(Tiểu luận) analysis of nestlé international marketingstrategy

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

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MIDTERM ASSIGNMENT

Module: International Marketing

ANALYSIS OF NESTLÉ INTERNATIONAL MARKETING

STRATEGY Lecturer: Nguyễn Thị Thu Thảo Class: K60CLC2

Group: 12

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 globalmarketing strategies of Nestle in two different markets of Australia and India wherethey are operating in The international market selection (IMS) process will be used to

do the preliminary screening and identify two highly potential market of India andAustralia MACS Matrix with different selection criteria will help to compare thedifference between two countries above to reveal the competitiveness among these twomarkets In report, we will examine the method of entry of Nestle when selecting amarket entry strategy in an emerging market and evaluate its way to succeed in theworld’s largest growing market, India In the last chapter, the key to success in theseinternational markets of Nestlé will be revealed by looking at their successfulmarketing strategies and tactics through STP model and Marketing mix 4P followersand inspiring trust to influence employees

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Table of contents

I INTRODUCTION 5

1 Background of Nestlé 5

2 Global market trend of FMCG industry 5

II MODELS OF SELECT MARKET: PRELIMINARY SCREENING 8

1 Market attractiveness analysis in India & Australia

2 Competitive strengths analysis in India & Australia 19

3 Market attractiveness/Competitive strengths (MACS) matrix 22

III MARKET ENTRY MODES OF NESTLÉ IN INDIA&AUSTRALIA 33

1 Modes of entry of Nestlé in India 2 Modes of entry of Nestlé in Australia 3 Evaluation IV MARKETING STRATEGIES OF MILO IN INDIA&AUSTRALIA 29

1 STP marketing model of Milo in India&Australia 2 Milo marketing mix-(4Ps) in India&Australia V REFERENCE

I INTRODUCTION

1 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

2 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

Market size India's retail market was projected

to grow from 883 billion dollars in

2020 to 1.7 trillion dollars in 2026

The market size of Australia, measured by revenue, of the Consumer Goods Retailing industry is $205bn in 2020 (3)

- Unemployment, total (% of total

labor force) (modeled ILO

estimate) is 6.0% (4)

- Inflation, consumer prices (annual

%) is 5.1%

- GDP of Australia = $1.54 trillion (Worldbank, 2021)

Marketing 100% (2)

75

VGCC Vin Fast Goes Global - Of cial Cas…International

world’s largest democracy

About the political stability index(

-2.5 weak, 2.5 strong) From 1996

to 2021 The average value for

India during that period was -1.08

points, the latest value from 2021 is

-0.62 points

country and it is stable politically.About the Political stability index (-2.5 weak; 2.5 strong) From 1996

to 2021 The average value for Australia during that period was 0.99,The latest value from 2021 is 0.85 points

to 405,000 AUD per year

Infrastructure - Quality of trade and

transport-related infrastructure (1=low to

5=high) (Workbank, 2018)

Logistics performance index in

India is 2.91

- One of the biggest issues facing

India's FMCG industry has been the

lack of transportation and storage

- Quality of trade and related infrastructure (1=low to 5=high) (Workbank, 2018) Logistics performance index in

transport-Australia is 3.97

- As a developed nation, Australia has incredibly advanced infrastructure

InternationalMarketing 100% (1)International

Marketing - EXAM…International

Marketing 100% (1)

38

2.Competitive strengths analysis in India&Australia

Competitive strengths ( Compared to UNILEVER in both market )

Obtainable

market share

With a majority of its

product categories having

more than 50% of the

market share in India

With a market share of roughly 16%, Nestle Australia is Australia's second-largest confectionery company (after Cadbury)

Financial result Profit before tax of Nestle

Market

presence

-After more than a century

of being associated with the

nation, NESTLÉ India now

has 9 production sites and 4

branch offices spread all

over the country

- The company is divided into three divisions: Home & Personal Care, Foods (but not Ice Cream), and Ice Cream North Rocks, Minto Tatura, and Petone are the locations of the company's factories The company is headquartered in Sydney, Australia

Marketing In 2015, Nestle India

invested about 4 450 billion

India: Nestle India provides

some customized products

to meet the demand of the

Indian market as well as

change the context of

promotion into family and

nutrition-centric

Australia: Apart from Milointroduction in 1934, most of theproduct brands in Australia have theirpromotion focus on adolescents andworking people

India&Australia- Competitive strengths Matrix

3 The market attractiveness/competitive strength (MACS) matrix

III MARKET ENTRY MODES OF NESTLÉ IN

INDIA&AUSTRALIA

1 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 Inthis 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)

2 Modes of entry of Nestle in Australia

Our group found that Nestle India and Nestle Australia shared the same entry mode withtwo 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

4 Evaluation

Advantage Disadvantage India

Direct exporting Nestle experience in

internalization

Exporting required little limited commitment and investment in the Indian FMCG market

Minimize the risks as Indian unstable political platform for settling production

Nestle could not gain controlover 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

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 integratetheir technology to the growth, efficiency of local agriculture and qualities of raw materials

Greenfield investment certainly required the high investment cost and time-consuming entry which were handle by previous direct exporting and suport from its headquarter

Australia

Direct exporting

Hierarchical mode- Greenfield

investment

- 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 invasionand 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 agentsand 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 thegreenfield 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 thesubject for investigation and evaluation

1 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 4 sales branches and 40 distribution

centers across the country, more than 1700 distributors, reached about 4 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 185suppliers across the country

Australia: Nestle Australia Milo divides Australia to 5 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 7 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 7 million unique views while driving an 85.5% lift in ad recall and nearly 12% lift in consideration from Aussieand 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