Tuesday, March 12, 2019

Marketing Report on Nestle's Nescafe Classic


Company Description

Nestle is one of the largest company in the world. It is a Swiss transnational food and drink company.  /it was originated is 1860 , two Swiss enterprises were founded that would later from the core of nestle. They expanded their business throughout Europe and U.S. In 1866, Charles & George established Anglo Swiss condensed “Milk Company” in Switzerland. And after that slowly and gradually they have become one of the world’s leading food and beverage company, with over 500 factories around the world and over 250,000 employees. In 2005, it achieved sales of $75 billion from its portfolio of well-known brands, such as Nescafe, Nestle Pure Life, Milo , Koko Krunch, Nestle Cerelac, Milk Pak , Lean Cuisine, Kit Kat, Butterfinger, Purina, and Friskies.
SWOT Analysis
STRENGTHS
WEAKNESSES
1.      Nestle is a highlydiversified company operating in many different markets and sectors of those markets.
2.      Criticism over high water usage, selling contaminated food, anti-unionism, forced child labor and using other unethical practices.
3.      They have unmatched Research and Development capability.
4.      Much of its sale depend upon a few well-recognized brands. This makes the company vulnerable to any sudden changes in consumer behavior.
5.      They variety of brands give Nestle a strong ability to weather econmics because it serves many different segments of the market.
  1. The company is heavily dependent upon advertising to shape consumer opinion and drive traditional sales. This can lead to high marketing costs with a questionable return on investment.
7.      Nestle has low cost operators that allow them to not only beat the competition by producing low cost products, but by also edging ahead with low operating cost.
8.      No direct market outlet.
9.      Strong relationship with retailers

10.  Strong geographic presence.


OPPORTUNITIES
THREATS
  1. Growth in online retail could open up new distribution channels such as Amazon Prime that can bypass traditional retailers.
2.      Poor quality water and its scarcity
  1. Transparency in material sourcing.
4.      Increased competition in the beverage and food industries
5.      Nestle have opportunity to expand their product line like tea, etc.
6.      The price of coffee beans could significantly rise due to major weather disasters
7.      Ethical business activities and support in community.
8.      There is pressure from large retailers for cutting prices.
9.      In todays health conscious societies, they can introduce more health-based products, and because they are a market leader, they would likely be more successful.
10.  Strong presence of regional competitors

Product description
Nestle began developing a coffee brand in 1930. Nestle introduced the new product under the brand name Nescafe, which  is a portmanteau of the words "Nestlé" and "café", on 1st April, 1938. Nestle first introduce their coffee brand in Switzerland. Nescafe is soluble powdered coffee that became an American stable during World War 2.Their first ever coffee, which is now named as Nescafe classic.  
Later on they introduced a new brand in Canada and the US called “Taster’s choice”. In 2003, the company reintroduced the Nescafe brand in Canada & US & the product is now known as “Nescafe Taster’s Choice”. In 2006, Nescafe launched the new coffee machine system “Dolce Gusto”. This system allows consumer to make various style of coffee themselves. Nescafe have produced and retained reliable products under their brand name. Nescafe have noticed the increase of coffee culture lifestyle. That is adopted by students and young professional & have decided to focus on the psychographics & lifestyle of intend market.
The price for a 50g Nestle Nescafe classic is 175 PKR rupees. Positioning of Nescafe is “1 coffee cup, 1 good feeling”. Unique Selling point of Nescafe classic is “100% pure instant coffee”. It is used to make coffees instantly as well as people often add it in their tea to get a mixture of tea and coffee.
Product line:
Nescafe has a pretty huge product line. Here are some of the products that are included in their product line:
·         Nescafé Original
·         Nescafé Classic
·         Nescafé Gold Blend Half Caff
·         Nescafé Gold Blend Decaf
·         Nescafé Alta Rica Decaff
·         Nescafe Blend 43
·         Nescafé Blend 37
·         Nescafé Black Gold
·         Nescafé Classico
·         Nescafé Decaff
·         Nescafé Half Caff
·         Café Parisien
·         Nescafé Gold Blend
·         Nescafé Suraya
·         Nescafé Alta Rica
·         Nescafé Espresso
·         Nescafé Fine Blend
·         Nescafé Partners Blend
Product Mix:
The four dimensions to a company's product mix include,
·         Width
·         Length
·         Depth
·         Consistency.
Depth of a product mix pertains to the total number of variations for each product. Variations can include size, flavor and any other distinguishing characteristic. For example, if a company sells three sizes and two flavors of toothpaste, that particular brand of toothpaste has a depth of six.
·         Nescafe Classic. (500g pack, 100g bottle, and 50g bottle)
·         Nescafe gold. (100g and 50g bottle)
·         Nescafe 3 in 1. ( sachets)
·         Nescafe Cold Coffee. (200ml pack)
Hence Nescafe have four type flavors that comes in three sizes. Nescafe has a depth of 12.
Width of a company's product mix pertains to the number of product lines that a company sells. For example, if a company has two product lines, its product mix width is two. 
9 for nestle Pakistan,

