MKT201-- term paper--Nescafé

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Information about MKT201-- term paper--Nescafé
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Published on February 22, 2014

Author: samiyayesmin

Source: slideshare.net

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term paper to study, observe and learn how all the marketing factors and strategies, according to our course “Principles of Marketing”, are practically being used at Nescafé

For G. M. Shafayet Ullah's class

Group II

Group II SUBMITTED TO: Course Instructor: G. M. Shafayet Ullah MKT 201 - Principles of Marketing Office Room: UB 0633 Email: shafayet.bracu@gmail.com SUBMITTED BY: GROUP II Sl. No. Name I.D. Email add. 1. Protiti Khan 11304018 protiti.211@gmail.com 2. Samiya Yesmin 11304043 samiya.yesmin@gmail.com 3. Lamisa Manzoor 11304072 lamisa.manzoor@gmail.com 4. Prianka Grasia Costa 10204016 prickyedro_1727@hotmail.com 5. BushraMuhsanat Khan 11304063 muhsanatkhan_bushra@yahoo.com 6. Anika Mozammel 11204096 Anika_04@ymail.com 7. Nazmus Sakib 11204010 vengeance_35@hotmail.com 8. Nahian Zaman 11204023 nahianzaman@hotmail.com Page 2 of 30

Group II EXECUTIVE SUMMARY NESCAFÉ is one of the strategic brands to the world’s leading food company Nestlé. In Bangladesh the brand has a well established position as it holds 95% of the market share in coffee market in Bangladesh. But the overall coffee market in Bangladesh is very small compared to the large tea market of 60000 tons. NESCAFÉ globally holds 59% of the market share in the instant coffee category segment. NESCAFÉ has a predefined profile of its consumers which include students with the age group of 16 to 24 years and office executives within the age group of 24 to 35 years. Nestlé realizes that the brand acceptance of NESCAFÉ in Bangladesh is very strong but the biggest challenge is to ensure trial of the brand among the large consumer base. Hence we decided to study the working of Nescafé to observe and learn how all the marketing factors and strategies, according to our course “Principles of Marketing”, are practically being used. Investing heavily in promotion requires a lot of budget which normally comes from the revenue of products. NESCAFÉ needs invest a lot into promotion but at the same time cannot afford to make its products more expensive. Therefore striking the perfect balance here is the main challenge facing NESCAFÉ in Bangladesh. Page 3 of 30

Group II LETTER OF TRANSMITTAL Date: December 14, 2012 G.M. Shafayet Ullah Course Instructor Principles of Marketing BRAC Business School Subject: Submission of Term Paper Dear Sir: We are pleased to submit our report on “Marketing Plan and Strategies of Nestlé, regarding the brand Nescafé” for your review. This report was done with the help of Mr. Ishtiaque Ahmed, Senior Brand Officer, Nestlé Bangladesh Limited. He helped us with his excellent guidance and the information that we required to complete this report. It was a pleasant experience for us to work on this project. We would like to thank you for giving us such a wonderful opportunity. Yours Sincerely, ________________________ Protiti Khan Samiya Yesmin Anika Mozammel Prianka Grasia Costa Lamisa Manzoor Bushra Muhsanat Khan Nazmus Sakib Nahian Zaman Page 4 of 30

Group II ACKNOWLEDGEMENTS First of all, we would like to convey our special thanks to Mr G. M. Shafayet Ullah, our faculty advisor for his valuable guidance, which helped us to complete this report successfully. We are highly grateful to him. Next, we would like to acknowledge the help of Mr. Ishtiaque Ahmed, Senior Brand Officer, Nestle Bangladesh Limited, Mr. Mahfuzul Islam, Senior Brand Officer, Nestle Bangladesh Limited, and Mr Ahmed Shafquat Noor, Financial Planning Analyst, Nestle Bangladesh Limited, for sharing their insights into the topic and providing us the support and information we needed. We greatly appreciate their help. Page 5 of 30

Group II TABLE OF CONTENTS 1. Background of Paper .............................................................................................. 7 2. Introduction: ........................................................................................................... 8 3. Company History: .................................................................................................. 8 3.1 HISTORY of the Organization ............................................................................ 9 3.2 Company Profile: Nestlé Bangladesh Limited (NBL) ....................................... 10 4. Nestlé .................................................................................................................... 11 4.1 Vision ................................................................................................................. 11 4.4 Goals .................................................................................................................. 11 4.2 Mission............................................................................................................... 11 4.3 Objectives .......................................................................................................... 12 5. Nescafé~ Product, Service & Branding Strategy ................................................. 12 6. Nescafé Market segmentation, Targeting and Positioning ................................... 14 7. Nescafé~ Product Life-cycle Stage ...................................................................... 16 8. BCG Matrix .......................................................................................................... 18 9. SWOT Analysis of Nescafé ................................................................................. 19 10. Nescafé Pricing Strategies: ................................................................................... 20 11. Nescafé- Marketing Communication Mix ............................................................ 22 13.1 Advertising:...................................................................................................... 23 13.2 Personal Selling: .............................................................................................. 24 13.3 Public Relation:................................................................................................ 25 13.4 Direct Marketing: ............................................................................................. 25 13.5. Promotion Mix Strategy of Nescafé: .............................................................. 25 12. Consumer Buying Behaviour ............................................................................... 22 13. Business Markets .................................................................................................. 23 14. Suggestions ........................................................................................................... 26 Page 6 of 30

