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NESTLE

BACHELOR IN MANAGEMENT STUDIES

(2012-2013)

Submitted

BY

MR. PARESH MANE

TBMS-326

SMT. PARMESHWARIDEVI DURGADUTT

TIBREWALA LIONS JUHU COLLEGE OF ARTS,

COMMERCE & SCIENCE

J.B NAGAR, ANDHERI (EAST) MUMBAI-400059

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NESTLEBACHELOR IN MANAGEMENT STUDIES

(2012-2013)

Submitted

In partial fulfillment of the requirements

For the Award of Degree ofBACHELOR IN MANAGEMENT STUDIESBY

MR. PARESH MANE

TBMS-326

SMT. PARMESHWARIDEVI DURGADUTT

TIBREWALA LIONS JUHU COLLEGE OF ARTS,

COMMERCE & SCIENCE

J.B NAGAR, ANDHERI (EAST) MUMBAI-400059

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CERTIFICATE

This is to certify that Mr. PARESH MANE of BACHELOR IN

MANAGEMENT STUDIES (2012-2013) has successfully completed the

project on NESTLE under the guidance of PROF. MARUTHUVAR

ESWARI.

COLLEGE SEALCOURSE COORDINATOR PRINCIPAL

EXTERNAL EXAMINER

PROJECT GUIDE /

INTERNAL EXAMINER

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DECLARATION

I, Mr. PARESH MANE the student of BACHELOR IN

MANAGEMENT STUDIES (2012-2013) hereby declare that I have

completed project on NESTLE. The information submitted is true and

original to the best of my knowledge.

SIGNATURE OF STUDENT

Mr. PARESH MANE

ROLL NO. TBMS / 326

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ACKNOWLEDGEMENT

I would like to thanks the teacher of SMT. PARMESHWARIDEVI

DURGAUTT TIBREWALA LIONS JUHU COLLEGE OF ARTS,

COMMERCE AND SCIENCE affiliated by University of Mumbai for

their excellent suggestions.

A special thanks to PROF. MARUTHUVAR ESWARI for her constant

encouragement and guidance from the beginning with the never ending

patience. Her constant support and efforts helped me to complete my

project on time

I would like to thanks to some of my respected professors like Dr. Nanda

Indulkar Miss. Rakhee Soni , Miss. Seema Horande, and Mr. Shahid

Qureshi without whom the project would have to not come to end.

I also take opportunity to thank my entire friend for cooperating with me

and to all the people who are and indirectly connected to the project.

Above all, I thanks to our principle Dr. Trishla Mehta for their cooperation

during the time of completion of project.

Mr. PARESH MANE

ROLL NO. TBMS / 326

DATE:

PLACE: MUMBAI

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CONTENTSCH

.NO.

TOPIC

PG.

NO.

1 INTRODUCTION 1

2 OBJECTIVE OF THE STUDY 17

3 RESEARCH AND METHODOLOGY 19

4 ANALYSIS AND INTERPRETATION OF DATA 22

5 SWOT ANALYSIS 26

6 FINDINGS AND RECOMENDATION 32

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CHAPTER. 1

INTRODUCTION

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1.1 INTRODUCTION OF NESTLE

FMCG companies have now realized that India lives in its rural

villages. So much so that rural marketing has become the latest

marketing mantra of most FMCG majors. The lure of an untapped

market has driven the marketers to chalk out bold new strategies for

targeting the rural consumer in a big way.

India is on the move and so are the markets in India. Apart from

economic changes, India is also facing social changes like changes in

life style, hobbies etc. New fashions, Adventures holidays, etc. are in

today.

Further, food habits of Indians are changing rapidly. Chocolates

which were believed to be kids preference are now being consumed by

kids, teenagers, and adults. Chocolate market in India (Currently 28 000

tones) is growing at a fast rate annually.

To take advantage of the growing market, internationalconfectionery companies are getting ready to woo the proverbial Indian

Sweet tooth. An influx of worlds leading Chocolate players is expected.

Nestle also piled primarily on the urban consumers. After

understanding the great potentiality rural India possesses, Nestle is also

experimenting in big way to bring the much needed volumes and help

itself to bank upon the volume driven growth, in this severe competitiveFMCG sector where the dispersion or market penetration plays a big role.

So Nestle is eying on the market penetration and it is being targeted by

devising different marketing strategies.

The rational behind Nestle going for the market penetration is to

acquire new consumer base by making the products available to the every

interior of the country and increase its sales, to sustain growth. The

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company is having a marketing strategy to drive penetration through

wholesale marketing. But is it a right marketing strategy? Or will it

prove to be an expensive mistake? If they want to increase their

penetration then how and where they should go for? These are the issues

Nestle is facing today.

This project is a market research and it touches every aspect of the

current wholesale marketing and predicament associated with it. It also

juxtaposition that how penetration, can be possible through wholesale

marketing, what is the cost of doing it and maintaining it. This project

gives an insight into the every feasible aspect that is associated in

Driving penetration through wholesale marketing, for Nestle.