·         Ambient Dairy (Nestle Bunyaad, Nesvita calcium plus, Milk Pak)
·         Chilled Dairy (Nestle yogurt, Zeera/Podina Raita)
·         Juices ( Nesfruita, Fruita Vitals)
·         Bottled water
·         Culinary & food (Maggie Noodles)
·         Baby food (Cerelac)
·         Breakfast cereal (Corn flakes, Koko Crunch)
·         Coffee (Nescafe)
·         Confectionary (KitKat)
Product mix length pertains to the number of total products or items in a company's product mix, For example, ABC Company may have two product lines, and five brands within each product line. Thus, ABC's product mix length would be 10.
Nestlé’s product mix length is 28.
Product mix consistency pertains to how closely related product lines are to one another--in terms of use, production and distribution. A company's product mix may be consistent in distribution but vastly different in use. For example, a small company may sell its health bars and health magazine in retail stores. However, one product is edible and the other is not. The production consistency of these products would vary as well.
Product Life Cycle:
Growth:
Ø  Nescafe has a strong branding, high quality with reasonable price to secure their market position.
Ø  Utilize advertising to stress the product’s benefits for targeted costumers.
Maturity:
At this stage Nescafe also develop a new product image and apply the new technology to their products.
Competitor Analysis
These are some of the competitors of Nescafe Classic:
1.      Maxwell
They makers of Maxwell house coffee and pepsi-cola soft driks have formed a joint venture to sell ready to drink canned coffee. They are targeting matured drinkers of coffee who want to feel the strongest of traditional coffee. They have set high prices which indicates that they they look for high income class people who want to sit back and relax at their home with a cup of coffee. 150g jar of Maxwell is of  Rs. 525.
2.      Moccona
They are targeting the main household shopper of age 25-60. It is the most expensive instant coffee in the market. And their advertisement emphasis on its rich European background and flavor. The current market price of Moccona in Pakistani is Rs. 750 for a 150g jar.
3.      Riva
They have a specific target audience who are younger consumers like students. They are potentially threatening to Nescafe as their intended market develops loyalty to brand at young age. They have similar pricing structure to Nescafe. Their market share keeps on increasing. Riva’s launch in Australia affected the maturity and stability of the instant coffee market with respect to Nescafe. The price of a 150g jar of Riva is Rs. 625.
4.      Lavazza
It claims to be “Italy’s favorite coffee”. It’s strength includes an excellent international marketing campaign targeted at younger female coffee drinkers. As a national firm they have home field advantage and they keep on advertising themselves in Italy culture. The price of 150g of Lavazza is Rs. 650. IT is available only in a few super markets like Aghas and Hyperstar.
These are some of the available competitors of Nescafe in Pakistan and this number keeps on increasing. But none of them affects Nescafe yet because they have already established their standing. The price they are offering has also become justifiable with their positioning in the market. They have a good standard packaging and pricing but along with that biggest accomplishment of this brand is feasibility. Finding a Nescafe coffee in Pakistan is easy. They have made themselves available at every mall and every shopping outlet and they are also available in local general stores. They have made such positioning that when the name of coffee comes one’s mind drifts off to Nescafe instantly. Hence, it is quite difficult for a new brand to come and capture their market.
Market Segmentation & Target market
Market Segmentation:
The Nescafe target market is mainly for coffee lovers. It is convenient to be used at home, work place or on the way. It serves them by offering wide product line for different segments.
Geographically it targets west side of turkey  because of the habitual use in east side of turkey. Demographically it targets youth to create loyalty towards brand.
Some Potential Market segments are:
1: Students:  Students are busy in their life style, possess ambitious and outgoing personality. They are potential, regular and first time users. They are also  seasonal users mostly in exam days.
2: Professionals: They are inspired and outgoing in nature. They live in urban areas mostly consume at morning. They are regular users and prefer quality.
3: Managers: People in this category are of the age of 45-60.They are  heavy users and their choice used to be indifferent. These people live in urban areas and  are hard workers in nature.
Target Market
Nestle is focused on big distributors having great market experience and huge market share. Like Albert Heijn, Jumbo and wholesalers like Hanos.
Differentiated Marketing
Nescafe target different market segments by using differentiated marketing strategy. It offers different products to different market segments to fulfill their requirements. Nescafe Xpress, Nescafe Cappuccino, Collection, Nescafe 3ü1 Arada, Nescafe Cappuccino.
NESCAFÉ CLASSIC
Differentiated Marketing
Nescafe offers different quantities so that anyone can buy as per there need and budget. For example: Classic 2gram is suitable for students. Because they may need it anywhere and at any time. But Classic Kanavos 200grams is for families. It also offers Classic economic packet 100 grams for families with lower income level.
Pricing Strategy
Nescafe has adopted non-price competition strategy. Nescafé have a huge set of products, which is mainly aimed to satisfy the customer taste buds. The price of products are dependent on the quality of the material used in that particular product.  The products are high in quality and they are significantly priced. Nescafé has made several changes in the portfolio and new products are inducted. This has increased the customer base, as people have a wide variety to choose from. Nescafe has many varieties to attract and satisfy their customers of different classes at an affordable price which gives them a good competitive advantage against their competitors.