Group II 14.1 Establishing Presence in Social Networking Sites: ......................................... 26 14.2 Tapping the FM Revolution: ............................................................................ 27 14.3 Reviving NESCAFÉ Unplugged: .................................................................... 28 14.4. NESCAFÉ 3 in 1-Fast & Furious: .............................................................. 28 15. Conclusion ............................................................................................................ 30 16. Works Cited .......................................................................................................... 30 1. BACKGROUND OF PAPER Nestlé Bangladesh Limited is a leading food company with lots of global strategic brands operating in Bangladesh. NESCAFÉ is one of the strategic brands of Nestlé Bangladesh Limited. Worldwide NESCAFÉ is the largest profit making category with different ranges of coffee starting from instant coffee to coffee specialties. Hence we decided to study the working of Nestlé Bangladesh Limited to observe and learn how all the management factors, related to our course “Principles of Management”, are practically being used. Analyzing and learning from this huge and successful multinational corporation, Nestlé, has been a major revelation Page 7 of 30

Group II 2. INTRODUCTION: Nestlé Bangladesh Limited is a leading food company with lots of global strategic brands operating in Bangladesh. NESCAFÉ is one of the strategic brands of Nestlé Bangladesh Limited. Worldwide NESCAFÉ is the largest profit making category with different ranges of coffee starting from instant coffee to coffee specialties. Hence we decided to study the working of Nestlé Bangladesh Limited to observe and learn how all the marketing factors, related to our course “Principles of Marketing”, are practically being used. Analyzing and learning from this huge and successful multinational corporation, Nestlé, has been a major revelation 3. COMPANY HISTORY: Nestlé S.A. is a Swiss multinational nutritional and health-related consumer goods company headquartered in Vevey, Switzerland. It is the largest food company in the world measured by revenues. It ranks No. 1 in Consumer Food Product category of Fortune's "World's Most Admired Companies". Nestlé's products include baby food, bottled water, breakfast cereals, coffee, confectionery, dairy products, ice cream, pet foods and snacks. 29 of Nestlé's brands have annual sales of over 1 billion Swiss francs (about $ 1.1 billion), including Nespresso, Nescafé, KitKat, Smarties, Nesquik, Stouffer's, Vittel, and Maggi. Nestlé has around 450 factories, operates in 86 countries, and employs around 328,000 people. It is truly a Multinational Corporation with home country sales accounting for only 2% of the worldwide total. With the motto “Good Food, Good Life”, Nestlé has always been dedicated to providing the best food to people throughout their lives, with their unique experience of anticipating consumers’ needs and creating solution. The company's strategy is guided by several fundamental principles, which only reflects its concern for people. The business objective is to manufacture and market the company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and Page 8 of 30

Group II business partners. All these sound human values and principles on which the company is built on have resulted in Nestlé doing business for about a period of one and a half century with evidently remarkable success. 3.1 HISTORY OF THE ORGANIZATION In the mid-1860s Henri Nestlé, a trained pharmacist, began developing an alternative source of infant nutrition for infants who had been unable to be breast fed. The Anglo-Swiss Condensed Milk Company was founded in 1866-87 by Americans Charles and George Page. In 1875 Henri sold the company to Jules Monnerat and retired. Thirty years later, Nestlé and Anglo-Swiss Milk Company merged, not before producing fierce competition between them. By the early 1900s, the company was operating factories in the United States, United Kingdom, Germany, and Spain. The First World War created demand for dairy products in the form of government contracts, and, by the end of the war, Nestlé's production had more than doubled. Nestlé found itself in crisis after the end of World War I in 1918. Wartime contracts finished and civilian consumers who had adapted to condensed and powdered milk during the war switched back to fresh milk. However, new products appeared steadily: malted milk, a powdered beverage called MILO in 1934, and, in 1938, Nescafé. It became an instant success and was followed in the early 1940s by NESTEA. Nestlé felt the effects of the Second World War immediately. Profits dropped from US$20 million in 1938, to US$6 million in 1939. Factories were established in developing countries, particularly in Latin America. Ironically, the war helped with the introduction of the company's newest product, Nescafé ("Nestlé's Coffee"), which became a staple drink of the US military. Nestlé's production and sales rose in the wartime economy. In 1947, Nestlé merged with Alimentana S.A., the manufacturer of MAGGI seasonings and soups. The acquisition of Crosse & Blackwell, the British manufacturer of preserves and canned foods, followed in 1950, as did the purchase of Findus frozen foods (1963), Libby's fruit juices (1971) and Stouffer's frozen foods (1973). In 1974, the Company became a major shareholder in L'Oréal, one of the world's leading makers of cosmetics. After this diversification endeavour, its overall financial condition deteriorated drastically. To address this, Nestlé made its second venture outside the Page 9 of 30

