International Marketing

Read about Global Marketing Issues of Beverage Company Nestle

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Introduction to International Marketing

International marketing is the application of marketing principles and is spread in more than one county. It involves satisfying different needs of people across national boarder or overseas market. Global marketing is the multinational planning process and extends company’s local market strategy by executing the pricing, promotion and distribution strategy to satisfy the needs of individuals and organization’s objective in significant manner. The research report describes the impact of broadcasted advertisement over TV satellite and it defines the needs of standardization of advertisement. The project is focused on the global marketing issues that are associated with Nestle which is one of the major food and beverages company in the world. In the report, international practices and their impacts on a UK based multinational company Nestle have been explained. The global communication mix of Nestle has also been analyzed.

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International marketing

Technological improvements have seen fastest growth than any other area or aspect. New arrivals and quicker communications are creating a borderless economy thus bringing people and organizations closer than ever before. The level of business operations is approaching a broader concept by viewing the world as one market. Global marketing is a concept when a business views all of their markets as one and decisions are no longer limited by borders. For companies to grow successfully worldwide, marketing teams must learn to deal with a perfect marketing mix in the global environment. The marketplace has expanded globally and it is important for businesses of all sizes to create a global marketing strategy. An organization can standardize some of its marketing aspects globally like logo and tag line but some aspects such as advertising and pricing require understanding of local market needs. It is obvious that preference of a European consumer is likely to be different from an Indian customer. The lives, behaviour and culture vary from region to region.

For e.g. Telecom giant Nestle followed a systematic approach of global marketing strategy. The logo, tagline and palette remain the same while other strategies are customized as per the market differences. Its precise approach has earned the company a high recognition and awareness due to its global sponsorships in new markets. Global market entry boils down to decide where, when, how to enter and how much to invest in a foreign market (Gyves, 2008).

Cultural differences and similarities between nations in a marketing context

Nestle is the largest nutrition and food company at the global ground. It is operating in different countries thus cultural difference is a major problem in international marketing. The company has to understand the cultural differences so they can formulate successful marketing strategies. The needs and wants of different consumers can be same in the global market but their perception of accepting the product can change. Different cultural values affect the marketing practices of company. Cultural factors are the important barriers that affect satellite broadcasting of advertisement over Television. It remains same from one generation to another. Cultural values, beliefs and norms are the causes of change in attitudes towards different products and services. The firm needs to identify or research the cultural values of a country and try to find out the common norms of all countries. By finding out the common norms in different countries, they can follow a similar advertising approach everywhere (Allen, 2010). Language is another barrier in advertising and broadcasting.

In different countries people speak and understand different languages as there are many languages all over the world. In such case advertisements over TV become a difficult task for the advertisers as they need to consider people from all countries. The customers on global ground may interpret a particular message in different ways as they will perceive things according to their own culture. It is difficult for Nestle to advertise globally rather than locally. To advertise their products at a global level they can use regional language to attract more customers. This regional approach will be effective because the potential customers can understand the proper meaning of advertisement.

Hofstede 4 factors

Power Distance: PD can be defined as the difference between nations on the basis of hierarchy and relationships. The consumer can act differently in respect of the power with them.

Uncertainty Avoidance: According to this dimension countries differ on the basis of facing threat or avoidance of facing threats. Basically countries in these dimensions are ready to face risk and try to adopt the innovations. In the context of Nestle in many countries its new product Atta noodles was a big failure on the other hand in India people liked the product very much (Schwarz, 2003).

Individualism vs. Collectivism: It is the major cause of cultural difference between the countries. As per the Individualism dimension the customers get influenced by their own beliefs and they choose the product which they think is good for them. On the other hand as per the collectivism concept they act as per the members of the group to which they belong to.

Masculinity vs. Femininity: These two dimensions distribute the emotional roles between the genders. The country in with the number of male are higher than the number of females there a company can have masculine cultures where the values are competitiveness, ambition. On the other hand the greater number of female country shows the feminine cultures which place more value on relationships and quality of life (Morschett and et.al., 2006).

Nestlé’s contemporary ethical and practical frameworks of marketing within a global context

Nestlé is a multinational corporation and it has offices all around the globe. Company serves in almost all the countries so it is very much necessary for them to use broadcasting advertising. Advertising means promoting the products of the company to attract the people by the medium of Television, radio, newspapers, magazines, shows, etc. Company uses all these forms of advertisement and is highly recognized for the innovative ideas in the marketing (Wilkinson, McAlister and Widmier, 2007). But in the field of Advertising it is very much necessary to use all the ethical means and framework because all these things are done on the global level and the slightest mistake can change the image of the Nestlé from good company to a bad company. Some of the ethical practices that company is following in the global context are-

Truthfulness in Advertisement- It is very much necessary to use the truthfulness in the advertising so that the people are not misguided. Nestlé is making a determined effort to advertise in a very responsible way by not misleading the consumers regarding the benefits of the product. Company do not encourage people to use the products irresponsible through its advertisements (Moriarty and Franzen, 2008).

