Nestle

BY Muhammad Hayat Malik Amir Ali Adnan Rana Muhammad Ilyas Sami ullah Khan MBA (1st Semester) TO

SUFIAN MASOOD AHMED

SAN INSITITUTE OF MANAGEMENT SCIENCES LAHORE

NESTLE PURE LIFE DRINKING WATER

INTRODUCTION TO NESTLE: Today, Nestle is the world leading Food Company. Nestle headquarters is in Switzerland. Its international R&D network supports the products made in more than 500 factories in 86 countries. The Nestle factories are operating in the region of: 1. 2. 3. 4. 5.

Africa America Asia Europe Oceania

Being a company dedicated to food from the beginning, Nestle remains sensitive to culinary and eating habits, and responds to specific nutritional problems, whilst also setting and matching new trends such as growing out-of-home consumption and caring about the well being of its consumers.

EANING OF NESTLE: Henri Nestlé endowed his company with the symbol derived from his name. His family coat of arms, the nest with a mother bird protecting her young, became the Company's logo and a symbol of the Company's care and attitude to life-long nutrition. The Nestlé nest represents the nourishment, security and sense of family that are so essential to life. BRIEF HISTORY OF NESTLE: 1866 -1905 In the 1860s Henri Nestlé, a pharmacist, developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his mother's milk or any of the usual substitutes. People quickly recognized the value of the new product, after Nestlé's new formula saved the child's life, and soon, Farine Lactée Henri Nestlé was being sold in much of Europe.

1905-1918 In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestlé's production had more than doubled. 1918 -1938 After the war Government contracts dried up and consumers switched back to fresh milk. However, Nestlé's management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestlé's first expansion into new products, with chocolate the Company's second most important activity 1938 -1944 Nestlé felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to $6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the Company's newest product, Nescafe, which was a staple drink of the US military. Nestlé's production and sales rose in the wartime economy.

NESTLE PURE LIFE DRINKING WATER

1944 -1975 The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and companies were acquired. In 1947 came the merger with Magi seasonings and soups. Crosse & Blackwell followed in 1950, as did Findus (1963), Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in L'Oréal in 1974. 1975 -1981 Nestlé's growth in the developing world partially offset a slowdown in the Company's traditional markets. Nestlé made its second venture outside the food industry by acquiring Alcon Laboratories Inc.. 1981 -1996 Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé's improved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. 1996+ The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and world markets developed into more or less integrated trading areas. Since 1996 there have been acquisitions including San Pellegrino (1997), Spillers Pet foods (1998) and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002: in July, Nestlé merged its U.S. ice cream business into Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef America, Inc.

MISSION STATEMENT “Nestle is dedicated to providing the best foods to people throughout their day, throughout their lives, throughout the world. With our unique experience of anticipating consumers' needs and Creating solutions, Nestle contributes to your well-being and enhances your quality of life.”

Nestle is not only Switzerland's largest industrial company, but it is also the World's Largest Food Company. The mission statement emphasizes on the fact that Nestle products are available in nearly every country around the world. Wherever one may live, only Nestle can provide the best and most reliable food and beverage products to meet his/her needs throughout the day, throughout the life. Especially, people on the move want to be able to find good food wherever they are, whatever the time of day. They are often reassured that they will find well-known brands out of home. This statement also reflects the image of high quality products that Nestle offers. Nestle has the advantage that it offers caterers, fast food chains and other restaurants a complete range of high quality ingredients, base products and meal components, as well as leading consumer brands such as Nescafe. Quality is the cornerstone of the success of the Nestle Company. Every day, millions of people all over the world show their trust in the company by choosing Nestle products. This trust comes from a quality image that has been built up for over a century. Therefore, the quality of the products ultimately enhances the quality of the consumer’s life. In addition, the mission statement declares that Nestle has the ability to anticipate “…consumer’s needs and create solutions….” Nestle has proven this ability a number of times by introducing new products that were required by consumers. Especially, the launch of Nestle Pure Life in Pakistan proves the accuracy of this fact. In Pakistan, there was a need for safe and healthy drinking water and Nestle responded to this consumer need by introducing Nestle Pure Life.

