Marketing Concepts and Market Positioning

Discuss about the Theories Of Destination Marketing And Management.

The marketing management refers to as the process that helps in developing and planning the strategies associated with the product or services, advertising, promotion, and sales to reach desired customer segment (Wang and Pizam, 2011). The report is based on the five important aspects of the marketing management which are followed by the company. The company that has been selected for the analysis is Nestle, one of world’s largest food and Beverage Company. There are different products which are offered by the company but out of these the product that has been selected for the analysis is Nescafe.

The company began in the year 1866 as an Anglo-Swiss condensed Milk company. The company has its headquarters in Vevey, Vaud, Switzerland. The products of the Nestle include medical food, bottled water, coffee, tea and breakfast cereals. The company has approximately 447 factories that operated in approximately 194 countries (Nestle, 2018). The purpose of the company is to enhance the quality of life and to contribute to a healthier future.

Market positioning refers to the place that a brand captures in the mind of the customers and how the brand is different from the products of the competitors (Wilson and Gilligan, 2012). The current market position of the company can be examined with the help of the different marketing concepts. Some of the concepts are given below: –

The STP plays a crucial role in the market as it allows a business to reach a consumer with the particular needs and wants. These three components are vital for the firm’s strategic marketing efforts (Hanlon, 2018). Organisations in their endeavor to form a space for themselves in the market may devise revolutionary products or services.

The segmentation divides the market into the smaller group of people with different needs, behaviour, and characteristics.

• Geographic segmentation: – Company has divided two segments for the Nescafé coffee that are southern and northern. Most of the coffee and roasted beans are consumed in the area of the southern segment. The image reflects the consumption of Nestle coffee in different geographical areas.

(Source: https://www.slideshare.net/quyank0812/group-4-24930358)

• Demographic segmentation: – Nescafe has segmented people on the basis of age group, income, gender, and region. The company has divided the segment of age from 13-19 years, 20-30 years or above. Another segment is on the basis of income the company, Coffee prices are moderate according to that the Nescafe segments for income are middle or high-income group people (Bhasin, 2018).
• Psychographic segmentation: – Nescafe coffee divides this segment on the basis of social class and lifestyle. Most of the people think that consuming coffee will add to their status.
• Behavioral segmentation: – Nescafe segments potential users, first-time users and regular users of the coffee. Along with this, they try to capture the market of heavy drinkers with medium to light drinkers (Kotler, 2015).

The target market is the market where the company sells its products and services and while selling the company targets specific segments. The major target segments of the Nescafé coffee are the people who are like to consume quality coffee at affordable prices. Moreover, the brand offers different flavors to their target customers which make them consume different flavors according to their mood. Nescafe has built its strong brand equity through with the use of the aggressive marketing strategy across the world. The main targets of the company also include the people who are looking for quality and believe in following a set lifestyle. Nescafe makes their product available in every southern and northern part. In the northern part, the demand for the coffee is increasing rapidly and the southern places are already well established for coffee.

Competitor Analysis

The positioning refers to as the place that the brand or company acquires in the mind of the customers and it also reflects how it is different from its competitors. If the products of the company are positioned well in the market then the sales of the products will be strong. The strong positioning of the products in the market represent the high brand image of the company (Sharma and Garg, 2013).

The positioning statement of Nescafe is “1 coffee cup, 1 good feeling”, to middle and upper-class people our Nescafé is coffee that helps you to feel good and refreshed. The market positioning map of Nestle brand is discussed below which shows that the company provides high quality with high prices. Comparing the positioning of the company with the competitors Nestle quality is superior from others due to which the prices of products are high.

(Source: https://www.slideshare.net/BusinessManagement2/overview-of-nestle-products)

The below perceptual positioning map reflects the positioning of the Nescafé coffee in the mind of the customers. The positioning of the company shows that the company is able to provide high convenience with high perceived quality to the customers.

(Source: https://www.slideshare.net/ishangi/07s-nescafe)

The competitor analysis in the marketing and strategic management reflects the assessment of strength and weakness of the company’s competitors. Moreover, this analysis helps in understanding the marketing positioning of the company. The main competitors of the company include Owl International and Super Coffeemix Company. The table given below reflects the brand shares in terms of the retail volume in which the Nestle was able to acquire the first position in the year 209, 2010 and 2011.

