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PREPARED FOR: Dr. Shibli Noman Khan Lecturer Department of Business Administration Independent University, Bangladesh

PREPARED BY: Alif Al Mohammed Shalahuddin ID: 1221557 MBA 509 Department of Business Administration Independent University, Bangladesh

Date: 30 July 2012

Letter of Transmittal 30th July, 2012 Dr. Shibli Noman Khan Asst. Professor Department of Business Administration Independent University Bangladesh,

Subject: Submission of Term paper

Dear Sir, Its our great pleasure to submit the Report on Nestle Bangladesh Ltd. A study was making on a company that you have asked to prepare to study. I have tried our best to follow the instruction that was given by you. Throughout this study I tried to identify how Nestle operating their local business being a multinational company in Bangladesh.

I sincerely hope that you will enjoy this report as I enjoyed while writing it. If you need any further clarification or quarry in interpreting this analysis, we will be glad to oblige you.

Thank you,

Alif Al Mohammed Shalahuddin ID: 1221557 MBA-509

Table of Contents Particulars

ABSTRACT PART ONE: INTRODUCTION TO REPORT Origin of the Report Objective of the Report Scope and Limitation PART TWO: NESTL BANGLADESH LTD. 2.1 Introduction 2.2 History of Nestl 2.3 Global Brand of Nestl 2.4 Nestl in Bangladesh Customers of Nestl Bangladesh Limited Functions of Nestl Bangladesh Products of Nestl Bangladesh PART THREE: ORGANIZATION STRUCTURE OF NESTL 3.1 Global Organization Structure of Nestl 3.2 Organization Structure of Nestls in Bangladesh PART FOUR: STRATEGY OF NESTL 4.1 Key Success Factors External factors Internal factors 4.2 Marketing Strategy Market Segmentation Target market Positioning strategy Advertising and Promotional activities Medium Responses 4.3 Competition Structure 4.4 Nestls Consumer Communication and Relationship 4.5 Retaining Old Customer or Attracting New Ones? Customer Satisfaction Level 4.6 Market Audit External Audit Internal Audit 4.7 Nestls Commitment to Environmentally Sound Business Practices 4.8 The Supply Chain Raw Materials Manufacturing Distribution Marketing 4.9 What Makes Nestl to Become Nestl? Medical support Food support Sports Development Programme 4.10 Conclusion PART FIVE: APPENDICES References


02-03 03 03 03 04-13 03 04 09 10 11 12 13 14-16 15 16 17-35 18 18 18 20 20 20 20 21 22 23 24 26 26 27 27 27 30 31 31 31 33 34 34 34 34 35 36 37

Table of Figures Particulars

Figure 01: Sales Regions Figure 02: Sales Process Figure 03: Organizational Functions Figure 04: Nestl Brands in Bangladesh Figure 05: Global Organizational Structure Figure 06: Organizational Structure in Bangladesh 11 11 12 13 15 16


The study seeks to identify the local business policies of Nestle Bangladesh Ltd. as a multinational company. How they operate their business in Bangladesh being a multinational company to compete with their local competitors. To operate their business how they develop their strategy to gain the competitive advantage. In details the study aimed to identify the business policy and their strategy in Bangladesh. What is there key success factors, marketing strategy, competition structure, market audit as well as how they develop their market segmentation, target market, positioning strategy, advertising and promotional activities and what is the output.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh


Part One: Introduction to Report

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh


Origin of the Report

During the summer2012 semester of MBA program of Independent University, I was required to do a term project in the course International Marketing (MBA 509). This course is designed to give the business students an understanding international marketing that is necessary tounderstand the in department of international marketing concepts applied by companies. Out of several options of the term project topics, I have chosen a company Nestl Bangladesh Ltd. for the term project.

Objective of the Report

To prepare and submit the term project within specified time. To have a very practical idea and over viewing the marketing sector focusing on a specific company and their performance in Bangladesh. Present companys current mission, vision, objectives, and goals. Find out their strength, weakness, opportunities, threats. Defining their market segmentation, target market and product positioning and key marketing areas. Source of information the report is originated from both primary and secondary data source. Primary data: Face to face conversations with employees. By arranging appointment with top officials of the company. Secondary data: Companys reports and other published materials various marketing books, personal interview with a Nestl professional.

