Report on Nestle Water Marketing Strategy

MARKET

Markets may be any of a variety of different systems

Markets vary in size, range, geographic scale, location, types and variety of human communities

Market is any structure that allows buyers and sellers to exchange any type of goods, services and information

Market facilitates trade and enables the distribution and allocation of resources in a society

Markets allow any tradable item to be evaluated and priced

MARKET DEMOGAPHICS

Population: 180,000,000

Growth rate: 1.828%

Birth rate: 27.74 births/1,000 population

Death rate: 8 deaths/1,000 population

Net migration rate: -1.24 migrant(s)/1,000 populations

0-14 years: 40% (male 33,293,428; female 31,434,314)

15-64 years: 56.9% (male 48,214,298; female 46,062,933)

65 years and over: 4.1% (male 3,256,065; female 3,542,522)

INDUSTRY ANALYSIS

POPULATION 180000000

RURAL 116916480

URBAN 63083520

PEOPLE WITHOUT WATER 44%

BOTTLE WATER USAGE 9%

PEOPLE WITHOUT BOTTLE WATER 91728000

TOTAL TARGET MARKET 9072000

MISSION STATEMENT

Nestlé is dedicated to providing the best foods to people throughout their day, throughout their lives, throughout the world. With our unique experience of anticipating consumers' needs and creating solutions, Nestlé contributes to your well-being and enhances your quality of life.

VISION STATEMENT

We envision Nestlé to grow in the shortest

Possible time into the number one food company in

Pakistan with the unique ability to meet the needs of consumers of every age group from infancy to old age,

For nutrition and pleasure, through development of a large

Variety of food categories of the highest quality

We envision the company to develop an extremely

Motivated and professionally trained workforce, which

Would drive growth through innovation and renovation

We aspire, as a respected corporate citizen, to continue

Playing our due role in the social and environmental

Sectors of the country

ORGANIZATION PORTFOLIO

ESTABLISHMENT:

Nestlé was founded in 1866 by Henri Nestlé with headquarters in Vevey, Switzerland. It has employed around 250,000 people and has factories or operations in almost every country in the world.

COMPANY TYPE:

It is one of the world's biggest food and Beverage Companies.

BRANDS:

Nestle offers a variety of brands of which the most well known are Nescafe, Nestlé Kit Kat, Nestlé juices and Nestlé bottled waters.

Nestlé's existing products grow through innovation and renovation while maintaining a balance in geographic activities and product lines.

The Company's priority is to bring the best and most relevant products to people, wherever they are, whatever their needs, throughout their lives.

BRAND PORTFOLIO

In 1992, Nestlé was the first company to dare to launch a mineral water, Valvert. Today Nestlé Water is established in 130 countries and markets about 70 different brands.

In 1998, for the first time in its history, Nestlé associated its name with bottled water "Nestlé Pure Life".

The brand was launched in Pakistan and soon appeared in Brazil, followed by Argentina, Thailand, the Philippines, China, and Mexico in 2000. In 2001, India, Jordan, and Lebanon followed, and in 2002, Egypt, Uzbekistan and the United States.

Today the Nestle Pure Life brand is present in 20 countries around the world, across all continents - Asia, Near East, South and North America and Europe.

Wherever it is to be found around the world, Nestle PURE LIFE answers some crucial consumer needs, focused on three core pillars: Trust, Quality and Service.

Nestle PURE LIFE offers an ideal balance between a healthy supply of minerals and a pleasant, refreshing taste, making it suitable for the whole family. It contains essential minerals such as:

Calcium: necessary for building strong bones and teeth,

Magnesium: necessary for muscle contraction and transmission of pulses.

COMPANY FROM FOUNDATION TILL NOW

1866	Company's foundation
1905	Merger between Nestlé and Anglo-Swiss Condensed Milk Company
1929	Merger with Peter-Cailler-Kohler Chocolate Suisse's S.A.
1947	Merger with Alimentana S.A. (Maggi)
1971	Merger with Ursina-Franck (Switzerland)
1985	Acquisition of Carnation (USA)
1988	Acquisition of Buitoni-Perugina (Italy)
1988	Acquisition of Rowntree (GB)
1992	Acquisition of Perrier (France)
1995	Nestlé acquires Victor Schmidt & Söhne, Austria's oldest producer of confectionery, including the famous 'Mozartkugeln'.
1997	Nestlé, through the Perrier Vittel Group, expands its mineral water activities with the outright acquisition of San Pellegrino.
1998	Nestlé acquires Spillers Petfoods of the UK and strengthens position in the petfood business which began in 1985 with the acquisition of the Carnation Friskies brand.
1999	Divestiture of Findus brand (except in Switzerland and Italy) and parts of Nestlé's frozen food business in Europe. Divestiture of Hills Bros, MJB and Chase & Sanborn roast and ground coffee brands (USA).
2000	Acquisition of Power Bar.

