History of nestle

Henri Nestle established Nestle in 1867 in Switzerland. He developed a baby formula that could

save life of children .The Company formed by the 1905 merger was called the Nestlé and Anglo-

Swiss Milk Company. By the early 1900s, the Company was operating factories in the United

States, Britain, Germany and Spain. In 1904, Nestlé added chocolate to its range of food

products after reaching an agreement with the Swiss General Chocolate Company. After World

War-I the demand of products was doubled. Two of its factories in Sheikhupura and Kabirwala

are multi product factories.

Sheikhupura factory

The Milk Pak Sheikhupura factory had commenced operations in 1981 as a producer of UHT

milk. In 1988, the existing production facility of Milk Pak in Sheikhupura became a part of

Nestle Milk Pak.

Kabirwala factory

In 1990 KDL merged with Nestle. The factory in Kabirwala is the largest milk plant in the Nestlé

world. Through its effective marketing and a vast sales and distribution network throughout the

country, it ensures that its products are made available to consumers whenever, wherever and

however. It is a food processing company, registered on the Karachi and Lahore stock exchanges

and operating in Pakistan since 1988 under a joint venture with Milk Pak ltd and took over

management in1992. For ten years in a row, the company has won a place among the top 25

companies of the Karachi Stock Exchange.

Mission statement

Wherever you live only Nestle can provide the best and most relevant food and beverage

products to meet your needs throughout your day, throughout your life. The Nestle Network icon

will take you on the journey of discovery through our world of food. Nestle strive to bring

consumers foods that are safe, of high quality and provide optimal nutrition to meet

physiological needs. In addition to Nutrition, Health and Wellness, Nestlé products bring

consumers the vital ingredients of taste and pleasure.

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Vision statement

The Nestle vision is to be the leading health, wellness, and Nutrition Company in world. Nestle

Pakistan aims to meet the various needs of the consumers by marketing and selling food of a

consistently high quality.

Core values

Respect

Team work

Proactive

Passion

Integrity

Trust

Humility

Ownership

Result focus

Openness

Business objectives

Sell high quality

Making innovation

Satisfy customer needs and wants

Profit maximization

High market share

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The major objective of the company is to sell high quality, innovative and superior product

which satisfy needs and wants of consumers. Nestle not maximize profit through high market

share but use maximize customer’s satisfaction. Nestle earns profit through satisfaction of

consumer.

Diversification

Nestle is a diversified company because it has many business in all over the world

Nestle company provides good food products only.

Organizational structure

Nestle is decentralized. The reason is that it give its employee a degree of freedom. Non

managerial employee can easily convey their suggestions to the top level manager. There is a

simple network of lose relationship.

Three important points of de-centralized structure

Structure is open and flexible

No clear and precise duties

No strict adherence to explicit job arrangement

Market offerings

In market Nestle company offering different products.

Liquid Group

Powder Group

Maggi Noodles

Cereals and Baby Food

Product Mix

Product Line Liquid Group Powder Noodles Cereals &

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Group Baby Food

Product Line

Length

Milk Pack Nido Maggi Noodles Cerelac

Water Everyday Koko crunch

Juices Nescafe

Nesvita

Milo

Product Depth

1 Liter 1 Kg Large Packet

Half Liter 0.5 Kg Small Packet

Small Packets

Nestle milk

In 1988, the existing production facility of Milk pack in Sheikhupura became a part of Nestle

Milk pack. The Milk pack Sheikhupura factory had commenced operations in1981 as a producer

of milk.

In 1986 Milk pack Ltd. acquired the services of Kabirwala Dairy Ltd. For co packing of UHT

milk under the brand name milk pack. Nestle Milk pack acquired KDL in 1990.Nestle Milk pack

Ltd. is the market leader in food and beverage industry. They are producing high quality well

known brands. Nestle says we want you to be able to make healthier choices for you and your

family.

Milk pack

1 liter pack

½ liter pack

¼ liter pack

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Production plant

Production plants of Nestle are in following:

Sheikhupura Factory

Kabir Wala Factory

Milk collection center

The core raw material of Nestle Milk pack is milk. So the company has twenty-five milk

collection centers in Pakistan.

