Nestle: Marketing Management Analysis - Porter's 5 Forces, PESTLE

This report provides a comprehensive marketing analysis of Nestle, a leading food processing company operating globally. It begins with an introduction to marketing management and Nestle's operations, followed by an in-depth analysis using Porter's Five Forces model to assess competitive intensity, and PESTLE analysis to evaluate the macro-environmental factors influencing Nestle. The report also identifies opportunities and threats for Nestle, analyzes its product portfolio using the BCG matrix, and discusses its strategic priorities. The report examines strategic marketing, market segmentation, targeting, and positioning. It also evaluates the marketing mix elements (product, price, place, promotion) and provides recommendations for Nestle's future marketing strategies, considering its global presence and the evolving consumer landscape.

Marketing Management

TABLE OF CONTENTS
INTRODUCTION:..........................................................................................................................3
TASK 1............................................................................................................................................3
1.1................................................................................................................................................3
1.2................................................................................................................................................5
.1.3...............................................................................................................................................8
TASK 2............................................................................................................................................9
2.1................................................................................................................................................9
2.2..............................................................................................................................................10
2.3...................................................................................................................................................13
TASK 3..........................................................................................................................................14
3.1...................................................................................................................................................14
3.2...................................................................................................................................................16
3.3..............................................................................................................................................18
TASK 4..........................................................................................................................................19
4.1..............................................................................................................................................19
4.2..............................................................................................................................................20
CONCLUSION..............................................................................................................................22
REFERENCES..............................................................................................................................23

INTRODUCTION:
Marketing is a platform to sales. Marketing includes research, planning, advertising and
promotional techniques to increase the sales. Marketing management is a concept which reviews
organisation's resources and activities to increase its customer base, improve relationship with
the customers by providing them products and services as per their requirements. It helps the
organisation to enhance its perceived value and brand image. Marketing management analyses
the context of the industry in which the company operates. It includes value chain analysis,
Porter's five forces model, competitor's analysis and others (Bailey, 2011) The role of marketing
manager is to examine resources and competencies, competitor's cost structure, product
differentiation, competitive positioning and other factors. The objective of marketing
management is to provide customer satisfaction by identifying and meeting their stated or
unstated needs and wants.
TASK 1
1.1
Nestle is world's leading health, and wellness company. Nestle is a food processing
industry which operates in more than 194 countries in the world with employee strength of over
339000 people. The organization serves numbers of products to the customers. It includes
products such as confectionery, coffee and tea, baby food, dairy products, bottled water, medical
food, breakfast cereals, pet foods, ice cream, frozen food and snacks. Nestle has around 450
factories in the world. Maggi, KitKat, Nespresso, Smarties, Nescafé, Nesquik, Stouffer’s and
Vittel are the most popular brands of Nestle (Barutcu, 2011)
Porter's 5 forces Model: Porter's five forces model is an important tool that analyzes the level
of competition within the industry. Porter identifies 5 forces that determine competitive intensity
and attractiveness of the industry. These following are the 5 forces which are derived by Michael
Porter: Threat of new entrants: The new entrants will always be a threat for the company if the
market is attractive. The food industry is very large, viable, competitive and profitable.
Food industry has a very huge and attractive market which attracts the new entrants to
work in it. Although, Nestle has accomplished its brand name in the market but the food
industry is large and viable and lot of companies in the food industry has achieved a place