Nescafe has differentiated itself from the competitor Super Coffeemix who retained its present product description which reflects that company believes in targeting the mature segment people who prefer the classic and traditional taste of coffee. On the other hand, Owl Company makes use of strategy in which they focus on delivery of straits Asian coffee. Nescafe is capable enough to give strong competition to its rivals. Along with this, the major competitor of the company is Starbucks; the brand is well-known for its quality products that are available at high prices. (Refer Appendix 1.1).

Marketing objective refers to as the goals that are set by a business when promoting the products or services to the potential customers that should be achieved by the company within the given time frame. Considering the current positioning of the company there are 3 marketing objections that the company should follow in the next 3 years (Nestle, 2018).

Marketing Objectives

The company improves its supply chain or distribution network of the products with the sustainability in the quality and quantity.

It has been evaluated from the positioning map that the company is asking for the high prices for its products with high quality. In addition, the prices of the coffee offered by the competitors are less which shows that its high time when the company should try to improve its supply chain or distribution network as the effective distribution network will help the company in reducing the price of the customers (Christopher, 2016). The decrease in the prices will help the Nescafé in attracting new customers towards the brand.

There are numerous ways which will help the company in improving the supply chain and some of the ways are discussed below: –

• Transparency: – Company should improve its transparency in the supply chain management system. The wastage of products, mistakes, and fraud are supply chain strategy programs that can be fixed by the company with the use of the ERP system in their supply chain management system (Chopra and Meindl, 2009). The company should ensure that they are maintaining transparency while forming the deals with the suppliers involved in the supply chain. This will provide an advantage to the suppliers as they will get to know the truth and allow them to treat fairly.
• Business operations of Nescafé: -Nestle has to pay attention towards the operations of Nescafe to run an effective business (Monczka, et.al, 2015). To run an effective business the company needs to check the operations conducted by them are meeting the set standard and regulations or not.

Nescafe should source more than 90 000 tonnes of coffee that are compliant with the (SAN) Sustainable Agriculture Network principles by the year 2020.

In the coming next 3 years, it is recommended to the company to increase the sales of the product which will be possible if the company will be able to source more coffee considering the principles of the sustainable agriculture network. The company will be able to increase the sales when they will find proper sourcing of coffee beans (Passariello and Iliff, 2010). The appropriate sourcing will be possible when the company will be able to form the tie-ups with the numerous suppliers. Moreover, the company has to make use of the effective strategy to increase the sales of the products. (Refer Appendix 1.2)

 The objective of the company should be to grow market share by opening Nescafé outlets across the world in the next 3 years. 

One of the most important objectives of the company should apply vertical integration. Vertical integration is an arrangement in which the supply chain of a company is owned by the company. Considering this theory, the company should expand its business by opening its own Nescafé outlets where the company offer all the products of the Nescafé brand. This will help the company in growing the market share of the nestle coffee. Though this is the fact the market share of the Nescafé brand in coffee is high but still, the company should take necessary steps to grow the market share (Hassan and Craft, 2012). In the Nescafé outlets, the company can provide all the details regarding the use of the products along with the advantages of consuming Nescafé coffee. (Refer Appendix 1.3)

Target Segments

Target segments are a collection of customers within a business serviceable accessible market that the business has decided to aim its marketing efforts towards (Wedel and Kamakura, 2012). The segments which are targeted by the company include: –

• Demographic segment- The company target the demographic segment in which the primary target is people within the age group of 25-30 comprises of both male and female belongs to the middle and high-income group. These people include a businessman, professional, Married, children and many others.
• Geographical segment- Nescafe believes in target the people across the world and these people can purchase the coffee from the nearby shop or outlet at the affordable prices. These customers include people who enjoy coffee every day and everywhere.
• Psychographic segmentation- The brand focuses on the people who are urban young who are professional cosmopolitans having contemporary lifestyles. These customers believe in aroma and taste of the coffee along with the quality. (Refer Appendix 1.3)

There are numerous ways which help the company in creating loyalty with the customer targeted by the company. The loyal are most valuable customers for the brand like Nescafe as these customers are worth up to the 10 times the value of their first purchase (Martínez and del Bosque, 2013). Below given ways shows how a company will develop the loyalty with the chosen customers in the strategic three-year horizon.

