nestle munch case study

Nestlé Marketing Strategy 2024: A Case Study

Welcome to our in-depth analysis of Nestlé’s marketing strategy. Nestlé, with a global presence in 147 countries and over 2000 brands, has become a dominant force in the food and beverage industry. This case study will delve into the various aspects of Nestlé’s marketing approach, including its target audience segmentation, digital marketing tactics, brand differentiation, and market expansion strategies. By understanding how Nestlé has achieved success through effective marketing, we can glean valuable insights and lessons for our own marketing endeavors.

Key Takeaways:

Nestlé caters to different target audiences, including kids, working professionals, and the general audience, with its wide range of products in beverages, breakfast cereals, chocolates, confectionery, dairy, and nutrition foods.
Nestlé’s marketing campaigns strategically target the youth, promoting customer engagement and emotional connection.
Nestlé has a strong online presence, utilizing major social media platforms like Facebook, Instagram, Twitter, and YouTube for digital marketing .
By optimizing its website for search engines, Nestlé ensures high organic keywords and backlinks, providing easy access to detailed corporate and product information.
With its global market expansion, Nestlé has acquired 30 companies to enhance its product portfolio and maintain competitiveness.

Stay tuned as we dive deeper into each facet of Nestlé’s marketing strategy, providing valuable insights and lessons that can inspire and guide your own marketing efforts .

The Journey of Nestlé: From Infancy to Global Dominance

Nestlé, founded by Henri Nestlé in 1866, started as a humble infant formula business. This marked the beginning of what would become a remarkable journey for the company, propelling it to become the world’s largest food and beverage company.

Driven by a commitment to providing high-quality products and meeting the evolving needs of consumers, Nestlé expanded its product range and entered various markets. By 1873, Nestlé’s products were already being sold in over 30 countries, highlighting its early global ambitions and growth potential.

In the years following World War I, Nestlé continued to flourish. By the end of the war, Nestlé had over 40 factories worldwide and had doubled its overall production. This rapid expansion solidified Nestlé’s position as a global player in the food and beverage industry.

Today, Nestlé operates in more than 180 countries worldwide, with a presence in 186 countries. The company owns over 2,000 brands and employs nearly 340,000 people, showcasing its extensive reach and workforce size.

With a market cap of $326.07 billion as of Feb 9, 2023, Nestlé is considered a global leader in the food industry in terms of revenues and profitability. It holds a market-leading position in several Fast-Moving Consumer Goods (FMCG) markets within the snacks, food, and beverages industry.

Nestlé’s success can also be attributed to its ability to adapt and leverage market opportunities. Through BCG analysis, Nestlé has identified its key verticals, such as liquid and powdered beverages, confectionery and cookies, chocolate, ready prepared and cooked foods, and dairy products, as stars with significant market share and growth potential.

However, Nestlé also faces challenges and continues to innovate to address them. The company’s pet care vertical, for example, falls into the question mark category due to its small market share in a high-growth market. Nestlé’s environmental and social responsibilities are also crucial considerations, with the company actively working to minimize its impact through various sustainability initiatives.

The journey of Nestlé from its infancy to global dominance is a testament to its unwavering commitment to providing quality products, adapting to change, and meeting the diverse needs of consumers around the world.

Nestlé’s Global Market Expansion

Nestlé, with its extensive portfolio of over 2,000 brands, including popular products like Kit Kat, Nespresso, and Purina, has established a remarkable presence in the market. The company’s ambitious international expansion strategies have allowed it to operate in over 190 countries worldwide.

To successfully penetrate new markets, Nestlé employs various market entry strategies, partnerships, and acquisitions. By understanding cultural nuances and adapting their products to local tastes and preferences, Nestlé ensures its products resonate with consumers around the globe.

Strategic Partnerships and Acquisitions

Nestlé understands the importance of collaboration and has formed strategic partnerships with renowned companies to expand its global reach. Notable examples include collaborations with Google for the Android KitKat operating system and Starbucks for its Nespresso range of coffee beans.

Through acquisitions, Nestlé has also expanded its market presence. By acquiring local companies and leveraging their established distribution networks, Nestlé gains a foothold in new territories swiftly and efficiently.

Local Market Entry Strategies

Recognizing the importance of understanding local markets, Nestlé tailors its market entry strategies accordingly. The company utilizes out-of-home advertising, such as banners, benches, and hoardings, to engage consumers effectively. Additionally, Nestlé has established franchises in colleges, schools, malls, and corporate parks to ensure its products reach a wider audience.

