A STUDY ON

BARNALI BERA Roll No:511019429

Specialization :- Marketing

DR.ZAKIR HUSAIN INSTITUTE , BHUBANESWAR, ORISSA

CENTER CODE – 03084 YEAR OF SUBMISSTION –

SMU

Sikkim Manipal University Directorate of Distance Education

A PROJECT REPORT ON A STUDY ON NESTLE

A PROJECT REPORT

UNDER THE GUIDANCE OF

MR.ROHIT KHEMKA

Submitted By

Barnali Bera

In partial fulfillment of the requirement for the award of the degree of

Master In Business Administration in Marketing

SMU

Sikkim Manipal University Directorate of Distance Education

Acknowledgements

We would like to put our thankfulness across to all those who have put in direct or indirect

hard work towards the successful completion of this project.

First & foremost, we would like to thank my guide MR.ROHIT KHEMKA

for his able direction and marketing proficiency devoid of which this project would have never

concretised.

We are also immensely grateful to the officials and product managers at Nestlé India, Orissa

Dr. S.N. Bhat Food Regulatory Manager

Ryan Fernandes Brand Franchise Manager

Rohit Dogra Manager, Milk And Nutrition

Rashmi Gupta Manager, Maggi

Himanshu Manglik Communications Manager

A special thanks to Sudip Bandyopadhyay (Creative Consultant), who is handling the

advertising for Milk Products and Nutrition division of Nestle India, on behalf of Ogilvy &

Mather.

BARNALI BERA Roll No:511019429

Specialization :- Marketing

CERTIFICATE

This is to certify that the Project report titled “A STUDY ON NESTLE.”

is submitted to the college by the candidate Barnali Bera bearing

Roll.No:511019429 is the of bonafide research carried out by the candidate

under my supervision in subject ‘Marketing Management’

Signature External

Rohit Khemka

Contents

Executive Summary 1

History of Nestle 2

Milk Products and Nutrition 3

• Introduction

• Analysis of 4P’s of this Division

Beverages 19

• Introduction

• Analysis of 4P’s of this Division

Prepared Dishes and Cooking Aids 34

• Introduction

• Analysis of 4P’s of this Division

Chocolates & Confectionery 44

• Introduction

• Analysis of 4P’s of this segment

Conclusions & SWOT Analysis 61

References 64

Executive Summary Our project was aimed at studying the marketing mix of products

marketed by Nestlé India there by understanding the concept of 4P’s

better. It details how Nestle has marketed its product in India. Nestlé

India has divided its product portfolio into four different segments,

namely-

Milk Products and Nutrition,

Chocolates and Confectionery,

Beverages, and

Maggi (noodles, soups and ketchups).

Separate marketing mixes have been developed for these four different

segments. The pricing, promotion techniques used and place of

marketing and of course the product of one segment are very different

from products of another segment. Therefore, we also decided to divide

our project coverage into four different sections to cover the segments

separately. Besides this

Apart from the secondary research from newspapers, journals and the

inter-net, we have interacted with some officials concerned with these

things, present at Nestlé India, Gurgaon. All this has helped us in our

extensive study of the marketing mix of various Nestlé India products.

2

History of Nestlé

Nestlé S.A. is a multinational packaged food company founded and

headquartered in Vevey, Switzerland, and listed on the SWX Swiss

Exchange with a turnover of over 87 billion Swiss francs. It originated

in a 1905 merger of the Anglo-Swiss Milk Company for milk products

established in 1866 by the Page Brothers in Cham, Switzerland, and the

Farine Lactée Henri Nestlé Company set up in 1866 by Henri Nestlé to

provide an infant food product. The two world wars both affected

growth: during the first, dried milk was widely used but the second war

caused profits to drop by around 70%. However, sales of the instant

coffee Nescafé were boosted by the US military. After the wars, growth

was stimulated by acquisitions expanding its range and taking control of

several well known brands, so they now include Maggi, Thomy and

Nescafé that are known globally. It is the world's largest food company,

with Kraft Foods being second.

Nestlé India is a subsidiary of Nestlé S.A. Nestlé India manufactures

products of truly international quality under internationally famous

brand names such as Nescafé, Maggi, Rice Mania, Milkybar, Milo, Kit

Kat, Munch, Bar-One, Milkmaid and Nestea.

3

4

Milk Products and Nutrition

Nestlé India has a wide portfolio for Milk Products and Nutrition. It

includes-

Nestlé has a very clear Charter of ethics and responsible behaviour in

selling infant nutrition products. Nestlé India follows this Charter and

also complies with The Infant Milk Substitutes, Feeding Bottles and

Infant Foods (Regulation of Production, Supply and Distribution) Act,

1992 that guides the sale of infant nutrition products in India. Nestlé

India does not advertise its Infant Nutrition products.

NESTLÉ CEREMEAL

It is for children over 2 years of age, to provide them with

NUTRISHAKTI - a nutrient dense formula that has the right quality and

quantity of key nutrients that meet at least 20% of your child's daily

nutrient needs in every serve. It is easy to prepare and takes only 3

minutes to cook. NESTLÉ CEREMEAL with ‘Nutrishakti' benefits from

the extensive Research and Development efforts and expertise of the

Nestlé Group.

Nestle Ceramel Nestle Everyday Daily Whitener

Nestle Everyday Ghee Nestle B-Activ Probiotic Dahi

Nestle Milkmaid Nestle Set Dahi

5

NESTLÉ CEREMEAL Wheat Daliya contains the goodness of wheat

with the added benefits of Vitamins and Minerals from ‘Nutrishakti'.

NESTLÉ CEREMEAL Multi grain Daliya contains rice and ragi apart

from wheat with the added benefits of Vitamins and Minerals from

‘Nutrishakti'. NESTLÉ CEREMEAL is available in select outlets in the

markets in East and South India.

NESTLÉ EVERYDAY DAIRY WHITENER

It is a creamy Dairy Whitener, which is specially made to add a rich,

smooth taste to your tea. NESTLÉ EVERYDAY Dairy Whitener was

launched in India in 1986 and this innovative product created a separate

category of Dairy Whiteners in India

NESTLE EVERYDAY PURE GHEE

It is 100% Shudh [pure] Ghee which is untouched by hand and

hygienically packed.

NESTLÉ CURDS

It is 100% fresh and natural, just like homemade. It is made from high

quality pasteurised toned milk. The Cultures in NESTLÉ Curds are good

for digestion and for a healthy, active life.

NESTLÉ Curds is available in Chennai and Banglore.

NESTLÉ MILKMAID

It is Partly Skimmed Sweetened Condensed Milk. NESTLÉ

MILKMAID is a versatile product and excellent as a dessert ingredient.

Lip-smacking desserts can be whipped up in the shortest possible time.

6

NESTLÉ MILKMAID is a globally recognized and popular brand of

Nestlé. It has been available in India ever since the Company first

started importing and selling its products over 90 years ago.

NESTLÉ SET DAHI

It is 100% Fresh and Natural and is made from fresh, high quality

pasteurised toned milk. It has all the goodness of natural Calcium and

the Cultures used in Nestlé Set Dahi help improve digestion. NESTLÉ

Set Dahi is available in all the metros.

NESTLÉ FRUIT 'N DAHI

It is a delicious innovation that combines the goodness of Dahi and the

nutrition and taste of real fruits.

NESTLÉ Fruit 'N Dahi is available in all metros in Mango and

Strawberry variants.

NESTLÉ JEERA RAITA

It is delicious and has all the goodness of Dahi and Jeera. It is made

from double toned milk and has a low fat content. NESTLÉ Jeera Raita

is also extremely versatile. You can use it as the base to prepare your

own favorite Raita, simply by adding vegetables, fruits or spices of your

choice.NESTLÉ Jeera Raita is available in Delhi.

NESTLÉ MILK

Nestlé has over 135 years of dairy expertise and NESTLÉ Milk ensures

high quality and safety. NESTLÉ Milk goes through Ultra Heat

Treatment to provide bacteria-free milk to its consumers. The product

also goes through stringent quality checks and can be consumed straight

7

from the pack as no boiling is required. The sealed pack of NESTLÉ

Milk has a shelf life of 120 days without refrigeration. However, once

opened, it must be refrigerated. The packaging is tamper-proof.

NESTLÉ Milk is available in all metros.