NESTLE'S HISTORY AND INNVATIONS:

The key factor which drove the early history of the enterprise that would become The Nestlé Company was Henri Nestlé's search for a healthy, economical alternative to breastfeeding for mothers who could not feed their infants at the breast.

In the mid-1860s Nestlé, a trained pharmacist, began experimenting with various combinations of cow's milk, wheat flour and sugar in an attempt to develop an alternative source of infant nutrition for mothers who were unable to breast feed. His ultimate goal was to help combat the problem of infant mortality due to malnutrition. He called the new product Farine Lactée Henri Nestlé.

Nestlé's first customer was a premature infant who could tolerate neither his mother's milk nor any of the conventional substitutes, and had been given up for lost by local physicians. People quickly recognized the value of the new product, after Nestlé's new formula saved the child's life and within a few years, Farine Lactée Nestlé was being marketed in much of Europe.

Henri Nestlé also showed early understanding of the power of branding. He had adopted his own coat of arms as a trademark; in Swiss German, Nestlé means 'little nest'. One of his agents suggested that the nest could be exchanged for the white cross of the Swiss flag. His response was firm: "I regret that I cannot allow you to change my nest for a Swiss cross .... I cannot have a different trademark in every country; anyone can make use of a cross, but no-one else may use my coat of arms."

Meanwhile, the Anglo-Swiss Condensed Milk Company, founded in 1866 by Americans Charles and George Page, broadened its product line in the mid-1870s to include cheese and infant formulas. The Nestlé Company, which had been purchased from Henri Nestlé by Jules Monnerat in 1874, responded by launching a condensed milk product of its own. The two companies remained fierce competitors until their merger in 1905.

Some other important firsts occurred during those years. In 1875 Vevey resident Daniel Peter figured out how to combine milk and cocoa powder to create milk chocolate. Peter, a friend and neighbor of Henri Nestlé, started a company that quickly became the world's leading maker of chocolate and later merged with Nestlé.

In 1882 Swiss miller Julius Maggi created a food product utilizing legumes that was quick to prepare and easy to digest. His instant pea and bean soups helped launch Maggi & Company. By the turn of the century, his company was producing not only powdered soups, but bouillon cubes, and sauces and flavorings.

First came infant and milk nutrition

Innovation and an entrepreneurial spirit have been Nestlé characteristics from the start.

In 1886, while the Page brothers in Cham were building Europe's first condensed milk factory, for the Anglo-Swiss Condensed Milk Co., Henri Nestlé, in Vevey, was developing his infant cereal "Lactous Farina Nestlé "launched in 1867.

The two companies merged in 1905 to become the "Nestlé & Anglo-Swiss Condensed Milk Co.". The former had developed a successful long-life product from fresh milk, a highly perishable raw material, whilst Henri Nestlé had achieved international acclaim due to the remarkable qualities of his invention. Given the highly infant mortality rate, due mainly to the lack of an appropriate breast-milk substitute, his infant cereal respond to a real need.

His name and the Nestlé symbol (Nestlé means "little nest" in German) were guarantee of the consistent quality of his product, the result of painstaking scientific research.

Then came product diversification

Contacts with other leading companies that have innovative ideas led to acquisitions and diversifications.

The company expanded in 1929 through the acquisition of the,

Cailler

Peter and

Kohler chocolate companies,

Followed in 1947 by the Maggi group and its culinary products

Thus Nestlé became the heir to inventions such as Daniel Peter's milk chocolate (1875) and Julius Maggi's vegetable-based soups (1884) and stock cubes (1908).

Nestlé accumulated knowledge, as well as the perseverance and competence of scientists like Max Morenthaler, made possible the huge success of the Nescafe launch in 1938.

Subsequent acquisitions opened doors to new areas, such as

Preserves (Crosse & Blackwell 1960),

Frozen foods (Findus, 1962),

Mineral water (Vittel, 1969)

Pet care (Carnation, 1985).

Others reinforced the company's position in established areas, for example,

Italian cuisine (Buitoni, 1988),

Chocolate and confectionery (Rowntree, 1988)

Performance foods (PowerBar, 2000).

