European Marketing Strategies for Nestle: A Global Marketing Report

This report analyzes the global marketing strategies of Nestle, focusing on its European operations in Germany, France, and Italy. It begins with an executive summary outlining the report's objective: to determine the need for streamlining marketing practices in Europe. The report then delves into a macro-environment analysis of the three countries, utilizing PESTEL, Porter's Five Forces, and Hofstede's Cultural Framework to assess the political, economic, social, technological, environmental, and legal factors influencing Nestle's marketing efforts, alongside industry competition and cultural nuances. The report identifies the most suitable marketing strategies, information needs, and key marketing practices for Nestle in the European context. It explores the multi-domestic and regional marketing approaches, highlighting the importance of adapting to local consumer preferences. Finally, the report provides conclusions and recommendations for Nestle to optimize its marketing activities, emphasizing the need for a localized approach, particularly in France, to foster sustained growth. The analysis underscores the impact of the global marketing environment on strategy formulation, including pricing and quality considerations, and acknowledges the management challenges associated with global marketing operations.

Running head: GLOBAL MARKETING
Streamlining the European Marketing Efforts of a Multinational FMCG Company (Nestle)
Name of the student:
Name of the university:
Author note:

1GLOBAL MARKETING
Executive summary
The report is aimed at identifying whether it is needed or beneficial to streamline marketing
practices in European countries. To serve the purpose, Italy, Germany and France were picked
for the study as three different European states. It was being found in the study that
multinationals adopt both the centralized and decentralized approaches for its marketing
activities in the target foreign market. Multinationals require a set of information for its
continued global operation as well as a new market entry. This set of information can be
obtained by conducting a macro-environment analysis of the target country. Global organizations
do have different marketing practices for different foreign markets. The multi-domestic strategy
was found suitable in some contexts. Nestle also uses a Multi domestic strategy for its foreign
operations. Some companies prefer the regional marketing approach for their foreign audience.
Alcon, as discussed in the study, takes a very good utilization of a regional marketing approach
for its global operations. It is because of this Alcon is successful in even complex business
environments such as Asian countries. Nestle, as found in the study, does well with its traditional
as well as contemporary approaches to marketing. However, the company was being
recommended to work more closely with the locals especially in France where smaller stores act
as the primary touchpoint for customers. It is needed for sustained growth in Europe. The global
marketing environment does have an impact on the marketing strategy formulation. As found in
the study, the pricing and quality strategy of Nestle has the impact of its global audience who
demands quality products at a valuable deal. Global marketing offers several management-
related problems like doing intensive works to be flexible with the demand, deploying the best
marketing team to take care of the marketing practices, etc. Marketing practices need to be made
relevant to the market entry strategies like Multidomestic and Regional.

2GLOBAL MARKETING
Table of Contents
1. Introduction..................................................................................................................................3
2. The macro-environment in Europe (LO4)...................................................................................4
PESTEL analysis.........................................................................................................................4
Porter’s Five Forces.....................................................................................................................6
Hofstede’s Cultural Framework..................................................................................................8
3. The most suitable marketing strategy (LO1, LO2)....................................................................10
Approach....................................................................................................................................10
Information Needs.....................................................................................................................11
Key marketing Practices............................................................................................................12
4. Marketing activities to be standardized or adapted (LO3)........................................................13
5. Conclusion and recommendations (LO5)..................................................................................16
References......................................................................................................................................18

3GLOBAL MARKETING
1. Introduction
Marketing is an essential activity of modern organizations. This enables them to
understand their customer better and meet their 'needs, wants and desires' for a specific product
or service. When marketing is related to global contexts, its significance in terms of strategy
making gets enhanced. The significance is due to the benefits that global marketing produces for
organizations. It is also significant for the fact that global marketing is a challenging task to
conduct. Market consultants having expertise in marketing essentials can help through the
challenges; however, even that does not ensure the utmost smooth performance for the client
organizations. It is mainly due to macro-environment factors, which create confusion in regards
to the selection of the best international strategies. In some situations, multi-domestic strategies
can be suitable to meet the local needs whereas globally standardized strategies in many other
circumstances. Multinational companies face many difficulties while dealing with foreign
markets, which are too hard to be covered with just one single strategy (Keegan 2017).
McDonald's, for example, follows a standardized strategy for its global operation; however,
considered adjusting with the local needs with few considerations in its global menu (Panwar and
Patra 2017).
The global marketing strategy will be the focus of this study. The purpose will be served
by studying it specifically in the context of Nestle. Nestle is a giant company in the ‘Food
Processing’ industry. Headquartered in Switzerland, Nestle offers many products to consumers
worldwide. The company employs more than 3, 30,000 people across its worldwide existence.
Marketing is an essential business goal of Nestle, which pursues to meets the quality and price
needs of consumers (Nestle.in 2020).

