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STP Analysis

Discuss about the Marketing Management for The Nestle Global.

 Nestle

(Source: NESTLE LANKA, 2015)

The Nestle Global was established in the year 1866 and later on in the year 1906 it has grounded one of its subsidiaries in Sri Lanka. It is recognized as one of the market leaders in the Sri Lanka’s beverage and food industry. As per the company’s tagline ‘Good Food Good Life’, it is facilitating customers across the world as well as in Sri Lanka. Presently in the Sri Lankan market, the company is keeping its entire focus over few major components such as achieving sustainability, maintaining health and wellness of the customers, cultural values, and values of people as well as on achieving competitive benefit through effective development and research to reach the untapped regions and for developing Nestle effectively stabilize and strategize its market position (Nestle, 2012). The vision and aim of the organization is to get recognized as the key leader in the beverages and food industry through offering the wellness, health and nutritional products to the customers as well as by achieving the trust of the stakeholders. In last few years the company has positioned itself as a differentiated organization from the competitors as the company always offers the nutritional, safe and supreme quality food products and that has became its USP. And thus Nestle is regarded as the behemoth in the industry of beverages and food worldwide (NESTLÉ LANKA PLC, 2015).

Segmentation, Targeting and positioning

The products of Nestle Lanka are mainly segmented on the basis of the behavioral and demographic aspects. In the demographic segmentation there are two products which are highly recognized i.e. Milo and Nestomalt. Nestomalt is considered as an energy drink which is mainly for the feeble and the aged people as well also for the common people as a healthy beverage while Milo is identified as an energy booster that is majorly famous to be used by the sportsperson. There is another product named Nespray mil powder which is segmented for the various age groups for example for the kids who are under age group 3. There are varied flavors of Nestle Maggi noodles which are made available to the customers just to satisfy all type of customers and their taste buds (Ranaweera, 2015). There are available in vegetables, meat, spicy etc. so that people can have as per their preferences. The market targeting is varied for all these products as the market targeting is completely based on the various substitutes which are present in the market as well as on the industrial rivalry. For instance, Nescafe incorporates a market strategy which is undifferentiated where the product which is marketed is common for all the customers. Milo, Nestomalt and Nespray have a different market strategy whereas Baby & Me, Lactogrow and Nangrow have their emphasis over a highly concentrated niche market.

Recommendation to incorporate change to enhance the market share

As the people of Sri Lanka are more familiar to take use of the homemade food products for the children and so with great buyer power the segment of infant nutrition is recognized as a niche market. Whereas the segment of breakfast cereals is facing a tough competition from its opponent Kelloggs as the products of Kelloggs are highly recognized and thus Nestle do not capture a large share in its target market. While on the other hand, in the segment of condensed milk, milkmaid is identified as the market leader and has captured a very significant percentage of the market share (NESTLE LANKA, 2015). Because of the increased sugar and high calories, the customers are making a distance towards buying these products but the market does not have any robust substitute and thus it is strongly ruling the target market. Milo and Nestomalt holds a competitive positioning in the industry as the price and the availability of these goods are considered as very much customer friendly in comparison with the other products. There was increased number of customers were attracted by the ready to drink bottled packs of the products like Milo, Nescafe and Nestomalt because of the present weather conditions.

From the various past versions of the products the company has developed a strong mindset for the brand to provide innovative things to the customers (IUF, n.d). But again there was one issue regarding the durability of those packed drinks but Nestle has developed tetra packing which was beneficial in keeping the drinks safe for longer time frame with no concern with the change in the weather conditions. But there are still present numerous grocery stores in Sri Lanka which no dot have a refrigerator and thus there is a need that Nestle must keep a high concentration to market the products in these areas by managing and increasing the freshness and durability of its products in spite of the scorching and burning weather conditions (DAILY MIRROR, 2016).

 NESTLE LANKA

(Source: NESTLE LANKA, 2015)

For improving the market share, the first step in the developing approaches should be the understanding of the company’s capabilities and the resources. There are four major elements on which the competitive positioning of the Nestle products is depended i.e. company’s financial stability, reputation, technology and human resources. The people of Sri Lanka are very much pricing sensitive because of the culture and the economy in which they have been residing (SENEWIRATNE, 2016). By considering this aspect, the segmentation of the Maggi noodles can be provided an innovative and new approach by developing an introductory characteristic or element in the packaging. Because of the variations brought up in the packaging of noodles there will be drawn attention of the customers because of the convenience and there will be increased sales of the noodles in the market. As well as the consumers are now approaching for those products which are healthy and safe for their health and fitness thus the company should develop more and more healthy and nutritious products to facilitate the youth and the health conscious customers.

