Market attractiveness analysis in India & AustraliaMarket/country attractivenessIndiaAustraliaMarket size India''''s retail market was projected to grow from 883 billion dollars in 2020 to
FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS ��� MIDTERM ASSIGNMENT Module: International Marketing ANALYSIS OF NESTLÉ INTERNATIONAL MARKETING STRATEGY Lecturer: Nguyễn Thị Thu Thảo Class: K60CLC2 Group: 12 Lê Thị Phương Thanh 2113253013 Huỳnh Duy Khanh 2114254001 Cao Thanh Nhã 2112253618 Ho Chi Minh City, 2022 Executive summaries Nestle was founded in 1866 by Henri Nestle It started off with one man’s initiative to produce infant formula (for infants who are intolerant to their mothers’ milk) and grew into a multi-national cooperation worldwide The successful brand name attracted a lot of attention and acceptance from people all around the world It also considers the local culture before adapting its distribution and marketing plans to fit the demands of regional markets Decentralization is the plan's main tactic so that it can best respond to local conditions Because of its strength and adaptability, it may make judgments based on the demands of regional marketing In any nation where it conducts business, Nestle aspires to be a "insider," not a "outsider." The purpose of this report is to analyze the globalization process as well as the global marketing strategies of Nestle in two different markets of Australia and India where they are operating in The international market selection (IMS) process will be used to the preliminary screening and identify two highly potential market of India and Australia MACS Matrix with different selection criteria will help to compare the difference between two countries above to reveal the competitiveness among these two markets In report, we will examine the method of entry of Nestle when selecting a market entry strategy in an emerging market and evaluate its way to succeed in the world’s largest growing market, India In the last chapter, the key to success in these international markets of Nestlé will be revealed by looking at their successful marketing strategies and tactics through STP model and Marketing mix 4P followers and inspiring trust to influence employees Table of contents I INTRODUCTION Background of Nestlé Global market trend of FMCG industry II MODELS OF SELECT MARKET: PRELIMINARY SCREENING Market attractiveness analysis in India & Australia Competitive strengths analysis in India & Australia 19 Market attractiveness/Competitive strengths (MACS) matrix 22 III MARKET ENTRY MODES OF NESTLÉ IN INDIA&AUSTRALIA 33 Modes of entry of Nestlé in India Modes of entry of Nestlé in Australia Evaluation IV MARKETING STRATEGIES OF MILO IN INDIA&AUSTRALIA .29 STP marketing model of Milo in India&Australia Milo marketing mix-(4Ps) in India&Australia V REFERENCE I INTRODUCTION Background Henri Nestle founded the international corporation Nestle in 1867, and it is headquartered in Vevey, Switzerland The Nestle company launched its global operations by opening its first overseas offices in London in 1868 The Nestle company has always looked to other nations for development prospects Anglo-Swiss Milk Corporation and Nestle combined in 1905 to expand the company's product offering By the late 1990s, the Nestle Company had more than 500 factories spread throughout numerous nations, effectively doing its business in every country in the world The business has expanded to become one of the greatest food producers in the world, with 500 plants and a recent presence in 86 countries Nestle has a dedicated portfolio of numerous goods produced for both domestic and foreign markets Among the company's offerings are milk, confections, coffee, chocolate drinks, Nescafe, and Lactogen for infants Using effectively planned local and worldwide marketing tactics, Nestle makes its presence known in various markets Global market trend of FMCG industry FMCG (Fast moving consumer goods ) also known as consumer packaged goods they are types of products that can be bought at low costs By 2025, the worldwide FMCG market is anticipated to reach $15,361.8 billion, growing at a 5.4% CAGR Due to the introduction of experience retailing and customer demand to complement their physical shopping experience with a social or leisure activity, the FMCG market has grown steadily over the past ten years The product type, distribution method, and geographic regions are used to segment the worldwide FMCG market The growth of the FMCG is facilitated by the rise in the affluent population and growing use of the internet and social media, as well as an increase in the consumption of