Nestle Marketing Report 1

Nestle Marketing Report

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Executive Summary

Nestle S.A. is a leading global food and beverage company that was founded in 1867 in

Switzerland by Henri Nestle. The company creates long-term value for its consumers through the

satisfaction of their needs and wants as well as the implementation of a decentralized approach to

its market. This marketing strategy entails Kit Kat, a chocolate-covered wafer bar confectionary

brand produced by Nestle. A report from Research and Markets in 2017 forecast an international

chocolate market annual growth of 2.4% up to 2021. Healthier versions of chocolate products are

also expected to increase during this period. The healthy chocolate range has begun challenging

the marketing space for traditional chocolate and Kit Kat has effectively responded by

developing new Kit Kat confectionary products that have reduced their total sugar by up to 40%

and use traditional natural ingredients.

Based on the SWOT analysis, the strengths of Nestle S.A. include global recognition and

reputation, high diversification, efficient R&D, extensive product portfolio as well as quality

brands and products. Weaknesses on the other hand include its numerous large brands creating

conflict of interest, legal and consumer issues including child labor, price fixing etc and price

fluctuations among retail giants. Opportunities that the firm can take advantage of include

providing health-based products, market expansion and launching lower sugar content products

in the current health conscious market. Increased competition in the food processing industry,

increasing prices of commodities and raw materials and increasing consumer buyer power are

some of the threats facing the firm.

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Market segmentation of the new product has been based on demographic, behavioral,

psychographic and geographic market segments. The product is generally targeted to younger

consumers or millennials who have a strong demand for healthy snack options. More than two

thirds of millennial consumers (young adults and teenagers) prefer snacks with fewer

ingredients, less sugar but with same taste and less calories.

The new Kit Kats will be mainly promoted through social media, considering the target

market, Millennials, spend large amounts of time online. Kit Kat and Nestle recognize the power

of social media platforms and digital networks in impacting consumer choice. Social media will

be strategically used to win over consumers’ affection.

Table of Contents
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1. Company Introduction..............................................................................................................4
2. Industry Analysis......................................................................................................................5
3. SWOT Analysis........................................................................................................................6
4. Segmentation, Targeting and Positioning................................................................................7
4.1. Segmentation.....................................................................................................................7
a. Demographic Segmentation..............................................................................................7
b. Psychographic Segmentation............................................................................................8
c. Geographic Segmentation.................................................................................................8
d. Behavioral Segmentation..................................................................................................8
4.2. Targeting...........................................................................................................................9
4.3. Market Positioning............................................................................................................9
5. Marketing Mix Strategy.........................................................................................................10
5.1. Product............................................................................................................................10
5.2. Price................................................................................................................................10
5.3. Place................................................................................................................................11
5.4. Promotion........................................................................................................................11
6. Evaluation and Control...........................................................................................................12
6.1. Social Media Marketing Goals.......................................................................................13
6.2. Re-examination of Target Customer Profiles.................................................................13
6.3. Return on Investment......................................................................................................14
7. Conclusion..............................................................................................................................15
References......................................................................................................................................16
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Nestle Marketing Report

1. Company Introduction

Nestle S.A. is a leading global food and beverage company that was founded in 1867 in

Switzerland by Henri Nestle. The company’s headquarters are in Switzerland and has more than

450 factories in more than 190 countries. Nestle employs around 340,000 people[ CITATION Nes15

\l 1033 ]. The Swiss multinational is the largest food processing firm in the world in terms of

revenue, sales and market presence since 2014[ CITATION Row15 \l 1033 ]. In 2017 Nestle ranked

number 64 on the Fortune Global 500. The company’s products include baby and medical food,

bottled water, coffee and tea, confectionary, breakfast cereals, ice cream, dairy products, frozen

food, pet foods and snacks. Nestle has 29 brands which include Kit Kat, Nescafe, Smarties,

Maggi, Nesquik and Vittel and garner annual sales of more than $1.1 billion US dollars.

As the leading food company in the world in every measurable aspect, Nestle has

solidified its position through geographical diversification. The company creates long-term value

for its consumers through the satisfaction of their needs and wants as well as the implementation

of a decentralized approach to its market. Nestle also derives its sales and financial success

through superior marketing strategies.

This marketing strategy entails Kit Kat, a chocolate-covered wafer bar confectionary

brand produced by Nestle. Nestle acquired the brand in 1988 from Rowntree of York, United

Kingdom. Kit Kat products have many different flavors and varieties which include chocolate,

white, milk, soy sauce, banana and green tea.

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2. Industry Analysis

Firms in the food processing industry are involved in the transformation of raw

agricultural ingredients to finished food products, increasing the shelf life of food products which

comply with the relevant health standards. Food processing industries range from meat

processing to food packaging. The food products are typically sold directly to wholesalers or

retailers in order to be distributed to the final consumers. The food industry is characterized by

intense competition and large companies like Nestle obtain competitive advantage through

efficiency and innovation in processing and distribution. Moreover, successful food processing

firms implement diversification competitive strategies where they differentiate and add related or

similar food products to their existing core businesses.

Global economic fluctuations have had minimal impact on the food processing industry

due to the increasing demand among consumers for convenience and ready to serve food

products. However, the industry has been facing the challenge of rising raw ingredients’

prices[ CITATION Rep13 \l 1033 ]. Other challenging factors and issues affecting food processing

companies include dieting and obesity, increased consumer interest on quality ingredients and

allergens.

Key segments have been emerging in the food processing industry. The acceleration of

the growth of the organic food and health products market is one. According to the Organic

Trade Association (OTA), the sales of organic food products have increased by over 28.6 billion

US dollars as of 2018, which comprises of 4 percent of the total food sales. Companies with

intent to be successful in the food processing industry have to be adherent to these factors

considering they have a significant impact on the industry.

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Changes in consumer taste and marketplace have begun challenging the mainstream

traditional chocolate industry. A report from Research and Markets in 2017 forecast an

international chocolate market annual growth of 2.4% up to 2021. Healthier versions of

chocolate products are also expected to increase during this period[ CITATION Res17 \l 1033 ].

These shifts should be capitalized by Nestle, particularly by Kit Kat through the reduction of

sugar counts and organic production. The firm has already began the development of healthier

confectionary alternatives to meet the changing consumer needs, allowing them to enjoy the

products with compromise on taste[ CITATION Nes19 \l 1033 ]. The healthy chocolate range has

begun challenging the marketing space for traditional chocolate.

3. SWOT Analysis

Strengths
 Globally recognized and reputable
brand
 High diversification
 Efficient R&D system
 Quality brands and products
 Extensive product portfolio
 Sustainability practices
 Extensive and diversified distribution
system
Opportunities
 Provision of allergen free food
products
 Introduction of health-based products
in today’s health conscious society
 Transparency in material sourcing
 Market expansion
Weaknesses
 Price fluctuations within retail giants
 Water usage controversies and
criticism
 Contaminated food recalls
 Brand structure. Numerous large
brands creating conflict of interest
 Legal and consumer issues including
child labor, price fixing etc.
Threats
 Increased competition in the food
processing industry
 Increasing price of commodities and
raw materials
 Increasing consumer buyer power.
 Changing consumer trends towards
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 Launching low-sugar products health consciousness leading to a

 Strategic alliances with other food decline in sales.
giants like Starbucks
 More focus on R&D to innovative
health-conscious products and handle
ethical issues

4. Segmentation, Targeting and Positioning

4.1. Segmentation.

Appropriate segmentation of the population will involve dividing the market into

homogenous groups in order to facilitate the identification of their needs and wants. Aghdaie,

Tafreshi & Behzadian (2014) customer-oriented segmentation approach is what will be

implemented for the new Kit Kat product, whereby Nestle will choose to focus on one of the

existing several segments and leave the other segments to competitors.

a. Demographic Segmentation

Nestle will segment the market based on age. Although the product will be targeted to every

age segment in the market, the largest segment of the Kit Kat product will be consumers of ages

35-54 with children below the age of 18 years. For this reason, the firm will decide on putting

this demographic segment (35-54 years) as the leading buyer in our analysis with more than 40

percent of the total market segmentation. The next age segment for the new product will be

consumers aged 12-17 and those aged 18-24 years. The Kit Kat brand is highly popular with

teenagers and young adults in Australia due to the fun and quirky nature of the brand. This will

be reflected in the online marketing strategy where the health-consciousness of the product will
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be highlighted. This will resonate with the younger demographic who are becoming more

socially and health conscious. As a result, ages 12-17 years and 18-24 years will represent the

second and third category respectively of the total segment with 20% each.

b. Psychographic Segmentation

The product has also been segmented based on lifestyle and personality. The company is

interested in a segment of active consumers who are either students or working class who require

energy in their daily activities. Moreover, the personality focus entails consumers who are

hardworking and health conscious. Regular users with enthusiastic and grateful attitude towards

the product are also within the new Kit Kat’s psychographic segmentation.

c. Geographic Segmentation

The market has mainly been distributed into the rural and urban areas. Traditionally, the

Kit Kat brand was largely targeted to the urban population. The advent of the new product will

see specific efforts made to penetrate the rural market. The marketing strategy will increase the

reach of the product to the rural population and develop additional preference in this market. The

urban population will also be a significant market, representing more than 60 percent of the

product’s reach.

d. Behavioral Segmentation

Based on the current benefits of the new product, Nestle will provide the new Kit Kat to

consumers who love snacks but prefer eating healthier products with less calories than the

competitors.
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4.2. Targeting

A product’s target market is based on the segmentation. The new Kit Kat confectionary bars

are generally targeted to younger consumers or millennials who have a strong demand for

healthy snack options. More than two thirds of millennial consumers (young adults and

teenagers) prefer snacks with fewer ingredients, less sugar but with same taste and less

calories[ CITATION Amp17 \l 1033 ]. Millennial parents are also conscious of buying healthier

snacks for their children. Therefore, the new chocolate bars are meant to create more options to

cater for the millennial’s preference for healthier, tasty, convenient and nutritious snacks. While

taste is a significant factor for younger consumers in their choice and preference of snacks, this

market is not willing to sacrifice health for flavor.

4.3. Market Positioning

Market position entails influencing consumer perception, providing competitive advantage

for a brand to be successful over competitors. The objective of the new product is to display

itself as the youthful, healthy and nutritious snack option, focusing on a segment of millennial

consumers who indulge themselves in chocolates and confectionary bars.

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5. Marketing Mix Strategy

5.1. Product

The Kit Kat’s sugar content have been structured differently to reduce its content while

ensuring the taste remains the same. With less sugar content used in the chocolate, the tongue

will perceive identical sweetness and natural taste. The new Kit Kat confectionary products have

reduced their total sugar by up to 40% and use traditional natural ingredients. The new Kit Kat

will be a moderately priced chocolate bar with four fingers measuring 9cm to 1cm available to

customers in search for a delightful and healthy chocolaty experience with wafer crunch. The

product will continue to come in different shapes, flavors and sizes across the world. More than

100 new variants will be released to the global market with flavors such as soy sauce, banana,

green tea and ginger ale released in the Australian market. The traditional red and white

packaging will still be used, with green stripes added to differentiate the new products and

indicate high cocoa content with lower sugar chocolate.

5.2. Price

The pricing strategy will remain relatively at the same level for the new Kit Kat

confectionaries. One characteristic feature that the brand has maintained and in result made it an

extremely popular choice for consumers is sustaining the price levels over the years. Prices will

however by slightly reduced to represent the reduction of sugar ingredient in the new

confectionaries. Medium bars weighing 45g will retail for $1.99 in Australia while the block bar

(170g) will come at an improved price of AUD $5.49. Share bars on the hand (65g) will retail at

the recommended price of AUD ($2.49). These new and improved reasonably price offerings

will ensure more customers are attracted and the current customer base remains loyal to the

brand when arriving at purchasing decisions in the competitive snacks market.

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5.3. Place

Nestle will produce the new Kit Kat products across 16 countries including Australia,

Brazil, USA, Japan, Malaysia, India, China, Thailand etc. In Australia the latest variety will be

available nationwide and the product will be launched at the Kit Kat Chocolatory at Melbourne

Central this year. After the launch, consumers will be able to purchase the new low-sugar variety

with same taste in-stores (shipped countrywide) or order online in bulk (free delivery).

5.4. Promotion

Millions of consumers globally subscribe to social media platforms of their favorite

brands, online personalities and celebrities, following them on Twitter and Instagram to be

updated on news and trends. Kit Kat and Nestle recognize the power of social media platforms

and digital networks in impacting consumer choice. Social media will be strategically used to

win over consumers’ affection.

The new Kit Kats will be mainly promoted through social media, considering the target

market, Millennials, spend large amounts of time online. A study conducted by Amplify Snack

Brands 2017 also indicates that Millennials are more influenced and engaged in marketing

efforts involving recommendations than other generations. Influencers and celebrities will be

leveraged on social media platforms to reach out to customers in the new social media campaign.

The brand will meet consumers where they are already communicating and engaging in (online

social platforms) and generate social media posts regarding the new healthier and tasty chocolate

bars and engage them in trying the new product.

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6. Evaluation and Control

Kit Kat will develop techniques to raise awareness and actively promote its new product

on social media platforms, extending customer relationship and interaction marketing in this

modern cultural facet. The measurement and evaluation of a digital marketing campaign’s

effectiveness is a vital process. Murdough’s (2010) social media measurement model will be

utilized in this campaign to facilitate evaluation and control. In the figure below, the social media

measurement conceptual phases have been illustrated. The concept process will focus on

defining what Kit Kat aims at accomplishing through the advancement of the brand’s

relationship with its customers. The implemented activities in the process will include;

a) Mapping metrics and objectives of the new product’s marketing

b) Identifying the specific key performance indicators (KPI) which are in alignment

with the objectives

c) Establishing performance benchmarks to gauge the campaign’s success[ CITATION

Chr102 \l 1033 ].
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Figure 1: Social Media Marketing Measurement Model

6.1. Social Media Marketing Goals

The first step in the evaluation of the social marketing campaign is an extensive

examination of the specific goals set for the new product. The digital content marketing goals

include

a) Increase the number of social shares by 10%

b) Increase the size of the brand’s fan base on social networking sites by 5%

c) Increase the number of mentions of the brand name on Twitter and Instagram by

50%

d) Increase the number of total conversions resulting from social traffic by 40%

These goals will be reviewed and revised annually to determine the brand’s performance

and account for changes in the new product’s offerings.

6.2. Re-examination of Target Customer Profiles

The current digital marketing strategy will be based on a series of well-developed

customer profiles outlining the specific demographic the campaign would like to reach. In this

case, the new and healthier Kit Kat products’ campaign aim to reach the millennial group who

have specific health-consciousness interest and intense online presence. Millennials are the

primary target of the digital campaign and a periodical assessment of whether the brand is

participating on the right digital channels will be conducted. According to a study by SDL (2014)

5 out of 6 millennials connect with brands through social networks and the average Millennial

checks their phone 45 times a day. The target audience is therefore more likely to discover brand
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content through their most engaged respective social network. Five digital channels will

therefore be utilized in the digital campaign and consequently evaluated

a. Facebook. 88% of Millennials own Facebook accounts and 50% of this proportion are

regular users. An active presence on Facebook will be implemented by Kit Kat and

followers engaged with accordingly to ensure high returns

b. Instagram. This is the second most popular social networking site among the

Millennials who account for more than 55% of users in the platform. Instagram will

facilitate Kit Kat’s sharing of the new product’s information as well as brand identity

through photos. User experience will be gauged through likes and comments.

c. Snapchat. This is the most recent social platform that has become an obsession among

Millennials[CITATION Tal19 \l 1033 ]. Kit Kat will take advantage of this platform

through a Snapchat account to announce the new product launch and create engaging

content to generate interactions and sales of healthier Kit Kat chocolate bars

d. Twitter. This microblogging platform is dominated by Millennials and has become

exceptionally popular for brands. Kit Kat will leverage Twitter in the social campaign

by sharing quick campaigns, interacting with customers and portray the brand’s new

personality.

6.3. Return on Investment

The overall return on investment (ROI) will be used to assess the social media marketing

performance. Two variables will be tracked to measure the ROI

a) The financial amount and time expenditure invested in the social media campaign

b) The financial benefits or sales converted from the campaign

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7. Conclusion

` In conclusion, it is evident that Nestle S.A., which is a leading global food and beverage

organization, has a better marketing strategy which is based on decentralized approach. Kit Kat

is their main approach to this. The organization is project to do well since the global market of

chocolate is projected to increase by 2.4% in the next 2 years. The organization has also enacted

mechanism to deal with the growing need of healthy chocolate brands through Kit Kat. The

strength for the organization includes their global recognition, their reputation, their high

diversification, their extensive product portfolio and their high quality products. Weaknesses for

the organization are child labor, price fixing and price fluctuations. Opportunity for the

organization is health-based products while its threat is increased competition. The organization

is currently exploiting its opportunity of health-based products and this is projected to increase

its sales and revenue. It is also incorporating social media marketing in its operations of

promoting their health-based product.

References
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Aghdaie, M. H., Tafreshi, P. F. & Behzadian, M., 2014. Customer-oriented benefit segmentation: an
integrated approach. Int. J. Business Innovation and Research, Vol. 8, No. 2, pp. 168-189.

Amplify Snack Brands, 2017. Better-For-You Snacks: The New Snacking Reality. [Online]
Available at: https://amplifysnackbrands.com/documents/Amplify-2017-Snack-Study.PDF

Badrikian, T., 2019. Top 5 Marketing Channels to Reach Millennials. [Online]

Available at: http://www.laveh.com/blog/marketing-channels-to-reach-millennials

Murdough, C., 2010. Social Media Measurement. Journal of Interactive Advertising Volume 10, pp. 94-
99.

Nestle, 2015. Nestle Annual Report 2014. [Online]

Available at: http://www.nestle.com/asset-library/documents/library/documents/annual_reports/2014-
annual-report-en.pdf

Nestle, 2019. Nestle's groundbreaking material science makes less sugar taste good. [Online]
Available at: https://www.nestle.com.au/media/newsandfeatures/nestle-research-discovery-sugar-
reduction

Report Linker, 2013. Food Processing Industry: Market Research Reports, Statistics and Analysis, s.l.:
Report Linker.

Research and Markets, 2017. Global Organic Chocolate Market 2017-2021, s.l.: Research and Markets.

Rowan, C., 2015. The world's top 100 food & beverage companies – 2015: Change is the new normal"..
Food Engineering.

SDL, 2014. New SDL Study Shows Millennials are 56 Percent More Likely to Discover Marketing Content
on Social Networks than Via Search Engines or Email. [Online]
Available at: https://www.sdl.com/about/news-media/press/2014/new-sdl-study-shows-millenials-are-
more-likely-to-marketing-content-on-social-media.html