Scope and Limitation

There was great difficulty of finding appointment of the top officials of Nestle although talking to the officials interviewing few personnel of top management and talking to personal references was helpful, still we could not cover in depth analysis on the above mentioned topic. Getting relevant papers, documents, information were strictly prohibited. The officers were hesitant to reveal the information in regard of confidentiality Unavailability of financial data as Nestl does not publish financial report to the public. For the confidentiality concern, access to some information was not available.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh

Restriction on time and resources of data due to absence of corporate website in

Part Two: Nestl Bangladesh Ltd.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh


2.1 Introduction
Todays Nestl, the world's largest food and nutrition company, founded by the Henri Nestl (10 August 1814 7 July 1890); a German confectioner in Vevey, Switzerland in 1866. In the food industry Nestl is the most trusted name with high quality products. Good food Good Life is the mission of Nestl, which drives the company to provide consumers with the best tasting and most nutritious choices in a wide range of food and beverage categories and eating occasions. The vision of creating shared value and the very own Corporate Business Principles shaped the company culture and made them a reliable investor over 86 countries of the world. Today Nestl employs around 280000 people and have factories or operations in almost every country of the world with a total equity of CHF 62.60 billion.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh


2.2 History of Nestl

1866-1905: Henri Nestl's quest for a healthy, economical alternative to breastfeeding is the important factor that drives the history of Nestl Company. Henri Nestl, pharmacist, began experimenting with various combinations of cow milk. His ultimate goal was to help combat the problem of infant mortality due to malnutrition. People quickly recognized the value of the new product, as Nestl's new formula saved the life of children within a few years. In August, 1867 Charles and George Page, two brothers from Lee County, Illinois, USA, established the AngloSwiss Condensed Milk Company in Cham. In 1877 Anglo-Swiss added milk-based baby foods to their products and in the following year the Nestl Company added condensed milk so the firms became direct and fierce rivals. Henri Nestl retired in 1875 but the company under new ownership retained his name as FarineLacte Henri Nestl. Their headquarters in Glendale, California, USA.

1905-1918: The Company formed by the 1905 merger was called the Nestl and Anglo-Swiss Milk Company. Most production facilities remained in Europe, however, and the onset of World War I brought severe disruptions, as a result acquiring raw materials and distributing products became increasingly difficult. At the same time the war created tremendous new demand for dairy products, largely in the form of government contracts. By war's end, the Company had 40 factories, and its world production had more than doubled since 1914. Moreover in this period Nestl added chocolate to its range of food products and also the Condensed-milk exports increased rapidly as the Company replaced sales agents with local subsidiary companies. In 1907, the Company began full-scale manufacturing in Australia.

1918-1938: The end of World War I brought with it a crisis for Nestl. Rising prices for raw materials, the worldwide postwar economic slowdown, and declining exchange rates made the situation worst. In 1921, the Company recorded its first loss. Nestl's management brings Louis Dapples as an expert to deal with the situation; his rationalized operations and reduction of the company's outstanding debt improve the financial condition. On the other hand Nestl's first expansion beyond its traditional product line came in 1920s by producing chocolates. In the meantime Brazilian Coffee Institute first approached to Nestl in 1930 to reduce Brazil's large

coffee surplus, after eight years of research Nestl came with Nescaf became an instant success.
Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh

1938-1944: in this period World War II were felt immediately upset the business once again and Profits dropped from $20 million in 1938 to $6 million in 1939. To overcome distribution problems in Europe and Asia, factories were established in developing countries; particularly in Latin America. As the end of the war approached, Nestl executives found themselves unexpectedly heading up a worldwide coffee concern, as well a company built upon Nestl's more traditional businesses.

1944-1975: The graph of growth sets its trends little higher between 1944 and 1975. As a result many new products were added as and outside companies were acquired. In Nestl merged with Alimentana S.A in 1947, purchase of Findus frozen foods occurred in 1960, Libby's fruit juices joined the group in 1971 and Stouffer's frozen foods in 1973and finally in 1974 the Company became a major shareholder in L'Oral, one of the world's leading makers of cosmetics. The Company's total sales doubled in the 15 years after World War II.

1975-1981: In 1920s the economic situation was in challenge due to price of oil rose, growth in the industrialized countries slowed down and worldwide unstable political situation. In 1975 and 1977 price of coffee bean and the price of cocoa tripled. In this situation to maintain a balance, Nestl went to second venture outside the food industry by acquiring the pharmaceutical and ophthalmic product producer Alcon Laboratories Inc. of U.S; as a result it increased competition and shrink the profit margins.

1981-1995: Improvement of financial situation through internal adjustments and strategic acquisitions are the two important moves in this period. As a result between 1980 and 1984, diversification of several non-strategic or unprofitable businesses occurred. On the other hand Nestl managed to put an end in the third World to about a serious controversy over its marketing of infant formula in this period. In 1984 Nestl acquire American food giant Carnation and became one of the largest company in the history of the food industry.

1996-2002: The opening of Central and Eastern Europe, along with China and a general trend

hand in July 2000 Nestl launched a Group-wide initiative called GLOBE (Global Business
Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh

towards liberalization of direct foreign investment was good news for the company. On the other

8 Excellence) aimed to simplifying business process. Two more acquisitions took place in this period-U.S. ice cream business was to be merged into Dreyer's and the acquisition of Chef America, Inc. a leading U.S.-based hand-held frozen food product business.

2003-2009: Within this area the acquisition of Mvenpick Ice Cream, Jenny Craigand Uncle Toby's enhanced Nestl's position as one of the world market leaders in the super premium category. On the other hand Novartis Medical Nutrition, Gerber and Henniez join the Company in 2007. Meanwhile Nestl entered into a strategic alliance with the Belgian chocolatierPierreMarcolini at the end of 2009.

2010 to onward: In mid-2010 Nestl finalized the sale of Alcon to Novartis; at the same time Nestl bought Krafts frozen pizza business. Another important move in this period is launch of Special. Tea machine system and the completion of the CHF 25 billion share buyback program

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh


2.3 Global Brand ofNestl

The brand portfolio delivers the message once again how big Nestl in the food industry. It is the trust and effort of the Nestl professionals which created the win wining scenario. Today Nestl covers almost every food and beverage category giving consumers tastier and healthier products. 1. Baby foods: Cerelac, Gerber, Gerber Graduates, NaturNes, Nestum 2. Bottled water: Nestl Pure Life, Perrier, Poland Spring, S.Pellegrino 3. Cereals: Chocapic, Cini Minis, Cookie Crisp, Estrelitas, Fitness, Nesquik Cereal 4. Chocolate & confectionery: Aero, Butterfinger, Cailler, Crunch, Kit Kat, Orion, Smarties, Wonka 5. Coffee: Nescaf, Nescaf 3 in 1, Nescaf Cappuccino, Nescaf Classic,NescafDecaff, Nescaf Dolce Gusto, Nescaf Gold, Nespresso 6. Culinary, chilled and frozen food: Buitoni, Herta, Hot Pockets, Lean Cuisine, Maggi, Stouffer's, Thomy 7. Dairy: Carnation, Coffee-Mate, La Laitire, Nido 8. Drinks: Juicy Juice, Milo, Nesquik, Nestea 9. Food service: Chef, Chef-Mate, Maggi, Milo, Minors, Nescaf, Nestea, Sjora,Lean Cuisine, Stouffer's 10. Healthcare nutrition: Boost, Nutren Junior, Peptamen, Resource 11. Ice cream: Dreyers, Extrme, Hagen-Dazs, Mvenpick, Nestl Ice Cream 12. Petcare: Alpo, Bakers Complete, Beneful, Cat Chow, Chef Michaels Canine Creations, Dog Chow, Fancy Feast, Felix, Friskies, Gourmet,Purina, Purina ONE, Pro Plan 13. Sports nutrition: PowerBar 14. Weight management: Jenny Craig

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh


2.4 Nestl in Bangladesh

Popular Nestl brands started entering this part of the sub-continent during the British rule and the trend continued during the pre-independence days of Bangladesh. After the independence in 1971, Nestl World Trade Corporation, the trading wing of Nestl S.A, sent regular dispatch of Nestl brands to Bangladesh through an array of indentures and agents and some of the brands such as NESPRAY, CERELAC, LACTOGEN, and BLUE CROSS etc. became some very common products.

