DEDICATION

I dedicate this work to my affectionate Parents and my worthy teachers

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ACKNOWLEDGEMENT
All appreciation and thanks to Almighty ALLAH the most gracious, merciful and beneficent, which gave me the courage & talent to complete this task successful. Many people have contributed in completion of this project, and I would like to thank all of them. Course from very beginning to the completion of this report. I found it difficult to find the words for appropriate dimensions, to express my gratitude to my worthy instructor Saad Khan for his potential interest, useful suggestions, constant encouragement, dynamic supervision and kind behavior throughout the course of this research. I am also thankful to all my seniors supervisors, brand managers and affectionate parents who prayed, encouraged and supported me and also to all people who helped me in completing this project

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PREFACE
The purpose of this report is to explain what I did and learned during my internship period with Nestle. This report is also a requirement for the fulfillment of BBAMARKETING program. The report focuses primarily on the basic structure, and management style of the Nestle. After that Companys core marketing strategies has been explained. Then the most important marketing 4Ps are discussed. After that there is most important part of the report that is named what I have learned in internship period. Then I have calculated the basic financial ratios which are typically called ratio analysis. At last but not the least there are some recommendations for the betterment of Nestle

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ABSTRACT
The vibrant capabilities of communication department of Nestle planning have been highly accentuate. The department has been acknowledged as the means through which the swift industrialization and the other processing goals of the association can be conquered. This report delves into the role of my BBA program for setting the goals and objectives and then devising means to achieve them. It covers all the aspects regarding organizational structure and marketing aspects which encompass the organization. The verdict about Nestle marketing department process may facilitate policy makers, employment agencies, organization to ascertain and over and above existing cooperation, not only in Pakistan but also in all parts of the world.

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METHODOLOGY
Aspects have been piled up by means of primary sources by interviewing key accounts managers during my internship, beyond this I also visited there warehouse. All of the above, I put in writing all that stuff which I observed during my internship Secondary information has been congregated through different internet sites of NESTLE company.

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EXECUTIVE SUMMARY
Nestl headquarters is in Vevey, Switzerland was founded in 1866 by Henri Nestl and is today the worlds biggest food and Beverage Company. Sales at the end of 2005 were CHF 91 bn, with a net profit of CHF 8 bn. They employ around 250,000 people and have factories or operations in almost every country in the world. And the address is Nestl S.A. Avenue Nestl 55 1800 Vevey Switzerland Central switchboard (Tel) +41 21 924 2111 (Fax) +41 21 924

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Table of Contents
PREFACE...........................................................................................................................3 ABSTRACT........................................................................................................................4 METHODOLOGY.............................................................................................................5 EXECUTIVE SUMMARY................................................................................................6 Table of Contents................................................................................................................7 INTRODUCTION TO NESTLE......................................................................................10 Introduction..............................................................................................................11 Key Dates......................................................................................................................13 JOINT VENTURES & ASSOCIATED WEBSITES..............................................14 Associated Websites ....................................................................................................14 Alcon http://www.alconlabs.com/ ...........................................................................14 COMPANY INFORMATION.........................................................................................15 Country: .......................................................................................................................15 Exchanges:....................................................................................................................15 Currency:......................................................................................................................15 Market Cap:..................................................................................................................15 Fiscal Yr Ends:.............................................................................................................15 Share Type: ..................................................................................................................16 Contacts - Nestle Pakistan Ltd.........................................................................................17 Background.......................................................................................................................20 Objective...........................................................................................................................28 Mission Statement............................................................................................................29 Vision................................................................................................................................30 STRATEGIES..................................................................................................................31 Non-strategic activities and products are outsourced or discontinued........................31 Organizational Structure...............................................................................................33 Board of Directors of Nestl S.A.................................................................................34 Board of Directors of Nestl S.A.............................................................................34 Kaspar Villiger.............................................................................................................34 Daniel Borel..................................................................................................................34 Jean-Pierre Meyer.........................................................................................................34 Andr Kudelski.............................................................................................................35 Carolina Mller-Mhl..................................................................................................35 Gnter Blobel...............................................................................................................35 Jean-Ren Fourtou........................................................................................................35 Steven G. Hoch.............................................................................................................35 Nana Lal Kidwai.........................................................................................................35 Beat Hess......................................................................................................................35 Independent auditors....................................................................................................35 SALES STRUCTURE.................................................................................................36 TRAINING PROGRAM..........................................................................................37 CAREER DEVELOPMENT........................................................................................40 Management/....................................................................................................................42 Administrative Style.........................................................................................................42 INTERNSHIP REPORT 7

STYLE OF WORKING...............................................................................................43 Production.........................................................................................................................45 Marketing Mix..................................................................................................................49 MARKETING PROCESS............................................................................................50 ANALYZING MARKET SITUATION..................................................................50 DEVELOPING MARKETING MIX......................................................................50 It includes development of 4Ps namely......................................................................50 MARKETING IMPLEMENTATION.....................................................................50 MARKETING CONTROL......................................................................................50 ANALYZING MARKETING SITUATION...............................................................52 SWOT analysis.............................................................................................................52 Internal analysis............................................................................................................52 Strengths.......................................................................................................................52 Weaknesses...................................................................................................................53 External analysis.......................................................................................................55 Opportunities................................................................................................................55 Current market situation...............................................................................................57 MARKET ANALYSIS................................................................................................57 Customer Profiling (Customer Data)...........................................................................58 Transaction Details...................................................................................................58 Appended Database Data.........................................................................................58 Life Style......................................................................................................................58 DEVELOPING THE MARKETING MIX..................................................................60 Product Mix..................................................................................................................61 Diary.........................................................................................................................61 From shelf-stable solutions to chilled dairy. Nestle has long been a major player in the dairy industry , originally with shelf stable brands as NIDO, innovation and renovation play a major role in the development of milk based products..................61 Nestle Milkpak UHT milk .........................................................................................62 The key competencies are ...........................................................................................62 MILKPAK UHT cream ...............................................................................................62 MILKPAK Desi Ghee .................................................................................................63 Nestle NIDO................................................................................................................63 Nestle NIDO 1 +.........................................................................................................63 Nestle everyday ..........................................................................................................63 Key competencies are...................................................................................................63 Nestle everyday liquid................................................................................................64 Nestle plain yogurt......................................................................................................64 Launched in November 2000, nestle plain yogurt became the market leader and has .......................................................................................................................................64 Nestle butter................................................................................................................65 Analysis of Company Marketing/ Sales Procedures....................................................74 Pricing Policy...............................................................................................................76 Nestle want to earn profit not just by satisfying consumers but by pleasing them 77 Price List.......................................................................................................................78 Distribution Policy........................................................................................................80 Sales on cash.................................................................................................................80 Objectives.....................................................................................................................81 ORDER PROCESSING...............................................................................................81 INTERNSHIP REPORT 8

WAREHOUSING........................................................................................................81 Inventory management.................................................................................................81 Other distribution channels..........................................................................................81 Terms of contract .........................................................................................................82 ...........................................................................................................................................83 REGISTERED CORPORATE OFFICE..................................................................84 CORPORATE OFFICE ANNEX ...........................................................................84 Factories........................................................................................................................84 SHIEKHUPURA......................................................................................................84 KABIRWALA .........................................................................................................84 NORTH ZONE.........................................................................................................84 Islamabad......................................................................................................................84 Peshawar.......................................................................................................................84 CENTRAL ZONE....................................................................................................84 Faisalabad.....................................................................................................................85 Gujranwala....................................................................................................................85 SOUTH ZONE.........................................................................................................85 Karachi..........................................................................................................................85 Hyderabad.....................................................................................................................85 Quetta............................................................................................................................85 Milk collection centers.................................................................................................86 REGISTERED .........................................................................................................87 Promotional Policy.......................................................................................................88 Nestle uses media like..................................................................................................89 As far as direct marketing is concerned following techniques are adopted at nestle 90 Societal Marketing........................................................................................................90 STRATEGIC PLANNING:.........................................................................................93 Dealing with clients support by instances....................................................................96 Market Segmentation, Targeting, Positioning.............................................................97 Positioning....................................................................................................................98 Financial Analysis..........................................................................................................100 Income Statement.......................................................................................................101 Balance Sheet.............................................................................................................106 RATIO ANALYSIS.......................................................................................................115 WHAT I HAVE LEARNED AT INTERNSHIP...........................................................124 Analysis......................................................................................................................125 To have knowledge about their customers as well as their competitors.......................125 RECOMMENDATION...........................................................126 REFERENCES...............................................................................................................127

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INTRODUCTION TO NESTLE

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Introduction
In 1866 Henri Nestl, a pharmacist, developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his mothers milk or any of the usual substitutes. People quickly recognized the value of the new product, after Nestls new formula saved the childs life, and soon, Farine Lacte Henri Nestl was being sold in much of Europe. In 1905 Nestl merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestls production had more than doubled. After the war Government contracts dried up and consumers switched back to fresh milk. However, Nestls management responded by streamlining operations and reducing debt. The 1920s saw Nestls first expansion into new products, with chocolate the Companys second most important activity. Nestl felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to $6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the Companys newest product, Nescaf, which was a staple drink of the US military. Nestls production and sales rose in the wartime economy. The end of World War II was the beginning of a dynamic phase for Nestl. Growth accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse & Blackwell followed in 1960, as did Findus (1963), Libbys (1971) and Stouffers (1973). Diversification came with a shareholding in LOral in 1974. Nestls growth in the developing world partially offset a slowdown in the Companys traditional markets. Nestl made its second venture outside the food industry by acquiring Alcon Laboratories Inc.

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Nestl divested a number of businesses1980 / 1984. In 1984, Nestls improved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. The first half of the 1990s proved to be favorable for Nestl: trade barriers crumbled and world markets developed into more or less integrated trading areas. Since 1996 there have been acquisitions including San Pellegrino (1997), Spillers Pet foods (1998) and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002: in July, Nestl merged its U.S. ice cream business into Dreyers, and in August, a USD 2.6bn acquisition was announced of Chef America, Inc. Some important facts

Nestl, based in Switzerland, is the worlds largest food company. It

manufactures a wide variety of food products, from chocolate to frozen dinners to pet food, and is one of the top four water bottling companies in the world. It controls onethird of the American bottled water market, selling water under 70 different brand names. Bottled water contributes to the plastic waste problem and seizes water that

should remain a shared public resource. Nestl has been repeatedly sued for the impacts of its bottled water operations on communities and for false advertising of its products. Nestl has been criticized internationally for its aggressive marketing of infant

formula in countries where potable water is scarce, leading to a reduction in breastfeeding and increased risk for infants. Nestl is also one of the worlds largest chocolate producers, and critics charge

that this makes it a contributor to child and forced labor problems in cocoa-growing nations. The International Labor Rights Forum has sued Nestl for its involvement with

child labor.

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Fight Nestls food and water abuses by taking action and visit Go Green to

learn about sustainable alternatives to Nestls products. Switzerland-based Nestl S.A. manufactures a wide variety of food products from chocolate to frozen dinners to pet food. In addition, Nestl is one of the most prominent bottled water companies in the world, and also produces personal and health care products. Nestl SA, employs 247,000 people and reported sales of over $80.7 billion in 2006. Nestl USA, the North American subsidiary of Nestl S.A., accounted for $8.1 billion of Nestls annual sales in 2005. The company also owns 26 percent of LOreal

MERGERS & ACQUISITIONS Key Dates

1866 Company foundation

1905

Merger between Nestl and Anglo-Swiss Condensed Milk Company

1929

Merger with Peter, Cailler, Kohler Chocolats Suisses S.A.

