MARKETING PRINCIPLES

UNIT 4: (4.1.1)

Explain the various elements of the marketing process

As defined by Phillip Kotler, Marketing is a process in which companies create
value for the customers and build strong relationship with customers and in return capture
value from them. In old sense marketing is all about making a sale, but today its about
satisfying consumer needs. Today every successful firm has one thing in common i.e.
they have highly customer focused and are highly committed to marketing. These firms
work passionately to understand the needs of consumers and satisfy consumers by
building strong customer relationship management.
Nestle is a multinational FMCG (fast moving consumer goods) company. Nestle
was founded by Henri Nestle in 1867 and headquartered in Switzerland. Nestle was
founded in Pakistan in 1979 in collaboration with Milk Pak Limited in Lahore and
known as Nestle Milkpak, Ltd. Its Pakistan head office is located in Upper mall, Lahore.
Nestle has basic principles which every single employee has to adopt like honesty,
fairness, and a strong human orientation.
Nestle business processes have evolved over a period of time and also adaptive
to changing environment. Nestle offers high quality products. Their departments work
in greater coordination in order to develop a product according to consumer
preferences, price, convenience and variety.
Nestle has decentralized structure, they promote adaptability as much as
possible to adjust in different states, people with different mentalities and
circumstances. Nestle has extensive product portfolio in Pakistan. Dairy products of
Nestle Pakistan are divided into two categories.

AMBIANT DAIRY
Nestle Milkpak
Nestle Milkpak Cream
Nestle Nido
Nestle Everyday
Nestle Nesvita Plus

CHILLED DAIRY
Nestle Yogurt
Nestle Riwayati maza
Nestle Acti-plus Yogurt
Nestle Milkpak Yogurt
Nestle Zeera-Raita
Nestle Podina Raita
Milo

Nestle marketing division has sole purpose to build brands. In fact they say that
brand building is Nestle way. In Nestle marketing managers put untiring efforts to
build their brands and gain market share in respective category. Nestls marketing
team provides services in three basic parts i.e.

Brand management
Communication
Consumer insights

Brands are managed in a way that consumer preferences are met along with special
services that help consumer wherever he has problem regarding a product. Marketing
mix of Nestle comprises of 4Ps including Product, price, placement and promotions.
Product:
Products are developed after a thorough marketing research conducted on local
areas where targeted consumers live. Their behavior is assed regarding a product and
its development. A product has different benefits associated with it. A product is
anything that satisfies a consumer need, or a solution to a problem. Products in Nestle
are developed keeping in mind the consumer requirements regarding a product.
Marketers work hard to create a product to satisfy the target consumers.
Price:
Every product has a market price; a price on which it will be sold to end
consumer. Widely used method for price is cost plus pricing. Marketers add a certain

percentage of profit into cost. But brands like Nestle use value based pricing. Value
based pricing is the one in which price is set as per value offered by a product. At
Nestle they create Value based solutions/products for consumers and charge
accordingly. Every product should be priced rightly because if price is too low, firms
profitability will suffer. And if price is too high, target segment will not buy it.
Placement:
Placing a product in market so that it reaches to end consumer is what placement
is. There are two ways through which a firm places its product or deliver its product to
end consumer.
Some companies deal with consumers directly as in business to business deals.

Producer

Consumer

Some companies have selling process through retailer.

Producer

Retailers

Consumer

Mostly companies in Pakistan follow this route of selling that involves distributors,
whole sellers and retailers.

Producer

Distributor

Wholeseller

Retailer

End-consumer

Nestle is using second and third channels for distribution of products. Selling
through retailer channel is used when they have to distribute to big retail stores like
metro and Hyper-star in Lahore. Nestle use third channel for more than 80% of
distribution across Pakistan. As Pakistan is under developed country, people prefer to
buy from small retail shops instead of big malls or lager retailers. Nestle is widely
available in all rural and urban areas of Pakistan. Nestle has stronger distribution

network across the Pakistan, and it gives Nestle a competitive edge over the local
brands.
Promotions:
Nestle use all kinds of media for promoting its products. Main purpose of this P of
Marketing is giving your consumer awareness about your brands. Any promotional
activity has one of the three purposes.

Inform your consumer about your product

Persuade if consumer knows about your product, then influence him to buy your
product.

Remind- if a consumer knows your product and buy it, then he must be retained for
lifetime.
SWOT ANALYSIS OF NESTLE
In order to be successful, every organization has to analyze it internal and

external environment and know about its own strengths and weakness as well as
opportunities and threats in external environment. If managers do not realize the worth
of opportunities, their firm cannot grow. Every firm has goals for growth; these goals
are attainable if managers know about their strength and weakness to effectively utilize
opportunities while minimizing threats.

Strengths:

Nestle produces high quality products. For Nestle Quality is everything.

