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Marketing Strategy of Nestle (Nestle Pure life)

Nestle Pakistan Limited is selected to study that how they have planned their Supply Chain for Nestle Milkpak. Nestle is a multinational food company and offering ast Moving Consumer !oods ( MC!). "he motto of Nestle is Good Food, Good Life# so delivering the $ualitative products to the customer is their main o%&ective. "he customers of NPL showed interest on NPL %ecause of trust on 'uality of Nestle# at the heart of which there are $ualitative products and its long term commitment to deliver %etter products to consumers. (eing the market leader# the market share of NPL is )*+ that is much higher than its competitors. NPL is passing through its !rowth stage (of Product Life Cycle) i.e. its sales are increasing tremendously and competitors are entering in the market like ,$ua ina %y Pepsi and ,skari -aters. "here are different S./0s of NPL to cover a wide market needs like for 1ome and office delivery there are 2gallon and 3 gallon %ottles (%ulk usage) and for day to day usage easily carrying light weight like 45.3# 6.3# 6.7 liters8 %ottles are availa%le in the market. Still Nestle is working on %ringing the changes and innovation in this field. or this it has close relationship with its suppliers and distri%utors to get their suggestion to improve the $uality of NPL. Nestle Pakistan also has the Customer Service 9epartment with the logo :"alk to Nestle: in Lahore to receive the complaints and suggestions from the customers. ;n this way Nestle analy<e its market and %ecomes aware of the new market trends. Marketing strategy include = P0s strategy i.e. Product# Price# Place and Promotion strategies. Product is something that is offered to the market. NPL product strategy studies show that they are positioning the product with respect to its attri%utes that NPL is safe# pure# refreshing and healthy water. Nestle also does product line e>pansion? recently it has offered a 6.73 liter %ottle of NPL in the market. ;t0s also using the company name with its product name i.e. Nestle Pure Life. NPL round shape and elegance of the %ottle are instantly recogni<a%le. 'uality is cornerstone of NPL success. Nestle people say@ 4'uality is our more successful product and it is key to our success today and tomorrow.8

;n Price strategy# Nestle has adopted the strategy of nonAprice competition. ;t is offering one price for NPL to all cities of Pakistan. ;t also keeps the check on distri%utors to maintain single price of NPL. ;t offers trade discounts to its distri%utors.

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Placement is the distri%ution of the product to its customers at right time# in right $uantity# at right price and at right place. "o ensure this# channel adopted %y the Nestle for distri%ution of NPL is as follows@

Producer clip

-holesaler

clip Cetailer

Consumer

NPL comes under the category of MC!# so for this the timely supply is very important that0s why Nestle is following intensive distri%ution strategy. Promotion is the very important and crucial element of marketing strategy as through it the company esta%lishes its image in the minds of the customers. NPL is promoted %y using different ways of promotion. ,dvertisement of NPL is done through "D# radio# %ill%oards# newspapers and maga<ines. Current advertising slogans are that NPL is trust# hope and happiness and E;FGH .ay yahi hay Iindagi. Nestle also conducts the tradeshows# concerts# events# sponsorships# and discounts for sales promotion. or esta%lishing pu%lic relations# Nestle distri%utes its newsletters# annual reports# calendars and diaries# lo%%ying# donation for charita%le and civic events. or the victims of *th Gcto%er 7663 earth$uake# Nestle has donated J6 trucks# which were containing different foods items# and NPL was one of them which is around Cs. 7 (illion. "he Nestle organi<ed its teams to distri%ute products to the effected areas and all employees contri%uted from top to %ottm (M9 himself was involved personally to distri%ute products physically) 7.5 ;ntroduction ood is core element in our daily lives. Not only does it ena%le us to survive# %ut approprate amounts and $uality also help to ensure a %etter standard of living %y contri%uting to our health and wellness. Consumer needs and e>pectations associated with a particular food product are not fi>ed# %ut change with time and according to geographic region# culture and the various stages of life. Kver since its foundation in 5*LL# Nestle0s goal has %een to keep in step with this constant process of change. ;t reacts to new consumer re$uirements with innovative and continually renovated products# and implements new scientific findings in tasty foods. Mission Statement NestleMs %usiness mission is to manufacture and market the CompanyMs products in such a way as to create value that can %e sustained over the long term for shareholders# employees# consumers# and %usiness partners. Motto of Nestle is 4!ood ood# !ood Life8.

Objectives Nestle does not favor shortAterm profit at the e>pense of successful longAterm %usiness development. 7

Nestle recogni<es that its consumers have a sincere and legitimate interest in the %ehavior# %eliefs and actions of the Company %ehind %rands in which they place their trust# and that without its consumers the Company would not e>ist. Nestle %elieves that# as a general rule# legislation is the most effective safeguard of responsi%le conduct# although in certain areas# additional guidance to staff in the form of voluntary %usiness principles is %eneficial in order to ensure that the highest standards are met throughout the organi<ation. Nestle is conscious of the fact that the success of a corporation is a reflection of the professionalism# conduct and the responsi%le attitude of its management and employees. "herefore recruitment of the right people and ongoing training and development are crucial. Nestle continues to maintain its commitment to follow and respect all applica%le local laws in each of its markets. 2.2 History (T e story of !est"e# From n$trition to %e""ness& Nestle Pakistan Ltd. is a food processing company# which is registered on .arachi and Lahore stock e>changes. ;t esta%lished its first production unit in 5J** in Sheikhupura# Pakistan with the name of Nestle Milkpak Limited %ut its name has %een changed and now it is called Nestle Pakistan Limited. 1ead$uartered in Lahore# the Company operates five production facilities. "wo of its factories in Sheihupura and .a%irwala are multi product factories# while another one at .arachi is already for production. Gne factory in ;slama%ad and two in .arachi produce %ottled water. "hrough its effective marketing and a vast sales and distri%ution network throughout the country# it ensures that its products are made availa%le to consumers whenever# wherever and however. Nestle Pakistan is a su%sidiary of Nestle S.,.A a company of Swiss origin head$uartered in Devey# Swit<erland. S ei' $($ra Factory "he production facility# under the name of Milkpak Ltd. at Sheikhupura commenced operations in 5J*5 as a producer of /1" milk. (y 5J** it had e>panded its operations to producer %utter# cream# desighee all under the %rand name M;L.P,. and fruit drinks under the %rand name CGS". ,fter Nestle S.,.# Swit<erland# took a ma&or participation in Pakistan Ltd. ;n 5J**# the Pakistan factory at Sheikhupura %ecame a part of the &oint venture under the name of Nestle Milkpak Ltd. Soon afterwards in 5JJ6 the milk powder plant was esta%lished to produce powder milk (N;9G). "his was followed in su%se$uent years %y the installation of production lines of infant formulae (L,C"G!KNs)# tea whitener (KDKCF9,F)# chocolate drinkApowder (M;LG) growing up milk (NKSL,C)# ready to drink chocolate drink (M;LGC"9)# sugar confectionery (PGLGMint)# fruit drinks ( CGS")# &uices (GC,N!K# ,PPLK# P;NK ,PPLK# M,N!G)# coffee

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(NKSC, K)# fle>i%le confectionery line ("G G and SGG"1KCS)# %ottled water (NKS"LK P/CK L; K)# plain and fruit yogurt# speciali<ed infant formulae(N,N 5 N 7). 9uring these years a variety of variants of different products were also introduced as a part of e>pansion of products portfolio. "o meet the needs of safe storage for the ever e>panding product range and their increasing volumes# a National 9istri%ution Center (N9C) was constructed in 7666. Spread over LL5= s$ uare meters# it can store up to *266 pallets# appro>imately *666 tons. )abir%a"a Factory Nestle Pakistan ac$uired the factory in 5JJ6 as a su%sidiary and su%se$uent to its merger with Nestle Pakistan in ,pril 5JJ) it %ecame a fully owned unit of Nestle Pakistan Ltd. , M,!!; NGG9LKS plant was installed in 5JJ7# followed %y a mil powder plant for N;9G and !LGC;, whose capacity was su%se$uently increased several times. "hen came a new %utter line for producing %ulk and cultured %utter. , dry milk line was installed for tea whitener powder (KDKCF9,F) and the milk powder plant was modified to produce N;9G enriched with vitamins and minerals. "he desi ghee plant was relocated form Sheikhupura actory and its capacity was dou%led. , National 9istri%utions Center and an Gccupational 1ealth Center were esta%lished and a new incinerator was commissioned with a scrap yard for proper water disposal. 7.2 Product Lines 'uality and nutritional value are the essential ingredients in all %rands of Nestle. Millions of people prefer Nestle products every day# happy with the addition to their wellness that they %ring. Nestle is giving its products in 56 different categories of food with )3 %rands. "hese food categories with product lines are@ (a%y food (Cerelac)# (everages (Necscafe li$uid# M;LG# (uddy# Grange &uice# Nestea)# (reakfast cereals# Chocolate and confectionery (.it.at)# 9airy Products (Milkpak# N;9G# Kvery9ay#)# Prepared food (Maggi noodles)# (ottled -ater (Nestle Pure Life) Nestle is offering following Product lines in Pakistan@ Products with Fears of Launch@ 5J*5 Nestle Milkpak 5J*2 Nestle (utter 5J*L Pakistan /1" Cream# Pakistan 9esighee# rost 5JJ6 N;9G# CKCKL,C 5JJ5 Nestle Cice# L,C"G!KN 5# L,C"G!KN 7 5JJ7 Nestle Kvery9ay# !loria# Maggi noodles

