MARKETING PROCESS OF NESTLE CORPORATION

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1 MARKETING PROCESS MARKETING “There are many definitions of marketing. The better definitions are focused upon customer orientation and satisfaction of customer needs.” “Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others” KOTLE R “Marketing is defined by the American Marketing Association as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” “Marketing is a Systematic process which starts from Customer and ends on Consumer along with profitability.” “Marketing is successful if customer becomes a repeated consumer after getting full satisfaction.” AS-HAM. (AMBREEN, SAMREEN, HAMAD, AMINA, MUHAMMAD ARSLAN) NESTLE CORPORATION

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MRKETING ANALYSIS OF NESTLE COMPANY ABOUT THEIR STRATEGIES AND THE IMPLIMENTATION

Transcript of MARKETING PROCESS OF NESTLE CORPORATION

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MARKETING“There are many definitions of marketing. The better definitions are focused upon customer orientation and satisfaction of customer needs.”

“Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others”

KOTLER

“Marketing is defined by the American Marketing Association as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”

“Marketing is a Systematic process which starts from Customer and ends on Consumer along with profitability.”

“Marketing is successful if customer becomes a repeated consumer after getting full satisfaction.”

AS-HAM.

(AMBREEN, SAMREEN, HAMAD, AMINA, MUHAMMAD ARSLAN)

NESTLE CORPORATION

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ANALYZING MAEKETING SITUATION

DEVELOPING MARKETING MIX

MARKETING CONTRO

MARKETING IMPLEMENTATION

MARKETING PROCESS

It is a process which consists of four steps enabling the marketers to perform their strategies according to their plans. These steps are:

ANALYZING MARKET SITUATIONIt is based on information and research including SWOT and PEST analysis of market

DEVELOPING MARKETING MIXIt includes development of 4P’s namely

ProductPricePlacePromotion

MARKETING IMPLEMENTATIONIt involves turning plans into actions.

MARKETING CONTROLBeing the last step it identifies the gap between planned and actual goals

Marketing process

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MILK PAK

Milk Pack was the first tetra pack

introduced in Pakistan in 1981 with

green and white packaging that is

associated with Pakistan’s flag. It was a

brand that promised natural and healthy

milk. It further gained strength when it

was backed by Nestle Switzerland a well

established and reputable international

brand that bought in to it and expanded

its scope and activities. It has recently

highlighted the use of iron that has been

added to the milk and communicated

this in its advertising and packaging. The

tag line also reads as “making a stronger

household”.

Milk Collection

The core raw material of Nestle

MilkPak is milk. Over the last Twenty Eight years, the company's prime concern has been to improve the

quality and volume of milk for UHT processing and for other milk based products. the company

successfully established its own collection system and expanded its operations over a very large milk

shed area in Punjab. Owing to this tremendous growth in the volume of an extremely high quality raw

milk, Nestle MilkPak now produces a superior quality and better tasting UHT milk, with longer shelf life.

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Today, Nestle MilkPak can boast of the largest milk collection network in the country, unmatched in size,

productivity and efficiency. Milk is collected through a vast network of village milk centers (VMCs), sub-

centers and centers. At these centers, chillers have been installed to lower milk temperature to 4C for

preventing bacteria development during long hauls to the factories, which are undertaken by a large

fleet of specially insulated tankers.

Nestle gathers High Quality milk through a comprehensive strategy, intensive education program for the

farmers and the milk collection staff, up gradation of milk loading and transportation system, increase in

the chilling capacity and above all, adherence to the highest acceptance standards at all milk collection

points, including the factories.

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MARKETING PROCESS

ANALYZING MARKETING SITUATION

SWOT analysis

A SWOT Analysis is conducted by the company so that it is able to position itself to take

advantage of particular opportunities in the environment and to avoid or minimize

environmental threats. In doing so, the organization attempts to emphasize its strengths and

moderate the impact of weaknesses. The analysis is also useful for uncovering strengths that

have not been fully utilized and in identifying weaknesses that can be corrected. Matching

information about the environment with the organization's capabilities enables management to

formulate realistic strategies for attaining its goals.

A SWOT Analysis of Nestlé MilkPak is as follows:

Internal analysis

Strengths

Socially Responsible Company.

