nestle prjct

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A SUMMER TRAINING SUMMER TRAINING PROJECT ON PROJECT ON MARKETING STRATEGIES OF NESTLE FOODS INDIA LTD. (CHOCOLATE SEGMENT) AS COMPARED WITH ITS KEY COMPETITORS (Submitted in the partial fulfillment of the requirement of MASTER OF BUSINESS ADMINISTRATION (AFFILIATED TO G.B.T.U., LUCKNOW) SUBMITTED TO : SUBMITTED BY: i

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Page 1: Nestle Prjct

AA

SUMMER TRAINING SUMMER TRAINING

PROJECT ONPROJECT ON

MARKETING STRATEGIES OF NESTLE FOODS INDIA LTD. (CHOCOLATE SEGMENT)

AS COMPARED WITH ITS KEY COMPETITORS

(Submitted in the partial fulfillment of the requirement of MASTER OF BUSINESS ADMINISTRATION

(AFFILIATED TO G.B.T.U., LUCKNOW)

SUBMITTED TO: SUBMITTED BY:DR.ANITA SAXENA RANJANA KUNTAL(H.O.D) Roll No.0929170039

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`STUDENTS DECLARATION

I hereby declare that the project report entitled on Marketing Strategies of Nestle Foods

India Ltd. (Chocolate Segment) as Compared With its Key Competitors. Submitted in

partial fulfillment of the requirement to award the degree of Masters in Business

Administration (Marketing) is my original work and not submitted or the award of

any other degree, diploma, fellowship, or any other similar title or prizes.

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ACKNOWLEDGEMENT

I would like to thank my supervisor AJEET YADAV, Faculty Guide, DIT,

SCHOOL OF ENGINEERING, Gr. Noida, for his valuable guidance, the

enthusiasm and supervision for doing this project work. Special thanks to my parents

and friends who were very keen in my studies and Project work throughout till

completion.

I would like to give my sincere thanks to my teachers & friends for their regular

support & guidance that has helped me in preparing of my report.

Above all I praise GOD that I have been successful in preparing my project..

RANJANA KUNTALMBA (III Sem.)

Roll No. 0929170039

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CONTENTS

1. INTRODUCTION

2. LITERATURE PROBLEM FORMULATION COMPANY Company profile 10 Industrial Scenario 19 Major Products 27 Marketing Strategies 33 Distribution network 47 Brand Loyalty 51 Market Segmentation and Target Market

3. OBJECTIVES & RESEARCH METHODOLOGY Objectives 66 Methodology 66

4. ANALYSIS & INTERPRETATION OF DATA SWOT Analysis 84

5. FINDINGS/RECCOMENDATION/CONCLUSION Conclusion 88 Findings & Recommendations 89

6. BIBLOGRAPHY 937. APPENDIX 95

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LIST OF TABLES

Table 1.1 Board of Directors

Table 1.2 Major Products

Table 1.3 Industry Chronology

Table 1.4 Sales by Management responsibilities & geographic area

Table 1.5 Distribution network of NIL

Table 1.6 NIL‘s most liked products

Table 1.7 Reasons to like Nestlé’s product

Table 1.8 Brand loyalty for the products

Table 1.9 should the company improve its products

Table 1.10 Quality-wise comparison of products

Table 1.11 Availability –wise comparison

Table 1.12 Price –wise comparison

Table 1.13 NESTLE’s new launches

Table 1.14 Research methodology adopted

LIST OF FIGURES

Fig.1.1 Chocolate market share of NIL

Fig.1.2 Major Products

Fig 1.3 Reason to like Nestle

Fig 1.4 Quality-wise comparison

Fig 1.5 Availability-wise comparison

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Fig 1.6 Price-wise comparison

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INTRODUCTION

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FMCG companies have now realized that “India lives in its rural villages”. So much so

that rural marketing has become the latest marketing mantra of most FMCG majors.

The lure of an untapped market has driven the marketers to chalk out bold new

strategies for targeting the rural consumer in a big way.

India is on the move and so are the markets in India. Apart from economic changes,

India is also facing social changes like changes in life style, hobbies etc. New fashions,

Adventures holidays, etc. are in today.

Further, food habits of Indians are changing rapidly. Chocolates which were

believed to be kid’s preference are now being consumed by kids, teenagers, and adults.

Chocolate market in India (Currently 28 000 tones) is growing at a fast rate annually.

To take advantage of the growing market, international confectionery

companies are getting ready to woo the proverbial Indian Sweet tooth. An influx of

worlds leading Chocolate players is expected.

Nestle also piled primarily on the urban consumers. After understanding the

great potentiality rural India possesses, Nestle is also experimenting in big way to bring

the much needed volumes and help itself to bank upon the volume driven growth, in

this severe competitive FMCG sector where the dispersion or market penetration plays

a big role. So Nestle is eying on the market penetration and it is being targeted by

devising different marketing strategies.

The rational behind Nestle going for the market penetration is to acquire new

consumer base by making the products available to the every interior of the country and

increase its sales, to sustain growth. The company is having a marketing strategy to

‘drive penetration through wholesale marketing’. But is it a right marketing

strategy? Or will it prove to be an expensive mistake? If they want to increase their

penetration then how and where they should go for? These are the issues Nestle is

facing today.

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This project is a market research and it touches every aspect of the current

wholesale marketing and predicament associated with it. It also juxtaposition that how

penetration, can be possible through wholesale marketing, what is the cost of doing it

and maintaining it. This project gives an insight into the every feasible aspect that is

associated in “Driving penetration through wholesale marketing, for Nestle.

In the above context, the prime objective of this report is to prepare a marketing

plan for any brand that is planning to enter the India Chocolate Market. Therefore, this

report is generic (broad-based) to the extent that it does not focus on any single brand.

However, this may prove to be a relevant marketing guide for any brand launch in

India.

The FMCG sector has been the cornerstone of the Indian economy. Though, the

sector has been in existence for quite a long time, it began to take shape only during the

last fifty-odd years. To date, the Indian FMCG industry continues to suffer from a

definitional dilemma. In fact, the industry is yet to crystallize in terms of definition and

market size, among others. The sector touches every aspect of human life, from looks

to hygiene to palate. Perhaps, defining an industry whose scope is so vast is not easy.

After witnessing booming sales and flooding markets with innumerable

products, FMCG companies have had to abruptly apply the brakes and look for various

ways to save costs. The MORE THAN RS. 43,000 crore (listed companies) FMCG

industry in India, which has been on a roll for many years, faces tough times ahead,

although many segments still shows good growth.

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REVIEW OF LITERATURE AND PROBLEM

STATEMENT

India is on the move and so are the markets in India. Apart from economic

changes, India is also facing social changes like changes in life style, hobbies etc. New

fashions, Adventures holidays, etc. are in today. Further, food habits of Indians are

changing rapidly. Chocolates which were believed to be kid’s preference are now being

consumed by kids, teenagers, and adults. Chocolate market in India (Currently 20 000

tones) is growing at a fast rate annually. To take advantage of the growing market,

international confectionery companies are getting ready to woo the proverbial Indian

Sweet tooth. An influx of worlds leading Chocolate players is expected. Further, since

Confederation of Indian Industry (CII) is a representative body of the Indian Industry, it

receives its inquiries for pertinent marketing information from various domestic and

international players, who want to invest in India. In the above context, the prime

objective of this report is to prepare a marketing plan for any brand that is planning to

enter the India Chocolate Market. Therefore, this report is generic (broad-based) to the

extent that it does not focus on any single brand. However, this may prove to be a

relevant marketing guide for any brand launch in India.

Improved penetration of brands is an important consideration in the Company’s

vision of sustained growth. Expansion of distribution and reach was a focus area. Some

of the initiatives that are expected to contribute significantly include introduction of

single serve convenience packs at affordable price point, such as NESCAFE Redimix

and MAGGI Hot Cup Soup Powder. The initiative to automate distributor operation has

continued and is expected to be complete during 2003. This will help NIL achieve

greater speed and transparency in the flow of information, ensure better levels of

customer contact and enable faster response to consumer needs.

The Company continued to strengthen initiatives to facilitate availability of

products for out of-home consumption. These initiatives were supported by a number

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of new product launches. The development of NESTEA Instant Tea premix for hot

vending offers consistency and convenience as compared to tea bag preparation;

NESCAFE Frappe premix fort cold vending has been introduced in Quick Serve

Restaurants; Low Sugar NESCAFE premix has been developed for health conscious

consumers; MAGGI Hot Cup Soup dispensed through vending machines is an

innovative and pioneering concept in the market. Large number of Nestle Consumption

Zones including Cafe NESCAFE, Coffee Corners and multibrands stalls were set up

and innovative vending machines were introduced for Iced Tea. Sustained focus on

continuously improving the value to the consumer, helped to introduce vending

machines with eight beverage options to offer consumers a range of specialty beverage

at the same location.

On the manpower development front, programmed during the year continued to be

focused on the operational front more particularly sales and production.

To support the growth plans and distribution strategy, and simultaneously

improve the operational efficiency, the on strengthening chain continued to receive

attention during the year.

Marketing is based on the principle of satisfying consumer’s needs.

The overall trust of consumers in Nestle’ brands and products comes from a quality

image that has been continuously strengthened foe over 130 years. Nestles strives to

increase this trust through its commitment to environmentally sound business practices.

For this reason nestle: Opposes the shortly-term opportunistic “green marketing”

that can mislead the consumer; Bases environmental claims in advertising promotional

SUPPLIERS

PROCURMENT SUPPLY PLAN

SALES & MARKETING

MANUFACTURER DISTRIBUTOR CUSTOMER CONSUMER

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material’ labeling and corporate communication on solid scientific evidence and

selects materials and printing methods for merchandising materials such as consumer

offers, in-store promotions is play materials, leaflets and printed materials in light of

environmental considerations.

Marketing strategy is the complete and unbeatable plan designed specially for

attaining the marketing objective of the firm.

The marketing objectives indicate what the firm wants to achieve; the marketing

strategy that decides the success at the business unit level which in turn decides the

total corporation’s success. The link between marketing strategy and overall success is

indeed direct and vital. And in this linkage lies the significance of marketing strategy.

Nestle India ltd. has an aggressive marketing strategy which is very well

understood when one goes through the in-depth study of the 4-P’s of the marketing and

price strategies with respect to its products. One comes to the conclusion that NIL has a

well defined roadmap to success i.e. to reach its ultimate objective of realizing

customer satisfaction through value for price products.

Alreck and Settle (1999) in the paper has mentioned six strategies for building

relationship(between a specific brand and a particular customer group - to create a

strong bond between brand and buyer)which are linking the brand to a particular need;

associating it with a pleasant mood; appealing to subconscious motives; conditioning

buyers to prefer the brand through reward; penetrating perceptual and cognitive barriers

to create preference; and providing attractive models for buyers to emulate. The paper

states that the choice of an individual strategy or combination depends mainly on the

nature of the branded product or service and the success of the strategy depends heavily

on the marketer's understanding of the preference building and bonding process.

The article provides results like the six consumer preference-building methods

mentioned require particular kind of product, pricing, promotion and distribution. It

further states that Successful advertising needs clear consistent strategies and also lists

some of the crucial elements without which advertising will not work. The paper helps

us in analyzing the factors which influence the selection of a strategy for building

consumer brand preference.

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The purpose of this study has explored the consequences of various attributes

on brand equity of brands, which vary along selected criteria and attributes and to

investigate the impact of brand equity and the attributes on brand preferences. In the

pretest, subjects were asked to rank the attributes listed in previous studies of Nestle.

The top nine attributes (i.e. brand name, calories, sugar content, sodium content,

caffeine content, fizz/carbonation, flavor/taste, sweetness, and price) were included in

the study, with brand name being one of them. The second phase was a preference task

using the same Nestle products.

PROBLEM STATEMENT

Problem defining is the most crucial aspect of any research. It helps in

understanding the background of the problem by analyzing it in an appropriate

environmental context. This helps in translating the exact problem faced by the

management into marketing research problem.

A wholesaler plays a pivotal role in the distribution channel of any company

especially in a FMCG Company. Wholesalers are important as they carry out the role

of the Conduit in any company’s distribution network and cater to a large pool of

retailers which a distributor of a company cannot cater.

So retailers who come from distant places and whose purchasing power is less are been

taken care by the wholesalers. So ‘wholesalers can be impetus to drive the penetration

in the market’.

