Marketing Plan Nestle

Executive Summary

Nestle (Malaysia) Berhad is getting ready to introduce a new variant of its Nescafe line, known as Nescafe Honey. This addition is aimed at the middle to upper working class demographic who prefer starting their mornings with coffee. It also serves as a health-conscious choice that aids consumers in staying alert and confident all day long. The beverage industry has witnessed steady growth over the last five years, and we foresee this pattern persisting, with an estimated 12% rise by January 2012. Hence, this presents us with a significant chance to launch our latest offering.

Our company consistently generates positive cash flows every year, which will result in a projected sales growth of 7% upon the launch of our new product. This growth is expected to gradually increase to 14% within the first three years (January 2012). The factors that are critical for our success include:

1. We have establishing and maintaining a strong relationship with our customers through our promotion, advertisement and others.
2. As a market leader, we keep to promote and maintain high quality product in the market to make the life more comfortable.
3. We have creates the customer loyalty through our nurturing value and quality.

Furthermore, our estimated annual sales figures are as follows: RM 4,224,000 in the year 2010, RM 5,456,000 in the year 2011, and RM 7,920,000 in January 2012. Considering our 25% market share in the beverage industry, we estimate our demand to reach 8.8 million among the population of Malaysia.

Nescafe adopts a marketing strategy that involves adapting our existing product for a new market while also focusing on using environmentally friendly products and enhancing the quality of Nescafe Honey. Our pricing objective aligns with our commitment to delivering a superior product.

We employ cost-based pricing methodology for determining our selling price. Our strategy involves utilizing television, radio, and billboard advertising to effectively reach our target market. The presence of a spokesperson further enhances market awareness. From January 2009 to January 2012, we have a planned schedule for launching, campaign management, advertisement creation, web development, and promotional activities.

Market Analysis

Market Needs and Wants

The coffee can is packaged in a seemingly ordinary beverage can, but it feels notably heavier and denser when held. To access the contents, just turn the can upside down and press the button, which will break a seal on the opposite side.

After gently shaking the can to remove all the red liquid, let it stand for about three to four minutes. This will make the can of coffee hot and it needs to be activated at room temperature for convenience.

Paper-packaging

Currently, plastic is commonly used to package coffee products, posing a threat to the environment. To address this issue, the government urges companies to adopt saf er alternatives. Thus, coffee products should consider using paper-packaging as a substitute for plastic-packaging. While paper-packaging is often utilized in flights, hotels, and high-class restaurants, it is not commonly seen in sales.

Best Bins in selling Bulk Coffee

Nowadays, people are occupied with their work and studies. This is why the rounded corners in BestBins design are considered a valuable feature. It helps eliminate coffee residue that is often found in the front or corners of the bin, which is a common problem with acrylic bin systems. By cross merchandising packaged goods within the coffee section, it presents a great opportunity to attract package customers to explore bulk shopping. As a result of these additional bulk purchases, both revenues and profits will increase as the crossover becomes more prominent. This is mainly due to the usual margin advantage that bulk coffee offers compared to selling pre-packaged coffee!
3 in 1 instant coffee

Nescafe and many other companies in the F&B industry have been practicing the concept of 3 in 1. It is a convenient and popular option, particularly among working individuals given the current trend.

Market Trends

Making Coffee a Special Occasion

Many people only associate coffee with breakfast and tea time, but it can actually be enjoyed on any special occasion, such as birthdays, weddings, anniversaries, and other ceremonies.

Coffee as a gift box

Most people prefer giving chocolate as a gift, but have they considered giving coffee instead? Coffee can actually be a great gift for anyone. Let’s explore the various uses of coffee. While coffee is commonly enjoyed as a beverage, it can also enhance the flavor of cakes when added to their recipes. This adds a unique and delicious taste to the cake. An example of this is the tiramisu cake available in the market.

Market Growth

There is a growing potential for coffee in Malaysia as many coffee houses have opened up. Additionally, coffee is a necessity for many people as it provides alertness and energy. Furthermore, companies are actively researching and developing high-quality coffee products.

Companies’ marketing activities may lead to increased growth of coffee in the upcoming year. Nevertheless, coffee growth faces challenges as people’s focus shifts towards health-oriented products like yogurt. Furthermore, the rise in raw material costs may escalate coffee production expenses. Consequently, consumers may opt for less expensive alternatives.

