109876543210

NESTLE The Global GiantGood Food Good Life

Khuram Shahzad083268

Shakeel Anjum083277

Fahad Insha081105

Abrar Ahmad083222

Ali Qurashi081126

Introduction

Business Purpose

Competitive Positioning

Marketing Mix

Analysis

Conclusion

Industry Analysis DEEP-LIST

Target Market Competitors

Financial

Four P’s

Other

Outl ine

INTRODUCTION

Nestlé with headquarters in Vevey, Switzerland

Nestlé is today the world's leading nutrition, health food company

“Nestlé” is a Swiss-German word which means “Little Nest” which is its trademark

2 million 31 thousand people employed from all over the world and present in 81 countries of the globe having 522 factories

Over 700 products renovated or innovated in the past five years, with wellness in mind

Introduction

HISTORY

Henri Nestlé established Nestlé in 1867 in Switzerland (Vevey HQ)

His first product was lactogen formula for infants by the name ”Farine Lactee”

Henri Nestle

Figure Ke y Da t e s

1866 Foundation of Anglo-Swiss Condensed Milk Co.

1867 Henry Nestlé's Infant cereal developed

1905Nestlé and Anglo Swiss Condensed Milk Co. (new name after merger)

1934 Launch of Milo 1938, Launch of Nescafé

1947 Nestlé Alimentana S.A. (new name after merger with Maggi)

1948 Launch of Nestea and Nesquik

1973 Stouffer (with Lean Cuisine)

1977 Nestlé S.A. (new company name)

1981 Galderma (joint venture with L'Oréal)

1990 Cereal Partners Worldwide (joint venture with General Mills)

1991 Beverage Partners Worldwide (joint venture with Coca-Cola)

1992 Perrier (with Poland Spring)

1997 Creation of Nutrition Strategic Business Division

1998 Launch of Nestlé Pure Life

2001 Ralston Purina

2002 Joint venture with L'Oréal

2010 Kraft Pizza

Nestlé MilkPak Limited was incorporated in Pakistan under the Companies Ordinance, 1984 & listed on Karachi and Lahore stock exchanges since 1980.

Joint venture between Nestle Switzerland and MilkPak Limited came about in 1988.

Nestlé Pure Life was launched in Pakistan in 1998

Nestle Pakistan

EXTERNAL ENVIRONMENT

DEEP-LIST Analysis

More the education more will be the awareness about brand and quality food.

If the income level of people is high then purchasing power will be high so they will purchase more

Nestle products are made for people belonging from all age groups

Both male/female are included equally in its target market

Demographic environment

If the inflation rate is high then there will be decrease in purchasing power. so inflation indirectly affects the company’s sale.

Nation varies greatly in its level and distribution of income

Changes in major economic variables such as income, cost of living, interest rate and savings have a large impact on the market place

Economic environment

Government regulations to protect interest of society and from unfair business practices

Unstable political conditions Law order situation getting worse

Political environment

Registered in the stock exchanges of Pakistan

Legal environment

Consumption behavior of Pakistani people is high so they consume more goods

As Pakistan is Muslim country so we cannot add any ingredient which is prohibited in Islam or which is not “Halal”.

As nestle water is the branded item so the people who are brand conscious will prefer to use nestle water .so nestle is focusing more on the posh areas.

Social/cultural environment

Technological environment is changing rapidly

Most dramatic force shaping company’s offerings and the way product is marketed

Company’s must keep up with technological changes to match up with its enviroment

Technological environment

INDUSTRY ANALYSISPorter’s five Forces Model

Internal Rivalry

Threat of New Entrants

Bargaining Power of

Buyer

Threat of Substitutes

Bargaining Power of Suppliers

Figure P o r t e r ’ s F i v e Fo r c e s

Sign Impact

Bargaining power of buyer High Negative

Bargaining power of supplier Low Positive

Threat of substitutes Low Positive

Threat of new entrants Moderate Moderate

Internal rivalry High Negative

Table I m p a c t & s i g n s o f p o r t e r ’ s f o r c e s

Note:- attractive industry

Nestlé’s mission is to provide the best food to people throughout the world.