Digital Marketing and Consumer Connections

Nestlé recognizes the importance of digital marketing in its global expansion efforts. By leveraging innovative technology and data-driven insights, the company aims to build valuable consumer connections. One example is Nestlé’s focus on utilizing its first-party database to reach 400 million consumers by 2025, demonstrating its commitment to personalized marketing strategies.

Nestlé’s international expansion, market entry strategies, and strategic partnerships and acquisitions have played a significant role in the company’s global dominance. By understanding local markets, collaborating with renowned brands, and leveraging digital marketing, Nestlé continues to expand its reach, bringing its diverse range of products to consumers worldwide.

Nestlé’s Competitive Landscape

Nestlé, as the largest food and beverage company globally, faces intense competition in the industry. Key competitors such as PepsiCo, Unilever, Mondelez International, and Danone pose challenges to Nestlé’s market share and dominance. However, Nestlé has strategically positioned itself to maintain its position as one of the industry leaders.

With over 2,000 brands spanning various sectors including cereals, chocolates, coffee, dairy, and baby food, Nestlé boasts a diverse product portfolio that caters to a wide range of consumer preferences. This variety has allowed Nestlé to capture a significant portion of the market and strengthen its brand reputation.

Nestlé’s strengths lie in its commitment to sustainability, digitalization, data analytics, and investment in research and development. These strategic initiatives have not only enabled Nestlé to create nutritious and delicious food and beverage options but also fostered its strong distribution network.

While Nestlé’s market capitalization reached a staggering $389.43 billion as of January 4, 2022, the company is not without its weaknesses. Product recalls, dependence on a few key markets, and criticism of marketing practices have presented challenges to Nestlé’s growth.

However, Nestlé leverages opportunities in the industry by tapping into the growing demand for health and wellness products, expanding into emerging markets, and investing in plant-based and sustainable food trends. By staying ahead of changing consumer preferences, Nestlé remains at the forefront of innovation.

Threats to Nestlé include intense competition, shifting consumer preferences, and regulatory challenges. To combat these threats, Nestlé has developed a competitive strategy centered around nutrition, health, and wellness. The company heavily invests in research and development to create products that align with evolving consumer needs.

Nestlé’s market dominance and longevity can be attributed to its ability to adapt to the ever-changing landscape of the food and beverage industry. With a global presence in 188 countries and a successful history spanning over 150 years, Nestlé continues to shape the market with its focus on health, sustainability, and data-driven marketing. The brand actively invests in e-commerce and continually develops new products to meet consumer demands, solidifying its position as a leader in the industry.

Nestlé’s Target Audience and Product Segmentation

Nestlé, operating in almost 200 countries worldwide, has implemented a robust market segmentation strategy to cater to diverse regions and tastes. Demographically, Nestlé targets a wide range of age groups, ensuring that their products meet the specific needs of different consumer segments.

For infants, Nestlé offers Gerber, a renowned brand providing nutrition for growing babies. Nesquik, on the other hand, caters to kids and teenagers, offering delicious and nutritious beverages. Nescafé is aimed at adults, providing a diverse range of coffee products to suit various preferences.

Income plays a significant role in Nestlé’s demographic segmentation. The company offers products tailored for low, middle, and high-income groups, ensuring accessibility to a wide consumer base.

Behavioral segmentation further guides Nestlé in developing products for different occasions, benefits sought, and consumption rates. By understanding consumer behavior, Nestlé can effectively meet the diverse needs of their target audience .

In addition, Nestlé utilizes psychographic segmentation to align their products with consumer lifestyles, personalities, values, and attitudes. This approach allows Nestlé to connect with consumers on a deeper level and resonate with their preferences.

Nestlé employs a differentiated targeting strategy to tailor products for specific segments. For example, they offer Gerber for health-conscious parents, addressing the unique nutritional needs of infants. Boost is targeted towards seniors, providing them with essential nutrients to support their health and well-being.

While Nestlé takes a differentiated approach, they also use undifferentiated targeting for mass-market products like Nestlé Pure Life water. This strategy ensures that Nestlé can cater to a broad audience with essential everyday products.

Furthermore, Nestlé adopts concentrated targeting for premium products such as San Pellegrino sparkling water, appealing to a more discerning and sophisticated consumer base.

