CHAPTER – 1 INTRODUCTION AND LITERATURE REVIEW

INTRODUCTION
Nestlé was founded in 1866 by Henri Nestlé and is today the world's
biggest food and beverage company. Sales at the end of 2005 were CHF
91 b n, with a net profit of CHF 8 bn. Nestlé employ around 250,000
people from more than 70 countries and have factories or operations in
almost every country in the world. The history of Nestlé began in
Switzerland in 1867 when Henri Nestlé, the pharmacist, launched his
product Farine Lactée Nestlé, a nutritious gruel for children. Henri used his
surname, which means ’little nest’, in both the company name and the
logotype. The nest, which symbolizes security, family and nourishment,
still plays a central role in Nestlé’s profile. Since it began over 130 years
ago, Nestlé’s success with product innovations and business acquisitions
has turned it into the largest Food Company in the world. As the years
have passed, the Nestlé family has grown to include chocolates, soups,
coffee, cereals, frozen products, yoghurts, mineral water and other food
products. Beginning in the 70s, Nestlé has continued to expand its product
portfolio to include pet foods, pharmaceutical products and cosmetics too.

Today, Nestlé markets a great number of products, all with one thing in
common: the high quality for which Nestlé has become renowned
throughout the world The Company's strategy is guided by several
fundamental principles. 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, throughout their lives. Taste of Nestlé in each of the countries
where Nestlé sell products. Nestlé is based on the principle of
decentralization, which means each country is responsible for the efficient
running of its business - including the recruitment of its staff. 'centralize
what you must, decentralize what you can'. Nestlé is a company which is
present in all over the world but It has difference and unique motto to deal
in all over the world. Nestlé believes that they should think about their
organizations globally but they deal with people by interacting with them
locally. “Thinking globally - acting locally”
MARKETING MIX OF NESTLE

The Marketing mix of Nestle discusses the 4P’s of one of the strongest
FMCG companies of the world. The Nestle marketing mix shows Nestle has
a strong product line which boosts its marketing mix. Below are the
products, price, place and promotions of Nestle.

Products in the Marketing mix of Nestle

There are 4 different strategic business units within Nestle which are used
to manage various food product.

Beverages – One of the most known coffee brands Nescafe, belongs to the
house of Nestle and is one of the cash cows for Nestle. However, it is not
the biggest fund cow. Nestle has a worldwide distribution and has many
different variants. Looking at India, nestle has also launched Nestea.

Milk and Milk products – Nestle every day, nestle slim and Nestle Milk
maid are some of the milk and milk-based products from the house of
Nestle.

Prepared dishes and cooking aides – Nestle has a third category of

products which comes into prepared dishes and cooking aides. The major
cash cow of Nestle lies in this segment, which is Maggi Noodles. Probably
one of the most widely sold ready to cook noodle brands is Maggi. Maggi
has a fantastic taste and quality. Thus, it was not a surprise, that Nestle
expanded the Maggi brand to create an umbrella of different products like
Maggi pasta, Maggi sauce, Maggi cubes etc. The Maggi range contributes
vastly to the bottom line of Nestle.

Chocolates – Nestle has some popular chocolate products, most popular

being Nestle KitKat, Munch, Milky bar, Eclairs and Polo. The newly
introduced Alpino is targeting the gifting segment in response to various
chocolates like Dairy milk and Bournville by Cadbury. The chocolates
segment of Nestle is a star, where the competition is high and the
expense is high but at the same time the market size is huge as well.

As we can see, two major brands of Nestle are a very high contributor to
its Brand equity – Nescafe and Maggi. These are two brands sold across
India in small as well as big shops and super markets. There have been
many competitors for these products, like Bru for Nescafe and Top ramen
and SunFest Yippie against Maggi.
Price in the Marketing mix of Nestle

The price is dependent on the market of each individual products. For

example, Nescafe and Maggi being the clear leaders are priced with
higher margins for the company as compared to competition. This is
because the product quality is good enough and a bit of skimming price
will not cause the customer to switch brands.