The Nestlé global vision is to be the leading health, wellness, and nutrition company in the world

Nestlé’s objective Is to consolidate and strengthen its leading position at the cutting edge of innovation in the food area in order to meet the needs and desires of customers around the world, for pleasure, convenience, health and well being.

Goals and Objectives

COMPETITIVE ANALYSIS

Competitor:

Nestele Milk Pack Nestle Pure Life

Haleeb Trang Tea Max Olpers Milkman

Aquafina Kinley Sufi Gourmet Water Green Water

Divided whole country into north, east, west, south.

Targeted at every age group Easily assess ability of product Improve the brand image with use of these

variables like◦ Quality◦ Price◦ Packaging

Segmentation

Nestle is targeting mainly on those city in which density of population is high such as Lahore, Karachi, Faisalabad etc.

Nestle is also focusing on educated class because they know the values of health in life.

Targeting

Positioning

We position our products as a high quality product, consumer focused with messages like;

“Who knows your taste better than us”,

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

“Add additional flavors’ to your life”

NESTLE PRODUCT MIX

Figure N e s t l e B r a n d s

Milk, dairy and chilled dairy

Beverage

s

Bottled

water

Baby

foods

Food Breakfas

t cereals

Chocolate & confectionery

• MILKPAK, NESVITA, NIDO, NESLAC, EVERYDAY, NESTLE DAHI, FRUIT YOUGURT, RAITA, MILKPAK CREAMMilk, dairy and chilled

dairy

• NESCAFE, MILO, NESTLE FRUITA VITALSBeverages

• NESTLE PURE LIFEBottled water

• CERELACBaby foods

• MAGGI 2-MINUTES NOODLESFood

• NESTLÉ CORNFLAKES, NESTLÉ KOKOCRUNCHBreakfast cereals

• KITKAT, KITKAT CHUNKYChocolate &

confectionery

Milk, dairy and chilled dairy

MILKPAK, NESVITA, NIDO, NESLAC, EVERYDAY, NESTLE DAHI, NESTLE FRUIT YOUGURT, NESTLE RAITA, MILKPAK CREAM

NESTLE MILKPAK For A Stronger Home

NESVITA PRO-BONES

Bones strong tou mein strong!

NIDO

NESTLE EVERYDAY

Mazaidar chai har bar

Perfect cup of tea, every time

Sehat Mehfooz

Nestle Fresh n Natural Dahi

NESTLE Fruit Yogurt

Sehat bhara rawaaiti mazaa

NESTLE Raita

Mazaidar Riwayat

NESTLE Cream

BeveragesNESCAFE, MILO, NESTLE FRUITA VITALS

NESCAFE

Jaago!

Come Alive!

MILO

NESTLÉ FRUITA VITALS Apple Nectar

NESTLE FRUITA VITALS

NESTLÉ FRUITA VITALS Orange Juice

NESTLÉ FRUITA VITALS Red Grape Nectar

NESTLÉ FRUITA VITALS Pineapple Nectar

NESTLÉ FRUITA VITALS Chaunsa Nectar

NESTLÉ FRUITA VITALS Guava Nectar NESTLÉ Mango drink

NESTLÉ Orange Mango drink

Rise & shine with NESTLE FRUITA VITALS

NESTLE PURE LIFE

Pakistan’s Favorite Water

Baby foodsCERELAC

CERELAC

Bharpoor nashvonuma!

Sehatmand mustakbil ka behtrin aghaz!

Best start to healthier future!

FoodMAGGI 2-MINUTES NOODLES

MAAGI 2-Minutes Noodles

Main, ami aur MAAGI, fun kay real parteners

Breakfast cerealsNESTLÉ CORNFLAKES, NESTLÉ KOKOCRUNCH

NESTLÉ CORNFLAKES

NESTLÉ KOKOCRUNCH

Chocolate & Confectionery

KITKAT, KITKAT CHUNKY, POLO

KITKAT AND KITKAT Chunky

Have a break, have a KITKAT

Milk reception Mixing Heating & cooling Standardization Pasteurization UHT-treatment