Incorporating customized marketing, Nestlé offers personalized experiences through products like Nespresso machines. These offerings allow consumers to enjoy their favorite coffee flavors in the comfort of their homes.

Nestlé’s market positioning revolves around quality, nutrition, health and wellness, product innovation and variety, and sustainability. These attributes help maintain the company’s global leadership in the competitive food and beverage industry.

With a presence in 194 countries and 447 factories globally, Nestlé’s extensive market segmentation, targeting, and positioning strategies ensure that they effectively serve consumers with diverse needs and preferences.

Nestlé’s Marketing Mix Strategy

Nestlé, a global leader in the food and beverage industry, employs a comprehensive marketing mix strategy to effectively reach its diverse consumer base. The company’s marketing mix encompasses various elements, including pricing strategy, product diversification, and promotions, to meet evolving customer needs and drive business growth.

One of the key aspects of Nestlé’s marketing mix strategy is its pricing strategy. The company implements a range of pricing tactics to cater to different market segments and maintain competitive advantage. Nestlé uses an affordable pricing strategy for brands like Maggi instant noodles and pasta, making them accessible to a wide range of consumers.

In addition, Nestlé applies a bundle pricing strategy for certain products, such as Maggi Instant Noodles, by offering multiple packaging options. This strategy not only drives sales but also provides consumers with flexibility and choice.

Moreover, Nestlé employs penetration pricing for popular products like Milky Bar and Maggi noodles to efficiently enter new markets. By offering competitive prices, Nestlé can quickly gain market share and establish a strong presence.

To align with rival pricing and remain competitive, Nestlé utilizes a competitive pricing strategy in segments like healthcare nutrition and chocolates. This allows the company to position its products effectively and capture market demand .

Furthermore, Nestlé maintains premium pricing for high-demand products like Nestle Milk Maid and Nescafe Gold Decaf. By pricing these products at a premium, Nestlé reflects their quality and value, satisfying the preferences of discerning consumers.

In terms of product diversification, Nestlé boasts a diverse portfolio with over 8,000 brands spanning various categories, including dairy products, chocolates, beverages, prepared dishes, cereals, health science products, pet care products, water, performance and healthcare nutrition, and baby food. This extensive range of offerings allows Nestlé to target various consumer segments and meet their specific needs.

When it comes to promotions, Nestlé leverages various sales promotion tactics to boost marketing and sales. The company emphasizes branding and consumer engagement to create awareness and build customer loyalty. Nestlé utilizes a mix of advertising channels, including TV, posters, print commercials, and web advertising, to effectively promote its products and reach a wide audience.

Overall, Nestlé’s marketing mix strategy, encompassing pricing strategy, product diversification, and promotional activities, enables the company to adapt to changing consumer preferences and stay ahead in the competitive market.

Nestlé’s Brand Differentiation and Equity

Nestlé, with a brand value of US $303 billion, is recognized as one of the most valuable companies globally, reflecting its strong brand differentiation and equity. The company’s unwavering commitment to quality, reliability, and sustainability has helped it establish a consistent brand image and attract a loyal customer base.

One of the key factors contributing to Nestlé’s brand differentiation is its diverse product portfolio. In response to challenges like product bans, Nestlé has successfully diversified its offerings, ranging from premium Nescafe beverages to pet foods. This broad range of products allows Nestlé to cater to various consumer needs and preferences, setting it apart from competitors.

The Nestlé marketing strategy further reinforces its brand differentiation through various tactics. The company frequently incorporates buy-one-get-one promotions, special offers, discounts, and bundle deals to attract cost-conscious consumers and increase product visibility. These strategies not only drive sales but also contribute to Nestlé’s brand image as a provider of affordable, high-quality products.

With over 150 years of consistent messaging and a strong commitment to its original mission of ‘Good Food, Good Life,’ Nestlé has built a brand image steeped in trust and reliability. This consistent messaging has helped Nestlé maintain a positive brand equity, with customers associating Nestlé with quality, nutrition, and satisfaction.

Nestlé’s brand equity is further strengthened through strategic co-branding partnerships. Collaborations with renowned companies like Google for Android KitKat and Starbucks for Nespresso Capsules provide Nestlé with profitable opportunities to expand its reach and tap into new markets.

