Marketing Analysis Of Nestle 195e2x
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Principles of Marketing: Final project
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Maryam Razaque FA13-DDP BBA-019
Acknowledgements Praise and thanks to Allah, the lord of universe who is either of all knowledge and wisdom to mankind. We bow our head in gratitude to almighty Allah who blessed us with the capability to complete our project, which was a challenge for us.“We the group would like to avail this opportunity to thank our course instructor of Principles of Marketing, Miss Tahira Umair for his cooperation and as a teacher.” We feel pleasure in expressing heartfelt gratitude to our families for their encouragement affection, , constant help and prayers at all times without which it was not possible for us to achieve this target
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Table of contents: Acknowledgements Executive summary______________________________________________________4 Company Introduction (history, mission, vision etc)__________________________________5 Company’s Marketing Department Hierarchy_______________________________________7 Company Business Portfolio_____________________________________________________8 Chosen Brand (Name, Logo, Launching Time, Slogan, Target Market, Value proposition)_____9 Current Marketing mix_________________________________________________________12 Customer – driven Marketing strategy (Which your Product follow)_____________________13 Apply BCG Matrix and Product market expansion grid on your chosen brand._____________14 External & internal factors affecting the brand ____________________________________17 SWOT analysis_______________________________________________________________20 Product classification, company Product line & product lifecycle_______________________23 Pricing Strategy ( Launching Period)______________________________________________24 Brand Positioning, Personality & brand strategy_____________________________________24 Channel of distribution_________________________________________________________27 Competitive advantage & Competitor Analysis_____________________________________29 Tools of promotion mix / IMC used by company for selected brand_____________________31 Current Advertising campaign (Preferably electronic Media Commercial)________________35 Conclusion__________________________________________________________________37 References__________________________________________________________________39.
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Executive Summary: This is an informative report in nestle Pakistan private limited, in this report we have described how nestle came into being internationally and in Pakistan. Through our research we found out how much Nestle cares about its customers. Good food Good life is the principal they always follow. We have described the marketing strategies nestle uses and we have explained their performance of nestle. Nestle Pakistan limited formally known as nestle Milkpak limited is a subsidiary of nestle a company of Swiss origin headquartered in Vevey, Switzerland. It is listed on Karachi and Lahore stock exchanges. For 5 years in a row the company has successfully placed itself amongst top 25 companies of KSE. Its principal activities are to manufacture process and sell food product
.
Noodles, baby food, and infant formula milk and breakfast
cereals in Pakistan. Nestle is a low cost leader with its efficient operations hence it provides its customers with high quality products and sells them at a price. Therefore it is earning good profits. Nestle has set its manufacturing plants at in Karachi, Lahore, Islamabad and Kabirwala. The milk processing plant at Kabirwala district is the Nestlé’s world largest milk processing plant. When nestle introduced its products in Pakistan people were neither aware nor accustomed to them. Therefore nestle ran an extensive marketing campaign to educate people and create a need for its products. In this report we did several types of marketing analysis on Milkpak such as SWOT analysis, external and internal factors, brand personality, brand positioning, brand strategy etc.
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NESTLE MILK PAK Introduction: Nestlé Pakistan is proud of its commitment to excellence in product safety and quality and to providing value and aims to be the leading Nutrition, Health and Wellness Company. As a socially responsible corporate, we always focus on environment friendly operations, ethical business practices and our responsibility towards the communities. Nestlé in Pakistan is operating since 1988 under a t venture with Milk Pak ltd and took over management in 1992. The company’s strategy is guided by Nestlé’s Corporate Business Principles which are in line with internationally accepted best practices and ethical performance culture. Nestlé’s existing products grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential is never sacrificed for short-term performance. The Company’s priority is to bring the best and most relevant products to people, wherever they are, whatever their needs are, and for all age groups. Nestlé Pakistan today is the leading Food & Beverages Company in Pakistan with key focus on Nutrition, Health and Wellness and reaching the remotest of locations throughout Pakistan to serve the consumers. Nestlé Pakistan also prides itself in being the leaders in Nutrition, Health & Wellness. Ever since 1867, when Henri Nestlé invented the first infant food, nutrition has been in our DNA. Today more and more consumers mirror our emphasis on nutrition, as they realize that food choices affect their health and quality of life. Nestlé Pakistan operates in many ways but people, products and brands are the main flag bearers of the Company’s image, and we continue to enhance the quality of life of Pakistanis.
History: 1860-1905 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. 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.
1905-1938 5
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, 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. After the war Governmentcontracts dried up and consumers switched back to fresh milk. However, Nestlé’s management responded quickly, streamlining operations andreducing debt. The 1920s saw Nestlé's first expansion into new products, with chocolate the Company's second most important activity.
1938-1975 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 staple drink of the US military. Nestlé's production and sales rose in the wartime economy. The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and companies were acquired. In 1947 came a lot of mergers. Diversification came with a shareholding in L’Oreal in 1974.
1975-1996 Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé'simproved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. Nestlé's growth in the developing world partially offset a slowdown in the Company's traditional markets.
1996-2000 The first half of the 1990s proved to be a favorable time for Nestlé: trade barriers crumbled and world economic markets developed into a series of more or less integrated trading areas. The opening of Central and Eastern Europe, as well as China, and a general trend towards liberalization of direct foreign investment was good news for a company with interests as farflungand diverse as Nestlé. While progress since then has not been asencouraging, the overall trends remain positive. Nestlé opened the 20th century by merging with the Anglo-Swiss Condensed Milk Company to broaden its product range and widen its geographical scope.
2000-present: In July 2000, Nestlé launched a Group-wide initiative called GLOBE(Global Business Excellence), aimed at harmonizing and simplifying business process architecture; enabling Nestlé to realize the advantages of a global leader while minimizing the drawbacks of size. Nestlé was First to Produce: Infant milk, Condensed milk, Milk chocolate, Soluble coffee and Freeze-dried coffee.
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Company Mission and Vision Nestlé’s mission, in the words of our founder Henri Nestlé, is to: “...positively influence the social environment in which we operate as responsible corporate citizens, with due regard for those environmental standards and societal aspirations which improve quality of life.” -- Henri Nestlé, 1857. Lead a dynamic, ionate and professional workforce – proud of our heritage and positive about the future.
Meet the nutrition needs of consumers of all ages – from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage products of the highest quality.
Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic, and environmental sectors of Pakistan.
Hierarchical details of Marketing Department Nestle is a big name and it is one of the best brand of the country having the largest market share in milk industry in Pakistan. It is not only one person who is marketing the milk pack everyone who is part of Nestle is marketing it. If we make the hierarchy of the marketing of Nestle Milk pack we will find out that there is a brand manager who is responsible for all activities that will take place in the marketing department under him is sub brand manager who is responsible in the absence of the brand manager. They are the top management and mostly decide what to do and how to do. What steps should be taken to do the marketing. Under them there is a whole marketing team who work according to the instructions which they have got from the top management. This team is further divided into sub teams. All the decision regarding the T.V commercials, radio, news paper and billboards are decided by the brand manager on the advice and on the bases of statistical calculations. For example for placing a bill board all calculations are made that what size of billboard will be suitable, where should be it place so that is well seen, how much should be spend on it either it is in our budget or not. All these things are taken in and a lot of thinking is done before applying the idea.
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Business Portfolio Nestlé is committed to the following Business Principles in all countries, taking into local legislation, cultural and religious practices: 1.
Ambient dairy Milkpak Nido Every day
2.
Chilled dairy Nestle plain yogurt Nestle Dahi Nestle zeera raita Nestle podina raita
3. Bottled water Nestle pure life mineral water 4. Culinary and food Maggi 5. 6.
Baby food Cerelac Breakfast cereal Nestle koko crunch Nestle milo Nestle corn flakes Nestle fitness
7.
Coffee Nescafe classic Nescafe gold Nescafe 3in1 coffee
8. Confectionary Nestle crunch 8
Nestle kitkat Chosen Brand:
Milkpak.
Brand Logo: Brand logo is a stick drawing of a home with MILKPAK written under it, which totally indicates that
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Launching time: Milkpak was therefore incorporated in January 1979 and began commercial production in November 1981. In 1984 Milkpak started marketing the Frost line of fruit juices which had been introduced a few years earlier by Packages Ltd. Nestle Milkpak was launched almost three decades back and since then it shares the most market share.
