Global Market Challenges for Nestle

This assignment delves into the complexities of navigating the global market for Nestle. It meticulously analyzes the company's strengths and weaknesses within this context, utilizing a PESTLE analysis to identify external factors impacting its operations. Furthermore, it explores potential solutions for overcoming these challenges and achieving success in diverse international markets.

Running head: Market segments and decisions making
Market segments and decisions making

Market segments and decisions making
Table of Contents
Introduction.................................................................................................................................................3
Description about industry and organization..............................................................................................3
A. Growth................................................................................................................................................3
B.Profitability...........................................................................................................................................4
Market segmentation..................................................................................................................................5
Primary target market.................................................................................................................................5
Secondary market.......................................................................................................................................5
Contemporary issues in Nestle....................................................................................................................7
Level of involvement of primary target marker in organizational decision making.....................................7
Nature of competition.................................................................................................................................8
Positioning map.........................................................................................................................................10
Conclusion.................................................................................................................................................11
References.................................................................................................................................................11
Appendices................................................................................................................................................13
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Market segments and decisions making
Introduction
The primary purpose of this task is to analyze and measure the significance of marketing
audit in the global market. Here is the discussion about Nestle which is biggest food brands in
the world. It offers several foods and drinks products to people across the world. It explains
profitability, PESTLE analysis and growth rate of Nestle. On the other hand, it depicts that how
primary and secondary market involves in the decision-making process. The target audience is a
significant part of the firm that helps to increase and enhance the sale of the organization. Also, it
explains the contemporary issues and marketing mix strategies of the firm. It outlines that how
the organization creates a positioning map to make goodwill in the competitive market. A
marketing research and assessment is conducted by the company to measure the opportunities
and threats of the market.
Description about industry and organization
Nestle is a Swiss transnational food and drink company with its headquartered is located
in Vevey Vaud Switzerland. It is the biggest fast food organization in the world evaluated by
revenue. Nestle products include breakfast cereals, coffee and tea, bottled water, baby food,
medical food, dairy products, pet food, snacks, frozen food, and ice-cream. It is one of the main
shareholders of L’Oreal which is the biggest cosmetics firm across the world. In today’s era, the
firm is increasing its revenue and profit with maintaining sustainability within the organization.
Apart from this, the firm uses dynamic and unique advertisement and promotional strategies to
increase profitability and returns. The firm has more than 2000 brands in the world and it
operates its business operations and activities in 191 countries across the world. The primary aim
of the firm is to improve and increase the quality of life and contribute to a healthcare future
(Nestle, 2017).
A. Growth
The statistic indicates Nestle group global sales from 2005 to 2016. In 2016, Nestle group
generated sales of about 89.5 billion CHF. Nestle is one of the biggest consumer goods company
in the world. The revenue of the company is 92.36 billion U.S dollars in 2015. The firm employs
approx 328,000 employees in the world (Statista,2017).
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Market segments and decisions making
(Source: Statista, 2017)
B.Profitability
Nestle total sale is US$ 89.7 billion and net profit is $8.5 billion. The growth rate of the
company is 3.2% across the world. Along with this, the organization is improving its operating
profit margin by 30 basis points to 15.3 percent.
(Source: Nestle, 2017)
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Market segments and decisions making
Market segmentation
Market segmentation is a process which divides the entire market into different groups
and consumers with similar preferences, tastes, and demands. Using different methods
approaches and policies, Nestle can divide its entire population between primary and secondary
market. Various approaches of market segmentation are used by Nestle to assist and guide the
customers across the world (Wedel & Kamakura, 2012). The primary and secondary market has
been stated below.
Primary target market
The primary target market plays an integral role to maximize profitability and returns.
The organization can take several opportunities by evaluating and analyzing the primary target
audience. Nestle is targeting its main target audience in Australia on the basis of demographic
segmentation approach. It also focuses on the age, sex, gender and income level of people in the
country. The primary target market of Nestle is upper-class people, children who are between the
age of 6 to 14 years. Youngsters also prefer Nestle products and services in such country. These
are the target market of Nestle, which is the primary reason behind the sales of Nestle food
products and services in the competitive market. In this way, the company should focus on
requirements, wants and desires of the primary target audience to maximize profitability and
minimize risks of the market (Sivakumar & Shyamala, 2017).