In addition to brand differentiation, Nestlé’s brand equity is also shaped by its sustainability efforts. The company’s commitment to using food-grade recycled plastics and investing in sustainable coffee production has garnered recognition from the UN Global Compact. These initiatives not only contribute to Nestlé’s positive brand image but also resonate with socially and environmentally conscious consumers.

In the highly competitive health, nutrition, and wellness market, Nestlé’s strong brand equity gives it a competitive edge. It enables the company to distinguish itself from competitors and foster customer loyalty. However, it is crucial for Nestlé to continually nurture and enhance its brand differentiation and equity to stay ahead in the market.

Nestlé’s Digital Marketing Tactics

Nestlé, with its global market presence and diverse product strategy, recognizes the importance of digital marketing in reaching its vast consumer base. By leveraging various digital platforms, Nestlé successfully engages with its target audience, enhances brand visibility, and drives consumer engagement.

One of Nestlé’s key digital marketing tactics is its strategic collaboration with influential celebrities, content creators, and industry leaders. These partnerships help the brand expand its reach and tap into new markets. By associating with well-known personalities, Nestlé can effectively promote its products and engage with consumers on a more personal level.

To further expand its online presence, Nestlé actively utilizes social media platforms and content marketing strategies. The company creates informative and engaging content on platforms like YouTube, leveraging the power of video to connect with consumers. Nestlé’s social media strategy aims to foster a sense of community, encouraging consumers to share their experiences and engage in conversations about the brand.

Nestlé’s digital marketing efforts have also prioritized personalization. By using data-driven insights, the company tailors its messaging and campaigns to suit the preferences and needs of individual consumers. This personalized approach helps Nestlé establish a deeper connection with its target audience, thereby increasing brand loyalty and driving consumer engagement.

Notably, Nestlé has integrated sustainability into its digital marketing initiatives. The brand emphasizes its sustainable sourcing practices, eco-friendly packaging, and community support efforts. By showcasing its commitment to sustainability, Nestlé appeals to the growing number of eco-conscious consumers who prioritize brands with a positive environmental footprint.

Through brand storytelling, Nestlé effectively creates emotional connections with consumers. By leveraging narratives that evoke sentiments such as sharing a cup of hot cocoa with loved ones or nostalgic memories associated with a Kit Kat break, the brand taps into the emotions of consumers, driving brand loyalty and fostering long-term engagement.

In summary, Nestlé’s digital marketing tactics encompass strategic partnerships, social media engagement, content marketing, personalization, sustainability initiatives, and brand storytelling. These strategies allow the brand to effectively reach its target audience, build a positive brand image, and drive consumer engagement in an increasingly digital world.

Nestlé’s Global Sustainability Initiatives

Nestlé is dedicated to fostering sustainability efforts and environmental responsibility, demonstrating its commitment to social responsibility and the well-being of the planet. By prioritizing sustainability, Nestlé aims to create a positive impact on the environment and society at large.

One of Nestlé’s key environmental initiatives is the reduction of greenhouse gas emissions. The company reported a substantial decrease of 6.4 million tonnes compared to a business-as-usual scenario. Nestlé places a particular emphasis on Scope 1 and 2 emissions, highlighting its dedication to mitigating climate change.

To further its sustainability goals, Nestlé has set an ambitious target to have 100% of its key ingredients sustainably produced by 2030. To achieve this goal, the company has developed the Produced Sustainably Framework, which ensures responsible sourcing and production processes.

Nestlé actively engages in Landscape Enterprise Networks (LENs) to promote nature-based solutions that enhance water quality and biodiversity. By participating in buy and sell initiatives, Nestlé supports the sustainability of its supply chain and contributes to environmental conservation efforts.

The company also prioritizes transparency and accountability by reporting various environmental Key Performance Indicators (KPIs). These KPIs include greenhouse gas emissions (Scope 1, 2, and 3), water use reduction in factories, sustainably produced key ingredients, and maintaining a deforestation-free primary supply chain.

In its commitment to responsible reporting, Nestlé engages EY for independent assurance to provide limited assurance on selected Environmental, Social, and Governance (ESG) KPIs. By aligning its reporting with international standards, Nestlé ensures the credibility and integrity of its sustainability efforts.

While Nestlé’s sustainability initiatives have gained recognition from external organizations like CDP, TFT, and Oxfam International, there are also criticisms regarding sourcing practices and labor conditions within its supply chain. Nestlé acknowledges these concerns and strives to continually improve its practices.

