nestle report

DEDICATION

I dedicate this work to my affectionate

Parents and my worthy teachers

INTERNSHIP REPORT 1

ACKNOWLEDGEMENT

All appreciation and thanks to Almighty ALLAH the most gracious, merciful and

beneficent, which gave me the courage & talent to complete this task successful.

Many people have contributed in completion of this project, and I would like to thank

all of them. Course from very beginning to the completion of this report. I found it

difficult to find the words for appropriate dimensions, to express my gratitude to my

worthy instructor Saad Khan for his potential interest, useful suggestions, constant

encouragement, dynamic supervision and kind behavior throughout the course of this

research. I am also thankful to all my seniors’ supervisors, brand managers and

affectionate parents who prayed, encouraged and supported me and also to all people

who helped me in completing this project

INTERNSHIP REPORT 2

PREFACE

The purpose of this report is to explain what I did and learned during my internship

period with Nestle. This report is also a requirement for the fulfillment of BBA-

MARKETING program. The report focuses primarily on the basic structure, and

management style of the Nestle. After that Company’s core marketing strategies has

been explained. Then the most important marketing 4P’s are discussed. After that

there is most important part of the report that is named what I have learned in

internship period. Then I have calculated the basic financial ratios which are typically

called ratio analysis. At last but not the least there are some recommendations for the

betterment of Nestle

INTERNSHIP REPORT 3

ABSTRACT

The vibrant capabilities of communication department of Nestle planning have been

highly accentuate. The department has been acknowledged as the means through

which the swift industrialization and the other processing goals of the association can

be conquered.

This report delves into the role of my BBA program for setting the goals and

objectives and then devising means to achieve them. It covers all the aspects

regarding organizational structure and marketing aspects which encompass the

organization.

The verdict about Nestle marketing department process may facilitate policy

makers, employment agencies, organization to ascertain and over and above existing

cooperation, not only in Pakistan but also in all parts of the world.

INTERNSHIP REPORT 4

METHODOLOGY

Aspects have been piled up by means of primary sources by interviewing key

accounts managers during my internship, beyond this I also visited there warehouse.

All of the above, I put in writing all that stuff which I observed during my internship

Secondary information has been congregated through different internet sites of

NESTLE company.

INTERNSHIP REPORT 5

EXECUTIVE SUMMARY

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

and is today the world’s biggest food and Beverage Company. Sales at the end of

2005 were CHF 91 bn, with a net profit of CHF 8 bn. They employ around 250,000

people and have factories or operations in almost every country in the world.

And the address is

Nestlé S.A.

Avenue Nestlé 55

1800 Vevey

Switzerland

Central switchboard

(Tel) +41 21 924 2111

(Fax) +41 21 924

INTERNSHIP REPORT 6

Table of Contents

INTRODUCTION TO NESTLE...................................................................................9Introduction..........................................................................................................10

Key Dates.................................................................................................................12JOINT VENTURES & ASSOCIATED WEBSITES..........................................13

COMPANY INFORMATION.....................................................................................14Background..................................................................................................................19Objective......................................................................................................................27Mission Statement........................................................................................................28Vision...........................................................................................................................29STRATEGIES..............................................................................................................30

Organizational StructureBoard of Directors of Nestlé S.A......................................32Board of Directors of Nestlé S.A.............................................................................33SALES STRUCTURE.............................................................................................35

TRAINING PROGRAM......................................................................................36CAREER DEVELOPMENT...................................................................................39

Management/................................................................................................................41Administrative Style.....................................................................................................41

STYLE OF WORKING...........................................................................................42Production....................................................................................................................44Marketing Mix.............................................................................................................48

MARKETING PROCESS.......................................................................................49ANALYZING MARKET SITUATION..............................................................49DEVELOPING MARKETING MIX...................................................................49MARKETING IMPLEMENTATION.................................................................49MARKETING CONTROL..................................................................................49

ANALYZING MARKETING SITUATION...........................................................51SWOT analysis.........................................................................................................51Internal analysis........................................................................................................51Strengths...................................................................................................................51Weaknesses..............................................................................................................52

External analysis..................................................................................................54Opportunities............................................................................................................54Current market situation...........................................................................................56MARKET ANALYSIS............................................................................................56Life Style..................................................................................................................57DEVELOPING THE MARKETING MIX..............................................................59Product Mix..............................................................................................................60Analysis of Company Marketing/ Sales Procedures................................................73Pricing Policy...........................................................................................................75Price List..................................................................................................................77Distribution Policy...................................................................................................79Objectives.................................................................................................................80ORDER PROCESSING...........................................................................................80

INTERNSHIP REPORT 7

WAREHOUSING....................................................................................................80REGISTERED CORPORATE OFFICE..............................................................83CORPORATE OFFICE ANNEX........................................................................83

Promotional Policy...................................................................................................87Societal Marketing...................................................................................................89STRATEGIC PLANNING:.....................................................................................92

Dealing with clients support by instances....................................................................95Market Segmentation, Targeting, Positioning..........................................................96Positioning................................................................................................................97

Financial Analysis........................................................................................................99Income Statement...................................................................................................100Balance Sheet.........................................................................................................104

RATIO ANALYSIS...................................................................................................113WHAT I HAVE LEARNED AT INTERNSHIP.......................................................122

Analysis..................................................................................................................123RECOMMENDATION.............................................................................................124REFERENCES...........................................................................................................125

INTERNSHIP REPORT 8

INTRODUCTION TO NESTLE

INTERNSHIP REPORT 9

Introduction

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

breastfeed. His first success was a premature infant who could not tolerate his

mother’s milk or any of the usual substitutes. People quickly recognized the value of

the new product, after Nestlé’s new formula saved the child’s life, and soon, Farine

Lactée Henri Nestlé was being sold in much of Europe.

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

1900s, the company was operating factories in the United States, Britain, Germany

and Spain. World War I created new demand for dairy products in the form of

government contracts. By the end of the war, Nestlé’s production had more than

doubled.

After the war Government contracts dried up and consumers switched back to fresh

milk. However, Nestlé’s management responded by streamlining operations and

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

chocolate the Company’s second most important activity.

Nestlé felt the effects of World War II immediately. Profits dropped from $20 million

in 1938 to $6 million in 1939. Factories were established in developing countries,

particularly Latin America. Ironically, the war helped with the introduction of the

Company’s newest product, Nescafé, which was a staple drink of the US military.

Nestlé’s production and sales rose in the wartime economy.

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

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

seasonings and soups. Crosse & Blackwell followed in 1960, as did Findus (1963),

Libby’s (1971) and Stouffer’s (1973). Diversification came with a shareholding in

L’Oréal in 1974.

Nestlé’s growth in the developing world partially offset a slowdown in the

Company’s traditional markets. Nestlé made its second venture outside the food

industry by acquiring Alcon Laboratories Inc.

INTERNSHIP REPORT 10

Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé’s improved

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

important being American food giant Carnation.

The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled

and world markets developed into more or less integrated trading areas. Since 1996

there have been acquisitions including San Pellegrino (1997), Spillers Pet foods

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

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

Dreyer’s, and in August, a USD 2.6bn acquisition was announced of Chef America,

Inc.

Some important facts

• Nestlé, based in Switzerland, is the world’s largest food company. It

manufactures a wide variety of food products, from chocolate to frozen dinners to pet

food, and is one of the top four water bottling companies in the world. It controls one-

third of the American bottled water market, selling water under 70 different brand

names.

• Bottled water contributes to the plastic waste problem and seizes water that

should remain a shared public resource. Nestlé has been repeatedly sued for the

impacts of its bottled water operations on communities and for false advertising of its

products.

• Nestlé has been criticized internationally for its aggressive marketing of infant

formula in countries where potable water is scarce, leading to a reduction in

breastfeeding and increased risk for infants.

• Nestlé is also one of the world’s largest chocolate producers, and critics

charge that this makes it a contributor to child and forced labor problems in cocoa-

growing nations.

• The International Labor Rights Forum has sued Nestlé for its involvement

with child labor.


• Fight Nestlé’s food and water abuses by taking action and visit Go Green to

learn about sustainable alternatives to Nestlé’s products.

Switzerland-based Nestlé S.A. manufactures a wide variety of food products from

chocolate to frozen dinners to pet food. In addition, Nestlé is one of the most

prominent bottled water companies in the world, and also produces personal and

health care products. Nestlé SA, employs 247,000 people and reported sales of over

$80.7 billion in 2006. Nestlé USA, the North American subsidiary of Nestlé S.A.,

accounted for $8.1 billion of Nestlé’s annual sales in 2005. The company also owns

26 percent of L’Oreal

MERGERS & ACQUISITIONS

Key Dates

1866 Company foundation

1905 Merger between Nestlé and Anglo-Swiss

Condensed Milk Company

1929 Merger with Peter, Cailler, Kohler Chocolats

Suisses S.A.

1947 Merger with Alimentana S.A. (Maggi)

1969 Vittel (equity interest)

1971 Merger with Ursina-Franck

1974 L’Oréal (equity interest)

1977 Acquisition of Alcon (2002: partial IPO)

1985 Acquisition of Carnation

1988 Acquisition of Buitoni-Perugina

1988 Acquisition of Rowntree

1992 Acquisition of Perrier

1998 Acquisitions of San Pellegrino and Spillers Petfoods


http://www.coopamerica.org/programs/rs/profile.cfm?id=255

2000 Acquisition of PowerBar

2001 Acquisition of Ralston Purina

2002 Acquisition of Schöller and Chef America

2003 Acquisition of Mövenpick, Powwow and Dreyer’s

2004 Acquisition of Valio (ice cream activities)

2005 Acquisition of Wagner, Protéika, Musashi

JOINT VENTURES & ASSOCIATED WEBSITES

Major Joint Ventures

1974 L’Oréal - (26.90%, 27.95% voting rights)

1981 Galderma - (joint venture with L’Oréal)

1990 Cereal Partners Worldwide - (joint venture with General Mills)

1991 Beverage Partners Worldwide (formerly CCNR) – (joint

venture with Coca Cola)

2002 Dairy Partners Americas - (joint venture with Fonterra)

Laboratories innéov - (joint venture with L’Oréal)

Associated Websites

Alcon http://www.alconlabs.com/

Cereal Partners http://www.cerealpartners.co.uk/

Galderma http://www.galderma.com/

Innéov http://www.inneov.de/

L’Oréal http://www.loreal.com/_en/_ww/index.aspx


http://www.loreal.com/_en/_ww/index.aspx

http://www.inneov.de/

http://www.galderma.com/

http://www.cerealpartners.co.uk/

http://www.alconlabs.com/

COMPANY INFORMATION

Ticker:

NESTLE

Country:

PAKISTAN

Exchanges:

KARACHI

Major Industry:

Food & Beverages

Sub Industry:Diversified Food

2007 Sales28,235,393,000

(Year Ending Jan 2008).

Employees:

2,345

Currency:

Pakistan Rupees

Market Cap:

61,221,938,400

Fiscal Yr Ends:

December

Shares Outstanding:

45,349,584


Share Type:

Ordinary

Closely Held Shares:28,922,725

Management of Nestle Pakistan Ltd

Haseeb Aslam

Country Business Manager Water

Water Division

Aslam,Haseeb,LAHORE,Water

Peter Wuethrich

Head of Technical

Technical Division

Wuethrich,Peter,LAHORE,Technical

Raymond Franke

Head of Finance and Controls

Finance & Control Division

Franke,Raymond,LAHORE,Finance & Control

Trevor Clayton

Managing Director

M D Office

Clayton,Trevor,LAHORE,General Management

Salman Nazir

Head of Supply Chain

Supply Chain Division

Nazir,Salman,LAHORE,Supply Chain

Uzma Qaiser Butt

Head of Human Resources

Human Resources Division

Butt,Uzma,LAHORE,Human Resource

Zafar Hussain

Head of Sales


Sales Division

Hussain,Zafar,LAHORE,Sales

Contacts - Nestle Pakistan Ltd.

