Nestle Cerelac With Introducing Saltish Flavors

Introduction and Product/Service Description

In today’s world where everything is changing with time, the food items and preferences regarding food are also changing which has affected the food market. In this regard, Cereal plays an important role while choosing healthy food because it is full of protein and nutrition. Various companies in the world are producing different food products based on cereal. In the case of baby food, the amount of protein and nutrition is more important than elders and many companies are preparing baby food that can meet the needs of babies or infants (Cereals, 2010). Regarding baby food, many health complexities may occur such as vomiting and digestion problems therefore it is crucial to take all the possible factors regarding baby food into account. Nestle is one of the biggest food and beverage companies in the globe that is operating in more than 189 counties with 2000 brands (AlFaris & Aldayel, 2020). This company was established in the 1860s by Henri Nestle and it was grown during the First World War and Second World War. Nestle is known for baby food that is a quality food product meeting international standards (Netting & Palmer, 2020).

Nestle Cerelac is the most famous baby food around the globe. Other food products that Nestle produces include bottled water, pet foods, breakfast cereals, dairy products, coffee, snacks, confectionery, and ice cream. Nestle is a nutrition, health, and wellness-based company and it prepares Cerelac for babies by focusing on their needs (Mariam, 2005). Nestle provides Cerelac as an easily digested instant cereal and as a supplement to the babies or infants to meet the baby’s growth requirements and necessities.

There are many structures, design, and even flavors of Nestle Cerelac that attract its customers in the food market place. The purpose of this research report is to make the marketing plan for Nestle Cerelac by introducing saltish flavors (Cereals, 2010). This unique product can be regarded as an extension of Nestle Cerelac that will be more suitable for babies who like the saltish flavor because many babies do not like the sweet flavor in their food. Regarding the market, various companies are in this competition and Nestle has to compete with them to make its new flavor of Cerelac successful in the baby food market. This saltish flavor Cerelac has wheat and rice as the prominent ingredients that are good for the health of babies therefore, an effective marketing strategy is necessary for Nestle to promote it. The Nestle saltish Cerelac also has corn as the main ingredient that is a plus point for the company to promote its saltish flavored Cerelac in the baby food market.

Part 2: A Critical Analysis of the Market Context

The market environment indicates the actors and forces outside of marketing which can affect the ability of a company to preserve and build on its relationships with its customers as well as with its stakeholders. Regarding the macro-environment of the company, these could be technological, political social, and demographical forces (Jewel & Kalam, 2020). Regarding the company, the microenvironment includes actors such as the public, suppliers, or competitors. A company needs to change its way of operating and marketing strategies according to the various changes in the environment and Nestle company is definitely in a changing environment.

Figure 2.1: Market value of infant nutrition worldwide in 2019 and 2027(in billion U.S. dollars)

(Source: Statista)

 

The baby food industry is very competitive at the global level and retail sales in 2018 regarding this industry are grown from 71.4 billion U.S. dollars to about 98.9 billion U.S. dollars by 2024 that indicates the popularity of the baby food industry (AlFaris & Aldayel, 2020). According to research reports of 2019, China was the biggest market for baby food with more than 71.56 billion dollars in sales revenue, and India was in second place with almost 30.25 billion dollars in its sales of the baby food industry. While the United States was stood at sixth place in baby food industry sales. During the forecast period of 2018-2026, the baby food and global infant formula market are anticipated to grow at 5.12% CAGR. Major driving factors regarding this market are:

  • Increased parental concerns regarding nutritional requirements and health necessities of their children.
  • The increasing popularity of baby food formula.
  • Increase in the number of working women or parents.
  • The rise in the individual’s spending power.
  • Changing lifestyle and growing urbanization.
  • Online retailing stores of baby food or E-Commerce stores of baby food companies.

The increasing parental concerns about the nutrition requirements and health concerns of their children is the major factor that is boosting the global baby food and infant formula market. Babies or newborns need an appropriate amount of proteins and nutrition in their daily diet therefore the demand for baby food and infant formula has been increased as they have these protein and nutritional values (Kent, 2015). Also, the increasing number of working parents especially women, is the major factor that affects this market. The leading product type segment is infant formula or milk formula in the baby food and Global infant formula market. Other major factors include the changing lifestyle, raise in individual’s spending power, growing urbanization, E-Commerce stores, and online retailing. In the baby food market, new challenges are introducing with the rise in consumption of infant formula and baby food (Cho & Yun, 2020).

