Brand Management
MKT470
Section 01
Assignment: Business Strategies of Nestle
Submitted To: Mrs. Zakia Binte Jamal
Submitted by: Romala Munna
ID: 1710070
Submitted: April 21st, 2023
Mkt470 Brand Management
Business Strategies of Nestle
Table of Contents
Company Overview
Business Strategies
Differentiation
Diversification
Innovation
Developing Branding & Marketing
Mergers & Acquisitions
Sustainability
Conclusion
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Mkt470 Brand Management
Business Strategies of Nestle
Company Overview
Nestle is the largest food company, currently operating in over 190 countries worldwide,
associated with more than 2000 brands and with a work force of about 300000 employees. Nestle
started its journey in 1866, founded by Henri Nestle, a German immigrant who developed and
launched an affordable substitute for breast milk. It started out as a booming business in the
infant formula industry. Nestle actually had a cold war with the Page Brothers, George and
Charles Page, for about 30 years, famous at that time for their condensed milk worldwide. The
Page brothers began their journey in 1866, alongside Nestle in Switzerland.
By 1905, after the death of the Page brothers and Nestle, the two companies were merged
together, resulting in about 20 factories. Nestle faced some backlash after World War I, but with
the help of Uncle Sam and several different business strategies Nestle was able to increase in size
on a double scale and continued from there on. Nestle has major product diversity and operates
in several different categories and focuses on product innovation and sustainability as to
surviving both the world wars, through different strategies and initiatives.
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Mkt470 Brand Management
Business Strategies of Nestle
Business Strategies
Over time Nestle faced hardships but was able to overcome its battles using business strategies to
allocate their resources and capabilities to create a competitive advantage and achieve its desired
outcome. The business strategies used by Nestle throughout its history are listed and explained
below in order:
Differentiation
Before the Page Brothers and Nestle had their individual companies merge together, they were
competitors. As Nestle started off with a breast milk substitute the Page brothers were
dominating the condensed milk industry by 1877, having their brand spread worldwide. It was at
this point that Nestle in retaliation differentiated into developing its own condensed milk.
Throughout Nestle's history and growth the company differentiated itself in various ways to be
different, better and more sustainable than its competitors, giving it the title of the 'World's
largest food Company. How they did that is discussed even further in continuation of the
business strategies adopted by the company.
International Expansion
Once Nestle was merged with the Page brothers, World War I had hit. As Nestle dominated
Continental and Western Europe, it was after the destruction of the war that made Nestle realize
that remaining regional won't enable or help the company grow as much as desired. World War I
left Nestle unable to meet demands due to the shortage of raw materials and international
embargoes. This left Nestle devastated and resulted in them buying factories in the United States,
through the help of infamous Uncle Sam. By 1921, Nestle had doubled up twice to having
around 80 factories to its name. And came to the conclusion, 'Don't keep all your eggs in one
basket'. From the 1930s-1940s, Nestle continued buying factories in Asia and Latin America to
avoid history repeating itself from World War I, in preparation for World War II. This strategy
actually helped to keep the company safe during The Great Depression.
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Mkt470 Brand Management
Business Strategies of Nestle
Diversification
Upon facing competition from the Page brothers, the company quickly retaliated by developing
its own condensed milk as well, around 1877. After expanding itself internationally, the Brazilian
government actually wanted to associate with Nestle, in order to have their massive market and
quantity of coffee be utilized and sold. This is where Nestle discovered Nescafe, launching itself
in 1938. With time, Nestle diversified into categories like pet food, confectionery, cocoa and
bottled water, where the company became the world's largest bottled water company in 1992.
This enabled Nestle to not rely solely on a single product category, instead aided the company to
gain new growth opportunities which the company was able to successfully utilize for the benefit
of the company.
Innovation
Once Nestle gained fame through its Brazilian coffee, Nescafe, to a well established and
demanded level, after around 40 years of its launch, with the help of technology and machinery,
Nestle was able to launch its very own Nespresso System, a coffee machine for Nescafe Coffee.
Nestle made sure to have and maintain a strong focus on their research and development with
time. Their innovative products include the coffee machines mentioned and baby food products
made for specific nutritional needs as well. At that time in the world, being able to create and
develop these innovative products of theirs enabled Nestle to stay on top and differentiate itself
from its competitors by offering coffee and after service coffee machines to make the coffee, for
example. This method aided Nestle to maintain its position as the leader in the food and beverage
industry.
Developing Branding & Marketing
Overtime, roughly ranging from the 1940s to 1990s, Nestle acquired and developed strong
brands under its name. Some of these include, Nescafe, Kitkat, Nestea, Nesquik, etc. Nestle
marketed and advertised these brands individually in order to spread brand awareness, gain and
build customer loyalty. The development of these unique brands associate themselves with high
quality, innovative and sustainable aspects setting them apart from the rest of the market.
Therefore, aiding the company to gain more fame among people worldwide as a trustable and
reliable company for all the products the company carries with its numerous brands.
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Mkt470 Brand Management
Business Strategies of Nestle
Mergers & Acquisitions
The strategy allowed the company to acquire other companies to expand their market share and
gain access to new technology to achieve other strategic goals. Nestle had its first merger after
the death of Henri Nestle. The first competitors that Nestle faced was the Page brothers. It was
with their company after the owners had died that the remaining Board of Directors decided to
merge both the companies back in 1905. Afterwards, due to the backlash and devastation faced
from the adverse effects of World War II, around 1941, the company entered the war for higher
profitability and was able to acquire smaller companies that did not survive due to the war. In
1947, Nestle acquired Maggi, a company offering soups and seasonings. Moving onto 1948, the
company acquired Nestea and Nesquik. Around 2 decades in between, Nestle moved into
acquiring frozen food and pharmaceuticals. In 1974, Nestle formed a joint venture with around
30% of stake through L'Oreal. Over the years in the 1980s Nestle acquired smaller companies
like Perrier, Gerber, Kitkat, Friskies and even After Eight.
Sustainability
As Nestle got older, the company continued to reduce its impact on the environment. And
continued to improve the welfare of the farmers providing raw materials. This has improved the
social and environmental performance throughout the years. This allowed Nestle to stand out
compared to competitors in the eyes of socially and environmentally conscious consumers,
attracting these types of consumers. This helped to build trust with customers, suppliers,
investors and stakeholders, which in turn helped build a better reputation overtime.
Conclusion
All these strategies combined helped the company build brand recognition. With the
development of high-quality and innovative products, the company has been able to reach
customers with a wide range of preferences, keeping up with the changes in consumer behavior
and market trends. All in all, being able to maintain its position as the leader in the food and
beverage industry as well as being the world's largest company..
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