Simon Metes, Alessandro Spinelli, Luis Santiago Arias Garcia, Jonathan Pietrowski
Nestlé
History
In 1866, the first condensed milk factory of the Anglo-Swiss Condensed Milk company was established in
Switzerland. In 1867 Henri Nestlé made a revolutionary baby food, and in 1905 Henri Nestlé's company
merged with Anglo-Swiss Condensed Milk Company to form the Nestlé Group. International trade developed
during these years, and brothers Charles and George Page set up Europe's first condensed milk plant in Cham,
realizing an alternative to fresh milk. It is used as the Milkmaid brand. In the meantime, Henri Nestlé began
producing a product in Switzerland for infants who cannot be breastfed with the aim of reducing infant death.
The product becomes emblematic for the "nest" logo. In 1902 George Puste died and Anglo Swiss revised its
plans by selling the U.S. division and increasingly strengthening its merger with Nestlé. In 1904, the Nestlé
group began selling chocolate by taking over the export sales of Peter and Kahler. In the early 1900s Nestlé
& Anglo-Swiss increasingly became a global dairy company exporting products to Africa, Asia, Latin America
and Australia. In 1905 Nestlé and Anglo Swiss merge permanently to form Anglo-Swiss Milk Company and
open their offices in Cham, Vevey, and London. During the 1920s and 1930s, the company suffered through
the Wall Street crash and the post war period but increasingly implemented its professionalized
management, centralized research, and innovative new products such as Nescafé. Also during these years
the company fully acquires Peter - Cailler - Kahler putting more and more chocolate at the centre of its
business. The most developed products are white chocolate called Galak, chocolate with honey and air
bubbles called Rayon, and the vitamin supplement Nestrovit. In 1938, the Brazilian government contacted
the company to seek a solution to its surplus of coffee produced, and the Nestlé group decided to launch
Nescafé, a freeze-dried coffee extract. During World War I, limits imposed on international trade prompted
the company to acquire more factories around the world to maintain its global business. By the end of the
war, the company had 40 total factories. During the wars, the Nestlé Group signed major government
contracts to support the armed forces, notably during the first world war the company's condensed milk is
included in British army rations. During World War II, the company merged with the Swiss company
Alimentana, which developed soups and condiments, taking the name Nestlé Alimentana. This brand
becomes very popular among American soldiers and at the end of the war is included in the CARE aid
provided to Japan and Europe. After World War II the continued development of new household appliances
spurred the company to create new practical products such as Nesquik ready meals, Nestea i.e. instant tea,
and infant cereals called Cerelac. In this sense, the company has been pushing for continuous acquisitions to
develop in new areas such as frozen foods and canned foods. The acquisitions of German frozen food
manufacturer Jopa, French manufacturer Heudebert Gervais, Swiss frozen food manufacturer Frisco, and
finally Swedish frozen food manufacturer Findus are famous. In 1968 it acquired the French yogurt producer
Chambourcy and launched the Sveltesse line for health conscious consumers. Shortly thereafter it began
developing his mineral water business by buying a part of the French brand Vittel. In 1977 the company
changed its name to simply being Nestlé S.A.. From 1981 to 2005 Nestlé sold brands that were no longer
profitable and increasingly promoted brands that satisfy health-conscious consumers, the slogan being
"Nutrition, Health and Wellness". In this sense, in 1998 it acquired San Pellegrino and the Nestlé Pure Life
brand was launched. Furthermore, on the occasion of the 120th anniversary of San Pellegrino, a new factory
was built called "Factory for the future". From 2006 onwards the company has focused on creating shared
value, the Nestlé Health Science and Nestlé Institute Sciences brands were launched with the aim of creating
food products to treat chronic medical conditions. From the history of Nestlé we note that its brands have
always been attentive to the major global trends and problems. Nestlé has always tried to have a good
reputation in this. The company has had to adapt more and more over time to the ever-changing needs, lying
firmly on its concepts of providing healthy but at the same time tasty products, the slogan that communicates
this mission today is "Feed yourself well, live better".
2. Brand Inventory
A) The strategy
Nestlé has implemented a decentralized strategy that allows local organizations to implement their own
business strategy by region.
Nestlé is organized into many separate strategic business units (SBUs). They are required to make high-level
strategic decisions and participate in the overall strategic development of the company, including
acquisitions and go-to-market strategies. The equivalent of this structure is the regional organization, which
divides the world into five large geographical areas, such as Europe, North America, etc. Regional
organizations are responsible for the development of regional strategies and assist throughout the strategy
development process.