NESTLE PURE LIFE DRINKING WATER

Finally, it is quite evident that the organization has actually implemented its mission statement in the business practices that it carries out. Also, the mission statement has been an important guideline for any SBU that the firm has started and this is portrayed by the success that each SBU of Nestle enjoys. HOW NESTLE DEFINE MARKETING: Building customer relationship based on customer value and satisfaction is at the very heart of modern marketing. The two fold goals of Nestle marketing is to attract new customers by providing superior value and to keep and grow the current customers by delivering satisfaction. Nestle defines marketing as: “A social and managerial process where by individual & groups obtains good food and good life through creating and exchanging products and values.” NESTLE BUSINESS PRINCIPALS:

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Nestlé's business objective is to manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners. Nestlé does not favor short-term profit at the expense of successful long-term business development. Nestlé recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and actions of the Company behind brands in which they place their trust and that without its consumers the Company would not exist. Nestlé believes that, as a general rule, legislation is the most effective safeguard of responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary business principles is beneficial in order to ensure that the highest standards are met throughout the organization. Nestlé is conscious of the fact that the success of a corporation is a reflection of the professionalism, conduct and the responsible attitude of its management and employees. Therefore recruitment of the right people and ongoing training and development are crucial. Nestlé continues to maintain its commitment to follow and respect all applicable local laws in each of its markets.

MARKETING PHILOSPHY NESTLE ADOPTED: Nestle vision is to be the leading food & beverage company in the world providing customers with healthy food at affordable prices. Their logo is Good Food for GOOD LIFE; there all products are for society welfare. So according to their logo and mission statement it is very fair to say that they are following the Societal Marketing Concept. PRODUCT MIX OF NESTLE Nestle is a well-known company all over the world and Pakistan. The company basically deals in food products as their logo says “Good Food, Good Life.” Their major products lines are: Milk Products:i) Nestle Milkpak UHT Milk: This product was launched in 1981. Backed by a very strong brand name, aggressive marketing and distribution plan, consistent quality, and availability throughout the year, it has become quality milk. In September 1999, Milk Pak UHT milk was launched as Nestle Milk Pak UHT milk. It is available in 1000, 500 and 250 ml sizes. ii) Milkpak Butter: This product was launched in 1985 under the Milk Pak brand name. It has been recently repackaged in a crisp white laminate, the design of which bears closed resemblance to that of Milkpak UHT milk. This new package design allows to gain strength from Nestle Milkpak UHT milk. It is available in 200 and 100 gm sizes. iii) Milkpak UHT Cream: This product was launched in 1986 under Milkpak brand name. It is available in 200 ml size. iv) Milkpak Desi Ghee: . This product was launched in 1986. It is available in 1000 ml size and is a leading branded desi ghee in the country. v) Nestle Everyday: To meet the requirements of the tea-whitening segment, this product was launched in 1992. On account of aggressive marketing, focused distribution, excellent consumer acceptance and product quality, this brand has shown strong growth and holds good promise for the future. vi) Nestle Nido: Soon after it was introduced in the early 70`s as an imported product, Nido full cream milk powder became the market leader. Local manufacturing of Nido began in 1990, which has reinforced its position as the dominant player in the full cream milk powder category. II- Chocolate Drinks:i) Milopowder:

NESTLE PURE LIFE DRINKING WATER

This product was launched in 1994. It is available in 14,100 and 200 gm sizes. It is strongly associated with a healthy life style and is an ideal drink for growing children who need strength and energy. ii) Milo RTD: To cater for consumer convenience, Milo RTD (ready to drink) was launched in 1995 and is now available in an attractive 180 ml slim pack. It is popular among all age groups especially among the growing segment of nutrition conscious consumers. It is an excellent substitute for cold drinks. III- Coffee:i) Nescafe Classic: It is one of the world’s most popular coffee brands. Nescafe global campaign “open up” was launched in Pakistan in October, introducing a new brand framework and increased emphasis behind coffee sales in Pakistan. Nestle Milkpak locally packs imported coffee and markets it in 225 and 500gm. IV- Fruit Drinks:i) Frost: It is a well-known brand launched in 1986 and has the largest market share. Positioned as a cold drink and an alternate to cola drinks, its strength lies in the convenience attached to its usage. ii) Nestle Orange Juice: The product was launched in July 1996. It is available in 180ml and1litre sizes. In a market that is becoming increasingly conscious about nutrition and is displaying preference for healthy drinks, Nestle Orange Juice has made very good inroads and has a strong potential in the future.

V- Dietetic & Infant Products:i) Lactogen: Lactogen 1 and Lactogen 2 are infant and follow-up formulae launched in 1991 and are available in two sizes both pack and can. The brands provide both affordability and quality. ii) Cereals: Launched in 1989, it is the dominant player in the growing infant food market. It is available in 5 flavors and provides balanced nutrition to infants. iii) Nestle Rice: An affordable starter weaning cereal and offers the flexibility of preparation with a variety of meals. This was launched in 1994 and available in125ml pack size. iv) Nestle Wheat: Nestle wheat is a wheat-based infant cereal without milk. It is available in 125 and 200 gm pack sizes. iv) Neslac: Neslac is a growing up milk, formulated specially for 1 to 4 years old. This was launched in 1994. It contains a right balance of proteins, calcium, iron, vitamins and essential minerals in order to cater nutritional needs of growing children. VI-Culinary Products:i) Maggi 2-minute Noodles: Fast to cook, good to eat – Maggi 2-Minutes Noodles were launched with local production in 1992, and doing so Nestle pioneered the category of instant noodles in Pakistan. It offers flavors like chicken masala, chili and chatkhara.