Nestl Bangladesh Limited started its commercial operation in Bangladesh in 1994. Its total authorized capital is TK1.5 billion and total paid up capital is TK 1.1 billion. The only factory of the company in Bangladesh is situated at Sreepur, 55 km north of Dhaka. The factory produces the instant noodles and cereals and repacks milks, soups, beverages and infant nutrition products. Today Nestl Bangladesh Ltd. is a strongly positioned organization. The Company is continuously growing through the policy of constant innovation, concentrating on its core competencies and its commitment to high quality food to the people of Bangladesh.

Since the beginning of Nestls operation in Bangladesh, the chairman of the company has been Mr. LatifurRahman, one of the top industrialists of the country, his firm Transcom used to import the products of Nestl. His business house Transcom is still involved in wide range of business like beverage, pharmaceutical, electronics, newspaper, tea export, fast food franchises etc. Still he remains as an honorary chairman of the company although his group Transcom does not capture any share today as Nestl S.A. holds 100% share of this company.

In Bangladesh Nestls vision is-to be recognized as the most successful food and drink Company in Bangladesh, generating sustainable, profitable growth and continuously improving results to the benefit of shareholders and employees.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



Customers of Nestl Bangladesh Limited

Nestl Bangladesh Limited markets its products throughout the country with the help of the distributors. A part from that, Nestl Professional is a separate function which is responsible for the institutional sale. There are currently 80 distributors of Nestl Bangladesh products of which 76 are retail distributors and remaining 4 are Nestl Professionals distributors providing products for the out of home consumptions. The whole country is divided into six regions:

Dhaka North

Dhaka South





Figure1: Sales regions

The retail distributors supply Nestl products to four types of outlet, while Nestl Professional Distributors supply products to different institutions.

Vending Site

Tea Bunk Retail Distributor Mordern Trade Nestl Bangladesh Ltd.


Institutional Sale

Figure2: Sales Process

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



Nestl Professional

Functions of Nestl Bangladesh

Day by day demand and trust on the Nestl products are growing. Focusing on the substantial growth and the other business perspective, the company developed its own functional areas. Currently the existing fictional areas are:

General Management

Finance and Control

Human Resource

Supply Chain



Nestl Professionals


Figure3: Organizational Functions

No matter how many functions are running, their main aim is to gain ultimate excellence. Every function contributes from their end to meet the corporate goal. The General Management take cares of the overall operation of the company and makes the key decisions. Human Resource focuses the management of employees and organizational culture; moreover HR professionals are also responsible for retaining the people who are making the difference with their competitors at the end of the day. Supply Chain ensures the stable supply of the products according to the demand of the customers. Marketing looks after the existing brands, market share and product development of the products. Nestl is the worlds largest Nutrition Company that is why the importance of the Nutrition products is much more in compared to the other food companies; as a result they created a totally separate team to look after the Nutrition products, such as, CERELAC, LACTOGEN. Finance and control deals with the financial transactions and most importantly they also apply the control mechanism to remain the company complaint financially and procedurally. Finally Sales and Nestl Professionals are responsible for earning

after the institutional sales.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



revenue for the company, but sales goes for the retail distributors and Nestl Professionals looks

Products of Nestl Bangladesh

Globally the product line of Nestl is very large but in Bangladesh currently there are only 12 products. Nestl believes all foods and beverages can be enjoyable and play an important role in a balanced and healthy diet and lifestyle; as a result no matter how short the product line may be but it ensures the same quality in compare to the other countries.


Maggi, Shade-Magic


Breakfast Cereal












Figure 04: Nestl Brands in Bangladesh

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



Part Three: Organization Structure of Nestl

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



3.1Global Organization Structure of Nestl

Table 2: Global Organizational Structure

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



3.2 Organization Structure of Nestls in Bangladesh

Figure 06: Organizational Structure in Bangladesh

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



Part Four: Strategy of Nestl

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



4.1 Key Success Factors

Strong brands / relationships with consumersResearch and developmentInnovation and renovationProduct availability-