Registered and Corporate Office

308 – Upper Mall,

Lahore

+92 042 111.637.853

+92 042 578 9303

+92 042 578 9304

Corporate Office Annex

304 – Upper Mall,

Lahore

+92 042 111.637.853

Park Lane Tower

72-Tufail Road,

Lahore Cantt

Lahore

Sheikhupura Factory

29thK.M.Lahore

Sheikhupura Road,

Shiekhupura

Kabirwala-Kabirwala Road

Kabirwala Factory

Kabirwala, District Khanewal

+92 065 111.637.853


Islamabad Factory (Water)

Plot no. 32, Street 3,

Sector 1 – 10/3,

Islamabad

Karachi Factory (Water)

23-A, North Western Industrial State

Port Qasim Authority

Karachi


Code of Business Conduct


Background

Since its founding, Nestlé’s business practices have been governed by integrity,

honesty, fair dealing and full compliance with all applicable laws.

Nestlé employees worldwide have upheld and lived this commitment in their

every day responsibilities ever since, and Nestlé’s reputation remains one of the

Company’s most important assets today. The Nestlé Corporate Business

Principles prescribe certain values and principles which Nestlé has committed to

worldwide. This Code of Business Conduct specifies and helps the continued

implementation of the Corporate Business Principles by establishing certain

nonnegotiable minimum standards of behavior in key areas. The nature of this

Code is not meant to cover all possible situations that may occur. It is designed to

provide a frame of reference against which to measure any activities. Employees

should seek guidance when they are in doubt about the proper course of action in

a given situation, as it is the ultimate responsibility of each employee to “do the

right thing”, a responsibility that cannot be delegated.

Employees should always be guided by the following basic principles:

avoid any conduct that could damage or risk Nestlé or its reputation;

act legally and honestly;

– Put the Company’s interests ahead of personal or other interests.

Compliance with laws, rules and regulations

We respect the law at all times

Nestlé and its employees are bound by the law. Compliance with all applicable

laws and regulations must never be compromised.

Additionally, employees shall adhere to internal rules and regulations as they

apply in a given situation. Those internal rules are specific to the Company and

may go beyond what is required by the law.


Conflicts of Interest

We will always act in the best interests of Nestlé

A Conflict of Interest occurs when personal interests of an employee or the interests

of a third party compete with the interests of Nestlé. In such a situation, it can be

difficult for the employee to act fully in the best interests of Nestlé. Employees shall

avoid Conflicts of Interest whenever possible.

If a Conflict of Interest situation has occurred or if an employee faces a situation that

may involve or lead to a Conflict of Interest, the employee shall disclose it to his or

her Line Manager and/or the HR or the Legal or Compliance Function to resolve the

situation in a fair and transparent manner.

Outside directorships and other outside activities

We take pride in Nestlé’s reputation and consider Nestlé’s best interests also in our

outside engagements and activities

Outside of Nestlé, no activities shall be pursued if such activities will interfere with

the employee’s responsibilities for Nestlé, or if they create risks for Nestlé’s

reputation or if they in any other way conflict with the interests of Nestlé. When in

doubt about the permissibility of an activity, employees shall consult with the HR or

the Legal or Compliance Function. The following positions and activities are deemed

acceptable only in case of prior authorization from a member of the Executive Board:

Board member

Officer

Employee

Partner

Consultant

Authorization will be withheld if the position or activity is likely to conflict with

Nestlé’s interests or the employee’s responsibilities.

Board memberships on publicly listed companies need prior approval by the CEO and

In the case of members of the Executive Board –Chairman.


Unless requested by the Company to take up a particular position or activity,

employees shall pursue outside activities and positions at their own risk and cost

and within their spare time only.

Families and Relatives

Nestle hiring and people development decisions will be fair and objective

Immediate family members and partners of employees may be hired as employees

or consultants only if the appointment is based on qualifications, performance,

skills and experience and provided that there is no direct or indirect reporting

relationship between the employee and his or her relative or partner.

These principles of fair employment will apply to all aspects of the employment,

including compensation, promotions and transfers, as well as in case that the

relationship develops after the respective employee has joined the Company.

Provided that they are equally suited as other candidates, priority may be given to

children of Nestlé employees with respect to internships, training periods,

employment during holidays and similar short-term assignments.

Corporate opportunities

We are committed to advance Nestlé’s business

Employees shall not compete with the Company. Nor shall they take personal

advantage of business opportunities that they discover during the course of their

employment, unless the Company expressly waives its interest in pursuing such

opportunity.

If employees want to pursue business opportunities that might be of interest to the

Company, they shall inform their Line Manager who will seek a management

decision as to whether or not the Company wants to pursue the opportunity. Even if

the Company decides against pursuing the opportunity, the employee may seize the

opportunity on his or her own behalf only if it is clear that doing so will not result in

direct or indirect competition with the Company’s operations.


Insider trading

We respect and follow the Insider Trading

Rules when buying or selling Nestlé securities

Nestlé prohibits the purchase and sale of Nestlé shares or securities on the basis of

potentially share price relevant information which is not yet public. Non-compliance

may not only entail disciplinary sanctions, but also result in criminal charges.

When in doubt regarding the interpretation or applicability of Nestlé’s insider trading

rules, employees shall consult with the Legal or Compliance Function.

Antitrust and fair dealing

We believe in the importance of free competition

Nestlé is prepared to compete successfully in today’s business environment and will

always do so in full compliance with all applicable antitrust, competition and fair

dealing laws. Therefore, employees must at all times adhere to the following rules:

– Commercial policy and prices will be set independently and will never be

agreed, formally or informally, with competitors or other non-related parties,

whether directly or indirectly;

Customers, territories or product markets will never be allocated between

Nestlé and its competitors but will always be the result of fair competition;

Customers and suppliers will be dealt with fairly. All employees, but

especially those who are involved in marketing, sales and purchasing, or who

are in regular contact with competitors, have a responsibility to ensure that

they are familiar with applicable competition laws. When in doubt, the Legal

Function should be contacted in order to

Provide competition law advice and training.


Confidential information

We value and protect our confidential information and we respect the confidential

information of others

Confidential information consists of any information that is not or not yet public

information. It includes trade secrets, business, marketing and service plans, consumer

insights, engineering and manufacturing ideas, product recipes, designs, databases,

records, salary information and any non-published financial or other data.

Nestlé’s continued success depends on the use of its confidential information and its

nondisclosure to third parties. Unless required by law or authorized by their

management, employees shall not disclose confidential information or allow such

disclosure. This obligation continues beyond the termination of employment.

Furthermore, employees must use best efforts to avoid unintentional disclosure by

applying special care when storing or transmitting confidential information. Nestlé

respects that third parties have a similar interest in protecting their confidential

information. In case that third parties, such as joint venture partners, suppliers or

customers, share with Nestlé confidential information, such information shall be

treated with the same care as f it was Nestlé’s confidential information.

In that same spirit, employees shall protect confidential information that they have

obtained in the course of their prior employment.

Fraud, protection of company assets, Accounting

We insist on honesty and we respect the

Company’s assets and property

Employees must never engage in fraudulent or any other dishonest conduct involving

the property or assets or the financial reporting and accounting of Nestlé or any third

party. This may not only entail disciplinary sanctions but also result in criminal

charges. Nestlé’s financial records are the basis for managing the Company’s business

and fulfilling its obligations to various stakeholders. Therefore, any financial record

must be accurate and in line with Nestlé’s accounting standards.


Employees shall safeguard and make only proper and efficient use of Nestlé’s

property. All employees shall seek to protect Nestlé’s property from loss, damage,

misuse, theft, fraud, embezzlement and destruction. These obligations cover both

tangible and intangible assets, including trademarks, know-how, confidential or

proprietary information and information systems. To the extent permitted under

applicable law, the Company reserves the right to monitor and inspect how its assets

are used by employees, including inspection of all e-mail, data and files kept on

Company network terminals.

Bribery and corruption

We condemn any form of bribery and corruption

Employees must never, directly or through intermediaries, offer or promise any

personal or improper financial or other advantage in order to obtain or retain a

business or other advantage from a third party, whether public or private. Nor must

they accept any such advantage in return for any preferential treatment of a third

party.

Moreover, employees must refrain from any activity or behavior that could give rise

to the appearance or suspicion of such conduct or the attempt thereof. Employees

should be aware that the offering or giving of improper benefits in order to influence

the decision of the recipient, even if he or she is not a government official, may not

only entail disciplinary sanctions but also result in criminal charges. Improper benefits

may consist of anything of value for the recipient, including employment or

consultancy contracts for closely related parties. Employees must be aware that

election laws in many jurisdictions generally prohibit political contributions by

corporations to political parties or candidates. Nestlé has adopted a policy not to make

such contributions except for the parent company in its country of origin. Any such

contributions and any deviations from such policy must be approved by the CEO and

the Chairman.


Gifts, meals, entertainment

We compete and do business based only on quality and competence

Employees shall not be influenced by receiving favors nor shall they try to improperly

influence others by providing favors. Employees may only offer or accept reasonable

meals and symbolic gifts which are appropriate under the circumstances, and they

shall not accept or offer gifts, meals, or entertainment if such behavior could create

the impression of improperly influencing the respective business relationship. When

assessing the situation in light of the above, employees shall consult the policy

applicable in their Market. If no such policy is available, they shall apply the most

restrictive local practice in order to avoid even the appearance of improper dealings.

When in doubt, the employee shall seek guidance from his or her Line Manager or the

Legal or Compliance Function.

No employee shall offer to or accept from any third party gifts taking the form of any

of the following, whatever the value involved:

Money

Loans

Kickbacks

Similar monetary advantages.

Discrimination and harassment

We embrace diversity and respect the personal dignity of our fellow employees

Nestlé respects the personal dignity, privacy and personal rights of every

employee and is committed to maintaining a workplace free from discrimination

and harassment. Therefore, employees must not discriminate on the basis of

origin, nationality, religion, race, gender, age or sexual orientation, or engage in

any kind of verbal or physical harassment based on any of the above or any other

reason. Employees who feel that their workplace does not comply with the above

principles are encouraged to raise their concerns with the HR Department.


Failure to comply

We will consult the Code, comply with its provisions and seek guidance where

needed

It is each employee’s responsibility to ensure full compliance with all provisions of

this Code and to seek guidance where necessary from their Line Manager, or from the

HR or the Legal or Compliance Function. To “do the right thing” and to ensure the

highest standards of integrity is each employee’s personal responsibility that cannot

be delegated. When in doubt, employees should always be guided by the basic

principles stated in the introduction to this Code. Any failure to comply with this

Code may result in disciplinary action, including the possibility of dismissal and, if

warranted, legal proceedings or criminal sanctions.

Reporting illegal or non-compliant conduct

We take responsibility for ensuring that we all act with integrity in all situations

Employees shall report any practices or actions believed to be inappropriate under this

Code or even illegal to their Line Managers or the appropriate members of the HR or

the Legal or Compliance function. If it is appropriate, in view of the nature of the

reported matter, reports of violations may be made directly to higher levels including

the Group’s Chief Executive Officer and/ or Chief Compliance OfficerWhere

appropriate, complaints may be made on a confidential basis or through employee

Hotlines. All complaints shall be properly investigated.

Nestlé prohibits retaliation against any employee for such reports made in good faith,

while it also protects the rights of the incriminated person.


Objective

“Making our customers winners by constantly exceeding their expectations.”


Mission Statement

Nestlé believe that research can help them make better food so that people live a

better life. “Good Food is the primary source of Good Health throughout life.

Nestle 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 Nestle heritage and an essential

element. They know there is still much to discover about health, wellness and

the role of food in our lives, and they continue to search for answers to bring

consumers Good Food for Good Life.”