Slogan: “yehi hai Doodh ka khalis maza”
Target Market: Geographic Segmentation: Geographic segmentation approach markets are divided into different units these units may include nations states, countries or even may neighborhood consumer often have different buying habits depending upon where thy reside Geographically Nestle has been very successful in 10
targeting those areas where its competitors are not easily available. So Nestle Delight will have an advantage over its competitors in this case of all purpose milk. Nestle can use its current supply chain to deliver the milk Fto its target markets. A large segment belongs to the northern and rural areas of Pakistanwill be covered by Nestle because of strong distribution network. There is a gap in the supply cycle of milk in some critical situations when shortage occurs due to short of raw material supply. Province wise Segmentation:
SINDH PUNJAB BALOCHISTAN NWFP
Demographic Segmentation: Dividing the market in the basis of demographic variables such as age sex, family size, education, income, and social classes are called demographics segmentations. Nestle is currently targeting house wives, people of all ages especially growing children on basis of its purest form of milk. Young mother’s segment should be addressed for the better growth of their children because the purest form of milk. So, Nestle fulfill the need of complete healthy and nutritious food for everyone in family. Youth is to be addressed with respect to the energy they need to perform their daily tasks.
Age
Gender
Social Class
Occupation
Income Range
4-20
Teen Ages
Middle & Upper
N.A
N.A
20-50
MALE
Upper Upper, Upper Middle, Upper Lower,
Self-employed, Job Holders
50,000-250,000 per month
20-50
MALE
Middle Upper, Middle Middle
Job Holders, Self-employed
10,000-50,000 per month
20-50
FEMALE
Upper Upper, Upper Middle, Upper Lower,
Housewives, Job Holders
50,000-250,000 per month
20-50
FEMALE
Middle Upper, Middle Middle
Housewives, Job Holders
10,000-50,000 per month
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Behaviorist Segmentation: Dividing consumer into groups according to their uses loyalties or buying responses to a product is behaviorist segmentation for example product of brand usage degree of usage are combined with demographics and psychographic criteria to develop profiles of market segments Nestle has an advantage that they have already got a strong brand image. People are loyal to this brand, making use of which Nestle can specially target this segment & offer them any new product or highlight any feature into marketing campaign to sell more.
Customers Profile: Families, children, Females House wives between the ages of 25-35 who are conscious about health of their children. NESTLE is focusing People as a whole regardless of demographic, psychographics and geographic. The main target of the firm is PEOPLE. This can be seen from their media and hoardings. Even on the packing design one can see the FAMILY, which focuses all the age groups.
Current Marketing Mix:
Product: Quality product, Product style and logo, Product life cycle.
Price: Competition based pricing. Milkpak is holding a large share in the market due to its quality at same price as compared to competitors.
Place: Milkpak is not sold directly to consumers and the complete distribution process is followed. It uses indirect channels for distribution like:
Manufacturer Distributor Wholesaler Retailer Consumer
Promotion: Nestle focuses on health conscious people in their ment. Marketing Strategies: Marketing programs of Nestle Milkpak Ltd. are very influential one. Whenever new products or new packaging of existing product is launched; it is properly 12
communicated through an orchestrated promotional plan like events or sponsors, music programs are sponsored, point of purchase and point of sales materials are properly displayed at visible places of retail outlets. In this way, proper awareness about the project are created and the sales are stipulated. ing Activities In ing activities Nestle Milkpak Ltd. is having competencies in procurement, technology development, human resource management and infrastructure. So far as technological development is concerned, Nestle Milkpak Ltd. has the advantage of technical knowhow got from Nestle V.A. Switzerland. Management of human resources at Nestle Milkpak Ltd. is very good. Newly recruited employed are trained as per requirement. Quality control and information management are contributing a lot in making the infrastructure of Nestle Milkpak Ltd. very effective and efficient. Capacity Increase of Milk Powder Line at Kabirwala Factory Kabirwala Milk Powder Plant which began production in September 1996, doubled its capacity in February 1999. A new NIRO evaporator was installed to meet increased processing requirements during the coming years.
Customer driven Marketing strategy: Nestlé is an organization working globally. As the operations of the organization areextended in almost all countries, it is not doubtless at all the competitive focus must be at the heart of the company’s international strategy. Nestlé’s competitive strategies are closely affected with foreign direct investment (FDI) in milk, dairy, beverages and other food businesses. Nestlé has an objective to balance sales obtained from low risk and low growthc ountries of the developed world with high risk and potentially high growth markets of underdeveloped or developing countries i.e. Africa and Latin America. Nestlé identifies the potential profits from these high-risk countries, but doesn’t take unnecessary risks just for the sake of growth. This strategy and process of circumventing keeps growth steady while maximizing shareholders‟ value.
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BCG Matrix:
Stars: The products with high market share and high market growth are categorized as star products of the company. This means that star products can be seen as market leading products. These products will need a lot of investment to retain their position, to further growth as well as to maintain its lead over competing products.
Cash Cows: The products with high market share and less market growth are categorized in cash cows. This is due to less competitive pressures with a low growth market and they usually enjoy a dominant 14
position that has been generated from economies of scale. Cash cows are still generating a significant level of income but are not costing the organization much to maintain.
Question marks: These products prove to be tricky ones for product managers. These products are in a high growth market but does not seem to have a high share of the market, hence are labeled as question marks.
Dogs: Product classified as dogs always have a weak market share in a low growth market. These products are very likely making a loss or a very low profit at best. These products can be a big drain on management time and resources Milkpak is categorized in the cash cow products of nestle, Milkpak has been successful covering major portion in the market of Pakistan and is a source of generating major capital for the company. Milkpak enjoys a dominant position in the market and has proven to be one of the best milk in Pakistan.
Market expansion grid:
Existing market
Existing product
New product
Market penetration:
Product development:
New market
Milkpak
Market development:
Mineral water
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Nesvita
Diversification:
Nestle crunch
Market penetration: The market penetration strategy can be used by a company to find ways to better adapt to the current market and increase its sales and profits. In the market penetration strategy the company is increasing its marketing efforts in order to gain a bigger market share for their existing products on the current markets. Market penetration strategy can be applied on Milkpak since it covers a huge market share and more opportunities are available to increase the market share. Some of the ways to increase market share would be to try to convince current customers to buy more products by making them believe that it is a healthy and a reliable product. Moreover by attracting the competitor’s customers to buy your product, this can be done by advertising the idea that your product is comparatively better in every manner whether it is quality, price or quantity etc.
Product development: Product development is used when there is a new product which has to be introduced in an existing market. Nestle Nesvita launched recently in the past couple of years needs to be implied upon the product development strategy. This may be done because the company’s products are not selling anymore or that the company has identified new segments which it had missed before and wants to introduce new product to increase product sales. There are majorly three tactics which the company can use for Product development. 1. The company can develop new features for the product. 2. The company can develop different product quality levels. 3. The company can improve the product’s technology.
Market development: 16
The market development strategy is used when the product is an existing product but the market is new. . A company might decide to increase its territorial reach and therefore enter a new market. The new market may have tough competitors, or it may happen that the new company may be received very positively. Nestle mineral water an existing product requires the implementation of the market development strategy. A major way to increase market share would be to create the awareness that pure is necessary for a healthy life, convincing people to prefer bottled water in comparison to tapped water.
Diversification: Diversification strategy is used when a company enters new markets with new products. In such a scenario, the demands of the new market might be different from the current markets where the company exists. Thus, the company has to bring new products in new markets and hence the complication rises. Nestle crunch is identified as the diversification product of the company.
External and internal factors affecting the brand: External factors: Some of the major external factors affecting the brand are:
Political Economical Social Technological Legal factors
Political factors: Political factors or how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods) The company policies are affected and
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its budget is also affected. Nestle pays15% sales tax and 18%excise duty when they import chillers from other countries.
Economical factors: Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how the company operates and makes decisions. For example, Interest Rates Affects Company’s cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy. Hence forcing the company to increase the price of the product.
Social factors: Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. Companies may change various management strategies to adapt to these social trends such as recruiting older workers. People mostly prefer fresh and open milk and rely less on processing milk because they think that milk companies add chemical skin milk during process, so such factors are to be considered important.
Technological factors: Technological factors include environmental aspects, such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation.
Legal factors: 18
Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.
Internal factors: An organization's internal environment is composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behavior. employee behavior directly affects the brands performance.