NESTLÉ SLIM MILK

Nestlé has over 135 years of dairy expertise and NESTLÉ Slim Milk

ensures high quality and safety. NESTLÉ Slim Milk has a fat content of

less than 0.5%. NESTLÉ Slim Milk goes through Ultra Heat Treatment

to provide bacteria-free milk to its consumers. The product also goes

through stringent quality checks and can be consumed straight from the

pack as no boiling is required. The sealed pack of NESTLÉ Slim Milk

has a shelf life of 120 days without refrigeration. However, once opened,

it must be refrigerated. The packaging is tamper-evident.

NESTLÉ Slim Milk is available in all metros.

8

Analysis of the 4Ps for this

Division

Product Mix

“The essence of all nestle milk products, particularly those targeted

towards infants remain same, irrespective of all the cultural nuances.

So, our strategy remains more or less consistent in India as compared to

rest of the world”, remarks Rohit Dogra, Brand Manager, Milk and

Nutrients, Nestle.

Nestle is the world’s largest dairy, with an annual turnover of more than

U.S. 8billion$. So they understand the dairy business better than anyone

else. When they operate in India, the focus is to put to use their vast

expertise and knowledge in the diversified domestic market. However,

the task is not uphill because their products address all basic needs of

human beings.

“There is a lot of science that goes while we make our products”,

explains Mr. Dogra.

This is particularly because of the sensitivity of the matter involved in

manufacturing and delivering perishable consumption products. Any

margin of error could spell doom for the company’s fortunes. So there

comes a lot of responsibility while dealing in such products.

Another sensitive area of concern is that a major chunk of its

products cater to infants and due to perceived risks involved (like

unwarranted objections by certain segments of the public, risk of

depreciation in quality due to storage problems or transportation

problems, etc.), the challenge is enormous for the company.

9

Nestle realizes the need to constantly add new products to its

portfolios to cater to different market segments. This is in tune with

a natural tendency to constantly innovate.

Over a period of time, we have seen new products being added to its list.

While products like ceramel and milkmaid doing well, in recent times

nestle has come up with products like Lassi, fruit n dahi, etc to cater

unexplored segments of Indian market.

The example of nestle slim milk is a classic, on how it was positioned

and which set benchmarks for others to follow.

The pack of Nestle Slim Milk is being positioned as drink for fitness and

it is mentioned that it is 99.5 per cent fat free. Apart from conveying that

calories are kept in check, the concluding message reinforces the

packaged milk health proposition by saying: "So, don't think twice

before making the switch to a healthier alternative."

Breaking the myth of packaged milk (or for that matter milk on the

whole) being only meant for being 'strong' or to put on weight, the

agency specifically conveys the message of being slim and trim through

milk.

O&M creative consultant, Sudip Bandyopadhyay said, "The brief was to

creative awareness about the brand. There seems to be a tendency of

ignoring milk for putting on weight and also milk in tetra-packs or

packets is being considered as an artificial one. There is also emergence

of low-calorie sweeteners and other products. So the whole idea is to

reinforce milk as an option for providing a refreshing nourishing boost."

Another interesting example is of variants like nestle Fruit n Milk

The company worked on the 'Tasty bhi healthy bhi' proposition to

gain acceptance among both kids and mothers.

10

A relatively new addition has been lassi, a classical case of adapting to

the local Indian flavor.

The company began the test marketing of sweet lassi in Delhi, Haryana

and Punjab.

"With changing lifestyles, there is a growing need for products that

are convenient, tasty and of high quality. In order to cater to such

emerging needs, Nestlé sweet lassi has been developed as a ready-to-

drink product that provides refreshment, nutrition and wellness," the

Chairman and Managing Director, Mr Carlo M. Donati, said in a

statement here.

He said the product has been developed after extensive testing for

consumer preferences and traditional styles of preparation. It is available

in 200-ml packs for Rs 12.

With big players like Amul and Mother Diary still ruling the roosts,

“tetra pack milk is a good way to have a major slice of market share and

go for penetration”, suggests Mr. Dogra.

Lectogen is priced h liye

igher but it has more value additions, the product has been quite a hit

with those who realize that steep prices can justify quality and good

health. This reflects a pricing strategy in which company is charging

higher prices in return for claiming superior value-additions.

Efforts are underway to penetrate products like Milkmaid and

Whitener but people’s stereotype perceptions about them are still major

obstacles.

In the `Milk Products and Nutrition' category, the Company continues to

focus on introducing products that leverage the Nestle Group's Know-

11

how and Research and Development competence. During 2003, the

Company had launched the NESTLE DEVELOPMENTAL

NUTRITION PLAN and CERELAC 123 wheat based weaning food,

which is backed by continuous and ongoing research at the worldwide

Research and Development facilities of the Nestle Group. This was a

major breakthrough in infant feeding. During the third quarter of 2004,

the Company has also launched NESTUM123, which is a rice based

weaning food, to ensure the right eating experience at the right stage of

development for the infant. NESTUM 123 also incorporates Nestle

Group's unique Z-line technology that makes the product easy for the

infant to digest.

Using its knowledge of infant nutrition and local needs, the Company

introduced NESTUM Ragi in the Southern market and LACTOGEN 3

in select geographies, to provide proper nutrition at the appropriate

stage. Also, since India has a high incidence of low birth weight infants',

who require specialized nutrition, the Company utilized its access to the

technology from the Nestle Group to introduce PRE-LACTOGEN.

To sum up, Nestlé’s Product Mix in milk and nutrients category, the

company has been continuing to add new products to its portfolio, which

are in tune with the local flavour, and is likely to do so.

And with its value additions and proven expertise, it continues in its

endeavour to become the market leader in other categories.

“About five years back, India was predominantly a seller’s market

but now there has been a marked difference in the consumers,

psychologically and behaviourally. This awakening of Indian

consumers brings great challenges to us”, Mr. Dogra observes.

12

Price Mix

The high costs of raw materials and processing are a cause for concern.

However, The Company feels that raw material cost inflation could soon

be brought under control.

The management is implementing programs to control key raw materials

costs. The company recorded very low sales growth of 3.7 per cent last

quarter as sales were by a non-recurring factor of insufficient availability

of milk solids, which restricted production. Due to high prices of solid

milk, the use of the milk was allocated to the most profitable business in

its product. Also sales to canteen store departments (army sales) and

ghee sales were stopped during the period, impacting sales growth. This

shortage has now been resolved and is unlikely to recur in 2H, the

company said.

For the export market, there has been a decline in sales value as there is

a movement from retail packs to bulk packs. Overall, in milks, curd and

powders, the products are priced higher. But the top brass of the

company justify high prices on account of “superior quality”.

In milk segment, nestle is relatively dearer than brands like Amul

and Mother Diary but Mr. Dogra explains that the cooperatives

generally operate on a no-profit margins so they can afford to lower

the prices.

He feels that high prices are more than compensated by greater

value additions. He cites the example of Lactogen, which although

expensive, is still a hit with rural market because of greater benefits

attached.

“Somehow, consumers have to make a trade-off between prices and

quality.” Overall newcomers like Fruit Dahi and Slim Milk are fairly

13

charged, consumers feel. Thus, Nestlé’s pricing strategy is little

influenced by competitive moves but more by promising customers

more value additions.

Place Mix

The company has been very thoughtful about its geographic

segmentation. There are many instances of how some products are

marketed only in specific areas.

NESTLÉ CEREMEAL is available in select outlets in the markets in

East and South India because in other parts of the country, there are still

stereotype conventions about the product.

NESTLÉ Curds is available in Chennai and Bangalore because of

relatively high-anticipated profitability in these regions.

NESTLÉ Set Dahi, NESTLE MILK and SLIM MILK is available in all

the metros and NESTLÉ Jeera Raita is available in Delhi for similar

reasons.

Supply Chain

With increasing market penetration and larger coverage of geographies,

the Company has initiated efforts to ensure that the supply chain and

distribution structure remains efficient. In order to strengthen these

efforts to improve the distribution of Stock Keeping Units (SKU's)

across retail outlets and to improve the quality of sales and consumer

satisfaction, the Company has implemented web related processes to

increase efficiencies in supply chain and order planning.

During the year, the Company also initiated the rationalization of stocks

in order to increase the freshness of stocks available to the consumer.

These initiatives are necessary to maintain the high quality that Nestle

14

Guarantees the consumer. In addition to these, there are efforts on to

create more awareness among wholesalers and retailers to create storage

value and minimize loss of quality or time.

Promotion Mix

Overall, there has been a lot of emphasis on packaging, not only to

safeguard products, but also to create a distinct brand entity.

