Marketing startegy of nestle bangladesh ltd.

LOCAL BUSINESS POLICIES OF NESTLÉ
BANGLADESH LTD.

INDEPENDENT UNIVERSITY, BANGLADESH
DEPARTMENT OF BUSINESS ADMINISTRATION

REPORT ON
LOCAL BUSINESS POLICIES OF NESTLÉ BANGLADESH LTD

PREPARED FOR:
Dr. Shibli Noman Khan
Lecturer
Department of Business Administration
Independent University, Bangladesh

PREPARED BY:
Alif Al Mohammed Shalahuddin
ID: 1221557
MBA 509

Date: 30 July 2012

Letter of Transmittal

30th July, 2012
Dr. Shibli Noman Khan
Asst. Professor
Independent University Bangladesh,

Subject: Submission of Term paper

Dear Sir,
It’s our great pleasure to submit the Report on Nestle Bangladesh Ltd. A study was making on a
company that you have asked to prepare to study. I have tried our best to follow the instruction
that was given by you. Throughout this study I tried to identify how Nestle operating their local
business being a multinational company in Bangladesh.

I sincerely hope that you will enjoy this report as I enjoyed while writing it. If you need any
further clarification or quarry in interpreting this analysis, we will be glad to oblige you.

Thank you,

Alif Al Mohammed Shalahuddin
ID: 1221557
MBA-509

Table of Contents
Particulars Page

ABSTRACT
PART ONE: INTRODUCTION TO REPORT 02-03
Origin of the Report 03
Objective of the Report 03
Scope and Limitation 03
PART TWO: NESTLÉ BANGLADESH LTD. 04-13
2.1 Introduction 03
2.2 History of Nestlé 04
2.3 Global Brand of Nestlé 09
2.4 Nestlé in Bangladesh 10
Customers of Nestlé Bangladesh Limited 11
Functions of Nestlé Bangladesh 12
Products of Nestlé Bangladesh 13
PART THREE: ORGANIZATION STRUCTURE OF NESTLÉ 14-16
3.1 Global Organization Structure of Nestlé 15
3.2 Organization Structure of Nestlé’s in Bangladesh 16
PART FOUR: STRATEGY OF NESTLÉ 17-35
4.1 Key Success Factors 18
External factors 18
Internal factors 18
4.2 Marketing Strategy 20
Market Segmentation 20
Target market 20
Positioning strategy 20
Advertising and Promotional activities 21
Medium Responses 22
4.3 Competition Structure 23
4.4 Nestlé’s Consumer Communication and Relationship 24
4.5 Retaining Old Customer or Attracting New Ones? 26
Customer Satisfaction Level 26
4.6 Market Audit 27
External Audit 27
Internal Audit 27
4.7 Nestlé’s Commitment to Environmentally Sound Business Practices 30
4.8 The Supply Chain 31
Raw Materials 31
Manufacturing 31
Distribution Marketing 33
4.9 What Makes Nestlé to Become Nestlé? 34
Medical support 34
Food support 34
Sports Development Programme 34
4.10 Conclusion 35
PART FIVE: APPENDICES 36
References 37

Table of Figures
Particulars Page
Figure 01: Sales Regions 11
Figure 02: Sales Process 11
Figure 03: Organizational Functions 12
Figure 04: Nestlé Brands in Bangladesh 13
Figure 05: Global Organizational Structure 15
Figure 06: Organizational Structure in Bangladesh 16

Abstract
The study seeks to identify the local business policies of Nestle Bangladesh Ltd. as a
multinational company. How they operate their business in Bangladesh being a multinational
company to compete with their local competitors. To operate their business how they develop
their strategy to gain the competitive advantage.

In details the study aimed to identify the business policy and their strategy in Bangladesh. What
is there key success factors, marketing strategy, competition structure, market audit as well as
how they develop their market segmentation, target market, positioning strategy, advertising and
promotional activities and what is the output.

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Local Business Policies of Nestlé Bangladesh Ltd.

Part One: Introduction to Report

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Origin of the Report
During the summer’2012 semester of MBA program of Independent University, I was required
to do a term project in the course International Marketing (MBA 509). This course is designed to
give the business students an understanding international marketing that is necessary
tounderstand the in department of international marketing concepts applied by companies. Out of
several options of the term project topics, I have chosen a company ‘Nestlé Bangladesh Ltd.’ for
the term project.

Objective of the Report
To prepare and submit the term project within specified time. To have a very practical idea and
over viewing the marketing sector focusing on a specific company and their performance in
Bangladesh. Present company’s current mission, vision, objectives, and goals. Find out their
strength, weakness, opportunities, threats. Defining their market segmentation, target market and
product positioning and key marketing areas. Source of information the report is originated from
both primary and secondary data source.
 Primary data: Face to face conversations with employees. By arranging appointment
with top officials of the company.
 Secondary data: Company’s reports and other published materials various marketing
books, personal interview with a Nestlé professional.

