Nestle's Practices in the International Marketing Management

Submitted Assignment , 2022 , 60 Pages

Business economics - Market research

This report has evaluated and analyzed the international marketing management practices of the company Nestle. It has started with providing a clear picture of the company, such as its product portfolio, vision, mission, brands, values, and corporate business principles. It identifies the international marketing strategies that Nestle uses, which include the 7 Ps of marketing mix strategies and the STP marketing model.

The paper highlighted three issues the company faces in the international marketing environment. These include the political conditions and instability that create new laws, the economic conditions of the various countries and the social and cultural factors, using Nestle India's Maggi Noodles event in 2015 as an example. It also showed, that it depended on the localization approach and an acquisition strategy to expand and enter new international markets. While the best international entry methods for the company are joint ventures, foreign direct investment and wholly owned subsidiaries, applying the Porter Model and Ansoff Matrix together for selecting the international market entry and developing the strategy of entry successfully is also important.

Moreover, the report showed brand management through the CBBE model and applied it to the Cerelac brand category of Nestle Company. It also discussed how to develop the new brand strategy and apply it to the new Life Cuisine brand of the company. It also discussed the NDP process and its key strengths, which involve increasing the competitive advantage, quality, and value of the company, as well as its weaknesses, which include its complexity and risk, changes in the sourcing of ingredients, and shelf-life stability.

Furthermore, this study provided new international marketing strategy recommendations for expanding the business of Nestle in the international marketplace. After that, it devised an international marketing plan for launching a new food product at Nestle successfully. The plan showed how to implement the strategy from the first to the last step, involving timelines, key players, and actionable tasks.

Table of Contents

List of Figures

List of Tables

Executive Summary

Chapter 1: Introduction
1.1 The Nestle Company's Profile
1.2 The Nestle's Product Portfolio and Brands
1.3 The Nestle Company's Size
1.4 The Nestle Commitment to People, Society and the Planet
1.5 The Performance of Nestle Company
1.6 Marketing Management Practices of Nestle Company

Chapter 2: Literature Review
2.1 The Current Issues that Impact on the International Marketing Environment of Nestle Company
2.1.1 Political Condition and Legislation
2.1.2 Economic Forces
2.1.3 The Social and Cultural Factors

Chapter 3: Background Analysis
3.1 Marketing Approaches of Nestle in Local, National and Regional Marketplace ...
3.2 International Entry Methods of Nestle SA and its Benefits
3.2.1 Joint Ventures Method
3.2.2 Wholly Owned Subsidiary Method
3.2.3 Foreign Direct Investment Method
3.3. The Impact of the Changing Marketing Business Environment on Nestle SA Company
3.3.1 Micro Environmental Forces
3.3.2 Macro Environmental Forces

Chapter 4: Application of Learning to Practice
4.1 Marketing Strategies
4.1.1 Overview of How to Select an International Market and Develop the Right Entry Strategy
4.1.2 Evaluation of the Most Suitable Models for Selecting the International Market Entry Methods
4.1.3 Analyzing Entry Market Criteria Strategies
4.2 Brand Management
4.2.1 Keller's Brand Equity Model
4.2.2 The CBBE Model of Nestle Company
4.2.3 Psychological and Sociological Factors Influencing Consumer Decision Making
4.2.4 A New Brand Strategy Development for Nestle Company
4.3 New Product Development (NPD)
4.3.1 The Strengths of New Food Product Development in Nestle Company
4.3.2 The Weaknesses of New Food Product Development in Nestle Company.
4.3.3 International Marketing Strategy
4.3.4 International Marketing Plan