1947 1969 1971 1974 1977 1985 1988 1988 1992 1998 2000

Merger with Alimentana S.A. (Maggi) Vittel (equity interest) Merger with Ursina-Franck LOral (equity interest) Acquisition of Alcon (2002: partial IPO) Acquisition of Carnation Acquisition of Buitoni-Perugina Acquisition of Rowntree Acquisition of Perrier Acquisitions of San Pellegrino and Spillers Petfoods Acquisition of PowerBar 13

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2001 2002 2003 2004 2005

Acquisition of Ralston Purina Acquisition of Schller and Chef America Acquisition of Mvenpick, Powwow and Dreyers Acquisition of Valio (ice cream activities) Acquisition of Wagner, Protika, Musashi

JOINT VENTURES & ASSOCIATED WEBSITES

Major Joint Ventures 1974 1981 1990 1991 LOral - (26.90%, 27.95% voting rights) Galderma - (joint venture with LOral) Cereal Partners Worldwide - (joint venture with General Mills) Beverage Partners Worldwide (formerly CCNR) (joint venture with Coca Cola) 2002 Dairy Partners Americas - (joint venture with Fonterra) Laboratories innov (joint venture with LOral)

Associated Websites Alcon http://www.alconlabs.com/

Cereal Partners http://www.cerealpartners.co.uk/ Galderma http://www.galderma.com/ Innov http://www.inneov.de/ LOral http://www.loreal.com/_en/_ww/index.aspx

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COMPANY INFORMATION
Ticker:
NESTLE

Country:
PAKISTAN

Exchanges:
KARACHI

Major Industry:
Food & Beverages

Sub Industry:
Diversified Food

2007 Sales
28,235,393,000 (Year Ending Jan 2008).

Employees:
2,345

Currency:
Pakistan Rupees

Market Cap:
61,221,938,400

Fiscal Yr Ends:
December

Shares Outstanding:
45,349,584

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Share Type:
Ordinary

Closely Held Shares:

28,922,725

Management of Nestle Pakistan Ltd

Haseeb Aslam Country Business Manager Water Water Division Aslam,Haseeb,LAHORE,Water Peter Wuethrich Head of Technical Technical Division Wuethrich,Peter,LAHORE,Technical Raymond Franke Head of Finance and Controls Finance & Control Division Franke,Raymond,LAHORE,Finance & Control Trevor Clayton Managing Director M D Office Clayton,Trevor,LAHORE,General Management Salman Nazir Head of Supply Chain Supply Chain Division Nazir,Salman,LAHORE,Supply Chain Uzma Qaiser Butt Head of Human Resources Human Resources Division Butt,Uzma,LAHORE,Human Resource Zafar Hussain Head of Sales

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Sales Division Hussain,Zafar,LAHORE,Sales

Contacts - Nestle Pakistan Ltd.

Registered and Corporate Office 308 Upper Mall, Lahore +92 042 111.637.853 +92 042 578 9303 +92 042 578 9304 Corporate Office Annex 304 Upper Mall, Lahore +92 042 111.637.853 Park Lane Tower 72-Tufail Road, Lahore Cantt Lahore Sheikhupura Factory 29thK.M.Lahore Sheikhupura Road, Shiekhupura Kabirwala-Kabirwala Road Kabirwala Factory Kabirwala, District Khanewal +92 065 111.637.853

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Islamabad Factory (Water) Plot no. 32, Street 3, Sector 1 10/3, Islamabad Karachi Factory (Water) 23-A, North Western Industrial State Port Qasim Authority Karachi

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Code of Business Conduct

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Background
Since its founding, Nestls business practices have been governed by integrity, honesty, fair dealing and full compliance with all applicable laws. Nestl employees worldwide have upheld and lived this commitment in their every day responsibilities ever since, and Nestls reputation remains one of the Companys most important assets today. The Nestl Corporate Business Principles prescribe certain values and principles which Nestl has committed to worldwide. This Code of Business Conduct specifies and helps the continued implementation of the Corporate Business Principles by establishing certain nonnegotiable minimum standards of behavior in key areas. The nature of this Code is not meant to cover all possible situations that may occur. It is designed to provide a frame of reference against which to measure any activities. Employees should seek guidance when they are in doubt about the proper course of action in a given situation, as it is the ultimate responsibility of each employee to do the right thing, a responsibility that cannot be delegated. Employees should always be guided by the following basic principles: avoid any conduct that could damage or risk Nestl or its reputation; act legally and honestly; Put the Companys interests ahead of personal or other interests.

Compliance with laws, rules and regulations

We respect the law at all times

Nestl and its employees are bound by the law. Compliance with all applicable laws and regulations must never be compromised. Additionally, employees shall adhere to internal rules and regulations as they apply in a given situation. Those internal rules are specific to the Company and may go beyond what is required by the law.

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Conflicts of Interest
We will always act in the best interests of Nestl A Conflict of Interest occurs when personal interests of an employee or the interests of a third party compete with the interests of Nestl. In such a situation, it can be difficult for the employee to act fully in the best interests of Nestl. Employees shall avoid Conflicts of Interest whenever possible. If a Conflict of Interest situation has occurred or if an employee faces a situation that may involve or lead to a Conflict of Interest, the employee shall disclose it to his or her Line Manager and/or the HR or the Legal or Compliance Function to resolve the situation in a fair and transparent manner.

Outside directorships and other outside activities

We take pride in Nestls reputation and consider Nestls best interests also in our outside engagements and activities Outside of Nestl, no activities shall be pursued if such activities will interfere with the employees responsibilities for Nestl, or if they create risks for Nestls reputation or if they in any other way conflict with the interests of Nestl. When in doubt about the permissibility of an activity, employees shall consult with the HR or the Legal or Compliance Function. The following positions and activities are deemed acceptable only in case of prior authorization from a member of the Executive Board: Board member Officer Employee Partner Consultant

Authorization will be withheld if the position or activity is likely to conflict with Nestls interests or the employees responsibilities. Board memberships on publicly listed companies need prior approval by the CEO and

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In the case of members of the Executive Board Chairman. Unless requested by the Company to take up a particular position or activity,

employees shall pursue outside activities and positions at their own risk and cost and within their spare time only.

Families and Relatives

Nestle hiring and people development decisions will be fair and objective Immediate family members and partners of employees may be hired as employees or consultants only if the appointment is based on qualifications, performance, skills and experience and provided that there is no direct or indirect reporting relationship between the employee and his or her relative or partner. These principles of fair employment will apply to all aspects of the employment, including compensation, promotions and transfers, as well as in case that the relationship develops after the respective employee has joined the Company. Provided that they are equally suited as other candidates, priority may be given to children of Nestl employees with respect to internships, training periods, employment during holidays and similar short-term assignments.

Corporate opportunities
We are committed to advance Nestls business Employees shall not compete with the Company. Nor shall they take personal advantage of business opportunities that they discover during the course of their employment, unless the Company expressly waives its interest in pursuing such opportunity. If employees want to pursue business opportunities that might be of interest to the Company, they shall inform their Line Manager who will seek a management decision as to whether or not the Company wants to pursue the opportunity. Even if the Company decides against pursuing the opportunity, the employee may seize the

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opportunity on his or her own behalf only if it is clear that doing so will not result in direct or indirect competition with the Companys operations.

Insider trading
We respect and follow the Insider Trading Rules when buying or selling Nestl securities Nestl prohibits the purchase and sale of Nestl shares or securities on the basis of potentially share price relevant information which is not yet public. Non-compliance may not only entail disciplinary sanctions, but also result in criminal charges. When in doubt regarding the interpretation or applicability of Nestls insider trading rules, employees shall consult with the Legal or Compliance Function.

Antitrust and fair dealing

We believe in the importance of free competition Nestl is prepared to compete successfully in todays business environment and will always do so in full compliance with all applicable antitrust, competition and fair dealing laws. Therefore, employees must at all times adhere to the following rules: Commercial policy and prices will be set independently and will never be agreed, formally or informally, with competitors or other non-related parties, whether directly or indirectly; Customers, territories or product markets will never be allocated between Nestl and its competitors but will always be the result of fair competition; Customers and suppliers will be dealt with fairly. All employees, but especially those who are involved in marketing, sales and purchasing, or who are in regular contact with competitors, have a responsibility to ensure that they are familiar with applicable competition laws. When in doubt, the Legal Function should be contacted in order to Provide competition law advice and training.

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Confidential information

We value and protect our confidential information and we respect the confidential information of others Confidential information consists of any information that is not or not yet public information. It includes trade secrets, business, marketing and service plans, consumer insights, engineering and manufacturing ideas, product recipes, designs, databases, records, salary information and any non-published financial or other data. Nestls continued success depends on the use of its confidential information and its nondisclosure to third parties. Unless required by law or authorized by their management, employees shall not disclose confidential information or allow such disclosure. This obligation continues beyond the termination of employment. Furthermore, employees must use best efforts to avoid unintentional disclosure by applying special care when storing or transmitting confidential information. Nestl respects that third parties have a similar interest in protecting their confidential information. In case that third parties, such as joint venture partners, suppliers or customers, share with Nestl confidential information, such information shall be treated with the same care as f it was Nestls confidential information. In that same spirit, employees shall protect confidential information that they have obtained in the course of their prior employment.

Fraud, protection of company assets, Accounting

We insist on honesty and we respect the Companys assets and property Employees must never engage in fraudulent or any other dishonest conduct involving the property or assets or the financial reporting and accounting of Nestl or any third party. This may not only entail disciplinary sanctions but also result in criminal charges. Nestls financial records are the basis for managing the Companys business and fulfilling its obligations to various stakeholders. Therefore, any financial record must be accurate and in line with Nestls accounting standards.

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Employees shall safeguard and make only proper and efficient use of Nestls property. All employees shall seek to protect Nestls property from loss, damage, misuse, theft, fraud, embezzlement and destruction. These obligations cover both tangible and intangible assets, including trademarks, know-how, confidential or proprietary information and information systems. To the extent permitted under applicable law, the Company reserves the right to monitor and inspect how its assets are used by employees, including inspection of all e-mail, data and files kept on Company network terminals.

Bribery and corruption

We condemn any form of bribery and corruption Employees must never, directly or through intermediaries, offer or promise any personal or improper financial or other advantage in order to obtain or retain a business or other advantage from a third party, whether public or private. Nor must they accept any such advantage in return for any preferential treatment of a third party. Moreover, employees must refrain from any activity or behavior that could give rise to the appearance or suspicion of such conduct or the attempt thereof. Employees should be aware that the offering or giving of improper benefits in order to influence the decision of the recipient, even if he or she is not a government official, may not only entail disciplinary sanctions but also result in criminal charges. Improper benefits may consist of anything of value for the recipient, including employment or consultancy contracts for closely related parties. Employees must be aware that election laws in many jurisdictions generally prohibit political contributions by corporations to political parties or candidates. Nestl has adopted a policy not to make such contributions except for the parent company in its country of origin. Any such contributions and any deviations from such policy must be approved by the CEO and the Chairman.

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Gifts, meals, entertainment

We compete and do business based only on quality and competence Employees shall not be influenced by receiving favors nor shall they try to improperly influence others by providing favors. Employees may only offer or accept reasonable meals and symbolic gifts which are appropriate under the circumstances, and they shall not accept or offer gifts, meals, or entertainment if such behavior could create the impression of improperly influencing the respective business relationship. When assessing the situation in light of the above, employees shall consult the policy applicable in their Market. If no such policy is available, they shall apply the most restrictive local practice in order to avoid even the appearance of improper dealings. When in doubt, the employee shall seek guidance from his or her Line Manager or the Legal or Compliance Function. No employee shall offer to or accept from any third party gifts taking the form of any of the following, whatever the value involved: Money Loans Kickbacks Similar monetary advantages.

Discrimination and harassment

We embrace diversity and respect the personal dignity of our fellow employees Nestl respects the personal dignity, privacy and personal rights of every employee and is committed to maintaining a workplace free from discrimination and harassment. Therefore, employees must not discriminate on the basis of origin, nationality, religion, race, gender, age or sexual orientation, or engage in any kind of verbal or physical harassment based on any of the above or any other reason. Employees who feel that their workplace does not comply with the above principles are encouraged to raise their concerns with the HR Department.