Nestle has earned trust and loyalty from customers worldwide.

Nestle is leader in providing healthy, tasty and nutritious food.

Nestle is adaptive to new technology and changes in environment and has ability
to continuously bring new products in market.

Nestle Pakistan has greater support from its parent company. Nestle has high
levels of resources that makes operations to run smooth.

Nestle has excellent management and staff

Nestle has strong Research & Development team.

Nestle product portfolio has diverse range of products ranging from dairy
products to ready to cook food and confectioneries.

Nestle has a strong distribution network across Pakistan covering rural and
urban areas.

Weakness:

Nestle does not aim at all product equally. Some brands get more attention than
others.

Distributing products across the country is costly, but somehow nestle is

managing it.

Supplying the products to end consumer through a long indirect method brings
less profit as compared to delivering product through a single retailer.

Following long indirect method gives fewer profit margins to retailers as well
compared to other competing products. Hence, retailer prefers less to push
Nestle products to consumers.

Nestle has complex supply chain

Sales division was flat in 2008 and following year, whereas overall industry grew
8.9%. This is due to launch of Olpers milk and juices.

Nestle is competing in many markets at a same time with family branding

strategies. In some categories it is leader. But some categories are ignored.

Opportunities:

Nestle can enter in ice-cream market as internationally nestle has launch ice
cream brands successfully.

Nestle can plan on incentive programs for retailers in order to get higher sales.

In annual budget 2014, government has announced regulations for free markets.
Nestle can work on it.

Nestle can open its own retail stores in order to remove whole sellers and
retailers.

Nestle can work on expansion strategies. It can expand in existing categories or

can enter a new category.

Every year disposable income of households is increasing. It brings more users

towards buying brands especially in FMCG category.

Threats:

High wages brings high inflation too. High inflation leaves no option but to
compromise on existing usage of brands. If inflation is increasing day by day,
consumers will not buy brands with value based pricing. They would like to
purchase cheaper brands.

Oil prices also increasing worldwide leading to increase operational costs and
resulting in high prices of products for end consumers.

Competitors that entered in market after Nestle, has used extra ordinary
marketing tactics and gained popularity among consumers. Now nestle need to
put more efforts to promote its products and attract consumers towards it.

There are some local competitors that are competing with nestle solely on basis
of cost. They are major threats to Nestle. In Pakistan, consumers are pricesensitive.

Nestles scope of marketing totally revolves around one concept: brand building is
Nestle way. Management believes in building strong brands. They work on each
minute detail of segmentation, targeting and positioning. This will be discussed in later
part of this assignment.

UNIT 4: (4.1.2)

Evaluate the benefits and costs of a marketing orientation for a selected

organization
Marketing orientation is philosophy of doing business solely focusing on two
things; identification of stated or hidden needs of target consumers and meeting them
effectively. Nestle is a market oriented business. Its business philosophy stresses on
fulfilling consumer needs by tailoring products according to their requirements and
expectations.
Lets look at Nestls mission statement in order to understand that how Nestle is
incorporating concept of marketing-orientation. Nestle being the one of the worlds best
nutrition, health and wellness organization follows a mission, saying: Good food,
Good life. Nestls mission is to offer its consumers the best food in a variety of flavors
with best taste from morning to night.
Everything pursued by an organization in its main functions has some benefits
and costs attached to it. Benefits of implementing market-orientation are mentioned
below:
Benefits of implementing market-orientation

Improved objective performance i.e.

o higher profits,
o market share, and
o optimum utilization of resources
Leads to continuous development of products and business processes.
Helps to build strong customer relationship and customer life-time value. If

consumers are satisfied with Nestls products they will buy products repeatedly. It
leads to increase in customer loyalty.
It helps in firm to have greater responsiveness to consumer wants and insights.
It also helps in gaining competitive advantage by analyzing consumer insights and
competitors offerings.

Sometimes organizations are unable to get desired results from marketing orientation.
There are some factors that inhibit the firms ability to effectively utilize market
orientation.
Factors inhibit Implementation of Market-Orientation (MO)

Marketing orientation requires high levels of investment and costs. In order to know
the consumer insights and feedback regarding an existing product or a new product,
firms need to have market intelligence. Conducting marketing research and
gathering consumer opinions is resource consuming.
Firms often get low return on investment due to certain factors like higher
competition. Ineffective technology may also contribute to inhibit growth of an
organization.
Group cohesiveness: when groups/ teams work with greater synergy and
cooperation, it means their efforts are cohesive. Less cohesiveness leads to lower
profitability and inability to execute market orientation.
If departments are not inter-functionally coordinated, MO (market-Orientation
cannot be applied).
If marketing personnel do not possess necessary skill, and experience to perform, it
will inhibit development of everything within marketing domain of an organization.
Employee behavior within an organization is an important concern. Employees need
to be responsive and open to changes. They should maintain good relationship
among themselves and with their bosses. Managers should encourage them to work
with creativity and bring innovative approaches capture consumer value.

Over more than thirty years of operations in Pakistan, Nestle is successful in gaining trust
and loyalty of consumers. Nestle gives priority to its consumer insight. Nestle not only gives
product to satisfy need but it gives value based solution. Customers are given high level of
importance, for that nestle has efficient systems to gain consumer satisfaction. Customer

relationship management in Nestle entails attracting new customers, and retains them for a life
time by delivering them superior services. Customer relationship management (CRM) is a
growing concern for big organizations like nestle.
Nestle Pakistan has various platforms where consumers can interact with
company and get help in case of any query or problem. Nestle website provides its
consumers with opportunity to contact the organization or record their complaints
about a products and can give complement about their performance.

This snapshot is taken form Nestle Pakistan website. It presents easy and different
convenient modes. Nestle consumer services are known as Nestle NAATA. Naata
(relationship) word is taken from Urdu dictionary, an excellent example of adapting to
regional situations. Website provides
o a 24/7 toll free helpline number (0800-62282)
o email: NAATA@pk.nestle.com
o links to face book and twitter
Nestle make use of up to date technology and social media platforms to give ease to
consumers if they want to contact with organization. Such consumer complaints,

feedback and insights are very helpful for marketers to gain market intelligence and
improve their products.

Unit 4: (4.2.1)

Explain micro and macro factors which has influence on marketing

decisions
Firms operate in environment which keeps on changing. Environmental factors have
stronger influence on firms performance and stability. Marketers have to analyze these
factors and then design marketing strategies. Environment factors are of two types;
micro and macro environmental factors.

Micro factors are most important for firm and have stronger impact on marketing
strategies and plans. Micro factors include
Customer:
Nestle is customer based organization i.e. delivering value by satisfying consumer
needs. Consumer preferences change with time. Its a necessity to know about
consumer preferences regarding favors, taste and variants. For milkshakes mango,
strawberry, vanilla and chocolate are the preferred flavors.
Suppliers:
Supply chain management is a major concern for many small and large companies.
Nestle has established good relationships with the supplier over this whole time in
order to fulfill demand and replenish on time.

Intermediaries:
Intermediaries are the whole sellers, distributors or retailers that come in between
company and end consumer. Managing intermediaries can help in effective distribution
of products. If problems arise in intermediaries network, then it would lead to lower
sales and switch behavior from consumer side. Therefore company must ensure reliable
network of intermediaries.
Competitors:
Competitors have products that are either alternate or substitute of your product.
Nestle Diary products have plenty of competitors in market. With milkshakes, Nestle
has first mover advantage. Therefore there are products that come under category of
direct competitors like
i.

Nurpur flavored milk having four flavors:

o
o
o
o
o

ii.

chocolate,
strawberry,
ice-cream,
mango and
Banana.

Goodmilk Oolala(flavored milk)

o

Chocolate

Mango

Strawberry

Banana

Indirect competitors could be

o Milo and Nestles cold coffee (Latte) and
o omung lassi from Olpers.
o Cafes serving diary related products.
o KFC Krushers
o Mcdonald milkshakes
o Hardees

o Coffee tea company (CTC), cold coffee

o Star-bucks cold-coffee
o Gloria jeans
o Jammin java Caf

Macro Factors involve economic, political, technological and legal environment of

organization.
Economic environment:
Economic factors involve income, current prices, debts, savings and purchasing power
of a targeted consumer. In Pakistan economic situation is critical since 2007. Inflation is
increasing and affects purchasing power directly. Marketers have to pay attention
towards economic factors. What is disposable income of targeted consumers, what price
he affords, and how to increase demand knowing the economic situation.
Political and legal environment:
Pakistan has instable political environment. Political instability affects business
operations badly. Nestle has to look upon the political system of Pakistan and make
strategies in order to prevent losses.
Technological environment:
Advancement in technology has changed the way of doing business now a day.
Companies having higher technologies and upgraded systems are more successful than
those who do not use technology. Nestle systems and processes are having advance
technology and monitor these trends
o The speeding pace of change,
o Bringing creativeness and innovation
o Ever changing R & D budgets

Unit 4: (4.2.2)

Propose segmentation criteria for products in different markets

Dividing markets into different groups of people on basis of some characteristics
is called market segmentation. Markets are divided into groups because its not
possible for any firm to fulfill needs of every type of consumers with a single product.
Segmentation helps marketers to understand consumer needs closely and make
products accordingly. There are different levels of market segmentation. Mass
marketing is mass production, mass distribution and mass promotion of a single
product. Coca cola used mass marketing when it had only one kind of product.
Niche marketing is targeting a small group of consumers having distinctive
needs. Like Nestle has cold-coffee, only for those who like to have cold coffee. Colgate
launched herbal for a specific group of consumers. Individual marketing is the most
customized form of marketing, also called one to one marketing. United Bank Pakistan

launched its customized Galleria credit cards where individuals can get their own
picture on their personal credit cards.
Nestle Milkshakes also have special category of consumers which can be selected
on basis of geographic, demographic, psychographic and Behavioral aspects of
individuals.
Geographic segmentation: based on dividing consumer markets with respect to
geography like states, regions or countries, cities (rural or urban areas) etc. For Nestle
milkshake we will be targeting consumers of Lahore, Karachi and Islamabad.