The main problems that new product faces is that of getting experienced and

effective channel members. As existing marketing marketer/manufacturer can piggy

back on the existing channel structure. A new company will have to provide greater

incentives convince channel members to stock the product offering. Quick handling of

problems of stockiest & dealers. The biggest problem in distributing a product

category like chocolates is lack of infrastructure. The product needs to be kept in

refrigeration (more so, in summers)-limiting the points at which it is available (ideal

temperature needed for chocolates is 18 to 25 degrees). Hence, summer see sales suffer.

Demand falls by almost two-thirds in the summer months. Nestle' markets infant

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formula according to the principles and aims of the WHO International Code of

Marketing Breast Milk Substitutes, and seeks dialogue and cooperation with the

international health community and in particular with the WHO and UNICEF, to

identify problems and their solution.

In India 70% of population lives in villages and so this population plays a pivotal

role in the turnover figures of any company, especially FMCG Company. As many of

the competitors of Nestle is going rural to increase its consumer base, Nestle is also in

the purview to increase its penetration in the every interiors of the country, so that

every product of Nestle should be available to every part of the country and on the

other hand to increase the consumer base and its sales figures. So the Problem

statement can be summaries as following

Nestle wants to go rural as many FMCG companies are doing so, including its

competitors.

Management decision problem is whether to take step to carry out the

penetration through wholesalers or not?

Management is unaware of the current level of penetration in the up-country

market?

If Penetration through wholesalers is possible then how to go about it?

The customers can be tapped directly through the distribution channel or not or

penetration en-route wholesalers would be the optimum solution?

What is the profile of the customers to have the knowledge regarding the

consumer behavior and their buying behavior?

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COMPANY PROFILE

NESTLE FOODS INDIA LTD.

Nestle Foods India is a Transnational company (TNC) with its worldwide

operations in over 70 countries. The founder of Nestle was Henry Nestle who from a

modest beginning founded the company in 1866 at Switzerland for manufacturing milk

powders for babies. At that time Switzerland faced one of the highest infant mortality

rates and the milk formula saved the lives of many infants whose mothers were unable

to breast feed successfully.

Nestle has been a partner in India's growth for the past nine decades and has

built a very special relationship of trust and commitment with the people of India. The

culture of innovation and renovation within the company and access to the Nestle

Group's proprietary technology/ Brands, expertise and the extensive centralized

Research and Development facilities helps the company to create value that can be

sustained over the long term. Nestle India manufactures products of truly international

quality under internationally famous Brand names such as Nescafe, Cerelac, Maggi,

Milky Bar, Milo, BarOne, Nestea and Kit Kat and in the recent years the company has

also introduced products of daily consumption and use such as Nestle Milk, Nestle

Dahi, Nestle Butter, Nestle Fruit 'n milk ready to drink beverage and Nestle Pure Life

bottled drinking water.

Nestle is often quoted by most as "multinational of multinationals." There is a

good reason, as less than 2% of the turnover comes from the domestic market in

Switzerland and rest from its other operations worldwide.

At present Nestle in the world's largest food company with its international

headquarters at Vevey, Switzerland. With almost 500 factories world wide it employs

many people directly or indirectly.

Nestle is under first 50 companies of Fortune’s five hundred list. It is present

over all five continents of the globe in over 80 countries. It is having 200 operating

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companies, one basic research center and 17 technological development centers and

around 2,76,000 employees.

TABLE 1.1 BOARD OF DIRECTORS OF NESTLE INDIA Ltd .

Name Designation

Antonio Helio Waszyk Chairman and Managing director

Pradip Baijia Non Executive Director

Ravinder NarainNon Executive Director

Rakesh MohanNon Executive Director

Christian Schmid Director (Technical)

Name Designation

Shobinder Duggal Director

Michael W O Garrett Non Executive Director

Richard Sykes Alternate Director

Swati A Piramal Non Executive Director

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Nestlé’s Philosophy

When Henri Nestle introduced the first commercial infant formula in 1867, he

also created a symbol of the Bird's nest, graphic translation of his name, which

personifies the company's business. The symbol, which is universally understood,

evokes security, motherhood and affection, nature and nourishment, family and

tradition. Today it is the central element of Nestlé’s corporate identity and closely

parallels the company's corporate values ad culture.

Mission Statement

At Nestlé, our research makes it possible for everyone to enjoy better food for

a better life.

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Good Food is the primary source of Good Health throughout life. We strive to

bring consumers foods that are safe, of high quality and provide optimal nutrition to

meet physiological needs. In addition to nutrition, health and wellness, Nestlé products

bring consumers the vital ingredients of taste and pleasure.

As consumers continue to make choices regarding foods and beverages they consume,

Nestlé helps provide selections for all individual taste and lifestyle preferences.

Research is a key part of our heritage at Nestlé and an essential element our future.

We know there is still much to discover about health, wellness and the role of food in

our lives, and we continue to search for answers to bring consumers Good Food for

Good Life.

Promote awareness of the effect of our lifestyle both on ourselves and on our

environment.

Exist as a financially successful, non-hierarchical, democratic organization where

workers participate in the creation and running of their working Environment, as an

example to encourage others to do likewise.

Provide an environment that encourages and helps people to develop and achieve

their potential.

Actively support co-operatives, fair trade, environmental issues and community

activities.

Vision Statement

Your VISION defines your long-term dream.  It should not be achievable.  

That may sound ridiculous, but the objective is for your vision to always be just slightly

out of your reach.  It's what you constantly strive to attain, and it becomes your reason

for being.

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ORGANISATION HISTORY

In 1860’s Henri Nestle, a Swiss pharmacist, established the world-renowned

Nestlé brand amid a spirit of innovation and goodwill. In 1866 he developed a food for

babies whose mothers were unable to breastfeed. His first success was a premature

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

value of the new product was quickly recognized when his new formula saved the

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

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

the early 1900s, the company was operating factories in the United States, United

Kingdom, 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 more than

doubled.

The first Nestle factory to begin production in the United States was opened in

Fulton, Oswego County, New York. The factory however was closed in 2001, after the

company decided that the cost of restoring, and updating the factory could not

financially be justified. Employees of the factory were furious, and raised the company

flag upside down the day the closing was announced.

After the war, government contracts dried up and consumers switched back to

fresh milk. However, Nestlé’s management responded quickly, streamlining operations

and reducing debt. The 1920s saw Nestlé’s first expansion into new products, with

chocolate the company's second most important activity.

Nestlé felt the effects of World War II immediately. Profits dropped from

US$20 million in 1938 to US$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.

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The end of World War II was the beginning of a dynamic phase for Nestlé.

Growth accelerated and companies were acquired. In 1947 came the merger with

Maggi seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus

(1963), Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding

in L’Oreal in 1974. In 1977, Nestlé made its second venture outside the food industry

by acquiring Alcon Laboratories Inc.

The Brazilian president, Lula da Silva, inaugurates a factory in Feira de Santana

(Bahia), February, 2007.

In 1984, Nestlé’s improved bottom line allowed the company to launch a new round of

acquisitions, notably American food giant Carnation and the British confectionery

company Rowntree Mackintosh in 1988, which brought the Willy Wonka Brand to

Nestle.

The first half of the 1990s proved to be favorable for Nestle: 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 Petfoods

(1998), and Ralston Purina (2002). There were two major acquisitions in North

America, both in 2002: in June, Nestlé merged its U.S. ice cream business into

Dreyer's, and in August a US$2.6 billion acquisition was announced of Chef America,

Inc. In the same time frame, Nestle came close to purchasing the iconic American

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company Hershey's, though the deal fell through. Another recent purchase includes the

Jenny Craig fitness firm for US$600 million.

In December 2005 Nestlé bought the Greek company Delta Ice Cream for €240

million. In January 2006 it took full ownership of Dreyer's, thus becoming the world's

biggest ice cream maker with a 17.5% market share.[3]

In November 2006, Nestle purchased the Medical Nutrition division of Novartis

Pharmaceutical for $2.5B. In April 2007 Nestlé bought baby food manufacturer Gerber

for $5.5 billion.

NESTLE OVER THE YEAR

Nestle was established because of Henri’s concern for his fellow citizens. Henri, who

had a passionate interest in pursuing his work ideals, hoped that his efforts would one

day benefit society. He produced the first milk cereal food for children, an achievement

that even today, is recognized as one of the major advances in public health throughout

the world.

While the original business was based on milk and dietetic foods for children,

numerous other food products have been added to the range over the years. These

include chocolate, instant beverages, culinary, refrigerated and frozen products, ice

cream, mineral water and pet food.

Nestlé’s other products include numerous chocolate bars as well as Nescafe

coffee and Perrier water.

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TABLE1.2 OUR BRANDS

Milk Products & Nutrition Chocolates&Confectionery

NESTLÉ EVERYDAY Dairy Whitener NESTLÉ KITKAT

NESTLÉ EVERYDAY Slim NESTLÉ KIT KAT LITE

NESTLÉ EVERYDAY Ghee NESTLÉ MUNCH

NESTLÉ Milk NESTLÉ MUNCH POP CHOC

NESTLÉ Slim Milk NESTLÉ MILKYBAR

NESTLÉ Fresh 'n' Natural Slim Dahi NESTLÉ MILKYBAR CHOO

NESTLÉ Jeera Raita NESTLÉ BAR-ONE

NESTLÉ NESVITA NESTLÉ FUNBAR

NESTLÉ NIDO NESTLÉ Milk Chocolate

NESTLÉ MILKMAID NESTLÉ Éclairs

NESTLÉ MILKMAID Fruit yoghurt POLO

NESTLÉ MILKMAID FUNSHAKES POLO Power mint

NESTLÉ CEREVITA POLO Zero

NESTLÉ TANG EEZ

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INDUSTRIAL SCENARIO

The processed foods sector, which currently accounts for less than 2% of total

food consumption in the country, is slated to grow at a fast pace. The Indian

Government has identified Food Processing as a high potential industry and has been

creating a policy environment conducive to its growth. Historically, the policy

framework favoured small and unorganized players while the MNC players were

restricted from adding capacities. This led to the mushrooming of a vast unorganized

sector. Large players with strong marketing network and brand equity were forced to

source from third party producers. During the last few years, however, several food

products have been de-reserved from small-scale sector. MNC’s as well as domestic

players have made aggressive investments in the sector. Quantitative restrictions on

import of several food products have been lifted, leading to greater availability of

imported products. MNC’s are able to offer a wider product range, without the need to

establish a manufacturing base.

COMPETITION

Baby food and Instant coffee are categories where brand loyalties are very

strong and Nestle is the market leader. HLL is a significant competitor to Nestle in

instant coffee; while Heinz is the main competitor in the baby foods market. The

market for culinary products, semi-processed foods such as noodles, ready mixes for

Indian ethnic breakfast and sweets, is largely an urban market. HLL and Indo Nissin

Foods are the main competitors in these product segments. Nestle has also achieved a

significant 25% share in the chocolate/confectionery market. The company has recently

expanded its dairy products portfolio to include, milk, curd and butter. The company

also forayed into the bottled water segment with the launch of its Perrier brand in the

premium mineral segment and Pure Life in the purified water segment.

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OBJECTIVES OF NIL

Be in every way the leading company in Indian food industry.

Ensure high quality standards in everything we undertake.

Provide our consumers with superior quality products.

Provide our shareholders with rapid growth & fair returns.

Provide our employees a challenging & satisfying work environment.

To be a good corporate citizen & contribute positively to the society in which

we operate.

DISTINGUISH CHARACTERISTICS OF THE INDUSTRY

FMCG companies sell their products directly to consumers. Major features

which distinguish this sector from the others are as follows:

LOW CAPITAL INTENSITY

Most product categories in FMCG require relatively minor investment in plant and

machinery and other fixed assets. Therefore shortage of product for want of capacity

would be a rare phenomenon. The turnover is typically five to eight times the

investment made in a Greenfield plant at full capacity. This is also due to the fact that

the business being marketing driven, players do not integrate backward. Also, the

business has low working capital intensity as bulk of sales from manufacturers takes

place on a cash basis.

HIGH INITIAL LAUNCH COST

Nonetheless, there is a large front-ended investment made in new products

including cost of product development, market research, test marketing and most

importantly its launch. To create awareness and develop franchise for a new brand

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requires enormous initial expenditure is required on launch advertisements, free

samples and product promotions. Launch costs are as high as 50-100% of revenue in

the first year and these costs progressively reduce as the brand matures, gains consumer

acceptance and turnover rises. For established brands, advertisement expenditure varies

from 5 - 12% depending on the categories. It is common to give occasional push by re-

launches, which involves repositioning of brands with sizable marketing support.

