The Swiss Food Giant Nestle Marketing Essay
The marketing communication these days have changed like never before with more emphasis on the non conventional media rather than just relying on the mass media. Companies are no longer looking at the mass media as their saviour to reach out to the masses and convince them; on the contrary many of them find these mass media advertising as intrusive and the messages carried through them does not create the impact as much as they want it to be. Integrated marketing communication is the order of the day with multiple mediums used by the companies ensuring that they reach out to the customers in a more effective and efficient manner. By having the messages communicated through various channels they make sure that these companies are able to create a complete brand experience. IMC tries to integrate various marketing communication channels such as PR, online and social media, mass media advertising etc into one singular entity conveying a compelling simple theme that can get the customers for the company. The main factor that these companies have to make sure is that they convey a unified message in all the mediums. There are several examples where companies in an attempt to woo the customers tried to pass on conflicting messages thus driving the customers away from them. Synergy between various mediums and the compatibility of the messages in all the mediums thus plays a very important role in this case (Fall C, 2002).
NESTLE In UK
In a recent media statement, the Swiss food giant Nestle said that they are well placed to cope up with the changing demographics and cost pressures and they are all set to rule the UK market. This statement came in view of the rise in the input prices by almost 10 % which has made other major corporations found wanting. Nestle still believes that they can be a market leader in confectionaries after the huge success of their brand Kit Kat which was well established. But the company has been under severe pressure to streamline its processes due to the fact that there has been an increase in the price of raw materials and that too the customer base in UK is more or less saturating leaving no room for further expansion. Major supplier of cocoa, Ivory Coast going through a rough political phase has been the reason for worry in UK confectionary industry. This leads to changes in prices even though Nestle claims that the pricing won't vary much and would be decided upon based on various
segments that they are catering to (Ellwood, I. 2002). All these factors lead to the importance of having a loyal customer base and increased frequency of use by the existing customer base. In order to reach to your customer and get a share of their mind, especially in the FMCG segment it is essential that you have to reinforce the message again and again so as to get a top of the mind recall. In this age when one is bombarded with thousands of advertisements every day, unless and until you try out something different the customers are not really going to pay attention to you. One way to overcome this problem is using an integrated marketing communication approach, wherein the messages are passed on to the customers by means of various channels and thus reinforcing the message. By using various media options that are seen as non intrusive you are actually talking to the customers in a more conducive environment and hence they are more likely to listen to you (Davies, M. 1998). When you run a campaign it is essential to monitor the campaign and then guide it at each and every stage so that the money that is spent on advertising is not wasted. This is also possible by the use of various media options like Social and interactive media where the customers essentially form a part of the campaign thus giving them a feeling that they have an involvement in the whole process and thus they feel like owning the product.
Integrated Marketing Campaign by NESTLE
Nestle has been using Integrated marketing campaigns to good effect in almost all the countries they are into. They have been using non conventional media options to good effect so as to maintain the brand image that they have developed at the same time ensure a top of the mind recall in the minds of the customers. They have been into event marketing which is a very effective mode of communicating with your customers, as they are in a framework of mind to listen to you.
For example their recent family days campaign as a part of the Minor league basketball sponsorship. They are using all the available media options for this purpose and have made an interactive website which has already attracted many hits in the initial days of the campaign itself. Thus by making the product a part of the events the company is trying to make it an essential part in the lives of those who love baseball and the customers start associating themselves with the brand more. This gives them immense opportunities to piggy-back on those events and thus creates a hype and excitement around the brand (Brassington, F and Pettitt, S, 2000). They can even analyse the current brand health and these events gives you the best platform to relaunch or reinforce the position in the market. By linking a campaign to loyalty and frequency programs the company can actually get more of repeat purchases thus ensuring that they are getting most out of a profitable customer by maintaining a long term relationship with them.
Let us now look at various media options that are available, the pros and cons of them with respect to Nestle and then analyse whether they should go ahead with such an option or not.
