NESTLE

Executive Summary

Pakistan is an agricultural country. According to Ministry of Food, Agriculture and

livestock, agriculture accounts for 20.9 percent of the GDP. Dairy industry contributes 49%
to the agriculture value and 11% to the GDP. Annual production of milk is 35.25 Billion
liters in the country; But the Processed milk is only 4% of the total production.
Like other countries Dairy is not a dedicated profession of the people, farmers is associated
with dairy and agriculture at the same time, Profitability for the farmers is very less.
Infrastructure is not developed, cooling tanks and other facilities are not available, and the
large part of milk production is wasted. There is a multi-hierarchal distribution system of
the milk; the farmers are not getting reward of their work. All these factors are making this
industry unattractive for the farmers and the industry is no developing up to the mark.
Only 4% of the total milk production is processed and used in urban areas of the country.
Nestle Milkpak have a great share in the different multinational companies. It is
statistically calculated that Nestle Milkpak have 50% share in the Nestle company and now
Nestle become the leader of all multinational companies in food products and beverages.
Nestle is operating in all big cities in Pakistan and try best to provide its Products to other
small cities and towns.
According to Pakistan Dairy Development Authority

• Only 0.52 Billion liters UHT and 0.5 Billion liters pasteurized milk is available in the
country.
• In urban areas 4.7 Billion liters milk is provide by Gawalas.
• 1.27 Billion liters processed milk is sold by the milk shops.
• There is a potential of about 5 billion liters of milk sold in the urban areas.
• In urban areas people are more health and quality conscious, the income level of urban
population is also good so this segment has potential for UHT and Pasteurized milk.

Nestle is the world largest food company and nestle Milkpak is Nestlé’s famous UHT milk
brand. Nestle Milkpak has south Asia’s biggest Plant at Kabirwala. It is targeting upper and
middle class. It is differentiating its brand by adding Iron and Vitamin “C”.
The Nestle Milkpak is following growth strategy. The immense competition is going in the
market; it is recommended that Nestle Milkpak should invest more in milk business and
other value added milk products. In this way Nestle Milkpak can fulfill the local demand
by locally processed milk and milk products instead of the imported milk products. Nestle
has brand recognition throughout the world and they can export milk powder and other
value added products in future.

NESTLE
Nestle is the largest food company in the world. It is present in all five continents, has an
annual turnover of 74.7 billion Swiss Frances. There are 509 factories are running in 83
countries, having 231,000 employs.

Company Mission

At Nestle, we believe that research can help us to make better food, so that people live
a better life.
Good food is the primary source of good health, so we are trying to make good food.
To provide fresh and pure products to the customers, we introduced (SHE) Safety, Health
and environment policy to protect health of our employs and keep clean our surrounding
environment
Company Vision

• Vision of Nestle Milkpak Company is to expand business according to the

increasing demand of market.
• As per our company vision in 2020 production capacity of all plants working in
Pakistan is being increased.
• So extension of Kabirwala Plant is the example of our company vision.

History Of Nestle

• Our story begins in 1867, when Henry Nestle developed a baby formula that saved
child’s life and marked the beginning of Nestle.
• It is originally consisted of two companies and two products, Henry Nestle and His
baby food in Vevey, and the Anglo Swiss Condensed Milk company and its
condensed Milk in Cham, both in Switzerland.
• His first factory was located in Vevey.
• In 1875, He sold His Company and retired.
• In 1880 second factory was built in bercher.
• In 1883, first time Nestle built a factory abroad, in Edlitz Grimmenstein.
• In 1890, Vevey factory produced 28 billion cans of Milk food and 2.2 million cans
of condensed Milk.
• In 1912, Nestle begins it long relationship with South Asia when Nestle condensed
Milk company start.
• In 1979, Milkpak Ltd. Is founded by Syed Baber Ali. It manufactures UHT Milk,
Cream and Butter as well as fruit Juices.