In the above context, the prime objective of this report is to prepare

a marketing plan for any brand that is planning to enter the India

Chocolate Market. Therefore, this report is generic (broad-based) to the

extent that it does not focus on any single brand. However, this may

prove to be a relevant marketing guide for any brand launch in India.

The FMCG sector has been the cornerstone of the Indian economy.

Though, the sector has been in existence for quite a long time, it began to

take shape only during the last fifty-odd years. To date, the Indian FMCG

industry continues to suffer from a definitional dilemma. In fact, the

industry is yet to crystallize in terms of definition and market size, among

others. The sector touches every aspect of human life, from looks to

hygiene to palate. Perhaps, defining an industry whose scope is so vast is

not easy.

After witnessing booming sales and flooding markets with

innumerable products, FMCG companies have had to abruptly apply the

brakes and look for various ways to save costs. The MORE THAN RS.

43,000 crore (listed companies) FMCG industry in India, which has been

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on a roll for many years, faces tough times ahead, although many

segments still shows good growth.

1.2 REVIEW OF LITERATURE AND PROBLEM

STATEMENT

India is on the move and so are the markets in India. Apart from

economic changes, India is also facing social changes like changes in life

style, hobbies etc. New fashions, Adventures holidays, etc. are in today.

Further, food habits of Indians are changing rapidly. Chocolates whichwere believed to be kids preference are now being consumed by kids,

teenagers, and adults. Chocolate market in India (Currently 20 000 tones)

is growing at a fast rate annually. To take advantage of the growing

market, international confectionery companies are getting ready to woo

the proverbial Indian Sweet tooth. An influx of worlds leading Chocolate

players is expected. Further, since Confederation of Indian Industry (CII

)is a representative body of the Indian Industry, it receives its inquiries for

pertinent marketing information from various domestic and international

players, who want to invest in India. In the above context, the prime

objective of this report is to prepare a marketing plan for any brand that is

planning to enter the India Chocolate Market. Therefore, this report is

generic (broad-based) to the extent that it does not focus on any single

brand. However, this may prove to be a relevant marketing guide for any

brand launch in India.

Improved penetration of brands is an important consideration in

the Companys vision of sustained growth. Expansion of distribution and

reach was a focus area. Some of the initiatives that are expected to

contribute significantly include introduction of single serve conveniencepacks at affordable price point, such as NESCAFE Redimix and MAGGI

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Hot Cup Soup Powder. The initiative to automate distributor operation

has continued and is expected to be complete during 2003. This will help

NIL achieve greater speed and transparency in the flow of information,

ensure better levels of customer contact and enable faster response to

consumer needs.

The Company continued to strengthen initiatives to facilitate

availability of products for out of-home consumption. These initiatives

were supported by a number of new product launches. The development

of NESTEA Instant Tea premix for hot vending offers consistency andconvenience as compared to tea bag preparation; NESCAFE Frappe

premix fort cold vending has been introduced in Quick Serve Restaurants;

Low Sugar NESCAFE premix has been developed for health conscious

consumers; MAGGI Hot Cup Soup dispensed through vending machines

is an innovative and pioneering concept in the market. Large number of

Nestle Consumption Zones including Cafe NESCAFE, Coffee Cornersand multibrands stalls were set up and innovative vending machines were

introduced for Iced Tea. Sustained focus on continuously improving the

value to the consumer, helped to introduce vending machines with eight

beverage options to offer consumers a range of specialty beverage at the

same location.

On the manpower development front, programmed during the yearcontinued to be focused on the operational front more particularly sales

and production.

To support the growth plans and distribution strategy, and

simultaneously improve the operational efficiency, the on strengthening

chain continued to receive attention during the year.

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Marketing is based on the principle of satisfying consumers needs.

The overall trust of consumers in Nestle brands and products comes

from a quality image that has been continuously strengthened foe over

130 years. Nestles strives to increase this trust through its commitment to

environmentally sound business practices.

For this reason nestle: Opposes the shortly-term opportunistic green

marketing that can mislead the consumer; Bases environmental claims in

advertising promotional material labeling and corporate communication

on solid scientific evidence and selects materials and printing methods

for merchandising materials such as consumer offers, in-store promotions

is play materials, leaflets and printed materials in light of environmental

considerations.

Marketing strategy is the complete and unbeatable plan designed

specially for attaining the marketing objective of the firm.

The marketing objectives indicate what the firm wants to achieve; themarketing strategy that decides the success at the business unit level

which in turn decides the total corporations success. The link between

marketing strategy and overall success is indeed direct and vital. And in

this linkage lies the significance of marketing strategy.