Monitoring- Company monitors to ensure that their advertisement does not contains objectionable content and they do not portray discrimination or offensive attitudes to different religious, political or social groups. They avoid the advertisement that contains all such things.

Guidelines- Companies guidelines on the advertising have been distributed to all its marketing staff and the advertising agencies globally, and also all its campaign are review and comply with their principles. According to the guidelines they have banned the use of infants in the advertising.

Charity- Company is also very active in doing charities through its marketing campaigns. They provide all the details of the company that they are supporting and they also include the way by which consumers can contribute in it. For example, Nestlé provides a number at the back of its product on which people can call so some amount will be deducted from their balance and will automatically transferred into the charity accounts (Henley, Raffin and Caemmerer, 2011).

Alliance with WHO- Company has done an alliance with WHO to make the advertisement which promotes the social causes. This alliance has proved to be one of the best ways of advertising the products of the company and also to increase the social awareness.

However despite of all these efforts company has been criticized for some of its ethical advertisings. Company introduced the baby milk product and advertised that it has various advantages for the infants. Company claimed that the product improves health of the babies and protect them against infections. This campaign was the biggest failure in the history of company as the product was found to be dangerous for the kids and resulted in diarrheal and other diseases (Jaffery, 2013).

Other than this the company was also blamed for the use of plastic bottles which were not environmental friendly. They were also using kids in the production of chocolates, so all these things have shadowed the good things that company is doing (Klöpping, 2013).

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Segmentation, Targeting and Positioning

Nestle has set its product for babies and younger generations as large range of their products are baby milk food products. With the use of effective marketing strategies they want to make children healthy and ensure their sufficient nutrition. The company also targets new age generation to build a strong relationship by providing various eatable products. Nestle want to change customers toward their products. The points below show the segmentation, targeting and positioning process of the company (Ivy, 2008).

Segmentation is the process of dividing the market into similar group. The segmentation strategies of Nestle help understanding the requirements and needs of selected customer groups and also help in selecting promotional techniques. NESTLE segmentation is based upon geographic, demographic, psychographic and behavioural aspects. The global market is divided as per that the weather warm hot and cold. In many countries Nescafe offers cold coffee and in other countries it offers hot coffee. Nestlé segmented market area for its main products based on the generation. For the products Cereals, Lectogen, Koko Krunch, Nido, Nestle divided the market area segment for new born baby and children of different ages. Nestle provides KIT KAT to those people who really want to taste and enjoy chocolate whereas Nescafe 3 in 1 is for specially those customers who are really engaged in activity and do not have more time (Zweifel, 2003).

Targeting is the process of choosing a group having similar needs. Market targeting can give the market opportunities to a firm. Nestle examines the different type of market segments on the basis of t size and growth, structural attractiveness and so on. Then it decides a suitable target market in which it can offer a suitable marketing strategy. The firm can use similar marketing strategies in different countries which can suit to the target market consumers. The company uses the differentiated targeting strategy as it provides different product for many segments based on different ages, occupation, season and climate of countries. Through concentrated marketing Nestlé has earned a strong market position. The company specializes in producing baby food (Zou and Fu, 2011).

The primary objectives of company are to improve its position as the world’s number one selling product. In this way through targeting the company has achieved its objectives in global market. The company provides their products to the customers through an experienced market so that it can become much easy to acquire the products. Nestlé’s logo is totally different from others competitors that gives a competitive edge. By creating product, service, channel, people and image differentiation Nestle reaches art the consumers touch easily, effectively & efficiently in comparing with other competitors in food processing market (Leonidou and et. al,2010).

PEST on Nestle

Political - The rules set by the government with respect to the food industry affects the marketing practices of Nestle in global perspectives. On the other hand the political change in the countries can also influence public priorities and funding arrangements. The company is trying to meet the standard laws which are set by the government like as health and safety act, disability act and so on. The rules related accounting standards, taxation requirements and the tax policies highly influence the Nestlé’s business (Smith, 2008)

Economic: The economic crisis in different countries may affect the business strategies of Nestle. It in a country recession occurs company will be affected and can earn losses. Change in currency exchange rates and interest rates are also a factor that can affect the company art a global level. The little difference in currency will affect the Import and export of company (Samy, Odmelin and Bampton,2010).