Vision

The Nestlé is to be the leading health, wellness, and Nutrition Company. In

particular, we envision to: Lead a dynamic motivated and professional workforce

proud of its heritage and bullish about the future. Meet the nutritional needs of

consumers of all age groups – from infancy to old age, from nutrition to pleasure,

through an innovative portfolio of branded food and beverage products of the

highest quality. Deliver shareholder value through profitable long-term growth,

while continuing to play a significant and responsible role in the social, economic

and environmental sectors of the country.


STRATEGIES

To fulfil this vision, Nestle follow these strategies:

Nestle have profitable and diversified high quality food and beverage

product portfolio, delivering 60:40+ advantage to consumers, available

across all sales channels.

Brands are the preferred choice in their categories. Consumer insight

drives all aspects of our marketing and communication efforts.

Nestle communications to the consumer are relevant, cutting-edge, and

adhere to the highest standards of responsible communication.

Nestle is seen as the No. 1 career destination for talented, motivated

and ambitious professionals.

Nestle result-oriented organisational structure ensures effective

communication and empowered self-management.

Nestle milk collection and agri services will continue to play the

primary role in development of the dairy sector in rural Pakistan.

Nestle proactive innovation and renovation culture is the key to our

success in the marketplace.

Fully integrated systems (Nestlé Pakistan, suppliers, customers) ensure

efficient business processes.

Non-strategic activities and products are outsourced or discontinued


Part II


Organizational

Structure


Board of Directors of Nestlé S.A.

Helmut O. Maucher

Honorary Chairman

Board of Directors of Nestlé S.A.

Peter Brabeck-Letmathe

Chairman

Paul Bulcke

Chief Executive Officer

Andreas Koopmann

1st Vice Chairman

CEO, Bobst Group

Rolf Hänggi

2nd Vice Chairman

Chairman, Rüd, Blass & Cie AG, Bankers

Edward George (Lord George)

Former Governor of the Bank of England

Kaspar Villiger

Former Swiss government minister

Daniel Borel

Co-founder and Board member, Logitech International S.A.

Jean-Pierre Meyer

Vice Chairman, L’Oréal S.A.


André Kudelski

Chairman and CEO, Kudelski Group

Carolina Müller-Möhl

President, Müller-Möhl Group

Günter Blobel

Professor, the Rockefeller University

Jean-René Fourtou

Chairman of the Supervisory Board, Vivendi

Steven G. Hoch

Founder and Senior Partner, Highmount Capital

Naïna Lal Kidwai

CEO, HSBC India and Country Head of

HSBC Group Companies in India

Beat Hess

Group Legal Director, Royal Dutch Shell plc

David P. Frick

Secretary to the Board

KPMG Klynveld Peat Marwick Goerdeler SA

Zurich

Independent auditors


Territory In-charge

Group Brand Manager

Key Account Executives

Area Brand Manager

Business Development Manager

SALES STRUCTURE

Head of Sales

Zonal Sales Manager National Key Account Business/Chiller Manager

Regional sales manager Key Account Manager

Area Sales Manager Brand Manager


TRAINING PROGRAM

The training programs are conducted time to time according to the need of the

organization. Thus, there are different training programs held for the employees. The

training programs are conducted every month whereas the training programs for the

employees are conducted from time to time according to the standard of the company.

They are also providing technical training to their employees. They made cross

functional teams for training and the development of their employees.

TRAINING PROGRAM FOR DSR

An organization conducts a training program to provide better service to its customer.

Thus, for this reason Nestlé conducts training program every month to train its DSR

in various areas because DSR are the delivery person and it is they who through their

behavior and appearance develop the image of their company.

The training program for the DSR emphasize on the following features:

How to behave when they are dealing with the customers

What is expected from them

What are there duties

How to handle the situation if any problem arises.

How to dress themselves

How to handle the retailer

Their personal attire


TRAINING PROGRAMS FOR THE EMPLOYEES

The training program for the employees involves different programs, which gives

them chances to improve themselves where they lack and to handle the situation more

confidently, and efficiently.

According to the need, the employees are given a chance to visit the Institute of Sales

& Marketing in Lahore for one day training. These training programs are offered to

the employees once in a year to keep up the new building standards of the

organization and to make them competitive.

Departments

Supply Chain & Procumbent (Distribution)

Technical (Factories)

Human Resource

Finance (Finance & Control Manager)

Working

Looking the main shops known as key accounts

Key Account:

Self service

Having wide range of assortment

Minimum Sales Volume

Responsibilities

Run Promotion


Displays

Sampling

Below the line

o Merchandising

o Long term mutual benefits relationship

o Availability / maintains

o Market intelligence

o Planning of BTL

o Provide excellent customer service

Requirement

Mba in marketing with 1-2 years experience

Good Communication skills

Key competent ion

Excellent negotiation skills

Good writing and verbal skills

Analytical skills

Assessment

KPI (key performs indicators)

Sales target

Activities


Attendance

Value growth

Incentives

Customer service level

CAREER DEVELOPMENT

Nestlé does give their employees a chance to discuss their career development for

future accomplishments. They send their efficient workers and employees abroad for

the improvement in their career. They also conduct workshops and seminars for this

purpose.

When employees are given specific training program, they tend to learn new things

and therefore show improvement in their performance. This betterment in their

performance enable them attain promotion for themselves which gives them more

experience and motivates them to do well in future and develops their career as they

go along.

COMPENSATION SYSTEM

Nestle has established a separate compensation department for its employees. They

offer incentive pay and special bonuses to employees. They have developed the

performance appraisal system. They also provide disability benefits to their


employees. Company has hired human resource professionals to develop a

competitive compensation system.


Part III


Management/Administrative Style


STYLE OF WORKING

Nestlé is profit and customer oriented organization rather than system and strategy

oriented. The products are manufactured at low-cost and sales are made at high price.

All the departments of Nestlé are related to each other along with their independent

working. In order, to improve their working and their level of service they provide to

their customer, weekly and monthly meetings are held. These meetings discuss the

following things:

Performance level of employees

Progress at territory level and as a whole

Sales of the organization

Where an improvement is required the working/activities of division include the

following features:

Selling through proper transportation

Area storming for creating awareness

Stall activities

Rewards offering scheme

Taking feedback from the customers

Providing service for chiller maintenance and technical problems

This activities/working of the organization involve the basic principles of marketing,

client service, public relation, planning, organizing, leadership and communication

The basic principle of Nestlé in marketing is to provide its customers with quality

product at reasonable price. For communication at national and international level

there are various ways to communicate that are as follows: Universal and direct

telephone lines

Fax


Email

Letters


Part IV


Production


As a consequence of joint venture arrangement between Nestle S.A. of Switzerland

and Milkpak Ltd. in 1988, the existing production facility of Milkpak in Sheikhupura

became a part of Nestle Milkpak.

The Milkpak Sheikhupura factory commenced operations in 1981 as a producer of

UHT milk. By 1988, it had expanded its operation and was also producing butter,

cream, desi ghee - all under the brand name of MILKPAK and juice drinks under the

brand name FROST.

To meet the demands of the large food market that Pakistan offered, Nestle Milkpak

reorganized and reinforced the production of existing brands and gave shape to new

production lines. The first to come was a milk powder plant, which not only began

producing NIDO in 1990 but was also critical to the production of several milk-based

products in the future. With the installation of the roller dryer in 1990, the first such

product to come was CERELAC - an internationally recognized brand of infant

cereal. This was followed by LACTOGEN 1 & 2 in 1991.

The year 1992 saw the introduction of tea whitener EVERYDAY and milk powder in

bulk packing named GLORIA. MILO and NESLAC came under production in 1994

and MILO RTD in 1995. Local packing of imported coffee under the name of

NESCAFE 3 in 1 commenced the same year. In 1996, Nestle Milkpak’s first

confectionery plant of POLO Mint was installed and the production of NESTLE

PURE ORANGE JUICE commenced. Packaging of coffee under the brand name of

NESCAFE CLASSIC was undertaken the same year.

In 1997 NESTLE WHEAT and two variants of POLO viz. Strawberry and Orange

were introduced. In 1998 a substantial capital investment was made to launch several

products and install two new state-of-the-art technologies. SWEET TREETS were

launched in early 1998. The addition of two flavors of POLO: Blackcurrant and

Strong Mint, increased the number of POLO variants to five. A new variant Lemony

was added to the range of popular FROST fruit drink flavors and a new 1-liter


packing of FROST was introduced. Flavored milks under the brand FRESH &

FRUITY came under production on the new Tetra Filling Machine equipped with the

modern “slim” format. MILO RTD and UHT Cream were also shifted over to this

new format.

A new flexible confectionery line enabled the manufacture of a wide range of high

and low boiled sweets and toffees, including TOFFO and two variants of SOOTH-

ERS’ Menthol Eucalyptus and Honey Lemon. Nestle Milkpak also contracted to

supply dairy mixes to McDonald’s, for its popular soft serves and milk shakes. And to

top it all, the most prestigious project, NESTLE PURE LIFE was also commissioned

in December. Based on the latest water treatment and bottling technology, this marked

the entry of Nestle Milkpak in the Pakistan water market and that of Nestle in the

world water market.

The expansion of high boiled sweet line continued in 1999 with the introduction of

Fruit Drops and BUTTERSCOTCH.

The year 2000 saw the production of some exciting products. First came NESCAFE

Frothed Original, followed by its two other flavors: Mocha and French Vanilla.

NESCAFE Frappe RTD was to come next. The fruit juice range was expanded by the

production of Mango and Orange- Mango Mix. On the confectionery side, Tutti Fruiti

was added under the umbrella of POLO and Wild Cherry was added to the

SOOTHERS range. The success of NESTLE PURE LIFE in PET bottles encouraged

the commissioning of 5-gallon bottles production line for home and office in June.

And the last product line of the year to be commissioned in November was that of

NESTLE Plain Yogurt, a high quality product with special Stay-Fresh Seal.

To meet the needs of safe and quality storage for the ever expanding product range

and their volumes, a National Distribution Center (NDC) was completed and became

functional in June, 2000. Spread over 6614 square meters, it has the capacity to store

up to 8300 pallets (approximately 8000 tons).


Part V


Marketing Mix


MARKETING PROCESS

It is a process which consists of four steps enabling the marketers to perform their

strategies according to their plans. These steps are:

ANALYZING MARKET SITUATION

It is based on information and research including SWOT and PEST analysis of market

DEVELOPING MARKETING MIX

It includes development of 4P’s namely

Product Price Place Promotion

MARKETING IMPLEMENTATION

It involves turning plans into actions.

MARKETING CONTROL

Being the last step it identifies the gap between planned and actual goals


Marketing process

Milk Pack was the first tetra pack introduced in Pakistan in 1981 with green and white

packaging that is associated with Pakistan’s flag. It was a brand that promised natural

and healthy milk. It further gained strength when it was backed by Nestle Switzerland

a well established and reputable international brand that bought in to it and expanded

its scope and activities. It has recently highlighted the use of iron that has been added

to the milk and communicated this in its advertising and packaging. The tag line also

reads as “making a stronger household”. Milk Collection The core raw material of

Nestle MilkPak is milk. Over the last Twenty Eight years, the company’s prime

concern has been to improve the quality and volume of milk for UHT processing and

for other milk based products. The company successfully established its own

collection system and expanded its operations over a very large milk shed area in

Punjab. Owing to this tremendous growth in the volume of an extremely high quality

raw milk, Nestle MilkPak now produces a superior quality and better tasting UHT

milk, with longer shelf life.

Today, Nestle MilkPak can boast of the largest milk collection network in the

country, unmatched in size, productivity and efficiency. Milk is collected through a

vast network of village milk centers (VMCs), sub-centers and centers. At these

centers, chillers have been installed to lower milk temperature to 4C for preventing

bacteria development during long hauls to the factories, which are undertaken by a

large fleet of specially insulated tankers. Nestle gathers High Quality milk through a

comprehensive strategy, intensive education program for the farmers and the milk

collection staff, up gradation of milk loading and transportation system, increase in

the chilling capacity and above all, adherence to the highest acceptance standards at

all milk collection points, including the factories.


