INTRODUCTION:
Marketing Strategies help to develop a good fit between business goals, expertise, competencies, available resources and varying opportunities of the market. To examine the action plan and marketing strategies of FMCG, Nestle India is selected, a multinational company which has internationalized its operations and become the world leader in the industry.
Nestle India Ltd., a subsidiary of Nestle Switzerland, is one of the largest companies in FMCG sector that provides and manufactures world class food, beverages, confectionery, prepared dishes, chocolates. Nestle India started its business in 1961 by setting up its first factory at Moga in Punjab, which has now turned into eight factories and four divisional offices across the country. Nestle India carried out its production under recognized brand names such as Maggi, Nescafe, Bar-One, Milo, Kit Kat, Nestea, Milky bar and Milkmaid. This paper has proposed a standard marketing plan of Nestle India. In a logical context, the report has analysed the India market and its internal and external environment, followed by SWOT analysis that leads to setting proper marketing strategies and objectives. Further, the report encloses market segmentation and positioning process within terms of the marketing mix. In the end, proper measurements to implement a marketing plan and strategies are provided.
SITUATION ANALYSIS
Macro Environment: Macro environmental forces include demographic environment, economic environment, technological environment and cultural environment, which are discussed below:
Demographic Environment
Nestle India manufactures a wide range of products including prepared foods, milk, yogurt, snacks, chocolates, cereals and beverages that target almost every teenager, child, adult and old, without any gender specifications. Nestle products are set at standard prices; hence people from middle and upper income group are their major targets.
Economic Environment
Nestle India has set the standard prices that remain same around the country. Seeing spending behavior of Indians, Nestle India has a major concern over its advanced features of products and development of products.
Technological Environment
Nestle India is a worldwide leader of advanced technology that is broadly used in food processing and manufacturing activities. Through its comprehensive research and development department, company has innovated its processes such as probiotics and fermentation, malt extraction, portion dispensing process, extrusion, foam enhancer and healthier fats. Nestle India offers the best quality of products to its customers with exceptional product development.
Cultural Environment
Nestle India is highly concern about cultural values of Indians and thus has adjusted its operations according to tastes and preferences of local people. As the company targets upper and middle class, it studied Indian taste buds carefully and launch some new products that meet the consumer demands. Nestle examines that mostly Indians like spices and carbohydrates, seeing that desperation, Nestle launched two-minute Maggi noodles with pedestrian essences. Nestle visited several hundred Indian homes to study the culture and eating and cooking habits of people (The economist, 2011).
Micro Environment:
Micro environmental forces include company, customers, competitors and suppliers. These forces are elaborated further in detail:
Company
Nestle India Ltd. is one of the largest companies in FMCG sector that provides healthy food and beverages. Nestle India started its business in 1961 by setting up its first factory at Moga in Punjab. The company spread over its operations across the country with eight factories and four divisional offices. In 1967, Nestle set its another factory in Tamil Nadu, followed by Karnataka in 1989, Haryana in 1993, Goa in 1995 and 1997, Uttarakhand in 2006, and Himachal Pradesh in 2012 (Nestle, a). The divisional offices are located in Mumbai, Delhi, Kolkata and Chennai. Nestle India carried out its production under recognized brand names such as Maggi, Nescafe, Bar-One, Milo, Kit Kat, Nestea, Milky bar and Milkmaid. With its diversified product range, Nestle India has captured the largest portion of India market while being at top among competitors with market capitalization of Rs. 46,326.92 crore (IIFL. 2014).
Competitor
Nestle India faces an intense competition in this market. The major competitors include GlaxoSmith Con, Britannia, KRBL, Heritage Foods, Kwality, LT Foods, Usher Agro, Kohinoor Foods, Reo Agro, Lakshmi Energy, ADF Foods, Vadilal Ind, SKM egg Product, Sita Shree Food, KLRF, Agro Dutch Ind. Despite the high degree of competition, Nestle India stands out at top in the industry (Moneycontrol, 2014).
Customer
The customers of Nestle India ranges from the middle class to upper class, which are specifically concern about hygiene and good nutrition. In this hustle and bustle of life, people usually prefer to take prepared food that guarantees the healthy life. Ranging from students, children to professionals, working women and old age people, Nestle products meet the wide array of demands.