At the same time, reseat at Nestlé resulted in the development of new products such as

Nestlé Pure Life (1998).

Existing products such as Nescafe, Maggi culinary products or the various dairy products have been constantly improved and adapted to current consumer life-styles.

Today and tomorrow a company that cares about consumers al around the globe

　Today, Nestlé is the world's leading food company. Its international R&D network supports the products made in 479 factories in 81 countries.

Being a company dedicated from the start to food, Nestlé remains sensitive to culinary and eating habits, and responds to specific nutritional problems, whilst also setting and matching new trends such as growing out-of-home consumption.

CONTRIBUTION TO OTHER SECTOR

Social

In the social sector, the company has created over 1200 permanent job opportunities for the skilled, unskilled and professional manpower, apart from hundreds of contractual jobs. It has also played a remarkable role in expansion and vitalization of the dairy and livestock sector.

Environment

Another key area where the company is proud to make a contribution in the environment is by making available the processed and packaged dairy.

Registered & Corporate Office	308 Upper Mall, Lahore PABX : (042) 5757082-95 Fax : (042) 5711820

Factories	Sheikhupura 29^{th Kilometer, Lahore- Sheikhupura Road} Sheikhupura, Punjab, Pakistan ^Kabirwala ^{Khanewal – Kabirwala Road, Kabirwala} ^{District Khanewal, Punjab, Pakistan} ^{Phone : (06512) 411433-36} ^{Fax : (06512) 411432}


Auditors	A.F. Ferguson & Co. (Chartered Accountants)


Legal Advisors	Cheema & Ibrahim (Advocates)

Bankers	^{ABN AMRO Bank} ^{Bank of Tokyo-Mitsubishi Ltd.} ^{Citibank N.A} ^{Credit Agricole Indousuez} ^{Deutsche Bank A.G.} ^{Habib Bank Ltd.} ^{Muslim Commercial Bank Ltd.} Standard Chartered Bank.

^{REGIONAL SALES OFFICES}

Karachi	^{F-77/1, Block 7,} ^{Clifton, KDA Scheme 5,} ^{Karachi, Sind, Pakistan.} ^{Phone : (021) 5833935-6} ^{Fax : (021) 5833937}
Hyderabad	^{178, Block C, Unit 2 Latifabad,} ^{Hyderabad, Sind, Pakistan.} ^{Phone : (0221) 860403} ^{Fax : (0221) 863202}
Lahore	^{29-b, Main Gulberg,} ^{Lahore, Punjab, Pakistan} ^{Phone : (042) 5754335-6, 5752582} ^{Fax : (042) 5761491}
Multan	^{Surij Miani Road, Chungi No. 1,} ^{Multan, Punjab, Pakistan.} ^{Phone : (061) 515061} ^{Fax : (061) 515057}
Faisalabad	^{Al Haq Plaza, 271-A,} ^{Small D Ground, People's Colony} ^{Faisalabad, Punjab, Pakistan} ^{Phone : (041) 546993, 734538} ^{Fax : (041) 543538}
Gujranwala	^{23, D.C. Road.} ^{Gujranwala, Punjab, Pakistan.} ^{Phone : (0431) 256320} ^{Fax : (0431) 256320}
Peshawar	^{201, Block B, 2nd Floor} ^{City Tower, Jamrud Road,} ^{Peshawar, N.W.F.P, Pakistan} ^{Phone : (091) 840859, 842415, 43901} ^{Fax : (091) 45516}
Quetta	^{63 B – D, Chaman Housing Scheme,} ^{Opposite Askari Park} ^{Quetta, Baluchistan, Pakistan.} ^{Phone : (081) 834887} ^{Fax : (081) 822297}
Islamabad	^{74-W, Yaseen Plaza, 1st Floor, Blue Area,} ^{Islamabad, Pakistan} ^{Phone : (051) 2271874-5, 2824328} ^{Fax : (051) 2821899}

^{RATIO ANALYSIS is useful essentially for:}
^Investors

^{Assessment of earnings and dividend prospects.}

^{Growth in economic value of investments with respect to the risks undertaken.}
^{Bankers/Creditors concern}

^{Assessment of the ability of the business to service its debt obligations.}

^{Debt coverage.}

^{Proper utilization of assets financed.}

^{Government's concern}

^{Evaluation of the economic contributions of the business entity.}

^{Determination of the entity's financial strength to carry social and developmental programs.}

^{THE ANALYSIS}
^{The financial ratios discussed here are those which are derived simply and directly from financial statements. These ratios are used in analyzing the financial statements in ordinary course of business activity. The ratio analysis can be divided into three broad categories:}