Promotion Strategy:

Nescafe emphasizes on the promotion of products in all different kinds of way according to their target market and culture. The company has made one thing sure that their logo remains the same since the origin. This in a way made the people recognise the logo and they could recognise the brand just by the logo, as the logo has been imprinted in the mind of the people. Nestle has used a number of advertising strategies throughout the years to make the product Nescafe appealing. In particular, it has used persuasive advertising, with an emotional aspect, to make it an instant success. Such as their recent TV commercial gave coffee a way of being energetic and getting new ideas. For that they used artists to come and tell how Nescafe helped them in their lives. Nestle runs a number of advertisements and TV commercials focused towards making it a household premium brand. The continuous advertising with smart promotions has given Nescafe a strong position in the instant coffee industry. Not just the electronic media Nescafe do make loads of efforts to attract their target market using other promotion tools such as radio, billboards, internet, public relation activity and newspapers.
Positioning
Nescafe uses product differentiation and image differentitation in order to gain competitive advantages to build a position by providing superior value compare to competitors. Nescafe has the biggest market share in instant coffee market with the features of its products, quality levels, and the satisfaction that it gives to customer as perceived value. Besides, the company conveys Nescafe Classic’s distinctive benefits and positioning since customers perceive a differenece based on brand image differentiation when competing offers look the same.

Value Proposition

More for the Same
Nescafe is selling its products at the same prices with market average like its competitors but at the same time presents its customers high level of satisfaction with respect to quality of coffee.

Positioning Statement

“To people who are inspired and outgoing, cool and trendy, In the need of starting each morning with an enjoyable taste and original smell of coffee,   Nescafé and its Classic gives the best taste and quality, That makes you both relax, happy and unsleepy.”

Marketing Channels/Distribution Mix

The channel of distribution of Nescafe coffee goes from manufacturer to distributers but those distributers vary according to their geographical location and then they reach to the final customer. They have two distribution channels widely used here in Pakistan. Those are:
1st distribution channel:
Nestle/Nescafe --à Supermarket
Supermarket --à Consumers
In this one Nestle send their product directly to super markets , such as Imtiaz, Hyperstar, Macro etc. and then from these products directly reach consumers. In this channel its quite easy for marts and nestle to be in touch.
2nd distribution channel:
Nestle/Nescafe --à Wholesale
Wholesale --à Retailer
Retailer --à Consumers
In this channel, Nestle sends their product to Whole sale and then from their they go to local retail stores and then from their they reach the final consumer. Here, wholesalers are chosen by Nestle only and one can’t have a say in it although other wholesalers can request for their product and coordination.


CONCLUSION AND RECOMMENDATIONS
Nescafe Classic is one of the leading coffee brands. They have been assuring quality in a justifiable price for a very long time.  They might have to invest more in CSR activities and other than that if they keep on inventing their products and bringing innovation in them then there will be hardly someone who can get them to a downfall.

                       


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