final draft v4.0

Masters of Business Administration

The American University in Cairo

Nestlé Waters Egypt

Marketing Plan

Group Project

By: Omar El-Attar 800-10-4018

Khaled Fouad

Hady El-Gohary

Ahmed Tarek

Ayman Abourayyan

Supervisor

:

Dr. Amr Kais

Date: 22May, 2011

Table of Content

Executive Summary................................................................................................................ 4

Chapter 1 : Internal Environment...................................................................................... 5

1.1 Mission Statement.................................................................................................................. 5

1.2 Company and Brand Over View.........................................................................................5

1.2.1 Nestlé..................................................................................................................................................... 5

1.2.2 Nestlé Waters.....................................................................................................................................7

1.2.3 Nestlé Waters Egypt........................................................................................................................7

1.3 Products..................................................................................................................................... 7

1.3.1 Nestlé Pure Life..................................................................................................................................7

1.3.2 Nestlé Pure Life Products:............................................................................................................7

1.4 Previous Results......................................................................................................................8

1.5 Channels.................................................................................................................................. 10

Chapter 2 : External Environment...................................................................................11

2.1 Markets.................................................................................................................................... 11

2.2 Competitive Analysis...........................................................................................................12

2.3 Market Forces........................................................................................................................ 14

2.3.1 Demographic Forces.....................................................................................................................14

2.3.2 Economic Forces............................................................................................................................15

2.3.3 Technological Forces....................................................................................................................17

2.3.4 Political–legal Forces....................................................................................................................17

2.3.5 Socio-cultural Forces....................................................................................................................18

2.3.6 Natural Forces.................................................................................................................................19

2.4 SWOT Analysis...................................................................................................................... 20

Chapter 3 : Marketing Plan................................................................................................ 21

3.1 Marketing and Sales Objectives.......................................................................................21

3.1.1 Market Share....................................................................................................................................21

3.1.2 Numeric and weighted handling.............................................................................................22

3.1.3 Sales Volume....................................................................................................................................22

3.1.4 Regional Targets.............................................................................................................................22

3.2 Marketing Strategy.............................................................................................................. 24

3.2.1 Market Segmentation...................................................................................................................24

3.2.2 Target Markets................................................................................................................................26

3.3 Product Strategy................................................................................................................... 27

3.3.1 Product...............................................................................................................................................27

3.3.2 Product Attributes.........................................................................................................................27

3.3.3 Brand Name& Positioning..........................................................................................................28

3.3.4 Packaging...........................................................................................................................................28

3.3.5 Label.................................................................................................................................................... 28

3.3.6 Quality.................................................................................................................................................29

3.3.7 Complimentary products............................................................................................................30

3.4 Price Strategy........................................................................................................................ 31

3.4.1 Proposed Modification to the Coupon System..................................................................31

3.4.2 Annual subscription......................................................................................................................31

3.5 Distribution strategy...........................................................................................................32

3.5.1 Current Distribution Channels.................................................................................................32

3.5.2 Proposed Distribution Strategy...............................................................................................33

3.5.3 Expansion of Water Hubs and Water Shops......................................................................33

3.6 Marketing Communication Strategy..............................................................................36

3.6.1 Advertising........................................................................................................................................36

3.6.2 Direct Marketing............................................................................................................................36

3.6.3 Public Relation................................................................................................................................36

3.6.4 Sales Promotion I (Summer Package)..................................................................................37

3.6.5 Sales Promotion II (Water Catering Service).....................................................................38

Chapter 4 : Implementation &Control............................................................................41

4.1 Action Plan for 2012 & 2013............................................................................................41

4.2 Budgeting................................................................................................................................ 42

4.3 Evaluation and Control.......................................................................................................45

References............................................................................................................................... 46

Executive Summary

The main goal of this project is to create a marketing plan for Nestlé Waters Egypt

for the 5-gallon water bottles. The main focus will be on the business-to-consumer

segment as it presents the bigger portion of Nestlé Waters focus in Egypt. This

project will study the various aspects of the current market in order to maximize

sales by creating more brand loyalty and correspondingly creating a bigger

customer lifetime equity. In addition, newer markets will be analyzed in order to

maximize sales by penetrating newer market segments by offering a more diverse

marketing mix.

The project is divided in to two major sections. The first section studies the business

environment in general of all Nestlé Waters in Egypt, covering the internal and

external factors. This will be followed by a thorough SWOT analysis, which will be

the foundation of the two-year market plan proposed. The second section will

explain the marketing plan by analyzing each element of the marketing mix; the

product, the price, the place, and the promotion.

- 4 -

Chapter 1: Internal Environment

This chapter focuses on the internal environment of Nestlé Waters Egypt. Therefore,

in order to study the environment of Nestlé Waters Egypt in specific, a brief over

view for Nestlé in general is given.

1.1 Mission Statement

Nestlé Waters has the following mission statement:

“As the leading healthy hydration company we passionately

provide healthy solutions to enhance consumers' life”

1.2 Company and Brand Overview

1.2.1 Nestlé

Nestlé is the world’s leading Nutrition, Health and Wellness Company. Wherever the

Company is active, it has been focusing on the concept of shared value, an approach

to business that says that if you want to have a long-term business success, you have

to also create value for society. Nestlé is currently the leading FMCG Company of

Switzerland, and Henri Nestlé established it. Nestlé is serving a worldwide market,

with more than 500 factories in 86 countries comprising almost all continents. This

international and multicultural dynamic thriving is also one of Nestlé’s strengths; its

staff at its home base in Vevey represents a total of 85 different nationalities

working in close collaboration. Nestlé’s product portfolio has more than 6000

- 5 -

brands all over the world serving best to their customers. It offers a wide variety of

products ranging from Chocolates, Baby food, Dairy products, Pet food, Beverages,

Waters and more.

