SCHOOL YEAR : 2009 – 2010

Creation Date : October 2009

Distribution Date : November 2010

STUDENS’ NAME Katharina PETER

Anne-Valérie PRUNIER

Aleksandra RYBARZ

Tuğrul TUFAN

Yue ZHAO

MODULE Marketing Mix Strategy

TEACHER’S NAME Laurence COGAN

PROGRAM ESC MIM 1, Anglo Group 2

Content

I. Nestlé company.......................................................................................................................4
A. History................................................................................................................................4
B. Founders and Current management....................................................................................5
C. Incorporate vision and mission...........................................................................................5
D. Capital and stockholders....................................................................................................6
E. Product families..................................................................................................................6
II. Firm’s marketing metrics.......................................................................................................7
A. Evolution of sales...............................................................................................................7
B. Evolution of profits............................................................................................................7
III. External environment ...........................................................................................................7
A. Market segments................................................................................................................7
B. Competition and market shares..........................................................................................8
C. Political and legal environment..........................................................................................8
D. Internal environment : Strengths and weaknesses.............................................................9
IV. SWOT Analysis..................................................................................................................10
V. Product policy analysis........................................................................................................12
A. Levels of product .............................................................................................................12
B. Analysis of the brand........................................................................................................13
C. Analysis of the packaging................................................................................................13
D. Product’s market share.....................................................................................................15
E. Direct and indirect competition........................................................................................15
VI. Pricing policy analysis........................................................................................................15
A. Pricing objective and pricing policy................................................................................15
B. Value of NaturNes (4 to 6 months)..................................................................................15
C. The different costs of NaturNes for customers................................................................17
D. Range of pricing in the retailing stores............................................................................17
E. Range of competitors prices.............................................................................................18
F. Competitors’ policies........................................................................................................18
G. The different factors which influence price formation for NaturNes...............................19
1. Internal factors..............................................................................................................19
 2. External factors.............................................................................................................19
H. Estimation of price elasticity from target market’s buying intentions (in €) ..................20
VII. Distribution policy analysis...............................................................................................21
A. Suppliers...........................................................................................................................21
B. Channel levels and intermediaries....................................................................................21
C. Types of retailers: off and online.....................................................................................22
D. Exclusive, selective or intensive......................................................................................22
E. Merchandising..................................................................................................................22
VIII. Promotion policy analysis................................................................................................24
A. Selected Media for advertising.........................................................................................24
B. Examples of advertising and objectives...........................................................................24
C. Types of promotion..........................................................................................................24
D. Types of Public Relations ...............................................................................................25
E. Types of Personal Selling:................................................................................................25
F. Push or Pull Strategy:.......................................................................................................25
APPENDIX..........................................................................................................................27
Appendix 1: The current organization of Nestlé..................................................................28
Appendix 2: The different brands of Nestlé.........................................................................28
Appendix 3: An example of a TV ads of NaturNes.............................................................30
I. Nestlé company
Today, French women are joining the workforce more than the past, they have less time to
cook for their children. Therefore, there is a huge demand for baby food products. As a result,
the baby food market in France has a big possibility for growth. Between 2001 and 2006, the
French market has grown at an average annual rate of 2.6%. Moreover, according to different
researchs made, French people are the world's largest consumers of baby foods, buying about
95 kilos of baby food per year.

As a result of this evolution and growth in the baby food market, we have chosen to analyze
the infant nutrition industry and more especially the brand “Nestlé NaturNes”.

A. History

The history of Nestlé began in the mid-1860s, when Henry Nestlé, a Swiss pharmacist, started
to do experiments with different combinations of milk and other ingredients in order to create
a new product, substitute of natural mother’s milk. He wanted to decrease the mortality
among the children, whose organisms did not accept the natural milk. As a result he invented
a new product which was called “Farine Lactée” (flavor with milk). His first target customers
were babies who did not accept any kind of milk and had no right to survive without it. This
innovation in a short period of time became a best-seller in Europe.

In 1874 Nestlé’s company, which was set in Vevey, was bought by Jules Monnerat, who
extended the production by adding the condensed milk.

The beginning of 19s. century was a time of fast development. In 1905, there was a first
merger with Anglo-Swiss Condensed Milk Company. In 1907, the Company began full-scale
manufacturing in Australia, its second-largest export market. Warehouses were built in
Singapore, Hong Kong, and Bombay to supply the rapidly growing Asian markets.

During the World War I the demand for milk increased significantly. As a result Nestlé’s
production had more than doubled.