Suppliers
The Suppliers of Nestle India are very competent in building value delivery process. Their suppliers include major players in the industry like KCL, Web Consortium Explorer, who are well informed of company’s policies and environmental trends to keep alert about situations like strike calls, changes in prices of raw material. (Nestle, b).
SWOT Analysis:
Analysing the environmental forces thoroughly, the following SWOT analysis has been proposed:
MARKETING STRATEGIES AND OBJECTIVES:
Nestle India has adopted multi domestic strategy to operate efficiently in every market around the world. Multidomestic strategy focuses on local requirements of people rather than globally coordinated one and adapt to local cultures and values to better compete in a specific market effectively (Grøgaard, 2012). Nestle India has altered their products according to the needs of Indian people such as introducing Maggi noodles as according to the tastes of people, diversifying food product line with several spicy products to go with local preferences. In addition, company also captured the Indian market by offering valuable trade discounts to its target consumers.
The above marketing strategies are guided by few fundamental objectives that are altered according to cultural, religious and legal practices in India.
Objectives:
- Nestlé India does not prefer profits in a short run at a cost of business development in long-term.
- Its objective is to produce and market the products that create customer value and continue over the long period for its employees, shareholders, partners and consumers.
- Company will uphold its commitment to accept and follow all applicable legal acts in its every target market.
- Nestle India identifies that its customers are central power to this company, who place their trust in company’s products. The objective is to maintain their trust to win more customers.
MARKET SEGMENTATION:
Market segmentation of Nestle India is based on four major variables. They are geographic variables, psychographic variables, behavioral variables and demographics variables (Kotler, 2011).
GEOGRAPHIC VARIABLES
- Country: India
- Size/Population: Lower, upper and middle class of India.
- Density: Urban and rural
DEMOGRAPHIC VARIABLES
- Income: Family income 25,000+, individual income 15,000+.
- Gender: Both male and female
PSYCHOGRAPHIC VARIABLES
- Social class: Upper lower class, middle and upper class.
- Life styles: People who care for their health and want to maintain a healthier lifestyle.
BEHAVIOURAL VARIABLES
- Occasion: Daily intake activities
- Benefits: Quality, Hygienic, Economy, Convenience
- User Status: Potential customers
- Loyalty Status: High
- Readiness Stage: Well-recognized
- Attitude towards product: Enthusiastic. It has been projected that attitude of target customers is enthusiastic towards Nestlé’s products as the company innovates products according to the customers’ requirements.
TARGET MARKET:
The target market of Nestle India is classified into three major classes of India, which include upper-lower class, middle class and upper class. The classification is based on purchasing power of people in different target classes, and thus company uses various marketing strategies according to the consumption pattern of consumers.
Upper-lower Class:
These are the people whose family income ranges from INR 25,000 to 40,000. People are motivated to use packed and hygienic products especially the teenagers, students and old aged people of this group.
Middle Class:
People are classified into lower-middle, middle-middle, and upper-middle class. These are mostly working women, children, small entrepreneurs and students who rely upon healthy but quick-to-prepare food. For such people, Nestle product lines help out them with its vast variety of products. The monthly income in this class varies from INR 40,000 to 200,000.
Upper Class:
Nestle India targets lower-upper; middle-upper and upper-upper class of India whose monthly income is INR 200,000 or more. These people are highly conscious about health and safety. They do not compromise on their health for money. People are usually managers, entrepreneurs, corporates, middle and top level managers, businessmen, politicians, ministers. People from the upper class use Nestle Products as they assure pure and healthy life.
POSITIONING:
Nestle India has wisely positioned its every product and brand relative to its strong competitors. In the process of positioning, company has conveyed benefits to its target customers so that the brand must remain a priority to the current and approaching customers. As its logo ‘Good Food, Good Life’ depicts that company’s main focus is on quality of food that will bring good health. While maintaining safety and food quality standards, Nestle India encourages health and well-being of people devoting to regional cultures in terms of tastes and satisfaction. At Nestle India, there are two main central concerns, which are:
Customers: Customers are the central focus of Nestle India, and they always make efforts to respect and meet their needs and preferences.
Quality: Another key focus is the supreme quality of products that help to win the customers. Company believes in creating value by offering superior quality and innovation in products.
