Nestle South Africa - Marketing - Case Study Example

MARKETIGN REPORT: NESTLE SOUTH AFRICA (Student Name) (Course No.) (Lecturer) (University) (Date) Executive Summary Founded in 1866 as a gesture of benevolence and innovation by Henri Nestle, the Nestle conglomerate has grown to become a world-renowned food and beverage company. Some of the products from Nestle include ice cream, baby food, snacks, and breakfast cereals. The Nestle company corporate headquarters reside in Switzerland. Additionally, Nestle holds other numerous sub-branches all over the globe, hence giving the company a multinational status. The company works with a strong policy of providing the world with the best food for a good life hence providing a wide array of products in the market. Additionally, Nestlé’s success relies on the effective use of quality research and development. Therefore, this report aims at analyzing the market compatibility factors presented by Nestle as a global company (McGinnis, 2006). Introduction and Background One of Nestlé’s prosperous branches is in South Africa. The country holds a number of Nestle companies that are responsible for products such as Nestea Ice tea, mineral drinking water brands, and the all so popular Maggi products. Nestle South Africa represents one of the Nestle brands. The South African branch came into being during the Second World War in the 1870s. Nestle South Africa contributes to the twenty-eight percent revenue generated from Africa and Asia. The South African economy incorporates a large number of investor companies hence the country best serves the Nestle conglomerate (Dubin, 2006). The current markets in South Africa relating to the confectionery industry are inclusive of Cadbury, Kraft foods, Ola, and Hershey foods, amongst other companies. The product lines of Nestle South Africa consist of a number of products that exist in a worldwide forum. For instance, Nesquick, Nescafe, Milo cereals, and Cerelac are some of the firm’s product lines. Market Description Nestle South Africa’s prime target market relates to the consumers health and food needs. The consumers targeted range from infants to adults hence the wide array of products, most likely a family setup. The idyllic nestle consumer refers to individuals who value nutrition and a good life for the long run. Additionally, Nestle also caters to pet nutritional needs (McGinnis, 2006). The confectionery market in South Africa demonstrates stable advances in subsequent years especially since key growth opportunities across various categories get swift identification. For instance, consumers in SA prefer value products that are in line with the country’s high inflation rates. Secondly, the primary distribution channels consist of developed economy movements such as supermarkets and hypermarkets. Thirdly, the sugar category in the confectionary industry enjoys the highest infiltration levels on a private basis in the entire South African market. Finally, the packaging materials in use such as film, also favor the confectionary market in the country since consumers like easy packaging materials (William & Fereell, 2007). The market leaders in the country’s confectionary industry include Nestle and Cadbury companies. The other confectionary manufactures manufacture products on a large scale but with limited exportation amounts. The market concentration levels are at a high level. The high levels attribute to the fact that Africa stands as one of the largest producers of cocoa. Cocoa serves as a major ingredient in the confectionary world. The market distribution in the South African market is widely spread and, as a result, the products undergo stiff competition against each other (Dubin, 2006). Market industry growth in south Africa are based on marketing strategies that lean towards consumer behaviors rather than buzzing behaviors that only occur for a short while. For instance, Nestle uses such strategies to learn consumer behaviors and hence acquire benefits. SWOT ANALYSIS STRENGTHS Supply chain efficiency: Extensive network distribution levels in both rural and urban environments enables Nestle SA to reach multitudes. Brand recollection: Nestle represents a household name thus the name holds a high visibility factor to the consumers. Market share: Nestle holds high market penetration levels thus enabling the firm to hold leadership positions in the industry. Product line: Nestle offers a wide product range specifically pet food, baby food, all day cereals, and ice cream (McGinnis, 2006). WEAKNESSES Brand name commoditization: Nestlé’s cereal brands have experienced exceptional success rates thus causing the brand name to experience commoditization aspects. As a result, other products from the Nestle brand often undergo less recognition. Market saturation: The confectionary industry hosts a large number of both national and global companies in the healthy nutrition segment causing the market to fill up. Consequently, growth experiences a minimalized scope and unhealthy competition between market players (Dubin, 2006). Cost control: Mainstream properties of satellite Nestle companies exist on a rental basis leading to high operational costs, hence, decrease in profit levels. Consequently, Nestle cereals are highly priced to cope with the monetary standards. OPPORTUNITIES Business strengthening: Strengthening of global businesses can occur through acquisitions and mergers to expand satellite markets. Product line expansion: Proliferation of the Nestle Company’s sales can occur by stretching the product lines, stating values for the various segments, and by creating offers for the novel consumers. Tapping of rustic markets of developing countries: Urban markets are experiencing near saturation thus rural markets offer sole opportunities for the firms