Marketing plan of Nestle (Malaysia) Berhad
Major Assignment
MARKETING PLAN OF NESTLE (MALAYSIA) BERHAD
TABLE OF CONTENTS
I. Executive Summary 5
II. Current Market Situation 6
2.1. Situational Analysis 6
2.2. Market Overview 6
2.2.1 Market Demographic and Needs 6
i. Culture and language 6
ii. Economic climate 7
iii. Political Climate 7
iv. Market Need 7
2.2.2 Market trends and target market growth 7
2.3. S W O T analysis 9
2.4 Competitive and Industry Analysis 11
2.5 Product Overview 12
2.6 Key to success and critical issues 12
2.6.1. Keys to success 12
2.6.2. Critical issues 13
III. Environmental Analysis 13
3.1 Macro environmental analysis 13
3.1.1 Demographic 13
3.1.2 Economy 14
3.1.3 Infrastructure 14
3.1.4 Laws 14
3.2 Micro environmental factors 14
3.3 Competitive strategy 15
IV. Marketing Strategy 15
4.1 Mission 16
4.2 Marketing Objectives 16
4.3 Financial Objectives 16
4.4 Target Market 17
4.5 Market Positioning 17
4.6 Strategy Summary 17
V. Marketing Mix 18
5.1 Product 18
5.2 Pricing 20
5.3 Promotion 20
5.4 Packaging 21
5.5 Channel of Distribution 21
5.6 Services 21
5.7 Internal Marketing 22
VI. Marketing Research 22
VII Financial Analysis 23
7.1 Sales or revenue Forecast 23
7.2 Marketing expenses and budget 23
7.3 Break even Analysis 24
7.4 Profit and Loss analysis 24
VIII. Control 25
8.1 Implementation 25
8.2 Marketing Organization 26
8.3 Contingency Planning 26
References 27
Appendixes 30
Appendix 1
Appendix 2
Appendix 3
Appendix 4
Appendix 5
Appendix 6
Appendix 7
Appendix 8
Appendix 9
Appendix 10
Appendix 11
Appendix 12
Appendix 13
Appendix 14
Appendix 15
Appendix 16
I. EXECUTIVE SUMMARY
Contemplating Nestlé's situation as the Dominant firm in the beverage industry and market leader in the Malaysian market, the principle aim of this marketing plan is to: reinforce market perception of nestle products, expand total market, protect current market share, and gain additional share. (Kotler P. & Armstrong G., 2001)
As such, the strategy that Nestle adopt in this marketing plan are as follow: (a). Keeping local brands that suit Malaysian taste while going global with its technology. (b). Fashioning products for Malaysia from natives ingredients, employ local employee (c). Promote its image brand as concern to the health (d). An attractive packaging innovation. (e). Be socially responsible by providing a couple of scholarship program to the Malaysian citizen.
In this marketing plan, a new channel of distribution which is public transportation, buses that cater the outstation route is been introduced. This by itself predicted may boost the revenue by 5%. Furthermore, a new packaging is introduced as well. Besides being attractive and durable, this new packaging also able to cut cost of production by 2%. A suggestion card is attached in this new packaging enable a feedback from customer.
An especially important to take note of is that a new product is introduced in this marketing plan. It is a new coffee-mate that has 2 new flavors on top of the original taste, Hazelnut Flavored and French Vanilla Flavored.
II. CURRENT MARKET SITUATION
2.1. Situational Analysis
As the world's leading food company, Nestlé is dedicated to providing the best nourishment to people each day, throughout their lives. Its recipe for success comes from an intimate understanding of consumer needs and the ability to meet those needs through its global resources. All around the world, Nestlé contributes to the well-being of individuals, families, communities, nations - to enhance their quality of life.
Especially in the beverage dairy product, Nestle offer kick-starting the morning with NESCAFE(r) to winding down the day with a mug of warm, chocolaty MILO(r), Nestlé beverages have always played an important part in the day of almost every man, woman and child in Malaysia. In fact, enjoying a favorite Nestlé beverage has become part of Malaysian life, whether it's at the local 'mamak' stall or at a fancy restaurant. (Nestle Malaysia, 2004)
2.2. Market Overview
2.2.1. Market Demographics and need
i. Culture and Language
Malaysia has a population of approximately 25 million people. Race and religion are diverse with ethnic Malays forming about 66 per cent, Chinese - 25 per cent and Indians - seven per cent of the population.
Sunni Islam, a moderate and tolerant version of the Islamic faith, is the religion of more than half of the population and is primarily identified with the Malays. Thus, halal issues are significantly important. Other major religions include Buddhism, Taoism, Hinduism and Christianity. Muslim do not consume pork related product whereas Hinduism and Buddhism generally avoid beef.
The urban population of Malaysia has a relatively high standard of living and the society is gaining in affluence. Many Malaysians are exposed to Western culture through education, the media and travel and have incorporated various Western tastes in their lifestyles (Infostream, 2004)
ii. Economic Climate
Following the impact of the global economic slowdown in 2001-02, the threat of terrorism and the outbreak of SARS in the region, the Malaysian economy began to rebound in the second half of 2003. The industrial production index grew by 11.7 per cent year on year in November largely due to strong growth in the export oriented manufacturing sector 14.9 %. Domestic oriented industries grew more moderately. Exports raised 7.4 per cent in November - the fourth consecutive month of growth. Imports also continued to raise by 6.2 per cent, however, Malaysia's trade surplus widened to around RM6.3 billion. The trade surplus for the first 11 months of 2003 was recorded by to be not less than the amount of RM68.9billion.