Milk Processing

Pricing Profit Earning: Customer satisfaction: TRATIGIES FOR FIXING THE PRICE: In nestle prices are set on cost basis as

given below:◦ Price = Cost + Profit

Break even or Target price:◦ Per Unit Price = variable cost + fixed cost / units

of sale

Regional Sales Offices

North ZoneIslamabad and north outstationsPeshawarJhelum

Central Zone

LahoreFaisalabadGujranwalaMultan Sahiwal

South ZoneKarachiHyderabadQuettaSukker

Our Distribution System

“Our ambition is to achieve a high level of customers satisfaction through low cost ,brightly Efficient operations driven by value creation and continuous improvement”

Our mission is to:Optimize and consolidate resources and processes for a low-cost but efficientDevelop and manage simplified and effective supply network to achieve a high level of serviceCreate a continuous improvement culture driven by performance measures and reward

Television Radio News Paper Bill Board Hoarding etc.

Sometime company also makes free sampling, held stalls at different programs like Health Mela.

Promotion

PLC/CLC/ILCILC: Industry Life CycleCLC: Company Life CyclePLC: Product Life Cycle

Figure P LC / C L C / I LC

Sales Profit

($)

Development Introduction Growth Maturity Decline

Loss ($)

Profit

Sales

Industry (ILC)

NESTLE Company (CLC)NESTLE Products

PORTFOLIO ANALYSIS

KSF Quality products Packaging Latest technology Research and development Distribution network Innovation Better equipment Partnership with suppliers

SWOT AnalysisStrength, weakness, opportunity, threat

Str

ength

s• Strong brand image and market pull• Large scale organization, Multinational• Distribution networks throughout the country• Quality Products• Environment Friendly• Skilled labor, Educated staff• Arrangement of events• Easy to approach outlets• Solid Financial position• Strong supply chain network• Focus on research and developmentWeakn

ess

Feasibility of new products e.g. NesteaRelatively a new company in comparison to its rivals e.g. Lever Brothers.Low levels of inventory maintainedNo credit salesLow sales margins due to highly value added productsWeak marketing (Advertising) of MilkPakDependency on others (govt. & sponsors) for the arrangement of events

Opport

unit

ies

Thre

ats

Pakistan is the seventh largest producer of milkAverage yield of Pakistani animalsPakistani milk market is 20 billion litersNestlé MilkPak has entered the cold dairy market by launching Nestlé plain yogurt and now fruit yogurtCapitalize on its superior quality milkThe coffee brand, by tuning the taste of the masses towards coffee Credit policy can be adopted to increase sales

Price fluctuations, Raw material are importedThe uncertainty of economic conditionsThe present economic crisis in the worldEffect of Seasonality’s upon salesMarket segment growth could attract new entrantsHaleeb and Olpers are growing very fastDecrease in purchasing power of the peopleNo entry barrier

Strong supply chain network

Haleeb and Olpers

are growing very fast

Strengths

Weaknesses

Opportunities

Threats

Compete more aggressively with Olpers and haleeb using its strong supply chain network

Figure S t r e n g th v e r s u s T h r e a t

Distribution networks throughout the country

Pakistan is the seventh largest producer of milk

Strengths

Weaknesses

Opportunities

Threats

Increase the scope of its product towards smaller cities of pakistan

Figure S t r e n g t h v e r s u s O p p o r t u n i t y

Re launch Nestea with more features and strong marketing (Advertising)

Market segment growth could attract new entrants

Strengths

Weaknesses

Opportunities

Threats

Feasibility of new products e.g. Nestea

Figure W e a k n e s s v e r s u s T h r e a t

More advertising of Milkpack Brand

Nestlé MilkPak has entered the cold dairy market by launching Nestlé plain yogurt and now fruit

Strengths

Weaknesses

Opportunities

Threats

Weak marketing (Advertising) of MilkPak

Figure W e a k n e s s v e r s u s O p p o r t u n i t y

Key Internal Factors(Strengths)

Weight Rating Weighted Score

Strong brand image and market pull 0.06 4 0.24

Large scale organization, Multinational 0.04 3 0.12

Distribution networks throughout the country 0.07 3 0.21

Quality Products 0.08 4 0.32

Environment Friendly 0.06 3 0.18

Strong supply chain network 0.05 3 0.15

Easy to approach outlets 0.04 4 0.16

Focus on research and development 0.08 4 0.32

Arrangement of events 0.06 3 0.18

Table I F E M a t r i x

Key Internal Factors(Weaknesses)

