Nestle’s Sustainable Growth in Mature Market Essay Example

Nestle’s Sustainable Growth in Mature Market Essay The company establishment Nestle was first founded by Henri Neslte in the 1860s by developing and producing food products for babies who could not adapt mother’s milk. Following the success in baby food products, Henri incorporated with an Anglo-Swiss condensed milk company to develop dairy products, especially for government supply in World War I. High sensitive and quick responding to the demand of consumer, Nestle continued to create and develop new product mix to canned food, beverage, pet care products, to maximize its scope of business in food segment. Nestle had been incurring high success during its operation in food industry, proved by production many creative product portfolio, double sales and tripled profits, globally brand recognition, offices and factories around the world with the management of previous CEO Helmut Maucher. Maucher successfully promoted Nestle to higher position in market as a global company and has been operating beyond its original Europe boundary. Nestle seems not still happy with what it had obtained. Under leadership of current CEO Peter Brabeck, Nestle is now experiencing a more significant growth and synergies as the top nutrition and food company with strategic management of Brabeck since he took over Nestle in 1997. In today, Nestle has developed another core business to Research and Development sector to support its traditional food and beverage business. Vision and Mission Vision According to Chief Technology Officer, Bauer, of Nestle in his presentation, Nestle has two visions classified for its two core sectors. 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The new sector applies science and technology into innovating and reinnovating consumer=oriented products. Mission Brabeck’s growing strategies are aiming to position Nestle as the market leader in food industry, or at least to rank stably its product categories as second strong product power. Approaches to the mission are now strategically deploying by series of initiatives to increase internal and external operation efficiency. Nestle is currently widely known as the most success company manufacturing and distributing nutritional products for any aspect of health care. That means, Nestle already reaches the first part of its vision, however, Brabeck never stop thinking of giving Nestle to the most possibly highest position as he can and strikes strategies to advance Nestle’s competencies over its major competitors Nestle in a mature market Industry value chain analysis Targeted consumers: Nestle focuses on developing and manufacturing nutritious food and health care products to all types of retail consumers from premature babies to maturity and aging group. Another special profitable market for Nestle is to develop consuming products for pet care In order to Nestle’s products deliver to end-users, they are distributed by large buyers such as wholesalers, supermarkets, schools, businesses. Even they are retail or larger buyers; they of course have power over their choices and expectation of products. They are holding negotiating power on sales contracts at prices and quality they expect to. Nestle is an nutrition, health and wellness business, and it declare consumer orientation is main business development, it thus must notice to consumer’s wants and needs to offer them satisfactory products and acceptable prices. Intensive competition: Although already being the world’s largest food and beverage company, other food companies either globally or regionally achieve some objectives of their expansion strategies during years. Consequently, Nestle’s widespread position is not likely to be stable for a long-run. The three main competitors of Nestle are defined as Kraft, Masterfoods, and Unilever. Additionally, Nestle also must be aware of slow and consistent of local rivals. Both Nestle and its competitors distribute similar products to the same groups of consumers in same markets. Obviously, demand for food is essential and mature; however, with the significant increase in quality of life, people are searching for high qualitative nutritious products that satisfy their demand for health care. Thus, add-ins product is an important strategy for Nestle to remain its world largest position and market share. Key suppliers: strong supply chain is one of the most important competitive advantages to every business. Nestle has a wide supply chain operating over the world, in countries it has representing offices and factories. Similarly to consumer aspect, suppliers also have their owned