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Failure to comply
We will consult the Code, comply with its provisions and seek guidance where needed It is each employees responsibility to ensure full compliance with all provisions of this Code and to seek guidance where necessary from their Line Manager, or from the HR or the Legal or Compliance Function. To do the right thing and to ensure the highest standards of integrity is each employees personal responsibility that cannot be delegated. When in doubt, employees should always be guided by the basic principles stated in the introduction to this Code. Any failure to comply with this Code may result in disciplinary action, including the possibility of dismissal and, if warranted, legal proceedings or criminal sanctions.

Reporting illegal or non-compliant conduct

We take responsibility for ensuring that we all act with integrity in all situations Employees shall report any practices or actions believed to be inappropriate under this Code or even illegal to their Line Managers or the appropriate members of the HR or the Legal or Compliance function. If it is appropriate, in view of the nature of the reported matter, reports of violations may be made directly to higher levels including the Groups Chief Executive Officer and/ or Chief Compliance OfficerWhere appropriate, complaints may be made on a confidential basis or through employee Hotlines. All complaints shall be properly investigated. Nestl prohibits retaliation against any employee for such reports made in good faith, while it also protects the rights of the incriminated person.

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Objective

Making our customers winners by constantly exceeding their expectations.

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Mission Statement
Nestl believe that research can help them make better food so that people live a better life. Good Food is the primary source of Good Health throughout life. Nestle strive to bring consumers foods that are safe, of high quality and provide optimal nutrition to meet physiological needs. In addition to nutrition, health and wellness, Nestl products bring consumers the vital ingredients of taste and pleasure. As consumers continue to make choices regarding foods and beverages they consume, Nestl helps provide selections for all individual taste and lifestyle preferences. Research is a key part of Nestle heritage and an essential element. They know there is still much to discover about health, wellness and the role of food in our lives, and they continue to search for answers to bring consumers Good Food for Good Life.

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Vision
The Nestl is to be the leading health, wellness, and Nutrition Company. In particular, we envision to: Lead a dynamic motivated and professional workforce proud of its heritage and bullish about the future. Meet the nutritional needs of consumers of all age groups from infancy to old age, from nutrition to pleasure, through an innovative portfolio of branded food and beverage products of the highest quality. Deliver shareholder value through profitable long-term growth, while continuing to play a significant and responsible role in the social, economic and environmental sectors of the country.

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STRATEGIES
To fulfil this vision, Nestle follow these strategies: Nestle have profitable and diversified high quality food and beverage product portfolio, delivering 60:40+ advantage to consumers, available across all sales channels. Brands are the preferred choice in their categories. Consumer insight drives all aspects of our marketing and communication efforts. Nestle communications to the consumer are relevant, cutting-edge, and adhere to the highest standards of responsible communication. Nestle is seen as the No. 1 career destination for talented, motivated and ambitious professionals. Nestle result-oriented organisational structure ensures effective communication and empowered self-management. Nestle milk collection and agri services will continue to play the primary role in development of the dairy sector in rural Pakistan. Nestle proactive innovation and renovation culture is the key to our success in the marketplace. Fully integrated systems (Nestl Pakistan, suppliers, customers) ensure efficient business processes. Non-strategic activities and products are outsourced or discontinued

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Part II

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Organizational Structure

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Board of Directors of Nestl S.A.

Helmut O. Maucher Honorary Chairman

Board of Directors of Nestl S.A.

Peter Brabeck-Letmathe Chairman Paul Bulcke Chief Executive Officer Andreas Koopmann 1st Vice Chairman CEO, Bobst Group

Rolf Hnggi 2nd Vice Chairman Chairman, Rd, Blass & Cie AG, Bankers

Edward George (Lord George) Former Governor of the Bank of England

Kaspar Villiger
Former Swiss government minister

Daniel Borel
Co-founder and Board member, Logitech International S.A.

Jean-Pierre Meyer
Vice Chairman, LOral S.A.

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Andr Kudelski
Chairman and CEO, Kudelski Group

Carolina Mller-Mhl
President, Mller-Mhl Group

Gnter Blobel
Professor, the Rockefeller University

Jean-Ren Fourtou
Chairman of the Supervisory Board, Vivendi

Steven G. Hoch
Founder and Senior Partner, Highmount Capital

Nana Lal Kidwai

CEO, HSBC India and Country Head of HSBC Group Companies in India

Beat Hess
Group Legal Director, Royal Dutch Shell plc David P. Frick Secretary to the Board KPMG Klynveld Peat Marwick Goerdeler SA Zurich

Independent auditors

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SALES STRUCTURE
Head of Sales

Zonal Sales Manager

National Key Account

Business/Chiller Manager

Regional sales manager

Key Account Manager

Business Development Manager

Group Brand Manager

Area Sales Manager

Key Account Executives

Brand Manager

Territory Incharge

Area Brand Manager

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TRAINING PROGRAM
The training programs are conducted time to time according to the need of the organization. Thus, there are different training programs held for the employees. The training programs are conducted every month whereas the training programs for the employees are conducted from time to time according to the standard of the company. They are also providing technical training to their employees. They made cross functional teams for training and the development of their employees.

TRAINING PROGRAM FOR DSR

An organization conducts a training program to provide better service to its customer. Thus, for this reason Nestl conducts training program every month to train its DSR in various areas because DSR are the delivery person and it is they who through their behavior and appearance develop the image of their company. The training program for the DSR emphasize on the following features: How to behave when they are dealing with the customers What is expected from them What are there duties How to handle the situation if any problem arises. How to dress themselves How to handle the retailer Their personal attire

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TRAINING PROGRAMS FOR THE EMPLOYEES

The training program for the employees involves different programs, which gives them chances to improve themselves where they lack and to handle the situation more confidently, and efficiently. According to the need, the employees are given a chance to visit the Institute of Sales & Marketing in Lahore for one day training. These training programs are offered to the employees once in a year to keep up the new building standards of the organization and to make them competitive.

Departments
Supply Chain & Procumbent (Distribution) Technical (Factories) Human Resource Finance (Finance & Control Manager)

Working
Looking the main shops known as key accounts Key Account: Self service Having wide range of assortment Minimum Sales Volume

Responsibilities
Run Promotion Displays Sampling

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Below the line o Merchandising o Long term mutual benefits relationship o Availability / maintains o Market intelligence o Planning of BTL o Provide excellent customer service

Requirement
Mba in marketing with 1-2 years experience Good Communication skills Key competent ion Excellent negotiation skills Good writing and verbal skills Analytical skills

Assessment
KPI (key performs indicators) Sales target Activities Attendance Value growth Incentives Customer service level

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CAREER DEVELOPMENT
Nestl does give their employees a chance to discuss their career development for future accomplishments. They send their efficient workers and employees abroad for the improvement in their career. They also conduct workshops and seminars for this purpose. When employees are given specific training program, they tend to learn new things and therefore show improvement in their performance. This betterment in their performance enable them attain promotion for themselves which gives them more experience and motivates them to do well in future and develops their career as they go along.

COMPENSATION SYSTEM
Nestle has established a separate compensation department for its employees. They offer incentive pay and special bonuses to employees. They have developed the performance appraisal system. They also provide disability benefits to their employees. Company has hired human resource professionals to develop a competitive compensation system.

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Part III

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Management/ Administrative Style

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STYLE OF WORKING
Nestl is profit and customer oriented organization rather than system and strategy oriented. The products are manufactured at low-cost and sales are made at high price. All the departments of Nestl are related to each other along with their independent working. In order, to improve their working and their level of service they provide to their customer, weekly and monthly meetings are held. These meetings discuss the following things: Performance level of employees Progress at territory level and as a whole Sales of the organization Where an improvement is required the working/activities of division include the following features: Selling through proper transportation Area storming for creating awareness Stall activities Rewards offering scheme Taking feedback from the customers Providing service for chiller maintenance and technical problems This activities/working of the organization involve the basic principles of marketing, client service, public relation, planning, organizing, leadership and communication The basic principle of Nestl in marketing is to provide its customers with quality product at reasonable price. For communication at national and international level there are various ways to communicate that are as follows: Universal and direct telephone lines Fax Email Letters

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Part IV

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Production

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As a consequence of joint venture arrangement between Nestle S.A. of Switzerland and Milkpak Ltd. in 1988, the existing production facility of Milkpak in Sheikhupura became a part of Nestle Milkpak. The Milkpak Sheikhupura factory commenced operations in 1981 as a producer of UHT milk. By 1988, it had expanded its operation and was also producing butter, cream, desi ghee - all under the brand name of MILKPAK and juice drinks under the brand name FROST. To meet the demands of the large food market that Pakistan offered, Nestle Milkpak reorganized and reinforced the production of existing brands and gave shape to new production lines. The first to come was a milk powder plant, which not only began producing NIDO in 1990 but was also critical to the production of several milk-based products in the future. With the installation of the roller dryer in 1990, the first such product to come was CERELAC - an internationally recognized brand of infant cereal. This was followed by LACTOGEN 1 & 2 in 1991. The year 1992 saw the introduction of tea whitener EVERYDAY and milk powder in bulk packing named GLORIA. MILO and NESLAC came under production in 1994 and MILO RTD in 1995. Local packing of imported coffee under the name of NESCAFE 3 in 1 commenced the same year. In 1996, Nestle Milkpaks first confectionery plant of POLO Mint was installed and the production of NESTLE PURE ORANGE JUICE commenced. Packaging of coffee under the brand name of NESCAFE CLASSIC was undertaken the same year. In 1997 NESTLE WHEAT and two variants of POLO viz. Strawberry and Orange were introduced. In 1998 a substantial capital investment was made to launch several products and install two new state-of-the-art technologies. SWEET TREETS were launched in early 1998. The addition of two flavors of POLO: Blackcurrant and Strong Mint, increased the number of POLO variants to five. A new variant Lemony was added to the range of popular FROST fruit drink flavors and a new 1-liter packing of

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FROST was introduced. Flavored milks under the brand FRESH & FRUITY came under production on the new Tetra Filling Machine equipped with the modern slim format. MILO RTD and UHT Cream were also shifted over to this new format. A new flexible confectionery line enabled the manufacture of a wide range of high and low boiled sweets and toffees, including TOFFO and two variants of SOOTH- ERS Menthol Eucalyptus and Honey Lemon. Nestle Milkpak also contracted to supply dairy mixes to McDonalds, for its popular soft serves and milk shakes. And to top it all, the most prestigious project, NESTLE PURE LIFE was also commissioned in December. Based on the latest water treatment and bottling technology, this marked the entry of Nestle Milkpak in the Pakistan water market and that of Nestle in the world water market. The expansion of high boiled sweet line continued in 1999 with the introduction of Fruit Drops and BUTTERSCOTCH. The year 2000 saw the production of some exciting products. First came NESCAFE Frothed Original, followed by its two other flavors: Mocha and French Vanilla. NESCAFE Frappe RTD was to come next. The fruit juice range was expanded by the production of Mango and Orange- Mango Mix. On the confectionery side, Tutti Fruiti was added under the umbrella of POLO and Wild Cherry was added to the SOOTHERS range. The success of NESTLE PURE LIFE in PET bottles encouraged the commissioning of 5-gallon bottles production line for home and office in June. And the last product line of the year to be commissioned in November was that of NESTLE Plain Yogurt, a high quality product with special Stay-Fresh Seal. To meet the needs of safe and quality storage for the ever expanding product range and their volumes, a National Distribution Center (NDC) was completed and became functional in June, 2000. Spread over 6614 square meters, it has the capacity to store up to 8300 pallets (approximately 8000 tons).