TECHNOLOGY

Basic technology for manufacturing is easily available. Also, technology for

most products has been fairly stable. Modifications/ improvement rarely change the

basic process. Nonetheless, major global players spend enormous sums on R&D due to

their ability to spread cost over the wider base of their global operations. Their R&D

efforts are towards:

Cost effective manufacturing process without compromising on quality and

functional performance.

Research driven formulations, which give cutting edge.

High standards of hygiene/ purity for personal care and food products.

Standardized formulation, which can be used across countries.

MARKETING DRIVE

In relative terms, marketing function has greater importance in FMCG

companies. The players have to reach out to mass population and compete with several

other brands which essentially offer similar products. The perceived differences are

greater than the real differences in the product.

MARKET RESEARCH

Consumers' purchase decisions are based on perceptions about brands. They

also keep on changing with fashion, income and changes in lifestyle. Unlike industrial

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products, it is difficult to differentiate products on technical or functional grounds.

With increasing competition, companies spend enormous sums on product launches.

Market research and test marketing become inevitable.

BALANCE SHEETS ARE MISLEADING

The most critical asset for FMCG companies is represented by its brands and

distribution network. Brands are bought and sold like any other assets. Typically, when

an FMCG business is sold, the value of the brand is several times of that of tangible

assets. However as per the current accounting practices in most countries, investment

made in building of brands are written off as revenue expenditure. This is due to high

risk involved with a new brand, subjectivity involved in its valuation, lack of

consistency and difficulty in separating a brand's value from that of tangible assets

employed in the business. While a successful brand will pay back the investment

several times, in case of brand failure, entire investment has to be written off. High

return on net worth of most established companies is also misleading due to the fact

that the assets sans brands are considerably understated in the balance sheet.

THIRD-PARTY MANUFACTURING

Manufacturing of products by third party vendors is quite common. Third party

manufacturing used to give fiscal advantages particularly of excise duties. These have

been considerably diluted in the past 7 years of reforms. In the last budget the

government proposed to change the basis of excise levy to MRP basis. A total of 43

product categories have been brought under the MRP net in the subsequent budgets.

Besides excise benefits, third party manufacturing also provides other benefits.

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TABLE 1.3 THE INDUSTRY CHRONOLOGY

YEARS DEMANDS

RUPEES TERMS

GROWTH RATE

1990 12 000 tones

350 crores 2 %

March -1995

Excise Duty increased to 15 percent

3 %

Excise duty further increases to 28.75 % Cocoa Prices Zoom

Drops to 6-7 %

1998 Excise duty reduced to 25 %, further to 20 percent and finally to 18 %. Import Nestle launches Kit-Kat-sets up a new unit. Production Arrangement with CAMPCO continues. Mars selects production site.

2005 Market zooms up due to greater marketing thrust by players (especially Nestlé’s) Chocolates-Selected import Item

23 %

2006 Chocolates-Open General License 20 000 tones

23 %

2007 Quantitative restriction lifted 32000 tones

23.6 %

The Indian Chocolate market can be sliced into four parts.

1. MOULD CHOCOLATE SEGMENT- comprising slab chocolates like Dairy milk

chocolates, etc. These are made by pouring the ingredients into moulds.

2. COUNT LINE SEGMENT - comprising bars like 5 star, Bar One, Perk, Kit Kat,

etc. These have ingredients other then chocolate and are usually Bar shaped, making for

chunky bites.

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3. CHOCO-PANNED SEGMENT- comprising chocolate forms like Butterscotch,

Nutties, Tiffin’s, etc. Panned varieties have different cores/centers which are covered

with a layer of chocolate.

4. SUGAR-PANNED SEGMENT - comprising chocolate forms such as Gems,

Chocolate éclairs, etc. These generally have a sugar coating on the outside. The

rejuvenation exercise of Nestlé’s, was one of the key reasons behind the churning up of

the country’s Rs.350-crore chocolate market to a growth rate of 32 percent in 2005,

from a mere a few years earlier .

Chocolate Market shares

CADBURY74%

NESTLE20%

AMUL5%

OTHERS1%

CADBURY

NESTLE

AMUL

OTHERS

Fig.1.1

NESTLE FOODS INDIA LIMITED- HISTORIAL HIGHLIGHTS

Incorporated in 1959 as Food specialties, Nest India (NIL) was promoted by

Nestle Alimantana, Switzerland, which presently holds 51% equity stake in the

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company. Manufacturing in India began with the start up of the Moga Factory in 1962.

Nestlé’s first unit at Moga, Punjab is manufacturing:

Milk products

Infant milk formulae

Weaning cereals

Culinary products

Beverages

It is the main manufacturing unit of Nestle India Limited. The second factory at

Choladi, Tamil Nadu to produce beverages i.e. 100% EOU for instant tea was set up in

1967.

The third plant in Nanjangud, Karnataka was set up in 1989 to produce

Instant Coffee

Health Beverages

The fourth plant at Samalkha, Haryana, was set up in 1993, to produce

Weaning cereals

Culinary products

Health beverages

Milk products

The fifth plant at Ponda, Goa was set up in 1994 to produce:

Wafers

Waffles

The sixth plant at Bicholine, Goa was set up in 1997 for manufacture of

culinary products. Nestle India is now putting up another factory at Pant Nagar in

Uttaranchal. Nestle India will invest over Rs 100 crores in the factory. This is the

seventh plant of Nestle India and like the other plants, this plant will also be of

international standards. This factory at Pant Nagar will initially manufacture culinary

products including its very popular MAGGI. The factory will benefit from and will be

closely aligned with the research and Development Facilities of Nestle Group and its

proprietary, world class technology.

Nestle India; the largest food company in the country is continuously looking at

new niches in the market place for its various products.

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In milk products Nestle has made a considerable mark. For instance, the company was

the first to introduce a Dairy Whitener with its product 'Everyday'. And till today that

product is a brand leader despite the presence of a host of other brands in the field. IN

the case of Milkmaid condensed milk, Nestle relaunched the product as desert maker

and has seen the sales graph climbing since.

In baby foods, Nestle has made its strong hold with Lactones and Cerelac.

Nestle is also popular in pure ghee segment. Its Everyday pure ghee has gained a quite

satisfactory market share; Nestle has also entered into fitness food products. Nestle

today is a household name. Nestle extended the product line in coffee by bringing in

Dolco, and then Sunrie.

In 1990, NIL entered the chocolate business introducing Nestle Premium

chocolate. Nestlé’s products are sold under brand names such as a Milkmaid, Everyday,

Cerelac, Nescafe, Maggi, Lactones, and Éclairs etc. It launched the world famous Kit

Kat chocolates in 1995. During the year 1996 Milo the world's largest selling chocolate

energy food drink was launched.

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MAJOR PRODUCTS

RECENTLY LAUNCHED PRODUCTS

Set Dahi

New Tomato and Curry Flavors in Maggie Noodles

New Dal and Atta in Maggie Noodles

A new confectionery – Nestle Chocó Stick

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Soft Chewy fudge Milky bar Choo

Nestle` recently launched products Tea Iced Tea

Nestle slim milk

The company is also setting up ‘CAFÉ NESCAFE’ and ‘COFFEE CORNERS’

across metros and mini-metros in India.

NESTLÉ: 4.6% ORGANIC GROWTH IN FIRST QUARTER

Group-wide organic growth of 4.6%

6.3% sales increase at constant exchange rates

Swiss franc sales down 7.5% as a result of a 13.8% negative foreign exchange

impact

The overall organic growth of 4.6% in a difficult quarter, aggravated by late

Easter, is mainly due to our successful drive for innovation and our strong market

positions. Our consolidated sales clearly took a hit from the strong Swiss franc, but we

expect this effect to taper off in the course of the year. “We are confident that the rest

of the year will bring an acceleration of growth and that we will therefore achieve our

stated objective of improving the Group's performance in constant currencies for 2007."

The Nestlé Group's consolidated sales for the first three months of 2007

amounted to CHF 19.7 billion. In constant currencies, sales increased by 6.3%,

reflecting organic growth of 4.6% (real internal growth 2.5%, pricing and others 2.1%),

as well as a small contribution from acquisitions, net of divestitures. As a result of the

strong Swiss franc, the adverse foreign exchange effect was 13.8%.

Foreign exchange factor held back consolidated sales, and real internal growth was

impacted by the late Easter date and the competitive situation in Japan. Additionally, in

keeping with the Group's policy of ensuring margin improvements, Nestlé raised prices

in several product categories to reflect cost increases. Nevertheless, the Group expects

its strong brands, its broad distribution network and its capacity for innovation to lead

to an improvement in sales growth as the year goes on.

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TABLE 1.4 SALES BY MANAGEMENT RESPONSIBILITIES AND GEOGRAPHIC AREA

Jan.-March Jan.-March Organic Growth RIG

2007 2006 Jan-March 2007 Jan-March 2007In CHF million % %

Zone Europe 6'778 '628 +1.8 -0.4

Zone Americas 5'978 '154 +4.8 +1.9

Zone Asia, Oceania and Africa 3'291 '633 +3.2 +1.9

Nestlé Waters 1'719 '740 +10.9 +10.7

Other Activities * 1'947 '156 +9.4 +8.4

Total 9'713 1'311 +4.6 +2.5

The growth rate in Western Europe reflects the importance of chocolate and ice cream

to that Zone, both of which were impacted by the late Easter date. There should be

some improvement, therefore, in the first half. Canada and the US performed well, but

there was some slowness in Latin America. Importantly, however, the key markets of

Brazil and Mexico both achieved positive RIG and organic growth. Most Asian

markets are growing at a good rate, with Greater China outperforming its ambitious

target of double-digit RIG. In Japan measures were taken to improve the quality of

sales in the ready-to-drink business. The water business and Alcon again delivered

good growth, capitalizing on their leadership positions in their respective markets.

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SALE In CHF million

Among the product groups, beverages, especially soluble coffee and coffee

mixes under the Nescafe brand, and powdered beverages, under brands such as Milo

and Mosque, did well, as did the specialty roast & ground coffees. There was good

progress also in the chilled and the frozen culinary sector; the recently acquired Chef

America achieved double-digit growth. The performance of chocolate and

confectionery was impacted by the late Easter, as well as by price increases.

20062007

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MARKETING STRATEGY

IMPROVED PENETRATION

Improved penetration of brands is an important consideration in the Company’s

vision of sustained growth. Expansion of distribution and reach was a focus area. Some

of the initiatives that are expected to contribute significantly include introduction of

single serve convenience packs at affordable price point, such as NESCAFE Redimix

and MAGGI Hot Cup Soup Powder. The initiative to automate distributor operation has

continued and is expected to be complete during 2005. This will help NIL achieve

greater speed and transparency in the flow of information, ensure better levels of

customer contact and enable faster response to consumer needs.

OUT-OF-HOME CONSUMPTION

The Company continued to strengthen initiatives to facilitate availability of

products for out of-home consumption. These initiatives were supported by a number

of new product launches. The development of NESTEA Instant Tea premix for hot

vending offers consistency and convenience as compared to tea bag preparation;

NESCAFE Frappe premix fort cold vending has been introduced in Quick Serve

Restaurants; Low Sugar NESCAFE premix has been developed for health conscious

consumers; MAGGI Hot Cup Soup dispensed through vending machines is an

innovative and pioneering concept in the market. Large number of Nestle Consumption

Zones including Cafe NESCAFE, Coffee Corners and multibrands stalls were set up

and innovative vending machines were introduced for Iced Tea. Sustained focus on

continuously improving the value to the consumer, helped to introduce vending

machines with eight beverage options to offer consumers a range of specialty beverage

at the same location.

On the manpower development front, programmed during the year continued to be

focused on the operational front more particularly sales and production.

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To support the growth plans and distribution strategy, and simultaneously improve

the operational efficiency, the on strengthening chain continued to receive attention

during the year.

INNOVATION, RENOVATION AND TECHNOLOGY FROM NESTLE

The continuous efforts on product innovation and renovation during the year has

contributed significantly to the performance of the Company during the year and would

remain a key element even in the future to sustain leadership and profitable growth,

especially in a market that is becoming increasingly competitive under the General

License Agreement with Nestle Group, NIL has the license for know- how, patents,

brands and other intellectual property, in relation to the products manufactured and/or

sold by your Company. Access to proprietary technology of Nestle and the fruits of

extensive centralized Research and Development is available on a continual basis. The

excellent performance of the Company over the years has been greatly influenced by

these inputs.

COMMUNITY DEVELOPMENT

Initiatives by the Company, for community development continued to be focused

on programmed in the areas where the factories are located. These programmed gives

importance to providing drinking water facilities in schools, supporting and

participating in immunization programmers, providing basic facilities to local schools

and arranging medical camp.