The robust growth is witnessed by the global baby food items regarding the increasing disposable income of the population around the world. Among the population, the increasing health concerns about the health of infants is regarded as the major factor to drive the growth of the market of baby food globally (Masufi & Mudau, 2020). The increasing cases of malnutrition among children is another key factor to drive the growing market for baby food products. According to WHO, almost 52 million children are weak and these children are under the age of 5 years.

Figure 2.2: Increasing purchasing power

(Source: Research Nester)

 

Figure 2.2 indicates the increasing purchasing power in Europe that is a key factor to drive the overall baby food market growth. Across the globe, the growing disposable income of the population coupled with the increasing industrialization is expected to analyze the overall market of baby food during the forecast period. Also, the increase in the income of the population across the globe concerning the high spending towards the various food items is forecasted to foster the growth of the overall baby food market. For example, the purchasing power standard has increased from 23,295 to 23,638 according to Eurostat (Chang & Zhao, 2019). This is the reason that increasing purchasing power is anticipated to increase the baby food products’ market growth during the forecast period. The demand for the packaged food items has been increased and the growing awareness is forecasted to drive the overall market of baby food during the forecast period. The food items with an adequate amount of nutrients are continuously developing by the manufacturers or the companies.  This is another factor to forecast the baby food market globally.

 

Figure 2.3: Global Baby Food & Infant Formula Market Size 2017 by Type

(Source: Adroit Market Research)

 

The above figure is indicating the rise in awareness regarding the baby’s nutrition needs because nutrition is the major need of the babies for their proper development and growth. During the infancy period and early years of a child, the lack of adequate nutrition results in increasing the risk of health issues, that is directly or indirectly cause almost 40-45% of the total number of deaths of children under the age of 5 years (Jackowska & Halicka, 2018). Various factors cause changes in the overall market of baby food. These factors include bottle feeding, food safety, breastfeeding as a government initiative, fall in birth rate, etc.

Figure: 2.4: Key Factors Impacting the Global Baby Food Market

(Source: Adroit Market Research)

 

Part 3: Segmentation, Targeting, and Positioning (STP)

Segmentation and Targeting

There are four different types of segmentation and this research report will focus on the geographical, psychographic, demographic, and behavioral segmentation that are the key categories regarding the baby food market (Tazrian, 2017).

Geographical Segmentation

Geographically, the baby food market could be segmented on a divisional basis where each division could be divided into different zones and a large number of distributors could be restricted to those specific zones to sell their products based on the geographical situation of zones (Jannat, 2015).

Demographic Segmentation

Regarding age, when deciding the demographic segmentation regarding Nestle Cerelac with saltish flavor then Nestle company should consider the children under the age of five and this Cerelac must meet their nutritional requirements that are crucial for the development and growth of the children or infants. While regarding income, Nestle Company should focus on the middle and upper-income groups because the lower-income group cannot afford ready-made baby food (AlFaris & Aldayel, 2020). Based on the lifestyle and the social class, buyers could be divided into different groups such as the higher upper class, lower upper class, and upper-middle class.

Psychographic Segmentation

Nestle has different classes where the company can focus to introduce the saltish flavor of the Cerelac such as the mothers who do not want to give breastfeed to their children and prefer the baby food with high nutritional value. The educational level of the customers matters the most in the food market therefore, Nestle Company should make marketing promotions based on the education of the customers such as social media ads or videos that can convey the message of the company appropriately (Jackowska & Halicka, 2018).

Behavioral Segmentation

According to the preferred benefits, buyers are divided into different groups that help the company to decide its strategic approach regarding each group. In the case of Cerelac, the saltish flavor is a unique idea that provides Nestle company a plus point to compete with other companies that are also producing baby food. The saltish flavor Cerelac is the food of early-stage children who do not like the sweet flavor.

Positioning

In the market, a company needs to clear the position of its product. There are various influential factors when a company decides to choose which segments to target. If it is easy for a new product to enter the segment or if there is high competition within a certain segment, then that specific segment is not attractive for the company to target as its preference. The possible substitutes of the company’s product and the changes in the purchasing power of the suppliers and buyers are also crucial factors to be considered while specifying the target of a company (Cereals, 2010). With the population increase across the globe, the demand for healthy food has been increased because good nutrition is necessary for the development and growth of infants during their first year of life. Therefore, healthy and good food is required to meet their needs. Diet with high proteins and calories is needed for infants because infants are very active and they spend their energy in their different activities. Therefore, they need healthy food.