With a robust commitment to sustainability, Nestlé achieved a notable 13.5% decrease in greenhouse gas emissions compared to its 2018 baseline. This achievement demonstrates significant progress towards the company’s net-zero ambitions, highlighting its dedication to combatting climate change.

Looking forward, Nestlé aims to source 20% of its raw materials from regenerative agriculture by 2025, showcasing its determination to reduce its environmental impact through innovative agricultural practices.

Furthermore, Nestlé has focused on optimizing its supplier count, reducing it by 10% from 150,000 to approximately 132,000 since 2016. This strategic adjustment emphasizes building closer partnerships and improving efficiency in operations.

The company’s sustainability initiatives go hand in hand with its strategic adjustments in manufacturing and distribution. Nestlé strives to boost efficiency, cut costs, and enhance long-term development while maintaining its commitment to sustainability.

As a leader in sustainable procurement within the global food and beverage industry, Nestlé sets a benchmark for other companies to follow. Through its diversification across various segments of the industry, Nestlé mitigates risks and taps into different consumer markets.

Nestlé’s focus on nutrition, health, and wellness products aligns with changing consumer preferences, reflecting a strategic shift towards offering healthier options.

Strategic acquisitions, such as Atrium Innovations and Aimmune Therapeutics, further highlight Nestlé’s commitment to expanding its product portfolios and global reach through mergers and acquisitions.

Leveraging its extensive global distribution network, Nestlé ensures widespread availability of its products, allowing the company to capitalize on emerging markets and cater to local demands.

Nestlé recognizes the increasing significance of e-commerce sales channels and has invested in partnerships with major platforms, as well as developing its own capabilities to reach consumers directly.

The company utilizes Customer Relationship Management (CRM) systems to gain insights into customer preferences, enabling a targeted approach to marketing and sales efforts.

Investing heavily in marketing, Nestlé aims to maintain and strengthen brand equity for well-known brands like Nestlé, Nescafe, and KitKat, among others. This focus on branding reflects a robust marketing strategy that resonates with consumers.

Digital marketing plays a significant role in Nestlé’s approach, leveraging social media, online advertising, and other platforms to engage with consumers and effectively promote its products.

Notably, Nestlé integrates sustainability into its marketing strategy, showcasing its commitment to environmental and social responsibility. This emphasis on sustainability can resonate positively with socially conscious consumers, who prioritize brands that align with their values.

Nestlé’s global sustainability initiatives demonstrate the company’s dedication to driving positive change in environmental and social spheres. By prioritizing sustainability and responsible business practices, Nestlé aims to make a lasting impact while addressing global challenges.

Nestlé’s Market Challenges and Adaptability

Nestlé, as a global leader in the food and beverage industry, faces several market challenges that require strategic navigation and adaptation to ensure continued success. These challenges include the complexity of regulatory systems, shifting consumer demands, and intense competition from both established players and emerging market entrants.

One of the major challenges Nestlé encounters is navigating regulatory systems in various countries. Each region has its own set of regulations and compliance requirements, which can pose obstacles to market entry and expansion. To overcome this challenge, Nestlé invests significant resources in understanding and complying with local regulations, ensuring that its products meet the necessary standards and legal requirements.

Another crucial aspect of Nestlé’s market challenges is the need to adapt to local market dynamics. Consumer preferences, cultural nuances, and purchasing behaviors vary across different regions and markets. Nestlé recognizes the importance of tailoring its products and marketing strategies to meet these specific market needs . By conducting thorough market research and leveraging consumer insights, the company develops products that resonate with local consumers, enabling it to establish a strong presence in diverse markets.

Furthermore, Nestlé’s market adaptation is driven by its commitment to innovation and product diversification. The company constantly endeavors to introduce new products and enhance existing ones to cater to changing consumer trends and preferences. For example, Nestlé’s expansion in the pet care and coffee-related categories, with a focus on Purina pet care products and Starbucks collaborations, demonstrates its agility in capitalizing on growth opportunities in high-demand segments.

Additionally, Nestlé’s marketing strategy plays a critical role in addressing market challenges and fostering adaptability. The company aims to increase its visibility and sales through increased marketing investments, leveraging data-driven strategies to drive customer engagement and strengthen brand loyalty. By utilizing data analytics, artificial intelligence, and machine learning, Nestlé can deliver personalized messaging and targeted campaigns that resonate with specific target audiences, enhancing the effectiveness of its marketing efforts.