The Malaysian economy continued to recover in the third quarter to 2003 following relatively flat economic performance in 2002 and the first half of 2003. This recovery is being fuelled by increased demand and higher prices for Malaysia's key palm oil, petroleum and electronics exports from major trading partners such as the USA, Japan, Singapore and China. (BursaMalaysia, 2004)
In the third quarter of 2003, the key economic indicators include:
* Gross Domestic Product: +5.1 per cent
* Consumer Price Index: +1 per cent
* Exports: +3.3 per cent
* Imports: +3.1 per cent
* Trade surplus: RM19.81 billion
* Private consumption: +5.4 per cent
(Source: Bank Negara, Central Bank of Malaysia - Third Quarter 2003 Reports)
The government has also invested heavily in infrastructure to facilitate both efficient business and a high standard of living, particularly in the major centres.
iii. Political climate
Malaysia entered a new political era in November 2003 with the retirement of long serving Prime Minister Dr Mahathir Mohamad. Dr Mahathir has been succeeded by his former Deputy Prime Minister, Datuk Seri Abdullah Ahmad Badawi who has stamped his first 100 days as prime minister with a very active campaign on corruption and cronyism in government. He has also moved quickly to improve bilateral relations with ASEAN neighbors (Malaysian Macro environments, 2004).
Barisan Nasional (National Front) is the governing coalition and consists of the United Malays National Organization (UNMO), the Malaysian Chinese Association, Gerakan (a Chinese-based party), the Malaysian Indian Congress plus a number of other parties including some based in Sabah and Sarawak. The current government has been in power since 1955. (Malaysian Macro environments, 2004)
iv. Market need
The key opportunities in the Malaysian dairy industry include: the infant formula and formulated milk powder, cheddar and non-cheddar cheese, butter, ghee, ice cream. (Malaysian Food and Beverage Executives Association, 2004)
2.2.2. Market trends and target market growth
The dairy industry in Malaysia is relatively under developed. Domestic milk production is around 30 million liters in Peninsular Malaysia and satisfies only 3.7 per cent of Peninsular Malaysia's requirement for milk products. The raw milk production is drawn from 36 milk-collecting centers throughout Peninsular Malaysia and managed by the Veterinary Authority. (Malaysian Veterinary Authority, 2004)
The strong growth of the hypermarket and supermarket sectors in Malaysia has led to a greater availability of shelf space for dairy products. In addition, increased urbanization and a growing middle-income society have resulted in greater demand for dairy products. (Federation of Malaysian Manufacturers, 2004)
Malaysia aims to achieve at least 10 per cent self-sufficiency in milk products by 2010. Future plans are to focus on improving milk quality and improving the cold chain distribution. (Nutrition Society Malaysia (NSM), 2004)
The country has a milk processing industry, which produces: the sweetened condensed milk, yoghurt, pasteurized milk, recombined milk, UHT milk, ice cream.
The milk processing industry currently has seven to eight main corporations. Sweetened condensed milk is widely used as a creamer and sweetener for warm beverages such as coffee, tea and cocoa followed by powdered milk and milk drinks.
Due to a limited domestic supply of milk and high capital investment, Malaysia does not have a spray-dried dairy processing industry to produce dairy milk powder. Hence, the dairy industry is offering a great opportunity for nestle to be explored further.
2.3. SWOT Analysis
Strengths
. Quality products
2. Successfully test marketed globally
3. Offer alternative to e-commerce ventures
4. Skilled and committed team
5. High margins on beverage appliances
6. Outsourcing
7. Low set up costs
Capitalize on Strengths
. Market entry and to gain market knowledge
2. Favorable consumer perception
3. Offers investor opportunity to balance portfolio
4. Management has skills and experience in a variety of areas
5. Ability to negotiate on bulk purchases
6. Reduces capital costs
7. Reduces investor's risk and exposure
Weaknesses
. Reliance on one client initially
2. Exposure to fluctuating packaging costs
3. Management team(board of director) has not worked together for long period
4. Board not yet finalized
Address Weaknesses
. Committed to expansion
2. High margins provide flexibility
3. Independent Chairman appointed and Corporate Governance structures in place
4. Positions to be offered to venture partners
5. Professional sales team recruited with assistance of venture partners who will have affinity with, and experience in the ...