Chapter 5: Recommendations and Conclusion
5.1 Recommendations
5.2 Conclusion

References

List of Figures

Figure 1: Nestle's Corporate Business Principles

Figure 2: The Nestle's Product Portfolio and Brands

Figure 3: The Nestle's Sales Revenue by Product Segmentations in 2020

Figure 4: The Nestle's Sales by the Geographical Areas

Figure 5: Highlighted Data of Nestle Company in 2020

Figure 6: The Nestle's Commitment to People Health, Social and Planet

Figure 7: The Highlighted Performance of Nestle Company in 2020

Figure 8 : Porter's Five Forces Model

Figure 9: Ansoff Matrix

Figure 10: Keller's Customer-Based Brand Equity Pyramid

Figure 11: Nestle Cerelac Product Customer-Based Brand Equity Pyramid

Figure 12: Maslow's Hierarchy of Needs

List of Tables

Table 1: Nestlé's 7P's of Marketing Mix Strategies

Table 2: The STP Marketing Model of Nestle Company

Table 3: The Taxes Borne and Collected of Nestle for the Largest Countries in 2020

Table 4: Compare & Contrast Between the Porter Model and Ansoff Matrix

Table 5: Porter's Five Forces Model Analysis for Nestle SA Company

Table 6: The Ansoff Matrix Analysis of Nestle SA Company

Table 7: Nestle Life Cuisine Brand Strategy Development

Table 8 : Nestle International Marketing Strategy for Expanding its Business

Table 9: International Marketing Plan for Launch New Food Product in Nestle

Executive Summary

This report has evaluated and analyzed the international marketing management practices of Nestle Company. It has started with providing a clear picture of the company, such as its product portfolio, vision, mission, brands, values, and corporate business principles. It identifies the international marketing strategies that Nestle uses, which include the 7 Ps of marketing mix strategies and the STP marketing model.

The paper highlighted three issues the company faces in the international marketing environment. These include the political conditions and instability that create new laws, the economic conditions of the various countries, and the social and cultural factors, using Nestle India's Maggi Noodles event in 2015 as an example. It also showed that, it depended on the localization approach and an acquisition strategy to expand and enter new international markets. While the best international entry methods for the company are joint ventures, foreign direct investment, and wholly owned subsidiaries, applying the Porter Model and Ansoff Matrix together for selecting the international market entry and developing the strategy of entry successfully is also important.

Moreover, the report showed brand management through the CBBE model and applied it to the Cerelac brand category of Nestle Company. It also discussed how to develop the new brand strategy and apply it to the new Life Cuisine brand of the company. It also discussed the NDP process and its key strengths, which involve increasing the competitive advantage, quality, and value of the company, as well as its weaknesses, which include its complexity and risk, changes in the sourcing of ingredients, and shelf-life stability.

Furthermore, this study provided new international marketing strategy recommendations for expanding the business of Nestle in the international marketplace. After that, it devised an international marketing plan for launching a new food product at Nestle successfully. The plan showed how to implement the strategy from the first to the last step, involving timelines, key players, and actionable tasks.

Chapter 1: Introduction

1.1 The Nestle Company's Profile

Nestle SA is a Swiss multinational food product and beverage manufacturer that was founded in 1905 through the integration of the Farine Lactée Henri Nestlé company that was established in 1867 by Henri Nestlé and the Anglo-Swiss Milk Company that was founded in 1866 by two brothers, George and Charles Page. The company's headquarters are in Vevey, Vaud, Switzerland. Today, it is the largest food and beverage company in the world, with more than 2000 brands present in 191 countries and 376 factories in 85 countries around the world, with a total sale of 84,343 million CHF. It has about 273,000 employees. Nestle gained its strong global brand through the use of properly designed local and international marketing strategies (Nestlé, 2021). The main competitors include ConAgra Foods, Unilever, Kraft Foods Group, Hansen Natural Corporation, Mondelz International, and Monster Beverage Corporation (Reza, 2020).

Nestle's mission is "Good Food, Good Life" this statement refers to the company's belief in the power of food to enhance the lives of everyone through providing the best-quality beverages, foods, and nutritional health solutions. While the vision of the company is to be a leading, competitive Nutrition, Health, and Wellness company that delivers improved shareholder value by being a preferred employer, preferred corporate citizen, and preferred supplier while selling preferred products. The values of the company focus on the conception of honesty, fairness, and concern for individuals and families, communities, and the planet (Nestlé, 2021). The corporate business principles of the Nestle Company concentrate on six factors, as shown in Figure 1.