To ensure its long-term success, Nestlé places great emphasis on sustainability, a key factor in addressing market challenges. By aligning with consumer expectations and contributing to a positive brand image, Nestlé not only appeals to eco-conscious consumers but also fosters trust and loyalty. The company invests in sustainable sourcing, promotes eco-friendly packaging, and supports local communities, enhancing its market position and long-term competitiveness.

Overall, Nestlé’s ability to navigate regulatory systems, adapt to local market dynamics, and drive innovation enables it to overcome market challenges effectively. By continuously assessing consumer demands, leveraging data-driven marketing strategies, and emphasizing sustainability, Nestlé maintains its position as a global leader in the food and beverage industry.

Nestlé’s Localization Strategy

In its pursuit of global dominance, Nestlé has recognized the power of localization. By adapting its products and marketing strategies to the unique tastes and preferences of different markets, Nestlé has been able to effectively penetrate and connect with consumers on a local level.

One key aspect of Nestlé’s localization strategy is the introduction of Nestlé localized products . For example, in India, Nestlé has successfully launched products like Maggi Atta Noodles and Maggi Special Masala to cater to specific regional tastes. These localized offerings have resonated with consumers and propelled Nestlé’s growth in the Indian market.

In addition to localized products, Nestlé also emphasizes Nestlé global branding . While catering to local preferences, the company strategically maintains a consistent global brand image, building trust and recognition among consumers worldwide.

Nestlé’s localization strategy goes beyond product adaptation. The company actively engages with local communities and stakeholders, providing tailored recipes for Indian cuisine and sharing knowledge with farmers. These initiatives not only strengthen Nestlé’s connection with the local population but also contribute to the company’s efforts in promoting sustainable farming practices and supporting local economies.

Furthermore, Nestlé employs a strategic pricing strategy as part of its localization approach. By offering products like Maggi, Nescafe, and Kitkat in various price ranges, Nestlé caters to different income levels within a market, ensuring accessibility and affordability for a wide range of consumers.

By implementing a comprehensive localization strategy , Nestlé has been able to successfully navigate diverse markets and establish a strong foothold in each. The combination of localized products, global branding, community engagement, and strategic pricing has enabled Nestlé to capture the attention and loyalty of consumers across the globe.

Nestlé’s market dominance and marketing success can be attributed to its strategic approach and commitment to innovation, sustainability, and localization. With a rich history of over 150 years, Nestlé has established itself as the world’s largest food company, operating in 190 countries globally.

By diversifying its product portfolio with well-known brands like Nescafe, KitKat, Maggi, and Nestea, Nestlé has achieved a broad global market presence. The company’s innovative marketing strategies, including targeted marketing, celebrity endorsements, social media mastery, co-branding collaborations, and sampling programs, have propelled its success and enabled it to connect deeply with diverse audiences.

To ensure long-term success, Nestlé must remain focused on future strategies. This includes investing in sustainable packaging materials and waste reduction initiatives to address environmental challenges. By adopting stricter marketing guidelines and prioritizing sustainability in its strategic planning, Nestlé can further enhance its marketing practices and continue to innovate. Additionally, diversifying into new markets or product categories could help the company maximize revenue streams.

With a net sales of CHF 84.3 billion in 2020 and a market value of US $303 billion, Nestlé ranks among the world’s top companies. As it strives to achieve its goals of 100% recyclable packaging by 2025 and net-zero greenhouse gas emissions by 2050, Nestlé’s commitment to sustainability will not only benefit the environment but also position the company for future growth and continued market dominance.

What is Nestlé’s marketing strategy?

How did nestlé start, how does nestlé expand its operations globally, who are nestlé’s major competitors, who is nestlé’s target audience, what is nestlé’s marketing mix strategy, how does nestlé differentiate its brand, what digital marketing tactics does nestlé use, how does nestlé prioritize sustainability, what market challenges does nestlé face, how does nestlé localize its products, what is the significance of nestlé’s marketing strategy for its success, related posts:.

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Good food, Good growth: Nestle’s way of doing business!

I vividly remember spending my childhood evenings heavily snacking on a bowl of Maggi, desperately trying to slurp down the remnants of it before my little brother ate off my plate. In school, the birthday boy/girl distributed “Munch,” “Kitkat,” or “Milkybar” to his/her classmates as a customary ritual.