Village Milk centers 2273

Sub centers 583

Main Centers 23

Designing processes

Milk collection

Reception

Storing of milk

Standardization

De-creaming

Pasteurization

Evaporation

Spray drying

Cooling

Packing

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Drying

Brand name of products

Milk Dairy and Chilled Dairy Products

1. Nesvita

2. Cerelac

3. Nescafe

4. Milo

5. Nestle yogurt

6. Nestle every day

7. Nestle raita

8. Nido

Nestle pure life

Nestle Pure Life was first launched in 1998

Purpose was to meet the global need for a safe drinking water

Pleasant taste at an affordable price

Mission statement

Nestle believes that research can help them to make better food which can help people to live a

better life.

Vision statement

The Nestle global vision is to be the leading health, wellness and Nutrition Company of the

world

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Juices

Juices are 100% pure. A delicious and easy way to get refreshment.

Maggi Noodles

Maggi noodles are part of the Maggi family, a Nestlé brand of instant soups, stocks, and

noodles.

In 1982, Nestle Company introduced this Maggi to India and it is going good till now. 

In1992, KDL started the production of Maggi Noodles.

Cereals and baby food

Choosing the best nutrition for your baby can be difficult and confusing and you always

wonder if it’s just right. 

NESTLÉ KOKO KRUNCH is a delicious cereal with a rich chocolate taste that kids

love. 

Product life cycle stages

Almost All products are on maturity stage like

• Nestle milk pack

• Nestle pure water

• Milo

• Nesvita

• Coffee

• Cerelac

• Juices

• Nido

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One product is on beginning stage

• Crunch

4 P’s

Product

Product is anything that can be offered to a market for attention, acquisition, use or consumption

that might satisfy a want or need. Broadly defined, products include physical objects, services,

events, persons, places, Organizations, ideas, or mixes of these entities. The Nestlé research and

development centers have two main tasks to create new products and manufacturing processes

and to improve those that already exist. These centers play a key role in product safety and

quality and also have their role in conserving resources and protecting the environment.

Quality control

Procedure to avoid maximum limit of expiry/damage

Reduce the sales return

Losses

Quality is the cone competitive priority of Nestle Milkpak Ltd.

Nestle Milkpak Ltd pays special attention for maintaining consistent quality. They have special

sort of equipments and process which facilitates in maintaining a consistent quality. So the each

and every unit of its product equally satisfies its customers.

Packaging

Packaging serves a major role in our daily lives. It protects food products from spoilage and

ensures safety from manufacture through storage, distribution and consumption. Packaging may

also provide tamper-evidence features. It communicates information, including nutritional

information and serving instructions, and provides the convenience demanded by today's

consumers.

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It is Nestlé's objective to develop safe and wholesome packaged foods using the most efficient

and appropriate packaging materials available, while, at the same time, satisfying consumer

requirements and expectations. For Nestlé, this is particularly important in packaging. Concern

for the effects of packaging on the environment is forcing it to look for new solutions and to

consider their interaction with our biological product food. Packages Pvt. limited is responsible

for the packaging of nestle products.

Price

Prices are set on the basis of

Quality management

Brand position

PPP (popular position product)

Price is the sum of all the values that customers give up in order to gain the benefits of having or

using a product or service. It’s a very powerful tool at the disposal of an organization to

differentiate its offerings.

Pricing strategy

Nestle pricing is an important strategic issue because it is related to products Position. Nestle is

basically using psychological pricing strategy as they are earning huge profits, approximately

30% on their products. People believe in nestle hence this aspect gives nestle a competitive

advantage being a market leader to set its prices high. The main thing behind the success of

nestle is they keep an eye on their customers and accordingly they change the price. People have

trust in nestle that is the reason they are willing to buy nestle products again and again. Nestle

has always tried to enter the market with the right price and then justifying it with high quality

products and by communicating and transferring the maximum value to the customers.

Place/Distribution

Distribution of products from the factory to the customer involves transport and storage.

Efficient management of the distribution system is essential to preserve the safety and quality of

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Nestlé's products, to ensure a high level of customer service, and to meet its commitment to

environmentally sound business practices.

To this end, Nestlé:

selects appropriate transportation modes, with particular attention given to optimum unit

loads (pallets), vehicle-capacity utilization, route planning, and consolidation with

outside partners, scheduling, and fuel conservation;

optimizes warehouse and distribution center locations and environmentally efficient

operational systems; and

Identifies and implements measures to reduce energy consumption and waste.

