This is a solution of Business Environment Strategy Assignment part 1 in which we discuss the study aims at studying the importance of Nestle’s packaging design as a mean of communication and branding in highly competitive market.

Business Environment Strategy Assignment part 1

Introduction: Nestle the Global FMCG Major

Business Environment Strategy assignment part 1

Nestle is a global leading FMCG (Fast Moving Consumer Goods) company. Fast moving consumer goods or commonly known as the FMCG are goods that have a quick turnover and a relatively low cost of production. They usually get repurchased within a year and are in huge demand, as there are bought in bulk by customers. For instance some of Nestle company’s products like Maggi, Milo & Nescafe are quick selling products. The impact of Nestle’s strategy is such that some of its brands are synonymous with the product itself. For instance in some countries, Maggi is synonymous with Noodles and Nescafe with coffee. The company has done well so far, as it has realized and even revolutionized the FMCG sector.The FMCG sector is a booming industry in almost every country as there is growth in the per capita income and increase in the aggregate demand for goods and services and there are plenty of opportunities to tap into for the manufacturing sector. FMCG sector being the fourth largest sector contributing to employment is also the biggest contributor to GDP. Being sold at a relatively lower cost with an extremely narrow profit margin, the sector can only be sustainable if firms are able to sell their products in large numbers. Moreover extensive competition within the sector makes it impossible for an FMCG firm like Nestle to be able to grab a decent chunk of the market share, which makes it all the more important for the marketing case team to come up new strategies for the firm to be able to sustain themselves. Consumer behavior is the study of how individual makes decision to spend his or her resources (time, effort, money) on consumer related item. It helps in understanding what consumers buy, where they buy it, how often they buy it and how often they use it. (Ben & Gutierrez, 2001)

Business Environment strategy and Management Strategy

Environment has important role in forming Nestle’s strategy. We present following analysis:
.a. PESTEL Analysis
.b. Porter five forces
.c. SWOT Analysis
The study aims at studying the importance of Nestle’s packaging design as a mean of communication and branding in highly competitive markets. Modern marketers have understood the importance of attractively packaging products and how that affects the purchasing pattern of consumers. The aim of this work is to assess Nestle’s role of packaging and the design for increasing the sales appeal off their products. Nestle has given a huge importance in packaging a product so much so that some of its brands have become synonymous with the product. For instance, its packaging for Maggi Noodles, Nescafe Coffee or even Milo, in some countries has become extremely appealing. So there is a strong market research, business strategy and efforts involved by Nestle to arrive at such strategy. The focus in this task is also to study such efforts and research involved by Nestle. (Deliya, 2012)

PESTEL analysis

The PESTLE analysis below identifies a number of forces, which have an influence ion industry dynamics. Of these forces, perhaps the most prominent are social forces, which relate to differences in consumer behavior. As an international firm, Nestlé have to be able to ensure a level of adaptation, which is appropriate to different markets driven by different cultures and consumer preferences.

Economic

Awareness and knowledge of changing inflation, economic growth rates and income levels.
Changing consumer budgets, rise of the cost conscious consumer.
Rising price of raw material goods in relation to the need to source from sustainable suppliers (Kumar et al, 02013, p.205).

Political

Changing regulation surrounding food standards and marketing actions.
Government stability in new emerging economies i– question of risk as part of the internationalization process (Kumar et al, 2013, p.205).
Changing global regulations i– standardised practice yet adaptation to different political forces i(De iMooij, i2013, ip.61).

Economic

Awareness and knowledge of changing inflation, economic growth rates and income levels.
Changing consumer budgets, rise of the cost conscious consumer.
Rising price of raw material goods in relation to the need to source from sustainable suppliers i(Kumar iet ial, i2013, ip.205).

Social

Changing consumer attitudes i– move towards healthier products in line with government initiatives i(Newman iet ial, i2014, ip.15) supporting balanced diets and ithe dangers of sugar.
Changing lifestyle i– return back to home cooking and the promotion of family time in a world of convenience. The need to adapt to different cultural settings ii.e. language, religious beliefs and family settings.Understanding of consumer behaviour is crucial to ensuring a personal approach to marketing. Consumers viewing the firm as an agency for power in the wider external environment i(Eisenhardt iet ial, i2010: i1263).

Technological

Rise of social media, consumers interacting with firms and being able to do so across a range of platforms.
Innovation fuelled by technological developments.
E-commerce as a platform for development i(Lin iet ial, i2014, ip.3).

Legal

1.Changing nature of regulation.
2. Need to adhere to global regulations and changes across different international markets i(Schaffer iet ial, i2014, ip. i12).

Environmental

Increased attention directed towards corporate social responsibility i(Servaes iand Tamayo, i2013, ip. i1045).
Environmental concerns from consumers including concerns over packaging/recycling i(Dubois, i2012, ip. i36).
Nestle had conducted its research by identifying the ground and focus areas. They had already noticed changes in the environment, where people may cling to solutions within the existing culture.Secondary data was collected by the means of research on previous papers written on the same topic. Journals, research articles and other sources on the internet were tapped in order to understand the applications of consumer behavior and study similar models applied in other states of the country and worldwide. (Silayoi & Speece, nd).

7p’s of marketing

A final consideration for Nestlé is an identification of the 7p’s iof imarketing iand iin iparticular ian iunderstanding iof iwhat itheir iproduct ioffers ito ithe imarket i(Armstrong iand iCunningham, i2012, ip. i34). iThe i7p’s iof imarketing iis ian iimportant imarketing itool ioutlining ia ifocus ion ia iclear iunderstanding iof ieach ifactor:
Product: iBaby iformula, inutrients ito ienable ia iprogression ifrom ibreast imilk ito iformula ior iformula ifor ithose imothers ichoosing inot ito ibreastfeed.
Price i: iPrice irelatively ilow ito icompetitors. iIt iis iimportant ito ibalance ithe ineed ihere ibetween ilow icost iand ithe iinfluence ithis ihas ion itrust.
Place: iSupermarkets, iplace iof iconvincing.
Promotion: iRelationship imarketing iprinciples iused ito iengage ithe iconsumer. iNestlé iwill iinteract iwith iconsumers iduring ia ishopping imall iroad ishow ito ishowcase itheir iproduct iofferings iand ithe ivalue iof itheir iproducts.
People: iEmployees iwithin ithe ifirm iused ito isupport ithe igrowth istrategy iof iparticular iproducts. iCompany iobjectives iand imarketing iobjective itranslates iinto iperformance igoals ifor iteams iwithin ithe ifirm.
Process: iCustomer iservice iis iimportant iand ia ikey ideterminant iof itrust. iAs ia iresult iof ithis, iemphasis ishould ibe iplaced ion ithe irole iof iemployees iin ieducating ithe iconsumer iand itherefore itranslating ithe icore ielements iof ithe ibrand.
Physical ievidence i: iPhysical ievidence iin ithe iform iof ipackaging iand ipromotional itools iwill ibe iused ito isupport ithe idevelopment iof ithe igrowth istrategy iemployed.

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