in the market but could not cross the Nestle in terms of the market share. The threat of
new entrants in case of Nestle is low (Camusio, 2011). Threat of substitute products: In food processing industries, there are so many substitutes
available due to the nature of the industry. Groupe Danone and Kraft foods are the
companies that deals with the similar products as Nestle. Nestle is required to focus on
maintaining health and wellness aspects to remain unbeatable in terms of market share.
Product innovation and differentiation will help the organization in taking competitive
edge to go beyond the substitutes. The threat of substitute products is high in case of
Nestle. Bargaining power of suppliers: Bargaining power of suppliers in the food industry is the
most important factor as the raw material can make a lot of difference in the food
processing industry. Nestle is known for its strong relationship with its suppliers. Most of
its products are dairy products and agricultural raw materials. Nestle always maintains
high standards and seek quality suppliers to retain the best suppliers globally. Nestle
advises its suppliers to work more efficiently and reduce wastage (Chen, 2011). The
bargaining power is high in case of Nestle because it is a food processing industry and
suppliers plays a significant role in supplying raw materials. Bargaining power of customers: Bargaining power of the customers also plays a
significant role in the business operations of the company. In food processing industry,
bargaining power of the customers are high. The customers can easily shift to the
substitute product if the company compromises with quality in the product. By
innovating new products as per the needs and wants of customers, Nestle has done well in
countering the bargaining power of customers. Nestle always cares about the
requirements of the customers and satisfies their needs by incorporating the healthy
products into its production process.
 Competitive rivalry within the industry: Competition level is increasing day by day in the
food processing industries as many new firms are incorporating their business in this
industry (Corley, Jourdan and Ingram, 2013) Groupe Danone and Kraft Foods are the
main rivals of Nestle in the industry. The firm has established a very strong brand image
in the market so it is difficult for the rivals to challenge the business operations of Nestle.
So the Competitive rivalry threat within the industry is low for Nestle.

PESTLE Analysis: PESTLE analysis is an important tool which monitors and analyses the
external factors or macro environment of the organisation. The following factors influence the
dynamics of the industry:
Political Factors: Political factors talks about the implication of rules and regulation of the
government on the business operations. Some Nestle products are not allowed in different
countries due to various reasons. The organization has done well in competing with the local
companies in India and China (Corley, Jourdan and Ingram, 2013). Government regulations
changes time to time and country to country as they impose different tax laws, accounting
standards and revised tax law interpretation has affected the business operations of Nestle.
Economic Factors: Economic factors talks about country's economic growth rate, inflation rate
and per capita income of the country. Nestle has faced some problems in supplying the products
due to different economic policies in different countries. Now company's clients and employees
are aware about the changing economic growth and inflation rate of the country.
Social Factors: The social factors talks about the company's responsibilities towards the society.
The social media have provide awareness to the public about the uses of ingredients in the
production process of the companies, So Nestle need to maintain its quality in production and
sales process (Craft and Hassan, 2015)
Technological Factors: Technology creates opportunities for the companies to bring new
products or improve the existing products. Internet and E-commerce plays a significant role in
the business activities. Nestle is required to adopt technical changes and improve its quality
products to maintain the top position in the food processing industry.
Legal Factors: Legal factors talks about health and safety of the customers. Nestle is a well
known brand and it needs to maintain the quality in the production process.
Environmental Factor: Environment affects the business operations and business activities
Nestle. IT gives companies a place to carry its business activities. It needs to reduce wastage,
control pollution from production to give a better environment to people of society (Dent, 2011)
1.2
Opportunities for Nestle:
Nestle has established its business in the global market. It has a well known brand image.
The organisation can come up with innovative products such as customised products which can
satisfy the needs and wants of the customers. The firm can expand its product line in growing

economies and it has opportunity to carry out its business in developing countries such as Brazil,
Russia, China, India and South Africa. The food processing industry is growing day by day and
the number of new entrants in this industry is also increasing. Nestle can capture the untapped
market by offering high quality services to their customers. The company can build partnership
with major companies in the world to run its business activities smoothly. Nestle has a strong
research and development department which can help them in introducing new products as per
the demand of the customers in the future (El-Ansary, 2006). The demand for healthier food is
rising, so it can also be seen as a good opportunity for Nestle to maintain quality of healthy and
nutritious products and grow the business in the future. The sales and distribution network of
Nestle is so huge that it can develop its products in countries of Africa as well. The income level
in growing countries is increasing rapidly so it can be a positive sign for the firm like Nestle
which is already established in the market.
Threats for Nestle:
Although, Nestle has a well known image in the market but there are some major threats
for the company that can affect the business operations of the organisation. The change in trends
can be seen as a big threat for the organization. The people are becoming more health conscious
which can impact on the demand of Nestle products such as Chocolates and chocolate related
products. The pre-packaged products are considered as unhealthy and unsafe products in Europe,
it can also affect the demand for some Nestle products. The major competitors like Walmart and
other retailers have cut prices for their products it could affect the demand of Nestle products in
the market. The government of India has banned Maggi for some period; it can affect the
business operations of Nestle. The negative word of mouth for Maggi can also be seen as a major
threat for Nestle. The buying power of customers and suppliers in the food industry is also
increasing day by day. The customers may shift to another brand if the firm compromises with
the quality in products and services. The prices for raw material are also increasing which may
harm its competitive price in the future (Fawzy and Dworski, 2010)

