Nestle S.A. (OTC: NSRGY) is a multinational packaged foods and beverage manufacturer headquartered in Switzerland. It is widely considered to be the world’s largest food manufacturer, with more than 2000 brands and operations in 197 countries.
Nestle reported revenues of $99.09 billion on December 31, 2015, and estimated sales of $92.62 billion for the current fiscal year. Nestle had a market capitalization of $245.71 billion, according to YCharts.com; because the company is based in Switzerland, it does not have to report its enterprise value like an American company would.
Currently Nestle operates in 12 different segments of the consumer products market, including baby foods, bottled water, cereals, candy, coffee, prepared and prepackaged foods, dairy, drinks, food service, healthcare and nutrition, ice cream and pet care. Its staple of brands includes some of the best-known names in the industry, such as Stouffer’s, Dreyer’s, Haggen-Daz, Purina, Aero, Butterfinger, Gerber, Maggi and Perrier.
- Nestle is a highly-diversified company operating in many different markets and sectors of those markets.
- The variety of brands gives Nestle a strong ability to weather economics because it serves many different segments of the market.
- It has well-established relationships with other powerful brands, including Coca-Cola, Colgate Palmolive and General Mills.
- Nestle owns some of the world’s most recognized and trusted brands. Some families have used its products for generations. Gerber has historically been one of the most trusted brands of baby food in the United States.
- It has strong research and development capabilities that are growing.
- Nestle has strong relationships with retailers.
- It includes well-established brands with a large amount of market share in some of the largest national economies, including Europe and the United States.
- Much of its sales depend upon a few well-recognized brands. This makes the company vulnerable to any sudden changes in consumer behavior.
- Grocery sales in some major markets are increasingly concentrated in the hands of a few giant retailers such as Walmart and Kroger in the United States and Tesco in the United Kingdom. These companies have the ability to force sharp reductions in price. Some of these retailers are intent on supplementing name brand products with more-profitable house brands.
- Some of its brands, such as Carnation milk, are not tailored to modern lifestyles and are seen as old-fashioned by some customers.
- The company is heavily dependent upon advertising to shape consumer opinion and drive traditional sales. This can lead to high marketing costs with a questionable return on investment.
- There is a high cost for launching new brands to supplement older, less-fashionable food products.
- Growth in online retail could open up new distribution channels such as Amazon Prime that can bypass traditional retailers.
- Growing middle classes in nations such as China and India create larger and broader markets for Nestle’s products.
- Increased disposable income in countries like China could increase the demand for luxury items like bottled water, ice cream and pet food.
- Changes in lifestyle, such as longer work hours, more women in the workforce, and more single-person households, increase the demand for prepackaged foods.
- Increased mobility and car ownership increase the demand for candy, bottled water and snack foods in nations like China.
- Increased interest in health and nutrition could increase demand for some Nestle products, such as energy drinks.
- Retailers such as Walmart, Kroger and Aldi are increasingly promoting house brands, which are more profitable for them. House brands are often sold at a lower price and given greater visibility on shelves. Some retailers such as Aldi and Trader Joe’s emphasize house brands at the expense of traditional products.
- There is pressure from large retailers such as Walmart to cut prices.
- The growing use of new retail channels such as Amazon Prime and dollar stores may not favor traditional retail products.
- They have experienced disruption of the traditional grocery industry in countries like the United States by new players such as Whole Foods Market and online retailers.
- There is a growing ineffectiveness of traditional advertising as new technologies such as streaming video supplant traditional broadcast and print media.
- Consumers in some countries are eating fewer meals at home, which means less demand for some Nestle products. Bloomberg reported that Americans’ spending on restaurant meals overtook spending on groceries for the first in April 2015.
- A growing suspicion of prepackaged foods as unnatural and unhealthy in Europe and North America is becoming common. This increases the demand for fresh and natural foods in some markets. It also increases the demand for organic and other alternatives.
- There is a possibility of increased government oversight and regulations in some markets, such as India. India’s government ordered billions of dollars of Maggi instant noodles be pulled from the shelves in the summer of 2015 because of allegations of excessive levels of lead in the product.
Despite the threats, Nestle still owns some of the world’s best-recognized and most profitable food brands. Unfortunately, it faces a dramatically-changing grocery market in which traditional brands are losing much of their effectiveness. Such brands are heavily dependent upon traditional advertising and marketing strategies such as television commercials, which are often ineffective in today’s world.
Changing patterns of consumer behavior, such as the demand for more natural food in Europe and the United States and increased spending on take-out and restaurant food, could be a greater threat to Nestle. It might have to create products or revamp brands simply to maintain market share.
Nestle’s prospects in a radically-changing consumer marketplace are good because of its strong brands, reputation with consumers, good relationships with retailers and research and development capabilities. This company should remain one of the dominant names in packaged food and beverages for decades to come.
Image “Nestle” by JDGfromMTL is licensed under CC BY 2.0
Essay about A Marketing Strategy for Nestle's Milo
3749 Words15 Pages
A Marketing Strategy for Nestle's Milo
In this brief I am going to discuss the key features of my marketing mix and create my marketing strategy by using the information attained from my SWOT analysis, PEST analysis and a Competitive Audit. I am going to choose an area of the product (Nestle's Milo) that I feel needs improving and improve it. To achieve this I’m going to use the four
P’s to meet the objectives of Nestle and the needs of customers.
I have chosen to improve the packaging (the product factor of the marketing mix) because I believe that it is inadequate in quality and it is the area that could give Milo that competitive edge. Also if I’m going to promote it in the UK through advertisements and promotional
activity…show more content…
If a product or service is not accessible to potential customers, then no matter how well it has been priced and promoted, it will not be successful.
Price involves pricing a product or service at the right price. This is an important factor since customers believe that the price should always be offered at value for money. There are two factors, which need to be considered when making decisions on price:
· Price determination
· Pricing Policies
Both of these factors need to coexist within price or price will be unsuccessful; for example price determination. It is important that the customer believes that the price offers value for money because if the price is too high consumers may not be able to afford it and may assume that the product is of poor quality.
The ultimate aim of promotion is to encourage consumers to buy or use a product or service. For promotion to be effective, an organisation must be talking to the right people about the right product and convince them that it is at the right price. All the four factors involved with the marketing mix must all work consistently and simultaneously to be able to meet marketing objectives. If they did not work well together then a lot of things would go wrong and marketing objectives