Nestle India bagged the Best Package Design Award and Portfolio

Registering Highest Sales Growth Award at the second Annual

Indian Dairy Awards presented at the National Milk Seminar 2003

held at Goa on 17 and 18 January.

Hosted by Tetra Pak India, the fourth National Milk Seminar on

Strategic Marketing, organized by the Ministry of Food Processing and

Ministry of Agriculture was focused around Time to Act - Here & Now.

Presentations and panel discussions were held to spotlight on business

opportunities, perspectives of international and national speakers from

within the dairy industry and outside highlighted the areas of successful

government-industry cooperation, business strategy, innovating for

category conversion and upgradation, premium branding, new channel

development, and value branding.

Using the health platform as a proposition

for a milk brand is not an alien concept. But

Ogilvy & Mather Delhi has used the same

USP differently in its new ad campaign for

Nestlé’s Fruit n Milk. The agency recently

released two television commercials for the new brand. Mothers

catching and correcting their children when they are up to mischief is

quite common. Of course kids being kids love having fun even if it

15

borders on what their mothers have forbidden them to do. Moms know

this and have a habit of keeping tabs on their little ones.

Using this mother-child peculiarity as a key, the agency worked on the

'Tasty bhi healthy bhi' proposition to gain acceptance among both kids

and mothers.

Says O&M associate creative director Sudip Bandyopadhyay, “There

are these do’s sand don’ts for kids. Mothers have their eyes on kids. We

have taken situations, where kids normally get caught. But when

mothers find children sheepishly having Nestle Fruit n Milk, they don’t

find it to be a problem. Instead, they have an expression of acceptance

for this.”

The first commercial has two mothers looking for their children. They

anticipate them to be on the terrace and up to - as you guessed right -

some mischief. As their kids see them approaching, they hide

something. After a fair deal of urging, they reveal to their mothers what

they are concealing: a pack of Nestlé’s new ready to drink milk brand.

And their mothers, with a sigh of relief, say this is allowed. The frame

then cuts to Nestlé’s new product and positioning statement.

The second commercial shows an in-charge of a boarding school

catching students in a similar situation with a torch. And the kids face a

similar outcome with their headmaster condoning their sipping on their

Fruit n Milk.

“The campaign is for the 8-15 age-group. We have tried not only a fresh

angle from the taste and health proposition but also from the new

product launch perspective. We came up with this, when mothers says

'yeh to allowed hai.' This has been conveyed through the surprise

element. Not only to catch kids but also to empathise with mothers,”

says Bandyopadhyay.

16

The commercials have been directed by Red Ice’s Koushik Sarkar. The

campaign has been extended to outdoor campaign has rolled out

nationally.

One major issue is that Nestlé India does not advertise it’s Infant

Nutrition products due to legal obligations.

So, quality considerations drive sales volumes in these segments.

Nestle India launched a new print campaign for its packaged milk brand

Nestle Slim Milk. Created by Ogilvy & Mather, the campaign focused

on propagating milk as a proposition for staying healthy and trim with a

stylish presentation of the pack amidst a yellow background. The

campaign, released mainly in magazines, primarily targeted the socio-

economic class A. Breaking the myth of packaged milk (or for that

matter milk on the whole) being only meant for being 'strong' or to put

on weight, the agency specifically conveys the message of being slim

and trim through milk. O&M creative consultant, Sudip Bandyopadhyay

said, "The brief was to creative awareness about the brand. There seems

to be a tendency of ignoring milk for putting on weight and also milk in

tetra-packs or packets is being considered as an artificial one. There is

also emergence of low-calorie sweeteners and other products. So the

whole idea is to reinforce milk as an option for providing a refreshing

nourishing boost."

The pack of Nestle Slim Milk is being positioned as drink for fitness

and it is mentioned that it is 99.5 per cent fat free. Apart from

conveying that calories are kept in check, the concluding message

reinforces the packaged milk health proposition by saying: "So, don't

think twice before making the switch to a healthier alternative."

"The whole presentation revolves around first glance, which should

immediately strike the slim proposition. That's why the pack is

17

shown to be curved (portraying a body with slim waist) in the

centre. Instead of using blue colour, we have deliberately chosen

yellow colour in the background," adds Bandyopadhyay.

Apart from the print campaign, the agency also worked on outdoor

advertising.. Nestle, which had launched ready-to-drink milk market

with its Fruit n Milk brand in mango and strawberry flavours earlier, is

sourcing its Slim Milk and Fruit n Milk from Dynamix Dairy Industries.

“In addition, other promotional tools like consumer contact programs,

exchanges with medical personnel and a lot of ground work is

involved”, informs Mr. Dogra.

Earlier, Nestle only talked to kids but there is an 'inclusive

audience' that is also being spoken to, these days and that is the

mothers, as at the end of the day it is the mothers that are the

buyers of the products. So the brand though specifically targeted at

kids 'has' to speak to the mother too," says one industry analyst.

Against Competition

Perhaps the greatest challenge to Nestle comes from cooperatives like

Amul and Mother Diary. Unfortunately for Nestle, it has been unable to

be at the top of the ladder, with these domestic players still ruling the

roost. Mr. Dogra acknowledged this and admitted that both these

cooperatives have extremely efficient operations and a very good

marketing set-up. However he points out to the fact that since these

cooperatives generally operate on low/no profit margins, they enjoy

higher sales volumes due to price slashes.

Another interesting point he raised was that these cooperatives have

been clever enough to manipulate food laws in the country, which

puts them in an advantageous position.

18

In this portfolio, Nestle faces stiff competition in Milk Powders due to

availability of competitive and economical substitutes as illustrated

below

MILK POWDER

Sr. Nestle’s Product Indian Substitute

01. Milk Maid Amul

02. Nespre Milkcare

05. Lactoz Amulya

06. Everyday Sapana

07. Cerelac Indana

08. Neslam ......

09. L.P.F ......

Perhaps, a major factor, which is a roadblock to the company’s success,

has been the “foreigner tag”. Among certain groups, nestle is still some

“foreign corporation which is here to take away Indian wealth”.

19

20

Nestlé Beverages

The portfolio of beverages segment of Nestlé is not so broad, still so

strong as to make its presence important for Nestlé’s overall success.

It includes some popular brands by Nestlé-

It’s not the number of brands in beverages segment of Nestlé that makes

it attractive, but the market share that they possess. Beverages account

for 38% of the company's turnover and Nestlé is a market leader in

instant coffee with its Nescafé and Sunrise brands. Nestlé Milo also has

a strong presence in the market.

NESCAFÉ CLASSIC

It is a 100% Pure Instant Coffee. It has the unmistakable taste of 100%

pure coffee and is made from carefully selected coffee beans picked

from the finest plantations, blended and roasted to perfection. 100%

coffee…100% pleasure….

The beginnings of Nescafé can be traced all the way back to 1930, when

the Brazilian government first approached Nestlé.

Nescafé Classic

Nescafé Sunrise

l l

21

In 1937, after eight years of work, scientists at Nestlé's research

laboratory in Vevey perfected a powdered coffee product that was

commercially introduced in Switzerland, on April 1st, 1938 under the

brand name Nescafé. Nescafé - a combination of Nestlé and café.

It became so popular during World War II that for one full year the

entire output of the Nescafé plant in the United States (more than 1

million cases) was reserved for military use only. By the 1950s, coffee

had become the beverage of choice for teenagers, who were flocking to

coffee houses to hear the new rock 'n' roll music. Since then, Nescafé

has become one of the world's best-known brands. With more than 3,000

cups consumed every second, Nescafé is by far the world's leading

coffee brand. In India, Nescafé was introduced in 1964.

NESCAFÉ SUNRISE

It is an Instant Coffee-Chicory mixture made from blends of Coffee and

Chicory. Coffee 70% and Chicory 30%.

The secret of great taste lies in the blend. NESCAFÉ SUNRISE

PREMIUM is a blend containing plantation beans to give you an

incomparable experience.

This unique blend of Coffee & Chicory was introduced in Indian market

in 1980s with various variations- Nescafé Sunrise Premium, Sunrise

Extra, etc. sunrise Extra has more Chicory in it (40%). Thus it tastes

even stronger.

NESTLÉ MILO

It is a contemporary, brown health beverage with a delicious chocolaty

taste.

22

1 in 6 cups of chocolate beverage consumed in the world today is

NESTLÉ MILO.

In India Nestlé Milo was introduced in 1996. It’s a combination of

health and taste. It has essentials vitamins also and it gives you extra

winning energy. Now it is available in different tastes also. Latest in the

series is the Badam Shakti flavour.