Building relations with medical and scientific community in light of Nestl Bangladesh Ltd., this report tried to analyze the following components of marketing strategy through different theories and applications: External factors Social: Nestl makes an effort to integrate itself as much as possible into the cultural and social values of the different countries. During operation in Bangladesh Nestl has launched products with integration of social & cultural factors. This has been done to match the taste buds of Bangladeshi consumers. Ethical: Although Nestl faces ethical dilemmas in commercialization of its products, it does not consider its high price to be an ethical crisis. This is because they are not ready to compromise their quality in order to make their product widely available to all. Internal factors Marketing structure: Nestl is more people, product and brand oriented than system oriented. Nestl favors long-term successful business development and even to greater extent, customer life-time value. At the same time Nestl does not lose sight of the necessity to improve in terms of quality, price and distribution. However, Nestl remain conscious of satisfying the wants needs and demands of its consumers. It is also aware of the need to generate a sound profit annually. Nestl seeks to earn consumers confidence, loyalty and preference and anticipate their demands through innovation and renovations. Therefore Nestl is driven by an acute sense of performance adhering to quality and customer satisfaction Nestl is as decentralized as possible within its marketing strategic definitions requiring increasing flexibility. Nestl is always committed to the concept of continuous improvement of its activities and customer satisfaction through market segmentation, positioning and target marketing.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



The effective formulation of their marketing strategy depends on the proper match between the three key elements: o Consumer o Quality o Competition One thing to be mentioned is that the match between consumer and quality is most important for Nestl. Besides there are some other concerns that effect the marketing strategy. This concerns are where to compete, how to compete and when to compete

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



4.2 Marketing Strategy

The current marketing strategy of the company is based on the foundation of the four pillar strategy which has the following factors:

Market Segmentation
Nestl is targeted towards the consumer market. So Nestl food products can be treated as consumer products. The major factors which play key role in the process of consumer segmentation are: Demographic (age, income, etc.) Consumption pattern Social economic factors Brand loyalty patters Perceptual factors Cultural factors Proper consideration of the given factors results in effective consumer segmentation for Nestl. Since the product range is expensive in Bangladesh; FoysalAlam, the Marketing Officer, says, we have to concentrate strongly on income of consumers.

Target market
Nestls main focus is the socio-economic class, which is the company wide target. Nestls potential consumers are those who acknowledge that Nestl is all about quality and most importantly those who can afford the products. The strategy for selecting their target market is the following: Income level (>10000 Tk) Education Quality realization

Positioning strategy
Nestls positioning strategy comprises of the three steps: Identifying the right competitive advantage Choosing the right competitive advantage Selecting the right completive advantage

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh


The company then effectively communicates and delivers the chosen position to the market. Nestl strongly believes that their products are specific and so are the product benefits. This, Foysal Alam, the marketing officer, termed as Benefit Positioning Regarding new upcoming products, Nestl is looking forward to renovation and innovation for Maggi noodles and soups. This might be in terms of new flavors or improvising the quality and the quantity of the products.

Advertising and Promotional activities

The company focuses on its corporate image that Nestl is all about quality. It hardly emphasizes on promotion and publicity because consumers in Bangladesh already know that ensuring product quality is what Nestl focuses, not price. Nestl mainly focuses the two possible advertising objectives: Informative advertising Persuasive advertising

Since Nestl is already an acknowledged and quality food product company in Bangladesh, it does not emphasize much on publicity and promotion. Here are a few points to ponder about advertising done by Nestl Bangladesh Ltd.: Nestl cannot advertise for infant milk. Mass advertising is done for new products only Advertising and promotion is done by product wise 15% of marketing communication budget is spend for publicity More indulged into product sampling and test marketing Nestl had performed test sampling in the year 2003 on Nescaf. Nestl Bangladesh Ltd. has specialized agencies for their promotional purposes. They are:Product name advertising agencies: Nescaf -Unitrend Milo - (25%) Unitrend Maggi - Protishobdo Polo Protishobdo

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh


Nestl is associated with the following profiles of major media types:

Medium Responses
Newspapers (e.g. ProthomAlo) Small Pass along audience, approx. 1 lakh. High cost per exposure. TV Reach up to 20 lakh audience Billboards Very few Local Magazines Negligible Outdoor

The given table suggests that Cost per Contact is better in television advertisement than in newspapers and other media for Nestl. Nestl also believes that television receives better clutter, fleeting, exposure and a mass audience for promotion, which is only to be considered for Nestl Bangladesh Ltd. The main advertising is done on television and to a very little extent, newspapers. The emphasis is on building a corporate image about maintaining their high quality. There are also considerations underway to promote upcoming brands and products to extend their promotional activities by putting up more billboards, posters, flyers, and banners. They will start internet as their medium from year 2005. These decisions are carried out by the marketing department. Hence, Nestl Bangladesh is trying to integrate their promotional activities and have an integrated marketing approach