NML’s products enjoy strong brand image and market pull.

Innovative and constantly growing product line. NML launched 17 new products, including

variants of existing products in recent past.

Sales force is the major resource strength in terms of physical resources of the company.

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Marketing strategies established by the company are innovative and lure customers.

Financial, marketing and sales strategies are formulated by gauging the customer demands.

Periodic research carried out to judge market trends.

It is a large scale organization, with abundant funds and has the capability of acquiring

weaker firms by throwing them out of competition. The recent acquisition of the water

brands Aqua and Fontalia provide an example for this strength of the company.

Multinational.

Growing Sales and profits.

Major shareholder in the food industry of Pakistan.

Aggressive Marketing.

Efficient Distribution networks through out the country.

Quality Products.

Environment Friendly.

Skilled labor.

Educated staff.

Large number of offerings.

Pre purchase virtual display.

Arrangement of events.

Good background of the company.

Easy to approach outlets.

Physical evidence Strong Brand image

Quality product

Solid Financial position

Strong supply chain network

Qualified work force

Commitment to High Quality Products

Focus on research and development Estimations of UHT Milk Production and Consumption

up to 2008– 09

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Year Annual Production

(million liters) Annual Consumption

(million liters)

2008-09 => 648.43 353.71

2009-10 => 753.89 372.05

Weaknesses

Selective investment due to uncertain economic and political conditions.

Feasibility of new products needs to be analyzed, e.g. Nestea was launched some years back

but it failed because no customer demand for it existed.

Relatively a new company in comparison to its rivals e.g. Lever Brothers.

Low levels of inventory maintained can be dangerous.

No credit sales.

Low sales margins due to highly value added products.

They cannot launch many of its expensive international brands due to the lower income

groups.

Physically impossibility to have target market.

There is weak marketing of MilkPak as there is no advertisement of MilkPak on official website.Lack of awareness among the target market.

It Dependency on others (govt. & sponsors) for the arrangement of events. The target

market of Nestle MilkPak is upper middle and high class because lower middle and poor

class cannot afford to buy UHT milk due to its premium price.

It is a main weakness of MilkPak that there are different companies of milk but the name of

nestle MilkPak is always stand in the last because of low advertising and marketing.

External analysis

Opportunities

Pakistan is the seventh largest producer of milk in the world with annual output of over 22

billion liters.

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There are substantial growth opportunities considering the average yield of Pakistani

animals at only 1,100 liters/annum as compared to 6,000 liters/annum for animals in Europe

and USA. There are nearly 20 million milk producing animals in the country, mostly in Punjab

(80%).

The overall milk market in Pakistan is 20 billion liters, out of which processed milk

contributes only 3 million liters. Nestlé MilkPak along with other processed milk businesses

contribute only 2% to this large market.

Nestlé MilkPak has expanded its product range by entering the cold dairy market recently by

launching Nestlé plain yogurt and now fruit yogurt is also added to it.

To expand the cold dairy products range, Nestlé fruit yogurt is the latest addition to this

group.

The cold dairy market offers many opportunities for the company which can capitalize these

products by banking on its superior quality milk.

The coffee brand also offers many opportunities for the company to expand by tuning the

taste of the masses towards coffee.

Credit policy can be adopted to increase sales.

Threats

Price fluctuations due to rupee devaluation as raw material are imported.

The uncertainty of economic conditions poses a great threat as the major funds invested in

the country come from outside Pakistan.

The present economic crisis in the world, led to the withdrawal of foreign management from

the company and the investment has come to a halt.

Competition with Nestlé’s owns smuggled brands.

Effect of Seasonality’s upon sales.

Imported raw material, in some of the company’s products.

Major player may enter target market

Legal and ethical issues.

Market segment growth could attract new entrants.

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Economic slow down can reduce demand. Two main competitors Haleeb and Olpers are

main threat for MilkPak especially the Olpers is growing very fast.

Inflation is getting higher and higher so the purchasing power of the people is decreasing

day by day.

There is no entry barrier for new entrants as the Olpers has come in the market.

Taste of consumer has already developed which is hard to change.