Mission statement: An organization's mission statement describes what the organization stands for and why it exists. It explains the overall purpose of the organization and includes the attributes that distinguish it from other organizations of its type. A mission statement should be more than words on a piece of paper; it should reveal a company's philosophy, as well as its purpose.
Organizational culture: The organizational culture is an organization's personality. Just as each person has a distinct personality, so does each organization. The culture of an organization distinguishes it from others and shapes the actions of its .
Formal structure: The formal structure of an organization is the hierarchical arrangement of tasks and people. This structure determines how information flows within the organization, which departments are responsible for which activities, and where the decision‐making power rests.
SWOT Analysis: 19
Strengths: Brand Name: Milkpak is a product of nestle. Milkpak is a trusted brand known throughout the country for its nutritious wholesome goodness and pure natural taste. Quality: The quality of Milkpak is superior and they continuously work to maintain the quality. They believed that quality and persistent commitment to continuous improvement are essential to our ongoing success. UHT (Ultra Heated Treatment): They use ultra heat treatment to kill the spores in milk.UHT is the sterilization of food by heating it for an extremely short period, around 1-2 seconds at a temperature exceeding 135 degree C. Research and development department: Research and development department continuously works on innovation for the milking process and for the improvement of quality. It is essential to keep coming with breakthroughs for the success of any product or the success of any company and mikpk has always delivered. Distribution Network: Nestle Milkpak has a very strong distribution network which covers all over Pakistan. Packaging: Milkpak was the first tetra pack introduced in Pakistan in 1981 with green and white packaging. This green and white color associated with the Pakistan’s flag. Brand loyalty: Milkpak is the product of Nestle; Nestle enjoys a good and strong reputation all over Pakistan which ensures brand loyalty from its customers.
Weakness: 20
External sources for raw material: As nestle is dependent on external sources for the raw material, they therefore sometimes face some difficulties in executing the production process timely. Packaging from Tetra pak: Milkpak depends entirely on Tetra pak for the packaging of its dairy products, Tetra pak being the only option for packaging for nestle because of their monopoly in the business, charges more than sufficient amount for packaging which leads to increase in prices and decrease in advertising budget . As we are all aware that it requires frequent advertising to survive in the milk business. Weak implementation of CSR: The company has announced and is involved in various programs that aims to make company more eco friendly and improving the working conditions fits suppliers .Still Nestle receives a lot of criticism over the effectiveness of its programs.
Opportunities: Develop its own farms: Milkpak should develop its own farmhouses to ensure continuous and qualitative supply rather than relying on others. Increased Government funding/: Government of Pakistan decided to increase the farmers funding. This is an opportunity for Milkpak because farmers will be able produce more quantitative and qualitative milk. Explore from the government of Pakistan such investment opportunities. Strong and continuous marketing campaign: Nestle needs to initiate the programs for strong and continuous marketing campaign as it will only proof to be beneficial for the organization in every manner. Suitable environment:
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Pakistan is the seventh largest milk producing country in the world with the annual output of over 22 billion liters. There are substantial growth opportunities considering the average yield of Pakistani animals at only 1100 liters/annum as compared to 6000 liters/annum for animals in Europe and USA. There are nearly 20 million milk producing animals in the country.
Threats: Competitors: Two main competitors Haleeb and Olpers are the main threats for Milkpak especially Olpers market share is increasing rapidly.
New entrants: Market segment growth could attract new entrants
Political and economical issues: Economic slowdown can reduce the demand and politically Pakistan is not a stable country.
Religious extremists: Due the foreign origin of the company some extremists avoid the use of nestle and recommend it to others not to use Milkpak or any other brand of nestle
Rising raw food prices: With an overall growth of worlds economy and population, demand for raw food increases resulting in higher material costs and squeezed margin for nestle.
Inflation: Inflation is getting higher and higher day by day which is decreasing the purchasing power of people.
Product classification: Milkpak is categorized in the convenience goods as it is included in the necessities of life. A convenience product is a consumer product that takes little thought, is routine, purchased 22
often, appeals to a large target market and the consumer purchases with little planning. These are the products that appeal to a very large market segment. They are generally consumed regularly and purchased frequently. Because of the high purchase volume, pricing per item tends to be relatively low and consumers often see little value in shopping around since additional effort yields minimal saving.
Product Line: A product line is a number of products grouped together based on similar characteristics. The characteristic used to split products, will depend on the firm and its product strategy. Milkpak is the only liquid milk sold by nestle in Pakistan, whereas a couple of other products are sold i.e. Nido and Everyday both are powdered milk. These products are not absolutely of the same nature but more or less carry the same characteristics.
Product life cycle:
Eventually every product goes through all the stages of product lifecycle. Nestle Milkpak after the stages of introduction and growth is now enjoying a stable maturity stage. The product covers a wide range of market and is a known product throughout the country. Maturity stage is a time period when the product sales are at its peak. During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product 23
modifications or improvements to the production process which might give them a competitive advantage.
Pricing strategy: (launching period) Price is the value that is put to a product or service and is the result of a complex set of calculations, research and understanding and risk taking ability. A pricing strategy takes into segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others. It is targeted at the defined customers and against competitors. There are several pricing strategies; following are the four basic strategies variations of which are used in business: 1. 2. 3. 4.
pricing Penetration pricing Economy pricing Skimming strategy
The pricing strategy which was implemented for Milkpak at the time of launch was the penetration strategy.
Penetration strategy: Price is set artificially low to gain market share quickly. This is done when a new product is being launched. It is understood that prices will be raised once the promotion period is over and market share objectives are achieved.
Brand positioning, Personality and Brand strategy: Brand positioning: Put simply, brand positioning is the process of positioning your brand in the mind of your customers. Brand positioning is also referred to as a positioning strategy, brand strategy, or a
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brand positioning statement.
In both of these ments, the r is trying to project the fact that the product is absolutely safe and healthy, moreover the company is implying the fact that the product is an absolute necessity which completes and makes the family stronger. Projecting into the minds of customers that it is a safe product and is to be used by the whole family. It basically is what kind of perception you create of your product in the minds of the customers. Milkpak has now positioned itself as a part of their daily life.
Brand personality: 25
A set of human characteristics that are attributed to a brand name. A brand personality is something to which the consumer can relate, and an effective brand will increase its brand equity by having a consistent set of traits. This is the added-value that a brand gains, aside from its functional benefits. There are five main types of brand personalities: excitement, sincerity, ruggedness, competence and sophistication. Milkpak is having good market share and growing so fast Nationwide, as per our internal research suggests Currently Milkpak is having Brand Personality is contribution of Love, Care, Family and power as our previous ments have made in consumers mind that every ad shows family, love, care and everyone likes to have Milkpak as a Milk, IRON as feature of Milkpak helps individual to fulfill routine tasks with help your IRON POWER which gives 20% IRON requirements. We here are trying to build a Brand Personality i.e. milk for everyone.
Brand strategy for Milkpak: Your brand is more than your logo, name or slogan — it’s the entire experience your prospects and customers have with your company, product or service. Your brand strategy defines what you stand for, a promise you make, and the personality you convey. And while it includes your logo, color palette and slogan, those are only creative elements that convey your brand. Instead, your brand lives in every day-to-day interaction you have with your market:
The images you convey
The messages you deliver on your website, proposals and campaigns
The way your employees interact with customers
A customer’s opinion of you versus your competition
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Channel of distribution Milkpak, Nestle: Nestle uses indirect distribution method for the distribution of Milkpak all over Pakistan , the hierarchy of distribution is as follows
Manufacturer
Distributor
Retailer
Consumer
The distribution strategy pursued by the Nestle Milkpak is intensive. It means that the product distribution is covering wide market. There are regional headquarters of the company in all the big cities of the country. There is a distributor in each big city. In order to reach remote areas, a distributor engages a sub-distributor for a small area. The company is directly linked with the main distributor and the sub-distributor has no such direct with the company. The company provides the Milkpak inventory to the main distributor that is further dispatched to retailers and sub-distributors. There is a regional manager of Nestle that employs Area Sales Manager for a specific area. Then comes the Territory Sales Officer (TSO). TSO is directly linked with the distributors to set and achieve targets. The targets vary from area to area and are set on the basis of history of the area sales. As the sales targets depend upon the area history of sales; these are usually achievable. If these targets are facing some kind of setback, the promotional schemes based on areas are announced as discussed earlier. For distribution Pakistan is divided into three geographical zones and then in further regional zones.
