Nestle UK Marketing Management Report: Semester 2, 2023

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MARKETING MANAGEMENT
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Executive summary
In a commercial and a business enterprise, marketing management plays a crucial role to analyse
the current position of the company. The concerned study has focused on the renowned brand
Nestle which is known for their high quality standards in the food and beverage industry of the
UK.
The concerned study has focused on one of the renowned companies in UK’s food and beverage
industry, Nestle. Nestle holds massive amount of share in the industry and plays a major role
with a wide range of products line. The company holds other famous brands under their umbrella
as a parent company and has managed to sustain the competitive scenario of the industry. After
doping the external environmental analysis, it has been observed that the company has major
challenges to attract the target group to their business. A new marketing mix strategy has been
provided that aims to bridge the gap between the present strategy of the company and the
external environment.
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Table of Contents
1. Introduction..................................................................................................................................3
2. Background information..............................................................................................................3
3. Marketing audit............................................................................................................................4
3.1 SWOT analysis of Nestle in UK............................................................................................4
3.2 Competitor analysis................................................................................................................6
3.3 External marketing environment of Nestle in UK.................................................................8
3.4 Outline of the overall market attractiveness..........................................................................9
3.5 Analysis of potentially for market growth...........................................................................10
4. Marketing mix of the company..................................................................................................11
5. Company’s product or service mix............................................................................................12
6. Different brands for different target markets.............................................................................15
7. New marketing mix for achieving gaps between Nestlé’s current marketing strategy and their
external environment:....................................................................................................................16
8. Conclusion.................................................................................................................................19
Reference List................................................................................................................................20
Appendices....................................................................................................................................23
Appendix 1:................................................................................................................................23
Appendix 2:................................................................................................................................24
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1. Introduction
Marketing management is highly important in order to meet the highly increasing competition as
well as the needs for improving the various methods of cost reduction and maximising profits.
The concerned study is based on Nestle which is known for their quality assured produced with
highly jam packed with nutritional facts. The background information of the industry and the
company has been properly explained with the support of adequate data. The marketing audit,
overall market attractiveness of the company has been mentioned. The potentiality of the market
growth has been examined in the study. The marketing mix of the Nestle in the UK has been
explained in addition with their product mix (Refer to appendix 2). The new marketing mix
actions are also justified regarding the gaps between the organisation’s present marketing
strategies along with their external environment.
2. Background information
 Company background:
Nestle is currently one of the renowned company in that is dominating the food market since a
long time. The origin of the company is in Vevey, Switzerland. Nestle is known as the largest
food organisation across the world measured by the revenues in the year 2014. The company has
managed to rank 64 on the Fortune Global of 500 Top companies in the year 2017 (nestle, 2019).
The company has a vast range of products that includes baby food, medical food, breakfast
cereal, coffee, team, snacks, pet food and bottled water as well. It has been observed that the total
reported sales has increased around 0.4% to almost CHF 89 billion in the year 2017
(Uk.jobs.nestle.com, 2019).
 Industry background:
In the year 2014, the functional food market of UK has been observed to be worth of around 1.2
billion GBP. After analysing the current scenario of the food industry of UK, it has been
observed that UK consumers spend almost 230 billion GBP. The strong demand for the raise of
new products has been observed. According to Izberk and Nakata (2016, p. 180), 8500 new
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products are added in the hypermarkets on an annual basis. Moreover, 743 million European
consumers are seen to be demanding products from UK due to the feasibility of location. The
strong supply chain and the infrastructure are massive opportunities. On the other hand, UK is
known for the lowest corporation tax in the G20 nations that is 19% while France and Italy
(Szmigin and Gee, 2017).
3. Marketing audit
The marketing audit of Nestle has been properly discussed with in terms of the internal and
external analysis along the competitor analysis as well.
3.1 SWOT analysis of Nestle in UK
Strength Weakness
 On of the biggest food and drink
company beating PepsiCo and Coca
Cola.
 Worldwide and diversified food
product portfolio.
 Strong Research and Development
capabilities are observed.
 Owns 22 successful brands under their
umbrella (Finch et al. 2015, p. 168).
 Product penetration is quite deep.
 Distribution system is also very
efficient.
 Numerous products of Nestle have
faced severe form of criticism due to
the imbalance of nutrition value.