SWOT Analysis

Strengths

1. Board of director: Nestle has a great top management. Local companies form a group of autonomous regional managers who know more about the culture of the local markets.
2. Human Resources: They have measurable experience and expertise in variety of areas. They are also capable of filling several positions within their team and adopt a “can-do” attitude.
3. Financial ability: The venture is attractive to multiple investors as it is a `real business’ opportunity. Besides, low cost operators enable them to produce low cost of products.
4. Image: Nestle has a strong brand name in Malaysia which known as Malaysia’s First Leading Coffee. Both the MVU and La Barista have well-defined and unique features and functions. Future products (Modular food carts, soup and other beverage machines) are in early stages of development.
5. Technology: The venture has secured its IP. There is a commitment to innovation and technology in all areas. Production is driven by technology and research and development initiatives and budgets are in place.
6. Customer Relationship: Nestle company has a strong relationships with many perspective customers and suppliers in the target market

Weaknesses

1. Financial: Nestle need of reliance on 250,000 shareholders.
2. Teamwork: Nestle is a big company which has many departments like finance, sales, marketing and manufacturing. Every department has their own job, work and making decision making. These cause them lack in communication among workers. As a result, conflict will always occur specially on budget for new product because each department has their own objective. Indirectly, it will slow down the process of launch on a new product.
3. Rising marketing communications’ expenditures: When the environment changes faster, it will cause the pressure from market competition to force the company management to increase the expenditures on promotion. Therefore, company needs to use special methods to promote a new product such as advertisement and direct marketing. As a result, the cost of materials will increase.

Opportunities

1. Products: All products produce by Nestle are health-based products. Have many differentiate of products that give chance to consumers to make choices.
2. Economic environment: Today, the purchasing power of consumers increases due to the increase of income. Therefore they are likely to purchase high quality product rather than simply purchase more. Thus, there will be a growing market for high quality and priced instant coffee.
3. Technology environment: The methods of use to grow, harvest, process and manufacture coffee products has certainly evolved. The use of irrigation systems, fertilizers, machinery in the harvest process, and the introduction of automated, computer-controlled equipment has raised efficiency and, in many cases, has also improved product quality. For example, Nescafe recently using freeze-dried technology, instant coffee has a significantly longer shelf life than any product in the pure coffee market, which is a significant advantage.

Threats

1. Economics environment: Some markets entering are already mature such as tongkat ali, old town white coffee and so on. They have a long history and have many loyal consumers. Therefore, there is intense competition in Malaysia’s market. Besides, due to increasing of petrol, the cost of raw material is increasing rapidly. As a result, it will affect our sales and gain low profit.
2. Natural environment: Consumers are beginning to boycott products that have been manufactured in such a way as to damage the environment. This is putting pressure on manufactures to ensure all procedures are environmentally friendly, or risk losing market share.
3. Political and legislative environment: Organizations that operate in the Malaysia instant coffee market are subject to laws that regulate virtually all aspects of their business, including such areas as food and health safety, pollution emissions, and advertising and labeling requirements.
4. Cultural environment: Changes in Malaysian culture and the emergence of varied sub-cultures can have a large impact on the instant coffee market in Malaysia. People today are more concerned about their health. There is a wealth of research linking caffeine to many ailments, and thus, this is increasing demand for the ‘healthy’ alternative – decaffeinated products. There is also the threat the consumers could boycott coffee products all together, and switch to another beverage, such as tea, which is well known for its positive health benefits.

Competition Analysis

Nescafe, the market leader in the coffee category, has successfully created strong brand awareness among consumers. This awareness has translated into customer loyalty and stable operating margins for the company. The key to their success lies in nurturing brand loyalty through offering higher value and quality products.

The Nescafe brand has a higher promotion level compared to other brands. In 2007, they ran multiple promotional campaigns such as value offers, bonus packs, discount vouchers, free premiums, and competitions. Nestle company focuses on research and development to ensure high quality and healthy products for consumers.

Mission and Objectives

Corporate Mission

At Nestle, we recognize the significance of research in enhancing food quality and improving people’s lives. We firmly believe that Good Food is crucial for maintaining Good Health throughout every stage of life. Hence, our goal is to offer food products that are safe and of superior quality, meeting consumers’ physiological needs.

Nestle products support nutrition, health, and wellness while also offering flavor and enjoyment. Nestle acknowledges the importance of consumer preferences for taste and lifestyle when choosing what to consume. Research has been a key factor in Nestle’s history and will remain vital for its future. Nestle understands that more understanding is needed on the connection between health, wellness, and food’s impact on our lives. Therefore, Nestle remains committed to finding answers that can offer consumers Good Food for a Good Life.

Corporate Value

Within our organization, the Nestle Group has consistently maintained a fundamental set of values and principles that steer our interactions with others, drive our business practices, and shape our overall approach.

