24

Nescafe

Name:Class:Roll Num:Date: 19th April, 2015

EXECUTIVE SUMMARYNescafes is a big brand extension of Nestle operating with 72% of 73% total market share of instant coffee in the world. Currently, it has its product operating in 55 countries and in each country the brand is positioned according to the local needs and psychological wants of consumers. It has four major international competitors Maxwell, Moccona, Lavazza and Riva but out of all Riva is the one with strong potential to compete with increasing its market share. Nescafe is a powerful brand with a lot of strengths, some weaknesses and threats but still are many opportunities available to them. Political, economic, social and technological conditions are supportive due to its strong roots in the countries and terms with governments. It attracts people from all SECs with different price ranges for products. Further Nescaf plays a great deal with positioning, massive advertisement and huge distribution networks. The new product that I will launch is flavoured milk Sips. It will be launched in four different flavours Mango, Chocolate, Caramel and Strawberry in a bottle of 250 ml. It links directly to the people who want to drink juices or flavoured milks to become healthy and enjoy at the same time. It will go great in the market as it will create its awareness through the massive advertisements and after creating the hype it will launch with four different flavours to meet the taste of target market. Segmentation would be on the basis of age mainly and then gender and positioning and market strategy with promotions will help to acquire the interest of targeted audience.

Table of ContentsIntroduction1PESTEL Analysis3Political:3Economic:3Social:3Technology:4Environmental:4Legal:4Swot Analysis4Strengths:4Weaknesses:5Opportunities:5Threats:6Segmentation and Positioning Strategy6Segmentation:6Positioning Strategies:6Australia:6Malaysia:7United States of America:7Industry Analysis Through Porter Five Forces7Australia:7Threat of Buyers:7Threat of Suppliers:7Rivalry:8Threat of New Entrants:8Threat of Substitutes:8Malaysia:8Threat of Buyers:8Threat of Suppliers:9Rivalry:9Threat of New Entrants:9Threat of Substitutes:9United States of America:9Threat of Buyers:9Threat of Suppliers:10Rivalry:10Threat of New Entrants:10Threat of Substitutes:10Value Chain of Nescafe10Consumer Needs:10Nutrition Research:11Development:11Quality and Safety:11Consumption:11Porters Value Chain12Infrastructure:12Human Resource Management12IT Department12Procurement12Inbound Logistics12Operations13Outbound Logistics13Sales and Marketing13Services13Current Market Strategy13Mission and Goals13Marketing Mix14Product:14Pricing:14Cost Leadership:14Place:14Promotion:15Conclusion15New Product16Product:16Price16Place:16Promotions:16Market Strategy and Positioning:17Ansoff Matrix17Segmentation:17Target Market17CONCLUSION17References19Appendix23Diagram No 1 PESTEL Analysis23Summary Table PESTEL Analysis:23Diagram No 2 SWOT Analysis:24Summary Table SWOT Analysis:24Diagram No 3 Porters Five Forces Model:25Summary Table Porter Five Forces Model25Diagram No 4 Value Chain:26Diagram No 4(a) Value Chain:26Diagram No 5 Product Life Cycle:27Diagram No 6 BCG Matrix:27Diagram No 7 Ansoff Matrix:28