North Zone:
Islamabad and North outstations 27
Jehlum
Peshawar
Central Zone:
Lahore
Faisalabad
Gujranwala
Multan
Sahiwal
South zone:
Karachi
Hyderabad
Quetta
Sukkur
Some of the Distributors in Lahore: Saeed Brothers: Model town Township
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Zakir and Sons: Airport Ghazi road
Dean distributors: Muslim town
SMR Distributors: Fatah Garh
Competitive advantage of Milkpak:
Nestle Milkpak never compromises on quality.
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Nestle Milkpak,s extensive milk collection system ensures that the milk you get is of the finest quality.
Nestlé’s products are available in every city and town
Nestle is using the latest technology in its production units.
Nestle makes milk powder of the surplus milk in winter and converts this milk powder into UHT milk in summer.
Observing the market situation nestle often offers seasonal discounts on Milkpak to gain competitive advantage.
When on promotion Nestle offers additional free products with Milkpak for instance small pack of powdered milk free with 1 liter pack of Milkpak.
Milkpak has arranged various schemes offering gifts to people in return for empty wrappers of Milkpak, gifts such as cars were distributed through lottery.
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Competitor’s analysis of Milkpak: Some of the major competitors of Milkpak are as follows:
Olpers
Haleeb
Goodmilk and others
Olpers: Engro Foods had only recently been established by Engro a traditional giant in Pakistan’s chemical and fertilizer industry. Engro Foods launched Olpers Milk after long tenure of consumer research and time and money consumption. During this time they are continuing observing the issues with the packed milk. After three years of their launch Olpers Milk gain reputation among consumers and now currently holding 30 percent of market share. Within the dairy market, company now has a diverse portfolio of products ranging from different types of cream to low fat milk.
Haleeb: In1986 the commercial production process started with UHT liquid milk from May 21, 1986. The liquid milk was the first product launched in the market. The company started its operations in 1985 having the state of the art plant in the entire dairy sector of Pakistan. Comprising an area of 32 Acres, this plant had a capacity of producing 80,000 liters per day of milk.
Price analysis with competitors:
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Products:
Price of 1 liter pack
Price of 250 ml. pack
Milkpak
Rs. 110
Rs.30
Olpers
Rs. 110
Rs.30
Haleeb
Rs. 75
N/A
Goodmilk
Rs. 88
Rs. 29
Market Share as of 2011
Nestle 40% Olpers32.5 % Goodmilk,Haleeb and others 27.5%
Tools of promotion mix / IMC used by company for selected brand:
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Promotion activities play an important role in re launching any product. Increase in target market is possible by personal selling. It includes persons in retail stores telling the benefits to potential customers about importance of milk in standard packed form. Awareness plays the most important role. They should taste house wives on different places. Because they are the main servers of such kind of nutritional diets to their family TV commercials and Bill Boards should be planned to be d properly.
Determining the promotional methods: There are various promotional methods like personal selling, advertising, sales promtions, public relations etc. but Nestlé attracted the existing customer of the imported brands and potential customers through its advertising campaign. In their campaign, Nestlé mostly focus the small children who are the major portion of our society and milk and such kinds of Products are basic requirement of grooming children that the reason Nestle launched Nesvita Milk especially designed for growing children because introduction of calcium diets in daily diet chart is basic requirement.
Broadcast media:
TELEVISION: Nestle use 40% of their budget on the broadcast media. Television is the major medium used for the ment. Nestle has been playing commercials on the TV since they have launched the Nestle Milkpak. Their Ads cover all the lifestyles of the people. In their ads they have shown many situations.
Friends sitting together
Child playing
Swimmer Families in good mode
Younger generation in smiling energy form
Family enjoying picnic etc. 33
In the entire above situations they have showed the importance of the pure milk, when it’s about athlete, he is health conscious, when friends sitting together and having fun what they need. The main thing the Nestle wanted that people should trust on that Nestle is purest form of milk.
RADIO: Nestle is not only advertising on Television but they are also advertising on radio. They play the vocal ads on Fm 100 and 101. Advertising on radio is basically for the people who are on roads.
PRINT MEDIA: In the print media Nestle is using the following mediums to .
Magazines & Newspapers: Nestle in both magazine and newspaper on weekly and monthly basis. Following is the list of magazine and newspaper in which nestle :
The News
Nation
Dawn
Sunday Magazine
The Economist MAG, Etc.
BELOW THE LINE Below the line includes following mediums of ment:
Direct mail
Outdoor
Transit
Supplementary material
DIRECT MAIL ADVERTISING It is any form of advertising issued directly to the prospect, whether through the mail, fax, online computer services, salesperson, dealers or other means rather than through traditional mass media. 34
Postcards Nestle sends postcards to their home and office persons in the category of retailers and whole sellers. On different occasions nestle send them different post cards to build long term healthy relationships so that they can contribute in increasing the market share of their product.
Leaflets/ flyers: Nestle has placed many types of leaflets, which contain information about Nestle Milk pack, at different outlets.
Folders / brochures: Nestle send brochures of their product to their customers through mail to make them aware of new innovations and products. This helps nestle in getting more customers.
OUTDOOR: Nestle spend a big share of their ment budget on the outdoor ment, which includes:
Painted Billboards
MMT
Vinyl sheet
Rotary Plan
Here is an example of their billboards and rotary plan: Nestle has placed more than 100 billboards across the roads. They have put on different skins of them, which are showing different situations in which people are using pure water. According to the Nestle they use heavy outdoor ment to remind people about the availability of their product because it is a product for which people never pre plan to purchase it so to motivate them for the purchase of Nestle Milk Pack they have to place billboards. Beside this they rotate the skins of their billboards after few months the reason for this is that people lose interest in those skins when
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they see it for a long time so when they rotate them and place the new one that create the interest among the people.
TRANSIT ADVERTISING Transit advertising is a category of out of home media that includes bus and taxicab advertising as well as posters on transit shelters, terminals, and airports. Types of transit advertising:
Inside cards
Outside posters
Terminal posters
Taxi / bus exteriors
Terminal posters
Nestle has placed many attractive and attention getting posters on the terminals and Stations in different cities.
Scroll Works Nestle is also advertising on scroll works, as we know scroll works through mini vans in the city. These van moves throughout the city when people see the scroll work those ads remind them of Nestle Milk Pack during delivery towards the retail outlets and whole sellers.
Skins on Buses Nestle has pasted their skins on Daewoo city buses, in this category they are advertising on certain buses
Current advertising campaign: NESTLÉ Pakistan and Tetra Pak Pakistan has proudly co-launched the Pakistan Safe Milk Movement today. The aim of the movement is to educate every Pakistani on the importance of consuming milk that is safe. In addition, the movement also intends to give enough awareness to everyone to be able to understand how milk could be unsafe and the subsequent adverse effects on health owing to the consumption of unsafe milk.
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The ceremony was hosted by Sidra Iqbal, leading media anchorperson and development activist. Among other notables from both NESTLÉ Pakistan and Tetra Pak Pakistan, the launch event was attended by renowned philanthropist Syed Babar Ali and also by distinguished writer and respected media personality Anwar Maqsood, the brand ambassador for NESTLÉ MILKPAK, who is also spearheading the movement.
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Conclusion: Summing it all up I would say that Milkpak introduced packed milk in Pakistan for the first time. Nestle created and has revolutionized the milk industry since its existence. Milkpak has been a leader in the respective fields since its existence but nowadays competitions are tough some strong competitors have entered the market and are consuming the markets share of Nestle, but Nestle still is on top of the mountain striving hard to maintain its superiority. But still nestle needs to keep up the good work and strive as hard as they can to keep up their position in the market. Nestle Milkpak have a great share in the different multinational companies. It isstatistically calculated that Nestle Milkpak have 50% share in the Nestle company and now Nestle become the leader of all multinational companies in food products and beverages. Nestle is operating in all big cities in Pakistan and try best to provide its Products to other small cities and towns.