ANALYZING MARKETING SITUATION

SWOT analysis

A SWOT Analysis is conducted by the company so that it is able to position itself to

take advantage of particular opportunities in the environment and to avoid or

minimize environmental threats. In doing so, the organization attempts to emphasize

its strengths and moderate the impact of weaknesses. The analysis is also useful for

uncovering strengths that have not been fully utilized and in identifying weaknesses

that can be corrected. Matching information about the environment with the

organization’s capabilities enables management to formulate realistic strategies for

attaining its goals.

A SWOT Analysis of Nestlé MilkPak is as follows:

Internal analysis

Strengths

Socially Responsible Company.

NML’s products enjoy strong brand image and market pull.

Innovative and constantly growing product line. NML launched 17 new

products, including variants of existing products in recent past.

Sales force is the major resource strength in terms of physical resources of the

company.

Marketing strategies established by the company are innovative and lure

customers.

Financial, marketing and sales strategies are formulated by gauging the

customer demands.

Periodic research carried out to judge market trends.

It is a large scale organization, with abundant funds and has the capability of

acquiring weaker firms by throwing them out of competition.

The recent acquisition of the water brands Aqua and Fontalia provide an

example for this strength of the company.

Multinational.

Growing Sales and profits.


Major shareholder in the food industry of Pakistan.

Aggressive Marketing.

Efficient Distribution networks through out the country.

Quality Products.

Environment Friendly.

Skilled labor.

Educated staff.

Large number of offerings.

Pre purchase virtual display.

Arrangement of events.

Good background of the company.

Easy to approach outlets.

Physical evidence Strong Brand image

Quality product

Solid Financial position

Strong supply chain network

Qualified work force

Commitment to High Quality Products

Focus on research and development Estimations of UHT Milk Production and

Consumption up to 2008– 09

Year Annual Production

(Million liters) Annual Consumption

(Million liters)

2008-09 => 648.43 353.71

2009-10 => 753.89 372.05

Weaknesses

Selective investment due to uncertain economic and political conditions.

Feasibility of new products needs to be analyzed, e.g. Nestea was launched

some years back but it failed because no customer demand for it existed.

Relatively a new company in comparison to its rivals e.g. Lever Brothers.

Low levels of inventory maintained can be dangerous.


No credit sales.

Low sales margins due to highly value added products.

They cannot launch many of its expensive international brands due to the

lower income groups.

Physically impossibility to have target market.

There is weak marketing of MilkPak as there is no advertisement of MilkPak

on official website.

Lack of awareness among the target market.

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

target market of Nestle MilkPak is upper middle and high class because lower

middle and poor class cannot afford to buy UHT milk due to its premium

price.

It is a main weakness of MilkPak that there are different companies of milk

but the name of nestle MilkPak is always stand in the last because of low

advertising and marketing.


External analysis

Opportunities

Pakistan is the seventh largest producer of milk in the world with annual

output of over 22 billion liters.

There are substantial growth opportunities considering the average yield of

Pakistani animals at only 1,100 liters/annum as compared to 6,000

Liters/annum for animals in Europe and USA. There are nearly 20 million

milk producing animals in the country, mostly in Punjab (80%).

The overall milk market in Pakistan is 20 billion liters, out of which processed

milk contributes only 3 million liters. Nestlé MilkPak along with other

processed milk businesses contributes only 2% to this large market.

Nestlé MilkPak has expanded its product range by entering the cold dairy

market recently by launching Nestlé plain yogurt and now fruit yogurt is also

added to it.

To expand the cold dairy products range, Nestlé fruit yogurt is the latest

addition to this group.

The cold dairy market offers many opportunities for the company which can

capitalize these products by banking on its superior quality milk.

The coffee brand also offers many opportunities for the company to expand by

tuning the taste of the masses towards coffee.

Credit policy can be adopted to increase sales.


Threats

Price fluctuations due to rupee devaluation as raw material are imported.

The uncertainty of economic conditions poses a great threat as the major funds

invested in the country come from outside Pakistan.

The present economic crisis in the world, led to the withdrawal of foreign

management from the company and the investment has come to a halt.

Competition with Nestlé’s owns smuggled brands.

Effect of Seasonality’s upon sales.

Imported raw material, in some of the company’s products.

Major player may enter target market

Legal and ethical issues.

Market segment growth could attract new entrants.

Economic slow down can reduce demand. Two main competitors Haleeb and

Olpers are main threat for MilkPak especially the Olpers is growing very fast.

Inflation is getting higher and higher so the purchasing power of the people is

decreasing day by day.

There is no entry barrier for new entrants as the Olpers has come in the

market.

Taste of consumer has already developed which is hard to change.


Current market situation

Today, Nestlé MilkPak produces in over 81 countries and achieves 98% of its

turnover outside Europe. Nestlé MilkPak is the world’s largest milk company, which

does 98% of its business. It has an annual turnover of 70 billion Swiss francs, 522

new factories in 81 countries, 200 operating companies, 1 basic research outer and 20

technological development groups, has more than 231,000 employees and more than

8000 products around the globe. There are three companies co-ordinate the activities

of some 200 operating companies around the globe. Their functions and details are as

follows: The first, Nestlé MilkPak, holds the financial shares in the allied companies.

It also checks the profitability of these companies and to ensure the profitability of the

group as whole. The second, Nestlé MilkPak, has two areas of activities that are as

follows:

Research and technological development

Technical assistance beside this, it provides know-how in engineering,

marketing, production, organization, management and personnel training on a

continuous basis. The third company is Nestlé World Trade Corporation that

oversees the import and export of merchandise worldwide.

MARKET ANALYSIS

In 1986, Haleeb entered the market with its distinctive blue packaging and positioned

itself as the thickest natural milk. The two brands were the main players in a market

that is the world’s fourth largest milk producing country.

Then in 2006, Engro Foods launched Olper’s milk in a market dominated by two

highly entrenched strong brands.


Customer Profiling (Customer Data)

Transaction Details

Frequency,

Amount and timing of purchases,

Items bought,

Prices paid

Use of cash or credit.

Marketing channel

Promotion type, and

Address/city.

Appended Database Data

Life Style

Profession/occupation,

vehicle ownership,

Internet use,

Travel,

Pets, and

Hobbies.

Financial

Investments,

Credit card usage and type,

Living expenses, and

Credit worthiness.

Demographic

Age,

income,

education,

gender,


marital status, and

Number of kids.

Almost all type of peoples is the consumers of the milk.

Own/rent,

urban/rural,

size of city,

region, and

Size of dwelling.


DEVELOPING THE MARKETING MIX

The most interesting part of commerce is the marketing; this is the latter addition of

the business tools. It starts with conceiving idea of presenting a product, traditionally

producers were interested in producing those goods only which has existing pull,

whereas now because of marketing tools they are producing with the intention of

pushing the product into consumer’s hand. Marketers use numerous tools to elicit

desired response from their target markets. These tools constitute a marketing mix.

Marketing Mix is the set of marketing tools that the firm uses to pursue its marketing

objectives in the target market. McCarthy classified these tools into four broad

groups that he called the four P’s of marketing:

Product

Price

Place

Promotion

1981 Milkpak

1983 Butter

1986Milkpak UHT

creamMilkpak Desi

GheeFrost

1990 NIDO Cerelac

1991 Rice Lactogen1 Lactogen 2


1992 Everyday Gloria Maggi

1994 Milo Powder Neslac

1995 Milo RTD

1996 Juices Polo mint Nescafe’ classic

1997 Kit Kat

1998 Toffo Soothers Pure life

2000 Plain Yogurt

2001 Fruit yogurt NAN 1 NAN 2

2002 Everday liquid

2003 Buddy Nesvita yogurt Nesvita milk

2004 Raita Caution Easywhip Nescafe 3 in 1

Product Mix

YEARS OF PRODUCT LAUNCH

Diary

From shelf-stable solutions to chilled dairy. Nestle’ has long been a major player in

the dairy industry , originally with shelf stable brands as NIDO, innovation and

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

Nestle’ Milkpak UHT milk

Launched in 1981, MILKPAK milk became synonymous with purity, in September

1999; it was launched under the Nestlé’s brand, which further strengthened its

position. Backed by a very strong brand name , aggressive marketing and

distribution , consistent quality and all year round availability , nestle’ milkpak milk

has become number one selling milk brand in Pakistan. It is available in four pack

sizes of


1500 ml 1000 ml 500 ml 250 ml

The key competencies are

clean bacteria free homogenized standardized

Nestle’ NESVITA hi- calcium low fat milk To tap the fast growing “adult well being’ segment in Pakistan, nestle’ hi calcium low

fat (HCLF) milk was launched in September 2003. Not only did this product offer

high calcium, but it also offered the advantage of low fat retaining, at the same time,

the natural goodness and taste of milk. The product, which was re-launched under the

brand of nestle’ Nesvita in 2005, has become the preferred choice of those seeking

healthy lifestyles. It is available in;

1000 ml 500 ml

MILKPAK UHT cream

MILKPAK UHT cream was introduced under the MILKPAK brand in 1986. It is

available in an attractive 200 ml slim pack. The consumer trust in the brand name and

the product has ensured its dominant share in the cream category.

Key competencies are

Hygienically processed Nourishing Convenient packing Excellent for cakes and coffees


MILKPAK Desi Ghee

MILKPAK Desi Ghee was introduced in 1986 in tetra packaging. However, in line

with the current market trend, MILKPAK Desi Ghee was re-launched in 870 gm tin

packaging in 2000 followed by 75 gm sachet in 2003. The product was also

introduced in 16 kg tin packaging to tap the potential of loose desi ghee.

Nestle’ NIDO

One of nestle’ largest brands internationally, NIDO was launched in Pakistan in 1990.

Since then NIDO has grown from strength to strength to become the mother’s trusted

partner in catering to her children’s growth and development. Along with the natural

goodness of pure milk NIDO is now also enriched with minerals and vitamins that

help children excel in the classroom and on the playing field. It is available from 100

gm to 62 gm pack sizes.

Nestle’ NIDO 1 +

The NIDO family was expanded with the launch of NIDO 1+ in august 2005. The

product is meant for children from 1-3 years of age. NIDO 1+ contains Prebio 1 , a

natural fibre by nestle’ that helps maintain a healthy tummy while providing the

nutrition and goodness of milk. Regular use of NIDO 1 + will ensure a healthy child.

Nestle’ everyday

To target the large potential offered by the tea –creaming segment , NESTLE’

everyday tea-creamer was launched in1992. Supported by integrated marketing ,

focused distribution with sampling drives and excellent consumer acceptance, the

brand has shown strong growth and holds great promise for the future. The brand is

available in a variety y of pack sizes ranging from 40 gm to 1000gm


Good for tea Long life Nourishing Convenient packing

Nestle’ everyday liquid

Nestle’ everyday liquid leveraged by a very strong mother brand EVERYDAY

powder was introduced to capture the huge liquid milk consumption in tea. Launched


in june 2002 in 200 ml , it Is now available in 125 ml and 375 ml sizes. Year 2005 has

seen this brand become a significant player in highly competitive milk market.

Nestle’ plain yogurt

Launched in November 2000, nestle’ plain yogurt became the market leader and has

Maintained its position ever since. The stay- fresh seal, printed expiry date and an

exclusive distribution system contributed to the immense popularity and success of

the product. N account of its nationwide distribution, NESTLE’ plain yogurt is only

national player in the market.


Nestle’ fruit yogurt

The year 2001 saw the launch of the Nestlé’s fruit yogurt in 3 variants of strawberry,

mango and peach with real fruit pieces. This made a pleasant difference for the

consumer, as the local competition was only able to offer fruit flavored yogurt.

Nestle’ Nesvita high calcium low fat yogurt

After the success of plain yogurt, nestle’ introduced “hi-calcium low fat” yogurt in

2003. The product contains less than 1 % fat and 50 % more calcium than plain

yogurt. In 2005 the product was relaunched under the brand of nestle’ nesvita which

has helped to further strengthen its brand image.