^{The Solvency Ratios.}

^{The Efficiency Ratios.}

^{The Profitability Ratios.}

^{Competitor Analysis}

^{• TOTAL SHARE OF COMPETITORS}

^{– NESTLE 2903040}

^{– AQUAFINA 1995849}

^{– SUFI 453600}

^{– KINLEY 1451520}

^{– OTHER 2268000}

^WATER

^{NESTLÉ Pure Life – PET Bottles}
^{The year 2001 saw the successful completion of three years of outstanding business for NESTLÉ Pure Life – PET Bottles of 0.5 and 1.5 liters. The exceptional brand success was the result of expanding national distribution and an increasingly loyal customer base. The brand has revolutionized the Pakistani market by tapping the real consumer need for pure, healthy, and safe water and has successfully dominated a key strategic business}
^{NESTLÉ Pure Life – Home & Office Service}
^{In 2000, NESTLÉ Pure Life established a successful Home and Office (H&O) delivery service in Lahore, which has substantially grown ever since and has come to dominate the 5- gallon market. Successful marketing and sales strategies offer greater convenience and better value to the consumers. The brand is poised for strong growth in future.}

^{AVA & FONTALIA}
^{To expand its H&O water delivery business countrywide, Nestlé acquired major share holdings in both these businesses in 2001. While AVA is an important national player in the branded bottled water category, both in PET and H&O services}
^{NESTLÉ PURE LIFE & BULK WATER}
^{The launch of Nestlé Pure life in December 1998 was a truly historic event. This marks Nestlé Milkpak's entry into the country's fastest growing water market. At the same time Pakistan became the first country where Nestlé launched this new worldwide brand. It has been launched in 11 markets internationally with its lead and best performing market being in Pakistan. The reporting of Nestlé Pure life is not directly under the Nestlé headquarters at Vevey, Switzerland. Rather all the water brands at Nestlé have to report to Perrier Vittel, the pioneer and lead French Brand in the water market. Other than that, all the research concerning the contents is carried out at the Research Center at Vevey.}

^{SEGMENTATION STRATEGY}

^{• Psychographic Segmentation}

^{• Demographic Segmentation}

^{• Geographic Segmentation}

^{• Behavioral segmentation}

^{TARGET MARKET}

^{• Targeting Strategy Of Nestle Pure Life Is Differentiated Marketing}

^{• Nestle Pure Life Targets Both Genders}

^{• Targets The Upper And Middle Class People Who Are Health Conscious}

^{• Tourists Are Also The Target Market Of Nestle Pure Life}

^POSITIONING

^{• Newly Drinking Water With Safety And Security}

^{• Pure Water Pure Relationship}

^{• Safe And Healthy Drinking Water}

^{• Public Awareness Message}

^{INDUSTRIAL SWOT ANALYSIS}

^Strengths

^{– the lifestyle of the people is changing}

^{– DEMAND is increasing day by day in the bottle Water}

^Weaknesses

^{– the lack of awareness and the poverty}

^{– the lack of availability in the remote areas is also the strong reason}

^{Opportunities}

^{– people are becoming more health conscious}

^Threats

^{– Low Entry Barrier}

^{– Economical Uncertainty}

^{SWOT ANALYSIS}
^Strengths:

^{• High Quality Obtained By The Usage Of A Special Production Process.}

^{• Own Industrial Laboratories That Perform Constant Control For Physical-chemical And Bacteriological Parameters.}

^{• Daily Sensor Water Analysis for Flavor, Color And Odor.}

^{• Great And Neutral Taste Which Suits All The Family}

^{• Safety And Purity From The Source To The Consumer}

^{• Produced Locally, Close To The Consumer.}

^Weakness:

^{• Nestle Pure Life Is Relatively Expensive Than Other Brands.}

^{Opportunities:}

^{• Water Is An Essential Part Of Life And Everyone Prefers To Drink Safe And Healthy Water.}

^{• Nestle Is A Trusted Brand For Providing Good Quality Products.}

^Threats:

^{• Tough Competition From Aquafina And Kinley.}

^{MARKETING MIX}
^1-PRODUCT:
^{Nestlé Pure Life is drinking water that has been treated and rematerialized using a standardized industrial process to ensure purity and quality. Pure and Safe Nestle PURE LIFE refills your body with water to maintain a good level of hydration. It provides a balanced mineral formula (on average 150-170 mg per liter), contributing to daily mineral requirements.}