Henri Nestlé used his surname, which means ‘little nest’, in both the company name

and the logotype. The nest, which symbolizes security, family and nourishment, still

plays a central role in Nestlé’s profile. The first product made by Henri Nestlé, a food

for babies who were unable to breastfeed where his first success was a premature

infant who could not tolerate his mother's milk or any of the usual substitutes.

People quickly recognized the value of the new product, after Nestlé's new formula

saved the child's life, and soon, Farine Lactée Henri Nestlé was being sold in much of

Europe.

Nestlé has always been known for its long-term commitment and strong connection

to its economic and social environment. This was manifested primarily by its

contribution to the development of milk-producing regions and the location of

production facilities in rural areas. Subsequently, the Company quickly set to work

developing more complex products to better meet changing consumer needs. Over

time, the Nestlé Group evolved in line with its market and moved progressively from

basic foodstuffs to products with an emphasis on convenience and enjoyment.

Nestlé now focuses on nutrition, health and wellness products. Ever since its

creation, Nestlé has aimed at international markets. Its first product – infant formula

– was on sale in sixteen countries worldwide only six years after its launch. The

Group is now established all over the globe. This is an invaluable window of

opportunity both for the town of Vevey, where the Group has been headquartered

since 1867, and for Switzerland as a whole.

- 6 -

1.2.2 Nestlé Waters

Nestlé Waters is a business-unit of Nestlé that produces and/or distributes

numerous brands of water across the world that are different in their brand names

depending on the region.

1.2.3 Nestlé Waters Egypt

Nestlé Waters Egypt is one of Nestlé Waters subsidiaries around the world; it is the

premium between the bottled water companies in Egypt, offering two brands, which

are Baraka and Nestlé Pure Life.

1.3 Products

1.3.1 Nestlé Pure Life

Nestlé Pure Life is the number one bottled water all over the world, after that comes

Danon Water then Aquafina and Dasani consequently. Nestlé Pure Life started

competing in the Egyptian market in 2002; it’s now offering several product sizes to

serve the different needs of its consumers.

1.3.2 Nestlé Pure Life Products

a) 0.60L Bottle

b) 0.75L Bottle

c) 1.5L Bottle

d) 5-gallon Bottle

- 7 -

1.4 Previous Results

This section reveals some previous results for the bottled water market in Egypt for

the past 3 years. As shown in the below figure, there are at least eight market

players in the bottled water industry. Furthermore, Nestlé has been competing with

Aquafina and Dasani for the past three years.

J/J08 A/S08 O/N08 D/J09 F/M09

A/M09

J/J09 A/S09 O/N09 D/J10 F/M10

A/M10

J/J100%

5%

10%

15%

20%

25%

30%

Market Share - Volume of Sales (litres)

Nestle Aquafina Dasani BarakaAqua Hayat Schweppes Safi

Market Share (2008 to 2010)

The below figure reflects the sales concentration in 2010 for each company

according to the geographical locations. Nestlé, mainly targeted Cairo with 80%

turnover, then came Alexandria with around 17% turnover. From the figure, it can

be clearly observed that Nestlé Waters Egypt does not target the major remaining

areas of Egypt, such as: the Delta, Upper Egypt, or the Canal Zone.

- 8 -

Tot. MarketNestle Aquafina Baraka DasaniSchweppes Safi Aqua Hayat0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Bottled Water Category Turnover per Region (2010)

Cairo Alexandria Delta Egypt* Upper Egypt* Canal Zone

% T

urn

over

1.5 Channels

Nestlé Waters Egypt has three main distribution channels:

a) Traditional trade

Mainly through kiosks, small and large groceries, and supermarkets.

b) Modern trade

Mainly through famous supermarkets and hypermarkets, such as: Metro, Hyper One,

and Carrefour.

c) Out of Home channel

Mainly through hotels, cafes, restaurants, schools, hospitals, etc.…

- 9 -

Chapter 2: External Environment

This chapter covers the external environment that Nestlé pure life faces in the

bottled water market in Egypt.

2.1 Markets

The consumption of bottled water has been increasing consistently over the last

decade, even in countries with excellent tap water quality. However in Egypt, due to

the risk of contamination of tap water, the Egyptian market is shifting towards

buying bottled water.

Nestlé’s Pure Life 5-gallon bottled-water market consists of regular consumers and

businesses. 5-gallon bottled-water has become a lifestyle for many families and

business. For the business-to-consumer market, families, mainly with middle and

high income, are the only segment present. On the other hand, for the business-to-

business market, various business firms are present. Companies regardless of their

sizes are increasingly looking for their employees’ health. 5-gallon-bottled water is

becoming essential in almost every company nowadays.

Geographically speaking, the 5-gallon bottled water market is mainly concentrated

in Cairo, Alexandria, Delta, Sinai, and Red Sea. However, Upper Egypt and the Canal

area mainly rely on tap water.

- 10 -

Nestlé Pure Life is operating only in the Egyptian market. It heavily exists in Cairo

with turnover of 80%, Alexandria 18%, and 2% in the Delta. The top market players

in Egypt in bottled water are Aquafina, Dasani, and Nestlé. Moreover, other

competitors are also present, such as: Aqua, Hayat, Safi, and Schweppes.

2.2 Competitive Analysis

Nestlé Pure Life had the third biggest share of the Egyptian bottled water market in

2010 with market share of 20%. Aquafina, owned by Pepsi, was the market leader

with a market share of 25%and Dasani, owned by Coca Cola, was second with 23%

market share.

Dasani has not yet entered the 5-gallon bottles market in Egypt, which leaves the

competition to Aquafina, Aqua delta, Hayat, and Nestlé pure life. Aquafina bottles are

disposable (one time use) same as Hayat. However, Nestlé pure life & Aqua delta

bottles are using bottles refill technique. Disposable bottles claim that it provide

better sterilization, but Nestlé pure life quality control tends to be the highest

among its competitors (as described later in the product strategy).