Nestle India ltd. has an aggressive marketing strategy which is very

well understood when one goes through the in-depth study of the 4-Ps of

SUPPLIE

RS

PROCURMENT SUPPLY

PLAN

SALES &

MARKETING

MANUFACTURER DISTRIBUTOR CUSTOMER CONSUMER

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the marketing and price strategies with respect to its products. One comes

to the conclusion that NIL has a well defined roadmap to success i.e. to

reach its ultimate objective of realizing customer satisfaction through

value for price products.

Alreck and Settle (1999) in the paper has mentioned six strategies

for building relationship(between a specific brand and a particular

customer group - to create a strong bond between brand and buyer)which

are linking the brand to a particular need; associating it with a pleasant

mood; appealing to subconscious motives; conditioning buyers to prefer

the brand through reward; penetrating perceptual and cognitive barriers to

create preference; and providing attractive models for buyers to emulate.

The paper states that the choice of an individual strategy or combination

depends mainly on the nature of the branded product or service and the

success of the strategy depends heavily on the marketer's understanding

of the preference building and bonding process.

The article provides results like the six consumer preference-

building methods mentioned require particular kind of product, pricing,

promotion and distribution. It further states that Successful advertising

needs clear consistent strategies and also lists some of the crucial

elements without which advertising will not work. The paper helps us in

analyzing the factors which influence the selection of a strategy for

building consumer brand preference.

The purpose of this study has explored the consequences of various

attributes on brand equity of brands, which vary along selected criteria

and attributes and to investigate the impact of brand equity and the

attributes on brand preferences. In the pretest, subjects were asked to rank

the attributes listed in previous studies of Nestle. The top nine attributes

(i.e. brand name, calories, sugar content, sodium content, caffeine

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content, fizz/carbonation, flavor/taste, sweetness, and price) were

included in the study, with brand name being one of them. The second

phase was a preference task using the same Nestle products.

1.3 PROBLEM STATEMENT

Problem defining is the most crucial aspect of any research. It

helps in understanding the background of the problem by analyzing it in

an appropriate environmental context. This helps in translating the exact

problem faced by the management into marketing research problem.A wholesaler plays a pivotal role in the distribution channel of any

company especially in a FMCG Company. Wholesalers are important as

they carry out the role of the Conduit in any companys distribution

network and cater to a large pool of retailers which a distributor of a

company cannot cater.

So retailers who come from distant places and whose purchasing power is

less are been taken care by the wholesalers. So wholesalers can be

impetus to drive the penetration in the market.

The main problems that new product faces is that of getting

experienced and effective channel members. As existing marketing

marketer/manufacturer can piggy back on the existing channel structure.

A new company will have to provide greater incentives convince channel

members to stock the product offering. Quick handling of problems of

stockiest & dealers. The biggest problem in distributing a product

category like chocolates is lack of infrastructure. The product needs to be

kept in refrigeration (more so, in summers)-limiting the points at which it

is available (ideal temperature needed for chocolates is 18 to 25 degrees).

Hence, summer see sales suffer. Demand falls by almost two-thirds in the

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summer months. Nestle' markets infant formula according to the

principles and aims of the WHO International Code of Marketing Breast

Milk Substitutes, and seeks dialogue and cooperation with the

international health community and in particular with the WHO and

UNICEF, to identify problems and their solution.

In India 70% of population lives in villages and so this population

plays a pivotal role in the turnover figures of any company, especially

FMCG Company. As many of the competitors of Nestle is going rural to

increase its consumer base, Nestle is also in the purview to increase its

penetration in the every interiors of the country, so that every product of

Nestle should be available to every part of the country and on the other

hand to increase the consumer base and its sales figures. So the Problem

statement can be summaries as following

Nestle wants to go rural as many FMCG companies are doing so,

including its competitors.

Management decision problem is whether to take step to carry out

the penetration through wholesalers or not?

Management is unaware of the current level of penetration in the

up-country market?

If Penetration through wholesalers is possible then how to go about

it?

The customers can be tapped directly through the distribution

channel or not or penetration en-route wholesalers would be the

optimum solution?

What is the profile of the customers to have the knowledge

regarding the consumer behavior and their buying behavior?

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1.4 COMPANY PROFILE

NESTLE FOODS INDIA LTD.

Nestle Foods India is a Transnational company (TNC) with its

worldwide operations in over 70 countries. The founder of Nestle was

Henry Nestle who from a modest beginning founded the company in

1866 at Switzerland for manufacturing milk powders for babies. At that

time Switzerland faced one of the highest infant mortality rates and the

milk formula saved the lives of many infants whose mothers were unable

to breast feed successfully.