processed and packaged foods II MODELS OF SELECT MARKET: PRELIMINARY SCREENING Market attractiveness analysis in India & Australia Market/country India Australia attractiveness Market size India's retail market was projected The market size of Australia, to grow from 883 billion dollars in measured by revenue, of the 2020 to 1.7 trillion dollars in 2026 Consumer Goods Retailing industry is $205bn in 2020 (3) Economic - GDP of India = $3.17 trillion conditions (Worldbank, 2021) - GDP of Australia = $1.54 - GDP growth in India is 8.9% trillion (Worldbank, 2021) (annual) - GDP growth in Australia is 1.5% - Unemployment, total (% of total (annual) labor force) (modeled ILO estimate) is 6.0% (4) - Unemployment, total (% of total labor force) (modeled ILO - Inflation, consumer prices (annual estimate) is 5.1% %) is 5.1% - Inflation, consumer prices (annual %) is 2.9% Political stability India is a republic country and the Australia is a type of democratic Document continues below Discover more from: International Marketing Trường Đại học… 245 documents Go to course Snacks in 74 Vietnam(Full Market… International Marketing 100% (4) BÀI TIỂU LUẬN GIỮA 58 KỲ International Marketing 100% (2) Summary about 75 Global Marketing ( A… International Marketing 100% (2) VGCC Vin Fast Goes Global - Official Cas… International Marketing 100% (2) Investigative 13 Marketing Report OF… International Marketing 100% (1) International Marketing - EXAM… world’s largest democracy 38 country and it is stable politically About the political stability index( About the Political stability index -2.5 weak, 2.5 strong) From 1996 (-2.5 weak; 2.5 strong) From 1996 to 2021 The average value for to 2021 The average value for India during that period was -1.08 Australia during that period was points, the latest value from 2021 is 0.99,The latest value from 2021 is -0.62 points 0.85 points International Marketing 100% (1) - Australia's population was Demographics 25,890,773 people (Worldbank, - The current population of India is 2022) 1,412,347,731 people (Worldbank, 2022) Infrastructure - With a gross yearly income - Australian salaries range from ranging from 7,700 to 15,400 23,000 AUD (the minimum salary) dollars to 405,000 AUD per year - Quality of trade and transport- - Quality of trade and transport- related infrastructure (1=low to related infrastructure (1=low to 5=high) (Workbank, 2018) 5=high) (Workbank, 2018) Logistics performance index in Logistics performance index in India is 2.91 Australia is 3.97 - One of the biggest issues facing - As a developed nation, Australia India's FMCG industry has been the has incredibly advanced lack of transportation and storage infrastructure facilities Consumer Consumer spending in India was spending power $1,882.35 billion in 2021, a 16.11% increased by 13.34% from 2020 to rise from 2020 Australia's consumer spending $796.77B in 2021 2.Competitive strengths analysis in India&Australia Competitive strengths ( Compared to UNILEVER in both market ) Criteria India Australia Obtainable With a majority of its With a market share of roughly 16%, market share product categories having Nestle Australia is Australia's second- more than 50% of the largest confectionery company (after market share in India Cadbury) Profit before tax of Nestle Revenue of Nestlé Austrlia is India is 2,883.77 crore 2,452,837 ( million CHF)=2,579,324 (2021) =16,657,211 million dollars Financial result (million $) Market -After more than a century presence of being associated with the divisions: Home & Personal Care, - The company is divided into three nation, NESTLÉ India now Foods (but not Ice Cream), and Ice has production sites and Cream North Rocks, Minto Tatura, branch offices spread all and Petone are the locations of the over the country company's factories The company is headquartered in Sydney, Australia Marketing In 2015, Nestle India invested about 450 billion Australia: In 2018, it was among the rupees in advertising top 15 media accounts in Australia with an annual media spend of almost $50 million Product India: Nestle India provides communication some customized products introduction in 1934, most of the to meet the demand of the product brands in Australia have their Indian market as well as change the context of promotion into family and nutrition-centric India&Australia- Competitive strengths Matrix Australia: Apart from Milo promotion focus on adolescents and working people The market attractiveness/competitive strength (MACS) matrix III MARKET ENTRY MODES OF NESTLÉ IN INDIA&AUSTRALIA Modes of entry of Nestlé in India Exporting: With a history stretching back to 1912, Nestle