One 450 gm. Cup of nestle’ nesvita hi- calcium low fat yogurt contains 900 mg of

calcium ,which is sufficient to fulfill the daily adult requirement of approximately

1000 mg of calcium as recommended by the US food and nutrition board

(1997).calcium is essential for stronger bones and teeth and helps combat osteoporosis

especially in women.

Nestle’ Raita

Nestle’ raita was launched in year 2004. it has become an instant favorite with

Pakistani cuisine lovers and housewives.

Nestle’ easy whip

Nestle’ easywhip was launched in oct 2004, in order to meet the needs of urban cream

usage. As compared to other available creams, it is the only cream that whips.

Nestle’ butter

New pack design allows milkpak butter to gain the strength like that of UHT milk


nourishing

Convenient packing

Source of vitamin


Baby Food

Lactogen

Lactogen 1 and Lactogen 2 are casein-predominant infant and follow up formulae.

Locally launched in 1991 in soft packs. Lactogen is available in 200gm and 400 gm.

Is also available in imported tins of 450 gm and 1000 gm. The brand provides both

affordability and quality

NAN

NAN 1 is a whey-based started infant formula while NAN 2 is its follow up . the local

manufacturing of these formulae began in 2001 , which was a landmark achievement,

as it brought the expertise of producing an internationally renowned high quality

infant product exclusively to nestle’ Pakistan in this region. This also offers a great

advantage to the consumer as a high quality product is now available at the best

affordable price. NAN 1 and NAN 2 are available in locally produced 400 gm soft

packs and in imported tins of 450 gm

CERELAC

With local production commencing in 1990, cerelac has emerged as the dominant

player in the branded infant cereal market. Available in six variants, the brand

provides balanced nutrition to infants from six months onwards. The variants include

cerelac wheat, cerelac wheat 3 fruit, cerelac wheat honey, cerelac wheat banana,

cerelac rice and cerelac chicken vegetable rice – the latest addition to the cerelac

range. Cerelac sachet of wheat and wheat 3 fruit were added to the range in October

2002, which provided affordability and accessibility to the consumer.


NESTLE’ rice

An affordable starter weaning cereal, nestle’ rice offers the flexibility of preparation

with a variety of meals. With the advantage of being gulten free , the brand is

available in 125 gm pack and is especially suited to the needs if infants from 6 months

onwards. It was launched in 1994.

Neslac

Neslac is growing up milk formulated specially for young children from 1 to 3 years

of age. It contains just the right balance of proteins, calcium, iron, vitamins and

essential minerals to cater to the nutritional needs of a growing child during this

special age.


Beverages

Nescafe classic

Nescafe’ classic is locally repacked and marketed in 1.4gm and 25 gm sachets, 50gm

and 100 gm jar packs and 500g bag and box. The brand enjoys a special position in

the country’s coffee consuming segment.

Global campaign “open up “was launched in Pakistan as well, introducing a new

frame work and increased sales of coffee in Pakistan

Nescafe’ 3 in 1

To cater for consumer convenience, nescafe’ 3 in 1 was launched in 2004. Available

in 18gm single serve sachet, it offers an inexpensive way of having coffee wherever,

whenever and however.

Nescafe’ gold

In order to offer more sophisticated coffee experience nescafe’ gold is available In 50

gm and 100 gm ja pack. This is particularly appreciated by coffee connoisseurs who

look for the rich full-bodied taste, coupled with stimulating aroma

Milo powder

Ever since milo powder was launched in 1994, it has achieved fairly consistent

results. Milo is positioned as a milk modifier, both for hot and cold consumption. The

inexpensive alternate to imported products and have an immense potential,

particularly among growing children and those involved in active lifestyles. It is

marketed in 200 gm packs and 14gm single serve sachet.


MILO RTDTo cater for consumer convenience, MILO RTD (ready to drink) was launched in

1995 and is available in 200ml and 125 ml pack sizes. It is an ideal alternate to

summer drinks and is popular with all age groups, particularly among children and

consumers who are nutrition conscious or have an active life style.

Frost

A well-known fruit drink brand FROST was introduced in 1986. Positioned as a cold

drink and alternate to other soft drinks, its strength lies in the convenience attached to

its usage.

Nestle’ juices

Encouraged by the consumer response to nestle’ orange juice launched in 1996, the

category of nestle’ juices was further expanded with the introduction of mango and

mango orange in 2000, followed by apple nectar in 2002.

In 2003, based on consumer insight and to broaden the range further, nestle’

pineapple nectar was introduced. To offer more variety to consumers, red gapes nectar

was launched in 2005.

Nestle’ juices category as gained substantial market share and is a preferred choice of

consumers. Available in 1000ml and 250ml pack.

Nestle’ buddy

Introduced by keeping small kids in mind, nestle’ buddy gave a new concept. It is a

small jucie packet available in mango flavor. It says “nestle’ buddy, only for cool

kids” which attracts young kids to have a check on this product


Confectionary & Culinary

In view of the potential for confectionary sales in country, company established as

independent sales and distribution network that expended swiftly/

POLO

Nestle’ milkapk successfully entered the confectionary business in 1996 with the

launch of POLO. POLO was positioned as the refreshing sweet with a hole and

catered for the younger segment.

Over the years its range has been extended to appeal to various age and income

groups.

Nestle’ kitkat

Chocolate is a small but fast growing segment. Nestle’ kitkat was launched in 1996 to

make inroads in this market. Popular price points and focused marketing activities

have shown excellent sales growth. Complementing the company’s confectionary

business.

Nestle’ kitkat chunky

Launched In Pakistan in 2005 kit kat chunky is nestle’‘s giant single wafer version of

the world famous brand KIT KAT. The launch was part of global strategy to make

KIT KAT the largest selling chocolate brand in the world.

MAGGI 2- minute noodles

Fast to cook, good to eat – MAGGI 2- minute noodles were launched in 1992 and in

doing so nestle’ Pakistan pioneered the category of instant noodles in Pakistan. Maggi

2 minute noodles have special appeal for children, as they are fun to eat and offer a


range of appetizing flavors: chicken, chatkhara, chilli, ketchup and masala. The

product was re launched in 2003 with renovated packaging to further strengthen its

market leadership.

Nestle toffo

Nestle’ toffo is a toffee which has caramel taste. The product was made for kids by

taking care of their requirements.

Nestle’ hazelnut wafer chocolate

Filled with hazelnut and wafer this chocolate was liked by specific segment. Due to

its unique and enriched combination, nestle’ hazelnut wafer chocolate soon got its

place in the market.

Nestle’ rice crispy chocolate

Nestle’ rice crispy chocolate is a mini chocolate to fill in the demand of users who

need small amount of chocolate. It’s a blend of exclusive flavors and is an innovation

in itself.

Soothers

Soothers are the Throat drops. These are the medicated candies to give a relief to

throat and to help people in getting rid of throat rashes and reactions. The soothers are

present in two flavors.

Honey lemonMenthol eucalyptus


Water

Nestle’ Pure Life

Launched in December 1998, nestle’ pure life was nestle’ first global bottled water

brand. Marketed in 0.5 and 1.5 liter PET bottles, it was established as the clear market

leader within 3 months of launch, becoming the benchmark for quality of bottled

water in Pakistan. With focused attention on distribution, marketing communication

and merchandising, nestle’ pure life soon came to command dominant market

leadership, establishing a new price point of bottled water.

Nestle’ pure life is a part of the product portfolio of nestle’ waters, which ranks as the

biggest bottled water company in the world with its renowned brands like

PERRIER ,VITTEL , CONTREX, POLAND SPRING etc. Nestle’ pure life is

registered with NSF international USA, an independent quality certification agency,

with the authorization to use its mark of quality on the label. It is also approved by

PSQCA and carries its mark of certification

Nestle’ pure life – home and office service

In 2000, nestle pure life established a successful home & office(H& O) deliver

service, which has substantially grown ever since and has come to dominate the 5-

gallon market in major towns , offering greater convenience and better value to the

consumers. Successful marketing and sales strategies has provided greater

convenience and better value to the consumers. The brand is poised for continued

strong growth.

AVA & FONTALIA

To expand its H&O water delivery business country wide, nestle’ acquired major

share holdings in both these businesses in 2001. While AVA is an important national

player in the branded bottled water category, FONTALIA is a strong player in H&O

service in Karachi


These acquisitions have helped the company in the extension of its H&O service in

Karachi and Islamabad. The two factories in Islamabad and Karachi that produce the

AVA brand were later merged with nestle’ Pakistan in 2003, as was the factory that

produced FONTALIA which was merged in 2005.

VALUE added services BY NESTLE

Brand Consciousness

People prefer Nestle because of its strong brand background all over the world.

People from all the classes opt for brand name. The main factor, which convinces

them, is its verified brand and line extensions. This point makes the brand name

strong position in the minds of the people. This is the biggest positive factor,

which is the result of one of the highest turnovers of Nestles products.

Nestle Pure Life

is the biggest icon in water industry. Although there are many big competitors

working in the same industry but the value Nestle offering is different and unique

which is its purity.

Packaging:

The packaging, which Nestle is giving to its customers, is different as compared

to it rivals. In their competition Classic and Cool are supplying water in the same

design, which can be bought from the market. But here Nestle has its own design,

which attracts the customers.

Delivery:

Nestle is considered pioneer in delivering water at your doorstep. Big hoardings

are placed on the roads with their number given of free delivery.

Availability:

Nestle is available at all areas of Lahore. Because they have only few distributors

but they are covering each and every area of Lahore. If competitors are taken, they

don’t have full coverage of main cities.


Analysis of Company Marketing/ Sales Procedures

The company succeeded in achieving sustainable profitable growth during the

previous year driven by successful marketing and sale strategies and focus on key

initiatives. Consumer confidence in the company’s brands has further strengthened

and the trade remains confident as ever in doing business with it.

Innovation and renovation remained the key to the development of products. In

previous 1-2 years, several new products were introduced that include NESTLE

BUDDY, NESCAFE 3 IN 1 , NESTLE RAITA ,CAUTION , NESTLEEASYWHIP

in addition to two new products in the chocolate category with NESTLE RICE

CRISPY AND NESTLE HAZELNUT WAFER. New variety was also added to the

existing range with the launch of NIDO 750 g . EVERYDAY 750 g and MAGGI 2-

MINUTE NOODLES ketchup flavor.

The strategy to increase penetration by offering right price point pack sizes ,

supplemented by distribution expansion in small towns continued with focus on

CERELAC , NIDO and EVERYDAY sachets through localized activities , with very

good results.

Consumer insight remained our guiding principle to develop effective

communication. Consumer services shows, door-to-door sampling, “Path to

Purchase” philosophy and consumer promotions strengthened our communication.

During the period nestle’ continued with strategy to increase the distribution

penetration and develop additional trade channels. Second strata towns remained the

focus of our attention and activities such as town storming, special distribution drives

and distributor training were extensively undertaken.

Further sales structure was strengthened with emphasis on area- based territory

management and additional area demarcation, overall availability and visibility of

products provided a competitive edge.

One of the key initiatives has been the “Category Sales Development” function,

which has effectively been aligned with marketing and sales to strengthen strategy

planning with respect to channels, customers and shoppers.


FoodServices business unit is fast developing the required skills and competencies to

meet specialized needs of Out-Of-home customers. Organizational structure was

further strengthened and its role and activities expanded during 2004.

Out –Of-Home channels that the unit serves include hotels, restaurants, clubs,

businesses, industries, third party canteens and NESCAFE vending operations.

Specialized products and pack sizes have been developed to meet specific channel

needs. Our strategic outlook is clearly skewed towards propelling growth behind

liquid milks, tea creamers, hot and cold beverages and water. The future outlook

seems very upbeat owing to dramatic changes in consumer trends for out of home

consumption.

