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1.3 Research Objective

The objectives of this research are the best marketing strategy that should be

implemented and best suited for Indonesian market illustrated by case of Nestle Company in

Indonesia which have the big market competition and brand awareness of food and beverages

industry in Indonesian market. Furthermore, from this research study, we tend to know any

factors that influence and have big impact toward the marketing strategy of Nestle Company

in Indonesian market. This study tend to know relation between the brand image and brand

awareness of Nestle Company which this company have a famous brand all over the world.

How the company could introduce and improve their brand image with the awareness of

brand itself.

2. LITERATURE REVIEW

This chapter will review and state the theories and concepts which are highly related

with the field study of marketing strategy. Moreover, in this chapter also explain and define

the basic theory that support the study of marketing strategy and give the insights of various

researches on this area. How the marketing strategy which applied and used by company,

what the competitive strategy that suit best for the product, how the consumer awareness

works to help the brand image and factors supporting and influencing consumption of

products are explicated.

2.1 Definition of Marketing

While marketers do their best to imbue brands with positive, motivating values and associations, marketers do

not decide a brand's ultimate meaning. Consumers do – and sometimes they find relevance, purpose and

significance that the brand's creators may not have seen or intended.

– Dorothy Fitch, global analyst, Millward Brown

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Many people may know that marketing is just about advertising and sales. Basically,

any activities associated with buying and selling a product or goods and services can be

defined as marketing. It also includes advertising, delivering products to consumers.

However, marketing is not only talking about that, marketing is everything a company does

to get customers and maintain a relationship with them. The small things like playing golf

with a prospective client, sending an email to customer, meeting with the past client in coffee

shop, thank you letters can be defined as marketing. The true meaning and goal of marketing

is to match the products of company to the people who want and need it, thereby ensure

profitability.

It is the process of analysis, planning, implementation, and control in order to

achieving the organizational objectives by delivering the value to target audiences. Philip

Kotler explained that “Marketing is a social process by which individuals and groups obtain

what they need and want through creating and exchanging products and values with others.”

It includes the element of profit.

2.2 Marketing Strategy

Marketing strategy is defined, how the business tries to achieve its objectives by

setting the goals and high-level strategies. A study to marketing strategy will lead us to know

and understand how the company uses different aspect of strategies formulation,

implementation and its effects. “A set of business principles that an enterprise uses to serve

its customers and achieve profitability”. -(Kotler, 2003). He realizes that marketing strategy

is designed to an organization or companies to use the resources optimally and efficiently in

order to meet the requirements of product and services of the target market. Hence it can be

derived that marketing strategy and product innovation are inter-related and nearly connected.

Moreover, marketing strategy has been proposed in many different ways, most researchers,

scholars, expert and theorists have explained marketing strategy via the integrated aspect of

4P’s - Product, Price, Place, and Promotion. (Kotler, 2003).

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Implying marketing strategy theories can be useful to achieve its marketing objectives

by maximization the utilization of resources and opportunities in the market. Accordingly to

build the company’s more advantages and benefits, it reflects the strategies that are applied in

target market and products positioning. Moreover, the company should take a look into the

market segment that also has big impact toward the marketing of a product and it differs

where the company will target. These segments will differ in needs and wants, responses to

the marketing and profitability. By working at the market segment, company can best

perform to be competitive against its competitor and company should develop the marketing

strategy for each strategy on the basis of potential success of its strategies.

There some food and beverages company that is considered as success company in

food and beverages major. It is explained by where the companies successfully implemented

their marketing strategy and increasing the volume of sales significantly. It is done by

successfully implementing the strategies. Moreover, improving productivity, raising prices,

simplifying promotions, or by cutting product costs. Companies focused on Product

development through line extensions than developing new products. Our research unearths

that in order to achieve their goals how important is the role of branding, positioning, pricing,

channels, merchandizing, promotion, advertising, collateral, and product development.