power in term of conditions and considerations of supply contracts and they are uncontrollable entities. According to Nestle’s official website, it asserts the company has a strong relationship with its suppliers in single market. The relationship and professional corporation are conducted under respect and loyalty elements of non-negotiable standards to generate the competitive advantage to the company. Barriers to entry/exit: There is unlikely chance for a new participant to compete against Nestle and there is no signal from Nestle’s current rivals to exit the industry. The expansion of regional companies, however, must be noticed as they cannot confront to Nestle in global arena but they will probably occupy market share in a particular area. Merges between existing competitors to enhance their capital, market share and competitive factors then can obstruct Nestle’s internal growth. Substitute product: Adopting business strategies Raisch and Ferlic (2005) mentioned in their analysis that Brabeck wanted to achieve four percent of real internal growth when he had recently taken over Nestle in 1997. On the way to reach his goal, Brabeck had been developing challenging objectives such as strengthening innovative capacity and organizational changes. Many strategies were initialed during 1997 to 2005 in order to obtain his ambitious goal and objectives. Corporate level strategies As a global organization international strategy is at the heart of their competitive focus. Nestle’s competitive strategies are associated mainly with foreign direct investment. Nestle 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. Nestle recognizes the profitability possibilities in these high-risk countries, but pledges not to take unnecessary risks for the sake of growth. This process of hedging keeps growth steady and shareholders happy. When operating in a developed market, Nestle strives to grow and gain economies of scale through foreign direct investment in big companies. For example Nestle licenses its brands to local producers. In the developing markets, Nestle grows by manipulating ingredients or processing technology for local conditions, and employ the appropriate brand. For example, in many European countries most chilled dairy products contain sometimes two to three times the fat content of American Nestle products and are released under different brand names. Another strategy that has been successful for Nestle involves striking strategic partnerships with other large companies. In the early 1990s, Nestle 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. European and American food markets are seen by Nestle to be flat and fiercely competitive. Therefore, Nestle is setting is sights on new markets and new business for growth. In Asia, Nestle’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. Nestle’s strong cash flow and comfortable debt-equity ratio leave it with ample muscle for takeovers. Recently, Nestle acquired Indofood, Indonesia’s largest noodle producer. Their focus will be primarily on expanding sales in the Indonesian market, and in time will look to export Indonesian food products to other countries. Nestle has employed a wide-area strategy for Asia that involves producing different products in each country to supply the region with a given product from one country. For example, Nestle produces soy milk in Indonesia, coffee creamers in Thailand, soybean flour in Singapore, candy in Malaysia, and cereal in the Philippines, all for regional distribution. Business level strategies. To be able to adopt Innovation Strengthening objective, Nestle invested in maximizing assets, capacity utilization and distribution network. These investments were to generate operation efficiency and resources for reinforcing brands and stimulate product innovation that increases the company’s competitive advantages. For example, Nestle employed and financially succeeded in MH97, Target 2004+ and Operation Excellent 2007 projects which created considerably savings on capital. Reducing production cost (direct and indirect cost), innovation on production to minimize time and maximize outputs, closure of 165 factories from 1997 to 2002 and focusing on high-performed factories, improve supply chain were implemented during the period. As a result, the company saved up to 7 billion. For more saving, the company initialed FitNes project in 2002 to renovate administrative process that could save 1 billion. The amount saved from those activities was then invested in Ramp;D sector by establishment of Product Technology Centers, Local Application Centers and Clusters in the US, Europe, and partly Asia.