Nestle In Pakistan

• Nestle have been serving Pakistani consumers since 1988, when our parent
company Switzerland based on Nestle first acquired share in Milkpak.
• Nestle acquires 40% share in Milkpak.
• In 1990, sheikhupura factory starts the production of Nido Milk Powder cereals; a
plant is acquired at Kabirwala.
• 1n 1992, Nestle takes over the running of company and begins to develop its Milk
collection network.
• In 1996 Milkpak is renamed to Nestle Milkpak Ltd.
• In 1997, the Kabirwala plant becomes a fully owned unit of Nestle Pakistan.
• 1n 1998, Nestle Milk collection system in Punjab matures and company is able to
buy all its Milk from Formers instead of relying on contractors.
• In 2005, Nestle Milkpak Ltd. Is renamed again Nestle Pakistan.

Nestle Quality Policy

• Quality is the foundation of our food, nutrition, Health and Wellness Company.
• A Nestle brand name on product is a promise to the customers that :
• It is safe to consume.
• It complies with all relevant laws and regulation.
• Quality is to win consumers trust and preference.
• We are committed to offering products and services to all customers that meat their
needs.
• Quality is every body’s commitment.
• Our management takes the lead, sets the objectives and demonstrates its
commitment towards quality.
• All Nestle functions across our value chain are fully responsible to follow
mandatory norms.
• Quality is to strive for Zero defect and no waste.
• We focus on facts and results and we strive for Zero defect and excellence in every
thing we do.
• We adopt “No waste” and we constantly look for competitiveness and opportunities
for continuous improvement of the quality standards delivered to our customers.
• Quality is to Guarantee, food safety and full compliance.
• We enforce food safety, regulatory and quality requirements in every step of our
value chain.

Nestle Milkpak

• Launched in 1981, it has become synonymous with quality milk. Backed by a very
strong brand name, aggressive marketing and distribution plans, consistent quality
and availability through out the year, MILKPAK UHT has been extremely
successful. In September 1999, MILKPAK UHT milk was launched as NESTLE
MILKPAK UHT MILK. NESTLE MILKPAK UHT MILK is available in three
pack sizes of 1000, 500 and 250 ml.
• “ Dhood ki Qudrati Ghizayat Pure, nutritious goodness of Milk”
• Pure, rich and delicious Nestle Milkpak standardized (UHT) benefits from Nestlé’s
expertise in bringing you the best life has to offer and benefits from 140 years of
consumers trust.
• Encourage your family to exercise regularly, eat a healthy, well balanced diet and
drink pure, nutritious Milk for good health.
• Milk is a must drink for your children as it is a rich source of calcium that helps in
the growth and development of strong bones and teeth.
• A 250ml Nestle Milkpak Glass consist of following things
 • 27-30% of calcium, 15-18% of protein, 31-34% of phosphorous,6-9% of Vitamin
A and 160-169 kCal of energy, as recommended dietary allowance by national
Academy of Science (USA).

Different Size Packing Of Nestle Milkpak

• Enjoy Nestle Milkpak in four convenient sizes, depending on your family need.
• 1500ml, 1000ml, 500ml and single serve 250ml packing

Dynamic Expansion

Nestle Pakistan has being at the forefront of development of dairy sector in Pakistan as
major industrial stake holder for a while .internal efforts and some initiatives with
government have being going on since long in order to maximize the development of the
sector .still, a need for sector wise coordination and combine efforts was there to ensure
utilization of all available resources to move forward in the direction.
Through the agric-services department nestle has being involved with various
infrastructure and support related initiatives such as development of model farms, setup of
milk chiller and import of Australian cow to boost milk production .nestle is also working
towards setting up mega dairy farms to exemplify best farm practices and ways to boost
mike production

OTHER BRANDS OF NESTLE

• Nestle Juices
• Nestle Nesvita
• Nestle yogurt
• Bottled Water
• Chocolate
• Baby Food
• Maggi noodles
• Nescafe
INTERNAL COMPETITORS

• Haleeb Milk
• Olpers milk
• Good Milk
• Dairy Queen Milk

EXTERNAL COMPETITORS

• DANONE
• MILUPA

COMPETITORS ADVANTAGES

• We never compromise on quality and quantity

• Our extensive milk collection system ensures that the Milk you get is of the finest
quality.
• Our products are available in every city and town

Objectives and Goals of Nestle

Marketing objectives are compatible with the overall corporate objectives of nestle.
Company’s objective is to be the world’s largest and best branded food manufacturer while
insuring that nestle name is synonymous with the products of the highest quality.