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Part V

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Marketing Mix

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MARKETING PROCESS
It is a process which consists of four steps enabling the marketers to perform their strategies according to their plans. These steps are:

ANALYZING MARKET SITUATION It is based on information and research including SWOT and PEST analysis of market

DEVELOPING MARKETING MIX

It includes development of 4Ps namely Product Price Place Promotion

MARKETING IMPLEMENTATION It involves turning plans into actions.

MARKETING CONTROL Being the last step it identifies the gap between planned and actual goals

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Marketing process
Milk Pack was the first tetra pack introduced in Pakistan in 1981 with green and white packaging that is associated with Pakistans flag. It was a brand that promised natural and healthy milk. It further gained strength when it was backed by Nestle Switzerland a well established and reputable international brand that bought in to it and expanded its scope and activities. It has recently highlighted the use of iron that has been added to the milk and communicated this in its advertising and packaging. The tag line also reads as making a stronger household. Milk Collection The core raw material of Nestle MilkPak is milk. Over the last Twenty Eight years, the companys prime concern has been to improve the quality and volume of milk for UHT processing and for other milk based products. The company successfully established its own collection system and expanded its operations over a very large milk shed area in Punjab. Owing to this tremendous growth in the volume of an extremely high quality raw milk, Nestle MilkPak now produces a superior quality and better tasting UHT milk, with longer shelf life. Today, Nestle MilkPak can boast of the largest milk collection network in the country, unmatched in size, productivity and efficiency. Milk is collected through a vast network of village milk centers (VMCs), sub-centers and centers. At these centers, chillers have been installed to lower milk temperature to 4C for preventing bacteria development during long hauls to the factories, which are undertaken by a large fleet of specially insulated tankers. Nestle gathers High Quality milk through a comprehensive strategy, intensive education program for the farmers and the milk collection staff, up gradation of milk loading and transportation system, increase in the chilling capacity and above all, adherence to the highest acceptance standards at all milk collection points, including the factories.

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ANALYZING MARKETING SITUATION SWOT analysis

A SWOT Analysis is conducted by the company so that it is able to position itself to take advantage of particular opportunities in the environment and to avoid or minimize environmental threats. In doing so, the organization attempts to emphasize its strengths and moderate the impact of weaknesses. The analysis is also useful for uncovering strengths that have not been fully utilized and in identifying weaknesses that can be corrected. Matching information about the environment with the organizations capabilities enables management to formulate realistic strategies for attaining its goals. A SWOT Analysis of Nestl MilkPak is as follows:

Internal analysis Strengths

Socially Responsible Company. NMLs products enjoy strong brand image and market pull. Innovative and constantly growing product line. NML launched 17 new products, including variants of existing products in recent past. Sales force is the major resource strength in terms of physical resources of the company. Marketing strategies established by the company are innovative and lure customers. Financial, marketing and sales strategies are formulated by gauging the customer demands. Periodic research carried out to judge market trends. It is a large scale organization, with abundant funds and has the capability of acquiring weaker firms by throwing them out of competition. The recent acquisition of the water brands Aqua and Fontalia provide an example for this strength of the company. Multinational. Growing Sales and profits.

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Major shareholder in the food industry of Pakistan. Aggressive Marketing. Efficient Distribution networks through out the country. Quality Products. Environment Friendly. Skilled labor. Educated staff. Large number of offerings. Pre purchase virtual display. Arrangement of events. Good background of the company. Easy to approach outlets. Physical evidence Strong Brand image Quality product Solid Financial position Strong supply chain network Qualified work force Commitment to High Quality Products Focus on research and development Estimations of UHT Milk Production and Consumption up to 2008 09 Year Annual Production (Million liters) Annual Consumption (Million liters) 2008-09 => 648.43 353.71 2009-10 => 753.89 372.05

Weaknesses
Selective investment due to uncertain economic and political conditions. Feasibility of new products needs to be analyzed, e.g. Nestea was launched some years back but it failed because no customer demand for it existed. Relatively a new company in comparison to its rivals e.g. Lever Brothers. 53

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Low levels of inventory maintained can be dangerous. No credit sales. Low sales margins due to highly value added products. They cannot launch many of its expensive international brands due to the lower income groups. Physically impossibility to have target market. There is weak marketing of MilkPak as there is no advertisement of MilkPak on official website. Lack of awareness among the target market. It Dependency on others (govt. & sponsors) for the arrangement of events. The target market of Nestle MilkPak is upper middle and high class because lower middle and poor class cannot afford to buy UHT milk due to its premium price.

It is a main weakness of MilkPak that there are different companies of milk but the name of nestle MilkPak is always stand in the last because of low advertising and marketing.

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External analysis Opportunities

Pakistan is the seventh largest producer of milk in the world with annual output of over 22 billion liters. There are substantial growth opportunities considering the average yield of Pakistani animals at only 1,100 liters/annum as compared to 6,000 Liters/annum for animals in Europe and USA. There are nearly 20 million milk producing animals in the country, mostly in Punjab (80%). The overall milk market in Pakistan is 20 billion liters, out of which processed milk contributes only 3 million liters. Nestl MilkPak along with other processed milk businesses contributes only 2% to this large market. Nestl MilkPak has expanded its product range by entering the cold dairy market recently by launching Nestl plain yogurt and now fruit yogurt is also added to it. To expand the cold dairy products range, Nestl fruit yogurt is the latest addition to this group. The cold dairy market offers many opportunities for the company which can capitalize these products by banking on its superior quality milk. The coffee brand also offers many opportunities for the company to expand by tuning the taste of the masses towards coffee. Credit policy can be adopted to increase sales.

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Threats
Price fluctuations due to rupee devaluation as raw material are imported. The uncertainty of economic conditions poses a great threat as the major funds invested in the country come from outside Pakistan. The present economic crisis in the world, led to the withdrawal of foreign management from the company and the investment has come to a halt. Competition with Nestls owns smuggled brands. Effect of Seasonalitys upon sales. Imported raw material, in some of the companys products. Major player may enter target market Legal and ethical issues. Market segment growth could attract new entrants. Economic slow down can reduce demand. Two main competitors Haleeb and Olpers are main threat for MilkPak especially the Olpers is growing very fast. Inflation is getting higher and higher so the purchasing power of the people is decreasing day by day. There is no entry barrier for new entrants as the Olpers has come in the market. Taste of consumer has already developed which is hard to change.

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Current market situation

Today, Nestl MilkPak produces in over 81 countries and achieves 98% of its turnover outside Europe. Nestl MilkPak is the worlds largest milk company, which does 98% of its business. It has an annual turnover of 70 billion Swiss francs, 522 new factories in 81 countries, 200 operating companies, 1 basic research outer and 20 technological development groups, has more than 231,000 employees and more than 8000 products around the globe. There are three companies co-ordinate the activities of some 200 operating companies around the globe. Their functions and details are as follows: The first, Nestl MilkPak, holds the financial shares in the allied companies. It also checks the profitability of these companies and to ensure the profitability of the group as whole. The second, Nestl MilkPak, has two areas of activities that are as follows: Research and technological development Technical assistance beside this, it provides know-how in engineering, marketing, production, organization, management and personnel training on a continuous basis. The third company is Nestl World Trade Corporation that oversees the import and export of merchandise worldwide.

MARKET ANALYSIS
In 1986, Haleeb entered the market with its distinctive blue packaging and positioned itself as the thickest natural milk. The two brands were the main players in a market that is the worlds fourth largest milk producing country. Then in 2006, Engro Foods launched Olpers milk in a market dominated by two highly entrenched strong brands.

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Customer Profiling (Customer Data) Transaction Details

Frequency, Amount and timing of purchases, Items bought, Prices paid Use of cash or credit. Marketing channel Promotion type, and Address/city.

Appended Database Data

Life Style Profession/occupation, vehicle ownership, Internet use, Travel, Pets, and Hobbies.

Financial Investments, Credit card usage and type, Living expenses, and Credit worthiness.

Demographic Age, income, education, 58

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gender, marital status, and Number of kids.

Almost all type of peoples is the consumers of the milk. Own/rent, urban/rural, size of city, region, and Size of dwelling.

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DEVELOPING THE MARKETING MIX

The most interesting part of commerce is the marketing; this is the latter addition of the business tools. It starts with conceiving idea of presenting a product, traditionally producers were interested in producing those goods only which has existing pull, whereas now because of marketing tools they are producing with the intention of pushing the product into consumers hand. Marketers use numerous tools to elicit desired response from their target markets. These tools constitute a marketing mix. Marketing Mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. McCarthy classified these tools into four broad groups that he called the four Ps of marketing: Product Price Place Promotion

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Product Mix
YEARS OF PRODUCT LAUNCH

Diary
From shelf-stable solutions to chilled dairy. Nestle has long been a major player in the 1981 1983 1986 1990 1991 1992 1994 1995 1996 1997 1998 2000 2001 2002 2003 2004 Milkpak UHT cream NIDO Rice Everyday Milo Powder Milo RTD Juices Kit Kat Toffo Plain Yogurt Fruit yogurt Everday liquid Buddy Nesvita yogurt Nesvita milk NAN 1 NAN 2 Soothers Pure life Polo mint Nescafe classic Milkpak Desi Ghee Cerelac Lactogen1 Gloria Neslac Lactogen 2 Maggi Milkpak Butter Frost

Raita Caution Easywhip Nescafe 3 in 1 dairy industry , originally with shelf stable brands as NIDO, innovation and renovation play a major role in the development of milk based products

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Nestle Milkpak UHT milk Launched in 1981, MILKPAK milk became synonymous with purity, in September 1999; it was launched under the Nestls brand, which further strengthened its position. Backed by a very strong brand name , aggressive marketing and distribution , consistent quality and all year round availability , nestle milkpak milk has become number one selling milk brand in Pakistan. It is available in four pack sizes of

1500 ml 1000 ml 500 ml 250 ml

The key competencies are

clean bacteria free homogenized standardized

Nestle NESVITA hi- calcium low fat milk

To tap the fast growing adult well being segment in Pakistan, nestle hi calcium low fat (HCLF) milk was launched in September 2003. Not only did this product offer high calcium, but it also offered the advantage of low fat retaining, at the same time, the natural goodness and taste of milk. The product, which was re-launched under the brand of nestle Nesvita in 2005, has become the preferred choice of those seeking healthy lifestyles. It is available in;

1000 ml 500 ml

MILKPAK UHT cream

MILKPAK UHT cream was introduced under the MILKPAK brand in 1986. It is available in an attractive 200 ml slim pack. The consumer trust in the brand name and the product has ensured its dominant share in the cream category. Key competencies are

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Hygienically processed Nourishing Convenient packing Excellent for cakes and coffees

MILKPAK Desi Ghee

MILKPAK Desi Ghee was introduced in 1986 in tetra packaging. However, in line with the current market trend, MILKPAK Desi Ghee was re-launched in 870 gm tin packaging in 2000 followed by 75 gm sachet in 2003. The product was also introduced in 16 kg tin packaging to tap the potential of loose desi ghee.

Nestle NIDO
One of nestle largest brands internationally, NIDO was launched in Pakistan in 1990. Since then NIDO has grown from strength to strength to become the mothers trusted partner in catering to her childrens growth and development. Along with the natural goodness of pure milk NIDO is now also enriched with minerals and vitamins that help children excel in the classroom and on the playing field. It is available from 100 gm to 62 gm pack sizes.

Nestle NIDO 1 +
The NIDO family was expanded with the launch of NIDO 1+ in august 2005. The product is meant for children from 1-3 years of age. NIDO 1+ contains Prebio 1 , a natural fibre by nestle that helps maintain a healthy tummy while providing the nutrition and goodness of milk. Regular use of NIDO 1 + will ensure a healthy child.