BCG Matrix: BCG matrix is portfolio marketing model which analyzes the market and growth
of the organisation.
Stars
Ceralac
Nescafe
Question Marks
Smarties
Nestle Nestum
Nescafe Decaf
Nesquik
Cash Cows
KitKat
Maggi Noodles
Dogs
Milky Bar
Neastea
Nestle Dahi
Nestle Crunch
Nestle Munch
Nestle's products such as Ceralac and Nescafe has high market share and high growth rate.
Products such as Smarties and Nescafe Decaf has high growth rate but comparatively low market
share. The other products like KitKat and Maggi noodles have low market growth but have high
market share. Milky Bar, Nestle Dahi has low market share as well as low growth in the market
(Fillis, 2010)

.1.3
The objective of Nestle is to become world's largest and best branded food manufacturer.
Source:
The following are the strategic priorities of Nestle:
 To deliver sustainable financial performance
 To put resources behind the ideas,
 Products and categories to recognized for healthy and nutritious products.
 Create values for the customers and control wastage.
 Improve customer relationship by developing E-commerce channels.
Illustration 1: Objective of Nestle

Nestle is world's leading health and wellness food processing industry. It operates its business
activities in more than 194 countries. It has captured a lot of urban as well as rural market in the
growing countries. The company has positioned itself among the top food processing industries
by quality products and services. The above stated threats for the company can impact the market
position of the firm. The negative word mouth for Maggi noodles can harm the image of Nestle
(Fritz, 2013). The opportunities of firm are directly linked with its objective. The aim of the
company is to become leader of food processing in the whole world. If the organisation identifies
the opportunities and works towards it, the company will be able to achieve its objective in time.
TASK 2
2.1
Strategic marketing is a process that helps the organisation in increasing sales by
concentrating more on the available resources. The strategic marketing assists in producing the
products which can be more profitable for the organisation. It looks at all the aspects of the
business and chooses the most profitable one. The marketing strategy starts with marketing
research and planning. It defines the target audience for the product, their needs and wants and
also focuses on the progress of competitors. The company can differentiate the products from its
competitors and enhance its reach to the customers. The organization can set the prices of their
products by analyzing their customer's progress. With the proper research, the company can
produce as per the needs of the consumers (Gangeshwer, 2013). The strategy marketing also
helps in establishing effective distribution network. The uses of internet for shopping purpose are
growing rapidly, so the company can use technologies effectively in distributing products and
services. The marketing communication helps the organisation to establish the brand in the
market. It requires proper strategic planning for establishing the brand image in the market. The
marketing strategy can impact the business environment. If all the employees have access to the
marketing plan, they will share the common goal and able to work efficiently and effectively
towards it. The strategic marketing planning is a process that evaluates and researches the
market, set objective of the organisation, identifies target audience, manages and controls the
workforces and defines the distribution network and then focuses on improving relations with the
customers. The management information system (MIS) helps in providing effective and efficient
decision making. MIS studies people, technology, organisation and relationship with the

