Marketing Management Report: A Case Study of Nestle Coffee

This report provides a comprehensive marketing analysis of Nestle's coffee products, focusing on the Australian market. It begins with an introduction to the company, its products, and consumers, specifically targeting millennials. The report then delves into industry analysis, highlighting current trends in profitability and growth within the coffee market. A detailed PESTLE analysis examines the political, economic, social, technological, legal, and environmental factors influencing Nestle's operations. The competitive landscape is assessed, comparing Nescafe with Moccona and Robert Timms. Segmentation analysis identifies major market segments, including young adults, middle-class consumers, and high-income consumers. The report also explores consumer involvement and decision-making processes, followed by a perceptual map illustrating the market positioning of various coffee brands. Finally, the report concludes with a summary of key findings and recommendations.

Running Head: MARKETING MANAGEMENT: NESTLE
MARKETING MANAGEMENT: NESTLE
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MARKETING MANAGEMENT: NESTLE
Contents
1 Introduction.........................................................................................................................................3
1.1: About the company...........................................................................................................................3
1.2 Product and Services.........................................................................................................................3
1.3 Consumers.........................................................................................................................................3
2 Industry Analysis and Market trends for Nestle...................................................................................4
2.1 Current trends in Profitability and growth.........................................................................................4
3 PESTLE Analysis................................................................................................................................4
3.1 Political..............................................................................................................................................4
3.2 Economic...........................................................................................................................................4
3.3 Social.................................................................................................................................................5
3.4 Technological....................................................................................................................................5
3.5 Legal..................................................................................................................................................6
3.6 Environment......................................................................................................................................6
4 Competition Analysis..........................................................................................................................7
5 Segmentation Analysis........................................................................................................................8
5.1 Major Market Segments:...................................................................................................................8
5.2 Primary and Secondary Markets........................................................................................................8
6 Level of involvement and decision making.........................................................................................9
7 Perceptual map for the market place..................................................................................................11
8 Conclusion.........................................................................................................................................12
9 References.........................................................................................................................................13

MARKETING MANAGEMENT: NESTLE
1 Introduction
The various sections or parts of introduction can be discussed as:
1.1: About the company
Nestle Australia manufactures and markets a range of food products, beverages, baby milk
products in Australia. It entered in Australia in 2008 and is a wholly owned subsidiary of Nestle
S.A. Its headquarters is located in Rhodes, Australia. Nestle is one of the largest food company
in the world and constantly a part of fortune 500 companies. Nestle is known for its huge
marketing budget and promote its product in numerous ways like direct advertising, organizing
competitions and distribution prizes, leveraging social media and by doing lot of work for the
society.
1.2 Product and Services
Nestle has wide range of product portfolio like Coffee, Medicated lounges, Noodles,
Baking ingredients, Cooking milks, Chocolates, Baby milk, baby food and each portfolio has
numerous products in it. Each portfolio competes with different competitors. On a higher level,
Nestle has competitors like Unilever, Starbucks, P&G, Cadbury, Cargill, Douwe Egberts.
1.3 Consumers
The key consumers for Nestle differs for the product ranges. For some products, the
consumers are old age people and for some university students. Given the huge product portfolio
of Nestle with each catering to different markets and competing with different organizations, it
would make more sense to consider a single product so as to streamline the analysis. Thus,
Nestlé’s coffee products will be considered and analyzed for PESTLE Analysis, 4P’s of

MARKETING MANAGEMENT: NESTLE
marketing mix, Competitor analysis and other aspects. The key consumers would be millennials
in this case.
2 Industry Analysis and Market trends for Nestle
The key sections under industry analysis can be discussed as:
2.1 Current trends in Profitability and growth
As the coffee consumption is growing continuously in Australia due to rising urban
Australia, there is huge growth for Nestle in Australian coffee markets. While in 2015, it has
60% of the total market share of instant coffee; its share increased to 73% in 2016 (O'Mahony, &
Lobo, 2017) and expected to rise in coming years. Also, with aggressive promotional strategy,
company is able to maintain its profitability. It is a debt free and cash rich company that has
superior return on equity (http://www.nestle.com.au/aboutus/annual-report ) as compared to its
competitors which means it is constantly generating value for its promoters and shareholders.
3 PESTLE Analysis
3.1 Political
Political environment in Australia subjected to the various laws for the organizations like food
and safety standards, Labor standards, quality standards, labeling requirements and so on. Nestle
has worked on quality of life and other economic developments in the industry Political
environment is favorable for the organization. It can be said that the political factors are positive
for the organizations in food and beverage industry.
3.2 Economic
Economic factors are related to the purchasing power and spending patterns of the people. As
most of the coffee beans and varieties are exported from outside, there is a dependency on

