Leah M. Shockley
MKG 310 – Introduction to Marketing
Colorado State University – Global Campus
Doctor Jason Geesey
September 14, 2014
Nestle: Pricing and Retail Strategy
Though Nestle has a solid presence in various markets such as: coffee, dairy products, teas, bottle water, and many others – its most interesting and competitive market is chocolate. The company decidedly entered into the chocolate market which is already heavily saturated in various countries, but did so based on faith in its product and branding strength.
Nestle hones a strategy that has it entering into markets before competitors. This yields to the company building a substantial position in the way it has sold basic food items that appeal to local populations. By narrowing its initial market concentration to just a few strategic brands, Nestle claims it can simplify life, reduce risk, and concentrate its marketing resource effort on a limited number of key niches. The goal of Nestle, then, has been to build a commanding market in each position of these niches. As income levels rise within respective populations around the globe, the company progressively moves out of these niches and into more upscale items such as mineral water, chocolates, cookies, and prepared foods (Guruvayurappan, 2014).
Because of the ties that exist between Nestlé’s success and the communities that it relies on, the foundation of the company lies on a shared value approach. Here, Nestle recognizes and capitalizes on the connection between societal and economic progress; the company continually attempts to redefine the way in which it capitalizes on respective products in certain economies (Porter & Kramer, 2011).
Recently, representation of clean, pure and a sustainable production of chocolate goods have been trending. Consumers are concerned about the quality of chocolate products in addition to its value. Moreover, consumers want to know where food derives from and that big name chocolate companies like Nestle are doing something about sustainability options. Nestle has been affiliating itself with better and more nutritious ingredients since the company was founded, the market is simply more intrigued with this promise and wants proof of sustainable efforts since the market has become more knowledgeable (William Reed Business, 2012).
Nationally, a multitude of brands have been faced with the challenges of current marketing trends. The larger Western Europe and North American markets have become increasingly saturated and various populations worldwide have become somewhat stagnant, resulting in lower food consumption. While these factors are taking place across the globe, the balance of power shifted from large-scale manufacturers of branded foods and beverages to nationwide supermarkets and discount chains. The competition between branding companies has since shifted and the act of bargaining down prices begins. Nestle has since looked to emerging markets in Eastern Europe, Asia, and Latin America for growth possibilities. Even though many of these markets are seen as relatively poor, the economies that surround it are growing rapidly. As income levels rise, it is assumed these nations will replace branded food in each respective country with a more basic or bargain substitute. These economic variances result in marketing opportunities for Nestle, since emerging markets will be a given and the opportunity to customize products in a global market can yield great successes (Guruvayurappan, 2014).
Nestlé’s retail strategy generally wants to appeal to the masses. This concept has stood as a challenge considering the chocolate market is already saturated in various countries. Regardless, Nestle strives to set its products apart by offering an assortment of chocolate that appeals to three central consumer needs: wellness, convenience, and variety seeking (Margolin, 2001). With this