Scope and Limitation
There was great difficulty of finding appointment of the top officials of Nestle although talking
to the officials interviewing few personnel of top management and talking to personal references
was helpful, still we could not cover in depth analysis on the above mentioned topic. Getting
relevant papers, documents, information were strictly prohibited. The officers were hesitant to
reveal the information in regard of confidentiality Unavailability of financial data as Nestlé does
not publish financial report to the public.
 For the confidentiality concern, access to some information was not available.
 Restriction on time and resources of data due to absence of corporate website in
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Bangladesh

Part Two: Nestlé Bangladesh Ltd.

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2.1 Introduction
Today’s Nestlé, the world's largest food and nutrition company, founded by the Henri Nestlé (10
August 1814 – 7 July 1890); a German confectioner in Vevey, Switzerland in 1866. In the food
industry Nestlé is the most trusted name with high quality products. ―Good food Good Life‖ is
the mission of Nestlé, which drives the company to provide consumers with the best tasting and
most nutritious choices in a wide range of food and beverage categories and eating occasions.
The vision of ―creating shared value‖ and the very own ―Corporate Business Principles‖
shaped the company culture and made them a reliable investor over 86 countries of the world.
Today Nestlé employs around 280000 people and have factories or operations in almost every
country of the world with a total equity of CHF 62.60 billion.

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2.2 History of Nestlé
1866-1905: Henri Nestlé's quest for a healthy, economical alternative to breastfeeding is the
important factor that drives the history of Nestlé Company. Henri Nestlé, pharmacist, began
experimenting with various combinations of cow milk. His ultimate goal was to help combat the
problem of infant mortality due to malnutrition. People quickly recognized the value of the new
product, as Nestlé's new formula saved the life of children within a few years. In August, 1867
Charles and George Page, two brothers from Lee County, Illinois, USA, established the Anglo-
Swiss Condensed Milk Company in Cham. In 1877 Anglo-Swiss added milk-based baby foods
to their products and in the following year the Nestlé Company added condensed milk so the
firms became direct and fierce rivals. Henri Nestlé retired in 1875 but the company under new
ownership retained his name as FarineLactée Henri Nestlé. Their headquarters in Glendale,
California, USA.

1905-1918: The Company formed by the 1905 merger was called the Nestlé and Anglo-Swiss
Milk Company. Most production facilities remained in Europe, however, and the onset of World
War I brought severe disruptions, as a result acquiring raw materials and distributing products
became increasingly difficult. At the same time the war created tremendous new demand for
dairy products, largely in the form of government contracts. By war's end, the Company had 40
factories, and its world production had more than doubled since 1914. Moreover in this period
Nestlé added chocolate to its range of food products and also the Condensed-milk exports
increased rapidly as the Company replaced sales agents with local subsidiary companies. In
1907, the Company began full-scale manufacturing in Australia.

1918-1938: The end of World War I brought with it a crisis for Nestlé. Rising prices for raw
materials, the worldwide postwar economic slowdown, and declining exchange rates made the
situation worst. In 1921, the Company recorded its first loss. Nestlé's management brings Louis
Dapples as an expert to deal with the situation; his rationalized operations and reduction of the
company's outstanding debt improve the financial condition. On the other hand Nestlé's first
expansion beyond its traditional product line came in 1920s by producing chocolates. In the
meantime Brazilian Coffee Institute first approached to Nestlé in 1930 to reduce Brazil's large
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coffee surplus, after eight years of research Nestlé came with Nescafé became an instant success.
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1938-1944: in this period World War II were felt immediately upset the business once again and
Profits dropped from $20 million in 1938 to $6 million in 1939. To overcome distribution
problems in Europe and Asia, factories were established in developing countries; particularly in
Latin America. As the end of the war approached, Nestlé executives found themselves
unexpectedly heading up a worldwide coffee concern, as well a company built upon Nestlé's
more traditional businesses.

1944-1975: The graph of growth sets its trends little higher between 1944 and 1975. As a result
many new products were added as and outside companies were acquired. In Nestlé merged with
Alimentana S.A in 1947, purchase of Findus frozen foods occurred in 1960, Libby's fruit juices
joined the group in 1971 and Stouffer's frozen foods in 1973and finally in 1974 the Company
became a major shareholder in L'Oréal, one of the world's leading makers of cosmetics. The
Company's total sales doubled in the 15 years after World War II.