5JJ= M;LG powder# NKSL,C 5JJ3 M;LG C"9 5JJL Nestle &uices# PGLG Mint# NKSC, K Classic 5JJ) Nestle .it.at 5JJ* Nestle "G G# Nestle Soothers# Nestle Pure Life

7666 Nestle Plain Fogurt 7665 Nestle ruit Fogurt# Nestle N,N 5# N,N 7 7667 Kvery9ay li$uid# 7662 (/99F &uices# Nestle 1iACalcium Low at Fogurt# Nestle 1iACalcium Low at M;L. 766= Nestle Caita# NKSC, K (2 in 5) -ater is essential for life. ;t represents a%out L6+ of an adultMs %ody weight. -hile at first sight# there would seem to %e enough water on our %lue planet# in fact# %arely 5+ of the worldMs water is availa%le for human and environmental needs. ,s the world0s leading food and (everage Company# and the world leader in %ottled waters# Nestle has a responsi%ility towards the sustaina%le use of water resources. "his responsi%ility is em%edded in Corporate (usiness Principles and in strategy for sustaina%ility. Nestle %egan its entry into the water %usiness in 5JLJ. ;n 5JJ*# for the first time in its history# Nestle associated its name with %ottled water@ Nestle Pure Life. "he %rand was launched in Pakistan and soon appeared in (ra<il# followed %y ,rgentina# "hailand# the Philippines# China# and Me>ico in 7666. ;n 7665# ;ndia# Eordan# and Le%anon followed# and in 7667# Kgypt# /<%ekistan and the /nited States. NPL %ottled water is availa%le in markets in several different si<es i.e. S./s (Stock .eeping /nits). "hese S./s are of 3 gallon (5*.J liters)# 2 gallon for direct home and office delivery and .7 liter# .3 liter# and 5.3 liter %ottles. ;n Pakistan# Nestle water is strengthening Nestle Pure Life0s %ase of operations to meet the need of county0s emerging need for clean# goodAtasting water inconvenient si<es and packages to satisfy a family0s re$uirements. NPL is today num%er one water %rand in Pakistan. ,nnual %ottled water consumption per person varies widely throughout ,sia# from 7 liters in Pakistan to )2 liters in "hailand# giving ,sia strong growth potential for years to come. Nestle with head$uarters in Devey# Swit<erland was founded in 5*LL %y 1enri Nestle and is today the worldMs %iggest food and %everage company. Sales at the end of 7663were C1 J5 %n# with a net profit of C1 * %n. Nestle employs around 736#666 people and have factories or operations in almost every country in the world. *.+ Mar'et

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Market consists of people or organi<ations with needs to satisfy# money to spend# and willingness to spend it. Markets are made up of current and prospective customers# defined as any person or group with whom a marketer has an e>isting or potential relationship. *.2 ,na"ysis of Mar'et ,naly<ing the market means getting the information a%out the current market trends. "he needs and wants of the customers are identified? the availa%ility of the products is monitored as well as information a%out the competitors is gathered through this analysis. "he image of the product in the minds of the customers is also &udged and then on the %asis "here are different ways# which are adopted %y Nestle to get the information of the market. *.2.+ Sa"es -e(artment Sales department is a primary source of getting the information a%out the market. "hey actually visit the market and find out that who are the competitors# and what strategies they are adopting. "hey also collect the complaints of the customers and make sure the availa%ility of the product in the markets. *.2.2 .$stomer Service -e(artment or Kvery product there is customer service department. "his is head office %ased department i.e. every head office has its own department. ;n this department# customer0s complaints are collected which are gathered through the sales force or directly su%mitted %y the customers. "hen %atch num%er is assigned to these complaints and is transferred to the Marketing 9epartment. ;f Marketing 9epartment can0t %e a%le to solve the pro%lem then these complaints moved to the 'uality ,ssurance 9epartment# which is working in the actory. Nestle %elieve in maintaining regular contact with their consumers. "his applies %oth to how it presents its products and to how it addresses its consumersM $uestions and concerns. -hen 1enri Nestle prepared his first %o>es of infant formula for sale# he put his address on the packages so people would know where to go if they had $uestions. "oday# Nestle0s Consumer Celationship Panel with the words :"alk to Nestle: e>presses the same commitment. "his is why Nestle have a worldwide Nestle Consumer Services network devoted to caring for consumers. "he employees have e>pertise in a wide range of areas such as nutrition# food science# food safety and culinary e>pertise. "hey provide the prompt# efficient and high $uality service that consumers e>pect from Nestle. ;n addition# employees are taught to talk with consumers and a%ove all# to listen. Listening helps to understand what people want. Nestle uses the insights gained from relationships with consumers to drive product development.

Nestle cares for its consumers %ecause its success depends on meeting their needs and e>pectations. "hrough listening and understanding# it can make products that they will want to use all through their lives. *.2.* /esearc and -eve"o(ment -e(artment ;n Nestle# CN9 departments are locali<ed. ;ts head office is in Swit<erland. Nestle has divided the whole world into 2 <ones each has its own CN9. 5. ,merica 7. Kurope 2. ,.G.,. (,sia Gceania ,frica) "he CN9 in ,merica Ione is in ,merica itself# in Kurope Ione# it is in rance and in ,.G.,. Ione it is in ,ustralia. "he customer complaints are forward to the CN9 where research is conducted. "he results of the research and decisions are then transferred form CN9 to locali<ed offices. *.2.0 S$(("iers and distrib$tors "o know a%out the market Nestle Pakistan limited has esta%lished the close relationship with their suppliers who provide the raw material and the distri%utes who distri%ute the product in the market. ,s these %oth have an upAtoAdate knowledge a%out the market as they have a close interaction with the customers and also with the competitors. *.* ST1 (Se2ment, Tar2et and 1osition& *.*.+ Mar'et Se2mentation Market segment consists of a large identifia%le group within a market with similar wants# purchasing power# geographical location# %uying attitudes# or %uying ha%its. ;n a total market# there is always some diversity among the %uyers. -ithin same general market there are group of customers# market segments# with different wants# %uying preferences# product use %ehavior. ;n some markets these differences are relatively minor# and a single marketing mi> can satisfy %enefits sought %y the consumer. "he market segment is %ased on need %ased and it0s targeted for every one who cares for hisOher life and wants to maintain good health. *.*.2 Tar2et Mar'et ,fter the company has segmented a market# management must ne>t select one or more segments as its target markets. "he company can select any one of the tree strategies i.e. Market ,ggregation# single segment concentration# or multiple segment targeting. "he target market consists of upper lower class to upper upper class due to their purchasing power and company is following multiple targeting strategy which includes mainly two focus groups i.e. home N office consumption especially for %ulk water.

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*.0 Major .om(etitors Competition typically is defined as among forms within an industry producing products that are su%stitutes for one another. "herefore# the identification and evaluation of marketplace competitors is a key element of strategic marketing and a vital element of the corporate survival. Nestle is the market leader in the water industry. ;t is the first company which launched %ottled water for first time in Pakistan and that0s why it has ma>imum market share than others %ecause of %eing pioneer in this industry. ;t is also leading the other firms in new product introductions# distri%ution coverage# and promotional intensity. or different product categories there are different competitors of Nestle. Nestle pure life (NPL) ma&or competitors at this time who are also offering their water product in market are following@ Pepsi is offering ,$ua ina ,skari water "here are also other small competitors as well e.g. Classic# Nova etc which have very low market segements. ,ccording to market view# competition is defined as@ "he competition %etween the firms# which are satisfying the same customer# needs. So according to concept the competitors of NPL are all those companies# which are satisfying the need of thrust of the customers. (everages companies like unilever# "apal danedar# Pepsi# Coca cola etc. also come in this kind of the competition. *.3 Mar'et S are NPL share is )*+. Pepsi ,$ua ina share is 53+ ,skari -ater has share of 7.J+. Cemaining =.5 + is for all other competitors.