Special K Case Essays

Special K Case Essays Special K Case Paper Special K Case Paper Kellogg is a U. S. company, which offers the Special k cereal and accompanying products (cereals in different flavors as well as granola bars and protein shakes) that are healthier options for people who are aware of their diet and want a better lifestyle. Kellogg expands the market by targeting women who skip breakfast to stay slim. The marketing strategy helps to position the brand as a healthy alternative. The commercials we chose offer a weight management plan designed to lose weight in 2 weeks by consuming Special K products. The commercials chosen are both from the same campaign and the same year- 2009. In this report we have taken into consideration different international advertising factors to show Kellogg’s international advertising strategy. In this report we used several factors of international ad models to determine that Kellogg uses a hybrid international marketing strategy. Hybrid Advertising Strategy see table 1 Based on the environmental analysis below, we concluded that Kellogg’s uses a hybrid strategy known as pattern advertising (1). We considered these environmental factors: Political and legal: Kellogg uses a global approach because both countries have similar advertising regulations; therefore, there is no need for diversification. Economic: Kellogg’s uses a global approach because both ads target the same market consisting of middle and upper class working women who have a similar income, age, and knowledge of healthy lifestyle. Sociocultural: Kellogg’s uses a local approach because in the American advertisement the idea of time and logic is very important. In contrast, in the Mexican advertisement Kellogg appeals to emotions and the idea of personal satisfaction. Technological: Kellogg’s uses a global approach because they are aware that their target markets, who are middle to upper class working women, have the technology (television, internet) to see the commercials. Creative Execution see table 1 Creative execution, or the manner in which ads are carried out and presented, is different for U. S. and Mexican ads. The impact of the message depends not only on what is said but also on how it is said in these ads (2). Messages are presented in a mix of different execution styles: Straight sell: is presented in both ads. Here, the straight sell relies on the specific benefits/attributes of the product-the target audience can lose 3 kilos in 2 weeks (Mexico)/6 lbs in 2 weeks (U. S. ) with the help of Special K products. Both ads show that by buying Special K products, the target audience will enjoy the reward of weight loss. Rational vs. emotional argument: the rational argument, or the supporting claim, is presented in the U. S. ad by stating that loosing weight will lead to the â€Å"healthier new you. This is because in the U. S. the rational argument appeals to the monochromatic culture with low power distance like U. S. On the other hand, the emotional appeal is demonstrated in the Mexican ad when it shows the woman feeling great about herself. The emotional appeals to collectivistic cultures with high power distance like Mexico. Demonstration: the actual use is seen only in the Mexican ad bec ause Mexico is a collectivistic culture heavily relying on the opinion of family, friends, etc. so therefore the target audience is able to connect with the woman eating and enjoying the Special K cereals. High-context cultures, like Mexico, are relational, collectivist, intuitive, and contemplative. Therefore, women in Mexico need to relate to the everyday situation when using Special K products. Americans rely on reason and individualism and therefore they don’t have the need to connect with the woman in the ad. Slice of life: both ads portray a real-life situation involving a problem-not being able to fit into jeans- and then both ads focus on how to resolve the problem by eating Special K, losing weight, and finally fitting into those jeans again. The slice of life is effective for everyday products such as cereals that consumers feel good about if they see real people buy and use them. Dramatization: it is used in the Mexican ad where there is a scenario in the form of a story- bad shopping experience and not being able to fit in your regular size-and the problem solution-eating special K products and losing weight. The reason for dramatization is that Mexico uses emotional/dramatic appeal in the advertising. On the other hand, U. S. commercials rely on the rational/lecture appeal. Also, Mexico is a high context culture meaning that they use more dramatizations in commercials while they do not have to use many words to explain the situation. In contrast, U. S. is a low context culture, so ads are based on words and explanations. Personality symbol: there is a central character (woman) that the audience can identify with in both ads. Special K is positioned as a cereal for adults, targeted to women and their ongoing concern with losing weight that is heavily influenced by popular culture in both Mexico and U. S. Humor: humor is used in Mexican ad when the woman tries to fit into jeans in the dressing room while her husband waits, and then she dances around when she is