^{Structure of water}

Mineral Component	Concentration, not more
General mineralization (mg/l)	220 mg/l
Calcium	40 mg/l
Magnesium	15 mg/l
Potassium	20 mg/l
Bicarbonates	60 mg/l
Fluorides	0,6 mg/l
Hardness	Mg-eq/l 3

^{PRODUCT TYPE:}
^{It is a consumer product and a convenience good.}
^{PRODUCT ATTRIBUTES:}
^{Nestle Pure Life is a pure, safe and healthy, colorless and odorless drinking water with a pleasant taste.}
^{BRAND NAME:}
^{Nestle Pure Life.}
^{BRAND POSITIONING:}
^{Premium drinking water}
^{BRAND IMAGE:}
^{Safe and healthy water}
^{BRAND EXTENSION:}
^{Nestle is soon introducing flavored water in lemon, orange, raspberry and strawberry flavors.}
^PACKAGING:
^{Nestlé PURE LIFE is available in a wide variety of packaging formats to suit all consumer needs and consumption occasions. Packaging is innovative to meet the individual needs of consumer all over the world.}
^{The range of formats extends from the individual bottle for on-the-go consumption (0.33l to 0.5l), to the family size bottle (1.5l) and on to larger formats of 5 gallons (18.9l) for in-home and office usage.}
^{Nestle PURE LIFE 18.9-liter bottles have a protective cover, so that the consumer can immediately define, that the product was delivered from the factory. Its proprietary design equally protects the brand from counterfeiting.}
^{Nestlé Pure Life's originality lay in the use of an all-new plastic, P.E.T. (polyethylene teraphthalate), which is stronger and more elastic than the PVC. Besides, P.E.T. is recyclable.}
^{Nestlé PURE LIFE is bottled when possible in the country, or at least in the region where it is sold, combining the benefit of a local production and the strength of a worldwide brand.}
^LABEL:
^{The label provides information like quantity, mineral contents, logo, manufacturing date and best before date. Consumer service number is mentioned and stamp of PSQCA with license number is also mentioned.}
^2-PROMOTION:
^{Nestle Waters Coolers has been a part of Nestle Waters since 2003 and represents Nestle Pure Life brand. Service quality has always been the main driver of HOD business. They are using television and radio advertisements in electronic media. In print media they are using billboards, newspapers, pole signs and posters.}
^{In big departmental store they have display corner in which Nestle Pure Life is refrigerated. Moppies are also used for advertisement in these stores.}
^{In summers direct marketing is used for promotion by providing cool points of Nestle Pure Life where chilled Nestle Pure Life is available for instant drinking.}
^3-PLACE:
^{Nestle Pure Life is a convenience good and is frequently used therefore it has been placed on all big and small stores to make it available everywhere. The type of placement used for nestle pure life is spot exchange.}
^4-PRICE:
^{Nestle pure life is following brand pricing through which it provides functional and psychological satisfaction to its target customer. The pricing strategy of Nestle Pure Life is market skimming.}
^{Prices of Nestle Pure Life are relatively higher than their competitors. Market prices of individual consumables (0.33l to 0.5l) are Rs.10 and Rs.13. The price of family size bottle (1.5l) is Rs.24 and of large bottles of 5 gallons (18.9l) is Rs.130}

^{STRATEGIES FOR CREATING COMPETITIVE ADVANTAGE}
^{DIFFERENTIATION STRATEGY:}
^{They have developed a very visible image of their water that it is safe and healthy and is "PURE LIFE" in true sense.}
^{OVERALL EXCELLENCE STRATEGY:}
^{Nestle is a trusted brand and its products are consider to best and of very high quality world wide. This is a very important competitive advantage of Nestle Pure Life.}

	Introduction	Growth	Maturity	Decline
Characteristics
Customers	Innovators	Mass Market	Mass Market	Loyal Customers
Competition	Little if any	Increasing	Intense	Decreasing
Sales	Low levels, then rising	Rapid Growth	Slow/no annual growth	Declining
Profits	None	Strong, then at peak	Declining annually	Low/none
Marketing Implications
Overall Strategy	Market Development	Market Penetration	Defensive	Efficiency
Costs	High per unit	Declining	Stable or increasing	Low
Product Strategy	Undifferentiated	Improved items	Differentiated	Pruned Line
Pricing Strategy	Most Likely high	Lower over time	Lowest	Increasing
Distribution Strategy	Scattered	Intensive	Intensive	Selective
Promotion Strategy	Category awareness	Brand Preference	Brand Loyalty	Reinforcement