Ironically, the World War II emerged the best time for introducing the new product. For
example, Nescafe was the basic drink of US military). Annual production levels reached one
million cases by 1943.

The time after the war was a dynamic phase in Nestlé’s development. In 1947, the company
merged with Alimentana S.A., the producer of Maggi seasonings and soups. The company
strengthen its position on the market thanks to the round of acquisitions: Crosse & Blackwell
(1960), Findus frozen foods (1963), Libby's fruit juices (1971), Stouffer's frozen foods
(1973), Alcon Laboratories Inc. (1975), Carnation, San Pellegrino (1997), Spillers Petfoods
(1998), Ralston Purina (2002), Mövenpick Ice Cream, Jenny Craig, Uncle Toby's, Delta Ice
Cream, Novartis Medical Nutrition, Gerber, Sources Minérales Henniez.
From 2007 Nestlé cooperates also with chocolate maker Pierre Marcolini who is a strategic
partner of the company.

B. Founders and Current management

The founder of Nestlé is Henry Nestlé (1814-1890).

The current management1:

- Chairman of the Board of Directors, Nestlé S.A.: Peter BRABECK-LETMATHE

- Chief Executive Officer, Nestlé S.A.: Paul BULCKE

- 1st Vice Chairman: Andreas KOOPMANN

- 2nd Vice Chairman: Rolf HÄNGGI

- Chairman's and Corporate Governance Committee: Jean-René FOURTOU

C. Incorporate vision and mission

The most important aim of the company is to create value that can be sustained over the long
term by meeting consumer needs for nutrition, enjoyment, and quality they can trust. Nestlé
creates products which are a response to the customer demand. That fact, indeed, has a great
influence on composing new lines of products. The customer is in the centre of attention and
he/she is a direct inspiration for the company.

Nestlé is an international company, which operates in many countries in the world. As a

consequence the company has to adjust to the different legislation. Nestlé emphasizes that, as
a minimum, its employees must comply with the laws applicable in the countries in which it
operates. Additionally, it introduces in each subsidiary the International Labour Organisation
Conventions and the International (WHO) Code of Marketing of Breast-milk Substitutes,
which are the globally recognized and accepted documents.

Nestlé fully respects the human rights and ensures that its own companies are not complicit in
human rights’ abuses. It also establishes good relations between the company and its
employees. For Nestlé, the employees are the most valuable asset without which the company
could not exist.

The company has many subsidiaries in the countries where the child labour is a very huge
problem. Nestlé’s policies totally forbid to employ children before they have reached the legal
age and they have completed their compulsory education, as defined by the appropriate
authorities. The company does not cooperate with the suppliers which use children as the
workforce.

1
Cf Appendix : The current organization of Nestlé
The protection of the environment is also a part of the company’s mission. It introduces new
environmental friendly technologies which reduce the risk of disruption of the environmental
balance. With the Nestlé Water Policy, the company wants to protect water as it is an
important resource for making its products.

D. Capital and stockholders

In 2006, the shares were 267 555 249 euros worldwide.

Compared to 2006, the shares in 2008 amounted to 253 949 396 euros at the end of 2008.

Due to listing no more than 100 000 000 registered shares with a nominal value of 0,07 euros
each, the share capital increased totally for about 6 630 533 euros.

Nestlé company:

Item Figure
Capital expenditure 3 232 million euros

as % of sales 0.044

Market capitalization 99 846 million euros

(end December)

Earnings per share 3,12 euros

Dividend (proposed) 0,9 euro

E. Product families

Nestlé offers a wide range of products, which meet consumers’ needs. They are divided into
eight different groups which includes many different brands of food and beverage2.

Summary of the different markets where Nestlé is present:

2
Cf annexe 2 : The different brands of Nestlé.
II. Firm’s marketing metrics

A. Evolution of sales

B. Evolution of profits

In 2008, the turnover of Nestlé amounted 72.87 billion euros, plus a net profit of 11.93 billion
euros.

III. External environment

A. Market segments

The French baby food market is the biggest in the world. In France, each baby eats in average
95 kg of baby food per year. Furthermore, it is still an increasing market due to the fact that
more women are working. Therefore, they do not have that much time to prepare healthy food
for their baby. In general, women are the first target of the crisis. In fact, women are the first
one to lose their job and then become housewife. The fact to be unemployed for the baby food
industry has two main effects: First families will spend less money on baby food products.
They will prefer cheaper brands in order to save money. Then, mothers will have time to cook
and to prepare healthy food for their tot. As a result the demand for different convenient food
is very high.