The effect of Environmental Influence and the Buying Behavior

There is a need that the brand image and reputation which is owned by the major food and beverages companies must be protected among the customer base (Nestle, 2000). By introducing several bottled and packed drinks it is essential to maintain the durability and freshness of those drinks irrespective of the weather and the environmental conditions. There is a requirement that the shops lor the grocery stores which sell these type of products of Nestle must have a storing capacity or refrigerator so that the freshness doesn’t get impacted but if it is not affordable for the shopkeepers then in that case nestle must provide a small refrigerator to those grocery shops so that they can keep those products. These can be returnable in nature or can be kept with the sellers if they have covered a curtained budget off sales of Nestle products. It will safeguard the goodness and quality of the products and the freshness will be delivered to the consumers as the company wants as swell as there will be the loyalty will be retained among the suppliers and the customers (Nestle Annual Report, 2011).

Competition

The dairy products are one of the Nestlé’s key product segments. The domestic customers are very much concerned regarding the nutritional value of the products as well as the dairy industry is highly competitive in nature. In the portfolios of the opponents they have a similar range of products. There are products like Anchor Plus and Anchor PediaPro which gives a robust competition to the Nestle products in the milk powder industry such as Nangrow range, Nespray 3 Plus and Nespray 1 Plus directly. For achieving the competitive benefit, the manufacturers are forced to deliver more customized and enhanced product range in the market. Whereas milkmaid stand as market leader because of the absence of substitutes or the rival products in its category. Presently there are chances that few imported and local condensed milk products but because of the strong brand recognition the impact over the market share of Nestle will be very squat (Clifford, 2012).

There has been an up surged internet penetration because of the developed and improved technological infrastructure. For facilitating the youths, the organizations are more and more trying to adopt online marketing techniques and social media campaigns for the promotion. As well there are huge investments made in the development t and research sector so that the different needs of the consumers can be met by offering them with the improved products. One such product is drinking yoghurt which is highly consumed by the people of Sri Lanka but still Nestle haven’t introduced this product in its portfolio. On the other hand, the competitors such as Ambewela, CIC and Cargills have introduced varieties of drinking yoghurts in their respective portfolios. Because of the extreme weather conditions people are attracting towards these kinds of products. The positive implications of such healthy drinks have made them popular among different age groups of customers. As well as the price is also very much consumer friendly which makes them more facilitating to buy (Steel, 2010).

Competition

There are various other factors other than the mentioned above such as legal, technological, economical, political, social and environmental. In the buying behavior of the customers there has been analyzed a fluctuation because of the political influences. The prices of the commodities are increasing day by day as the government has imposed several new tax rates on the services and goods. Additionally, the economic stability of the country has also been impacted because of the various policies introduced by the Sri Lankan government (Kelly, et al., 2015). For the first time in the history of Sri Lanka, during March end of the year 2016, the US Dollar exchange rate was enhanced up to 150 Sri Lankan Rupees and depreciated the value of the Rupee in the international market. Seen from the social aspect it is identified that the individuals who reside in the rural regions and the suburbs they possess different cultures and lifestyle. Therefore the geographical segmentation is one of the major aspects for improving the life styles of the consumers as well as matching their needs and requirements (Ibrahim, et al.,1999).

Before offering the products to the customers or implementing the strategies there is a need that the companies must perceive and analyze the consumers’ buying behavior model. The people are very much pricing sensitive because of the present cost of living prevailing in the nation and thus there is a need that Nestle must offer the products at lower prices so that there can be implementation of the low cost differentiation strategy and can gather increased consumer market. At the time of price deriving, the company should have a concern regarding the price competitiveness prevailing in the market. The products which are ready to drink are leading the market but the company must develop contingency plans and strategies as the people living in the suburbs are more conscious regarding the nutritional level of these packed drinks. There are opportunities for the Nestle to introduce some new and fresh flavor of yoghurt so that it can capture that segment also with its strong brand recognition and blissful flavors. In the rural areas the people are more concerned regarding the prices of the products in comparison with the nutritional value of those products (Alhawsawi, n.d.). Thus the company must consider revising its prices to increase its sales. Therefore the people can be facilitated by small packs and lesser prices as it will be friendly to their pockets. Because of the increased depreciation of the rupee value there will be a hard time for the imported products to get retained in the domestic market. The company can have a competitive benefit by offering the products which are new to the consumers and were never introduced before in the domestic market of Sri Lanka. For example, Soya milk is one of such products which can be introduced in the market. There are various soya products which the consumers are preferring to buy because of the higher nutritional values but these products are imported and thus the prices are too high and this generally give a buying power to the higher class customers only. Nestle must offer these soya products on a lower cost so that it can have an expanded customer base in this segment. This initiative of Nestle can give a competition to the foreign products too (Geissel, 2012).