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Appendix:
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References: http://www.nestle.pk/ http://www.nestle.pk/brands http://www.nestle.pk/aboutus http://www.ukessays.com/essays/management/historicalbackground-of-the-company-milkpak-management-essay.php http://articles.latimes.com/keyword/nestle-food-co http://www.reuters.com/article/2015/01/22/us-sweden-currencyborg-idUSKBN0KV2A420150122
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1
Maryam Razaque FA13-DDP BBA-019
Acknowledgements Praise and thanks to Allah, the lord of universe who is either of all knowledge and wisdom to mankind. We bow our head in gratitude to almighty Allah who blessed us with the capability to complete our project, which was a challenge for us.“We the group would like to avail this opportunity to thank our course instructor of Principles of Marketing, Miss Tahira Umair for his cooperation and as a teacher.” We feel pleasure in expressing heartfelt gratitude to our families for their encouragement affection, , constant help and prayers at all times without which it was not possible for us to achieve this target
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Table of contents: Acknowledgements Executive summary______________________________________________________4 Company Introduction (history, mission, vision etc)__________________________________5 Company’s Marketing Department Hierarchy_______________________________________7 Company Business Portfolio_____________________________________________________8 Chosen Brand (Name, Logo, Launching Time, Slogan, Target Market, Value proposition)_____9 Current Marketing mix_________________________________________________________12 Customer – driven Marketing strategy (Which your Product follow)_____________________13 Apply BCG Matrix and Product market expansion grid on your chosen brand._____________14 External & internal factors affecting the brand ____________________________________17 SWOT analysis_______________________________________________________________20 Product classification, company Product line & product lifecycle_______________________23 Pricing Strategy ( Launching Period)______________________________________________24 Brand Positioning, Personality & brand strategy_____________________________________24 Channel of distribution_________________________________________________________27 Competitive advantage & Competitor Analysis_____________________________________29 Tools of promotion mix / IMC used by company for selected brand_____________________31 Current Advertising campaign (Preferably electronic Media Commercial)________________35 Conclusion__________________________________________________________________37 References__________________________________________________________________39.
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Executive Summary: This is an informative report in nestle Pakistan private limited, in this report we have described how nestle came into being internationally and in Pakistan. Through our research we found out how much Nestle cares about its customers. Good food Good life is the principal they always follow. We have described the marketing strategies nestle uses and we have explained their performance of nestle. Nestle Pakistan limited formally known as nestle Milkpak limited is a subsidiary of nestle a company of Swiss origin headquartered in Vevey, Switzerland. It is listed on Karachi and Lahore stock exchanges. For 5 years in a row the company has successfully placed itself amongst top 25 companies of KSE. Its principal activities are to manufacture process and sell food product
.
Noodles, baby food, and infant formula milk and breakfast
cereals in Pakistan. Nestle is a low cost leader with its efficient operations hence it provides its customers with high quality products and sells them at a price. Therefore it is earning good profits. Nestle has set its manufacturing plants at in Karachi, Lahore, Islamabad and Kabirwala. The milk processing plant at Kabirwala district is the Nestlé’s world largest milk processing plant. When nestle introduced its products in Pakistan people were neither aware nor accustomed to them. Therefore nestle ran an extensive marketing campaign to educate people and create a need for its products. In this report we did several types of marketing analysis on Milkpak such as SWOT analysis, external and internal factors, brand personality, brand positioning, brand strategy etc.
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NESTLE MILK PAK Introduction: Nestlé Pakistan is proud of its commitment to excellence in product safety and quality and to providing value and aims to be the leading Nutrition, Health and Wellness Company. As a socially responsible corporate, we always focus on environment friendly operations, ethical business practices and our responsibility towards the communities. Nestlé in Pakistan is operating since 1988 under a t venture with Milk Pak ltd and took over management in 1992. The company’s strategy is guided by Nestlé’s Corporate Business Principles which are in line with internationally accepted best practices and ethical performance culture. Nestlé’s existing products grow through innovation and renovation while maintaining a balance in geographic activities and product lines. Long-term potential is never sacrificed for short-term performance. The Company’s priority is to bring the best and most relevant products to people, wherever they are, whatever their needs are, and for all age groups. Nestlé Pakistan today is the leading Food & Beverages Company in Pakistan with key focus on Nutrition, Health and Wellness and reaching the remotest of locations throughout Pakistan to serve the consumers. Nestlé Pakistan also prides itself in being the leaders in Nutrition, Health & Wellness. Ever since 1867, when Henri Nestlé invented the first infant food, nutrition has been in our DNA. Today more and more consumers mirror our emphasis on nutrition, as they realize that food choices affect their health and quality of life. Nestlé Pakistan operates in many ways but people, products and brands are the main flag bearers of the Company’s image, and we continue to enhance the quality of life of Pakistanis.
History: 1860-1905 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. 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.
1905-1938 5
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, 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. After the war Governmentcontracts dried up and consumers switched back to fresh milk. However, Nestlé’s management responded quickly, streamlining operations andreducing debt. The 1920s saw Nestlé's first expansion into new products, with chocolate the Company's second most important activity.
1938-1975 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 staple drink of the US military. Nestlé's production and sales rose in the wartime economy. The end of World War II was the beginning of a dynamic phase for Nestlé. Growth accelerated and companies were acquired. In 1947 came a lot of mergers. Diversification came with a shareholding in L’Oreal in 1974.
1975-1996 Nestlé divested a number of businesses1980 / 1984. In 1984, Nestlé'simproved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. Nestlé's growth in the developing world partially offset a slowdown in the Company's traditional markets.
1996-2000 The first half of the 1990s proved to be a favorable time for Nestlé: trade barriers crumbled and world economic markets developed into a series of more or less integrated trading areas. The opening of Central and Eastern Europe, as well as China, and a general trend towards liberalization of direct foreign investment was good news for a company with interests as farflungand diverse as Nestlé. While progress since then has not been asencouraging, the overall trends remain positive. Nestlé opened the 20th century by merging with the Anglo-Swiss Condensed Milk Company to broaden its product range and widen its geographical scope.
2000-present: In July 2000, Nestlé launched a Group-wide initiative called GLOBE(Global Business Excellence), aimed at harmonizing and simplifying business process architecture; enabling Nestlé to realize the advantages of a global leader while minimizing the drawbacks of size. Nestlé was First to Produce: Infant milk, Condensed milk, Milk chocolate, Soluble coffee and Freeze-dried coffee.
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Company Mission and Vision Nestlé’s mission, in the words of our founder Henri Nestlé, is to: “...positively influence the social environment in which we operate as responsible corporate citizens, with due regard for those environmental standards and societal aspirations which improve quality of life.” -- Henri Nestlé, 1857. Lead a dynamic, ionate and professional workforce – proud of our heritage and positive about the future.
Meet the nutrition needs of consumers of all ages – from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage products of the highest quality.
Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic, and environmental sectors of Pakistan.
Hierarchical details of Marketing Department Nestle is a big name and it is one of the best brand of the country having the largest market share in milk industry in Pakistan. It is not only one person who is marketing the milk pack everyone who is part of Nestle is marketing it. If we make the hierarchy of the marketing of Nestle Milk pack we will find out that there is a brand manager who is responsible for all activities that will take place in the marketing department under him is sub brand manager who is responsible in the absence of the brand manager. They are the top management and mostly decide what to do and how to do. What steps should be taken to do the marketing. Under them there is a whole marketing team who work according to the instructions which they have got from the top management. This team is further divided into sub teams. All the decision regarding the T.V commercials, radio, news paper and billboards are decided by the brand manager on the advice and on the bases of statistical calculations. For example for placing a bill board all calculations are made that what size of billboard will be suitable, where should be it place so that is well seen, how much should be spend on it either it is in our budget or not. All these things are taken in and a lot of thinking is done before applying the idea.
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Business Portfolio Nestlé is committed to the following Business Principles in all countries, taking into local legislation, cultural and religious practices: 1.
Ambient dairy Milkpak Nido Every day
2.
Chilled dairy Nestle plain yogurt Nestle Dahi Nestle zeera raita Nestle podina raita
3. Bottled water Nestle pure life mineral water 4. Culinary and food Maggi 5. 6.
Baby food Cerelac Breakfast cereal Nestle koko crunch Nestle milo Nestle corn flakes Nestle fitness
7.
Coffee Nescafe classic Nescafe gold Nescafe 3in1 coffee
8. Confectionary Nestle crunch 8
Nestle kitkat Chosen Brand:
Milkpak.
Brand Logo: Brand logo is a stick drawing of a home with MILKPAK written under it, which totally indicates that
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Launching time: Milkpak was therefore incorporated in January 1979 and began commercial production in November 1981. In 1984 Milkpak started marketing the Frost line of fruit juices which had been introduced a few years earlier by Packages Ltd. Nestle Milkpak was launched almost three decades back and since then it shares the most market share.