In general the French market has about 2 million consumers and represents about 471 million
euros. Developments of new food technologies are mostly driven by Nestlé and Diepal-NSA
(Danone with Bledina). They have created a new types of food, new packaging and new
recipes.

The French market is composed of four main parts: 40% for the baby milk market, 35% for
the packaged food in little jars, 10% for breakfast and dry food and last 15% for juices and
fresh products.

According to some research made by professionals, customers would like to have baby food
with biological products for a good price. People care more about their health and also about
their wallet. They want to eat biological products with a good taste and good quality as well.
Their worries are even worse when the products are for their baby. They have high
expectations for the quality and the price.

B. Competition and market shares

Nestlé is one of the

leaders on the baby
food market in
France, just after
Danone. In 2007, it
had 33% of the
market share. The
unquestionable leader
on the market is
Danone which two years ago had 62% of the market share. Its brand Bledina is the
most popular brand in the baby food industry. Also Hipp, a German company, is on
the third place in the baby food industry; but in comparison to Nestlé and Danone its
market share is not significant enough (about 1%).

The rest of the market share belongs to companies which are not the high-powered
competitors for Nestlé (It is the case for retailer brands).

C. Political and legal environment

Therefore that the French market is a highly valuable market some foreign companies try to
enter it with their products. But unfortunately for them, France has very high regulations and
restriction for the import aliments to the country. This means for example that meat that is not
produced in a EU certified slaughterhouse can not be imported. Furthermore there are certain
taxes that are calculated in according to the number of the ingredients of the product. Those
are high entry barriers for foreign companies on the French baby nutrition market.

Apart from this, on the market for organic products there are certain certifications available
for the food producer. Parents therefore can be sure that the government created a legal and
controlled protection for organic food, to a sure that no genetic modified ingredients are in the
food, that no pesticides are used and that processes are environmentally friendly. For

example: which respects European regulations, national and international

Other important factor of the legal policies concern the maximum ranges of chemicals within
baby food as well as in other grocery products, for example the level of preservatives,
dyestuffs and flavor enhancer. This is getting more and more important because further
research showed that those additives might make sick, influence the bodies development
process and are unhealthy. At the moment there are no regulations by the state but consumers
are getting more aware of those food problems and demand products which contain less or
none of those chemicals. Governments might release policies regarding this issue in the future
when there is enough prove dangerous implications.

D. Internal environment : Strengths and weaknesses

Nestlé NaturNes is the one of the strongest brands on the baby food market. The prestigious
image and the wide range of products are undoubtedly the greatest strengths of NaturNes.
Forty different dishes for children from 4 months to 1 year fully satisfy customer needs.

The company takes care of the babies’ health and safety. The panel of experts constantly
controls the production in order to remain the products up to the standards.

The advanced technology of food preparation and the environmental friendly packaging stand
the company out of the competitors. Nestlé is the first company to have introduced the plastic
containers, which are fully recyclable. The food consists only of organic ingredients prepared
in a way which does not change the taste of the biological products.

Nestlé NaturNes’ success is based also on the promotion which plays a great role in the
company’s strategy. The particular target market demands a specific promotion. That’s the
reason why the products’ advertisements appear mainly in magazines for parents and medical
magazines. Additionally, the whole campaign is supported by sales and point of purchase
promotions.

Of course like every other brands, NaturNes has some difficulties. Because of the nature of
the market, product life cycle is shorter than the other food products. This is why, without
innovations our brand can lose its high position among its competitors. The product is
common, so it has to be constantly improved to differentiate it from the other products on the
market. Nestlé NaturNess, in spite of its good image, has only medium quality. The price also
seems not to be encouraging as Bledina, the main competitor of NaturNess, has much lower
prices for the same kind of products.
IV. SWOT Analysis

Strengths:

1. One of the market leaders in the baby food industry in France (33% of a market share)

2. Wide range of products (40 different dishes for children from 4 months to 1 year)

3. NaturNes as an organic food is richer in vitamins, minerals, and fibre and retains the
level of nutrients for much longer

4. Delicious flavor

5. Products are up to the standards

6. Prestigious image

7. Advanced technologies of food preparation

8. Innovative environmental friendly packaging

9. Strong communication with the customer (Magazines for parents, medical magazines,
posters, Internet, sales promotion, POP)

10. Intensive distribution (products are within the customer’s reach)

Weaknesses:

1. Product cycle is short

2. High costs of distribution and promotion

3. Limits of product development

4. People are not conscious about organic food.

5. Price is higher than the price of the main competitor – Bledina

Opportunities:

1. Organic products which are really popular nowadays

2. Production and distribution of new products

3. The greater demand for baby food as a result of the population growth

Threats:

1. New competitors’ brands on the baby food market

2. New competitors’ products

3. New needs of the customers

4. Global crisis
V. Product policy analysis

A. Levels of product

The core benefit of the product is the meals for babies for the age of 4 month to 18 month.