1

INTRODUCTIONNescafe is a product of the known multinational FMCG Company Nestle that has been efficacious in attaining the market share for instant coffee. The word Nescafe has been derived from the two words Nestle and Caf and was launched in 1930s for the first time. At present Nescafe is the market leader and a highly consumed drink after Coca-Cola, Pepsi and Budweiser. A wide range of Nescafe coffees are available for its consumers with various tastes. The regular product range of Nescaf includes: Nescaf Classic, Nescaf 3in1, Nescaf Cold Range and Nescaf Espresso whereas, the premium range includes: Nescaf Alta Rica, Nescaf Cap Columbie, Nescaf Decaf, Nescaf Specialties Range, Nescaf Dolce Gusto and Nescaf Green Blend (Nescafe.com, 2015). Nescafe coffees are available in 55 different counties (Nescafe.com, 2015). Nescafe penetrates into its targeted market by focusing on the people that are brand oriented rather than system oriented. The products are launched in according with the needs and lifestyles of people with the focus on their regular lives and as well the occasions they indulge themselves into. Nescafe always attempts to look for the loyal customers and to capture new and retain old it keeps it focuses on renovation and innovation of the instant coffee extensions. Out of total 73% coffee market Nestle has occupied a market share of 72% (Srivastava, 2014). Major competitors of the Nescaf include Maxwell, Moccona, Riva and Lavazza. Maxwell sells its coffee now in the joint venture with PepsiCo and it focuses on mature coffee drinkers with high class lifestyle. Moccona as well is an expensive coffee targeting people between ages 25 to 60 years with high disposable income. Lavazza targets the young females with its international campaigns. Riva focuses on younger lot of people that mostly includes students and amongst all the competitors Riva has highest threat to Nescafe as its target market is becoming loyal to it and is extending on an ongoing basis. The pricing structure of Riva is also quite similar to Nescafe and it is enhancing its market share as the younger brand (Coroflot, 2014).