1975-1981: In 1920s the economic situation was in challenge due to price of oil rose, growth in
the industrialized countries slowed down and worldwide unstable political situation. In 1975 and
1977 price of coffee bean and the price of cocoa tripled. In this situation to maintain a balance,
Nestlé went to second venture outside the food industry by acquiring the pharmaceutical and
ophthalmic product producer Alcon Laboratories Inc. of U.S; as a result it increased competition
and shrink the profit margins.

1981-1995: Improvement of financial situation through internal adjustments and strategic
acquisitions are the two important moves in this period. As a result between 1980 and 1984,
diversification of several non-strategic or unprofitable businesses occurred. On the other hand
Nestlé managed to put an end in the third World to about a serious controversy over its
marketing of infant formula in this period. In 1984 Nestlé acquire American food giant Carnation
and became one of the largest company in the history of the food industry.

1996-2002: The opening of Central and Eastern Europe, along with China and a general trend
towards liberalization of direct foreign investment was good news for the company. On the other
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hand in July 2000 Nestlé launched a Group-wide initiative called GLOBE (Global Business

8 Excellence) aimed to simplifying business process. Two more acquisitions took place in this
period-U.S. ice cream business was to be merged into Dreyer's and the acquisition of Chef
America, Inc. a leading U.S.-based hand-held frozen food product business.

2003-2009: Within this area the acquisition of Mövenpick Ice Cream, Jenny Craigand Uncle
Toby's enhanced Nestlé's position as one of the world market leaders in the super premium
category. On the other hand Novartis Medical Nutrition, Gerber and Henniez join the Company
in 2007. Meanwhile Nestlé entered into a strategic alliance with the Belgian
chocolatierPierreMarcolini at the end of 2009.

2010 to onward: In mid-2010 Nestlé finalized the sale of Alcon to Novartis; at the same time
Nestlé bought Kraft’s frozen pizza business. Another important move in this period is launch of
Special. Tea machine system and the completion of the CHF 25 billion share buyback program

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2.3 Global Brand ofNestlé
The brand portfolio delivers the message once again how big Nestlé in the food industry. It is the
trust and effort of the Nestlé professionals which created the win wining scenario. Today Nestlé
covers almost every food and beverage category – giving consumers tastier and healthier
products.
1. Baby foods: Cerelac, Gerber, Gerber Graduates, NaturNes, Nestum
2. Bottled water: Nestlé Pure Life, Perrier, Poland Spring, S.Pellegrino
3. Cereals: Chocapic, Cini Minis, Cookie Crisp, Estrelitas, Fitness, Nesquik Cereal
4. Chocolate & confectionery: Aero, Butterfinger, Cailler, Crunch, Kit Kat, Orion,
Smarties, Wonka
5. Coffee: Nescafé, Nescafé 3 in 1, Nescafé Cappuccino, Nescafé Classic,NescaféDecaff,
Nescafé Dolce Gusto, Nescafé Gold, Nespresso
6. Culinary, chilled and frozen food: Buitoni, Herta, Hot Pockets, Lean Cuisine, Maggi,
Stouffer's, Thomy
7. Dairy: Carnation, Coffee-Mate, La Laitière, Nido
8. Drinks: Juicy Juice, Milo, Nesquik, Nestea
9. Food service: Chef, Chef-Mate, Maggi, Milo, Minor’s, Nescafé, Nestea, Sjora,Lean
Cuisine, Stouffer's
10. Healthcare nutrition: Boost, Nutren Junior, Peptamen, Resource
11. Ice cream: Dreyer’s, Extrême, Häagen-Dazs, Mövenpick, Nestlé Ice Cream
12. Petcare: Alpo, Bakers Complete, Beneful, Cat Chow, Chef Michael’s Canine Creations,
Dog Chow, Fancy Feast, Felix, Friskies, Gourmet,Purina, Purina ONE, Pro Plan
13. Sports nutrition: PowerBar
14. Weight management: Jenny Craig
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2.4 Nestlé in Bangladesh
Popular Nestlé brands started entering this part of the sub-continent during the British rule and
the trend continued during the pre-independence days of Bangladesh. After the independence in
1971, Nestlé World Trade Corporation, the trading wing of Nestlé S.A, sent regular dispatch of
Nestlé brands to Bangladesh through an array of indentures and agents and some of the brands
such as NESPRAY, CERELAC, LACTOGEN, and BLUE CROSS etc. became some very
common products.

Nestlé Bangladesh Limited started its commercial operation in Bangladesh in 1994. Its total
authorized capital is TK1.5 billion and total paid up capital is TK 1.1 billion. The only factory of
the company in Bangladesh is situated at Sreepur, 55 km north of Dhaka. The factory produces
the instant noodles and cereals and repacks milks, soups, beverages and infant nutrition products.
Today Nestlé Bangladesh Ltd. is a strongly positioned organization. The Company is
continuously growing through the policy of constant innovation, concentrating on its core
competencies and its commitment to high quality food to the people of Bangladesh.