Nestle being in FMCG category it is essential for them to advertise and remain in the minds of the customers and hence they have to use mass media. This is the cheapest option in terms of the cost per customer is concerned but the main worrying factor is that most of the developed nations have already admitted the famous death of mass media marketing as there are so many messages bombarded to the customers and they started ignoring the messages or is selectively paying attention to these channels. Another main factor that repels customer attention towards these channels are that the messages which are communicated are not distinctive or refreshing. For example when two companies Nestle and Cadbury comes up with a TV commercial about similar products, the customers don't find any major difference between the two and hence they tend to ignore both and the purchase is often impulsive. By "Have a break Have a Kit Kat" campaign the company tried to project the chocolate as a thing that can be used whenever there is a break. The marketing teams often fall into this trap, they cannot survive the competition without getting a share of mind and voice which is possible only with mass media channels, but they themselves know that the message that they communicate is not targeted at the population that they are selling to or the majority does not care to buy the product. But in an FMCG industry in order to ensure parity with others in the market, companies are forced to make media expenditure on the product.
The company thus have to ensure that they get the right TV spots whenever they are advertising rather than just extravagantly spending on Television advertising. In case of print media the life of ad is even longer and one can actually target the customers in a more effective manner. They can communicate their brand positioning in a more effective manner and the shelf value of such ads are much more than that of a radio or a TV commercial. Nestle has been not utilising this medium effectively, rather than just concentrating heavily on the TV commercials (Aaker, D and Joachimsthaler, E 2000). They should come out with effective Print ads in various national dailies and magazines that are meant for fun since their target group essentially reads these magazines and dailies. By means of print media, company can give more information to the customers and they can even invite them to be a part of various contests that they are planning in any campaign.
With widespread adoption of mobile phones, this is one of the important areas which can be effectively used by the Nestle. Most of the customers find mobile marketing as non intrusive and hence they welcome it if done in moderation. Again being an FMCG product Nestle have to combine this mobile marketing with any other sort of marketing such as event related or contests. They can give personalised information to individual customers on various product information and event sponsorships like that of Minor League Football Sponsorship. This medium is very effective because of the fact that the company can target its customers in a more effective manner. Unlike mass media which appeals to all sections of the population, in this case only the profitable customers can be targeted by effective use of CRM and database solutions. The messages are passed on to only those who have a good customer life time value according to the company statistics. This medium can also be used to lure those customers who are likely to switch by offering them better deals and better variety of options. Given the tie up of Nestle with major retail stores in UK, it can be stated that they have good information about its customers preferences and they can utilise them to attract the customers into their fold.
Marketers have realised the power of online media and almost every other company is trying hard to use the online media space to communicate their message to the customers. The customers on the other hand prefer this media much more than that of any other media channel because of the fact that this media channel gives them the option of a two way dialogue. Nestle can come up with initiatives to make customers a part of their marketing campaigns by means of suggestions and contests. Online media can be a double edged sword; it can create negative word of mouth which can affect the brand equity. No one realises it better than Nestle as they have already faced the brunt of Milk product campaign which gave them bad word of mouth and the news got spread all across the world in no time because of online media. There were several Boycott Nestle campaigns run across the world. So it has to be handled effectively. Online media also gives in-depth product information that the customers need. One of the main challenges that Nestle faces while addressing such an issue is that they have attract the customers to their website, which is difficult in case of an FMCG product. This can be done by having interactive sections, games and contests on the website which will draw the public towards these websites.
The company can also go in for advertorials and expert comments which are taken with more credibility by the public. They develop a sense of trust in the brand when the products are endorsed by the domain experts and celebrities. Social networking is one major tool which is being increasingly used by many companies. People who are their target segment are internet savvy and spend most of their time in social networking sites like facebook. The company can promote their products through these sites and get a customer feedback directly from them (Assael, H. 1992). By placing the product promotions within various games and other applications that can help them in making the brand memorable in the minds of the people. One of the important factors why marketers prefer this media option is that they get a direct feedback over a specific marketing campaign that they run and hence they are able to mould it accordingly based on the needs and requirements of the company. Moreover internet offers them immense opportunities to promote the product at a very less cost and thus direct the expenses in a more effective manner.