4GLOBAL MARKETING
The European market has been one of the top choices for multinationals for business
expansion. One of the advantages of doing business in Europe is the free flow of goods;
however, this may experience a hit once the UK is separated from the European Union. The best
thing about Europe is it gives the business access to around 500 million customers. However,
European countries have different cultures, markets and habits. One strategy may be suitable for
the Finland market; however, it can poorly struggle in France (Sebri and Zaccour 2017). Wal-
Mart, for example, failed in Germany for misreading the German customers (Sebri and Zaccour
2017).
2. The macro-environment in Europe (LO4)
This section will conduct a macro-environment analysis of Europe to identify whether
there are similarities between certain European countries and these can be grouped. The
assessment will be done using different management frameworks or models such as PESTEL,
Porter’s 5 Forces and Hofstede’s Cultural Framework. Therefore;
PESTEL analysis
 Political
Italy, which is the fourth biggest economy in the European Union, is wrestled with political
uncertainty. The national government had a constant conflict with the EU for facing the national
budget deficit. These raised concerns like Italy will exit out the Eurozone (Gamble 2017). It is
difficult to predict under such uncertainty about whether any new investment is safer. German
policy poses fewer barriers to trades except those offered with EU law and regulations. Germany

5GLOBAL MARKETING
also tries to reduce the regulatory burdens of trades by pressing the EU commission
(2016.export.gov 2020). France like Germany offers a stable business environment for foreign
companies. However, France just like Italy offers political uncertainty in terms of budget deficit
(2016.export.gov 2020).
 Economic
Italy is the world’s 8th largest economy. Italy is a major economic force in Europe as it is the
logistics hub for many foreign business needs like a strong manufacturing base, innovation and
design, etc. (2016.export.gov 2020). Germany ranks the 5th in the world in terms of economy.
Germany is also the largest European Union market giving access to around 82.4 million people
(2016.export.gov 2020). A huge customer base would mean increased business opportunities as
well as a diverse consumption habit. France situated at the heart of Europe offers a very stable
economic environment to potential companies (2016.export.gov 2020).
 Social
Germans consumers want low-cost offers. They value flexibility and thus will preferably buy
from someone accessible in multiple ways. Data privacy is a concern for German customers.
Half of the Germans won’t buy from a foreign company if their localization needs are not
fulfilled. Italians also think very carefully about their consumption. Italians likewise the
Germans appreciate low-cost offers. They will preferably buy from the locals. Foreign
companies will also have the opportunity if the deal is perfect and the overall sales experience is
excellent (2016.export.gov 2020). Unlike the Germans and Italians, French people prefer less
to buy from large companies. Instead, their preferred choices include small shops. French people
give foreign companies fewer opportunities over the locals (Santandertrade.com 2020).

6GLOBAL MARKETING
 Technological
Germans, Italians and French people are highly flexible. This is why the trend for internet use,
and e-commerce and m-commerce shopping is on a rise (Enwald et al. 2017). It is this habit of
the Europeans in these countries that give endless opportunities to foreign businesses. This habit
can be utilized for selling a product as well as reaching a wider customer population.
 Environmental
A significant contribution to air pollution can let foreign businesses face criticism. Air pollution
has become a major environmental issue for France (Statista 2020). Air pollution is also a major
issue for Germany and Italy (Koolen and Rothenberg 2019). Domestic and international
companies in these countries can take this as an opportunity for their brand positioning.
 Legal
Complex bureaucracy structure, as well as a slow judicial system in Italy, can affect a business
for its legal needs. Enforcing contracts and unfavorable labor laws in France can produce
problems for companies. Protecting the investors can be a challenge in Germany (Mitchell and
Ploem 2018).
The findings identify more or less the similar business environment in France,
Germany and Italy with slight variation in the consumption habit of consumers. French
customers, in particular, are fairly different from those in Italy and Germany when it comes to
buying a foreign product. More French customers love to buy from small shops.
Porter’s Five Forces

7GLOBAL MARKETING
Bargaining
power of
buyers (High)
Bargaining
power of
suppliers
(High)
Rivalry among
existing firms
(Low)
The threat of new
entrants (Low)
The threat of
substitute products
(High)
Customers in
the European
states such as
Germany, Italy
and France are
very choosy
when it comes
to select their
brand of
choice. They
are more keen
to buy from
the locals.
Foreign
businesses do
get the
opportunity
when they
could offer the
best quality.
It is an
important
factor of
consideration
for FMCG
companies.
Nestle despite
being into the
industry for a
long-time does
not take its
suppliers
lightly.
Instead, it is
known for
maintaining
good business
terms with
suppliers.
Nestle enjoys a
very strong
position in the
food processing
industry.
The food processing
industry is highly
competitive.
However, being into
this industry for
years, Nestle has
been able to obtain a
decent share of the
FMCG industry.
Due to the nature of
the industry, Nestle
faces substitute threats
for its products. From
milk-based products to
bottled water, there is
a range of similar
brands competing
directly with Nestle.
The localization
essentials of European
states increases this
problem further.
Table 1: Porter's Five Forces
(Source: Somers 2019)

