Strategic Marketing Management of Nestle Analysis

The purpose of this assignment is to evaluate the impact of organizational strategy in developing a marketing plan and to evaluate the component parts of a marketing plan. For this purpose a marketing plan for Nestle pure life (Bottled water by Nestle in Pakistan) is developed for understanding different components of marketing plan.

Impact of Organizational Strategy on Market Plan

It is very critical in today’s highly competitive market to develop and adapt an approach that supports the organization’s resources and nature of business. The strategy should be developed by keeping in mind all the available resources and should be so powerful that the product or service can outsell the competition. If the available resources are not considered while designing the strategies then it is quite possible that those resources will not be able to convert the inflow of customers in to profitable long term relationship. So it is very important to have a strategy that supports the resources and the expertise to implement it. Different organizations have different types of strategies, however most common are five significant strategies that affect the marketing plan of the organizations.

Market Leadership Strategy

If an organization has to maintain the position of market leadership then the marketing plan will be focused towards two main factors. First is to increase the market share and second is to keep intact the existing customers by providing them value to their money they are spending to buy the company’s products of services (Kathryn, 2010). Market share can be increased by finding the new markets in other demographics or expanding in to the new locations. Another way to increase the market share is to attach the competitor’s market share through variety of strategies. Offering several value added services helps to keep the customers intact with the organization. In this case the marketing plan will focus towards the augmented features of the product or service.

Market Challenger Strategy

If the organization’s strategy is to be a market challenger then the marketing plan will be focused towards the small unmet needs of the customers. The marketing plan will be very aggressive and the focus will be to increase the market share in small chunks and to target the customers by promoting those features which are fulfilling their unmet needs (Kathryn, 2010).

Market Follower Strategy

If an organization is following market follower strategy then the marketing plan will not be very aggressive (Dibb, 2001). The markets are already identified and researched by the competitors and the market plan will target those weak points which are left by the competitors and the better solutions will be provided to the customers.

Market Niche Strategy

Organizations can also divide the market in to small segments/chunks and prepare the marketing plan for each segment. This allows the organization to influence the customers more deeply with the marketing campaign as the focus is on a particular segment. For instance the marketing plan of a cosmetic can target the women between the age limit of 20-25 years.

Alliance Strategy

The organization can also form strategic alliances to increase the impact of the marketing plan. The strategic alliances enables the organization to offer new products or value added services to the customers and the marketing plan focuses on promoting the benefits of the alliance of the organization to the customers (Kotler, 2003).

Component Parts of a Marketing Plan

Marketing plan refers to that document which outlines the actions and details that are required to be undertaken in order to achieve one or more marketing objectives. Marketing plan can either be for a brand, or for a product or service or even for a whole product line. Marketing plans can cover the marketing objectives of up to five years and the marketing objectives are aligned with the organizational objectives. Following are the main components of a marketing plan.

Situation Analysis

Situation analysis is very important and initial part for developing a marketing plan. It explains and clarifies the current position of the organization in the market. This analysis should be done fairly by the organization as exaggerating the current market position in front of the management will ultimately give a failure at the end of marketing campaign. Situation Analysis involves external, internal and customer’s analysis (Ward, 2010).

SWOT Analysis

SWOT analysis is another major part of the marketing plan as it identifies the strengths and weaknesses of the organization and the opportunities and threats for the organization. It also helps to determine the current state of the organization, but it also adds the opportunities and threats to the organization which can be focused in the marketing plan (Dibb, 2001).

Marketing Goals and Objectives

After SWOT analysis the organization is in much better position to set the marketing objectives and goals. Goals are the overall accomplishment that is likely to be achieved by the organization and the objectives are the benchmarks which enables the organization to meet those goals (Ward, 2010). It is very important the goals and objectives should be realistic and should reflect the mission of the company.

Marketing Strategies

In marketing strategy the marketing mix and the target market is discussed. Product features, placement, pricing and distribution are the four main aspects of any product or service and the marketing plan contains the blend of these strategies and marketing strategy is designed keeping in mind the target audience (Kotler, 2003).

Implementation

Implementation planning is another important part of the marketing plan. At first it is described that what is required to be done internally in order to get success such as employee training, employee’s empowerment etc. for the success of market plan. Secondly, a month-by-month marketing calendar is prepared that guides the marketing activities.

Evaluation and Control

Evaluating the marketing plan is very important, as this helps to identify that what is to be done in future and what not. If the marketing plan is of 3 to 5 years then periodic evaluation is necessary as changing market conditions can be costly while sticking with the old techniques. Evaluation also helps to identify whether the plan is implemented properly.

Threat to Nestle Pure Life

Different threats and weaknesses for Nestle pure life are identified in the marketing plan, however, the most critical threat and weakness for the product is the current economic and political condition in Pakistan. This threat is for every business operating in Pakistan, however, Nestle pure life has direct affect to the economic situation of Pakistan. As the target market of Nestle pure life is upper and middle class and due to increasing ratio of unemployment and poverty the people are moving towards the usage of simple or boiled water as spending Rs. 35 for water is becoming unaffordable for majority of middle class people. Moreover, there are several other local brands which are not up to the mark, but they sell the brand to the local market by assuring them about the quality and purity which decreases the demand of high quality product like Nestle pure life. This causes a serious threat to the brand in near future (Rosemann, 2005).