Actual Product:

The actual product however contains 40 different recipes from fruits to vegetables to real
meals with meat, fish or potatoes in it. The product is available in 2 or 4 jar packages.

Nestlé launched the product under the brand “NaturNes” but still with Nestlé family brand.
This was necessary because the product is based on natural ingredients and special cooking
procedures to keep the special taste and texture of aliments. Consequently Nestlé launched a
high quality product, to attack their greatest competitor Danone. Therefore this product is
organic and nature, which allows to attract especially parents who care about biological
products, the environment and also the sustainable processing. (Style Packaging Brand name
Quality level)

Augmented product:

Nestlé has launched a baby webpage and a special natures webpage. On this sites mothers can
exchange or gather information about baby nutrition, and also get information on all the
Nestlé baby products, with all the different ingredients, preparation and use occasions.
 B. Analysis of the brand

Physical Fact Personality

- natural colored, textured and - a young feminine person,
tasty baby food
- caring about health, nutrition
- reclosable plastic container and environment

Culture
Relationship
- western, new hype of
- trustful, ecologic sustainable
ecological importance regarding
for environment and baby
the product and the producing
company

Reflected consumer Consumer metallization

- caring parent, who care about - cares about environment, but no

organic food for their children alternative late 68

- want healthy baby nutrition - does likely to spend money on value

C. Analysis of the packaging

1. First level of the packaging

NaturNes Baby food comes in little plastic jars which

contain from 130g to 200g biological baby food.

Every jar has a lid so that it is reclose able. Therefore it is easy to use and practically.
 2. The second level of the packaging

The little containers come in 2 or 4 paper wrapped

packages

The packaging in general involves ecological bright colors like white and light green, which
represents the nature in the jars. Additionally there is the big logo placed right in the middle
of the lower edge. Furthermore on the right upper corner, there is always a little teddy bear
sign with the data for which age the meal is appropriate.

The fruits, vegetables or other ingredients are shown as very natural

and very appetizing.

On the top of the packaging the consumer can find important

information about the product. This means that Nestlé describes the cooking procedure and
stresses out that all the ingredients are a hundred percent natural, and with no preservatives,
dyestuffs and gluten.

The backside of the carton shows further

information about the nutrition regarding the
energy of the product and again the
information that the product does not contain
any additional sugar.

Part of the augmented product is the little sign

where it sais how to contact “Nestlé bébé” via phone
or internet web page. There also is a hint to the Nestlé baby webpage.

Packaging: Materials, Graphics, Colors, Letters and Text, Size and Variety.

The global message of the packaging is coherent.

The logo

The logo consists basically of the letters of the NaturNes writing in blue. The writing in
general is a little bit brandish, so that it is more kids related. On the left side there is a
figurative icon in shape of a flower, this emphasizes the natural background of the product.
The Nestlé manufacture brand is in the middle of the container. The whole logo is coherent
with the organic baby jar food that it stands for.

In our opinion, the logo is not really a logo but it is more a writing, which basically is not bad
but as sign of recognition a little bit too big. But if the brand is getting stronger in the future
than it is possible the little flower on the left edge of the brand name is symbol enough to
suggest the consumer what the product is about.

D. Product’s market share

E. Direct and indirect competition

Nestlés biggest competitor is Bledina from Danone. This is a low price product which is
available in every supermarkets. Danone provides with is assortment a full baby meal service.
Like Nestlé they have a stage system so that food is special proceeded for different ages of the
baby.

On the other hand there are many trade brands, such as Carrefour, which is a brand even
cheaper than NaturNes.

Furthermore, NaturNes has not only competitors outside of Nestlé’s company. There are also
different brands that belong to Nestlé like “Moi tout seul”, “Ma recette” or “P’tit souper/ P’tit
Du”. But all those other brands have not such a complete range of products and are not that
special as NaturNes.

VI. Pricing policy analysis

A. Pricing objective and pricing policy

The general pricing objective for the company is to create a value which will be acceptable by
the customers. The price is an important step in the marketing mix for NaturNes because it
reflects the intrinsic value of the product. A wrong pricing is a barrier for the consumers. In
fact, if it is too expensive, consumers will not buy it. If the price is low, customers will
perceived NaturNes as a bad quality product or they will buy it, but the company will not
have enough profit to resist on the market. The pricing decision, is the most difficult decision.
It is the reason why before setting prices, Nestlé had to do some research on customers’
values and on the existing products available on the 4 to 6 months baby food market.

B. Value of NaturNes (4 to 6 months)

From the customer’s point of view, the value of the product is the difference between benefits
which are gained and the costs which are born.

The main benefits of NaturNes for customer:

• Prestigious image of Nestlé: Nestlé, through its experience emits a prestigious image
of the Brand. By buying Nestlé’s products, consumers think directly that products are
made with a really good and high quality.
• Quality: Consumers are reading
the ingredient labels of their food
and beverage products more
closely than ever. People care for
their health and even more when it
is about their child’s health. It is
the reason why the products
NaturNes are made with fresh fruits and vegetables, 100% natural, with no sugar or
salt added. Also it helps not to overload the organism. The recipes have been created
by experts in order to meet the highest nutritional standards and to ensure that the
food tastes great. A novel steam cooking technology was developed by Nestlé to
preserve these qualities. For Nestlé it is important to have a balanced diet.

• Choice: Nestlé proposes a wide range of products. In fact, the product NaturNes is
present with different types of flavor. (from Artichoke, Peas, Courgettes, Beans and
peas, Carrot and pea, Carrot and pumpkin, Vegetables, pasta and wheat, Vegetables
and wheat.)

• Practical of the container: Personal benefits. The lid allows consumers to keep the
food fresh and to keep it longer in the fridge. It is also a gain of time, consumers will
not have to transpose the food in a container. Also, consumers will not have to clean
as they can throw it directly in the garbage.

• Environmental improvements: Packaging

is made in plastic bowls with replaceable
lids. The plastic bowl packaging is more
environmentally friendly than glass food
containers as it requires less energy to
manufacture. (Marketing, 29th of October
2008) Also, the packaging reduces the
energy consumption and the emission of
greenhouse gases. By buying NaturNes,
customers will feel ease to have done
something in favor of the environment.
The environmental friendly is a behavior which is more and more in expansion, so it is
a good strategy for Nestlé to get this market.

• Gain of time: Parents do not need to cook. They just have to warm it up and it is ready
for baby. It is a market in expansion because more and more women are working and
 they do not have time to cook for their child. They prefer gaining their time buy
buying those products.

• Customer service : The company is willing to answer all the questions which the
customers have. They build the strong relation between the company and the
customer.

C. The different costs of NaturNes for customers

There are two types of cost for NaturNes: the time costs and the monetary costs.

• Time costs: In the twentieth century time is an important value for the people, so high
availability of the product is a necessity. NaturNes has a high penetration, the product
is available everywhere. If customers want to buy the product they could go to the
nearest supermarket to find it. They do not have to spend time to search for it.

• Monetary costs: NaturNes is a product which is middle ranged. That means that almost
everybody can afford it. The only thing that consumers have to do, is to chose the
flavor and the brand because there is not so much difference between other brands
(The packaging plays in important role for the choice of the product).

D. Range of pricing in the retailing stores.

To understand the pricing difference between the retailers, we have examined the prices of
NaturNes Carrot (4-6 Months) for offline distributors (Intermarché – d’Abroumont, Carrefour
– Quetiny, Marché Plus – Bannelier) and one online distributor (www.paradisdesprix.com).
Here are the results:

Intermarché Paradisdesprix.co Carrefour Marché plus

m Quetigny
NaturNes Carrot 1,30€ 1,44€ 1,45€ 1,45€

The price of NaturNes carrot (4-6 months) varies according to the place: from 1,30€ to 1,45€.
The lowest price is in Intermarché and the more expensive one is in Marché plus. But in fact
we can say that prices in all the retailer stores (Intermarché is an exception) are the same,
because Nestlé wants NaturNes to be available everywhere. Consumers do not have to go to
mall out of the city for buy NaturNes. When we think that their customer are working
mothers, this strategy is the best option for NaturNes.
 E. Range of competitors prices.

The NaturNes flavor carrot is the most expensive product among companies which produce
baby food. We have compared NaturNes carrot products with other well known brands whose
products are quite similar to ours. Here are the results:

BRAND MAIN WEIGHT PRICE THE DIFFERNCE

BETWEEN PRICES (%)
INGREDIENTS

Bio Carrots 2*130g 2€ + 37,9%

Babybio

NaturNes Carrots 2 x 130 g 1,45 € -

Carrefour Carrots & potatoes 2 x 130 g 1,35 € -6,9%

Hipp Carrots & potatoes 2 x 125 g 1,30 € -10,3%

Blédina Carrots 2 x 130 g 1,20 € -17,2%

The difference between the two market leaders (Blédina and NaturNes) is quiet small but it is
still in important difference, especially during the crisis time. In fact, people are more and
more careful than ever for their purchases.

Despite the fact that their products have generally the same ingredients and the same volume,
there is a difference between prices which amounts 0,25€. It means that the price of Nestlé
NaturNes is higher for about 17,2%. The main cause of this situation is the fact that Danone is
a very big manufacturer which uses the price as its main marketing tool while NaturNes is
using quality of product.

Surprisingly Carrefour’s price is lower for only 6,9%. The retailers’ brands seem to be the
cheapest one, but as we can see that is not a principle.

The difference between NaturNes and Bio Baby Bio can be explained that all the products
buy by Bio company are really expensive and the company needs to sell at higher prices if
they want to get a profitable margin.

F. Competitors’ policies

Blédina is the market leader on baby food. Consumers associate

the brand with its history. Because of its financial strength,
Blédina can provide the product with the lowest price.
Carrefour and Leclerc are retailers brands. They are outsourcing the production of their
products. Because of their lowest costs, they can provide the product with low prices.

Hipp, the German manufacturer is using pricing policy which is oriented

to find a balance between quality and price. This is the reason why they
have a middle range pricing policy.

Babynat is subject to the very strict specifications of child regulations.

They select the best products from the South West of France. Very good
quality but very expensive. Respect the environment and the rights of the
humans being.

G. The different factors which influence price

formation for NaturNes

1. Internal factors

• Marketing objective – Nestlé would like to become the leader on the baby food
market. In order to achieve this goal, the company created the line of products which
are made for each age group of babies; wide range of products and flavours is the first
step to gain new clients; the additional advantage is the price which is lower than the
other organic products.

• Marketing – Mix strategy

Product – NaturNes has a wide range of products; it offers forty different dishes for
children from for month to one year.

Price – the prices are set on the middle level and are lower than the other organic
products.

Promotion – it uses such marketing tools as: sales promotion, ads in magazines for
parents and in the internet.

Place – the products are available mainly in the supermarkets e.g. Carrefour,
Intermarché.

2. External factors

• Demand elasticity
 The demand for NaturNes’ products is sensitive. In fact, it can be explained by the fact
that NaturNes’ products are common to the products of the competitors’, with a similar
price. Moreover, the quality is not so different from the quality of the competitors.
NaturNes’ brand is well known, but it does not have an exclusive image. It is perceived as
an ordinary product by customers.

Baby food market profitability encourages new companies to invest in this sector. It
means that NaturNes do not have the monopole to produce such products as baby food is
available in every single supermarket and in spite of introducing many innovations, each
product has its substitutes.

NaturNes has a middle range price. This is not a very good way to attract customers.

• Industry structure

In 2007, Nestlé had 33% of the market share. It means that it is not a leader on the market,
but it is still a significant player among baby food producers. The brand is well known and
the sales are high, thanks to that the company can set higher prices than its competitors.

H. Estimation of price elasticity from target market’s

buying intentions (in €)

According to the survey which was conducted on 53 customers – principally people with
children – the price of Nestlé NaturNes Carrotes is quite elastic.

The respondents were asked to decide how much they would be able to pay for such product
(a maximum and also a minimum price were required).

Our research shows that the actual price is set on the right level, because 100% of the
customers is willing to buy it.

We proved also that the price is quite elastic. The increase of the price from 2€ to 3€ would
cause the drop of demand for about 50%.

100% of potential
customers would
by the product if
prices were
between 2€ and
2,50€.

70% of them
would buy it if it was 3€ maximum.
50% of them would buy it for 3,5€ maximum.

VII. Distribution policy analysis

A. Suppliers

Today executives have come to realize their customers' satisfaction - or dissatisfaction - was
linked to the performance of their supply chain. supply chain management (SCM) is "both a
source of competitive advantage and a lever for profit margin.

Nestle defines SCM as the two-way management of the flow of goods, services and
information from suppliers to manufacturers, wholesalers, distributors, stores -- to the end
user. SCM is especially critical for the food industry because of the ease of spoilage.
Seen that way, SCM becomes a branding issue. When Nestle places its logo on a product, the
logo represents "a seal of quality." Protecting that quality makes Nestle responsible for its
entire supply chain.

Nestle cooperates with around 165 000 suppliers who are willing to apply Nestle’s quality
standards. In 2008, the company purchased 14.9 billion euros of raw materials.
The company created its Supplier Code which specifies the principles of mutual cooperation
between Nestle and suppliers. By acceptance of the Code, the supplier commits that all
existing and future agreements and business relationships with Nestlé will be based on the
rules which there are included.

To strengthen the supplier chain, Nestle supports operating practices and farming practices. It
demands from the suppliers to strive towards improving the efficiency of their operations.

B. Channel levels and intermediaries

Nestle uses the system of indirect – marketing channel (2-level channel). This kind of system
is typical for most of the food producers. It contains two intermediaries: wholesaler and
retailer. Wholesaler is responsible for distributing Nestle NaturNes to the retailers – mainly
supermarkets. Retailer has a direct contact with the customer who is the last part of our
channel.

C. Types of retailers: off and online

The Natunes products are sold by off as well as online retailers.

The biggest offline retailers are Intermarche, Carrefour, Merche Plus, Auchan.

There is also a possibility to buy Natunes by the Internet. We can find the products in the
online shops like:

- paradisdesprix.com

- ooshop.com

- chronodrive.com

- auchandirect.fr

- houra.fr

D. Exclusive, selective or intensive

Nestlé NaturNes products are distributed in an typically intensive way. This kind of
distribution is often used for the products which are common and for which the demand is
high. Baby food is a kind of product which has to be available when to customer need it. That
is the reason why Nestle Company decided to sell NaturNes products in as many outlets as
possible.

E. Merchandising

Nestlé NaturNes is sold in ordinary supermarkets, therefore there are many different products
which need to get the attention of the consumers.

In Carrefour for example, they had little signs which stood out of the shelf. With this, they try
to catch the view of consumers and direct them toward the product. Furthermore they had
promotion for getting a discount on the price by buying NaturNes products. (See the picture
below)
All of those actions are very important because the shelf where the product is located is very
overload with products of the competitor as well as with substitute products from Nestlé its
self.

A typical shelf in Carrefour is organized as followed.

Cereals Cookies Baby milk

In general, the products are organized regarding the age of the baby. Starting on the right side
with baby milk, to baby food for the youngest (4-6 month), to baby food product for older
babies (18-24 month) and finally to products like cereals, cookies and firmer products.
NaturNes can be found in several places on the shelf as their product line concerns every age
of babies.
 VIII. Promotion policy analysis

A. Selected Media for advertising

Nestlé NaturNes mainly targets 25-35 years old young and working mothers. Most of the
targets have to time to prepare meal for their babies. Also they are concern about health factor
of the food. According to the Medias have the high frequency of target, Nestlé decides to
organize the media collection as folowing:

• Television

o Channel: National broadcast chanels (TF1, M6 etc.)

o Timing: Whole day, specially prime time

• MAGAZINE

o Channel: Mother-Baby magazines..

o Timing: monthly, weekly

• INTERNET

o Channel: Baby care websites, portals

B. Examples of advertising and objectives

There are 4 types of advertising objectives to recognize a specific task, a specific target, a specific period of
time: Informative, Persuasive, Comparative and Reminder Advertising. For the commercial in the annex,
Nestlé NaturNes wants to make a promotion of a new launched product for babies. This is an informative
advertising to introduce new products to clients and to build the primary demand. For achieving this
objective, commercial wants to show Nestlé NaturNes’ different cooking style as its most important
difference than the competitors. Also the commercial defines three most important benefit of Nestlé
NaturNes as “Omega 3-6”, “Nutrition” and “Fresh fibers” While commercial gives these messages, consumer
can feel natural atmosphere. Also, because of the nature of the product, the commercial is in the “Baby
World” concept. At the end of commercial give the title which contains two main element of product (baby-
food and Nature): “NaturNes-Nature Generation”3

C. Types of promotion
Retailler in France are main channels of Nestlé’s distribution which has a ultimate control of promotion.
That’s because promotion activities of Nestlé NaturNes is very limited. Most of the types that NaturNes uses,
are:

3
You can see a TV ads application of Nestlé NaturNes at Appendix
 1. Price discount: Offering a special price for a limited period. (like in
the Intermarché example)

2. Package selling : Buy the more than 2 jars for cheaper price.

3. Mass display: Spend the extra fee to display in the key places, like
the heads of gondolas, K1 and K2.

D. Types of Public Relations

The global policy of Nestlé NaturNes is to get closer with young mothers. That’s because Nestlé invests to a
website4 that mothers can find a lots of information about how they can take care about their babies,
communicate with other mothers, get information about new trends of baby-care, and read expert articles
And also as a corporate social responsibility strategy Nestlé make some projects that usually mothers concern
about with Nestlé Foundation France5 which initiates and supports research in human nutrition with public
health relevance in low-income and lower middle-income countries.

E. Types of Personal Selling:

Nestlé NaturNes’s sales are mainly concentrated on the markets. As the brand has been expanding and
adding new flavors to its product range, it also used personal selling like point of purchase activities in the
markets. This is also a kind of push strategy: Nestlé pushed its new product through personal selling.

F. Push or Pull Strategy:

Push promotional marketing strategy means that it’s the company who has to “push” the product to the
consumers; the demand for the product doesn’t come from the consumers.

Marketing
Marketing acc. itiesg
Producer Intermediaries End users

Demand

Push Strategy of NaturNes

The strategy that Nestlé NaturNes picked up due to the nature of the baby food market where there are many
competitors of Nestlé NaturNes is also a push strategy meaning that Nestlé NaturNes develops advertising
and promotional strategies and tools like wholesale discounts, bonuses etc. towards its marketing and

4
http://www.bebe.nestle.fr/
5
http://fondation.nestle.fr
distribution channels, shortly towards the intermediaries. As there are many competitors on the market,
Nestlé NaturNes can easily be substituted by another baby food.

It’s fact that Nestlé NaturNes is a brand which is well recognized by the consumers because of its quality
product. However, in order to be able to benefit from the brand name and to keep its current position on the
market, the push strategy is designed to have the supermarkets, hypermarkets and other small size selling
points promote Nestlé NaturNes to the end users.
APPENDIX
 Appendix 1: The current organization of Nestlé.

Appendix 2: The different brands of Nestlé.

• Beverages

Coffee: Nescafé, Nespresso

Water: Nestlé Pure Life, Vittel, S.Pellegrino.

Other: Nestea, Nesquik, Nescau

• Milk products

Shelf Stable: Nestlé, Nespray, Nesvita,Coffee-mate, Juicy Juice

Chilled Dairy: Nestlé, Yoco.

• Ice cream
 Nestlé, Antica Gelateria del Corso, Dreyer’s/Edy’s, Drumstick/Extrême,
Maxibon/Tandem, Mega, Mövenpick, Sin Parar/Sem Parar/Non Stop

• Prepared dishes and cooking aids

Bouillons, soups, seasonings, pasta, sauces, noodles: Maggi, Buitoni, Thomy,

Winiary, Torchin, Osem, Totole, Haoji

Frozen foods (prepared dishes, pizzas, small meals): Stouffer’s

Refrigeratedproducts (cold meat products, dough, pasta, pizzas, sauces,

snacks): Nestlé, Buitoni, Herta, Toll House

• Confectionery

Nestlé, Crunch, Cailler, Galak/Milkybar, Kit Kat, Smarties,Butterfinger, Aero,

Polo

• Professional products for foodservices

Chef, Davigel, Minor’s

• Nutrition

Infant: NaturNes, Nestlé, Nan, Beba, Nidina, Nidal, Good Start,

Lactogen,Guigoz, Nestogen, Alfaré, Mom&Me, Nestum, CerelacHealthCare:
Resource, Boost, Nutren, Peptamen

Performance: PowerBar, Musashi

Weight Management: Jenny Craig

• PetCare

Purina, Friskies, Fancy Feast, Alpo, Gourmet, Mon Petit, Felix, Dog Chow,
Cat Chow, Pro Plan, Purina ONE, Beneful, Tidy Cats, Purina Veterinary Diets
Appendix 3: An example of a TV ads of NaturNes

Opening

A baby is searching something

A normal baby food, everything is

cooking at the same time…

…but our wise pot does not happy of

this
However

For Nestlé NatureNes…

Every ingredient is prepared

separately…

And three benefits ;

Omega 3-6

Nutrition

Fresh fibers
Are inside NatureNes

Pack Shot

Nestlé NaturNes

“Nature Generation”