Section 2 Group 7

NESTLE S.A. :
INTERNATIONAL MARKETING

07/11/16

KANIKA AGGARWAL FT12222

KUSHAGRA PRASAD
FT12227
PRIYAKSHI GUPTA
FT12242

Points to be addressed in the

Presentation:
What are the external and internal forces
1.

2.

3.

providing reasons to adopt centralization or

decentralization at Nestle?
How influential are the roles in Nestle in
determining the degree of centralization or
decentralization of local markets?
Whether Co-ordination by centre is more feasible
& productive for

Some elements of Marketing Mix over others?

Some Product Categories over other?

Some Countries over Other?

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Internal Factors Influencing

Centralization and
Decentralization

CENTRALIZATIO DECENTRALIZATI
N
ON

Worldwide efficiency and Generation of new ideas

communication of Ideas. of products by local
managers (Mouseline in
France), brand names
(Bollino in France).
Nestles goal of reducing Knowledge of local
cost (economies of
markets and customers
scales) and increasing
by local managers.
profits.
Simplification of the

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Better relationship with

External Factors
Influencing Centralization
and Decentralization
CENTRALIZATION

DECENTRALIZATIO
N

Demographic convergence
between countries.

Product Differentiation.

Cultural convergence
between countries.

Differences in Consumer
Languages.

Spill over Effect.

Difference in Consumer
Perceptions (advertising,
branding).
Differences in Consumer
tastes.
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How does Nestle exert

Influence

Flexibility given to regional and country

managers on every elements of
marketing mix, except Branding.
Branding is controlled, standardized by
central organization who charge license
fees to country operating companies for
the use of brands and brand names.
Product Positioning, Distribution, Trade
Promotion, Consumer Protection and
Media advertising decentralized.
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Continued
6

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a) Degree of Centralization
based
on
Marketing
Mix
4Ps

PLACE
Germany & France exhibit different product launch requirement
which can be best understood and decided by a production
Manager in a decentralized Model

PRICE
Price points are sensitive to local market competition, consumers
purchasing power and brand value. Decision on Centralization is
contextual and dependent on the extent of achievable economies
of Scale.
Bolino (France) 13 million units sold Reduction in Cost of
production needed from existing 20% Local Competition from
Knorr.
5Minuten Terrine : 40 Million Units sold 30% of total cost from
COP
Centralization can help in achieving < 20% (COP) with good
economies of scale.
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Contd..
8

Product: Low degree of Centralization would be feasible to cater local

demands and consumer preferences.

Design of a new product (Instant noodles)to suit Local taste and

provide sufficient shelf life.

Promotion: Local coordination by product manager will be feasible

Best understands the market and a suitable branding model to

address local needs.

5Minuten Terrine:
Positioned to Women and Men in 30s and 40s
Strengthened on Maggies Brand Name
Value Promoted Nutritious and convenient to cook.

Bolino :
Positioned to Young ,Single consumers
Down Played Maggies Brand Name
Modified packaging as per market research and consumer
requirement.
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b) Degree of Centralization
based on Product Category

Assumptions:
Push products if more centrally coordinated
will increase profits by more sales and
reduced operations cost.
Taste based products should be less
centrally regulated.
Products already having high sales are
assumed to be performing well because of
higher degree of centralization.

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b) Degree of Centralization
based on Product Category

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c) Degree of Centralization
based on Country

Points to be considered before deciding on feasibility of

centralization:

Cross Cultural Understanding between different Countries

Spill Over National Boundaries

Demographic and cultural Trends

Consumer Tastes and Preferences
Family size, Population growth , away from food consumption and standard
of living.
Contribute to conflicts in product positioning.
65% of the programming watched in French Speaking pat of Switzerland
emanated from France.

Satellite Television centralized coordination planned to

break down cultural barriers

Offer same type of Advertising Cost effectiveness in Europe as in US.
Harmonized Product Positioning, Packaging, Promotion and Pricing.
Can be adopted for (Breakeven Volume)Cost/unit > Fixed Costs of
$200million/Satellite and other government hindrance issues.
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THANK YOU
Section 2 Group 7

07/11/16