23

Analysis of the 4Ps of this

Division

Product Mix

“To be successful in this consumer era, a company needs to do anything

and everything as per the wants of the consumers.” This much evident

fact provides the basis for the success mantra of nestlé.

What sets Nestlé apart from its competitors is its ability to reinvent and

innovate. The beverages segment of nestlé has always followed the same

strategy, i.e., innovation and renovation. It has conducted time-to-time

surveys to find out what the potential consumers desire and expect from

them and then, from adding those features to repositioning and

reintroducing, it has left no stone unturned to satisfy its consumers.

The Example of Nescafé

Science has always been a constant input for nestlé. Right from the

invention of Nescafé to the regular improvements, research &

development has been the basis of success.

Before the invention of Nescafé in 1938, the need for a soluble coffee

was felt among the consumers. This need was realized by nestlé & after

eight years of research Nescafé was finally invented. This was not the

end. Overtime, there have been so many innovations and improvements.

From making Nescafé by using 100% pure roast coffee beans to the

birth of the granule in1967 to capture more aroma and flavours from

every single coffee bean, to the ’full aroma’ process which was invented

to make the unique quality and character of Nescafé even better in 1994.

24

Talking particularly about India, from time-to-time, surveys have

been done to judge the consumer wants. Introduction of new products,

renovation, and repositioning- everything has been done accordingly.

After introduction of Nescafé Classic in India in 1964, as the need was

felt, company came out with a mixture of coffee & chicory, Nescafé

Sunrise. Nestlé has come out with new variations of its products,

Nescafé Sunrise Extra, Nescafé 3-in-1 readimix, to name a few.

The new Nescafé 3-in-1 coffee readimix is actually a relaunch. Its

previous attempt to instant coffee mix five years ago had come a

cropper. Today Nescafé coffees are available to suit all tastes.

In short, all its success is because of its strategy to make the product,

as the consumers want it to be. It is easily one of Nestlé’s star

performers.

The Example of Nestlé Milo

In India Nestlé Milo was introduced in 1996. With its launch, nestlé

was faced with the challenge of presenting Nestlé Milo as a worthy

competitor in the Indian energy drink market that was dominated

by Cadbury's Bournvita and SmithKline Beecham's Boost. So it was

important to bring Milo as something different from others.

A research campaign was launched to analyze consumer needs. The

research following the campaign revealed the need for Milo to be

perceived as a drink with 2 strong deliverables- Energy and Taste. This

was just the beginning. Nestlé Milo was so many times repositioned,

reintroduced in the market, which clearly reveals the Nestlé’s

strategy for Milo, i.e., aggressive and alive. Milo was also relaunched

in Dec 2001.

On the other hand, the company has been offloading products too.

Nestlé India was in the process of withdrawing its chocolate health drink

25

brand Milo from southern markets. The brand did not stand up to the

company's expectations during the last several years; there were

indications that it might be phased out.

In fact, Nestlé India had also begun rationalizing its product portfolio.

Once again in the near future, Milo is being relaunched by re-

energizing it with 'Badam Shakti'.

Both examples clearly suggest the Nestlé’s product mix and the secret

behind its success. The product mix started before the invention of the

product and continued without any end. Even today the renovations are

on.

Price Mix

The secret behind the price mix of Nestlé is the scale of production. In

the beginning, it may have been thought that the products are being

priced higher, but as the market segments increased and economies of

scale were reached, no one could complain about Nestlé’s prices at least

in beverages.

Nestlé has taken the Indian conditions in mind while deciding its price

mix. Initially when Nescafé was launched, it was considered quite

expensive. However, Nestlé has focused on expanding the domestic

market share through price cuts and product repositioning. It is

therefore no surprise that today Nestlé’s Nescafé dominates the premium

instant coffee segment. Nestlé Milo also justifies its price. Its pack of

500-gms priced at Rs.96, which can in no way be dissatisfying and is

comparable with other brands.

Another example is of Nestlé 3-in-1 readimix, which is priced at Rs.5

per sachet, which is definitely justified keeping the benefits it gives in

mind. Nestlé has so many outlets in India now to compete with Barista

26

and Café Coffee Day. There is a clear difference between the prices of

these coffee shops and Nestlé. Nestlé is a winner by a great margin.

Where, these coffee shops are affordable to a very small section of

market, Nestlé targets at a far greater market segment in term of its

prices.

To conclude, one cannot hold grudges about prices of Nestlé

beverages. Nestlé has surely taken the spending capability of the

domestic market in view.

Place Mix

As regards the place, they are available on almost all the outlets that are

selling such products.

Nescafé's USP is its easy availability. One could find it in any

departmental store big or small. It is also available at all small shops in

an area. Nestlé has been using its vast distribution network to push into

the market its chocolate-and coffee formulation Choc Café and Frappe

(both under the Nescafé umbrella). Easy availability is one of the

factors for Nestlé having a 44% share in the coffee market.

About Sunrise, Milo, or, Nescafé 3-in-1, all are easily available at the

shops near you. With the opening of its own outlets to compete with

coffee shops, the distribution of the beverage segment of Nestlé has

become even stronger. The location of these outlets make then even

more important. Distribution is definitely a strong point for Nestlé

beverages.

Promotion Mix

The rise in competition has made the promotion mix even more

important. A company needs to show how its products are different from

27

what is being provided by its competitors. Nestlé beverages have done

well in this regard also. From TV advertisements to sponsoring TV

programmes, events like MTV Youth Icon of the Year 2005and even

movies like ‘Koi Mil Gaya’, it has done everything to woo the

customers.

The Case of NESCAFÉ

Till a few years ago, life with Nescafé was exotic. You could enjoy the

aroma of the dark coffee beans, feel the nip in the air, overcome hurdles,

win acclaim, bond with friends and peers with laptops, as the catchy

Western jingle played in your mind. Remember, “The taste that gets

you started up...”? This was how the Nescafé was promoted in the

beginning. While talking about the ads, lets look at an interesting fact:

Let's watch out the Top 5 Coffee brands advertised on TV during the last

three quarters of 2008.

This table is a proof of the aggressive advertising adopted by Nestlé.

28

One of the most memorable and popular campaigns of all times is

the ‘Open Up’ advertisement of Nestlé.

One thing, the world over, which helps people to take time out, to listen

to each other and to open up is a cup of coffee. "Open Up" is the global

campaign for Nescafé to celebrate the part that coffee plays in people’s

lives.

To capture the enormous diversity of experiences and emotions

associated with coffee drinking the commercials were shot, over several

months, all over the world. And they will also be seen worldwide.

The noticeable difference between Nescafé's old campaigns and the

latest arranged marriage advert (and also the earlier train ad, featuring

VJ Gaurav) is the latter's bid to familiarise itself to the Indian middle

class. This is evident from the subject of the story, which is spun around

the most common of all cultural aspects of the Indian society – an

arranged marriage.

It's also apparent that Nestlé and McCann-Erickson's

choice of protagonists – actors Kashish (Aamna

Shariff) and Sujal (Rajeev Khandelwal) from STAR

Plus' popular serial 'Kahin To Hoga' – was driven by

the single objective of making the brand popular with the masses. The

serial is among the top four serials on STAR and even after a run of one

year, still enjoys a TVR above 10.

Clearly, with this particular ad, Nescafé is making

a very conscious effort to bond with the masses.

Lets look at the ad. The 30-second ad by McCann-

Erickson opens with the prospective groom and his

parents coming to see the girl. With an objective to get

29

familiar with each other, the boy and the girl step out into to garden.

Noticing that neither of the two is able to initiate a conversation, the

concerned parents wonder how to shake them up. “Arrey inhe jagao,”

(Wake them up) says the father of the girl. And, Nescafé is served to the

couple. With just a few sips, the initial awkwardness, quite surprisingly,

disappears. What follows is a chat with an allusion to movie titles. So

when the boy asks, “Toh Hum saath saath hain?” (So, are we together?),

the girl replies, “Qayamat se qayamat tak.” (From one apocalypse to

another.) The ad ends with the super “Jagao, Nescafé pilao.” (Arouse

them by serving Nescafé.)

The creative and the one before that were decided after Nestlé told

McCann-Erickson that the FMCG major was to expand the market. So,

it was time for a makeover. And, drinking Nescafé had to become a

relatable experience for the masses. If that literally meant repositioning

Nescafé, so be it.