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Weaknesses
. Reliance on one client initially
2. Exposure to fluctuating packaging costs
3. Management team(board of director) has not worked together for long period
4. Board not yet finalized
Address Weaknesses
. Committed to expansion
2. High margins provide flexibility
3. Independent Chairman appointed and Corporate Governance structures in place
4. Positions to be offered to venture partners
5. Professional sales team recruited with assistance of venture partners who will have affinity with, and experience in the food/beverage industry
6. Addressed by introductions through venture partners and independent Chairman
Opportunities
. Expanding infant milk market
2. Multiple repeat purchases of product for other outlets operated by initial purchasers
3. Introduction of online direct mail
4. Increasing awareness of specialty coffees
5. Other markets (domestic and coin vending)
6. Innovation in existing market
Maximize Opportunities
. Build consumer preference for La Barista coffee
2. Sell benefits
3. Target diverse range of users
4. Education of La Barista style coffee as option to specialist more expensive blends
5. Ease, quality and consistency of produce ideal for introduction to home and coin vending market
6. Commitment to relentless innovation ensures market bench marks challenged
Threats
. Imitation products
2. Window of opportunity may be limited
3. High number of competitors
Minimize Threats
. IP protection
2. Venture turn-key and ready to be actioned
3. Guaranteed demand through Nestle distribution
4. Backing of world's largest coffee marketer
(Refer to appendix 16 for further explanation)
2.4. Competitive and Industry Analysis
The table below described in detail the competitive analysis of Nestle in the beverage industry:
Competitive Strategy
Required Skills and Resources
Organizational Elements
Associated Risks
Overall cost Leadership
~ Sustained Capital Investment and access to capital
~Tight cost control
~ Rapid technology change
~Frequent, detailed reports
~ Process engineering skills
~Structured organization and responsibilities
~ Low cost of learning by industry or imitators
~ Intensive supervision of labor
~ Product designed for case of manufacture
~Incentives based on meeting strict quantitative targets
~ Inability to see required product or marketing change due to attention placed on cost
~ Low cost distribution system
Differentiation
~ Strong marketing Abilities
~ Strong coordination among function in R&D, product development, and marketing
~ The cost differential between low-cost competitors and differentiated firm becomes too great for differentiation to hold brand loyalty. Buyers thus sacrifice some of the features, services or image posed by the differentiated firm for cost saving
~ Product engineering with creative flair
~ Strong capability in basic research
~ Subjective measurement & Incentives instead of quantitative measures
~ Long tradition in the industry, combination of skills and experience
~ Amenities to attract highly skilled labor, scientist or creative people
~ Strong cooperation from channels
~ Imitation narrows perceived differentiation, a common occurrence as industries mature
Focus
~ Combination of the above policies directed at the particular strategic target
~ Combination of the above policies directed at the particular strategic target
~ The differences in desired products or services between the strategic target and the market as a whole narrows
~ Competitors find submarkets within the strategic target and out focus the focuser
The following table shows the current estimated market share of major competitors in the beverages dairy product market:
Estimated Market Share Analysis (Estimated by revenue)
Competitor
Current Share
Nestle (Malaysia) Berhad
31%
Malaysia Dairy Industries
8%
New Zealand Milk
2%
Dutch Lady Milk Industries Berhad
7%
East Asiatic Company
5%
Fraser & Neave Holdings Berhad
8%
Others
9%
2.5. Product Overview
We ensure that our products are of the highest or premium quality and also affordable. Innovation and renovation play a major role in the development of milk based products. Milk base products are our core business when nestle started. Products are produce according to the WHO and UNICEF requirement and are often developed together to ensure that the consumers will benefit from taking our products.
We continue creating new and value- added products, not only to satisfy customer appetite and tempt customer senses but also to provide health benefits to complement the overall wellness concept. ( Nestle Malaysia, 2004)
2.6. Keys to Success and Critical Issues
2.6.1. Keys to Success
Nestlé is dedicated to providing the best nourishment to people each day, throughout their lives. Its recipe for success comes from an intimate understanding of consumer needs and the ability to meet those needs through its global resources.
Operational efficiency which is efficient use of resources and better satisfaction of customer requirement are the definite key of success of Nestle. Operational efficiency focuses on our efforts to harness our resources not just across the country, but around the world, to deliver optimum performance in a sustained manner for long-term growth and profitability.
2.6.2. Critical Issues
Nestle in Malaysia faces several critical issues:
a. Nestle product known widely more expensive than its competitor brand.
Among its competitor brand, Nestlé's product known to be slightly more expensive
b. Halal issues
In Malaysia, thus far Nestle has been facing 11 (eleven) cases regarding halal mater. It has been argued that some component in Nestlé's product recipe do not comply with halal requirement. (Royal Customs and Excise Department Malaysia, 2004)
c. Diversity of background
Nestle claimed that its product adapt to local appetite. It claimed that in various land, Nestle try to manipulate the custom recipe in order to be accepted by its market. In Malaysia, though, Nestle face dilemma in come out with a custom recipe that represent local market's appetite since it consist of people with a diversified background, taste and preferences.
III. ENVIRONMENTAL ANALYSIS
3.1 Macro environmental Factors
The Macro Environmental factors that may explicitly affect the performance of Nestle are as follow:
3.1.1. Demographic:
Malaysian urban population relatively has a high standard of living and through advance in education develops a concern toward health, willing to spent a bit more to attain quality product.
Age structure: 0 - 14 years = 35%, 15-64 years = 61 % and above 65 = 4%. Targeted market of nestle is infant toward adult, which represent more than 80%.
Birth rate: 2.08%. It is an opportunity for the infant milk product. (Statistic, 2004)
3.1.2. Economy:
Purchasing power parity = Rm 10,300 (year 1999) Malaysian is experiencing economy growth by 5 %, household income increase by 3 %. Consumption in the beverage/ family was rm. 412 in 2002 and rm. 430 in 2003, which indicate an increase of 4.3%
61 % of Malaysia's population comprises the nation's middle to upper income group. All this factors affect positively toward Nestle.
3.1.3 Infrastructure:
Well equipped basic infrastructure- communication, water, electricity transportation, and rood. New retail outlets are continuing to open, providing better access to consumer on a nationwide basis. These businesses are looking for the product for their retail outlets.
3.1.4. Laws:
The Food Act 1983 (refer appendix 9) and Food Regulations 1985 set product standards and particular labeling requirements for milk and milk based products.
3.2. Micro environmental Factors
. The threat of entry by new competitors. (high barriers to enter the market)
- Economies of Scale
- Differentiation
- Capital requirement
- Switching cost
- Government regulation difficult to comply
2. The intensity of rivalry among existing competitors.
- Numerous rivals, equally balanced
- High fixed cost
- Low switching cost
- High exit barriers
- Diverse competitors
3. Pressure from substitute products.
- Numerous rivals promote high substitutes products.