Balanced growth was achieved in all strategic categories and the market share

position of key brands was further strengthened. Trade spent & market returns were

kept well under control while achieving sales value growth and an impressive Real

Internal Growth (RIG). Distributors’ outstanding was efficiently managed due to the

compliance of sales on cash policy.


Pricing Policy

According to nestle’ there is no specific policy about pricing that has been followed.

Because pricing a product depends on many factors like,

Target market

Consumers

Product cost

Manufacturing process

Raw material cost

Demand of product

Availability of raw materials

Distributional cost

Storage cost

GMP (Good Manufacturing Practices) etc

The problem with nestle’ high prices is that its quality standards are very high. High

hygienic conditions are maintained during manufacturing, storage and distribution.

If any raw material does not fulfill the quality standard criteria the product is disposed

off or sold back at a cheap price.

At times tons of milk is disposed off if it doesn’t meet anyone of the criteria. And also

the release criterion of products is very strict. due to the fact that major product of

nestle’ is for infants and therefore very stringent policies are followed , and in case of

any deviance the products are not released .

Such procedures are the reason for high cost of nestle’ products. But even then nestle

is one of the major food selling companies due to its high quality that ensures health

and fitness.


Nestle want to earn profit not just by satisfying consumers but by pleasing them

To set the price followings things are checked

Pricing objective

Demand

Cost

Competitors cost , prices, offers

Selecting a pricing method

Setting final price

Demand of nestle products is a major factor in the price determination. it sets a ceiling

on the price a company can charge on its products.

Companies select a pricing method that includes one or more of three considerations:

Customer demand

Cost

Competitors pricing

Nestle uses perceived value method. Means price are set by the proposition that price

should be according to the value perceived by customer

If a new product is launched a lot care is taken so as to gain consumers loyalty.

Psychology of consumers is taken into account.


Price List

These prices are subject to errors. As the final list was gone for update these days.

PRODUCT PACK SIZE(g) PRICE (Rs)Nido Pouch packs 62

4001000

15108240

Everyday Pouch packs 404001000

10104228

Nestle’ butter Tin packs 100200

2540

Nescafe’ classic 75225500

105N/AN/A

Lactogen 1 &2 Soft packSoft packImported tin

2004001000

72133500

Cerelac wheat three fruit

Soft packs 200400

73139

Cerelac wheat Soft packs 200400

61117

Cerelac banana Soft packs 200400

69132

Cerelac honey Soft packs 200 63

Cerelac rice Soft packs 200 69

Neslac Soft packs 200 115

Nestle item Soft packs 125 40

NAN 1 Imp tinSoft pack

450400

265185

NAN 2 Imp tinSoft pack

450400

265185

PRENAN Imp tin 400 375

AL110 Imp tin 400 325


PRODUCT FLAVOR SIZE PRICEMaggi noodles Chicken

ChatkharaChiliMasala

70707070

12121212

Nestle water 0.5 L250ml330ml

241236

Nestle yogurt 450 29Nestle’ wheat Banana 200 67

Three fruit 200 71Nestle juicesAppleRed grapesMangoMango orangePineappleorange

Soft packs 250ml 15

Kit kat SmallLarge

515

Milkpak cream 200ml 26Polo 5


Distribution Policy

As far as the distribution strategy is concerned Nestle follows one policy. i.e.

“Sales on cash”

No sale is done to the distributors on credit basis. Zero day’s credit is given to the

distributors. And therefore the whole process remains very clear and lucid.

According to nestle’

“We don’t push things into the market”

By following such a rule of thumb consumers get products only when they want.

There remains no idle stock in the market.

For distribution purpose nestle’ has its own sales team force that support the whole

procedure and coordinate with the distributors.

Such sales team is well trained and skilled. Training and development is provided to

all the distributors and sales team force.

Their exists a strong coordination among all the distributors of Nestle’ and the sales

team support.

For the distribution of products from SKP (Sheikhupura factory) a separate

department is present known as NDC (National Distribution Center) such department

ensures the supply of products from SKP factory to nation wide.

The aim of nestle’ is to provide its products according to the needs of consumers and

consumer convenience in getting the product is nestle’s top most priority.


Objectives

Nestle has following distribution objectives:

To reach the customer and better availability of the product to the customer To capture more market shares as compared to competitors satisfying the

changing needs of market.

Nestle’ has well defined physical distribution channel. Main elements of nestle’

distribution mix are

Order processing Warehousing Inventory management Transportations

ORDER PROCESSING

Physical distribution comes with customer order. Nestle’ order processing steps are

carried out quickly and accurately. Retailer’s send in their orders daily. Nestle’s order

dept quickly processes these orders and then warehouse send those items.

WAREHOUSING

Nestle has two factories. Each factory has its own cold houses which stores its

products. Nestle has large and highly organized warehouses designed to keep products

manufactured at its plants.

Inventory management

Nestlé major goal is to maintain a balance of inventory which can meet the overall

production requirements and fulfill demands off customers.

Other distribution channels

For the distribution outside Lahore, the company has hired a


“Goods forwarding agency”

The milk is transported through trucks to various out station destinations. In

individual cities, the company has appointed distributors who are given some

commission. All expenses of delivery are borne by the company. The products are

supplied from the factory according to area requirements under level two distributions

as explained above. The vehicles of company provide efficient and in time delivery

leaving no problem for consumers regarding availability of the products in the market.

Terms of contract

The company currently has about 250 distributors countrywide. So a tremendous

improvement has taken place in the recent years due to the efforts of the company

managers regarding the distribution divisions. Distributors are hired on contractual

basis. If any distributor uses his own transport the company provides him with the

equal price for job doe.


Nestle’ headquarter Switzerland


Company directory

REGISTERED CORPORATE OFFICE

308 Upper Mall, Lahore

CORPORATE OFFICE ANNEX

304 Upper Mall, Lahore

Factories

SHIEKHUPURA

29th km , LHR-SKP road , Sheikhupura , Pakistan

KABIRWALA

Khanewal-kabirwala road, kabirwala , district khanewal , Pakistan

REGIONAL SALES OFFICES

NORTH ZONE

Islamabad

92- east , 3rd Floor, Razia sharif plaza , fazal-e-haq road, Blue Area, Islamabad,

Pakistan.

Peshawar

201, Block B, 2nd Floor City Tower, Jamrud Road, Peshawar, N.W.F.P. Pakistan.

CENTRAL ZONE

Lahore29-b, Main Gulberg, Lahore, Punjab, Pakistan


Faisalabad

Al Haq Plaza,271-A, Small D Ground, People’s Colony Faisalabad, Punjab, Pakistan.

Gujranwala

3 irrigation road , opp. Commissioner house, civil lines, gujranwala.

MultanSurij Miani Road, Chungi No 1, Multan, Punjab, Pakistan.

Sahiwal :

174-B/7 tehsil road old civil lies ,stadium chowk ,sahiwal

SOUTH ZONE

Karachi

F-77/1, Block 7, Clifton, KDA Scheme 5, Karachi, Sind, Pakistan.

Hyderabad

178, Block C, Unit 2 Latifabad, Hyderabad, Sind, Pakistan.

Quetta

63 B-D, Chamman Housing Scheme, Opposite Askari Park Quetta, Baluchistan,

Pakistan.

Sukkur:

C- 408/6- Minara road, sukkur


Milk collection centers

1. Arif wala

2. Alluday wali

3. Basirpur

4. bhawana

5. Chishtlan

6. Duniyapur

7. Farooka

8. Ghaziabad

9. Jalla more

10. Haveli lakha

11. Kamalia

12. Kalowal

13. Layyah

14. Ludden

15. Mailsi

16. More mandi

17. Mian channu

18. Minchanabad

19. Pakpattan

20. Pindi bhattlan

21. Renala

22. Sahiwal

23. Shorkot

24. Yazman


REGISTERED

CORPORATE

OFFICE

SHEIKUPURA FACTORY

KABIRWALA FACTORY


Promotional Policy

For promotion of its products, nestle ‘follows an aggressive strategy. The strong

promotion is done through mediums like TV and magazines/ news papers.

Some other mediums which are used for promotion purposes are nestle’ international

websites, billboards, posters, radio etc

The chart shows the increase in nestle’ sales promotion and advertisement expense in

the year 2004 and 2005. from almost 0.6 bn it has increased to Rs. 0.8 bn

“Nestle’ is a human company providing a response to human needs through out the

world” this is the opening statement of nestle’ management and leadership principles”

– a document that defines Nestle’ values and that is applied throughout the

organization worldwide, thereby becoming a tangible expression of Nestlé’s corporate

culture.

For promotion nestle’ fulfills its social responsibility very efficiently. “Nestle’

corporate business principles”- a document that serves as the company’s management

tool, reflects its commitment to corporate social responsibility as the way of doing

business . not only does the company abide by its policy of serving its consumers

through high quality and safe products coupled with responsible consumer

communication , it adheres to good manufacturing practices , environmentally sound


business practices and support the principles of UN’ s global concept on human rights

.

Nestle uses media like

TV commercials

Magazines

Outdoor advertisement ( banners, billboards , neon signs)

Point of sale advertisement in shops , departmental stores and other consumer

buying places

Buses printed especially for nestle pure life and everyday

Promotional budget

Nestle’ promotional budget is et by the main head office in Switzerland on annual

basis for various consumers’ products depending on the sales and demand

Advertisements are very important in building image of company. Because customers

are attracted and persuaded to try the product out. The budgets for different products

vary depending on the sales and demand of products. Like on milk nestle’ has 60 % of

total sales. As compared to competitors like halleb and others, the advertising strategy

is very different. The company doesn’t rely on comparative ad but it tries to attract

customers by its distinctive and unique approach. For ad , nestle’ hires top leading

models that present hidden qualities in the products.

When juices were introduced, company made such advertisement that people were

surprised


As far as direct marketing is concerned following techniques are

adopted at nestle’

Door to door selling

Prizes

Free sampling

Nestle is doing a lot to improve the picture in the minds of consumers. Its market size

is increasing day by day

Societal Marketing

Nestle’ actively takes part in various social action programs undertaken for the rural

and underprivileged communities, sports and culture is promoted and environmentally

safe practices are strictly adhered to.

Such policy aims at meeting the company’s obligations to the society at large.

Social action programs

Child and mother issues

The company arranges nutrition program for undernourished children and mother

through several NGO partners and charitable organizations. It also assists APWA in

participating in international seminars and conferences on child issues

Donations

The company donates to hospitals and organizations that provide services to the poor

and also responds to distress calls by the government and NGOs for assistance to

victims of flood, earthquake, drought and other natural calamities.

Rural support programs

It helps to alleviate the sufferings of rural populations which do not have easy access

to potable water by undertaking tube well and hand pump installation schemes in


selected areas. The first tube well was completed in 2002 in a village of about 3000

inhabitants in Tehsil Dunyapur, district Khanewal to meet water needs of the

inhabitants of desert regions of cholistan and thar , 150 hand pumps each have been

installed in both.

The milk collection and Agri-services dept of the company provides free and

extensive advisory and support service to milk farmers by training them in good

animal husbandry practices vaccinating and treating their milch animals, facilitating

purchase of feed supplements and fodder seeds and assisting in breed improvement .

This translates into increased milk production and consequently a better income for

the farmers.

Educational support to underprivileged students

To help improve the quality of education in rural areas, which have remained

neglected for too long, the company undertakes rehabilitation and refurbishing of

primary and middle schools, particularly those for girls.

Three schools have been rehabilitated in 2004. In partnership with an NGO that

specializes in education, the company has embarked on a program of school adoption

in 2004, under which educational facilities are being improved through provision of

teaching aids and steps are taken to enhance the quality of education through teacher

training. These measures have shown immediate results and the school attendance has

already doubled.

During 2004 the company donated 55 computers to schools in poor urban

communities to enable those children to step into the world of technology.

Sports & culture

The company regularly sponsors a variety of sports and cultural events such as the

international polo Tournament and SAF Games.