Nestle everyday
To target the large potential offered by the tea creaming segment , NESTLE everyday tea-creamer was launched in1992. Supported by integrated marketing , focused distribution with sampling drives and excellent consumer acceptance, the brand has shown strong growth and holds great promise for the future. The brand is available in a variety y of pack sizes ranging from 40 gm to 1000gm

Key competencies are

Good for tea Long life Nourishing Convenient packing

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Nestle everyday liquid

Nestle everyday liquid leveraged by a very strong mother brand EVERYDAY powder was introduced to capture the huge liquid milk consumption in tea. Launched in june 2002 in 200 ml , it Is now available in 125 ml and 375 ml sizes. Year 2005 has seen this brand become a significant player in highly competitive milk market.

Nestle plain yogurt

Launched in November 2000, nestle plain yogurt became the market leader and has Maintained its position ever since. The stay- fresh seal, printed expiry date and an exclusive distribution system contributed to the immense popularity and success of the product. N account of its nationwide distribution, NESTLE plain yogurt is only national player in the market.

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Nestle fruit yogurt

The year 2001 saw the launch of the Nestls fruit yogurt in 3 variants of strawberry, mango and peach with real fruit pieces. This made a pleasant difference for the consumer, as the local competition was only able to offer fruit flavored yogurt.

Nestle Nesvita high calcium low fat yogurt

After the success of plain yogurt, nestle introduced hi-calcium low fat yogurt in 2003. The product contains less than 1 % fat and 50 % more calcium than plain yogurt. In 2005 the product was relaunched under the brand of nestle nesvita which has helped to further strengthen its brand image. One 450 gm. Cup of nestle nesvita hi- calcium low fat yogurt contains 900 mg of calcium ,which is sufficient to fulfill the daily adult requirement of approximately 1000 mg of calcium as recommended by the US food and nutrition board (1997).calcium is essential for stronger bones and teeth and helps combat osteoporosis especially in women.

Nestle Raita
Nestle raita was launched in year 2004. it has become an instant favorite with Pakistani cuisine lovers and housewives.

Nestle easy whip

Nestle easywhip was launched in oct 2004, in order to meet the needs of urban cream usage. As compared to other available creams, it is the only cream that whips.

Nestle butter
New pack design allows milkpak butter to gain the strength like that of UHT milk Key competencies are nourishing Convenient packing Source of vitamin

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Baby Food
Lactogen Lactogen 1 and Lactogen 2 are casein-predominant infant and follow up formulae. Locally launched in 1991 in soft packs. Lactogen is available in 200gm and 400 gm. Is also available in imported tins of 450 gm and 1000 gm. The brand provides both affordability and quality NAN NAN 1 is a whey-based started infant formula while NAN 2 is its follow up . the local manufacturing of these formulae began in 2001 , which was a landmark achievement, as it brought the expertise of producing an internationally renowned high quality infant product exclusively to nestle Pakistan in this region. This also offers a great advantage to the consumer as a high quality product is now available at the best affordable price. NAN 1 and NAN 2 are available in locally produced 400 gm soft packs and in imported tins of 450 gm CERELAC With local production commencing in 1990, cerelac has emerged as the dominant player in the branded infant cereal market. Available in six variants, the brand provides balanced nutrition to infants from six months onwards. The variants include cerelac wheat, cerelac wheat 3 fruit, cerelac wheat honey, cerelac wheat banana, cerelac rice and cerelac chicken vegetable rice the latest addition to the cerelac range. Cerelac sachet of wheat and wheat 3 fruit were added to the range in October 2002, which provided affordability and accessibility to the consumer.

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NESTLE rice
An affordable starter weaning cereal, nestle rice offers the flexibility of preparation with a variety of meals. With the advantage of being gulten free , the brand is available in 125 gm pack and is especially suited to the needs if infants from 6 months onwards. It was launched in 1994. Neslac Neslac is growing up milk formulated specially for young children from 1 to 3 years of age. It contains just the right balance of proteins, calcium, iron, vitamins and essential minerals to cater to the nutritional needs of a growing child during this special age.

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Beverages
Nescafe classic Nescafe classic is locally repacked and marketed in 1.4gm and 25 gm sachets, 50gm and 100 gm jar packs and 500g bag and box. The brand enjoys a special position in the countrys coffee consuming segment. Global campaign open up was launched in Pakistan as well, introducing a new frame work and increased sales of coffee in Pakistan Nescafe 3 in 1 To cater for consumer convenience, nescafe 3 in 1 was launched in 2004. Available in 18gm single serve sachet, it offers an inexpensive way of having coffee wherever, whenever and however. Nescafe gold In order to offer more sophisticated coffee experience nescafe gold is available In 50 gm and 100 gm ja pack. This is particularly appreciated by coffee connoisseurs who look for the rich full-bodied taste, coupled with stimulating aroma Milo powder Ever since milo powder was launched in 1994, it has achieved fairly consistent results. Milo is positioned as a milk modifier, both for hot and cold consumption. The inexpensive alternate to imported products and have an immense potential, particularly among growing children and those involved in active lifestyles. It is marketed in 200 gm packs and 14gm single serve sachet. MILO RTD To cater for consumer convenience, MILO RTD (ready to drink) was launched in 1995 and is available in 200ml and 125 ml pack sizes. It is an ideal alternate to summer

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drinks and is popular with all age groups, particularly among children and consumers who are nutrition conscious or have an active life style. Frost A well-known fruit drink brand FROST was introduced in 1986. Positioned as a cold drink and alternate to other soft drinks, its strength lies in the convenience attached to its usage. Nestle juices Encouraged by the consumer response to nestle orange juice launched in 1996, the category of nestle juices was further expanded with the introduction of mango and mango orange in 2000, followed by apple nectar in 2002. In 2003, based on consumer insight and to broaden the range further, nestle pineapple nectar was introduced. To offer more variety to consumers, red gapes nectar was launched in 2005. Nestle juices category as gained substantial market share and is a preferred choice of consumers. Available in 1000ml and 250ml pack. Nestle buddy Introduced by keeping small kids in mind, nestle buddy gave a new concept. It is a small jucie packet available in mango flavor. It says nestle buddy, only for cool kids which attracts young kids to have a check on this product

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Confectionary & Culinary

In view of the potential for confectionary sales in country, company established as independent sales and distribution network that expended swiftly/ POLO Nestle milkapk successfully entered the confectionary business in 1996 with the launch of POLO. POLO was positioned as the refreshing sweet with a hole and catered for the younger segment. Over the years its range has been extended to appeal to various age and income groups. Nestle kitkat Chocolate is a small but fast growing segment. Nestle kitkat was launched in 1996 to make inroads in this market. Popular price points and focused marketing activities have shown excellent sales growth. Complementing the companys confectionary business. Nestle kitkat chunky Launched In Pakistan in 2005 kit kat chunky is nestles giant single wafer version of the world famous brand KIT KAT. The launch was part of global strategy to make KIT KAT the largest selling chocolate brand in the world. MAGGI 2- minute noodles Fast to cook, good to eat MAGGI 2- minute noodles were launched in 1992 and in doing so nestle Pakistan pioneered the category of instant noodles in Pakistan. Maggi 2 minute noodles have special appeal for children, as they are fun to eat and offer a range of appetizing flavors: chicken, chatkhara, chilli, ketchup and masala. The product was re launched in 2003 with renovated packaging to further strengthen its market leadership. Nestle toffo

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Nestle toffo is a toffee which has caramel taste. The product was made for kids by taking care of their requirements. Nestle hazelnut wafer chocolate Filled with hazelnut and wafer this chocolate was liked by specific segment. Due to its unique and enriched combination, nestle hazelnut wafer chocolate soon got its place in the market. Nestle rice crispy chocolate Nestle rice crispy chocolate is a mini chocolate to fill in the demand of users who need small amount of chocolate. Its a blend of exclusive flavors and is an innovation in itself. Soothers Soothers are the Throat drops. These are the medicated candies to give a relief to throat and to help people in getting rid of throat rashes and reactions. The soothers are present in two flavors. Honey lemon Menthol eucalyptus

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Water
Nestle Pure Life Launched in December 1998, nestle pure life was nestle first global bottled water brand. Marketed in 0.5 and 1.5 liter PET bottles, it was established as the clear market leader within 3 months of launch, becoming the benchmark for quality of bottled water in Pakistan. With focused attention on distribution, marketing communication and merchandising, nestle pure life soon came to command dominant market leadership, establishing a new price point of bottled water. Nestle pure life is a part of the product portfolio of nestle waters, which ranks as the biggest bottled water company in the world with its renowned brands like PERRIER ,VITTEL , CONTREX, POLAND SPRING etc. Nestle pure life is registered with NSF international USA, an independent quality certification agency, with the authorization to use its mark of quality on the label. It is also approved by PSQCA and carries its mark of certification Nestle pure life home and office service In 2000, nestle pure life established a successful home & office(H& O) deliver service, which has substantially grown ever since and has come to dominate the 5-gallon market in major towns , offering greater convenience and better value to the consumers. Successful marketing and sales strategies has provided greater convenience and better value to the consumers. The brand is poised for continued strong growth. AVA & FONTALIA To expand its H&O water delivery business country wide, nestle acquired major share holdings in both these businesses in 2001. While AVA is an important national player in the branded bottled water category, FONTALIA is a strong player in H&O service in Karachi These acquisitions have helped the company in the extension of its H&O service in Karachi and Islamabad. The two factories in Islamabad and Karachi that produce the INTERNSHIP REPORT 72

AVA brand were later merged with nestle Pakistan in 2003, as was the factory that produced FONTALIA which was merged in 2005.

VALUE added services BY NESTLE

Brand Consciousness People prefer Nestle because of its strong brand background all over the world. People from all the classes opt for brand name. The main factor, which convinces them, is its verified brand and line extensions. This point makes the brand name strong position in the minds of the people. This is the biggest positive factor, which is the result of one of the highest turnovers of Nestles products. Nestle Pure Life is the biggest icon in water industry. Although there are many big competitors working in the same industry but the value Nestle offering is different and unique which is its purity. Packaging: The packaging, which Nestle is giving to its customers, is different as compared to it rivals. In their competition Classic and Cool are supplying water in the same design, which can be bought from the market. But here Nestle has its own design, which attracts the customers. Delivery: Nestle is considered pioneer in delivering water at your doorstep. Big hoardings are placed on the roads with their number given of free delivery. Availability: Nestle is available at all areas of Lahore. Because they have only few distributors but they are covering each and every area of Lahore. If competitors are taken, they dont have full coverage of main cities.

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Analysis of Company Marketing/ Sales Procedures

The company succeeded in achieving sustainable profitable growth during the previous year driven by successful marketing and sale strategies and focus on key initiatives. Consumer confidence in the companys brands has further strengthened and the trade remains confident as ever in doing business with it. Innovation and renovation remained the key to the development of products. In previous 1-2 years, several new products were introduced that include NESTLE BUDDY, NESCAFE 3 IN 1 , NESTLE RAITA ,CAUTION , NESTLEEASYWHIP in addition to two new products in the chocolate category with NESTLE RICE CRISPY AND NESTLE HAZELNUT WAFER. New variety was also added to the existing range with the launch of NIDO 750 g . EVERYDAY 750 g and MAGGI 2-MINUTE NOODLES ketchup flavor. The strategy to increase penetration by offering right price point pack sizes , supplemented by distribution expansion in small towns continued with focus on CERELAC , NIDO and EVERYDAY sachets through localized activities , with very good results. Consumer insight remained our guiding principle to develop effective communication. Consumer services shows, door-to-door sampling, Path to Purchase philosophy and consumer promotions strengthened our communication. During the period nestle continued with strategy to increase the distribution penetration and develop additional trade channels. Second strata towns remained the focus of our attention and activities such as town storming, special distribution drives and distributor training were extensively undertaken. Further sales structure was strengthened with emphasis on area- based territory management and additional area demarcation, overall availability and visibility of products provided a competitive edge. One of the key initiatives has been the Category Sales Development function, which has effectively been aligned with marketing and sales to strengthen strategy planning with respect to channels, customers and shoppers.