With this advert and the one before (the train ad), the once-elitist

Nescafé has begun talking the language of the masses. In the train ad,

for example, the tag line, voice-over, the train attendant, and the model

all looked and sounded Indian. Except for the train and the location,

which definitely looked 'phoren'. Perhaps, the only traces of aspiration.

But then, Nestlé's attempt to include Nescafé in the Indian every-day

life seems justified since the promise of good times is firmly in the

territory of urban, hip coffee hubs – Barista and Coffee Cafe Day

these days.

In words of Mr. Prasoon Joshi, regional CD, South & South East

Asia, McCann-Erickson, “While we are trying to make Nescafé a

regular feature in the lives of many, we are also giving a very specific

reason for that. Nescafé stimulates the mind, relieves mental fatigue; it

30

is a very invigorating experience. And that's what precisely

differentiates coffee drinking from tea.”

Besides this Nestlé regularly comes up with various promotional offers

like free jars, extra quantity for the same price etc.

Talking about the packaging, Nescafé’s come a long way since 1938.

However their logo and packaging has changed little over the years.

They continue to use the coffee beans and a red coffee mug on their

packaging. The use of colours and the simple elegance of the package

appeal to all. Nescafé is also available in a variety of sizes with the

option of easy to store sachets and pouches to the airtight and reusable

jars.

The Case of NESTLÉ MILO

With the launch of Milo, Nestlé was faced with the challenge of

presenting Milo as a worthy competitor in the Indian energy drink

market that was dominated by Cadbury's Bournvita and

SmithKline Beecham's Boost. This work was handed over to Mudra.

The agency had to begin from zilch, right from gaining customer

confidence to building its brand image. This is how Mudra and Nestlé

handled all this together.

'Milo' the energy drink Nestléd into the Indian

market in 1996. The responsibility of launching the

drink in a market dominated by time tested Bournvita

and Boost was no easy task for Mudra. Being the fifth

player in the brown beverage market, the drink was up

against Bournvita, which had an enviable market share

of 40%, and SmithKline Beecham, a strong contender, especially in the

south.

31

Using the consumer insight that mothers are driven by a need to support

their sons' hard work and help them succeed when under pressure, the

agency launched an impressive ad campaign. The research following the

campaign revealed the need for Milo to be perceived as a drink with 2

strong deliverables- Energy and Taste. Thus a strategy was adopted

wherein the agency targeted children belonging to the age group of

7-12 years and through them their mothers. The strategy worked and

led to a 40% volume growth, with the market share growing to 8.8%.

After establishing Milo as the world's number one energy drink and its

taste benefits, the attention shifted to presenting its emotional benefits

too. The focus was now on revamping the brand image from being a

tasty energy drink to one that provided extra energy to 'win'.

The agency once again came up with commercials addressed to children

as the target audience and mothers as the secondary audience. The

campaign proved to be successful with the drink emerging as the No. 2

brand in 3 out of 4 zones, and its market share growing to an impressive

11.4%.

Not satisfied, the agency undertook another research, which revealed

two issues that needed to be addressed immediately. Firstly the pester

power, which in this category was not very high and secondly, the fact

that Milo' s brand promise of winning was unfortunately being perceived

as an advertising/ marketing claim. Hence they embarked into yet

another campaign, this time with the intention of improving the brand

image by overcoming a mother's apprehensions and getting her to

subscribe to the brand promise. The brand was thus re-launched with the

same promise but with a strong support in the form of 'extra B-vitamins'

in the product.

32

This re-launch which took place in Dec 2001 proved beneficial as it

boost the drink's market share to 13% making it the leading brand in the

East, No. 2 brand in the north and west and No. 3 brand in the south..

Again in 2004, Nestlé India repositioned Milo. In Milo’s new

avataar, Nestlé planned to define and claim ownership of the ‘school

going kids’ category, more precisely the class 7 to class 11 segment,

rather than the broad based ‘kids’ segment. This, sources add, will

be done by sharpening Milo’s positioning as a drink for a school

going kid who’s a champion in mind and body. That time, Nestlé

India had been aiming to increase penetration by following a multi-

pronged strategy of expanding the product basket, increasing sales

turnover by reducing the shelf life of products and lowering price points

by making smaller packs. This was decided when market leader Glaxo

SmithKline Beecham Consumer Healthcare (GSK), repositioned the

Horlicks brand from health drink to a fun drink for young people.

Apart from seeking a new positioning, and thereby a new target

audience, Milo’s relaunch included a new packaging, new stock

keeping units (SKUs) at lower price points and, for the first time

new flavours as well. The product was launched in a flat-bottomed

Stabilo pouch pack instead of its current cardboard pack. The relaunch

of Milo, which has otherwise kept a low-key profile, was also supported

by an aggressive media campaign.

These were just some of the promotion techniques adopted by Nestlé

Milo. Milo has always included gifts with it to attract its young

customers. And finally, here is the latest advancement in this row:

Nestlé’s Milo with 'Badam Shakti'

Nestlé is relaunching its chocolate health food drink Milo by re-

energising it with 'Badam Shakti'. According to company sources, Milo

33

is all set to get a new lease of life with a new packaging, formulation

and a distinct positioning. Currently, Milo is available in a SKU of

500gm priced at Rs 96. By giving Milo a new distinct local positioning

and introducing the brand in convenient sachets at lower price

point, it is clearly moving away from being a very urban-focused

player and targeting newer markets and driving rural demand.

34

35

Prepared Dishes & Cooking

Aids

(Maggi)

“What Xerox is to photocopier and Colgate to toothpaste,

Maggi is to noodles in India”

As clearly visible from the previous page Maggi’s culinary portfolio is

quite diversified, offering different varieties of prepared food and dishes

ranging from soups to sauces from noodles to taste enhancers. But the

prime thing which accounts for a large part of Maggi’s revenue is Maggi

noodles.

Maggi Noodles & Rice Mania

Maggi Vegetable Atta noodles

Maggi soups

Maggi sauces and ketchups

Maggi magic cubes

36

Analysis of the 4Ps of this

Division

Product Mix

Nestle has a lot of products under its brand MAGGI. Some

of them are :

• Maggi noodles

• Maggi vegetable Atta noodles

• Maggi soups

• Maggi sauces and ketchups

• Maggi magic cubes

MAGGI 2-MINUTE NOODLES

Maggi noodles were launched in 1983 in India. And today is one of the

largest snack food brands in the country and define the Instant Noodles

category in the country. Fast food and maggi are synonymous in India.

It’s a two minute preparation dish. The noodles are wheat flour based.

Other than that the basic ingredients of Maggie noodles are wheat gluten

and guar gum. The vegetable oil fried form of the noodles is available

extensively here in India as the air dried form available across the world

did not do well here in India.

A tastemaker pouch is present in all the packs to add spices etc. thus

adding to the taste of the noodles. The basic contents of a tastemaker are

sugar, mixed spices, onion powder, and edible starch.

In terms of its PLC cycle, this product is perhaps in maturity stage,

with stable prices, peak profits and soaring revenues.

37

Nestle revised the nutrition content of maggi noodles in 2004 keeping in

mind the R.D.A(RECOMMENDED DIETRY ALLOWANCE) of an

normal Indian child (7-9 YEARS). Another factor for this revised

content was the guidelines for nutritive value of Indian food by ICMR

(Indian Council For Medical Research).

This is an excellent example of a responsible company adapting to

changing legal environment and complying with changed norms.

MAGGI noodles are available in 5 types, namely:-

-Vegetable Atta - Masala

-Tomato - Chicken

-Curry

MAGGI VEGETABLE ATTA NOODLES &

RICE MANIA

Considering the changes being faced and the margin trends in the global

market nestle India launched another variation in its noodles category

known by vegetable atta noodle. The main constituent as suggested by

the name is atta in the making of these noodles. This variation was

introduced because in India many people believe Maida as a hinder to

good health and all the noodles made by Maggi before this was of

Maida.

Nestlé India used the Group's extensive Research and Development

expertise to develop MAGGI Vegetable Atta Noodles which contain

whole wheat and real vegetables. A 100 gm pack of MAGGI Vegetable

Atta Noodles provides the goodness of 3 rotis (energy, carbohydrates,

dietary fiber, protein and calcium). “A lot of research has been

undergone before the launch of Atta noodles, and it is believed to be a

38

successful project”, said Rashmi Gupta (Brand Manager, Maggi). This

brings home the point as how a successful company needs to

constantly monitor the changing consumer demands and come out

with new variants repeatedly.