Nestle has been a partner in India's growth for the past nine

decades and has built a very special relationship of trust and commitment

with the people of India. The culture of innovation and renovation within

the company and access to the Nestle Group's proprietary technology/

Brands, expertise and the extensive centralized Research and

Development facilities helps the company to create value that can be

sustained over the long term. Nestle India manufactures products of truly

international quality under internationally famous Brand names such as

Nescafe, Cerelac, Maggi, Milky Bar, Milo, BarOne, Nestea and Kit Kat

and in the recent years the company has also introduced products of daily

consumption and use such as Nestle Milk, Nestle Dahi, Nestle Butter,Nestle Fruit 'n milk ready to drink beverage and Nestle Pure Life bottled

drinking water.

Nestle is often quoted by most as "multinational of multinationals."

There is a good reason, as less than 2% of the turnover comes from the

domestic market in Switzerland and rest from its other operations

worldwide.

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At present Nestle in the world's largest food company with its

international headquarters at Vevey, Switzerland. With almost 500

factories world wide it employs many people directly or indirectly.

Nestle is under first 50 companies of Fortunes five hundred list. It

is present over all five continents of the globe in over 80 countries. It is

having 200 operating companies, one basic research center and 17

technological development centers and around 2,76,000 employees.

BOARD OF DIRECTORS OF NESTLE

INDIA Ltd.

NameDesignation

Antonio Helio Waszyk Chairman andManaging director

Pradip Baijia Non Executive Director

Ravinder NarainNon Executive Director

Rakesh MohanNon Executive Director

Christian SchmidDirector (Technical)

Name Designation

Shobinder DuggalDirector

Michael W O Garrett Non Executive Director

Richard Sykes Alternate Director

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Swati A Piramal Non Executive Director

1.5 VISION MISSION STATEMENT

1. Mission Statement

At Nestl, our research makes it possible for everyone to

enjoy better food for a better life.

Good Food is the primary source of Good Health throughout life.

We strive to bring consumers foods that are safe, of high quality and

provide optimal nutrition to meet physiological needs. In addition tonutrition, health and wellness, Nestl products bring consumers the vital

ingredients of taste and pleasure.

As consumers continue to make choices regarding foods and beverages

they consume, Nestl helps provide selections for all individual taste and

lifestyle preferences.

Research is a key part of our heritage at Nestl and an essential

element our future. We know there is still much to discover about health,

wellness and the role of food in our lives, and we continue to search for

answers to bring consumers Good Food for Good Life.

Promote awareness of the effect of our lifestyle both on ourselves andon our environment.

Exist as a financially successful, non-hierarchical, democratic

organization where workers participate in the creation and running of

their working Environment, as an example to encourage others to do

likewise.

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Provide an environment that encourages and helps people to develop

and achieve their potential.

Actively support co-operatives, fair trade, environmental issues and

community activities.

2. Vision Statement

Your VISION defines your long-term dream. It should not be

achievable. That may sound ridiculous, but the objective is for your

vision to always be just slightly out of your reach. It's what you

constantly strive to attain, and it becomes your reason for being.

1.6 HISTORY OF NESTLE

In 1860s Henri Nestle, a Swiss pharmacist, established the world-

renowned Nestl brand amid a spirit of innovation and goodwill. In 1866he developed a food for babies whose mothers were unable to breastfeed.

His first success was a premature infant who could not tolerate his own

mother's milk or any of the usual substitutes. The value of the new

product was quickly recognized when his new formula saved the child's

life, and soon, Farine Lacte Henri Nestl was being sold in much of

Europe.

In 1905 Nestle merged with the Anglo-Swiss Condensed Milk

Company. By the early 1900s, the company was operating factories in the

United States, United Kingdom, Germany and Spain. World War I

created new demand for dairy products in the form of government

contracts. By the end of the war, Nestl's production more than doubled.

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The first Nestle factory to begin production in the United States

was opened in Fulton, Oswego County, New York. The factory however

was closed in 2001, after the company decided that the cost of restoring,

and updating the factory could not financially be justified. Employees of

the factory were furious, and raised the company flag upside down the

day the closing was announced.

After the war, government contracts dried up and consumers

switched back to fresh milk. However, Nestls management responded

quickly, streamlining operations and reducing debt. The 1920s saw

Nestls first expansion into new products, with chocolate the company's

second most important activity.

Nestl felt the effects of World War II immediately. Profits

dropped from US$20 million in 1938 to US$6 million in 1939. Factories

were established in developing countries, particularly Latin America.

Ironically, the war helped with the introduction of the company's newest

product, Nescafe, which was a staple drink of the US military. Nestls

production and sales rose in the wartime economy.

The end of World War II was the beginning of a dynamic phase for

Nestl. Growth accelerated and companies were acquired. In 1947 came

the merger with Maggi seasonings and soups. Crosse & Blackwell

followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's

(1973). Diversification came with a shareholding in LOreal in 1974. In

1977, Nestl made its second venture outside the food industry by

acquiring Alcon Laboratories Inc.