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FoodServices business unit is fast developing the required skills and competencies to meet specialized needs of Out-Of-home customers. Organizational structure was further strengthened and its role and activities expanded during 2004. Out Of-Home channels that the unit serves include hotels, restaurants, clubs, businesses, industries, third party canteens and NESCAFE vending operations. Specialized products and pack sizes have been developed to meet specific channel needs. Our strategic outlook is clearly skewed towards propelling growth behind liquid milks, tea creamers, hot and cold beverages and water. The future outlook seems very upbeat owing to dramatic changes in consumer trends for out of home consumption. Balanced growth was achieved in all strategic categories and the market share position of key brands was further strengthened. Trade spent & market returns were kept well under control while achieving sales value growth and an impressive Real Internal Growth (RIG). Distributors outstanding was efficiently managed due to the compliance of sales on cash policy.

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Pricing Policy
According to nestle there is no specific policy about pricing that has been followed. Because pricing a product depends on many factors like, Target market Consumers Product cost Manufacturing process Raw material cost Demand of product Availability of raw materials Distributional cost Storage cost GMP (Good Manufacturing Practices) etc

The problem with nestle high prices is that its quality standards are very high. High hygienic conditions are maintained during manufacturing, storage and distribution. If any raw material does not fulfill the quality standard criteria the product is disposed off or sold back at a cheap price. At times tons of milk is disposed off if it doesnt meet anyone of the criteria. And also the release criterion of products is very strict. due to the fact that major product of nestle is for infants and therefore very stringent policies are followed , and in case of any deviance the products are not released . Such procedures are the reason for high cost of nestle products. But even then nestle is one of the major food selling companies due to its high quality that ensures health and fitness.

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Nestle want to earn profit not just by satisfying consumers but by pleasing them

To set the price followings things are checked Pricing objective Demand Cost Competitors cost , prices, offers Selecting a pricing method Setting final price Demand of nestle products is a major factor in the price determination. it sets a ceiling on the price a company can charge on its products. Companies select a pricing method that includes one or more of three considerations: Customer demand Cost Competitors pricing Nestle uses perceived value method. Means price are set by the proposition that price should be according to the value perceived by customer If a new product is launched a lot care is taken so as to gain consumers loyalty. Psychology of consumers is taken into account.

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Price List

These prices are subject to errors. As the final list was gone for update these days.

PRODUCT Nido Everyday Nestle butter Nescafe classic Lactogen 1 &2 Cerelac wheat three fruit Cerelac wheat Cerelac banana Cerelac honey Cerelac rice Neslac Nestle item NAN 1 NAN 2 PRENAN AL110

PACK Pouch packs Pouch packs Tin packs

Soft pack Soft pack Imported tin Soft packs Soft packs Soft packs Soft packs Soft packs Soft packs Soft packs Imp tin Soft pack Imp tin Soft pack Imp tin Imp tin

SIZE(g) 62 400 1000 40 400 1000 100 200 75 225 500 200 400 1000 200 400 200 400 200 400 200 200 200 125 450 400 450 400 400 400

PRICE (Rs) 15 108 240 10 104 228 25 40 105 N/A N/A 72 133 500 73 139 61 117 69 132 63 69 115 40 265 185 265 185 375 325

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PRODUCT Maggi noodles

FLAVOR Chicken Chatkhara Chili Masala

Nestle water Nestle yogurt Nestle wheat Nestle juices Apple Red grapes Mango Mango orange Pineapple orange Kit kat Milkpak cream Polo

Banana Three fruit Soft packs

SIZE 70 70 70 70 0.5 L 250ml 330ml 450 200 200 250ml

PRICE 12 12 12 12 24 12 36 29 67 71 15

Small Large 200ml

5 15 26 5

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Distribution Policy
As far as the distribution strategy is concerned Nestle follows one policy. i.e. Sales on cash

No sale is done to the distributors on credit basis. Zero days credit is given to the distributors. And therefore the whole process remains very clear and lucid. According to nestle

We dont push things into the market

By following such a rule of thumb consumers get products only when they want. There remains no idle stock in the market. For distribution purpose nestle has its own sales team force that support the whole procedure and coordinate with the distributors. Such sales team is well trained and skilled. Training and development is provided to all the distributors and sales team force. Their exists a strong coordination among all the distributors of Nestle and the sales team support. For the distribution of products from SKP (Sheikhupura factory) a separate department is present known as NDC (National Distribution Center) such department ensures the supply of products from SKP factory to nation wide. The aim of nestle is to provide its products according to the needs of consumers and consumer convenience in getting the product is nestles top most priority.

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Objectives
Nestle has following distribution objectives: To reach the customer and better availability of the product to the customer To capture more market shares as compared to competitors satisfying the changing needs of market.

Nestle has well defined physical distribution channel. Main elements of nestle distribution mix are Order processing Warehousing Inventory management Transportations

ORDER PROCESSING Physical distribution comes with customer order. Nestle order processing steps are carried out quickly and accurately. Retailers send in their orders daily. Nestles order dept quickly processes these orders and then warehouse send those items. WAREHOUSING Nestle has two factories. Each factory has its own cold houses which stores its products. Nestle has large and highly organized warehouses designed to keep products manufactured at its plants.

Inventory management Nestl major goal is to maintain a balance of inventory which can meet the overall production requirements and fulfill demands off customers.

Other distribution channels For the distribution outside Lahore, the company has hired a

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Goods forwarding agency

The milk is transported through trucks to various out station destinations. In individual cities, the company has appointed distributors who are given some commission. All expenses of delivery are borne by the company. The products are supplied from the factory according to area requirements under level two distributions as explained above. The vehicles of company provide efficient and in time delivery leaving no problem for consumers regarding availability of the products in the market.

Terms of contract The company currently has about 250 distributors countrywide. So a tremendous improvement has taken place in the recent years due to the efforts of the company managers regarding the distribution divisions. Distributors are hired on contractual basis. If any distributor uses his own transport the company provides him with the equal price for job doe.

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Nestle headquarter

Switzerland

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Company directory
REGISTERED CORPORATE OFFICE 308 Upper Mall, Lahore

CORPORATE OFFICE ANNEX 304 Upper Mall, Lahore Factories

SHIEKHUPURA 29th km , LHR-SKP road , Sheikhupura , Pakistan

KABIRWALA Khanewal-kabirwala road, kabirwala , district khanewal , Pakistan

REGIONAL SALES OFFICES

NORTH ZONE Islamabad 92- east , 3rd Floor, Razia sharif plaza , fazal-e-haq road, Blue Area, Islamabad, Pakistan.

Peshawar 201, Block B, 2nd Floor City Tower, Jamrud Road, Peshawar, N.W.F.P. Pakistan.

CENTRAL ZONE
Lahore 29-b, Main Gulberg, Lahore, Punjab, Pakistan

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Faisalabad Al Haq Plaza,271-A, Small D Ground, Peoples Colony Faisalabad, Punjab, Pakistan.

Gujranwala 3 irrigation road , opp. Commissioner house, civil lines, gujranwala. Multan Surij Miani Road, Chungi No 1, Multan, Punjab, Pakistan. Sahiwal : 174-B/7 tehsil road old civil lies ,stadium chowk ,sahiwal

SOUTH ZONE
Karachi F-77/1, Block 7, Clifton, KDA Scheme 5, Karachi, Sind, Pakistan.

Hyderabad 178, Block C, Unit 2 Latifabad, Hyderabad, Sind, Pakistan.

Quetta 63 B-D, Chamman Housing Scheme, Opposite Askari Park Quetta, Baluchistan, Pakistan. Sukkur: C- 408/6- Minara road, sukkur

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Milk collection centers

1. Arif wala 2. Alluday wali 3. Basirpur 4. bhawana 5. Chishtlan 6. Duniyapur 7. Farooka 8. Ghaziabad 9. Jalla more 10. Haveli lakha 11. Kamalia 12. Kalowal 13. Layyah 14. Ludden 15. Mailsi 16. More mandi 17. Mian channu 18. Minchanabad 19. Pakpattan 20. Pindi bhattlan 21. Renala 22. Sahiwal 23. Shorkot 24. Yazman

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REGISTERED
CORPORATE OFFICE

SHEIKUPURA FACTORY

KABIRWALA FACTORY

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Promotional Policy

For promotion of its products, nestle follows an aggressive strategy. The strong promotion is done through mediums like TV and magazines/ news papers. Some other mediums which are used for promotion purposes are nestle international websites, billboards, posters, radio etc The chart shows the increase in nestle sales promotion and advertisement expense in the year 2004 and 2005. from almost 0.6 bn it has increased to Rs. 0.8 bn

1000000000 800000000 600000000 400000000 200000000 0 2003 2004 2005 Sales promotion and advertisment expenses

Nestle is a human company providing a response to human needs through out the world this is the opening statement of nestle management and leadership principles a document that defines Nestle values and that is applied throughout the organization worldwide, thereby becoming a tangible expression of Nestls corporate culture. For promotion nestle fulfills its social responsibility very efficiently. Nestle corporate business principles- a document that serves as the companys management tool, reflects its commitment to corporate social responsibility as the way of doing business . not only does the company abide by its policy of serving its consumers through high quality and safe products coupled with responsible consumer communication , it adheres to good manufacturing practices , environmentally sound business practices and support the principles of UN s global concept on human rights .

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Nestle uses media like

TV commercials Magazines Outdoor advertisement ( banners, billboards , neon signs) Point of sale advertisement in shops , departmental stores and other consumer buying places Buses printed especially for nestle pure life and everyday

Promotional budget Nestle promotional budget is et by the main head office in Switzerland on annual basis for various consumers products depending on the sales and demand Advertisements are very important in building image of company. Because customers are attracted and persuaded to try the product out. The budgets for different products vary depending on the sales and demand of products. Like on milk nestle has 60 % of total sales. As compared to competitors like halleb and others, the advertising strategy is very different. The company doesnt rely on comparative ad but it tries to attract customers by its distinctive and unique approach. For ad , nestle hires top leading models that present hidden qualities in the products. When juices were introduced, company made such advertisement that people were surprised

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As far as direct marketing is concerned following techniques are adopted at nestle

Door to door selling Prizes Free sampling

Nestle is doing a lot to improve the picture in the minds of consumers. Its market size is increasing day by day

Societal Marketing
Nestle actively takes part in various social action programs undertaken for the rural and underprivileged communities, sports and culture is promoted and environmentally safe practices are strictly adhered to. Such policy aims at meeting the companys obligations to the society at large.

Social action programs

Child and mother issues The company arranges nutrition program for undernourished children and mother through several NGO partners and charitable organizations. It also assists APWA in participating in international seminars and conferences on child issues Donations

The company donates to hospitals and organizations that provide services to the poor and also responds to distress calls by the government and NGOs for assistance to victims of flood, earthquake, drought and other natural calamities. Rural support programs

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It helps to alleviate the sufferings of rural populations which do not have easy access to potable water by undertaking tube well and hand pump installation schemes in selected areas. The first tube well was completed in 2002 in a village of about 3000 inhabitants in Tehsil Dunyapur, district Khanewal to meet water needs of the inhabitants of desert regions of cholistan and thar , 150 hand pumps each have been installed in both. The milk collection and Agri-services dept of the company provides free and extensive advisory and support service to milk farmers by training them in good animal husbandry practices vaccinating and treating their milch animals, facilitating purchase of feed supplements and fodder seeds and assisting in breed improvement . This translates into increased milk production and consequently a better income for the farmers. Educational support to underprivileged students To help improve the quality of education in rural areas, which have remained neglected for too long, the company undertakes rehabilitation and refurbishing of primary and middle schools, particularly those for girls. Three schools have been rehabilitated in 2004. In partnership with an NGO that specializes in education, the company has embarked on a program of school adoption in 2004, under which educational facilities are being improved through provision of teaching aids and steps are taken to enhance the quality of education through teacher training. These measures have shown immediate results and the school attendance has already doubled. During 2004 the company donated 55 computers to schools in poor urban communities to enable those children to step into the world of technology.