If

milkshake concept is appreciated by these markets, then it will be launched nationwide.

Demographic segmentation: is done on basis of gender, age and life-cycle stage,
income, occupation, family structure and size etc. some products are gender specific
like clear men and clear women. Some products are age specific like Colgate junior for
kids (2-12 years) and other variants for elders and Ponds Age miracle (females 30+
ages). Income group (social classes: lower, lower middle, upper middle, elite class). For
Nestle Milkshake we suggest that
o Gender (does not matter, males as well as females both can use it).
o Age group (any- younger and older people, every one like to have milkshakes)
o Income group (we will target upper middle and elite class (high income group)
Psychographic segmentation is based on consumer psychological behavior.
Consumers who have high resources and high innovative behavior are the ones who
will try these milkshakes first. Moreover, change in lifestyle systems and increased
awareness people are motivated to have healthy life style. This motivation also
influences them to buy milkshakes.
Behavioral segmentation: consumer buying decision is often changed in
changing situations. Markets can be divided into light, medium or heavy users. In
summers people like to have more chilled drinks like shakes. In summers usage rate

would be enhanced but in winters, it may fall. This behavior would help to manage
supply and demand within an organization.

Unit 4: (4.2.3)

Targeting strategy for selected product/service

Every firm has limited resources. Organizations cannot tie with all consumers in
outsized and diverse markets. Hence, big consumer markets are divided into segments
with consumers having similar and distinctive needs. After dividing markets into
segments, firms analyze that which segment needs they can fulfill. If marketers want to
develop an effective marketing plan, they should have understanding of factors that
make each segment unique and different from others. Decisions for segmentation are
critical for organization because marketers have to study the behavior of consumers
closely.
Segmentation has many benefits for marketers and organization. Complete marketing
plan and feasibility depends on this factor. South Asian Markets (include Pakistan) are
considered to be heterogeneous and diverse from European markets because of
o
o
o
o
o
o
o

Population size
Occupations
Income criteria
Social-cultural factors
Behavioral factors
Availability of advertising media
Accessibility

For rural and urban areas need separate strategy for marketing the product and making
product to accessible to every single user. For effective targeting strategy, firm must
follow the following steps.

identify the martket segment opportunities

decide on how many and which segmeant to target

design an effective segmentation criteria.

There are various segments that firms can target depending on the expertise and
resources a firm has. Firms can target a single segment like Mahindra tractors,
primarily targeting agricultural market. Selective specialization is used when a firm
decides to target on selective segments, each different from other and measureable in
terms of size. Procter & Gambles Crest targets different segment of consumer with
different products. Crest kids (kids). Crest toothpaste (cavity protection, Pro-health, 3D
White, sensitivity); mouthwash; Oral B toothbrush; Crest white strips etc. each product
and variant has distinct consumer set, but all are related to teeth health.
Product Specialization is used by firms which deal in a single specialized
product and in B2B markets like microscope only purchased commercial laboratories
and educational institutional. Market specialization is used by firms which caters
different consumers for same market. For example Nestle juices (apple, pineapple,
mango chaunsa, pomegranate, guava, grapes etc.). There are firms which have full
market coverage like Microsoft (software market). Only large firms can optimize this
strategy to target a whole market with different products like Coca-cola has coke (diet
coke, sprite, sprite 3G, and sprite lemon), minute maid pulpy (lemon, orange), kinley
(drinking water).

Segment selected for targeting should be measureable with respect to size, segment
characteristic and purchasing power. Segment should be sustainable i.e. it must be
large enough to cater for a long time and profitable. Segment selection also depends on
accessibility, that can we deliver products to all consumers efficiently. A segment
should be differentiable as well as actionable (consumers can be attracted through
different marketing plans and they should respond differently to different promotional
strategies).
As far as Nestle is concerned for Milkshakes it is focusing on Market specialization. This
segment is measurable, accessible (easily through existing distribution channels), large
enough to bring profits and differential.
Geographically: Lahore, Karachi and Islamabad
Demographically: gender (any), age (any, above 2-years but mostly covering youth),
income (high income group), and social class (upper-middle and upper class)
Psychographic segmentation: consumers who like to have a healthy lifestyle and are
out-door oriented
Behavioral Segmentation: behaviorally nestle juice targeted people who are
enthusiastic, positive and like to have high quality and service products.