1.7 OUR BRANDS

Milk Products & Nutrition Chocolates&Confectionery

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NESTL EVERYDAY Dairy Whitener NESTL KITKAT

NESTL EVERYDAY Slim NESTL KIT KAT LITE

NESTL EVERYDAY Ghee NESTL MUNCH

NESTL Milk NESTL MUNCH POP CHOC

NESTL Slim Milk NESTL MILKYBAR

NESTL Fresh 'n' Natural Slim Dahi NESTL MILKYBAR CHOO

NESTL Jeera Raita NESTL BAR-ONE

NESTL NESVITA NESTL FUNBAR

NESTL NIDO NESTL Milk Chocolate

NESTL MILKMAID NESTL clairs

NESTL MILKMAID Fruit yoghurt POLO

NESTL MILKMAID FUNSHAKES POLO Power mint

NESTL CEREVITA POLO Zero

NESTL TANG EEZ

Beverages Prepared Dishes & Cooking Aids

NESCAF CLASSIC MAGGI 2-MINUTE Noodles

NESCAF SUNRISE MAGGI Vegetable Atta Noodles

NESTL MILO MAGGI Dal Atta Noodles

NESCAF Mild MAGGI Rice Noodles Mania

MAGGI Sauces

MAGGI Pizza Mazza

MAGGI Healthy Soups

MAGGI Healthy Soup- Sanjeevni

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CHAPTER. 2

OBJECTIVES OF THE STUDY

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2.1 OBJECTIVES OF THE STUDY

Be in every way the leading company in Indian food industry.

Ensure high quality standards in everything we undertake.

Provide our consumers with superior quality products.

Provide our shareholders with rapid growth & fair returns.

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Provide our employees a challenging & satisfying work

environment.

To be a good corporate citizen & contribute positively to the

society in which we operate.

.

CHAPTER. 3

RESEARCH METHODOLOGY

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3.1 RESEARCH METHODOLOGY

As mentioned earlier, the objective of the study is to formulate a

Marketing Strategy for any new entrant in the Indian Chocolate Industry.While recommending the said strategy detailed information from both

primary and secondary sources was collected and analyzed. This

included:

PRIMARY SOURCES

Four level primary information collections were undertaken. These

were:

1. In order to get relevant information regarding competition, executives

of the following chocolate players in the market were interviewed: To

analyze buying behavior and in order to gain an insight into the buyer

need-satisfaction level, a questionnaire was formulated. These included

pan shops, grocery shops, bakeries, departmental stores, etc.

SECONDARY SOURCES:

A number of secondary sources of information were used. These

were:

Confederation of Indian Industries reports, PHDCCI & FICCI library.

Internet websites Of Nestls, Nestle and indiainfoline.com,

askjeeves.com

Extensive use of secondary information in the form of

magazines/journals/newspapers clippings, such as Business World,

Business Today, Business India, A&M, Economic Times, etc.

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Tools analysis

Observation and descriptive survey methods was used to collect the

data about the features, expectations, satisfaction, problems etc. the

customers.

Size of sample:

The present study was conducted on a sample size of 80.

THE METHODOLOGY ADOPTED WAS AS FOLLOWS:

INDUSTRY SCENARIO SKETCH (UTILIZING SECONDARY INFORMATION)

EXTENSIVE INTERVIEWS HELD WITH PRIMARY/SECONDARY SOURCES

(COMPANIES/CHOCOLATE MANUFACTURERS ASSOCIATION)

INTERVIEW WITH EX-DISTRIBUTOR OF NESTLE INDIA LTD

EXTENSIVE RETAILER INTERVIEWS IN NARAINA INDL. AREA

FORMULATION AND ADMINISTRATION OF A QUESTIONNAIRE

FORMULATION OF THE RECOMMENDED STRATEGY ON THE BASIS OF

THE ABOVE MENTIONED PRIMARY AND SECONDARY INFORMATION

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CHAPTER. 4

ANALYSIS AND INTERPRETATION OF

DATA

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4.1 ANALYSIS AND INTERPRETATION OF DATA

AWARENESS - PURCHASE PREFERENCE

23

0

10

20

30

40

50

60

70

80

90

Picnic

Fruitn'Nut C

DM

Foreignbrands K

itKat

Perk

Amul

5Star

BarOne

Break

Crunch

Cadbury's

Nestle

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PURCHASE PREFERENCE: WHAT INFLUENCED YOU TO

BUY THE SELECTED BRAND

24

0

10

20

30

40

50

60

70

80

Amu

l

5Sta

r

KitKa

t

CDM

Picnic

Fruitn'N

ut

ForeignBrands

Per

k

Crunc

h

BarOn

e

Cadbury

's

Nestle

0

10

20

30

40

50

60

70

80

90

Advertising Word of Mouth Attractive

Packaging

Dealer Shop Display Family, fr iends,

relatives

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PURCHASE BEHAVIOUR:

REASONS FOR PURCHASE:-

25

0

10

20

30

40

50

60

70

Occasion led As a gif t Casual Purchase Energy Snack

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CHAPTER. 5

SWOT ANALYSIS

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5.1 SWOT ANALYSIS

The SWOT Analysis shows the relationship between critical

variables of the company. The SWOT matrix has a wider scope. The

TWOS matrix is a conceptual framework for a systematic analysis that

facilitates the external threats and opportunities with the internal

weaknesses and strengths of the organization.