According to the company, the new Maggi variant is targeted at

consumers who want to include health and wellness in their food in a

convenient manner. The company says the product has been developed

to address the concern that children as well as adults lack sufficient fiber

in their diet. The success of Maggi atta noodle has also illustrated

that how all new additions to a company’s portfolio can reap the

benefits of a good brand name.

MAGGI HEALTHY SOUPS

Another product of Maggi is its soups. Nestlé pioneered the dehydrated

soups market in India and was the first to introduce tasty and convenient

packaged soups. Maggi launched soups in India in 1989. The new

MAGGI Healthy Soups have been carefully prepared through the

Research and Development efforts of Nestlé Group and are even more

delicious, quick to prepare, convenient and healthy. As the tag line

“taste bhi, health bhi” suggests the main focus of Maggi is on two things

taste n health of people.

Today there are above ten different variants available in the market, of

these soups such as Tomato, Mixed Vegetable, Mushroom, Chicken, Sweet Corn

Chicken, Hot & Sour Vegetable and the Sanjeevni range.

Maggi soups are examples of product diversification being

specifically targeted at different consumer profiles.

39

SAUCES AND KETCHUPS

Sauces and Ketchups are relished for their high quality and taste and are

considered ‘good value for money' by consumers. MAGGI offers a wide

range of products that appeal to various segments including traditional

ketchups, Indianized sauces and specialty sauces. There are 8 variants in

the MAGGI Sauces range:

MAGGI MAGIC CUBES

Maggi magic cubes are taste enhancers. As the tag line "Chutki bhar

Jadoo!" Suggests these cubes just needed to be sprinkled over the food

items to get the taste. MAGGI MAGIC Cubes are available in two

flavors - Vegetarian Masala and Chicken. Currently these cubes

available in the southern part of India-which reflects the fact that the

company is aware of differences in tastes, preferences brought about by

geographical differentiation.

Price Mix

Noodles

A 50 gram pack is available for Rs. 5.The 100 gm priced at Rs.10. The

bigger packs- the 400 gm, 800 gm & the 7.2 kg pack, are available at a

proportionately lesser price at Rs. 36, 65 & Rs. 550 respectively. If we

take an insight into noodles market we will find that almost all the

products are priced more or less the same. Given below are the list of

products and their prices.

It is testimony to the fact that the industry product life cycle is in

maturity stage and companies can no longer charge higher prices in

the name of differentiation.

40

-Maggi atta noodles and Rice Mania- Rs 15 - Maggi Masala -

Rs 10

-Top Ramen mug noodles - Rs 10 - Wai Wai noodles -

Rs 12

Soups and Ketchups

Sauces and ketchups are priced on the basis of their flavours and

quantity. While all the standard size of the soups are priced at a same

price. The 56 gram pack of soup which serves 4 (each serving =150 ml

approx.) is priced at Rs. 20 (inclusive of taxes) now to gain advantage of

point pricing.

It was previously priced at Rs. 22. Maggi’s main competitor in the soup

category is I.T.C’s brand annapurna knorr soups which have been priced

at Rs.25

Again, prices are kept keeping in mind competitor’s moves.

41

Promotion Mix

Noodles

Extensive promotion through advertisements on TV. The ads have

always featured kids and never a celebrity since the people at Nestle

believe that as long as the celebrity ad is on TV kids want the product &

thereafter it is gone. In ads the kids are shown come back from play or

school asking for Maggi: “Badi gazab ki bhookh lagi, Maggi chahiye

mujhe abhi.” In another advertisement, a kid jumps out of bed and gets

ready for school as soon he knows there is Maggi in Tiffin :Aaj Khane

mein kya hai ?

Large scale promotions are also undertaken at school level:

KG-Nursery Smiley Contests: Here, kids are judged on the basis of

cleanliness, punctuality etc. The kid with maximum smileys at the end

of the stipulated period gets a Maggi Gift Hamper.

Maggi Quiz contests: Interschool Quiz contests are held and the

winners get Maggi bags full of noodles. The audience gets prizes of 1 or

2 100 gram packs of Maggi noodles.

Also do wet sampling in small markets unaware of fast food culture

such as UP or remote North-East.

Garlic flavor of Maggi was also launched in 1998 but did not fair well in

the market and was withdrawn and the old flavor was reintroduced with

the phrase “Sab kuchh pehle Jaisa”or “It’s back.

Nestle choose PRIETY ZINTA as its brand ambassador for Maggi

noodles, keeping her bubbly and childish attitude in mind. She appeared

in the T.V. commercial with some of kids promoting Maggi noodle’s

small pack.

42

Thus Nestle chooses its brand ambassadors carefully keeping in

mind the intended positioning and target market for the product.

With the introduction of Maggi vegetable atta noodles, nestle has done

every thing possible to promote this brand, as the company believes a lot

in this product. This is clearly visible from the following analysis.

The table below shows the Top 5 Brands in Noodles/Pasta category on

Television, along their Advertiser, in the 1st half of 2005.

• Almost the entire advertising share (100%) is contributed by Top

5 brands

• 'Maggi Vegetable Atta Noodles' grabs 50% of the advertising

share in the 1st half of 2005

Soups

The soups have been promoted extensively through TV advertisements.

43

Place Mix

The main pillar on which the palace of Nestle’s revenue stands is easy

and vast availability of its products. As regards the PLACE- Perfect

Location for A Customer Exchange, they are available on almost all

the outlets that are selling such products.

If you visit any departmental store, big or small one thing you can

always be sure of getting is Maggi noodles. It is also available at all

small shops in an area. The vast distribution channels of Nestle Maggi

noodles even acts as one of its successful marketing strategies. The vast

availability of this product to the consumers is one of the factors for

which nestle enjoys an undisputed market share in this category.

44

45

Chocolates & Confectionery Nestlé forayed into chocolates & confectionery in 1990.At the time of

introduction, Nestlé marketed Milky bar and Kit-Kat chocolates in India. In

the confectionery range, it had products like Soothers and Polo. Today, it has

cornered a third share of the chocolate market in the country. The category

contributes 14% to Nestle ‘s turnover. It has expanded its products range to all

segments of the market.

Nestle Milk Chocolate Bar One

Nestle Kit Kat Nestle Munch

Nestle Milkibar Choo Nestle Eclairs

Nestle Acti-V Polo

46

Sales of Product Portfolios

14%

86%

Chocolates andConfectionery

Other Products

MARKET SHARE

34%

63%

3%NestléCadbury’sOthers

47

CHOCOLATES

TABLET COUNT-LINE

WAFER

MILK CHOCOLATE

BAR-ONE KIT-KAT

MUNCH

From the interviews, we learnt that the people at Nestlé acknowledge the

fact that chocolates are an impulse buy. Accordingly, Nestlé India

markets chocolates at affordable prices for various age groups. Nestlé

chocolates are less heat-sensitive compared to the others in the market.

Nestlé has a very clear Charter of ethics and responsible behavior in

selling chocolates and confectionery. It has reinforced the guidelines for

market hygiene for its chocolate brands. The exercise is aimed at

ensuring that storage of its chocolate brands at retail outlets meet with

adequate hygiene standards.

TABLETS CATEGORY

This is the indulging chocolates category. These are block type

chocolates.

MILK CHOCOLATE

This is the new name which ahs been given to the leading milk

chocolate of the country-Milky bar. This chocolate is targeted at

children below 12 years. Milky bar was the chocolate with which Nestlé

entered Indian markets. It has been in the running ever since the

beginning. Milky bar has a very big market in south India. This

chocolate has seen the decline of Cadbury’s Milk-Treat, which was

launched at a lower price but could not match the satisfaction, the taste

which eating a Milky bar gave.

Marketing Project - 49 -

COUNT-LINE CATEGORY

In simple words, these are the caramel chocolates.

BAR-ONE

It is a luscious nougat and caramel with delicious choc layer. Chocolate

for the young people which began its advertising with Aftab Shivdasani

in his teens. The chocolate had a national presence till 2004 but over

time, has been withdrawn and is now aggressively marketed in south

India and east India. The chocolate was re-launched in 2004 but still

could not match up to meet its competitor in this segment, Cadbury’s 5-

Star. This chocolate constantly reminding us that it is the ’Time for

Action’ lost out to ’mera 5-star’.

WAFERS CATEGORY

The category with frozen chocolates over crispy-crunchy wafers.

KIT-KAT

It is one of the most successful brands of the world. In India, it was the

second largest chocolate before the launch of Nestlé Munch. It is the

thin wafer chocolate coming with two fingers and four fingers and a

unique ‘breaking' ritual attached to it. It is targeted at young adults

ageing from 18-24 years. This good-flavoured chocolate always gives us

the message ’Happy ho ja’.