Since the beginning of Nestlé’s operation in Bangladesh, the chairman of the company has been
Mr. LatifurRahman, one of the top industrialists of the country, his firm Transcom used to import
the products of Nestlé. His business house Transcom is still involved in wide range of business
like beverage, pharmaceutical, electronics, newspaper, tea export, fast food franchises etc. Still
he remains as an honorary chairman of the company although his group Transcom does not
capture any share today as Nestlé S.A. holds 100% share of this company.

In Bangladesh Nestlé’s vision is-to be recognized as the most successful food and drink
Company in Bangladesh, generating sustainable, profitable growth and continuously improving
results to the benefit of shareholders and employees.
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Customers of Nestlé Bangladesh Limited
Nestlé Bangladesh Limited markets its products throughout the country with the help of the
distributors. A part from that, Nestlé Professional is a separate function which is responsible for
the institutional sale. There are currently 80 distributors of Nestlé Bangladesh products of which
76 are retail distributors and remaining 4 are Nestlé Professional’s distributors providing
products for the out of home consumptions. The whole country is divided into six regions:

Dhaka North Dhaka South Chittagong Bogra

Khulna Sylhet

Figure1: Sales regions

The retail distributors supply Nestlé products to four types of outlet, while Nestlé Professional
Distributors supply products to different institutions.

Vending Site

Tea Bunk

Retail Distributor

Mordern Trade

Nestlé
Bangladesh Ltd.
Retail/Wholesale

Nestlé
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Institutional Sale
Professional
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Figure2: Sales Process

Functions of Nestlé Bangladesh
Day by day demand and trust on the Nestlé products are growing. Focusing on the substantial
growth and the other business perspective, the company developed its own functional areas.
Currently the existing fictional areas are:

General Finance and Human
Management Control Resource

Supply Chain Marketing Nutrition

Nestlé
Sales
Professionals

Figure3: Organizational Functions

No matter how many functions are running, their main aim is to gain ultimate excellence. Every
function contributes from their end to meet the corporate goal. The General Management take
cares of the overall operation of the company and makes the key decisions. Human Resource
focuses the management of employees and organizational culture; moreover HR professionals
are also responsible for retaining the people who are making the difference with their
competitors at the end of the day. Supply Chain ensures the stable supply of the products
according to the demand of the customers. Marketing looks after the existing brands, market
share and product development of the products. Nestlé is the world’s largest Nutrition Company
that is why the importance of the Nutrition products is much more in compared to the other food
companies; as a result they created a totally separate team to look after the Nutrition products,
such as, CERELAC, LACTOGEN. Finance and control deals with the financial transactions and
most importantly they also apply the control mechanism to remain the company complaint
financially and procedurally. Finally Sales and Nestlé Professionals are responsible for earning
revenue for the company, but sales goes for the retail distributors and Nestlé Professionals looks
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after the institutional sales.
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Products of Nestlé Bangladesh
Globally the product line of Nestlé is very large but in Bangladesh currently there are only 12
products. Nestlé believes all foods and beverages can be enjoyable and play an important role in
a balanced and healthy diet and lifestyle; as a result no matter how short the product line may be
but it ensures the same quality in compare to the other countries.

Breakfast
Beverage Culinary Dairy Nutrition
Cereal

Maggi, Shad-
Nescafe Nido Comflex HunyGold
e-Magic

Nestea Coffeemate Kokocranch Lectozen

Nesfuta NAN

Cerelac

Figure 04: Nestlé Brands in Bangladesh

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Part Three: Organization Structure of
Nestlé

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3.1Global Organization Structure of Nestlé

Table 2: Global Organizational Structure
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3.2 Organization Structure of Nestlé’s in Bangladesh

Figure 06: Organizational Structure in Bangladesh

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Part Four: Strategy of Nestlé

