1 Executive summary The competition in the confectionery industry has increased to higher levels. In such environment it is crucial that products such as Kitkat must check the way they are marketing themselves in the market. This report analyses the situation of the environment of Nestle at the global levels where it is found that due to the increasing instability in the developed country company should focus on developing and under developed nations. Strategies that are currently used by the company and their internal strengths and weakness have been highlighted. It was found that company is capable of making higher sales taking help of its financial strength and brand name. It was found that products such as Cadbury, mars and Ferrero Rochers are giving tough fight to Kitkat. Company new focus on innovation and should also give priority to innovative technologies in the coming years so as to perform different marketing activities.
3 INTRODUCTION Marketing has become one of the most essential functions in the business. Success of the organisations depends on the way they have marketed their products or services. All the departments and functions works with the marketing departments so as to achieve the common objectives. There is intense competition in the industry and in such an environment, marketing plays a crucial role in the making an edge over the rivals. Both digital and traditional marketing techniques are used by the organisations to ensure that they reach to maximum possible customers. It is also crucial that firms analysis the situation of the market and makes strategies accordingly. For this it is crucial that company analyses its external environment (Kotler, et al. 2015). It is also crucial that companies analyses the strengths and weaknesses they have. It is necessary for making the marketing plan. At the same time, it is crucial that firms analyses what their competitors are doing. This is essential for reducing the chances of failures. Nestle is a Swiss food and drinks company operating in different parts of the world. In terms of revenue it is the largest food company in the world. This company deals in the business of breakfast cereals, dairy products, tea and coffee, medical food, bottled water, baby food, frozen food, snacks, pet foods, confectionery and ice creams (Nestle, 2019). Its confectionary business has been successful in different parts of the world especially the chocolate products. Kitkat has been its one of the most successful products in different markets. This is a wafer bar confection known for its taste. Due to highly competitive products by the competitors, it is essential that company redesigns it marketing for its chocolate products. This report provides a marketing plan for Nestle while analysing its internal and external environment. It also produces a competitor’s analysis and hence produces the marketing strategies that can be made by the company so as to gain advantage in the market. Main Body Situational analysis External environment In the competitive environment, it is crucial for the firms to understand the situation in the market. For this it is crucial that company analyses its external environment so as to
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4 understand the factors that are producing challenge for the company’s product. Some of the factors in this regards are: Political:There is lot of political instability in different parts of the world and governments are taking decisions that might affect the investments plan of Nestle. Decision such as Brexit will have impact on its sales in the European market. The increasing conflict between the big super powers of the world is putting pressure on these companies to select the best trade routes. Governments are forcing these companies to invest in their country (Izberk-Bilgin and Nakata, 2016). On the other hand the implementation of GST in the countries like India which is one of the biggest consumer countries of this company has made the trading easier. South Asian countries like Malaysia and others are easing their trade rules and hence it provides opportunity for Nestle to grow within these countries. Economic:In a last decade world economy has seen many hiccups. From poor performance of the European market to slow down in the American economy, economic barriers for Nestle have enhanced. This is having the effect on the sales of the confectionary products and people do not want to spend too much on celebrations. In such an environment it is also hard for companies to find new investors (Kotler and Armstrong, 2010). Due to this Nestle is spotting its opportunities in the emerging markets such as Malaysia where the living index and per capita income has seen a rise. Social:Society demands are changing at very fast speed. Chocolates have become one of the crucial parts of the celebrations and hence companies are also making efforts to rebuild their marketing campaign in such a manner that they look to be a best product for the celebration or enjoying time. At the same time increasing job insecurity and reducing stability in the market has forced the firms to make marketing plans that reaches to all the sections of the society (Jobber and Ellis-Chadwick, 2012). Technological:Most significant changes in the last two decades can be seen in the way both employees and organisation is using technology for their purpose. Advancements in the technology have helped the firms to make changes in their business model from production to reaching out to customers. In marketing also companies are investing more on doing business through digital mediums. People are also ordering confectionery items with the help of online technologies which is a sign for the company that where they will have to look towards in the future (Berthon, et al. 2012). This trend is not only followed in technological advanced nations but also becoming common in the developing nations.