This figure was removed due to copyright reasons.

Figure 1: Nestle's Corporate Business Principles

Source: (Nestle, 2020)

1.2 The Nestle's Product Portfolio and Brands

Nestle is the largest international company with a broad product portfolio of the most needed foods and beverages for pet care. Under these brands, it has 2,000 titles and a large portfolio. The company's main products will be classified into seven top categories. These seven categories include fevers, prepared cooking aids, petCare, nutrition and health science, milk products and ice cream; water; and confectionery (Nestlé, 2021). The company offers them under various brands, as demonstrated in Figure 2.

This figure was removed due to copyright reasons.

Figure 2: The Nestle's Product Portfolio and Brands, Source: (Nestlé, 2021)

1.3 The Nestle Company's Size

To determine the size of the Nestle company, it should find out the following factors, according to its last annual report:

- The number of its product lines and the volume of its sales revenue by product segmentation are shown in Figure 3.

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Figure 3: The Nestle's Sales Revenue by Product Segmentations in 2020 Source: (Nestlé, 2021)

- The number of markets in which the company operates in the world and its total sales in each geographical area are detailed in Figure 4. Europe, the Middle East, and North Africa (EMENA), the Americas (AMS), and Asia, Oceania, and sub-Saharan Africa (AOA).

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Figure 4: The Nestle's Sales by the Geographical Areas, Source: (Nestlé, 2021)

- The number of countries where the company sells its products, the employees' number, and the corporate taxes paid are detailed in Figure 5.

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Figure 5: Highlighted Data of Nestle Company in 2020, Source: (Nestlé, 2021)

1.4 The Nestle Commitment to People, Society and the Planet

To identify Nestle's commitment to people's health, society, and the planet in a clear picture, kindly look at Figure 6 below.

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Figure 6: The Nestle's Commitment to People Health, Social and Planet Source: (Nestlé, 2021)

1.5 The Performance of Nestle Company

Nestle relies on its health, nutrition, and wellness strategy to enhance its value creation. According to the 2020 annual report (Nestlé, 2021), compared to the previous year, the company has improved in profitability, organic sales growth, and capital efficiency, as illustrated in Figure 7.

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Figure 7: The Highlighted Performance of Nestle Company in 2020 Source: (Nestlé, 2021)

1.6 Marketing Management Practices of Nestle Company

Local marketing refers to a company that has a limited geographic area for selling its products, while regional marketing refers to a company that has a large geographic area for selling its products and services, such as a district or group of smaller states. National marketing is when the company sells its products and services in a specific country (Topper, 2022). The global marketing approach indicates a company that holds its marketing operations at its main headquarters while selling its products or services globally in different countries. While international marketing refers to the company that can hold its marketing operations from its main subsidiary's offices that operate in different countries (Prachi, 2019).

Accordingly, it can be deduced that Nestle has a local and mostly international marketing strategy, as it operates its marketing activities not only from its main headquarters in Vevey, Vaud, Switzerland, but also from its factory offices around the world. The company has a long history of acquisitions and expansion of its markets worldwide that began with the 4Ps marketing mix strategies that contain product, price, place, and promotion. After that, Nestle S. A transfer to the extended 4Ps framework will consist of three added factors that include people, physical evidence, and process as part of the marketing mix (Reza, 2020), as will be identified in Table 1 below.

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Table 1: Nestlé's 7P's of Marketing Mix Strategies

Moreover, Nestle SA depends on the STP marketing model, which refers to segmentation, targeting, and positioning, to develop its specific and actionable international marketing strategies as detailed in Table 2.