Our company has chosen four core values: Trust, Respect, Involvement, and Pride. These values are crucial for our business’s success and for creating a positive work environment. When it comes to Trust, we believe in earning the trust of our colleagues, customers, and business partners by demonstrating competence, honesty, and integrity. Regarding Respect, we value and support our employees by embracing their diverse cultures, religions, and traditions. Involvement is another important value; we actively participate in proactive change to promote sustainable growth that leads to profitability. Lastly, Pride plays a significant role in our company culture; we take pride in passionately developing successful brands through the dedication of our employees and the quality of our activities and products.

Corporate Philosophy

• Be the leading multinational company in food, nutrition and wellness. Produce and sell world-class products of the highest consistent quality, reliability and convenience based on business excellence principles throughout our operations. • Maximise the use of good quality local raw materials.
• Be an exemplary employer with a progressive human resource and social policy; with a management style that is based on “Management Commitment and People Involvement”
• Be a responsible corporate citizen, fulfilling all obligations to Government, shareholders, customers, communities and consumers.
• Protect the environment by being committed to environmentally sound business practices and taking into account the need to preserve natural resources and save energy. Guarantee that all products manufactured, imported and distributed by Nestle Malaysia are certified HALAL by authorised Islamic certification bodies.
• Deliver shareholder value through the achievement of sustainable and profitable long-term growth.

Marketing Objectives

We employ a product differentiation strategy where we make alterations to our current product to cater to a new market.

• To meet the needs of specific market This is because different market has it owns need and demand. So in the hope that we can fulfill consumer’s specific need to make their life more convenient through modify existing products.
• To produce environmental friendly products Nowadays, consumers are more aware of environmental friendly products.

Therefore, we aim to guarantee that all product procedures are environmentally friendly in order to avoid consumer boycott.

• To develop brand awareness and acceptance We will like to sustain brand awareness among consumers. Therefore, we will actively conduct marketing campaigns and participates in various promotional activities. This is because we want to build up brand loyalty in the consumers and as a result, it will increase our company’s sales.
• Overtake key rivals on quality or product performance Research and development is a vital part for us to improve the current product. It will help us to produce more quality and healthy products to consume than competitor brands.
• Boost firm’s reputation with customers

By offering high-quality and nutritious products, our company can enhance its reputation among customers, leading to increased post-purchase engagement and willingness to try our latest offerings.

Financial Objectives

Our financial goal is to achieve sales growth by increasing annual sales between 7% (from January 2009 to January 2010) and 14% (in December 2012). Additionally, we aim to maintain positive cash flows on an annual basis.

Market Targeting and Positoning

Target Market

Nestle’s marketing strategy is centered around product differentiation, primarily targeting middle-to upper-income consumers who are concerned about their lifestyles. It is important to consider that career individuals are often occupied with work responsibilities.

Therefore, they do not have much time to have breakfast in the morning. Thus, a warm coffee can help to increase their alertness and energy during the day. Making coffee is a simple process as it only requires 3 minutes. Additionally, this specific market segment often holds various events such as tea-time and meetings. For instance, during such occasions, people usually prefer to have tea. However, we aim to change their perspective by introducing coffee as a suitable beverage for them during these occasions.

Product Positioning

Point-of-Parity

Introducing “NesHoney”, a unique coffee mix infused with honey that brings a fresh offering to the market.

Our Neshoney POP is beneficial for sensitive skin as it has the ability to attract water. Currently, coffee products are typically packaged in stick packs or bottles. However, our Neshoney stands out with its unique honey comb bottle design that helps maintain warmth.

Value Proposition Statement

A healthy-based product with an attractive appearance designed for working people to help them achieve their goals.

Marketing Mix Strategies

Product Strategies

Value Offerings: The primary advantage that customers are truly purchasing is the ability to quench their thirst and stay alert, effectively combating drowsiness.

Our product provides not only a boost but also has the added benefit of healing sore throats.

1. Features: Our products are light weight, stackable, cheap, filled easily and easy to handle.
2. Design: Our product’s design is unique because it is hexagon. We choose hexagon because it shape same like honeycomb.
3. Quality: Our coffee bean that used in Nescafe Honey is from Coffea Arabica and Robusta which is high quality among the coffee bean. Arabicas have a wider taste range which ranging from sweet-soft to sharp-tangy. Power Root and Superpower using the same quality as our product. However, old town using Arabica, Robusta and Liberica which Liberica is lesser quality.

Our product stands out by using honey instead of sugar like our competitors. Honey is a more potent sweetener, allowing us to use less of it. Unlike table sugar, which requires the stomach to use its enzymes to break down its molecules for energy, honey contains a special enzyme added by bees that divides sucrose into glucose and fructose.

Our packaging for the hot can is a 2-piece slim retortable aluminum can that can keep the coffee warm.

Product Life Cycle

The Beverage Industry in the market has reached the maturity stage of the product life cycle.