that hold the hope of reaping any type of profit (Dubin, 2006). THREATS Market competition: Differentiation of brands in the cumulative global market has grown harder thus enabling counterfeits to flood the market. Ethical matters: Unsubstantiated facts concerning major rivals competing with each other often lead to unethical behaviors in order to add sales. Low Margins: Rising competition leads to low margins and as a result discounts accorded to consumer’s aid in long run market sustenance. Target Market The marketing world centers on people in order to survive. Thereby, the target market for any business oriented strategy aims towards grouping a market into segments. Afterward, marketing efforts get concentrated in one or multiple segments that were identified earlier. Examples of segmenting variables used during target marketing divide into four classes namely: behavioralistic, geographic, psychographic, and demographic. Demographic segmentation stands as one target market strategy that Nestle employs (William & Fereell, 2007). The demographic segmentation strategy denotes the categorization of the target population using certain aspects such as age, gender, generation, social class, amongst other classes. New Product Description The South African Nestle branch has recently introduced new cereal brands into the market. One of the brands, bar one cereal embraces two uniquely combined flavors namely chocolate and caramel. The cereal brand resembles the bar one chocolate flavored ice cream. Marketing mix variables used when executing the market for the cereal product consider place, the product, the price, and the promotion strategy in use. The relevant marketing mix used for such items lean towards promotion, price, and product. The product aspect looks at factors such as the features with regard to the two unique flavors, and the marketing strategy points towards consumer habits in relation to current trends in the market (William & Fereell, 2007). The price factor views the pricing strategy in both the internal and external market area. Additionally, pricing looks at the competing categories and how to counteract the competitor’s advances, with the customer demands in the market environment. The promotion aims at strengthening the relationship with the target customers through advertising and sales promotions. The two strategies enable the company to design future marketing goals together with how to achieve the set goals (McGinnis, 2006). Customer Value Preposition A customer value preposition denotes the distinctive marketing statements linked to certain products that tell consumers why they ought to purchase an item. Nestlé’s bar-one cereal uses distinctive messages to get to the target consumer. Firstly, Nestle cereals get manufactured using whole grains to stimulate energy. Secondly, the cereals offer consumers seven vitamin sources together with minerals. Finally, the product hails from South Africa hence convincing the consumers of homegrown quality (Dubin, 2006). The domestic factor stands as a marketing strategy to the consumers who may hold a preference towards nationality. The consumers of the new cereal stand to gain nutritional health from the product hence making it the main customer value preposition of choice. Product Justification Bar-one cereal from Nestle represents a novel idea for a breakfast cereal. However, despite the products being a unique idea, the reception illustrates a successful future. The Nestle South African branch mixed a great strategic plan consisting of the right amounts of the four Ps of marketing. The firm introduced the rightful product. The company sells the product at a friendly price. The company places the commodity on the right pace or platform. Additionally, the firm embraces the right and correct promotion method for the new cereal brand. As a result, the new cereal product from Nestle SA largely embraces the strength-opportunities strategy of the companies SWOT analysis findings (McGinnis, 2006). The novel cereal idea embraces the ice cream brand with the same name. Therefore, the product grips the strengths identified in the SWOT diagram. Firstly, supply chain efficiency by Nestle has enabled the commodity reach a large number of the potential customers especially supermarket and hypermarket shoppers (Ibid, 2006). Secondly, the Bar-one cereal identifies as a nestle product hence consumers are able to recollect the name easily. Thirdly, Nestlé’s prowess in the confectionary industry enables bar one to stand as a leader in the cereal world. Lastly, Nestlé’s product lines enable the cereal brand to thrive since the brand name comes with a guarantee for satisfaction in other categories of good food and life (William & Fereell, 2007). The bar-one cereal embraces the opportunities stipulated in the SWOT diagram as follows. The bar one product opens opportunities in the rural market sector due to saturation in the urban markets. For instance, urban consumers might not recognize the new cereal because the market hosts a number of varieties as opposed to rural novel consumers (Dubin, 2006). By developing the new cereal brand under Nestle, the company has increased product lines, and consequently the sales undergo an increase. Business strengthening of the Nestle headquarter have led to expansions in other countries like South Africa. The expansions have led to new products such as bar one and, as a result, the firm has immensely acquired success and superiority. Reference list Dubin, J, A 2006, Studies in Consumer Demand - Econometric Methods Applied to Market Data: Boston, MA, Springer US McGinnis, J. M, 2006, Food marketing to children and youth: threat or opportunity? Washington, DC, National Acad. Press. William, P, & Fereell O, 2007, Marketing (LL Version), Cengage Learning. Read More