MARKETING MANAGEMENT: NESTLE
exchange rate for the prices. Mostly, the increased cost is passed to the customers. Large players
which are cash rich can absorb this volatility but for smaller players, it is mandatory to pass these
costs to consumers. As a result, there is a risk for smaller players but companies like Nestle have
nothing to fear. Also, as the disposable income of population is increasing, people are spending
for buying better quality of coffee as well coffee machines for personnel use (Khamis, 2009).
Economic factors are quite favorable for the large players of Coffee industry like Nestle.
3.3 Social
As far as social aspect is concerned, there are 2 groups in Australia. One of the groups is about
the population which is much more conscious about their health. There are numerous Health
development centers and people are focusing on diet, living stress free life, fitness and so on.
These people tend to ignore the coffee products due to the present of caffeine in coffee products
and prefer healthy products like fruit juices, instant health drink.
At the same time, People have become social more than ever in Australia and love to meet and
discuss over a cup of coffee. Coffee is also marketed by companies as a means of self
expression. Also, as the culture is more globalized, coffee consumptions is also increasing. In
short, there is huge demand for coffee in Australia and experts are referring to current period as
the era of coffee (Adams, 2012) because Australia has never witness so much consumption of
coffee as it is doing now. Social factors are quite favorable for the coffee industry in Australia.
3.4 Technological
There are various technological changes in the coffee industry and one of the biggest
developments is the small portable coffee machine for personnel use. As the coffee demand is
increasing, the coffee maker is also becoming popular. Nestle also has launched coffee makers
and these products are finding a good market. Beside it, technological changes also promoted

MARKETING MANAGEMENT: NESTLE
innovation and companies are researching on how to improve the shelf life of some of the
products and how to give more authentic taste of coffee to consumers (Mithik, & Islam, 2014).
There are no hurdles in coffee Industry from technological aspect. It is expected that there would
be further advancements in the technological sector for the organizations operating in food and
beverage industry.
3.5 Legal
There is not much impact of legal conditions in Australia as long as the organization is following
all the rules and regulations. There are laws related to import and export, taxation rules and labor
wages. There is not so much issue however some of the labor related laws are highly bend
towards the labor. This factor is also moderately favorable and not much of an issue for
globalized players because they are used to oblige to different rules and laws of different
countries. It is important that the organizations in the food and beverage industry must comply
with all the legal laws and guidelines that exist within the country. Nestle is a global brand and it
must also comply with the international trade laws for exports and imports.
3.6 Environment
Today, consumers tend to become conscious about how the company is manufacturing their
products and how much they are negatively impacting the environment, what is their carbon
content and so on. Organizations that are not environment friendly do not receive a good
response from the customers for their products in fact customers in many cases, people have
boycotted such products. Though, coffee manufacturing is quite clean but it is highly dependent
on the vagaries of nature like earthquake, drought and so on. These catastrophes can impact the
supply of raw materials and increase the supply of coffee. Environment factors are moderately
favorable for the coffee industry.

MARKETING MANAGEMENT: NESTLE
4 Competition Analysis
Nescafe is competing with Moccona and local coffee player Robert Timms. Nestle is a
market leader with more than 70% of the market share. There is 1 product of Robert Timms
which is called coffee bag similar to Tea bag which is not been manufactured by the Moccona
and Nescafe. This product is very famous. Also, Moccona’s product line is more expensive as
well as of high quality than nestle. As a result, it is preferred by only the people who have high
economic and social status. As Nestle is targeting the middle class customers and young
students, it remains a largest player in the Australian coffee market.
Also, Nescafe has its own shelves in the supermarkets in market for promotion which are placed
in the strategic places that can get the customer attentions easily. Moccona is also easily
available in most of the supermarkets however it does not have its own shelves. As far as Robert
Timms is concerned, it is not easy to find this brand in the supermarkets as it is placed in the top
or bottom of the shelves where it is difficult to capture customer attention (Lekakis, 2013).
As far as the pricing is concerned, Nescafe has huge range of products to cater to the
different class from middle income group to higher income group while Moccona focuses on
premium group. Robert Timms has weak competition with both of the players and thus it has to
keep its prices low so as to retain its position in the market. Regarding promotion, Nescafe has
unbeatable promotional strategy as compared to its competitors. As Robert Timms is a local
brand, it promote itself using the same theme however find difficult to compete with cash rich
giants like Nestle. It is expected that the competition would further increase in the market as
more and more players enter the country. The large originations like Nestle must focus on
continuous improvement of its products and services so that it can remain ahead of the
competition.