PesteL Analysis Political:In USA it works with government to control diabetes and obesity, in Australia it improves quality of life for its consumers through focusing on economic developments and in Malaysia it works for health and nourishment with the vision of nourishing Malaysia (Cakir, 2014). Economic:In USA, it works for farmers and communities ensuring that the economy in which it operates is strong. In Australia, this mega giant is one of the high tax payers to the government serving as the strong support and in Malaysia its one of the big job providers leading to the decrease in rate of unemployment so economic conditions are always favourable for it (Cakir, 2014). Social:In USA it works for the rural areas, educational facilities for the children of farmers with some literacy and numeracy courses for rural people. In Australia it is one of the good job providers and in Malaysia various initiatives are taken out for the people with bad or poor health to bring them back to life. Further in all the countries, it has implemented a strategy of Greenwash in its factories leading towards lesser carbon omissions and water withdrawal bringing it favours from the social sector (Cakir, 2014). Technology:Nescafe has a strong financial position and therefore, its always able to cope up with technological advancements. In all the countries USA, Australia and Malaysia, all of its products pass through extensive research and development and quality tests before getting launched in to the market (Cakir, 2014). Environmental:Environmental conditions in USA and Australia are favourable for the Nescafe whereas, Malaysia is a tropical place, coffee is more seasonal there (Cakir, 2014). Legal:Nescafe being a top coffee manufacturer always employs the correct food ingredients and also follows the Food Standards Agency (FSA) guidelines in all the countries (Cakir, 2014). Swot AnalysisThis section elaborates strengths, weaknesses, opportunities and threats for the brand in USA, Malaysia and Australia. As the brand has common SWOT in all the countries so they are all mentioned together. Strengths:The strengths of the brand include: Nestle A strong globally established parent brand. Excellent market presence with visibility and availability to the customers with strong distribution networks. Massive advertisements of the brands. High control on the quality of products. A large number of products available for consumers with various tastes and prices (Jurevicius, 2013).Weaknesses: Nescafe has a price point system of portfolio. As a distribution network is huge a lot of money is paid to the sales team. Being a market giant it has to pay a big amount of tax. Health conscious people avoid drinking coffee as it includes a strong dosage of caffeine (Jurevicius, 2013).Opportunities: With strong and established brand name they can establish tie-ups with other corporations. As they focus on the local needs and they have acquired the major market share they can play with the price to meet the demands. With strong roots in to economy they can establish their outlets anywhere required (Arif, 2013).Threats: Major threats are the people conscious towards coffee and caffeine. Another threat could be its growing global competitors. Usage rate is low in the countries with high preference towards the tea. Price inflation leading to the overall increase in prices (Arif, 2013).segmentation and Positioning Strategy Segmentation:Nescafe segments its consumers on the basis of demographics and psychographics. In USA, segmentation is done on the basis of age, gender, tastes and income level. In Australia, consumers are segmented on the basis of psychographics such as keeping their needs for relations and connections in mind and in Malaysia, again psychographic segmentation is done keeping in mind the discovering nature of customers. Positioning Strategies:Australia:In Australia Nescaf is positioned as the drink that helps the people to connect with each other. It focuses on the emotional appeal by emphasizing the coffee with relationships (Nescafe.com.au, 2015). Malaysia:In Malaysia, Nescaf is positioned as the drink that would lead to the revolution. They position Nescaf as a drink that could be enjoyed with family or friends anyone but the drink would lead to discovering something important and special. They emphasis through positioning on drinking it and discovering what special comes out or develops (Nescafe.com.my, 2015). United States of America:In United States of America it is positioned as the brand that meets the taste of all the people with its wide range in the coffee flavours. It is positioned as the perfect toast and no matter what the taste of consumer it Nescaf has a product for it (Tasterschoice.com, 2015).Industry Analysis Through Porter Five ForcesAustralia:Threat of Buyers:Nescafe is the leading brand in Australia with low threat of buyers. Very few local and international competitors are available to the consumers to switch with such a wide variety that is offered by Nescaf products. Threat of Suppliers:Threat of suppliers is moderate. The quality of coffee depends upon the quality of raw materials provided by the farmers so Nescaf focuses on building strong relations with its farmers (Langley, 2013).Rivalry:Rivalry within the industry is faced by a large number of local coffee FMCG companies and the international competitors. Rivalry is high but Nescafe maintains to keep its position in the market. Threat of New Entrants:Threat of new entrants is low as it includes high fixed costs and barriers to exit are quite high as well. Therefore, a company can only enter on a small level and for a broader scale a strong distribution with a massive investment is required. Further, as Nescaf has settled itself in the market it is not easy for the companies to enter and acquire the customers. Threat of Substitutes:Threat of substitutes is moderate. There is a good number of local and international substitutes available but through the Nescafes strong positioning and massive availability, substitutes are not able to compete at this level (Langley, 2013). Malaysia:Threat of Buyers:Threat of buyers is high in Malaysia. Though it acquires 53% of the market share but as there are many substitutes available to the consumers. Threat of Suppliers:Threat of suppliers is high as suppliers have good sources to sell raw materials too so to retain the market share it is must for the brand to keep good relations with suppliers and farmers (WestCoast Public Relations Sdn. Bhd., 2013).Rivalry:Rivalry within the industry is high with tough competition. There is a presence of lot of international and local competitors.Threat of New Entrants:Threat of new entrants is low as there the fixed costs of entering the business and barriers to exit are high. Threat of Substitutes:Threat of substitutes is high. A big number of competitors with 47% market share are operating within the national industry (WestCoast Public Relations Sdn. Bhd., 2013).United States of America:Threat of Buyers:Threat of buyers is high. Though, Nescafe stays the market leader still a lot of substitutes are available to the consumers.Threat of Suppliers:Threat of suppliers is moderate. Nestle focuses on establishing strong economic favours for its suppliers for all of its brand extensions.Rivalry:Rivalry within the industry is high due to the presence of strong competitors in the market. Threat of New Entrants:Threat of new entrants is low. Entering the market of instant coffee requires high quality, massive distribution, huge marketing budgets and wide availability therefore making it difficult for the brands to enter and compete on a large scale. Threat of Substitutes:It is moderate as Nescafe stays the market leader by capturing loyal customers and its massive marketing campaigns (Nisen, 2014). Value Chain of Nescafe This value chain of Nescaf is followed globally. (Nestle, 2015). Consumer Needs:Identifying and understanding the needs and wants of consumer through research surveys and keeping the health and nutrition priority those products are produced that could completely satisfy the todays consumer (Nestle, 2015). Nutrition Research:After evaluating the consumer needs nutrition research is conducted to scientifically analyse the right nutrients are used in the right amount so that the produced product can meet the nutritional needs of consumers (Nestle, 2015). Development:This method includes conversion of scientific discoveries in to real products. Technological requirements and standards as per Nestls R&D department are evaluated (Nestle, 2015). Quality and Safety:In this step, methods are developed to test ingredients and products throughout the process of production in all stages from raw material to finished product. Quality managers ensure that superior quality and safety standards are met (Nestle, 2015).Consumption:After the completion of production product is launched in to the market. When, once a product is launched an initiative is launched for rigorous consumer tasting to guarantee that consumers are happy with the quality and taste of product. After the feedback products are renovated to the satisfaction (Nestle, 2015).Porters Value ChainIt is same for all the countries USA, Malaysia and Australia. The process of value chain is below:Infrastructure:Nescafes infrastructure is designed in a way that its factories lead to rural development in all the countries USA, Malaysia and Australia. They have modern and highly equipped factories with automated systems (Nestle , 2014). Human Resource ManagementHuman resource management is one of the success keys for Nescafe. Talented and efficient workforce is hired keeping in mind the need of the company. IT DepartmentThe processes are systems are automated through IT and softwares in all states. ProcurementHigh quality raw materials are incorporated to manufacture high quality food products. Inbound LogisticsThere are various factors that come under this category include pricing, transportation, fuel, delivery time, production material. OperationsIn this process coffees are processed and packed (Nestle, 2015).Outbound LogisticsThen the finished products are moved to the shops, retailers and wholesalers. Sales and MarketingSales teams work shop to shop to sell Nescafe products on daily basis and massive advertisements are done to attract consumers from all the areas (Nestle, 2015). ServicesOverall, a great service is provided to the customers and country. Current Market StrategyNescafe is a consumer focused brand with major emphasis on the needs of consumers and this is how it targets them specifically according to their needs. For example in Australia, it focuses on relationships, In Malaysia the emphasis is on discovering special things and bringing revolutions and in USA it focuses on satisfying tastes (Arena, 2014). Mission and GoalsThe major vision and mission of all Nestle products is to become a leader in nutrition and create good food and good life for the people. Though missions in various countries differ but the major goals of Nescaf include brining high quality products to the people that meet the highest standards of nutrition and satisfy their psychological needs. Another goal includes the use of ingredients that bring taste and pleasure (Nestle, 2015). Marketing MixProduct:Nescafe offers a big range in the coffees and in each country the range is specified as per the needs of consumers. Whether its Australia, USA or Malaysia Nescaf is the market leader though it differentiates in its product range. According to the BCG matrix, it falls under the category of Star in these countries with high market share and high market growth. If we compare it to the global market still it could be considered as the Star brand for Nestle with high market and growth rate. Its products are at the initial stages of maturity (Vevey, 2014). Pricing:Cost Leadership:Nescafe focuses on being the cost leader by offering all range of products for people from various social economic classes. A good number of products are available for the people from younger age group, SEC B and SEC A+ (Marketing 91, 2014).Place:Nescafe has its products in 55 countries of the world. In all the countries Nescaf is the market leader with massive distribution network and sales team so that the products are available to everyone at every retail outlet, hypermarket and store (Marketing 91, 2014). Promotion:Promotions are designed depending on the target market and positioning. In Australia, the focus in on connections, in Malaysia it is on Revolution and in USA the advertisements emphasis on taste (Naveed, 2014). ConclusionAfter the complete analysis on Nescafes marketing structure it could be concluded that it is big brand extension operating with 72% of 73% total market share of instant coffee in the world. Currently, it has its product operating in 55 countries and in each country the brand is positioned according to the local needs and psyche of consumers. It has four major international competitors but out of all Riva is the one with strong potential to compete with increasing its market share. Nescafe is a powerful brand with a lot of strengths and few weaknesses and still are many opportunities available to them. Political, economic, social and technological conditions are supportive due to its strong roots in the countries and terms with governments. It is focused on consumers with all types of products with different prices that attract people to it from all SECs. Further, Nescaf plays a great deal with positioning, massive advertisement and huge distribution networks.