SUPPLY CHAIN (DISTRIBUTION STRATEGY)

Thrust on strengthening the supply chain continued to receive attention during the

year and the Company advanced towards becoming the Best in Class Supply Chain in

the FMCG sector. Distribution costs were contained by increase and efficient use of

railways for primary dispatches. Simultaneously, the vehicles transporting raw and

packing to factories were used for finished goods dispatches too, thereby saving freight

costs. Efforts in collaborative logistics with other companies and third party services

providers have begun to yield benefits.

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In order to improve response to customer demand, forecasting was given

considerable attention. This has led to an empowered demand planning role that

ensures optimized inventory as well as satisfaction of consumer demand. Initiatives in

e-connectivity with the distributors and also with the suppliers are further aligning our

efforts in this direction.

MARKETING STARTEGIES OF NESTLE INDIA

LIMITED

Marketing strategy is the complete and unbeatable plan designed especially for

attaining the marketing objective of the firm.

The marketing objectives indicate what the firm wants to achieve; the marketing

strategy that decides the success at the business unit level which in turn decides the

total corporation’s success. The link between marketing strategy and overall success is

indeed direct and vital. And in this linkage lies the significance of marketing strategy.

Nestle India ltd. has an aggressive marketing strategy which is very well

understood when one goes through the in-depth study of the 4-P’s of the marketing and

price strategies with respect to its products. One comes to the conclusion that NIL has a

well defined roadmap to success i.e. to reach its ultimate objective of realizing

customer satisfaction through value for price products.

PRODUCTS

Quality is the essential ingredients in all of our brands and the reason why

millions of people choose Nestlé’s products every day. Our consumers have come to

trust in Nestlé’s commitment to excellence and turn to Nestle brands to maintain

nutritional balance in a fast paced world.

BABY FOODS

The production of infant food goes right back to the origins of the Nestle

Company. Henri Nestlé’s `Farine Lace’s was the first product to bear the Nestle’ name.

In 1867 a physician persuaded Henri Nestle’ to give his product to an infant

who was very ill—he had been born prematurely and was refusing his mother’s milk

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and all other types of nourishment. Nestlé’s new food worked, and the boy survived

from the very beginning, Nestle' product was never intended as a competitor for

mother’s milk.

In 1869, he wrote; “During the first months, the mother’s milk will always be

the most natural nutrient, and every mother able to do so should herself suckle her

children.”

The factor that made baby foods success in the early days of the Nestle

company—quality and superior nutritional value—are still as valid today for the wide

range of infant of infant formula, cereals and baby food made by Nestle. The World

Health Organization (WHO) recognizes that there is a legitimate market for infant

formula, when a mother cannot or chooses not to breast feed her child. Nestle' markets

infant formula according to the principles and aims of the WHO International Code of

Marketing Breast Milk Substitutes, and seeks dialogue and cooperation with the

international health community and in particular with the WHO and UNICEF, to

identify problems and their solution. Nestlé’s expertise as the world’s leading food

manufacturer

Gained over more than 125 years, is put the disposal of health authorities, the

medical profession and mothers and children everywhere.

Milk based products and baby food contributes to 34% of Nestlé’s turnover. For

ensuring regular procurement of good quality milk, Nestle has developed a network

around its Moga factory for collection of fresh milk everyday from the farmers. Nestle'

has a dominating 87%market share in the baby weaning foods with its Cerelac and

Nestum brands. Infant milk powder is sold under the Lactogen and Nestogen brands.

Brand loyalties are very high in categories such as infant food and weaving cereals,

enabling the company to command a price premium.

Other milk products include dairy whiteners (21% market share ) sold under

the Every Day and Tea Make brands, sweetened condensed milk and ready to cook

mixes for traditional Indian sweets sold under the Milkmaid brands. The company also

markets ghee (6% market share) under the Every Day) brand. Nestle has expanded its

milk product portfolio with the launch of new dairy products such as UHT milk, Curd

and Butter. Huge investments arte being made in building a diversified dairy business

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and the distribution infrastructure for the same. Milk products sales registered a 10.6%

growth during 2006. The major competitors are HLL with Milkana, Amul with Amulya,

Britannia with Britannia Dairy Whitener, and Kwality with Kream Kountry. Britannia

with 11% of market share, Amul with 19%, and HLL with 8%, Kwality with 4% of it,

Rest of the market share lies with local players like Nova, Indiana etc. local players are

very active & some of them are operating under the small scale industries. Nestle is still

the market leader in the long term & is continuously on the 4-P’s to grow further.

DAIRY BRANDS

Nestle' has long been a major player in the dairy industry, originally with well

known shelf stable brands such as Nido, Nespray, La Lechera and Carnation, then

building a strong international presence in Chilled dairy and Ice cream under the Nestle'

brand.

Innovation and renovation play a major role in the development of milk based products

as well as of breakfast cereals, managed as a joint venture with General Mills.

The area of nutrition, with its benefits to health and wellbeing, is having a

significant impact on the development of our business. A wide range of proven, science

based solutions such as starter and follow-up formulas, growing-up milks, cereals,

eternal diets, oral supplements and performance foods are actively developed and

successfully brought to market under the Nestle brand.

BREAKFAST CERAELS

Although cereals have been with mankind in form or another for millennia, it

was not until the mid 19th century that scientific research, technological innovation and

then influence of a group of American health reformers, gave rise to the currently

foodstuff we know today as breakfast cereal.

Nestle' has a joint venture with General Mills outside North America, Cereal

Pardoners Worldwide, which is active in more than 80 countries.

The joint venture began in 1990 and its rapid growth has been characterized by

branding and lately the launching of breakfast cereal brands into the fast-growing cereal

bar market.

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ICE CREAM

There are many myths and stories as to the invention of ice cream: was it Macro

Polo who brought it back from China (along with pasta)? Probably not, considering he

most likely never visited China.

The story of its popularity is however connected with the invention of

technology to make it on an industrial scale and to keep it cold once made. Before

refrigeration techniques, food was frozen with the aid of ice mixed with salt which was

either stored in ice house or shipped from cold countries. But then at the end of the 19 th

century, both making and freezing it became easier and together with the invention of

the ice cream cone made the product boom.

Today the United States is the absolute leader in terms of volume consumed but

the highest per head consumers are in New Zealand. Flavors you’d never thought of

and yet they’re commercially available:

Sorbets- Smoked Salmon, Tomato, Cucumber Ice-Creams – Garlic, Avocado, Sweet

Corn.

The ice cream cone is the most environmentally friendly form of packaging. A

system from Damascus, Ernest E Hamwi is credited with its invention. Apparently

during the 1904 St Luis World’s fair. His waffle booth was next to an ice cream vendor

who ran short of dishes. Hamwi rolled a waffle to contain ice cream and the cone was

born.

CHOCOLATE & CONFECTIONARY

The story of chocolate began in the New World with the Mayans, who drank a

dark brew called cacahuaquchtl. Later, the Aztecs consumed chacahoua and used the

cocoa bean for currency. In 1523, they offered cocoa beans to Cortez, who introduced

chocolate to the Old world, where it swiftly became a favorite food among the rich and

noble of Europe.

From the beginning, turning raw, bitter cocoa beans into what one 17 th century

writer called “the only true food of the gods” has been a fine art, a delicate mixture of

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alchemy and science. Centuries ago it was discovered that by fermenting and roasting

the beans, an almost otherworldly flavor could be created.

In 1875, after years of trying, a 31-year old candy madder in Vevey named

Daniel Peter figured out how to combine milk and cocoa powder. The result –milk

chocolate.

Peter, a friend and neighbor of Henri Nestlé’s started a company that would

quickly become the world’s leading maker of chocolate. For three decades the company

called Peter, Cailler, Kohler relied on Nestle for milk and marketing expertise. In 1929,

the almost inevitable merger took place as Nestle’ acquired Peter, Cailler, and Kohler.

Indian chocolate market is growing day by day. Premium segment is opening

upon. The companies like Nestlé’s are launching indigenous product made to

international standards of the 20,000 tonnes chocolates market worth about Rs 400

crore, Nestle’s accounts for around 65% of market share followed by Nestlé’s around

23%. Amul has 5% of the share, with the minor players taking the Rest.

Though with much smaller portfolios, Nestle is putting up a touch fight from

the treat for kids, chocolate are now being positioned as near- meal substitute. Thanks

to the initiative taken by Nestlé’s India. The market has become broad based in the

sense that adults are important target segments now. The repositioning of Nestlé’s dairy

milk in 1994 as “real taste of life” grew the entire category of milk chocolates by 20%.

If facilitated the repositioning of Nestle brands in the basket.

5 STARS: As energy bar, earlier targeted to teenager, before launch of perk 5 star

energy bar positioning made it snacking chocolate with Nestle' pitching Bar-one in

1993 gaian it “For those in between times”.

MUNCH: Munch is the market leader in the chocolates. It is the largest selling

chocolate in India & is followed by Nestlé’s Dairy Milk.

E’CLAIRS: competing in the chewable toffee segment, Éclairs was relaunched by

Nestlé’s during the mid-90 with a new name milk-éclairs. Its worth is 4000 tones now.

Nestle' also presents here NESTLE' E’CLAIRS. Due to launch of multibrands Nestle can

not pay attention to brands like Mr. Pop Candy Lollypop.

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KIT-KAT: Kit- Kat which was launched in India in 1995 today leads the chocolate

coated wafer bars category. It has 11.5% share of chocolate market. But Nestle’s perk

is with9%.

PRODUCT PRICE WEIGHT

KIT- KAT Rs. 14 36 gm.

PERK Rs. 10 2x17.5 gm.

Nestle forayed into chocolate & confectionary in 1990 and has cornered a

fourth share of the chocolate market in the country. The category contributes 14% to

Nestlé’s turnover. It has expanded its products range to all segments of the market the

Kit-Kat brand is the largest selling chocolate brand in the world. Other brands include

Milky Bar, Marbles, Crunch, Nestle Rich Dark, Bar-one, Munch etc.

Amul is also competing in this category especially in western regions of India.

But Nestle' still has its own position in the market. The sugar confectionary portfolio

consists of Polo, Soothers and Frootos. All sugar confectionary products are sold under

the umbrella brand Allen’s. Nestle has also markeys some of its imported brands like

Quality Street, Lions and After Eight. New launches such as Nestle Chocó Stick and

Milky Bar Choo at attractive price points to woo new consumers chocolate

confectionary sales registered a strong 21.5% of growth in 2006 aided by good volume

growth in Munch, Kit-Kat and Classic sales. Nestle relaunched Bar-One during the year

1993.

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PREPARED FOODS

Convenience foods—packaged soups, frozen meals, prepared souses and

flavorings----date back more than a century. With the industrial revolution came

factory jobs for women and less time to prepare meals.

The problem was so widespread that it became the object of intense study in 1882 by

the Swiss Public Welfare Society, which offered a series of recommendations,

including an increase in the consumption of vegetables.

The society commissioned Julius Maggi, a miller with a reputation as an

invention and capable businessman, to create a vegetable food product that would be

quick to prepare and easy to digest. The results –two instant pea soups and an instant

bean soup --- helped launch one of the best known brands in the history of the food

industry. By the turn of the century, Maggi & Company was producing not only

powdered soups, but bouillon cubes, sauces and flavorings.

Maggi merged with Nestle in 1947.

Buitoni the authentic Italian brand, which has been producing pasta and sauces in Italy

since 1827, became part of the Nestle' Group in 1988.

Ready to cook food/ cooking aids are sold under the umbrella brand name

Maggie. Culinary product account for about 14% of Nestlé’s turnover. Maggie is the

market leader in the noodles (45% market share), the Ketchup (43% market share) and

soups (41% market share) categories.

Other products sold under the umbrella brand Maggie, are ready-to-cook

gravy/sauces, soups, seasonings, as well as traditional Indian foods such as pickles and

instant snack mixes (dosa mixes). New taste variants are continuously launched to add

variety to the product offerings.

HLL, Heinz, Knor & Indo Nissin Foods are Major competitors in this category.

Gits mixes, Top Raman, Hot serve, are some products that are in competition to

products under Maggie brand. But Maggie has used Quick and Easy cooking as its

Unique Selling Preposition that worked to distinguish the Nestle' to lie ahead than all

brands. HLL as brand Wagon is the part of our daily life uses creative selling

prepositions to maintain its position as the top FMCG firm in India. Its marketing

strategies (including launch, pricing & distribution strategy are good enough to shatter

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the competition, so Nestle is working as an early worker to remain and lead in the

market.