Secondary market
The customer of the secondary market may have fewer demand and preferences for the
products and services of the firm. For Nestle, the secondary target market is middle-class people
in Australia. Nestle is the largest company which is providing good quality, tasty and healthy
food and beverage products and services. The organization brand portfolio includes milk and
dairy products, nutrition and bottled water (Sakunia & Jha, 2016). The young adults and
teenagers eat food and beverage products in the market. In this market, the demands of Nestlé’s
products and services are less in comparison to the primary target audience in Australia.
The firm also uses segmentation, targeting and positioning strategy to analyze and identify the
target audience in the global market. The STP strategy is discussed below.
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Market segments and decisions making
Segmentation: Nestle divides its market into different segments to maximize the optimum level
of outputs and returns in the global market. Segmentation provides satisfaction to the consumers
by providing effective products and services to the customers. The company divides its market
on the basis of geographic, demographic, behavioral and psychographic areas (Weinstein &
Cahill, 2014).
Targeting: Market segmentation reveals the firm’s market opportunities. The company
examined and analyzed the different type of market segment on the basis of growth, nature, and
size of the market. In addition, the firm also differentiates its products on the basis of the target
audience. The organization has been able to make a good image in the minds of customers by
focusing on the target audience. By using effective and dynamic targeting strategies, Nestle can
attain its long-term objectives and goals.
Positioning: The firm uses effective and attractive strategies to position its food products
effectively and efficiently. It helps to gain competitive advantages in the global market. Nestle
positions its products on the basis of needs, requirements and income level of people. The
organization uses value-based strategies and positioning strategies to attract more customers in
the global market (Enama, 2017).
Along with this, Nestle uses marketing mix strategy to differentiate its products and services
from competitors. The market mix strategy of Nestle has been discussed below (Lasserre, 2012).
Product: It is one of the significant elements of the marketing mix in the world. The firm uses
impressive and unique product mix strategies to differentiate its food products from rivalries.
The company introduces its products in different varieties and attributes. Nescafe and Maggi two
major contributors to Nestle brand equity across the world.
Price: Nestle set the suitable prices to increases revenue and outputs. The price is dependent on
the market and competitors products. Along with this, the organization provides good quality of
food products to the consumers. It will also help to maintain sustainability within the
organization.
Place: Nestle follows the FMCG strategy and approach to distribute its products and services in
the Australia. It uses various tactics to decide the location and place for increasing the sale of the
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Market segments and decisions making
food products. Maggi and Nescafe is the significant brand of Nestle. Due to these two innovative
products, the company has been able to drive other products in the market as well.
Promotion: Nestle uses effective promotional and advertisement strategies and policies to attain
an optimum level of outcomes. The company should focus on promotional strategies to hit the
competitors and to overcome the competitors (Aaker & McLoughlin, 2009).
Contemporary issues in Nestle
There are various issues faced by the organization. The contemporary issues include
management of change, child labor issues, ethical issues and environmental issues. The
employees do not accept the organizational changes because they do not want to do work
effectively and they ignore the work. Child labor is another issue in Nestle which may influence
trading activities and operations. It also affects the financial position and goodwill of the firm
adversely. Due to resistance to change, the company is unable to use innovative technology
within the organization. Furthermore, the organization has not been able to appoint skilled and
experienced workforce in the organization due to ineffective human resource management. It
also has a negative impact on the performance and productivity of the firm as well as employee
(Akhtar, 2016). Water management is another significant cause that may affect the growth and
sales of the corporation. It also affects the health and life of people in the international market.
Social media issues and other marketing barriers are also faced by Nestle while conducting its
business operations at international level. The firm is unable to use effective social media
channels and strategies due to low technology. Along with this, corporate social responsibility is
biggest issues that could affect the progress of the firm. The organization does not follow CSR
practices due to poor management. As a result, Nestle has not been able to provide profit and
dividend to shareholders (Kiran & Sharma, 2011). All these issues affect profitability and
outputs of the firm. The company should focus on these issues and hurdles to attain desired
results. The organization should maintain sustainable human resource management to carry the
business activities effectively and efficiently (Sethi, 2012).