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5 Segmentation Analysis
This section would discuss the major markets segments for Nestle and Primary and
secondary target markets.
5.1 Major Market Segments:
Nestle marketing strategy aimed at large and diverse set of the population and thus have kept
their prices reasonable and affordable as compared to its competitors in Australia. Below are its
primary market segments:
5.2 Primary and Secondary Markets
Primary segment comprising of young adults and middle class consumers has a huge impact on
Nestle in terms of decision making
Young Adults and Students Age between 15-23 years: These students have busy lifestyle and
stay in urban areas. They are ambitious and looking for ease and convenience while making
coffee (McDonald, 2015). Due to ease of making of instant coffee, Nestle targets this group with
its Latte range of products.
Middle Class consumers: These people are regular user of coffee and are addicted to it and
whose day starts with a cup of coffee in the morning. This class looks for quality at an affordable
price (Topik, 2015) and thus Nestle targets this class by Expresso, Blend 43 and mild roast
products. This segment is one of the biggest markets of Nescafe and drives maximum revenue.
Blend 43 product line is very famous among this class and also recognized as people’s coffee . It
is the most profitable for the company and has the highest turnover in the market.
Secondary target markets are as follows:

MARKETING MANAGEMENT: NESTLE
High income consumers looking for high quality authentic coffee: These people are those
who do not want to compromise with the quality no matter what the cost it. They are people with
high income, ambitious, successful. Moccona is a leader in this segment. Nestle targets this
segment by brands like Alta rice and Gold range. These brands of Nescafe offer premium coffee
with very high quality as compared to other blends.
Ethnicity group: Nescafe also tries to capture ethnic groups by using popular actors in
advertisements based on the ethnicity.
6 Level of involvement and decision making
Level of involvement and decision making is likely to have towards your organization in
terms of decision making. Let us try to analyze the 4P’s of marketing and how the primary
segments have shaped the 4P’s for the company:
Product: Nestle offers capsules, beans, powered as well as instant coffee. Apart from it, it has
flavor and non flavor coffees also. There is large variety of coffee that the company has for each
target customer. However, Latte 43 and blend 43 products remain most famous. Also, as the
coffee market is growing in Australia, Nestle has a bright future and has positioned itself for the
capturing the future market.
Price: Nestle is the cost leader in Australia and its famous product instant coffee is much more
affordable that its closest competitors which is Moconna instant coffee. It is primarily due to the
fact that Moconna targets high social and economic status population while Nestle focuses on the
market for middle class. Nescafe also used price skimming strategy for targeting upper class
people however this strategy does not worked out for the Nescafe (Khamis, 2015).

MARKETING MANAGEMENT: NESTLE
Place: Nestlé’s coffee is easily available in most of the supermarkets. While big markets like
Coles and Woolsworths have the large variety of coffee ranges, smaller markets have fewer
ranges that have relatively high turnover. In short, it is very easy to get a nestle coffee in
Australia. Also, Nestle has massive distribution team and budget and thus its representatives
makes sure that its products are placed in a better position than its competitors and should be the
first one to get the attention of the people.
Promotion: Nescafe is the established brand worldwide due to the excellent promotion strategy
and brand campaigning by numerous ways. Nescafe has launched its videos on You-Tube and
promoted them aggressively. Also, the cost is kept down by leveraging crowdsourcing for
making videos. Apart from it, it sponsors big events frequently in Australia, gives advertisements
during prime times, shows advertisement on hoardings. It also uses digital media and organizes
the contest on Facebook and twitter quite frequently. Also, Nestle has highly contributed in the
society and for our planet and never failed to leverage these in order to market itself (Koen,
Bertels, & Elsum, 2011). Promotion is the biggest strength of Nescafe and none of its
competitors is able to match to Nescafe in its outstanding promotional strategy. Below are few
examples of campaigns by Nescafe:
 Win $ 1,000 every morning for every month
 Nescafe Big Break give $180,000 to people for new and achievable ideas
 Nescafe Best short film award for students

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7 Perceptual map for the market place
Nescafe has segmented the market based on the income group, Age group, gender, region,
different socio-economic status. It has identified students, homemakers, freelancers and
deskbound employees and rich businessman (Pritchasrd, 2000) Based on each category, it is
targeting its various products by defining a dedicated positioning strategy for each of the
segment. Below is the positional map of Nescafe for the Australian market.
 Young Adults and Students Age between 15-23 years who are looking for convenience
and cost effective coffee can enjoy their cup of latte
 Middle class people for whom coffee is a way of life and who appreciate quality at
affordable price have coffee of Australia which is Blend 43.
 High class people who are looking for superior taste, rich blend for whom price is no bar
must try 100% pure coffee brand like and exotic products like Alta rice
The diagrammatic representation of perceptual map for Nestle can be shown as:

MARKETING MANAGEMENT: NESTLE
8 Conclusion
The above paper discusses the marketing audit for Nestle. The paper discusses the external
and internal environment for Nestle Nescafe. With the above discussion, it can be said that
Nestle must continuously analyze and explore its internal and external stakeholders. The focus
on 4Ps of marketing, service relationship marketing, analysis of competition, would help Nestle
to further grow in the global market where the competition is high.