Social: Social or cultural environment has great impact on Nestle. Social change involves change in customer’s attitudes towards products and the change in lifestyles. Different countries have different culture, language, religious beliefs, food preferences and reference group. The company has developed strategies that can be matched with the belief and culture of diverse customers. Nestle products are for everyday use or necessity. Nestle is totally dependent on the consumer lifestyle and their attitude and it has taken social and cultural factors under consideration so that it can achieve strategic objectives (Ginny and Shoham, 2014).

Technological – Technology is a major factor that can be major challenge for Nestle at a global level. The company has to adopt the new technologies in production department so the production can be increased while having cost reduction. For the delivery of products is has to adopt more effective channels of distribution so it can become easier for the customers to avail products. Products can become safer with the use of new packaging technologies. Another segment related to technology is that the advertisement of Nestle products is much easier with internet, other media channels (Czinkota and Ronkainen, 2012).

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International marketing Mix of Nestle

Product: Nestle is committed to provide the best quality product to its customers. The product offered by the company meets high standards of quality. The packing of the product is designed in order to make the customer attracted towards it. To beat the competitive art the global level the company needs to differentiate the product from those of its competitors. Nestle always tries to attract the customers by describing the features of the product so it can gain consumer recognition. Nestlé’s attractive packaging is one of the part of effective marketing strategies (Terpstra, 2000).

Price: At the global level Nestle does not set a single price, it uses a pricing structure that reflects variations in global demand and costs, market-segment requirements, purchasing timing, order levels, delivery frequency, guarantees, service contract and so on. Nestle is a very successful company and all its products are at affordable prices. The price has a direct relation with the quality of product. It always focuses on the quality hence it needs to bring out the pricing process which can suit its quality and brand. The major competitors of the company are Heinz, Kraft, ConAgra, Mars Incorporated, Hershey, Cadbury, General mills etc. It set its product prices after analysing the competitors pricing strategies and that is reason of its superior market position (Wise and Sirohi, 2005).

Place: Place refers to an activity of making products available to the customers. At the global level it is very hard to decide the effective channel distribution strategies. Nestle always tries to make products available to the target customers in usable condition. At the global level the company can chose two types of channels such Consumer marketing channel and Business marketing channel. The company adopts consumer marketing channel in which the product reaches the consumer through the wholesalers or retailers. Nestle has e-marketing for some of its products where the products reach the consumers directly from the producer (Christopher, 2012).

Promotion: There are many promotional methods that a company can use for promoting the products like personal sales, advertisement’s, sales promotions, public relations etc. Nestlé has adopted advertising method to promote the product in which they communicate with the consumers through print media, hording board, newspaper, posters etc.In different countries company adopts different types of promotional mix to make aware and persuade the customer towards the brand. Nestlé has made the different platform for retailers and has made the difference to other milk providing companies running in the country in which it operates. The company always show the attracting messages in their adverting activities (Curwen and Whalley, 2005).

Globalization (Standardization) V/S Global localization (Adaptation)

Standardization in products refers to offer the same product and marketing strategies in different countries on the other hand adaptation means to focus on the product or a single market/ advertising strategy that are accepted by a country individual or target market. Nestle adopts the both concepts on global ground by offering diverse products and through applying advertising activities. Broadcast advertisement over TV satellite is difficult because of the countries cultures and different markets. The attitudes of people in different countries are entirely different so it will affect the standardization. As a result company has to adopt the adaptation approach. Nestle could completely standardize both the advertising message strategy and tactical ways of message implementation.

The use of technology and the innovative ideas have can help company in increasing the impact of advertisement in countries in which it operates. Now a day’s more people are trend to travel in different countries so the global FNCG market and the companies can reach the customers through satellite. The advertisement of homogenous products through satellite helps to increase the popularity of brands or product. Nestle focuses on ‘western’ lifestyle’ in its advertisement. This will help to increase the standardisation of advertisement in global market. As per a next perspective the standardisation in advertisement cannot be increased because of cultural diversity ( Chhokar, Brodbeck and Bell, 2013).

Cognitive relationship between consumers & Nestle

The relationship between the producer and the consumer is very strong. Nestle ensures its customer receive quality products. Consumers prefer to use the products of Nestle because they are aware about the brand and its quality. The company provides broader range of product options across globe and it also provides a greater flexibility to choose the products. Organization shares the information related to product and its uses through labeling over the product packaging. It also provides nutrition information and the consumption messages to the buyers. Nestle spends more on consumer research which helps it in building knowledge about consumer behaviors and to provide the product according to the diverse consumers preference. Consumers are attracted towards the brand as they are satisfied with the products and are influenced by creativity and innovation in product offerings.

Nestle also adopts the global marketing code of practice in which it target the children between ages eight to twelve for the advertising purposes. This strategy helps the business to create faith among the consumers and also attracts them towards products. The advertising practices done by the company have an emotional touch which attracts the buyer. Business also creates the brand awareness with its ethical advertising practices. So it can be said that there is a cognitive relationship between the consumers & Nestle.

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EPG model and Nestle:

EPG model provides a framework of any organization’s international business strategy. In this model E implies Ethnocentrism, P stands for Polycentrism and G refers to Geocentrism. In Ethnocentrism concept, company promotes its products on the basis of ethnicity whereas Polycentrism approach focuses on promoting the product having political orientation. The advertising strategies of Nestle are based upon Geocentrism and are not standardized. It means the strategies are more focused on catering to needs of different geographical areas. As the company deals in overseas market so its marketing strategies for particular product are designed as per the geographical areas. It may be because of cultural diversity among all countries.

The Geocentrism approach provides various benefits to the consumers as well and Nestle. While practicing this approach organization can have better promotional tactics and can gain the attention of potential consumers towards the products. Let’s have the example of Nestlé’s condensed milk product, although the product is similar and is offered in various countries but the advertising of the product differs in all these countries. Nestle promotes its products in a different way, in all the countries. It is not possible for organization to attract diverse consumers by using a similar advertising campaign so it has to change its marketing strategies as per the geographical areas.

Product, Brand and Pricing issues for International Marketers

The success of a company is depends upon the acceptance of product by the local and international customers. Through concentrating on marketing, Nestlé has earned a strong market position. The company has a goods of consumer requirement at local market as well is in global market. While operating business in overseas countries, Nestle conducts a market analysis so it can develop proper marketing strategies in order to capture the market. At the global level, company faces issues related to product and it’s pricing. At the global level Nestle needs to decide that what type of product it has to offer and the strength of competition in the market. Nestle may face problems with production, R&D and marketing. The product mix of company depend on some factors such as level of market/economic development, sales & profit,Competition in marketplace, market characteristics, product characteristics and legal considerations. The product positioning process creates a unique place for the product in comparison to competitors (Brady, 2010).

The issue related to prices of products and services exists in the international market because of cut throat competition. The pricing is very difficult in FMCG industry as the standardization of advertising broadcasting is difficult because of cultural diversity. The customer generally expects low prices on services, in case of new company enters in markets. But it is difficult to set low prices as company has to bear lot of expenses for operating business in global countries. Nestle is trying to develop international market strategies to face all these issues.

Political, Legal & Regulatory Issues

Company may face a number of Political, Legal & Regulatory issues in marketing, when it operates in global countries. Nestle is operating in various countries such as UK, US Asia, North America, South America, Europe and Australia. The exchange rate fluctuations in the currency affect the business of company as in all these countries monetary system and regulations are different. Legal and political problems affect the uses of satellite broadcasting of TV advertisement. The political rules in broadcasting context are different to the other ones. In China the government has put restrictions regarding the use of sex appeal, fear appeals etc whereas in European or American countries there would be not much limits or restrictions in such advertisement.

Nestle has to be aware with the different laws pertaining to media and tele broadcasting. In France the company has to face lots of these challenges as the children in food advertisement is the country banned. In such cases excessive advertisement should be limited by the broadcasters this adversely affect the scope of satellite broadcasting of TV advertisement. Some countries put greater emphasis on the role of litigation system, whereas others support dispute resolution wherever it possible. The company such as Nestle needs to have a crucial understanding pertaining with international legal issues, before entering into a new territory. Intellectual property protection is also an issue that a company has to consider when entering in global markets. The Licensing systems in different countries are the issues for the company while operating business in foreign countries (Nestle programs, 2014).

CONCLUSION

The report explains the importance of international marketing principles for Nestle who wants to conduct the business in overseas markets. It explains the difference and similarities in standardization and adoption of broadband advertising. This report also explains the ethical and practical framework of marketing within a global context. The marketing mix of Nestle products in overseas markets has also been explained. The report concludes that company has to face issues such as Political, Legal & regulatory, social & cultural environments and global CSR issues while operating in international markets.

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