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Nestl
Securingcustomers'intereststhroughmutualownership
01_Introduction
Consumerresearchshowsthatpeoplearelookingtoadopthealthierlifestyles.Newspapersandtelevision
channelsbombarduswithhealthinformationandmessagesaboutthebenefitsofhealthierliving.
Governments,keentoensurethatpeoplearelookingaftertheirhealthinordertoeasetheburdenon
publichealthservices,arealsoreinforcingthesemessages.Asaresult,manypeoplearetakingpositive
stepstoleadhealthierlives.Theyarestartingtotakeappropriateexercise;tofindwaysofrelaxingandto
eatabalanced,nutritiousdiet.
Whenmillionsofpeopledecidetochangetheirlifestyleandtheirbuyinghabitsmarketledcompaniesare
certaintonoticeandtorespond.Thisisbecausetheirabilitytostayinbusinessdependsonproviding
goodsandservicesthatmeetcustomers'needsandtorespondtochangingrequirements.
Nestlistheworld'sbiggestfoodandbeveragecompanyandproducesawiderangeofproducts.Manyof
itsbestknownbrandsarehouseholdnames,althoughyoumayperhapsnotrealise,thatsomeofthemare
partoftheNestlportfolio.
TheNestlorganisationoperatesthroughproductdivisions.Theseinclude:
Youwillbefamiliarwithmanyofthebrands,whichinclude
Nescaf(coffee)
Smarties,KitKat(confectionery)
Perrier,Buxton(water)
Buitoni(pasta)
Sveltesse(chilleddairy)
ShreddedWheat(cereals).
HenriNestldevelopedthefirstinfantfoodin1867tosavethelifeofafriend'sbabywhocouldnotbe
breastfed.Sincethen,thecompanyhaslookedtobuildonatraditionofprovidingnutritiousproducts.It
buildsitsbusinessaround:
discoveringwhatcustomerswant
identifyingpressuresforchangee.g.governmentcampaigns,healtheducationinitiatives
respondingtochangesinthemarketplace.
Today,inLausanne(Switzerland),Nestloperatestheworld'slargestnutritionbasedscienceresearch
unit.Over600scientistsandfoodtechniciansworktheredevelopingandimprovingproducts.
ThisCaseStudyfocusesonhowNestl,oneoftheworld'sleadersinconsumerledapproachestoproduct
development,continuallyseekstoprovideproductsthatmeetconsumers'changingrequirements.In
particular,italsolooksathowNestluseitsvastscientificandconsumerknowledgetomakeproducts
thatmakeiteasierforconsumerstobehealthier.

02_Respondingtomarketdemands
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AmarketledcompanylikeNestliscontinuallymonitoringcustomerattitudesandrequirementsthrough
marketresearch.Thisresearchtakestwomainforms:
Qualitativeresearch.Thisinvolvessettingupsmallfocusgroupsofconsumerswhoexpresstheirideas
andopinionsabouttheirneedsandviewsondifferentproducts.Atonelevel,thismightinvolveasking
groupsofathletestotalkabouttheirlifestyles,dietaryhabitsandtrainingregimes.Atanotherlevel,it
couldinvolveaconsumerfocusgroupdiscussingthequalityofthenutritionallabellingonayoghurt
drink.
Quantitativeresearch.Whereasqualitativeresearchinvolvesonlyrelativelyfewpeople,quantitative
researchinvolvesmuchbiggernumbers.Forexample,professionalmarketresearchersmayinterview
thousandsofpeoplethroughpostalortelephoneinterviewing.
Nestlregularlyusesbothformsofresearchtogainaclearideaofconsumeropinionsandtrends.Market
researchhelpsthecompanytokeepintouchwithaneverchangingenvironmentinwhichsocialattitudes
andbuyingpatternsarecontinuallyshifting.
Nestl'smarketresearchersdonotworkinisolation.Theyliaisecloselywiththecompany'sproduct
developers,foodscientistsandtechnologists.Inthiswaythecompanycandesignproductstomeetmarket
needs.
NestlspendsmoreonResearchandDevelopment(R&D)thananyothercompanyinthefoodindustry.It
isconstantlylookingatwaystoimproveitsproducts.
Usingthismarketledapproach,NestlintroducedanddevelopeditsSveltesse('slimness'or'elegance'in
French)range.Therangebeganwithyoghurtsanddairyproductsandgloballynowincludesbottledwater,
icecream,cerealbarsandfrozenpreparedmeals.
IndevelopingSveltesse,theemphasisisconcentratingonanappealingtastecombinedwithaloworno
fat,lowcalorieoption.

03_Strategicdevelopment
Astrategyisthemeansbywhichanorganisationachievesparticularends.Anagreedstrategyanswersthe
question"Bywhatmeansarewegoingtoachieveourobjective?".Forexample,Nestl'smarketresearch
confirmsthatincreasingnumbersofconsumerswanttobuygoodtastingfoodsthatcanallowthemto
havehealthierdiets.Nestliskeentocaptureagreatershareofthisgrowingmarket.SoNestl'songoing
strategyistodevelopa'Wellness'approachthatbuildsonitstraditionofproducingnutritionalproducts.
Wellnessisaconditionofenhancedhealth,aphysicalstatewhichismaintainedbygooddiet,exerciseand
lifehabits.Wellnessisalsoassociatedwithafeelingofvitalityandbeingingoodshape.
In2001,Nestl'sChiefExecutivesetoutthecompany'svisionwhenhestated:'Wewanttogrowfromthe
respectedandtrustworthyfoodcompanythatweareknownasnow,intoarespectedandtrustworthyfood,
nutritionandWellnesscompany'.
Nestl'sdevelopmentofastrategytopromoteWellnessisanevolutionofthecompany'soriginal
commitmenttonutritionandhealth.