Slogan: “yehi hai Doodh ka khalis maza”
Target Market: Geographic Segmentation: Geographic segmentation approach markets are divided into different units these units may include nations states, countries or even may neighborhood consumer often have different buying habits depending upon where thy reside Geographically Nestle has been very successful in 10
targeting those areas where its competitors are not easily available. So Nestle Delight will have an advantage over its competitors in this case of all purpose milk. Nestle can use its current supply chain to deliver the milk Fto its target markets. A large segment belongs to the northern and rural areas of Pakistanwill be covered by Nestle because of strong distribution network. There is a gap in the supply cycle of milk in some critical situations when shortage occurs due to short of raw material supply. Province wise Segmentation:
SINDH PUNJAB BALOCHISTAN NWFP
Demographic Segmentation: Dividing the market in the basis of demographic variables such as age sex, family size, education, income, and social classes are called demographics segmentations. Nestle is currently targeting house wives, people of all ages especially growing children on basis of its purest form of milk. Young mother’s segment should be addressed for the better growth of their children because the purest form of milk. So, Nestle fulfill the need of complete healthy and nutritious food for everyone in family. Youth is to be addressed with respect to the energy they need to perform their daily tasks.
Age
Gender
Social Class
Occupation
Income Range
4-20
Teen Ages
Middle & Upper
N.A
N.A
20-50
MALE
Upper Upper, Upper Middle, Upper Lower,
Self-employed, Job Holders
50,000-250,000 per month
20-50
MALE
Middle Upper, Middle Middle
Job Holders, Self-employed
10,000-50,000 per month
20-50
FEMALE
Upper Upper, Upper Middle, Upper Lower,
Housewives, Job Holders
50,000-250,000 per month
20-50
FEMALE
Middle Upper, Middle Middle
Housewives, Job Holders
10,000-50,000 per month
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Behaviorist Segmentation: Dividing consumer into groups according to their uses loyalties or buying responses to a product is behaviorist segmentation for example product of brand usage degree of usage are combined with demographics and psychographic criteria to develop profiles of market segments Nestle has an advantage that they have already got a strong brand image. People are loyal to this brand, making use of which Nestle can specially target this segment & offer them any new product or highlight any feature into marketing campaign to sell more.
Customers Profile: Families, children, Females House wives between the ages of 25-35 who are conscious about health of their children. NESTLE is focusing People as a whole regardless of demographic, psychographics and geographic. The main target of the firm is PEOPLE. This can be seen from their media and hoardings. Even on the packing design one can see the FAMILY, which focuses all the age groups.
Current Marketing Mix:
Product: Quality product, Product style and logo, Product life cycle.
Price: Competition based pricing. Milkpak is holding a large share in the market due to its quality at same price as compared to competitors.
Place: Milkpak is not sold directly to consumers and the complete distribution process is followed. It uses indirect channels for distribution like:
Manufacturer Distributor Wholesaler Retailer Consumer
Promotion: Nestle focuses on health conscious people in their ment. Marketing Strategies: Marketing programs of Nestle Milkpak Ltd. are very influential one. Whenever new products or new packaging of existing product is launched; it is properly 12
communicated through an orchestrated promotional plan like events or sponsors, music programs are sponsored, point of purchase and point of sales materials are properly displayed at visible places of retail outlets. In this way, proper awareness about the project are created and the sales are stipulated. ing Activities In ing activities Nestle Milkpak Ltd. is having competencies in procurement, technology development, human resource management and infrastructure. So far as technological development is concerned, Nestle Milkpak Ltd. has the advantage of technical knowhow got from Nestle V.A. Switzerland. Management of human resources at Nestle Milkpak Ltd. is very good. Newly recruited employed are trained as per requirement. Quality control and information management are contributing a lot in making the infrastructure of Nestle Milkpak Ltd. very effective and efficient. Capacity Increase of Milk Powder Line at Kabirwala Factory Kabirwala Milk Powder Plant which began production in September 1996, doubled its capacity in February 1999. A new NIRO evaporator was installed to meet increased processing requirements during the coming years.
Customer driven Marketing strategy: Nestlé is an organization working globally. As the operations of the organization areextended in almost all countries, it is not doubtless at all the competitive focus must be at the heart of the company’s international strategy. Nestlé’s competitive strategies are closely affected with foreign direct investment (FDI) in milk, dairy, beverages and other food businesses. Nestlé has an objective to balance sales obtained from low risk and low growthc ountries of the developed world with high risk and potentially high growth markets of underdeveloped or developing countries i.e. Africa and Latin America. Nestlé identifies the potential profits from these high-risk countries, but doesn’t take unnecessary risks just for the sake of growth. This strategy and process of circumventing keeps growth steady while maximizing shareholders‟ value.
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BCG Matrix:
Stars: The products with high market share and high market growth are categorized as star products of the company. This means that star products can be seen as market leading products. These products will need a lot of investment to retain their position, to further growth as well as to maintain its lead over competing products.
Cash Cows: The products with high market share and less market growth are categorized in cash cows. This is due to less competitive pressures with a low growth market and they usually enjoy a dominant 14
position that has been generated from economies of scale. Cash cows are still generating a significant level of income but are not costing the organization much to maintain.
Question marks: These products prove to be tricky ones for product managers. These products are in a high growth market but does not seem to have a high share of the market, hence are labeled as question marks.
Dogs: Product classified as dogs always have a weak market share in a low growth market. These products are very likely making a loss or a very low profit at best. These products can be a big drain on management time and resources Milkpak is categorized in the cash cow products of nestle, Milkpak has been successful covering major portion in the market of Pakistan and is a source of generating major capital for the company. Milkpak enjoys a dominant position in the market and has proven to be one of the best milk in Pakistan.
Market expansion grid:
Existing market
Existing product
New product
Market penetration:
Product development:
New market
Milkpak
Market development:
Mineral water
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Nesvita
Diversification:
Nestle crunch
Market penetration: The market penetration strategy can be used by a company to find ways to better adapt to the current market and increase its sales and profits. In the market penetration strategy the company is increasing its marketing efforts in order to gain a bigger market share for their existing products on the current markets. Market penetration strategy can be applied on Milkpak since it covers a huge market share and more opportunities are available to increase the market share. Some of the ways to increase market share would be to try to convince current customers to buy more products by making them believe that it is a healthy and a reliable product. Moreover by attracting the competitor’s customers to buy your product, this can be done by advertising the idea that your product is comparatively better in every manner whether it is quality, price or quantity etc.
Product development: Product development is used when there is a new product which has to be introduced in an existing market. Nestle Nesvita launched recently in the past couple of years needs to be implied upon the product development strategy. This may be done because the company’s products are not selling anymore or that the company has identified new segments which it had missed before and wants to introduce new product to increase product sales. There are majorly three tactics which the company can use for Product development. 1. The company can develop new features for the product. 2. The company can develop different product quality levels. 3. The company can improve the product’s technology.
Market development: 16
The market development strategy is used when the product is an existing product but the market is new. . A company might decide to increase its territorial reach and therefore enter a new market. The new market may have tough competitors, or it may happen that the new company may be received very positively. Nestle mineral water an existing product requires the implementation of the market development strategy. A major way to increase market share would be to create the awareness that pure is necessary for a healthy life, convincing people to prefer bottled water in comparison to tapped water.
Diversification: Diversification strategy is used when a company enters new markets with new products. In such a scenario, the demands of the new market might be different from the current markets where the company exists. Thus, the company has to bring new products in new markets and hence the complication rises. Nestle crunch is identified as the diversification product of the company.
External and internal factors affecting the brand: External factors: Some of the major external factors affecting the brand are:
Political Economical Social Technological Legal factors
Political factors: Political factors or how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods) The company policies are affected and
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its budget is also affected. Nestle pays15% sales tax and 18%excise duty when they import chillers from other countries.
Economical factors: Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how the company operates and makes decisions. For example, Interest Rates Affects Company’s cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy. Hence forcing the company to increase the price of the product.
Social factors: Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. Companies may change various management strategies to adapt to these social trends such as recruiting older workers. People mostly prefer fresh and open milk and rely less on processing milk because they think that milk companies add chemical skin milk during process, so such factors are to be considered important.
Technological factors: Technological factors include environmental aspects, such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation.
Legal factors: 18
Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.
Internal factors: An organization's internal environment is composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behavior. employee behavior directly affects the brands performance.
