MKGT 3215-001

Fall 2010
Mrs. Tamara L. Cohen

Global Marketing Management

Case Study:
Thursday
Oct.26, 2010
Nestlé
 Exam # 2 Oct. 26
Exam #2 will follow much the same format as Exam #1:
• Multiple choice questions; Fill-in-the-blank questions; Short answers.
• Material from classes 11, 12, 13 (guest, Family Dollar), 14, 15, 16, &
Nestlé case (class 17)

Suggestions for effective preparation (in order of importance):

1. Study PPTs from each class. All PPTs are on my web site. Pay attention
to the notes below the slides. (Most but not all slides have notes below.)
2. Study your own notes from class. Pay attention to any topics we dwelt on
in class. Review 1-2 major points mentioned in elevator speeches.
3. Review your homework assignments.
4. You may be required to figure out an answer using a concept we’ve
learned e.g. “cultural borrowing” in 1st test
5. There may be references to subjects mentioned in elevator speeches.
6. Read assigned passages from text book.
 Nestlé
Preparation for this class:
• Read Cateora & Graham
Nestlé Infant Formula Controversy
Case 1-2, pp 598 - 601 (14th ed.)
• Visit Nestlé web site www.nestle.com

? ?
 BOTTLE
or
BREAST ?
 BACKGROUND
• 1974 pamphlet “Nestlé Kills Babies”
Arbeitsgruppe Dritte Welt allegation:
– False advertising in LDCs encouraged mothers to use infant formula
instead of breast-feeding, causing deaths and malnutrition.
– Nestlé accused of unethical & immoral conduct.

• Infant formula misused in LDCs

• Worldwide boycott of Nestlé > 20 years
• 1913 Nestlé started promoting
breastfeeding as best (educational booklet)
• 1982 Nestlé supports WHO code re marketing
infant formula to mothers in LDCs

• AIDS/HIV contracted through breast milk

 PROBLEMS
2. Consumers in LDCs often poor &
1. Marketing and illiterate. Language problems.

false advertising 3. Economically deprived mothers

also nutritionally deprived. Quality
of infant formula and quantity of their breast milk
inferior.
in LDCs 4. Lack of nutrition education + poor
sanitation + affordable good food in
allegedly led to 5.
LDCs.
Poor women’s work schedules
misuse and 6.
often don’t permit breast-feeding.
Native weaning foods’ nutritional
consequent value low & contaminated at all
stages of preparation.
death and 7. Nestlé defense that never
malnutrition. advocated bottle over breast,
evidence statement on packaging.
8. Nestlé accused of dumping.
9. Doctors in LDCs liberally gave out
samples of formula.
 more PROBLEMS
10. Nestlé accused of systematic WHO
code violation.
11. Worldwide boycott of Nestlé
products & controversy continued for
> 20 years.
12. Boycott groups well organized, use
modern political pressure, strong
15. HIV / AIDS
media coverage.
13. The longer the controversy
continues, the more costly the
settlement.
14. Infant formula use has been
successful in some LDCs but not in
others.
15. Other companies sold formula in
LDCs too. (Is Nestlé an appealing
target because it’s so big?)
16. What responsibility does Nestlé
have to a culture it has changed?
                                                                       
 COURSES of ACTION
1. High cost of marketing + training
= price of social responsibility
2. Continue no mass media
advertising. Use only sales rep’s.
3. Control/monitor distributors’
promotional activities (previous
free rein over local advertising).
4. Nestlé headquarters should
closely coordinate & monitor all
external PR programs.
5. Continue advertising campaign
targeting poor women who
receive free formula from gov’t.
This program promotes breast-
feeding to under-educated
audience. Publicize this!
6. Further comprehensive nutrition
+ hygiene education programs,
especially in rural areas.
7. Clarify labeling on all infant
products: Use graphic instructions
for areas of low literacy.
8. Develop promotional/instructional
materials to help low literacy users.
9. Dumping: Tighten up hospital
administrations’ broad interpretation
of “in need” to rein in providing low
cost and free formula on request.
10. Nestlé stop all free and low cost
giveaways in LDCs, except for
limited number of infants in need.
Help get other companies to stop.
11. Address accusations of WHO code
violations. Use PR to publicize
actions and defuse opposition.
Deny free samples to doctors
supporting substitution. Nestlé field
policy includes articles of WHO
code.
 more COURSES of ACTION
12. Tighten up direct selling methods. 16. Determine appropriate policy re
Common practice was to use best practices for mothers with
mother-craft nurses (nurses/ AIDS/HIV. Breast-feeding or
dieticians/midwives), dubious bottle-feeding best? Nestlé should
qualifications to advise re breast- cooperate with govt’s in each
vs bottle-feeding. country separately to determine
13. Recognize successful infant best approach to handling
formula use in LDCs where use AIDS/infant formula problem.
controlled by educated LOCALIZATION is key.
missionaries and responsible gov’t
agencies. Limit distribution strictly
to these sorts of medical and
religious groups.
14. Initiate personal relationships with
main perpetrators of boycotts.
Defuse boycotts.
15. Improve planning and monitoring of
cross-cultural aspects of product
introductions and community
activities.
 RECOMMENDATIONS
• Maintain commitment to serve LDC markets
despite criticism.
• Continue activities and policies in support of
responsible marketing in LDCs. Use proactive and
constructive PR to advocate for Nestlé image.
• Prioritize comprehensive nutrition + hygiene
education programs, especially in rural areas.
• Contribute responsibly to battle against spread of
AIDS/HIV in LDCs.
 CONCLUSION
Nestlé is a major global marketing
company with dominant brands and a
record of impressive aggressive growth.
The company has battled negative publicity and boycotts for almost 25
years. Corporate responsibility is not only what is defined by the
industry but also what is perceived by consumers.
Nestlé has distinctive competencies in producing high quality foods.
The right strategy is to expand geographically. Emerging markets
present great opportunity. Nestlé should maintain and extend its
considerable endeavors to bring its infant formula to developing
countries’ markets responsibly. The company should focus its public
relations efforts on the company’s multiple positive initiatives in
developing countries all over the world.
 EXECUTIVE SUMMARY
Nestlé Alimentana is the biggest food company in the
world. The company has taken a battering over the issue
of infant malnutrition and death in developing countries,
due to alleged irresponsible marketing and improper use
of its infant formula.
Nestlé’s stated mission is to be the world's leading nutrition
health and wellness company based on sound human
values and principles. This company has the vision and
the resources to remain committed to serving
challenging markets in developing countries, while
combating negative image through its own proactive
public relations campaign.
Next class: Exam # 2

Preparation: Review PPTs & your class notes

Review assigned readings
Sample exam question: