Microenvironment and Macro-Environment of Nestle Kit Kat Chocolate - Case Study Example

Nestle Kit Kat Chocolate Introduction Nestle is considered the leading user packaged goods’ organization globally, established and headquartered within Switzerland. The origin of Nestle came up from a 1905 combination of Anglo-Swiss Milk Company that was founded during 1866 by Charles Page, George Page, and Henri Nestle Company that was established during 1866 by Henri Nestle (Nestle, 2013). The organization grew considerably in the First World War as well as during the Second World War, ultimately extending its offerings past its initial infant formula and condensed milk products. Currently, the organization operates in eighty six nations all over the globe and employs approximately 283,000 individuals. The company had begun as an idea from a single man, and grew into a huge corporation. A pharmacist, Henri Nestle initiated an infants’ milk formula for those who could not endure their mother’s milk (Nestle, 2013). This product turned out to be a success thereby creating a demand all over Europe. While popularity of Nestle grew, other businesses desired to combine and become Nestlé’s business partners. In the UAE, Nestle launched a new plant within Dubai in 2010. The facility houses Nestlé’s Regional Microbiological Laboratory that specializes in salmonella’s analysis. The lab started operations during 2009 and offers services to the factories of Nestle within the region of Middle East. Additionally, it serves as a facility of training for several UAE’s government entities. The facility intends to fulfill the Nestle products’ demand within the region. Microenvironment Company Nestle is a company that is publicly owned with several subsidiaries all over the world. Several of these subsidiaries are run in its individual name, with a few exceptions. Nestlé’s executive committee is regarded the chief management group accountable for resources allocation and operations of the organization (Nestle, 2013). The Nestle Group is operated by geographies for majority of the beverage and food business, with special exceptions on businesses that are globally managed such as Nestle Nutrition, Nestle Health Science, Nestle Waters, Nestle Professional, and Nespresso (Nestle, 2005). In essence, the company’s structure is grounded on the decentralized management principle. This structure is intended to offer practical guarantee that there is protection of assets and that events and transactions are properly recorded. One of the advantages of decentralized management is flexibility. Businesses ought to make quick decisions so as to maintain competitive advantage. An environment that is decentralized offers flexibility to management at the lower level to assess the situation hence make proper and sensible decisions. Suppliers In the corporate business principles of nestle, the company commit to nurture responsible practices within the supply chain. The company wants to guarantee both supplier relationships and responsible sourcing that provide competitive advantage (Nestle, 2013). The supplier code of nestle institutes non-negotiable least standards that calls upon the employees, subcontractors, agents and suppliers to value and to abide by every time when carrying out business (Nestle, 2013). The supplier code of nestle is a central component of every purchase order, contracts of supply and is presently incorporated into every other commercial agreement. The supplier code of nestle is executed in every business and market and it applies to every supplier. While the global population rises and keeps on shifting to urban regions, the issue of producing enough agricultural raw substances is turning out to be trickier. This is the reason the company is working harder to make sure that raw materials are sourced in a manner that is sustainable and responsible (Nestle, 2013). The company’s wellbeing together with that of farmers is directly tied together, however, in several rural areas, absence of investment within agricultural and social infrastructure lessens the quantity and quality of the relied on raw materials (Nestle, 2013). Therefore the company works on training farmers and capacity building in approaches of sustainable production, both to safeguard the supply of raw materials, and to gain a positive, lasting effect on local financial system and living standards. The company’s general standard is to produce, within nations from which commodities are sourced from. Manufacturing and local sourcing both indirect and direct income as well as opportunities of employment to local individuals helps to decrease environmental impacts that are transport-related for local use. The company believes it has a duty of ensuring that farm employees as well as others hired within the chain of supply work within reasonable labour conditions. For this reason, Nestle is dedicated to the ILO Core and the United Nations Global Compact Conventions, together with its enduring dedication to dealing with child labor (Nestle, 2013). Competition In their whole product lines, Nestlé’s operating organizations compete with other companies small and large, as well as local and worldwide, situated all over the globe. There is competition in every product line regardless of the size and number of the involved competing companies. The major competitors of Nestle include and not limited to Mars and Cardbury. Without research and development, Nestle may possibly not have been the leading food industry in nutrition, wellness and health. Nestle has a dynamic international network of R&D regions working on product development and scientific research (Nestle, 2013). The company considers that it will deal with the enormous competition and it will also face the substitute products’ threat. The company hopes to understand its marketing segments, and maintain a promotion and advertising plan (Nestle, 2013). To obtain a competitive place in the mind of the consumers, the company tries to uphold the family brand of Nestle and enhance communication through being in touch with its customers. Marketing