Sports & culture The company regularly sponsors a variety of sports and cultural events such as the international polo Tournament and SAF Games. Environment

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For nestle respect and responsibility for the environment is a part of its broader commitment to sustainable development. Sustainable development requires an integrated approach to policy and decision making in which long term economic growth, environmental protection and social achievements are not incompatible, but are complementary and mutually dependent. Nestles record of environmental activities can be traced back over several decades , with many effective measures put in place. The first global nestle policy on the environment was published in 1999, confirming and strengthening the companys commitment to environmentally sound business practices. In line with nestles global commitment, nestle milkpak in Pakistan is equally dedicated to play its role in helping to protect environment. The company fully complies with local laws of environmental act / regulation (1997)

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STRATEGIC PLANNING:
BOSTON CONSULTING GROUP (BCG) MATRIX FOR THE SBUS

Companys Market Share High Low

Pure Life Water Confectione ries

High STARS MARKS
Industry Growth Rate

Culinary products

QUESTION DOGS
Chocolate Drinks Fruit Drinks

CASHCOWS

Milk Products Coffee Dietetic & Infant foods

Low

STARS: The two Sbus, Mineral water and Confectioneries fall into this category of the BCG. These SBUs have high market share and high industry growth rate. These Subs are requiring lots of investment to compete in the growing market. For example, lots of money is being spent and aggressive marketing strategies have been implemented for the Mineral water to build and maintain market share. Nestle Pure Life has captured 50 % of the bottled-water market in Pakistan since it was introduced in 1998. Its approximate sales for 1999 are RS. 70, 401000. This sales figure is quite impressive as the sales rose quite high in only one year. It is predicted that there will be additional growth in the mineral water category in coming years. The sales of the confectioneries

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rose to RS. 106,559 000 from RS. 87,758 000. The huge increase of RS. 18, 801 000 puts this SBU in the stars category and shows its increasing market share. There is a growing market for the products in confectioneries for example Kitkat (eventhough its imported), Polo Smarties etc. This can be proven from the fact that Nestle keeps introducing new products in this category for example Allens Soothers were launched during the last quarter of 1998. CASHCOWS: Milk products, Coffee and Dietetic and Infant food have a high market share and are doing business in mature industries. Since the customers of this product category are loyal, the marketing costs of these SBUs are quite low and as a result a large amount of cash can be generated. Customer Loyalty is a must for these Cash cows to maintain their market share. The sales of the Milk products have increased to RS. 108,430000 from RS. 87, 758000. This huge increase in sales reflects the high market share of this SBU. However, its growth rate is low because in general this category is in its maturity stage that is a number of milk products have been launched by Nestle, most of which are quite old. An innovation has not really been made in this category. The same conclusion can be made about Coffee. There is an already existing market for Coffee which is not increasing further by a large amount. The sales of Coffee were Rs. 46, 89 000 in 1999 and Rs. 392, 00 000 in 1998. This huge difference shows that a great amount of cash is being generated from this SBU. Sales of Dietetic and Infant food rose to Rs. 60,935 000 from Rs. 52,655 000. The infant foods unit of Nestle is operating in a mature industry. Like the milk products, the infant foods have been around for a long time without barely any new product line being started in this category. QUESTION MARKS: Included in this section is the culinary products of the organization. The products such as Maggi 2-minute Noodles and Maggi cold sauces have a low market share and a high growth rate. These products especially the cold sauces are operating in a highly competitive market. The approximate sales were Rs. 79,919 000 in 1999 and Rs. 60,818 000 in 1998. This figure represents a great potential for growth in future. However, in contrast, the market share of the products in this category is not very high INTERNSHIP REPORT 94

currently. A reason for this is that Nestle just recently introduced cold sauces such as Emily sauce etc. However the enthusiasm with which the customers received the different flavors of sauces, portrays a very high potential for future growth. The firm needs to focus on differentiating its products in the competitive market to gain customers. DOGS: Chocolate and Fruit drinks fall into this category and they possess a low market share and a low growth rate. Chocolate drinks had sales of Rs. 19639000 in 1999, which rose from Rs. 19541000 in 1998. This is quite a small increase considering the rise in the sales of other SBUs. However, the chocolate drinks are still profitable so the firm does not have to worry about liquidating or getting rid of this SBU. The sales of Fruit drinks rose to Rs. 40,620 000 in 1999 from Rs. 38,103 000 in 1998. There has been a small amount of increase; however it is not a lot compared to other SBUs. Firstly, there is not a huge market for chocolate drinks in Pakistan. People usually tend to buy light juices like apple or orange juice or Pepsi instead of chocolate drinks. Secondly, regarding the fruit juices, there are not a lot of flavors available currently in this category. Nestle needs to introduce new flavours such as apple, grape etc. to capture the market that prefer these flavours. This will not only increase the sales of the SBU, but it will also increase its market share. At the moment, additional amount of money is not being invested in these SBUs, as they are not very profitable. Nestle is currently trying to maximize profits from this category by minimizing expenditures and by differentiating the product to build market share.

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Dealing with clients support by instances

For the customers and consumers there exists a separate department to handle all the complaints and support all the queries. Customers which are the retailers, distributors are given full support by the sales team force. Such team is specially defined to meet all the inquiries and criticisms. The customer service department has direct contact with the consumers i.e. the end users of the product. Thousands of consumers are directly contacted to find out their preferences, demands and views regarding products. Continuous feedback is attained so as to achieve continuous improvements. This means about million people are contacted every year. Nestle teams visit schools, colleges, universities and organize shows. Nestle also have a session with mothers. This session is for about 1-2 hrs to resolve all the complaints and to spread knowledge. Such sessions bring awareness to the mothers that how they could bring up their children in the best possible way The CS dept handles all kinds of complaints e.g. replacement, investigation etc for more efficient functioning a software has been provided to the customer service department. This software is names COSMOPLUS. This software has given a new direction to the CS department as by the help of this nestle is getting more close to its clients. If a product is found defective & is to be replaced, full investigation is done. So as to find the reason for such cause. The product is replaced to the client. In most of the complaints clients themselves are found faulty. But even then nestle try its level best to provide its service in the most competent way. Nestl is committed to offer consumers high-quality food products that are safe, tasty and affordable. The Nestl Seal of Guarantee is a symbol of this commitment. It believes in maintaining regular contact with consumers. This applies both to how it presents its products and to how it addresses consumers questions and concerns. When Henri Nestl 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.

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Today, Consumer Relationship Panel with the words Talk to Nestl

the same commitment.

expresses

This is why we have a worldwide Nestl Consumer Services network devoted to caring for our consumers. Our 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 Nestl. In addition, we teach them talk with consumers and above all, to listen. Listening helps us to understand what people want. Nestl uses the insights gained from relationships with consumers to drive product development. Nestl care for their consumers because they believe that their success depends on meeting their needs and expectations. According to nestle, Through listening and understanding, we can make products that consumers will want to use all through their lives.

Market Segmentation, Targeting, Positioning

Nestle products are used more in cities so it concentrates more on urban areas then on rural areas. Nestle is well aware of the various characteristics of the population. It segments of the population on the basis of these characteristics marketing mix for each. Mostly they use income, age, gender, and social class, family e.g. lactogen 1 , 2 NAN 1 ,2 is for infants Cerelac is for basics. .Yogurt is meant for almost all ages. .As in Pakistan there is joint family system so the products are available in variant size. .Pure juices are meant for people of all ages With the passage of time the life style, personalities and values of people have changed and Nestle is well aware of these changes. INTERNSHIP REPORT 97

Nestle tailor their messages to appeal the personality traits. As it says Milk pak Khalis hi sub kuch hai Nestle is also aware of the fact that values also relate to purchase behaviour. It appeals your sense of belonging when it says Tu hi mera pyaar Everyday And her achi cheese mehngi nahin hoti milo is for people who value fitness. Hi calcium low fat milk and yogurt is for health conscious people Consumer is as important for an organization as is blood for the human body. Consumer is always interested in its benefits. a successful company is that which markets the benefits and simply the physical characteristics of a product and nestle is not ignorant of this fact. it communicates and gives the feeling that its existence in the market is for the human benefits. Its products are fully hygiene, good for health, nourishing and fresh. E.g. 1. Nestle yogurt meant for people who want fresh and hygienic yogurt. 2. Pure juices are for the people who want to be fit and want less sugar intake. Etc.

Positioning

Nestle is trying its best to continuously improve its image in the minds of people Water is produced by various companies but nestle makes it superior by saying Pure life Its considered that every quality product is expensive but by introducing everyday at reasonable price it says Zindagi main her achi cheez mehngi nahi Hotee For nestle nutrition like nido , lactogen nestle is making awesome ads in which it is shown that by taking nestle products children become smart and intelligent. As in one of NIDO ad A little girl says mama dekhein mein kitneee smart houn na And most of all the words GOOD FOOD, GOOD LIFE

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Depicts a positive image that nestle is concerned about providing good food so that everyone could have better, healthy lives!

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Financial Analysis

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Income Statement
2008 2007

Sales Cost of goods sold Distribution expenses Marketing and administration expenses Research and development costs EBIT

109908 -47339 -9084 -35832 -1977 15676

107552 -45037 -9104 -36512 -1875 15024

Net other income/(expenses) Other income Other expenses 9426 -2124 7302 Profi t before interest and taxes Net financing cost financial income Financial expense 102 -1247 -1145 Profi t before taxes and associates Taxes Share of results of associates Profi t for the period 21833 -3787 1005 19051 576 -1492 -916 13518 -3416 1280 11382 22978 695 -1285 -590 14434

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Sales
Increase (Decrease) Amoun Percen t t
526271 2 20.4%

The sales figure has been increased by 2.9% due to increase in demand

Cost of goods sold

Increase(decrease) Amount Percentage -2302 5.11%

the cost of good sold increased by 5.11% due to inflation

Distribution expenses
Increase(decrease) Amount Percentage 20 -0.22%

distribution decrease by .22% because we are finding cheap buyers

Marketing and administration expenses

Increase(decrease) Amount Percentage 680 -1.86% marketing expenses decease by 1.86% due to cheap source for marketing

Research and development costs

Increase(decrease) Amount Percentage -102 5.44% research and development cost increase by 5.44% due to our immersive research on consumer buying pattern

EBIT
Increase(decrease) Amount Percentage 652 4.34% EBIT increase by 4.34% because increase in sales, cost of good sold and R&D cost, and decrease in distribution cost

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Net other income/ (expenses): Other income

Increase(decrease) Amount Percentage 8731 1256.26% net increase by 1256% because sales are more than expenses Other expenses Increase(decrease) Amount Percentage -839 65.29% other expense increase by 65% due to high rates

Total
Increase(decrease) Amount Percentage 8731 1256.26% -839 65.29% 7892 -1337.63%

Profi t before interest and taxes

Increase(decrease) Amount Percentage 8544 59.19%

Net financing cost: Financial income

Increase(decrease) Amount Percentage -474 -82.29% Financial decrease by 82% due to decrease in return against our investment portfolio

Financial expense
Increase(decrease) Amount Percentage 245 -16.42% Financial expenses decrease by 16% due to decrease in cost of borrowing INTERNSHIP REPORT 103

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Total
Increase(decrease) Amount Percentage -474 -82.29% 245 -16.42% -229 25.00%

Profit t before taxes and associates

Increase(decrease) Amount Percentage 8315 61.51% profit before tax increased by 61% due to decrease in financial and operating expenses