It has been common to suggest that companies identify its strengths

and weaknesses as well as opportunities and threats in the external

environment. But what is often overlooked is that combining these factors

may require distinct strategies choices. To systematize these choices, the

TWOS matrix has been proposed. T stands for threats, W stands for

weaknesses, O stands for opportunities and S stands for strengths. A

marketing opportunity is aware of buyer need in which a company can

perform profitably. An environment that would lead, in the absence of

defensive marketing action, to deterioration in sales or profit. An ideal

business is high in both major opportunities and low in major threats.

A speculative business is high in both major opportunities and

threats.

A mature business is low in opportunities and high in threats.

The TWOS matrix starts with the threats because in many situations a

company undertakes strategic planning as a result of a perceived crisis,

problems or threats.

STRENGTHS

High brand equity consumer & dealer regarding Nestle' as

company delivery quality product.

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Company processes an extensive powerful distribution network.

Company processes a dedicated & experienced sales staff.

Strong base in monitoring & controlling market.

Distributions are highly dedicated towards performance &

experience.

Nestle India Limited (NIL) has a very strong parent company

Nestle S.A. support with 51% of equity share holding, which is the

world's largest food company.

NIL's milk products sold under Milkmaid and Everyday brands are

market leaders. NIL has strong brand value in other products like

Kit-Kat, Polo, Milo, Maggi and Nescafe.

NIL - State of the Art Technology and production systems ensuring

high technological/high value and optimum cost advantage to its

product portfolio.

Idealization of products to suit local tastes are critical for success

and NIL is converting its international products into Indian tastes

products.

Nestle has altogether 570000 outlets in more than 3000 towns. This

is one of the major strengths of the company.

NIL most of the products are being produced according to Indian

tastes, priced within Rs. 25/- so that they are afforded by most of

the people easily, advertised and promoted according to regional

culture and values and is available to most of the consumers easily,

at their nearby shops.

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WEAKNESSES

Company takes time in handling return claims on authorized wholeseller.

Warehousing norms are not followed which account for increased

breakage.

Restricted website minimizes marketing opportunities.

Yearly initiatives are not so motivating.

A high percentage of turnover and profits coming from a few

products categories like Coffee/Maggi.

NIL has been in India since last 39 years yet its growth has been

very slow. After the opening up of the economy, it has started

growing but till then it did not launched much products.

The profits of NIL are also reduced because of increased Royalty

payments that NIL is making to its parent Nestle, Switzerland. The

higher royalty payments are made on account of new international

brands launched by NIL in India.

NIL factories are not to meet the demands of products with the

supply. NIL's products range is so large that it is not able to give proper

attention to all the products, their marketing strategies are not

properly worked out as many of its products are dyeing. There was

an embarrassing starter like Nestea an iced tea, Nesfit - a glucose

rich energy drink, Bonus, Milo is not given much of promotion.

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Recently, there are difference between the Nestle S.A. parent

company and Nestle India Limited and because of this there are in

the top management of the NIL. Even its M.D Daravis E. Ardeshin

has also resigned.

Proof financial distribution as the NIL is unnecessarily giving its

shareholders high dividend, which could be avoided and be used

for investment in plants for their capacity expansion.

OPPORTUNITIES

Great quality.

Mass market is growing with established performances.

Growing middle class is increasing opportunities.

Great taste.

Low differentiation in market brands.

Credit facility given to dealers.

India being the second most populated country in the world, NIL

has lot of opportunities of launching and selling new products and

earning a record profit from this country.

As NIL has been in India since last 39 years, it has understood the

culture, values, tastes and psychology of the Indian consumer and

so it can easily develop Indianised products that will be acceptable

to the Indian consumer.

Food industry is the second highest growing industry in India and

offers a lot of opportunities for NIL in India.

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THREATS

Tough competition especially in premium segment.

Characteristics of premium segment that it is never brand loyal.

Tough competition (indirect) with barista, caf coffee day.

Mere availability of best sellers from the parents portfolio does

not guarantee a winner. Since most of these products would be

fighting it out with their global competitors and then Indian

counterparts on the Indian turf.

It faces fierce competition in almost all the segments it participates

in like. It duels with Top Ramen in the instant noodle market, Kit-

Kat vs. Perk, Polo vs. Minto, Milkmaid vs. Mithai Mate (launched

by Amul at a staggering 60% discount to the market leader), Milo

vs. Horlicks, Complan and Bournvita.

Recent turmoil and increased internal politics together with lack of

apathy from their parent company is going to affect the

performance of the company in the short to midterm.