=.5 Marketing Strategy or each target market# management must design a Marketing strategy# which includes the designing of the marketing mi>. "he Marketing Mi> is the com%ination of multiple aspects of the following four elements@ a product# how it is distri%uted and promoted# and its price. "hese four elements are intended to please the target market(s) and# e$ually important organi<ation marketing o%&ectives.

"he CompanyMs strategy is guided %y several fundamental principles. NestleMs e>isting products grow through innovation and renovation while maintaining a %alance in geographic activities and product lines. LongAterm potential is never sacrificed for shortAterm performance. "he CompanyMs priority is to %ring the %est and most relevant products to people# wherever they are# whatever their needs# throughout their lives. Nestle is committed to the following (usiness o%&ectives in all countries# taking into account local legislation# cultural and religious practices@ NestleMs %usiness o%&ective is to manufacture and market the CompanyMs products in such a way as to create value that can %e sustained over the long term for shareholders# employees# consumers# and %usiness partners. Nestle does not favor shortAterm profit at the e>pense of successful longAterm %usiness development. Nestle recogni<es that its consumers have a sincere and legitimate interest in the %ehavior# %eliefs and actions of the Company %ehind %rands in which they place their trust# and that without its consumers the Company would not e>ist. Nestle continues to maintain its commitment to follow and respect all applica%le local laws in each of its markets. "o achieve these o%&ectives the product# price# place and promotion strategies for Nestle Pure Life are as following@ 0.2 1rod$ct Strate2y ,nything offered to a market for attention# ac$uisition# use# or consumption that might satisfy a need or want. Product is set of tangi%le and intangi%le attri%utes# including packaging# color# price# manufacturing# prestige# retailing# services# etc. which the %uyer may accept as offering want is satisfied. Nestle is offering the products# which comes under the category of fast moving consumer goods ( MC!). Nestle is committed to offering consumers highA$uality food products that are safe# tasty and afforda%le. "he Nestle Seal of !uarantee is a sym%ol of this commitment. "o %e successful in marketing# producers must need carefully planned strategies for their products. Now the $uestion is that how Nestle has planned the product strategies for NPL. 0.2.+ 1ositionin2 t e 1rod$ct 4n re"ation to t e attrib$te Nestle is positioning its water as pure and safe water# which is essential to good health. "hey say that "rust Nestle Pure Life and also Nestle pure life is 1appiness# 1ope and "rust# this is the message which they are giving in their advertising campaign.

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Nestle also claims that NPL is Pakistan0s favorite water and currently their slogan is E;FGH kay yehi hay <indagi. Gn %asis of these# it is said that Nestle is positioning in relation to the attri%ute and $uality of the product. ;ts %asic foundation is unchanged from the time of the origins of Company# and reflects the %asic ideas of fairness# honesty# and a general concern for people. 0.2.2 1rod$ct Line 56(ansion Product line e>pansion is accomplished %y increasing the depth (variety of si<es# colors# models) within the product line. Nestle is offering variety of si<es in NPL product line# which are as follows@ /etai" "ine# 5.3 liters 6.3 liters 6.7 liters (Cecently launched) Home and Office Line# ;t is also comes under Nestle (ulk category. 2 !allon 3 !allon 0.2.* 1rod$ct Life .yc"e Product life cycle consists of the aggregate demand over an e>tended period of time for all %rands comprising a generic product category. Product life cycle is divided in four stages. ;ntroduction@ 9uring introduction stage# sometimes called the pioneering stage# a product is launched into the market in a fullAscale marketing program. Gro%t # ;n the growth stage# or marketAacceptance stage# sales and profits rise# fre$uently at a rapid rate. Competitors enter the market# often in large num%ers if the profit outlook is particularly attractive. Mat$rity# 9uring first part of the maturity stage# sales continue to increase# %ut at a decreasing rate. -hen sales level off# profits of %oth producers and middlemen decline. "he prime reason is intense competition. -ec"ine#

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;n this stage sales volume decreases and losses %ecome grater than the profits. Small competitors normally $uit from the market at this stage and only large and strong remain moderately successful in decline stage. NPL is at the growth stage of the product life cycle. Large and small %oth kinds of competitors are entering in the market. Sales volume and market share is increasing rapidly. Last year# the sales of water were *666 tons and now this figure is raised up to 5=666 tons. 0.2.0 7randin2 , %rand is a name andOor mark intended to identify the product of one seller or group of sellers and differentiate the product from competing products. (randing reduces the price competition. Nestle is using following %randing strategies@ T e com(any name combined %it a (rod$ct name# , Nestle %rand name on a product is a promise to the customer that it is safe to consume# that it complies with all regulations and that it meets high standards of $uality. 7randin2 for Mar'et Sat$ration# NPL is categori<ed as NPL 1ome and Gffice (1G9) in %ulk (in gallons) and NPL for retailers i.e. easily carrying %ottles of small si<es. "hese multiple %rands are necessary to penetrate separate target markets. 0.2.3 1ac'a2in2, -esi2n, .o"or Packaging consists of all the activities of designing and producing the container or wrapper for a product. Packaging is intended to serve vital purposes@ Packaging connotes pleasure and attraction. (y adding value to the product# the shape of the %ottle contri%utes to %uilding %rand identity. NPL round %ottle and the classic elegance of %ottle are instantly recogni<a%le. Constant research into materials and styles generates innovative packaging in ever more attractive shapes# te>tures and colors. Cenovation in design# graphic identity and la%els helps set new standards and energi<e %rands %y anticipating trends in consumer tastes. (y adopting a new dynamic design# a renovated and moderni<ed s$uare %ottle is lunched %y Nestle. Packaging practicality is a key factor for success. (eyond the %asic re$uirements P strength# water tightness# etc. P ease of daily use is a su%&ect of regular research. ;nnovation in this area can focus on transportation convenience# making the pack more comforta%le to carry the %ottle. Packaging is an essential protection. ;t guarantees product safety and $uality from manufacturing through warehousing and distri%ution up until the end consumer. ;t is particularly crucial in preserving water0s original purity over time. Several of Nestle -aters0 research programs aim to optimi<e material performance# while a %attery of tests and ever more innovative capping techni$ues guarantee consumer safety on a daily %asis.

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;n addition to this primary role# packaging fulfils several complementary functions# including product identification and enhancement# practicality# consumer information# functionality to suit changing lifestyles# and so on. !iven greater diversity in packaging types and $uality# along with the emergence of new consumption patterns# packaging must also meet new ecological challenges. ;n this conte>t# Nestle -aters continue its efforts to develop more environmentally friendly %ottles. "his responsi%le corporate policy relies on a dual approach@ reducing %oth packaging weight and energy re$uirements during the manufacturing process while considera%ly increasing the $uantity of material recycled. 0.2.8 Labe"in2 , grade la%el is used in case of NPL. !rade la%el identifies the product0s &udged $uality with a letter# num%er# or word. Nestle is using different phrases words to show the $uality of the product. Like "rust# 1appiness# Pure# Pakistan0s favorite water# safe# healthy and Premium drinking water. 0.2.9 :$a"ity "here0s no agreement on a definition of product $uality# even though it is universally recogni<ed as significant. 'uality is a relative term and it varies from person to person due to the personal interests? what one likes# another may dislike. (ut one thing is common that when an organi<ation fulfills the e>pectations of the customers through its products then the image that organi<ation is esta%lished as a $ualityAdelivering organi<ation. "he same case is with NPL it is satisfying the needs and e>pectations of the customers through its standardi<ed products. Kveryday# millions of people all over the world show their confidence on Nestle %y choosing Nestle Pure Life. "his confidence is %ased on $uality image of Nestle and a reputation for high standards that has %een %uilt up over many years. Nestle commitment to product $uality remains the corner stone of its %usiness philosophy. ;n Pakistan too the Company has all along %een committed to achieving the highest $uality of its products. ,s a part of this effort# in 5JJ2# the Company em%arked upon the 4farm to ta%le8 $uality concept P the guarantee a%out the $uality of Nestle products up to the time of consumption %y the consumer. Nestle e>pect this concept to result in its product %ecoming the product of choice for its consumers. :$a"ity is t e cornerstone of !1L s$ccess# Kvery product on the shelf# every service and every customer contact helps to shape this image. , Nestle %rand name on a product is a promise to the customer that it is safe to consume# that it complies 'uality is the cornerstone of success. Kvery product on the shelf# every service and every customer contact helps to shape this image. , Nestle %rand name on a product is a promise to the customer that it is safe to consume# that it complies with all regulations and that it meets high standards of $uality. /nder no circumstances will we compromise on the safety of a product and every effort must %e made to avoid ha<ards to health. Likewise# compliance with all relevant laws and 57