Nestle Pakistan Limited

Marketing Plan – Nestle Pure Life

Executive Summary

Its manufacturing facilities are located in Sheikhupura, Kabirwala, Islamabad and Karachi, Pakistan.

Nestle provides mineral water to the customers with an objective to provide value to the customers. The company’s main target market is those people who believe that tap water is not hygienic. The company enjoys the highest market share in the mineral water industry of Pakistan however Pepsi’s Aquafina has been giving tough competition to nestle pure life. 1 year Marketing plan for year 2011 is developed distributing each activity in different months.

Situation Analysis

Company Profile – Nestle Pakistan Limited is a subsidiary of Nestle SA, a Switzerland based company, aimed to build a based on sound human values and principles. In 1992, Nestlé was the first company to dare to launch a mineral water, in five different countries at once. Nestle Pakistan is engaged in the processing, manufacturing and sales of products such as dairy, culinary, confectionary and beverages. The major company’s products include NIDO milk, NESVITA milk, MILKPACK milk and ice-cream, Fruit yogurt; Everyday creamed tea, Cerelac and Nestle mineral Water (Nestle pure life).

Mission Statement – Nestlé believe that research can help to make better food so that people live a better life.

Objectives – This marketing plan considers the following objectives of organization for its product Nestle pure life:

To maintain the position as Market Leader.

Increase the Market share.

Exceed customers’ expectations both in terms of product quality and service.

Create awareness of benefit of PET bottles and approach in rural areas.

SWOT Analysis – SWOT analysis helps to understand the ability of the organization internally and externally (Lyndsay, 2010). Blow is the SWOT analysis of the company:

Strengths

Strong distribution channel

Skilled Labour

Educated Staff

Large number of Offerings

Strong Brand Name

Strong Background of the company

Easy to approach

Weaknesses

Small Target market

Lack of awareness among the target market

Dependency of other government and sponsors for the arrangement of events

Opportunity

Favorable weather conditions (Summer most of the time)

People love to enjoy eating ice cream

Few and Weak competitors

Threats

Major players may enter in the market

Legal and ethical issues

Local mineral water manufacturers

Economic slowdown and bad political conditions

Competitors Analysis

Nestle Pure Life introduce the bottled water culture. No doubt Nestle pure life is currently a dominant leader in Pakistan market in Mineral water Industry. Nestle Pure Life is currently dominating more than 80% of bottled water market share (Rosemann, 2005), when Nestle Pure Life start its bottled water business in Pakistan way back in 1998 on that particular time AVA was the major competitor in the market, but after a time period of one year AVA was acquired by the Nestle Pure Life and now currently AVA is in the business of bulk water.

There are different brands of bottled mineral water but the most famous are:

Nestle Pure Life

Aquafina

Sufi

Kinley

For manufacturing and distributing mineral water in Pakistan the company has to obtain licenses and have to follow the rules and regulations of Pakistan Standard Quality Control Authority (PSQCA). Particular in Lahore, gourmet is giving a very tough competition to Nestle pure life as their price is less than Nestle pure life. Moreover, gourmet is approaching the other cities and rural areas of the country and possibly will emerge as a strong competitor of Nestle pure life in near future. There are also other competitors found within a local market which include Sparklet, Acqacare, Pure, Aafi, Oura, Aabshar and many other local brands, but their market share is very low as compare to the Nestle Pure Life.

Macro Environmental Analysis

The Macro-Environment forces, which include political, Social-Cultural and Economic forces, affect the overall performance of the brand (Kotler, 2003). Political instability always matter in a market situation, there should be an investment security. PSQCA has approved Nestle Pure Life; Nestle Pure Life is also promoting the culture of humanity and higher labor as many people from Pakistan have got job in the different parts of the world in Nestle Food.

No doubt Nestle Pure Life is a market leader, but some of the government policies affecting the marketing strategy of Nestle Pure Life as government closed many several companies by saying that they are producing un approved water for the people of Pakistan in the name of mineral water, but such kind of situation doesn’t affect any marketing strategy of Nestle Pure Life because it is producing a water according to the standard which is approved by World Health Organization WHO.

As far as Social and Cultural forces are concerned now the people are realizing the need of bottled water especially in cities, as they are more health conscious as compare to the people of rural areas. But now the trend is changing gradually the people live in countryside they also realizing the need of Safe and Clean water, they know that health is wealth, as Nestle is a dominant factor so they are using Nestle Pure Life as their first choice.

Target Market

On the consumer side the Target Market is:

People who believe that tap water are not hygienic

People traveling by road on highways, railways and by air

Tourists or foreigners

Middle, Upper Middle and Elite class

Students of school, college or universities

On the Business side target market is

High ways, Motorways, railway Stations Airports bus stops hotels etc.

Educational Institutes of the city, where students might interact

Shopping centers and Market places

Departmental stores and bakeries, General stores and others etc.