ii)

Maggi Cold Sauces: Nestle entered the Cold Sauces category early in the year with the launch of Maggi ketchup, Maggi mirch maza and Maggi khatti meethi – the first Emily sauces in Pakistan. The innovative taste of Khatti meethi together with the more traditional tastes of Ketchup and Mirch maza, were received well by the consumers. VII- Confectionery:In view of the impressive potential for confectionery sales in the country, Nestle Milkpak established an independent sales and distribution network for confectionery products. From three main cities in 1996, it has grown into a nation-wide network. The initial product range includes locally produced Polo Mint, Kitkat, Smarties, Lion Bar, and Fox’s, Allen’s Toffo and Allen’s Soothers. Both Toffo and Soothers are produced on a new confectionery line-based on a new state-of-the-art technology that provides an extremely flexible process for production of wide range of high and low boiled candies. This will enable the company to introduce varieties of new sweet flavors over the next few years. VIII- Water:Nestle Pure Life:

NESTLE PURE LIFE DRINKING WATER

The launch of Nestle Pure Life in December 1998 was a truly historic event. This marks the Nestle Pure Life’s entry into the country’s fast growing water market. At the same time Pakistan became the first country where Nestle launched the new brand. Nestle Pure Life is a premium drinking water, produced to the highest standards of safety and purity. It is ideally balanced with essential minerals. It is available in two convenient sizes of 0.5 and 1.0 liters. Capitalizing on its strong brand recognition, aggressive pricing and supported by a strong marketing campaign, Nestle Pure Life has made very strong inroads into the water market in Pakistan. Nestlé PURE LIFE is available around the globe today in Canada, USA, Mexico, Brazil, Argentina, South Africa, Saudi Arabia, Jordan, Egypt, Lebanon, Turkey, Russia, Uzbekistan, Pakistan, China, Thailand, and the Philippines. Launched on the North American market in 2003, Nestlé PURE LIFE is destined to become the world’s leading and most widely distributed brand by 2010. MARKETING PHILOSPHY FOR NESTLE PURE LIFE WATER:

Nestle Pure Life is a premium drinking water, produced to the highest standard of safety and purity. Their aim is to provide customer with pure drinking water on suitable prices make the product as convenient as possible. According to their claim that they provide the best food through out the world. For Nestle Pure Life they adopted the societal and marketing concept. STRATEGIC PLANNING: BOSTON CONSULTING GROUP (BCG) MATRIX FOR THE SBU’S