The strength of pricing for Nestle comes from its packaging or

consumption-based pricing. For Nescafe as well as Maggi, nestle offers a
lot of sizes and package options. In supermarkets, you can even find a 16
packet Maggi whereas in small retail shops, you can find 5 Rs Maggi.

Thus, with the variety available, customer can make his own choice based
on his consumption. In other products like KitKat and Munch, due to tough
competition from other companies, nestle offers competitive pricing. You
will find that nestle will be similar priced to many of Cadbury’s Products in
the chocolate segment.

Place in the Marketing mix of Nestle

Nestle follows the FMCG strategy of distribution which involves breaking

the bulk. The typical distribution strategy of Nestle is as follows.

Manufacturing >> C & F agent >> Distributors >> Retailers >>

Consumer Manufacturing >> Bulk buyers >> Consumer

These are the two different forms of distribution which Nestle has. It is
typical of any FMCG company. However, the Nestle channel is known to be
strong with a good marketing and sales network for channel distribution.

On top of it, nestle regularly introduces trade discounts and various tactics
to keep the channel motivated. The major challenge is in the distribution
of Maggi which is the most in-demand product along with Nescafe. Due to
these two products, nestle is able to drive other products in the market as
well. Thus, on purchase of one weak product, the distributor might get a
discount on the stronger product or vice versa.
Promotions in the Marketing mix of Nestle

One of the most widely known tunes is the Nescafe tune. It was one of the
best advertising campaigns and was launched at least 2 decades back.
However, that campaign brought Nescafe strongly in the market.

On the other hand, Nestle’s brand was pushed by the excellent product
quality of Maggi and the witty and innovative campaigns of Maggi. Where
Nescafe focuses on value and the good things in life, Maggi focuses on
moments you had with your Maggi. The recent campaign was completely
focused on your Maggi story, where people had to come out with various
innovative ways that they had their Maggi.

Promotions for other products too is done smartly. KitKat focuses on “Take
a break” and has done some good marketing for the same. KitKats
website too is very innovative and shows nothing but asks the visitor to
take a break and have a KitKat. The major push expected of a FMCG
company is in sales promotions at the ground level. This is where Nestle
really rocks. Nestle focuses on its strength which is Maggi, Nescafe and
KitKat which are the most promoted brands in the market on ground level.

Besides this, nestle regularly uses TVC’s and ATL marketing. It is also
present online through some smart creative. Overall, nestle is a brand
which has strong products as well as strong marketing, and hence the
brand has a very high brand recall value.

We hope that Nestle keeps bringing in good products and keeps

maintaining the quality of the products it already has.
REVIEW OF LITERATURE

Paul Rozin (1991) examined that Chocolate is the most craved food
among females, and is craved by almost half of the female sample (in
both age groups). Although this craving is related to a sweet craving, it
cannot be accounted for as a craving for sweets. About half of the female
cravers show a very well-defined craving peak for chocolate in the
premenstrual period, beginning from a few days before the onset of
menses and extending into the first few days of menses. There is not a
significant relation in chocolate craving or liking between parents and
their children.

Sarah Hagget (1994) examined that a controversial, government endorsed

campaign to tackle obesity by encouraging children to exchange
chocolate bar wrappers for sports equipment. A company like Cadbury is
capable of delivering 12 million messages into the marketplace and
engaging young people in positive dialogue. Under the scheme, school-
children get “free” equipment when they collect tokens from Cadbury
chocolate bars. It has been calculated that children need to collect tokens
from 5440 chocolate bars for a net and set of volleyball posts.

Lipp (1998) examined that his work reviews the literature on the
compositional data of vegetable fats used or proposed as alternatives to
cocoa butter in chocolate and confectionery products. Cocoa butter is the
only continuous phase in chocolate, thus responsible for the dispersion of
all other constituents and for the physical behaviour of chocolate. Unique
to cocoa butter is its brittleness at room temperature and its quick and
complete melting at body temperature. There were, and are, strong efforts
to replace cocoa butter in part for chocolate production for technological
and economic reasons.