The distribution network of Indo Nissin food is strong enough & it has covered

a large portion of market in very short time. Its distribution network is not very long &

the prices are also low. The company had adopted a low budget promotional strategy

and is very fine at merchandising. These all are working together for the good of the

company.

Nestle has the advantage of great brand image & it is actually working for maintenance

and growing it.

BEVERAGES

In 1937, Nestle scientists perfected a powered coffee product that was

introduced in 1938 under the brand name Nescafe’- the world’s first commercially

successful soluble coffee.

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

of the Nescafe’ plant in the United States (more than one million cases) was reserved

for military use only. Since then, Nescafe’ has become one of the world’s best-known

brands. In addition, Nestle' is a major producer of chocolate-based and malted drinks.

Its leading brands, Nesquik, Milo and Nescau are very popular with a growing

number of young people around the world. Nestle' ready-to-drink beverages Nestea and

Nescafe’ are sold in various forms (cans, bottles). These are distributed by Nestlé’s

joint-venture with the Coca-Cola Company, Beverages Partners Worldwide. Nestle' is

also present in fruit juices (Libby’s) as well as espresso coffee in capsules (Nespresso).

Beverages like coffee, tea and health drinks contribute to about 30% of Nestlé’s

turnover. Beverages sales registered a 155% growth during 2007. While about 14% of

sales come from domestic market, exports contribute to about 16% of sales.

Nestle Nescafe’ dominates the premium instant coffee segment. Nestlé’s other

coffee brand Sunrise has also been relaunched under the NESCAFE’ franchise to

leverage on the existing equity of the brand. Nestle' has focused on expanding the

domestic market through price cuts and product repositioning. However it has been

losing share in the domestic market, where it has a 37% market share.

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The major competitors are Coca-Cola, which launched coffee & tea under brand

name Georgia in 2002. Its tea in four flavors which are classic, Adark, Masal & Elaichi

and coffee in three variants Classic, Cappuccino & Mochaccino to suit the taste of

customer. They adopted the strategy to distribute vending machine to even small

retailer so as to cover a large market. Tata coffee also Works against Nestle'. But n is

still the market leader in terms of market share, Customer’s choice & quality.

Milo, brown-malted beverages was launched in 1996. It has an estimated

volumes share of about 35 in the malted food drink segment.

Nestlé’s Bourn vita & HLL with Boost are the major players in the market

along with Milo. Bourn vita is with largest market share of 35%. The promotional

strategies of Nestle' for Milo are working fast for the good of Milo. Nestle' has

launched non-carbonated cold beverages such as Nestea Iced Tea and Nescafe’ Frappe

during 2004.

BEVERAGES

Nestle' Food Services provides food and beverages professionals with a wide

selection of branded products. Our solutions meet the growing opportunities to service

consumers in out-of-home channels.

Beverages solutions featuring well known consumer brands such as Nescafe’,

Nestea and Nesquik as well as host professional brands including Minor’s, Chief and

Davigel are part of the diverse portfolio of Nestle' Food Services.

Working to meet the need of Food Service operators across a wide spectrum of

business channels such as quick service restaurants supports our commitment to giving

consumers the brands and quality they come to expect and rely on in the home as well

as out of the home.

BOTTLED WATER

Nestle' brgan its entry into the water business in 1969 with a 30% stake in the

owners of the Soci’e’Te’ Ge’ne’le Des Mineral’s De Vittal. It acquired a controlling

interest in SGEMV in January 1992, and went on in May of the same year to buy the

entire Perrier Group.

In 1992, Nestle' was the first company to dare to launch a mineral water,

Valvert, in five different countries at once. It’s originally lied in the use of an all-new

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plastic, P.E.T. (Polyethylene teraphthalate), which is stronger and more elastic than the

PVC used since 1968. Besides P.E.T. is recyclable.

By the end of 1997, the group was present on every continent, and the purchase

of San Pellegrino gave it the leadership in the Italian market. In 1998 f or the first time

in its history, Nestle' associated its name with bottled water: Nestle’ Pure Life.

The brand was launched in Pakistan and soon appeared in Brazil, followed by

Argentina, Thailand and Philippines, China and Mexico in 2000. in 2001 India, Jordan,

and Lebanon followed and in 2002, Egypt, Uzbekistan and then United States.

Nestle’ Pure Life is drinking water that has been treated and rematerialized

using a standardized industrial process to ensure purity and quality and is marketed in

emerging countries.

A second product with the Nestle' name was launched in May 2000, this time in

six European countries: Nestle’ Aquarelle. A natural spring water currently from nine

different springs in France, Germany, Belgium, Hungry, Italy and Spain, Nestle'

Aquarel also uses the multi-source concept to satisfy new consumer expectations,

especially for water with a low mineral content that the whole family can drink.

In April 2002, the group changed its name to Nestle' Water’s, a token of Nestle'

decisive commitment to the bottled water market, which now represents 9% of its sales.

Today, Nestle' Water’s is established in 130 countries and markets about 70 different

brands. The group is able to offer top quality brands ad innovative packaging to meet

the individual needs of the water consumer all over the world, whenever, wherever and

however thanks to the wide variety of its offer in terms of distribution and product mix.

PETCARE

Nestle' entered the pet care business with the purchase of carnation in 1985, and

we consolidated our position in Europe with acquisition of the spillers brand in 1998,

and further with the acquisition of Ralston-Purina in 2001 creating Nestle' Purina Pet

Care.

Carnation for its part developed the Friskies brand in the United States in the

1930s and in selected markets in Europe and Asia since the 1960s. Today Nestle' is

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well-positioned with a balanced portfolio of internally developed and recently acquired

brands.

Technologies to develop and add value continually for pets and their owners are

engineered into our current product range. These include state-of-the-art nutritional

innovations, such as products which help maintain feline urinary tract health or

innovations for the most discriminating of pets and their owners. Nestle' has already

become an industry leader and we continue to develop our international presence.

CONSUMER SERVICES

At Nestle' we are committed to offering consumers high-quality food products

that are safe, tasty and affordable. The Nestle' seal of guarantee is a symbol of this

commitment.

We also believe in maintaining regular contact with our consumers. This applies

both to how we present our products and to how we address our consumer’s questions

and concerns. When Henri Nestle' prepared his first boxes of infant formula for sale, he

put his address on the packages so people would know where to go if they had

questions. Today our consumer relationship panel with the words “Talk to Nestle'”

expresses the same commitment.

This is why we have a worldwide Nestle' consumer services network devoted to

caring for our consumers. Our people have expertise in a wide range of areas such as

nutrition, food science, food safety and culinary expertise. They provide the prompt,

efficient and high quality service that consumers expect from Nestle'.

In addition we teach them talk with consumers and above all, to listen.

Listening helps us to understand what people want. Nestle' uses the insights gained

from relationships with consumers to driver product development.

At Nestle' we care for our consumers because our success depends on meeting

their needs and expectations. Through listening and understanding we can make

products that they will want to use all through their lives.

PROMOTION

Promotion is an attempt to influence customers. Its aim is inform & remind the

prospective consumers of the company’s offer & to advocate the cause of its production

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in the minds of its audience. Thus informing, reminding & advocating about the

company’s product are real purpose of the promotion component of the mix.

NIL has rightly understood the production of a good product is not enough to

ensure success in the market, unless target customers are aware of its existence,

features and products. So company has framed a very strong and very wide

communication plan.

ADVERTISING

NIL is associated with MUDRA advertising company in India. It has properly studied

the market and developed the commercials in several languages. NIL has booked spot

for the advertising in almost all the channels.

EXHIBITIONS & TRADE SHOWS

It also participates in trade shows & exhibitions.

IN 1997, at Jawaharlal Nehru Stadium in an exhibition NIL displayed its all old and

new products. This was the time when MILO was launched in India.

AHARA 97, Here Nestle' India Ltd. presented its wonderful world of Nestlé’s

recipes along with its products. It also exhibited the various to make Maggie tastier.

This shows that Nestle' never leave its product even if it is market leader & is the good

source of its revenue.

FOOD EXPO 98, organized by CII & attended by over 100000 people. The

Mumbai branch of NIL ensured high visibility for its products like products under

Maggie brand, MILO & chocolates by setting the venue ablaze with Nestlé’s hues Vic

banners, umbrellas posters & product displays.

INTERNATIONAL FOOD CONFEDERATION 1998: IFCON provided

opportunity for the leading, international food scientists, technologists & research

institutes to reflect massive change sweeping across the food processing sector.

FOOD EXPO 1999:

In October in Chicago NIL participated there also.

CHILDREN SPORT MEET 98:

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At DPS R. K. Puram children between age group of 4-13 years put their best

foot & arm forward. Attired in colorful MILO T-Shirts & Caps they participated in 12

events.

FREE GIFTS

Like giving school Kit i.e., pen scale etc, with Maggie. Noodles & chocolates,

Free Cricket bag or a sport watch, badminton racket, bag etc on the payment of a very

minimal amount of Rs. 10 with Milo.

OTHERS

Some other examples of exhibition in which NIL participated are:

India international trade fare (IITF).

Nestle' Hungama 1998.

Maggie Display Contest.

Splendor 1999.

Boarding School Development Campaign.

Moga Summer School Camp.

The competitors of NIL are also very Active and they also participate in these

events and sponsor some event in their own ways & methods. HLL participates in most

of the regional trade shows through its retailers. It displays its new products at large.

HLL is the 1st largest company of India in terms of advertising & promotional

expenditure. It also invents largely on window display contests retail level.

Amul promotes its products by using emotional appeal in order to use the emotional

aspects if Indian citizen. It uses kiosks and hoardings to promote its product range. The

promotional expenses of Amul are not so big as that of the MNC’s but still it is a

respected firm in our eyes.

Nestles under its promotional campaign that is designed by Ogilvy & Mather the

adv shows the power of positioning with emotional benefits and it really works for

Nestles & leaves it with dramatic increase in sales.

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PLACE:

Physical distribution is also called as market logistics. It involves:

Planning Implementing

Controlling the physical flow of the materials and final goods from point of

origin to point of use to meet customer’s requirements at a profit. Over the last several

years, NIL has introduced a number of new products. These include: Kit-ka, Polo,

Milo, Cerelac, Maggie, Dosa Mixes, Bar-one etc.

The success of these products is in part based in Nestlé’s nation wide

distribution system and its strong relation with channel members, which allow it to

quickly place new products in the market.

Channels of distribution tend to be traditional for a number of product

categories. For i.e. in the beverages and food industry, manufacturers normally sell

through wholesalers, who deal with retailers. But the distribution strategy of Nestle' is

not a traditional one. The products manufactured in various production units are

passed on to C&F agents. Practically each C&F agent covers just one state. The

products are then sent to various distributions, the company itself has defined the

particular area to be covered by each distributor. Salesman from the distributor’s office

then approaches various retailers of their area & book the order. The products are

delivered to on the next day as against the orders. For instance MILO is manufactured

at Karnataka. C&F agents located at various places collect the product from production

unit. In Delhi C7F is in Mandali Village, Trans Yamuna. The agent in turn send the

products to distributor and then to retailers.

The distribution channel includes 6, 00,000 outlets in 3000 towns throughout

the country, serviced by 39,000 distributors. Practically every shop dealing in consumer

goods is an outlet for Nestle'. This is formulating its marketing strategies.

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TABLE 1.5 DISTRIBUTION NETWORK OF NIL

DISTRIBUTOR (4%-7%)

C & F AGENTS (1%-3-% Margin)

SUPER STOCKIST (3%-6%)

MANUFACTURER

STOCKIST (3%-5%)

ORGANISED RETAILER (6%-18%)

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TABLE1.6 NESTLE’S MOST LIKED PRODUCTS

PRODUCTS PERCENTAGE

CHOCOLATE 10%

COFFEE 28%

MILKMADE 5%

MAGGIE 40%

MINERAL WATER 2%

INFANT FOODS 5%

SOUPS 4%

SAUCES 6%

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10% people like chocolates as Nestlé’s best product. Among chocolates the Kit-

Kat & Munch are the most liked ones. Munch is the largest selling chocolates in Indian

chocolate market followed by Nestlé’s Dairy milk. Coffee is considered as the best

product of Nestle' by 28% of respondents. They like the taste & aroma as it best

quality. Milkmaid is liked by 5% of people & this crowd involves women &

surprisingly children. Maggie noodle is the most loved product by 40% respondents

especially mothers & children as they consider it as the all time dish (Fast to cook,

good to eat). Infant products are liked by 9% of respondents, most of them were

mothers but, it is very interesting to quote that some mothers them & their elder

children liked the taste of Cerelac & it increased the purchasing frequency of the

product.