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



4.3 Competition Structure

Nestl supports free enterprise and therefore competes fairly and ethically and expects other companys right to do so. The competition structure for Nestl in Bangladesh is very limited whereas it faces bigger challenges in other countries such as India, china,etc. Still Nestl tends to face competition in the food market. In terms of quality and product square is the biggest challenge and threat. Pran is the strong contender in terms of turnover. When it comes to beverage and drinks Nestl consider Ispahani and Cocola to be strong players. Although 7080% consumers prefer Maggi noodles, Cocola seems to be catching up fast. In terms of competitive advantage, quality seems to be the foremost tool for Nestl. Although Nestl tends to face criticisms in terms of price and number of products sold, in comparisons to local competitors, Nestl intends to abide by their policy which never attempts to compromise quality.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



4.4 Nestls Consumer Communication and Relationship

Nestl is committed to offering consumers high-quality food products that are safe, tasty and affordable. The Nestl Seal of Guarantee is a symbol of this commitment. It also believes in maintaining regular contact with the consumers. This applies both to how they present their products and to how they address their 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. Today, the Consumer Relationship Panel with the words Talk to Nestl expresses the same commitment. This is why they have a worldwide Nestl Consumer Services network devoted to caring for their consumers. Nestls 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, the expertise teaches them talk with consumers and above all, to listen. Listening helps them to understand what people want. Nestl uses the insights gained from relationships with consumers to drive product development. Nestl care for Nestls consumers because its success depends on meeting their needs and expectations. Through listening and understanding, it can make products that they will want to use all through their lives. Although Nestl is very conscious of its role in communicating responsibility to consumers, Nestl in Bangladesh does not really perform much consumer communication. As noted their marketing officer, For Nestl, our consumers are our distributors. Nestl has a separate department designated as Consumer Relation Department where the purpose is served. A P.O.Box had been assigned where consumers can send complaints, mails or any enquiries directly in order to reach Nestl. This can also be termed as Post Purchase Service. Consumer communication is not much practiced in Bangladesh because at the moment, Nestl does not have any organized internal database of its consumers. Hence, it can be said that Nestl hardly

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



takes any initiatives in case of consumer communication.

However, for specific brands, such as Milo, Nestl Bangladesh has an organized database of 1000 consumers who are the core that is final consumers of Nestl. Whenever, there are any upcoming new products, Nestl sends these loyal consumers newsletters, leaflets, free samples and even feedback questionnaires. This is the only consumer communication that Nestl does in Bangladesh; also consider to be Direct Marketing. For any other products Nestl never performs consumer communication.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



4.5 Retaining Old Customer or Attracting New Ones?

For Nestl, it is a 60-40 ratio. They believe whoever is loyal, Nestl should do their best to retain their loyalty because if this loyal consumers become disloyal their word-of-mouth may contaminate other eager consumers. So, Nestl emphasizes more on retaining loyalty rather than attracting new consumers.

Customer Satisfaction Level

Nestl regards its consumers as its most valuable asset involvement at all levels start with open communication whether it deals with customer satisfaction or their needs and wants. Nestl recognizes that its consumers have a sincere and loyal interest in the behavior, beliefs, and actions of the company behind brands in which they place their trust. With it consumers the company would not exist. Nestl satisfies consumers in many countries and cultures throughout the world. According to the Marketing officer Nestl Bangladesh Ltd, customer satisfaction varies from one aspect to another. In terms of product delivery consumers do not give similar responses. He explained with the simple example, Nescaf for some is refreshment, for others it is relief. At the end of the day, Nestl consumer are 100% satisfied with the high quality of Nestl products.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



4.6 Market Audit

The marketing audit is divided in 1. External Audit o Opportunities o Threats 2. Internal Audit o Strength o Weakness

External Audit: Scanning the external environment of Nestl, we tried to find out the opportunities and threats that are pointed out here: Opportunities: The ability to expand their product line that requires an approach that is compatible with Nestls strengths and that compensates for its weaknesses, e.g. to make certain products available in the market at a relatively lower price so that a larger number of consumers can buy itproducts such as Cerelac. Enhance distribution of their Infant Nutrition Products in a country like Bangladesh where malnutrition already exists, increasing the distribution channels and channel outlets. Threats: Few local manufacturers who tend to sale their products at a relatively lower price through various unethical means. For instant, many do not value expiry dates since not much restrictions are practiced in Bangladesh.High degree of bargaining power of suppliers.