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4.1 Key Success Factors
 Strong brands / relationships with consumers-
 Research and development-
 Innovation and renovation-
 Product availability-
Building relations with medical and scientific community in light of Nestlé Bangladesh Ltd., this
report tried to analyze the following components of marketing strategy through different theories
and applications:
External factors
 Social: Nestlé makes an effort to integrate itself as much as possible into the cultural and
social values of the different countries. During operation in Bangladesh Nestlé has
launched products with integration of social & cultural factors. This has been done to
match the taste buds of Bangladeshi consumers.
 Ethical: Although Nestlé faces ethical dilemmas in commercialization of its products, it
does not consider its high price to be an ethical crisis. This is because they are not ready
to compromise their quality in order to make their product widely available to all.
Internal factors
 Marketing structure: Nestlé is more people, product and brand oriented than system
oriented. Nestlé favors long-term successful business development and even to greater
extent, customer life-time value. At the same time Nestlé does not lose sight of the
necessity to improve in terms of quality, price and distribution. However, Nestlé remain
conscious of satisfying the wants needs and demands of its consumers. It is also aware of
the need to generate a sound profit annually.
Nestlé seeks to earn consumer’s confidence, loyalty and preference and anticipate
their demands through innovation and renovations. Therefore Nestlé is driven by an acute
sense of performance adhering to quality and customer satisfaction Nestlé is as
decentralized as possible within its marketing strategic definitions requiring increasing
flexibility. Nestlé is always committed to the concept of continuous improvement of its
activities and customer satisfaction through market segmentation, positioning and target
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marketing.
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The effective formulation of their marketing strategy depends on the proper
match between the three key elements:
o Consumer
o Quality
o Competition
One thing to be mentioned is that the match between consumer and quality is most important for
Nestlé. Besides there are some other concerns that effect the marketing strategy. This concerns
are where to compete, how to compete and when to compete

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4.2 Marketing Strategy
The current marketing strategy of the company is based on the foundation of the four pillar
strategy which has the following factors:
Market Segmentation
Nestlé is targeted towards the consumer market. So Nestlé food products can be treated as
consumer products. The major factors which play key role in the process of
consumer segmentation are:
 Demographic (age, income, etc.)
 Consumption pattern
 Social economic factors
 Brand loyalty patters
 Perceptual factors
 Cultural factors
Proper consideration of the given factors results in effective consumer segmentation for Nestlé.
Since the product range is expensive in Bangladesh; FoysalAlam, the Marketing Officer, says,
“………………………we have to concentrate strongly on income of consumers.
Target market
Nestlé’s main focus is the socio-economic class, which is the company wide target. Nestlé’s
potential consumers are those who acknowledge that Nestlé is all about quality and most
importantly those who can afford the products. The strategy for selecting their target market is
the following:
 Income level (>10000 Tk)
 Education
 Quality realization
Positioning strategy
Nestlé’s positioning strategy comprises of the three steps:
 Identifying the right competitive advantage
 Choosing the right competitive advantage
 Selecting the right completive advantage
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The company then effectively communicates and delivers the chosen position to the market.
Nestlé strongly believes that their products are specific and so are the product benefits. This,
Foysal Alam, the marketing officer, termed as “Benefit Positioning”
Regarding new upcoming products, Nestlé is looking forward to renovation and innovation for
Maggi noodles and soups. This might be in terms of new flavors or improvising the quality and
the quantity of the products.

Advertising and Promotional activities
The company focuses on its corporate image that “Nestlé is all about quality”. It hardly
emphasizes on promotion and publicity because consumers in Bangladesh already know that
ensuring product quality is what Nestlé focuses, not price. Nestlé mainly focuses the two
possible advertising objectives:

 Informative advertising
 Persuasive advertising

Since Nestlé is already an acknowledged and quality food product company in Bangladesh, it
does not emphasize much on publicity and promotion. Here are a few points to ponder about
advertising done by Nestlé Bangladesh Ltd.:

 Nestlé cannot advertise for infant milk.
 Mass advertising is done for new products only
 Advertising and promotion is done by product wise
 15% of marketing communication budget is spend for publicity
 More indulged into product sampling and test marketing Nestlé had performed test
sampling in the year 2003 on Nescafé.

Nestlé Bangladesh Ltd. has specialized agencies for their promotional purposes. They
are:Product name advertising agencies:

 Nescafé -Unitrend
 Milo - (25%) Unitrend
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 Maggi - Protishobdo
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 Polo – Protishobdo

Nestlé is associated with the following profiles of major media types:

Medium Responses

 Newspapers (e.g. ProthomAlo) Small Pass along audience, approx. 1 lakh. High cost
per exposure.
 TV Reach up to 20 lakh audience
 Billboards Very few
 Local Magazines Negligible
 Outdoor –

The given table suggests that Cost per Contact is better in television advertisement than in
newspapers and other media for Nestlé. Nestlé also believes that television receives better
clutter, fleeting, exposure and a mass audience for promotion, which is only to be considered for
Nestlé Bangladesh Ltd.