4. The bargaining power of buyers. (High customer buying power)
- Buyers has all the relevant information
- Low switching cost
- Purchase is not very important for the buyers
- Low profit margin
5. The bargaining power of suppliers (High supplier bargaining power)
- Dominated by few supplier (Komnas, Twenty20, Rawnas)
- High switching cost
- Differentiated product
- Supplier's input is crucial
3.3. Competitive Strategy
Nestlé's competitive strategies include: (a). Keeping local brands that suit Malaysian taste while going global with its technology. (b). Fashioning products for Malaysia from natives ingredients, employ local employee (c). Promote its image brand as concern to the health (d). Attractive packaging innovation. (e). Be socially responsible by providing a couple of scholarship program to the Malaysian citizen. (f). In developing countries, like Malaysia Nestle first establish sales channels by making basic mass-produced foodstuff that the locals can afford. Then as consumer grow richer, pump higher-valued products through these same channels.
IV. Marketing Strategy
4.1. Mission
Be the leading multinational company in food, nutrition and wellness.
Produce and sell world-class products of the highest consistent quality, reliability and convenience based on business excellence principles throughout our operations
Maximize the use of good quality local raw materials
Be an exemplary employer with a progressive human resource and social policy; with a management style that is based on "Management Commitment and People Involvement"
Be a responsible corporate citizen, fulfilling all obligations to Government, shareholders, customers, communities and consumers.
Protect the environment by being committed to environmentally sound business practices and taking into account the need to preserve natural resources and save energy.
Guarantee that all products manufactured, imported and distributed by Nestlé Malaysia are certified HALAL by JAKIM.
Deliver shareholder value through the achievement of sustainable and profitable long-term growth
4.2. Marketing Objectives
Our primary Marketing Objectives are to:
* Increase product awareness to targeted market by 5%
* Develop and introduce one new product by this year
* Decrease/remove potential customer resistance to buy the product lead to 2%
increase in sales
* Experience an increase in new customer who are turned into long term loyal customers
* Inform targeted audience about the features and benefits of our product and its competitive advantage, leading to a 2.5% increase in sales
4.3. Financial Objectives
Nestlé's financial objectives are as follows:
* Sales Volume: 10 % increase in sales (please refer appendix 10 a)
* Profitability: Increase 22% in net profit (please refer appendix 10 b)
* Export: Target export 13% of total sales (please refer to appendix 11)
4.4. Target Market
The target market segment strategy will not be significantly different to address the two groups. Both groups, regardless of income, typically belong to the same group of having a relatively high living standard. Therefore, to reach the different groups does not require a distinctly different strategy.
Those two distinct target populations are:
. Middle class of income (Rm 24,000-48,000 /year)
This group of people does not have huge amounts of disposable income, however in their economic circumstances they don't too sensitive toward price differences.
2. Upper class of income (>Rm 48,000/ year)
Typically, this group is characterized by a wealthy one income family. This group of market that goes and look for quality and concern toward healthy product
4.5. Market Positioning.
Nestle will positioning itself as follow:
* Position itself as healthy concern product and quality product
Today's consumers are discerning, well-educated and informed. They demand consistent quality in products and innovation, and strive to maintain good health through active lifestyles, wholesome foods and general well-being.
* Value the local taste
Its recipe for success comes from an intimate understanding of consumer needs and the ability to meet those needs through its global resources
* Modern and convenience lifestyle
Nestlé contributes to the well-being of individuals, families, communities, nations - to enhance their quality of life by provide the convenience lifestyle.
4.6. Strategy Summary
The single objective of Nestle is to increase the market share and maintain the cash cow situation. The marketing objectives will seek to first increase customer awareness regarding their product, reduce the potential customer resistance, develop a customer base, and work toward building customer loyalty and referrals.
The message that Nestle seek to communicate is that Nestle offers the highest quality, most innovative beverage producer among the competitors. This message will be communicated through two main ways:
First, marketing innovation by the introduction of online the 'Dear Nestle' direct mailer pack that has been developed to strengthen the bond with the loyal consumers. This feature not only provides updated information on Nestle activities but is also a direct channel of communication for feedback and exchange of ideas.
Second is the innovation in the distribution. Beyond homes Nestle food services hotels, airlines, vending machines, quick-serving restaurants, and even the humble 'mamak' stalls. Particularly, for this marketing plan we start in expanding our wing even to the Bus that caters the outstation route.
V. Marketing Mix
Nestlé's marketing mix is comprised of the following approaches to product, pricing, promotion, and distribution program.
5.1. Product
The Products that is covered in this marketing plan is beverages. Following are those products complete with its details:
Depend on the brand that's been trusted since 1889. Use CARNATION to turn every dessert into a sweet success.
The #1 brand of sweetened beverage creamer in Malaysia.
The #1 beverage with the great chocolatey taste that has been a Malaysian household favourite since 1951.
The delicious and nutritious malted drink alternative.
Wonderfully creamy with great-tasting goodness, Nestlé Full Cream makes every creation delicious.
Low in fat, high in great taste and the wholesome goodness of fresh milk.
Serve a totally refreshing taste that will leave your customers thirsty for more.
A real beverage refresher that is 100% natural, 100% satisfying.
Juice up your beverage selection with the refreshing, 100% natural NESTLÉ MANGO DRINK.