Its chief objectives are:

• To achieve compatibility with international voluntary standards on environmental

management systems.

• To build mutual trust with consumers, governmental authorities and business

partners.

• To ensure continuous improvement of nestles environmental performance.

• Conservation of natural resources and minimization of waste.

 • Total compliance with the laws.

• To establish the benchmark for good business practice.

• Employing new technologies and processing.

• By committing to resources, both human and financial.

• Measuring the cost and benefits to business of it’s activities.

• Monitor progress.

• Audit results.

• Review targets.

SWOT ANALYSIS OF NESTLE

Strengths

•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

•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.

Opportunities
• Increasing interest of people
• 31billion customers are there in Pakistan for milk. Upton now only 4 billion
customers are being facilitated.27 billion customer markets is still available to
be penetrated.
 • Few and weak competitors
• Estimations of UHT Milk Production and Consumption up to 2008– 09

Year Annual Production

2008-09 => 648.43 353.71
2009-10 => 753.89 372.05

• The projected values of UHT Milk consumption and production are obtained from
the ARIMA model.

• More people are coming towards processed milk because loose milk is dangerous
for health due to a lot of contamination.

• Growth of processed milk is increasing with 20% annually so Nestle Milkpak has
the opportunity to capture a large share of market.

Threats
• 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.

Current market situation

Today, Nestlé Milkpak produces in over 81 countries and achieves 98% of its turnover
outside Europe. Nestlé milkpak is the world’s 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,
Nestlé 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, Nestlé 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 Nestlé World Trade Corporation that oversees the
import and export of merchandise worldwide.
Core competency and key success factors:
Nestle have stronger distribution channels

Financials of Nestle Milk pack

Key Stats & Ratios

Q3 (Sep '08) Annual Annual

(2007) (TTM)

Net profit margin 0.15% 6.39% 3.61%

Operating margin 8.55% 10.87% 9.89%

EBITD margin - 14.39% 13.33%

Return on average assets 0.31% 12.55% 7.56%

Return on average equity 1.17% 54.35% 28.86%

Employees 2,345

Financials
 Financials for September 2005

Description Values

Hierarchical details of Marketing/ sales department

Nestle is a big name and it is one of the best brand of the country having the largest market
share in milk pack industry in Pakistan. It is not only one person who is marketing the milk
pack everyone who is part of Nestle is marketing it.

If we make the hierarchy of the marketing of Nestle Milk pack we will find out that there
is a brand manager who is responsible for all activities that will take place in the marketing
department under him is sub brand manager who is responsible in the absence of the brand
manager. They are the top management and mostly deicide what to do and how to do.
What steps should be taken to do the marketing. Under them there is a whole marketing
team who work according to the instructions which they have got from the top
management. These team are further divided into sub teams. All the decision regarding the
T.V commercials, radio, news paper and billboards are decided by the brand manager on
the advice and on the bases of statistical calculations. For example for placing a billboard
all calculations are made that what size of billboard will be suitable, where should be it
place so that is well seen, how much should be spend on it either it is in our budget or not.
All these things are taken in account and a lot of thinking is done before applying the idea.
Officers and Directors

Syed Yawar Ali Esquire Chairman of the Board

Trevor Clayton Chief Executive Officer/ Managing Director,

Director

Raymond Franke Head of Finance and Control, Secretary

Peter Wuethrich Head of Technical

Zafar Hussain Shah Head of Sales

Uzma Qaiser Butt Head of Human Resources

Haseeb Aslam Country Business Manager (Water)