Company’s Market Share High

Low

NESTLE PURE LIFE DRINKING WATER

• Pure Life Water • Confectione ries

Culinary products

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Industry Growth Rate

High

Low

STARS

QUESTION MARKS

CASHCOWS

DOGS

• Milk Products • Coffee • Dietetic & Infant foods

• •

Chocolate Drinks Fruit Drinks

STARS: The two Sbu’s, Mineral water and Confectioneries fall into this category of the BCG. These SBU’s have high market share and high industry growth rate. These Sub’s are requiring lots of investment to compete in the growing market. For example, lots of money is being spent and aggressive marketing strategies have been implemented for the Mineral water to build and maintain market share. Nestle Pure Life has captured 50 % of the bottled-water market in Pakistan since it was introduced in 1998. Its approximate sales for 1999 are RS. 70, 401000. This sales figure is quite impressive as the sales rose quite high in only one year. It is predicted that there will be additional growth in the mineral water category in coming years. The sales of the confectioneries rose to RS. 106,559 000 from RS. 87,758 000. The huge increase of RS. 18, 801 000 puts this SBU in the stars category and shows its increasing market share. There is a growing market for the products in confectioneries for example Kitkat (eventhough it’s imported), Polo Smarties etc. This can be proven from the fact that Nestle keeps introducing new products in this category for example Allen’s Soothers were launched during the last quarter of 1998. CASHCOWS: Milk products, Coffee and Dietetic and Infant food have a high market share and are doing business in mature industries. Since the customers of this product category are loyal, the marketing costs of these SBU’s is quite low and as a result a large amount of cash can be generated. Customer Loyalty is a must for these Cashcows to maintain their market share. The sales of the Milk products have increased to RS. 108,430000 from RS. 87,758000. This huge increase in sales reflects the high market share of this SBU. However, its growth rate is low because in general this category is in its maturity stage – that is – a number of milk products have been launched by Nestle, most of which are quite old. An innovation has not really been made in this category. The same conclusion can be made about Coffee. There is an already existing market for Coffee which is not increasing further by a large amount. The sales of Coffee were Rs. 46,89 000 in 1999 and Rs. 392,00 000 in 1998. This huge difference shows that a great amount of cash is being generated from this SBU. Sales of Dietetic and Infant food rose to Rs. 60,935 000 from Rs. 52,655 000. The infant foods unit of Nestle is operating in a mature industry. Like the milk products, the infant foods have been around for a long time without barely any new product line being started in this category. QUESTION MARKS: Included in this section is the culinary products of the organization. The products such as Maggi 2-minute Noodles and Maggi cold sauces have a low market share and a high growth rate. These products especially the cold sauces are operating in a highly competitive market. The approximate sales were Rs. 79,919 000 in 1999 and Rs. 60,818 000 in 1998. This figure represents a great potential for growth in future. However, in contrast, the market share of the products in this category is not very high currently. A reason for this is that Nestle just recently introduced cold sauces such as “Emily sauce” etc. However the enthusiasm with which the customers received the different flavors of sauces, portrays a very high potential for future growth. The firm needs to focus on differentiating its products in the competitive market to gain customers. DOGS: Chocolate and Fruit drinks fall into this category and they possess a low market share and a low growth rate. Chocolate drinks had sales of Rs. 19639000 in 1999, which rose from Rs. 19541000 in 1998. This is quite a small increase considering the rise in the sales of other SBU’s. However, the chocolate drinks are still profitable so the firm does not have to worry about liquidating or getting rid of this SBU. The sales of Fruit drinks rose to Rs. 40,620 000 in 1999 from Rs. 38,103 000 in 1998. There has been a small amount of increase; however it is not a lot compared to other SBU’s. Firstly, there is not a huge market for chocolate drinks in Pakistan. People usually tend to buy light juices like apple or orange juice or Pepsi instead of chocolate drinks. Secondly, regarding the fruit juices, there are not a lot of flavours available currently in this category. Nestle needs to introduce new flavours such as apple, grape etc. to capture the market that prefer these flavours. This will not only increase the sales of the SBU, but it will also

NESTLE PURE LIFE DRINKING WATER

increase its market share. At the moment, additional amount of money is not being invested in these SBU’s, as they are not very profitable. Nestle is currently trying to maximize profits from this category by minimizing expenditures and by differentiating the product to build market share. Objectives of Nestle Pure Life: The main objective for the SBU was to be number one selling bottled-mineral water in Pakistan. This objective was hoped to be accomplished by setting the following further sub-objectives. i) Safety: To provide the consumers with a safe drinking water: Consumers want reassurance. The Nestle name on the product is an assurance of quality for the consumer. Also related to safety is the fact that the water is captured in a safety environment and undergoes rigorous treatment to meet universal quality standards. The water is de-mineralized by distillation. Mineral salts are then added, in accordance with a strict formula developed. The bottling line is also subject to strict sanitary regulations: an air-controlled room houses the filing machine, and the bottles and caps are sterilized. Quality is a continual process and is monitored during each production phase - some 200 controls. Packaging also receives special attention. Each Nestle Pure Life bottle and the 5-litre PET jug have a special cap and tamper-resistant band. This way, the consumer can tell immediately whether the bottle has come straight from the plant or if it has been tampered with. 2.