Internal Audit: Then we tried to analyze the internal situation of Nestl and we figured out the following strengths and weaknesses: Strengths: o A portfolio of products which responds to the consumer trend for lighter yet indulgent snacking o A unique strategic position which combines powerful local brands with strong global product brands

targets o Centralized organization that helps in easier coordination of business activities

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



o Dedicated core staff who are willing to provide significant labor hours to accomplish

Nestl Weaknesses: o Far fewer staff than actually required in terms of tasks to be completed. o Significantly less customer support services than is required in terms of the number of customers and the complexity of the services offered. o Except form Milo, they have no post purchase service for other products in Bangladesh.

Another Approach toward Strengths; Weaknesses Apart from conducting the SWOT analysis, under marketing assessment, a different approach is taken to make an in depth analysis about Nestl. In this approach, first, some core factors are identified against which the performance or relative strength or weakness of Nestl can be measured. These factors include: a. Marketing Factors b. Manufacturing Factors c. Organizational Factors But these factors are too broad. So, further some criteria were developed for each factor to be evaluated. Then the relative weaknesses or strengths are measured against each criterion that is summarized here in a tabular format:


Fundamental Strength

Marginal Strength


Marginal Weakness

Fundamental Weakness

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



Performance Measurement Criterion

Marketing Factors: Relative Market Reputation Previous Performance Competitive Stance Customer Loyalty Depth of product range Product quality New product program Distribution cost Dealer network Geographical coverage Sales force After sales service Manufacturing cost Pricing Advertising Structure of competition Manufacturing actors: Production facilities Flexibility Workforce Technical skill Delivery capabilities Organizational Factors: Culture Leadership Managerial capabilities Workforce Flexibility Adaptability

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



4.7 Nestls Commitment to Environmentally Sound Business Practices

Nestl respects the environment, supports sustainable development and is committed to environmentally sound business practices throughout the world. To fulfill this commitment, Nestl: integrates environmental principles, programmes and practices into each business; strives for the continuous improvement of its environmental performance through application of the Nestl Environmental Management System (NEMS); Complies with applicable environmental legislation. Where none exist, Nestls own internal rules are applied; and Provides appropriate information, communication and training to build internal and external understanding concerning the Companys environmental commitment.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



4.8 The Supply Chain

Bringing a food product to the consumer involves a continuous process from farm to table. Integrated measures for preserving the environment, and consequently for optimizing global environmental benefits, are put in place along the supply chain. Nestl endeavors to apply the following practices to meet its environmental commitment.

Raw Materials:
In general, Nestl is not directly involved in the production of raw materials. Wherever possible, locally available raw materials are used. They are either obtained directly from producers or purchased through trade channels. Nestl applies the following principles when sourcing raw materials: all raw materials must meet both legal and internal quality criteria, including limits on possible environmental contaminants; whenever possible, preference is given to raw materials that are produced by environmentally sound farming methods (e.g. integrated crop management); and farmers are encouraged to apply sustainable farming methods and, where appropriate, are provided with assistance in crop production and dairy farming. Such assistance includes the provision of recommendations for the conservation of natural resources (soil, water, air, energy, and biodiversity) and techniques for reducing environmental impact.

Manufacturing comprises all processes that are necessary to transform perishable raw materials into safe and convenient food products for consumers. Nestl strives to achieve optimal performance in its manufacturing activities, including the environmental aspects. As such, the manufacturing practices of the Group: Respect natural resources by emphasizing the efficient use of raw materials, water and energy; Minimize the use of environmentally critical substances; Continuously seek improvement in the efficiency of production facilities; and Reduce waste generation and emissions as much as possible; consider recycling of waste as a priority and dispose of non-recyclable waste in an environmentally sound manner.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



Regular environmental assessments of Nestls manufacturing practices are conducted to: Evaluate factory performance; Review factory compliance with applicable legislation and Nestls own standards; Packaging fully investigate incidents that could affect the environment and take relevant measures; and Compare results with previous targets and set new improvement objectives.