MARKETING MIX:
Product:
With an extensive range of products, Nestle India offers supreme quality, value in their products. Their products include food, water, prepared foods, chocolates, cereals, chocolates and beverages. Nestle India carry out its production under recognized brand names such as Maggi, Nescafe, Bar-One, Milo, Kit Kat, Nestea, Milky bar and Milkmaid.
Price:
Nestle India has undertaken the aspects of quality, product value, service and brand image while setting the prices of products. Companies decide to compete either on price or non-price based elements to develop marketing strategies (Steenhuis, Waterlander and de Mul, 2011). Nestle India has adopted following strategies:
Non-Price competition: Nestle India has sustained stable prices across the country and taken into consideration the other aspects of marketing like outstanding promotional activities, creating uniqueness, providing the best quality with innovation.
One-Price Strategy: This special price strategy supports te idea that company charges same prices on all products on purchasing equal quantity of products. However, for varying quantities, different prices will be charged.
Promotion:
Nestle India has made a combination of effectively promotional activities which help to influence the purchasing behaviour of Indian people. The methods used by company are:
- Advertising refers to broadcast on television and radio or print media.
- Personal selling refers to personal communication to encourage sales.
- Public relations which refer to engaging with interest groups by contributing in social or charitable events, lobbying, issuing annual reports, newsletters.
- Sales promotion refers to engaging with target customers through concerts, event or television program sponsorship, trade shows, discounts and in-store displays.
Placement:
Nestle has used effective channel of distribution to make the products available to its potential customers. Company’s product moves from producer to wholesalers, then to retailers and ultimately to end users. The chain is described as:
Producer Wholesaler Retailer Consumer
Nestle India has well-built channel of distribution and an effective supply chain management, which is based on two key distribution channels, which include:
- Consumer retail channel
- Bulk consumer
Process:
The actions taken by Nestle India to manufacture products and distributing them to the final users are legally assessed and are concerned about premium service based standards. The process includes timely product deliveries, responsiveness to stakeholder's complaints. (Ferrell and Hartline, 2012).
Physical evidence:
Nestle India has spread over its operations across the country with eight factories, and four divisional Nestle India started its business in 1961 by setting up its first factory at Moga in Punjab. In 1967, Nestle set its another factory in Tamil Nadu, followed by Karnataka in 1989, Haryana in 1993, Goa in 1995 and 1997, Uttarakhand in 2006, and Himachal Pradesh in 2012. The divisional offices are located in Mumbai, Delhi, Kolkata and Chennai.
People:
Henri Nestle founded nestle in Vevey, Switzerland in the year 1866. Currently, the company employs approximately 280,000 people around the world. Moreover, company functions, in a way, that creates long-term value for its consumers, employees, shareholders, community as well as farmers.
CONTROL AND EVALUATION:
Nestle India has maintained its premium quality and brand value in India over number of years. It has gained a competitive advantage through its constant improvement in performance and quality. However, company needs to undertake following measurements in order to sustain its value across India:
- Constant measurement of work performance and business operations to remain effective throughout.
- Response quickly to the queries or issues of Nestle customers
- Company needs to maintain its value and brand recognition by incorporating advanced technology in the business processes. Innovation or technological advancement is the core concern for the growth of Nestle India.
- Adaption to suitable strategies that best go with the business environment and external forces like culture, social values, people beliefs, tastes and preferences. The more the company adapts to the local environment, more customers will attract towards company’s products.
Nestle India has been successfully operating in India since 1961 and continues to grow and prosper over the period. This growth has become possible due to thorough and fine control over business operations and evaluation of every single process to ensure quality, value and satisfaction to its customers.
CONCLUSION:
Marketing strategies shapes the managerial operations of the company to develop a good match between company’s objectives, resources and varying market conditions. Nestle India also developed the marketing strategies, in a way, that contributed to its profit growth and value creation. With its extensive product lines, company offers well recognized valuable products like Maggi, Nescafe, Bar-One, Milo, Kit Kat, Nestea, Milky bar and Milkmaid. Nestle India targets to upper-lower class, middle and upper class of India who are concerned about healthy life and food. The market segmentation is based on geographic variables, psychographic variables, behavioral variables and demographics variables. Nestle India has applied multi domestic strategy to enter a foreign market with price discounts and allowances to its customers. With the intensive distribution and promotional strategies, company has successfully presented their product to the final consumer in India.
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