However, a recent study conducted by “Egypt Consumer Protection Agency” on

bottled water in Egypt confirmed that there are only 7 brands of 1.5-litre bottles fit

for consumption, and those brands are Aqua, Nestlé, Aquasiwa, Mineral, Dasani,

Siwa, Aquafina, and the 19-litre bottles of Nestlé. The study also found seven other

brands were fraudulently labeled, meaning the ingredients on labels did not match

what was in the water, but said they were still fit for consumption. Those include the

1.5-litre bottles of Baraka, El-Manar, Delta, Hayat, Aquamena, Nahl, and the 19-litre

bottles of Siwa.

Below table provide in-depth competitive analysis between the top bottled water

competitors in Egypt

- 11 -

BrandMarket

ShareLarge sizes features Value added services

Aquafina 25%

Size: 12 liter & 19 liter

Prices 13EGP & 18.5EGP

No delivery services

Alliance with producers of

water dispensers

Using disposable bottles for

better sterilization

Dasani 23% Not Producing

Nestlé 20%

Size: 19 liter

Price: 20EGP

Delivery service: Available


water dispensers

Coupon subscription with

19EGP/bottle

Aqua delta 8%

Size: 19 liter

Price: 18EGP



water dispensers

Coupon subscription with

16EGP/bottle

Hayat 4%

Size: 19 liters, 12 liters, and 6 liters

Price: 20EGP, 12EGP, 5EGP


Using disposable bottles for

better sterilization

- 12 -

2.3 Market Forces

2.3.1 Demographic Forces

a) Population and age structure

Egypt’s population was 80,471,000 in July 2010. The age structure shows that about

33% of the population is between 0-14 years, 62.7% between 15-64 years and only

4.3% are above 65 years. The population has a median age of 24 years old. About

50% of the population are below 20 and 39% are below 15 years old. The above

distribution shows that the Egyptian society is a young society, which could

represent a clear opportunity for bottled water industry since the new generation

could be easily attracted to the bottled water culture than the older generations.

b) Geographical distribution of population

Egypt is a dry country with most of the population accumulated around the Nile and

the Delta regions. About 45% of the population lives in urban cities and only small

percentage of population are living in desert areas. This could represent a threat to

the bottled water industry, since a very high percentage of population is

concentrated in areas where a cheap source of water, which is tap water, is available

from the Nile and its branches.

c) Educational trends

Rates for primary and secondary education have strengthened in Egypt in recent

years. The vast majority of children are in primary schools; however there is a high

rate for dropping out. There are approximately 200,000 primary and secondary

schools with some 10 million students, 13 major universities with more than

500,000 students, and 67 teacher colleges. Efforts are done to force education to the

remaining 7-9% of students who drop out illegally. The higher the educational level

is, the higher the opportunity for the penetration of bottled water industry.

- 13 -

2.3.2 Economic Forces

a) Natural resources

Egypt has groundwater resources that could easily serve the country for the next

century, as stated by Dr. Farouk El-Baz, Egyptian scientist and director of Boston

University’s Center for Space Physics. The big reserve of groundwater in Egypt

represents a great opportunity for bottled water industries to provide a sustainable

supply of healthy and economic hydration.

Distribution of Egypt Water By Source for 2006/2007

b) Income per capita and unemployment

The below table shows the main economic indicators in Egypt for 2010. The low

GDP per capita, high inflation rate and high percentage of population below poverty

line represent big challenges for the bottled water industry in Egypt. Large

segments of the market will not be willing to direct a percentage of their limited

income towards products, which they consider non-essential especially in the light

of availability of free substitution from tap water. In the tight economic conditions,

the intangible health considerations may not be the dominating factor.

- 14 -

GDP $500.9 billion (2010 est.)

GDP growth 5.3% (2010 est.)

GDP per capita $6,200 (PPP) (2010 est.)

Inflation (CPI) 12.8% (2010 est.)

Population below poverty line 20% (2005 est.)

Labor force 26.1 million (2010 est.)

Unemployment 9.7% (2010 est.)

Egypt's Economy

c) Professional business environment

The increasing trend of foreign and local investments in Egypt in the last two

decades has massively increased the number of companies, banks and institutions

that have professional business offices. In such offices, bottled water is the main

source of hydration and hence the demand on bottled water increased

d) Tourism

The Egyptian tourism industry is one of the most important sectors in the economy,

in terms of high employment and incoming foreign currency. Egypt is one of the

best-known touristic countries in the world. It has many constituents of tourism,

mainly historical attractions especially in Cairo, Luxor and Aswan, but it also offers

beaches and other sea activities. About 12 million tourists visit Egypt each year. This

has a considerable effect on the demand on bottled water, since it is the main source

of hydration in touristic places such as hotels, airports and entertainment areas. The

high potential in this sector could be considered as an opportunity for bottled water

industry but its instability due to political and safety considerations could also be a

threat.

- 15 -

e) Competition

The Egyptian market of bottled water industry is characterized by being a free

highly competitive market. There are more than six players in the market with the

maximum market share less than 25%. The fierce competition increases the price

elasticity of demand dramatically and opens the door for a price war.

2.3.3 Technological Forces

The phenomenal change in technology has its effect on all business and on bottled

water industry as well. The effect of technology is clear on the new technologies

associated with product lines for various products such as flavored water, packaging

and bottling techniques and new tap-water filters. The effect of technology has

exceeded the effect on the product-related to another effect on the distribution and

promotion. The tools of the new digital world, such as the Internet and mobile

communications, are now widely used to reach new segments of customers and

create new marketing channels with them

2.3.4 Political–legal Forces

a) Local specifications of bottled water in Egypt

The Egyptian ministry of Health has determined in the specification number “1589”

the local specification of bottled water. All market players should comply with these

specifications or else they will face legal implications, which could affect their image

or get them out of the market completely. In 2007, the ministry of health conducted

an audit, which clarified that some products were not compliant with the

specifications. The concerned companies were highly affected by the results of the

study and some of them got out of the market.