Environment

For nestle’ respect and responsibility for the environment is a part of its broader

commitment to sustainable development. Sustainable development requires an


integrated approach to policy and decision making in which long term economic

growth, environmental protection and social achievements are not incompatible, but

are complementary and mutually dependent.

Nestle’s record of environmental activities can be traced back over several decades ,

with many effective measures put in place. The first global nestl’e policy on the

environment was published in 1999, confirming and strengthening the company’s

commitment to environmentally –sound business practices.

In line with nestle’s global commitment, nestle’ milkpak in Pakistan is equally

dedicated to play its role in helping to protect environment.

The company fully complies with local laws of environmental act / regulation (1997)


STRATEGIC PLANNING:

BOSTON CONSULTING GROUP (BCG) MATRIX FOR THE SBU’S

Company’s Market Share

High Low

High STARS QUESTION MARKS

CASHCOWS DOGS

Low

STARS:

The two Sbu’s, Mineral water and Confectioneries fall into this category of the BCG.

These SBU’s have high market share and high industry growth rate. These Sub’s are

requiring lots of investment to compete in the growing market. For example, lots of

money is being spent and aggressive marketing strategies have been implemented for

the Mineral water to build and maintain market share. Nestle Pure Life has captured

50 % of the bottled-water market in Pakistan since it was introduced in 1998. Its

approximate sales for 1999 are RS. 70, 401000. This sales figure is quite impressive

as the sales rose quite high in only one year. It is predicted that there will be

additional growth in the mineral water category in coming years. The sales of the


Indu

stry

Gro

wth

Rat

e

Milk Products

Coffee Dietetic &

Infant foods

Chocolate Drinks

Fruit Drinks

Pure Life Water

Confectioneries

Culinary products

confectioneries rose to RS. 106,559 000 from RS. 87,758 000. The huge increase of

RS. 18, 801 000 puts this SBU in the stars category and shows its increasing market

share. There is a growing market for the products in confectioneries for example

Kitkat (eventhough it’s imported), Polo Smarties etc. This can be proven from the

fact that Nestle keeps introducing new products in this category for example Allen’s

Soothers were launched during the last quarter of 1998.

CASHCOWS:

Milk products, Coffee and Dietetic and Infant food have a high market share and are

doing business in mature industries. Since the customers of this product category are

loyal, the marketing costs of these SBU’s are quite low and as a result a large amount

of cash can be generated. Customer Loyalty is a must for these Cash cows to

maintain their market share. The sales of the Milk products have increased to RS.

108,430000 from RS. 87, 758000. This huge increase in sales reflects the high market

share of this SBU. However, its growth rate is low because in general this category is

in its maturity stage – that is – a number of milk products have been launched by

Nestle, most of which are quite old. An innovation has not really been made in this

category. The same conclusion can be made about Coffee. There is an already

existing market for Coffee which is not increasing further by a large amount. The

sales of Coffee were Rs. 46, 89 000 in 1999 and Rs. 392, 00 000 in 1998. This huge

difference shows that a great amount of cash is being generated from this SBU. Sales

of Dietetic and Infant food rose to Rs. 60,935 000 from Rs. 52,655 000. The infant

foods unit of Nestle is operating in a mature industry. Like the milk products, the

infant foods have been around for a long time without barely any new product line

being started in this category.

QUESTION MARKS:

Included in this section is the culinary products of the organization. The products

such as Maggi 2-minute Noodles and Maggi cold sauces have a low market share and

a high growth rate. These products especially the cold sauces are operating in a

highly competitive market. The approximate sales were Rs. 79,919 000 in 1999 and

Rs. 60,818 000 in 1998. This figure represents a great potential for growth in future.

However, in contrast, the market share of the products in this category is not very


high currently. A reason for this is that Nestle just recently introduced cold sauces

such as “Emily sauce” etc. However the enthusiasm with which the customers

received the different flavors of sauces, portrays a very high potential for future

growth. The firm needs to focus on differentiating its products in the competitive

market to gain customers.

DOGS:

Chocolate and Fruit drinks fall into this category and they possess a low market share

and a low growth rate. Chocolate drinks had sales of Rs. 19639000 in 1999, which

rose from Rs. 19541000 in 1998. This is quite a small increase considering the rise in

the sales of other SBU’s. However, the chocolate drinks are still profitable so the

firm does not have to worry about liquidating or getting rid of this SBU. The sales of

Fruit drinks rose to Rs. 40,620 000 in 1999 from Rs. 38,103 000 in 1998. There has

been a small amount of increase; however it is not a lot compared to other SBU’s.

Firstly, there is not a huge market for chocolate drinks in Pakistan. People usually

tend to buy light juices like apple or orange juice or Pepsi instead of chocolate drinks.

Secondly, regarding the fruit juices, there are not a lot of flavors available currently in

this category. Nestle needs to introduce new flavours such as apple, grape etc. to

capture the market that prefer these flavours. This will not only increase the sales of

the SBU, but it will also increase its market share. At the moment, additional amount

of money is not being invested in these SBU’s, as they are not very profitable. Nestle

is currently trying to maximize profits from this category by minimizing expenditures

and by differentiating the product to build market share.


Dealing with clients support by instances

For the customers and consumers there exists a separate department to handle all the

complaints and support all the queries.

Customers which are the retailers, distributors are given full support by the sales team

force. Such team is specially defined to meet all the inquiries and criticisms.

The customer service department has direct contact with the consumers i.e. the end

users of the product.

Thousands of consumers are directly contacted to find out their preferences, demands

and views regarding products. Continuous feedback is attained so as to achieve

continuous improvements. This means about million people are contacted every year.

Nestle’ teams visit schools, colleges, universities and organize shows.

Nestle’ also have a session with mothers. This session is for about 1-2 hrs to resolve

all the complaints and to spread knowledge. Such sessions bring awareness to the

mothers that how they could bring up their children in the best possible way

The CS dept handles all kinds of complaints e.g. replacement, investigation etc for

more efficient functioning a software has been provided to the customer service

department. This software is names COSMOPLUS. This software has given a new

direction to the CS department as by the help of this nestle’ is getting more close to its

clients.

If a product is found defective & is to be replaced, full investigation is done. So as to

find the reason for such cause. The product is replaced to the client.

In most of the complaints clients themselves are found faulty. But even then nestle’

try it’s level best to provide its service in the most competent way.

Nestlé is committed to offer consumers high-quality food products that are safe, tasty

and affordable. The Nestlé Seal of Guarantee is a symbol of this commitment.

It believes in maintaining regular contact with consumers. This applies both to how it

presents its products and to how it addresses consumers’ questions and concerns.

When Henri Nestlé 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, Consumer Relationship Panel with the words “Talk to Nestlé” expresses

the same commitment.

This is why we have a worldwide Nestlé 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 Nestlé.

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

helps us to understand what people want. Nestlé uses the insights gained from

relationships with consumers to drive product development.

Nestlé care for their consumers because they believe that their success depends on

meeting their needs and expectations.

According to nestle’,

Through listening and understanding, we can make products that consumers will want

to use all through their lives.

Market Segmentation, Targeting, Positioning

Nestle products are used more in cities so it concentrates more on urban areas then on

rural areas.

Nestle is well aware of the various characteristics of the population. It segments of the

population on the basis of these characteristics marketing mix for each. Mostly they

use income, age, gender, and social class, family e.g.

lactogen 1 , 2 NAN 1 ,2 is for infants

Cerelac is for basics.

.Yogurt is meant for almost all ages.

.As in Pakistan there is joint family system so the products are available in variant

size.

.Pure juices are meant for people of all ages


With the passage of time the life style, personalities and values of people have

changed and Nestle is well aware of these changes.

Nestle tailor their messages to appeal the personality traits.

As it says” Milk pak Khalis hi sub kuch hai”

Nestle is also aware of the fact that values also relate to purchase behaviour.

It appeals your “sense of belonging” when it says “Tu hi mera pyaar Everyday”

And “her achi cheese mehngi nahin hoti

milo is for people who value fitness.

Hi calcium low fat milk and yogurt is for health conscious people

Consumer is as important for an organization as is blood for the human body.

Consumer is always interested in its benefits. a successful company is that which

markets the benefits and simply the physical characteristics of a product and nestle is

not ignorant of this fact. it communicates and gives the feeling that it’s existence in

the market is for the human benefits. Its products are fully hygiene, good for health,

nourishing and fresh. E.g.

1. Nestle yogurt meant for people who want fresh and hygienic yogurt.

2. Pure juices are for the people who want to be fit and want less sugar intake. Etc.

Positioning

Nestle is trying its best to continuously improve its image in the minds of people

Water is produced by various companies but nestle makes it superior by saying

“Pure life”

It’s considered that every quality product is expensive but by introducing “everyday”

at reasonable price it says

“Zindagi main her achi cheez mehngi nahi Hotee”

For nestle’ nutrition like nido , lactogen nestle is making awesome ads in which it is

shown that by taking nestle’ products children become smart and intelligent. As in

one of NIDO ad

A little girl says “mama dekhein mein kitneee smart houn na ”

And most of all the words

“GOOD FOOD, GOOD LIFE”


Depicts a positive image that nestle’ is concerned about providing good food so that

everyone could have better, healthy lives!


Financial Analysis


Income Statement

2008 2007

Sales 109908 107552

Cost of goods sold -47339 -45037

Distribution expenses -9084 -9104

Marketing and administration expenses -35832 -36512

Research and development costs -1977 -1875

EBIT 15676 15024

Net other income/(expenses)

Other income 9426 695

Other expenses -2124 -1285

7302 -590

Profi t before interest and taxes 22978 14434

Net financing cost

financial income 102 576

Financial expense -1247 -1492

-1145 -916

Profi t before taxes and associates 21833 13518

Taxes -3787 -3416

Share of results of associates 1005 1280

Profi t for the period 19051 11382


Sales

Increase (Decrease)Amount Percent

5262712 20.4%

The sales figure has been increased by 2.9% due to increase in demand

Cost of goods soldIncrease(decrease)

AmountPercentage

-2302 5.11%

the cost of good sold increased by 5.11% due to inflation

Distribution expensesIncrease(decrease)

AmountPercentage

20 -0.22%

distribution decrease by .22% because we are finding cheap buyers

Marketing and administration expensesIncrease(decrease)

Amount Percentage680 -1.86%

marketing expenses decease by 1.86% due to cheap source for marketing

Research and development costsIncrease(decrease)

Amount Percentage-102 5.44%

research and development cost increase by 5.44% due to our immersive research on consumer buying pattern

EBITIncrease(decrease)

Amount Percentage652 4.34%

EBIT increase by 4.34% because increase in sales, cost of good sold and R&D cost, and decrease in distribution cost


Net other income/ (expenses):

Other incomeIncrease(decrease)


net increase by 1256% because sales are more than expenses

Other expensesIncrease(decrease)


other expense increase by 65% due to high rates

Total

Increase(decrease)Amount Percentage8731 1256.26%-839 65.29%7892 -1337.63%

Profi t before interest and taxesIncrease(decrease)


Net financing cost:

Financial incomeIncrease(decrease)

Amount Percentage-474 -82.29%

Financial decrease by 82% due to decrease in return against our investment portfolio

Financial expenseIncrease(decrease)

Amount Percentage245 -16.42%

Financial expenses decrease by 16% due to decrease in cost of borrowing


Total

Increase(decrease)Amount Percentage

-474 -82.29%245 -16.42%

-229 25.00%

Profit t before taxes and associatesIncrease(decrease)


profit before tax increased by 61% due to decrease in financial and operating expenses

TaxesIncrease(decrease)


Share of results of associatesIncrease(decrease)

Amount Percentage-275 -21.48%

Profit t for the periodIncrease(decrease)