The main advertising is done on television and to a very little extent, newspapers. The emphasis
is on building a corporate image about maintaining their high quality. There are also
considerations underway to promote upcoming brands and products to extend their promotional
activities by putting up more billboards, posters, flyers, and banners. They will start internet as
their medium from year 2005. These decisions are carried out by the marketing department.
Hence, Nestlé Bangladesh is trying to integrate their promotional activities and have an
integrated marketing approach

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4.3 Competition Structure
Nestlé supports free enterprise and therefore competes fairly and ethically and expects other
company’s right to do so. The competition structure for Nestlé in Bangladesh is very limited
whereas it faces bigger challenges in other countries such as India, china,etc. Still Nestlé tends to
face competition in the food market. In terms of quality and product square is the biggest
challenge and threat. Pran is the strong contender in terms of turnover. When it comes
to beverage and drinks Nestlé consider Ispahani and Cocola to be strong players. Although 70-
80% consumers prefer Maggi noodles, Cocola seems to be catching up fast.
In terms of competitive advantage, quality seems to be the foremost tool for Nestlé. Although
Nestlé tends to face criticisms in terms of price and number of products sold, in comparisons to
local competitors, Nestlé intends to abide by their policy which never attempts to compromise
quality.

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4.4 Nestlé’s Consumer Communication and Relationship

Nestlé is committed to offering consumers high-quality food products that are safe, tasty and
affordable. The Nestlé Seal of Guarantee is a symbol of this commitment.

It also believes in maintaining regular contact with the consumers. This applies both to how they
present their products and to how they address their consumers’ questions and concerns. When
Henri Nestlé prepared his first boxes of infant formula for sale, he put his address on the
packages so people would know where to go if they had questions. Today, the Consumer
Relationship Panel with the words “Talk to Nestlé” expresses the same commitment.

This is why they have a worldwide Nestlé Consumer Services network devoted to caring for
their consumers. Nestlé’s people have expertise in a wide range of areas such as nutrition, food
science, food safety and culinary expertise. They provide the prompt, efficient and high quality
service that consumers expect from Nestlé.

In addition, the expertise teaches them talk with consumers and above all, to listen. Listening
helps them to understand what people want. Nestlé uses the insights gained from relationships
with consumers to drive product development.

Nestlé care for Nestlé’s consumers because its success depends on meeting their needs and
expectations. Through listening and understanding, it can make products that they will want to
use all through their lives.

Although Nestlé is very conscious of its role in communicating responsibility to consumers,
Nestlé in Bangladesh does not really perform much consumer communication. As noted their
marketing officer, “For Nestlé, our consumers are our distributors”. Nestlé has a separate
department designated as “Consumer Relation Department” where the purpose is served. A P.O.-
Box had been assigned where consumers can send complaints, mails or any enquiries directly in
order to reach Nestlé. This can also be termed as “Post Purchase Service”. Consumer
communication is not much practiced in Bangladesh because at the moment, Nestlé does not
have any organized internal database of its consumers. Hence, it can be said that Nestlé hardly
takes any initiatives in case of consumer communication.
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However, for specific brands, such as Milo, Nestlé Bangladesh has an organized database of
1000 consumers who are the core that is final consumers of Nestlé. Whenever, there are any
upcoming new products, Nestlé sends these loyal consumers newsletters, leaflets, free samples
and even feedback questionnaires. This is the only consumer communication that Nestlé does in
Bangladesh; also consider to be Direct Marketing. For any other products Nestlé never performs
consumer communication.

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4.5 Retaining Old Customer or Attracting New Ones?
For Nestlé, it is a 60-40 ratio. They believe whoever is loyal, Nestlé should do their best to retain
their loyalty because if this loyal consumers become disloyal their word-of-mouth may
contaminate other eager consumers. So, Nestlé emphasizes more on retaining loyalty rather than
attracting new consumers.

Customer Satisfaction Level

Nestlé regards its consumers as its most valuable asset involvement at all levels start with open
communication whether it deals with customer satisfaction or their needs and wants. Nestlé
recognizes that its consumers have a sincere and loyal interest in the behavior, beliefs, and
actions of the company behind brands in which they place their trust. With it consumers the
company would not exist. Nestlé satisfies consumers in many countries and cultures throughout
the world. According to the Marketing officer Nestlé Bangladesh Ltd, customer satisfaction
varies from one aspect to another. In terms of product delivery consumers do not give similar
responses. He explained with the simple example, Nescafé for some is refreshment, for others it
is relief. At the end of the day, Nestlé consumer are 100% satisfied with the high quality of
Nestlé products.

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4.6 Market Audit

The marketing audit is divided in

1. External Audit 2. Internal Audit
o Opportunities o Strength
o Threats o Weakness

External Audit: Scanning the external environment of Nestlé, we tried to find out the
opportunities and threats that are pointed out here:

 Opportunities: The ability to expand their product line that requires an approach that is
compatible with Nestlé’s strengths and that compensates for its weaknesses, e.g. to make
certain products available in the market at a relatively lower price so that a larger number
of consumers can buy it………products such as Cerelac. Enhance distribution of their
Infant Nutrition Products in a country like Bangladesh where malnutrition already exists,
increasing the distribution channels and channel outlets.
 Threats: Few local manufacturers who tend to sale their products at a relatively lower
price through various unethical means. For instant, many do not value expiry dates since
not much restrictions are practiced in Bangladesh.High degree of bargaining power of
suppliers.