Intermediaries Marketing intermediaries assist Nestle Company to support, sell and distribute the products. Nestle Company hires agencies of advertising to produce radio and television commercials as advertising campaign constitute. Promotion entails the activities which represent the product’s value and encourage consumers to purchase it (Mitrega, 2006). In the marketing promotion and campaign of Nestle, the company tries to reach everyone everywhere. Advertising campaigns are done in radio, television, newspaper, and street. Macro-environment Demography environment Demographic environment involves the people who structure the market (Mitrega, 2006). Nestle Company has a wide demographic market. With regards to its product line of Kit Kat chocolate, the targeted people in UAE as well as globally include those from ten years of age and above. On the other hand, chocolate is liked by almost everyone hence the company works hard to please its consumers in terms of variety of tastes. Both male and female are thought to use this product. Since Nestle targets the adults, youths and children, which are UAE’s leading population, the product will not cover those below 4 years of age and those above 65 years of age because of health issues related to chocolate consumption at these crucial ages in life. The covered population is a huge segment since the company focuses on not less than half of UAE’s population (Nestle Opens Factory in Dubai, 2011). Economic environment The population in UAE constitutes of both the young and old. Since chocolate is not restricted a certain age group, Nestle Kit Kat consumption is increasing thus resulting in economic development for the Nestle company as well as economic development for UAE in general. Nestle is dedicated to its business principles within each country, with consideration of cultural, religious and local legislation practices (Nestle, 2005). Political Environment The political environment includes the taxation for raw substances bought abroad, environmental regulations, employment laws, competition regulations and political stability. With a good political stability in the UAE, no politics issues may influence the launching of new products by Nestle hence enhance its market growth (Nestle Opens Factory in Dubai, 2011). Segmentation Nestle understands the geographical difference in wants and needs. This is why the Nestle Kit Kat chocolate is provided in various tastes so as to fit everyone’s desire. In terms of psychographic segmentation, the company accommodates everyone’s need by producing a wide array of Kit Kat chocolate with regards to affordability. Behavioral segmentation entails responses, attitudes or knowledge to the product (Mitrega, 2006). Nestle Kit Kat chocolate is liked by majority of people in the UAE. In general, the segmentation of Kit Kat chocolate is for individuals who seek to have chocolates with high quality as well as moderate price. Demographic segmentation requires the market to be divided into variables like gender, family, and age. For instance, Nestle segmentation with regards to age has Nestle baby food whereas the younger and older age has Nestle Kit Kat chocolate (Nestle, 2013). Nestle Nutrition in health care is essential for old individuals to conquer health issues. Current product description Kit Kat Pop Choc is tasty bitesize portions of well-known Kit Kat wafer that are covered in milk chocolate. Without artificial flavors, preservatives and colors, the latest sharing bag features the brand ‘LOVE TO SHARE’ in maintaining the refreshed sharing bag variety of Nestle chocolate (Nestle, 2013). The slogan of Kit Kat enables penetration into the competitive market. The new Kit Kat 4 finger fine dark is designed for the lovers of dark chocolate. This product uses the optimum cocoa beans that cover every bar within a deeply rich dark chocolate that is bittersweet. The Kit Kat Fine Dark also features the innovative packaging with Foil Fresh. This is considered a lasting version to the range of Kit Kat and taps in the increasing consumer tendency to dark chocolate. Current Target Market Nestle Kit Kat targets every consumer who loves chocolate particularly the young. Adults also are the target market because Kit Kat is basically consumed as a snack and snacking can take place anywhere including workplace and at school for school going children. Kit Kat for is every age group as well as the upper, middle and lower class people. In terms of positioning, Kit Kat is a chocolate one needs to take whenever he or she takes a break. Marketing opportunity description The UAE provides several opportunities for Nestle to become more successful. This is because of the products offered by the company specifically the Kit Kat which targets everyone regardless of age and social class. There is unexploited rural market in UAE because since Nestle is still growing in the UAE. Another marketing opportunity for Nestle Kit Kat chocolate is the excellent product packaging as well preservation (Nestle Opens Factory in Dubai, 2011). A huge size of the market in the UAE gives Nestle better marketing opportunity. An established target market is another opportunity for Nestle, particularly Nestle Kit Kat chocolate. The last marketing opportunity is the influential Nestlé’s successful brand that helps it compete with other local chocolate producers in the UAE. Recently, following the worldwide recall of Nestle chocolates, the UAE was not affected after it was reported that there was plastic in a couple of bars of chocolate and Easter eggs within the UK (Hanif, 2013). Marketing Analysis Nestle Kit Kat has a powerful brand name. A suitable brand has a number of advantages like organization’s identification as well as increasing its value (Mitrega, 2006). A good brand enhances recognition of the product. Nestlé’s brand provides several sensory stimuli that increase customer recognition. Through this, consumers in the UAE recognize Kit Kat from its logo and packaging hence increasing the product’s consumption (Nestle Opens Factory in Dubai, 2011). Another advantage of a good brand is