Philip K. Wilson (1999) examined that in 1753, the noted oncologist, Carl
Linnaeus, named it Theobroma cacao, the food of the Gods. Two and a half
centuries later, Joanne Harris emphasized this exotic’s erotic sensations in
her award-winning fiction debut, Chocolate. For millennia, healers have
touted its myriad medicinal, yet mystical, abilities. By the 1950s,
chocolate, what had long been used as a drug, a food and as a source of
currency, was being marketed merely as a pleasure-filled snack. Over the
next half century, the craving to carve out chocolate’s healthy, medicinal
qualities resurged.

Jan Wollgast (2000) examined that Cocoa beans are rich in polyphenols,
particularly catechins and proanthocyanins. However, a sharp decrease in
quantity occurs during fermentation and drying of cocoa beans and
further retention has been reported during roasting. Characterisation and
in particular quantification of polyphenols in chocolate has only been
developed relatively recently. This work reviews further on the literature
on the available methodology for analysis, quantification, isolation,
purification, and structure elucidation of polyphenols in cocoa components
and other commodities.

“Indian Food and Beverages Forecast” published by RNCOS (2007) A

series of recent studies has indicated that, India’s food –processing sector
has undergone significant changes over the last six to seven years. The
type, variety, quality and presentation of products have all improved,
mainly as a result of economic liberation. The report augurs that the
Indian food processing industry would witness a CAGR growth of 15% for
the period spanning from 2007 to 2011. Many countries are increasingly
eying upon India for food. Recently, India has determined to export 6000
metric tons of rice to Sri Lanka.

Jasdeep Singh Kandhari (2008) investigated that “A study of consumer

preference towards Nestle chocolates” analysed the major dimensions
which affects the preference of the consumers towards a particular brand
like advertising strategies, packaging strategies, different forms of the
chocolate, etc. and it also includes responses of various respondents by
conducting a survey through questionnaires.

Krishnakumari and Das (2012) investigated that employed mothers spend

more on commercial body food which are readily available and nutritious
for the cost they bear. the improper timing, quality and quantity of
weaning food are the cause of a high rate of malnutrition in the society.
Shendge (2012) examined that “A Consumer Preference towards Nestle
Chocolates with Special Reference to Navi Peth Area in Solapur City”
viewed that Chocolate is liked and eaten by all the people of all age
groups.

Syeda Quratulain Kazmi (2012) examined that Customer perception is

basically an organism which describes an individual’s perceived image
which he expects from any product or service. Observation can be
changed or influenced by numerous factors behaviour, children who are in
their teenage prefer food with respect to food nutritious as well as three
factors plays a very important role, home environment, school and social
gatherings.

Anna Kuikka and Tommi Laukkanen (2012) examined that "Brand loyalty
and the role of hedonic value” The objective of this paper is to explore the
antecedents of brand loyalty in the chocolate market. A large sample of
808 effective responses were collected through an online questionnaire
that was posted on the Facebook wall of a Finnish confectionery company.
A model of four antecedents (brand satisfaction, brand equity, brand
value, brand trust) leading to two aspects of brand loyalty (behavioural
loyalty, attitudinal loyalty) was constructed. The moderating effect of
consumers' hedonic value in the model was tested. Confirmatory factor
analysis was used to validate the constructs and multigroup structural
equation modelling was used to test the hypotheses.

B.Sugandhi Shanmugapriya and M. Suganya (2015) examined that

Chocolate are replacing the traditional taste of Indian sweets. They
conclude that chocolate company should promotional activities to
increase their demand along with introducing new flavor in chocolate.

Tanu Payal (2015) examined that “A study on consumer preference

towards Nestle chocolates in Dwarka of West Delhi” viewed that consumer
is the real king of the market and large market share can be captured by
satisfying and fulfilling the customer needs.