Because of the present Swadesi prime and changing public opinion

towards MNCs will affect NIL's future.

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CHAPTER 6

FINDINGS & RECOMMENDATIONS

FINDINGS

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6.1 FINDINGS & RECOMMENDATIONS

FINDINGS

In the age group of 16-20 and 21-30, the average monthly spend is not influenced

by the place of residence/ social class but rather on, where a person studies/works

i.e. by the social] circle of his friends and colleagues.

The consumers by and large are satisfied with the present choices available in

chocolates i.e. there are no complaints of consumers as regards to existing

varieties of chocolates. However there are many new wants and demands of consumers in terms of new

flavors and ingredients of chocolates which the present brands of chocolates have

not introduced into the Indian markets.

There is a substantially low margin of difference in terms of people who are

sensitive to price of chocolates and hence it cannot be proved conclusively that

introducing a chocolate at a lesser price than the prevailing price will lead to

capturing of market share. Consumers attach more value to the brand of the chocolates as well as the

packaging i.e. the quality of the chocolates.

79% of chocolate sales happen through kirana shops i.e. mom and pop shops which

says that chocolate is a commodity which has to be available to the consumer when

and where he wants it. The sales of chocolates largely depend on its availability to

the consumer at his convenience.

The chocolate confectionery market elicits conscious and unconscious feelings of

passion, loyalty and enthusiasm. Almost 80% of chocolate purchases are made on

impulse. Buyers generally decide quickly which confectionery product to buy with

almost half of purchase decisions made within 10 seconds of arriving at the

confectionery fixture in the store. Brands play an important role in the chocolate

confectionery industry. A brand is a name, mark, or feature, which distinguishes

one product from another. A good brand effectively guarantees that it will deliver

all of the qualities that the consumer associates with it.

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For many people, chocolate is Nestle, and no other brand will do. This consumer

loyalty is critical because of the value of the chocolate confectionery market and

because, in all markets, a small number of consumers account for a large proportion

of sales. Loyal customers are the most valuable customers to have because they will

buy your product over and over again. Research data shows that the Nestle brand

equity is highly differentiated from other brands with consumers. Brand equity is

the value consumer loyalty brings to a brand, and reflects the likelihood that a

consumer will repeat purchase.

This is a major source of competitive advantage. The Nestle umbrella brand

has endured in a highly competitive market, and has established the link, in the

mind of the consumer, that Nestle equals chocolate. The Nestle brand is associated

with best tasting chocolate. Marketing managers at Nestle are working to ensure

this association is continually developed through their 'Choose Nestle' marketing

strategy. Key concepts of quality, taste and emotion underpin the Nestle brand.

These core values help to differentiate Nestle from other brands and ensure its

competitive advantage.

The Nestle brand has proven itself to be a leader in a highly volatile and

competitive market because it has successfully established, nurtured and developed

its umbrella brand and growing portfolio of products. Perhaps very few product

categories in India have seen as much excitement generation, widening of appeal

and repositioning as chocolates. Nestle India's" has been successful in revamping

its brand portfolio and its repositioning efforts. It has reinvented and revamped its

brand portfolio, strengthened its distribution network and relied heavily on

promotions and advertising - while launching and relaunching brands.

Nestls strategy to attract consumers is somewhat unique in a sense, instead

of focusing on the product; it seeks to tap into emotions normally associated with

chocolates. They have also adapted their strategies to the unique demands of the

Indian retail sector. The strategy has clearly proved successful, as they have been

able to build and maintain a leadership position in the market with many loyalcustomers.

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Nestle introduced a new global marketing strategy called 'Choose Nestle'. This

strategy came about as a result of extensive research into consumer behaviors and

perception. It is a campaign that perfectly illustrates how a brand can evolve and

how different messages can be communicated without losing the core strength and

brand values that are already established

New product development has played a key role in developing markets as

brands strive to offer something to a consumer that is truly different The Nestle

product range addresses the needs of each and every consumer, from childhood to

maturity, from impulse purchase to family treats. For example an analysis of the

'gift' sector highlights the importance of developing innovative products to address

specific markets. Nestle designs products to coincide with Diwali, rakshabandhan, ,

Mother's and Father's Day.

The chocolate confectionery market is full of brands that need to fight for our

attention. The role of advertising is to keep a brand in the mind of the consumer.

We are constantly presented with countless brand images and messages on a daily

basis. During the lifetime of a brand, companies will develop marketing strategies

that communicate brand identity and core values to gain our attention. In order to

keep its product competitive and contemporary, these messages need to change

over time.

Nestle provides one of the most successful examples of how an advertising

message can be modified from one campaign to the next to attribute new values to

a brand giving consumers more reasons to buy Nestles. Nestle employs all types of

advertising from the internet to posters, from TV, radio and cinema to print media.