5 Legal:The legalities regarding the food quality have become very strong. Even the slightest of defects can put this company under pressure. This is evident from the case of Maggi Noodles which was once one of the best-selling products of this company but due to the food quality it has to face lots of legal issues. This can easily happen in the chocolate products also if not proper watched (Czinkota and Ronkainen, 2013). Environment:The change in the global climate has an impact on the production of food items such as Cocoa. This is a challenge towards the sustainability goals of Nestle. Apart from this, Nestle has to deal with huge amount of waste products and hence they need to make a new waste management plan to tackle with this issue (Hawkes and Harris, 2011). Competition:Competition in the industry has grown to alarming level and this has reduced the sales and profit margin of the company in different parts of the world. Competitors such asCadbury,Hershey’s,PepsicoaregivingtoughfighttoNestle.Withtheproduct differentiation and pricing strategy they are also able to change the trends in the market. Even in the small nations like Malaysia, there is increase in the numbers of local and global competitors (Gillespie and Riddle, 2015). Marketing strategies This company has made many kinds of marketing strategies so as to confront the challenges facing their business and to be successful in the current situation. Some of the marketing strategies used by Nestle are as follows: STP strategy of Nestle It is essential for an organisation like Nestle to identify most appropriate strategies for segmenting and targeting their customers. It is crucial part of the marketing that they select the most appropriate target segment for them so that maximum sales can be guaranteed (Terpstra, Foley and Sarathy, 2012). Segmentation and Targeting is done on the basis of different kinds of variables which are illustrated below in the table. Types of SegmentationSegmentation CriteriaMcDonalds target segment GeographicRegionInternational/Domestic DensityRural/Urban DemographicAge3-55
6 GenderMale and female Life-cycle StageChild, bachelors, married IncomeMiddle and Low OccupationWorkers,studentsand employees BehaviouralBenefits soughtTimeefficientandcost efficient people Degree of loyaltySwitchersandHardcore loyal User StatusBothregularandpotential chocolate eaters. PersonalityCaring, Careless as well as Easy going PsychographicLifestylePeople from all sections of thesocietywhichincludes Mainstreamerindividuals and Strugglers. Social ClassPeople from all social class of the society. Their positioning strategy is unique as they have not positioned their chocolates as something that is very chocolaty or product that lures the taste buds of chocolate lovers.“Broad in appeal, young in feel, big in stature” is their tagline which itself suggests that how they have tried to attract their target segment. Their positioning strategy largely focuses on creating value and belief. Their promotional taglines such as “Have a KitKat Break” suggest that company wants to focus on making it a daily use product rather than making it an occasional product (Chandon and Wansink, 2011). Making products widely available:In their marketing strategy, company has focused towards making it available at all the stores so that it can be easily available for its customers (Saxena, 2011). For this company has concentrated on their efficient supply chain model which helps them in reaching to each and every region.