Group II food industry by acquiring Alcon Laboratories Inc., a U.S. manufacturer of pharmaceutical and ophthalmic products in 1977. In the same year the group took its current name, Nestlé S.A. Between 1980 and 1984, Nestlé managed to put an end to a serious controversy over its marketing of infant formula in the Third World. In 1984, Nestlé's improved profit figure allowed the Company to launch a new round of acquisitions, including the IPO of American food giant Carnation; San Pellegrino (1997), UK’s Spillers Petfoods (1998), along with Findus brand (1999) Ralston Purina (2002) and since then pet care business has been joint world leader and known as Nestlé Purina Pet Care. In 2007, Nestlé acquired Gerber, known for its infant products, and Novartis Medical Nutrition. Then in 2010, Nestlé acquired Kraft frozen pizza business in the U.S. and Canada which included Delissio. In 150 years, Nestlé has come across a long way. 3.2 COMPANY PROFILE: NESTLÉ BANGLADESH LIMITED (NBL) Nestlé Bangladesh Limited (NBL) stared its commercial operation in Bangladesh at 1994. Its total authorized capital is 1.5 billion taka and total paid up capital is 1.1 billion. The only factory of the company in Bangladesh is situated at Sreepur, 55 km north of Dhaka. The factory produces instant noodles and cereals and repacks milks, soups, beverages and infant nutrition products. 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 independence in 1971, Nestlé World Trade Corporation, the trading wing of Nestlé S.A., sent regular dispatches of Nestlé brands to Bangladesh through an array of indentures and agents, and some of the brands such as NESPRAY, CERELAC, LACTOGEN, BLUE CROSS etc. became household names. In the early eighties Transcom Ltd. was appointed as the sole agent of Nestlé products in Bangladesh. In 1992 Nestlé S.A. and Transcom Ltd. together acquired the entire share capital of the company Vita Rich Foods Ltd. Nestlé S. A. took 60 percent while Transcom Ltd. acquired 40 percent. With this acquisition, the name of the company was also changed to Nestlé Bangladesh Limited. In 1998 Nestlé S.A. took over the remaining 40 percent share Page 10 of 30

Group II from Transcom Limited when Nestlé Bangladesh became a fully owned subsidiary of Nestlé S.A. It has invested more than USD 28.3 million in Bangladesh and achieved above 600 crores in sales in 16 years. Today, NBL is a strongly positioned organization. It is continuing to grow through its policy of constant innovation and renovation, concentrating on its core competencies and its commitment to high quality, with the aim of providing the best quality food to the people of Bangladesh. It currently employs around 462 people directly and has more than 1000 people employed by suppliers and distributors in connection with Nestlé. 4. NESTLÉ 4.1 VISION NESTLÉ BANGLADESH’S VISION IS TO BUILD NESTLÉ AS THE RESPECTED AND TRUSTWORTHY LEADING FOOD, BEVERAGE, NUTRITION, HEALTH AND WELLNESS COMPANY IN BANGLADESH ENSURING LONG TERM SUSTAINABLE AND PROFITABLE GROWTH. THE COMPANY IS VERY MUCH FOCUSED TO ENSURE THAT THE VISION IS IMPLEMENTED IN EVERY ASPECT. THE COMPANY’S VISION AND THE ROADMAP TO REACH IT ARE AS FOLLOWS. 4.2 GOALS Generate value in its products that can be sustained over the long term for its shareholders, employees, consumers and business partners. Retain consumer loyalty. 4.3 MISSION Be in every way, the leading company in the local food industry. Ensure high quality standards in everything the company undertakes. Provide consumers with superior quality products. Page 11 of 30

Group II Expand total coverage and provide brand wise distribution targets Provide employees a challenging and satisfying work environment. Be a good corporate citizen and contribute positively to the society in which NBL operates. 4.4 OBJECTIVES To build mutual trust with consumers, governmental authorities and business partners. To ensure continuous improvement of Nescafé environmental performance. Conservation of natural resources and minimization of waste. To establish the benchmark for good business practice. To employ new technologies and develop better processing capabilities. 5. NESCAFÉ~ PRODUCT, SERVICE & BRANDING STRATEGY Product: Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need is known as product. Nestlé Bangladesh Limited is a leading food company with lots of global strategic brands operating in Bangladesh. NESCAFÉ is one of the strategic brands of Nestlé Bangladesh Limited. Worldwide NESCAFÉ is the largest profit making category with different ranges of coffee starting from instant coffee to coffee specialties. NESCAFÉ is a contemporary, up-beat brand of distinctive quality that offers a rewarding coffee experience every time, everywhere. It brings a level of passion, competence and inventiveness that is unmatched by any other brand. NESCAFÉ CLASSIC has the unmistakable taste of 100% pure coffee and is made from carefully selected coffee beans picked from the finest plantations, blended and roasted to perfection. 100% coffee…100% pleasure…..making every occasion special from the first sip. NESCAFÉ 3-in-1 has galvanised the youth to action through its “Get Set Go” campaign in Bangladesh. The call to action was based on a real insight into the core target group Page 12 of 30