This same creative message is then communicated through point of sale,

merchandising, package design and public relations. Besides advertising and sales

promotion, brand perception by consumers gets affected by several other factors

like packaging, distribution efficiency, after-sale service (where applicable), speed

of response to customer complaints. Shopping experience and delivery of the value

proposition are also among the contributing factors. Nestle India has also worked &

is still working on these factors to successfully position its brand as the topmost

brand of chocolate. Nestle India expects strong growth in India in future. Thecompany plans to increase the franchise of its existing brands and continue to

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explore new product opportunities including adjacent market opportunities. Nestle

India is also looking for more opportunities in the SAARC region.

RECOMMENDATION

Although product line is very good & has good width & depth, but NIL should try

to make stronger brand equity in Dairy products, Amul is still leader.

It should work more on concept of CRM (Making new customers & retaining old

ones.

Cash discounts must be given.

More competitive pricing to be done in the premium segment.

Increase their sales force to make more frequent visits to the sales person.

Should also look for rural markets.

Quick handling of problems of stockiest & dealers.

Online ordering facility & electronic payment through website can save a lot of

time.

Due to sluggishness in a FMCG market, most of the companies are under pressure

to maintain volume & market share. NIL should draw out an action plan to

improve sales through new product launches.

Company should concentrate on all round cost saving & productivity gain, to

neutralize the adverse impact of increased excise of confectionary.

The market strategy of the firm is a complete and unbeatable plan or an instrument

designed especially for attaining the marketing objective of company. The

formulation of the marketing strategy consists of two steps:-

1. Segmentation & target market selection.

2. Assembling the marketing mix.

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CONCLUSION

In line with the Company's objective to provide superior value in

every product category and market sector, efforts were focused to providequality products to customers at attractive price points. While the

Company continued to generally maintain price points across all the

product categories, the pricing of some products were also reduced to

meet consumer expectations.

Nestls domestic sales registered a 18.5% volume growth during

the first 9 months of 2006. Exports registered a 31% yoy volume growth.In value terms, domestic sales grew by 15.8% yoy to Rs12.1bn, while

Exports grew by 26.4% yoy to Rs2.4bn

Advertising plays an important role in creating brand awareness,

brand recall and brand recognition which are important in helping a

customer make purchase decision of that brand.

Nestle has been a partner in India's growth for the past nine decades and

has built a very special relationship of trust and commitment with the

people of India. The culture of innovation and renovation within the

company and access to the Nestle Group's proprietary technology/

Brands, expertise and the extensive centralized Research and

Development facilities helps the company to create value that can be

sustained over the long term. Nestle India manufactures products of truly

international quality under internationally famous Brand names such as

Nescafe, Cerelac, Maggi, Milky Bar, Milo, BarOne, Nestea and Kit Kat

and in the recent years the company has also introduced products of daily

consumption and use such as Nestle Milk, Nestle Dahi, Nestle Butter,

Nestle Fruit 'n milk ready to drink beverage and Nestle Pure Life bottled

drinking water.

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BIBLIOGRAPHY

BOOKS

Kotler Philip (2004); Marketing Management; Pearson EducationPvt. Ltd.

Ramaswamy V.S. and Namakumari S. (2002); Marketing

Management Planning Implementation and Control; McMillan India

Pvt. Ltd.

Al Ries (1996), FOCUS, Harper Collins Publishers Ltd.

David A. Aaker (1991), Managing Brand Equity, the Free Press.

David A. Aaker (1996), Building Strong Brands, the Free Press.

Jean-Noel Kapferer (1994), Strategic Brand management,

Macmillan Publishing Co.

Internet Sites

www.Nestle.Com

Magazines

Business Today

Business World

Business Standard

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QUESTIONNAIRE

1. Do you consume chocolates?YES / NO

2. If yes, what all brands do you normally buy?

3. How often do you buy chocolates?

(No.) chocolates per day / week / month (please tick)

4. What brands of chocolates are you aware of?

5. Please rank the following attributes in a chocolate on a scale of 1-7 accordingto their importance to you? (1-most important, 7-least important)

Taste

Quality

Packaging

Price

Flavor

Add-ons (Wafers, nuts, etc.)

Brand Image

6. I often pick up a chocolate while I make other purchases.YES / NO

7. What influenced you to buy the above stated brand(s)?

Advertising

Word of mouth

Attractive Packaging

Dealer

Shop Display

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Family/Friend/Relatives

Any Other (Pls. Specify)

8. How do you rate the idea of chocolates being made available at the followingoutlets.(Please rate on a scale of 1-5, where 1 is most preferred and 5 is least

preferred). Pan Shops

Sweet Shops

Gift Shops

Stationary Shops

Ice-cream Parlors

Fast Food Joints

Milk Booths

Restaurants

Exclusive Chocolate Parlors

Road-side Kiosks

9. If a particular brand is not available with the retailer, you will -

Drop the idea of buying a chocolate

Go to another retail outlet

Try another (competitors) brand