Nestle Marketing Strategies Analysis

This assignment requires an in-depth analysis of Nestle's marketing strategies. Students must examine various aspects such as their competitive advantage, channel strategies, customer relationship management (CRM) initiatives, and branding approaches. A SWOT analysis should be conducted to evaluate Nestle's strengths, weaknesses, opportunities, and threats within the market. The assignment emphasizes understanding how Nestle leverages a relationship-based marketing approach to achieve success and build strong brand loyalty.

Running head: Operation management
Operation Management

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Table of Contents
Introduction.................................................................................................................................................1
Pestle analysis of Nestle..............................................................................................................................2
Political factors........................................................................................................................................2
Economic Factors....................................................................................................................................2
Social factors...........................................................................................................................................2
Technological factors..............................................................................................................................3
Legal Factors...........................................................................................................................................3
Environmental factors..............................................................................................................................3
Porter Five Force Analysis of Nestle...........................................................................................................3
Threat of New entrants – low..................................................................................................................4
Competitive rivalry- High........................................................................................................................4
Bargaining Power of Suppliers – Low.....................................................................................................4
Bargaining Power of Buyers – High........................................................................................................5
Threat of Substitutes- High......................................................................................................................5
Five competitive forces that determine industry profitability......................................................................5
Conclusion...................................................................................................................................................6
References...................................................................................................................................................7
Appendix.....................................................................................................................................................9

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Introduction
In this report the company which is taken is Nestle. Nestle is one of the famous brands in
the market. The founder of the company is Henri Nestle and it was founded in 1866 in
Switzerland. So, in the first phase of the report, the PESTEL Analysis will be discussed. The
second phase of the report will take into consideration Porter Five Forces Model.
Pestle analysis of Nestle
Political factors
It is analyzed that the company is conducting the operations in diversified communities
and at the time of conducting the operations the company has to face many changes in rules and
regulations. Various products and services are also offered by Nestle but there are various
reasons due to which many products are not allowed in many countries. The stability is
maintained in many economies like India and China. Nestle has to take into consideration the
political changes in the developing countries so that the operations can be conducted smoothly.
The activities of Nestle are also affected by the instability of the government and it gives
negative impact on the overall operations of the company (Loughlin, 2015).
Economic Factors
The company has also maintained a proper network of research and development so that
products can be introduced according to the demand of the customers. Change in economic
policies of various countries the company has to deal with the problems related to supply of its
products to the customers. It is analyzed that the customers are aware of the changes in inflation
and economic growth. Change in economic policies gives direct impact on the target segments

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of the company. The decision related to price is one of the essential factors that give direct
impact on the inflation rate and buying power. In enhancing the economic growth of the farmers
the organization is emphasizing on contributing to enhance the satisfaction level of the customers
(Nestle, 2013).
Social factors
The operations of the company are influenced by the thoughts and beliefs of the
customers. The culture and lifestyle of the individual influence the company to provide specific
product to the proper segment group. Social perspective is the factor that is taken into
consideration by the organization. It is seen that the change in the attitude of the customers plays
a great role in conducting the activities of the company (Rezaeegiglo et al., 2014). In the recent
scenario, the people focus on their health and also consume those products that are beneficial for
their health. The organization has also attained goodwill in the market by evaluating the behavior
of the consumers. Nestle is a global brand but the products are produced locally so that proper
quality can be offered to customers (Krafft et al., 2015).
Technological factors
Technology provides many opportunities to the organization so that new products can be
created in a proper manner. Nestle considers the latest technology in conducting the operations
of the company like to maintain the proper database by considering latest softwares. Social
media has minimized the gap between the consumers and the organization. Nestle takes into
consideration the state of art technology for creating new products and to attain proper standards
globally (Moura et al., 2015).
Legal Factors
Nestle has to face many labor laws that are related to minimum wages. It is analyzed that
the organization has to follow many promotion laws as it is one of the assets of the organization.
Nestle has to consider the foreign trade regulations so that products can be supplied to other
countries. These laws assist to provide food and beverages to the consumers at international and
domestic level by considering rules and regulations of the transportation products. Nestle has to
follow the global regulations so that the changes can be taken into consideration in the
international markets. It is evaluated that many countries focus on making changes so that the