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Table 2: The STP Marketing Model of Nestle Co. Source: (Hanlon, 2022)

Chapter 2: Literature Review

2.1 The Current Issues that Impact onthe International Marketing Environment of Nestle Company

The definition of international marketing is simply the marketing of products and services in more than one country, like Nestle. All marketing activities face many challenges and issues due to the complexity and changing environment, whether due to internal or external factors. The internal factories impact the marketing of the company through its strategy and decisions that relate to implementing its mission, objectives, and values. The marketing environment can also affect the structure of the company, the characteristics of human resources, the internal power relationship, etc. (Yadav, 2009). Therefore, these forces can decrease the ability of the company to maintain its competitiveness and serve its customers, such as consumers, suppliers, and the public. While the external environmental factors can also have deep impacts on the marketing environment. These factors include political, economic, social, technological, environmental, and legal factors (PESTLE) (Agwu & Onwuegbuzie, 2018).

Accordingly, the organizations try to control these forces through marketing policies and new strategies; however, they face uncontrolled forces whether in the home country or foreign countries. For instance, the international marketing business of Nestle, which operates in several foreign countries, may face changes in political stability, economic climate, and class structure that have a direct impact on business decisions and growth. Thus, external forces can create new threats and opportunities in the marketing environment of the company (Ganapavarapu & Chary, 2015). Consequently, the marketers of the company need to understand the context of environmental factors in which marketing operates to use suitable strategies and methods to maintain and develop their ability to serve the customers efficiently and enhance the markets successfully (Jones, 2017).

According to many studies about the most current issues and challenges that impact the international marketing environment of Nestle, they presented three key factors that are discussed below.

2.1.1 Political Condition and Legislation

As Nestle is a multinational company that operates in more than 190 countries, all the political factors can impact its operations or its decisions directly or indirectly as they relate to its international marketing environment in these foreign countries. Actually, political instability exposes its business to risks and threats, as the change in government leads to the creation of new policies and regulations that relate to international business. Such conditions can have a deep impact on the international strategy of Nestle by bringing new threats or opportunities (Jones, 2017). For instance, the Brexit situation created instability in the European Union, which led to the disruption of Nestle's UK food supply chain. So, the company discussed its new plan to replace the production in Newcastle and York with production in Poland as there is no clear vision for the future of the country (Frue, 2019).

Moreover, the political environment involves the laws, regulations, limitations of production, licensing and permits, and taxes that can affect Nestle accordingly. In addition, many countries have implemented investment restrictions, operational restrictions, and discriminatory restrictions. These factors create many current issues in the international market environment, such as supply chain disruption, distribution channel difficulties, and the resulting impact on costs and prices. Therefore, all the marketing activities of Nestle are subject to the legislation of different foreign countries (Frue, 2019). Nestle suffers from the tax costs that are paid to all the countries they operate in, which can decrease its efficiency in marketing as a tax reduces the total amount of consumer and producer surplus. For example, in 2020, Nestle paid around CHF 13.9 billion in incurred (tax borne) and collected taxes from clients, suppliers, and shareholders to the governments in its largest markets, which represent closely the total of the Group's net sales (Nestle, 2020) as shown in Table 3.

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Table 3: The Taxes Borne and Collected by Nestle for the Largest Countries in 2020

Source: (Nestle, 2020)

2.1.2 Economic Forces

The second current issue that Nestle faces is the economic condition of the various countries where it operates. Many countries suffer from low economic growth, eliminating the ability of customers to buy the imported product as the purchasing power of the country is limited. Therefore, the costs that the company incurs when moving its business and production to these countries will not be covered if people cannot buy the products (Maverick, 2021). The economic condition of any country is determined by the stage of development of the economy, the level, the nature of the economy, economic resources, and income distribution, which can all play a significant role in the international market environment.In addition to the other factors such as inflation, currency exchange rates, shipping, productivity, and unemployment, these can have an extremely negative impact on incomes and prices as well (Markgraf, 2022).

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• Course: MASTER IN THE INTERNATIONAL BUSINESS ADMINISTRATION
• Author: Ali Al Ghail (Author)
• Publication Year: 2022
• Pages: 60
• Catalog Number: V1355321
• ISBN (PDF): 9783346868725
• ISBN (Book): 9783346868732
• Language: English
• Tags: Marketing Strategies, Brand Management, Nestle, Leadership Styles, International marketing management