New ProductProduct:The new product that I will launch is flavoured milk Sips. It will be launched in four different flavours Mango, Chocolate, Caramel and Strawberry in a bottle of 250 ml. Price The pricing strategy that will be used is market skimming. It will be launched with a higher price and its price will decrease with the increase in market share. Place:It will be available at all mega retail outlets and hyper markets. Promotions:TV advertisements along with billboards and print magazine ads will be used for its promotions. Firstly, hype will be created before its launch through sampling and awareness campaigns and then after the launch, promotional campaigns will be designed and launched to bring more people to the product. Market Strategy and Positioning:Market strategy is that it will position itself as a drink for people who prefer healthy lifestyle as it is all made of milk and fresh fruits. Further, through the market skimming, it will target the SEC A of its economy. Ansoff MatrixThe strategy that is used is Diversification as it includes a launch of new product in to the new market. Segmentation:Target market will be segmented on the basis of gender and age mainly.Target MarketThe target market for this product is children, youngsters and old age people who prefer to drink healthy drinks. The major chunk of the target market is youngsters as it a product that will provide them energy and all the healthy nutrients they need. CONCLUSION Drink that brings to you joy and healthThis tagline is proposed by my own self. It links directly to the people who want to drink juices or flavoured milks to become healthy and enjoy at the same time. Overall, it could be concluded that the product will go great in the market as it will create its awareness through the massive advertisements and after creating the hype it will launch with four different flavours to meet the taste of target market. Segmentation would be on the basis of age mainly and then gender and positioning and market strategy with promotions will help to acquire the interest of targeted audience.