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Market segments and decisions making
Level of involvement of primary target marker in organizational
decision making
Market segmentation plays a vital role in the decision making process in term of its
marketing process. It comprises demographic, behavioral, geographic and psychographic
attributes and uniqueness. Primary target audience plays a considerable role in the decision-
making process of its food products and services (Nestle, 2013). When Nestle introduces it's new
and innovative fast food and beverage products in the market, marketing research is conducted
by the firm and effective marketing strategies are initiating within the organization. The primary
target audience is highly involved in the decision-making process (Solomon, Russell-Bennett &
Previte, 2012). By considering the primary target audience, Nestle has been able to make
decisions. The company is developing its products in various features and characteristics to
increases sales and revenue of the firm. It also helps to fulfill the desires, wants, and choices of
the consumers in the global market. It uses dynamic packaging strategies to attract more and
more customers in the international market (Kapferer, 2012).
After considering targeting and segmentation strategies, Nestle will take decisions
regarding the positioning its food and drink items. The company sets the reasonable prices to
reach its optimum level of revenue and returns. The primary target market of the firm are from
upper and middle class, so it can improve and enhance the prices according to the needs and
requirements of the customers. After deciding market segmentation, it can be easy for Nestle to
make the decisions in terms of promotion and marketing of its food and beverage products. The
primary market is essential for the decision-making process. In addition, the primary target
audience is highly engaged in organizational decisions making process. In this way, the
organization has been to beat the competitors and to stay in the competitive market globally
(Wheelen & Hunger, 2011).
Nature of competition
When an organization launches new food and beverage products in the competitive
market, it conducts marketing audit for explaining and evaluating the nature, and level of rivalry
in the food industry. There is immense and high competition exists in food and drink industry.
The company maintains an oligopolistic market structure to deal and handle the competition in
the market. There are several leaders in the food industry which affects the success and growth
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Market segments and decisions making
of organization negatively. Therefore, the company needs to focus on the plans, policies, and
strategies of the competitors. To overcome the competitors, Nestle is introducing innovative
products and services at appropriate prices. The main competitors include Sara Lee, Danone,
Unilever and Parle products Ltd. which influence the revenue and returns of Nestle (Islam,
2016).
The strengths and weaknesses of Nestle and Unilever have been discussed below.
Strengths
Nestle Unilever
 Nestle is one of the largest brands in the
world.
 Employee strength of the employees
approx 330,000 globally.
 The company offers a wide range of
products such as pet food, dairy
products, confectioneries, and
beverages etc.
 Nestle is well known and popular brand
include Maggi, Kit Kat, Nescafe and
Boost etc.
 The brand recall and brand loyalty are
high for the brand.
 Furthermore, the company uses
effective supply chain and logistics
management to manage and handle the
business activities successfully.
 Unilever uses dynamic and effective
marketing and advertising strategies to
attract and retain consumers.
 Along with this, CSR practices are
implemented by the firm.
 The firm employs more than 170,000
employees within the organization.
 It uses dynamic distribution and
advertisement strategies to reach in the
global market.
 Nestle operates and manages its
business activities and operations in
more than 190 countries.
Weaknesses
Nestle Unilever
 Strong and high competition exist in  Cutthroat competition affects the
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Market segments and decisions making
the global market.
 Operation issues are faced by the firm.
sustainability and trading activities of
Unilever.
 The firm uses traditional strategies to
reduce and eliminate the issues and
queries of the customers.
From this situational analysis, it can be assumed that Nestle maintains a good image in
the international market. The comparison of strengths and weakness of both the companies show
that Nestle and Unilever are competing with their own strengths and attributes to stand out
against the rivalries in the international market (Mohajan, 2015).
Positioning map
A dynamic and effective positioning map is created for Nestle after considering the
primary target audience, level of involvement of primary market and competition,. By this graph,
Nestle attempts to indicate the ideas, thoughts, and perception of its consumers in the
international market. The positioning map for Nestle has been drawn below.