Life Cycle of the Products and the Recommended Innovations

There are several products of Nestle which covers under the company’s portfolio and they all are at different stages in the life cycles of the product. It is not necessary that every product will experience each and every stage of the life cycle but it can be possible that in the portfolio the product can be established at different stages wherever possible (PORTER, 1998).

In the product mix of Nestle there is one new product named. Nestle Sjora which is made by combining milk and fruit and is very much based according to the hot weather seasons. There is another product named CoolPro which has been introduced with it as the beverage provision solution. It helps in automatic identification of the portion size where it can be used by the minimum staff at the various food outlets (Khan, et al., 2013).

There is a need to introduce and promote this product effectively because it is at its introduction stage thus strong promotional campaigns are required to advertize this product. There is a need to inform the suppliers about the various benefits associated with the products so that they can influence the customers to purchase it. The pricing of this product will matter a lot as it will decide the future market share of the product (Shocker, Srivastava and Ruekert, 1994).

In the Sri Lankan market, there are products which are recognized as the stars of the product mix of Nestle such as the drinking packages Milo, Nestomalt and Nescafe. As per the Ansoff matrix, these products capture a huge growth and market share. Therefore the more investments on these products will lead to the entrance in the maturity stage of life cycle of these products (HANLON, 2013).

As per the discussion in the segmentation, targeting and positioning part, it is analyzed that the suppliers are striving hard for safeguarding the freshness and durability of the packed drinks in the extreme weather conditions. By taking use of CoolPro for such drinks with the involvement of the innovative product named, Nestle Sjora, the suppliers will be confident in introducing the new beverage similar to those products which have already won the trust of the customers. It will help Nestle to compete the products like drinking yoghurt as discussed in the emerging trends. Thus as an outcome the both categories of the product will help in moving the products towards their next subsequent stage in the life cycle of the products (FME, 2013).

The product milkmaid is providing huge returns to the subsidy of Nestle operating in Sri Lankan market and now it is presently in its maturity stage. It is significant for the company to rebrand milkmaid otherwise it will reach to its declining stage. Therefore it is important that the product that is in maturity stage must be provided a new brand image so that the consumers can have a fresh look over that product and keep on buying that for years to come. As discussed in the competition part, there should be a significant consideration by the company over the health issues related to the high sugar levels found in the drinks. The company can promote these products at the time of the festival seasons of Sri Lanka where there is a demand for this for the preparation of the desserts and sweets. The company can also contribute by providing various tips and recipes which can be used while taking use of milkmaid.

There is one more product which is at its maturity age i.e. Maggi Noodles. By introducing the various packaging sizes it has already won the hearts of the customers as mentioned in the recommendations provided to incorporate change for increasing the market share. The company has also added various flavors, minerals and vitamins in the noodles for satisfying the needs and requirements of all the customer groups. And this strategy will surely increase the life cycle of the product and help to sustain in the market for a longer time frame (Johnston, 1997).

In the Sri Lankan market of Nestle, the Nespray milk powder is one such product which is at its declining stage of product life cycle. Majorly in the suburbs regions, the competitors have introduced the liquid milk and UHT and thuds it decreases the demand for the milk powder. Thus for increasing the life cycle of Nespray milk powder it is important to introduce the liquid milk. And the company should reduced the packet size of milk ponder so that it can be delivered in the rural areas where there are still inefficient facilities to store liquid milk. This strategy will benefit the company in building loyalty and trust among the targeted customer groups (Monson, 1991).

There is another product of Nestle which is at the declining stage i.e. Maggi coconut milk powder as it has been very less consumed by the customers because of the processed form. At the time of preparation of meals in Sri Lanka most probably every household takes use of the coconut milk. Therefore it is better for the company to re-launch the product in the form of liquid coconut milk in the canned or tinned pack. It will help in saving a lot of time of the people which they exercise in scraping coconut and extracting milk from that. Thus bit will be a better strategy to offer tinned or canned coconut milk in the Sri Lankan market (Bordenave, 2012).