Competitors

In the baby food market, the competitors of Nestle in the UK are Danone/Nutricia Ltd, Little Dish, Ella’s Kitchen Group Limited (Hain Celestial), Organix Brands Plc (Hero), Hipp (UK) Ltd, HJ Heinz Company Limited (Kraft Heinz Company), Urban Fresh Foods, Annabel Karmel Group Holdings Ltd, and The Kids Food Company (Jannat, 2015).

Figure 3.1: EUROPE INFANT FORMULA & BABY FOOD MARKET FORECAST 2018-2026

(Source: Inkwood Research)

The demand for convenient on-the-go food has been increased in families with a growing number of working women. People are turning to brands on which they can trust in this uncertain world. The awareness about the behavior of the companies is also increasing among the people that are directly or indirectly affecting the sales of the companies. Regarding a balanced healthy diet in the lifestyle, people prefer to buy the best food for their children therefore, it is the best aspect to be targeted by Nestle in saltish Cerelac that can be accomplished by improving the food quality along with flavor (Sojamo & Larson, 2012). The suggested positioning statement for the new, improved saltish Cerelac of Nestle company is as follows: ‘To babies or infants under the age of five who do not like the sweet food, Nestle Cerelac with saltish flavors, new baby food products, that provide unique flavor, but is still rich of proteins and nutrition’.

Part 4: Recommended Extended Marketing Mix

The marketing mix for Nestle Cerelac with saltish flavors along with recommendations is explained below.

Product

For the brand value, the products of the brand play a vital role such as the positioning of the products in the market. Nestle Cerelac with saltish flavors is the potential product in the baby food market that provides the company with a huge market. If any product of the company seems to be unhealthy in the market then it indicates that the product of the company is not meeting the market requirements and it is also not benefited from the brand value of the company. In the case of Nestle, the Cerelac is of high quality that helps the company to attract the customers looking for healthy food for their children. There are various flavors of Cerelac that Nestle company offers and saltish flavors are the extension in the Cerelac product of the company that provides different but healthy baby food (Lotfifard & Borojerdi, 2018). Wheat, rice, and corn are the main ingredients of Cerelac with saltish flavors. Nestle Cerelac is available in different sized boxes and with different shapes to attract the babies or its customers.

Pricing Strategy

The pricing strategy of Nestle is according to the quality of its food and beverage products. Nestle Cerelac ’s pricing strategy also depends on the quality of Cerelac. Some other companies are providing baby food, Cerelac at a much lower price than Nestle but regarding quality, Nestle Cerelac is better than that Cerelac. Additionally, Nestle Company also changes its pricing strategy based on the surroundings or in other words according to the geographical and marketing aspects of different countries (AlFaris & Aldayel, 2020). The price of Nestle products, Cerelac is according to the size of the box and the uniqueness of the specific flavor. In the case of Nestle Cerelac with saltish flavors, the company will follow its pricing strategy the same as it does for the other flavors of Cerelac (Lotfifard & Borojerdi, 2018). As the lower income group cannot afford the baby food of the brand, therefore, the pricing strategy of the company targets the middle and upper-income group.

Promotion

A company can choose between having a push and pull market strategy when it promotes a product, either it is new or improved. Introducing Nestle Cerelac with saltish flavors, the company may adopt the push and pull strategy to get success in the overall market of baby food. Regarding the push marketing strategy, Nestle Company can use TV advertisements, newspapers, hoardings, magazines, doctors, etc. For this purpose, the company has to make its financial budget for the promotional activities to make it’s functioning smooth and effective. Another effective promotion for Nestle is the share promotion with other famous brands that are related to the products of babies such as the PIGEON brand that provides skin care products for babies and newborns (Jannat, 2015). Share promotion will help Nestle to save costs. Nature of promotion is also important regarding the market therefore Nestle is recommended to focus on the nature of promotions as Cerelac is baby food and its promotion should be creative and attractive (Lotfifard & Borojerdi, 2018). The implementation of the marketing strategy is the pull strategy that helps the company to attract potential customers and, in this regard, the potential customers are those parents who are looking for healthy baby food for their children. Digital marketing and influencer marketing are recommended to Nestle to reach its targeted customers.

Channel and Distribution Strategy

Nestle has a wide network of distributors in some countries with all the required equipment. The company supplies its products to major sales channels situated in different areas of different countries across the globe. Nestle is currently working in more than 186 countries across the globe and major distributor channels of Nestle are manufacturer, agent, distributor, retailer, and end customers of the company. The company is recommended to provide potential opportunities to the local producers in different countries to become its suppliers regarding Nestle Cerelac with saltish flavors. Because Nestle uses fresh raw materials in Cerelac such as fruits, milk, etc. and this company is widespread, therefore, it will be beneficial for the company to make the local producers the company’s suppliers (Jannat, 2015).