Mission statement: An organization's mission statement describes what the organization stands for and why it exists. It explains the overall purpose of the organization and includes the attributes that distinguish it from other organizations of its type. A mission statement should be more than words on a piece of paper; it should reveal a company's philosophy, as well as its purpose.
Organizational culture: The organizational culture is an organization's personality. Just as each person has a distinct personality, so does each organization. The culture of an organization distinguishes it from others and shapes the actions of its .
Formal structure: The formal structure of an organization is the hierarchical arrangement of tasks and people. This structure determines how information flows within the organization, which departments are responsible for which activities, and where the decision‐making power rests.
SWOT Analysis: 19
Strengths: Brand Name: Milkpak is a product of nestle. Milkpak is a trusted brand known throughout the country for its nutritious wholesome goodness and pure natural taste. Quality: The quality of Milkpak is superior and they continuously work to maintain the quality. They believed that quality and persistent commitment to continuous improvement are essential to our ongoing success. UHT (Ultra Heated Treatment): They use ultra heat treatment to kill the spores in milk.UHT is the sterilization of food by heating it for an extremely short period, around 1-2 seconds at a temperature exceeding 135 degree C. Research and development department: Research and development department continuously works on innovation for the milking process and for the improvement of quality. It is essential to keep coming with breakthroughs for the success of any product or the success of any company and mikpk has always delivered. Distribution Network: Nestle Milkpak has a very strong distribution network which covers all over Pakistan. Packaging: Milkpak was the first tetra pack introduced in Pakistan in 1981 with green and white packaging. This green and white color associated with the Pakistan’s flag. Brand loyalty: Milkpak is the product of Nestle; Nestle enjoys a good and strong reputation all over Pakistan which ensures brand loyalty from its customers.
Weakness: 20
External sources for raw material: As nestle is dependent on external sources for the raw material, they therefore sometimes face some difficulties in executing the production process timely. Packaging from Tetra pak: Milkpak depends entirely on Tetra pak for the packaging of its dairy products, Tetra pak being the only option for packaging for nestle because of their monopoly in the business, charges more than sufficient amount for packaging which leads to increase in prices and decrease in advertising budget . As we are all aware that it requires frequent advertising to survive in the milk business. Weak implementation of CSR: The company has announced and is involved in various programs that aims to make company more eco friendly and improving the working conditions fits suppliers .Still Nestle receives a lot of criticism over the effectiveness of its programs.
Opportunities: Develop its own farms: Milkpak should develop its own farmhouses to ensure continuous and qualitative supply rather than relying on others. Increased Government funding/: Government of Pakistan decided to increase the farmers funding. This is an opportunity for Milkpak because farmers will be able produce more quantitative and qualitative milk. Explore from the government of Pakistan such investment opportunities. Strong and continuous marketing campaign: Nestle needs to initiate the programs for strong and continuous marketing campaign as it will only proof to be beneficial for the organization in every manner. Suitable environment:
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Pakistan is the seventh largest milk producing country in the world with the annual output of over 22 billion liters. There are substantial growth opportunities considering the average yield of Pakistani animals at only 1100 liters/annum as compared to 6000 liters/annum for animals in Europe and USA. There are nearly 20 million milk producing animals in the country.
Threats: Competitors: Two main competitors Haleeb and Olpers are the main threats for Milkpak especially Olpers market share is increasing rapidly.
New entrants: Market segment growth could attract new entrants
Political and economical issues: Economic slowdown can reduce the demand and politically Pakistan is not a stable country.
Religious extremists: Due the foreign origin of the company some extremists avoid the use of nestle and recommend it to others not to use Milkpak or any other brand of nestle
Rising raw food prices: With an overall growth of worlds economy and population, demand for raw food increases resulting in higher material costs and squeezed margin for nestle.
Inflation: Inflation is getting higher and higher day by day which is decreasing the purchasing power of people.
Product classification: Milkpak is categorized in the convenience goods as it is included in the necessities of life. A convenience product is a consumer product that takes little thought, is routine, purchased 22
often, appeals to a large target market and the consumer purchases with little planning. These are the products that appeal to a very large market segment. They are generally consumed regularly and purchased frequently. Because of the high purchase volume, pricing per item tends to be relatively low and consumers often see little value in shopping around since additional effort yields minimal saving.
Product Line: A product line is a number of products grouped together based on similar characteristics. The characteristic used to split products, will depend on the firm and its product strategy. Milkpak is the only liquid milk sold by nestle in Pakistan, whereas a couple of other products are sold i.e. Nido and Everyday both are powdered milk. These products are not absolutely of the same nature but more or less carry the same characteristics.
Product life cycle:
Eventually every product goes through all the stages of product lifecycle. Nestle Milkpak after the stages of introduction and growth is now enjoying a stable maturity stage. The product covers a wide range of market and is a known product throughout the country. Maturity stage is a time period when the product sales are at its peak. During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product 23
modifications or improvements to the production process which might give them a competitive advantage.
Pricing strategy: (launching period) Price is the value that is put to a product or service and is the result of a complex set of calculations, research and understanding and risk taking ability. A pricing strategy takes into segments, ability to pay, market conditions, competitor actions, trade margins and input costs, amongst others. It is targeted at the defined customers and against competitors. There are several pricing strategies; following are the four basic strategies variations of which are used in business: 1. 2. 3. 4.
pricing Penetration pricing Economy pricing Skimming strategy
The pricing strategy which was implemented for Milkpak at the time of launch was the penetration strategy.
Penetration strategy: Price is set artificially low to gain market share quickly. This is done when a new product is being launched. It is understood that prices will be raised once the promotion period is over and market share objectives are achieved.
Brand positioning, Personality and Brand strategy: Brand positioning: Put simply, brand positioning is the process of positioning your brand in the mind of your customers. Brand positioning is also referred to as a positioning strategy, brand strategy, or a
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brand positioning statement.
In both of these ments, the r is trying to project the fact that the product is absolutely safe and healthy, moreover the company is implying the fact that the product is an absolute necessity which completes and makes the family stronger. Projecting into the minds of customers that it is a safe product and is to be used by the whole family. It basically is what kind of perception you create of your product in the minds of the customers. Milkpak has now positioned itself as a part of their daily life.
Brand personality: 25
A set of human characteristics that are attributed to a brand name. A brand personality is something to which the consumer can relate, and an effective brand will increase its brand equity by having a consistent set of traits. This is the added-value that a brand gains, aside from its functional benefits. There are five main types of brand personalities: excitement, sincerity, ruggedness, competence and sophistication. Milkpak is having good market share and growing so fast Nationwide, as per our internal research suggests Currently Milkpak is having Brand Personality is contribution of Love, Care, Family and power as our previous ments have made in consumers mind that every ad shows family, love, care and everyone likes to have Milkpak as a Milk, IRON as feature of Milkpak helps individual to fulfill routine tasks with help your IRON POWER which gives 20% IRON requirements. We here are trying to build a Brand Personality i.e. milk for everyone.
Brand strategy for Milkpak: Your brand is more than your logo, name or slogan — it’s the entire experience your prospects and customers have with your company, product or service. Your brand strategy defines what you stand for, a promise you make, and the personality you convey. And while it includes your logo, color palette and slogan, those are only creative elements that convey your brand. Instead, your brand lives in every day-to-day interaction you have with your market:
The images you convey
The messages you deliver on your website, proposals and campaigns
The way your employees interact with customers
A customer’s opinion of you versus your competition
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Channel of distribution Milkpak, Nestle: Nestle uses indirect distribution method for the distribution of Milkpak all over Pakistan , the hierarchy of distribution is as follows
Manufacturer
Distributor
Retailer
Consumer
The distribution strategy pursued by the Nestle Milkpak is intensive. It means that the product distribution is covering wide market. There are regional headquarters of the company in all the big cities of the country. There is a distributor in each big city. In order to reach remote areas, a distributor engages a sub-distributor for a small area. The company is directly linked with the main distributor and the sub-distributor has no such direct with the company. The company provides the Milkpak inventory to the main distributor that is further dispatched to retailers and sub-distributors. There is a regional manager of Nestle that employs Area Sales Manager for a specific area. Then comes the Territory Sales Officer (TSO). TSO is directly linked with the distributors to set and achieve targets. The targets vary from area to area and are set on the basis of history of the area sales. As the sales targets depend upon the area history of sales; these are usually achievable. If these targets are facing some kind of setback, the promotional schemes based on areas are announced as discussed earlier. For distribution Pakistan is divided into three geographical zones and then in further regional zones.