Unit 4: (4.2.4)

Demonstrate how buyer behavior affects marketing activities in

different buying situations
Basis of effective targeting strategy is identifying the needs of consumers and
understanding of consumer behavior, attitudes towards using a product. Marketers
who know behavioral aspects of targeted consumers are successfully launch new
products and build strong brands. Consumers respond to situations differently. Their
buying decision may change with different promotions or from opinion of people. For
understanding behavior of consumer towards using or buying a product can be affected
by various factors. Some are explained below:
Occasions: some product sales are enhanced with the special occasions. Like
Cadbury promote its products with special occasions too like Valentines Day,
weddings, Eid, Diwali etc. Nestle Milkshakes can be promoted by participation in
Health related events in institutes, sports day, funfairs etc.
Benefits: consumers can be classified on basis of benefits they seek in products.
Benefits associated to milkshake could be health and wellness, nutrition and
refreshment.
User-status: there could be different user status for consumers of a product. There
are non-users, ex-users, potential users, first time users and existing users. For marketer
it is important to know answer of following question:
o
o
o
o

Why non-users and ex-users are not using the product?

How potential consumers should attract in order to make then first time users and then
regular users?
What improvements should be made in existing marketing plan to enhance repeat
purchases and gain consumer loyalty?
What should the Advertisement or promotions objectives: inform, persuade or remind. If
consumers lack knowledge, how advertisement message should be design to make them
aware of the product and its benefit.
How to modify deeply held attitudes or behaviors related to buying a product?

Usage rate: user can be classified into three classes: light, medium and heavy user.
Heavy users of a product exist in a very small percentage but this segment gives higher
sales and profits. Sometimes promotional message are designed in a way that persuade
consumers to buy/use more of a product. For example Sunsilk bottle has usage
information i.e. For daily use in addition to information about benefits and features
and components. Similarly Nestle milk shakes will be promoted using this strategy.
Advertisement will contain message related to usage and situations. Sometimes
discounts and sale promotions are given in order t enhance usage and sales. We often
come by signs like get one buy one free, 5% discount, now in Rs. 20 instead 25,
buy 6 and get one free etc. these are called price cues. If price cues are effectively
used, it can bring tremendous growth is sales.
Promotions on retail store play important role. Consumer might not have
planned to buy the product, but sales promotions and certain tactics influence his/her
behavior and they buy the product. Sometimes such buying behavior also called
impulse buying.
Consumers go through a five step process before buying any product. And people
around in family or social circle influence this decision through their input and roles
(initiator, influencer, decider, buyer and user).
i.

Need recognition need or a problem arise

ii.

Information search buyer search for information to satisfy need

iii.

Evaluation of alternatives- information search brings alternative solutions for a

need or problem and evaluate on criteria

iv.

Purchase one most appropriate alternate is selected and purchased

v.

Post-purchase evaluation- consumer satisfaction or dissatisfaction comes after

using a product. If product satisfies needs, repeat purchase will occur. Otherwise
user will switch to other products.

Nestle milkshake purchase decision is given in following figure.

need recognition

information search

evaluation of alternatives

purchase

post-purcahse attiude

i am thirsty
i want to have milkshake, flavored milk

share of mind (certain product or brands cme to mind first in order

of preference)
which one is readily accessible
Nestle Milkshakes
goodmilk oolala
nurpur flavoed milk
i prefer to buy Nestle because of high quality and nutrition factor

i am satisfied and feeling refrehed/ it was not good as i expected.

Unit 4: (4.2.5)
Propose new positioning for a selected product (Nestle Milkshakes).
Positioning is defined as creating an image of product or service offered in mind of
consumer against competitive products. Every company has to create a distinct image
of its offering. Otherwise it would be difficult for consumer to differentiate products
and evaluate them. Positioning is done on basis of four factors:
o Product- what is the product which needs to be positioned?
o Benefits- what is the value proposition (benefits attached to a product in form of
value)
o Target market- who are the targeted consumers and what are their belief and
attitudes
o Competitors- what are the competing brands and how they are positioning
themselves.

Positioning leads to enhanced brand image and create Competitive advantage.

