MUHAMMAD HUMAYUN MAQBOOL

REGISTRATION 3850-FMS/MBA/F08

INTERNATIONAL ISLAMIC UNIVERSITY ISLAMABAD

Humayun.mba3850@iiu.edu.pk

EXECUTIVE SUMMARY:

Nestlé with headquarters in Vevey, Switzerland was founded in 1866 by Henri Nestlé and is

today the World’s biggest food and Beverage Company. Sales at the end of 2005 were 91 billion,

with a net profit of 8 billion. They employee around 250,000 people and have factories or

operations in almost every Country in the world.

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Background of the company:

Nestlé Company had started off from a single man's idea, and developed into a giant corporation.

In 1866 Henri Nestlé, a pharmacist, developed a milk food formula for infants who were unable

to tolerate their mother milk (Nestle.com). His product became a success, and it created a

demand throughout Europe. As Nestlé’s popularity grew more businesses wanted to merge and

become partners with Henri Nestlé's business. From 1866 to 1947 the Nestlé Company had gone

through several name changes. In 1905, Anglo-Swiss Condensed Milk Co. and Farine Lactee

Henri Nestlé merged, and the company’s name became Nestlé & Anglo-Swiss Condensed Milk

Co. Then in 1929, Peter-Cailler-Kohler Chocolates Suisse’s S.A. merged with the company. The

name was then changed to Nestlé & Anglo-Swiss Holding Co. Ltd, on November 27, 1936. In

December 1947, Co. acquired all the shares capital of the Alimentana S.A. Company in

exchange for fifteen Nestlé shares and fifteen Unilac shares for each of Alimentana S.A. share,

so this point the name was at Nestlé Alimentana S.A. And then finally, the last name change that

the company would endure was in 1977, where it adopted the name Nestlé SA (Mergent Online).

Along the way Nestlé’s company remain successful, which allowed them expand to new region

and territories throughout the world, making them the world’s biggest food and beverage

company. Nestlé’s headquarters are located in Vevey, Switzerland, but the Nestlé Company has

factories or operation in almost ever country in the world. In addition, to the increase in the size

of the Nestlé Company; Nestlé also has increased the variety in the different products they offer.

In Nestlé’s business strategy they encourage product growth through innovation and renovation

(Nestle.com). This strategy has allowed Nestlé to develop many different products in the various

fields: baby foods, dairy products, breakfast cereals, ice creams, chocolates and confectionery,

prepared foods, beverages, food services, bottled water, and pet care.

Introduction of the Company:

Nestlé is the world's leading food company. Since it was set up by Henri Nestlé to provide an

infant food product, it has been associated with providing high quality, customer and consumer

focused products. In recent years it has focused on becoming a nutrition, health and wellness

company. Wellness is about supporting people to live more healthy lives e.g. through the

development of probity yoghurts that help maintain the balance of the digestive system. The

company is a world leader in research and development, and Nestlé's scientists work in all areas

to create healthier and more nutritious foods.

Brief History:

In 1866 Henri Nestlé, a pharmacist, developed a food for babies who were unable to breastfeed.

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. In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early

1900s, the Company was operating factories in the United States, Britain, Germany and Spain.

World War I created new demand for dairy products in the form of government contracts. By the

end of the war, Nestlé's

Production had more than doubled. After the war Government contracts dried up and consumers

switched back to fresh milk. However, Nestlé’s management responded by streamlining

operations and reducing debt. The 1920s saw Nestlé's

First expansion into new products, with chocolate the Company's second most important activity.

Nestle felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to

$6 million in 1939. Factories were established in developing countries, particularly Latin

America. Ironically, the war Helped with the introduction of the Company's newest product,

Nescafe, which was a staple drink of the

US military. Nestlé's production and sales rose in the wartime economy. The end of World War

II was the beginning of a dynamic phase for Nestlé. Growth accelerated and

Companies were acquired.

