consumer associates with it. 33

For many people, chocolate is Nestle, and no other brand will do. This consumer loyalty is critical because of the value of the chocolate confectionery market and because, in all markets, a small number of consumers account for a large proportion of sales. Loyal customers are the most valuable customers to have because they will buy your product over and over again. Research data shows that the Nestle brand equity is highly differentiated from other brands with consumers. Brand equity is the value consumer loyalty brings to a brand, and reflects the likelihood that a consumer will repeat purchase. This is a major source of competitive advantage. The Nestle umbrella brand has endured in a highly competitive market, and has established the link, in the mind of the consumer, that Nestle equals chocolate. The Nestle brand is associated with best tasting chocolate. Marketing managers at Nestle are working to ensure this association is continually developed through their 'Choose Nestle' marketing strategy. Key concepts of quality, taste and emotion underpin the Nestle brand. These core values help to differentiate Nestle from other brands and ensure its competitive advantage. The Nestle brand has proven itself to be a leader in a highly volatile and competitive market because it has successfully established, nurtured and developed its umbrella brand and growing portfolio of products. Perhaps very few product categories in India have seen as much excitement generation, widening of appeal and repositioning as chocolates. Nestle India's" has been successful in revamping its brand portfolio and its repositioning efforts. It has reinvented and revamped its brand portfolio, strengthened its distribution network and relied heavily on promotions and advertising - while launching and relaunching brands. Nestls strategy to attract consumers is somewhat unique in a sense, instead of focusing on the product; it seeks to tap into emotions normally associated with chocolates. They have also adapted their strategies to the unique demands of the Indian retail sector. The strategy has clearly proved successful, as they have been able to build and maintain a leadership position in the market with many loyal customers. 34

Nestle introduced a new global marketing strategy called 'Choose Nestle'. This strategy came about as a result of extensive research into consumer behaviors and perception. It is a campaign that perfectly illustrates how a brand can evolve and how different messages can be communicated without losing the core strength and brand values that are already established New product development has played a key role in developing markets as brands strive to offer something to a consumer that is truly different The Nestle product range addresses the needs of each and every consumer, from childhood to maturity, from impulse purchase to family treats. For example an analysis of the 'gift' sector highlights the importance of developing innovative products to address specific markets. Nestle designs products to coincide with Diwali, rakshabandhan, , Mother's and Father's Day. The chocolate confectionery market is full of brands that need to fight for our attention. The role of advertising is to keep a brand in the mind of the consumer. We are constantly presented with countless brand images and messages on a daily basis. During the lifetime of a brand, companies will develop marketing strategies that communicate brand identity and core values to gain our attention. In order to keep its product competitive and contemporary, these messages need to change over time. Nestle provides one of the most successful examples of how an advertising message can be modified from one campaign to the next to attribute new values to a brand giving consumers more reasons to buy Nestles. Nestle employs all types of advertising from the internet to posters, from TV, radio and cinema to print media. This same creative message is then communicated through point of sale, merchandising, package design and public relations. Besides advertising and sales promotion, brand perception by consumers gets affected by several other factors like packaging, distribution efficiency, after-sale service (where applicable), speed of response to customer complaints. Shopping experience and delivery of the value proposition are also among the contributing factors. Nestle India has also worked & is still working on these factors to successfully position its brand as the topmost brand of chocolate. Nestle India expects strong growth in India in future. The company plans to increase the franchise of its existing brands and continue to 35

explore new product opportunities including adjacent market opportunities. Nestle India is also looking for more opportunities in the SAARC region.

RECOMMENDATION
Although product line is very good & has good width & depth, but NIL should try to make stronger brand equity in Dairy products, Amul is still leader. It should work more on concept of CRM (Making new customers & retaining old ones. Cash discounts must be given. More competitive pricing to be done in the premium segment. Increase their sales force to make more frequent visits to the sales person. Should also look for rural markets. Quick handling of problems of stockiest & dealers. Online ordering facility & electronic payment through website can save a lot of time. Due to sluggishness in a FMCG market, most of the companies are under pressure to maintain volume & market share. NIL should draw out an action plan to improve sales through new product launches. Company should concentrate on all round cost saving & productivity gain, to neutralize the adverse impact of increased excise of confectionary. The market strategy of the firm is a complete and unbeatable plan or an instrument designed especially for attaining the marketing objective of company. formulation of the marketing strategy consists of two steps:1. Segmentation & target market selection. 2. Assembling the marketing mix. The

36

CONCLUSION
In line with the Company's objective to provide superior value in every product category and market sector, efforts were focused to provide quality products to customers at attractive price points. While the Company continued to generally maintain price points across all the product categories, the pricing of some products were also reduced to meet consumer expectations. Nestls domestic sales registered a 18.5% volume growth during the first 9 months of 2006. Exports registered a 31% yoy volume growth. In value terms, domestic sales grew by 15.8% yoy to Rs12.1bn, while Exports grew by 26.4% yoy to Rs2.4bn Advertising plays an important role in creating brand awareness, brand recall and brand recognition which are important in helping a customer make purchase decision of that brand. Nestle has been a partner in India's growth for the past nine decades and has built a very special relationship of trust and commitment with the people of India. The culture of innovation and renovation within the company and access to the Nestle Group's proprietary technology/ Brands, expertise and the extensive centralized Research and Development facilities helps the company to create value that can be sustained over the long term. Nestle India manufactures products of truly international quality under internationally famous Brand names such as Nescafe, Cerelac, Maggi, Milky Bar, Milo, BarOne, Nestea and Kit Kat and in the recent years the company has also introduced products of daily consumption and use such as Nestle Milk, Nestle Dahi, Nestle Butter, Nestle Fruit 'n milk ready to drink beverage and Nestle Pure Life bottled drinking water.

BIBLIOGRAPHY
BOOKS Kotler Philip (2004); Marketing Management; Pearson Education Pvt. Ltd. Ramaswamy Pvt. Ltd. Al Ries (1996), FOCUS, Harper Collins Publishers Ltd. David A. Aaker (1991), Managing Brand Equity, the Free Press. David A. Aaker (1996), Building Strong Brands, the Free Press. Jean-Noel Kapferer (1994), Strategic Brand management, V.S. and Namakumari S. (2002); Marketing

Management Planning Implementation and Control; McMillan India

Macmillan Publishing Co. Internet Sites www.Nestle.Com Magazines Business Today Business World Business Standard

QUESTIONNAIRE
1. Do you consume chocolates? YES / NO 2. If yes, what all brands do you normally buy?

3.

How often do you buy chocolates? (No.) chocolates per day / week / month (please tick)

4.

What brands of chocolates are you aware of?

5.

Please rank the following attributes in a chocolate on a scale of 1-7 according to their importance to you? (1-most important, 7-least important) Taste Quality Packaging Price Flavor Add-ons (Wafers, nuts, etc.) Brand Image

6.

I often pick up a chocolate while I make other purchases. YES / NO

7.

What influenced you to buy the above stated brand(s)? Advertising Word of mouth Attractive Packaging Dealer Shop Display

 Family/Friend/Relatives Any Other (Pls. Specify) 8. How do you rate the idea of chocolates being made available at the following outlets.(Please rate on a scale of 1-5, where 1 is most preferred and 5 is least preferred). Pan Shops Sweet Shops Gift Shops Stationary Shops Ice-cream Parlors Fast Food Joints Milk Booths Restaurants Exclusive Chocolate Parlors Road-side Kiosks 9. If a particular brand is not available with the retailer, you will Drop the idea of buying a chocolate Go to another retail outlet Try another (competitors) brand