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International Marketing: Case Study - 4 Group-C: Shyam Devikar (6) Sachin Khochare (13) Pradeep Poojari (22) Mehul Shah (27) Manish Singh (31) Sammir Vichare (35) 27/2/2011

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27/2/2011

International Marketing: Case Study - 4

Group-C: Shyam Devikar Sachin Khochare Naziya Maknojia

Pradeep Poojari (6) Mehul Shah (13) Manish Singh (17) Sammir Vichare

(22) (27) (31) (35)

An Overview of NestleHistory of Nestl Nestl began in Switzerland in the 1866 when founder Henri Nestl created one of the first baby formulas; realized the need for a healthy and economical product for babies. Nestl developed its own condensed milk to contend with its competitor, the AngloSwiss 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 Nestl 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 Emerging Markets Cross Cultural Preferences Marketing Strategy Product Positioning Product Pricing Product Packaging Distribution Nestle Way Centralized De-Centralized Centralized/ De-Centralized De-Centralized De-Centralized De-Centralized De-Centralized Case Facts Acquisitions Maggi-775 products Multi-Domestic Instant Noodles-Diff. Target Customers Germany v/s France Instant Noodles No Production Unit Import; Kenya Infrastructure Nescafe; T V v/s Tape Promotion Instant Noodles-Diff. Brand Names

Advertising/ Promotion Branding

De-Centralized Centralized with exceptions

Nestle: Decentralized / Influence of CenterNot 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 globalCentralized Regional Responsibility Financial Function Technical Function IT Function HR Function Decentralized Country Operation Country Revenue Country Profits Country Production 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 Centre2 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 Centre1st 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 Centre2nd 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: TodayThe 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