SA is regarded as one of the first food and beverage corporations to establish contact with India Through sales representatives, condensed milk products were distributed in Chennai and Kolkata Hierarchical mode- Wholly owned subsidiaries (greenfield investment): In response to a request from the Indian government to help Punjab's milk industry grow, the corporation increased its presence shortly after India gained its independence in 1947 In this time, local production and community development were encouraged by the Indian government's economic policies Through its fully owned subsidiary Nestle Holdings Ltd (NHL), Nestle Holdings S.A promoted the trading firm in New Delhi in 1959 (Company Analysis On Nestle-India Limited, 2010) Modes of entry of Nestle in Australia Our group found that Nestle India and Nestle Australia shared the same entry mode with two stages: direct exporting and hierarchical mode- greenfield investment Direct exporting: By 1906, Australia had become the second largest export market for Nestlé and was served by a network of sales agents Hierarchical mode- greenfield investment: they established a firm in Australia in 1908 because it had such enormous potential A national sales and distribution network was built up over time Evaluation India Direct exporting Advantage Disadvantage Nestle experience in internalization Nestle could not gain control Exporting required little limited commitment and investment in the Indian FMCG market Minimize the risks as Indian unstable political platform for settling production Hierarchical mode- Greenfield investment Direct exporting had built the custmers’ awareness in advance Nestle could build an optimal format , to develop the milk economy and gradually settle its production in India Nestle India could integrate their technology to the growth, efficiency of local agriculture and qualities of raw materials Australia Direct exporting Hierarchical mode- Greenfield investment over the market, because the company distributed its goods through retailers and wholesalers in Chennai and Kolkata Nestle’s direct exporting resulted in cost for building the contact with agents and distributors from home base The variation in culture caused the communication problems and information filtering where transaction cost incurred Greenfield investment certainly required the high investment cost and timeconsuming entry which were handle by previous direct exporting and suport from its headquarter - Direct exporting: Direct exporting was evaluated as the appropriate one as it required limited commitment and investment in the Indian FMCG market Besides, India was chosen as a target market for Nestle’s expansion and showed the potential results mainly due to the company’s experience in internalization Lastly , India was under the invasion and oppression of British imperialism causing a too unstable political platform for Nestle to settle its production while the company still wanted to minimize the risk However, using this method, Nestle could not gain control over the market, because the company distributed its goods through retailers and wholesalers in Chennai and Kolkata In addition, Nestle’s direct exporting resulted in cost for building the contact with agents and distributors from home base Furthermore, the variation in culture incurred the communication problems and information filtering where transaction cost incurred - Wholly owned subsidiary (green field investment model): At the first period of its strategy, direct exporting had provided it opportunity to conquer the first drawback of the Greenfield investment which required a time-consuming entry Another benefit of the greenfield investment model is for the company's ability to build an optimal format in a way that suits the interest of the firms at that time, to develop the milk economy and gradually settle its production in India Additionally, Nestle India could beneficially integrate their state of the art technology into the local subsidiary, leading to the increase in growth and efficiency of local agriculture and qualities of raw materials However, the greenfield investment certainly required the high investment cost which was considered to have a slight impact on Nestle due to the strong support from its headquarter → Similarity can be observed from both the Nestle subsidiaries in India and Australia the pros and cons evaluation share many features in common, particularly the main points: IV MARKETING STRATEGIES OF MILO IN INDIA&AUSTRALIA Due to the wide range of products, it is difficult to evaluate Nestle marketing strategies and tactics in general Therefore, our team