8GLOBAL MARKETING
The findings of the analysis suggest that Nestle will need to understand its European
customers better through innovation in product design. It needs to take the competition seriously
and maintain effective business terms with its suppliers.
Hofstede’s Cultural Framework
Fig 1: Country Comparison based on Hofstede’s Cultural Dimensions
(Source: Hofstede Insights 2020)

9GLOBAL MARKETING
Power Distance: This is a cultural comparison between Italy, France and Germany based
on Hofstede’s cultural framework. Children in France are trained to be dependent on their
parents to a certain degree. This dependency passes on to the teachers and then supervisors. It is
the society where decisions can be influenced if marketing efforts make sense. Co-determination
rights are very prevalent in German society. Hence, decision-makers will be tested for their
abilities to influence a buying decision. Northern Italy gives preference to the decentralization of
decision-making. Likewise, for the Germans, the marketing strategy in Italy needs to be adjusted
based on the customer preference for products.
Individualism: In terms of individualism, Italy scores more than Germany and France.
However, all these are the societies where individuals are concerned with themselves as well as
their immediate families. Hence, they will use better products for themselves and will choose the
same for their families as well.
Masculinity: With a score of ‘43’, France is somehow a feminist society. Therefore,
caring for the quality of life is higher there compared to that in Germany and Italy.
Uncertainty Avoidance: France with a score of '86', gives high regard to social norms
than the Germans and Italians. It is a society where traditional buying behavior still exists
significantly. Italy comes next to France in terms of carrying its social norms whereas Germans
are somewhat positive towards the change if there are strong reasons to do so.
Long Term Orientation: With a score of ‘83’, Germany is a society that tends to care
less about short-term wins or losses. They focus more on long-term gains. This cultural
perspective lets Germans adapt to the best. However, both Italians and French are relatively less
patient towards a change in attitude.

10GLOBAL MARKETING
Indulgence: France with a score of ‘48’ is somewhat an indulgent society that gives
importance to individual needs and desires. Italy in this cultural perspective is a very restraint
society that suppresses the gratification of needs and also regulates it with stricter social norms.
The findings indicate that it is difficult to influence the consumer behavior of the
French people compared to that of Germans and Italians. Quality products should do well in
these European states as these societies care for themselves as well as their immediate families.
French people tend to carry their traditional buying behavior followed by Italy. Germans are very
good at adapting to changes if they have reasons to do so. France somewhat gives importance to
individual needs; however, it still significantly caries its restraining character.
3. The most suitable marketing strategy (LO1, LO2)
Approach
The approach adapted to international marketing and the information needs of
developing a marketing strategy becomes highly decisive when making selections for the most
suitable marketing strategy. Two approaches can be adopted in the context of global marketing.
These are ‘Centralized’ and ‘Decentralized’ approaches. The centralized approach is largely
suitable for companies having expertise in marketing practices. They face manageable regulatory
hurdles in the target country. They can find local resources when needed and access materials to
meet the increased local needs. These are the companies that operate effectively in foreign
markets with their subsidiaries in those locations. Their marketing practices have universal
appeal and need little or no added essence of localization. These companies or their products
carry a fairly positive’ Country of Origin Effect’ (Pekgun, Griffin and Keskinocak 2016).

11GLOBAL MARKETING
A decentralized approach to marketing practices is more suitable for companies with
products in severely regulated industries. To operate in foreign markets, these companies need
localization essence added to their product portfolio. The decentralized approach is more
applicable to markets where demand for local language and local sales is huge. The target
foreign market carries a strong negative ‘Country of Origin’ effect. Decentralized is more
suitable for companies that have limited resources to execute marketing in volume. These
companies are not also highly trained in marketing practices.
Information Needs
Information needs become a decisive factor while developing a marketing plan. The
pieces of information needed to construct a marketing plan that is suitable for the target foreign
market can be many. One of these is tariff barriers. Taxes, as well as duties imposed on imports,
decide the favourability of the target market. A less favorable market will thus see companies
investing more in their marketing practices to ensure they drive momentous sales to be into profit
zone (Vasylieva et al. 2017). Bureaucratic rules in the target foreign market make global
marketing a harder act. International companies will thus have to accustom to legal formalities. If
there is evident cultural diversity between the host and the guest countries, international
companies seeking entry to the target host country will need to consider a few things. They may
have to change their offers slightly or even adapt to the local taste (Vasylieva et al. 2017). These
are just a few sets of information that will be needed while designing a marketing plan for a
target foreign country. However, the list of information needs may be even bigger than those
mentioned here in this paragraph. The needs will vary depending on the country of the target.