To offer consumers a healthy product: Remineralization let Nestle offer consumers a balanced, refreshing and healthy product, the product's second key objective. The formula developed for Nestle Pure Life contains minerals such as calcium, which is essential for bone development; magnesium, which is recommended for muscles and the central nervous system; bicarbonates, which are particularly useful for digestion; and sodium, which helps regulate hydration in the human body. Overall mineralization is light (200 mg per liter) and suitable for the whole family. iii) To offer an affordable mineral water: As well as being pure, safe, healthy water, Nestle Pure Life is affordable and convenient. No matter what the format, Nestle Pure Life is sold consistently at popular prices affordable for a large portion of the population. The 1.5-L bottle is offered for Rs. 22 -cheaper than most of the other water brands of the same size. The 0.5 L bottle was initially offered for Rs. 8 but now is sold for Rs. 12. The increase in price has been caused mainly due to inflation and competition. iv) To make the product as convenient as possible: This was the product's fourth objective. Due to its well-balanced mineral content, Nestle Pure Life can also be used for cooking and to prepare tea or coffee. The brand is available in several formats suited to a variety of consumption patterns (50 cl, 1.5 litre, 5 litre). The idea is clear: to be close to the consumer. In other words, Nestle Pure Life must be available in all sales and restaurants outlets and anywhere else consumers young and old are likely to buy or drink water. These objectives can be very well matched with the mission statement of the organization. Consider the following mission statement: “Nestle is dedicated to providing the best foods to people throughout their day, throughout their lives, throughout the world. With our unique experience of anticipating consumers' needs and Creating solutions, Nestle contributes to your well-being and enhances your quality of life.” Referring to the first part of the mission statement, Nestle did provide the consumers with the best bottled-mineral water, as it is number one in the bottled-water market in Pakistan. According to their claim that they provide the best food throughout the world, Nestlé Pure Life is available throughout Pakistan in a number of outlets because of the intensive distribution strategy of the firm. Secondly, Nestle was very successful in identifying the need for safe and pure drinking water, and thus came with the wonderful solution of providing the Nestle Pure Life water. Referring to Nestlé Pure Life, it has all the essential minerals, which a human body needs, as well as, it is pure and safe. Thus it improves one aspect of our lives. By drinking healthy water, people can escape different fatal diseases like Hepatitis B and C (one of the causes of which being the contaminated water). Ultimately, the quality of life is enhanced as portrayed by the mission statement. NESTLE PURE LIFE & ITS COMPETITORS: There are not too much competitors of nestle pure life in the market because Nestle was the only company who gives the idea o bottled water. Up to some extent Sparklet and AVA are the competitors of Pure Life Water. But in future Pepsi and Cocal Cola will be their competitors because they are also launched their drinking water Aquafina.

NESTLE PURE LIFE DRINKING WATER

MARKET SHARE OF PURE LIFE WATER: Nestle occupied 85% of drinking water market in all over the Pakistan. In Lahore Nestle Pure Life has 69%of total market, Sparklet has 13% and Cool

The Percentage Use of Nestle Pure Life and its Competitors in Islamabad Others 20% Sparkle 30%

Nestle Pure Life 60% have 11% and reaming 7%are kept by other local companies. In Karachi 50% of market is kept by Nestle and 25% by AVA and remaining 25% is kept by other local companies. As for as Islamabad is concern Nestle Pure Life has 65%of market Share.

Market Share of Nestle Pure Life in Karachi

Market Share of Nestle Pure Life in lahore

1

1

2

2

3

3

4

STRATEGIES FOR COMPETIOTIVE ADVANTAGES: Every product on the shelf, every service and every customer contact helps to shape this image. A Nestlé brand name on a product is a promise to the customer that it is safe to consume, that it complies with all regulations and that it meets high standards of quality. Customers expect us to keep this promise every time.Under no circumstances will we compromise on the safety of a product and every effort must be made to avoid hazards to health. Likewise, compliance with all relevant laws and regulations is a must and is not negotiable. People, equipment and instruments are made available to ensure safety and conformity of Nestlé products at all times. The effort is worth it. Companies with huge quality standards make fewer mistakes, waste less time and money and are more productive. They also make higher profits. Quality is our most successful product. It is the key to our success, today and tomorrow.