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activities can be conducted smoothly and with proper rules and regulations (Frambach et al.,
2016).
Environmental factors
In the present scenario, the emphasis is to have a clean environment. So nestle should
consider rules and regulations to produce food for environment-friendly operations. There are
various countries that set various rules so that the products can be accepted in the market. Nestle
is emphasizing towards social contribution so that the problems related to packaging and
recycling can be solved properly.
Porter Five Force Analysis of Nestle
Threat of New entrants – low
In the food industry, the threat of new entrants is low. The players who are prevailing in
the market hold a large share of the market. It is important to analyze the needs and wants of the
consumers so that they can survive in the competitive environment. It is evaluated that each and
every year there are various entrants enter the industry so that the large share of the market can
be attained. Nestle has achieved a good image in the market but as the food industry is taken into
consideration it is evaluated that there are various companies who entered the market.
Nestle gives a challenge to the new entrants so that the quality can be given to the
customers and the large market share can be achieved by the company. As the outcome is
attained it is seen that many companies enter the market in each and every year so that the large
portion can be gained to enhance the profitability of the company. It is evaluated that in China
nestle is from decades and it boosts the quality of the products and satisfaction of the customers
which has allowed the organization to consider the large share of the market. The policies related
to government also make it difficult for the new entrants to enter the market. The discouragement
can be given from the approval of the FDA.
Competitive rivalry- High
Nestle conducted the activities in the consumer food industry and faces a tough
competition in the market. It is evaluated that the competitors of the organization are Kraft foods

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and P&G. The Products that are in the breakfast segment have the competitors like Kellogg's. So
nestle is one of the largest players in the industry and still has to face a high level of the
competition in this industry. To compete in the high level of competition the organization spends
a huge amount on marketing the activities (Hollensen, 2015). The competition is not only of
price but also with the variants available in the products and offers related to the promotion. All
the competitors who are in the market have to strive so that large market share can be achieved.
So the competitive rivalry of the organization is high.
Bargaining Power of Suppliers – Low
Nestle holds a large share of the market in the industry. So it needs large suppliers to
achieve high quantities. It is analyzed that if the supplier starts the method of supplying they
never bargain the prices. The company focuses on suppliers so that relations can be kept for a
long time. It is also essential to keep proper relation with the suppliers so that good quality of
the raw material can be achieved. The organization takes care of the suppliers so that the
products of the company can be available for the customers (Mirzabeiki et al., 2017).
Bargaining Power of Buyers – High
There is a high level of competition in the market and the bargaining power of the buyers
is also high. It is easy for the consumers to switch to the other brands. It is important to give
emphasis on the product prices so that the consumers can be retained for a long time. The cost of
switching is low for the consumers. The consumers have various choices to select the products
range and there are many organizations who sell similar products. The organization focuses on
increasing the level of satisfaction of the consumers (Payaud, 2014).
Threat of Substitutes- High
There are various products of Nestle like a packaged water bottle and pasteurized milk
that have various substitutes available. As the organization gives daily products so the threat of
substitute is high. Nestle has to consider innovative ideas so that the company can sustain for
long in the competitive market. In the food industry, the share of the market is large so that the
substitute is available easily for the customers. There are allegations made on the products of the
organization as it is evaluated that it is not healthy for consumption. The negative impact is seen
in the image of the organization and sale of the products that are substitute can be managed
(Iqbal and Khan, 2016). For example: The substitute of Maggi is Knorr noodles.