Salman Nazir Head of Supply Chain

Adeel Aali Head of Quality Assurance

Ali Aziz Product Unit Manager – Beverages

Organization Structure

National Sales Manager

Zonal Sales Manager

Regional Sales Manager

Customer Area Managers System Support Event

Service Manager
Management

Customer
Service Officers System Support
Territory
Officer
In-
charge

DS
Sales Associates
 Event
Management

Officer

Leader
Market segmentation and target strategy including consumer
profiling
It is really a big market and it is always difficult to segment the big market. There are
many uses for segmentation.
Needs Based Segmentation

Milk Pack has made different sizes of tetra packs which can match the needs of
buyers, ranging from 0.25 liters to 1.5 liter. Buyers can buy according to there need
between these quantities.

Product Segmentation
Manufacturers diversify products within each needs base to appeal to buyers with
different tastes and wealth.
Customer Segmentation
Customers are segmented based on their needs and product preferences. Segments
grow or shrink over time as a product improve, become outdated or tastes changes.
Global Segmentation
Insurance firms and medical and legal practices also use product segmentation, and
sometimes attempt to cover all the product space.

In-store Display Segmentation

Nestle have also segmented Milk Pack on the bases of In- Store display
segmentation. In this type of segmentation the company have given different shelves
in bib stores and also given the chillers to some of the agent having the Milk Pack
sticker upon them but in Pakistan unfortunately the shop keepers are not using the
shelves properly and they have put other brand products on those shelves. Drug
stores, grocery stores, book stores, and other retail outlets use segmentation in order
to keep like products close to each other within the store, making shopping
convenient and cross selling more profitable.

Customer Profiling (Customer Data):

Transaction Details
• Frequency,
• amount and timing of purchases,
• items bought,
• prices paid,
• Use of cash or credit.

Acquisitions Details
• 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,
• gender,
• marital status, and
• Number of kids.
Almost all type of peoples are the consumers of the milk.
Geographic
• Own/rent,
• urban/rural,
• size of city,
• region, and
• size of dwelling.

Market Research Data

Behavioral
• Purchase patterns,
• why they bought,
• what they use the product for,
• Responsiveness to different marketing channels.

Attitudinal
• Product preferences,
• willingness to try other brands,
• price sensitivity,
• shop for convenience,
• Opinion of the company and the competition.
 FAB Analysis

Product strategy including a complete FAB analysis, product line and product depth
analysis.

Product Characteristics expressed as…

Feature Advantage Benefit

This feature… what it does… and how it helps the client.
Calcium essential for strong bones and strong bones and teethes
teethes strong
Vitamin A Improve vision and keeps Better eyesight and healthy
skin and hair healthy skin and hair
Phosphorous Important for healthy bones strong bones and teethes
and teeth
Protein Necessary for cell and tissue Proper growth of cell and
growth tissues
Iron Stronger the bones It full fill the daily nutrition
requirement
Vitamin C it is good for bones. Stronger bones
Market Positioning:
They will position our product as a high quality product consumer focused. Messages
like
“They knows your taste better than us”, “Nestle Milkpak now at your door step”;
“Add additional flavors’ to your life” will help us portray our picture clearly and
distinctly. Milkpak will position our product against the competitors and gain
competitive advantage through our efficient promotional methods, using innovations,
and by reaching closer to our target market through the arrangement of events like
BASANT, VALENTINE DAY and etc. In short consumers will view us as a product
providing highly quality, in terms of taste, customer focused and, at the same time
reasonably priced as compared to others.
Pricing strategies of Milkpak
Milkpak was first launched in 1988 in Pakistan. Actually this is the
Pakistani product and purchased by the Nestle Company. Price of the Milkpak set
after the market survey. In this market survey the survey team want to search that
how much value consumer actually wants to give this product. They provided the
milk to the different people without telling them the name of the company and ask
them what should be the price of this one glass milk. In this way company know the
willingness of the people that how much money customer actually want to spend on
that product. After this they checkout their cost on that product and after analysis
they set the price of the Milkpak. After launching it in the market they again check
the consumer behaviour regarding price of the Milkpak, and if consumer is satisfy
with the product then they ask question to judge the behaviour of consumer that if the
price of the Milkpak increased by the company then what will they do. If consumer
still satisfied then they increase the price of the Milkpak. CDL have adopted value
pricing, in which they charge fairly low price for a high offering. Value pricing says
that the price should represent a high-value offer to consumers.
Value pricing is not a matter of simply setting lower prices on one’s products
compared to competitors. A matter of reengineering the company’s operations to
become a low- cost producer without sacrificing quality, and lowering prices
significantly to attract a large number of value-conscious customers.