Nestlé's growth in the developing world partially offset a slowdown in the Company's traditional

markets. Nestlé made its second venture outside the food industry by acquiring Alcon

Laboratories Inc. Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé's improved

bottom line allowed the Company to launch a new round of acquisitions, the most important

being American food giant Carnation. The first half of the 1990s proved to be favorable for

Nestlé: trade barriers crumbled and world markets

Developed into more or less integrated trading areas. Since 1996 there have been acquisitions

including San Pellegrino (1997), Spillers Pet foods (1998) and Ralston Purina (2002). There

were two major Acquisitions in North America, both in 2002: in July, Nestlé merged its U.S. ice

cream business into Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef

America, Inc.

Significant brand:

Nestle ice-cream which means a refreshing treat which every one loves. Nestle started their ice-

cream product in 1991 in United States. The products gain a wide acceptance with kids as well as

grownups.

The project is about induction of Nestle ice-cream in Pakistan.

Identification of Opportunity:

SWOT Analysis .

STRENGTH

Nestle is the world's largest food and beverage company in terms of sales. Due do strong brand

name our product will gain a wide consumer acceptance from all over the Pakistan. The biggest

strength would be the strong brand name the risk in investing would be reasonable very low. And

the pledge of getting a viable business, one that has been “worked” many times before. We will

set a complete transparent manufacturing system for customer satisfaction in terms of hygiene.

We will strengthen our product by broad distribution network by increasing the capacity for

innovation which will lead to an improvement in sale growth. We will be organizing a team

which will inspect and observe the accumulation (stock) on daily bases to prevent any damages

occurring and also in order to keep the inventory fresh. We will make sure that we are not having

surprise shortage, weather it is winter or summer no matter what circumstances are. Further

strength would be.

Strengths

Skilled labor.

Educated staff.

Large number of offerings.

Pre purchase virtual display.

Arrangement of events.

Good background of the company.

Easy to approach outlets.

Physical evidence

Weakness:

The main weakness of our product is the lack of an established good standing. Our competitors

have been around for decades and therefore have a loyal base. The second biggest weakness

would be the lack of capital, establishing such an enormous and gigantic plant there will be a

need of acquiring financial support in terms of loans from the bank. Spending millions in a

strong brand is no guarantee to wealth. It may the safest way to get into the business, but it is not

necessarily the cheapest. Further weakness would be.

Weaknesses

Small target market.

Lack of awareness among the target market.

Dependency on others (govt. & sponsors) for the arrangement of events.

Opportunities:

The biggest opportunity would be considered geographically. Pakistan is situated in an area

where we have summers most of the time. People love as well as enjoy eating ice-cream in this

season. Due to strong brand name in the market our product has a great potential of earning

profits. To make the product successful we will be utilizing the highest degree of technology in

calculating customers’ satisfaction as well as their feed back. Gaining initial success the next

step would be opening a par lour where people can enjoy all the flavors under one roof. Further

opportunities would be.

Opportunities:

Increasing interest of people

Few and weak competitors

Threats:

The biggest threat to are product is the fierce competition in the local market. Walls by (unilever)

are one of the biggest names in ice cream which not only distribute their products nation wide

but also had a total control on the local market. The second thread that our product will face

would be Shezan, Gourmet and many others small bakeries which have their influence on the

market.

Threats

Major player may enter target market

Legal and ethical issues.

Market segment growth could attract new entrants.

Economic slow down can reduce demand.

BCG MATRIX :

BCG MATRIX:

STARS

The products which have high market share and high anticipated growth rate would come under

this. Nestlé two major products lie under the star products. Otherwise nestle have hundreds of

products and brands .But we will discuss here only its

Major products nestle milk pack and second is nestle water. These two products will lies in the

category of star products.

QUESTION MARKS

The product which have high anticipated growth rate but low market share would be considered

as question marks. The product which we are going to launch first time in Pakistan (NESTLE-

ICE-CREAM) would come under the question marks.

CASH COWS

The products which have low anticipated growth rate and high market share would be considered

as cash cows .The product which lies under this is nestle Milo.

DOGS

The product which have low anticipated growth rate and low market share would be considered

as dog product of the company’s the product which comes under this is nestle corn flakes.

Core Distinctive Competency of the Company:

To pose our product against the competitors we will be using differentiation strategy which will

not only differentiate us from others but also give an edge over others. Our core products will be

very beneficial especially in terms quality, health, and hygiene and most important consumer

satisfaction. Our augmented products will include consumer satisfaction as we have discussed,

warranty to retailers in terms of expire, delivery and after sales services.