Present Market Strategy

There is very much dependency over the mass media advertising of the product s of Nestle in Sri Lanka. There is robust competition in the advertising industry. The usual practice adopted is taking sue of a television or sports personality in the advertisements. But the youth is not facilitated by these advertisements as they spent less time in reading newspapers and watching television. With change in time people adopt products which are good and beneficial for them instead of getting influenced by the famous personalities. The other concern is health as in present time consumers prefer products which are healthy for them instead of the processed food products. Most of the supermarket chain facilitates consumers by offering buy one get one free offer or other discounted offers but in today’s time the people are not attracted by these offers except when they actually need that product. But in Sri Lanka where there is increased price sensitivity, people still get influenced by these offers. The older age group is one of the targeted customer bases of Nestle for the activities related to the post-sales marketing. The scratch cards or the gift vouchers do not attract the youth and thus the company must change its marketing strategies (NESTLÉ LANKA PLC, 2011).

While introducing any strategy there is a need to comprehend the mindset of the customers. To be inventive e there is a need to consider all the age groups as well as enhance the awareness regarding the nutritional value of the products such as Nestomalt and Milo. The emphasis of Milo can be on the school children by making them understand the importance of having breakfast. Similarly for middle age a cup of Nestomalt will be a good option to keep them healthy and fit. All these activities must include a digital component for attracting increased number of customers. The youth who spend large amount of time on mobiles amid internet are the perspective buyers of online selling. Hence it is significant for Nestle to sell its products through e-commerce (Salleh, n.d.). As well as there should be an initiative to offer and suggest products whiles the customers are going through the site. For extending the product life cycle of milkmaid, the company should increase its online presence by creating a page or website where there has been take use of milkmaid while preparing dishes or by the chefs in developing innovative dishes as well as through blogs and several recipes. There can also be an online competition where housewives can participate by introducing their dishes by taking use of milkmaid and winning prizes for the most innovative dishes. There can be in-house promotional activities if the supermarkets introduce various fun activities and games sponsored by milkmaid (Oberholster, 2007). To involve youngsters there can be posting of pictures and comments on the social media of the participants of those activities.

There can be also a campaign where customers can post there selfies while buying the Nestle products. It will increase the engagement of the youth in the buying of the Nestle products. There can be use of the QR codes that is the Quick Response codes. It will help in sharing the information in one click to the customers (Matzler, et al., 2013). Another way to attract the consumers is to have a recognized presence over the various search engines so that customers can have a look over the pages and blogs of Nestle as compared to its competitors. It will help in retaining the present customers and also aid improving promotions and products as per the needs of the customer groups (Kemper, 2001).

The recommendations provides above regarding the marketing plan, enhancements and products will help Nestle to achieve its organizational objectives in the upcoming years. By emphasizing more concentration on the rural regions the company can have a significant increase of 10 percent in its sales by the end of the year 2016. It can be an impact of the up increased sales of Nescafe, Milo and Nestomalt (Nestle, 2015). There is also expected a significant increase in the sales of milkmaid and magi noodles because of the initiatives adopted by the company. If we analyze from the qualitative point of view it will be realized that there will be an increase in the product life cycle of milkmaid and Maggi because of the several tactics and innovative product enhancement strategies incorporated by the company. There can also be identified an increase in the brand loyalty and equity in this year and majorly in the youth who take use of social media robustly. There can be up surged sales because of the effective digital promotions. There are opportunities in the segment of soya products and yoghurt products. There are possibilities that Nestle would capture the competitors’ market by introducing drinking yoghurt and other dairy products such as coconut milk. There are predictions that Nestle can experience a significant revenue generation and increased customer base by the year 2018 with its several innovative strategies and improved products (Nestlé Global, 2010).

References

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Clifford, M.N. ed., 2012. Coffee: botany, biochemistry and production of beans and beverage. Springer Science & Business Media.

DAILY MIRROR, 2016. Nestlé launches Sri Lanka’s first smart cool beverage solution. Accessed on: 9th October, 2016. Accessed from: https://www.dailymirror.lk/107366/Nestle-launches-%20Sri-Lanka-s-first-smart-cool-beverage-solution%20

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