In this article you will learn about Nestle case study which includes different types of Pricing Strategies that Nestle has used.
In 2019, America accounted for 50% of Nestle’s global sales. In that year, it earned a total of around 92.6 billion Swiss francs.
→How did Nestle manage to make that much money?
→What was their price strategy?
Nestle case study
Heinrich Nestle established Nestle in Switzerland in 1866. One of the first international corporations is Nestle. Nestle set out to seize development prospects in several nations right from the start. It joined with Anglo-Swiss condensed milk in 1905, expanding its product line to include condensed milk and infant formula. With operations in 189 nations, Nestle now has 447 plants.
Products offered by Nestle
Breakfast cereals, beverages, dairy, chocolates, nutritious foods and food services are all offered by Nestle.
Popular food items from Nestle that are available in India include Kit Kat, Maggi, Milkmaid, Polo, and Nescafe.
This renowned company has been using its knowledge of Health, Nutrition, and Wellness for more than 150 years to make its clients’ lives healthier and happier.
They do, however, believe that what works now might not tomorrow.
In order to uncover more ways to experiment with foods, nutrition, and beverages, they keep exploring and concentrating on pushing the boundaries.
Nestle unlocks the potential of food to raise everyone’s standard of living, not only now but for future generations.
The brand focuses on increasing consumer satisfaction and enjoyment, enabling better health, and making the greatest nutrition accessible to everyone.
In addition to this, the company explores novel approaches to safeguard and enhance natural resources.
Competitors of Nestle: A Case Study
Carnation, Kit Kat, Nestle-water, and Stouffers are just a few of the well-known consumer brands owned by Nestle.
The corporation is a major player in the global food and beverage market because thirty of its brands had earnings of more than $1 billion in 2010.
Nestle is one of the food and beverage industry’s most geographically diverse corporations, with about 42% of its sales occurring in North America. It puts it in a position that gives it an advantage over its competitors.
Leading economies including the United States and Europe have significant market shares where its brands are well-established.
Nestle faces significant competition from Danone and Unilever. Like Nestle, these two are industry titans in the food and beverage sector.
Due to its rapid sales in the food and beverage sector, particularly ice cream, frozen food, tea-based beverages, and cookery items, Unilever reported an increase in annual profits of almost 26% in 2010.
Danone, on the other hand, reported a 38 percent increase as a result of rising stock prices. Additionally, the surge in earnings was boosted by an increase in its yoghurt sales.
Nestle Handles, on the other hand, positioned itself in the market by implementing a new accounting technique that helped to drive down its cost of sales.
Discounts, allowances, and promotions for the company’s merchants could potentially be included in sales profits rather than the marketing line.
Even though Nestle’s sales were down for a year, their pricing strategy enabled them to compete with their counterparts, which helped them become a well-known manufacturer despite the intense competition.
Nestle, the most well-known food maker in the world, competes fiercely with Unilever.
With offices in 160 nations and about 1,49,000 employees, Unilever houses its food, home, and personal care divisions in London.
Unilever has a market share of about 8.6% in the Western European ready meals industry, which places it second, 0.3 points behind the renowned Nestle, as the corporation works hard to outperform Nestle in terms of the quality of their product.
Target Market of Nestle
The distinctive feature of Nestle is that it provides a broad selection of products that cater to audiences of all ages, from 2-year-olds to working adults.
Here is a list of Nestle’s target market and the products that are offered in each segment.
|Kids||Koko Krunch, Caregrow, Lactogrow|
|Working Professionals||Sunrise, Nescafe|
|General Audiences||Maggi, KitKat, Milkmaid|
Everyone will be aware of how popular Nescafe is among working professionals, especially coffee enthusiasts.
Who doesn’t want to feel fresh?
According to Nestle, Nescafe is the only coffee that will keep professionals alert throughout the day.
Parents totally trust Nestle’s “Caregrow” product when it comes to children. Cereals are included in the product to keep young children healthy.