regulations is a must and is not negotia%le. People# e$uipment and instruments are made availa%le to ensure safety and conformity of Nestle NPL at all times. =.2 Price 4Price is the amount of money andOor other items with utility needed to ac$uire a product. and utility is an attri%ute with potential to satisfy the wants.8 , product price influences wages# rent# interests# and profits. Some prospective customers are interested in low prices# where as another segment is more concerned with other factors# such as service# $uality# value# and %rand image. Consumer0s perception of $uality may %e influenced not &ust %y price %ut also %y such factors as store reputation and advertising. Pricing o%&ectives may %e@ ProfitA oriented@ "o achieve a target return "o ma>imi<e profit SalesAoriented "o sta%ili<e prices "o maintain or increase market share

Status $uoAoriented@ "o sta%ili<e the prices "o meet competition

;n developing a marketing program# management has to decide whether to compete primarily on the %asis of price or the nonAprice elements of the marketing mi>. Nestle has adopted following for setting the pricing of NPL@ 0.*.+ !on;(rice .om(etition Nestle is trying to maintain sta%le prices of NPL and attempt to improve its market positions %y emphasi<ing other aspects of their marketing programs. Gf course# competitors0 prices still must %e taken into considerations# and price changes will occur over time. Nevertheless# the emphasis of Nestle is on something other than price. "o maintain this nonAprice competition Nestle is developing distinctive# hopefully uni$ue# products and to create a novel# appealing promotional program. ;n addition# it emphasi<es the variety and $uality of the NPL# which they are offering to customers. Market Kntry Strategies "he price of NPL is maintained constant over the period as the %ase for this is $ualitative product which over the time period has reaped more market %y keeping price constant.

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=.2.7 9iscounts and ,llowances 9iscounts and allowances result in a deduction from the %ase (or list) price. "he deduction may %e in the form of reduced price or some other concession# such as free merchandise or advertising allowances. 9iscounts and allowances are common in %usiness dealings. Nestle (NPL) offers the "rade 9iscounts to it customers. "rade discounts sometimes called functional discounts are deductions from the list price offered to %uyers in payments for marketing functions the %uyer will perform. "he e>amples of these functions are@ storing# promoting# and selling the product. 0.*.* One;1rice Strate2y NPL is using this special price strategy i.e. oneAprice strategy in which the company charges the same price to all similar customers who %uy identical $uantities of a product. (ut for different $uantities the company is offering different price. Kven prices are set for the NPL products. 0.*.0 /esa"e 1rice Maintenance Some manufacturers want to control the prices at which middlemen resell their products? this is termed as resale price maintenance. Nestle is also following this strategy. ;t is doing so to protect the %rand0s image. "hey say that their control of prices provide middleman with ample profit margins. 0.0 1"ace ;nn marketing strategy# Place means distri%ution of the products. ;t is a very important element of the marketingAmi>. Gwnership of a product has to %e transferred some how from the individual or organi<ation that makes it to the consumer who needs it and %uy it. !oods also must %e physically transported from where they are produced to where they are needed. or this purpose# middlemen are used. Middleman is a %usiness firm that renders services related directly to the sale andOor purchase of a product as it flows from producer to consumer. 9ue to these middlemen# activities such as creating assortments and storing products can %e shifted from one party to another in an effort to improve efficiency. "hey are also a%le to carry out distri%ution activities %etter or more cheaply than either producers or consumers. , distri%ution channel consists of the set of people and firms involved in the transfer of title to a product as the product moves from producer to ultimate consumer or %usiness user. 0.0.+ Ty(e of -istrib$tion c anne"# 9iverse distri%ution channels e>ist today. "he distri%ution channel used for distri%ution of NPL %y Nestle is@ ProducerclipQimage65L -holesaler clipQimage653R5SCetailerclipQimage653 Consumer "his is an economically feasi%le choice. Nestle Pakistan Limited has a strong network of distri%ution and has a separate supply chain department. "his comes under the term@

5=

0.0.2 <ertica" Mar'etin2 System (<MS& DMS is tightly coordinated distri%ution channel designed specifically to improve operating efficiency and marketing effectiveness. "his is done %y the Nestle. "hey have esta%lished an ownership relationship with the successive levels of the middlemen. 0.0.* S$(("y c ain mana2ement (S.M& ;t represents a total system perspective of distri%ution# com%ining distri%ution channels and physical distri%ution. "he core of supply chain management is coordinated logistics. /nder supply chain management NPL is distri%uted through two main channels ie. 5. Consumer Cetail Channel 7. (ulk Consumer a. 1ome %. Gffice 5. Consumer Cetail Channel Company clipQimage65)R7S-holesaler clipQimage65)R5SCetailer clipQimage65)Consumer 7. (ulk Consumer Company clipQimage65)R=S-holesalerclipQimage65)R2S Consumer 0.0.0 .onsiderations in se"ectin2 t e c anne"s Nestle is adopting following considerations while selecting the distri%ution channel. Mar'et consideration ;t is necessary to know a%out the current marketing trends and also a%out the competitors. 1rod$ct consideration

;t is necessary to give the good $uality of NPL. Midd"eman .onsideration -ater is necessity of life so in time availa%ility of NPL to the customer is very necessary. Company consideration Nestle also has to take care of its o%&ectives while selecting the channel i.e. $uality service and at reasona%le distri%ution cost to get ma>imum profit. =.=.3 ;ntensity of 9istri%ution

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"here are many degrees of intensityQQ ranging from intensive to selective to e>clusive. "he Nestle (NPL) uses ;ntensive 9istri%ution. "he company is trying to sell its products through every availa%le outlet in a market# where a consumer might reasona%ly look for it. ,s water is a product of daily usage so its availa%ility at right time and at right place is very important. /ltimate consumers demand immediate satisfaction from convenience goods and will not defer to purchase a particular %rand. "hat0s why Nestle is using this intensive distri%ution. (y using this timely distri%ution many %enefits the Nestle (NPL) is receiving# such as@ ;mprove customer service# which directly affects the demand. Kffective physical distri%ution management opens many revenues for company. "he strong and effective distri%ution channels has added value to product %y %oth time utility and place utility. "he Nestle %rands are another strategic asset for Nestle -aters. "hey originated in the glo%al need for a safe family drinking water with a pleasant taste# afforda%le price and tailored to local preferences. "his need gave rise to a new multiAsite production process for %ottled water %ased on a simple idea@ a single %rand of water produced at a variety of sites# thus reducing costly logistical# warehousing and transport constraints P which are particularly high in the %ottled water sector P ena%ling consumers to en&oy the product at a more attractive price under a strong %rand identity. Careful Management of distri%ution channels has resulted in helping for Nestle to keep the sta%le prices of the Nestle Pure Life. =.3 Promotion ;t consists of a diverse collection of incentive tools# mostly short term# designed to stimulate $uicker or greater purchase of particular products or services %y consumers or the trade. rom marketing point of view# Promotion informs# persuades# and reminds prospective and current customers and other selected audiences a%out a company and its products. "he most useful %rand is failure if no one knows it is availa%le. =.3.5 Promotional Mi> , promotional mi> is an organi<ation0s com%ination of personal selling# advertising# sales promotion# and pu%lic relations. ,n effective promotional mi> is a critical part of all marketing strategies. Promotion# in whatever form it takes# is an attempt to influence. Nestle is using following methods for promotion of NPL@ =.3.5.5 ,dvertising ;t is nonApersonal communication paid for %y a clearly identified sponsor promoting ideas# organi<ations# or products. "he most familiar outlets for ads used for the advertisement of