 Due to post Brexit situation, low
economic growth in the market has
been found.
 Foreign exchange has been a major
problem.
 Child labour I the cocoa farms of
Turkey and Ivory Coast has brought
negative publicity.
 The brand structure is quite no
differentiated.
Opportunities Threats
 Decreasing the amount of sugar in
chocolate bar by 40%
 Impact of Brexit on the labour morality
has been a major challenge to the
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 Increased sales in the market have been
observed.
 Growth of various lower calorie drinks
like value added water has been choice
of the public.
 In UK, people have become more
health conscious that increases the low
calorie food demand.
 The expansion of distributed system
has been a major opportunity to the
company.
 The constant improve in the brand
image is another opportunity that the
company has gained.
company’s supply chain.
 Presences of sugar regulatory policies
have given tough situation to Nestle.
 UK government has introduced rules in
2016 which bans the advertising of
high fat, salt and sugary food (HFSS) to
the children aged under 16 (Spence,
2018, p. 51).
 The digital disruption is a major threat
to the business growth.
 The rise of raw materials is rising in
UK which has been a great threat to the
production.
 Threat of substitutes and new entrants
in the market is rising.
Table 1: SWOT analysis of Nestle in UK
(Source: Spence, 2018, p. 51)
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3.2 Competitor analysis
Porter’s five force model has been used in order to showcase the competitor analysis of the
company.
 Competitive rivalry: (High) In UK, Nestle majorly operates the food
industry of the consumers that faces an intense
competition from the competitors. The existing
competitors are seen to be Kraft Foods, P&G
along with the Group Danone. In particular
products such as in case of breakfast and cereal
products Kellogg’s has given tough
competitions to the Nestle.
 Threats of the new entrants: (Low) In the year 2015, UK’s food industry has been
considered to worth almost 1.2 billion GBP
(Scrinis, 2015, p. 140). The presence of the
diverse food industry makes it quite tough for
new companies to cross the entry barrier in the
market. The well experienced and the existing
companies in the industry are noticed to be
holding large market share and they have also
managed to build customer loyalty over the
time. Therefore, very few companies succeed
in order to establish themselves within the
market.
 Bargaining powers of the suppliers:
(Low)
As Nestle holds the largest share in the UK
market, they tend to make long terms
relationship with their suppliers. As a
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consequence, the company needs a substantial
amount of supplies for their requirement and
having a consistent supplier is required for that.
The company manages to fulfil the need of
their suppliers having a stable and strong
relationship with them. This enables them to
maintain the quality of the raw products.
 Bargaining powers of the buyers:
(High)
The presence of tremendous competition
makes the bargaining power of the buyers quite
high. The switching cost is quite lower as
many companies such as MARS and Danone
sell similar products in low prices (Adhikari
and Roy, 2017, p. 47). Therefore, the company
tries to satisfy their customers by maintain the
quality or brand loyalty.
 Threats of substitutes: (High) There are various products such as bottled
water and pasteurised milk which have
substitutes and also readily available in the
market. On the other hand, baby food is
homemade. In the recent years, allegations
have resulted a major drop of sales in certain
products where the consumers have opted out
for other substitutes in the market.
Table 2: Competitor analysis of Nestle in UK
(Source: Adhikari and Roy, 2017, p. 47)
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3.3 External marketing environment of Nestle in UK
The external marketing environment or the macro environmental analysis of Nestle, UK has been
performed with the help of PEST framework.
Political factors Economic factors
 Brexit has majorly impacted on the
European Union labour recruitment
process. In addition to that, the mobility
has been also impacted by the reduction
of supply chain performance in the
food industry of UK.
 Nestle has planned to relocate the
actual production of some of their
brands like Blue Riband Chocolate
Wafers towards Poland. This has
shown a cut of around 300 jobs.
 Swing of Foreign exchange has been
observed in the year 2016 that has
resulted a major impact of 1.6% on the
group revenues of Nestle (Basenko et
al. 2019, p. 26).
 Low economic growth after Brexit in
UK and the rise in the price inflation
against the backdrop has been found in
terms of stagnant wage growth.
Social factors Technological factors
 The sale has been highly affected due
to the high consciousness on the less
salty foods and low sugared drinks.
 Nestlé’s children program has gained
major attraction to the company (Smith,
2017).
 Training programs for the farmers are
initiated.