Competitive advantage (CA) is anything distinctive a firm has in comparison to its
competitors. Competitive advantage can gained through various factors like
a) Personnel differentiation
b) Channel differentiation
c) Image differentiation
Personnel differentiation is having well trained and satisfied employees. For
any firm, employees are valuable assets just like money. Companies which have high
turnover rate are unsuccessful in long run. Nestle is lucky to have strong management
and motivated employees.
Channel differentiation can lead to reduction in operating costs. It is important
to have good relationships with the intermediaries so that distribution runs smoothly
and product is available to end consumer. Channel differentiation is source of
competitive advantage for ZARA. Nestle also has strong channels of distribution but
improvements are needed.
Creating a strong image (image differentiation) is important now a day.
Marketers are using celebrities for many brands. Advanced marketing suggest using
celebrity image in building image of your product. Some products are known as having
cool image. Pepsi represents youth with youngistan ads showing Ranbir Kapoor and
Priyanka Chopra. Nike use footballers in promoting brands and continuously
maintaining sports image.
Sometimes brands are positioned keeping in mind the product life cycle (PLC)
stage. Nestle milkshakes are on introductory stage and need stronger positioning
backing up with strong promotional activities.

For Nestle milkshakes, for improved positioning first we need to consumers about the
product and induce product trail in malls or big retail stores. Positioning suggested for
milkshakes will base on four factors
o
o
o
o

Quality
Nutrition
Taste of real fruits
Variety

Positioning statement for milkshakes will be have wonderful sips of Nestle milkshakes
with great taste and variety and stay tuned to freshness and nutrition.

Unit 4: (4.3.1)

Nestle product development for gaining sustainable competitive

advantage
Market needs are changing gradually so in order to compete with the current
situation and with the changing taste of customer development of product is needed. In
development process following steps are involved

A proper research should be conducted to know about customer specifications

Creating samples a and taste

When you have done with your sample creation than feedback and observation
is required

Nestle preferred the media for catering update before 6-8 weeks of the launch. In
order to maintain consumer satisfaction you need to evolve the portfolio of your
project. Qualitative and quantitative research should be conducted with a view to
company brand equity. Customer perception about the product is also another
important factor, evolving needs of customer enables one to make innovation in their
product. Nestle succeeded to retain the customer for long term by making gradual
changes rather the market is despite changing.
Competitive advantage is the advantage of company over its competitors to retain the
customers by its sales. Competitive advantage includes those things that help any
company to take an edge over its competitor like
Nestle competitive advantage
Due to their product development strategy Nestle get the leading competitive
advantages which are as follows
o Research and development phase allows company to lead the company in a
way of innovation and gives maximum flexibility in product portfolio
o Nestle provide significant economies of scale due to their large scope
o Nestle is much concerned about their employees when they are their work
place
o Nestle made a promise with its customers to give them best and high
standards
o Nestle is consumer based company that really cares about its customers by
providing the best quality food as their tagline represent GOOD FOOD,
GOOD LIFE.

o Nestle have Strong Research and development as they are focusing on

nutrition, health and wellness
o Nestle is focusing on every segment and ensuring their availability of
product in every area and this is all just because of their best management
o Nestle is using advance technology by opening laboratories in their
industries studying food pathogens that are harmful for human health. They
are using the technology in all operations of management that increases the
efficiency of employees as well as increasing the sales ratio
Sustainable Competitive advantage
Every company is working for attaining the sustainable competitive advantage
to retain the customer for long term. All this is done by understanding the customer
perception and creating value based strategies. If you have created your value for
customer than you should be able to get benefit over customer for a long term.

Unit 4: (4.3.2)

Nestle and its distribution networks

Distribution means how product reaches from manufacturing unit to the end consumer.
Distribution involves the following steps
o From manufacturing unit product is sent to distributors
o Distributors makes sure that the product is available in his area
o Distributors and re-distributors provide the product to the whole sellers and
retailers
o At last retailers make sure that product is available to the end consumer

As we discussed above Nestle is consumer based company so they make sure that their
product is available at every retail store worldwide. Nestle distribution network is
equipped with advance transportation facility. Distribution table of Nestle taken from
www.slideshare.net is as follows

When the product is converted into finished good than it reaches to the
distribution center and then distributed across the country.
Incentives should also be given to the retailer because when the product reaches
to the retailer the profit margin becomes minor and due to this retailers will sale
their product at high price to keep their margin.

Unit 4: (4.3.3)

Pricing strategy: reflection of organizational goals and objectives

Selecting a price for any product is important as Nestle has adopted non price
competition. Nestle keeps check and balance on distributors to retain single price of No
profit Loss (NPL)
Price is the amount of money and/or other items with utility needed to acquire a product and
utility is an attribute with potential to satisfy the wants.
A product price can have impact on customer perception. Some customers are
interested in price while some are concerned with the quality and service of the
product. The objectives of organization is relation to price are as follows
o First pricing strategy is to achieve target and maximize profit
o Second related with sales to stabilize the prices and increase the market share
o And the last one is to have surety that their product must be available and price
must be reasonable
Price is one of the most influential factors while deciding the price of product and three
steps must be kept in mind which is as follow
o Knowing about customers need
o Knowing about your needs
o Research on similar product
When we talk about the customer need than we should be careful that what
customer want rather he is conscious about price or quality all factors must be kept in
price while deciding the price. Because your strategy is different in different cases, that
price will be taken in consideration which is beneficial for customer as well as for
yourself in earning the revenue and profit. When we talk about our needs than you
should consider what are you charging for your product. Accessing your need and your

customer need are both relating to each other. It depend what kind of technique you are
following rather it is cost plus, value based or leader pricing or competitive pricing.
Nestle is using value based pricing as it is more concerned about customer wellness and
providing the quality product. When customer is deciding the price he consider the
following points like it depends on consumer purchasing power on the basis of which
he decides rather to buy the product or take some other alternative.