Fig.1.2 REASONS TO LIKE NESTLE’S PRODUCTS

REASONS TO LIKE NESTLE' PRODUCTS

COLOR

TASTEPACKAGING

PRICE

ADVERTISEMENT

Fig1.2

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TABLE 1.7

FEATURES PERCENTAGE

COLOR 2%

TASTE 64%

PACKAGING 4%

PRICE 20%

ADVERTISEMENT 10%

Most of the respondent (64%) liked the products because of the great taste of

products like Maggie, Munch , Kit-Kat, Coffee, Frappe’, Slim Milk & sauces. 2% of

the respondents say that they like the color of the product most as it shows the

freshness of the product. 20% people are satisfied with the price.

TABLE 1.9BRAND LOYALTY FOR NESTLE’S

LOYALTY STATUS CONTRIBUTORS

HARD CORE LOYALTY 53%

SHIFTING LOYALS 19%

SWITCHERS 28%

BRAND LOYALTY FOR NESTLE

53%

19%

28%

HARD

CO

RELO

YALT

YSHIF

TING

LOYA

LSSW

ITCH

ERS

CONTRIBUTORS

Fig.1.3

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BRAND LOYALTY FOR NESTLE

Brand loyalty is very high for Nestle' as 53% of respondents denied to switch

over to other product, when any gift or scheme is offered by the competitors. Products

that have highly loyal customers are Maggie noodles, coffee, munch & everyday.

People also like & are loyal for sauces and it is showing an increasing trend (Heinz

recently started the Diwali offer to give 500 gm only for Rs. 39. people responded that

the offer wasn’t so interesting to switch from Maggie & also it was a short-term offer.

19% respondents said that they will some time switch over if they find a really

attractive offer. They also said that Nestle' is the company that uses least of the

marketing gimmicks to promote its products & people believe in quality of Nestle'.

20% people said that they switch in most of the cases.

TABLE 1.9 SHOULD NESTLE IMPROVE SOME OF ITS

PRODUCTS

PRODUCTS OPINION

CHOCOLATES 63%

SOUPS 21%

COFFEE 15%

MAGGIE 1%

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PRODUCTS THAT NEED IMPROVEMENT

0%10%20%30%40%50%60%70%

OPINION

63% of respondents want the company to work on the taste of Milky bar and Classic.

21% people want the soups to be offered in more flavors, at present

there are 12 flavors. They also want to make the soups creamier.

16% people say that Nescafe’ is the most powerful brand of Nestle', but they

say that prices are too high to afford, although Nescafe’ red mix is a big relief but it is

not so creamy.

TABLE 1.10 QUALITY WISE POSITIONING

Quality wise Nestle' and Amul are the most admired companies. They blamed

Nestle’s because of the recent issue of worms in the Nestle’s chocolate. They say that

Nestlé’s quality is trusted.

COMPANY OPINION

NESTLE 37%

BRITANNIA 21%

CADBURAYS 12%

AMUL 30%

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QUALITY WISE COMPARISON OPINION

NESTLE

BRITANNIACADBURA

YS

AMUL

Fig 1.4

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TABLE 1.11 AVAILABILITY WISE COMPARISON

Nestle' produces the products that are part of most of the people’s daily life. So

availability of fresh Nestle' product is smooth.

COMPANY OPINION

NESTLE’ 26%

AMUL 11%

BRITANIA 28%

NESTLES 35%

AVAILABILITY WISE COMPARISON

0%5%10%15%20%25%30%35%40%

NESTLE’ AMUL BRITANIA CADBURYS

OPINION

Fig.1.5

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The pricing policies of Nestle' regarding products like Coffee, Dahi & Milk needs

revision.

TABLE 1.12 PRICE WISE COMPARISON

COMPANY OPINION

NESTLE’ 23%

AMUL 38%

BRITANIA 21%

NESTLES 18%

PRICE WISE COMPARISON

0%5%

10%15%20%25%30%35%40%

OPINION

Fig.1.6

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MARKET SEGMENTATION AND TARGET MARKET SELECTION

Market segmentation and target market selection have an intimate relationship

with market strategy formulation.

The company may focus on the following factors while laying down the target market.

1. GEOGRAPHIC SEGMENTATION

Geographically the country can be broadly divided into 3 sub segments -Rural,

Suburban and Urban.

In the first phase (after the test launch), Urban parts of the country should be

targeted. The chosen segment is targeted because –

Lack of infrastructure, like refrigeration-not to venture rural markets.

The consumption pattern & behavior in Rural India does not fit with the product

attributes and perceived benefits.

The limitation of disposable income is another factor that hampers entry in rural

areas.

Semi-Urban may be considered in the second phase. An year after the launch.

Within Urban India, the cities with 1 million + population i.e. top 23 metros will

be targeted. A soft launch of the brand should be undertaken before taking the brand to

these areas. This (test launch) will be undertaken in Bombay, since it (Bombay) is a

high consumption city for chocolates. (Source: Nestle (I) Ltd – in fact Nestlé’s sales

peaked out in Bombay, during its initial launch).

2. DEMOGRAPHIC SEGMENTATION

The demographic variables have been separately addressed to arrive at the target

audience.

Age:

12 years + segment of the population is recommended to be targeted. Small kids

may not be targeted, because of the nature of the perceived product benefit by

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consumers in that age group, who are inclined towards sweeter and creamier snacks.

Further, it may not be easy to get youngsters off their tuck money. Also, children today

already have an array of cheap domestic and international confectionery (in the form of

chewing-gums, lollipops, rolls, lozenges and toffees).

Income:

The income segmentation may be all households with an annual income

exceeding Rs. one lakh. Targeted audience may be all households that can afford a

television or have access to satellite television.

3. PSYCHOGRAPHIC SEGMENTATION

Social Class: In terms of psychographic the social class targeted is the educated

upwardly mobile urban middle and upper class.

Personality Traits: This segment essentially consists of emulator’s i.e. upwardly

mobile, pioneers, freaky, fun loving type of people. These are the people who like to

enjoy life and believe in traveling and adventure.

Life Style: In terms of lifestyle, it may be aimed at those who favor buying

convenience products. They are also willing to experiment with alternate products in

place of conventional food items, as the universe of chocolate consumption is changing

from occasion led to more casual consumption.

4. BEHAVIORAL SEGMENTATION

The moulded segment of the market is perceived to be the growth engine of the

market. Hence, this segment is quite lucrative for a new brand launch. Also, chocolate

purchases have moved from being occasion-led to a casual snack. Hence, anytime

anyplace snack aspect needs to be established. This segment comprises of people who

like to have chances and want to try new things.

5. LEARNING-INVOLVEMENT

The purchase of a chocolate is of a low-involvement category. It is an impulse

purchase and decision to buy is not pre-planned.

6. USAGE RATE

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The market may be further segmented on usage rather than attitude-Anytime

Anyplace Snack. This is a group of consumers that find traditional snacks too heavy.

Even though a range of chocolates may be offered, a core brand (concentrated strategy

mentioned later) may be launched in the count line segment. Since this segment is

tipped to be the growth engine of the industry (according to industry sources – Mr.

Sanjay Verkey, Nestlé’s India and Mr. Bohidar) and this segment has a substantial

share of the market (33%).

7.TARGET AUDIENCE

Following from the above, it is recommended to target consumers who found

traditional snacks too heavy. Usage rather attitude is being used to segment. This is the

segment that tended to pick up biscuits instead-something they could munch while

continuing with their schedule.

There are 181 million urban individuals in India Our target segment is people

living in the top 23 metros (1 million +population), which implies 63 million people.

Further, SEC A-B in these 23 metros with Cable & Satellite at home are targeted (94.4

% of SEC A-B have a cable & satellite connection) [All these are NRS -VI & IRS ’99

figures].

ADVERTISING & SALES PROMOTION

When a marketer or a firm has developed a product to satisfy market

demand after thoroughly analyzing the market , there is a need for establishing

contact with the target market to eventually sell the product . Moreover, this has

to be a mass contact which means that the marketer is interested in reaching a

large number of people so that his product may receive optimum exposure .

Naturally , the best way to reach this mass market is through mass

communication and advertising is one of the means of such mass

communication along with such other means as publicity, sales promotion and

public relations .Advertising as a means of mass communication has , therefore,

made mass selling possible . It is perhaps the best known mass communication

channel. Marketers and firms engaged in selling their products and services

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throughout the country and or in other nations are fully aware of the necessity

and importance of advertising .

As a means of forceful communication , advertising promotes the sale of

goods , services , images and ideas through information and persuasion .

Advertising is not a panacea that can restore a poor product or rejuvenate

a decline market . It only helps in selling through the art and business of

persuasive communication .

The American Marketing Association, Chicago, defines advertising as

“ ANY PAID FORM OF NON PERSONAL PRESENTATION OF IDEAS

GOODS AND SERVICES BY AN IDENTIFIED SPONSOR .”

Advertising aims at drawing attention to a product. It seeks to create an

awareness about the existence of advertised product . It passes on information

about the product in such a way that interest is created in the mind of the

prospective consumer about the product .

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DIRECT COMPETITION

NESTLE, NESTLE & AMUL

At present there are three major players Nestle, Nestle’s and Amul in the Indian

Chocolate market. Campco initially tried to break into market but failed. Brief profile

of the same has been entailed below:

NESTLE’S INDIA LTD.

Nestlé’s India Ltd, has been in India since 1948. Its brands: Dairy Milk, 5 Star,

Gems and Chocolate Éclairs are the households names in India today. In all the

segments i.e. moulded chocolates, count chocolates and panned chocolates, it is

undoubtedly the market leader.

Nestlé’s has its manufacturing units at Thane (Mumbai), Malanpur, Indori(near

Pune), Mithuri and Kolhapur. It has a strong distribution network with about 500

distributors in North India and more than 3 lac retail outlets being serviced all over

India.

In 1997, Nestle planned to pump in Rs.80-crore to up production capacity at a

couple of Nestlé’s factories. This cash is exactly double of what’s been invested in

1996.

The Company launched Perk, a wafer enrobed chocolate in 1995. This was

reactionary to the launch of Kit Kat and has been able to counter competition.

NESTLE’S DAIRY MILK (CDM) - THE FLAGSHIP BRAND

CDM, the oldest of Nestlé’s brands was launched in 1956. In the early 90s, a

rise in the prices of cocoa, increase in the excise duty and a fall in the demand inspired

the idea of repositioning. Two years in the process after relaunch Nestlé’s Dairy Milk’s

market share stood at 25 percent with sales rising by an average 40 percent per annum.

Besides CDM Nestlé’s has a number of endorser brands such as Fruit’n’Nut, Nut Milk etc. Even though contribution of these brands to the company’s bottom-line is

very small, they are required in order to make a complete portfolio of offering.

The Company developed a concentration strategy on CDM, Five Star, Nestle’

Gems, Nestlé’s Éclairs, Perk and the latest of its offering Picnic (which has drawn a

good response in the market).

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The Company has also identified sugar confectionery, as a growth sector. It’s

first offering Googly.

NESTLE INDIA LTD.

Nestle India Ltd. has been in India for more than 35 years now. The world’s

largest marketer of chocolates (became world number one when it acquired Rowntree

Macintosh of the UK) - Nestle, made its foray in the Indian chocolate Industry in

November 1990. It launched three products - the milk chocolate, the bitter chocolate

and Crackle (a crunchy chocolate) - in the slabs category and Bar One in count lines.

Nestlé’s been quick to react, and launched a whole host of products in

succession: All Silk milk chocolate, Creamy Bar, and a new version of 5 Star.

Nestle, in the beginning did not have its own manufacturing facility. It had an

alliance with Campco to manufacture chocolates. Later, in 1995 a state-of-art

manufacturing plant was set up at Ponda, Goa at a cost of Rs. 50 crores. This unit took

care of the entire Kit Kat production. However, the production tie-up with Campco still

continued.

LAUNCH OF KIT KAT

Kit Kat, one of world’s most popular chocolate, was launched in India in 1995.

Within months of its launch, it fulfilled every target Nestle had set. Its launch was

accompanied by the launch of Nestlé’s Perk in order to counter Kit Kat and safeguard

the flagship brand – CDM. Kit Kat has been able to define a new segment in the

industry in the form of the wafer enrobed any time snack.

Kit Kat outsells Perk in the outlets where both are available. In the crucial

markets of Bombay and Delhi both are running neck-and-neck. It has even said to have

threatened the mother brand, Nestle Dairy Milk.

