MBA-IB Group 6 Presentation

8/2/2019 MBA-IB Group 6 Presentation

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Group 6

Group 6presentation

Case


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Group Members

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Benedict Mponzi 1428

Esha Namusanga 1434

Queen Wakasenyi 1446 Jared Mushi 143

Joe Bendera 1202Flora Malla 1421

James Nyamryakunge 1436

Roll number


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Background

In the mid-1860s, Henri Nestle (Henri), a merchant,chemist, and innovator experimented with various

combinations of cow's milk, wheat flour and sugar. The

resulting product was meant to be a source of infant

nutrition for mothers who were unable to breast-feed their

children.

In 1867, his formula saved the life of a prematurely born

infant. Later that year, production of the formula, named

Farine Lactee Nestle, began in Vevey, and the Nestle

Company was formed. Henri wanted to develop his ownbrands and decided to avoid the easier route of becoming a

private label. He also wanted to make his company a global

company.


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How Nestle AchievedInternational Expansion

Nestle achieved international expansion through globaldiversification of offerings by having; 7 world wide strategic business units (SBUs)

E.g. Coffee & beverages, Chocolate, powdered milkconfectionery (sweets) & ice-creams.

5 regional organizationsE.g.. Network of factories in the Middle East: ice-cream

in Dubai, soups and cereals in Saudi Arabia, yogurtand bouillon in Egypt, chocolate in Turkey and ketchupand instant noodles in Syria.

Strong R&D Team of; Expatriates army of about 700 managers going

from country to country 18 different groups operating in 11 countries

International training center in Switzerland


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How Nestle AchievedInternational Expansion (Contd)

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They Sourced Assets, Not Just Products

By building plants abroad.

Through purchasing local companies. E.g Goplana in Poland

Through having a Flexible organization structure

Nestle adopts a matrix organization which is highly decentralized in

decision making.

SBU1 SBU2 SBU3 SBU4 SBU5 SBU6 SBU7

North America

EuropeAsia

Africa

Middle-East

SBUs

Regions


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Nestles Branding strategy

Use ofNestles Brand Equity. Nestle hada brand power derived from the goodwill and

name recognition that it has earned over time

(Family of names strategy).

The Nestle brand itself had played a key role in the

company's globalization efforts. In 1996, about 40%

of the total revenues were generated from products

covered by the Nestle corporate brand. Nestle'slogo was an important part of the company's

corporate identity. The nest' was a graphic

translation of Henri Nestle's name, which meant

"little nest."..


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Life before Nestle.

Acquiring of Rowntree Brand When Nestle acquired Rowntree's brands in 1988, the major

challenges before Nestleaquired the company were:- Rowntree had a "one product, one brand" policy this ment that brands like Kit

Kat, After Eights, Smarties and Rolo were marketed with no mention of

Rowntree.

Rowntree's brands were not strongly managed European brands. Even though Kit Kat was a leading brand in UK, it was ignored outside the

country.In the early 1980s, Rowntree established Rowntree Continental Europe,

which handled business responsibilities outside the UK in Europe. However, this

did not benefit Kit Kat, which was launched in Europe by Rowntree Continental

Europe as a multi-local brand

After Nestle acquired the Rowntree brand, it instilled its brandingstrategies that were built around The Nest henceforth strategically

making the kit kat name into a household name consumer brand.

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Does The company Nestle need to

have many brands? It doesnt have to have many brands, but it needs to manage how it roll outs

new products. Some of the benefits of having many brands include It makes acceptance of new product easy.

It increases brand image.

The risk perceived by the customers reduces.

The likelihood of gaining distribution and trial increases. An established brand name increases

consumer interest and willingness to try new product having the established brand name.

The efficiency of promotional expenditure increases. Advertising, selling and promotional costs are

reduced. There are economies of scale as advertising for core brand and its extension reinforces eachother.

Cost of developing new brand is saved.

Consumers can now seek for a variety.

There are packaging and labeling efficiencies.

The expense of introductory and follow up marketing programs is reduced.

There are feedback benefits to the parent brand and the organization.

The image of parent brand is enhanced.

It revives the brand.

It allows subsequent extension.

Brand meaning is clarified.

It increases market coverage as it brings new customers into brand franchise.

Customers associate original/core brand to new product, hence they also have quality associations.

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Nestle Brands

Some of the Nestle Brands include;

Nescafe instant coffee

Perrier bottled water

Breakfast cereals including CheeriosKit Kat bars

Stouffers prepared meals

Bouitoni pasta and Maggi cooking sauces.

Pet food like friskiesBaby food like Nido

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Nestle Brands (Contd)

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Problems Associated with having

many Brands

Brand extension in unrelated markets may lead to loss of reliability

if a brand name is extended too far. An organization must research

the product categories in which the established brand name will

work. There is a risk that the new product may generate implications that

damage the image of the core/original brand.

There are chances ofless awarenessand trial because the

management may not provide enough investment for the

introduction of new product assuming that the spin-off effects fromthe original brand name will compensate.

If the brand extensions have no advantage over competitive brands

in the new category, then it will fail

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How to strategically reduce many

brands in a company

Nestle had 7500 brands, they easily could cut down to 1300 by applying the following method ofbrand classification;

The above table with brand classification has both a one to one relation from one column to another

and has a one to many relation originating from Brand location based classification which has the

one relation to many classifications on column 2.

Using the above method of classification, if Nestle decide to cut-down its brands from 7500 brands

up to 1300 brands . All they need to do is cut from outside of the two sides of extremes i.e from

Local product brand and Global corporate brand and start working their way backwards.

That is cut from Local Product, Local Family ,Local corporate to Regional product

And also cut from Global Corporate ,Global Family, Global Product, Regional Corporate to

Regional Family.

Through using this method Nestle will be able to greatly reduce the massive number of brands that

they carry and just remain with the more important brands such as Regional product, regional family

and regional corporate that will be appealing to a particular region that has the same market trends.

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Brand Location basedclassification

Brand need basedclassification

Local Product

Regional Family

Global Corporate


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What companies should do if they

want to reduce number of brands

Relinquishing of the brand name rights. This is a

legal agreement to allow other parties to use your

brand name

Through Mergers which is basically, when two

companies become one. This decision is usually

mutual between both firms.

Through Acquisitions which is a corporate action inwhich a company buys most, if not all, of the target

company's ownership stakes in order to assume

control of the target firm.

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Conclusion

Nestle management philosophy is to develop asmuch as can be decided locally, but the interestof the corporation as a whole has priority

Due to the industry Nestle is in, it is perhaps

undesirable for it to become fully global however. Nestles aim is to customize to the local tastes and

leave a lasting impression of The nest alwaystaking care of you.

GOOD FOOD, GOOD LIFE

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MBA-IB Group 6 Presentation

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Transcript of MBA-IB Group 6 Presentation