The world's #1 sparkling mineral water, PERRIER is the choice beverage of chic and sophisticated consumers.
In addition to those products above, we find it necessary to introduce a new product in order to capture the new market that has not been captured so far. Following are the details of it:
New COFFEE-MATE(r) in 2 different flavors: which are the Hazelnut Flavored and the French Vanilla Flavored
5.2. Pricing
We make sure that our products are reasonably priced. We seek to inform our customer and to make sure that the consumers know the quality of our products. As our competitors may have lower prices, it may affect our grip on the market share. Given the current economic situation, many consumers look for the lowest priced goods so we much accommodate but we guarantee that we do not compromise our quality.
Following are the approximate price of our major product:
Approximate pricing for nestle major products
Product
Price
Nestle Carnation
$ 5.60
Nestle Tea Pot
$ 3.60
MILO
$ 10.90
Nestomalt
$ 12.00
Nestle Full Cream
$ 6.00
Nestle Low Fat Milk
$ 15.00
Nestea
$ 5.00
Nestle Orange Juice Drink
$ 2.60
Nestle Mango drink
$ 2.60
Perrier
$ 1.50
Coffee- Mate
$ 10.00
5.3. Promotion
Our primary strategy of promotion would be the "Dear Nestle" direct mailer pack that has been developed to strengthen the bond with our loyal customers. This mailer pack provides the updated information on Nestle activities and promotion. Beside that nestle also holds public forums in an effort to promote and educate nutritional wellness among consumers. These forums also helped to foster a better relationship between the company and consumers. (Appendix 13)
Another mode of promotion for nestle is sponsoring major and rural sport events. Milo a brand from nestle always sponsors sporting events like badminton to bowling to the Commonwealth Games. This kind of promotion will always lead to the awareness of our customers (appendix 12)
Advertising on mass media is also used, which is through television and national newspaper advertisement. Last but not the least mode of promotion is the sales promotion that will be taking place during the months of May, June, July and December. During this sales promotion some free gifts such as: cute Jars, plates and spoon will be given. Beside, free extra pack will be attached in order to attract the customer.
5.4. Packaging
Since packaging is an integral part of our product, we propose new packaging in this marketing plan that is not only attractive and durable, but also functional too. Our innovative packaging strive to ensure every product packaging guarantees freshness, safety, convenience and whenever possible environmentally friendly too.
In this new packaging, we have reduced packaging materials use by 8%, which cutting the cost of production by 2%.
5.5. Channel of Distribution
Beyond homes, Nestle supplies its product to hotels, airlines, vending machines, quick-serve restaurants, supermarket, retailers and even the humble 'mamak' stalls. Wherever, whenever and however, nestle bring innovative solutions that guarantee high quality products and services. In this marketing plan we are please to introduce a new channel of distribution which is the public transportation (Buses that cater the outstation route).
5.6. Services
Nestle plans a multifaceted service strategy. Nestlé Foodservices provides a wide range of services to help you grow your business and make the most of your budget. This service which is totally free of charge, give tips from expert to help build business with nestle. This service also gives access information and support related to the use and maintenance of nestle food and beverages equipment further arrange for product delivery.
Nestle foodservices also provides wellness articles that educate consumer about healthy life style and information regarding certain health problems. Furthermore, this service provides recipes that are created by professionals using high quality delicious Nestlé branded products. New recipes are added all the time.
5.7. Internal Marketing
In order that the entire organization focus on the customer and support fully for this marketing plan, there are some internal marketing strategies that have been developed.
- Conduct a regular (semi-monthly) staff meeting to update the marketing workforce on the current plans, implementation and achievements.
- Maintain an open internal marketing communication through intranet, internal newspaper on each week's activities and any changes that are being made.
- Provide recognition and rewards for exceeding the planned sales level.
- To encourage Nestlé's staff to consume nestle products, 5% discounts is given to all nestle staff should they purchase any of the nestle products.
VI. Marketing Research
Nestle is using Marketing Research to support this marketing plan in a number of ways:
. The 'Dear Nestle' direct mailer
This is an online pack that has been developed to strengthen the bond with our loyal customers. The mailer pack is a direct channel of communication for feedback and exchange of idea from the valued customers
2. The suggestion card in every package of nestle product
An additional source of market research is a feedback mechanism based on a suggestion card system. This suggestion card will be attached on all the packaging of nestle product. The suggestion card has several statements that customer are asked to rate in terms of scale given. There are also several open ended question that allow the customers to freely offer some suggestion or critics. Customer will be asked to fill those forms and best suggestion will be rewarded monthly.
3. Focus group
In a focus group, we will bring together a group of users of nestle product to discuss issues and concerns about the features of our product such as packaging taste and also how acceptable the range of the price to them. The group typically lasts about two hours and is run by a moderator who maintains the group's focus.
