Strategic Marketing For Developing Competitive Advantage At Nestle (Essay Sample)

Strategic Marketing for Developing Competitive advantage at Nestle
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STRATEGIC MARKETING FOR DEVELOPING COMPETITIVE ADVANTAGE AT NESTLE
INTRODUCTION
This report is drawn up to consider the current competitive position of Nestle and to draw up a three-year marketing strategy to increase competitive advantage. According to Nestlé, S. A. (2015) the company is a leading nutrition health and overall wellness company. Nestlé’s mission is to enhance lives by producing top science strata-based nutrition. To conduct this analysis we shall look at the current position, the future desired position, the strength, and opportunities that will enable Nestle to achieve this goal. We shall also consider the weakness and threats that may prevent Nestle from developing and implementing strategic marketing for developing competitive advantage
According to Peter Drucker (2004), strategic marketing can be defined as the process of analyzing a business environment, market competition and other factors affecting the business organization, identifying opportunity, threats and forecasting trends in business. Strategic marketing can be seen as process selecting targets market strategies, or the product market of each business unit; it involves the establishment of market objectives, implementing and managing market programs, (Drucker 2004),
Strategic management is the process by which businesses differentiate themselves from their competitor by focusing on their strengths, to produce better quality service for customers, getting this done effectively, businesses must understand their current environment, they must have a clear future direction, understand their capacities and also have a clear aspiration, (Hart & Stapleton 1977). Market strategy in general term explains how market objectives can be achieved inform of gaining competitive advantage, by price reduction, product quality improvement, and intensive advertising, (Hart & Stapleton 1977)
The strategy at Nestle
According to Nestlé, S. A.( 2015), Nestle like most firms in its industry has some strategies which guide its operation worldwide; Nestlé’s strategy is to produce high-quality health and wellness products. Nestle has been able to achieve this by a commitment to leading the industry in research and development to drive innovation, with constant support renovation of its food and beverage products, (Nestlé, S. A,2015). In addition to research and development, Nestle maintains an efficient market system embedded in top notch customers relations. Nestle ensures a constant relationship between management and stakeholders and key society leaders in its drive to create a positive impact on the society, (Nestlé, S. A.2015).
WHERE ARE WE NOW?
For the purpose of this study is important to look at the concept of where are we now? This section will explain and address where Nestle is as regards its competitive advantage over other firms. According to lambin (1977), strategic marketing can be seen as the process of leading a firm or business organization towards the realization of attractive economic opportunities and Getting this done will require the adaptation of opportunities to the resource available to the firm, doing this effectively will provide growth and profitability for the firm. Baker (1999) described strategic marketing as the goal and purpose of a strategic business unit and the means by which it intends to achieve this goal regarding effective management of its marketing function.
A Perceived advantage and superiority
Nestle is currently perceived to enjoy a specific advantage over is competitors. In the year 2015, Nestle achieved an organic growth of 4.2%, comprising of real internal growth 2.2% and price of 2.0%, (Nestlé, S. A. 2015). Sales statistics were CHF 88.8 billion; this figure was a direct impact of the foreign exchange of 7.4%, and Nestle operating profit for the year 2015 was CHF 13billion. (Nestlé, S. A. 2015).Apart from the numerical profit as expressed above Nestle increased its level of investment in brand support, digital increment, and development of advanced in its nutrition and health platform, Over the same period, Nestle recorded earnings rose from CHF 2.70 to CHF 2.90 while earning per share over the same period increased by 6.5%.(Nestlé, S. A. 2015). Nestle operating cash flow remain strong at CHF 14.3 billion, and its cash flow was CHF 9.9bilion at an 11.2% of sales, (Nestlé, S. A. 2015).
In 2015 Nestle’s annual report showed that it had delivered a profitable growth at a higher end of the industry, the realization of this accomplishment remains a challenge for the major players in the industry, (Nestlé, S. A. 2015). Nestle continued to diversify investment, Nestle’s plan for the future is unequaled by another firm in the industry, with increased support for new product brands and further developing brands for its new platform in nutrition. (Nestlé, S. A. 2015).
Group results – according to Nestlé, S. A. (2015), in the year 2015 Nestle experience an organic growth of 4.2% its real internal growth was 2.2%, In America recorded 5.58% increase, in Europe in it was 3.5%, in North America, and the middle east organic growth increased by 1.9%, in Asia, ocean and sub-Saharan African countries organic growth also experience an increase of 2.4%. Nestle as continued to demonstrate its commitment to expansion and developing in markets in new territories and continents and new market statistic shows an increase by 1.9% and access to emerging market shows a rise by 7.0 %,( Nestlé, S. A. 2015).
Trading operating profit – Nestlé’s annual report for 2015 shows that during this period Nestle also experienced a considerable amount of profit with its record showing CHF 13.4 billion one the highest in its industry, with a margin of 15%. According to reports by Nestlé, S. A. (2015) the company delivered improvement in margin as a result of its increase investment in brand support, enhanced digital innovations, improvement of its health and nutrition platforms.
Net profit – Based on a report provided by Nestlé, S. A. (2015), the company’s net profit stood at 9.1 billion; the report pointed out that Nestle was able to record the highest profit among its competitors regardless of fluctuation in foreign exchange. Given this performance by Nestle, the board of directors proposed a dividend of CHF 2.25 per share, which was an increase when compared to CHF 2.20 per share paid to shareholders in the year 2014. It is also important to stress based on the report by Nestlé, S. A. (2015), the company has not recorded a decline in dividend payout since1995.
Nestle 2015 financial report provides evidence which considers the company to be at the top end of its industry due to its reliable and consistent record of growth and innovation. According to its 2015 annual report the board of director expressed confident and commitment to continue to deliver longer organic growth of about 5% to 6% expecting that margins will improve and also earning per share is projected to be on the increase. The company’s board of directors stated that there are years when Nestle exceeds its expectation, and there have been years when it came close. There here by concluded that Nestle has shown and maintain a consistent commitment to development and improvement of its brand, at such remains dominant player in the industry,(Nestlé, S. A. 2015).
WHERE DO WE WANT TO BE
This section will discuss where we want to be; this factor will be expressed in terms of Strategic direction and strategy formulation. Nestle has to define how the organization should look in the next three years. Adoption of adequate strategy formulation and direction will enable Nestle to get to where it wants to be. Afuah, A. (2003), defines Strategy formulation as the process by which a firm or business organization choose an appropriate course of action in order to attain and achieve organizational goals, it must be considered an inherent process if a firm must achieve its goal and be successful. Nestle needs to sustain and maintain its current competitive advantage, by maintaining an improving the innovation that it's currently available iin the organization. Nestle must ensure that its product quality improves and ensure that the market is aware of its innovation by improved branding and adequate advertisement to create awareness, this is in accordance with the research conducted by Wilson and Gilligan (2005). Nestle can gain and maintain competitive advantage; by creating an alignment and link between objective and strategy with the environment, Venkatraman, et al.,(1984) was of the opinion that there is a need to address the environmental fit, they considered environment fit as the process of linking the objective and strategy of a business with its environment, strategy fit ensures that an organization understand the dynamics of it environment and align its goals and objectives with the needs and dynamics of its environment and at such enjoy increase profit translating to a rise in its competitive advantage. At such Nestle must adequately address its environment conditions to sustain and increase its competitive advantage.
Nestle can gain and maintain a competitive advantage by establishing and maintaining an effective market strategies; this strategies include market segmentation and positioning, marketing segmentation will ensure that Nestle divides its market into target groups and provide suitable products t...