customers. This system helps in providing right information to the right employee at the right
time.
Marketing communication uses different marketing tools and channels and focuses on
business objective and communicates these objectives to the market. Advertising, direct selling,
personal selling, promotion and public relations are the main tools of marketing communication.
Marketing communication includes 7p's of marketing mix which are product, price, place,
promotion, people, process and physical evidence (Giligan and Wilson, 2012)
The process of strategic marketing planning process is as follows:
 The first step in strategic planning is to set the mission of the company. It should benefit
the customers in the long term. The mission should be future oriented and the company
needs to ensure that all the employees should know about the mission of the firm and
cordially works towards it.
 The organisation is required to conduct a situation analysis. The company should know
the factors that affect the business operations. The company can do SWOT analysis to
identify the strengths, weaknesses, opportunities and threats.
 After the SWOT analysis, the organization is required to set marketing objective. The
aim should be specific, measurable, achievable, and realistic as well as it should be time
bound to achieve the objective.
 The last step in strategic marketing planning process is strategy development. It includes
7P's of marketing mix. It also includes segmentation, targeting and positioning of the
market (Gilmore and Erdem, 2011).
 The last step in the strategic marketing planning process is to evaluate the marketing
plan. It specifies how, when, by whom the marketing tactics can be monitored and
accessed.
2.2
Integrated marketing refers to promoting a particular product or service to the targeted
customers. In integrated marketing all the employees work together to increase the sales and
enhance profitability of the organisation. Nestle needs to focus on the following activities for
framework of integrated marketing plan:

 Identify desired future positions: To create an integrated marketing plan, Nestle needs to
identify desired position of the organisation in the future. Nestle can mention its desired
future position in the vision statement. The company needs to identify its opportunities
and possible threats in order to succeed in the future. The threats need to be reduced
whereas opportunities needs to be exploited. The company is required to work more in
research and development department. The R & D department will assist the company in
identifying the resources and it will give a positive outcome as well (Helsen, 2014). Data collection and analysis: The second step in integrated marketing plan is to collect
and analyse the collected data. Data can be collected in two types either primary data
collection or secondary data collection. Primary data is collected for the first time from
the primary research by the researcher. It includes observation, survey, questionnaire and
customer feedbacks. The researcher himself collects the data with his intelligence. The
secondary data collection includes books, journals, internet and other secondary source.
In this type of data collection technique, the researcher collects the data on behalf of other
person. In case of Nestle, researcher can choose primary as well as secondary source of
data collection technique. After collecting the data, it needs to be analysed in most
appropriate way. The data analysis helps in decision-making process.
 Market penetration: Market penetration is an activity that provide assistance in gaining a
higher market share by selling the existing products and services in the existing market.
In this activity the company focuses on promoting new products through advertisements,
bundling by offering lower prices and volume discounts (Hollensen, 2015)
Nestle can sell its exiting products in existing market to gain a higher market share at
lower risk. It can sell the products like Maggi, Milky Bar, Nestle Dahi in the existing
Illustration 2: Market Penetration

market to enhance its market share. It will help in increasing existing customer usage and
securing dominance in growth markets. It will also provide assistance in drive out
competitors like Groupe Danone and Kraft and take a competitive edge in the market. Market and Product development: Product development is a process of bringing a new
product into the market. It includes design, conceptualisation, marketing and
development of new products and services. The objective of product development is to
satisfy the needs and wants of customers and increase the market share of the company. It
requires proper research of the market before launching a new product in the market. The
market development is a process of identifying and developing new market for the
existing products and services of the company (Jobber and Ellis-Chadwick, 2012) In
market development, the company focuses on new groups of people and promote its
existing products and services. The market development, company divides the whole
market into smaller groups and target new customers. Nestle can segment the whole
market geographically or demographically. It will provide assistance in capturing the
untapped market. Product life cycle: The product life cycle concepts defines the stages of the products from
when it was introduced in the market to its removal from the market. There are a few
stages in between the introduction and removal. There are four stages of product life
cycle, these are introduction, growth, maturity and decline. Introduction is the primary
stage of the product. In the growth stage, the sales and profits of that products rises
sharply. In this stage company needs to invest more money in the promotional activities
to maximise the more growth of the product and the company. In maturity stage the
product is established in the market and aim to maintain that market share. In this stage
the products requires more modification and improvements to maintain that image in the
market (Kotler and Keller,2012). It might help the company in taking a competitive
advantage from its rivals. Decline is the last stage of any product. The customers are
shifting to the substitute products in this stage therefore the sales and profits of the
company declines sharply. Many of the Nestle products are now in the maturity and
growth stage where the products are well established in the market and further it requires
some improvements to maintain the customer base.