VII. Financials
7.1. Sales or Revenue forecast.
For this marketing plan we targeted an increase of 10% in sales which is an increase from $2,656,989 to $2,922,687. There are few bases for this target, which are:
. The introduction of a new channel of distribution to the Buses that cater the outstation route. Contemplating the volume of its route and number of its passenger, it may boost 5% increase in sales(appendix)
2. The introduction of the new packaging innovation that serve as the pull strategy.
3. The emphasize that have putted in the sales promotion.
4. Economic growth of Malaysia which predicted to be 5%
Following are the detail of the sales forecast respective of its channel of distribution and respective of the months throughout the year covered by this marketing plan.
hotels
Airlines (air asia)
vending machine
restaurant
mamak stal
Bus transional
retailers
supermarket
TOTAL
Jan
20,226
7,000
9,485
24,356
24,356
2,000
36,000
80,000
233,423
Feb
21,789
7,000
9,485
24,356
24,356
2,000
36,000
80,000
234,986
Mar
21,789
7,000
9,485
24,356
24,356
2,000
36,000
80,000
234,986
Apr
22,789
7,000
9,485
24,356
24,356
2,000
36,000
80,000
235,986
May
40,000
7,000
9,485
24,356
24,356
2,000
37,600
81,122
255,919
Jun
35,000
7,000
9,485
24,356
24,356
2,000
37,600
81,122
250,919
Jul
28,825
7,000
9,485
24,356
24,356
2,000
37,600
81,122
244,744
Aug
28,825
7,000
9,485
24,356
24,356
2,000
36,000
80,000
242,022
Sep
28,825
7,000
9,485
24,356
24,356
2,000
36,000
80,000
242,022
Oct
28,825
7,000
9,485
24,356
24,356
2,000
36,000
80,000
242,022
Nov
28,825
7,000
9,485
24,356
24,356
2,000
36,000
80,000
242,022
Dec
45,000
7,588
9,485
24,356
24,356
4,134
37,600
81,122
263,641
350,718
204,588
233,820
292,272
292,272
46,134
438,400
964,488
2,922,692
(please refer to appendix 2 , 5 ,7)
7.2. Marketing Expenses and Budgets.
We allocated the amount of $ 350,722 for the total marketing expenses for this marketing plan which will include: Advertising, Sales Promotion, Marketing Research, Sales Training, and Customer Services. The very basis for this allocation is contemplating past record whereby about 12% of the sales is allocated for marketing expenses. (Refer appendix 6,15, 14)
Marketing Expenses Budget
2001
2002
2003
2004
Advertising
22752.7
35%
Sales Promotion
70144.4
20%
Marketing Research
35072.2
0%
Sales training
70144.4
20%
Customer service
52608.3
5%
Total Marketing expenses
332,883
294467
318838
350722
% of Sales
3%
2%
2%
2%
7.3. Break - Even analysis
Variable Cost
$10.00 per unit
Fixed Cost
$907,989,335.00
Price
$15.00 per unit
You will breakeven at
Break-even at
81,597,867 units
$ 2,723,968,005.00
(Please refer appendix 3, 4, 5, 7, 8)
7.4. Profit and loss analysis
As a result of the introduction of the new packaging innovation the total expenses for packaging reduced by 2% form 751,568 to 736,536. Sales as been targeted will be experiencing increase by 10% from 2,656,989 to 2,922,687, whereas the COGS contemplating the past record expected to be 68% of the revenue which is 1,987,427. Thus, the total profit will be 198,724 which is 22% increase from last fiscal year.
Following are the detail of it: (please refer appendix 2& 15)
Profit and loss analysis
999
2000
2001
2002
2003
2004
Sales
,952,571
2,202,451
2,585,708
2,479,649
2,656,989
2,922,687
COGS
,743,934
,695,848
,743,432
,987,427
% over sales
67%
68%
66%
68%
Working capital
841,774
783,801
913,557
935,260
Total Expenses
637,825
601,216
751,568
736,536
Profit
240659
202452
203949
82585
61989
98,724
VIII. Controls
Control is directed to monitor the quality and customers service satisfaction. Pivotal control will enable us to react very quickly in correcting any problem that may occur. We are also tightly controlling marketing schedule to assure timely implementation of planned programs.
A contingency plan has been developed for immediate implementation in the case of severe increase in the raw material price that may put pressure on cost of production.
8.1. Implementation.
To guide the implementation of this marketing plan, we have schedule the detailed month-by-month activity for each marketing program include the managerial responsibility. The schedule is as follow:
Implementation Schedule
Activity
Start Date
End Date
Budget
Manager
Department
Marketing Plan
-Oct-03
31-Dec-03
Dane
Marketing
Advertising
-Jan-04
31-Dec-04
$122,753
michy
Marketing
Sales Promotion
May, June, July, Dec
$70,144
michy
Marketing
Sales Training
Jan, Feb, Mar
$70,144
Dane
Marketing
Customer Service
-Jan-04
31-Dec-04
$52,608
michy
Marketing
Marketing research
-Jan-04
31-Dec-04
$35,072
Dane
Marketing
The Gantt Chart
Marketing Plan
Advertising
Sales Promotion
Sales Training
Customer Service
Marketing research
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
8.2. Marketing Organization
As the chief Marketing officer, Mr Ganeshan R. Ampalavanar holds the overall responsibility for marketing strategy and direction, He also direct the channel sales and all the marketing communication, and promotion activities.
Following the Sales Managers: Ang De Thiang, Fung Tan Shing, Lim Lorn Sun, Yeap Siew lim, Ang Lay Lienh, Wong Chen Ping, David Lineder
Brand Manager: Wan Cheng Kim
Senior Client Support: Fara Muhammad
Mass and Media communication executive: Mr. Ian James Donald
8.3 Contingency Planning
Nestle has prepared a contingency plan to implement if the following difficulties and risk happen:
- Extremely lower demand until break-even unattainable
This may happen if our product unacceptable to the market or the pricing strategies doesn't effective which resulting in extremely low demand. The possibility could be that the break-even level unattainable.
- High inflation that leads to increase in the cost of good sold.
Though it hardly possible since Malaysia has a very stable economy situation, still high inflation may lead to an increase in the cost of production which may effect severely in the price and demand.