Internal Audit:

Then we tried to analyze the internal situation of Nestlé and we figured out the following
strengths and weaknesses:

 Strengths:
o A portfolio of products which responds to the consumer trend for lighter yet indulgent
snacking
o A unique strategic position which combines powerful local brands with strong global
product brands
o Dedicated core staff who are willing to provide significant labor hours to accomplish
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targets
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o Centralized organization that helps in easier coordination of business activities

 Nestlé Weaknesses:
o Far fewer staff than actually required in terms of tasks to be completed.
o Significantly less customer support services than is required in terms of the number
of customers and the complexity of the services offered.
o Except form Milo, they have no post purchase service for other products in
Bangladesh.

Another Approach toward Strengths; Weaknesses Apart from conducting the SWOT analysis,
under marketing assessment, a different approach is taken to make an in depth analysis about
Nestlé. In this approach, first, some core factors are identified against which the performance or
relative strength or weakness of Nestlé can be measured. These factors include:

a. Marketing Factors
b. Manufacturing Factors
c. Organizational Factors

But these factors are too broad. So, further some criteria were developed for each factor to be
evaluated. Then the relative weaknesses or strengths are measured against each criterion that is
summarized here in a tabular format:

Weaknesses
Strengths

Fundamental Marginal Marginal Fundamental
Neutral
Strength Strength Weakness Weakness

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Performance Measurement Criterion

Marketing Factors: Manufacturing actors: Organizational Factors:
•Relative Market •Production facilities •Culture
•Reputation •Flexibility •Leadership
•Previous Performance •Workforce •Managerial capabilities
•Competitive Stance •Technical skill •Workforce
•Customer Loyalty •Delivery capabilities •Flexibility
•Depth of product range •Adaptability
•Product quality
•New product program
•Distribution cost
•Dealer network
•Geographical coverage
•Sales force
•After sales service
•Manufacturing cost
•Pricing
•Advertising
•Structure of competition

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4.7 Nestlé’s Commitment to Environmentally Sound Business Practices

Nestlé respects the environment, supports sustainable development and is committed to
environmentally sound business practices throughout the world. To fulfill this commitment,
Nestlé:

 integrates environmental principles, programmes and practices into each business;
 strives for the continuous improvement of its environmental performance through
application of the Nestlé Environmental Management System (NEMS);
 Complies with applicable environmental legislation. Where none exist, Nestlé’s own
internal rules are applied; and
 Provides appropriate information, communication and training to build internal and
external understanding concerning the Company’s environmental commitment.

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4.8 The Supply Chain

Bringing a food product to the consumer involves a continuous process from farm to table.
Integrated measures for preserving the environment, and consequently for optimizing global
environmental benefits, are put in place along the supply chain. Nestlé endeavors to apply the
following practices to meet its environmental commitment.

Raw Materials:

In general, Nestlé is not directly involved in the production of raw materials. Wherever possible,
locally available raw materials are used. They are either obtained directly from producers or
purchased through trade channels. Nestlé applies the following principles when sourcing raw
materials: all raw materials must meet both legal and internal quality criteria, including limits on
possible environmental contaminants; whenever possible, preference is given to raw materials
that are produced by environmentally sound farming methods (e.g. integrated crop management);
and farmers are encouraged to apply sustainable farming methods and, where appropriate, are
provided with assistance in crop production and dairy farming. Such assistance includes the
provision of recommendations for the conservation of natural resources (soil, water, air, energy,
and biodiversity) and techniques for reducing environmental impact.

Manufacturing:

Manufacturing comprises all processes that are necessary to transform perishable raw materials
into safe and convenient food products for consumers. Nestlé strives to achieve optimal
performance in its manufacturing activities, including the environmental aspects. As such, the
manufacturing practices of the Group:

 Respect natural resources by emphasizing the efficient use of raw materials, water and
energy;
 Minimize the use of environmentally critical substances;
 Continuously seek improvement in the efficiency of production facilities; and
 Reduce waste generation and emissions as much as possible; consider recycling of waste as a
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priority and dispose of non-recyclable waste in an environmentally sound manner.
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Regular environmental assessments of Nestlé’s manufacturing practices are conducted to:

 Evaluate factory performance;
 Review factory compliance with applicable legislation and Nestlé’s own standards;
 Packaging fully investigate incidents that could affect the environment and take relevant
measures; and
 Compare results with previous targets and set new improvement objectives.