In addition, Nestl exchanges information on environmental protection technology and practices in order to ensure a wide use of best practices. Nestl encourages its contract manufacturers to use environmentally sound manufacturing practices. Packaging serves a major role in our daily lives. It protects food products from spoilage and ensures safety from manufacture through storage, distribution and consumption. Packaging may also provide tamper-evidence features. It communicates information, including nutritional information and serving instructions, and provides the convenience demanded by todays consumers. Nestl is committed to reducing the environmental impact of packaging, without jeopardizing the safety, quality or consumer acceptance of its products. It is Nestls objective to develop safe and wholesome packaged foods using the most efficient and appropriate packaging materials available, while, at the same time, satisfying consumer requirements and expectations. Nestl seeks packaging solutions that: result in the lowest possible weight and volume of packages; take into account new packaging materials and processes that reduce the impact on the environment; avoid the use of substances that can adversely impact the environment during packaging production and disposal; decrease packaging waste at all stages, including package manufacturing, utilization and disposal; increase the use of recycled materials wherever possible; and Increase the recyclables and compatibility of its packages with existing waste management

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh




Regular assessments of Nestls packaging are carried out and action plans are implemented. Nestl supports industrial and governmental efforts to promote integrated waste management that takes into consideration matters such as source reduction, reuse, recycling, composting, energy recovery and landfill. Nestl encourages suppliers of its packaging materials to adopt sound environmental practices

Distribution Marketing
Distribution of products from the factory to the customer involves transport and storage. Efficient management of the distribution system is essential to preserve the safety and quality of Nestls products, to ensure a high level of customer service, and to meet its commitment to environmentally sound business practices. To this end, Nestl: selects appropriate transportation modes, with particular attention given to optimum unit loads (pallets), vehicle capacity utilization, route planning and consolidation with outside partners, scheduling and fuel conservation; optimizes warehouse and distribution center locations and environmentally efficient operational systems; and Identifies and implements measures to reduce energy consumption and waste.

Nestl encourages its distribution service providers to use environmentally sound practices. Marketing is based on the principle of satisfying consumers needs. The overall trust of consumers in Nestls brands and products comes from a quality image that has been

Continuously strengthened for over 130 years. Nestl strives to increase this trust through its commitment to environmentally sound business practices. For this reason, Nestl:

bases environmental claims in advertising, promotional material, labeling and corporate communications on solid scientific evidence; and selects materials and printing methods for merchandising materials such as consumer offers, in-store promotions, display materials, leaflets and printed materials in light of environmental considerations.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



4.9 What Makes Nestl to Become Nestl?

Inherited attitude Appreciation of the individual Understanding, knowledge and ideas The pull of its brands People and relationship driven

Flood relief Nestl Bangladesh donates products to support the Prime Ministers Relief Fund of Bangladesh which helps victims of floods and other natural disasters. The Company also assists with fund-raising efforts for the Flood Relief fund. Medical support The Company contributes to the Floating Hospital Project which provides medical assistance for the poorest of the poor people. Food support The Company also runs a feeding programme for a school, established for the under- privileged children of Dhaka city slums. Under this programme, food is supplied twice a week for the students. Sports Development Programme Cricket is the most popular sport in Bangladesh. Nestl Bangladesh has stepped forward together with the Bangladesh Cricket Board (BCB) to develop cricket talent for the future under a special sponsorship programme. Milo will sponsor a series of local cricket development camps and tournaments, to be organized by BCB for the under 13 and under 15 age groups. Through this specific programme, a pool of young talented cricketers will be identified to ultimately represent Bangladesh internationally.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



4.10 Conclusion
Finally it can be said that that Nestl Bangladesh Limited is using and developing their strategy perfectly. By using valuable marketing tools they are creating competitive advantage for themselves which ultimately helping them to reach their market as well as organizational objectives. Again their continuous renovation are making them leader into the market which leads to profit as well as customer base for their company.

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



Part Five: Appendices

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh



Corporate Governance report 2011 The Nestl Corporate Business Principles 2010 Annual Report 2011 Quick Facts 2011 Nestl Management report 2011 Nestl Sustainability Review Nestl People Development Review Corporate Business Principles Million Years of the Food Industry The Nestle Management and Leadership Principles Nestle Policy on the Environment

Local Business Policies of Nestl Bangladesh Ltd. Independent University, Bangladesh