Assignment of international marketing

(Competitive advantages of dairy products of nestle. Social

capital, brand value &gains from divers of globalization.)

About nestle
Nestle was founded in 1867 in Geneva, Switzerland by Henri Nestle. Nestlé’s first
product was "Farine Lactee Nestle". In 1905, Nestle acquired the Anglo-Swiss
Condensed Milk Company. Nestlé’s relationship with India started 1912, when it
began trading as The Nestle Anglo-Swiss Condensed Milk Company (Export)
Limited, importing and selling finished products in the Indian market.

After independence, in response to the then economic policies, which emphasized

local production, Nestle formed a company in India, namely Nestle India Ltd, and
set up its first factory in 1961 at Moga, Punjab, where the Government wanted
Nestle to develop the milk economy. In Moga, Nestle educated and advised
farmers regarding basic farming and animal husbandry practices such as
increasing the milk yield of the cows through improved dairy farming methods,
irrigation, scientific crop management practices etc. Nestle set up milk collection
centers that ensured prompt collection and paid fair prices. Thus, Nestle
transformed Moga into a prosperous and vibrant milk district.

In 1967, Nestle set up its next factory at Choladi (Tamil Nadu) as a pilot plant to
process the tea grown in the area into soluble tea. Nestle opened its third factor in
Nanjangud (Karnataka) in 1989. Thereafter, Nestle India opened factories in
Samalkha (Haryana), in 1993 and two in Goa at Ponda, and Bicholim in 1995

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and 1997 respectively. Nestle India is now putting up the 7th factory at Pant
Nagar in Uttarakhand.

Today, Nestle is the world's largest and most diversified food company. It has
around 2, 50,000 employees’ worldwide, operated 500 factories in
approximately 100 countries and offers over 8,000 products to millions of
consumers universally.

Brands & products

Dairy segment
 NESTLÉ EVERYDAY Dairy Whitener
 NESTLÉ EVERYDAY Ghee
 NESTLÉ Milk
 NESTLÉ Slim Milk
 NESTLÉ NESVITA PRO-HEART MILK
 NESTLÉ Fresh 'n' Natural Dahi
 NESTLÉ Fresh 'n' Natural Slim Dahi
 NESTLÉ Jeera Raita
 NESTLÉ NESVITA Dahi
 NESTLÉ MILKMAID Fruit yoghurt
 NESTLÉ MILKMAID
 NESTLÉ NIDO
 NESTLÉ Dahi

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 Brand value

Nestle the biggest consumer packaged foods producer in the world. In 2008,
Nestlé’s brand value was more than $5,592 million dollars.

 Nestle, the largest producer of consumer packaged beverages and foods in

the world, claimed the 63rd position in the Interbrand's list of 100 most
valuable brands in the world.
 In 1988, Nestle owned Rowntree Mackintosh PLC, widely known as
Rowntree. The main reason behind this acquisition was Rowntree's brand
value.
 The brand "Nestle" has an important role behind the globalization efforts of
the company. In 1996, almost 40% of the net revenues came from the
products that fell under the Nestle corporate brand
 The main attraction of Nestlé’s corporate identity is its logo. The design of
the logo is very innovative. The nest in the logo is a graphic translation of
the founder's, Henri Nestle, name.
 Nestle expanded the Kit Kat brand beyond the United Kingdom. The
company spending a lot of money to maintain a successful brand identity.
 Nestlé’s efficient brand management system continuously is working to
improve the company's brand value

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 Competitors

Nestle competes with other packaged foods companies as well as store brands
from retailers such as Safeway (SWY), Wal-Mart Stores (WMT), Walgreen
Company (WAG). Nestlé’s major competitors are:

 Unilever NV (UN) - A Dutch company that produces packaged foods and

products for the home and personal care markets. Unilever is one of Nestlé’s
largest international competitors.
 Kraft Foods (KFT) - A U.S. company that produces packaged foods products.
Kraft is one of Nestlé’s largest U.S. based competitors. On January 19, 2010,
Kraft bought Cadbury Schweppes (CSG) for $19.5 billion, creating the largest
candy company in the world and strengthening Kraft's international presence.
Cadbury Schweppes (CSG) is a U.K. company that produces products for the
confectionery and non-alcoholic beverages markets; they compete with
Nestlé’s beverage and confectionery products internationally and in the U.S.
 GROUPE DANONE (DA) - A French company that produces packaged
foods and beverages. Group DANONE competes with Nestle internationally
and in the U.S.
 Hershey Foods (HSY) - A U.S. company that produces chocolate and sugar
confectionery products. Hershey Foods competes with Nestlé’s confectionery
brands mostly in North America.

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Competitive advantages

Quality is a competitive advantage

We live in a competitive world and must never forget that our customers have a
choice. If they are not satisfied with a Nestlé product, they will switch to another
brand. Our goal, therefore, is to provide superior value in every product category
and market sector in which we compete.
The pursuit of highest quality at any price is no guarantee for success, nor is a
single-minded cost-cutting approach. Lasting competitive advantage is gained
from a balanced search for optimal value to customers, by simultaneous
improvement of quality and reduction cost.
Success can never be taken for granted. We must watch and learn from our
competitors. If they do something better, we must improve our own performance.
We can achieve competitive advantage through Quality.