Taxes
Increase(decrease) Amount Percentage -371 10.86%

Share of results of associates

Increase(decrease) Amount Percentage -275 -21.48%

Profit t for the period

Increase(decrease) Amount Percentage 7669 67.38%

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Balance Sheet
2008 Assets 2007

Current assets Cash and cash equivalents Short-term investments Trade and other receivables Current income tax receivables Assets held for sale Inventories Derivative assets Prepayments and accrued income Total current assets 5835 1296 13442 889 8 9342 1609 627 33048 6594 2902 14890 531 22 9272 754 805 35770

Non-current assets Property, plant and equipment Investments in associates Deferred tax assets Financial assets Employee benefi ts assets (a) Goodwill Intangible assets Total non-current assets 21097 7796 2842 3868 60 30637 6867 73167 22065 8936 2224 4213 1513 33423 7217 79591

Total assets

106215

115361

Liabilities and equity

Current liabilities Trade and other payables Liabilities directly associated with assets held for sale Financial liabilities Current income tax payables Derivative liabilities Accruals and deferred income Total current liabilities 12608 14179 7 15383 824 1477 2931 33223 24541 856 477 3266 43326

Non-current liabilities Financial liabilities Employee benefi ts liabilities Deferred tax liabilities 6344 5464 1341 6129 5165 1558

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Other payables Provisions Total non-current liabilities

1264 3663 18076

1091 3316 17259

Total liabilities

51299

60585

Equity 21 Share capital Treasury shares Translation reserve Retained earnings and other reserves Total equity attributable to shareholders of the parent Minority interests Total equity 383 -9652 -11103 71146 50774 4142 54916 393 -8013 -6302 66549 52627 2149 54776

Total liabilities and equity

106215

115361

Assets: Current assets Cash and cash equivalents

Increase(decrease) amount percentage -759 -11.5% cash and cash equivalent decrease by 11% because we made a cash payments

Short-term investments
Increase(decrease) amount percentage -1606 -55.3% short term investment decrease more than 50% because of sale of short term investments

Trade and other receivables

Increase(decrease) amount percentage -1448 -9.7%

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Trade and other receivables decrease by 9% due to change in credit policy

Current income tax receivables

Increase(decrease) amount percentage 358 67.4%

Assets held for sale

Increase(decrease) amount percentage -14 -63.6%

Inventories
Increase(decrease) amount percentage 70 0.8% Inventories increase by .8% due to cheap rates

Derivative assets
Increase(decrease) amount percentage 855 113.4%

Prepayments and accrued income

Increase(decrease) amount percentage -178 -22.1%

Total current assets

Increase(decrease) amount percentage -2722 -7.6% Total current assets decrease by 7.6% because economic recession

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Non-current assets
Property, plant and equipment
Increase(decrease) amount percentage -968 -4.4% Property, plant and equipment decrease by 4.4% because of sales

Investments in associates
Increase(decrease) amount percentage -1140 -12.8%

Deferred tax assets

Increase(decrease) amount percentage 618 27.8%

Financial assets
Increase(decrease) amount percentage -345 -8.2% Financial assets decrease by 8.2% because financial market is not performing well and we have sold some of our financial assests

Employee benefits assets

Increase(decrease) amount percentage -1453 -96.0%

Goodwill
Increase(decrease) amount percentage -2786 -8.3%

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Intangible assets
Increase(decrease) amount percentage -350 -4.8%

Total non-current assets

Increase(decrease) amount percentage -6424 -8.1% Total non-current assets decrease by 8.1% because of tangible assest

Total assets
Increase(decrease) amount percentage -9146 -7.9%

Liabilities and equity

Current liabilities Trade and other payables
Increase(decrease) amount percentage -1571 -11.1% Trade and other payables decrease by 11% because we had payments

Liabilities directly associated with assets held for sale

Increase(decrease) amount percentage -7 -100.0%

Financial liabilities
Increase(decrease) amount percentage -9158 -37.3% 110

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Financial liabilities decrease by 37% as compared to last year

Current income tax payables

Increase(decrease) amount percentage -32 -3.7%

Derivative liabilities
Increase(decrease) amount percentage 1000 209.6%

Accruals and deferred income

Increase(decrease) amount percentage -335 -10.3%

Total current liabilities

Increase(decrease) amount percentage -10103 -23.3% Total current liabilities decrease by 23% because of decrease in payable

Non-current liabilities
Financial liabilities
Increase(decrease) amount percentage 215 3.5%

Employee benefits liabilities

Increase(decrease) amount percentage 299 5.8%

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Deferred tax liabilities

Increase(decrease) amount percentage -217 -13.9%

Other payables
Increase(decrease) amount percentage 173 15.9% Other payables increase by 15% due to increase in credit purchase

Provisions
Increase(decrease) amount percentage 347 10.5%

Total non-current liabilities

Increase(decrease) amount percentage 817 4.7% Total non-current liabilities increase by 4.7% as compared to last year

Total liabilities
Increase(decrease) amount percentage -9286 -15.3%

Equity
Share capital
Increase(decrease) amount percentage -10 -2.5% Share capital decrease by 2.5% because we buy back some purchase

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Treasury shares
Increase(decrease) amount percentage -1639 20.5%

Translation reserve
Increase(decrease) amount percentage -4801 76.2%

Retained earnings and other reserves

Increase(decrease) amount percentage 4597 6.9% There is an increase in retained earnings and other reserves by 6.9%

Total equity attributable to shareholders of the parent

Increase(decrease) amount percentage -1853 -3.5%

Minority interests
Increase(decrease) amount percentage 1993 92.7%

Total equity
Increase(decrease) amount percentage 140 0.3%

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Total liabilities and equity

Increase(decrease) amount percentage -9146 -7.9%

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RATIO ANALYSIS

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LIQUIDITY RATIOS 2008 Current Ratio Quick Ratio Cash Ratio Working Capital Turnover Ratio Operating Cash Flow Ratio Current Assets/Current Liabilities Quick Assets/Current Liabilities Cash + Marketable Securities/Current Liabilities Sales/Average Working Capital Cash Flow from Operations/Current Liabilities 0.99 0.04 0.22 -628.05 0.37 2007 0.83 0.07 0.17 -14.23 0.27

Current Ratio
The current ratio has slightly increased and it is compatible with the industry.

Quick Ratio
The quick ratio has slightly decreased due to decrease in fixed assets.

Cash Ratio
The cash and marketable securities have increased during the current year causing the cash ratio to increase by a little amount but it is compatible with industrial trend.

Working Capital Turnover Ratio

The sales have decreased as compare to increase in working capital Causing the working capital turnover ratio to decrease and it also indicates in-efficient use of working capital. .Operating

Cash Flow Ratio

The increase in cash flow from operations has been compensated by equal increase in current liabilities causing the ratio to remain the same.

Working

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2008 Current Assets Current Liabilities Quick Assets Cash Marketable Securities Total Expenditure Sales Average Working Capital Operating Profit Depreciation Taxes Paid Total Assets Fixed Assets Total Liabilities Fixed Liabilities 33048 33223 1296 5835 1609 10000 109908 -175 15676 344 3787 106215 73167 51299 18076

2007 35770 43326 2902 6594 754 14000 107552 -7556 15024 122 3416 115361 79591 60585 17259

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Cash Flow from Operations

2008

2009

Operating Profit

15676

15024

Depreciation

344

122

16020

15146

Taxes Paid

3787

3416

12233

11730

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SOLVENCY RATIOS
2008 Interest Coverage ratio Debt Ratio Debt - Equity Ratio
EBIT / Interest Expenses

2007 10.07 0.53 0.11

12.57 0.48 0.12

Total Liabilities / Total Assets

Total Debts / Total Equity

Interest Coverage Ratio

Due to decrease in interest expenses the interest coverage ratio has increased means bank has much captial to meet its liabilities.

Debt Ratio
There is a decrease in debt ratio as compared to last year.

Debt - Equity Ratio

The total debts have increased while there is a decrease in total equity.

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ACTIVITY RATIOS
2008 Fixed Assets Turnover
Total Income / Fixed Assets

2007 1.35

1.50

Assets Turnover Ratio

Total income/ Total Assets

1.03

0.93

FIXED ASSETS TURNOVER

The increase in total income is slightly higher than increase in fixed assets because the bank has opened new branches so expenses on fixed assets have cause this ratio to increase by a small amount

ASSETS TURNOVER RATIO

The increase in total income is compensated by an equal increase in total assets.

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2008 EBIT Interest Expenses Total Liabilities Total Assets Total Debts Total Equity 51299 106215 6344 54916 15676 1247 60585 115361

2007 15024 1492

6129 54776

Sales Fixed Assets Total Assets

109908 73167 106215

107552 79591 115361

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PROFITABBILITY RATIOS 2008 Net Profit Margin Ratio Net Profit / Sales 19.86% 2007 12.57%

Gross Profit Margin Ratio

Gross Profit / Sales

20.91%

13.42%

Return on Total Assets

Net income after tax / Total Assets

17.94%

9.87%

Return on Equity

Net Profit after tax / Common Equity

4974.15%

2896.18%

NET PROFIT MARGIN RATIO

Net profit has increased because there might be and decreasing cost, increase in productivity and efficiency, decrease in fixed overheads and competitors have decreased.

GROSS PROFIT MARGIN RATIO

Gross profit may have increased due to decrease in sales and decrease in competition

RETURN ON TOTAL ASSETS

Return on total assets might have decreased because net income after tax is lower than the assets invested.

RETURN ON EQUITY
Return on equity has increased because net profit has decreased while common equity has decreased.

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SHAREHOLDERS' RATIOS 2008 Earnings Per Share (Net Profit - Preffered dividend)/No. of equity shares outstanding 5.70 2007 3.44

Dividend Payout Ratio

Dividends per common share / EPS

0.02

0.04

Dividend Yield

Dividends per common share / MPS

1.10%

1.30%

Return on Equity

Net Profit after tax / Common Equity

4974.15%

2896.18%

EARNING PER SHARE

compared to previous year.

Due to increase in net profit and lower sales in current year the profit available for common share hold

DIVIDEND PAYOUT RATIO

Dividend payout ratios has decreased

DIVIDEND YIELD
Dividends per common share are lower than previous year because dividends were high during previous year.

RETURN ON EQUITY
Return on equity has increased because net profit has decreased while common equity has decreased.

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WHAT I HAVE LEARNED AT INTERNSHIP

Objective
Impact of international chains on local key accounts. Impact on sales to local accounts. Analysis of basket size of the Shoppers. Previous shopping point of customers moving to International Chains. Reasons for moving of customers to International Chains. Suggestions & recommendations for local Key Accounts.

Working
Designed a questionnaire on local key accounts Our target market was local stores which are known as local accounts, because a lot of shoppers are shifting from local accounts to international chains We did a market survey on following local accounts to find why shoppers are moving from local accounts to international chains: Alfatah Bismillah Best Buy CSD Mall road HKB Jalal Sons Rahat bakery Victoria To enhance the sales and bring quality in the products We also ask their previous shopping point

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Analysis

I have calculate the findings and did analysis of it I suggest way forward for these local accounts I have prepared a presentation in which i pointed out the most lacking points of local accounts and recommend that Nestle should keep an eye on them for the increase in sales I have presented the whole project to the National Key Account Manager

Extra skills
Interpersonal skills Computer skills Presentation skills Get knowledge about the shopper Research that how much a research is important for a company To have knowledge about their customers as well as their competitors

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RECOMMENDATION
There are few recommendations that are recommended if the project is to be conducted again in future. Employees should be trained according to the changing standards of the organization. Company should conduct survey from time to time to according to which changes can be introduced in the organization to stay updated in the market. They should introduce creativity into the work, so that the employees can do their work active mindedly. Employees should be given compensation in order to keep them loyal. Employees should be more involved in decision making to become more differentiated. Company should provide incentives to shop keepers

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REFERENCES

www.nestle.com www.nestle.pk By communicating with the employees Annual report 2008

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