Out of the Home Advertising
Out of the home advertising has moved on from the ages of static bill boards which occupied the advertising history for so long. Emergence of 3D sign-boards and likes has made the arena more compelling and attractive for the customer to take a note while he is on transit. There are several examples where companies engage in direct battles with the competitors through out of the home media (Baker, M. 2000). The industry is focusing more on OOH as it provides a cheaper substitute to the mass media at the same time helps them in making aware about the product. Nestle even though have been involved in a certain degree of Out of the home mode of advertising, they haven't made any real breakthrough as afar as out of the home media is concerned (Booms, B.H. and Bitner, M.J. 1981). They heavily rely on 2D ordinary bill boards still. They have to move out of the conventional methods and try out something new like a 3D billboard. If the company has to target the rural segment then they have to effectively use it. Given the fact that the urban customer base are already on a saturation , Nestle has to concentrate more on its rural population and this can be done effectively with the help of Out of the home media channels.
Direct and E-mail Marketing
FMCG companies use less of direct and email marketing, as they have very little information as compared to that of many high involvement products. The company have not been using this media option that much. Nestle can still use direct mailers and e mails to its profitable customers. But still they won't have much of an option when they consider such an option. This can be used while they run any particular contests or to attract the customers to their websites. Nestle can use this mode of option to direct the traffic to the website and then promote the products through the website. Marketers can measure the response rate of the direct mailer campaigns and hence can monitor the same very easily. Many companies ignore this route but Nestle can make use of this mode so that it can complement other methods of marketing (David Sebastan, 1959).
PROS & CONS of IMC: Why it should be Used?
One of the main advantages of using an IMC approach in case of an FMCG is that it helps in effective cross functional merging of various media channels rather than just depending on the mass media to deliver. With an integrated marketing approach communication with the customers improves and it ensures that customers voice is also heard and at the same time gives them a sense of involvement in the whole process. By profiling the customers based on demographics and psychographics, Nestle can actually target only those who are actually a part of the target group rather than just communicating with anyone and everyone who is not a part of companies target group (John Gullivan, 1998). By applying strategic segmentation of customers, the company would be clear with respect to the communication objectives that they are upto and they help them in simplifying the whole process as they get an idea about how much to spend on each channel based on the effectiveness of the medium. Integrated marketing communications approach also makes sure that many offline and online mediums which have high potential but rarely used are also used in the process to ensure that the customers are attacked from all the sides and they essentially develop a sort of bonding with the customers (Hoyer, W.D. and MacInnis, D.J. 2001). With the advent of online and internet marketing numerous ways to woo the customers such as Search engine optimisation e marketing campaigns pay per click, blogs, RSS podcasts etc are used which have proved to be non intrusive and very effective in reaching the customers. One of the main advantages of such a campaign is that Nestle would be able to customise the marketing communications
based on the time budget and resources of the customers. This helps in streamlining the available resources with the company in a efficient manner. Nestle being a large corporation has the financial muscle power to utilise various channels to reach out to the customer and thus create a visible difference in their current campaign.
The main disadvantages of such a campaign are that there need to be simple message that needs to be communicated through various mediums. If the messages in various mediums are contrasting then it is never going to work in favour of the company. It also depends excessively on the database that the company have and the profiling that they do with the data. If not done in a proper manner then all the money that one spends on it is going to be wasted (Glynn Mangold, David J. Faulds, 1992).
The benefits of such campaigns are that it helps the company is maximising the use of money that they spend on marketing communications and it has been seen in many examples that the net results out of such campaigns per dollar is much more than that of normal mass media communications. It helps in interacting with the customers at an individual basis which is more effective and when you have a simple compelling story to tell through various media channels it is going to be a success for sure.
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