that it helps create brand loyalty. Consumers who are regular and enthusiastic buyers of a specific brand such as Kit Kat are expected to become loyal to the brand. Cultivating loyalty of the brand among consumers is the definitive reward for thriving marketers because these clients are expected to be attracted to shift to other products compared to customers who are non-loyal. Product positioning is another advantage of having a good brand. Product positioning means the place a product occupies in the mind of the customers (Mitrega, 2006). Established and supported brands make commodity positioning endeavours more effective. Firms such as Nestle that institute an effective brand can expand the brand through addition of new commodities within the same parent brand. It is because of the good brand that Nestle managed to win Kit Kat against its competitor Cardbury. Another strength that Nestle Kit Kat chocolate has is an excellent visibility and advertising that enables it to do well in the competitive market (Nestle Opens Factory in Dubai, 2011). Additionally, the company has a good availability and distribution of the product hence people in the UAE rely on it. One major weakness that the company has is that food products do not have a long shelf life. Another weakness is exciting competitors and unsteady economic conditions. Like in any other business, Nestle has a number of threats. For instance, there is the issue of other branded together with domestic chocolate manufacturers in the UAE hence posing stiff competition to Nestle Kit Kat chocolate (Nestle Opens Factory in Dubai, 2011). Another threat is that people may possibly substitute chocolates for sweets. Other threats that Nestle Kit Kat chocolates may possibly face are: product misunderstanding, poor campaign advertisements because of the market situations, uncertain situations may possibly affect sales, competitors sharing Nestles segments, and an unexpected decline in the markets of drinks and confectionery. Proposed product Nestle has a considerable amount of products ranging from infant food formula to chocolates. Due to this, Nestle is categorized within the family brand. Nestle brand attracts a lot of loyalty and preference from consumers. One of the famous Nestle products is the Kit Kat chocolate (Nestle, 2013). Nestle Kit Kat has good characteristic where it possess an excellent quality in addition to suitable prices. Kit Kat has many varieties, either lastingly or as narrow editions, like those sold in order to commemorate festivities like St. Valentine’s Day. Nestle introduced more than 200 dissimilar flavours from 2000, including soy sauce, green tea, ginger ale, banana, and creme brulee (Nestle, 2013). Other flavours include orange, Kit Kat Mint and Kit Kat Dark. The intention of the flavours is to appeal younger buyers. Proposed pricing Price is considered as the money paid in exchange for a service or product given (Mitrega, 2006). The pricing of Nestle Kit Kat varies and increase with the size. The price that is set by a company communicates a meaning to a number if consumers regarding the business, service or product, bringing about perceived value. This influences the brand, position or image within the marketplace (Mitrega, 2006). For instance, prices that are higher tell some users that the company has higher quality. Offering discounts, sales, closeouts and rebates can imply that a company is not able to sell its services or products at a regular price. Due to the established brand that Nestle has within the marketplace, the loyal consumers are able to purchase the products with or without discounts since they value the quality of the product and not the price, therefore they will but even if the price is increased. Proposed distribution process Nestle Company makes distribution of its goods for various regions within emirates facilitating accessibility for users (Nestle, 2013). This means Nestle products particularly Nestle Kit Kat chocolate can be easily found in pharmacies and various supermarkets (Nestle Opens Factory in Dubai, 2011). The company has also made it very easy for those who would like to purchase products online. Effective product distribution enhances its visibility hence increases business growth. Nestle Kit Kat chocolate is greatly distributed within the seven emirates so that the target consumers can get easy access. Proposed Promotion Mix Producing an excellent commodity, pricing it appealingly as well as making it accessible for the intended customers is among various problems that companies ought to solve. Contemporary era is regarded the period of communicating with clients, and guaranteeing customer gratification (Mitrega, 2006). Nestle Company promotes its various products through several advertisings. The Company supports its basis of promotion campaign with regards to four approaches. The first is individual selling. This campaign involves implementation of direct activity of selling particularly during the months of festivities. The target segments are greatly targeted. The second campaign is sales promotion. This promotion strategy entails plans of sales promotion whereby discounts are offered and the marketing team educates people on the significance of the commodity. Public relations are also a major player in every international company’s promotions (Nestle, 2013). Each year, Nestle is initiating its yearly report encompassing information for stockholders and shareholders (Nestle, 2013). Additionally, a large quantity of information concerning Nestle Kit Kat and its promotion is available in magazines and newsletters provided by Nestle UAE. Works Cited Hanif, Nadeem. UAE unaffected by worldwide Nestle chocolates recall. Retrieved on May 8, 2013 from . Nestle. Nestle Good Food, Good Life. Retrieved on May 8, 2013 from . "Nestle Opens Factory in Dubai." The Manufacturing Confectioner. 91.1 (2011): 8-8. Nestle, Nestle: Best Loved Recipes. Lincolnwood, IL: Publications International, 2005. Print. Mitręga, Maciej. Market Analysis. Katowice: Publisher of the Karol Adamiecki University of Economics, 2006. Read More