Group II students and young executives who are making their way in the world, those who feel that life is about taking every opportunity. Pack Size NESCAFÉ 200 gm jar Target Users Out of home pack mostly serving the bulk users, i.e. fast foods, restaurants etc. NESCAFÉ 100 gm jar In- home pack, mainly for the relatively frequent coffee drinkers. NESCAFÉ 50 gm jar In-home pack, meeting the daily usage need of households in an affordable way. NESCAFÉ 14 gm Containing right mix of coffee, creamer and sugar to have right taste of 3 in 1 pack coffee just by adding hot water, convenient pack size of 14 gm allowing the consumers to carry it with them and have coffee anytime, anywhere. NESCAFÉ 1.8 gm For 2 persons, affordable pack with broader consumer base, wide Bondhu Pack distribution in retail outlets. Table 3: NESCAFÉ Stock Keeping Units Product and Service Decisions: Marketers make decision at three levels- individual product decisions, product line decisions and product line mix decisions. Individual Product and Service Decision: the company focuses on product attributes, branding packages, branding, packaging, and labeling and product support services to take decision in this stage. Nescafé has really high-quality of taste. And the company is offering different types of coffee like- Nestea, Nescafé Gold. Product line decisions: A group of products that are closely related because they function in a similar way are sold to the same customer groups are marketed through the same types of outlets or fall within given price. As it is mentioned before that Nescafé has five deferent types, among them for example- 200 gm jar is used for out of home pack mostly serving the bulk users, i.e. fast foods, restaurants etc. Page 13 of 30

Group II Product Mix Decisions: The set of all product lines and items that a particular seller offers for sale. In a multistoried place like-Nandan has a mixture of products. There consumers can see all the five categories of Nescafé and can buy their preferred pack. Brand: A name, term, sign, symbol, design or a combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors. Nestle is a high qualified bran that offers five different stocks according to the consumers need. Branding strategy: Nestlé realizes that the brand acceptance of NESCAFÉ in Bangladesh is very strong but the biggest challenge is to ensure trial of the brand among the large consumer base. One of the key ways of increasing the coffee business in the country is by recruiting new consumers. Keeping this in mind, this project was initiated to have a picture of the coffee consumers’ profile and to come up with strategies that will be attractive for that particular profile. Positioning: Brand wise NESCAFFE holds the position of 33 and NESTLE 55. “Nescafé is still in the growing stage”, says one of the employees we took interview. 6. NESCAFÉ MARKET SEGMENTATION, TARGETING AND POSITIONING Market Segmentation: means dividing a market into smaller group with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. The local demand scenario of Nescafé can be divided into 3 segmentations. There are: Demography: Nescafé has tried to segment every age group, families, region, gender and different socio-economic groups. However, there has been a trend noticed by Nescafé in past it was mostly targeted to morning people, present times its targeting the youth. According to Andrew Ward worldwide account director of Nescafé has launched a $30 million global campaign, specifically aimed at 16-24 years old. E.g. Nescafé cappuccino, premium urban consumers between the ages of 17-30 years are attracted with the theme line Page 14 of 30

Group II “the magic world of endless pleasure”. And Nescafé classic targeted to the urban professionals from age 20-30 with the tag line "Coffee at its best". Geographic: Dividing the a market into different geographic units such as nations, regions, cities, etc. Nescafé from survey found majority of coffee consumers live in Dhaka, Chittagong and Rajshahi cities with respective consumption rate of 31.6%, 19.6% and 24.6%. It’s mostly popular in urban and semi urban areas of the cities. About 30% of our population falls below the age group of < 35 years giving a big target base for coffee business development. Psychographic: this is the division of market according to social class, life style, or personality characteristics. Nescafé Bangladesh, through their TV ads and other marketing means, has tried to grab the attention of the youth and has been very vocal about it. Their marketing campaigns, that mostly highlight the youth’s everyday happenings by bringing focus to small details and showing how Nescafé plays a part in it, leave a psychological effect on those youths and making them want to live such lives shown on the commercials. As a result, Nescafé is being effectively made known and the consumers end up buying the product. Positioning: is the act of designing the company image to occupy a distinctive place in minds of target markets. A product position is the way the product is defined by consumer attributes Nescafé’s positioning is “1 cup, 1 good feeling” . The TV channels and all promotional messages focus on passing love between two people, friendship and so on. Sharing a cup of coffee is shown as a symbol of sharing happiness with everyone. The Red Nescafé mug is another popular symbol which associates the Brand Nescafé with the concept of sharing happiness. Target marketing: Target marketing is a set of buyers sharing common needs or characteristics that the company decides to serve. Nescafé’s target market was mostly the youth. E.g college and university students engrossed in social networking websites like facebook, twitter etc. Under this target marketing strategy Nescafé follows differentiated marketing strategy in Bangladesh. Which is targeting different market segments and design separate offers for each. E.g Nescafé 3 in 1Coffee for people who are busy, bondhu package Page 15 of 30