Should either one of above risk taken place Nestle will try to cover the loss through:
- Bank Loan
- Liquidate some of the asset to cover liabilities.
References:
Ling, C S (2004). "Nestle Join The NPC Sponsorship List" New Straits Times April 17th 2004 pg 18.
Chan, J (2004) "Nestle Holds Public Forum" Star Newspaper. May 18th 2004 pg. 36
Boyd, H W jr., Walker O C., Mullins J., Larreche, J-C.(2002) "Marketing Management: A strategic Decision-Making Approach 4th Ed". McGraw-Hill Irwin: UK
Kotler P. & Armstrong G. (2001) "Principles of Marketing" McGraw-Hill: USA
Schiffman L.G & Kanuk L.L. (2004) "Consumer Behavior" Prentice Hall: USA
Infostream(2004). http://www.angelfire.com/ma/usmaret/artistic.html. Date access: 26/03/2004
Etzel M.J., Walker B.J. & Stanton W.J. (2001) "Marketing" Thompson Learning: US
Wood M.B. (2003) "The Marketing Plan" Prentice Hall: Australia
Parmerlee D. (2000) "Preparing the Marketing Plan" Prentice Hall: UK
Nestle Malaysia (2004) http://www.nestle.com.my date access: March - May 2004.
BursaMalaysia(2004) http://www.bursamalaysia.com/website/listing/lc/nestle.htm. Company profile: Nestle (malaysia) Berhad. Date access: 23th /04/2004
Stockk (2004) http://quote.stockk.com/?id=nestle Company search: Nestle(Malaysia) Berhad. Date access: 23th /04/2004.
Food Quality Control Division, Ministry of Health (2004) www.moh.gov.my/fqc/Index.htm date access: 13th/03/04
The Food Act 1983 (2004) www.moh.gov.my/fqc/reference/Food Act/index.htm date access: 15th/04/04
Food Regulations 1985 (2004) www.moh.gov.my/fqc/reference/FoodRegulations/index.htm date access: 24th/04/04
Royal Customs and Excise Department Malaysia (2004) www.customs.gov.my Date access: 15th/03/04
Department of Veterinary Services (2004) http://agrolink.moa.my/jph Date access: 13th/04/04
Malaysian Association of Hotels (food and beverage trends) (2004) www.hotels.org.my date access: 12/05/04
Malaysian Food and Beverage Executives Association (2004) www.mfbea.com.my Date access: 18th 03 -2004
Food Safety Unit, World Health Organisation (2004) www.who.org/fsf Date Access: 15/03/04
Federation of Malaysian Manufacturers (2004) www.fmm.org.my Date Access: 12th/04/04
Nutrition Society Malaysia (NSM) (2004) www.nutriweb.org.my Date Access: 13th/03/2004
Malaysian Macro environments (2004) www.einnews.com/malaysia Date Access: 24th /03/04
Statistic (2004) www.statistic.gov.my Date Access: 20th April 2004
APPENDIXES
Appendix 1:
History of Nestle:
The origins of the Nestle Company go all the way back to 1867, when Henri Nestle created a nutritious product for infants that could be used by mothers who were unable to breast-feed. The first commercially sold infant formula; the first condensed milk produced in Europe; the first milk chocolate; the first soluble coffee; the first freeze-dried coffee; the first granulated instant coffee -- to name just a few.
Today, the Nestle Company has grown and expanded to include the widest range of wholesome foods for people throughout the world.
Nestle in Malaysia:
Nestlé began in Malaysia in 1912 as the Anglo-Swiss Condensed Milk Company in Penang and later moved to Kuala Lumpur due to growth and expansion in 1939.
By the year 1962, with its first factory in Petaling Jaya, Nestlé Malaysia now manufactures its products in 8 factories and operates from its head office in Petaling Jaya, and 6 sales offices nationwide. Since December 13 1989, Nestlé have been public listed in the KLSE.
The organization currently employs over 3,500 people and manufactures as well as markets more than 300 HALAL products in Malaysia.