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7 Promotions through multiple channels:This Company has focused towards promoting its products through multiple channels. They are using both traditional and digital marketing means to enlarge its visibility. In the recent years, they have largely concentrated on promoting through online mediums. It is due to the fact that their major target segment is highly available on these digital marketing mediums. Social media has become one of their prime platforms where they are promoting their products (Peck, et al. 2013). Promotional Campaigns:They launch many types of marketing campaigns in different parts of the world which seeks to attract people especially their major target segment. In these campaigns, they take the help of local artists so as to create a bigger campaign. They also arrange competition at local levels and the winners of this campaign gets a cash prize (Day, 2011). Price leadership:This Company believes on the competitive pricing based on which they have set their products at lowest of cost. This helps them in attracting large numbers of customers and also helps them in taking an edge over their rivals (Scrinis, 2015). Lucrative packaging and variations:Kitkat is available in different types of design i.e. two stick and four sticks package size. Kitkat is being available in numerous limited editions which include Kitkat Green Tea Chocolate and Kitkat Chunky peanut butter (Street, 2015). Localisation:This Company has almost every time focused on localisation strategies. For instance their prices are set according to the local market. They generally hire local people which help them in connecting with the customers. In their advertisements they widely use local touch which helps them in connecting with the people in the market (Ghauri, Cateora and Ghauri, 2010). SWOT Analysis Along with the external environment, it is also essential for the organisation to analyse the internal environment. For analysing the strengths and weaknesses of the company, the use of SWOT analysis can be effective. Strengths This company and its product KitKat have a huge brand name which helps them in making their mark in the industry. At the same time, it helps company in marketing their products easily.
8 Nestle is the biggest food company in terms of revenue which shows the amount of financial capability they have. This financial asset of Nestle helps them in making new investments in different parts of the world. Their research and development capability in the industry is large which helps them in bringing innovations in their product. This helps them in gaining edge over the rivals as they bring their products in different variations (Vander Schee, et al. 2011). Nestle has a strong world-wide presence which gives them an immensely diversified income sources. This is necessary in the type of economic environment present in the different parts of the world. This can be understood by the fact that if the company faces sales challenges in one part of the world, they can easily achieve higher sales in the other corner. This company has also made its reputation in terms of environmental sustainability efforts they have made in different parts of the world. This is very much essential for improving the CSR image of the firm in the minds of the stakeholders. Huge amount of highly skilled labourers are attached with the company and this helps them in increasing their productivity and improving the ways in which they operate their business functions. This has helped them in implementing their strategies appropriately which again helped them in achieving their desired objectives (Appiah- Adu and Amoako, 2016). Weaknesses This company has been highly criticised for high usage of water. It has also faced criticism on selling unhealthy food items as well as it is also facing criticism over the issues such as anti-unionism, forced child labour and taking use of unethical practices in their business. Company has faced a blot on the image for selling contaminated food for which they had makes certain product recalls. Lesser product diversification in the chocolate industry as they are not producing any chocolate product that is high in terms of chocolate content (Akhtar, 2016). Opportunities They can improve their image by clearly mentioning the harmful ingredients present in their product.
9 Theyalsohavehugeopportunityinbringingtransparencyinthesourcingof materials. They have opportunities to expand in the rural areas of developing nations as well as in the under-developed nations (Kaynak and Herbig, 2014). Threats The degrading environmental condition is affecting the quality of the cocoa which will have long term effect on their confectionary items. Tremendously high competition in the food and beverage industry has an impact on the sales and revenue of the company and most importantly on the market share. Increasing economic instability is threatening the sustainability of the company as adding new investors is not easy for the company in such an environment (Andres Coca-Stefaniak, Parker and Rees, 2010). Competitor’s analysis Nestle is facing competition from different competitors. Analyses about the marketing of some of the major products by competitors are as follows: Diary milk by Cadbury: In the chocolate industry, Cadbury is their biggest competitor and is known for its high quality cocoa rich products. Diary milk is available in large varieties and taste which has played a major role in increasing the sales. They have placed the prices slightly on the higher side but still not in the