Group II for friends’ chit-chat times, etc. However, Bangladesh still do not have any page of their own in facebook opening one could help promoting its products more. On the other hand, one recent example would be the popular rock competition that was sponsored by NESCAFÉ. The competition that was called “NESCAFÉ GET SET ROCK”, which unlike conventional musical talent hunt contest, was one with a difference. The show itself was deemed a hit and ended up being followed by the youths and thus NESCAFÉ had made a huge impact highlighting their effective target marketing. 7. NESCAFÉ~ PRODUCT LIFE-CYCLE STAGE By satisfying the market, Nescafé has entered the growth stage. The early adopters will continue to buy, and later buyers will start following their lead, especially when they hear favourable word of mouth. Nescafé will introduce new product features, such as its Bondhu Pack and 3in1 Pack, and the market will expand, as market gain has become the main goal. There is an increase in competitors such as the Grey Market goods as well as Pran’s new initiative to produce coffee. This leads to an increase in the number of distribution outlets, and sales jump just to build reseller inventories. Prices are likely to remain where they are as Nescafé is imported as finished goods through heavy import taxation. Nescafé will keep their promotion spending at the same or a slightly higher level. Educating the market remains a goal, but now Nescafé must also meet the competition. Profits increase during the growth stage as promotion costs are spread over a large volume and as unit manufacturing costs decrease. Nescafé several strategies to sustain rapid market growth as long as possible. It improves product quality and adds new product features and models as it enters new market segments and new distribution channels. It shifts some advertising from building product awareness to building product conviction and purchase, and it lowers prices at the right time to attract more buyers. Page 16 of 30

Group II In the growth stage, Nescafé faces a trade-off between high market share and high current profit. By spending a lot of money on product improvement, promotion, and distribution, Nescafé can capture a dominant position. In doing so, however, it gives up maximum current profit, which it hopes to make up in the next stage. Thus Nescafé’s current status: Sales- Rapidly rising sales as Nescafé is growing market share. Costs High cost per customer- Average cost per customer as product has been in the market longer. Profits- Rising profits as it is the only major producer to instant coffee. Customers- Early adopters as people are still at the stage of trying out coffee. Competitors- Growing number as other businesses see the potential of this untapped market. Marketing Objectives: Maximize market share by converting tea drinkers to coffee enthusiasts Marketing Strategies would be: Product Offer product extensions, service, warranty: Nescafé has come up with a 3in1 offer as well as a Bondhu Pack offer in addition to their Classic Coffee. Price- Price to penetrate market, keeping it affordable is the main target as the market would be more receptive so the Bondhu Pack. Distribution- Build intensive distribution, so people can find it close to hand, as Nescafé’s idea is coffee anytime anywhere. Advertising - Build awareness and interest in the mass market, as people are already aware of the brand image through advertisements, making is a part of their life is the goal. Thus sampling is the major promotional activity at this stage. Sales Promotion - Reduce to take advantage of heavy consumer demand. Page 17 of 30

Group II 8. BCG MATRIX The Boston Consulting Group (BCG) matrix is a model that seeks to place the different products of an organization in different grids such as to analyse them in a comparative manner in terms of (a) percentage growth in sales and (b) market share position. Thus it gives an opportunity of self-assessment to the organization to reassess its product positioning and thus come out with alternative solution if the original placement of the products in the market does not meet the desired level of growth. Shown below is the BCG matrix of Nestlé Bangladesh: What is important to note here is that though in the international market Nestlé considers Nescafé a Star, in terms of the Bangladeshi market it is regarded as a Question Mark instead. This is because though sale of Nescafé is growing at a steady rate locally, its market share is still quite low and overall sales volume is not satisfactory yet to keep pace with the aggressive spending undertaken by Nestlé BD to promote the product in the country. Page 18 of 30

Group II 9. SWOT ANALYSIS OF NESCAFÉ Nescafé, a product of Nestlé is a famous and well-known brand of coffee made from fine cocoa beans. Its brand name has become synonymous with coffee all over the world as a result of its excellent quality and decades of innovative marketing campaigns. However, even though it's a highlypopular brand Nescafé has its own sets of strengths and weaknesses that must be focused upon. There are also opportunities for it to capitalize on to eliminate its drawbacks and increase its market share, but it has to look out for threats that can potentially jeopardize its business strategies. Given below is a SWOT analysis of Nescafé: Strengths: Strong brand name as it is associated with Nestlé It has fascinating and excellent marketing campaigns Their products are diversified into many flavors and segmented accordingly It has a very strong financial position Globally known brand with a very good reputation in the market worldwide It has great Marketing P’s. Their Promotion, Placement , Product and Pricing strategies are too good Health conscious products are made keeping in mind the nutritious values Good quality control over the products Weakness: People avoid caffeine if they are health conscious They have to pay a lot of sales and indirect taxes Opportunity: They must reduce their price according to the places they are selling their products They can expand their business into the rural areas They can simplify their taxing schemes Page 19 of 30