Product market expansion grid:

We will be following the same strategy for our expansion as does nestle ice-cream do and they

would be,

Low cost operator

Low cost operator in terms of using minimum initial investment - to not to overload the business

with expensive assets.

Assets utilization- ensuring full use of existing assets at a regional level before acquiring

additional ones.

Ingredients optimism – selection of appropriate ingredients, which gives desired consumer

perception at lower cost.

Innovation / Renovation

Using strong innovation system which will able to provide each year a new product range in a

timely manner, while making best use of existing assets.

Product availability (“with in arms reach”)

Maximum availability at the right cost at all channels.

Communication

By making nestle ice-cream the most visible brand in the street, placing a priority on visibility.

We will also be ensuring that we reinforce the availability and attractively of our brand in

locations of high traffic flow.

Product life cycle:

The diagram shows that the industry is on the growth phase while NESTLE is on introductory

phase.

Porter’s Five Forces:

PORTER FIVE FORCES

THREATS OF NEW ENTRANTS:

In Pakistan the competition in the ice cream business is very small. Currently 2-3 companies are

doing the business of ice cream out of which one brand is international and other two brands are

local’s from this it can be concluded that there would be a lot of chances of other international

famous brands of ice cream start their businesses in Pakistan.

SUBSTITUTES:

The major substitutes of nestle ice cream would be walls ice cream,Hico ice cream and eat more

ice cream.

BARGANING POWER OF SUPPLIER:

As nestle came in Pakistan since 1988 and they are the market leaders in the dairy products. As

nestle Pakistan is already in the business of dairy so our bargaining power of supplier would be

very moderate.

BARGAINING POWER OF CUSTOMER:

Bargaining power of customer would be very low because the price of our ice-cream would be

fixed.

Strategy for launching the product:

Goals & objectives:

Creating awareness about our product to at least 50% of the target market within three

months of launch.

This objective will be achieved through intense promotional activities, developed to get to the

target market in the best possible manner.

Capturing 60 % of target market within 1 year.

Our promotional activities will develop interest for people thus compelling them to approach us.

We will make good relations with our customers so they create good word of mouth for us and

approach us again and refer others.

Launching the product in summers.

We will be launching the product in summers to capture most of the target consumers and as

well as market share.

Opening different outlets.

We will be opening different outlets initially in major two cities and after gaining primarily

success we will be available in all big and small cities of Pakistan.

Marketing strategy:

Our product will include features that contains the combination of both health and

hygeine keeping in mind the individuals requirments in terms of taste. However the

marketing will be done considering the concept of mass personage.

Our product will be tailored to individual needs (desired taste) but promotion will attract

all of them collectively. Further more we will be following pull strategy and approach our

end users ourselves with the help of various promotional activities. In our case no

intermediary (whole sellers) is involved. Our distribution channel will be as follow.

ACTION PROGRAMS:

We will be acting for our operations by the following chart. For the implementation of

the plan we have divided the tasks to the respective staff that will ensure the

implementation

Responsibilities of the Team:

Marketing Head will be responsible to coordinate all the marketing activities happening. He

gets the sales, finance and process control activities done through the respective subordinates

however he is directly involved in the designing and implementation of the public relation and

advertisement activities. He also monitors the budget details given to him by the financial officer

and ensures its proper allocation.

Sales management in this the management is responsible for the activities related to sales such

as discounts and other sale promotions.

The financial officer’s keeps record of the marketing budget and the distribution of budget

allocated for various areas by the head.

The process control officers make sure that all the process involved in the service is performed

efficiently. He coordinates the activities of the mechanics and the computer designers.

Further there are staff for various areas who are directly involved in the accomplishment of the

tasks provided to them by their respective heads

Action Plan Timings:

All the Task force will work keeping in view the following major activities.

The service is to be launched on 1st march 2008.

The advertisement through cable and our magazine will be started one week before the

launch.

The first issue of the magazine will be distributed along with the English news papers on Sunday

24thof February 2008.

Projected budget:

As nestle is a huge and gigantic plant and needs and enormous investment to start its production.