Nestle, with its business model of creating shared value and its rock-solid marketing mix, has managed to find a cozy place in every household It has, of course, come a long way since its inception. And that makes the brand the number 1 FMCG company in the world.

The story began in Switzerland during the 1860s when one in five children died before the age of one year from malnutrition or disease.

A pharmacist’s assistant, Henri Nestle, appalled by this phenomenon, decided to deal with this problem. He developed a particular ‘soup for infants’ by crushing digestible bread with a paste of milk and sugar. This ‘infant cereal’ saved many children’s lives and soon made its way from Switzerland to the whole of Europe and then worldwide. There has been no looking back ever since!

Nestle Business Model: Creating Shared Value

Nestle, the “Good Food, Good Life” company, focuses on enhancing the quality of life and contributing to a healthier future, much aligned to why the FMCG giant was founded in the first place.

We’re helping to bridge the nutrition gap through our Nestlé for #HealthierKids initiative – so far we've helped 80 million children lead healthier lives. Read more: https://t.co/7NacGle6sN #Nestlé #GoodLife — Nestlé (@Nestle) May 19, 2021

Did you know? The company has a dedicated Nutrition Council called Nestle Nutrition Insititute . The Nestlé Nutrition Institute is a not-for-profit association established in 1981 to advance the science of nutrition. It comprises internationally renowned nutrition scientists who look into current and developing nutritional issues, which provide the company continuous advice related to its business, policies, and strategies! I mean, I’d be highly flattered if someone took care of me like this!

In its annual report, the company highlights its business strategy by emphasizing how it moves around the following key points-

Ensuring sustained organic sales growth, improved margins, and being relevant to the consumers in terms of bringing safe and high-quality nutrition to everyone, regardless of income level.
Improving operational efficiencies to increase underlying trading profits.
Allocating resources and capital with discipline and clear priorities.

While making nutrition accessible and affordable for all, the company adopts a balanced pursuit of combining global resources with local know-how to create value for society and its shareholders.

So how does Nestle do it?

The most important customer groups that Nestle targets are: children and older adults. For the former, they have a range of baby food, and for the latter, they offer clinical nutrition. However, now they cover nearly all age ranges and have a comprehensive portfolio of products!

Being a nutrition company, Nestle makes use of a lot of relationship marketing principles to engage the customer. A typical advertisement usually revolves around a caring mother who has a mission in her life to keep her children healthy, happy and hunger-free.

The marketing tactics are pretty simple and position the brand as a “Caregiver.” The company believes in creating a “shared value” for both society and its shareholders, operating on a 5P model-Purpose, Planet, Partnerships, People, and Performance.

Lets’s deep dive into the Marketing Mix of Nestle (4Ps)

Product –.

Nestle has seven business verticals offering health, nutrition, and wellness products. Its dairy products, powdered & liquid beverages, prepared dishes and cooking aids, and confectionery business verticals are the “stars” in the BCG matrix. In contrast, the remaining business verticals like water, and nutrition drinks pose a “question mark” due to the presence of a large number of local and national players. As per Nestle’s annual report :

High-growth categories of coffee, pet care nutrition, water, and nutritional health science. Together, these represented 63% of sales.
High-growth platforms, such as plant-based food and ready-to-drink beverages. In 2020, vegetarian and plant-based food offerings continued to see strong double-digit growth.
Trusted brands, such as Maggi, Milo, and Nido. 34 of our brands generate over CHF 1 billion each in annual sales at the retail level.

In Beverages, Nescafe is the most known coffee brand and also one of the biggest cash cows. There is a worldwide distribution of different variants of Nescafe. The company has also launched Nestea for the very chai-obsessed Indian population.

Nestle Everyday and Nestle Milk Maid are the most famous milk and milk-based products.

In the third category of products, prepared dishes, and cooking aids, Maggi tops the market. The company has also expanded the Maggi brand to create an umbrella of different products like Maggi Pasta, Maggi Sauce, etc. Check out the dramatic story of Maggi in India and associated lessons in the brand management .

KitKat, Munch, Milkybar, Eclairs, Polo, BarOne are the popular bar chocolate offerings from the house of Nestle. All of them compete neck-to-neck with their Cadbury counterparts.

Since Maggi and Nescafe are the primary revenue generators for the company, I will be using their reference quite often in this article. Not only are they well known, but most of us have grown up consuming them.