Group II Threats: Food inflation causes threats to companies like Nestlé Competitors in the global market Many people avoid coffee due to their health reasons 10. NESCAFÉ PRICING STRATEGIES: Nescafé uses a premium pricing strategy to signal its quality and strong brand attributes. Nestlé’s pricing strategy is different for different pack size to meet the demand of various channels. Factors that Nescafé Considers when setting prices are: 1. Value-Added pricing- Value-added pricing involves attracting value-added service to differentiate the company’s offers and to support charging higher prices. Nestle also followed this strategy. The price of Nestle 3 in 1 has a higher per cup price than any other NESCAFÉ pack. Yet, people tend to buy it more and 3 in 1 pack is very popular amongst young generation as it is easy to make without any hassle. And it gives extra value to that product as milk and sugar is mixed with the classic Nescafé. 2. Cost-based pricing- Cost-based strategy is setting prices based on the costs of production, distribution, and selling the product with a fair rate of return for effort and risk. And Nescafé is following the same strategy. As they import their product and raw materials mainly from abroad they cannot sell it at a low price. So they sell their product based on the expenses they need to bear after the import. The package pricing: There are three types of products of Nescafé which are available in Bangladesh. Such as1. Nescafé Classic Jar 2. Nescafé “Bondhu” Classic Sachet 3. Nescafé 3 in 1 Coffee Page 20 of 30

Group II Other than these three products Nescafé have some other products like- Coffee mate, Nescafé200 gm pillow pouch etc. These products are imported and available in some big chain stores. NESCAFÉ 200 gm Jar: NESCAFÉ 200 gm jar is the highest priced. The unit retail price is 460 Taka. Since the product is positioned to meet the requirement of bulk users, it basically has the lowest price per gm. NESCAFÉ 100 gm Jar: Price of this is 260 Taka. 100 gm is targeted to heavy users of 50 gm jar who can save Taka 10 buying 100 gm at once. NESCAFÉ 50 gm Jar: The price for NESCAFÉ 50 gm jar is 135 Taka per unit. These are mainly for household units with high frequency usage per day. The high frequency home users are willing to buy this pack that makes 50 cups of NESCAFÉ to save some extra money. This jar has a higher unit price but a lower cost per gm compared to the 1.8 gm pack. NESCAFÉ 3 in 1: The retail price of NESCAFÉ 3 in 1 is Taka 8 per unit. It has a higher per cup price than any other NESCAFÉ pack. Yet, those who are willing to incur extra costs to avoid the hassle of preparing coffee prefer it. NESCAFÉ 1.8 gm Bondhu Pack: This is a modified version of the previous .9 gm sachet. A pair of two .9 gm sachets comes at a price of Taka 5. These are meant mainly for the low frequency users. Despite higher cost per gm compared to 200, 100, 50 gm jars, it is more affordable for those who drink infrequently. These people usually buy 4 to 5 sachet at a time. Nescafé Classic Sachet: 0.9 g Sachet of Nescafé Classic Page 21 of 30

Group II It is one of the popular products of Nescafé which are available in Bangladesh. It is available in0.9g Sachet and its price is TK. 02.00. It is popular among customers because, it is highly available that means one can find it even in the road side tea stalls and it is really cheap. Nestle have launched this sachet to introduce the test of Nescafé Classic among the consumers. Nestle Bangladesh imports their products from Malaysia except Nescafé 3 in 1 Coffee Mix and Nescafé Classic Sachet, the raw materials of this two are imported from India and manufactured in Bangladesh. This is the reason they can sell it at a lower price. 11. CONSUMER BUYING BEHAVIOUR Since, most of the people in our country prefer tea over coffee, but still urban and semi urban college and university students belonging to the age group of 16 to 24 years have started to get accustomed to the coffee drinking culture and thus Nescafé, being the number one coffee brand in our country has a played a huge role. There are many psychological factors that have led to this group of people trying this particular brand. They are: Young, College & University students: Prefer to be cool. Values straight-talk, broad mindedness. Trying to break-out of traditional sense. Aspire to become a trend-setter and want to enjoy live by achievements. Highly influenced by word-of-mouth. Office executives & Self-employed Individuals: Seek for social acceptance, recognition and class. Value Self: Self-time, Self-Target. Influenced by word of mouth. Shops in nearby stores or shopping malls. Drinks coffee mainly because of taste, refreshment and class. However, there are several factors for Bangladesh having a low coffee consuming rate compared to her neighbouring countries. They would be: 1. Bangladesh being a tea-cultured country. 2. Coffee is less affordable compared to tea 3. The bitter taste of coffee does not go with the traditional need for sweet. Page 22 of 30

Group II 4. The mainstream population considering coffee as less-healthier drink compared to other traditional drinks. 12. BUSINESS MARKETS Nescafé Bangladesh is involved in only one type of B2B. They have a bundle offer on their coffee making machine, which they provide to business on the bases that they have to but the ingredients from Nescafé. These vending machines are provided by Nestlé for their business customers. 13. NESCAFÉ- MARKETING COMMUNICATION MIX Investment in promotional tools is very important to ensure a sustainable growth of NESCAFÉ and achieve the company’s long-term vision. Following are the brief of the different promotional tools the company undertook so far. 13.1 ADVERTISING: TV Commercial: NESCAFÉ has had a memorable presence in TV because of its “cholo shobai” campaign. This was the pioneer of theme music videos. The target group easily connected to the tune, videography and it became an instant hit. The video still evokes emotion in viewers’ hearts. Prior to that, NESCAFÉ had different TVCs. The first one was “anytime, anywhere” campaign for NESCAFÉ 3in1. Then came the “Jaago” campaign. The third campaign used the tagline “get, set, go”. Print Media: NESCAFÉ has been advertising in Prothom Alo, The Daily Star, Star Weekend magazine etc to generate awareness among the consumers. Page 23 of 30