decided to choose Milo in both markets as the subject for investigation and evaluation STP marketing model of Milo in India&Australia Table Nestle India’s segmentation, targeting and positioning 2.Milo marketing mix-(4Ps) in India&Australia Product mix India:The focus turned to highlighting Milo's emotional benefits after establishing it as the top energy drink in the world and highlighting its flavor advantages The failure of Milo in India was attributed to the severe competition with Horlick as a substitute and Bournvita and Boost dominate the milk additive category Apparently the product was tweaked to fit into the price bracket for Indian consumers Australia:Since its launch at the Sydney Royal Easter Show in 1934, Milo energy food drink has established itself to become a staple at the table of generations of Australians In 2019-2020, Nestlé unveiled its new plant-based, vegan friendly version of Milo earlier Instead of the usual milk powders, Nestlé has replaced it with a soy protein isolate and soluble corn fiber - and it still tastes just as good Price mix India: Nestle India conducted the relaunching skimming price in 2019 Milo is not trying to follow pricing of existing brands but create a distinct place for itself It is being launched in the premium segment with 400gm tin priced at Rs450, which is much higher than 500 gms jar of Horlicks, Bournvita and Complan priced at Rs235, Rs216 and Rs245 Australia: Nestle Australia Milo utilizes a penetration pricing master plan Particularly the price set for Nestle Milo 395g at 8.80 AUD exceeds Ovaltine Chocolate Light Break Energy Drink 400g at 8.50 AUD Place mix India: In 2018, Nestle India had established sales branches and 40 distribution centers across the country, more than 1700 distributors, reached about million outlets The distribution plan was looking to expand beyond top 100 towns, and have a hyperlocal strategy Its rural contribution accounts for about 20%-25% In 2022, the company built a specialty distribution network in 46 towns and had 185 suppliers across the country Australia: Nestle Australia Milo divides Australia to zones; Victoria, NSW, SA, WA, and Queensland Customers will find Milo in hypermarkets such as Coles, Woolworths and Aldi, in medium size supermarkets such as IGA Promotion mix India: Nestle India Milo conducted a lot of promotional activities from corporate social responsibilities to advertisments In addition, through Project RURBAN, your Company reached out to small towns with population less than 100,000 and large villages with population greater than 2,000, that offer long-term growth opportunities About its ad campaign, Milo focuses on the image of growing children, and the whole-hearted preparation from their mothers for energy consumption Nestle India conducts the marketing communication and sales in primary schools In the way of the primary school channel, Nestle has facilitated in 400 schools across 11 cities in India targeting children from to 12 years old Australia: The Milo brand enjoys high visibility via its strong allegiance to sport The Milo brand enjoys high visibility via its strong allegiance to sport These include Milo Cricket, with sponsorship of the Australian Cricket Board's national junior development programs Using brand lifts, Nestle Australia Milo found that YouTube also helped boost our reach by more than million unique views while driving an 85.5% lift in ad recall and nearly 12% lift in consideration from Aussie and Kiwi mums Standardization and adaptation Standardization - Distribution: We found that both Nestle India and Nestle Australia have intensive distribution systems which connect with wholesalers and retailers This distribution system is appropriate as Milo characterized the factors: Convenience, low-price, self-service, and common product Nestle Milo’s stage of product life cycle in India and Australia - Promotion: Both Nestle India and Australia are paying effort into multimedia promotion There is considerable growth in Nestle Australia’s unique reach, meanwhile, many Indian rural areas require the expansion of distribution systems Adaptation - Production: Milo in Nestle India was showing its decline and launching of this brand was required The alteration had been made not only to product but also promotion Therefore, Nestle India Milo’s product mode is dual adaptation which is required for the relaunching strategies On the other hand, Milo in Nestle Australia continues to dominate the maltbased energy beverage in the market The brand Milo itself was invented in Australia in 1934, and continues to develop towards the trend of health and sustainability