Current market situation

Today, Nestlé MilkPak produces in over 81 countries and achieves 98% of its turnover outside

Europe. Nestlé MilkPak is the world’s largest milk company, which does 98% of its business. It

has an annual turnover of 70 billion Swiss francs, 522 new factories in 81 countries, 200

operating companies, 1 basic research outer and 20 technological development groups, has

more than 231,000 employees and more than 8000 products around the globe. There are three

companies co-ordinate the activities of some 200 operating companies around the globe. Their

functions and details are as follows: The first, Nestlé MilkPak, holds the financial shares in the

allied companies. It also checks the profitability of these companies and to ensure the

profitability of the group as whole. The second, Nestlé MilkPak, has two areas of activities that

are as follows:

Research and technological development,

Technical assistance Beside this, it provides know-how in engineering, marketing,

production, organization, management and personnel training on a continuous basis.

The third company is Nestlé World Trade Corporation that oversees the import and

export of merchandise worldwide.

MARKET ANALYSIS

In 1986, Haleeb entered the market with its distinctive blue packaging and positioned itself as

the thickest natural milk. The two brands were the main players in a market that is the world’s

fourth largest milk producing country. Then in 2006, Engro Foods launched Olper’s milk in a

market dominated by two highly entrenched strong brands.

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Customer Profiling (Customer Data):

Transaction Details

Frequency,

amount and timing of purchases,

items bought,

prices paid,

Use of cash or credit.

Acquisitions Details

Marketing channel,

Promotion type, and

Address/city.

Appended Database Data

Life Style

Profession/occupation,

vehicle ownership,

Internet use,

Travel,

Pets, and

Hobbies.

Financial

Investments,

credit card usage and type,

living expenses, and

credit worthiness.

Demographic

Age,

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income,

education,

gender,

marital status, and

Number of kids.

Almost all type of peoples are the consumers of the milk.

Geographic

Own/rent,

urban/rural,

size of city,

region, and

size of dwelling.

Market Research Data

Behavioral

Purchase patterns,

why they bought,

what they use the product for,

Responsiveness to different marketing channels.

Attitudinal

Product preferences,

willingness to try other brands,

price sensitivity,

shop for convenience,

Opinion of the company and the competition.

DEVELOPING THE MARKETING MIX

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The most interesting part of commerce is the marketing; this is the latter addition of the

business tools. It starts with conceiving idea of presenting a product, traditionally producers

were interested in producing those goods only which has existing pull, whereas now because of

marketing tools they are producing with the intention of pushing the product into consumer’s

hand. Marketers use numerous tools to elicit desired response from their target markets. These

tools constitute a marketing mix. Marketing Mix is the set of marketing tools that the firm uses

to pursue its marketing objectives in the target market. McCarthy classified these tools into four

broad groups that he called the four P's of marketing:

Product

Price

Place

Promotion

Product

Defining the characteristics of your product or service to meet the customers' needs.

Price

Deciding on a pricing strategy. Even if you decide not to charge for a service, it is useful to

realize that this is still a pricing strategy. Identifying the total cost to the user (which is likely to

be higher than the charge you make) is a part of the price element.

Place or distribution

Looking at location (e.g. of a library) and where a service is delivered (e.g. are search results

delivered to the user's desktop, office, and pigeonhole - or do they have to collect them).

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PLACE

PROMOTION

PRODUCT

PRICE

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Promotion

This includes advertising, personal selling (e.g. attending exhibitions), sales promotions (e.g.

special offers), and atmospherics (creating the right impression through the working

environment). Public Relations are included within promotion by many marketing people.

Product

Nestlé is a famous group of companies. It is well known for its rendered services in food sector.

Nestlé has more than 70 consumer products in Pakistan. Good nutrition is essential from the very

beginning. That's why Nestlé strives to provide the best for everyone.

Nestlé has recognized the special nutritional requirements which start from infants and covers the range

to all age groups.

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They add specific nutrients to milk and encourage children to consume nutritious products with different

flavors, colors and shapes. For small children, and families Nestlé offers smaller sizes and portion able

packs.

Teens like lots of affordable enjoyment, with big portions and a succession of tastes and textures,

particularly when they are buying the products themselves. They also favor ready-to-drink beverages,

and here they can offer them a choice of refreshing teas or milk-based drinks

Good tasting lighter meals and healthier milks formulated specifically for adults are examples of how

Nestlé caters to these needs. Nestlé Clinical Nutrition has a range of good tasting products to help them

do it. Nestlé milk and dairy products are recognized throughout the world.