ReferencesArena, N., 2014. Nescafe's International Advertising Strategy, s.l.: s.n.Arif, S., 2013. SWOT ANALYSIS OF NESCAFE, s.l.: s.n.Cakir, M., 2014. PEST Analysis. [Online] Available at: https://mehmetcakir91.wordpress.com/pest-analysis/[Accessed 18 April 2015].Coroflot, 2014. MART201 - Coroflot. [Online] Available at: http://s3images.coroflot.com/user_files/individual_files/321713_8_727LS1KOODzvgA3EJcnxfNO.pdf[Accessed 19 April 2015].Jurevicius, O., 2013. SWOT analysis of Nestle. [Online] Available at: http://www.strategicmanagementinsight.com/swot-analyses/nestle-swot-analysis.html[Accessed 18 April 2015].Langley, S., 2013. Nescafe still number one in instant coffee. [Online] Available at: http://ausfoodnews.com.au/2013/07/08/nescafe-still-number-one-in-instant-coffee.html[Accessed 18 April 2015].Marketing 91, 2014. Marketing mix of Nescafe. [Online] Available at: http://www.marketing91.com/marketing-mix-nescafe/[Accessed 19 April 2015].Naveed, 2014. Nescafe. [Online] Available at: https://www.google.com.pk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=0CCkQFjAC&url=http%3A%2F%2Fwww.geocities.ws%2Fnaveeddear44%2FNescafe.doc&ei=h8YzVazYNo3gat76gZAI&usg=AFQjCNGWuvh_2iqICyaljKwiKPNPJF_eQA&bvm=bv.91071109,d.ZWU[Accessed 19 April 2015].Nescafe.com.au, 2015. Welcome to the World of Nescafe. [Online] Available at: https://www.nescafe.com.au/[Accessed 18 April 2015].Nescafe.com.my, 2015. Join the Coffee Revolution. [Online] Available at: http://www.nescafe.com.my/[Accessed 18 April 2015].Nescafe.com, 2015. All you want to know about coffee. [Online] Available at: https://www.nescafe.com/nescafe_en_com.axcms[Accessed 18 April 2015].Nescafe.com, 2015. Nescafe in Your Country. [Online] Available at: https://www.nescafe.com/country_selector_en_com.axcms[Accessed 18 April 2015].Nestle , 2014. Nestl report reveals rural development impact of its factories. [Online] Available at: http://www.nestle.com/media/newsandfeatures/nestle-report-reveals-rural-development-impact-of-its-factories[Accessed 27 April 2015].Nestle, 2015. Consumer Needs. [Online] Available at: http://www.research.nestle.com/researchandinnovation/valuechain/consumerneeds[Accessed 19 April 2015].Nestle, 2015. Consumption. [Online] Available at: http://www.research.nestle.com/researchandinnovation/valuechain/consumption[Accessed 19 April 2015].Nestle, 2015. Development. [Online] Available at: http://www.research.nestle.com/researchandinnovation/valuechain/development[Accessed 19 April 2015].Nestle, 2015. Nestl Roadmap to Good Food, Good Life. [Online] Available at: http://www.nestle.com/aboutus/strategy[Accessed 19 April 2015].Nestle, 2015. Nutrition Research. [Online] Available at: http://www.research.nestle.com/researchandinnovation/valuechain/nutritionresearch[Accessed 19 April 2015].Nestle, 2015. Quality and Safety. [Online] Available at: http://www.research.nestle.com/researchandinnovation/valuechain/qualityandsafety[Accessed 19 April 2015].Nestle, 2015. Value Chain. [Online] Available at: http://www.research.nestle.com/researchandinnovation/valuechain/home[Accessed 19 April 2015].Nisen, M., 2014. America loves K-cups, but instant coffee rules the world. [Online] Available at: http://qz.com/207354/america-loves-k-cups-but-instant-coffee-rules-the-world/[Accessed 18 April 2015].Srivastava, I., 2014. The Marksman, s.l.: s.n.Tasterschoice.com, 2015. Find Your Perfect Roast. [Online] Available at: http://www.tasterschoice.com/[Accessed 18 April 2015].Vevey, 2014. Full-Year 2013: 4.6% Organic Growth, Trading Operating Profit Margin up 20 basis points, up 40 basis points in constant currencies. [Online] Available at: http://www.nestle.com/media/pressreleases/allpressreleases/full-year-results-2013[Accessed 19 April 2015].WestCoast Public Relations Sdn. Bhd., 2013. NESCAF still fresh and strong after 75 years. [Online] Available at: http://www.nestle.com.my/media/pressreleases/allpressreleases/2013_nescafe_75year_media_launch[Accessed 18 April 2015].