category of luxurious products. They have promoted diary milk as a chocolate that provides maximum value to the customers that are demanding for high chocolate rich products. Their promotions also highlight that this product can be utilised as a gift and this the major reason why they give extreme importance to packagingandmarketing.FestivemarketinghasbeenthetrademarkofDairymilk (Thatcher, 2019). Ferrero Rocher: This product is also one of the major competitors of Kitkat and they have placed themselves in the category of luxury products. Company has been successful in terms of placing them as the product that gives taste of chocolates that are highly cocoa rich. This company uses its quality and brand name as a major marketing strategy for presenting itself in the market. Mars: This is one of those competitors that have the same types of confectionary items that Nestle has. This company is known for its quality and is available at reasonable rates. Their
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10 bar chocolates have been successful over the years. They believe on the strategy of unique products that gives them competitive advantage over the rivals. Marketing plan For the success of the marketing campaign, it is essential that firm looks for the best marketing approach (Beran, et al. 2012). This can be done by making a marketing plan that is feasible and suitable. There must be use of different variables so as to make the marketing effective. Marketing mix Marketing mix is a tool that is used in the marketing by any firm so as to improve the effectiveness of the campaign. This allows a firm to have a detailed approach that explains about what is the product, what is its price, what is the promotional strategy used by the company to market it and where it will be placed in the market. Marketing mix for Kitkat is as follows: Product:Kitkat is one of the best wafer based chocolate product that is marketed by Nestle. Kitkat gives the best value to its users as it is moderately priced and gives customers experience of chocolate that is available with crunch of wafer. This is best suitable product for the customers who want chocolaty products at affordable prices. Traditional bar of Kitkat is four fingers wide having dimension of 0.4 inches to 3.5 inches. This product is available in different taste and sizes and also varies from country to country. Kitkat has seprated itself from its major competitor’s product i.e. Dairy milk which is pure chocolate. In Japan they have launched around 200 variants of Kitkat comprising of flavours such as green tea, banana, ginger ale and soy sauce. They also offer Kitkat white and dark which provides them with huge penetration capacity in different parts of the world. Traditional Kitkat comprises of ingredients such as milk, cocoa mass, sugar, cocoa butter, lactose and whey powder etc. In some part of the world like Melbourne, they have a customisation facility where they customise their Kitkat as per their demand (Kabii, 2018). Price:This product has been priced according to the existing competition in the industry and the type of pricing model adopted by their competitors. Products such as Kikat is understood to be an impulsive buy as chocolate in this product do not constitute large portion. Its pricing is considered to be reasonable as it ensures that it gives its customer a total value of their
11 price. This is the major reason why large numbers of customers are loyal to Kitkat especially in terms of doing purchasing decisions. In spite of the increasing economic flexibility, this company has been able to maintain the price of Kitkat over the years. This is one of the major reasons for retaining customers (Izberk-Bilgin and Nakata, 2016). Place:Nestle sells their products in worldwide location which illustrates its strength in supply chain management. There has not been significant cases of misbalance in the demand and supply of the products. They are selling their products through offline and online mediums. They have collaboration with local vendors and distributors. This has helped them in reaching to larger part of the market share. They are also taking use of the third party vendors on the online mediums to sell its products. Promotions:This Company has applied different kinds of promotional strategies to gain a market share. They understand the importance of marketing in the growing competitive market. In order to create a buzz in the market, company has launched many varieties of Kitkat but they rolled out these versions so as to save the original version of the product. Nestle has promoted Kitkat as more of a snacks product rather than portraying it as a chocolate. This is also evident from its slogan “Have a break, have a Kitkat”. This also helps them in making it a product that can be consumed at any point of time and not only when a person has craving for chocolates. They have marketed Kitkat as best companion of tea or little meal. Google made request for naming an Android version as Kitkat. They have also promoted its products on different TV shows such as Big Brother and some movies also. Till now the major channel for advertising Kitkat has been TV advertisements but now they have started to shift their focus on online and social media marketing (Baines, et al. 2017). Action plan ActivityTimePeriod (in months) ManagerGrowth ObjectiveConcerned Department Situational Analysis 3Marketing HeadCollecting authenticated informationabout differentconsumersas well as the condition of the market. R&Dand marketing department Adoptingnew1IT ManagerUtilising technology andIT department