Pricing

Nestlé has its own set of techniques for setting the prices of the product. It does not primarily focus on

the competitor’s pricing strategies. It emphasizes on the market demand of the product. Nowadays

market is going through tough recession, so they set their prices keeping in view the purchasing power of

the customers.

Moreover the prices of the products are also subjected to the type of consumer product. If the product is

a daily use then it can have a minimum price to attract the customer towards your product. Thus the

company cannot influence much on the prices.

Price Structure

General: The prices of Nestlé’s products are and they are within the customer’s buying power. Nestlé also

give discounts to their regular customers. Nestlé has set prices in such a way that it offers the most

quality products with acceptable prices. Its prices are very much comparable with its competitors. It also

considers the fact that Pakistani market is not as much economically viable as the other foreign markets.

So it keeps in mind all the below line factors while setting the prices of the products.

Place

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Selection of place is also a very pivotal step in the success of the organization. The place must be right

where the customer wants to be, it must be easy assessable and approachable to the customer. Nestlé

makes it sure that its product is available at every corner of the country regardless of rural or urban

areas. Nestlé’s main focus is to make the product within the access of every consumer so that the

consumer should have no difficulty in getting the product. It also helps Nestlé to compete with the

competitors more effectively as by this it can make the product available to maximums number of target

customers. Nestle is catering the market of Gujrat in very effective manner by providing its products in

each and every corner which starts from the city and covers the rural areas specially its product,

MilkPak.

Middlemen and distribution channels

In Nestlé the distribution’s role within its marketing mix is to take the product to its target

market.

Today executives have come to realize their customers' satisfaction - or dissatisfaction - was

linked to the performance of their supply chain. Bernard Teiling, assistant vice president of

business process integration for Nestlé S.A., which is based in Vevey, Switzerland, says supply

chain management (SCM) is "both a source of competitive advantage and a lever for profit

margin." Even though the complexity and the cost of SCM have continually increased over the

last two decades, companies must be proficient in this process. "If you are not good at SCM,

someone else will be," says Teiling.

Nestlé defines SCM as the two-way management of the flow of goods, services and information

from suppliers to manufacturers, wholesalers, distributors, stores -- to the end user. SCM is

especially critical for the food industry because of the ease of spoilage.

Teiling feels a consumer products company remains profitable only if it has the right product at

the right price in the right place at the right time. However, getting these stars to line up only

happens when "the entire supply chain works as one."

Seen that way, SCM becomes a branding issue. When Nestlé places its logo on a product, the

logo represents "a seal of quality." Protecting that quality makes Nestlé responsible for its entire

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supply chain. Teiling says consumers don't care if a supplier or distributor had a problem. "If

something goes wrong in the supply chain, it ruins things for the consumer," says the Nestlé

executive.

Even though Nestlé feels responsible for every link in the supply chain, it outsources many of

those activities. "No one company can claim to do everything from A to Z in the food industry.

Today that's impossible," says Teiling. For example, Nestlé does no farming. And the world's

largest food company sells almost nothing directly to consumers.

With the arrival of the Internet, companies today want to manage their supply chains through

"an efficient interface with an eMarketplace." Many different exchanges are developing. Teiling

describes them "as a tremendous opportunity for Nestlé to work effectively to create new levels

of performance."

Nestlé is using all the three levels of channel to ensure that its product should readily available to all its

users throughout the country. Like it is using a zero level channel for distributing its product to its

customers. It uses mostly the 3-level channel. For example in case of milk products, it uses 3-level channel

to penetrate into the as there is enough competition. On other hand, in case of mineral water such as

Ava is uses zero level channel as it supplies the jumbo bottles of Ava directly to hotels.

Promotion

Nestlé sets its promotional budget on annually basis. Nestlé is well aware of the importance of the

effectiveness of the promotional program. It designs its promotional program using all the available

promotional tools.

Advertisements

Advertisement plays very important role in promoting the image and name of the company. Because you

can give your massage and persuade the person (person may be Customer, client etc) to buy your

product, therefore effective advertisement plays important role in the success of product.