 The support of breastfeeding has also
impacted on the company.
 Fourth industrial revolution also known
as the digital disruption has offered
various opportunities to the company
along with threats.
Environmental factors Legal factors
 The transition for a low carbon along  The new sugar tax levy has been
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with resource efficient future
 Water controversies have affected the
business growth of the company.
 The environmental of packing along
with the recycling process of coffee
grounds have been quite proper which
has brought various environmental
impacts on the company.
introduced by the UK government
which aims to reduce the sugar content
in drinks. The straight 20% of reduction
in has managed to impact on the
production of the company.
 Child slavery in supply chain has also
brought legal allegations against the
company (Skeja and Keskin, 2018, p.
31).
 The infant milk formula scandal has
brought negative reviews about the
company.
Table 3: External marketing environment of Nestle in UK
(Source: Skeja and Keskin, 2018, p. 31)
3.4 Outline of the overall market attractiveness
In regards to the current consumer requirement, the company positions its products mainly into
the health and nutrition category along with convenience and well being. The organisation
provides a wide range of products that aims to provide nutrition balanced ingredients with a
strong background of brand loyalty.
 Focus on nutrition, health as well as wellness:
After going though the market and the choice of people, the company managed to maintain a
high level of nutrition in their products. The core aim of the company is to enhance the consumer
lives on a daily basis (Schoen and Lang, 2016, p. 101). The roadmap of ‘Good food, good life’ is
surely followed by the company as part of the business objective.
 Product safety with quality assurance:
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The quality of the products is clinically tested. The production and the packaging process goes
through a number of test to meet the quality standards for the consumers. Therefore, product
safety is a key factor behind their market attractiveness.
 Customer communication:
In order to promote healthier diet, the organisation attempts to have effective communication
regarding their quality and loyalty with their consumers. This helps them to make a responsible
and reliable company in the market. Nestlé’s policies regarding consumer communication are
highly well performed which helps them to receive feedback about their products or service.
 Human rights within the business activities:
Nestle supports the UNGC guidelines principle of human rights. In order to provide a good
example of healthy human rights and labour practices through the business activities, the
company maintains the principle set by United Nations Global Compact (Miah et al. 2015, p.
230). The international labour organisations are also a part of their principle.
3.5 Analysis of potentially for market growth
The roadmap of ‘Good Food, Good Life’ has significantly brought positive changes within the
business threshold of the company. Meeting the consumer’s demand has highly engaged the
company to maintain a sustainable performance throughout their performance (Refer to
appendix 1).
The long term value has been persevered though achieving three major factors that helps them to
engage potentiality for their market growth.
 Constant growth: With the power of innovation, differentiation and also relevant to their
consumers, the company has committed to reach mid single digit growth of organic by
the end of 2020 (Wilkinson, 2016, p. 56).
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 Efficient operational performance: It has been observed that the renowned company
has a goal to increase their underlying trading and also operating profit margin between
17.5% to 18.5% (Dhanesh and Sriramesh, 2018, p. 205).
 Allocation of the resources: Nestlé allocates their resources and their capital with their
principles. This includes the presence of their acquisitions and their divestitures.
4. Marketing mix of the company
In order to analyse the marketing mix, the 4Ps have been considered which are as follows:
 Product:
In terms of segmenting the products, Nestle majorly focuses on five aspects of their products.
First is quality where all the products are reassured with their quality checking and nutrition
facts. The second is variety where they provide an abundant range of products that starts from
baby food to children, young adults to confectionaries. Dairy products, Coffee, Ice creams and
Pet care products are also distributed by them. Design, feature and Brnd names are also
highlighted while launching new products in the market by them.
 Promotion:
In order to promote the company to an anticipated level, Nestle highly focus to do highly quality
advertisement and publicities as well. The company are well known for their attractive form of
advertisements or commercials. They successfully utilises the platform of internet to provide the
best they have to offer to their customers. Each of their products is promoted to the target groups
with the help of concrete presence on social media and internet.
 Price:
After analyzing the competitors such as ConAgra, Mars, Heinz and Cadbury, Nestle has
managed to bring their own pricing strategy that helps them to beat the existing competition in
the market. According to Soo et al (2016, p. 39), quality plays a crucial role in order to determine
the price of the product. Nestle is known to be a quality oriented company that highly focuses on
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