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the NPL %y Nestle are the %roadcast ("D and Cadio) and print media (news papers and maga<ines). "he Nestle also uses other advertising vehicles like %ill%oards# "Ashirts and# more recently the ;nternet. Nestle has its own we%site which is giving the information a%out the different %rand of the company. Nestle is doing the selective demand advertising that is intended to stimulate demand for individual %rands. ;n the advertisement the message is given that# "here is one water# which gives you# hope# happiness and trust and that water is Nestle Pure Life. ;t is pure# safe# and healthy water. ,nd in recent advertising campaign# their slogan is# E;FGH .ay yehi hay <indagi. Gn %ill%oards the pictures of NPL advertisement seems so attractive# especially in summer season across the roads that it motivates the customer to purchase it immediately. Nestle has the internal advertising department as well as hire the services of the e>ternal Media manager assisted %y it0s assistant to devise all campaignsTT =.3.5.7 Sales Promotion ;t is demandAstimulating activity designed to supplement advertising. ;t is paid for %y the sponsor and fre$uently involved a temporary incentive to encourage a sale or purchase. Many sales promotions are directed at consumer. Nestle has designed it in away to encourage the company0s sales force or other mem%ers of the distri%ution channel to sell products more aggressively. Nestle Pakistan limited arranges concerts# trade shows# event sponsorship# inAstore displays# and discounts. ;n Nestle# a separate sales department is working. "he function of this department is to taking the sales orders# visiting the market# collecting the customer0s complaints and transferring to the concerned department. "hey also make sure the availa%ility of the NPL to the consumer at right time and at right place. =.3.5.2 Pu%lic relations ;t encompasses a wide variety of communication efforts to contri%ute to generally favora%le attitudes and opinions toward an organi<ation and its products. /nlike most advertising and personal selling# it does not include specific sales message. "he targets may %e customers# stockholders# a government agency# or a specialAinterest group. Pu%lic relations can take many forms# including newsletters# annual reports# lo%%ying# and support of charita%le and civic events. Nestle is following all a%ove mentioned pu%lic relations forms@ "he company assists through donations such hospitals and organi<ations that provide services to the poor and responds to distress calls %y the government and N!Gs for assistance to victims of flood# earth$uake# drought and other natural calamities. "he company arrange mil program for undernourished and sick children and mothers through several N!Gs and charita%le organi<ations.

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"he company has initiated a tu%e well and hand pump installation scheme in selected rural areas. ;t donates computers to schools for disadvantaged children run %y N!Gs and charita%le organi<ations. "o support the spread of education in rural areas# it undertakes Cefur%ishment Program of !ovt. operated primary and middle schools. "he Company regularly sponsors sports and cultural events# such as the ;nternational Polo "ournament and S, !ames in the recent past. "he company gives the e>tra gifts# calendars and diaries to the employees and customers for pu%lic relations. =.3.5.= Pu%licity Pu%licity is also a promotional method used %y the Nestle. Pu%licity is specific form of pu%lic relations that involves news stories a%out organi<ation or its products. Like advertising# it consists of an impersonal message that reaches a mass audience through the media. (ut several features distinguish pu%licity from advertising. "he company does not pay for it and it has little or no control over this and it appears as news and therefore has grater credi%ility than advertising. "he company seeks for good pu%licity and fre$uently provides the material for it in the form of news releases# press conferences# and photographs. -hen a picture of a company0s CKG appears on the cover of %usiness pu%lication and it accompanied %y a flattering article in the maga<ine# it is often attri%uta%le to the efforts of the firm0s pu%lic relations department. =.3.7 ;ntegrated Marketing communication Nestle is using the integrated marketing communication system. ;n this# company is trying to coordinate all promotional efforts make an effective impact on the customer mind and to deliver a consist message. "he Nestle has incorporated several different promotional campaigns. 9epending upon the o%&ectives and availa%le funds# it undertakes simultaneous local# regional# national# and international programs. indings and Cecommendations "his is competitive world and must never forget that customers have a choice. ;f they are not satisfied with a Nestle Pure Life# they will switch to another %rand. "he pursuit of highest $uality at any price is no guarantee for success# nor is a singleAminded costAcutting approach. Lasting competitive advantage is gained from a %alanced search for optimal value to customers# %y simultaneous improvement of $uality and reduction cost. Success can never %e taken for granted. Nestle must watch and learn from its competitors. ;f they do something %etter# Nestle must improve its own performance. Nestle can achieve competitive advantage through 'uality. Progress is followed %y listening to Nestle customers and %y measuring its works performance. Shortcomings and mistakes must %e analy<ed and corrected. Pro%lems must

5*

%e anticipated and prevented %efore they occur. Nestle also must identify and take advantage of opportunities. "o stand still is to fall %ehind. So Nestle must strive for continuous improvement in every area. ;t is through many small improvements as well as through ma&or %reakthroughs that Nestle will achieve e>cellence. -e have o%served from our e>tensive hardAwork to compile these pages and after visiting the organi<ation that the company is eager to serve consumers at its every possi%le level# consumer services department is the evidence of such a pursuit from the organi<ation point of view. Presently the company is market leader in it0s category %ut it shouldn0t take it as a complacent attitude rather capitali<e on its good %rand e$uity and to improve its $uality of product to reap not only more profits for the shareholder %ut also serve the humanity %y providing them healthful water which in other way a no%le N sacred &o%. "he company can fulfill this &o% %y having such a spirit following it religiously %y incorporating it all the marketing strategies. (i%liography Michael E. Kt<el# (ruce E. -alker and -illiam E. Stanton@ Marketing 57th edition Philip .otler@ Marketing Management 57th edition Stephen P. Co%%ins# Mary Coulter@ Management )th edition

Executive summary:

Nestle has been serving this world for over one hundred and thirty years. It has differentiated itself through its high quality product mix and positioned itself as health and Nutrition Company while targeting the health conscious people throughout the world. Nestle started its operations in Pakistan back in1 !!" by acquiring a diary company #I$%P&% $'(" when people of Pakistan actually needed it. )ince Pakistan is the fifth world*s largest milk producing country therefore Nestle deals mainly in dairy products. #oreover it also sells +uices" chocolates" prepared food like noodles" baby food" infant formula milk and breakfast cereals in Pakistan. Nestle is a low cost leader with its efficient operations hence it provides its customers with high quality products and sells them at a premium price. 'herefore it is earning good profits. Nestle has set its manufacturing plants at in %arachi" $ahore" Islamabad and %abirwala. 'he milk processing plant at %abirwala district is the Nestle*s world largest milk processing plant.

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,hen nestle introduced its products in Pakistan people were neither aware nor accustomed to them. 'herefore nestle ran an extensive marketing campaign to educate people and create a need for its products. Pakistan is a land where fresh eatables are readily available. Nestle should sell the same quality of products in Pakistan as it sells abroad. It should also introduce more brands in Pakistani market which it offers in other markets of the world since consumers in Pakistan are becoming more demanding day by day.

History:
In the mid-1!./s Nestle" a trained pharmacist named 0enri Nestle began experimenting with various combinations of cow1s milk" wheat flour and sugar in an attempt to develop an alternative source of infant nutrition for mothers who were unable to breast feed. 0is ultimate goal was to help combat the problem of infant mortality due to malnutrition. 0e called the new product 2arine $act3e 0enri Nestle.

Nestle1s first customer was a premature infant who could not tolerate any of the conventional substitutes" and had been given up for lost by local physicians. People quickly recogni4ed the value of the new product" after Nestle1s new formula saved the child1s life and within a few years" 2arine $act3e Nestle was being marketed in much of 5urope. 0enri Nestle also showed early understanding of the power of branding. Nestle means 1little nest1. Nestle was created in 1!.6. Nestle is today the world*s leading food company" with a 17/-year history and operations in virtually every country in the world. 'heir principal assets are not office buildings" factories" or even brands. 8ather" it is the fact that they are a global organi4ation comprised of many nationalities" religions" and ethnic backgrounds all working together in one single unifying

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corporate culture. 'heir culture unifies people on all continents" with roughly half their factories and people located in the developing world. Nestle started it operations in Pakistan in 1 !!. & qualified workforce" trained by nestles or emerging from a strong educational and industrial context" strongly influences the company*s ability to be globally competitive. 'he fair treatment and development of company staff and the strengthening of the local workforce are essential long-term investments. 'hey reinforce the conditions for growth and sustained economic development in the locations where Nestle operates. Nestle*s ability to employ thousands of people each year is an important contribution the company makes towards future generations" providing income to families who can enhance their chances at better education" healthcare and standard of living for entire families and communities.