The project requires an estimated budget of about 125 million. Luckily we have five partners and

the contribution will be equally divided among all. Further more we will be acquiring loans from

the bank.

CONTROL

To make sure that the whole marketing process runs smoothly we will be doing:

Budget Monitoring

Updating Plan

Measuring Objectives

Budget Monitoring:

Every month the financial officer will prepare a report listing the amount of budget spent on

various promotional activities and sends it to the marketing head who will then decide if the

budget allocation needs to be modified, increased or decreased for the next month.

Updating Plan:

The marketing head will continuously check the outcomes of the plan at the end of every month

on the basis of the data provided by the sales financial and process control staff and update the

plan accordingly.

Measuring Objectives:

At the end of every six months the progress towards the achievements of all the objectives will

be measured. The objectives can then be modified on the basis of the practical experiences of the

past six months.

Market segmentation:

We have divided our market into geographic, demographic, psychographic and behavioral

segments. These segments will help us understand our market better.

Geographic Segmentation:

Enjoying ice-cream is popular mostly all over the Pakistan but keeping in mind the market

conditions and secondly to reduce the initial (expenses not to over load the business). We will

be launching our product initially at Lahore and Karachi. So geographically we have divided the

market in to Lahore and Karachi.

Demographic segmentation:

The demographic segments for our product comprises of following variables:

Age:

Below 18, 18-30, 30 +

Gender:

Male, female

Psychographic Segmentation:

Lower class, Middle class, Upper class.

Behavioral Segmentation:

Firstly this segment includes people who are interested and like enjoying ice-cream.

Secondly it includes people who are willing to buy but not finding any other in the region

up to the level they desire with respect to quality, hygiene and taste.

And lastly there are people who are not interested in the concept at all.

Target market:

Knowing the fact that we can not be every thing for everyone we will be targeting only those

segments that can provide best possible returns so that we may reach are goals effectively and

efficiently.

Our target market collectively consist of males as well as females in Lahore and Karachi of age

group less then 18-30 belonging to middles class, not finding any other provider in terms of

quality, hygiene and taste.

Positioning:

We will position our product as a high quality product consumer focused. Messages like

“Who knows your taste better than us”,

“Nestle ice-cream now at your door step”;

“Add additional flavors’ to your life”

will help us portray our picture clearly and distinctly. We will position our product against the

competitors and gain competitive advantage through our efficient promotional methods, using

innovations, and by reaching closer to our target market through the arrangement of events like

BASANT, VALENTINE DAY and etc. In short consumers will view us as a product providing

highly quality, in terms of taste, customer focused and, at the same time reasonably priced as

compared to others.

Marketing mix:

Product.

Price.

Placement.

Promotion.

Product.

Our product is high in providing quality, taste and hygiene. We are the only one in local market

providing flavors as no one ever does in Pakistan where consumers may choose from a wide

range of flavors’. A large variety of modes manufactured by a single brand NESTLE.

Our products will include:

A wide range of flavors, keeping in mind the taste of individuals.

Modifying our products by new innovations every year.

Giving best taste at best affordable prices.

Selection of appropriate ingredients, which gives desired consumer perception.

Actual Product:

Our actual product consists of following attributes:

Brand name:

The brand name NESTLE has a direct relation with food and beverages as the name comes in

mind the person things of nothing but a quality products. The brand name is easy to read and

pronounce at the same time stylish and attractive

Features:

Initially our features include services like sending our representatives to the door steps of

interested consumers (target market), answering their concerns, and telling them what we have

for them.

Quality:

We will assure and provide quality service and make sure that the inventory we provide are

durable, healthy, fresh and long lasting. Our quality of service will help consumers develop trust

in us.

Styling:

Style and catchy designs are the most important aspects of our product. We will help our

consumers feel special and find the product healthful.

Variety:

Another feature of our product is variety and flexibility of products provided. We have the

availability of large variety of flavors as compared to different brands.

Price:

Our pricing is done considering

Our marketing objectives

The economic conditions of our target market

Pricing of our competitors

The nature of our business.