finally able to fit her jeans. The commercial is targeted to women, who can relate to main character because they think about the times when they tried to fit into jeans in the dressing room, and therefore they get the joke. As stated previously, the Mexican ad is appealing to women’s emotio ns and this is accomplished with the help of humor. Lifestyle: how well a product fits in consumer’s lifestyle is presented in both ads. Both ads show how easy it is to integrate Special K products into their lifestyle and lose weight. Special K ads are targeted towards working, middle class women, who do not have time to prepare difficult healthy meals, and therefore they can grab Special K cereal in the morning and pack healthy snacks for the whole day without any special, lengthy preparation. Advertising appeal see table 1 Both advertisements have an emotional appeal to their consumers, but the appeals are presented in different manners (1). Both advertisements present the issue of weight loss and women struggling to fit into their clothes. The American advertisement shows a woman trying on her jeans next to a dryer giving the impression that because she put her jeans in the dryer and they shrunk and won’t fit. Then it presents a clock, which indicates that it’s time to lose weight. Americans are very concerned with time, and the idea of losing 6 pounds or a jean size in 2 weeks can be very appealing to the American woman. In the Mexican advertisement, the advertisement involves the sense of personal satisfaction. A woman can be seen in a dressing room trying on many different garments that don’t fit her correctly while outside the dressing room a man is waiting impatiently for her. The commercial explains that no matter what, women will always have a reason to take their time. The advertisement encourages them to accept the challenge and gives them a chance to be able to win a full day of shopping. The commercial also says they can debut a new figure in new clothes. The Mexican advertisement not only has to appeal to the fact that women will lose 3 kilos in 2 weeks, but they can also win new clothes. Message see table 1 The American Special K advertisement claims that you will lose 6 pounds in 2 weeks if you take the Special K Challenge. The Special K Challenge requires you to eat their cereal and other snacks and follow the diet plan they give you. If you do this, you will lose weight. They claim that if you lose this weight, your clothes will fit you better and you will be much healthier. The Mexican Special K advertisement claims that if you use the Special K Program, you will lose 3 kilos in 2 weeks. If you use this program to lose weight, you will look better in your clothes. Also, if you buy Special K products, you will have a chance to win a new wardrobe that will flatter your new figure. Copy/ copywriters see table 1 Both ads use copywriters to communicate what the product is intended for and what it is supposed to do. In the American advertisements, they advertise the Special K challenge while in the Mexican ad they advertise the Special K program (programa de special K). Both ads in different words refer to the same thing, but are not copied from English to Spanish. Also, the slogan of the Mexican add is †because you can† (porque tu puedes) while the one in America is â€Å"It’s never too late to start a healthier new you† they both appeal to a slimmer healthier life, but again are interpreted and not presented with the exact translation. Neither of the ads present slang terms, but the American ad does present the term â€Å"wake up call† which for American means the time to change something, but in the Mexican society such idiom does not mean anything. Target market appeal see table 1 Number of people in ad: The Mexican ad reflects the collectivist culture by having many people in it. It is very busy, with many people in line and husbands waiting for their wives. The American ad, on the other hand, shows only one person, therefore appealing to the individualistic aspect of American culture. Masculine values: Both countries have a masculine culture, but the difference is that the Mexican ad reflects on the compet itive aspect, and the American ad reflects on the individual achievement aspect. Risk: Mexico is much more risk averse than the United States, so the Mexican ad backs the product with a promise of winning a shopping spree. The American ad just states that you can lose weight, therefore making you take the risk of purchasing the product for a vague reason. US product: Mexico has an overall positive attitude towards the United States, and therefore like American products. Therefore, The Special K brand is portrayed very similar in both advertisements. Availability of time: The product is a convenient and quick meal, so it appeals to people that are in a hurry. The product is portrayed in a similar manner in both advertisements. Independence of media from government control: Both countries have limited government control of broadcast television, so the company is able to freely express themselves in the ads, taking into account cultural factors. Relative importance of visual versus verbal in a message: Both cultures rely on visuals to portray a message and appeal to