Nestle company distributes their products in the market through distributers. Company use

financially strong distributors, who know the business values.

Distribution channels

Nestle uses indirect distribution channels to bring its products to the customers.

Producers→ Distributors→ Retailers→ Consumers

Nestle does not involve wholesalers in its distribution channel. Nestle products are distributed to

the customers mostly through distributors. They buy the distributors on contractual base. Nestle

usually do not go for retail selling. Home delivery service is also provided by Nestle Pure Life.

You can buy Nestle Pure Life from any shop in any area. Nestle uses vertical marketing system.

Nestle distributes its products through the strong supply chain management strategies and

efficient marketing logistics.

5 handling agents over all Pakistan

1. Islamabad

2. Karachi

3. Faisalabad

4. Peshawar

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5. Multan

Regional offices

Karachi

Hyderabad

Sukkhar

Lahore

Multan

Faisalabad

Gujranwala

Quetta

Islamabad

Peshawar

Services

Different carriage companies provide services to Nestle Pakistan

Promotion

It is not enough for a business to have good products sold at attractive prices. To generate sales

and profits, the benefits of products have to be communicated to customers. In marketing, this is

commonly known as "promotion".

In promotion we involves the

(1) Advertising

Any paid form of non-personal communication of ideas or products in the "prime Media": i.e.

television, newspapers, magazines, billboard posters, radio, cinema etc. Advertising is intended

to persuade and to inform

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(2) Personal Selling

Door to door selling exist e.g.

Now a day’s wet sampling of noodles is going on

(3) Sales Promotion

Providing incentives to customers or to the distribution channel to stimulate demand for a

product. From last 1 year no sales promotion is done because of over full demand.

Sales core objectives

Our product should always be at eye level on the shelves

Our product should always b block displayed

Our product should be at high traffic areas

Our stock dept should be sufficient at shelves product should be displayed according to

FIFO method

Competitors of Nestle in different products

Engro Foods

• Dairy products

PepsiCo and Coke

• They are competitors of water

Shezan and Coke

• juices

Knoor

• Maggi Noodles

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The products of Engro foods

Olpers

Omung

Tarang

The products of PepsiCo and coke

Kinley

Classic

Blu

Sufi

The products of Shezan

Fresher

Fruity

The products of Knoor

Knoor noodles

Knoor Cubes

SWOT Analysis

Strength

Good Will

Strong financial position

Strong core competence

Strong laws enforcement

High quality

Standardized products

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Use of latest techniques

Weakness

Raw material is basic input for every organization and milk is core raw material of Nestle

for which it is dependent on the outside Milkmen

Nestle has no single its own dairy farm which provide high quality milk to the firm

Another weakness of Nestle MilkPak Ltd. is that its total packaging depends upon

Packages Pvt. Limited

Opportunity

Moving in new market segment

Developing new marketing campaigns

Threats

Economic threats and Inflation rate

Low purchasing power of people

Milk pack competitors

Changing consumer trends

Increase in trade barriers

BCG Matrix of Nestle .

The BCG Matrix made a significant contribution to strategic management and continues to be an

important strategic tool used by companies today. The matrix provides a composite picture of the

strategic position of each separate business within a company so that the management can

determine the strengths and the needs of all sectors of the firm.

Stars.

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Stars are high growth, high share businesses or products. They often need heavy investment to

finance their rapid growth. Eventually, their growth will slow down and they will turn into cash

cows.

Cash Cows.

Cash cows are low growth, high share businesses or products. These established and successful

SBUs need less investment to hold their market share. Thus they produce a lot of cash that the

company uses to pay its bills and to support other SBUs that need investment.

Question Mark.

Question Mark are low share business units in high growth markets. They require a lot of cash

to hold their share. Management needs to think hard about which question marks it should try to

build into stars and which should be phased out.

Dogs.

Dogs are low growth, low share businesses and products. They may generate enough cash to

maintain themselves but do not promise to be large sources of cash.

According to Nestle, the relative market share and market growth rates of different products

are given below:-

Name Relative Market Share Market Growth Rate

Ceralac 31.2% 45%

Nestle Milk 21% 39%

Maggi Noddles 18.76% 64%

Nestle Yogurt 3% 12%

BCG Matrix Figure

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Mar

ket

Gro

wth

Star

Cerelac

??? Nestle Milk

Cash Cow

Maggi Noddles

Dog

Nestle Yogurt

Relative Market Share

Cerelac

Cerelac is one of the leading baby food products. It has witnesses quite a long hold on market

share and it s a major contributor for Nestle.