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They give full-page coverage in newspaper and also made advertisement in the television. Also providing

advertisements on online facility through creating Web Page of their Nestlé, giving all required

information about the products. They also advertise in weekly newspapers and magazines

The budgets for various consumer products vary depending on the sale and demand of the product. Like

on milk Nestlé has 75% of sales out of the total sales. So similarly it spends more on promotional

activities of milk.

Promotional themes

Nowadays a lot of companies are using certain promotional themes to promote their product better than

their competitors. For example, in case of milk is uses the theme of “Khalis” creating a view that its milk

is closest to pureness. Similarly is uses the promotional theme for Nestlé Pure life for mineral water

It also uses other below line activities to promote its product like by using the following techniques:

Free sampling

Door to selling

Prizes

Market positioning

Present image in the mind of customers is given below:

COMPANY QUALITY SERVICES LOCTION EXTRA

OF

PRODUCT

FACILITY

Nestlé Better Excellent Excellent Good

Haleeb Normal Normal Normal Normal

Halla Good Normal Good Average

In last two decades Nestlé Pakistan Ltd. has re-positioned itself by improving the elevations by its

products and allocating better customer services; because of it has the best position in the mind of the

customers among three companies. It also proves from the increasing market size of Nestlé.

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IMPLEMENTATION OF MARKETING STRATEGIES

Market segmentation and target strategy

It is really a big market and it is always difficult to segment the big market. There are many uses for

segmentation. Nestlé’s strategies about their marketing are in the form of marketing segmentation.

They have implemented their strategies by doing segmentation. Secondly they have made their

distribution plans, network and methods very strong. Marketing channels and strategies about pricing

and positioning are also in main focus.

Needs Based Segmentation

Milk Pack has made different sizes of tetra packs which can match the needs of buyers, ranging from

0.25 liters to 1.5 liter. Buyers can buy according to there need between these quantities.

Product Segmentation

Manufacturers diversify products within each needs base to appeal to buyers with different tastes and

wealth.

Customer Segmentation

Customers are segmented based on their needs and product preferences. Segments grow or shrink over

time as a product improve, become outdated or tastes changes.

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Global Segmentation

Insurance firms and medical and legal practices also use product segmentation, and sometimes attempt

to cover all the product space.

In-store Display Segmentation

Nestle have also segmented Milk Pack on the bases of In- Store display segmentation. In this type of

segmentation the company have given different shelves in bib stores and also given the chillers to some

of the agent having the Milk Pack sticker upon them but in Pakistan unfortunately the shop keepers are

not using the shelves properly and they have put other brand products on those shelves. Drug stores,

grocery stores, book stores, and other retail outlets use segmentation in order to keep like products close

to each other within the store, making shopping convenient and cross selling more profitable.

Market Positioning:

They will position our product as a high quality product consumer focused. Messages like

“They knows your taste better than us”, “Nestle MilkPak now at your door step”; “Add

additional flavors’ to your life” will help us portray our picture clearly and distinctly. MilkPak will

position our product against the competitors and gain competitive advantage through our

efficient promotional methods, using innovations, and by reaching closer to our target market

through the arrangement of events like BASANT, VALENTINE DAY and etc. In short consumers

will view us as a product providing highly quality, in terms of taste, customer focused and, at the

same time reasonably priced as compared to others.

Pricing strategies of MilkPak

MilkPak was first launched in 1988 in Pakistan. Actually this is the Pakistani product and

purchased by the Nestle Company. Price of the MilkPak set after the market survey. In this

market survey the survey team want to search that how much value consumer actually wants to

give this product. They provided the milk to the different people without telling them the name

of the company and ask them what should be the price of this one glass milk. In this way

company know the willingness of the people that how much money customer actually want to

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spend on that product. After this they checkout their cost on that product and after analysis they

set the price of the MilkPak. After launching it in the market they again check the consumer

behaviour regarding price of the MilkPak, and if consumer is satisfy with the product then they

ask question to judge the behavior of consumer that if the price of the MilkPak increased by the

company then what will they do. If consumer still satisfied then they increase the price of the

MilkPak. CDL have adopted value pricing, in which they charge fairly low price for a high

offering. Value pricing says that the price should represent a high-value offer to consumers.