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TABLE 1.13 NESTLÉ’S NEW LAUNCHES

BRAND LAUNCH

Allen Splash(Sugar Candies) Select Cities

After Eight Mints Delhi & Mumbai

Lion Wafer Bars Delhi & Mumbai

FUTURE OUTLOOK Focus will be on chocolates and confectionery followed by culinary products

which include the Maggi range and coffee.

AMUL

Gujarat Cooperative Milk Marketing Federation (GCMMF) launched the Amul

Chocolate way back in 1974. With its milk chocolates, Badam Bar, Crunch and Fruit n

Nut has a market share of about 5 %.

Due to lack of focus and with multinationals spending huge amounts on

advertisements its market share has been falling.

GCMMF is involved in a large number of products, of which chocolates

constitutes just 1-2 %. The company is not concentrating much on its chocolate

business. As of now, Amul chocolates are not on company’s focus.

Interestingly, Kaira District Cooperative Milk Producers Ltd.(KDCMPL) - the

manufacturer of Amul chocolate - is selling whatever it produces. Limited capacity is

also a reason for the share it has.

However, Amul’s memorable advertising campaign positioning it as a “A Gift

for Someone You Love”, saw the sales graph rising. Amul’s sales grew by 39% then.

Ever since, Amul has maintained a low profile.

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OTHER DOMESTIC PLAYERS

The only other organized player in the market is Campco, which has an

insignificant share of the market. It is supplying its production to Nestle. Apart from

this Campco did come up with its new brands like Treat. But crunch of resources

grossly effected the pace of the company and is hardly to be heard of today.

IMPORTED BRANDS

Considering the high growth potential, various multinationals wanted to set up

facilities in India (Mars being one of them). However, shortage of cocoa, seasonality in

demand, and the absence of a proper cold chain deterred them from investing in India.

The government also moved the import of chocolates from special item list to open

general license category. The duty structure was also reduced. This resulted in making

import of foreign brands easier and price competitive.

Due the above, Mars Inc.-the US giant, who had decided to set up facilities in

1995(the site for which was also selected), decided to postpone its investment plans.

An alternate strategy was formulated to import Mars chocolate brands into India

through Sarura Business (I) Ltd. Sarura, which came into existence about an year ago,

imports Mars brands and sells through its own distribution network. Highlights of the

strategy being followed are mentioned below:

Imports Mars brands every 40 days, after careful demand analysis. Takes 20 to 22

days to reach India.

DUTY STRUCTURE

Customs Duty 40 %

Counter-veiling Duty( a form of excise) 2 %

Special Duty(Surcharge) 3 %

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The import duty on finished product is expected to come down to 20-25 percent in a

phased manner.

OTHER FOREIGN BRANDS

Nestle has also recently launched its foreign brands by importing them into

India. These include Lion and After Eights.

FUTURE OF THE IMPORTED BRANDS

The future of this segment is highly dependent on extraneous factors like,

government policies regarding import of chocolates and the duties structure therein.

Any movement can make these players price competitive. In December 1997, a no. of

products reaching expiry are said to have been dumped into India due to favorable

import policy (this is when foreign brand imports like Sarura’s products came into the

market).

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DATA

ANALYSIS

& INTERPRETATION

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OBJECTIVE 0F THE STUDY

To do in depth study of marketing strategy Of NIL which has a very strong

brand equity & loyalty in so much competitive market.

To find out the competitive activity of Nestle’ in Indian market.

To study the Marketing Strategies of Nestle in competitive market.

RESEARCH METHODOLOGY

As mentioned earlier, the objective of the study is to formulate a Marketing

Strategy for any new entrant in the Indian Chocolate Industry. While recommending

the said strategy detailed information from both primary and secondary sources was

collected and analyzed. This included:

PRIMARY SOURCES

Four level primary information collections were undertaken. These were:

1. In order to get relevant information regarding competition, executives of the

following chocolate players in the market were interviewed: To analyze buying

behavior and in order to gain an insight into the buyer need-satisfaction level, a

questionnaire was formulated. These included pan shops, grocery shops, bakeries,

departmental stores, etc.

SECONDARY SOURCES :

A number of secondary sources of information were used. These were:

Confederation of Indian Industries reports, PHDCCI & FICCI library.

Internet websites Of Nestlé’s, Nestle and indiainfoline.com, askjeeves.com

Extensive use of secondary information in the form of

magazines/journals/newspapers clippings, such as Business World, Business

Today, Business India, A&M, Economic Times, etc.

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Tools analysis

Observation and descriptive survey methods was used to collect the data about

the features, expectations, satisfaction, problems etc. the customers.

Size of sample:

The present study was conducted on a sample size of ‘80’.

TABLE 1.14 THE METHODOLOGY ADOPTED WAS AS

FOLLOWS:

INDUSTRY SCENARIO SKETCH (UTILIZING SECONDARY INFORMATION)

EXTENSIVE INTERVIEWS HELD WITH PRIMARY/SECONDARY SOURCES

(COMPANIES/CHOCOLATE MANUFACTURERS ASSOCIATION)

INTERVIEW WITH EX-DISTRIBUTOR OF NESTLE INDIA LTD

EXTENSIVE RETAILER INTERVIEWS IN NARAINA INDL. AREA

FORMULATION AND ADMINISTRATION OF A QUESTIONNAIRE

FORMULATION OF THE RECOMMENDED STRATEGY ON THE BASIS OF

THE ABOVE MENTIONED PRIMARY AND SECONDARY INFORMATION

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ANALYSIS AND INTERPRETATION OF DATA

AWARENESS - PURCHASE PREFERENCE

0

10

20

30

40

50

60

70

80

90

Picn

ic

Fruit n

' Nut

CDM

Fore

ign

bran

ds

KitK

at

Perk

Amul

5 St

ar

Bar O

ne

Brea

k

Cru

nch

Cad

bury

's

Nes

tle

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PURCHASE PREFERENCE: WHAT INFLUENCED YOU TO BUY

THE SELECTED BRAND

0

10

20

30

40

50

60

70

80

Amul

5 St

ar

KitK

at

CD

M

Picn

ic

Frui

t n' N

ut

Fore

ign

Bran

ds

Perk

Cru

nch

Bar O

ne

Cad

bury

's

Nes

tle

0

10

20

30

40

50

60

70

80

90

Advertising Word of Mouth AttractivePackaging

Dealer Shop Display Family, friends,relatives

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PURCHASE BEHAVIOUR:

REASONS FOR PURCHASE:-

CHOCOLATES –

1. A GIFT TO A LOVE ONE

2.AS A GIFT IT IS FOR IMPULSE DRIVEN

0

10

20

30

40

50

60

70

Occasion led As a gif t Casual Purchase Energy Snack

No10%

Yes 90%

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3.MOST OF MY CHOCOLATE PURCHASES ARE PREPLANNED

4.I OFTEN PICK UP CHOCOLATES WHILE I MAKE OTHER

PURCHASES ----REINFORCING IMPULSE PURCHASE

Yes 10%

No90%

No24%

Yes 76%

0

100

200

300

400

500

600

700

Taste Quality Price Flavour Packaging Add-ons Brand Image

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PRODUCT RELATED

TASTE & PREFERENCE SIZE USAGE. WHAT SIZE OF A CHOCOLATE GO

YOU NORMALLY BUY.

0

10

20

30

40

50

60

70

80

90

Picn

ic

Frui

t n' N

ut

CD

M

Fore

ign

bran

ds

KitK

at

Perk

Amul

5 St

ar

Bar O

ne

Brea

k

Cru

nch

Cad

bury

's

Nes

tle

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0

10

20

30

40

50

60

70

15/25 gms 35/40 gms 80 gms Super saver - 105gms

200 gms

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PRICE RELATED

SUITABLE PRICE FOR A 40gms.CHOCOLATEPRICE

PERCEPTION.

THE PRICE OF MOST PREFERRED BRAND IS

Greater than Rs. 20/-5%

Between Rs. 10/- & Rs. 14/-

52%

Between Rs. 14/-& Rs. 20/-

29%

Below Rs. 10/-14%

High Expensive 19%

Cheap 5%

Reasonably OK76%

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PRICE SENSITIVITY (ELASTICITY). IF PRICE OF YOUR

FAVORITE BRAND IS REDUCED, YOU WILL BUY MORE OF IT

YES52%

NO48%

PRICE SENSITIVITY. IF THE FAVORITE BRAND IS FEW RS.

EXPENSIVE WOULD YOU TO GO FOR IT

YES

NO

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ADVERTISING/PROMOTION RELATED

ADVERTISEMENT RECALL TEST – (UNAIDED)

MOST LIKE ADS – (UNAIDED)

0

10

20

30

40

50

60

70

80

Perk KitKat CDM Picnic Amul 5 Star

0

50

100

150

200

250

Perk KitKat CDM Picnic Amul 5 Star

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WHETHER, SALES PROMOTION WOULD AFFECT YOUR

PURCHASE DECISION

YES43%NO

57%

BRAND LOYALTY IF A PARTICULAR BRAND IS NOT

AVAILABLE, YOU WILL:

52%

19%

29%

ANO

THER

BRAN

D DR

OP

THE

IDEA

GO

TO

ANO

THER

RETA

ILER

Series1

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IF YOU WANT TO BUY A WAFER CHOCOLATE, SAY KITKAT

AND IF IT IS NOT AVAILABLE, YOU WOULD SETTLE FOR A

BAR/MOULDED CHOCOLATE SAY 5 STAR OR CDM

NO33%

YES67%

CHOCOLATE BRANDS IN INDIA

ARE YOU HAPPY WITH THE KIND OF CHOCOLATE BRAND

AVAILABLE

NO24%

YES76%

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PLACE RELATED----OUTLET PREFERENCE

0

100

200

300

400

500

600

P an shop Sweet Shops Gift shops Stationaryshops

Ice-creamparlours

Fast Foodjoints

M ilk booths Restaurants Exclusivechocolateparlours

Road-sideKiosks

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DEMOGRAPHIC PROFILE OF THE RESPONDENTS

AGE

SEX

MALE

FEMALE

Between 35 yrs & 45 yrs 19%

Between 2 yrs & 17 yrs 29%

Between 18 yrs & 25 yrs 33%

Between 25 yrs & 35 yrs 19%

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MARITAL STATUS

MARRIED33%

UNMARRIED

67%

OCCUPATION

OCCUPATION

PROFESSIONAL

STUDENT

BUSINESSOTHERS

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MONTHLY INCOME

Less than Rs. 5000/-10% Between Rs. 5000/-

& Rs. 8000/-14%

Between Rs. 8000/- & Rs. 12000/-

24%

More than 12000/-52%

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SWOT ANALYSIS

The SWOT Analysis shows the relationship between critical variables of the

company. The SWOT matrix has a wider scope. The TWOS matrix is a conceptual

framework for a systematic analysis that facilitates the external threats and

opportunities with the internal weaknesses and strengths of the organization.

It has been common to suggest that companies identify its strengths and

weaknesses as well as opportunities and threats in the external environment. But what

is often overlooked is that combining these factors may require distinct strategies

choices. To systematize these choices, the TWOS matrix has been proposed. ‘T’ stands

for threats, ‘W’ stands for weaknesses, ‘O’ stands for opportunities and ‘S’ stands for

strengths. A marketing opportunity is aware of buyer need in which a company can

perform profitably. An environment that would lead, in the absence of defensive

marketing action, to deterioration in sales or profit. An ideal business is high in both

major opportunities and low in major threats.

A speculative business is high in both major opportunities and threats.

A mature business is low in opportunities and high in threats.

The TWOS matrix starts with the threats because in many situations a company

undertakes strategic planning as a result of a perceived crisis, problems or threats.

STRENGTHS

High brand equity ……… consumer & dealer regarding Nestle' as company

delivery quality product.

Company processes an extensive powerful distribution network.

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Company processes a dedicated & experienced sales staff.

Strong base in monitoring & controlling market.

Distributions are highly dedicated towards performance & experience.

Nestle India Limited (NIL) has a very strong parent company Nestle S.A.

support with 51% of equity share holding, which is the world's largest food

company.

NIL's milk products sold under Milkmaid and Everyday brands are market

leaders. NIL has strong brand value in other products like Kit-Kat, Polo, Milo,

Maggi and Nescafe.

NIL - State of the Art Technology and production systems ensuring high

technological/high value and optimum cost advantage to its product portfolio.

Idealization of products to suit local tastes are critical for success and NIL is

converting its international products into Indian tastes products.

