International Marketing: Case Study - 4

Group-C:Shyam Devikar (6)Sachin Khochare (13)Naziya Maknojia (17)

Pradeep Poojari (22)Mehul Shah (27)Manish Singh (31)Sammir Vichare (35)

27/2/2011

An Overview of NestleHistory of Nestlé

• Nestlé began in Switzerland in the 1866 when founder Henri Nestlé created one of the first baby formulas; realized the need for a healthy and economical product for babies.

• Nestlé developed its own condensed milk to contend with its competitor, the Anglo-Swiss Condensed Milk Company.

• The Anglo-Swiss Condensed Milk Company made products like cheese and instant formulas.

• The two companies merged in 1905, the year after Nestlé added chocolate to its line of foods.

• Acquisitions continued through out 1960s and 1970s - including Crosse& Blackwell (1960)

Factors : Decentralization V/s CentralizationInternal Factors Environmental Factors Nestle Way Case Facts

Emerging Markets Centralized Acquisitions

Cross Cultural Preferences De-Centralized Maggi-775 products

Marketing Strategy Centralized/ De-Centralized

Multi-Domestic

Product Positioning

De-Centralized Instant Noodles-Diff. Target Customers

Product Pricing De-Centralized Germany v/s France

Product Packaging De-Centralized Instant Noodles

Distribution De-Centralized No Production Unit -Import; Kenya Infrastructure

Advertising/ Promotion

De-Centralized Nescafe; T V v/s Tape Promotion

Branding Centralized with exceptions

Instant Noodles-Diff. Brand Names

Nestle: Decentralized / Influence of Center

Not Completely De-centralized…Nestle – A “glocal” company

• that thinks global• but acts local

Nestle prefers • brand to be local• people to be regional • only Technology goes global

Centralized Decentralized

Regional Responsibility Country Operation

Financial Function Country Revenue

Technical Function Country Profits

IT Function Country Production

HR Function Country Marketing

Country Administration

GLOCAL

Nestle: Role of Product Director• Serves as a link between the Centre & different regions. • Establish global or/& regional product market strategies.• Co-ordinate marketing guidelines (branding, positioning, packaging

and advertising guidelines) & approvals from Centre• New product development/Product Extensions

To Secure Co-operation of the Country Organization:

• Ensure cross fertilization / knowledge transformation• Provide operation assistance (markets-lack of skills achieving the

strategic goals)• Encourage local country manager’s–new ideas• Enhance their skills by training & job rotation• Avoid biasness or preferences of specific country

(Irrespective of its size , business volume & profit generated)• Center should not ignore untapped/blue ocean markets in developing

countries.

Nestle: Problems- Area of New Products

• Very less role of Local Manager in NPD i.e., Idea Generation.

• To much decision points(PD, RM, CM, RECO) at different areas -

rejection of ideas.

• Prepositioning by Center V/s Post-positioning by countries.

• Infrastructure Challenges (India – Power cut – Refrigeration?)

• Cultural Differences – Nestle Purina

• Trademark infringement – India

Nestle: Role & Approach of Centre

2 Perspectives of Nestle Executives

MOST- “Country managers had to have decision–making authority commensurate with their profit responsibility.”

MANY- “Autonomy of the country organizations reduced nestle’s ability to capitalize on the size and collective wisdom of corporation.”

Nestle: Role & Approach of Centre

1st Case: Expanding the ‘maggi’ culinary product line in Mexico:

• ‘Momentos Maggi’ advertising campaign and ‘Koch Studio’ concept.

• Center was flexible enough to be more decentralized & mature enough to understand the different needs of different market.

• Nestle developed a video tape rather than a film in television ( for Mexico).

• This tape will differ in each country depending on the local recipes sold under ‘maggi’ brand.

Nestle: Role & Approach of Centre

2nd Case: Instant noodles successful launch in West Germany , France , Switzerland, Austria & Norway:

• Nestle faced price competition from Knorr. • Failure in packaging aspect.• Under such circumstances , center role should be centralized

& enforce standardization to achieve the economies of scale in packaging by reduction in 20 % variable cost.

• This centralized action should be accepted by all countries to overcome the competition .

• For some elements of Marketing Mix , Individual countries should follow the center call to be more feasible with greater efficiency & productivity.

Nestle: Today

The Nestle Way: Evolution Not Revolution• Nestle is the world’s biggest marketer of infant formula,

powdered milk, instant coffee, chocolate, soups, and mineral water.

• Nestle strategy to dominate markets – 4 points:• Think and plan long term• Decentralize• Stick to what you know• Adapt to local tastes

• Long-term strategy works for Nestle because the company relies on local ingredients and markets products that consumers can afford.

• Nestle Continuous Excellence (2008) – enhances operations and encourages employees to bring new ideas @ Nestle