- 16 -

b) Political status

The unclear political future in Egypt before the revolution and the instability after

the revolution have a direct effect on the professional business environment,

tourism and foreign investments; these factors have clear effect on the sales of

bottled water as shown in the economic forces

2.3.5 Socio-cultural Forces

a) Hydration Culture

Unfortunately, most people in Egypt are not much aware of the importance of

hydration to preserve good health. People do not care much to keep their bodies

hydrated especially in hot weather, which Egypt has most of the year. Moreover,

people have high tendency to acquire their hydration from juices and fizzy products

rather than from bottled water. It is a big challenge for the market players in this

industry to work on changing this culture. However, the new increasing segment of

educated Egyptians represents an opportunity for this industry

b) Life Style

Some segments of the Egyptian market are customers with a lifestyle that is

potentially going to fit with heavy consumptions of bottled water. These segments

include athletic people who have higher hydration needs. They also include weight

watchers who have tendency to satisfy their hydration needs without gaining extra

calories. Finally, these segments also include outgoing people who spend long hours

outside their homes without an available source of hydration but bottled water.

c) Social Networks

The exponential increase in number of Egyptians joining social networks, such as

Facebook and Twitter, represents a situation that could be effectively utilized. These

social networks could provide a major platform to reach out to customers in order

to communicate ideas, and in order to spread certain cultures to the market.

- 17 -

d) Social Class

The higher the social class of the customers the higher is their demand on bottled

water products. Social class is a very important factor for segmentation, since it

could play a major role when it comes to the mentality of the customers.

2.3.6 Natural Forces

a) High Kidney Failure rate

Egypt has the highest kidney failure rate in the world, mainly because of the lack of a

reliable source of clean drinkable water. Despite that most Egyptians believe tap

water is contaminated and very unhealthy. However, in many cases they are forced

to use it due to economic implications.

b) Availability of tap-water

In many desert areas and cities away from the Nile, tap water is either not available

or has a bad taste. These areas represent an opportunity due to the increased

demand on bottled water. A good example of this is the high demand on bottled

water in the summer in major attractions in the north coast areas, such as “Marina”.

c) Seasonal Effects

Some seasons have obvious effect on the demand on bottled water. For example, the

demand increases in summer due to the higher needs for hydration. On the other

hand, this demand may decrease in Ramadan due to decrease of demand in

professional working environments, such as companies and banks.

- 18 -

2.4 SWOT AnalysisIn

tern

al

Strength Weaknesses

Strong brand name and

brand positioning.

Vertical Integration (From

raw material to finished product)

Product range capability

(incl. Nestlé Food).

Financial strength

Product/Production

experience.

Availability outside Cairo.

Availability in Kiosks, gyms,

restaurants, and clubs.

Credit policy (traditional

trade)

Exte

rnal

Opportunities Threats

Geographical location

Government subsidy (elec.,

gas, etc.)

Labor cost (exports)

Potential market growth

outside Cairo.

New residential areas in

Cairo and Alex.

Perception of tap water.

Sparkling and flavored

water.

Ramadan in summer.

Increased consumption per

Unexpected regulations and

expectations by consumer protection

agencies and ministry of health.

Global and local deals of

exclusivity for hotels & restaurants

Storage conditions at

traditional trade.

Advertisement costs.

Filters industry.

Competition.

Egyptian mentality: common

citizens not encouraged to pay for

water.

- 19 -

household

- 20 -

Chapter 3: Marketing Plan

3.1 Marketing and Sales Objectives

3.1.1 Market Share

The graph below shows the market share of Nestlé Waters in Egyptian market since

2008 throughout 2010. The market share of Nestlé has increase by about 5% in the

last two years, from an average of 15% to an average of 20%. The target of this plan

is to increase market share by 3% annually in the next two years.

Market Share for Bottled Water

- 21 -

3.1.2 Numeric and weighted handling

Numeric handling is the number of outlets Nestlé is available while weighted

handling is the efficiency of this availability (selling water in the right place). It is

clear from the above graph that Nestlé has succeeded to increase its numeric

handling from 4 to 5% in 2010. However, this has affected its weighted handling,

which has decreased from 50 to 45% as shown in the below graph.

Weighted handling of Nestlé waters

In this plan, we plan to achieve a tough target of increasing the numeric handling to

7.5% while keeping the weighted handling above 50% within the next two years.

This means that Nestlé needs to adopt a smart distribution strategy to increase its

existence in the efficient places.

3.1.3 Sales Volume

The current annual sales growth rate of Nestlé Waters is 10% and the target of this

plan is to reach an annual growth rate of 15%. It is planned to reach an annual

growth rate of 12% in the first year and 15% annual growth rate in the second year.

- 22 -

3.1.4 Regional Targets

The above target is for the overall growth rate. However, we believe that Nestlé

should have targets concentrated on certain geographical areas to seize the

potential growth opportunities in Delta and Upper regions. Only 2% of Nestlé sales

are in delta while Nestlé is not almost in the picture in Upper Egypt and Canal cities.

Below are the geographical targets of this marketing plan:

Delta: Increase annual sales volume by 30%; numeric handling from 1% to

3%

Upper Egypt and Canal: Increase annual Sales Volume by 50%; Numeric

handling to 1%

- 23 -

Two-Year Marketing Plan

Objectives Summary

Increase Market share to 23% in first year and 26% in second year

Increase Numeric handling to 7.5% in two years while keeping

weighted handling above 50%

Reach 15% annual Sales growth rate; 12% in first year

Delta: 30% sales growth rate, 3% numeric handling

Upper and Canal: 50% Sales growth rate, numeric handling 1%

3.2 Marketing Strategy

The following section will discuss the marketing strategies that will help in the

performance of the sales and customer loyalty of the 5-gallon water bottles.

