Case Study

In 2015, Nestl Middle East s total revenue, from a range of 60 products, was $2.4 billion.Nestl gains the consumer s trust not only by considering serious concerns over the quality of food and the variety it serves to its consumers, but also by investing in research labs to ensure that they exceed food safety and quality requirements.The Middle East is an important market globally and has been identified as a potential growth market with a lot of opportunities.

In March 2019, Nestl Middle East announced that the number of women in management or senior leader roles had risen from 16 percent to 30 percent over the last eight years.This was a crucial step for the company s goal of improving gender balance across all its offices around the world.Another recent investment is the advanced Sensory Lab Unit for Renovation Innovation of Products (SLURP), located in Dubai.This lab is fitted with high-end technological facilities to serve as a center of expertise for advanced sensory profiling analyses on shelf-stable dairy, coffee, and confectionery products

Nestl believes that investing in factories is extremely important as they support and facilitate research in various ways.As a market, the Middle East does not have homogenous consumers.Different countries have different tastes and preferences;the Middle East comprises 22 different countries with varying economies, cultures, and belief systems.Manufacturing products locally allows Nestl to adapt to the cultural needs and preferences of the local markets and accelerate the delivery of fresher products to the consumer.Any new information gathered from the market can be implemented effectively in a timely manner.According to Nestl, manufacturing products locally along with timely implementation of information gives them a prime advantage over their competition.Nestl has thus followed this practice for many of their manufacturing plants in the Middle East.

In March 2018, the company announced its intention to make 100 percent of its packaging reusable or recyclable by 2025.This initiative was introduced across the business with the goal of ensuring that none of the packaging or plastics is sent to a landfill.In February 2019, Nestl Middle East announced that it was offering $50,000 to the individual who comes up with a simple and economic way of checking daily levels of vitamin D deficiencies, a problem common across the Middle East and one that Nestle aims to address with a permanent solution.This will include developing a product portfolio that provides the ideal daily amount of vitamin D, phosphate, calcium, and other nutrition that is critical for the body.The company also plans to launch a long-term scientific health study of vitamin D deficiency in the Middle East and North Africa.

With health awareness on the rise, Nestl is focusing not just on expansion but also on making its products healthier.It is planning to reduce salt, saturated fats, and sugar in new as well as existingproducts.

The United Arab Emirates is not the only country where Nestl is interested in investing.In January 2019, Nestl opened its new Bonjorno coffee factory in Egypt with an investment of $14 million.The new factory has a direct workforce of about 240, along with 7,000 indirect jobs.The state-of-the-art factory was designed to meet their aim of supplying to the entire Egyptian market.This was made possible after Nestl acquired Caravan Marketing Company SAE in January 2017. Nestl has been investing in Egypt for over 100 years and now operates three factories with 3,500 direct employees.

Nestl continues to expand in emerging markets and is currently using the popularly positioned products (PPP) model to drive growth in the region.In order to target emerging consumers who are entering the cash economy and buying branded goods for the first time, Nestl s PPPs are adapted to meet the consumers needs in terms of price, accessibility, and formats (such as single-serve packets).In Egypt, research conducted on behalf of the food service industry is used for Nestl s professional strengthening.Moreover, since consumption onthe-go and out-of-home is steadily on the rise, there is scope for developing Nestl s coffee-machine vending business

Satisfaction of the needs of consumers, from emerging consumers to those looking for premium products, is a priority, and Nestl continuously strives to fill this gap.The Egyptian Revolution, also known as the Revolution of January 25, did not stop Nestl s investment;a week after the uprising it publicized a $160-million program for improvements across its manufacturing and distribution along with investment in skills over the next three to five years.Nestl Egypt aims to attract and adapt to the cultural change in an innovative way.For instance, it launched a new nutrition initiative called Healthy Kids, an educational scheme that aims to increase nutritional awareness and promote a healthy lifestyle.By the end of 2016, the program had reached over 650,000 children and trained around 2,000 teachers across 1,025 schools in 12 governorates.

Finally, Nestl is very keen on different marketing-research-based projects like understanding the nutritional needs of its consumers in order to accelerate the development of products with an improved nutrition profile at the right price in emerging markets.For example, in 2012, in Nestl entered into a research partnership with scientistscoordinated by the Council for Scientific and Industrial Research, a part of the South African government s Department for Science andTechnology.The partnership allows scientists to explore and make extensive use of Nestl s research capabilities and expertise in nutrition, food science, and food safety.Moreover, part of Nestl s global research and development efforts focuses on discovering new bioactive ingredients.Biodiversity is very important, and some of the research will work on studying how to make use of locally sourced ingredients to create foods that provide health benefits.Researchers have examined these ingredients effectiveness in targeting different tissues and in promoting health overall.

Question

6-7. Critically examine Nestl's positioning model.

6-8. Discuss the importance of investment in research with regard to the Nestl case.

6-9. Explain the different ways in which market research can be used to satisfy consumers.