Group 3

Nestle S.A.: International Marketing

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CEOs Dilemma
Centralization or decentralization Coordinated or Directed marketing policies from Centre to local Degree of influence over the local markets Whether Co-ordination by centre is more feasible &productive for v Some elements of Marketing Mix over others? v Some Product Categories over other? v Some Countries over Other?

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Benefits of Centralization and Decentralization

Centralization Easier Management Sharing of Best practices across the countries Reducing cost through economies of scale Decentralization Better understanding of local business New product ideas customized for local markets Concentrated marketing specific to local customers

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How does Nestle exert Influence

Flexibility given to regional and country managers on every elements of marketing mix, except Branding.

Branding is controlled, standardized by central organization who charge license fees to country operating companies for the use of brands and brand names.

Product Positioning, Distribution, Trade Promotion,Consumer Protection and Media advertising decentralized.

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 Marketing Strategy Product Positioning Product Characterisitics Branding Packaging Distribution Trade Promotion Consumet Promotion Media Advertising

No HQ Initiative Y Y Y Y Y Y

HQ promotes cross-fertilization among countries Y Y Y Y Y

HQ persuasion for HQ decision standardization making Y Y Y Y Y Y

HQ enforced standardization Y

HQ decision making and No HQ initiative will be retained as primary function and others would be secondary function.
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Degree of Centralization
Based

on Product Country

Marketing based on the regional needs Existing infrastructure

Product

category Based on Marketing mixPrice

Pricing objective Price customization Price points are sensitive to local market competition, consumers purchasing power and brand value. Decision on Centralization is contextual and dependent on the extent of achievable economies of Scale.
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Contd

Product
New product development depends on the local market needs and taste Product line breadth, length and depth all aligned to local market needs. Product needs to be with lesser degree of centralization as product development, depends on consumer demand. Eg- Instant noodles.

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Contd

Place : Place needs to be decentralized for proper operation

Eg Germany and France

Promotion
Tasks and tools vary from target market to another. This needs be of equal balance ie between centralization and decentralization, Use marketing knowledge from different markets. Promotion should target regional needs. Once the strategy is deviced, the communication mix is constructed accordingly.
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Points to be considered before deciding on feasibility of centralization:

Cross

Cultural Understanding between different Countries and cultural Trends

Demographic Consumer Family

Tastes and Preferences

size, Population growth , away from food consumption and standard of living. Over National Boundaries
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Spill

Conclusion
Nestle

needs to take a more decentralized approach. But the HQ should posses the necessary command on Product and aid in coordination Effective communication between HQ and regional divisions

Sharing of best practices Brand logos, Quality as a part of standardization

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Thank You

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