Unit 4: (4.3.4)

Promotional Activity to achieve marketing objectives

When you have decided the product to launch and their price is set than the most
important thing at that point is how would introduce it to general public? How people
come to know about your product? Promotion activity is initiated to inform the market
about your product. Promotional activities have some tools which are as follows
Personal selling is required when marketed is saturated and there are only few
customers than at that point you have to develop a communication link face to
face with a consumer like telemarketing and door to door is the common
example
Market research informs you about the customer specifications and you get the
idea of this how to promote your product.
Nestle is integrated its product promotion firstly by personal selling, giving
promotions at big retail stores, give an ad on TV to market their product.
Nestle is also doing E-selling these days on social media like face book, twitter
etc.
Nestle is reinforcing the healthy living in their promotional activities
Nestle Slim Milk is also promoted under the Goodness of Milk on the Nestle website.

Above the line (ATL) and below the line (BTL) technique can also be used for
advertisement, Nestle is using both techniques let me explain something to you what it
ATL and BTL. When a company is using the ATL technique then it means you are
advertising on Mass media like TV, Bill boards radios etc. But when we talk about BTL
it means company is developing a direct relation with the customer it involves demos
and sampling. While doing the promotion three steps must be kept in mind. First of all
you have to consider whether customer is informed about the product or not? If
informed than you have to convince the customer. And keep reminding the customer
through different promotional strategies. Promotional campaigns are conducted like on
festivals, references and concerts by giving them awareness and provide free samples
about the project.
Unit 4: (4.3.5)

Analyzing the additional elements of marketing mix

Marketing mix includes following element
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.

Product
Price
Place
Promotion
People
Packaging
Process
Physical environment

As far as we talk about packaging Nestle have an influential effect on their customer
about their packing material they are using. They attract the customers through their
packing material, plastic and metal papers.
Nestle uses the best packing material so that their product will remain fresh till they
reach to the end user. Lets us discuss some points that must be taken in consideration
while Packaging

 Nestle is using can keep the food hygienic for long term. Before packaging the
product is checked by team of scientists to check the hygenity than it gone
through the packaging process.
Nestle keeps one thing focus that while doing the packaging of the product one
should clear that every age person can open the product easily.
They can use special designing tools keep ensure that product should easily be
used by the consumer. Design of packaging is the thing that attracts the customer
towards itself.
Processes
Processes include all those activities involved to manufacture the product and reaches
to end consumer. It may be a, Manufacturing process, distribution process, sales process
and promotional activities. Efficient management is required to take the product from
initial stage to end stage.

Unit4: (4.4.1)

Marketing mixes for two different segments

First of all the marketing mix for two different segments is explained in table below
Existing product
Product:

Proposed product

Right now they are providing Product : If Nestle launches ice cream

milk and many other products

than it should have a great impact on the

current market situation

Place:

Products are available in almost Place

every retail store

Nestle

should

ensure

the

availability of their product in every retail

store

Price: Nestle is offering reasonable price Price: Price of that ice cream will be 90 Rs/
that is afforded by every class of the liter
economy
Promotion: Nestle is following Above the Promotion: Nestle will follow Above the
line (ATL) and below the line (BTL) line (ATL) and below the line (BTL)
promotional strategy

promotional strategy.

People: Their products are used by any People: Their products are used by Kids
age person( kids, teenagers, young and and teenagers mostly
old)
Packaging:
plastic packs

Their product is packed in Packaging:

Their product is packed in

plastic boxes

Physical environment: Outside the retail Physical

environment:

Promotions

stores they are setting the corners with outside the big retail stores having the
their logos

corner with their logo

No product can be launched without having proper planning so there is a need

of appropriate planning to launch any product in the market for this research must be

conducted. Nestle right now is manufacturing dairy products and the most abundant
one is milk which is offered at a reasonable price and used by all classes of the economy
and they are also setting corners with their logos outside the retail stores. Their
products are not directly launched into the market but a proper procedure is followed
From Manufacturer to Distributor, then to retailers from consumers.
Proposal to launch a new product
If Nestle launch a new product like ice cream and make it available at every retail
store than they can capture the market easily as this product is not offered by anyone of
their competitor. By setting the corners outside retail stores in order the people to know
about their product. Attractive packaging material is used to attract the children and
young people. And Promotion should be on the social media like face book as face book
is the most abundantly used media by the young people. It will be easier for Nestle to
launch an ice cream as it is already dealing with the dairy products.
For planning you must be aware for following things

How much budget you have?