In addition, Nestlé exchanges information on environmental protection technology and practices
in order to ensure a wide use of best practices. Nestlé encourages its contract manufacturers to
use environmentally sound manufacturing practices.

Packaging serves a major role in our daily lives. It protects food products from spoilage and
ensures safety from manufacture through storage, distribution and consumption. Packaging may
also provide tamper-evidence features. It communicates information, including nutritional
information and serving instructions, and provides the convenience demanded by today’s
consumers. Nestlé is committed to reducing the environmental impact of packaging, without
jeopardizing the safety, quality or consumer acceptance of its products. It is Nestlé’s objective to
develop safe and wholesome packaged foods using the most efficient and appropriate packaging
materials available, while, at the same time, satisfying consumer requirements and expectations.
Nestlé seeks packaging solutions that:

 result in the lowest possible weight and volume of packages;
 take into account new packaging materials and processes that reduce the impact on the
environment;
 avoid the use of substances that can adversely impact the environment during packaging
production and disposal;
 decrease packaging waste at all stages, including package manufacturing, utilization and
disposal;
 increase the use of recycled materials wherever possible; and
 Increase the recyclables and compatibility of its packages with existing waste management
schemes.
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Regular assessments of Nestlé’s packaging are carried out and action plans are implemented.
Nestlé supports industrial and governmental efforts to promote integrated waste management
that takes into consideration matters such as source reduction, reuse, recycling, composting,
energy recovery and landfill. Nestlé encourages suppliers of its packaging materials to adopt
sound environmental practices

Distribution Marketing
Distribution of products from the factory to the customer involves transport and storage.
Efficient management of the distribution system is essential to preserve the safety and quality of
Nestlé’s products, to ensure a high level of customer service, and to meet its commitment to
environmentally sound business practices. To this end, Nestlé:
 selects appropriate transportation modes, with particular attention given to optimum unit
loads (pallets), vehicle capacity utilization, route planning and consolidation with
outside partners, scheduling and fuel conservation;
 optimizes warehouse and distribution center locations and environmentally efficient
operational systems; and
 Identifies and implements measures to reduce energy consumption and waste.

Nestlé encourages its distribution service providers to use environmentally sound practices.
Marketing is based on the principle of satisfying consumers’ needs. The overall trust
of consumers in Nestlé’s brands and products comes from a quality image that has been

Continuously strengthened for over 130 years. Nestlé strives to increase this trust through its
commitment to environmentally sound business practices. For this reason, Nestlé:

bases environmental claims in advertising, promotional material, labeling and corporate
communications on solid scientific evidence; and selects materials and printing methods for
merchandising materials such as consumer offers, in-store promotions, display materials, leaflets
and printed materials in light of environmental considerations.
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4.9 What Makes Nestlé to Become Nestlé?

• Inherited attitude
• Appreciation of the individual
• Understanding, knowledge and ideas
• The pull of its brands
• People and relationship driven

Flood relief Nestlé Bangladesh donates products to support the Prime Minister’s Relief Fund of
Bangladesh which helps victims of floods and other natural disasters. The Company also assists
with fund-raising efforts for the Flood Relief fund.

Medical support
The Company contributes to the Floating Hospital Project which provides medical assistance for
the poorest of the poor people.
Food support
The Company also runs a feeding programme for a school, established for the under- privileged
children of Dhaka city slums. Under this programme, food is supplied twice a week for the
students.
Sports Development Programme
Cricket is the most popular sport in Bangladesh. Nestlé Bangladesh has stepped forward together
with the Bangladesh Cricket Board (BCB) to develop cricket talent for the future under a special
sponsorship programme. Milo will sponsor a series of local cricket development camps and
tournaments, to be organized by BCB for the under 13 and under 15 age groups. Through this
specific programme, a pool of young talented cricketers will be identified to ultimately represent
Bangladesh internationally.
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4.10 Conclusion
Finally it can be said that that Nestlé Bangladesh Limited is using and developing their strategy
perfectly. By using valuable marketing tools they are creating competitive advantage for
themselves which ultimately helping them to reach their market as well as organizational
objectives. Again their continuous renovation are making them leader into the market which
leads to profit as well as customer base for their company.

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Part Five: Appendices

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References
 Corporate Governance report 2011
 The Nestlé Corporate Business Principles 2010
 Annual Report 2011
 Quick Facts 2011
 Nestlé Management report 2011
 Nestlé Sustainability Review
 Nestlé People Development Review
 Corporate Business Principles
 Million Years of the Food Industry
 The Nestle Management and Leadership Principles
 Nestle Policy on the Environment

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Marketing startegy of nestle bangladesh ltd.

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