Nestle Milk:

Relative market share of Nestle milk is low as compared with its growth that’s why they are

lying under head Question mark.

Maggi Noddles:

Growth rate of Maggi Noddles is low as compared with its Relative market share that’s why they

are lying under head Question mark.

Nestle Yogurt:

Its both relative market share and growth rate are low as compared with other product that’s why

it is lying under head Dog.

PESTEL Analysis

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The main theme of PEST analysis is to measure market potential and situation, by indicating

growth or decline. PEST analysis can be used for marketing and business development

assessment and decision-making, and the PEST analysis encourages proactive thinking, rather

than relying on habitual or instinctive reactions.

Political/ legal analysis

Nestle baby milk can be affected by political change in several different ways e.g political

change can influence public priorities and funding arrangements. Nestle has to operate within the

framework of laws set by Parliament, and that’s why it depends on political considerations.

Government plays vital role by imposing the law and regulation on the companies. Government

set standard laws for companies that has to met otherwise they have to pay fines.

Nestle is trying to met all the standard laws which are set by the government. For example

Health and Safety Act, Disability Act but unfortunately Nestle break the law. Government laws

and regulation in accounting standards, taxation requirements, including tax rate changes, new

tax laws and revised tax law interpretations are highly influenced on Nestle business.

Nestle is also very keen about stability of government stability in countries where they are trying

to get in (especially in underdeveloped countries where political stability is at risk).They are also

subject to state, local, foreign environmental laws and regulations.  

Economical Analysis

Nestle needs to have enough information about the country inflation rate, economic growth rate,

and national per person capital income, in which they are willing to start their business.

Economic condition varies from country to country. Before starting the baby milk has focus on

the above factors. These are the factors that Nestle has to consider before setting corporate

objectives. Global economic turmoil has major influence on Nestle business because customers

are spending less and they have to adopt different strategies in order to run business smoothly. 

Social Analysis

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Social or cultural environment had great impact on Nestle. The main focus of social/ cultural

includes the Social change involves changing attitudes and lifestyles. The social and cultural

environment is constantly changing. Different countries had different culture (language, religious

beliefs, food, family, clothing and their lifestyle). Nestle has to developed strategies which are

according to belief and culture in multicultural country like UK. Every country has different

consumer taste and lifestyle and Nestle has to develop effective strategies in order to met

different lifestyle consumer behavior. Company is totally dependent on the consumer lifestyle

and their attitude. Product or services cannot be successful until company has enough

information about the consumer lifestyle. Nestle has to take social and cultural factors under

consideration in order to achieve their strategic objectives. 

Technological Analysis

Technological change has the most rapid, persistent and profound effect. It creates opportunities

for new products and product improvements and of course new marketing techniques- the

Internet, e-commerce. Technology creates opportunities for new product or product

improvements and new techniques of marketing such as internet and e-commerce. Technology

has great influence on business operations and overall decisions. Nestle uses technology by

taking orders via telephone and online by internet. Moreover, Nestle uses technology in various

business activities such as record of their customers and employee.

Suggestions and Recommendations

Nestle can go for backward integration and establish its own diary farms

Nestle should not depend on Packages Pvt. for the sake of packaging its products. It

should do packaging itself.

Nestle should diversify its product portfolio and introduce ice creams and some other

products which can cut the competition of major players in Pakistan. Dog items should be

back up by the cash generated by cash cows and renovate them.

Nestle should increase the distribution network and diversify their portfolio.

It should sell better quality products in Pakistani market also just like it sells in first world

countries because consumer in Pakistan is much aware today than it was a decade ago. It

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would help to rectify the feelings of discontent that prevail among the Pakistani

consumers against nestle.

Nestle should bring other flavors in breakfast cereals like fruit and nuts corn flakes to

Pakistan since consumers are becoming more demanding day by day. Moreover Kellogs

is offering a wide range of breakfast cereals with far better quality.

Nestle should increase the promotional campaigns magnitude since strong competitors

are taking over the industry especially in dairy products.

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