3.2.1 Market Segmentation

In this part, we are concerned with segmentation of the bottled water market to

help Nestlé waters to have a more focused approach to its different customer

segmentations.

a) Geographical segmentation

This is the traditional segmentation of the market based on the geographical

distribution. The figure below shows the distribution of Nestlé sales among the

different geographical regions in Egypt. It is clear that the sales are mainly

concentrated in Cairo and Alexandria. This coincides with Nestlé positioning

strategy, which stresses on quality and targets premium customers, which are

normally concentrated in Cairo and Alexandria.

60%22%

12%

6%

% Sales of Bottled Water per area

CairoAlexandriaDeltaUpper and Canal

- 24 -

However, we see that there is a high potential in other geographical regions such as

Delta and Canal where Nestlé can concentrate its effort and address segments of

customers who seek high quality hydration in absence of trusted source of tap

water.

b) Indoor versus outdoor users

The customers of bottled water could be differentiated into segments with respect

to their indoor/outdoor consumption pattern:

Outdoor users: These are the customers who tend to use bottled water while

they are outdoors where they do not have access to source of trusted tap

water. However, these users tend to use tap water while they are indoors.

This segment of customers is a good target for the small packages like the 0.6L

and 1.5L bottles. Even if these customers occasionally use bottled water at

their homes, they will not use the 5-gallon package. Hence, we believe that

this segment is not a good target for the 5-gallon business-to-consumer

marketing plan.

Indoor users: These are the users who tend to use bottled water in their

homes. These users usually do not trust tap water and only adopt bottled

water as the trusted healthy source of hydration. This segment of users is

characterized by having higher money income, education and loyalty to a

specific brand. This segment of customers will be focused at the most in the

suggested marketing strategies.

c) Volume Consumption

The customers could be segmented according to their annual volume consumption

of bottled water into three segments

Heavy users: These are the customers whose annual consumption exceeds

500 liters. (Equivalent to 25 5-gallon packages)

- 25 -

Moderate users: These are the customers whose annual consumptions

range from 200 to 500 liters. (From 10 to 26 5-gallon packages)

Light users: Annual consumption is from 100 to 200 liters (5-10 5-gallon

packages)

d) Quality-seeking versus price-seeking segmentation

The customers can be divided into two segments regarding their tendency to seek

quality of hydration. The first segment is the quality-seeking segmentation. This

segment concentrates on the quality of the bottled water and on the health

concerns. The second segment usually tends to use bottled water due to

unavailability of tap water. For this segment, price will be the dominant attractive

factor. The customers in this segmentation do not see major differences between the

different brands and they will not be very loyal to any company. They can shift

easily from one brand to another if they get better offer. We see that Nestlé should

definitely targets the two segments in different ways. For the first segment, Nestlé

should promote its positioning as the brand with premium quality and distinctive

health specifications while with the second segment, Nestlé should promote itself as

a company which delivers the best quality for money through attractive offers.

3.2.2 Target Markets

Considering the above segmentation, Nestlé Business-to-consumer 5-gallon

marketing plan should target the following segments

1) All geographical regions. Maintain and develop existence in Cairo and Alex

and establish existence in other regions

2) Indoor users

3) Subscribers with heavy and medium consumption

4) Quality seekers segment will be the main target. However, Nestlé could also

target the price seekers by special promotions by adopting the “Best price for

quality” strategy that matches with the positioning of Nestlé in the market.

- 26 -

3.3 Product Strategy

3.3.1 Product

Nestlé Pure Life is drinking water that has been treated and rematerialized using a

standardized industrial process to ensure purity and quality. Pure and Safe Nestlé

Pure Life refills your body with water to maintain a good level of hydration. It

provides a balanced mineral formula (on average 150 – 170 mg per liter),

contributing to daily mineral requirements.

3.3.2 Product Attributes

Nestlé Pure Life is a pure, safe and healthy, colorless and odorless drinking water

with a pleasant taste. The source of the water is a deep well in Kafr Al Arbein in

Banha, Qualubiya.

a) Water Contents

Mineral Concentration (mg/liter)

Calcium 16.3

Magnesium 6.28

Sodium 16.00

Potassium 1.40

Bicarbonate 87.84

Sulfate 17.00

Chloride 8.80

Silicate 9.0

T.D.S 132

- 27 -

3.3.3 Brand Name& Positioning

Nestlé branding strategy is using the company name combined with a product

name: Nestlé Pure Life. A Nestlé brand name on a product is a promise to the

customer that it is safe to consume, that it complies with all regulations and that it

meets high standards of quality.

3.3.4 Packaging

Nestlé Pure Life 5-gallon is available in one package; a 18.9-liter bottle that has a

protective cover so that the consumer can immediately define that the product was

delivered from the factory. Its proprietary design equally protects the brand from

counterfeiting. Bottles are now manufactured in Egypt, combining the benefit of a

local production and the strength of a worldwide brand. The are no suggestion on

any modification to the product itself, as it would require a huge effort to change the

current design of the product, and thus it will be more efficient to keep it as it is.

3.3.5 Label

The labels on Nestlé’s bottled water brands are often designed to convey the image

that the water itself comes from pure and pristine sources. The label provides

information like quantity, mineral contents, logo, and manufacturing date.

Consumer service number is mentioned as well.

3.3.6 Quality

Every day, millions of people all over the world show their confidence on Nestlé by

choosing Nestlé Pure Life. This confidence is based on quality image of Nestlé and a

reputation for high standards that has been built up over many years.