In 1998, Nestlé India had launched a variant of this chocolate-Kit-Kat

Orange. Unfortunately, this variant did not do very well in the market

and was soon withdrawn. Now, the company is planning to launch the

chocolate with new flavours- cumin and 'masala' - both staple spices

used in Indian curry dishes.

Marketing Project - 50 -

MUNCH

Nestlé Munch is a wafer layer covered with delicious choc layer. This

chocolate was launched in India in the last quarter of 1999 and has

become the market leader in its category. It is second only to Cadbury’s

Dairy Milk in the Indian chocolates market. The chocolate is meant for

people aged above 13 years. This chocolate alone accounts for $1million

of Nestlé India’s total revenues. This chocolate gives larger value for

lesser money as ’Munch Maha hota jaaye’ and the product’s taste

assures that ’ab to MUNCHing ruk na paaye’. This is the chocolate

having the highest penetration in the Indian market. The popularity of

the Munch brand cuts across age, town, culture and socio-economic

classes as it says “Mera MUNCH mahaan”.

KID/PLAY CATEGORY

These are the chocolates targeted exclusively at kids.

CHOCO-STICK

It is a relatively new chocolate brand at an affordable price point of only

Rs2. Meant for the children below 12 years; it has a small packaging so

that the parents are also not bothered by their kids’ consumption of

chocolate. Consequently, this chocolate is very famous among the

children especially in south India.

Apart from the above, Nestlé now also markets some of its imported

brands like Quality Street, Lions and After Eight.

Marketing Project - 51 -

SUGAR CONFECTIONERY

All sugar confectionery products are sold under the umbrella brand

Allen's.

The sugar confectionery portfolio consists of-

POLO

It was launched in the Indian market in 1994. It is popularly described as

a ‘Refresh mint'. It is unique in the category – ‘The Mint with the hole'.

A variant of this product, called Polo Saunf was launched in 1997 but it

did not do well in north India. This variant is still sold in other parts of

the country but Polo continues to have a nationwide presence.

ECLAIRS

These are the toffees marketed by Nestlé in competition to the

Cadbury’s Dairy Milk Éclairs. These were introduced in India in 1998.

They come in chocolate, milky bar and coconut flavours.

ACTI-V

It is a herbal throat soother with a unique liquid center with Anticol that

provides effective relief. It is available in Honey Lemon and Menthol

Eucalyptus

SOOTHERS

Soothers help to soothe a dry or a sore throat. These provide soothing

relief from everyday irritations (e.g. caused by excessive talking,

shouting or air conditioning) Eucalyptus & Menthol. These are available

in the following ’interesting’ flavours-

Marketing Project - 52 -

• Blackcurrant

• Honey & Lemon

• Lemon & Lime Liquid Centers

• Orange & Mango Liquid Centers

• Mixed Berry

• Tropical Mandarin

Analysis of the 4Ps of this

Division

Product Mix

As Mr. Ryan Fernandes, Brand Franchise Manager, Chocolates and

Confectionery, Nestlé India put it, "It is the result of an experience of

135 years that Nestlé gives us ‘Good Food, Good Life‘."

Nestlé primarily focuses on the areas where it can be the market

leader.

It believes that one cannot take a competitor head-on where the

latter already has considerable competitive advantage. So the focus

is to explore other areas.

It develops new products like Munch, which are somewhat new in

concept and take Nestlé to the leading position. Nestlé India has its own

local application laboratories to be able to access modern technology

and to check that the chocolates meet certain quality standards. Nestlé

chocolates are more heat-resistant than the other chocolates in the

market.

Marketing Project - 53 -

After the worms controversy involving Cadbury India's chocolate brands

had impacted Nestlé’s sales as well, Mr. Carlos Donati, Chairman

and Managing Director, Nestlé India says, "Any controversy that

shakes the consumer's confidence is not good for the category."

The company having such beliefs ought to have the second highest

market share in the Indian as well as the world chocolates and

confectionery market. It is consistently bridging the gap between its

position and the leader’s position, with the help of its flagship brands

Nestlé Kit-Kat, Nestlé Munch and Nestlé Milk Chocolate (Nestlé Milky

bar).

In India, where even the Nestlé officials agree that chocolates is

synonymous to Cadbury’s, they are focusing more on brands like Nestlé

Munch (in the Wafers Category). With their amazing focus on the

development and production of Munch, which has more crispy and

crunchy wafers than the competitor’s brand, they have been able to

make it the second largest selling chocolate in India.

To stay safe on a bicycle, you need to keep paddling. Similarly, to stay

in business and meet the competition, the company needs continuous

product innovation. In 2004, Nestlé India launched two variants-Milky

bar Choo, Strawberry Choo and Milky bar Starz. Nestlé Milky bar Choo

is a soft chewy fudge with white choc layer that kids love to ‘Choo'.

Nestlé had actually launched these chocolates as a limited editions

chocolate but seeing the commendable response to the launch of these

chocolates, it was decided that Nestlé India should continue marketing

these chocolates.

Now, Nestlé India is planning to launch the Kit-Kat chocolate with

new flavours- cumin and 'masala' - both staple spices used in Indian

curry dishes. The variants being tested are savoury varieties. Other new

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flavours may include saffron and passion fruit. These may be launched

soon in the Indian markets.

Thus like some of the other products, there is a conscious effort to

adapt to local flavour.

Price Mix

Nestlé India markets chocolates and confectionery at low prices with

compromising on neither the quality nor the quantity. According to Mr.

Carlos Donati, Former Chairman and Managing Director, Nestlé

India, "We give more value for lesser price." Here the consumers do not

need to make a trade-off between prices and quality. Nestlé Munch

getting more and more Maha day by day with the same price of only

Rs.5 is a glaring example of this.

Nestlé is increasing the quantity of this chocolate without increasing the

price.

Recently, Nestlé has brought to the market, a Bada Nestlé Munch with

the quantity of four Munches and the price being Rs.19, which is an

economy pack for the consumers as they get more in lesser price than

buying four individual units of the chocolate.

Over the years it has also been analyzed that pricing the chocolates

at rounded figures is the best strategy. Nestlé chocolate Kit-Kat was

priced at Rs.12 for four fingers and at Rs.6 for two fingers. In 2004,

Nestlé decided to lower the prices of these to Rs.10 and Rs.5

respectively. The response was so tremendous that the increase in

sales volume after this price fall compensated for the fall.

When Polo was launched in 1994, it was priced at Rs.3 and over the

years, there has not been much hike in prices as now a slightly bigger

pack is sold for Rs.5 and a smaller pack of Rs.2 is available.

Marketing Project - 55 -

Even today, the focus is on rounded prices such that the customer is just

taking out a coin out of his pocket and gets the chocolaty benefits being

Choco-Stick sold for only Rs.2. This can be managed out of the pocket

money of the child below 12 years of age also.

The focus is also to price the chocolate only a bit lesser than the

competitor because there cannot be a very aggressive price wars in case

of chocolates and confectionery. Bar-one was priced at Rs.5 whereas its

competitor Cadbury’s 5-Star was priced at Rs.6 for the same quantity. In

contrast, although Cadbury’s Milk-Treat, which was priced at Rs.10

whereas Nestlé Milky bar was marketed for Rs.12 for the same quantity,

could not match the latter’s quality and ultimately died out.

The product Nestlé Éclairs gives the consumer the taste of a chocolate at

the price of a toffee bar. In the words of Mr. Ryan Fernandes, Brand

Franchise Manager, Chocolates and Confectionery, Nestlé India,

"These surely offer a chocolate eating experience at a candy price

point."

On the other hand, the management is implementing programs to control

key raw materials costs. The high costs of raw materials and processing

are increasingly becoming a cause of concern. However, The Company

feels that raw material cost inflation could soon be brought under

control.

Place Mix

Nestlé has its own distribution channels and does not use many

intermediaries. After being produced in the factory in Mogha (Punjab),

the chocolates are taken to the Nestlé C.N.S. Workhouse. After this, the

chocolates go to the distributors, who take them to the shops. At some

places in India, Nestlé workforce directly delivers the chocolates and

confectionery products to the shops.

Marketing Project - 56 -

In addition to these, there are efforts on to create more awareness among

wholesalers and retailers to create storage value and minimize loss of

quality or time.