NESTLE PURE LIFE DRINKING WATER

The customer comes first We want to win and keep customers: distributors, supermarkets, hotels, shopkeepers and the final consumers. They have very different requirements. Trade customers expect excellent service, correct information and timely delivery. Consumers consider taste, appearance and price when they make their choice. Our task is to understand what customers want and respond to their expectations rapidly and effectively. We serve various groups of consumers and there is demand for products at different levels of perceived quality and price. All customers, however, expect value for their money – good quality at a reasonable price. When offering quality to customers we also mean environmental quality. Nestlé shares society’s concern for the environment and is committed to environmentally sound business practices throughout the world. Customers are central to our business and we must always respect their needs and preferences. Quality is a competitive advantage We live in a competitive world and must never forget that our customers have a choice. If they are not satisfied with a Nestlé product, they will switch to another brand. Our goal, therefore, is to provide superior value in every product category and market sector in which we compete. The pursuit of highest quality at any price is no guarantee for success, nor is a single-minded cost-cutting approach. Lasting competitive advantage is gained from a balanced search for optimal value to customers, by simultaneous improvement of quality and reduction cost. Success can never be taken for granted. We must watch and learn from our competitors. If they do something better, we must improve our own performance. We can achieve competitive advantage through Quality. Quality is a joint effort Operating companies are fully responsible for maintaining agreed quality standards. Not only Production units, but also Marketing, Purchasing, Distribution and Sales have a vital role to play in providing quality to customers. This implies a thorough knowledge of the products and services we offer Quality units at different levels of the organization provide specific support, promote quality awareness, assume guardianship and audit the system. Quality departments monitor operations against agreed standards and must intervene in case of non-conformity. Quality policy and principles, the mandatory standards and the recommended tools for implementation are laid down in the Nestlé Quality System that is applicable throughout the group. Further directions are given through instructions, norms and guidelines, often specific to a product. Our business products, such as raw material producers, packaging suppliers, contract manufacturers and distributors are expected to share our concern for Quality. They too must set up an adequate quality system, so as to meet our requirements consistently. Every function and department in the company as well as our business partners must share the quality efforts. Quality is made by people Adequate equipment, procedures and systems are needed to make Quality; so are involved and dedicated people. Each and every Nestlé employee must do his best to provide quality products and services. Training and teamwork are crucial to the successful implementation of high quality standards. Continuous training ensures that everyone understands his tasks and has the necessary skills to carry them out. Teamwork allows us to achieve results that are greater than the sum of individual efforts. We motivate employees by demonstrating management commitment to Quality, by setting challenging goals and by giving them responsibility and recognition. It is through employee involvement that goals and targets can be achieved in the shortest time. Quality must be a way of life for everyone in the company. Quality is action Quality is the result of deliberate action. It is the responsibility of senior managers to communicate the quality objectives and to provide the resources necessary for their implementation. It is then up to all employees to make Quality happen throughout the company. Progress is followed by listening to our customers and by measuring our performance. Shortcomings and mistakes must be analyzed and corrected. Problems must be anticipated and prevented before they occur. We also must identify and take advantage of opportunities. To stand still is to fall behind. So we must strive for continuous improvement in every area. It is through many small improvements as well as through major breakthroughs that we will achieve excellence.

SALES STRATEGY OF NESTLE PURE LIFE WATER: The sales strategy which Nestle adopted for Pure Life water is Availability & Visibility. To increase sales and gain profit the company has to provide proper supply of product in the market. All the time company remains busy to make the availability of their product in the market. In departmental stores and shops the Pure Life Water is so placed that it is visible for the customers.

NESTLE PURE LIFE DRINKING WATER

SALES PROMOTION STRATEGY:

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Personal Selling: A direct Vendor Selling Activity was coordinated and carried out during the summer months of June, July, and August 1999 in Lahore. A team of vendors, clad in branded T-shirts, caps and jackets, sold chilled 0.5 liter bottles to travelling customers on all major intersections. The brand got great mileage out of this innovative idea of personal selling in terms of brand awareness, paid trial, image as well as real sales.

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Publicity: Nestle Pure Life was launched on 14 December, 1998 in Karachi with a huge amount of enthusiasm and positive response shown by the locals. The successful story of its launch was printed in all the local newspapers the next day. This greatly helped in creating awareness of the brand and gave its introduction a good start.

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Sales Promotion: Specific promotions of Nestle Pure Life were arranged in some of the key outlets of Lahore. Elaborate shelf space was acquired for product display and specially designed POS material was extensively used to promote sales. On a 12-bottle purchase of 1.5 ml, one 1.5 ml bottle was offered free to consumers. Similarly on a 6-bottle purchase of 1.5 ml, one 0.5 ml bottle was offered free. Regarding trade promotion, the retailer was also given an additional discount of 4 % during this sales promotion. Not only did the sales of Nestle Pure Life grow tremendously during the promotion, these continued at a higher pace even after it was over. Product sampling and sticker sampling activities were carried out in Murree in summer of 1999. Nestle marketing team has also undertaken a major education campaign on water use and its importance in daily life. Mothers of school children were sent an invitation to attend a Water Show demonstrating the benefits of safe water and were asked to fill out a questionnaire. The questionnaire refined the team's knowledge of consumer perceptions. At the end of the show, visitors received a promotional kit offering a chance to sample Nestle Pure Life and opportunity to enter a photo contest on the theme “Nestle Pure Life and You.” The contest offered 10,000 rupees in prize money. This helped boost the brand's image in the minds of consumers. Another contest took place in October 2001by the name of “Cricket Hangama.” This contest provided a chance to win a thousand of tickets, signature posters, VIP Tickets, and a chance to dine with the cricket stars. Besides this, Nestle Pure Life also sponsored the following events: a high profile, national level hockey match played at Ayub Stadium, Quetta on April 18,2003 and a cycle race on March 9, 2000 in collaboration with the Baluchistan Cycle Association.  Public Relations: As far as the public relations is concerned, The organization releases an annual report which includes the company's financial statements along with the sales of all product categories. The annual report is mainly aimed at the stockholders. However, another very important form of public relations are the newsletters and bi-monthly magazines issued by the organization. A huge amount of information is found in these regarding the products and their promotion. In the same way, Nestle Pure Life was given quit a bit of importance in the newsletters issued after its launch, which obviously helped in creation of the awareness of this brand. Besides these promotional methods, word of mouth, a major factor in Pakistan proved to be very effective in the increasing sales of Nestle Pure Life. MARKET SEGMENTATION: To occupy a clear distinctive & desirable place related to competing mineral water in the minds of the target customers Nestle Pure Life segments its market on two bases:  Geographic segmentation  Demographic segmentation GEOGRAPHICAL SEGMENTATION: The Company segments its market geographically on divisional basis. They divide each division in different zones and every distributor is restricted to sale its products only in his own zone.