Pednekar, Achut P. (2015) examined that Customer satisfaction is

important for the company to build the sales and value of the brand. The
objectives and the purpose of the study were explained to the
respondents. Both primary and secondary data were collected to realize
the objectives of the study. Due to limitation of time, only 100
respondents were selected from Mapusa area on the basis of convenient
sampling. In order to make an in-depth study, secondary data has been
collected from journals, publications and news, internet and magazines.
Necessary statistical tools have been used and the collected data were
then consolidated, tabulated and analysed. The results and discussions
have been presented under various head. The products covered under the
study are Toothpaste, Soap, Shampoo, Detergents, Utensil cleaner, Face
cream, Milk, Soft drink, Coffee, Edible Oil, Noodle, Spices, Talcum powder,
Hair oil, Deo's, Tea Powder, Biscuits, Pickles, Chips, Chocolates, Ice cream
and Ketchup. The study concludes that most of the products are
purchased on the basis of quality, price, brand status, identity, services,
packaging, credibility and self-esteem. They get attracted to the many
variables related to the utility and the price value.

Udgam vigyati (2015) examined that the brand Maggi is strongly

established as a family brand with crisp brand equity in Indian market.
The brand has always been known to have the first mover’s advantage in
the portfolios like noodles, ketchups, soups, sauces, etc. The parent brand
Nestle has been the strong symbol of family, shelter and warmth which
brand Maggi has innovatively capitalised.

K.Raja Rajeswari and S.Kirthika (2016) examined that Nestle is a

multinational company. Today the world’s leading Food Company, with a
140 years history and operations in virtually every country in the world.
Nestle has grown to become the world’s largest and most diversified food
company, and is about twice the size of its nearest competitor in the food
and beverage sector. The company’s export portfolio comprises branded
milk product and nutrition, beverages, Maggi, chocolates. While other
companies compete with nestle in each of the product segment, nestle
pervades all these segments.

N.Vijayanand and P.Thillairajan (2018) examined that a model review of

200 respondents was assumed to locate out the inclination of NESTLE
Products in Chennai city. The study mostly determined on universal price
stage, superiority & customer anticipation overall fulfilment about NESTLE
Product, universal attentiveness and customer inclinations of NESTLE.
S.Shanthi (2018) examined that Chocolate is liked and eaten by all age
group of people. It may be in a form of hard, nuttiest, crunchy or chew. It
is available in small, big and family pack. Chocolate has many shapes like
as rectangle, sphere or a brick shape. It tastes like sweet and bitter. Some
people have chocolate in a glass of cold coffee, or in the form of a toffee.
Some people eat chocolate when they are sad; some relish hem when
they are happy. But I feel, to have chocolates we don't need a reason,
because we can have it anytime, any season

Dr.Purvi Derashri and Mr.Dignesh S.Panchasara (2018) investigated that

Consumers of nestle product refers to the level of happiness or
dissatisfaction with product and brand. The researchers have taken the
sample size of 100 respondents of students, children, businessmen,
servicemen and housewives because majority these people consume
nestle product in the market. The main objective of the research is to
study about consumer satisfaction of nestle product with understanding
the consumer profile, understanding the effectiveness of marketing
strategy and examine the loyalty of consumers. The research design
chosen is descriptive in nature.

P.Maria , Dr. V.Sangeetha and Dr.G.paulraj (2019) examined that In the

present days there are a large number of domestic and global players in
the marketplace. The key to achieve success is to retain the customers by
providing the things which they expect. With the presence of advanced
technology, the consumers’ expectations have ascended to a very high
standard and it becomes very daring for the marketers to achieve
customer satisfaction. Customer attrition is another evident challenge
facing every industry. In order to overcome this trend, the company has to
strengthen its delivery system in both pre and post purchase services to a
customer resulting to sustain55TT55 their repeated purchases and build
“Brand Loyalty”. Nestle is one among a popular brand which has been
serving this world for over one hundred and thirty years. It has
differentiated itself through its high-quality product mix and positioned
itself as health and Nutrition company targeting the health-conscious
people throughout the world. Moreover, it also deals with juices,
chocolates, prepared food like noodles, baby food, infant formula milk and
breakfast cereals in and extended to worldwide. Nestle is a low-cost
leader with its efficient operations. Branding creates emotional and
cultural responses. As consumers are bombarded with a variety of
products to meet the same needs, branding provides a way for consumers
to reduce their time for decision-making. By considering only those
products that they feel are relevant to them or that have met their needs
acceptably in the past