- 28 -

Nestlé commitment to product quality remains the corner stone of its business

philosophy. Every product on the shelf, every service and every customer contact

helps to shape this image. A Nestlé brand name on a product is a promise to the

customer that it is safe to consume, that it complies with all regulations and that it

meets high standards of quality. Under no circumstances will Nestlé compromise on

the safety of a product and every effort must be made to avoid hazards to health.

Likewise, compliance with all relevant laws and regulations is a must and is not

negotiable. People, equipment and instruments are made available to ensure safety

and conformity of Nestlé NPL at all times. Nestlé executives say:

“Quality is our most successful product. It is the key to our success, today and

tomorrow.”

Natural or treated, all of Nestlé Waters’ bottled waters undergo the same strict

quality controls and adhere to different local and international regulations linked to

their specificities. Based at the Product Technology Centre (PTC) in Vittel in France,

the Central Laboratory carries out over 200,000 chemical and microbiological

analyses every year. Linking two regional laboratories, the Central Laboratory is not

only a quality guarantee of the resource and the final product, but also a center of

expertise for the hundred Nestlé Waters’ production sites.

3.3.7 Complimentary products

The two main complementary products are the electronic water dispenser and the

manual water pump:

- 29 -

a) Water Dispensers

The water dispensers are machines where the 5-gallon bottle is fitted on top of it.

The water dispenser offers the customers cold water, hot water, and room-

temperature water. Nestlé already offers these water dispensers to the market in

partnership with different suppliers of these dispensers. The water dispensers are a

vital complimentary product, which will be a major element of the different

proposed marketing strategies.

One major suggested modification is to offer dispensers without the option of

heating the water. By doing so, the cost of the dispenser will decrease, which will

allow more customers to be willing to buy the dispensers, and consequently

increasing the sales of the 5-gallon bottles. The main reason for such modification is

that the culture of the Egyptian market is that Egypt is more of a tea-drinking

culture, where people require boiling water to make tea. And since, these dispensers

are not able to produce water at boiling temperatures, therefore the option of hot

water is irrelevant.

b) Manual Water Pumps

This product is another potentially vital product. It is simply a manual pump that is

mounted on top of the 5-gallon bottle, and it allows customers to manually pump

water from the bottle. The main advantage of this product is that it will target the

segments of the market that are not willing to pay money for the more expensive

water dispenser. Moreover, almost all of the targeted customers have refrigerators

at home, and taking into account that some of the customers no longer rely on tap

water for cooking, therefore it will be important to have the option of having a large

water source at home with a practical appliance to get this water.

- 30 -

3.4 Price Strategy

For a lot of consumers, value and price are highly related: ‘’the higher the price, the

higher the value’’. Consequently, Nestlé’s intention to position Nestlé Pure Life as a

unique, high quality product gives it a certain control over Pure Life price. Nestlé

Pure Life is following brand pricing through which it provides functional and

psychological value to its target customer. The pricing strategy of Nestlé Pure Life is

market skimming. Prices of Nestlé Pure Life are relatively higher than their

competitors. The typical consumer price for the 5-gallon bottle is 20L.E. noting that

80% of the price goes for logistics and 20% for the actual product value. Nestlé

provides coupons for home consumers. A 10 coupon book costs 190L.E. resulting in

unit price 19L.E. per bottle. Special rates can be agreed on with Business-to-

Business customers.

3.4.1 Proposed Modification to the Coupon System

We suggest a modified option that targets the market segment that will not be

willing to pay the whole price for the coupons at once. The main idea is to allow

these customers to pay only half the price in advance, and the rest of the price will

be paid as an extra charge with each coupon exchange.

3.4.2 Annual subscription

a) Idea

We propose the introduction of an annual subscription program. The main idea of

the annual subscription is to target the heavy users with a loyalty program that

ensures the continuity of the service with premium prices. Also, such program will

allow Nestlé to have a bigger chance of retaining the customers, as it will create

brand loyalty, and also will increase the customers’ lifetime equity.

b) Details

The subscription will be as follows:

- 31 -

1- Paying the entire price of the package once per year.

2- Special rate of LE 17 per bottle.

3- Package will be for 96 Bottles per year with average of 8 bottles per month.

4- Refund policy for 5 Bottles at end of year.

3.5 Distribution strategy

Nestlé Water today’s challenge is in the logistic cost of its 5-gallon bottle; the

product cost represents 20% of the total cost, while the remaining 80% represents

the distribution cost.

3.5.1 Current Distribution Channels

1. Nestlé water hub (warehouse): there are total of 4 hubs from where water

products are distributed to retailers, supermarkets, and customers (on

specific days of the week). These hubs are located in:

a. Aburawash

b. El Salam

c. Hurghada

d. Alexandria

2. Only one water shop exists in Rehab city.

3. Factory to retailers.

- 32 -

Nestlé Water Multichannel Distribution System

3.5.2 Proposed Distribution Strategy

Our strategy will aim at increasing 5-gallon coverage through using Multichannel

Distribution Systems. We shall expand the hubs and water shops in different

strategic locations in order to achieve an intensive distribution strategy that is able

to reach out to the biggest number of customers possible.

3.5.3 Expansion of Water Hubs and Water Shops

Nestlé-Waters hubs and water shops are its main source of water delivery to its

consumers. Having known that 5-gallon bottles product pricing is actually divided

between the product (the water and the package itself) and the delivery fees, it

could be fruitful to increase Nestlé-Waters hubs and water shops to best reach the

consumers and decrease the distribution cost leading to higher profit margins.

- 33 -

Nestle Factory

Hubs

Water Shops

Retailers

Retailers

The Water Hubs - Water Shops idea is basically aiming to increase the geographical

footprint of Nestlé-Waters around Egypt. Besides, the Water Shops could be another

alternative for Nestlé-Waters consumers to go and buy the packages themselves if

for any reason they missed the normal distribution round or they need extra bottles.

Having previously discussed that Nestlé currently has 4 hubs and a water shop, this

acted as guidance for where new locations should be reached according to the

expected market potentials. The target is to reach more consumers in Cairo, Alex,

Delta, and Upper Egypt.

a) Water-Hubs

Two Water-Hubs can be added to the existing network to increase Nestlé-Waters

coverage. It has been found that Mansoura & El-Minya are optimum spots to start

with in Delta and Upper Egypt.

Delta & Upper Egypt were specifically chosen as new Water-Hubs location at this

phase because a potential has been noticed there based on the competitors sales

percentages per region while Nestlé nearly doesn’t exist in those regions.

Tot. Market Nestle Aquafina Baraka Dasani Schweppes Safi Aqua Hayat0%

10%20%30%40%50%60%70%80%90%

100%

Bottled Water Category Turnover per Region (2010)

Cairo Alexandria Delta Egypt* Upper Egypt* Canal Zone

% T

urn

over

- 34 -

Mansoura was chosen due to the following reasons:

1. Intermediate locations with respect to other Delta cities.

2. Close to Cairo.

3. High living standards and educational levels.

El-Minya was also chosen to similar reasons:

1. Intermediate locations with respect to other Upper Egypt cities.

(Especially the ones between El-Minya& Cairo)

2. Upper Egypt distribution can also depend on the Hub already existing

in Hurghada using Safaga-Quena Road to reach cities as Quena, Edfu,

Luxor and Aswan if needed.

b) Water-Shops

Nestlé-Waters currently has one Water-Shop in Rehab mainly serving the residents

there. The idea seems a promising one and thus it has been thought of launching

new ones. Six Water-Shops could be added in Cairo, Alex and a seasonal one in the

North Coast.

Cairo Water-Shops:

1. Mohandseen. (Serving Mohandseen, Zamalek, Agouza & Dokki areas).

2. Heliopolis. (Serving Heliopolis and Nasr City areas).

3. Carrefour-Maadi. (Serving Maadi, Helwan and New Cairo areas).

4. 6th of October.

Alex & North Coast Water-Shops:

1. Somouha.

2. Zahran Supermarket in the North Coast (Seasonal).

- 35 -

3.6 Marketing Communication Strategy

We will use a mix of tools in our promotion strategy not only to increase our

coverage in the 5-gallon but also to introduce new services such as machine renting,

water catering services and water coupons.

3.6.1 Advertising

1- Flyers in hypermarkets and super markets, such as Spinneys and Carrefour.

2- Flyers attached with local newspapers on Fridays.

3- Handing out flyers at toll stations (Cairo-Alex, Cairo-Alamein, Cairo-Sokhna)

4- Nestlé delivery workers will distribute brochures on current customers and

new customers as well. This will be done as they are performing the regular

delivery of the 5-gallon bottles to homes.

5- Sales Representatives at hypermarkets.

6- Flyers attached to current Nestlé goods.

3.6.2 Direct Marketing

24/7 Nestlé hotline will be available for customer questions and feedback.

3.6.3 Public Relation

In all our promotion tools a link of website will be communicated to consumers

where they can visit and check all our new services and promotions for the whole

year.

- 36 -

3.6.4 Sales Promotion I (Summer Package)

a) Promotion Idea

The seasonal package is a temporary offer that is offered to customers who travel

for holidays to destinations such as the North Coast or the Red Sea. The main idea of

the seasonal package is to target the customers who travel to certain locations in the

country in specific times of the year and who have the demand of a clean source of

drinking water. The main targets will be the north coast travelers in the summer,

and the red sea travelers in spring and summer. The main potential here is that

these customers travel for holidays and they need a clean source of water. However,

they might not be willing to permanently purchase the water dispenser since they

will not need it except for a short period of time.

b) Promotion Details

The promotion will generally be as follows:

1- The customer contacts Nestlé to request the package.

2- The customer will be asked to decide desired package according to the

duration and the number of the 5-gallon bottles required.

3- Nestlé shall deliver the water dispenser and the water bottles on the

weekend at a time that is both agreed on by the customers and Nestlé.

4- Nestlé shall pick up the rented water dispensers at the date the package

expires.

5- The customer can also contact Nestlé to request the water dispenser to be

picked up at a date earlier than the designated expiration date, or if s/he may

wish to request extra bottles.

6- In such case, an extra delivery fee shall be incurred.

7- The customer could also return the water dispensers in case s/he is not

available on the date the package expires.

- 37 -

8- The customer is entitled to a refund on a certain number of water of bottles

only according to the package itself

c) Promotion Packages

Package 1 Package 2

Duration Weekly Monthly

# of Bottles TBD (min 4) TBD (min 8)

Price/Bottle LE 20 LE 19

Machine Rent Charge LE 70 LE 180

Max # of Returned Bottles 2 4

Deposit LE 150 LE 150

Delivery Charge LE 15 LE 15

Additional Delivery Charge LE 20 LE 20

3.6.5 Sales Promotion II (Water Catering Service)

a) Promotion Idea

The water catering service is offering customers a supply of drinking water in case

of events. It is quite similar to normal catering services, where Nestlé will provide

the customer with the water dispensers and a number of water bottles for a day or a

small period of time depending on the event. The main market segment that is

targeted by this initiative is the higher end of the Egyptian population, which are

mainly the upper-middle class and the upper class. The main idea is to target the

potential customers who frequently organize events, such as gathering or meetings.

And usually these people are required to offer their guests with a supply of drinking

water. Therefore, the main initial markets will be in Cairo and Alexandria.

- 38 -

b) Promotion Details

The promotion will generally be as follows:

1- The customer contacts Nestlé to request the water catering service.

2- The customer will be asked for required numbers of bottles, water

dispensers and the duration of the offer.