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Five competitive forces that determine industry profitability
The industry profitability can be determined by porter five forces model. So, in the
section threat of substitute goods, it is seen that the food industry is growing and there are many
good numbers of substitutes that can give tough competition to the company. Organizations like
Groupe Danone produces similar products as nestle. The company is being innovative to prevent
the customer from turning to the competitors (Sa Vinhas and Heide, 2014).
In threat of new entrants, it is seen that food industry is ready and also attract new clients.
The new entrants have to compete with the established brands like the company has to gain a
monopoly in the market. In the section bargaining power of the customers, it is seen that the
customer base has to search for the substitution of the products as it has high bargaining power.
The company gives emphasis on satisfying the demands and wants of the customers so the public
popularity can be gained (Peck et al., 2013).
In bargaining power of Suppliers, the product of the company is derived from the
agricultural raw material. Nestle offers good quality of raw materials that will assist the company
to retain high standards of production. It also helps to retain suppliers and advises them to avoid
the wastage (Zeng, 2017).
In Competition within the industry, the company has to maintain the proper edge with
the competitors. The competition with Kraft foods is stiff and it is healthy as it ensures the
consumers to attain best deals to enhance quality. Nestle also produces high-quality products so
that the needs of the customers can be satisfied (Saluja and Mahajan, 2017).
Conclusion
By analyzing the report it is concluded that company has to maintain goodwill in the
market so that the competitive advantage can be attained effectively. It is evaluated that if
quality offered by the company is good then it can be easy to enhance the overall goals and
objectives of the organization. Nestle should produce high-quality products so that the needs of
the customers can be satisfied. Also, the company like Groupe Danone produces similar products

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so the company should focus on being innovative to prevent the customer from turning to the
competitors.
References
Frambach, R.T., Fiss, P.C. and Ingenbleek, P.T., 2016. How important is customer orientation
for firm performance? A fuzzy set analysis of orientations, strategies, and environments. Journal
of Business Research, 69(4), pp.1428-1436.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.

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Iqbal, H.F. and Khan, M.Z.A., 2016. Nestle Two Minute Noodles (MAGGI): The Rise and Fall
Saga. Int. J. Phar. & Biomedi. Rese, 3(1), pp.21-29.
Krafft, M., Goetz, O., Mantrala, M., Sotgiu, F. and Tillmanns, S., 2015. The evolution of
marketing channel research domains and methodologies: an integrative review and future
directions. Journal of Retailing, 91(4), pp.569-585.
Loughlin, D., 2015. Global Summit of Pest Management Services. International Pest
Control, 57(4), p.216.
Mirzabeiki, V., Humphries, A. and Wilding, R.D., 2017. Co-opetition: the ability to co-operate
and compete together. Logistics and Transport Focus, pp.44-46.
Moura, A., Branco, M. and Camoesas, M., 2015, June. NESTLÉ, a global firm and its customer
relationships. In IMC 2015 International Management Conference 26th June 2015 (p. 96).
Nestle, M., 2013. Food politics: How the food industry influences nutrition and health (Vol. 3).
Univ of California Press.
Payaud, M.A., 2014. Marketing strategies at the bottom of the pyramid: Examples from Nestle,
Danone, and Procter & Gamble. Global Business and Organizational Excellence, 33(2), pp.51-
63.
Peck, H., Christopher, M., Clark, M. and Payne, A., 2013. Relationship marketing. Taylor &
Francis.
Rezaeegiglo, R., Sadouni, A., Aref, F., Khotbesara, P. and Eslam, N., 2014. Review and Rating
factors affecting the Deployment of (CRM) Customer Relationship Management at Nestle
Company. International Journal of Academic Research in Business and Social Sciences, 4(1),
p.539.
Sa Vinhas, A. and Heide, J.B., 2014. Forms of competition and outcomes in dual distribution
channels: The distributor’s perspective. Marketing Science, 34(1), pp.160-175.
Saluja, N. and Mahajan, V., 2017. Profitability, Efficiency and Risk Analysis of Nestle India
Limited. Choice, 6(1).

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Zeng, X., 2017, May. Research on the development strategy of product under the strategy of
brand merger and acquisition. In Applied System Innovation (ICASI), 2017 International
Conference on (pp. 963-965). IEEE.
Appendix
Figure 1: (Source: DotJobz, 2017)

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Figure 2: (Source: Adapted from competitive advantage: creating and sustaining superior
performance by Michael E Porter).
Figure 3 : ( Source : Sielearning,2017).