Setting price by looking the competitors

The competitors of milkpak are Haleeb milk, olphars and good milk
but the biggest competitor is open milk. Total requirement of milk in Pakistan is 31
billion litres in which only 3 billion litres are provided by packed milk. 28 billion
litres are provided by milkmaid. So if the nestle want to set price according to their
competitors then they have to set price according to the price of open milk which is
not possible.
Marketing Channels

These are the sets of the interdependent organizations involved in the process of
making a product or service available for the use of consumption.

Channel Function and Flows

A marketing channel performs the work of moving goods from producer to
consumers. It overcomes the time, place and possession gaps that separate goods and
services from those that need or want them. It perform number of functions:
• They gathering information about potential and current customer,
competitors, and other actors and forces in the marketing environment.
 • They develop and disseminate persuasive communication to stimulate
purchasing
• They place an order to the company
• They provide for the successive storage and movement of the physical
products.

Channel Level

Manufacturer

It is a two-level channel, milkpak has its own distributors which are suppose to
deliver the milkpak to the wholesaler as well as the retailer,.

Consumer
Wholesaler

&

Retailer
Distributor

Distribution Situation:

Company is using 2 channels for distribution of milkpak

• Retail outlets (indirect channel)

 • Sales promotion officers (direct channel)

Retail Outlets (indirect channel) : There are many retail outlets in all over
pakistan, which provide every day consumable items to the consumers.. 80 percent of
the milk’s sales would be through indirect channels.

Direct Sales Promotion Channel milkpak is being distributed to institutions

like government institutes, offices, teashops, caters, schools , colleges and marriage
halls. This channel will constitute 10 percent of the total milk’s sales.

Distribution Outlets: to increase the distribution of milkpak in all over Pakistan

these outlets are open..

Distribution

There are many authorized distributors of milkpak. Company has its own network of
vans, which deliver the milk to all the retail outlets early morning. The number of
vans operational in different cities and rather then this 135 local vans are also used to
supply the milk in pakistan.

Intermediaries: milkpak identifies the types of intermediaries available to carry on its

channel works:

1. Company Sales Forces

milkpak expand its direct sales force, assigning the sales representative to territories
to contact all prospects in pakistan

2. Stalls in BAZAAR
The company also introducing stalls in Sunday Bazaar, Tuesday Bazaar and Friday
Bazaar at different location of pakistan and especially to those areas where the sales
volume of the milkpak would be low in order to encourage the consumer.

Integrated marketing communication:

Company have a complete imc plan in which they that how can the
company will inform their consumer about the new, upcoming product and value
added services to the existing product. The sources which can use by the company to
inform their consumers are print, electronic as well as through their websites.

Unique selling proposition:

Milkpak is a trend setter in market. They first introduce the packed

milk in market. The usp of milkpak is “khalis he sub kuch hai”. They provided their
consumer pure milk and this the usp of nestle milkpak.
Problems Faced By Nestle

Nestle is facing the problem that is regarding the quality of mill . it is being perceive
that infant or child belonging to poor family who use low quantity of milk then
required in daily use are getting effected.
It is hard to agree the customer to swich to pack milk because of taste which is
huredel for further expansion

Recommendations
Nestle must state in writing that it accepts that the international code and the
subsequent relevant World Health Assembly Resolutions are minimum requirements
for every country.
Nestle must state in writing that it will make required changes to bring its Baby Food
Marketing policy and practice into line with International Code and Resolutions.