Group II In- Store Communication: Trade posters, Shelf talkers, Bunting, Danglers are the main elements used for in-store communication. Nestlé appoints merchandisers for installing these materials. These are also called Point of Sales Materials (POSM). Outdoor Activities: NESCAFÉ is currently using shop signage as outdoor promotion. These help shoppers remember the brand while they are making purchases. 13.2 PERSONAL SELLING: Sampling: Sampling is a very useful tool to ensure trial of coffee. Wet sampling is basically providing samples to consumers in ready to drink form. It is done through vending machines and also through different agencies. NESCAFÉ has yearly budget for free sampling and is actively utilizing it with a view to familiarizing people with coffee taste. 13.3 SALES PROMOTION: Major sales promotion tools of Nescafé are: Consumer tool: Sampling: Nescafé conducts sampling in programs which contains sizable amount of audience (500+) of their target market (youth) Free Goods: Sometimes free mug are given with Big Nescafé Jar. Also other company products like Nestea is used to make bundle pack. Trade Promotion: Discounts: Discounts are given to traders if they buy a number of products at a time. For example if a trade usually sells 5 products per month, 7 products are offered at a discount rate to that store to increase overall sales. Page 24 of 30

Group II Allowance: Allowance is given to trade for showcasing products during peak season. These display programs are usually two month long during peak season and the number of products to be displayed depends on the size and business of the trade. Business Promotion: Business promotions are given to tea bunks in two forms. One free coffee sachet is given for buying 10 sachets. Also Free Nescafé Mugs are given to tea bunks to promote visibility of the brand. 13.4 PUBLIC RELATION: The sampling activities done in programs like convocation of a business school or universities and also government organized seminar can be considered in this regard. 13.5 DIRECT MARKETING: They do not have much activities regarding Direct Marketing. Sometimes products that are available in the sampling booths in different programs can be considered as direct marketing. 13.6 PROMOTION MIX STRATEGY OF NESCAFÉ: Nescafé uses both. The pull strategy is used with the consumers by enhancing the brand image of the product and deliver superior value proposition. Push strategy is used in the trade as traders can often influence the consumers to buy coffee in winter or instead of tea if it is made profitable to them. Page 25 of 30

Group II 14. SUGGESTIONS 14.1 ESTABLISHING PRESENCE IN SOCIAL NETWORKING SITES: NESCAFÉ’s target market (mostly the college and university students) is engrossed in social networking websites like Facebook, Myspace, Twitter etc. Globally NESCAFÉ has its presence in those websites. But those touch points fail to connect to NESCAFÉ’s target market in Bangladesh in particular because it is for the mass consumers over the entire world. India started the “Neighbour” TVC campaign with the celebrity icon Deepika Padukon. Later, NESCAFÉ India came up with a facebook page called “Know Your Neighbour” which is very interactive and always keeps posting interesting coffee facts, stories and statuses. There are links to other pages like “NESCAFÉ Pakistan”, “NESCAFÉ Philippines”, “NESCAFÉ South Africa” and so on. It is highly recommended that NESCAFÉ Bangladesh has a page of its own on at least facebook. Once the presence of NESCAFÉ Bangladesh is established on social networking sites, it will have a platform from where it will be able to reach out more to its target group. Some simple but interesting things can be incorporated in its social network facet. The purpose behind all the activities will be to create a community full of exuberant young people. Even people who are young in heart (if not in age) will be welcome here. This community of NESCAFÉ will be more interactive through involving the fans in creative ways. Games The whole concept of introducing game on social networking site is to make the target audience more involved in consuming coffee. Here games like NESCAFÉ poker, NESCAFÉ football, NESCAFÉ snooker will be introduced. Here the target audience will be told to play these games with their friends over coffee using the NESCAFÉ’S GAME APPLICATION. Page 26 of 30