Figure 4.1: Nestle Distribution

(Source: Surabhi Udas – WordPress.com)

 

The company can also increase its channels by building close links with the local farmers by advising them regarding the effective farming practice to improve the quality and thus to maintain the standard. Nestle Cerelac with saltish flavors can be sold out by using the same channels as that for the other Cerelac flavors with a possibility of increased sales and this will help the company to improve its distribution strategy rather than developing a new distribution strategy for the Nestle Cerelac with saltish flavors (Cereals, 2010).

People

The satisfaction of the customers depends on their experience with the company that affects the customers’ link with that company such as their loyalty (Jannat, 2015). These effects are true especially when a company operates internationally such as Nestle.

Process

Since employees of Nestle are used to support some specific products, therefore this approach of the company’s employees can be used to promote Nestle Cerelac with saltish flavors in the overall market of baby food (Jannat, 2015). The marketing goals of Nestle include translating the goals of the company into the performance goals of the team within the firm. Additionally, different types of customers affect the other customers as well as the new or upcoming potential customers of the company positively or negatively. A change from being “something for the wealthy people” to being “something harmful” can change how people affiliate with the products.

Physical Evidence

Physical evidence of Nestle includes the packaging and promotional tools that the company uses in Cerelac with saltish flavors (Jannat, 2015). This physical evidence helps the company to develop its growth strategy in the overall market of baby food.

Part 5: A Discussion of Implementation Issues

Regulations and legislation and the competition in the market are two important and possible implementation issues that are taken into account when a company is making its marketing strategy regarding new or improved products. There are already Cerelac products or baby food in the market with different flavors and saltish flavors of Cerelac also exist in the baby food market. Additionally, different regulations are causing hurdles for the new entering baby food companies (Chang & Zhao, 2019). However, Nestle Company is already a global and world’s largest food company that provides quality food items across the globe. Nestle uses fresh raw material in its products and thus in its Cerelac products too. Therefore, the availability of fresh raw material at some particular location of Nestle and to deliver the product to other counters, may create some issues (Jewel & Kalam, 2020). Therefore, it is beneficial for Nestle to collaborate with the local companies or the producers along with establishing close relations with the local farmers to get on-time fresh raw material for its products. Because this collaboration will save Nestle from the issues of delay and also save the costs of the company regarding transportation.

Cerelac stays fresh seal and it is also a long-lasting baby food therefore some other companies are also entering in this competition. Therefore, Nestle Company needs to focus not only on the market trends but also on the marketing strategies of its competitors. It is recommended to Nestle Cerelac with saltish flavors to continuously study new trends in the upcoming years and keep up with adapting to new changes in the market. This also involves raising awareness to the youth who will be parents tomorrow and how to attract them to purchase Cerelac with saltish flavors for their infants (Jannat, 2015).

As a company at a global level, it is necessary to understand global causes and thus Nestle should introduce environmentally friendly packages wherever it is available all around the world and also improve its packaging to be more eye appealing. It should also start to introduce an organic range in its Cerelac as now there is a trend in organic products being produced and purchased and if Nestle can develop an excellent product in this category it will beat competitors as most competitors who are offering organic baby infant formula are usually very expensive, Nestle Company can take advantage of this and create a better quality lower-priced organic product infant formula with saltish flavors. Although Cerelac has high-end competitors due to more sophisticated offerings such as being organic, Nestle Cerelac still is a market leader in countries such as Portugal.

References

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Cereals, N. (2010). Bridge the protection gap with Nestlé Nestum and Nestlé Cerelac cereals. Professional Nursing Today, 44(14), 3.

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Cho, Y. K., & Yun, M. (2020). Evaluation of Mineral Content in Convenience Baby Food. Journal of Food Hygiene and Safety, 35(5), 489-494.

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Mariam, S. (2005). Nutritive value of three potential complementary foods based on cereals and legumes. African Journal of Food, Agriculture, Nutrition and Development, 5(2).

Masufi, N. M., & Mudau, F. (2020). The developmental growth and quality assessment of five selected cultivars of baby spinach grown in Gauteng province, South Africa. South African Journal of Plant and Soil, 37(1), 79-86.

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Sojamo, S., & Larson, E. (2012). Investigating Food and Agribusiness Corporations as Global Water Security, Management and Governance Agents: The Case of Nestlé, Bunge and Cargill. Water Alternatives, 5(3).

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