Although Nestlé, at some places, delivers the stock itself, still Nestlé

Munch is the highest penetrated brand in the Indian chocolates and

confectionery market. This chocolate alone, primarily because of its

deep penetration accounts for $1million of Nestlé India’s total revenues.

This brand has a nation wide presence.

Another one of the confectionery items, Nestlé Polo has a nation wide

presence and may be found having equal sales in the mountains as in the

plains.

If some chocolate is not doing well in one geographical boundary, it is

withdrawn from that market and then aggressively sold in the other

markets to maintain the sales. Accordingly, Nestlé Bar-One, which was

withdrawn from north India and west India, is being aggressively sold in

other parts of the country.

When asked from MR. RYAN whether there are any plans to shorten

distribution chains, he replied in the negative.

In a market like India, companies have to forsake some amount of

profit margins but there are less possibilities of shortening the

distribution channels.

Marketing Project - 57 -

Promotion Mix

As quoted by Mr. Ryan Fernandes, Brand Franchise Manager,

Chocolates and Confectionery, Nestlé India, "Chocolates are an

impulse buy. Therefore, we need to make sure that the customer coming

to a confectionery has the impulse to buy them."

Therefore, Nestlé has decided to focus on the promotion of Chocolates

and Confectionery at the point of purchase. Chocolates and

Confectionery items, if beautifully packaged, attract the customers’ eyes

at the point of purchase in a confectionery shop or a general store.

Therefore, officials at Nestlé train the distributors of these items, so

that they further train the shopkeepers so as to window display the

products and arrange them in arrays. This is a classical example of

relationship marketing and system’s approach of management

which focuses attention on a holistic viewpoint.

Even if the customer did not initially have any plan of buy the chocolate,

he may see the attractive packaging and get attracted and has the urge to

buy the chocolate. The small children going to a grocery shop or a

general store move around the shop and find the chocolates and the

Nestlé Éclairs and come back and tell their mothers who are busy

buying the ration, to buy them the chocolates and the other

confectionery items. This is surely targeted more at the children than the

adults. This kind of a display increases the sales of chocolates and other

confectionery items manifold.

Looking at the conventional promotion techniques such as advertising,

among all the chocolates sellers in the market, Nestlé was the topper in

terms of advertisement expenditure. To this, it was said that Nestlé’s

gain is Cadbury’s loss as by increasing the expenditure on flagship

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brands like Munch, Nestlé has been able to take it to the number 2

position.

But, in 2005, the advertising expenditure for television advertisements,

done by Nestlé India was surpassed by Cadburys India Limited.

Although, Nestlé’s advertising expenditure is less than half of that of

Cadburys India Limited, it still is the number 2 chocolates manufacturer

in India.

Nestlé has been able to use its brand ambassadors successfully although

it does not advertise all of its products. Famous Bollywood actress Rani

Mukherjee is the brand ambassador of Nestlé India’s flagship chocolate

brand Munch. In advertisements made by J Walter Thompson, Rani is

spotted donning different characters just to eat more and more of the

irresistible Munch, saying "Ab to Munching Ruk Na Paaye!" Rani

Mukherjee for roped in for bringing the brand recall. The ad film airs

across television channels all over. The same advertisement showing

Rani Mukherjee driving an auto and telling everybody in the village that

the chocolate is getting bigger and bigger, can be seen in different

languages on different television channels. "I am happy that the brand

ambassador Rani Mukherjee complements the popularity of the Munch

brand. Like the brand, her star appeal cuts across age, town, class and

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SEC," the Former Chairman and Managing Director, Mr. Carlos

Donati, once said in a statement.

Famous Bollywood actress Rani Mukherjee is the brand ambassador of

Nestlé India’s flagship chocolate brand Munch. In advertisements made

by J Walter Thompson, Rani is spotted donning different characters just

to eat more and more of the irresistible Munch, saying "Ab to

Munching Ruk Na Paaye!" Rani Mukherjee for roped in for bringing

the brand recall. The ad film airs across television channels all over. The

same advertisement showing Rani Mukherjee driving an auto and telling

everybody in the village that the chocolate is getting bigger and bigger,

can be seen in different languages on different television channels. "I am

happy that the brand ambassador Rani Mukherjee complements the

popularity of the Munch brand. Like the brand, her star appeal cuts

across age, town, class and SEC," the Chairman and Managing

Director, Mr. Carlos Donati, once said in a statement.

For Nestlé Kit-Kat, there is no particular brand ambassador. Over the

years, the advertisements have shown one person teaching the other how

to break the fingers of the chocolate and derive the ultimate pleasure and

telling everybody to "Have a Break and Have a Kit-Kat!" this punch

line was associated with the brand for 47 years. Now, Nestlé has

decided to do away with it and the new punch line says "Kit-Kat kha,

Happy ho ja!" Internationally the punch line for this chocolate is

"Make the most out of your break. "

As seen above, Nestlé does not release television ads or print ads for all

its chocolates and confectionery items. This is how the total

advertisement expenditure on chocolates and confectionery items, made

by Nestlé India is shared among different products.

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When asked about the customizations needed in packaging the

chocolates for Indian markets, Mr. Ryan Fernandes, Brand Franchise

Manager, Chocolates and Confectionery, Nestlé India, that the Indian

market requires that chocolates have a smaller packaging of about 36

grams and even 20grams whereas the same chocolate may be sold

abroad in a packing of 5grams and even 100 grams.

Nestlé chocolates have a more strengthened packaging as compared

to the chocolates of other brands. This ensures that the chocolates reach

the consumer intact and do not break or are spoiled by air, insects,

rodents or any other such factors. Thus, packaging plays the dual role

of promotion and safeguarding products against damage, leakage,

etc.

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Conclusions

Nestlé India has a very wide portfolio of products ranging from Maggi

Hot n Sweet Tomato Sauce to Nestle Fruit n Dahi. Although, Nestlé

does not advertise much about its products in India, still it is the world

market leader in the milk market and Maggi noodles is the product we

have all grown up eating.

On the whole, Nestlé India focuses mainly on the areas where it is a

potential leader. They may not try to replace the leader but surely their

product becomes the second best product in the market. For example,

they do agree that Cadburys is synonymous to chocolates in India and

therefore they did not necessarily try to replace their flagship brand

Cadburys Dairy Milk but have developed a product in the other

chocolates segment and therefore Nestlé Munch is the second best

chocolate in India today as showed by the sales figures.

They have tried to price their products at lesser than the price of the

competitors, for example, Nestlé Bar-One was sold at Rs.5 whereas the

same quantity of its competitor chocolate Cadburys 5-Star was sold at

Rs.6.

In some areas, Nestlé has been able to outperform its competitors and

rather, for products like Maggi noodles, it has no substantial

competitors. When magi noodles came into the market, there were other

players like Top Ramen, whose presence counted but now it makes no

difference to the leader-Maggi.

Anybody looking for a good, refreshing coffee would like to drink a

Nestlé Nescafe coffee and may not even at times give a second thought

to the competitor Bru coffee.

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To conclude the project, following is the SWOT Analysis of Nestle:

Strengths:

* Access to the Nestle Group's proprietary technology/brands, expertise

and the extensive centralised Research and Development facilities under

the General Licence Agreement.

* High quality, safe food products at affordable prices, endorsed by the

Nestle Seal of Guarantee.

* Strong and well differentiated brands with leading market shares.

* Ongoing product innovation and renovation, to convert consumer

insights.

* Well-diversified product portfolio.

* Efficient supply chain.

* Distribution structure that allows wide reach and coverage in the target

markets.

* Capable and committed human resources.

Weakness:

* Exports of coffee to Russia constitute substantial part of overall

exports.

* Complex supply chain configuration.

Threat:

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* Indications of shift in consumer spending towards asset building and

non-food related life style changes, diverting consumer demand for

FMCG products.

* Rising prices of raw materials and fuels.

* Change in fiscal benefits.

Opportunities:

* Potential for expansion in the smaller towns and other geographies.

* Potential for growth through increased penetration.

* Growing trend for `out of home' consumption.

* Leverage Nestle Technology to develop more products that provide

Nutrition, Health and Wellness.

Marketing Project - 64 -

References

www.nestle.com

www.nestle.in

www.indiantelevision.com

www.thehindubusinessline.com

www.business-standard.com

www.agencyfaqs.com

www.domain-b.com

www.brandreporter.com

www.5paisa.com

www.freedomindia.com

www.verybestbabies.com

www.nestle-nutrition.com

www.fnbnews.com

www.icicidirect.com