Nestle SA - Market Description, SWOT Analysis, Target Market, and New Product Designed - Example

NESTLE S.A Name Class Instructor Institution City State Date Nestle S.A Executive Summary Nestle S.A is an international company that deals in the production of beverages and foods that target all age groups in the world. The company has its origin from Switzerland, and it has expanded to cover all the corners of the world including Europe, America, Africa, Asia and South America. Nestle S.A is the largest food and beverage company in the world, and it has a lot of revenue from its sale of innovative food products. The range of Nestle food products includes bottled water, cereal, frozen food, baby food, pet food, and ice cream. The annual sales of Nestle top over 1 billion US dollars and this is a remarkable performance from a company that has come from humble beginnings. In essence, Nestle has over 450 factories that are located in over 200 companies. (Oskew, 2012, p.27) The organization encompasses an employee base of over 300,000 people that contribute to the success of Nestle. In this report, the Nestle S.A a SWOT analysis shall be prepared for an innovative product in the lines of business. Introduction In this marketing report, the market description of the market conditions will be discussed. Due to the recent economic recession and the affecting factors of supply and demand. The description of the nature of the company and its products will be highlighted. According to Weber, an innovative company is a successful company and, therefore, a SWOT analysis will be done to identify the strengths and weaknesses that prevail in the market for innovative beverage and food product. Essentially, the aim of a SWOT analysis is to identify the important factors that affect the marketing aspect of a new innovative product. (Maryon, 2001, p.26) Finally, Nestle has an enormous capitalization of the market covering up to 230 billion US dollars. The Nestle S.A Company is a perfect choice of company to do a marketing report about because of its rich history and competitive position. Nestle S.A has a rich history that began way back in 1866 when two companies that were located in Switzerland came together to form the business empire. As the two business entities were competing, growth also expanded through to the US and Europe. The exact origin of Nestle S.A emerged from Vevey when a businessman by the name of Henri Nestle started a milk and baby food company and then began to market the venture aggressively. Several years later, the improvement of the Nestle empire business came from the merging of the several sub-companies by the year 1905. However, the effects of the World War I and World War II hit the market potential hard by presenting a financial downturn turning Nestle into a mere chocolate producing company. Profits dropped slowly by 1939, however with the innovation of Nescafe Coffee was a success because the drink was favored by many of the American citizens and the population all around the world. Between 1975 and 1985 the organization formed many innovative products that ventured into buying many companies. In 1984, the company further acquired Carnation that was an evaporated milk product company. The deal cost a whopping 3 billion US dollars. (Telcalfe, 1992, p.28). The 1990s saw a huge crumble of market barriers and the company flourished amidst the economic recession of 2007 to acquire several companies and mergers. The most notable partnership was with the Dreyer’s Company ice cream franchise. Nestle S.A further bought out other ice cream companies such as Chef America, Hot Pockets, Delta Ice (a Greek franchise) and Novartis Pharmaceutical. In fact, by 2011, Nestle offered a deal to acquire Hsu Fu Chi and Pfizer Inc in a deal worth around 12 billion US dollars. The company has since expanded into new market territories that offer investment opportunities in areas as far as Singapore and Nigeria. The product lines of Nestle S.A Company include milkshakes, coffee, infant milk, foods, health care and nutrition products as well as seasonings and various soups. The company is also expanding into producing frozen foods, sauces, and pet food. Recently Nestle has acquired a vast percentage of shares in L'Oreal, a company that is competitive in the production of beauty and cosmetic lingerie. (Grey, 2004, p.32). The major brands that have hit the market with an incredible impact are the Garnier, Lancôme, and Maybelline. These are famous body shop stores that hold almost a quarter of the shares of Sanofi-Aventis. The organization called Sanofi-Aventis is the most competitive pharmaceuticals franchises in the world today. Market Description In Switzerland, Nestle S.A is one of the most competitive market-oriented companies. Mostly, it has expanded its tentacles into many other countries in the world. In the region, Nestle has acquired a tremendous market capitalization that is worth around 250 billion Swiss francs. This figure is equivalent to over 200 billion US dollars. In the year 2013, the market sale was worth a CHF of 100 billion and the net income from sales rose to CHF 10 billion. The company has also invested heavily in development and research, and this has seen the research investment shares of Nestle S.A to grow to a figure of CHF 2 billion. Research and development are essential ingredients of innovation, and the innovation drives business by the introduction of new products that have a wide acceptance among the customers. Furthermore, sales can only be boosted if the company constantly diversifies the products on the lines of business. Research has brought about new healthy and competitive products that are found in most homes and businesses in the modern day communities. The sales and market breakdown by activity for the Nestle S.A organization are quite massive. For instance, 25% of all the market sales are from coffee and tea only. 30% of the market share is contributed from the beverages that Nestle S.A sells. Notwithstanding, about 20% of market share is from dairy products that have been introduced and developed by the company. Another 10% of the market share is contributed