NESTLE PURE LIFE DRINKING WATER

E.g. Lahore is divided into five zones like East, West, South, North, and South west. DEMOGRAPHICAL FACTOR: If we look nestle pure life's demographic segmentation than we will find that our product is for every one. People from any area, any culture, any age, any sex, any belief and any income will drink water. It is not any luxury item which is used by a specific people. TARGET MARKET OF PURE LIFE WATER: A specific demographic target market was not chosen for Nestle Pure Life, instead the goal was to develop a product to be used by consumers of all ages - from infants to seniors. It was intended as a family product especially for families living in large, polluted urban agglomerations that experience increasing difficulties finding safe, healthy drinking water. In fact, Nestle Pure Life's 0.5 L bottle is targeting to be also an alternative to soft drinks. Basically the target market of nestle water is those areas where the consumers having more awareness about pure life. As the people in villages having less information about Nestle Pure Life. So targeting marketing depends on the awareness of the consumers.

SELETING TARGET MARKET Target Market Strategies Undifferentiated mass market.

Differentiated Segmented Marketing.

Concentrate Marketing.

Micro marketing or Individual Marketing.

POSITIONING STRATEGY: There are some competitive advantages or important attributes of Nestle Pure Life drinking water, occupying in consumer's mind relative to competing mineral waters are as follows: 

PURE DRINKING WATER:

Nestle Pure Life is only drinking water product in the market. Their competitors are selling mineral water which contain extra chemicals which are harm full for human body, but as for as pure life is concerned it is made by keeping in mind the chemicals which human body requires.  NESTLE LOGO & FAMILY BRAND: Pure life use Nestle brand name and the logo of nestle pure life is also showing family care to consumer which is enough to attract the customer. That's why customer gives it preference on other products.

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COMMUNICABLE:

Nestle pure life is a brand of nestle which shows a big sign of quality to customer. Due to its brand name it is very easy to communicate. MARKETING ENVIRONMENT: 1) Internal environment 2) Micro environment 3) Macro environment

NESTLE PURE LIFE DRINKING WATER

1) Internal Environment: In Nestle Internal environment ensures • Employees are on side with the goals of an organization. • They have direct impact on product quality, dependability and overall productivity. • They are internal market, which impact every department within an organization; a satisfied internal market will be better able to satisfy external market. Nestle under the supervision of top management runs the departments of finance, operations, accounting, sales and marketing, research and development to achieve the goals of organization. 2) Micro Environment: In Nestle microenvironment includes: a) Suppliers: Suppliers provide the resources like labor and material resources to produce goods and services. They add to customer overall value delivery system. Labor supplies include handling of • Quantity of labor • Quality of labor • Labor strikes • Labor relations Material supplies deals with the • • • • •

Quantity of material Quality of material Price of material Stability of material inputs Delivery delays

NESTLE PURE LIFE DRINKING WATER

Nestle efficiently handles the quality, quantity, price and stability of both material and labor supplies. Management maps out the strategies for labor strikes, supply shortages and delays to avoid increasing the cost of production, which can badly affect sales in short run and customer satisfaction in long run. b) Marketing Intermediaries: It includes the firms that help the company to promote, sell and distribute its goods to final buyers. • • •

The physical distribution firms determine the ways to store and ship goods to reach their destination. Marketing service agencies including marketing research firms, advertising agencies and media firms are also hired to target and promote product to right market. Financial intermediaries like banks, insurance companies helps to finance transactions and insure against risks associated with buying and selling of goods.

Nestle works in coordination with marketing intermediaries to make its product Pure Life Water available and visible to its valuable customers. c)

Customers:

Nestle deals with the reseller customers who buy the product Pure Life to resell at a reasonable profit.

3) Macro Environment: Macro environment include political, cultural, economical factors but as for as Nestle Pure Life Water is concern none of above factors affect on it. Because it is not at luxury item they are selling necessities of life which can never be affected. Demographic Environment: Demographic environment including age, sex and income also not effect Nestle Pure Life water. Because Water is for every gender, every age and for every class. SWOT ANALYSIS OF NESTLE PURE LIFE: STRENGTHS • • • •

The only brand in the area maintaining its quality and taste and having the same impact on its customer Economical Pure Drinking Water in market (Free of chemicals) Strong Brand Name

WEAKNESS • •

Communication is weak Lack of Awareness

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Concentrating on these areas can increase sales Increase in product line.