At Nestlé, Quality is our first priority. Let us practice it

every day.

 Nestlé describes itself as a food, nutrition, health, and wellness company.

Recently they created Nestlé Nutrition, a global business organization
designed to strengthen the focus on their core nutrition business. They
believe strengthening their leadership in this market is the key element of
their corporate strategy.

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 In order to reinforce their competitive advantage in this area, Nestlé
created Nestlé Nutrition as an autonomous global business unit within the
organization, and charged it with the operational and profit and loss
responsibility for the claim-based business of Infant Nutrition, HealthCare
Nutrition, and Performance Nutrition.
 The Corporate Wellness Unit was designed to integrate nutritional value-
added in their food and beverage businesses. This unit is responsible for
coordinating horizontal, cross-business projects that address current
customer concerns as well as anticipating future consumer trends.
 Nestlé’s competitive strategies are associated mainly with foreign direct
investment in dairy and other food businesses. Nestlé aims to balance sales
between low risk but low growth countries of the developed world and
high risk and potentially high growth markets of Africa and Latin America.
 When operating in a developed market, Nestlé strives to grow and gain
economies of scale through foreign direct investment in big companies. In
the developing markets, Nestlé grows by manipulating ingredients or
processing technology for local conditions, and employ the appropriate
brand.
 Another strategy that has been successful for Nestlé involves striking
strategic partnerships with other large companies. In the early 1990s,
Nestlé entered into an alliance with Coca Cola in ready-to-drink teas and
coffees in order to benefit from Coca Cola’s worldwide bottling system and
expertise in prepared beverages.
 In Asia, Nestlé’s strategy has been to acquire local companies in order to
form a group of autonomous regional managers who know more about the
culture of the local markets than Americans or Europeans. Nestlé’s strong
cash flow and comfortable debt-equity ratio leave it with ample muscle for
takeovers.

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  A pool of qualified suppliers that understand and support Nestlé’s
commitment to excellence.
 A pool of qualified suppliers that are directly aligned with
underrepresented and emerging communities and can promote positive
relationships with our customers
 Better quality goods and services at a lower price as a result of increased
competition and an extended supply base
 Access to new capabilities and innovations
 A competitive advantage as we seek government contracts, and assurance
that we are in compliance with the diversity expectations of our public
sector contracts.

Other advantage

 Strong innovation heritage

 Clear vision for the future
 Leveraging research into products and services

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Nestlé’s competitive advantage is Nestlé’s vision

Nestle Research Vision To Nestlé Vision

create the future, move faster To be the Nutrition, Health and
and go beyond what Wellness company
consumers tell us

•Science and technology as •Innovation driven by superior

the engine of innovation science and technology

•Being consumer centric •Understand consumers

‘nutritional and emotional needs

Nestlé’s competitive advantage is leveraging research into products and services

 Weight Management

 Growth and Development

 Protection
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SOCIAL CAPITAL

❛❛We believe that the true test of a business is whether it creates value for society
over the long term❜❜

Peter Brabeck-Letmathe,
Chairman and CEO, Nestlé

Nestlé India has always focused on long term, sustainable and profitable growth
and helped communities around its factories to improve their quality of life in a
similar manner. Nestlé Agricultural Services has used the experience gained by
Nestlé across the world to set up a system of direct and efficient contact with the
farmers. Company veterinarians and agronomists supervise the milk routes and
advise farmers on various issues including proper feed for the herds. Milk storage
facilities have been set up close to the farmers. Veterinary services are provided
free, and medicines provided at wholesale cost. The company assists farmers in
artificial insemination programs for their cattle, provides subsidy and helps them
in procuring loans. For more on Nestlé Agricultural Services, 

Safe Drinking Water

Water is a scarce resource. In India, availability of clean drinking water is a
major concern for many communities. Almost 200 million people do not have
access to clean drinking water. Nestlé India is committed to improving the
situation and believes that the first step is to create awareness in the communities

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around its factories. A key focus area of our Corporate initiatives is to help
provide Clean Drinking Water and educate children in schools to conserve this
scarce resource.

Education and Training

Nestlé supports initiatives to create awareness about the right to education and
encourages the communities around its factories to send their children to school.
Nestlé India employees have developed a special play 'Let Us Go to School' for this
purpose. This has been staged amongst the communities around our factories, and
its recordings screened at smaller gatherings along the milk routes.

The Company also recognizes the active role that village women play in adopting
good dairying practices in dairy farms and regularly conduct special programs
that help them.

Nestlé India supports local schools, helps in the maintenance of public parks and
green belts, facilitates blood donation camps and health awareness programs. The
key messages of conservation, hygiene, health and wellness are progressively built
into the communities where the Company is present. All these initiatives
strengthen the bond between Nestlé India and the community.

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