Relatively high growth rate
Unilever
Nestle
Relatively less healthy Relatively healthier
Product offerings product offerings
Hershey foods
Relatively low growth rate
The positioning map of the company indicates that Nestle is making effective and
dynamic decisions regarding the prices and products in the market. The firm focuses o the upper
class and middle-class people to maximize the sales and profitability. It also helps to beat the
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Market segments and decisions making
competitors in the rivalry market. Apart from this, the organization uses attractive and unique
strategies and approaches to minimize risks and maximize optimum outcomes and results. In this
way, the firm can accomplish the desired vision and mission with maintaining sustainability in
the workplace.
Conclusion
On the above-mentioned limelight event, it can be concluded and analyzed that marketing
audit is an essential part of every organization to analyze and identify the challenges and risks of
the market. Nestle company has been selected in the report to measure the macro environment of
the country. Nestle is one of the growing and leading food companies in Australia which
provides enormous types of food products for people across the world. The company is trying to
explore and flourish business operations and activities successfully in Australia. The economic
condition of the country is good and effective. Nestle can earn good returns and profits by
conducting operations and activities in Australia. Along with this, the primary and secondary
market plays an integral role to gain competitive advantages in Australian market. The
situational analysis is done by the firm to understand and know the external environment of the
country. Moreover, primary market involves in the decision-making process to take unique
decisions regarding the operations of the firm. A positioning map is created for Nestle to identify
the future position of the organization in the market. The company uses STP strategies and
marketing mix strategies to stay in the competitive market. In addition, contemporary issues
which are faced by nestle also have been discussed in the task. Now it is recommended that the
organization should use effective management strategies to manage and handle the various
barriers and challenges of the global market.
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Market segments and decisions making
References
Aaker, D. A., & McLoughlin, D. (2009). Strategic market management: global perspectives.
John Wiley & Sons.
Akhtar, S. (2016). Impact of Social Networking Sites in Marketing Communication and Sales: A
Study on Nestle Bangladesh Limited. World, 6(1).
Enama, A. (2017). Research on Market Development Strategy in Africa. A Case Study of Nestle
Nigeria PLC.
Islam, K. R. (2016). Corporate marketing–a study of corporate communications at Nestlé
Bangladesh Limited.
Kapferer, J. N. (2012). The new strategic brand management: Advanced insights and strategic
thinking. Kogan page publishers.
Kiran, R., & Sharma, A. (2011). Corporate social responsibility: a corporate strategy for new
business opportunities. Journal of international business ethics, 4(1), 10.
Lasserre, P. (2012). Global strategic management. Palgrave Macmillan.
Mohajan, H. K. (2015). Present and Future of Nestlé Bangladesh Limited. American Journal of
Food and Nutrition, 3(2), 34-43.
Nestle, M. (2013). Food politics: How the food industry influences nutrition and health (Vol. 3).
Univ of California Press.
Nestle,(2017). About us, retrieved on 16th January 2018,< https://www.nestle.com/aboutus>
Sakunia, D., & Jha, R. (2016). Managing Marketing Crisis: Case Study Research From Nestle's
Maggi Ban In India. Imperial Journal of Interdisciplinary Research, 2(10).
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Market segments and decisions making
Sethi, S. P. (2012). Multinational corporations and the impact of public advocacy on corporate
strategy: Nestle and the infant formula controversy (Vol. 6). Springer Science &
Business Media.
Sivakumar, A., & Shyamala, M. S. (2017). Brand image of Maggi noodles before and after re-
launch with special reference. IJAR, 3(3), 346-350.
Solomon, M., Russell-Bennett, R., & Previte, J. (2012). Consumer behaviour. Pearson Higher
Education AU.
Statista,(2017). Nestle Group’s sales worldwide from 2005 to 2016(in billion CHF), retrieved on
16th January 2018,< https://www.statista.com/statistics/268892/nestle-groups-global-
sales/>
Wedel, M., & Kamakura, W. A. (2012). Market segmentation: Conceptual and methodological
foundations (Vol. 8). Springer Science & Business Media.
Weinstein, A., & Cahill, D. J. (2014). Lifestyle market segmentation. Routledge.
Wheelen, T. L., & Hunger, J. D. (2011). Concepts in strategic management and business policy.
Pearson Education India.
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Market segments and decisions making
Appendices
1. PESTLE analysis
2. Nestle weaknesses
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