For the broader public, Nestle offers a number of additional items like KitKat, Milkmaid, and Maggi.
Nestle has created products with something for everyone in mind. We’ll go into how Nestle has marketed itself and its goods online in the next section.
Case Study of Nestle
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Nestle’s strategies for Digital Marketing
You must be aware at this point that Nestle has the largest revenue of any food and beverage company in the world.
What if, however, we said that Nestle consistently tries to be one step ahead in terms of marketing techniques and guidelines?
Regardless of whether they are offline or online, it has always concentrated on the most modern marketing techniques strategies.
You can learn how to create marketing strategies that generate a favourable response from customers by studying Nestle’s marketing strategies.
Let’s begin with the digital marketing strategies that Nestle must implement if they are to prosper as a brand.
Nestle: Partner with influential celebrities
Nescafe, a Nestle product, works with celebrities to promote their message and raise awareness of their brand.
They named Bollywood actress Disha Patani as their brand ambassador a few years ago.
Nescafe recently began a campaign called “Karne Se Hi Hona Hai,” which translates to “Only doing will make it happen,” and featured well-known content producers.
Also, they developed this campaign during the Covid Pandemic to motivate individuals and inspire them to keep striving for their goals regardless of their circumstances.
They appealed to India’s young with this campaign, encouraging them to dream, act, and succeed.
Nestle: Product localization
The process of localizing involves adjusting a company’s products for a certain market. On the numerous markets it presently manages, Nestle has invested much in localization.
Take Japan as an example, where the company’s main entry point was through chocolates infused with coffee.
Since Japan is typically a tea-drinking nation, the business created these candies to introduce children to the flavour of coffee.
When Nescafe and KitKat were added later, the rest is history.
Do you know anything about Android KitKat?
Google and Nestle collaborated to create the Android KitKat operating system a few years ago.
Nestle sought to benefit from Google’s goodwill in light of a recent issue involving one of their pet products. This movie overcame the crisis and generated discussion.
Nestle has signed another agreement with Starbucks to accomplish two goals simultaneously.
First, the company started developing new products, like as roasted beans, and enhanced its reputation by learning about a variety of Starbucks Nespresso Capsules.
Did you understand how co-branding helped Nestle?
Co-branding is a fantastic way to expand your reach and enter a new market. Startups looking to build their brand or introduce a new product can profit from this marketing.
Finding businesses that complement your items and working with them to create co-branding promotional commercials might be beneficial.
Nestle: Content Marketing
On the YouTube channels for each of its brands, Nestle has posted a lot of video content. The information includes cooking advice, educational “how-to” films, and greater insights on using the proper products.
As an illustration, the “Meri Maggi” channel has more than 530 videos and 5,71,000 subscribers.
Nestle has recognised various ways to provide essential information to its customers, despite the fact that video content is an emerging channel in its marketing strategy.
Nestle: Out-of-Home Advertising
Maggi, Milo, KitKat, and Nescafe are just a few of the Nestle brands that employ various techniques to get consumers’ attention.
Whether on benches, hoardings, or banners, Nestle’s brands have gained attention for their originality and contextual relevance.
What are the benefits of adopting OOH advertisements? First of all, most individuals understand these advertisements. They merit spreading.
Photographs can be taken online, sent to friends or family, and even discussed by marketers.
Additionally, they can inexpensively reach a large number of individuals with the aid of OTT.
Additionally, Nestle’s marketing tactics are excellent and bring in certain clients.
Nestle: Run marketing strategies that encourage connections and unite customers
The business issued a challenge to Arnaud, a regular 37-year-old man with 1,2000 Facebook connections, to catch up with them over a cup of coffee.
He therefore recorded these meetings and produced a 42-minute web video documentary from them. Arnaud and his friends had a cup of Nescafe throughout the sessions.
Social media users loved the documentary. On Facebook, it had nearly 8 million views, 63,050 likes, 4,850 comments, and 5,550 shares.
The number of admirers on Nescafe’s Facebook page increased by 400%.
The video generated excitement among viewers, who were eager to learn how to develop genuine relationships from their online friendships.
In response, it developed the “le Defi Nescafe,” a Facebook contest that gave victors the opportunity to reinvent the same experience.
More than 26,000 people submitted applications, almost 1,725 shared, and about 19,000 loved it.
Nescafe quickly rose to fame online by positioning itself as a product that fosters relationships and friendships.
Nestle’s Social Media Marketing Strategy
Instagram, Facebook, and Twitter are just a few of the three major social media networks where Nestle is present.
Nestle’s Social Media Presence
|About 23.3K people follow Twitter||Facebook page for Nestle has 11 million likes.||Nestle has roughly 21K followers.||YouTube channel has about 95K subscribers|
Let’s examine how it operates and what Nestle does on each social media site.
Nestle India has designed its Facebook. It shares posts related to what Nestle India is currently up to. It also announces its new launches, talks about its corporate social responsibility (CSR) measures, etc.
It maintains separate pages for its brands such as Maggi, Kit Kat, Nescafe, Koko Krunch, etc. which also have an huge amount of followers.
- Maggi has around 16 million followers
- Nescafe has 36 million followers
- Kit Kat has about 11 million followers
- Maggi has around 53K followers
- Nescafe has 30K followers
- KitKat has about 1 million followers
Having separate social media profiles for its various brands, helps them organize marketing campaigns effectively and thus resulting in a strong brand connection with its customers.
Nestle India has been maintaining its Twitter profile as a medium of communication between the company and its audience. It also solves queries related to its products by replying to every comment and mentions done by the general public on the platform.
Nestle on Twitter has maintained separate profiles for its various brands. This helps them promote their products effectively.
Nestle India’s YouTube channel has about 95K subscribers. On this platform, they post all the advertisements of their brands. However, Nestle maintains the same strategy of maintaining a separate profile for its various brands.
Nestle’s Pricing Strategy
The moment you make a mistake in pricing, you’re eating into your reputation or your profits.” Katharine Paine.
The most crucial factor for increasing sales is pricing. Harvard research show that a 1% rise in pricing results in an 11% increase in profits (approx.). Every time a transaction is made and the price structure is off, the company loses money. Consequently, accurate pricing is essential.
A multinational company called Nestle currently has a net worth of around $270 billion.
The brand’s price strategy is what has contributed to its success.
Nestle’s revenue is steadily increasing, which shows that its products were successfully identified and positioned in the market. In general, Nestle’s products are more expensive than those of the retailing brand.
In comparison to other brands, Nestle’s pricing strategy is very unique. It simply depends on recognition, which is linked to the product’s apparent excellence. Nestle evaluates the price plan it wishes to use based on this quality and the attitude of the customers.
Here are some of the strategies that Nestle has used to accomplish its objectives.
1- Price Skimming: Nestle
When using price skimming as a pricing strategy, a business sets its price high at first then gradually reduces it.
When Nestle enters a new market, it practices price skimming for some of its products.
Upper-middle-class consumers were regarded by Nestle as the product’s target market.
Later, as a result of the effectiveness of this strategy and approach, they cut the prices and focused on the middle class.
2-Inexpensive Pricing Strategy: Nestle
Nestle has a large number of brands and a variety of products, many of which are priced fairly. Market segmentation is used to determine pricing. Target audiences are typically included in market segmentation.
The method of segmenting a market involves breaking it up into smaller sections. Depending on needs, psychographic, behavioral, and demographic factors, it divides into subcategories.
Nestle uses a cheap price strategy rather than an expensive one if it wants to appeal to the mass market.
In the instance of Nestle’s Maggi noodles, this took place. Compared to other Nestle products, it is regarded as being reasonably priced. However, Maggi may appear to be a little expensive when compared to other noodle brands on a global scale.
Bundle price strategy.
Nestle has gradually come to understand that people prefer to buy their groceries in bundles rather than doing their shopping every day. Nestle therefore adopted the bundle packs strategy.
Maggi was initially available in a single pack, but Nestle later provided a 16 pack, which ultimately enhanced sales.
3- Penetration Pricing Strategy: Nestle
Offering new items at lower prices than competitors in an effort to attract more customers away from them is known as penetration pricing.
To draw in new customers, Nestle offered a new flavor of Maggi instant noodles at a discounted price of £2.25. The goal of Nestle’s plan was to steal more customers away from its competitors who were charging £3.25 for similar flavors. Nevertheless, Nestle raised the price to £3 as their client base grew.
4- Psychological pricing strategy: Nestle
Pricing that appeals to the consumer’s psychology makes it easier for them to develop a favorable psychological impact over them and make a purchase.
Instead of costing £9, Nestle Aero bliss was marketed for £8.99. This pricing strategy will influence the consumer’s psychology favorably and encourage them to purchase the product.
5- Stock Keeping Units: Nestle
Because Nestle does not want any customers to leave, it offers a range of prices for each stock-keeping unit, enabling it to appeal to a wider audience. Nestle has everything covered, offering several pack sizes for products like Maggi noodles and cereals.
Cereal from Nestle is a little more expensive than other brands.
As a result, it began providing tiny pouches for everyday use. This has made the pouches far less expensive than larger packs, enabling various customer segments to purchase Nestle’s products.
6- Discounts offered: Nestle
Nestle provides discounts at a variety of retail stores. Nestle items frequently come in bundles and are discounted by 5% or 10%.
It is less expensive to purchase coffee and creamer together than to do it individually.
7- Competitive pricing strategy: Nestle
Analyzing the pricing policies strategies of its competitors is another broad strategy that Nestle employs. Nestle has a number of brands, and each brand has a distinct department that analyses the pricing tactics of its competitors.
Additionally, it looks at the sales, innovation, and marketing strategies of competitors. As they take into account consumer preferences, Nestle’s competitive pricing strategy helps them to achieve their desired position.
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Global pricing strategies of Nestle
Nestle makes an effort to implement pricing strategies that would help it achieve its financial goals globally. These strategies frequently use the penetration and skimming strategies.
When Nestle products are exported to foreign countries, their prices inevitably increase. As an alternative, it also employs price skimming, which involves setting a higher price initially and then lowering it in response to customer demand.
Nestle has developed into one of the top parent companies with prosperous branches operating under its umbrella. Nestle has been successful with consumers because it adapts to various price tactics based on the places it sells in and the products it offers.
It prioritizes the needs of its clients and works to offer the highest-quality goods in a variety of price ranges so that all consumer groups can afford its goods, hence boosting sales and profitability for the business.
Nestle Company’s pricing strategy- Key Insights
✔Heinrich Nestle established Nestle in Switzerland in 1866.
✔Nestle was initially developed by Heinrich for the purpose of supplying milk formula for infants. He discovered that it could be made from powdered milk, sugar, and other natural foods.
✔A multinational company called Nestle has a current net worth of roughly $270 billion. The brand’s price strategy is what has contributed to its success.
✔Compared to other brands, Nestle’s pricing strategy is very unique.
✔Price skimming, inexpensive and bundle pricing, penetration pricing, stock keeping units, psychological pricing, discounts, and competitive pricing are some of the pricing strategies that Nestle employs.
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Upcoming plans of Nestle
According to Nestle’s CEO Mark Schneider, the business intended to invest Rs. 5,000 crores in India over the next three and a half years.
The FMCG company, which owns nearly 2,000 brands worldwide, is certain that this move will enable Nestle to strengthen its core operations in India and take advantage of fresh development prospects.
It is the company’s largest investment in India since it began producing goods there.