04_Ensuringstrategicfit
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AnEnvironment,ValueandResources(EVR)fitisasimplebutusefulbusinesstooltodecidewhethera
proposedstrategyisappropriate.
Thestrategythebusinesschoosesmustmatchthesethreeelements.
Forexample,Nestl'sWellnessstrategymust:
E MatchthestrategytotheprevailingEnvironment,inwhichthebusinessoperates.Inthiscase,itisa
socialenvironment,inwhichconsumersareseekingnutritionalproductstocomplementahealthy
lifestyle.
V Ensurethestrategyisconsistentwiththeorganisation'sValues.Nestlworldwideadherestoasetof
businessprinciplesthathavelongunderpinnedthewaythecompanyoperates.Onekeyprincipleisthat
ofmeetingconsumers'needsfornutrition,enjoymentandqualitytheycantrust.Thisiswhythe
companyplacessomuchemphasisonmarketresearchandonthebestwaystocommunicatewith
customers.Principlesthatunderpinconsumercommunicationinclude:
stressingmoderationinfoodconsumption
depictingchildreninhealthy,energeticpursuits.
Nestlisclear,forexample,thatitsadvertisingmustnotlooktoencouragechildrentoeatsnackfoods
insteadofmeals.
R EnsurethecompanyhasthenecessaryResourcestosupportthestrategy.Withitsscienceand
technologybase,Nestliswellequippedtodeveloptherequiredsciencebasedimprovementsto
existingproducts.ItcanalsohandlethedevelopmentofnewproductsthatcontributetoWellness.
PersonalhealthandWellnessarepowerful,universal,humanneeds.Withitsstrongbrands,wideproduct
portfolioandR&Dcompetence,Nestliswellpositionedtobenefitfromagrowingmarket.Ithasthe
valuesandtheresourcestomeetcustomerrequirementsinanenvironmentinwhichmoreandmore
peopleareseekinghealthandWellness.

05_Implementingthestrategy
Havingdevelopedaclearstrategy,itisimportanttoimplementit.Nestlwilllooktoensurethatgoing
forwardallitsproductsretainasuperiortasteprofilewhileprovidingenhancednutritionalbenefits.
Thiswillinvolve:
i. retaincertainproducts
ii. productreformulations(includingsalt,sugar,fatreduction)
iii.launchingnewproductswithscientificallyprovennutritionalbenefits.Nestl'sproductresearchand
developmentnetworkensuresitiswellplacedtomeetthechallengeofchangesinconsumer
expectations.TheCompany'sWellnessstrategyiscarefullygearedtodeliveringwhatconsumerswant
inrelationtothefoodstheyeatahighnutritionalvalueandapositivecontributiontotheirgeneral
wellness.
Thishasledtothefollowingthreepartstrategy:
Clinutrenhasbeenformulatedforpatientswithincreasedenergyandproteinrequirementsandsupports
thenutritionofpeoplesufferingfromaseriesofmedicalconditionsorrecoveringfromoperations.
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Fitnesseisa99%fatfreecereal.Sveltesseisarangeofloworfatfreeproducts(e.g.yoghurtandfromage
frais).
Usingthisapproach,overthepastfiveyearsNestlhasdevelopedorreformulatedover700productsso
thattheyhavealowerfat,sugarandsaltcontent.
Inaddition,theCompanylookstoeducateconsumersabouthealthylifestylesandpropernutrition.Its
initiativesinclude:
theNestlTrustsupportinganumberofinitiativesfocusedondevelopingnutritionalawareness,often
theseareaimedatyoungpeople
awebsitefocusedonprovidingnutritionalinformation
onpacknutritioninformation.
AstheWellnessapproachisnowcentraltoeverythingthatNestldoes,thecompanyhassetupa
StrategicWellnessUnit.ItsjobistopromotetheWellnessapproachbothinternallyandoutsidethe
organisation,sothateveryoneknowswhatitmeansandhowtoimplementit.

06_Conclusion
Consumerinterestinthenutritionalqualityandhealthimpactoffoodshasprobablyneverbeengreater
andforgoodreason.Governmentshavebeenbusy'spreadingthemessage'thathealthyfoodsanda
balanceddietarevitalforgoodphysicalandmentalhealthandageneralfeelingofWellness.
Nestlisoneoftheworld'sleadingfoodcompaniesandintendstoremainso.Itscommitmenttohigh
qualitymarketresearchensuresthatitremainsfullyawareofchangesinconsumerbehaviourand
consumertastes.Itsexcellentproductresearchanddevelopmentnetworkensuresthatitiswellplacedto
meetthechallengeofchangesinconsumerexpectations.Thecompany'sWellnessstrategyiscarefully
gearedtodeliveringtocustomerswhattheynowclearlywantinrelationtothefoodstheyeat;ahigh
nutritionalvalueandapositivecontributiontotheirgeneralWellness.

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