Appendix 2:
Appendix 3:
Appendix 4:
Appendix 5:
Appendix 6:
Appendix 7:
Appendix 8:
Appendix 9:
(Food Act 1983):
In this Act, unless the context otherwise requires -
"advertisement" includes any representation by any means whatsoever for the purposes of promoting directly or indirectly the sale or other disposal of any food;
"analyst" means any analyst appointed under section 3;
"animal" includes any quadruped or bird either domesticated or otherwise, fish, reptile or insect; whole or part of which are used for human consumption;
"appliance" includes the whole or any part of any utensil, machinery, instrument, apparatus, or article used for or in connection with the preparation, preservation, packaging, storage, conveyance, distribution or sale of food;
"approved laboratory" means any laboratory approved by the Minister;
"authorized officer" means any medical officer of health or any health inspector of the Ministry of Health or of any local. authority, or any suitably qualified person, appointed by the Minister to be an authorized officer under section 3;
"Director" means the Deputy Director General of Health (Public Health) of the Ministry of Health;
"Director General" means the Director General of Health of the Ministry of Health;
"entertainment" includes any social or other form of gathering, amusement, festival, exhibition, performance, game, competition, sport or trial of skill;
"food" includes every article manufactured, sold or represented for use as food or drink for human consumption or which enters into or is used in the composition, preparation, preservation, of any food or drink and includes confectionery, chewing substances and any ingredient of such food, drink, confectionery or chewing substances;
"food premises" means premises for or in connection with the preparation, preservation, packaging, storage, conveyance, distribution or sale of any food, or the re-labeling, reprocessing or reconditioning of any food;
"import" means to bring or cause to be brought into Malaysia by land, water or air for the purpose of sale from any place outside Malaysia but does not include the bringing into Malaysia of any food which it is proved is intended to be taken out of Malaysia on the same vehicle, vessel, or aircraft on which such food was brought into Malaysia without any transshipment or landing;
"importer" includes any person who, whether as owner, consignor, consignee, agent or broker, is in possession of, or is otherwise entitled to the custody or control, of the imported food;
"International Health Regulations" means the International Health Regulations as adopted by the World Health Assembly in 1969 and as amended from time to time;
"label" includes any tag, brand, mark, pictorial or other descriptive matter, written, printed, stenciled, marked, painted, embossed or impressed on, or attached to or included in, belonging to, or accompanying any food;
"medical examination" includes physical, micro-biological, chemical, serological. and radiological examination, and such examination may include the taking of specimen of any body fluid, tissue or waste product for examination or analysis;
"package" includes anything in which or any means by which food is wholly or partly cased, covered, enclosed, contained, placed or otherwise packed in any way whatsoever and includes any basket, pail, tray or receptacle of any kind whether opened or closed;
"premises" includes -
(a) any building or tent or any other structure, permanent or otherwise together with the land on which the building, tent or other structure is situated and any adjoining land used in connection therewith and any vehicle, conveyance, vessel or aircraft; and
(b) for the purposes of section 4 any street, open space or place of public resort or bicycle or any vehicle used for or in connection with the preparation, preservation, packaging, storage, conveyance, distribution or sale of any food;
"preparation" includes manufacture, processing and any form of treatment;
"seal" includes the detention in bulk of any food, a sample of which has been taken for analysis, pending the result of the analysis;
"sell or sale" refers only to sale for human consumption or use includes barter and exchange, offering or attempting to sell, causing or allowing to be sold, exposing for sale, receiving , sending, conveying or delivering for sale or exchange or in pursuance of such sale or exchange, supplying any food where consideration is to be received by the supplier for such supply either specifically or as part of a service contracted for sale, or having in possession any food for sale or exchange, or having in possession any food or appliance knowing that the food or appliance is likely to be sold or offered or displayed or exposed for sale or disposed of for any consideration, and includes electronic sale;
"tobacco" means any product obtained from the leaf of Nicotiana Tobacum plant or other related plants and includes any tobacco product;
"tobacco product" means tobacco, cigarette or cigar or any other form or tobacco including any mixture containing tobacco which is designed for human consumption but excludes any medicinal product controlled under the Poisons Act 1952 or the Control of Drugs and Cosmetics Regulation, 1984;
"vegetable substance" means any plant or part of a plant, and includes the stem, root, bark, tuber, rhizome, leaf, stalk, inflorescence, bud, shoot, flowers, fruit and seed, or an extract thereof
Appendix 10 a:
Sales forecast
Appendix 10 b:
Profitability Forecast
Appendix 11:
Appendix 12:
(Source: News strait times, Tuesday 19th may 2004)
Appendix 13:
(Source: Star newspaper 17th April 2004)
Appendix 14:
Appendix 15:
Appendix 16:
S W O T analysis
.
Strength
. Expertise: Nestle has put aside a sum that is dedicated towards the research and development. We employ highly skilled employees to assist with the development process. Thorough research and testing have been done prior to introduction of new products.
2. Market share: Currently, nestle is the largest food company in the world and we have a very large market share. We market over 8500 brands and 30000 products world wide. Nestle operates nearly 500 factories across 5 continents and employs over 200,000 employees worldwide. In Malaysia alone, Nestle employs over 3,500 people and manufactures as well as markets more than 300 HALAL products
3. Range of Products: Our products range from milk to ice cream to water and to many more. Nestle have a very wide range of products that are available worldwide. Nestle often create and innovate new products to ensure that the market share would remain and increase. Yearly we would introduce new products to capture the ever changing market and consumer.
4. Stability: As an organization that has been through more that a hundred years of experience, Nestle is very stable and reliable. Through the years, we have establish ourselves and the worlds best. Nestle has withstand the test over and over again building up to a strong organization.
Weaknesses
. Price: Nestle products are comparatively higher priced compared to our local "Buatan Malaysia" brands. This is because we want to ensure the quality and will not compromise it. Even thought our prices are relatively not competitive but our quality is our priority
2. Range of Products: Nestle boost a very wide range of products and it is actually our strength to have the ability to produce these products. Nevertheless due to the range of products we are unable to focus on a particular segment therefore it is seen as a weakness.
Opportunities
. Internet Business: The internet is a widely used tool today. Nestle can have an online business to make sure that we cope well with the advancement of technology. We would not want to be left behind by our competitors that have implemented the e-business method.
2. Market growth: According to the Malaysian statistics department, the Malaysian market is expected to grow due to the increase of life expectancy and increment in expenditure. This will prove to be a major reason on why we expect our market share to rise.
3. Technology: Nestle have set aside some resources for change. This change is meant towards the technological side. This means that we may need or may acquire new machine that is of higher technology to cope with the demands.
Treats
. Internet Business: Internet business can be seen as an opportunity and also a threat. For example the e-business might not take off and may incur losses to the business. It is then not advisable to continue in this area.
2. Competitors: Competitors are always a threat no matter how advance our business is and how large a market share we have. Our market share may erode due to competition coming and we may lose our superiority. In our business competition is very stiff and we need to innovate to ensure that we maintain our share of the market.