• •

Segments are being shared by competitors Uncertain conditions will effect the sales (diseases of animals)

OPPORTUNTIES

THREATS

NESTLE PURE LIFE DRINKING WATER

•

Under cutting by competitors.

BRANDING STRATEGY OF NESTLE PURE LIFE: Nestle brand name present a message of caring which make it distinctive and attractive than other companies. Pure Life's brand is good food for good life. The message of family protection is enough to get the attraction of customer. The Nestlé's brand name is easy to understand & translate. It is easy to pronounce and it is also easy to recognize. Another message in brand name is given to customer to preserve their families from different deceases. LABELING STRATEGY OF NESTLE PURE LIFE: Nestlé's pure life's label gives all information about their product like ingredients which are used in it and all instructions regarding product. PRODUCT LIFE CYCLE: If we look nestle pure life water in product life cycle than it easy to judge that it is at introduction stage. Because Nestle is the market pioneer and at this stage its profit is negative or low due to low sale and high distribution and promotion expenses. Other major reason to be at introduction stage is unawareness in rural areas. The people are not aware to the pure life water that’s why their sale is low. They can brought change in product life cycle by effective promotion, by formulating new price strategies etc.

Nestle Pure Life

Product

Introduction growth

maturity

decline

development

PRICE FIXATION STRATIGIES: These are following objectives of nestle pure life regarding price fixation: 

Profit Earning:

NESTLE PURE LIFE DRINKING WATER

Profit earning is the main objective of every company but in case of nestle their profit margin is low. Only a few amount of profit is collected from pure life water. Customer satisfaction:

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In nestle pure life price is not fixed by keeping in mind profit motive, only customer satisfaction is kept in mind while fixing the prices. STRATIGIES FOR FIXING THE PRICE:

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In nestle prices are set on cost basis as given below:

Price = Cost + Profit

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Break even or Target price: Per Unit Price = variable cost + fixed cost / units of sale

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CHANEL OF DISTRIBUTION: Nestle pure life is making full efforts to supply its product to ultimate consumers. For this purpose the company uses the conventional marketing channels of distribution to supply the product. In this method company supply the product to whole seller who respond it to retailers who supply to ultimate user. In this method Nestle feel little consumption of time because retailers cannot directly approach up to the company. The company also uses the vertical marketing system in which retailers also take supply from directly company resources without contact with whole sellers. In this way the margin of company decrease and going into the interest of the ultimate consumer. Vertical Marketing System

Pur Life Water

Whole Seller

Conventional Marketing System

Pure Life Water

Whole Seller

Retailers Retailers

.

Consumers

Consumers

NESTLE PURE LIFE DRINKING WATER

COMMUNICATION & ADVERTISING STRATEGY: Advertisement is a tool to introduce the product in the market. To increase sales and build an image in the mind of consumer company advertise their product in different ways, as for as Nestle pure life is concerned company use:  Television  Radio  News Paper  Bill Board  Hoarding etc. Some time company also makes free sampling, held stalls at different programs like Health Mela. Pure Life's communication strategy is weak as they follow emotional black mailing. In advertising they show emotional feelings to their customers. MESSAGE TO AUDIENCE: In every advertisement of pure life water the company tries to convey their message like: They provide health food and health drinking water for caring their customers. We work for society welfare. FUTURE FORECASTING OF NESTLE PURE LIFE WATER: In future two competitors of Pure Life are going to launch their water in the market which are Pepsi & Coca Cola. As their competitor will advertise their product at very high stage so people will get awareness about drinking water and nestle pure life can achieve a great market share in future Because people can see that our water is getting rough day by day and there is a need for pure drinking water to survive in the world. For these opportunities company is going to launch an other plant for drinking water next year. NESTLE ROLE FOR SOCIAL WELFARE: Nestle is not playing any acting role for the welfare of society because their margin ratio is very less. Nestle pure life profit margin is 5% on the other hand the profit margin of Pepsi is 60%, Mobilink 55% and Coca Cola has 50%. So they can afford these huge expenses but Nestle can't afford it. SUGGESTION FOR NESTLE PURE LIFE WATER:  The company should make huge expenses on advertisement in rural areas of Pakistan to create awareness in the mind of local area's people.  The company should held seminars and meeting for the promotion of Nestle Pure Life.

NESTLE PURE LIFE DRINKING WATER