PLACE:

PLACE:

We will be placing our product by different channels to hit the target consumers. Our coverage

will be quit flexible for intended positioning. Assortments regarding our product will be

enthusiastic. Our locations will be positioned in such a manner which will be accessible either to

consumer as well as retailers. As the map shows we will be placing the main head office at

Gulberg near Hussain Chowk. We will be having a completely separate department which will

make assure that the inventory remains fresh. Our transportation will be marked by our brand

name .And finally our logistics and equipment will be installed by the professionals of Motorola

to keep track of every thing.

Promotion:

The accomplishment of our objectives to create awareness about our product and to get

desired market share will be possible through our promotional efforts. Our promotional efforts

will not only help attract the existing market but also create interest in new groups of people

specially youngsters. The promotion tactics have been designed keeping in view the trends of

the target market and the modes which are best suited to reach them.

Promotional Mix:

Following tools will be used in our promotion:

Advertising

Public Relations

Sales Promotion

Direct Marketing

Advertisement:

We will advertise using world call cable, distributing magazine placed in news papers, and as

well as on World Wide Web.

On World Call cable we will advertise 20 times a day on 5 movie channels for 2 months. After

two months the advertisement will be reduced to 10 times a day. Further the advertisement

will also be displayed on the scroll for first two months. The advertisement will contain

attractive messages for the youngsters and ice-cream lovers. The cable advertisements will help

create awareness and capture the attention of large number of youngsters, as movie channels

are mostly watched by youngsters. The distribution of small magazines (catalog) is a unique

method of advertisement which will readily grasp the attention of people. This method has

been adopted instead of placing advertisement in the paper because news paper ads are not

viewed much by the youngsters. The magazine will display the details of our products and the

information regarding that.

Messages Delivered Through Advertisements:

Using AIDA model.

Awareness:

NESTLE the biggest in ice-cream industry now here in Pakistan.

Interest:

Enjoy five flavors in just one scoop. What more you can wish for.

Desire:

Flavors you have never tasted before…………it’s only the beginning let us show you what ice-

cream really means.

Action:

Just try us once we promise you it will be like nothing you’ve ever experienced.

Advertisement Costs: (source: world call help line)

World call cable charges Rs.250 /min for advertisement on five movie channels.

For scroll advertisement world call charges 45000 per month

To distribute a magazine of 5-7 pages, each page of dimensions 6” by 5” costs app Rs.4 per

piece.

Public Relations:

Building good relation with our clients is essential to capture large share in the market. These

public relations will be built by arranging festivals occasionally especially like BASANT.We will

be giving free kites on that the kites will be marked by our (product) brand name. This will not

only help in creating good public relations but also crate awareness among the public.

Sales Promotion:

Our major sales promotion is by giving special discounts or coupons to our customers and

retailers. For example with every purchase of 3 liter family pack extra one liter would be

absolutely free. We will arrange these kinds of discount activities’ on timely basis to keep an

edge over our competitors’.

Direct Marketing:

Direct marketing is an important entity in our promotional mix. Presently there are many

groups of youngsters who are really interested in trying these kinds of new products. The

important fact is that they not only themselves seek products from the best possible providers

but also refer their fellows. Our sales people will approach them and build relations with them.

Another technique we will use is sending occasional mails to the registered users on the web,

thus communicating ourselves directly with the most potential group of our market. These

mails will give details of our new products along with a redirection to our web site

(www.nestleicecream.com.pk)

Details of Promotional Budget:

Note: This is the budget required for promotional activities for the first 2 months after the

launch.

Total Budget: 1,110.000

Allocation

Activity Budget Required

Rs

Details

World Call Cable

Advertisement 450,000

1 minute advertisement 20 times a day.

World Call cable Scroll 90,000 First two months after the

launch

Magazines 320000 10,000 copies every Sunday

Public relation activities 5 % of total budget i.e.

250000

Prize money to the winners,

giving away shirts and key rings

etc

Conclusion:

Nestlé is the world's leading food company. Since many decades it has been associated with

providing high quality, customer and consumer focused products. Our company Nestle (ice-

cream) will be focused on becoming number one in nutritious, health and Wellness Company.

We will take pride by setting consumer satisfaction our first priority and we will be successful in

the upcoming years.