What is your target market

As you have done with the positioning of product?

Behavior of the customer in the existing market?

Planning starts with the research phase and ends when you have done with the
understanding the customer behavior and satisfaction. If successful Research and
development is conducted than you are able to know about consumer attitude towards
your product.

Unit 4: (4.4.2)

Illustrate difference in marketing products and services to businesses

rather than consumers.
Consumer markets are different in nature and scope.
Companies make products for consumers, sometimes these consumers are businesses
itself, called Business to Business markets. B2B markets are different from B2C markets
in different aspects.

Business to Business
Buyers
Focus

Companies/ businesses
Understanding organizational
needs and buying behavior

Business to Consumer
Single consumer
Consumer segment insights
are focused

Distribution channel Direct dealing and distribution Demands lengthy channel of

of products
distribution for convenience
Purchase

Seek efficiency and expertise

Content required

Need detailed content about Low involvement and less

products
content required, usually
they are influenced by
buzzwords used in ads.

Selling technique
Value through
service

Personal selling
Purchase through retailers
Require some times value added Not really required
services like salespersons in big
retail
stores
are
from
manufacturer companies

Profit margins

Higher because of absence of Lower because of lengthy

intermediaries
channel

Rational and logical

For Nestle to deal in B2B requires effort to first gather the

information about targeted businesses located in Lahore, Islamabad and Karachi. In

case of Lahore there are big retail stores where all big FMCG companies deal directly.
We have AL-FATEH store, Jalal Sons, Hyperstar, Metro, Makro and various retailers
covering the whole market. In metro, Nestle has already racks and shelves where its
products are displayed to an eye level. Near cash counter , nestle refrigerators are
placed , so that consumer who are exhausted after buying grocery can grab a milkshake
and re-boost the energy and get refresh.
Maintaining good relationships with the key accounts is important for sales growth.
B2B also offers an opportunity to manufacturing firm to promote their products, put
standees and fliers on areas where consumer can see it. But here still consumers like to
buy from the retailer who is closer and convenient. Therefore, for Nestle milkshake we
have to follow the traditional route 2 and 3 as explained in 1.1.

Unit 4: (4.4.3)
Show how and why international marketing differs from domestic marketing
International marketing is different from domestic marketing because of globalization,
cultural differences, diverse religions and values, level of competition, marketing
intelligence, international laws, political and legal systems etc.
Globalization:
Globalization means boundary less trade. The whole world is a global village now.
Globalization is good for any business but it has challenges too. Like with globalization,
now people have more options and alternates to choose form. Marketers job is tough
now.
Cultural differences:
For MNCs (multinational companies), there are cultural barriers. South Asian market is
different from other markets. Here people have diverse ethnic group, strong cast

systems and different cultural dimensions. For any domestic firm which want to
operate internationally has to face many challenges related to culture.
Level of competition:
Domestically firms know about the strength and weaknesses of competitors and
market products accordingly. Internationally, marketers face greater competition.
Marketing intelligence:
More market intelligence is needed. Consumers from different countries have different
taste preference may be due to climate or any other factor. Marketer has to gain
consumer insights and develop products accordingly.
Political and legal system:
For any domestic firm, its easy to operate under one political and legal system. When
firms go in international markets, they must have to understand and follow the political
and legal requirement to operate and make sure nothing go against that.
International law:
Domestic and international laws must be followed while trading internationally. Every
country has trade laws and work ethics defined, consumer rights etc. any wrong step is
harmful for firms image and can lead to disastrous results.
Technology:
Degree of technology may vary in international companies. In case of developed
country, technology can be managed but if a firm is expanding its operations to
developed company higher adaptability and technology requirements have to be met.

Media:
For expanding international, marketers must have information about the media
targeted consumers use. Whether they watch more tv, read magazines or social
networking sites.

Conclusion:
Marketing is an important division within an organization. It is important to
know the basic marketing mix (Product, price, placement, promotion) in order to
understand the marketing process. SWOT analysis helps the managers to understand
the internal capabilities, strengths, areas of weakness and external opportunities and
threats for organization. SWOT analysis of competitive firms also helps in making
effective marketing plan.
Market orientation is an important aspect of Nestls business philosophy. This
section is helpful in understanding the importance of MO for any organization and also
explains the factors that reverse MO effects. Marketers have to understand these factors
and apply them in right way under right circumstances. If marketers lack ability and
skills to understand this phenomenon, it would result in lower performance and lower
productivity.

Bibliography
kotler, P. (2014). Marketing Management. pearson: Dorling Kindersley.