Figure: 2.2 Marketing Strategies

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2.2.1 Competitive Strategy

“A firm's relative position within its industry determines whether a firm's profitability

is above or below the industry average. The fundamental basis of above average profitability

in the long run is sustainable competitive advantage. There are two basic types of competitive

advantage a firm can possess: low cost or differentiation. The two basic types of competitive

advantage combined with the scope of activities for which a firm seeks to achieve them, lead

to three generic strategies for achieving above average performance in an industry: cost

leadership, differentiation, and focus. The focus strategy has two variants, cost focus and

differentiation focus.” (Porter, Michael E., "Competitive Advantage". 1985)

Figure: 2.2.1 Competitive Advantages

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2.2.2 Marketing Mix

Marketing mix is design into four elements and defined as the business tools that are

used to describe the different kind of choices organizations have to make in process of

bringing the product or service to market. The elements of a product's marketing plan

commonly termed as 4Ps: product, price, place, and promotion.

Product:

Product means the goods-and-services combination the company offers to the target market.

Kotler and Armstrong (2010).

Product is divided into two, tangible and intangible. In order to actively explore the nature of

a product further, let’s consider it as three different products – the CORE product, the

ACTUAL product, and finally the AUGMENTED product. Moreover, The Product Life

Cycle (PLC) is based upon the biological life cycle. It starts from introduction, growth,

maturity and decline. That progress is applied on the product.

Price:

Price is the amount the consumer must exchange to receive the offering.

Solomon et al (2009).

The goal of company in term of price is to reduce the cost by improving the productivity and

efficiency. Then, the marketer need to increase the perceived value of the benefits of its

products and services to the consumer. There are various ways to pricing the product or

service and company should calculate carefully and consider some factors before do pricing.

Promotion:

Promotion includes all of the activities marketers undertake to inform consumers about their

products and to encourage potential customers to buy these products.

Solomon et al (2009).

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Promotion is one of the marketer’s tools to communicate with the consumer and to increase

the sales. Marketer uses the promotion to attract the buyer or consumer. There are some

promotion that commonly used in marketing and in promotion elements such as advertising,

sales promotion, public relations, direct marketing, online communications and personal

selling.

Place:

Place includes company activities that make the product available to target consumers.

Kotler and Armstrong (2010).

Place is also known as channel, distribution, or intermediary. It is the process through which

goods and/or services are moved from the manufacturer/ service provider to the buyer or

consumer.

Figure: 2.2.2 Marketing Mix

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2.2.3 Porters Five Forces

Figure: 2.2.3 Porter Five Forces

Porter forces provided a framework that models an industry as affected by five forces. It

is a tool for marketer to understanding where power lies in business. It is one of the important

tools for assessing the potential of industry’s profitability. It is also powerful for assessing the

balance of power with a little adaptation. It works by looking the strength of five forces that

influence the competition in market:

Supplier Power: The power of suppliers to increase the prices of your inputs.

Buyer Power: The power of your customers to decrease your prices.

Competitive Rivalry: The strength of competition in the industry.

The Threat of Substitution: The extent to which different products and services can be

used in place of your own.

The Threat of New Entry: in condition where they see that you are making good

profits, new competitors can enter the market (and then drive your prices down).

The five forces affect the company by identifying the strength and direction of each force.

Company can have a direct action toward the strength of company’s position and ability to

sustain the profit in the market.

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2.3 Brand Image

The food and beverages industry is also dependent on the brand image of a product

and its quality. This study of brand image will lead us to understand more about different

aspects of brand image and consumer perception on Branding. A traditional definition of a

brand was: “the name, associated with one or more items in the product line, which is used to

identify the source of character of the item(s)” (Kotler 2000, p. 396).As the brand was only

part of the product, the communication strategy worked towards exposing the brand and

creating brand image. Basically, marketer who create a name of brand, logo, or symbols of

the new product can be categorized of create a brand

Brand image is the current view of the customers about a brand. It can be defined as a

unique bundle of associations within the minds of target customers. It is some of beliefs held

about a specific brand. In short time, it is not really affecting the consumer perception but in

the long time, it can manner in which a specific brand is positioned in the market. Brand

image conveys emotional value and not just a mental image. It is a total observation of the

respondents toward a product outside the organization. It should represent an organization’s

vision and mission to the all consumers.

The unique logo of company’s image, motto describing organization’s business in

brief and brand identifier supporting the key values are the main elements to create positive

brand image. An image is formed about the brand on the basis of subjective perceptions of

association toward the brand. Volvo is associated with safety. Toyota is associated with

reliability .The brand image includes products' appeal, ease of use, functionality, fame, and

overall value.