Group II Flavour of the Month As NESCAFÉ have huge range of products, so the whole concept of having these applications is to know which is the most widely used flavor in the month. And what else could be done to improve other product better. Coffee Madness Basically coffee madness is the open forum for all the users of coffee. The concept of these applications is to know how differently and madly consumer makes different flavors of coffee and how innovatively consumer will play with the flavors. Here winner will be given a reward. 14.2 TAPPING THE FM REVOLUTION: FM Radio is undoubtedly the craze now. It is gaining more and more listenership day by day. The FM channels are working really hard to offer the listeners quality music and different talk shows on the go. Radio Foorti 88.0, Radio Today 89.6, Radio Amar 101.6 are the most popular channels. NESCAFÉ Bangladesh can air a program targeted towards the FM listeners, who, in fact are in the core of NESCAFÉ target group. The program might have following features The Radio Jockeys will be cool, 100% confident, natural and have excellent communication skills. He or she will have a vast knowledge on Music and updated about which songs are popular right now.  In the World Music Show section, the show will feature international music. Songs will be played from Billboard Top chart. ALL genre but mostly alternative/Indies/ Rock/Pop/House/Trance/Jazz will be covered. Artists’ profile, their background, the background of the song, gossips etc. will also be there.  Recipe section will give a short recipe of a drink/ food item that can be made with coffee. This will give ideas for great ways to have coffee and increase the consumption of coffee. E.g. - How to make latte, frappaccino, coffee cake, etc.  NESCAFÉ Live Lounge can be a section which will feature a celebrity guest who can play some live acoustic music every Thursday. Page 27 of 30

Group II 14.3 REVIVING NESCAFÉ UNPLUGGED: NESCAFÉ is the pioneer of unplugged music shows in Bangladesh. But sadly it could not retain, in its custody, that culture of acoustic music, relished with a cup of coffee and friends who make the environment even more fun. Numerous unplugged music shows now take place in the thriving cafes of Dhaka but very few of the audiences know who introduced this. Unplugged should be done at least once a year, to sustain the ownership of the property created. Hence the revival of the NESCAFÉ Unplugged Show is paramount to re-associate the brand with music. NESCAFÉ 3 IN 1-FAST & FURIOUS: Since NESCAFÉ 3 in 1 has the tagline “Get Set Go”, it can be associated with the speed. After creating enough hype, Go-carting / Drag or Rally Racing competition will be arranged. The venue will be decorated as NESCAFÉ-fast and furious zone with different brand materials. A challenging call to action like “Dare to be fast and furious? Sip your NESCAFÉ 3 in 1 and Get Set Go” can be used to encourage TG to set sail with the spirit of youth. This will strengthen the brand message-come out from your moments of hesitation-be fast and furious-Get Set Go! 14.4.1 NESCAFÉ 3IN1 UNDERWORLD: A one day concert can be arranged with the underground bands and some mainstream local bands. The social networking sites will come in handy to create viral effect for this concert. Invitation will be provided with every purchase of NESCAFÉ Special pack (20 packs of 3in1) during a month. 14.4.2 NESCAFÉ 3 IN 1 CAREER SHOW: The transition from student life to career is a crucial point for every youth. Good career advice can go a long way in making them the right decision not only for themselves, but also for their families. This is also a transition point from NESCAFÉ 3 in 1 to NESCAFÉ Classic as the young executives have increased purchasing power and Page 28 of 30

Group II need to make a statement. Standing by their sides at this time will create a group of loyal customers. 14.4.3 CANTEEN BRANDING: Branding the canteens of university & colleges will be the biggest step in communication with NESCAFÉ target group. The plan is to acquire a corner wall of the canteens, paint it red and use the wall as the scrap book. Students will post their wacky pictures, stories, trivia, creative write-ups and a host of other things. NESCAFÉ 3in1 logo and other visuals will be put in the surroundings which will gradually influence the students to have coffee. 14.4.4 OUT-OF-THE BOX METHODS: It is often difficult to have an impression on young people by existing media. They are surrounded by much information. In order to give them fresh surprise, newer media and creative methods are required. NESCAFÉ cannot afford to be complacent at the success of any particular campaign; it has to have constant innovation. A good example is NESCAFÉ in Japan. They branded the subway pillars with huge back-lit “N” fonts and NESCAFÉ logos. 14.4.5 PROMOTING OUT OF HOME CONSUMPTION: This might trigger higher in home consumption. Bangladesh is predominantly a tea drinking country. Though it is increasing, the coffee consumer base in Bangladesh is quite small. People here are not familiar with the taste of coffee. If the out of home consumption can be increase through installing more vending machines, more visible outdoor branding; it will definitely have strong implication on the in home consumption. Page 29 of 30

Group II 15. CONCLUSION Nestlé must ensure availability of its product to the hand reach of the customers. The smaller sachets in the portfolio would play a vital role to increase the distribution of the brand and to make sure that the brand is available for consumption by the consumers whenever and wherever possible. NESCAFÉ vending machines can also play a key role in making NESCAFÉ available to the target consumers. The product needs to be familiar to the consumers by establishing role of the brand in their daily lives. Sampling of the brand can work very well in ensuring familiarity of the brand among the target consumers. Interactive activities supported by sampling or trial of the product can work very well in ensuring familiarity of the product. Lastly the biggest challenge of the brand would be addressing affordability. Being an imported product, duty structure always creates pressure on the brand as far as affordability is concerned. Nestlé must continuously look for opportunity to increase the efficiency of the brand, save cost and thus reduce the price of the products to make it more affordable 16. WORKS CITED Islam, M. M. (2011). Profile of the Coffee Consumers: A Case of Nescafé. Munch Report, www.Neevai.com Interviews of Nestlé employees www.necafé.com Page 30 of 30

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