Restaurants and hotels

Marketing Mix

Product – Nestle Pure Life offers not only pure water but also pure Life because water is life and also purity is life Nestle has always been the symbol of purity. Nestle pure water provides a balanced mineral formula (on Average 150-170 mg per liter)

Price – Another strategy for success may be applied by lowering the price of bottles including bulk water bottles to attract more and more customers who may switch to its direct or indirect substitutes

0.8 liter Rupees 18

1.5 liter Rupees 35

Placement – Distribution should be done not only in urban areas but also the rural areas of the country. Distribution in small cities of the country is also one of the distribution strategies of Nestle Pure Life.

Promotion – Nestle Pure Life is using integrated marketing communication. The Company has adapted both Push and Pull strategies and using mass marketing by Advertising i.e. using different types of Medias like TV, radio, magazines, Sales Promotion i.e. sponsoring different events, using billboards and involves in different social activities.

Implementation

This action plan will carry out the marketing strategy and achieve the main Objectives of Nestle Pure Life through a variety of Scheduled programs. Following activities will be held during the year 2011 to promote the Nestle Pure Life.

Activities

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Invoices Income

Recovery Incomes

Trade sale Promotion

Regional Offices

Lucky draws

Free Offers

Research

Advertising

Data Analysis

Educate Dealers

Concept for bottled water

Implementation

Press and pour Offer

New Stores

Commitment Award

Specific promo

Contingency Planning

There is variety of risks involved in the marketing plan. Following are some of the risks and their mitigation strategies for the marketing plan of Nestle pure water.

Wrong Market Information – In Pakistani markets the availability of complete and authentic data is very difficult. There are very few government sources which provide the market information, but those also cannot be relied upon as the data collection is not known. In case the data or information taken from the governmental sources is found to be incorrect then the company will rely upon the data collected from surveys and past trends.

Outsourcing – If the internal resources are not able to meet the growing demand of the customers then the production will be outsourced, but the quality will not be sacrificed in any case.

Mismatch of Projections – If there is a mismatch of the financial projection then the efforts will be re-doubled and the focus will be on direct marketing. However, the other marketing expenses will not be cut down as it is very necessary to keep conveying the message across the target audience.

Nestlé’s Organizational Objectives and Marketing Plan

The organizational objectives of Nestle Pakistan are aligned with the marketing plan. However the change in the market conditions result in the change in organizational objectives which also reflects the marketing plan. The marketing plan discussed above tries to meet the following organization objectives.

Market Leadership

Nestle pure life is holding a market leader’s position at the moment in Pakistani bottled water market. The marketing plan’s objective is also to maintain this position and to increase the market share by targeting the rural areas along with the urban areas. For this the distribution network is planned to be stronger in small cities and villages.

Safety

The objective of the organization is to provide the customers with safe drinking water. Nestle brand provides the customers reassurance which they demand for fulfilling their most basic and important need. Marketing plan of Nestle pure life also focuses on educating the dealers and consumers directly about the benefits of mineral water.

Healthy Product

The formula developed for Nestle pure life contains minerals such as calcium, which is essential for bone development and promotion of this benefit through media and direct marketing team reflects in the marketing plan and fulfills this organizational objective.

Affordable Mineral Water

Another objective of the company is to provide the mineral water to the target customer at affordable prices. The prices of all the formats of the mineral water bottles are very affordable for the target market and that is the reason Nestle pure life’s market share is highest in Pakistan.

Convenient availability

Nestlé’s objective is to make the mineral water available to the consumers almost everywhere. Marketing Plan of Nestle pure life target the customers at different location like railway station, schools, colleges, airports etc. which fulfills the product availability objective of the organization.

Publicity and Promotion Strategy for Nestle Pure Life

Nestle is using different strategies for the promotion and publicity for Nestle Pure life. Below is the brief description of all the strategies used by Nestle Pure Life.

Push Strategy

The company is using push strategy by using the sales force and promoting the product to the wholesalers and dealers. The Nestle cooler is one of the example in this regard as the dealers sells and provide the coolers with Nestle pure life brand and that promotes the product. This type of strategy is mostly used for the corporate clients like different companies, banks etc. in which the Nestle Pure Life branded coolers are placed and the bottles are refilled by the dealers/company representatives periodically.

Pull Strategy

The company is also using pull strategy by directly communicating to the consumers through high advertisement through different channels. This results in the walk-in of the customers in the outlets and other distribution channels asking for the product.

Above the Line (ATL) – Company advertise above the line by using different TV channels, radio, newspapers, billboards etc.

Below the Line (BTL) – Company advertise below the line as well by distributing the fliers, through internet (Facebook), placing outlets at roadsides etc.

Mass Marketing

The company is also using Mass marketing where the whole market is communicated the same product. The company through different media channels communicates to all the market of Pakistan by ignoring the segments and target market as being human beings all the people are the potential customers of the product.

Integrated Marketing Communication

The company also assures that all the features and benefits of the product are communicated to the customers. Through advertisement campaigns the company conveys a message of purity and safety to the customers and also explains the ingredients of the product which are beneficial for the human body.