Business Foundation: Nestle Essay

Question:

Discuss about the Business Foundation for Nestle.

Answer:

Introduction:

Management of a successful organization in a country deals with the implementation of various strategies and plans. These plans and strategies have to be framed after analysing the internal and the external aspects that drive the future of the organization. It is quite important to frame the structure of the framework that would help in analysing the future scope of expansion ad raising the market share of a particular company (Boone and Kurtz 2013).

In this report, the organization that has been taken into consideration is Nestle. This report aims at analysing the strategies of Nestle in the confectionary market of Canada. In order to analyse the condition of the company, internal and external factors affecting the market has been analysed. An introduction to a new product has been framed in the report that would help in attracting the attention of the targeted group of the economy. This would help in raising both the effects market share and the sales and revenue of the organization in that particular country.

Background of the Company:

Nestle is a Swiss company who is expertise in the production of food and drinks. The headquarters of the company is situated in Vevey, Switzerland. The company has been considered as the largest producer of food and drinks which operates in mostly all the countries of the world. It has been able to generate huge revenues and has been rewarded as the title of one of the fortune global companies of the world. There are 29 brands of nestle which are spread worldwide and helps in generating huge demand among the consumers for its products and quality. The organization has been manufacturing its products in Canada since 1918 (www.corporate.nestle.ca. 2016). Currently the company has approximately employed 3500 people over 20 manufacturing, sales and distribution centres across Canada (www.corporate.nestle.ca. 2016). The organization has been grouped into key divisions, where each of the group is charged with developing and marketing the best-known brands of the country (Moura, Branco and Camoesas 2015).

Market Description:

The confectionary market of Canada is engaged in the manufacturing process of chocolate and non chocolate products. Major part of the Canadian market is located in British Columbia and there has been a significant growth in the market for confectionaries in the country in recent years (Stadler, Hughes and Guillaume-Gentil 2014). The demand for the products is increasing at a high level. There has been an increase of revenue of the Confectionery market in Canada by 20%. The domestic producers of the country are well advanced in nature where they export almost 96% of their products to United States of America (Park, Ungson and Cosgrove 2015).

As per Peck et al. (2013), the confectionery market has recently faced a rise in the demand due to the research studies that have been helpful in analysing the benefits generated by the products of this market. The perception of the people regarding the perception of health benefits has grown leading to a rise in the demand for dark chocolates (Modi 2013). The products of the confectionery market are more concerned regarding the health factor of the consumers, which have initiated an urge to prepare innovative products (Hughes 2014).

Swot Analysis

In order to analyse the internal aspects determining the future prospects of nestle in Canada, swot analysis has been considered. The swot analysis would consider the strengths, weaknesses, opportunities and threats prevailing within the organization.

Strengths

· The company has been in the confectionery market for almost 140 years.

· The company has been considered as one of the biggest brand globally.

· The organization has a wide product range, which includes varieties of products.

· The company has one of the largest research and development programs that helps in generating innovative ideas for work expanding its product range.

· The company has a strong supply chain network.

· The corporate social responsibilities of the organization ensure favourable activities for rural development, environmental protection and water conservation.

· The company has a strong brand loyalty along with strong marketing and advertising power.

Weaknesses

· The organization is a global brand, the company has to face various controversies related to the countries in which they operate.

· The company faces a strong competition from the domestic brands.

Opportunities

· The organization has the opportunity to introduce more health based food products.

· The organization focuses their expansion on developing countries.

· The company can continue with their mergers and acquisitions that would help in increasing their market share.

Threats

· The supply chain complexity of the organization might pose a major threat for the organization.

· Economic instability and inflation in various countries may pose a threat to the demand structure of the products.

· There is a raise in the cost of raw materials.

· Increasing competition in the confectionery market has posed a major threat for the organization.

Recommendation

Segmentation and Targeting:

Different customers have different necessities and companies do not always have that opportunity of satisfying every need of their consumers. Through market segmentation companies search for a market part that is not similar from what the other portrays. Segmentation helps in satisfying the major customer’s needs.

The new health product would be segmented on the basis of the characteristics of consumers:

-Geographic Area: Nestle Canada’s new product which is based on herbal coffee will be depending on the geographic weather: cold and humid.

In its initial stages, the new product ‘Nesherbcafe 3 in 1’ will be in two flavours: one the normal one for all seasons and the other that can be consumed with ice, which during warm seasons would bring freshness to the mind and body.

-Demographic Age: This new product would be for all generations above the age of 18. The main target ages will be the students and working professionals.

-Psychographic: Nestle Canada’s new healthy product will be for those who are engaged in one activity or more and lacks time for indulging in proper nutrition. Their buying of Nesherbcafe 3 in 1 would save them enough time as for the ingredients like sugar; coffee and milk have already been mixed.

-Behavioural: Nestle Canada would be made available for consumers who want healthy benefits from the products. This new herb coffee would be high in nutrition made from chosen herbs and mixed with grains and fruits. It is mainly for those who need to be energized all the time.

Target Marketing:

After segmentation the Nestle management has to decide on positioning its new product in the market and as stated earlier this new product would be for aimed at the upper and middle class income people, inclusive of the students and the working professionals.

New Product Description:

The ‘Nesherbcafe 3 in 1’ would be an appetizing combination of grains, herbs and fruits that are roasted and grounded to concoct and taste just like the coffee. Coffee lovers would love to taste this new product from the house of Nestle. During initial surveys people did complain about withdrawal of caffeine as a reason they have quitted drinking coffee, but Nesherb would just be injecting that desire back to those people who once stopped having it (Ryan 2015). This product would allow the consumers to experience the satisfaction and enjoyment that is generally perceived of a freshly brewed cup. The Nestle Management would even start a campaign by the name of “coffee alternative” to showcase its new product to the world. People must get ready to experience something from a brand they have trusted over the years and the brand has delivered excellence every time.

Customer Value Proposition:

Nestle has always maintained its basic customer value proposition which is that people can have confidence in the safety and quality of their products every time they open a wrapper or package. Nestle follows its one inflexible customary of food safety that meets the standards and requirements of the industry. The process that goes into making the products of Nestle (including the new one) is extensively laid out with procedures that are formalised along with verified standards. According to Purdue-Smithe et al. (2016), every process that is put into making the products is according to the legal requirements and practices prevailing in the countries in which Nestle operates. Problems may arise anytime, but it is essential to identify the errors or problems before the goods get distributed so that the customers do not have to face any problem.

In recent times people have been conscious about their health issues and they like consuming products that are free of chemicals. Nestle’s idea of launching one would be perfect for those who value their health and with products as such the company values their customer’s needs and desires too.

Justification for the Choice of Product:

From the Company’s perspective:

A company which is able to read the market situation in a proper manner is the one that stays ahead in the competition. It is viable for Nestle to come up with something like the herbal coffee when people are actually health conscious but have little time to fully concentrate on the same. If only companies are able to provide consumers with what they want, only then will they be able to sustain themselves in the market for longer period of time. It is more like ‘right product at right time.’

From Customer’s Perspective:

As stated earlier consumers in recent days have shown tremendous inclination to products that are made naturally or from different herbs and grains. People are living with this notion that the more herbal products they use, the more energized and lively they would become. It all comes down to the point of being fitter, but then people do not always have trust or belief on such products coming out of any company. However, with the customer base that Nestle has in Canada and across the globe, it is easy to channelize its products even if it is a new one in the product line.

Conclusion:

This report has taken into account the possible threats and opportunities that lies with Nestle Canada where it can be found that introducing healthy products is the best option of moving forward. The report also depicts a product recommendation which the company is thinking of launching in the coming few months and is at par with the desires of its consumers. The rising health consciousness of people have inflected many companies in coming up with products that are rich in health content and nestle too has been doing it for years now. It would just be that Nestle need to market it in a proper manner and let people know what is coming.

Reference:

Boone, L.E. and Kurtz, D.L., 2013. Contemporary marketing. Cengage learning.

Peck, H., Christopher, M., Clark, M. and Payne, A., 2013. Relationship marketing. Taylor & Francis.

Hughes, D., 2014. European Food Marketing: Adding Value in Mature Food Markets through Market Segmentation and Product Differentiation. EuroChoices, 13(2), pp.20-26.

Park, S.H., Ungson, G.R. and Cosgrove, A., 2015. Defining the Drivers of Profitable Growth. In Scaling the Tail: Managing Profitable Growth in Emerging Markets (pp. 67-90). Palgrave Macmillan US.

Ryan, R., 2015. Which Hot Beverage Contains The Highest Caffeine Content?.

Purdue-Smithe, A.C., Manson, J.E., Hankinson, S.E. and Bertone-Johnson, E.R., 2016. A prospective study of caffeine and coffee intake and premenstrual syndrome. The American Journal of Clinical Nutrition, p.ajcn127027.

Stadler, R.H., Hughes, G. and Guillaume-Gentil, O., 2014. Safety of food and beverages: Coffee, tea and herbals, cocoa and derived products.

Moura, A., Branco, M. and Camoesas, M., 2015, June. Nestl?, A Global Firm And Its Customer Relationships. In IMC 2015 International Management Conference 26th June 2015 (p. 96).

Modi, S., 2013. Study on Food and Dairy Industry.

(2016). Home. [Accessed 21 Dec. 2016].

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