by baby food products that are one of the most accepted products that the company has designed. Nearly all homes that have infants use Nestle products because of their high-end nutritional value. The remaining 10% comes from confectionery products such as sweets, chocolates, and candies. The other 30% of the market share is contributed by readily prepared foods and cooked dishes. Finally, pet food provides a market share of about 10%. Various studies have revealed that the geographic breakdown of market sales is as follows; 44% of the market of Nestle S.A products is from the American region including 30% from Europe and Asia, Africa, and Oceania combined. In fact, according to a worldwide survey that was conducted on online consumers back in the year 2006 by the Institute of Reputation, Nestle scores an impressive 75.2 marks out of a possible 100 scale. (Fäskiöld, 2001, p.72). SWOT Table for Nestle S.A Strengths The capability of R & D Brand and product portfolio Reputation levels Geographic presence and channels of distribution Acquisitions and mergers Weaknesses Not able to produce competitive foods The Strategy of CSR is weak Opportunities The demand for quality foods is ever increasing Forming partnerships and mergers with Start-up businesses Creating new ventures Threats Counterfeit food products Healthy eating trend Contamination of foods The prices of foods rising Discussion The company has invested more the 2 billion US dollars in the development and design of R & D programs from the year 2010. Furthermore, the design of products gives them a competitive edge over other companies and is a key strength in the company’s SWOT analysis. The business venture also offers a wide range of food products that are acceptable to the market. The new products have garnered more than 1 billion US dollars in every year’s revenues. The geographic presence of more than 100 nations all over the world is impressive. By getting into partnerships and mergers, the company has maintained a constant growth in the modern day history. The main weaknesses of Nestle S.A are the inability to supply consistent quality in their products. Some foods have overstayed in stored and become contaminated. It seems there is a lag in control of quality in the company. Nevertheless, the company has implemented a weak CSR company that does not reach out to the community in various CSR programs. The opportunities are vast, and they range from the ever rising demand for food products such as baby foods. In reaction to the worrying trend, the organization designed new and innovative foods to help in the direction. By acquiring new startup businesses that are cheap, Nestle has revolutionized the way in which the target products are made. The creation of new ventures also helps to provide successful mergers with companies such as Colgate and Coca-Cola Company. (Garrod, 1992, p.127). The imminent threats include the rates of contamination of foods and this is checked by control mechanisms in the production. Counterfeit goods are not original because they compete unfairly in the store shelves. The rise in food prices in recent days is also a threat to the company’s growth potential. In modern day, there have been advertisements that target consumers to change their mode of eating in a more healthy fashion that cut out the products that Nestle S.A designs such as sweets and chocolates. Recommendations Target Market In this report, we have seen that the best target market is the high population of developing countries in Asia and Africa. Baby food markets are doing well in areas that have a large number of newborns. (William, 2006, p. 37). In this regard, Nestle S.A Company is looking into diversifying into baby products such as oils and diapers. New Product Description The new product designed is the Nestle Diaper that will be well received by the market. In today’s modern families hygiene is important in the growth and development of infants. The Nestle Diaper is a long lasting hygienic pad that can last up to 12hrs, keeping the baby comfortable and happy all through the day. The innovative product is cheap and accessible in any store in the world. Customer value Proposition Given the fact that Nestle has had prior experience in baby products, a new and innovative design of baby diapers that is long lasting can be designed to offer quality baby products to many modern families. These families hail from all geographic locations including America, Africa, Asia, and Europe. Justification The target market of the product is ready as many families know the need of having a hygienic environment for the infant. The Nestle merger and acquisition of beauty and cosmetic companies will help in realizing the growth of the product. (Karlsen, 1993, p.272)The innovative product can be arranged in the lines of business of the Garnier, Lancôme, and Maybelline empires. The companies were recently acquired by Nestle S.A, and they are in correspondence with the S-O definition in the SWOT analysis for the company References Oskew, T. (2012). Nestle Company Growth and Opportunities: The Journey of Nestle S.A. Acton: Australian National University. Maryon, G. (2001). The History of Nestle Company, A Strategic review of Nestle since 1966 (Rendill Review). Task set, 9. Telcalfe, G. (1992). The Partnerships of Nestle and Mergers That Grew. Journal of Business Reviews Issues, 0192513X13484274. William, J. (2006). Nestle, Coca-Cola & Colgate. The Findings from a Study in Europe. Economics, 24(4), 283-284. Fäskiöld, G. (2001). The Economic Perspective of the Innovation in Confectionery Companies. European Journal of Business and Economics, 35(5), 75-78. Grey, S. (2004). The Origin and Makeup of the World’s Most Successful Business Ventures World: Success in Business. Business Management & Administration in the World Today, 12(1), 12-32. Garrod, E. (1992). The Approach to SWOT Analysis in New and Emerging Markets: The Mode of Business and Economic Growth in Nations. Review Digest, 23, 13-33. Karlsen U. (1993) the Nestle Company Marketing Structure: The Impact of Economic Realization and Identity. Business Economics and Administration 22: 3-23. Read More