Project Work Of Principles Of Management
On “
Apply BCG Matrix on any operating unit and project the
actions desired from top management in the list of the same ”
Submitted To:Dr. Manoj Kumar Sinha Faculty of Business Management
Submitted By :Kumar Vikram Aditya Roll No. 1023 1st Year B.B.A. LL.B. (Hons)
CERTIFICATE This is to certify that Researcher Project Work entitled Work entitled “Apply BCG Matrix on any operating unit and project the actions desired from top management in the list of the same.” Submitted is the record of work carried out during semester-I of First Year B.B.A. Ll.B. Course for the academic year 2013-2018 under my supervision and a nd guidance in conformity with the syllabus prescribed by Chanakya National Law University. University.
Place: PATNA. Date: GUIDE
CERTIFICATE This is to certify that Researcher Project Work entitled Work entitled “Apply BCG Matrix on any operating unit and project the actions desired from top management in the list of the same.” Submitted is the record of work carried out during semester-I of First Year B.B.A. Ll.B. Course for the academic year 2013-2018 under my supervision and a nd guidance in conformity with the syllabus prescribed by Chanakya National Law University. University.
Place: PATNA. Date: GUIDE
Apply BCG Matrix on any operating unit and project the actions desired from top management in the list of the same
TABLE OF CONTENTS
Introduction Hypothesis
Research Methodology
BCG Matrix – Matrix – Meaning, Meaning, Limitations And Diagram
Introduction to BCG Matrix And Nestle India
Studying the construction of BCG matrix for Nestle
Conclusion
Suggestions
Limitations
Bibliography
Annexure – Annexure – II (List of Nestle Products worldwide)
Annexure – Annexure – II II (List of Nestle Products offered in India)
Annexure – Annexure – III III (List of provisional stores surveyed for the study)
Introduction Nestle India is the third largest food industry in India with large range of milk products such as infant milk, weaning cereals and from instant coffee and chocolates to confectionery and ready-to-cook food operating from six units and eight copackaging units.
“Nestle” means “little nest”. Nestle began its operation from Switzerland in 1867 under henri nestle with commitment towards providing nutritive health and fun products like chocolates .The critical factors behind the corporate excel lence of Nestle India is the adoption of best business principles for promoting their work culture and human resource initiatives for their growth and development .General principles of nestle is that it is more people and product oriented than systems oriented, committed to create value for their share holders, decentralized within the limits imposed by basic policy and strategy decisions as well as group-wide needs for coordination and management development and committed to the concept of continuous improvement. Nestle India does not favour short-term profit at the expenses of successful long-term business development. It also r ecognizes the legitimate rights of the consumers of the nestle brands to know how the company operates. As for relationship with business partners, Nestle India insists on honesty, integrity and fairness in all aspects of its business and expects the same in its relationship with all its business partners. Nestle India requires its management and employees to avoid such personal activities and financial interests as would conflict, or appear to conflict with their commitment to their jobs.
HYPOTHESIS The hypothesis of the present study are , (i) To place the various brands of Nestle in India in the matrix as suggested by the Boston Consultancy Group, as based upon the data empirically collected. (ii) To analyse the brands so placed and critically compare their placement. (iii) To compare the outcomes so obtained and generate suggestions. The achievement of the above Hypothesis has been made b y following the methodology as stated below.
RESEARCH METHODOLOGY SCOPE: This study aims to study the products offered by Nestle in India b y placing them on the BCG matrix. The placement of the products on the matrix shall be on the basis of the empirical data collected in Patna (India) from a number of s izeable provisional stores which place Nestle products for sale. METHODOLOGY: The present study constitutes the construction and study of BCG matrix of Nestle products on the basis of empirical data collected about Nestle products from six provisional stores in Patna. TECHNIQUES ADOPTED FOR DATA COLLECTION:
(A) Interview method (B) Internet Survey (C) Opinion Generation
BCG Matrix – Meaning, Limitations And Diagram
Boston Consulting Group (BCG) Matrix is a four celled matrix (a 2 * 2 matrix) developed by BCG, USA. It is the most renowned corporate portfolio analysis tool. It provides a graphic representation for an organization to examine different businesses in its portfolio on the basis of their related market share and industry growth rates. It is a two dimensional anal ysis on management of SBU‟s (Strategic Business Units). In other words, it is a comparative analysis of business potential and the evaluation of environment. According to this matrix, business could be classified as high or low according to thei r industry growth rate and relative market share. Relative Market Share = SBU Sales this year leading competitors sales this year. Market Growth Rate = Industry sales this year - Industry Sales last year. The analysis requires that both measures be calculated for each SBU. The dimension of business strength, relative market share will measure comparative advantage indicated by market dominance. The key theory underlying this is existence of an experience curve and that market share is achieved due to overall cost leadership.
BCG matrix has four cells, with the horizontal axis representing relative market share and the vertical axis denoting market growth rate. The mid-point of relative market share is set at 1.0. if all the SBU‟s are in sa me industry, the average growth rate of the industry is used. While, if all the SBU‟s are located in different industries, then the mid -point is set at the growth rate for the economy. Resources are allocated to the business units according to their situation on the grid. The four cells of this matrix have been called as stars, cash cows, question marks and dogs. Each of these cells represents a particular type of business. Placing products in the BCG matrix results in 4 cat egories in a portfolio of a company: 1. Stars (=high growth, high market share)
- use large amounts of cash and are leaders in the business so they should also generate large amounts of cash. - frequently roughly in balance on net cash flow . However if needed an y attempt should be made to hold share, because the rewards will be a cash cow if market share is kept . 2. Cash Cows (=low growth, high market share)
- profits and cash generation should be high, and because of the low growth, investments needed should be low. Keep profits high. - Foundation of a company. 3. Dogs (=low growth, low market share)
- avoid and minimize the number of dogs in a company. - beware of expensive „turn around plans‟. - deliver cash, otherwise liquidate 4. Question Marks (= high growth, low market share)
- have the worst cash characteristics of all, because high demands and low returns due to low market Share.
- if nothing is done to change the market share, question marks wi ll simply absorb great amounts of cash and later, as the growth stops, a dog. - either invest heavily or sell off or invest nothing and generate whatever cash it can. Increase market share or deliver cash. The BCG Matrix method can help understand a frequently made strate gy mistake: having a one-size-fits-all-approach to strategy, such as a generic growth target (9 percent per year) or a generic return on capital of say 9,5% for an entire corporation.
In such a scenario: A. Cash Cows Business Units will beat their profit target easily; their management have an easy job and are often praised anyhow. Even worse, they are often all owed to reinvest substantial cash amounts in their businesses which are mature and not growing anymore. B. Dogs Business Units fight an impossible battle and, even worse, investm ents are made now and then in hopeless attempts to 'turn the business around'. C. As a result (all) Question Marks and Stars Business Units get mediocre siz e investment funds. In this way they are unable to ever become cash cows. These inadequate invested sums of money are a waste of money. Either these SBUs should receive enough investment funds to enable them to achieve a real market dominance and become a cash cow (or star), or otherwise companies are advised to disinvest and try to get whatever possible cash out of the question marks that were not selected.
Limitations of BCG Matrix :-
The BCG Matrix produces a framework for allocating resources among different business units and makes it possible to compare many business units at a glance. But BCG Matrix is not free from limitations, such as1. BCG matrix classifies businesses as low and high, but generally businesses can be medium
also. Thus, the true nature of business may not be reflected. 2. Market is not clearly defined in this model. 3. High market share does not always leads to high profits. There are high costs also involved
with high market share. 4. Growth rate and relative market share are not the only indicators of profitability. This
model ignores and overlooks other indicators of profitability. 5. At times, dogs may help other businesses in gaining competitive advantage. They can earn
even more than cash cows sometimes. 6. This four-celled approach is considered as to be too simplistic.
Introduction to BCG Matrix And Nestle India
Need for evaluation In the commercial arena, the choice of an effective strategy is perhaps the most important and the toughest decision to take. The decision to select among the grand strategies and deciding upon which strategy will best meet the enterprise‟s objectives is rendered complex by multifarious considerations. Nevertheless, the decision to replace the product once its positioning fails is a yet more complex decision. The beauty of BCG Matrix, a Matrix developed by a group known as Boston Consulting Group, USA, is that it seeks to place the different products of an organization in different grids such as to analyze them in a comparative manner in terms of profitability or in terms of (a) percentage growth in sales and (b) market share position, to be exact. Thus, it gives an opportunity of self assessment to the organization to reassess its product positioning and thus come out with alternative solution if the original placement of the products in the market does not meet the desired level of growth.
BCG Matrix explained Thus, when all the products of the company are put in four cells (thus i t actually provides an opportunity to reassess the entire position of the company in terms of all the products it offers to the market), the market standing of the company can be anal ysed in four different classes namely, stars, cash cows, dogs and question marks. Each of thes e classes have a different meaning attached to them and can be represented on the matrix as follows.
It is significant to note here that this matrix denotes the areas of strategic search for an organization i.e. how to proceed in replacing the products if they are not found to be of satisfactory placement.1
Nestle India and BCG Matrix With headquarters at Vevey, Switzerland and established in 1866 by henri nestle, Nestle has growth today to be the world‟s biggest food and beverages company. Established in the strong foundation of growth through innovation and renovation, the company is known today by its several strong brands which are dominating the markets t he world over. Nestle India is a subsidiary of Nestle S.A. of Switzerland. With six factories and a large number of co packers, Nestle India is a vibrant company offering a number of products in the Indian market. A number of brands are offered by the company in the country of which while some have already established a strong hold, many others exhibit enormous prospects to dominate the market and are only waiting for a favourable opportunity or appropriate and sizeable promotional campaign by the company. The present task seeks to undertake a construction of a BCG matrix for the products offered by Nestle India Ltd. in India 2 and an analysis thereon. The aim is to critically analyse the relative positioning of the various products offered by Nestle India and to examine them in the light of the prospects available and if the dogs and question marks can be converted to sizable opportunities and well established brands.
1
For Details Refer BCG Matrix Refer to Annexure – I and Annexure II for list of all the products of Nestle International and Annexure – III for list of products offered by Nestle in India. 2
A STUDY OF THE CONSTRUCTION OF BCG MATRIX FOR NESTLE INDIA Nestle has a wide range of products and is the market leader in food business over the world. However, it has a limited number of brands on India. The peculiarity of these brands is that those brands which are established ones are really ones which dominate the market and make almost no room for any competition while, the brands which are not so well established are not so on account of any qualitative deficiency but either because of a weak promotional campaign of the company or on account of a misplacement of the product in the target segment. Nevertheless, we go ahead with our study. The present chapter is devised in the manner that the overall matrix comes first and then each products placed on the matrix is explained as to why it finds a place in the grid it has been placed in the matrix, along with the relevant empirical data reproduced therein. Also, in the matrix itself, though the products have been placed in one of the categories, their projected placement i.e. where should be or can be placed with a promotional exercise, is also indicated by an arrow which shows the appropriate category in which the product is aimed to be placed. For example, Maggi Noodles has been the pioneer of the Noodle industry in the Indian market. But as far as Nestle is concerned, it is only a cash cow. Therefore it is aimed to be placed in the Stars. This is indicated by an upward arrow which signifies that the product is aimed for repositioning and the direction of the arrow shows the grid where it is heading to, in this case upward arrow is indicating to the stars. Also, besides the intended placement of the products, there are some products which need to be taken off the market. For example, Nestlé‟s world dominating brand of water, Nestle Pure Life, was taken off the Indian market on 29.12.2003 when strategically it was found unviable to continue with it. This shows the intention of Nestle not to play in the Indian water market though it has a well established base of the same brand abroad and it could have reaffirmed a market share had it decided to introduce Perrier , another famous water brand of Nestle.
The diagram above shows the construction of a BCG Matrix for Nestle India. Each product in the matrix finds an explanation herein below. Product: Nescafe Position: Star Reasons for present positioning:
(1) Nescafe is one of the leading coffee brands in the Indian market. (2) It has find a dominance which is unparalleled by any other brand in the country. (3) Not only does it have a high market share but it growth rate is also significantly high. (4) The name Nescafe has become generic with coffee. Intended Placement: Comments:
(1) Nescafe has witnessed a substantial growth in the present times and seems to continue dominating the market for some time. (2) Nestle India must look in for expanding the number of consumers in the North as it has in the South. (3) It kept on bringing new variants in order to hold on to its position. (4) The market share is firm and needs to major repositioning. Product: Cereals Position: Star Reasons for present positioning:
(1) Cereals has become one of the leading baby food products (2) It has witnesses quite a long hold in its market share with its sales increasing on a continuous basis for almost more than one and a half decade.
(3) Its different variants have kept competitors at bay and its finds a place easily at almost every general or provisional store in the Indian market. (4) It is a major contributor for Nestle India‟s revenues. Intended Placement: Comments: (1) With the increase in population and the growth market in the country Nestle
India can do much better in terms of registering more shares by an aggressive promotional drive. (2) It needs to take aggressive steps to enter into those households where traditionally followed methods of feeding new born infants are followed. The market exists for Cereals to expand and though it is already a star, it can do much better in terms of expanding its shares by adopting market development strategies. Product: Maggi Noodles Position: Cash Cow Reasons for present positioning:
(1) It is surprising to note that Maggi Noodles, which has found more households of consumption in India that any other country in the world and has become the first prefer ence of Indian children in terms of instant food, is only a cas h cow and not a star. (2) The reason essentially lies in the fact that though Maggi Noodles has a significantl y high market share in the Noodles market in India, the market growth rate of Noodle consumption is not very high. (3) Though the number of repeat purchasers is high in case of Maggi, the rate of increase among the new purchasers is not too high. Intended Placement: Star Comments:
(1) Maggi Noodles is undoubtedly the leader in the Noodles market and faces almost no competition which might threaten its existence in near t imes, yet the target placement of Maggi Noodles seems to be at fault.
(2) Instead of continuing to target the children, Maggi Noodles should now also concentrate on placing the products for Office Executives, Mid wives, Young adults, and the elite wing of the society. (3) The need presently is to expand the market or i n fact create new markets for Maggi Noodles. (4) Therefore, the task for Maggi Noodles lies ahead for Market Development and thus expanding the consumer base in the presently unexplored sections of the society. Product: Milo Position: Question Mark Reasons for present positioning:
(1) Though Milo has not totally been removed off the shelves of the stores and caters to the demand of the consumers arising on account of absence of other products i n the same design (e.g. Bournvita, Complan, etc.), it has been unable to acquire a market in the basis of its brand name. (2) The reason why it is not placed as a dog is that it has the potential to expand and also because the product lies in a market with high business growth rate. (3) The retailers don‟t give much importance to Milo a s an item on the shelf but they also do not completely disregard it off their stores. Intended Placement: Dog Comments:
(1) Milo is a food drink with a bit subtle taste and not that sweet as its competitors‟ offer, Bournvita being the primary one. Thus it needs to develop upon that. (3) Milo has not been promoted as a health drink as Boost or Complan and to some extent Bournvita has been done. Milo needs to improve in this regard. (4) Thus, in essence, Milo is not weak in terms of its qualitative deficiencies but on account of lack of an extensive promotional exercise meant to place it in the mindset of the Indian psyche.
Product: Maggi Sauce Position: Question Mark Reasons for present positioning:
(1) India has a growing Ketchup market and Maggi has been a si gnificant contender as a leader. But as far as Nestle is concerned, it is not turning up that size of revenues which every top brand contributes to Nestle. (2) Maggi Sauce has been highlighted with top television celebrities but there was a considerable time lag of more than five years in the two major promotion exercises Maggi Sauce has witnesses; once in the early 1990s and the one which is going on presently. (3) Maggi Sauce, acknowledge the retailers, has the capacity (both on account of the reasons of price and taste) to wipe out competitors (both the branded as well as the local ones) and thus has huge potential to be converted into a star. Intended Placement: Star Comments:
(1) Though it has been kept as a question mark yet, Maggi Sauce has the potential of turning all odds in its way to become a dominating brand. (2) Competitors like Kissan, Tops (especially in north India) etc. do not pose any barrier in the growth of Maggi Sauce as the leader. (3) Extensive market development, followed by an extensive promotion drive in all nooks and corners of the country is the key to turning Maggi Sauce into a success as a brand leader for Nestle Product: Maggi Pickles Position: Question Mark Reasons for present positioning:
(1) Maggi Pickles, on account of its limited variety ( especially in this taste crazy country) and comparatively higher prices, has been unable to acquire a ma rket necessary for its bare minimum existence.
(2) The sales of Maggi Pickles has never really trigged since its launch. (3) The placement of Maggi Pickles is doubted for the twin reasons of its high price and packing, which seems to target it to the upper substrata while the lack of a significant number of variants poses it a challenge to maintain itself in such households. (4) It is not a dog because it is not the market which has low growth rate. In fact the market of packaged pickle is growing but it is Maggi Pickles which is unable to gather a substantial share in this growing market. Intended Placement: Disinvest Comments:
(1) Placing Maggi Pickles on the hearts and mind of the typical taste centric and money conscious Indian consumer will require an overhauling and huge investment. (2) Extensive price cuts are required but the matching returns are doubtful. (3) Pickles being a non-durable product and their success essentially related to the taste of the consumer, are not one of the core competencies of Nestl e, which is better known to introduce standard taste in the country and get them approved by the consumers. (4) Thus it is better advised to disinvest in the business and focus on other brands. Product: Maggi Soup Position: Question Mark Reasons for present positioning:
(1) With the success of Knorr and other local packed soup, it is clear that packaged soup market in India has a good future. (2) Maggi Soups have never been rejected by the consumer. (3) According to the retailers, the demand for soup itself is underdeveloped and thus there is no indicator critically against the success of Maggi Soup. Intended Placement: Star Comments:
(1) Maggi Soup needs to dominate the market but before that it has to develop the market itself. (2) The demand for packages soup is underdeveloped and thus there is a need for extensive market development strategies. (3) The advantage of Maggi Soup in going in for such market development strategies is that it will get the advantage of early start and thus like Maggi Noodles it can make a monopoly on packaged soup. (4) The development of the market is to be based on the twin principles of the nutritive contents of the soup as well the convenience and taste, which make it a suitable alternative for other fast food. Product: Kit Kat Position: Question Mark Reasons for present positioning:
(1) Owing to crispiness and superior quality, Kit Kat has an upper edge over its competitors. (2) Had this survey been made a couple of years a go, may be Kit Kat would have found the position of a Cash Cow because of the market share it acquired in a fairly decent and yet to develop wafer-chocolates market. (3) However, on account of the rise of competitors, especiall y Perk, Kit Kat seems to have loosened up its grip in the market and has lost some of the prominent recognition which it commanded earlier. (4) It is placed as a Question Mark as the brand has the potential but la ck a significant market share as of now. Also, a mere repositioning in the market segment can lead to the success of the brand Intended Placement: Star Comments:
(1) Kit Kat is one of the major successful brands of Nestle, which has proclaimed i ts dominance and success world over, ruthlessly dominating the European and the South
American markets. There is no reason why it cannot repeat the story of its success in the Indian markets as well. (2) Kit Kat needs to emphasize over its superiority in terms of quality as well as the superior taste over its competitors. (3) Kit Kat needs to adopt a market penetration strategy and for doing so it needs to start on an aggressive promotional drive. Not confined one segment, it needs to target on the market executives, the University going folk, and house wives and the elderly in specific quarters and all segments at a time. (4) Kit Kat is already prominent as a brand name in the country. The only requirement is to capitalize upon it. Product: Bar One Position: Question Mark Reasons for present positioning:
(1) Though was in prominence for quite long a couple of years back but its sal es never really clicked. The qualities which a leader exhibits were never shown by Nestle wherever Bar One was concerned. (2) In tight competition for the market leader spot with Five Star, Bar One has superiority as far as its ingredients are concerned. It also sells well. Nonetheless there seems to be some barrier for which the retailers seem to recognize it only as a market challenger with subtle features. (3) Bar One has a growing market but lacks a considerable market share. Thus it finds the place as a question mark. Intended Placement: Star Comments:
(1) Market already exists for Bar One. The need is of market penetration. (2) Bar One needs to focus on the adolescences who seem to be the major buyers of chocolates of this type.
(3) The Rs. 5/- which it has recently introduced is a classic example of cashing in the consumer psyche but it cannot be denied that it has done so following the example of Five Star. It needs, therefore, to take more initiatives but more so of its own accord and not as a follow up measure. (4) Bar One needs to pursue a strategy of market penetration, as already stated, but it also needs to emphasis on the fact that it has to sell itself in the market as a chocolate. Though it is in the form of a bar but it still faces competition from other forms of chocolate wherein Cadbury is the toughest competitor to it. Thus it has to go on an extensive promotional drive and also illustrate the superiority of bar over the other forms of chocolate both in terms of convenience while consumption as well as the price. Product: Nestle Butter Position: Question Mark Reasons for present positioning:
(1) Nestle Butter, though available in the market f or some time now, has not found much support from the consumers primarily on account of the dislike of the taste of Nestle Butter. (2) Considered as salt less, Nestle butter again is yet to grow from its pre-launch position on account of the huge competition it faces from Amul, the market leader in this field. (3) Now, as the market growth rate is quite significant, yet as Nestle Butter has not acquired a better share in the market, it has been placed in the category of Question Mark. Intended Placement: Disinvest Comments:
(1) Facts do not favour Nestle to continue with its butter. (2) Instead of no response, a significant number of retailers are of the opinion that Nestle Butter seems to be rejected by the consumers for the reason that its taste does not suit the Indian psyche.
(3) Thus it is advisable for Nestle to discontinue with butter, as it did with its water brand, Pure Life. Also, it would be better to concentrate on other brand than to go in for a head on collision with Amul, the market leader, which is inevitable on account of the same market which both the products cater to. Product: Nestle Fruit N‟ Milk Position: Question Mark Reasons for present positioning:
(1) Nestle itself seems to be unclear as to which market it has been targeted to. On own side it is a fruit drink with pleasant flavours, on the other head, it is a health drink with nutrients of milk as well as fruits. (2) Also, the placement of the brand is dubious. While it finds a place with retailer of sizeable capacity, it seems absent from other health and juice shops. Thus there has to be a definite decision of made by Nestle as to the placement of Nestle Fruit N‟ Milk. (3) The product however, on its own accord, has not been a failure totall y. It seems to find a place consistently in some of the firms but there are no regular consumers for the products the consumers are either occasional users are those who have a flair to try new products. (4) The market for health drinks, however, is growing and the health conscious Indian consumer is now choosing a health drink like Real than just going in for cold drinks and other junk food. Intended Placement: Star Comments:
(1) Despite the fact there has not been much promotion of Nestle Fruit N‟ Milk by Nestle itself but the fact that it has not been rejected by the Indian consumer in itself is a positive signal. (2) The present step, therefore, that needs to be t aken by Nestle is to promote it in a predefined market, wherein placing it as a health drink would be most favourable to Nestle towards establishing it as a successful brand.
(3) Thus, Nestle Fruit N‟ Milk needs to be placed as a competitor to Real fruit juice and there is a certain prospect for this to succeed on account of the fact that it gives additional features than Real, which is only a fruit juice but Nestlé ‟s products offers the nutrients of both fruits as well as milk. (4) Therefore the need for Nestle is to go in for Market Development Strategy and capitaliz e on the growing concern of the Indian consumer of going in for health drinks. (5) The aim is to place Nestle Fruit N‟ Milk as the generic brand for health drink to a typical middle class Indian consumer. Product: Nestea Position: Dogs Reasons for present positioning :
(1) With taste conscious Indian consumer, typically a middle clas s one, the morning has to essentially begin with a cup of tea which suits the tongue and also gives a fresh start. But the peculiarly lies in the diverse local flavours of tea, which essentially has to be perfect in order to favour that brand. (2) There lies the problem with Nestea. Though Nestle has been successful in the beverages section world over, the diverse and typical taste t endered to by the Indian consumers is not in favour of going in with „one product suits all‟. It is for this reason that Nestea has not found acceptance with the Indian consumer. (3) But facts are not totally against Nestea. Tata Tea has been successful though it has also one flavour and serves on a National basis. However the taste of Nestea has simply not been accepted by the Indian consumer. Intended Placement : Disinvest Comments:
(1) Though there is a possibility for Nestea to f ind acceptable from the consumers if some amount of research and development is diverted towards the taste of Nestea but there are a multifarious reasons for which divestment of Nestea is recommended.
(2) Firstly, even if the taste of Nestea is changed, it is very hard to change the mindset of the typical Indian consumer who are more attached to taste than to any other consideration in case of tea. (3) Secondly, Nestea, as a foreign brand of tea shall have to face the xenophobic attitude of the consumer who prefer to consume local flavours or say variants of tea than any other foreign tea as illustrated by Ruby Dust in Maharashtra Circle. (4) Also, going into the local taste has never been the attitude of Nestle. Instead it has always chosen to go in for making the foreign taste accepte d to the local consumers. The same story has been told by the success of Maggi Noodles, Nescafe, Kit Kat etc. and wherever it has been unsuccessful, it has been advisable to disinvest the brand from the product line as has been done for Nestle brand of waters. Product: Milky Bar Position: Dogs Reasons for present positioning :
(1) It become quite popular in and around the year 2000 but it never reached the st age of a power brand. (2) Primary tried by the Indian consumer as a cr aze which laid in trying the first nonbrown chocolate, Nestle Milky bar was a sweet chocolate with cream colour. Thus the primary acceptance of Milky bar was not based on its core qualities but on the basis of certain peculiarities which it contained, differentiating it from other products in the same line. (3) Milky Bar, as a chocolate, though has a growing market, yet it has been placed as a dog on account of the inherent lack of core quality which makes it generic with chocolates. This was the main reason why it was never considered a competitor by other chocolate manufactures and the consumers also treated it so. Intended Placement : Disinvest Comments:
(1) Milky Bar has lost the primary battle which it had with mindset of the unaware Indian consumers who could never contemplate a non-brown chocolate.
(2) The market positioning of Nestle Milky Bar has been only to children ( as one can contemplate from the advertisements which relate only to children in the age group of 10 -15) and thus it has lost the adolescent consumer, which i s also a major part of the entire consuming segment of chocolates. (3) The promotion style of Milky Bar has never been dominating. The advertisements have been too soft and not too impressive. Thus success of Milky Bar requires rebuilding the image of Milky Bar. (4) The cost benefit analysis also shows that continuing with Milky Bar is expensive as the amount required for its promotion and development has not led to the same amount of returns. Product: Nestle Dahi Position: Dogs Reasons for present positioning:
(1) Majority of the consumers are unaware that Nestle offers a Dahi also. (2) The launch of Nestle Dahi has been in select cities but there too only select outlets retail it. (It is not offered in Patna) (3) The concept of packaged Dahi is not being accepted b y the consumer who prefers to play it safe with the local manufacturer wherefrom he can keep a check on the qualitati ve content of the product as well before consuming it. (4) Thus, lack of a growing market makes Nestle Dahi t o be placed in as a Dog. Intended Placement: Disinvest Comments:
(1) Dahi is a product which is best if considered fresh. This traditional mentality of the Indian consumer is the biggest barrier in the success of Nestle Dahi. (2) The concept of packaged Dahi is yet to materi alize in India. Therefore its launch by Nestle is premature.
(3) It is advisable to leave the avenue then to go in for market development in this case when there is big risk of the failure of the entire investment to doom on account of the psychic barrier of the consumers. Product: Crunch and Munch
(Since both these chocolates of Nestle cater to the same market and are also similar in composition and variety, they have been considered together in this case) Position: Dogs Reasons for present positioning: (1) Both the brands are non dominating, taste centric
chocolates in the bar category with not much associati on with any particular core quality which they depict which differentiates them from other brands. (2) The market is growing almost the right pace but t he share of these two chocolates is not considerable in the present market. Therefore they are classified as dogs. Intended Placement: Comments:
(1) Although if we proceed with this fact situation that these two brands are not doing well and also they do not have a core competence upon which they can be promoted, the obvious answer would be to disinvest them. However that is not s uggested in the instant case. (2) The primary reason for such is that these two brands are continuing on a no profit no loss basis and though they do not offer much of prospects for Nestle in terms of contributing with higher revenue, they in are in fact making Nestlé‟s presence felt in the chocolate market of which only Kit Kat is a probably power brand for Nestle. (3) Thus, the primary solution would be to continue with the brand such that Nestle keeps its prospects open in the chocolate market and thus diversifies its risk of proceeding just with one chocolate (Kit Kat and to some extent Bar One) especially when the disinvestment of Milky Bar has also been suggested.
CONCLUSION Any strategic decision making exercise cannot be successf ul unless the fact situation and the figures have been taken account of and the taken accordingly. The present attempt also follows the trend. In a field exercise, pertinent data has been collected as regards the different brands of Nestle as being offered in India and based on the facts collected, specific suggestions has been made for the promotion of the brands which are not performing well and also those which have already become the power brands. The aim of the exercise was not to highlight on the BCG matrix as such but to use BCG matrix as a tool towards analysis of Nestle India as an organization with all its products in particular as well as on a whole. Thus the suggestion generated are all brand specific and pertain to the factors behind each brand which contribute to its growth or lead to its fall. Also, one important fact has been witnessed by this study. It is not that organization name which is all for a product. This is to say that though Nestle is the leader is food products in the world and has dominating brands in India as well yet, its name is not sufficient to make all brands a success even though they may be related to the food business and thus within the core competency of Nestle. It is essentially only account of the fact that the present day consumers are changing. The colonial concept of a big name hides all has changed and unless the brand in particular comes up to the expectation in the subjective satisfaction of the consumer, it will not succeed, not matter how big the name of the organization is. Thus Nestle has to ref ocus on not so well performing brands and taking each of them in particular, in accordance with the plan of action as well the highlighted technique, decide to reposition its brands in the market. Escaping from the cumbersome task of repeating the observations made herein, it is only advisable to state that the present study has really come out with some glaring defects in the strategy followed in some of the products and Nestle has to revisit its plan of action in order to convert its dogs and question marks into stars.
SUGGESTIONS The suggestions for each of the brands have been sta ted along with the brands in research itself however there are certain general suggestion which is stated herein below. (1) Nestle India, no doubt is a leading company in food business yet, it has to focus on its
distribution system and offer better incentives for r etailers who have till date been clinging on to its products only because of the great demand they carr y despite the fact that there is not much which Nestle offers to these retailers. (2) Nestle India has to stop adopting a brand focus promotion strategy and also has to go in
for general promotional drive for the name Nestle itself. (Because majority of the consumers do not know that Nestle has so many brands to offer. In fact a huge number of them related Maggi as a different firm altogether than Nestle) (3) Nestle India needs to do away with this attitude of every time trying to impose a foreign
taste on the local consumers. Instead, as regards the products which necessarily relate to the taste satisfaction of the consumer, proper research and Indianization of the products is essential.
LIMITATIONS (1) The data collected on the field considers a small sample only. Thus proper corroborative
research is required before taking any action based on the findings of the present study. (2) The data for the nationwide figures of Nestle India is not widely available. Nestle India is
maintained as a subsidy of Nestle SA and thus proper reporting of its figures is not available. This also poses a limitation as far as comparison of the results of the study with the national figures is concerned. (3) The factual matrix of Nestle brands, as analysed in this study, is based on a li mited survey
of one city (Patna) thus the result may be incomparable with a similar study in other areas. (4) Not much data was available as far the not to successful brands of Nestle were concerned.
BIBLIOGRAPHY BOOKS: 1. L. M. Prasad, Business Policy: Strategic Management, (Sultan Chand & Co., New Delhi,
2001) 2. Meenakshi Gupta, Principles Of Management, (PHI Learning Private Limited,2009) 3.Biswajeet Pattanayak,Human Resource Management,( PHI Learning Private Limited,2009) WEBSITES: 1.
(last visited on September 22, 2013) 2.
b.com/companies/companies_n/nestle_india/19990124nestle_india.html>(last visited on September 22, 2013) 3.< http://www.netmba.com/strategy/matrix/bcg/(last visited on September 24, 2013) 4.(last visited on
September 25, 2013)
ANNEXURE – I (List of Nestle Products worldwide)
ANNEXURE – II (List of Nestle Products offered in India)