12 technologiesthat can help in making marketing effective creating objectives Segmentationand targetingofthe customers. 3Marketing HeadDecidingtargetgroups and people Marketing Analysing resources 4R & D HeadProcuring ResourcesR & D Initiating disruptionin supply chain 2Management Head Finding right technology for the campaign Management Implementation of marketingplan especiallyusing digital technologiesby running marketing programsonthe digital mediums. 8Marketing manager Takinghelpofdigital mediasuchassocial media and other tools Marketing Allocationof budget 1ManagerDefining of expenses for each of the activity Management Communication withpotential partnersand customersabout disruption 3PR ManagerAttracting customersPublic Relations
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13 Trainingof employees 1HR ManagerTrain the employees so that they can deliver the disruptiontothe customers Human Resource Management Initiation of Sales bycreating disruption in it. 12ManagerImplementation of salesManage This action plan will help the company in implementing the strategies made for doing marketing. Slight changes will be done in the action plan during the implementation based on the requirement and analysis. Monitoring and feedbacks It is crucial that company monitors each and every process of marketing. Monitoring can be effectively done with the help of technological mediums. It is essential that firm has a dedicated marketing team that monitors the way in which is done and gives feedbacks in case of any identified issues. In this monitoring process there must be use of different types of metrics based on which each and every aspect of the business can be analysed (Kazemi and Esmaeili, 2010). There must be a long term plan for monitoring so as to ensure that issues in marketing at any stage of the process can be documented. In the process it is essential that early success is not predicted. Predicting success at the early stage is one of the major reasons why company fails in the long term. Metrics such as Return on Investment, customer’s feedbacks, conversion of potential customers into actual ones are helpful making changes in the marketing plan which ensures its success. Based on this analysis, company needs to collect feedbacks about the marketing from both stakeholders as well as customers. Based on these feedbacks there must be self-evaluation so as to why they are the desired results are not achieved. Changes are made in the plans and strategies accordingly. The use of digital media platforms such as social media can be effective in collection of feedbacks (Berlan, 2012).
14 Budget for marketing This company need to focus on the marketing through digital media channels rather than on traditional marketing. According to this budget for the next two years on the advertisement of Kitkat has been provided in the table. Activities1styear (In $)2ndyear (In $) Direct marketing1500018000 Sales marketing1700019000 Traditional advertisement3300029000 Social media marketing80008000 Digital marketing1300030000 Total86000104,000 Recommendations There are large numbers of competitors available in the market. These competitors have the capacity to change the trends in the market. In such an environment company must focus on the innovation. Innovation in terms of type of products, design with which it is produced in the market and strategies that is used by the company needs to be analysed so as to stay ahead of the competitors. Since people prefer online mediums for making purchase hence Nestle should also give importance towards how maximum sales can be achieved through online mediums. It is also recommended that company needs to make agreement with other companies in the food and beverage industry so that they can sell their products combined. Like they have made agreements with Coca Cola, company needs to have more such contracts in future also. This will help them in making additional salesthrough different products. It is also recommended that this company takes use of digital mediums so as to market in the wider community. Company should also use data analytics and predictive analytics to measures trends in the market in the current time and in the future (Squicciarini and Swinnen, 2016). This will help the firm in not only ensuring sustainability but will also help them in making changes in the marketing approach in the coming time. It is also recommended that company focuses on increasing their reach in the rural market especially in the under developed and developing nations. This is because it will add new
15 income sources to the company. Company should also focus on packaging so as to make it a product that can be sent as a gift. This is also because chocolates have become major products that are exchanged by people on the festive occasion. CONCLUSION From the above based report it can be concluded that Nestle is one of the biggest food and Beverage Company in the world. Kitkat its one of the famous product is facing challenges from different competitor’s products. For this company needs to redesign their marketing campaign accordingly so as to ensure their long terms growth in the market and achieve higher sales. This company needs to focus on innovative digital mediums so as to do marketing and take help of predictive analytics to understand the changing purchasing behaviour in the future. During this period company needs to look at the strategies of competitors such as Mars, Cadbury and Ferrero Rocher so as to make better strategies than them.
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