Balance Sheet

2008 2007

Assets

Current assets

Cash and cash equivalents 5835 6594

Short-term investments 1296 2902

Trade and other receivables 13442 14890

Current income tax receivables 889 531

Assets held for sale 8 22

Inventories 9342 9272

Derivative assets 1609 754

Prepayments and accrued income 627 805

Total current assets 33048 35770

Non-current assets

Property, plant and equipment 21097 22065

Investments in associates 7796 8936

Deferred tax assets 2842 2224

Financial assets 3868 4213

Employee benefi ts assets (a) 60 1513

Goodwill 30637 33423

Intangible assets 6867 7217

Total non-current assets 73167 79591

Total assets 106215 115361

Liabilities and equity

Current liabilities

Trade and other payables 12608 14179Liabilities directly associated with assets held for sale 7

Financial liabilities 15383 24541

Current income tax payables 824 856

Derivative liabilities 1477 477

Accruals and deferred income 2931 3266

Total current liabilities 33223 43326

Non-current liabilities

Financial liabilities 6344 6129

Employee benefi ts liabilities 5464 5165

Deferred tax liabilities 1341 1558


Other payables 1264 1091

Provisions 3663 3316

Total non-current liabilities 18076 17259

Total liabilities 51299 60585

Equity 21

Share capital 383 393

Treasury shares -9652 -8013

Translation reserve -11103 -6302

Retained earnings and other reserves 71146 66549Total equity attributable to shareholders of the parent 50774 52627

Minority interests 4142 2149

Total equity 54916 54776

Total liabilities and equity 106215 115361

Assets:

Current assets

Cash and cash equivalentsIncrease(decrease)

amount percentage-759 -11.5%

cash and cash equivalent decrease by 11% because we made a cash payments

Short-term investmentsIncrease(decrease)

amount percentage

-1606 -55.3%short term investment decrease more than 50% because of sale of short term investments

Trade and other receivables

Increase(decrease)

amount percentage

-1448 -9.7%


Trade and other receivables decrease by 9% due to change in credit policy

Current income tax receivables

Increase(decrease)

amount percentage

358 67.4%

Assets held for sale

Increase(decrease)

amount percentage

-14 -63.6%

Inventories

Increase(decrease)

amount percentage

70 0.8%Inventories increase by .8% due to cheap rates

Derivative assets

Increase(decrease)

amount percentage

855 113.4%

Prepayments and accrued income

Increase(decrease)

amount percentage

-178 -22.1%

Total current assets

Increase(decrease)

amount percentage

-2722 -7.6%Total current assets decrease by 7.6% because economic recession


Non-current assets

Property, plant and equipment

Increase(decrease)

amount percentage

-968 -4.4%Property, plant and equipment decrease by 4.4% because of sales

Investments in associates

Increase(decrease)

amount percentage

-1140 -12.8%

Deferred tax assetsIncrease(decrease)

amount percentage

618 27.8%

Financial assets

Increase(decrease)

amount percentage

-345 -8.2%Financial assets decrease by 8.2% because financial market is not performing well and we have sold some of our financial assests

Employee benefits assetsIncrease(decrease)

amount percentage

-1453 -96.0%

Goodwill

Increase(decrease)

amount percentage

-2786 -8.3%


Intangible assets

Increase(decrease)

amount percentage

-350 -4.8%

Total non-current assets

Increase(decrease)

amount percentage

-6424 -8.1%Total non-current assets decrease by 8.1% because of tangible assest

Total assets

Increase(decrease)

amount percentage

-9146 -7.9%

Liabilities and equity

Current liabilities

Trade and other payables

Increase(decrease)

amount percentage

-1571 -11.1%Trade and other payables decrease by 11% because we had payments

Liabilities directly associated with assets held for sale

Increase(decrease)

amount percentage

-7 -100.0%

Financial liabilities

Increase(decrease)

amount percentage

-9158 -37.3%Financial liabilities decrease by 37% as compared to last year


Current income tax payables

Increase(decrease)

amount percentage

-32 -3.7%

Derivative liabilities

Increase(decrease)

amount percentage

1000 209.6%

Accruals and deferred income

Increase(decrease)

amount percentage

-335 -10.3%

Total current liabilities

Increase(decrease)

amount percentage

-10103 -23.3%Total current liabilities decrease by 23% because of decrease in payable

Non-current liabilities

Financial liabilities

Increase(decrease)

amount percentage

215 3.5%

Employee benefits liabilities

Increase(decrease)

amount percentage

299 5.8%

Deferred tax liabilities


Increase(decrease)

amount percentage

-217 -13.9%

Other payables

Increase(decrease)

amount percentage

173 15.9%Other payables increase by 15% due to increase in credit purchase

Provisions

Increase(decrease)

amount percentage

347 10.5%

Total non-current liabilities

Increase(decrease)

amount percentage

817 4.7%Total non-current liabilities increase by 4.7% as compared to last year

Total liabilities

Increase(decrease)

amount percentage

-9286 -15.3%

Equity

Share capital

Increase(decrease)

amount percentage

-10 -2.5%Share capital decrease by 2.5% because we buy back some purchase

Treasury shares

Increase(decrease)


amount percentage

-1639 20.5%

Translation reserve

Increase(decrease)

amount percentage

-4801 76.2%

Retained earnings and other reserves

Increase(decrease)

amount percentage

4597 6.9%There is an increase in retained earnings and other reserves by 6.9%

Total equity attributable to shareholders of the parent

Increase(decrease)

amount percentage

-1853 -3.5%

Minority interests

Increase(decrease)

amount percentage

1993 92.7%

Total equity

Increase(decrease)

amount percentage

140 0.3%


Total liabilities and equity

Increase(decrease)

amount percentage

-9146 -7.9%


RATIO ANALYSIS


LIQUIDITY RATIOS

2008 2007

Current Ratio Current Assets/Current Liabilities 0.99 0.83

Quick Ratio Quick Assets/Current Liabilities 0.04 0.07

Cash Ratio Cash + Marketable Securities/Current Liabilities 0.22 0.17

Working Capital Turnover Ratio Sales/Average Working Capital -628.05 -14.23

Operating Cash Flow Ratio Cash Flow from Operations/Current Liabilities 0.37 0.27

Current Ratio

The current ratio has slightly increased and it is compatible with the industry.

Quick Ratio

The quick ratio has slightly decreased due to decrease in fixed assets.

CASH RATIO

The cash and marketable securities have increased during the current year

causing the cash ratio to increase by a little amount but it is compatible with

industrial trend.

WORKING CAPITAL TURNOVER RATIO

The sales have decreased as compare to increase in working capital Causing

the working capital turnover ratio to decrease and it also indicates in-efficient

use of working capital.

.OPERATING CASH FLOW RATIO

The increase in cash flow from operations has been compensated by equal

increase in current liabilities causing the ratio to remain the same.

Working


2008 2007

Current Assets 33048 35770

Current Liabilities 33223 43326

Quick Assets 1296 2902

Cash 5835 6594

Marketable Securities 1609 754

Total Expenditure 10000 14000

Sales 109908 107552

Average Working Capital -175 -7556

Operating Profit 15676 15024

Depreciation 344 122

Taxes Paid 3787 3416

Total Assets 106215 115361

Fixed Assets 73167 79591

Total Liabilities 51299 60585

Fixed Liabilities 18076 17259


Cash Flow from Operations

2008 2009

Operating Profit 15676 15024

Depreciation 344 122

16020 15146

Taxes Paid 3787 3416

12233 11730


SOLVENCY RATIOS2008 2007

Interest Coverage ratio EBIT / Interest Expenses 12.57 10.07

Debt Ratio Total Liabilities / Total Assets 0.48 0.53

Debt - Equity Ratio Total Debts / Total Equity 0.12 0.11

INTEREST COVERAGE RATIO

Due to decrease in interest expenses the interest coverage ratio has

increased means bank has much captial to meet its liabilities.

DEBT RATIO

There is a decrease in debt ratio as compared to last year.

Debt - Equity Ratio

The total debts have increased while there is a decrease in total equity.


ACTIVITY RATIOS

2008 2007

Fixed Assets Turnover Total Income / Fixed Assets 1.50 1.35

Assets Turnover Ratio Total income/ Total Assets 1.03 0.93

Fixed Assets Turnover

The increase in total income is slightly higher than increase in fixed assets because the bank has opened new branches so expenses on fixed assets have cause this ratio to increase by a small amount

ASSETS TURNOVER RATIO

The increase in total income is compensated by an equal increase in total assets.


2008 2007

EBIT 15676 15024

Interest Expenses 1247 1492

Total Liabilities 51299 60585


Total Debts 6344 6129

Total Equity 54916 54776

Sales 109908 107552

Fixed Assets 73167 79591



PROFITABBILITY RATIOS

2008 2007

Net Profit Margin Ratio Net Profit / Sales 19.86% 12.57%

Gross Profit Margin Ratio Gross Profit / Sales 20.91% 13.42%

Return on Total Assets Net income after tax / Total Assets 17.94% 9.87%

Return on Equity Net Profit after tax / Common Equity 4974.15% 2896.18%

Net Profit Margin Ratio

Net profit has increased because there might be and decreasing cost, increase in

productivity and efficiency, decrease in fixed overheads and competitors have decreased.

GROSS PROFIT MARGIN RATIO

Gross profit may have increased due to decrease in sales and decrease in competition

RETURN ON TOTAL ASSETS

Return on total assets might have decreased because net income after tax is lower than

the assets invested.

RETURN ON EQUITY

Return on equity has increased because net profit has decreased while common equity

has decreased.


SHAREHOLDERS' RATIOS

2008 2007

Earnings Per Share (Net Profit - Preffered dividend)/No. of equity shares outstanding 5.70 3.44

Dividend Payout Ratio Dividends per common share / EPS 0.02 0.04

Dividend Yield Dividends per common share / MPS 1.10% 1.30%

Return on Equity Net Profit after tax / Common Equity 4974.15% 2896.18%

Earning Per Share

Due to increase in net profit and lower sales in current year the profit available for common share holders is higher as

compared to previous year.

DIVIDEND PAYOUT RATIO Dividend payout ratios has decreased

DIVIDEND YIELDDividends per common share are lower than previous year because dividends were

high during previous year.

RETURN ON EQUITYReturn on equity has increased because net profit has decreased while common equity

has decreased.


WHAT I HAVE LEARNED AT INTERNSHIP

Objective

• Impact of international chains on local key accounts.

• Impact on sales to local accounts.

• Analysis of basket size of the Shoppers.

• Previous shopping point of customers moving to International Chains.

• Reasons for moving of customers to International Chains.

• Suggestions & recommendations for local Key Accounts.

Working

Designed a questionnaire on local key accounts

Our target market was local stores which are known as local accounts, because

a lot of shoppers are shifting from local accounts to international chains

We did a market survey on following local accounts to find why shoppers are

moving from local accounts to international chains:

Alfatah

Bismillah

Best Buy

CSD Mall road

HKB

Jalal Son’s

Rahat bakery

Victoria


To enhance the sales and bring quality in the products

We also ask their previous shopping point


Analysis

I have calculate the findings and did analysis of it

I suggest way forward for these local accounts

I have prepared a presentation in which i pointed out the most lacking points

of local accounts and recommend that Nestle should keep an eye on them for

the increase in sales

I have presented the whole project to the National Key Account Manager

Extra skills

Interpersonal skills

Computer skills

Presentation skills

Get knowledge about the shopper

Research that how much a research is important for a company

To have knowledge about their customers as well as their competitors


RECOMMENDATION

There are few recommendations that are recommended if the project is to be

conducted again in future.

Employees should be trained according to the changing standards of the

organization.

Company should conduct survey from time to time to according to which

changes can be introduced in the organization to stay updated in the

market.

They should introduce creativity into the work, so that the employees

can do their work active mindedly.

Employees should be given compensation in order to keep them loyal.

Employees should be more involved in decision making to become more

differentiated.

Company should provide incentives to shop keepers


REFERENCES

www.nestle.com

www.nestle.pk

By communicating with the employees

Annual report 2008


http://www.nestle.pk/

http://www.nestle.com/

nestle report

Documents