Weight Rating Weighted Score

Feasibility of new products e.g. Nestea 0.05 1 0.05

Relatively a new company in comparison to its rivals 0.04 2 0.08

Low levels of inventory maintained 0.05 2 0.10

Low sales margins due to highly value added products 0.06 2 0.12

Weak marketing (Advertising) of MilkPak 0.08 1 0.18

No credit sales 0.05 2 0.10

Dependency on others (govt. & sponsors) 0.06 2 0.12

Total 2.63

Table E F E M a t r i x

Key Internal Factors(Opportunities)

Weight Rating Weighted Score

Pakistan is the seventh largest producer of milk 0.08 4 0.32

Average yield of Pakistani animals with Europe and USA 0.09 3 0.27

Pakistani milk market is 20 billion liters 0.08 4 0.32

Nestlé MilkPak has entered the cold dairy market 0.06 3 0.18

Capitalize on its superior quality milk 0.07 3 0.21

The coffee brand 0.09 4 0.36

Credit policy can be adopted to increase sales 0.05 2 0.10

Key Internal Factors(Threats)

Weight Rating Weighted Score

Price fluctuations, Raw material are imported 0.05 2 0.10

The uncertainty of economic conditions 0.06 3 0.18

The present economic crisis in the world 0.05 4 0.20

Competition with Nestlé’s owns smuggled brands 0.06 2 0.12

Market segment growth could attract new entrants 0.07 3 0.21

Decrease in purchasing power of the people 0.06 2 0.12

Effect of Seasonality’s upon sales 0.05 1 0.05

No entry barrier 0.08 3 0.24

Total 2.98

Current Product New Product

Current Market

New Market

Figure A n s o ff ’ s E x p a n s i o n G r i d

Market-penetration strategy

Product development

strategy

Market development

strategy

Diversification strategy

ES average is -4.125 FS average is 4.72 CA average is -1.83 IS average is 4.71 Directional vector coordinates

◦X-axis : 4.71+(-1.83)=2.88◦Y-axis : 4.72+(-4.125)=0.595

Space Matrix

ConservativeMarket penetrationMarket developmentProduct developmentRelated diversification

AggressiveBackward, forward, horizontal integrationMarket penetrationMarket developmentProduct developmentDiversification (unrelated or related)

DefensiveRetrenchmentDivestitureLiquidation

CompetitiveBackward, forward, horizontal integrationMarket penetrationMarket developmentProduct development

Competitive advantage

Industry strength

Financial Strength

Environmental stability

Strategic postures

Figure S p a c e A n a l y s i s M a p

% age of market Growth

Market ShareHigh

High

Low Low

Figure B C G Fr a m e w o r k

Nestle corn flakesNestle Milo

Nestle Ice CreamMilk pack

Nestle Pure Life Water

Confectioneries

Chocolate Drinks

Fruit Drinks

Milk Products

Coffee

Prepared Foods

Figure G r a n d S t r a t e g y M a t r i x

Quadrant IVConcentric diversification

Horizontal diversification

Conglomerate diversification

Joint ventures

Quadrant IIIRetrenchment

Concentric diversification

Horizontal diversification

Conglomerate diversification

Liquidation

Quadrant IMarket development

Market penetration

Product development

Forward integration

Backward integration

Horizontal integration

Concentric diversification

Quadrant IIMarket development

Market penetration

Product development

Horizontal integration

Divestiture

Liquidation

RAPID MARKET GROWTH

SLOW MARKET GROWTH

WEAK COMPETITIVE

POSITION

STRONGCOMPETITIVE

POSITION

Financial Analysis

Market Share

60%30%

20%

Nestle Pure Life

Nestle

Sparkle

Others

26%

26%18%

12%

12% 6%

Beverages Milk Products & Ice CreamPrepared Food Chocolate & ConfectioneryPetcare Pharmaceutical Products

Figure N E S T LE S a l e s B y P r o d u c t

G r o u p

Chart N E S T L E P a k i s t a n S a l e s

2004 2005 2006 2007 2008 2009

1285717142

2203128235

3418441156

Sales (in million of rupees)

Sales (in million of rupees)