Kim-Hyunah et al. (2005) analyzed the relationship among brand equity factors

(brand awareness, brand image, brand positioning, and brand loyalty) and suggested a

strategy for brand management in contract food service management companies. The

branding strategy is also determining the quality of the product. People who use or consume a

product with a specific brand and really satisfy with the product, they tend to buy with a same

brand and create good brand image toward that specific brand. They do not only buy a

product but also an image. Positive brand image is exceeding the customers’ expectations.

Positive brand image enhances the goodwill and brand value of an organization.

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2.4 Brand Awareness

Building a brand’s image begins with developing the brand awareness. Brand

awareness means the consumers recognize and remember a specific brand or name of the

company while they consider purchasing options. Brand awareness refers to how strong of

brand’s presence in consumer’s retention and memory (Keller 2008, pp.51).Brand awareness

can be defined as brand recognition and brand recall performance (Keller, 2008). In the

marketing, brand awareness guide to being considered by members of buying center, because

the consumer is remember and recognize a particular brand name of a product or services that

company offers. It becomes important to the marketing in the rebuy situation, when the

company tries to move a new vendor or evaluate a product that has been purchased recently.

This is the way how Aaker (1991) explain the three different levels of brand

awareness.

Figure: 2.4 Levels of Brand Awareness

Source : Aaker ,1991, p.62

In the brand awareness, there are some steps to make the consumer realize a brand

automatically. The levels of brand awareness are defined as Unaware of Brand, Brand

Recognition, Brand Recall, and Top of Mind. The first step is when a consumer is do not

know about anything about a specific brand or even never seen their products. This is the

level where consumers have no idea about a particular brand and need to be introduced. The

next level is where the consumer can recognize a specific brand but may be they do not

consumer or buy the product regularly. When the consumers just know about the products

and tend to buy or trying that brand, this is called brand recognition. Brand recognition, need

to be developed by the firm, a firm should promote their brands more in order to get more

attention and help a brand go to the next level.

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The third level is brand recall where the consumers already knew and tried a brand

and tend to buy more. In this level, an organization or firm is keep promoting and heading a

brand in order to let the consumer keep thinking and will not forget about a specific brand.

Sometimes it can be useful as a reminder too for consumer who already forgot about

particular brand. Moreover, the last level, when it becomes a top of consumer’s mind. In this

level, the consumer is being loyal to a specific brand and if they want to buy a product they

will remember a specific brand. An organization should create brand awareness until this step

and positioning their brand in the consumer’s mind.

Despite that, successful brand has characteristic instead the top of consumer’s mind.

The consumer’s top choice is a successful characteristic beside consumer’s mind. The top of

consumer’s mind brands is when the consumers are asked to name brands that directly come

to the consumer’s mind from the product category; one or two specific brands are nearly

always mentioned. The term of consumer’s top choice is the first or second choice when a

consumer reviews there evoked set of possible purchasing alternatives.

Brand awareness has positive effect on brand image and recommended that the food

and beverages company should focus on improving the brand awareness as the brand

strategy. It is thus very important in the marketing and to attract consumers in such way in

order to make the consumer realize and aware with the brand of the product. Moreover, it is

also important for a firm that consumer consider and think their brand while the potential

buyers are making a purchase about which brand can be acceptable and fully satisfy the

consumer’s need. It also can influence the consumer’s choice among several brands and in

low involvement conditions. Brand awareness will be adequate for product choice.

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2.5 Factors Influencing Consumer Behavior

The factors influencing the consumer Behavior of people for various food products in

developing country of origin and brand of the products were cross-tabulated against Cultural,

Social, Personal, Psychological and Product itself. There are some other factors influencing

the consumption except the brand image. Brand image as discussed earlier is built with stable

delivery of value to the consumers. Some of the factors are, the product itself is the internal

important factor that influencing the consumption. In addition, there are four main types of

external factors influencing consumer behavior of purchasing decision which have significant

impact to the consumption: cultural factors, social factors, personal factors and psychological

factors. The external factors relates with the buying behavior that influence the consumption.

The internal factor which is product is self should be one of the reason or factor that

influence the consumer behavior in purchasing decision. The consumption of a product or

brand is depending with the packaging design and exactly the quality of the product itself.