• Improvement in Customer experience- Nescafe should bring improvement in the morale of the employees working with the company as this is one of the effective ways through which the company can improve its customer experience (Hashimura, 2017). Employees are the one who directly interacts with the targeted customers at various geographical locations. The company should give proper training to their employees about the products which contribute to improving customer experience with the brand (Mosahab, Mahamad, and Ramayah, 2010).
• Customer feedback- Nescafe brand should welcome the customer feedback for this the company can form a portal for the customers. At the portal, the customer can share their reviews for different products. There should be a proper division on the portal regarding the products offered by the brand (Onibalusi, 2016). Through, this brand can easily bring improvement in the products that they are offering to customers.
• Personalized message or e-mails- Nescafe should make their customer feel special for which they can store the data of the customer can send them personalized message or e-mails. These personalized mail can be related to the happy birthday wishes, offer on coffee, free coffee on the previous occasions.

The marketing mix is the combination of the factors that are controlled by a company to influence consumers to buy its products. The marketing mix strategy of the Nescafe is discussed below: –

(Source: Bhasin, 2018)

Nestle is the parent company of Nescafe which is one of the most successful companies in the world. Nescafe offer a different set of products to their customers considering their need and various blends of coffee is offered by the company which includes Nescafe original blend, gold blend, gold blend decafe etc. The company also has divided the cappuccino into different flavors like unsweetened, decaffeinated, and skinny. The company believes in offering the product to different sort of customers according to their taste and preference which helps them in making their customer satisfied (Bhasin, 2018). (Refer Appendix 1.5)

The price of the products is depended on the quality that the company is offering to its customers. The pricing strategy adopted by the company is depended on the competitions and the demand for the product. Nescafe has brought numerous changes in the portfolio of products to increase the customer base as different people have a different preference (Enache, 2011). The prices are adjusted by the company according to the products and their quality. A typical packet of instant coffee offered by Nescafé cost approx. $6 (which contain approximately 3.-35 sachets) and the average saving cost is approx. 0.20. The range of the bottle of coffee cost approximately $5 from 100 servings which results in an approximately average saving of $0.50. Moreover, a can of Nescafé that is available in the market cost approx. $1. This shows that price range of the products is quite high which means that company has to make a strategy to reduce the prices of products. The affordability of the product will help the company in making good market positioning (Wheelen and Hunger, 2011).

Creating Loyalty with Target Segments

The place defines the presence of the product in the market this helps the company in ensuring that the products are easily accessible to the customers. Nescafé maintains a huge cycle of the distribution of the product which helps the company to increase the brand name in the market. Moreover, the company is able to distribute coffee products in supermarkets, retails stores, groceries stores and on many other small outlets (Lovelock, 2011). The customers are able to find the Nescafé coffee in almost each and every physical store which shows that the brand has an effective distribution network. In addition, the products are easily available on online websites like Amazon, big basket, and many others. Easily availability of the products has made the space in the mind of the customers as this will help the company in improving the current position in the market.

Nescafe ensure that they are getting involved in the promotion of products and services. The promotion of the products is done through different communication channels which include advertisement through print media and television, online promotion through different social media platforms, sales promotion through different offers and coupons offered, personal selling in which the employees of the company make them aware about the products (David, 2011). Moreover, the logo of the company is same which helps in imprinting the same brand symbol in the mind of the customers. It is generally found that the advertisements of the brand are generally innovative which helps them in grabbing the attention of the customers. This will help the company in making the good market position (Hitt, Ireland and Hoskisson, 2012).

Conclusion

The report is formed considering the five important marketing aspects which are positioning of the company’s product with the concept of STP and competitions analysis, marketing objective of the Nescafé coffee for the coming years based on the market positioning, target segments of coffee, marketing mix strategy of Nescafé coffee. It can be concluded at the end that the company is expected to register growth in market share and expansion of the business.

References

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Segmentation targeting and positioning