Chart P r o f i t A f t e r Ta x & p e r c e n t a g e o f S a l e s

2004 2005 2006 2007 2008 20090

200400600800

10001200140016001800200022002400260028003000

0%

33%

988 11531363

18051553

3005

8% 7% 6% 6%5%

7%

Profit After Tax Percentage Of Sales

Chart O p e r a t i n g P r o f i t & P e r c e n t a g e o f S a l e s

2004 2005 2006 2007 2008 20090

360720

1080144018002160252028803240360039604320468050405400

0%

33%

15472121

26403511

4105

5575

12% 13% 12% 13% 12%14%

Operating Profit Percentage Of Sales

Chart D i v i d e n d P a y o u t R a t i o

2004 2005 2006 2007 2008 20090

180360540720900

1080126014401620180019802160234025202700

0%

66%

132%

198%

265%

331%

397%

463%

529%

595%

661%

679

1134

227453

1882

2721

150%

250%

50%100%

415%

600%

Dividend Dividend Payout Ratio

Ratios Analysis

2009 2008 2007 2006 2005 2004

24%

26%

28%

30%

29%

26%

28% 28% 28% 28%

Gross Profit Ratio

Chart G r o s s P r o f i t R a t i o

2009 2008 2007 2006 2005 2004

10%

11%

12%

13%

14%14%

12% 12% 12% 12% 12%

Operating Profit Ratio

Chart O p e r a t i n g P r o f i t R a t i o

2009 2008 2007 2006 2005 2004

0%

1%

2%

3%

4%

5%

6%

7%

8%7%

5%

6% 6%

7%

8%

Profit After Tax Ratio

Chart P r o f i t A f t e r Ta x R a t i o

Chart I n v e n t o r y Tu r n o v e r R a t i o

2009 2008 2007 2006 2005 20040

2

4

6

8

10

12

9.2

10.39.4 9.3

7.77.2

Inventory Turnover Ratio

Chart To t a l A s s e t Tu r n o v e r R a t i o

2009 2008 2007 2006 2005 2004

0

0.5

1

1.5

2

2.5

3

2.32.1

2 2

2.42.7

Total Asset Turnover Ratio

Chart P r i c e E a r n i n g R a t i o

2009 2008 2007 2006 2005 2004

05

101520253035404550

18.8

38.945.2

34.8

30.3

23.9

Price Earning Ratio

2009 2008 2007 2006 2005 2004

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%40%

20%

26% 26%

37%

44%

Return On Capital Employed

Chart R e t u r n O n C a p i t a l E m p l o y e d

Chart M a r k e t Va l u e P e r S h a r e

2009 2008 2007 2006 2005 20040

200

400

600

800

1000

1200

1400

1600

1800

12461334

1800

1045

770

520

Market Value Per Share

Chart C u r r e n t R a t i o

2009 2008 2007 2006 2005 2004

0

0.2

0.4

0.6

0.8

1

1.2 1.1 1.1

0.9 0.9

1.1 1.1

Current Ratio

Chart I n t e r e s t C o v e r R a t i o

2009 2008 2007 2006 2005 20040

5

10

15

20

25

10.5

5 5.4 5.5

10.1

22.5

Interest Cover Ratio

Enhance its investments in Pakistan Latest milk plant with cost of $70 million

within couple of months Investing $70 million in milk production by

increasing capacity of milk powder by 40,000 tones annually◦ $44 million would be injected in Sheikhupura

factory, $12 has been allocated for expanding milk collection, and $31 million in bottled water plants

Future Plans

Nestle is a market leader Higher price against competitors but matches

with its quality Its packaging is good. We can easily find Nestle from any retailer

shop NESTLE must continue promoting its products

as it is doing now It has always maintained the quality of its

products Behavior of employees is not professional and

every department should be treated equally

Conclusion

RECOMMENDATIONS

Marketing policies in line with International Code and Resolutions

Nestle Milk Pack should concentrate on all age groups

Try to create strong brand loyalty among customers

keep aware of its competitive environment Improve their customer services Try to exploit the loopholes of their

competitor’s products.　 Creating some attractive jingle like Haleeb:

Chai banaye khoob haleeb…..

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THANKS FOR YOUR ATTENTION !

We would welcome your questions