The eye catching packaging design can attract consumer to buy a product. The packaging

should be as attractive as possible to interest the consumer.

The Culture factor is crucial and important when it comes to understanding the needs

and behaviors of an individual. Throughout his existence, consumer will be influenced by his

family, his friends, his cultural environment or society that will “teach” him values,

preferences as well as common behaviors to their own culture. For a brand, it is very crucial

to understand and take into account the cultural factors inherent to each market or to each

situation in order to adapt its product and its marketing strategy.

The different cultural for each country should be noticed and it also influence the

consumption for a product or particular brand. In Indonesia, the country which is majority

Muslim needs to be acknowledged their culture. The products or brands are certified halal.

The food industry is not offering, of course, any product with bacon or pork. In the culture

factor, there are social classes that have effect toward the consumption. It helps a firm to

categorize and segment people into similar values, lifestyles, interests and behaviors in

individuals belonging to the same social class.

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Secondly is the Social Factors that consist of references group and family, social roles

and status. The group of people or family can be one of the crucial factors that impulse the

consumer to buy a specific brand or product. It is generally observed that same group can

trends common consumption among the members. People who are wishing be part of that

group can easily buy a same brand or product, which is influenced by that group. Within

reference groups that influence the consumer buying behavior, several roles have been

identified:

The initiator : the person who suggests buying a product or service

The influencer : the person whose point of view or advice will influence the buying

decision. It may be a person outside the group (singer, athlete, actor,

etc.) but on which group members rely on.

The decision-maker : the person who will choose which product to buy. In general, it’s

the consumer but in some cases it may be another person. For

example, the “leader” of a soccer supporters’ group (membership

group) that will define, for the whole group, which supporter’s scarf

buy and bear during the next game.

The buyer : the person who will buy the product. Generally, this will be the

final consumer.

On the other side, family references also have a part during the purchasing decision

toward a particular brand or product. Family is maybe the most influencing factor for an

individual. The trust and believe to family member or relatives have influence toward the

consumption of some product or brand. Perceptions and family habits generally have a strong

influence on the consumer buying behavior.

Social roles and status is defined the position of an individual his family, his work, his

country club, his group of friends, etc. A social role is an attitude of individual about what

should to have and do according to the profession or position in the family, work, gender, and

etc. Meanwhile, social status reflects the rank and the importance of this role in society or in

social groups. For instance, the CEO driving a small car like a Ford Fiesta or a Volkswagen

Golf would be taken less seriously by its customers and business partners than if he is driving

a German luxury car such BMW or Mercedes Benz.

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Third is personal factor, which also one of the factors influence the consumption. The

Age, income, lifestyle, and personality which are include in the personal factors. An

individual has his own life, lifestyle, activities and hobby. The Age, income, lifestyle and

personality can be a parameter to know how they spent the money for buy a product. The

consumers buy different kind of products at 20 or 70 years and the buying decision process

may also change.

Furthermore, the purchasing power of an individual will have a decisive influence on

his behavior and purchasing decisions based on his income and his capital. This absolutely

affects the consumption with the perspective on money and the price. In addition, it also

reflects to what brands he buys. The lifestyle also determines all its interest, values and

opinion about a brand or product before purchasing and consuming. In order to attract more

customers, many brands are trying to develop an image and a personality that conveys the

traits and values.

The Fourth is psychological factors. Psychological factors split up into 2 categories:

motivation and perception as well as beliefs and attitudes. The motivation will directly

develop the purchasing behavior and lead to the satisfaction of the customers. To increase

sales and encourage consumers to purchase, brands should try to create a need in the

consumer’s mind so that consumer can develop a purchase motivation. The perception is

thought of consumer about the products or brand and will directly act the right thing and

make sense. There are many ways of forming perceptions about the products. Depending on

product, the reviews, past experiences, the availability and promotion by the company are

few of the factors which lead to formation of molding of perceptions about the product.

Furthermore, a belief is a conviction that an individual has on something. Through the

experience he acquires, his learning and his external influences. An attitude is a feeling, an

assessment of an object or idea and the predisposition to act in a certain way toward that

object. Beliefs as well as attitudes are generally reminded in the individual’s thought and are

difficult to change. For many people, their beliefs and attitudes are part of their personality

and reflects the real them.