Company Information
Ticker: N5)'$5 Country: P&%I)'&N Major Industry: 2ood 9 :everages Sub Industry: (iversified 2ood Employees: ;"<7= >Pakistan ? as of @anuary ;//!A Currency: Pakistan 8upee Market Capital: .1";;1" <!"7// Share Type:

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Brdinary

Mission Statement:
"Nestle is the largest food company in the world. But, more important to them is to be the world's leading food company.

&t Nestle" we believe that research can help us make better food so that people live a better life. Cood 2ood is the primary source of Cood 0ealth throughout life. ,e strive to bring consumers foods that are safe" of high quality and provide optimal nutrition to meet physiological needs. In addition to Nutrition" 0ealth and ,ellness" Nestle products bring consumers the vital ingredients of taste and pleasure.

Vision statement:
4Nestle aim is to meet the various needs of the consumer every day by marketing and selling

food of a consistently high quality. The confidences that consumers have in our brands is a result continuity consumers relate to this and feel they can trust our products. In particular, we en ision to! D $ead a dynamic" motivated and professional workforce ? proud of our heritage and positive about the future. of our companys many years of knowledge in marketing, research and development, as well as

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D #eet the nutrition needs of consumers of all ages ? from infancy to old age" from nutrition to pleasure" through an innovative portfolio of branded food and beverage products of the highest quality. D (eliver shareholder value through profitable long term growth" while continuing to play a significant and responsible role in the social" economic" and environmental sectors of Pakistan.

"oals o# $estle:
'he main goals as described by Nestle are as followsE
4!ood ood# !ood Life# the key to health# nutrition and wellness. -ith over 5=6 years of e>perience and e>pertise# we take great pride in %ringing you the %est products %ecause happy# healthy consumers are important to us. -e develop our products keeping your preferences# tastes and needs in mind. -e understand that you# along with millions of other consumers# know that you can trust our products to deliver purity# $uality# convenience and nutrition. Gur products are carefully aligned to Pakistani tastes and needs. -eMre always trying hard to develop new products and improve e>isting ones# and serve our consumers %etter. "hatMs why through constant renovation and innovation weMre always testing or launching value added products and making them availa%le in si<es that will suit every re$uirement. So e>plore the world of health with Nestle products# and find out what suits your familyMs needs8

%bjecti es o# $estle:
!arketing ob"ectives are compatible with the overall corporate ob"ectives of nestle. #ompanys ob"ective is to be the worlds largest and best branded food manufacturer while insuring that nestle name is synonymous with the products of the highest quality.

&hilosophy o# $estle:
NestleFs philosophy is summed up in four wordsE "ood 'ood, "ood (i#e) In their quest to become the world1s leading health" nutrition and wellness company" they do everything they can to help people live more fulfilling lives. "ood 'ood, "ood (i#e

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0enri Nestle chose his own coat of arms to represent the company1s philosophyE a bird1s nest" with a mother feeding her young. 'he image represents Nestle core valuesE care" family values" nutrition" healthy growth" safety and comfort. It is a guarantee of quality and a commitment to responsibilities as a food company and experts in nutrition. Bver the years Nestle has reaffirmed its commitment to wellness" helping consumers to live longer" healthier" and more productive lives" no matter their age" gender or socioeconomic status. "ood In*redients 'hree vital ingredients lie at the heart of Nestle and come together in their brandsE 'heir people, their research and development" and their commitment to quality) 'he ;=/"/// dedicated people who make up the Nestle family are their source of strength and energy. 8eali4ing this" Nestle offer them constant professional development" and feel their cultural diversity is one of greatest assets.

&roducts: +usiness (ines in &akistan:


Milked dairy and chilled dairy: #I$%P&% N5)GI'& NI(B N5)$&C 5G58H(&H N5)'$5 (ahi N5)'$5 2ruit Hogurt N5)'$5 8aita #I$%P&% Cream

7=

+e era*es: N5)C&25 N5IJIC% #I$B N5)'$5 2ruita Gitals +ottled ,ater: N5)'$5 Pure $ife +aby 'ood: C585$&C 'ood: #&CCI-; #inute Noodles +reak 'ast Cereals: Corn 2lakes 0oney Cold 2lakes %B%B Crunch Chocolate - Con#ectionary: %I'%&' %I'%&' Chunky
Polo

Tar*et market o# $estle:

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#ilk" dairy and Chilled dairyE wide variety of dairy products is available to cater almost every segment of customer. $iquid #ilk especially Nesvita is produced especially for the females as it contains high content of iron" beneficial for them.

:everagesE it includes Nescafe" #ilo" Nesquik" and Nestle 2riuta Gitals. 'heir main target market includes people of all ages. :ottled waterE businesses" students" for the people who do not have access to clean drinking water. :aby foodE target market of baby food is all the parents 2oodE it includes #aggie noodles which mostly caters children and teenagers. :reakfast cerealsE children" teens and adults benefits from it Chocolates and confectionaryE people of all ages. )ports nutritionE it specifically targets sports persons for a nutritive protein diet.

Si.e o# the or*ani.ation: /010: Nestle*s first quarter revenues in ;/1/" increased by ..=K compared to the previous year. 'he company1s food and drinks segment revenues increased by =.1K in 5urope and more than 1/K in emerging markets. In the first half of ;/1/" Nestle*s revenues increased ..1K compared to the first half of ;// L net profits increased 6.=K /002: Nestle is the world1s largest food and beverage company" with ;// sales of over 1/6 billion C02 >M1/1 billion J)(A. /003: ,ith sales of C02 1/ . billion >)wiss currencyA in ;//!" Nestle is the world1s leading nutrition" health and wellness company. 'he company employs more than ;!/"/// people and has 7=. factories in !7 countries. Nestle products are sold in almost every country in the world. Bnly about 1.= percent of its sales are generated in its home country" and all but 1; of its factories are situated abroad. Nestle is a truly public company with over ;=/"/// shareholders of which around one third are )wiss. No single shareholder owns more than <K of the stock. J) investors" who" together" hold over </K of the capital.

Competitors:
En*ro 'oods &akistan

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#a+or product linesE Blpers milk" Blwell" Blper Cream" 'arang 'ea whitener" 'arkka Chee
Haleeb 'oods

#a+or product linesE :read" snacks" desserts and meals.


She.an 'oods &akistan Ma&or product lines@ ood Products# Eams Eellies N Marmalades# "omato .etchup#

Sauces N Pickles# ruit Euices Syrups N S$uashes

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%r*ani.ation ChartC1,;CM,N
1.7arbec';"etmat e

Corporate governance

-.1 F/4.) CKG 1.7$"c'e


Corporate communications

/./amsa$er Pharma N cosmetics 1C F..astaner

inance N control

=.Sin2 Gperations =.Lo(e>


S(/0s marketing Nsales

?.7a$er
;nnovation technology N CN9

?.7a$er Ione K/C@ K/CGPK L.Frei6e Nestle Professional M..aira

Nestle nutrition /.T.La$be

7*

Ione ,G,@ ,S;,O, C;C,

F.<an -ij' Ione ,MS@ ,mericas L..antare""


Nestle waters

=.=.Harris

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Pakistan - key positions occupied by


'revor Clayton" Mana*in* 4irector" #( Bffice >Country Head o# %perationsA )yed Hawar &li" Chairman 8aymond 2ranke" Head o# 'inance and Controls" 2inance 9 Control (ivision 0aseeb &slam, country business mana*er water, water division. Peter ,uetherich" Head o# Technical" 'echnical (ivision )alman Na4ir" Head o# Supply Chain" )upply Chain (ivision J4ma Iaiser :utt" Head o# Human 5esources" 0uman 8esources (ivision Nafar 0ussain" Head o# Sales" )ales (ivision

!egistered and "orporate #ffices in Pakistan 603 7 8pper Mall, (ahore O ; /7; 111..<6.!=< O ; /7; =6! </< O ; /7; =6! </7 Corporate %##ice 9nne: </7 ? Jpper #all" $ahore

26

O ; /7; 111..<6.!=< &ark (ane Tower 6;-'ufail 8oad" $ahore Cantt $ahore O ; /7; ./ <//

Sheikhupura 'actory ; th%.#.$ahore-)heikhupura 8oad" )heikhupura O ; /=. <7/ ..1=-;= O ; /7; .<. !61/

;abirwala 'actory %abirwala-%abirwala 8oad" %abirwala" (istrict %hanewal O ; /.= 111..<6.!=< O ; /.= ;71 17<; Islamabad 'actory <,ater= Plot no. <;" )treet <L )ector 1 ? 1/P<" Islamabad O ; /=1 777 = O ; /=1 777 = 1-< 6

;arachi 'actory <,ater=

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;<-&" North ,estern Industrial )tate" Port Iasim &uthority" %arachi O ; /;1 76; /1=1-< O ; /;1 76; /1=7

Type o# +usiness:
Nestle Corporate :usiness Principles will continue to evolve and adapt to a changing world" their basic foundation is unchanged from the time of the origins of their Company" and reflects the basic ideas of fairness" honesty" and a general concern for people. Nestle is committed to the following :usiness Principles in all countries" taking into account local legislation" cultural and religious practices.