3- Nestlé shall deliver the water dispensers and the water bottles at a time that

is both agreed on by the customers and Nestlé.

4- Nestlé shall pick up the rented water dispensers at the end of the service.

5- The customer is entitled to a refund on a certain number of water of bottles.

c) Promotion Packages

Package

Duration TBD (min 1 day)

# of Bottles TBD (min 6 bottles)

Price/Bottle LE 19

# of Water Dispensers 3

Rent Charge / Water Dispenser LE 20

Max # of Returned Bottles 2

Deposit LE 150

Delivery Charge LE 25

- 39 -

d) Additional Promotional Strategy

Having some sort of alliance with current food catering businesses, in order

for the products to compliment each other. By doing so, Nestlé has the

opportunity to accelerate the demand on the water catering service.

Offering Nestlé foods products with the water catering service, in order to

encourage the customer to request the service. For example, a customer who

has a breakfast event could ask for Nescafe and other Nestlé foods product

along with the water catering service.

- 40 -

Chapter 4: Implementation &Control

4.1 Action Plan for 2012 & 2013

A 2-Years action plan (2012 & 2013) has been prepared to fulfill the optimistic

marketing objectives we have and implement the suggested initiatives.

20

12

Act

ion

Pla

n

Jan

Mansoura

Water-Hub

opening

20

13

Act

ion

Pla

n

JanLaunch of Water

Catering campaign

FebPreparing &

Promoting

for

Carrefour-

Maadi

Water-Shop

Feb

Preparing &

Promoting for

Heliopolis Water Shop

Mar Mar

Preparing &

Promoting

for Zahran

Super

Market

Water-Shop

Opening

Preparing &

Promoting

for the

Seasonal

Packages

campaign

Apr

Carrefour-

Maadi

Water-Shop

opening

Apr

May May Heliopolis

Water-

Shop

opening

Jun Zahran

Supermarket

Water-Shop

opening

Launch of the Seasonal

Packages campaign

Jun

- 41 -

Jul Preparing &

Promoting

for

Mohandseen

Water-Shop

Opening

JulEl-Minya Water-Hub

opening

Aug AugPreparing &

Promoting for 6th of

October Water-ShopSep Sep

Preparing &

Promoting

for

Somouha

Water-Shop

Oct

Mohandseen

Water-Shop

opening

Oct6th of October Water-

Shop opening

NovPreparing &

Promoting

for the Water

Catering

Campaign

Nov

Dec DecSomouha

Water-Shop opening

4.2 Budgeting

A suitable budget should be dedicated to efficiently cover the suggested initiatives

needed to achieve the defined marketing objectives. The budget should be covering

activities as advertising, Water-Shops & Water-Hubs renting and launching.

Activity Frequency Count Price/Unit Budget

Mansoura

Water-Hub

Location Rent 1/year - 1,000,000 1,000,000

Water-Hub Preparations - 1 200,000 200,000

Delivery Trucks - 7 100,000 700,000

Carrefour-

Maadi

Water-Shop

Location Rent 1/month - 15,000 180,000

Water-Shop Preparations - 1 100,000 100,000

Flyers Distribution with

news papers

2/year 200,000 70,000 140,000

- 42 -

Street Banners 1/month 1 50,000 60,000

Small Vans - 2 75,000 150,000

Zahran

Supermarket

Water-Shop




news papers1/year 200,000 70,000 70,000


Small Vans - 2 75,000 150,000

Seasonal

Package

Campaign

Flyers Distribution at Toll

Stations

4/month

(3 months)25,000 5,000 60,000

Brochures handed out

at home

1/month

(3months)50,000 10,000 30,000

Radio Ads3/Day

(3 months)- 2,000 540,000

Mohandseen

Water-Shop




news papers2/year 200,000 70,000 140,000


Small Vans - 2 75,000 150,000

Somouha

Water-Shop




news papers2/year 200,000 70,000 140,000


Small Vans - 2 75,000 150,000

- 43 -

Heliopolis

Water-Shop




news papers2/year 200,000 70,000 140,000


Small Vans - 2 75,000 150,000

El-Minya

Water-Hub

Location Rent 1/year - 1,000,000 1,000,000

Water-Hub Preparations - 1 200,000 200,000

Vehicles - 5 100,000 500,000

6th of

October

Water-Shop




news papers2/year 200,000 70,000 140,000


Small Vans - 2 75,000 150,000

Water

Catering

Campaign

Flyers Distribution at

Hypermarkets &

Supermarkets

2/year 200,000 40,000 80,000

Brochures handed out

at home4/year 200,000 40,000 80,000

General Ads Ramadan TV Ads8/Day

(1 month)- 15,000 3,600,000

Total Budget 14,400,000

- 44 -

4.3 Evaluation and Control

Regular systematic evaluation and control systems are mandatory to monitor the

performance and the degree to which the target objectives and goals are met.

Evaluation and Control process could be implemented in regular forms:

1. Monitoring the Sales objectives on quarterly basis.

2. Evaluating the degree to which marketing objectives are achieved quarterly.

3. Checking the progress done in preparing the new Water-Hubs and Water-

Shops on monthly basis to meet the opening scheduled dates.

4. Seeking regular feedback from call center representatives that could help to

enhance the provided service to ensure a 2-way communication process.

5. Arranging regular monthly meeting with the operations, sales and supply-

chain teams to ensure all teams are on the same track towards the overall

objectives.

- 45 -

References

“The Nestlé Waters Management Report” by Nestlé

‘The employee policies and procedures handbook’ by Nestlé Waters Egypt

http://en.wikipedia.org/wiki/Economy_of_Egypt

http://www.Nestlé-purelife.com/wide_range.aspx

http://www.Nestlé.com/Pages/Nestlé.aspx

Meeting with Basma….

- 46 -

final draft v4.0

Documents