AppendixDiagram No 1 PESTEL Analysis

Summary Table PESTEL Analysis: Countries

PESTELUSAAustraliaMalaysia

PoliticalHighly Favourable Favourable Highly Favourable

EconomicalFavourableFavourableFavourable

SocialFavourable Favourable Favourable

TechnologicalHighly Favourable Favourable Highly Favourable

EnvironmentalModerateModerateLess Favourable

LegalModerateModerateFavourable

Diagram No 2 SWOT Analysis:

Summary Table SWOT Analysis:StrengthsWeaknessesOpportunitiesThreats

Nestle A strong globally established parent brandNescafe has a price point system of portfolioWith strong and established brand name they can establish tie-ups with other corporationsMajor threats are the people conscious towards coffee and caffeine

Excellent market presence with visibility and availability to the customers with strong distribution networksAs a distribution network is huge a lot of money is paid to the sales teamAs they focus on the local needs and they have acquired the major market share they can play with the price to meet the demandsAnother threat could be its growing global competitors

Massive advertisements of the brands.

Being a market giant it has to pay a big amount of taxWith strong roots in to economy they can establish their outlets anywhere requiredUsage rate is low in the countries with high preference towards the tea

High control on the quality of productsHealth conscious people avoid drinking coffee as it includes a strong dosage of caffeinePrice inflation leading to the overall increase in prices

A large number of products available for consumers with various tastes and prices

Diagram No 3 Porters Five Forces Model:

Summary Table Porter Five Forces Model Countries

Porter Five ForcesUSAAustraliaMalaysia

Threats of BuyersHighLowHigh

Threat of SuppliersModerateModerateHigh

RivalryHigh HighHigh

Threat of SubstitutesModerateModerateHigh

Threat of EntrantsLowLowLow

Diagram No 4 Value Chain:

Diagram No 4(a) Value Chain:

Diagram No 5 Product Life Cycle:

Diagram No 6 BCG Matrix:

Diagram No 7 Ansoff Matrix: