Good Opportunity Analysis For Nestle Chocolate In Australia Essay Example
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Opportunity Analysis for
MKT103 – Introduction to Marketing
Executive Summary 5
Introduction and Company Background 8
Company Background 8
Company overview 8
Situation Analysis 10
Market Analysis 10
Macro Environment Analysis 11
Political Analysis 11
Economic Analysis 11
Social Analysis 12
Technological Analysis 12
Legal Analysis 13
Micro Environment Analysis 13
Company Analysis 13
Competitor Analysis 14
Competitive market Summary 15
Consumer Analysis 16
SWOT Analysis 17
Marketing Objectives 17
Target Market & Positioning 18
Selection of Target Market 18
Positioning Strategy 18
Positioning Attributes 18
Perceptual Map/s 19
Conclusions and Recommendations 20
Reference List 22
The primary objective of Nestle marketing plan in Australia is to increase customer base and sustain a long-term loyalty through producing differentiated health conscious products at an affordable market price. The program concentrates along the demographic segmentation that incorporates the changing lifestyle of the youths and their inclination toward social sites to seek market information. Ultimately, the Nestle Company will ride on to lure consumers with adjusted prices and high-quality products over market rivals
The Australian nation is a favourable market for advancing nestle chocolate diversification. In the recent years, consumers have marginally gained conscious of health related complications concerning the high uptake of sugar and fat. For that reason, market players have adjusted their product strategy to include low sugar and fat content chocolates. Further, new entrants such as Lindt have shifted the market curve towards premium chocolates. For Nestle to increase demand, price adjustment and increased product innovation targeting youths is the appropriate market strategy.
The market players have overlooked the demographic market segmentation of the Australian market. The young population consists of the highest population of chocolate consumers across the globe. In particular, the population’s consumption behaviour is overly inclined to affordability and product quality. However, the existing market players concentrate more on differentiation without a balance of price. The Nestle company focus strategy will be effective in adjusting economic prices based on differentiated products and the target consumer’s geographic and psychographic variation.
The Nestle Chocolate Company needs to re-strategize its production strategy to include the health social concern in the market and rising youthful population between the ages of 16 and 30 years. The essence of the target market is to increase market diversity and advance its differentiation strategy over market rivals. In particular, including organic chocolate bars in the market would capture the health conscious parents’ thus increasing revenue and consumer loyalty.
Introduction and Company Background
A marketing plan is an effective framework applied by firms in their endeavours to understand their internal and external environment. The plan entails conducting a comprehensive assessment of a company’s strengths and weakness, market competitiveness and the long-term sustainability of the firm’s strategic plan.
In particular, Nestle company marketing plan will be critical to understanding the market changes competitors’ strategies and assist in employing appropriate market approaches to reinforce its marketing strategies and increase market penetration.
Nestle company is a multinational corporation headquartered in Switzerland under the leadership of Wan Ling Martello. The company has an expansive market representation in over 194 countries served by over four hundred manufacturing plants. The multi-product strategy has enabled the firm to increase its pool of risk and due to unpredictable market changes with respect to consumer tastes and pertinent exogenous market factors that affect the product’s quality and ability to serve the consumer utility (Chocolate & Confectionery, 2015. The company produces a variety of differentiated products that included dairy products, ice cream, snacks, frozen foods, breakfast cereals, coffee, tea and chocolate. Based on the firm’s annual report, the company recorded 91.6 Billion Swiss Franc. The company ranked as the largest food company in the world with revenue due to its continuous innovation culture and product differentiation.
Nestle company was established in 1905 following a strategic alliance between Farine Naste Hentri Nestle and Anglo-Swiss Milk company. Prior to merging, the two companies operated independently under the management of Henri Nestle and two brothers; Charles page and George page respectively. As a strategic approach, the Nestle Company diversified its product chain to include Chocolate bars in the early 1920s. Since its establishment in the Oceanic region, the company has developed a strong market advantage having recorded a revenue growth of A$2.8 billion in the 2007 financial year. The company has maintained a top, bottom line model that capitalizes on a skilled workforce, corporate social responsibility and maximizing shareholders returns.
The Australian market has been growing rapidly with a developing interest in chocolate bars among consumers. Most chocolate revellers have demonstrated a critical consciousness about the quality of the products and its nutrition benefit. Survey statistics indicates that consumers’ consumption of chocolate has been declining marginally due to the global awareness of health and nutrition with most consumers opting for premium chocolates as safer products than chocolates made by artisan manufacturers. The Nestle Company has maintained a consistent innovation and product differentiation strategy by producing branded chocolate bars to suit the target markets inconsistent tastes and preferences (Chocolate & Confectionery, 2015).
The health conscious trend has shifted the market behaviour as most consumers are inclined to quality products as the major determining factor to influence the purchasing power on chocolates (Letmathe & Bulcke, 2012). In the confectionery market, Chocolate is the leading consumer product, accounting for approximately 50% of the confectionery total sales volume. On average, the Australian market consumes 6.3 kilograms of chocolate per capita- an indication of a profitable market segment. Cadbury accounts for a 55% of the chocolate market while Mars and Nestlé’s brands trail with an average of 18% and 14% market penetration respectively (Nieburg, 2013).
The entrance of Lindt chocolate brand is core competitive force that could shift the market share segmentation ratio in the ensuing economic periods. Additionally, the Cadburys chocolate sales volume has marginally declining thus creating an expansion opportunity for Nestle company. The health conscious trend among the consumers has paved the way for the entrant of close substitute products such as snacks, yoghurt and fruits. The market change renders the chocolate brand at stake prompting firms to upgrade the production strategy. In another perspective, the dwindling global prices of sugar, milk and cocoa are influencing factors to the chocolate production capacity and market pricing.
Outstandingly, the government has been in the process of instituting strict measures focussed at advertising of chocolate brands in print, video and audio media platforms as a cautionary approach to children who dominate the largest market segmentation.
Macro Environment Analysis
A nation with an unstable political environment is a detrimental factor to the success of local and foreign business enterprises. Australia boasts with a strong political government that endorses the social welfare for all citizens. The country plays host to key multinational corporations in the Asia Pacific region thus rendering it a key investment hub. The hierarchy of governance is divided into three that include the judiciary, executive and the legislature. The government accommodates the interests of investors through an open policy framework sufficient to boosts the investors trust and confidence in the government.
The country’s investment approach has seen dramatic growth in the Gross domestic product over the last ten years. Notably, the country has attracted global companies with the attractive package of low commercial houses. The positive trend rhymes well with Nestle Company’s strategy to diversify its local diversification of production and sales infrastructure. For instance, with the drastic decline property prices, Nestle Company could opt to purchase industrial premise rather than lease the property. In a different perspective, the Australian’ currency stability against the dollar and sterling pound hints a positive economic impact on the company’s ability to record productive growth and market sustainability.
Similarly, Australia government has a high level of educated individuals - a factor that would boost Nestle Company’s innovation strategy.
The Australian population of men and women between the age of 16 and 30 years is increasing a high rate as compared to the aged population. The growth manifests a market opportunity for the firms that target the young consumers. For instance, Nestle company could utilize the opportunity in increasing their market segment through aggressive price incentives and product diversification strategy. The elder’s society is keen on advocating high education levels for the children with the government offering partial financial incentives to the student’s university and tertiary institutions. In another perspective, the economic growth has influenced the rise in the middle-income population whose consumption behaviour is dependent on quality, prices and quantity. In that case, Nestle Company believes in continuous innovation strategy confined to the marketing mix strategies.
Further, with the rise in technology, consumers are likely to shift their attention to the social network to seek market information on new and existing products.
Technology is a key driving force in the advancement of a firm’s quality production and cost-effectiveness. The essence of technology consciousness in a company is to capture the market changing trends and the market volatility with respect to local and global policy changes. The government injects material and financial resources into the Commonwealth Scientific and Industrial Organization (CSIRO) to advance research initiatives to boost effectiveness in the Industrial sector. The private companies collaborate with the government body to develop market-oriented innovations that strive at reducing the cost of production and improvement in the quality of products.
In the recent past, confectionary and chocolate manufacturers have embraced the concept of Computer Aided Designs that ease the production of quality chocolates at the minimal wastage of lead time and cost. Moreover, the revolution of E-commerce has led to many companies selling and marketing their products using a website, enabling companies to interact with customers and monitor on-time information about the market. The Nestle Company established a global Information Technology Centre meant to consolidate data and market information on products research and innovation (Austrade, 2008).
The Australian government developed environmental sustainability rules advocating for low carbon emission and recycling of materials. The Government has also drafted policies that strive to create favourable taxations system for investors. For instance, all business enterprises are required to engage with nutrition experts to develop innovative products that uphold the health concerns of all consumers. Moreover, the government protects consumers from consumer exploitation by regulating prices and quality of products. In that case, the Nestle Company has to apply cost-effective measures to maintain the targeted profitability and consumer satisfaction.
Micro Environment Analysis
Strong brand identity across the globe
Investment in research to maintain a continuous innovation in chocolate products.
Strategic initiatives through mergers and acquisitions to strengthen firms market advantage.
Inconsistent variations in consumer’s tastes and preferences thus unable to meet consumers’ utility.
Issues of low-quality products as expected by the consumers as the management strive to safeguard the company’s profitability
The firm is unable to maintain a universally low price of chocolate products for all level of consumers to access, citing increased cost of production
In a competitive market, firms engage in consumer related strategies such as the quality of products, differentiated products and price adjustments to lure target customers loyalty. In Australia, Cadburys chocolate has been leading in market base followed closely by Nestle Chocolate. Apart from the Green and pack company that produces organic chocolate bars, Cadburys, Mars, Ferrero and Lindt are direct competitors for Nestle because they produce differentiated brands meant to suit consumers taste at different geographic market segmentations (Sivasailam, 2010).
Direct competitors are firms that provide similar products in the market and are high substitutable with each other. Outstandingly, Lindt has captured its market segment with a dissolvable chocolate adored by women while Green and Blacks concentrates on health conscience by offering organically manufactured chocolates. The two companies demonstrate key points of separation that safeguard their market sustainability. On the other hand, Cadbury and Nestle share a common production and marketing strategy of quality and affordability as points of similarity that drive the market competitiveness. To ease competition, Nestle could venture into production of organic chocolates as a diversification strategy.
Competitive market Summary
Consumers in the Australian market entail young population, children and the medium-aged people who have a high utility for chocolates. Chocolate products dominate among the confectionery products as they purchase differentiated brands of chocolate to suit their utility.
The consumers’ purchases associated products of chocolate including éclairs and snacks especially with a key concern on the health issue. In the Chocolate brands, the consumers have a strong loyalty of Cadburys chocolate products followed by Nestle mars, Green and Blacks and the recent entrant Lindt premium chocolate (Nieburg, 2013).
In most cases, they purchase the products in retail shops and supermarkets or snack and assorted sugary products shops.
Considering Chocolate can serve as a dessert or a leisure product there is no distinct time when Australian consumers purchase the products. However, the trend increases during lunch and evening hours as well as recreational weekends.
The consumers purchase the chocolate products based on price affordability and the uniqueness of the chocolate brand.
The major reason consumer purchase Chocolate is for a nutritious purpose and as a dessert.
The chart below outlines the current capacity of the Nestle company to with stand market competitiveness.
Target Market & Positioning
Selection of Target Market
The marketing plan focuses on building Nestle chocolate brand to the young population aged below thirty years. The strategy is informed by the rise in Australian young population between the age of 16 and 30 years and the untapped opportunity in the markets varying tastes and preferences. Based on preliminary market analysis, most rival companies develop chocolate brands but are reluctant to engage and understand the young population’s sentiments and product expectation.
Nestle company will apply the focus generic strategy that accommodates the affordability and unique differentiation of the product (Theodosiou & Leonidou, 2003). The differentiation approach will precede the pricing strategy, laying focus on capturing the consumers’ conscience with unique products and then capitalizing on the same to set an economical but affordable price of chocolate products
Notably most of the market rivals have concentrated on a specific market target such as women, school children thus overlooking other influencing factors. Therefore, implementing a focus position strategy would create a balanced approach to affordability and consumers views on product uniqueness and quality. Nestle strong brand will be driving force to overwhelm rival firms.
The target market is rationally conscious of the price of product and quality of the final products. In that case, Nestle firm will strive to apply cost-effective measures to reduce product price drastically to favourable levels.
Another attribute is the health concern raised by health experts globally. The management will endeavour to produce low fat and sugar chocolates while maintaining the indigenous taste of chocolate bars. Particularly, the company could consider adding organic chocolate bars to tap the market opportunity dominated by Green and Blacks chocolate manufacturers.
Conclusions and Recommendations
Nestle company stand out as a sustainable competitor in the Australian market dominated by the Cadbury brand. Due to the company’s innovation and differentiation approach, the firm would be able to capture consumer’s loyalty to their products. The technology revolution has eliminated the market information asymmetry and therefore consumers have access to the markets internal and external environment changes. In that case, Nestle Company should re-structure the production strategy to accommodate the health concerns of reducing sugar and fat content in chocolate products. The focus strategy on price and product differentiation is the appropriate approach to advance market demand and retain the chocolate brands long-term market advantage.
Chocolate & Confectionery. (2015, March). Retrieved from http://www.nestle.com.au/brands/chocolate-and-confectionery
Letmathe, P. B., & Bulcke, P. (2012). Nestle in society: Creating shared value. Nestle company.
Nestlé celebrates a century of success in Australia - Investment success story - Austrade - Austrade. (2008, March). Retrieved from http://www.austrade.gov.au/About-Austrade/News/Success-Stories/Nestle-celebrates-a-century-of-success-in-Australia
Nieburg, O. (2013, December 17). Premium chocolate growth in Australia: Leatherhead. Retrieved from http://www.confectionerynews.com/Markets/Social-climbers-Aussies-plump-for-premium-chocolate
Sheldon, P., & Thornthwaite, L. (2005). Employability skills and vocational education and training policy in Australia: An analysis of employer association agendas. Asia Pacific Journal of Human Resources, 43(3), 404-425.
Sivasailam, N. (2010). Chocolate and confectionery manufacturing in Australia. IBIS world Industry.
Theodosiou, M., & Leonidou, L. C. (2003). Standardization versus adaptation of international marketing strategy: an integrative assessment of the empirical research. International Business Review, 12(2), 141-171.
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