Price –

The strength of pricing for Nestle also comes from its packaging. For Nescafe as well as Maggi, Nestle offers a lot of sizes and package options! You could find large family packs of Maggi while finding a small pack also. Thus giving Nestle a strong pricing power.

Thus, with the variety available, the customer can choose based on his consumption. In other products like Kitkat and Munch, the company resorts to competitive pricing due to tough competition. You will most often find that Nestle prices its products similar to Cadbury in the chocolate segment.

Pricing contributed 0.4% to annual sales and improved during the year, particularly in emerging markets. Due to Covid, tough supply chain distribution, raw material sourcing, and increase in input prices affected its ability to capture a higher margin.

Place –

A typical distribution channel of Nestle is as follows-

Manufacturer>> C&F Agent (Warehousing)>> Distributors>>Retailers>>Consumer

Manufacturer>>Bulk Buyers>> Consumer

The company prides itself over its distribution channel which consists of a network of intermediaries, all taking part in doing their bit to get the products closest to the ultimate consumer.

The mammoth organization operates from 187 countries and hires almost 308,000 people worldwide. It has a separate quality policy that ensures that the products comply with food safety standards, regulations, and quality requirements. It advocates a no-waste attitude with zero defects. Key strategies which make the company’s supply chain strong are-

Understanding and engaging with the customer.
Ensuring responsible sourcing.
Acquisitions to eliminate any threats and gaining access to the acquiree’s suppliers in the process.
Commitment to becoming fully zero-waste.

Promotion –

The company uses a mix of value-based and product-based positioning strategies depending upon the kind of product they are branding and the market they are selling in. Take, for example, Maggi, which is associated with being a 2-minute snack that mothers can easily prepare for their hangry kid! I’m pretty sure all of you have watched this adorable advertisement! Nevertheless, I’m going to link it down below for you guys to reminisce.

The strategy used in the case of Maggi is that of a value-based approach. A value-based approach focuses on pivoting the product on the kind of value it can offer and the value perceived by the end customer. Maggi is something that everybody knows how to make and swears by. This is evident because Nestle had to suffer a massive decrease in customer trust post the Maggi-ban. However, today, Maggi has got back its pre-ban customer percentage and continues to be at the top of the packaged food chain, all thanks to the brilliant family-based marketing campaigns and use of the nostalgia factor.

Now, coming to Nescafe, how can we possibly forget the Nescafe jingle? Did you belt out the tune? Oh, I’m pretty sure you did! This is a classic case of product-based marketing. Ever been to the local Kirana shop asking for a “Nescafe” rather than just “coffee”? We’re all guilty of it.

Nestle- Investing for the long term

Nestle has focused on making sustainability an important part of its business model. According to the reports issued by the company, Nestle has made a commitment to reach net-zero emissions across the whole of its operations by 2050 .

In order to achieve this, radical action is to be taken across the value chain including switching to renewable energy in factories and offices, looking for innovative and sustainable packaging options, to working with suppliers and farmers on future-proofing the food system!

Nestle is planning to transform the way they operate, exploring new business models and addressing the biggest challenges in our food supply chain. That includes advancing regenerative agriculture, scaling up reforestation programs , making products more sustainable, using more renewable energy, and reducing waste.

Closer home, CMD Suresh Narayan of Nestle India had this to say: “There are so many categories in which we are not in. We don’t have a premium coffee business. Expresso and Dolce Gusto is not here. Our pet care is not here. Cereals is not here, in healthcare we are here but it is very small. Skin health we are here but it’s relatively very small. These are potentially the businesses.”

We’re eagerly waiting for the company to surprise us. Maybe we’d bring out another Strategy Story about it. Until then, stay tuned!

We continue to invest in research and development (R&D) and in our brands, and we made further investments behind key growth platforms. Purina PetCare unveiled plans to extend its production network in the Americas, Europe, China, and Australia. Nespresso announced a CHF 160 million investment in the expansion of its production center in Romont, Switzerland, to meet growing consumer demand worldwide. To accelerate the development of nutritious and environmentally-friendly plant-based products, we expanded production and R&D facilities and extended our supply chain partnerships. Annual Report 2020

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Ai Ling is currently a semi-qualified CA and a graduate of St. Xavier's College, Kolkata. She has done her articleship from Garv & Affiliates and also briefly interned with Nestle in their operational finance team.