Nestle has altogether 570000 outlets in more than 3000 towns. This is one of the

major strengths of the company.

NIL most of the products are being produced according to Indian tastes, priced

within Rs. 25/- so that they are afforded by most of the people easily, advertised

and promoted according to regional culture and values and is available to most

of the consumers easily, at their nearby shops.

WEAKNESSES

Company takes time in handling return claims on authorized whole seller.

Warehousing norms are not followed which account for increased breakage.

Restricted website minimizes marketing opportunities.

Yearly initiatives are not so motivating.

A high percentage of turnover and profits coming from a few products

categories like Coffee/Maggi.

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NIL has been in India since last 39 years yet its growth has been very slow.

After the opening up of the economy, it has started growing but till then it did

not launched much products.

The profits of NIL are also reduced because of increased Royalty payments that

NIL is making to its parent Nestle, Switzerland. The higher royalty payments

are made on account of new international brands launched by NIL in India.

NIL factories are not to meet the demands of products with the supply.

NIL's products range is so large that it is not able to give proper attention to all

the products, their marketing strategies are not properly worked out as many of

its products are dyeing. There was an embarrassing starter like Nestea an iced

tea, Nesfit - a glucose rich energy drink, Bonus, Milo is not given much of

promotion.

Recently, there are difference between the Nestle S.A. parent company and

Nestle India Limited and because of this there are in the top management of the

NIL. Even its M.D Daravis E. Ardeshin has also resigned.

Proof financial distribution as the NIL is unnecessarily giving its shareholders

high dividend, which could be avoided and be used for investment in plants for

their capacity expansion.

OPPORTUNITIES

Great quality.

Mass market is growing with established performances.

Growing middle class is increasing opportunities.

Great taste.

Low differentiation in market brands.

Credit facility given to dealers.

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India being the second most populated country in the world, NIL has lot of

opportunities of launching and selling new products and earning a record profit

from this country.

As NIL has been in India since last 39 years, it has understood the culture,

values, tastes and psychology of the Indian consumer and so it can easily

develop Indianised products that will be acceptable to the Indian consumer.

Food industry is the second highest growing industry in India and offers a lot of

opportunities for NIL in India.

THREATS

Tough competition especially in premium segment.

Characteristics of premium segment that it is never brand loyal.

Tough competition (indirect) with barista, café coffee day.

Mere availability of best sellers from the parent’s portfolio does not guarantee a

winner. Since most of these products would be fighting it out with their global

competitors and then Indian counterparts on the Indian turf.

It faces fierce competition in almost all the segments it participates in like. It

duels with Top Ramen in the instant noodle market, Kit-Kat vs. Perk, Polo vs.

Minto, Milkmaid vs. Mithai Mate (launched by Amul at a staggering 60%

discount to the market leader), Milo vs. Horlicks, Complan and Bournvita.

Recent turmoil and increased internal politics together with lack of apathy from

their parent company is going to affect the performance of the company in the

short to midterm.

Because of the present Swadesi prime and changing public opinion towards

MNCs will affect NIL's future.

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CONCLUSION

In line with the Company's objective to provide superior value in every product

category and market sector, efforts were focused to provide quality products to

customers at attractive price points. While the Company continued to generally

maintain price points across all the product categories, the pricing of some products

were also reduced to meet consumer expectations.

Nestlé’s domestic sales registered a 18.5% volume growth during the first 9

months of 2006. Exports registered a 31% yoy volume growth. In value terms,

domestic sales grew by 15.8% yoy to Rs12.1bn, while Exports grew by 26.4% yoy to

Rs2.4bn

Advertising plays an important role in creating brand awareness, brand recall

and brand recognition which are important in helping a customer make purchase

decision of that brand.

Nestle has been a partner in India's growth for the past nine decades and has

built a very special relationship of trust and commitment with the people of India. The

culture of innovation and renovation within the company and access to the Nestle

Group's proprietary technology/ Brands, expertise and the extensive centralized

Research and Development facilities helps the company to create value that can be

sustained over the long term. Nestle India manufactures products of truly international

quality under internationally famous Brand names such as Nescafe, Cerelac, Maggi,

Milky Bar, Milo, BarOne, Nestea and Kit Kat and in the recent years the company has

also introduced products of daily consumption and use such as Nestle Milk, Nestle

Dahi, Nestle Butter, Nestle Fruit 'n milk ready to drink beverage and Nestle Pure Life

bottled drinking water.

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FINDINGS & RECOMMENDATIONS

FINDINGS

In the age group of 16-20 and 21-30, the average monthly spend is not influenced

by the place of residence/ social class but rather on, where a person studies/works

i.e. by the social] circle of his friends and colleagues.

The consumers by and large are satisfied with the present choices available in

chocolates i.e. there are no complaints of consumers as regards to existing varieties

of chocolates.

However there are many new wants and demands of consumers in terms of new

flavors and ingredients of chocolates which the present brands of chocolates have

not introduced into the Indian markets.

There is a substantially low margin of difference in terms of people who are

sensitive to price of chocolates and hence it cannot be proved conclusively that

introducing a chocolate at a lesser price than the prevailing price will lead to

capturing of market share.

Consumers attach more value to the brand of the chocolates as well as the

packaging i.e. the quality of the chocolates.

79% of chocolate sales happen through kirana shops i.e. mom and pop shops which

says that chocolate is a commodity which has to be available to the consumer when

and where he wants it. The sales of chocolates largely depend on its availability to

the consumer at his convenience.

The chocolate confectionery market elicits conscious and unconscious feelings of

passion, loyalty and enthusiasm. Almost 80% of chocolate purchases are made on

impulse. Buyers generally decide quickly which confectionery product to buy with

almost half of purchase decisions made within 10 seconds of arriving at the

confectionery fixture in the store. Brands play an important role in the chocolate

confectionery industry. A brand is a name, mark, or feature, which distinguishes one

product from another. A good brand effectively guarantees that it will deliver all of

the qualities that the consumer associates with it.

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For many people, chocolate is Nestle, and no other brand will do. This consumer

loyalty is critical because of the value of the chocolate confectionery market and

because, in all markets, a small number of consumers account for a large proportion

of sales. Loyal customers are the most valuable customers to have because they will

buy your product over and over again. Research data shows that the Nestle brand

equity is highly differentiated from other brands with consumers. Brand equity is the

value consumer loyalty brings to a brand, and reflects the likelihood that a consumer

will repeat purchase.

This is a major source of competitive advantage. The Nestle umbrella brand has

endured in a highly competitive market, and has established the link, in the mind of

the consumer, that Nestle equals chocolate. The Nestle brand is associated with best

tasting chocolate. Marketing managers at Nestle are working to ensure this

association is continually developed through their 'Choose Nestle' marketing

strategy. Key concepts of quality, taste and emotion underpin the Nestle brand.

These core values help to differentiate Nestle from other brands and ensure its

competitive advantage.

The Nestle brand has proven itself to be a leader in a highly volatile and

competitive market because it has successfully established, nurtured and developed

its umbrella brand and growing portfolio of products. Perhaps very few product

categories in India have seen as much excitement generation, widening of appeal and

repositioning as chocolates. Nestle India's" has been successful in revamping its

brand portfolio and its repositioning efforts. It has reinvented and revamped its brand

portfolio, strengthened its distribution network and relied heavily on promotions and

advertising - while launching and relaunching brands.

Nestlé’s strategy to attract consumers is somewhat unique in a sense, instead of

focusing on the product; it seeks to tap into emotions normally associated with

chocolates. They have also adapted their strategies to the unique demands of the

Indian retail sector. The strategy has clearly proved successful, as they have been

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able to build and maintain a leadership position in the market with many loyal

customers.

Nestle introduced a new global marketing strategy called 'Choose Nestle'. This

strategy came about as a result of extensive research into consumer behaviors and

perception. It is a campaign that perfectly illustrates how a brand can evolve and how

different messages can be communicated without losing the core strength and brand

values that are already established

New product development has played a key role in developing markets as

brands strive to offer something to a consumer that is truly different The Nestle

product range addresses the needs of each and every consumer, from childhood to

maturity, from impulse purchase to family treats. For example an analysis of the 'gift'

sector highlights the importance of developing innovative products to address

specific markets. Nestle designs products to coincide with Diwali, rakshabandhan, ,

Mother's and Father's Day.

The chocolate confectionery market is full of brands that need to fight for our

attention. The role of advertising is to keep a brand in the mind of the consumer. We

are constantly presented with countless brand images and messages on a daily basis.

During the lifetime of a brand, companies will develop marketing strategies that

communicate brand identity and core values to gain our attention. In order to keep its

product competitive and contemporary, these messages need to change over time.

Nestle provides one of the most successful examples of how an advertising

message can be modified from one campaign to the next to attribute new values to a

brand giving consumers more reasons to buy Nestles. Nestle employs all types of

advertising from the internet to posters, from TV, radio and cinema to print media.

This same creative message is then communicated through point of sale,

merchandising, package design and public relations. Besides advertising and sales

promotion, brand perception by consumers gets affected by several other factors like

packaging, distribution efficiency, after-sale service (where applicable), speed of

response to customer complaints. Shopping experience and delivery of the value

proposition are also among the contributing factors. Nestle India has also worked &

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is still working on these factors to successfully position its brand as the topmost

brand of chocolate. Nestle India expects strong growth in India in future. The

company plans to increase the franchise of its existing brands and continue to

explore new product opportunities including adjacent market opportunities. Nestle

India is also looking for more opportunities in the SAARC region.

RECOMMENDATION

Although product line is very good & has good width & depth, but NIL should try

to make stronger brand equity in Dairy products, Amul is still leader.

It should work more on concept of CRM (Making new customers & retaining old

ones.

Cash discounts must be given.

More competitive pricing to be done in the premium segment.

Increase their sales force to make more frequent visits to the sales person.

Should also look for rural markets.

Quick handling of problems of stockiest & dealers.

Online ordering facility & electronic payment through website can save a lot of

time.

Due to sluggishness in a FMCG market, most of the companies are under pressure

to maintain volume & market share. NIL should draw out an action plan to improve

sales through new product launches.

Company should concentrate on all round cost saving & productivity gain, to

neutralize the adverse impact of increased excise of confectionary.

The market strategy of the firm is a complete and unbeatable plan or an instrument

designed especially for attaining the marketing objective of company. The formulation

of the marketing strategy consists of two steps:-

1. Segmentation & target market selection.

2. Assembling the marketing mix.

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BIBLIOGRAPHY

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Books Kotler Philip (2004); ‘Marketing Management’; Pearson Education Pvt. Ltd.

Ramaswamy V.S. and Namakumari S. (2002); ‘Marketing Management Planning

Implementation and Control’; McMillan India Pvt. Ltd.

Al Ries (1996), “FOCUS”, Harper Collins Publishers Ltd.

David A. Aaker (1991), “Managing Brand Equity”, the Free Press.

David A. Aaker (1996), “Building Strong Brands”, the Free Press.

Jean-Noel Kapferer (1994), “Strategic Brand management”, Macmillan Publishing

Co.

Internet Sites www.Nestle.Com

www.Google.Com

www.Yahoosearch.Com

Magazines Business Today

Business World

Business Standard

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ANNEXURE

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QUESTIONNAIRE

1. Do you consume chocolates?

YES / NO

2. If yes, what all brands do you normally buy?

3. How often do you buy chocolates?

(No.) chocolates per day / week / month (please tick)

4. What brands of chocolates are you aware of?

5. Please rank the following attributes in a chocolate on a scale of 1-7 according to their importance to you? (1-most important, 7-least important)

□ Taste

□ Quality

□ Packaging

□ Price

□ Flavor

□ Add-ons (Wafers, nuts, etc.)

□ Brand Image

6. I often pick up a chocolate while I make other purchases.

YES / NO

7. What influenced you to buy the above stated brand(s)?

□ Advertising

□ Word of mouth

□ Attractive Packaging

□ Dealer

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□ Shop Display

□ Family/Friend/Relatives

□ Any Other (Pls. Specify)

8. How do you rate the idea of chocolates being made available at the following outlets.(Please rate on a scale of 1-5, where 1 is most preferred and 5 is least preferred).

□ Pan Shops

□ Sweet Shops

□ Gift Shops

□ Stationary Shops

□ Ice-cream Parlors

□ Fast Food Joints

□ Milk Booths

□ Restaurants

□ Exclusive Chocolate Parlors

□ Road-side Kiosks

9. If a particular brand is not available with the retailer, you will -

□ Drop the idea of buying a chocolate

□ Go to another retail outlet

□Try another (competitor’s) brand

97