This is a solution of Business Environment Strategy Assignment part 2 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 2

Business Environment Strategy Assignment part 2

Ansoff’s matrix

Ansoff’s growth matrix is a marketing tool often used to understand the different strategic options available to a firm (Ansoff, 1980, p. 131). Looking at the opportunities available in both new and existing markets, emphasis within the matrix is placed ion the benefits and challenges of each strategic option and the extent to which the options are aligned to the internal resources and capabilities of the firm.Market penetration is a strategy, which sees growth underpinned by pushing existing products to existing markets. Through a focus on market structure penetration the firm would be able to maintain current product lines and focus upon increasing sales in this area through promotional activities and advertising. Market penetration is a strategy, which would secure growth in the market and would allow the firm to draw on their knowledge of the market to expand sales in this area.The second strategic option refers to the use of selling existing products to new markets. A new market in this case study could be a new consumer base or a new geographical base. Reflecting upon the nature of the product, it is unlikely Nestlé would be able to target a new customer base and thus it is advised that if this strategic option were to be followed emphasis would be placed on opening up to new emerging markets with existing products.

SWOT analysis

This section presents a SWOT analysis to ireview ithe imicro ienvironment iof ithe ifirm ireflecting ispecifically iupon ithe istrengths iand iweaknesses iof iNestlé iand ithe iopportunities iand ithreats ithe ifirm imust irespond ito ithrough ian ialignment iof ifirm istrengths ito isuch iforces. iA iSWOT ianalysis iis ioften iused, ias ia istrategic itool ito iallow ia ipresentation iof ithe ifirm’s iresources iand icapabilities, iwhich ican ibe ifurther, ideveloped ito iaid icompetitive iadvantage. iA iSWOT ianalysis itherefore iunderpins ithe idevelopment iof ifuture istrategic ioptions. iAs iseen iwithin ithe iwork iof iBarney i(1991, ip. i99) iand iTeece i(2009, ip. i12) ia idesirable icompetitive iadvantage iis ione iobtained ithrough ia iminimisation iof ithreats ialigned iwith ithe iseizing iof iopportunities.
Analysis ibelow ireveals ithe iinternal idynamics iof iNestlé iand ithe iopportunities/threats ifacing ithe ifirm.
Positive iFactors
Internal iFactors

Strengths

1. iStrong icultural ivalues istemming ifrom ithe ifirms iintegrated iapproach ito ibusiness iand icommitment ito itheir istakeholders i(Schein, i2012, ip.3).
2. iCurrent istrategic iposition iof iNestlé isupported iby ithree ikey iareas iof ibusiness i‘quality ileadership, icustomer isatisfaction iand isustainability’ i(Business iGreen, i2013, ip. i1).
3. iNestlé ihave ia istrong icommitment ito icorporate isocial iresponsibility iwith ireference ibeing imade ito i‘long iterm icommitment inever ibeing isacrificed ifor ishort-term iperformance’ i(CSR iWire, i2014, ip. i1).
4. iDiversified iand ivaried ibrand iportfolio.
5. iGlobal irecognition idriven iby ithe inumber iof istrong ibrands iwithin ithe ifirm’s iportfolio.
6. iThe ireputation iof iNestlé’s ibrand iis iestimated ito ibe ivalued iat i$7billion i(Nestlé, i2014b, ip.1).
7. iNestlé ihas ia iplace iin ithe iheart iof iconsumers idue ito iits ilongstanding ihistory.
8. iDevelopment iof itrust iand iloyalty ihighlighting ithe icapability idevelopment iof ithe ifirm.
9. iStrong iteamwork iwithin ithe ifirm ipromoting igood ilevels iof ijob isatisfaction iand iemployee icommitment.

External Factor

Opportunities
1. iAbility ito ireach inew iconsumer imarkets  iand iin iparticular inew iinternational imarkets ii.e. iNestlé’s iwork iin iemerging ieconomies.
2. iFurther iinternationalizations iwith ia iparticular ifocus ion ithe iBRICS ieconomies i(Brazil, iRussia, iIndia, iChina iand iSouth iAfrica) i– ithese ieconomies iare inoted ias ibeing icurrent igrowth ispots i(Wilson iand iPurushothaman, i2003, ip. i1).
3. iDevelopment iof iintangible icapabilities ito iaid icompetitive iadvantage. iBarney i(1991, ip.100) iargues ithat icompetitive iadvantage iis iachieved ithrough iinimitability iand ithis ishould ibe ia ifocus iof ithe ifirm.
4. iBackwards iintegration ito igain imore icontrol iover ithe isupply ichain iof ithe ifirm i(Martin iand iEisenhardt, i2010, ip.1105 i).
5. iInnovative idevelopment iof idistribution ichannels.