We actively promote our products by providing consumers with coupons, encouraging them to make future purchases. Additionally, coffee enthusiasts can sign up on our Nescafe website to receive free information on news, coffee, recipes for making great coffee, and other topics related to coffee. To further assist consumers, we offer a toll-free telephone line for inquiries and feedback. Our upcoming repositioning strategy involves changing both the product itself and the target markets. This is necessary because most of our competitors produce coffee products that are very similar, so we aim to differentiate our new product.

Product Mix

Nescafe Honey falls under the category of Nescafe products, as it incorporates coffee as its main ingredient along with the addition of honey. This combination offers numerous health benefits to consumers.

Branding

Our product, Nescafe Honey, was carefully chosen as the brand name due to its memorability. The word “Honey” is easily recognizable, memorable, and pronounced by all, even children. Additionally, the word “Honey” exemplifies our affection and care for our loved ones. As a result, we aim to make Nescafe Honey a beloved choice for consumers. It is important to note that Nescafe Honey falls under both parent and individual branding.

Pricing Strategies

Pricing Objective: Our main goal for Nescafe Honey is to achieve Product Quality Leadership. Being a leader in the market, our aim is to endorse and maintain high standards of quality in our production.

As a result, our competitor will emulate us in providing the highest quality to consumers. Our target market consists of middle to upper income working individuals, who are willing to pay a slightly higher price for products of superior quality. This is because they believe that the price reflects the product’s quality. Given that our product is health-focused, we prioritize the selection of high-quality raw materials for production.

Estimating demand for our Nescafe Honey is 8.8 million, based on Malaysia’s population of 25,274,132 in July 2008. Our market share in the beverage industry is 0.25.

The pricing approach we utilize is cost-based pricing. This means we employ markup pricing, where we add an 80% markup to the cost. The unit cost is calculated as RM 9,681,000 divided by 8,800,000, resulting in RM 1.10. We then apply a markup of RM 1.10 multiplied by 1.8, giving us a final price of RM 2.00.

Channel of Distribution Strategies

Our company uses intensive distribution for our convenience product because consumers are demanding location convenience. Our products can be considered routine products. Our distribution channel is as follows:

• 2-level Nestle (Malaysia) BHD. (Nesmal) Nestle House – 4, Lorong Pesiaran Barat P. O. Box 385, 46-918 Petaling Jaya, Selangor Jalan Sultan, Malaysia. For example, Yin Choon Sdn Bhd. Address: 12, Lorong Lengkuas, Georgetown, Penang, Malaysia. For example, Tesco, Giant, Bintang, and retailers near the housing area.
• For instance, automatic vending because it’s offer 24hours selling, self-service and near to our target market. The places for automatic vending are cafe of the company and near public transport.

Marketing Communication strategies

Advertisement Outdoor: Targeting middle to upper income working individuals, we aim to reach them during their daily commute by showcasing our advertisement on public transportation such as the KL monorail, LRT, and KTM. This convenient approach ensures that our target market will encounter our advertisement while on their way to work.

Radio is a crucial marketing communication strategy. Our advertisement will be featured on popular Malaysian radio stations such as My FM, Hot FM, Fly FM, and Mix FM. This enables us to reach our target market while they are stuck in traffic during their daily commute.

Television plays a crucial role in our marketing communication strategies. To advertise our product, we have chosen Media Prima Berhad, which is the largest television station in Malaysia. Media Prima Berhad encompasses various television stations including TV3, NTV7, 8TV, and TV9. Additionally, we run the Nescafe Kick-Start program on 8TV. The Nescafe Kick-Start program aims to discover new talent and support the youth in pursuing their dream careers. Our advertisement highlights the unmatched awakening power of Nescafe.

• Means –ends Chain Analysis NesHoney (1Now 1NesHoney)
• Terminal: Successful Life
• Instrumental: Achieve Goals
• Physio- social: active and confident
• Functional: Energy and Healthy skin
• Abstract: rich with vitamins and minerals
• Concrete: concept aroma Spokesperson for NesHoney

Fara Fauzana, an actress and DJ of Hot FM, represents our brand NesHoney. Her confidence and activeness led us to select her as our spokesperson. Despite her busy schedule, she manages to maintain her energy and perform well in her job. Neshoney helps her stay alert and confident.

Contingency Plan

1. Low awareness of our product We afraid our Nescafe Honey will have low attention from our target market. Therefore, we plan to give a free trial of our product near public transportation after we launch our product. Besides, if the situation goes on, we will low down our selling price where it can cover all of our costs and gain a bit of profit.
2. Price of raw material unstable We are difficult to make sure that our raw material will buy at the same price within 3 years. Therefore, we need to find more suppliers and deal with them to get a competitive price.