North Zone:
Islamabad and North outstations 27
Jehlum
Peshawar
Central Zone:
Lahore
Faisalabad
Gujranwala
Multan
Sahiwal
South zone:
Karachi
Hyderabad
Quetta
Sukkur
Some of the Distributors in Lahore: Saeed Brothers: Model town Township
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Zakir and Sons: Airport Ghazi road
Dean distributors: Muslim town
SMR Distributors: Fatah Garh
Competitive advantage of Milkpak:
Nestle Milkpak never compromises on quality.
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Nestle Milkpak,s extensive milk collection system ensures that the milk you get is of the finest quality.
Nestlé’s products are available in every city and town
Nestle is using the latest technology in its production units.
Nestle makes milk powder of the surplus milk in winter and converts this milk powder into UHT milk in summer.
Observing the market situation nestle often offers seasonal discounts on Milkpak to gain competitive advantage.
When on promotion Nestle offers additional free products with Milkpak for instance small pack of powdered milk free with 1 liter pack of Milkpak.
Milkpak has arranged various schemes offering gifts to people in return for empty wrappers of Milkpak, gifts such as cars were distributed through lottery.
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Competitor’s analysis of Milkpak: Some of the major competitors of Milkpak are as follows:
Olpers
Haleeb
Goodmilk and others
Olpers: Engro Foods had only recently been established by Engro a traditional giant in Pakistan’s chemical and fertilizer industry. Engro Foods launched Olpers Milk after long tenure of consumer research and time and money consumption. During this time they are continuing observing the issues with the packed milk. After three years of their launch Olpers Milk gain reputation among consumers and now currently holding 30 percent of market share. Within the dairy market, company now has a diverse portfolio of products ranging from different types of cream to low fat milk.
Haleeb: In1986 the commercial production process started with UHT liquid milk from May 21, 1986. The liquid milk was the first product launched in the market. The company started its operations in 1985 having the state of the art plant in the entire dairy sector of Pakistan. Comprising an area of 32 Acres, this plant had a capacity of producing 80,000 liters per day of milk.
Price analysis with competitors:
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Products:
Price of 1 liter pack
Price of 250 ml. pack
Milkpak
Rs. 110
Rs.30
Olpers
Rs. 110
Rs.30
Haleeb
Rs. 75
N/A
Goodmilk
Rs. 88
Rs. 29
Market Share as of 2011
Nestle 40% Olpers32.5 % Goodmilk,Haleeb and others 27.5%
Tools of promotion mix / IMC used by company for selected brand:
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Promotion activities play an important role in re launching any product. Increase in target market is possible by personal selling. It includes persons in retail stores telling the benefits to potential customers about importance of milk in standard packed form. Awareness plays the most important role. They should taste house wives on different places. Because they are the main servers of such kind of nutritional diets to their family TV commercials and Bill Boards should be planned to be d properly.
Determining the promotional methods: There are various promotional methods like personal selling, advertising, sales promtions, public relations etc. but Nestlé attracted the existing customer of the imported brands and potential customers through its advertising campaign. In their campaign, Nestlé mostly focus the small children who are the major portion of our society and milk and such kinds of Products are basic requirement of grooming children that the reason Nestle launched Nesvita Milk especially designed for growing children because introduction of calcium diets in daily diet chart is basic requirement.
Broadcast media:
TELEVISION: Nestle use 40% of their budget on the broadcast media. Television is the major medium used for the ment. Nestle has been playing commercials on the TV since they have launched the Nestle Milkpak. Their Ads cover all the lifestyles of the people. In their ads they have shown many situations.
Friends sitting together
Child playing
Swimmer Families in good mode
Younger generation in smiling energy form
Family enjoying picnic etc. 33
In the entire above situations they have showed the importance of the pure milk, when it’s about athlete, he is health conscious, when friends sitting together and having fun what they need. The main thing the Nestle wanted that people should trust on that Nestle is purest form of milk.
RADIO: Nestle is not only advertising on Television but they are also advertising on radio. They play the vocal ads on Fm 100 and 101. Advertising on radio is basically for the people who are on roads.
PRINT MEDIA: In the print media Nestle is using the following mediums to .
Magazines & Newspapers: Nestle in both magazine and newspaper on weekly and monthly basis. Following is the list of magazine and newspaper in which nestle :
The News
Nation
Dawn
Sunday Magazine
The Economist MAG, Etc.
BELOW THE LINE Below the line includes following mediums of ment:
Direct mail
Outdoor
Transit
Supplementary material
DIRECT MAIL ADVERTISING It is any form of advertising issued directly to the prospect, whether through the mail, fax, online computer services, salesperson, dealers or other means rather than through traditional mass media. 34
Postcards Nestle sends postcards to their home and office persons in the category of retailers and whole sellers. On different occasions nestle send them different post cards to build long term healthy relationships so that they can contribute in increasing the market share of their product.
Leaflets/ flyers: Nestle has placed many types of leaflets, which contain information about Nestle Milk pack, at different outlets.
Folders / brochures: Nestle send brochures of their product to their customers through mail to make them aware of new innovations and products. This helps nestle in getting more customers.
OUTDOOR: Nestle spend a big share of their ment budget on the outdoor ment, which includes:
Painted Billboards
MMT
Vinyl sheet
Rotary Plan
Here is an example of their billboards and rotary plan: Nestle has placed more than 100 billboards across the roads. They have put on different skins of them, which are showing different situations in which people are using pure water. According to the Nestle they use heavy outdoor ment to remind people about the availability of their product because it is a product for which people never pre plan to purchase it so to motivate them for the purchase of Nestle Milk Pack they have to place billboards. Beside this they rotate the skins of their billboards after few months the reason for this is that people lose interest in those skins when
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they see it for a long time so when they rotate them and place the new one that create the interest among the people.
TRANSIT ADVERTISING Transit advertising is a category of out of home media that includes bus and taxicab advertising as well as posters on transit shelters, terminals, and airports. Types of transit advertising:
Inside cards
Outside posters
Terminal posters
Taxi / bus exteriors
Terminal posters
Nestle has placed many attractive and attention getting posters on the terminals and Stations in different cities.
Scroll Works Nestle is also advertising on scroll works, as we know scroll works through mini vans in the city. These van moves throughout the city when people see the scroll work those ads remind them of Nestle Milk Pack during delivery towards the retail outlets and whole sellers.
Skins on Buses Nestle has pasted their skins on Daewoo city buses, in this category they are advertising on certain buses
Current advertising campaign: NESTLÉ Pakistan and Tetra Pak Pakistan has proudly co-launched the Pakistan Safe Milk Movement today. The aim of the movement is to educate every Pakistani on the importance of consuming milk that is safe. In addition, the movement also intends to give enough awareness to everyone to be able to understand how milk could be unsafe and the subsequent adverse effects on health owing to the consumption of unsafe milk.
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The ceremony was hosted by Sidra Iqbal, leading media anchorperson and development activist. Among other notables from both NESTLÉ Pakistan and Tetra Pak Pakistan, the launch event was attended by renowned philanthropist Syed Babar Ali and also by distinguished writer and respected media personality Anwar Maqsood, the brand ambassador for NESTLÉ MILKPAK, who is also spearheading the movement.
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Conclusion: Summing it all up I would say that Milkpak introduced packed milk in Pakistan for the first time. Nestle created and has revolutionized the milk industry since its existence. Milkpak has been a leader in the respective fields since its existence but nowadays competitions are tough some strong competitors have entered the market and are consuming the markets share of Nestle, but Nestle still is on top of the mountain striving hard to maintain its superiority. But still nestle needs to keep up the good work and strive as hard as they can to keep up their position in the market. Nestle Milkpak have a great share in the different multinational companies. It isstatistically calculated that Nestle Milkpak have 50% share in the Nestle company and now Nestle become the leader of all multinational companies in food products and beverages. Nestle is operating in all big cities in Pakistan and try best to provide its Products to other small cities and towns.
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Appendix:
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References: http://www.nestle.pk/ http://www.nestle.pk/brands http://www.nestle.pk/aboutus http://www.ukessays.com/essays/management/historicalbackground-of-the-company-milkpak-management-essay.php http://articles.latimes.com/keyword/nestle-food-co http://www.reuters.com/article/2015/01/22/us-sweden-currencyborg-idUSKBN0KV2A420150122
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