people. The ads both use imagery (i. e. more red in the Mexican commercial, minimalism in American) to appeal to the target market. The American ad, however, relies on verbal delivery to get the message to the viewers. Importance of self-service retailing: In both cultures self service retailing plays an important role for the deliverance of products to the population. Both ads expect the customer to purchase the product at their local grocery store. Development and acceptance of international trademark or trade name: Red, which is used for the theme color of Special K, is important in Mexican culture. The Mexican commercial underlines the red color, using it more than the American ad. Also, Special K does not mean anything bad in Mexico, so the name is acceptable. Applicability of products’ theme or slogan to other markets: Both slogans are different, but they imply the same thing. Both slogans are geared to appeal to the culture. Global media decisions see table 1 Both ads are television ads that implement sight, sound, motion, and color. Television advertising is intrusive in nature meaning that the viewer doesnt have to be actively involved to receive message. Special K is targeted towards middle-class working women and therefore both Mexican and U. S. ds run on television in the morning when women usually turn on the TV while preparing breakfast and in the evening while preparing dinner. The reason for this is the intrusive nature of TV advertising. Special K commercials also run on TV during the TV programs targeted to women. Advertising Objectives see table 1 Both Mexican and U. S. ads are hybrid of persuasive an informative advertising. The persuasiv e advertising motivates users to take action in the form a lifestyle change with the help of Special K products. There is an ongoing issue of weight loss presented in both ads and solution to lose weight. An informative advertisement communicates to create and build brand awareness by positioning Special K products as a cereal for adults that fits into working woman’s lifestyle. It informs the audience about the benefits (weight loss, healthier lifestyle) of the product. Big Idea see table 1 If your clothes are feeling tight, then you should eat Special K to be able to fit into them again. The big idea of both of these advertisements is that this product is a tasty, easy way to lose weight. This definitely appeals to many people who want to lose weight but do not have a lot of time. Also, they have many different Special K products so that the people who are trying to lose weight will have a lot of variety in the food they eat. In the Mexican ad you also have a chance to win a new wardrobe that will fit your new figure. Push/pull strategy see table 1 Both the American and Mexican advertisements use a pull strategy. Kellogg assumes that the target market has knowledge of the product. The ad’s wording them to try Special K and see for themselves that the product will help to lose weight, thus creating demand for the product. The customer will subsequently go to their retailer in search of the product. The ads encourage women to take the â€Å"special k challenge† and lose 6 pounds in 2 weeks. The Mexican ad also offers a free shopping spree for women that can fit into a specific red dress after the challenge. These challenges and offers make women look for the product at their local store. Table 1 Factor/ CountryUnited StatesMexico Hybrid advertising strategyPoliticalGlobal TechnologyGlobal EconomicalGlobal Socio-culturalLocal Creative executionStraight sellyesyes Rational/ motional argumentRationalEmotional demonstrationnoyes Slice of lifeyesyes dramatizationnoyes Personality symbolyesyes Humornoyes lifestyleyesyes Advertising appealyesyes MessagePromisesLosing 6 pounds in 2 weeks. Losing 3 kilos in 2 weeks. Benefit/ claimClothes will fit better and consumer will be healthier. Clothes will fit better and consumer will have a chance to win new clothes. Copy/copywriteCopywriteCopywrite Target marke t appeal# of people in ad 1 character-IndividualismMultiple characters-Collectivism Masculine valuesMasculine-individual achievementMasculine-competitive RiskMore risky-no promise behind Less risky-win shopping spree U. S. productAmerican is goodAmerican is good Availability of TimeLimited-convenientLimited-convenient Independence of media from government controlYes-choiceYes-choice Visual v. Verbal in messageVerbal-minimalisticVisual-dramatization Importance of self-service retailingPeople know where to buyPeople know where to buy Development and acceptance of international trademark Kellogg known Kellogg known Applicability of product’s theme or sloganVisible in adVisible in ad Global media decision Television advertisement-short commercialTelevision advertisement-short commercial Advertising objectivesHybrid of persuasive and informativeHybrid of persuasive and informative Big ideaFlavorful and convenient way of losing weight. Flavorful and convenient way of losing weight. Pull strategyKnown to target marketKnown to target market 1. Keegan, Warren J. , and Mark C. Green. Global Marketing. 6th. New Jersey: Pearson Education Inc. , 2011. Print. 2. Lakdawala, Ali. Advertising Messages. Scribd. Scribd Inc. , 2011. Web. 29 Nov 2011. .