Negative Factors

Weakness
1. iA inumber iof iNestlé’s iproducts ihave ifaced icriticism ias ia iresult iof itheir inutritional ivalue. iIncreased iemphasis ihas ibeen iplaced ion ihealthy ieating ithrough igovernment iinitiatives iand iNestlé iwould ibenefit ifrom ireviewing ia inumber iof itheir iproducts ito isupport itheir imission iof i‘good ifood iand igood ilife’ iin ia ichanging isocial ienvironment ii.e. irising ilevels iof ichild iobesity.
2. iThe ipast iof iNestlé iis itainted iin iparts iby inegative ipublic irelations ias ia iresult iof iwhat iis ireferred ito ias ithe ibaby imilk iscandal. iNoted iin ia irecent iarticle iby iMuller i(2013, ip.1) iit iwas istated ithat ithe iscandal ihad i‘grown iup ibut inot igone iaway’.
Recognizing ithe ineed ifor istability iand iconsistency iin ithe iprocesses ifound iwithin ithe icompany’s iglobal isupply ichain. iInternational istandards idemand ia ineed ifor istandardisation iyet ithis ihas ito ibe ibalanced iwith ithe ifirm’s istrategic ineed ifor iadaptation ito idifferent icultural ienvironments.

Threats

1. iHigher ilevels iof ibuyer ipower iwithin ithe iindustry ifuelled iby igreater ichoice iand ilower iloyalty i(Porter, i2008, ip.12: i2011, ip.5).
2. iVariability iin iraw imaterial iprices iinfluencing ithe ifirm’s iability ito isustain iprices iin ilight iof ia icommitment ito iwider iresponsibilities iaside ifrom iprofit ii.e. iCSR iinitiatives i(Servaes iand iTamayo, i2013, ip.1047).
3. iIncreased idynamism iin ithe iexternal imacro ienvironment ifuelling ishort-term idecision imaking iand iheightened icompetition i(Teece, i2009, ip.15).
4. iTechnological ichange idriving iboth iinnovation iand iassociated ichallenges.
5. iAgeing ipopulation ishifting ithe idemographics iof ithe iworkforce i(Kooij iet ial, i2014, ip. i2192).

Nestle’s Inference

The study conducted on role of packaging on consumer behavior was started with the motive of understanding consumer behavior and helping Nestle Management to understand what motivates consumers to buy their products. From the research conducted the team was able to conclude that majority of the people do get affected by the kind of packaging offered by firms to market their product. Packaging to consumers is more than a mere protective cover for the product; it is also a useful marketing tool. Psychologically people respond strongly to colors and patterns as our visual sensory is stronger and more dominant; this is why packaging can be used as a passive aggressive approach to marketing one’s product. In the study the majority of the respondents were in the age group 15-25 years while 28% belong to age group 26-35 years. 23% belonged to the age group of 36-45 years and 15 % belonged to 46-55 years and only 1 respondent was in the age group of 55 and above.

This practice ensured that consumer views across different generations were taken into consideration and provided the least deviation from the actual. By the method of random sampling it was ensured that people from all walks of life were included into the research sample, 41% respondents were working professionals while college students, self-employed and house-wives occupied almost a similar percentage.It was also noticed that majority of the respondents purchased FMCG products every week, while 38% preferred to buy them twice a month whereas only 15 % bought it once a month. This shows that people prefer to buy FMCG products on a weekly basis due to the small shelf life of the product.The study also inferred that type of material used for packaging and the ease of storage and convenience is an important factor for majority of the people. It was also noticed that a substantial number of people notice the brand name and make consumption decisions keeping in mind the brand in question. This also shows that brand equity too is important factor that comes into play while making consumption decisions for a large number of people. Towards the effect of packaging majority believed that it had an effect on the purchasing decision of a youngster.From this study it was concluded that 86% of the people agreed that they would prefer bio degradable products and out this 50% of the population also agreed to pay extra for bio degradable packaging.

Conclusion

Nestle was examined and its strategies were revealed so as to evaluate as to how these strategies have developed and the strategic decision making that has been instrumental in determining the success of the organisation.The first objective of the study was to conduct various analyses like SWOT, PESTEL Analysis, Ansoff and Porter. We determined that products play a major role on consumer buying behaviour as most of the respondents wanted convenient packaging, ease to store packaging and sometimes attractive packaging of the product. The second objective of the study was to determine whether the organization ws successful in these strategies. It was found that that buying behaviour, background images, innovations, branding images, shapes & sizes, print info and materials are considered as predictor and due to the increase in self service and changing consumer’s lifestyle. It can further be inferred that while the consumer may not be necessarily dissatisfied with the packaging available on the market, it would do no harm in tempting the consumer with functional and attractive packaging ideas, by multi-sensory appeal and creative design – preferably with packaging ideas made from board.Thus, form this we can conclude that Nestle has been farily successful.

References

Ben P. & Gutierrez B. (2001).Communicating to the consumer through packaging design. Available from http://ijsrm.in/v2-i8/4%20ijsrm.pdf Accessed on 17/07/15
Deliya (2012) Consumer Behaviour towards the new packaging of FMCG products. Available from http://www.abhinavjournal.com/images/Commerce_&_Management/Nov12/19.pdf
Mahalingam & Kumar (2012). A study on consumer behaviour towards selected fast moving consumer goods in Coimbatore city. Available from http://theglobaljournals.com/paripex/file.php?val=November_2014_1416651128_07.pdf
Kalam, M. A. & Akteruj J. (nd) Packaging Factors Determining Consumer Buying Decision. Available from www.eiic.cz/archive/?vid=1&aid=3&kid=20101-116&q=f1
Kuvykaite R. (2009). Consumer engagement in social media on brand building
Available from www.ijeim.informaticspublishing.com/index.php/ijeim/article/…/27078

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