In addition to the way Nestlé managers carry out their work as leaders, Nestlé practices the following
organizational principles, which are as decentralized as possible to best serve the needs of consumers within
a framework defined by its key policies, strategic directions, and operational efficiency. It also ensures that
all Nestlé companies work together and adopt Nestlé rules, policies, and standards in a decentralized
manner. In addition, it creates and maintains a structure that ensures flexibility of work, focus on results and
removal of unnecessary obstacles through decentralization. In addition, it is possible to manage a flat and
flexible organization with a minimum level of management and a wide range of controls, which allows people
to develop even through decentralization. The team must always have a leader who takes full responsibility
Nestlé managers at all levels are deeply involved in the running of the company and are more interested in
its continuous development than official authorities. To achieve this goal, Nestlé seeks people with a high
level of participation and requires the development of a common mindset that leads employees to achieve
the same goal (convergence of goals). Since the decentralized organizational structure imposes greater
responsibility on the manager, it is necessary to employ people who, in addition to professional and practical
skills, are characterized by attitude and a willingness to take the initiative and who are calm under pressure.
In addition, the person hired must have the ability to motivate and develop people, as well as a strong interest
in other cultures and lifestyles, including a belief in wisdom and continuous improvement.
Nestlé has realized that its employees are the most important driving force in shaping the company. It is
important that employees are satisfied with the provision of new opportunities to develop their knowledge,
development and receive a competitive salary to keep it at the same level. Employees are updated to improve
their skills and develop in accordance with the dynamic world, to develop the company and the employees
themselves, making them more independent at work.
The decentralized system demonstrates efficiency when working with limited budgets and data flows,
allowing Nestlé to reserve raw material purchases, obtain information faster and make better decisions.
Today, Nestlé is the world's leading food and beverage company, so its strategy works, and a centralized
system was a good choice.
The logo
The Nestlé brand is often considered
one of the most recognized and wellknown in the world. It has undergone
many changes over the years. 1868
The logo changes when new owners
take over the company. In 1875, the
hole design was combined with a
"nestle". The 1938 design was simple.
In the 1966 project, they pulled the
worm out of the bird's mouth because
the company was not just about
treatment. So instead of four birds,
there are now three. He can describe a
modern family for two children. The
"nestle" part of the 1988 logo uses a
progression where your face follows
the direction of the line.
1. Graphically represent the brand hierarchy
Here is the Nestlé’s brand hierarchy
2. Discuss the roles of brands in the portfolio. Focus on your brand and others deemed important to your
brand.
Nestlé is present in many different markets, through different brands. Among them, we can see frozen
products, ice creams, coffee, water and beverages, chocolates, baby products, pet foods, candies (with
Wonka). Nestlé is holding almost 30% from L’Oréal, so that way the brand is also present on the cosmetics
market.
Concerning those directly owned by Nestlé (i.e., except Wonka and L’Oréal), Nestlé brands are concerning
foods & beverage for different users. We can determine adults (coffee & beverages), children (chocolates,
beverages), babies (baby products), all kind of people together (frozen products + ice creams), and finally
pets.
We can see that Nestlé wants to promote their product to a Family target. In that sense, families are able to
use Nestlé brands products according their needs. They can even develop a fidelity to the brand, if they are
estimating that Nestlé products are good quality, and then decide to only buy foods and beverages products
from Nestlé.
On the brand hierarchy below, it is clear that Nestlé created and is owning numbers of brand in the same
market, to meet the same need. The advantage, and the strength for the brand, is that it is absolutely sure
to offer enough different products to meet the needs of the largest number of consumers. Company can
determine precisely what are the expectations from customers, and offer products as well.
3. Discuss the hierarchy of the brand
Even if there are 7 different categories in Nestlé, there is still a hierarchy into the brand.
1. Chocolates
2. Coffee
3. Ice creams
4. Pet foods
5. Beverages
6. Baby products
7. Frozen products
When it comes to our thoughts about Nestlé, the first thing we are thinking about is chocolate, and clearly,
it’s the first one Nestlé market in terms of presence and power. Thanks to its numerous brands in this field,
Nestlé is controlling an important part of the market, which is a thriving market. However, coffee is also the
second market where Nestlé is one of the key actors, as the company is having an important part on it.
After these two categories, Nestlé is present in others as written below, but the preponderance of Nestlé is
less than in the previous categories.
B) Analyse the firm’s branding and marketing programs. How do they contribute to brand knowledge?
Evaluate the consistency of the programs over time. Is there consistency between the brand and the
marketing elements? Describe and evaluate the impact of any observed discrepancies.
Nestlé decided to use colourful logos for their brands. The aim of this technic is of course to be seen directly,
more than competitors’ products. Moreover, Nestlé is promoting their products on communication networks
where families can see them, especially on television, but also on the internet (social networks, streaming
platform like YouTube), or in the street, thanks to advertising board.
Nestlé decided also to implement a standardization technique concerning the name of the brands. In that
way, consumers from all over the world can recognize brands anywhere, in a foreign country, and also It is
much simpler for Nestlé to create marketing strategy.
However, Nestlé chose to use different slogans, and advertisements. Indeed, even if the brand’s name is the
same, depending of the country, slogan used can be different. Thus, Nestlé wants to create a direct link with
customers so that they can feel near from the brand, with funny or rhyming slogans. It is exactly the same
thing for advertisements.
Nestlé is keeping the same way of promoting their products over time.
C) Profile direct and indirect competitors and the market situation.
Nestlé direct competitors are also giant companies, with a presence worldwide, getting a lot of different
brands into different markets. We can quote:
 Unilever
 Danone
 Kraft
 Kellog’s
 Mars
 Pepsico
 Ferrero
 Coca-Cola Company (precisely on beverages market)
 Procter & Gamble
 Mondelez
Concerning the market situation, as Nestlé is operating on foods & beverages markets, there are markets
which the whole world is concerned by, and as the global population is growing, we can considerate that
Nestlé markets have a large demand. However, as there are a lot of competitors, it can be difficult to
dominate markets.
3. Brand Exploratory
Salience
Nestlé is present in many regions of the world and therefore must reconcile its business with different
cultures, laws and people. The products offered, marketing and communication change from region to region
and to allow this, it has opened several branches all over the world.
Nestlé combines food products of most kinds. In the range of Nestlé brands we find water, food for children,
food related to sport and health, cereals, sweets, chocolate, coffee, condiments, ice cream, yoghurt, pet
food.
As far as purchases are concerned, the brand is linked to the image of big supermarkets, while for
consumption it is more linked to lunches or dinners at home.
Performance
For many customers in different situations
salience is not enough and therefore other
aspects such as the meaning and image of
the brand play a key role. Many Nestle
products are known for their extensive
history and health benchmarks. Just think
of baby milk or all the bottled waters
produced. In recent years, Nestlé has
increasingly focused on modifying its
products and making healthier products.
In this sense Nestlé has introduced traffic
light labels on many of its products to make the consumer aware. In particular, the label assigns letters from
A (healthier) to E (least healthy) and colours from green to red. This choice has been openly criticized by
several competitors and insiders because it leads the customer to focus on the single product and not on the
diet as a whole, for example oil has a letter E but is part of a healthy diet. Mark Schneider, CEO of Nestlé, said
that Nestlé will do everything to ensure healthy products by improving the processing of products but that
the goal is to find a balance between well-being and taste, thus also leaving room for delicious foods that
should be eaten in moderation.
Another aspect of performance is product prices. Those of Nestlé are not very high but Nestlé often has to
deal with new entrants in the sectors who are able to offer lower prices.
Linked to the performance Nestlé often offers not only the product but also various services. For example,
Nespresso services are famous thanks to boutiques, e-commerce platforms, mobile apps and customer
relationship centres. In the boutiques the customer can try the Nespresso coffees and understand the
flavours. The online customer can order his coffee and read the history and description of the products.
Customers can ask Nespresso for advice on products directly through the customer relationship centre. The
company is also engaged in charitable partnerships
Imagery
Nestlé’s image is linked to its historical products. In particular, drinks that
evoke different images such as celebrations and therefore youth (if we
think of San Bitter). Nestlé’s KitKat products also communicate this idea of
youth. We can see this above all in the choice of the red colour of the KitKat
package which has remained over time, it is intended to arouse a strong
emotion that pushes the consumer towards a feeling of hunger and joy.
Various products are reminiscent of meals of all kinds at home and
therefore the family (we can think of milk, breakfast cereals) and
friends. Nespresso coffee is linked not only to breakfast but also to the
concept of pause, rest and pleasure. In this famous commercial
(https://www.youtube.com/watch?v=kLjZk12XqTI), the protagonists
live in a city apartment but seem relaxed, dressed in a bathrobe
without worries, enjoying a Nespresso coffee.
Judgments
Despite the above discussions about health foods, Nestlé is seen by customers in relation to most of its
brands as a company that creates high quality products. There is a section on his website that describes this
aspect. The company has always focused on large investments in research and development and has created
a section within it called the Nestlé Quality Management System which helps the company to comply with
food safety and legal compliance. The slogan of this section is "from the farm to the fork" to underline how
the company does not neglect any manufacturing process. Furthermore, very often customers perceive the
superiority and credibility of Nestlé’s iconic products over other brands. It is very difficult for customers to
choose to change the product at the time of purchase. In this perspective we can think of Nespresso coffee,
San Pellegrino water which are excellent in their sector. Throughout its long history, Nestlé has faced several
disputes over food legal compliance issues that have affected its image. The dispute in India is famous when
Nestlé had to withdraw Maggi Noodles products because, according to the Indian authority, they contained
unacceptable levels of lead. Another famous dispute occurred in California when Nestle was accused of
extracting more water than agreed.
Feelings
The brand in general has low involvement, as we are dealing with food brands. One of the feelings that arises
is nostalgia with memories of various foods, especially snacks and packaged foods. The Nescafé brand can
arouse energy and power. Furthermore, the Nestlé sensations
brand communicates very clearly through its brand guidelines
(such as the smile logo) the sense of joy and happiness that
drinking one's favourite beverage causes.
Resonance
Nestlé can take into consideration that it has many customers loyal to its products who repeat the purchase.
The most famous products for this are breakfast cereals and baby products.
One of Nestlé's core values is honest communication and here we can see loyalty to the customer. The main
slogan is "Good Food, Good Life" which expresses the feeling of harmony of the company towards the
customer. Nestlé tries to offer healthier
products through continuous research to
meet the increasingly attentive needs of
customers.
In addition, Nestlé is committed to major
global challenges such as climate change,
has introduced a digital platform to
encourage separate collection and is
committed to achieving climate neutrality
in its production. In recent years Nestlé has
published a roadmap to achieve climate
neutrality within the company by 2050 and
in 2022 it invested € 5 million in the Eureka!
Fund with the aim of creating new
sustainable packaging.
Part 3. Continuation
Part A
Benefits for society.
Nestlé as mentioned before has a history of supporting certain activities that are beneficial for a certain
community or for the society as an aggregate, such as taking action against the climate change, by producing
with a lower percentage of electricity obtained by fossil fuels, reducing the deforestation caused by their
activities and also promoting products that are beneficial for the environment, not only with their main
Nestlé brand, but with all the brands that are under their ownership. Another aspect to highlight Nestlé
actions in this case is the fact that they have awareness of how packaging and the materials that these are
made of can be also very contaminant, so redesigning this packaging into a more sustainable one can be very
helpful in the action against climate change. Nestlé’s big influence around the globe and big net of
distribution and production makes that they are one of the of the few companies in the world that have the
capacity of making a significant impact in these mentioned social activities, the competition can’t have this
impact with their own actions, so this ends up giving Nestlé a huge advantage in terms of bigger brand equity
and competitive advantage.
Nestlé, aside from the numerous examples where they have been an example of a big company that
generates big benefits for society, has been involved in numerous scandals through all the years since they’re
globalization process. There are various examples of this scandals, that of course affect negatively to the
brand’s equity, in different situations. To exemplify this situation, we can look to situations like the company
spreading misinformation about breastfeeding in Africa during the decade of the 70’s in order to obtain
benefits and gain more market share, affecting a vulnerable part of the society, not only by decreasing their
purchasing power, but in some cases, they could even create health problems in a part of the population.
Another very important scandal of Nestlé has to do with deforestation, this is very noticeable, as it’s contrary
to the company’s politics about the fight against climate change, in this case, an investigation concluded that
Nestlé had different practices that contributed to the fast deforestation of African countries such as Ghana
and Ivory Coast, therefore, generating a harm to society, not only in those countries, but also all around the
world, as this kind of activities increase the effect of global warming. Not only humans are affected with these
activities, this also affect to the natural environment that inhabits this forest, affecting animals and plants,
some of this species are on risk of extinction, loosing them could be also be harmful for the society.
Brand Values
Nestlé is very clear with the brand values that they want to share with the rest of the world, as mentioned
before they are willing to make changes in their way of production and distribution in favour of the fight
against climate change, and numerous activities that intend to increase the quality of life in certain
communities.
However, this brand values, as we have seen in the last section, is not always accomplished by the company,
this affects the brand equity, as it takes away credibility of the brand’s words about all the social causes that
they support.
Nestlé has a huge and different variety of products, some of them can be considered very iconic, some of
them, like KitKat, for being very recognizable and as mentioned before, can be used as an icon for energy and
youth. Another example could be Nespresso, the capsule coffee product of Nestlé, that has become an icon
because of their marketing campaigns and strategies, creating iconic commercials featuring renown actors,
such as George Clooney in charismatic and easy to remember roles.
Customer Values
As mentioned before, Nestlé has a big variety of products, so they
have a very different variety of customers as well that can be
represented by the company’s values in many ways, for example,
Nespresso customers can be represented by the product, as they
like to drink in an easy but sophisticated way, allowing their
clients to build a unique way of consuming coffee different from
the rest. They also have products, such as Nesquik, that could be
also considered in this category of icon, as it’s one of their most
popular products and many people associate this with breakfast. This last part is something their competition
may not have, as the popularity of some of their products is very big, it’s very difficult for the competition to
compete in that aspect against Nestlé.
Some factors to consider talking about customers being represented by this are the numerous scandals we
talked about previously, this is because they affect the brand’s image for the public, this could lead to
customers not being represented by Nestlé’s products, or even in an extreme situation, creating a boycott to
their products, affecting both the brand equity and the brand sales and benefits. This could have a bigger
effect if the people who is affected by these activities are the possible consumers. An example of this could
be people stopping to buy Nestlé’s products due to their actions causing an increase of global warming.
PART B
Since Nestlé has an enormous variety of different products, we can then build different examples of profiles
of extreme users for each different category of products, for example, the profile of a possible consumer of
Nespresso it’s very different from the profile of a possible consumer of chocolate or even L’Oréal, which is
partially owned by Nestlé.
For example, a very clear consumer profile can be Nespresso clients. They could be described as people who
like to consume a certain product, in this case coffee, in a specific way, they like to consume capsule coffee.
This is used by Nestlé to create an image of sophisticated customers with different kinds of taste, but a
common element, as there is a big variety of flavors available under Nespresso brand, but it’s still the same
product and it’s consumed in the same way, which helps creating a sense of community and therefore, helps
building a strong brand equity. Another important element to have in
consideration, is how this coffee is consumed, it’s capsuled coffee, which
normally is only available in places like cafeterias or restaurants, giving
them a sense of uniqueness and exclusiveness, Nespresso products allow
customers to have the possibility of drinking this type of coffee in their
Houses or more private events, this helps the customer feel this
exclusiveness while the buying process is occurring and when the
consuming the product.
Other Nestlé products are very differentiated from this past example, could be the case of very different but
also popular products such as KitKat, a very famous chocolate bar consumed all around the world. This
product specifically is aimed to a younger audience, who require a bigger amount of energy, which is what
this bar is aimed to, but it’s consumed by all age ranges as a snack, so the consumer profile can be very wide
and open, but in the case of having to describe an extreme user, we could probably stablish young people
who practice sports related activities and the main way of consuming this product could be as a snack to gain
energy while resting or after finishing the activity.
KitKat is very clear with their marketing strategy, they want to show clearly what feelings should evoke buying
and consuming this product, as the catchphrase says “Have a break, have a KitKat”, they want to associate
the moments of resting to consuming their product.
Reflections and Recommendations
The main meaning of the brand Nestlé is to be a globally recognized brand and with affiliated customers. It
has a very long history and tradition which has led it to be one of the main food brands. Nestlé feels to be
part of society and it shows this with the commitment in public problems like the environment. During his
history it showed the skill to adapt in different cultures, regions of the world and needs of the people over
the times. In fact Nestlé continuously invests in research and development. The main negative meanings
are the controversies around Nestlé that which have lowered the image of the brand. Nestlé has not always
managed to raise its image with strong marketing campaigns after the controversies having to suffer them
entirely. Furthermore, now one of the biggest problems for Nestlé is related to the price and differentiation
of products. In fact, globalization allows people to be able to choose between multiple brands which
therefore compete with each other and prices become more and more competitive. The challenge for
Nestlé therefore is to be able to create unique products capable of differentiating themselves from the
competition regardless of price. Nestlé, in our opinion, could advance a rebranding to communicate greater
differentiation. It could also create products that don't exist or add ingredients to existing products to
create unique products. To communicate these aspects, it could introduce more effective labels to stand
out.
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Image Source : https://coffeeynya.ua/en/blogs/history-of-success-nestle/