Consumers
5. $utrition, Health and ,ellness

Bur core aim is to enhance the quality of consumers* lives every day" everywhere by offering tastier and healthier food and beverage choices and encouraging a healthy lifestyle. ,e express this via our corporate proposition Cood 2ood" Cood $ife.
7. >uality assurance and product sa#ety

5verywhere in the world" the Nestle name represents a promise to the consumer that the product is safe and of high standard.

2. Consumer communication

27

,e are committed to responsible" reliable consumer communication that empowers consumers to exercise their right to informed choice and promotes healthier diets. ,e respect consumer privacy.

Human 5i*hts and (abor &ractices


=. Human ri*hts in our +usiness acti ities

,e fully support the Jnited Nations Clobal Compact*s >JNCCA guiding principles on human rights and labor and aim to provide an example of good human rights and labor practices throughout our business activities.

%ur &eople
3. (eadership and personal responsibility

Bur success is based on our people. ,e treat each other with respect and dignity and expect everyone to promote a sense of personal responsibility. ,e recruit competent and motivated people who respect our values" provide equal opportunities for their development and advancement protect their privacy and do not tolerate any form of harassment or discrimination.
L. Sa#ety and health at work

,e are committed to preventing accidents" in+uries and illness related to work" and to protect employees" contractors and others involved along the value chain.

Suppliers and customers

). Supplier and customer relations

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,e require our suppliers" agents" subcontractors and their employees to demonstrate honesty" integrity and fairness" and to adhere to our non-negotiable standards. In the same way" we are committed to our own customers.

*. 9*riculture and rural de elopment

,e contribute to improvements in agricultural production" the social and economic status of farmers" rural communities and in production systems to make them more environmentally sustainable. The En ironment
J. En ironmental sustainability

,e commit ourselves to environmentally sustainable business practices. &t all stages of the product life cycle we strive to use natural resources efficiently" favor the use of sustainablymanaged renewable resources" and target 4ero waste.
56. ,ater

,e are committed to the sustainable use of water and continuous improvement in water management. ,e recogni4e that the world faces a growing water challenge and that responsible management of the world*s resources by all water users is an absolute necessity.

Customers

5very person" of any age group" gender etc is the target customer of Nestle Nestle target its customers by knowing customer needs 9 demands. 2or this purpose it made customer profile.

Customer profile based on two criteriaE >ualitati e research:?

2=

'his involves setting up small focus groups of consumers who express their ideas and opinions about their needs and views on different products. &t one level" this might involve asking groups of athletes to talk about their lifestyles" dietary habits and training regimes. &t another level" it could involve a consumer focus group discussing the quality of the nutritional labeling on a yogurt drink.

>uantitati e research:?

'his involves only relatively few people like professional market researchers may interview thousands of people through postal or telephone interviewing. Nestle regularly uses both forms of research to gain a clear idea of consumer opinions and trends. Jsing these customer profile techniques" Nestle developed its different product strategies to target the customers.

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S,%T 9nalysis
Stren*ths:

Company*s name Nestle specifies the quality image high standard and quality product $oyalty from customers is also the ma+or strength for the company 5mployees are also loyal due to the decentrali4ed culture of the company People trust on products due to proper health and safety measures 'he strength of Nestle confectionary is its imported chocolates and candies" which strengthens its image

:eing a multinational company it has the capability to attract more customers than the local companies

Company has the ability to compete in a dynamic environment Company always adapt the new technology

,eaknesses:

'here is not much margins for retailers to prefer it*s sales. 'hey need to improve the facilities like chillers. 'he distribution cost is high as compared to the competition in the local market. Company mostly advertises its milk products" advertisement of confectionary products is not so better.

%pportunities:

'hey have an opportunity to expand or capture the market by adding its product line. 'hey have the opportunity to offer snacks.

'hey can also capture the market of home appliances. Company can open separate stores to eliminate retailers. 8ecently" they have created an opportunity for themselves by introducing chillers in the market. Company is trying to open stores in universities. 'hey can provide incentives to retailers to increase sales volume. Company can enter in ice cream products

Threats:

5xisting companies are increasing their product lines that can prove to be a threat in the coming years. Company like Cadbury is giving more discounts to retailers as compared to distributors due to which retailers prefer its products for sale. &s compared to the local competitors" our distributor cost is very high. &s Nestle confectionary Products has to maintain and obey the Nestle standards. )ome companies are competing on the basis of cost.

En ironment:
In line with Nestle1s global commitment" Nestle Pakistan is dedicated to playing its role in helping to protect the environment. ,e comply with the 5nvironmental &ct >1 6A" and try to ensure that at every stage of our operations" the environmental impact is minimal. $earn more about our 8esponsibility to the 5nvironment pro+ectsE

%ur En ironmental Commitment in 9ction: Bur environmental commitment extends to every part of our value chain. 'hus" at the raw materials stage" we support sustainable agricultural and dairy farming practices" including environmental protection.

,hen it comes to production" all our factories try to maximi4e eco-efficiency" i.e. increase production while minimi4ing resource consumption" waste and emissions. Bur factories are equipped with complete testing and monitoring facilities for waste and air emissions. 'o eliminate air pollution" we have stopped using heavy fuel oil in our factories" which are now run on clean natural gas. 'his has reduced our emissions into the atmosphere to well below the legal limits. Bur )heikhupura 9 %abirwala factories have elaborate water treatment systems to prevent wastewater from polluting the environment. In ;//=" we upgraded our wastewater treatment plants in both factories. 'hat1s not allL we are continually reducing our consumption of raw water per ton of production. Irresponsible packaging can have a heavy impact on the environment. 'o reduce the amount of material used without +eopardi4ing the safety and quality of our products" we are always working on new packaging solutions that have minimal weight and volume and can be easily recycled. ,e even operate a collection system for used packaging. )olid waste is collected at source and then reused" recycled or disposed in an environmentally friendly way. Natural gas incinerators at our )heikhupura 9 %abirwala factories are used to safely dispose of material that cannot be recycled 9 dumped. Bur factories have environment committees to manage routine environment issues and review performance. 5nvironmental impact assessment is done in advance for every new pro+ect and measures are adopted to minimi4e adverse impacts on the environment. Bur employees regularly undergo training to inculcate awareness about environment-friendly practices.

Mana*erial Implications:
'he problems faced by Nestle in today*s world are the claims faced by it as being charged with the responsibility of violating the QInternational #arketing CodesR. Nestle claims that I is doing nothing wrong and unethical in the way it markets is baby foods around the world. :aby milk action has raised the case of Q)yed &amar 8a4aR who has publici4es evidence of

Nestle malpractice in Pakistan as well. It has been claimed that company marketing is causing unnecessary deaths and suffering of babies" largely among poor because they do not use the proper amount of powder in order to save some volume for future use which causes great danger to baby life. 5ecommendations:

Nestle must state in writing that it accepts the international code and the subsequent relevant ,orld 0ealth &ssembly 8esolutions are minimum requirements for every country. Nestle must state in writing that it will require changes to bring its :aby 2ood #arketing policy and practice into line with International Code and 8esolutions.

Marketin* Strate*y: 'he products include features that contain the combination of both health and hygiene keeping in mind the individuals requirements in terms of taste. 0owever the marketing will be done considering the concept of mass percentage. Products will be tailored to individual needs >desired tasteA but promotion will attract all of them collectively. 2urthermore Nestle will be following pull strategy and approach its end users itself with the help of various promotional activities. 2or the distribution of products" no intermediary >whole sellersA is involved. 'he distribution channel is direct.
Nestle

(irect Channel

Cetailors

Tar*et Market: %nowing the fact that Nestle cannot be everything for everyone" it will be targeting only those segments that can provide best possible returns so that it may reach its goals effectively and efficiently. 'he target market collectively consists of males and females in $ahore and %arachi of age group less than 1!-</ belonging to middle class" not finding any other provider on terms of quality" hygiene and taste. Market Se*mentation:? Nestle has divided its market into geographic" demographic" psychographic and behavioral segments. 'hese segments will help to understand the market better and in implementation of marketing strategies.