Value pricing is not a matter of simply setting lower prices on one’s products compared to

competitors. A matter of reengineering the company’s operations to become a low- cost

producer without sacrificing quality, and lowering prices significantly to attract a large number

of value-conscious customers.

Setting price by looking the competitors

The competitors of MilkPak are Haleeb milk, olphars and good milk but the biggest competitor is

open milk. Total requirement of milk in Pakistan is 31 billion litres in which only 3 billion litres

are provided by packed milk. 28 billion litres are provided by milkmaid. So if the nestle want to

set price according to their competitors then they have to set price according to the price of

open milk which is not possible.

Marketing Channels

These are the sets of the interdependent organizations involved in the process of making a

product or service available for the use of consumption.

Channel Function and Flows

A marketing channel performs the work of moving goods from producer to consumers. It

overcomes the time, place and possession gaps that separate goods and services from those

that need or want them. It perform number of functions:

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They gathering information about potential and current customer, competitors, and

other actors and forces in the marketing environment.

They develop and disseminate persuasive communication to stimulate purchasing

They place an order to the company

They provide for the successive storage and movement of the physical products.

Channel Level

Manufacturer

It is a two-level channel, MilkPak has its own distributors which are suppose to deliver the

MilkPak to the wholesaler as well as the retailer,.

Consumer

Wholesaler

&

Retailer

Distributor

Distribution Situation:

Company is using 2 channels for distribution of MilkPak

Retail outlets (indirect channel)

Sales promotion officers (direct channel)

Retail Outlets (indirect channel): There are many retail outlets in all over Pakistan, which

provide every day consumable items to the consumers.. 80 percent of the milk’s sales would be

through indirect channels.

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Direct Sales Promotion Channel: MilkPak is being distributed to institutions like government

institutes, offices, teashops, caters, schools, colleges and marriage halls. This channel will

constitute 10 percent of the total milk’s sales.

Distribution Outlets: to increase the distribution of MilkPak in all over Pakistan these outlets are

open..

Distribution

There are many authorized distributors of MilkPak. Company has its own network of vans, which

deliver the milk to all the retail outlets early morning. The number of vans operational in

different cities and rather then this 135 local vans are also used to supply the milk in pakistan.

Intermediaries: MilkPak identifies the types of intermediaries available to carry on its channel

works:

1. Company Sales Forces

MilkPak expand its direct sales force, assigning the sales representative to territories to contact

all prospects in pakistan

2. Stalls in BAZAAR

The company also introducing stalls in Sunday Bazaar, Tuesday Bazaar and Friday Bazaar at

different location of pakistan and especially to those areas where the sales volume of the

MilkPak would be low in order to encourage the consumer.

Integrated marketing communication:

Company have a complete imc plan in which they that how can the company will inform their

consumer about the new, upcoming product and value added services to the existing product.

The sources which can use by the company to inform their consumers are print, electronic as

well as through their websites.

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Unique selling proposition:

MilkPak is a trend setter in market. They first introduce the packed milk in market. The usp of

MilkPak is “khalis he sub kuch hai”. They provided their consumer pure milk and this the usp of

nestle MilkPak.

MARKETING CONTROL

Problems Faced By Nestle

Nestle is facing the problem that is regarding the quality of milk . it is being perceive that infant

or child belonging to poor family who use low quantity of milk then required in daily use are

getting effected.

It is hard to agree the customer to swich to pack milk because of taste which is huredel for

further expansion

Recommendations

Nestle must state in writing that it accepts that the international code and the

subsequent relevant World Health Assembly Resolutions are minimum requirements

for every country.

Nestle must state in writing that it will make required changes to bring its Baby Food

Marketing policy and practice into line with International Code and Resolutions.

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SUGGESTIONS

Nestle Milk Pack should concentrate on all age groups (by showing its benefits) instead of

concentrating just on child growth.

They should try to create strong brand loyalty among customers.

They should keep in mind the competing environment while designing their strategies.

They should concentrate on customer retention.

They should improve their customer services.

They should try to exploit the loopholes of their competitor’s products. 

Should try to cater the mind of the customer by creating some attractive jingle like Haleeb: Chai

banaye khoob haleeb…..

 

REFERENCES

www.nestle.com

Economy survey of Pakistan 2008

www.Google.com

 

 

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