"eo*raphic Se*mentation:

'he geographic segmentation is based on the weather conditions as en+oying ice cream is popular mostly all over the Pakistan but keeping in mind the market conditions and secondly to reduce the initial expenses >not to over load the businessA.

4emo*raphic Se*mentation:

Nestle has demographic segmentation for its products that comprises of following variablesE 9*e: :elow 1!. 1!-</" </O "ender: #ale" female

&sycho*raphic Se*mentation:

'he psychographic segmentation of Nestle is based on the classes such as lower class" middle class and upper class.

+eha ioral Se*mentation:


2irstly" the segment includes people who are interested and like en+oying Nestle

products.
)econdly" it includes people who are willing to buy but not finding any other in the

region up to the level they desire with respect to quality" hygiene and taste.
'hirdly" there are people who are not interested in the concept at all.

Core 4istincti e Competency o# the company: 'o pose our product against the competitors Nestle will be using differentiation strategy which will not only differentiate it from others but also given an edge over others. Company*s core products will be very beneficial especially in terms of quality" health and hygiene and most important consumer satisfaction. 'he segmented products of Nestle will include consumers* satisfaction as warranty to retailers in terms of expire" delivery and after sales services. &roduct Market E:pansion "rid: Nestle will be following the same strategy for its expansionE

(ow Cost operator:

Nestle will be low cost operator in terms of using minimum initial investment to not to overload the business with expensive assets. &ssets will be utili4ed in such a way that ensure full use of existing assets at a regional level before acquiring additional ones. )election of ingredients is done which will give desired consumer perception at lower cost

Inno ation@ 5eno ation:

Jsing strong innovation system which will able to provide each year a new product range in a timely manner" while making best use of existing assets.

&roduct a ailability <Awith in arms reachB=:

Nestle strives to provide maximum availability at the right cost at all channels.

Communication:

:y making Nestle*s products the most visible brands in the street" placing a priority on visibility and will also be ensuring that the company has reinforce the availability and attractiveness of its brand in locations of high traffic flow.

ST59TE"IC M9$"EME$T 9T $EST(E &9;IST9$ (IMITE4 'here are sets of policies which are uniform for everyone and strictly enforced. 'he procedure for policy formulation is transparentL where everyone is given a chance to express one1s opinion. 'he ultimate approval is given by the Chief 5xecutive. Policies are formulated in the various meetings as outlined below. PB$ICH 2B8#J$&'IBN

8egular meetings are organi4ed at each level of the organi4ation to keep the company moving in a systematic manner. 'he main ob+ective behind these meetings is to bring forth the employees at a forum" where they can discuss their problems" give suggestions for improvement and development. &lso they can share their experiences with each other. )ome meetings are held at periodic basis which are necessary to keep a check on the progress of the company. 'hese areE )enior #anagement #eetings Cycle #eetings (epartment ,ise )cheduled #eetings

)5NIB8 #&N&C5#5N' #55'INC)

5very month" the (ivisional heads and the )enior #anagers hold a meeting to discuss ma+or policy issues facing the management. 'he 0uman 8esources #anager plays the role of a guardian for establishment and development of the policies. &t the )enior #anagement meetings" the suggested policies are presented before the (ivisional 0eads and )enior #anagement. 'he )enior #anagement discusses the feasibility of these policies. 'he recommended policy is the one that has the approval of all members. Bnly after" the whole of this exercise has been done" it is presented before the Chief 5xecutive. 0e takes the ultimate decision which is always in the best interest of the company and its employees.

CHC$5 #55'INC)

)ales personnel of Nestle #ilkpak $td. from all over Pakistan hold a meeting or a bi-monthly sales review. 'he ma+or force behind a giant food company like Nestle is its sales. 'herefore it is extremely necessary to keep a check upon the progress of the various brands and their sales profitability. Information regarding the sales is required at each division of the company.

#arketing #anagers need it to design methods for stabili4ing and building the sales of prosperous brands. 'he 2inance and Control (ivision needs it to +udge the viability of the investments being made and the budget allocation" also for managing the supply against the demand of various brands. )imilarly" 'echnical Purchase (ivision too needs requisite information for purchasing equipment for product innovations which is based mainly on the sales. &t this meeting the Nonal and 8egional )ales #anagers make presentations and provide figures necessary to make interpretations. (5P&8'#5N' ,I)5 )C05(J$5( #55'INC) In addition to the high level meetings and sales previewL every department holds several scheduled and non-scheduled meetings. )cheduled meetings are organi4ed to keep all members of the department up to date about the complete workings of the department. #embers discuss their problemsL give suggestions for improvements" generate ideas for development of their department and share experiences with each other as well the respective bosses. 'his helps develop communication through all levels of the hierarchy. &nd management remains aware of the work being done by the sub-ordinates. Non-scheduled meetings can be called anytime to discuss urgent issues. 'hese do not have any prescribed datePdayPtime as compared to the scheduled meetings. #&N&C58I&$ )'H$5 Bne of the most difficult responsibilities that any manager assumes is that of managing people even if he is responsible for managing a homogeneous group. 'he difficulty of this task is magnified with the si4e of the organi4ation and as diversity is introduced to the group >cultural diversity" gender" age" beliefs" disabilities etc.A. Nestle #ilkpak $imited is an example of such an organi4ation which is large in si4e and diverse in culture. 'he original culture of #ilkpak $imited still prevails and the key managers face a tough task of managing the people and making them adapt to the culture the Nestle team wants to incorporate in the company. No formal data could be obtained on the managerial style for managers at Nestle #ilkpak" the following detail rests on my personal observation. 'he relation observed by me" of the managers at different levels with their sub ordinates was that of an Sopen-door policyS. 'he key to success in managing a diverse work group is encouraging

open" two way communications. 'he employees of a particular department and the organi4ation as a whole knew that not only are they valued" but their opinion is also welcome. 'he more they feel that their input is valued" the greater the sense of ownership they1ll have in their department1s mission. 'his was exactly the case observed at N#$. 'herefore" it can be said that a Sdemocratic styleS of leadership was observed at the organi4ation. 'his style describes a leader who tends to involve sub ordinates in decision making" delegates authority" encourages participation in deciding work methods and goals" and uses feedback as an opportunity for coaching. 'he use of feedback was a very important element observed by me during my training. :eing an internee" I was also asked by one of my department heads to give a feedback stating the good and bad points of the employees I was working with including the Incharge himself. )uch elements go a long way in the success of a large scale and diverse organi4ation like Nestle #ilkpak $imited and the appropriate management style is mandatory in the achievement of targets for the company. M9$9"E5I9( &%(ICC #anagerial policy guidelines are made in consultation with the senior executives of the company. S& Policy and Procedure 2orumS is held for the line managers who are responsible to implement the policies approved in their respective departments. If any changes are made regarding the policies or procedures" it is the responsibility of the 0uman 8esources #anager to convey the change to the line managers. &part from the policies" the managerial styles vary from person to person

References:
&hase 1: Si.e o# nestle in /002 and /010 httpEPPwww.wikinvest.comPstockPNestleT>N)8CHA $estle in corporate scenario httpEPPwww.nestle.comPPagesPNestle.aspx Competitors httpEPPwww.conagrafoods.comP httpEPPwww.danone.comPenPbrandsPbusinessPfresh-dairy-products.html httpEPPwww.kraftfoodscompany.comP:randsPlargest-brandsPbrands-BPPagesPindex.aspxUletterVo httpEPPwww.hersheys.comPpure-products.aspx httpEPPwww.habibfood.comP httpEPPwww.olpers.com.pkP Type o# business httpEPPwww.nestle.comPCommonPNestle(ocumentsP(ocumentsP$ibraryP(ocumentsPCorporateTC overnancePCorporate-:usiness-Principles-5N.pdf

&hase /: Corporate Social 5esponsibility httpEPPwww.nestle.pkPcommunityPeducation.aspx httpEPPwww.nestle.pkPcommunityPearthquake-relief.aspx

httpEPPwww.nestle.pkPcommunityPearthquake-relief.aspx httpEPPwww.nestle.pkPcommunityPsociety.aspx httpEPPwww.nestle.pkPcommunityPquality-assurance.aspx httpEPPwww.nestle.pkPcommunityPshe-policy.aspx httpEPPwww.nestle.pkPindexPcorporate-legal.aspx