Nestle’s marketing strategy has always been a topic of discussion because of its sterling achievements.
The Swiss company started out as a small baby food company and gradually rose to the global market through sheer dedication and long-term game plans.
Today Nestle owns 2000 brands, operates in 186 countries, and generates over $84 billion annually.
How did Nestle do it?
Granted, the brand had over 150 years to nurture, but tons of companies had those opportunities and failed. Yet, Nestle prevailed.
What is Nestle’s secret to success?
I am here to show you a glimpse of the nine marketing strategies Nestle employed to carve its way into the international market.
1. A Diverse Portfolio
A diverse portfolio can help you lower the risks and increase your revenues. Nestle uses product diversification for this reason to thrive in the FMCG industry.
Let me give you an example.
A few years back, India banned Maggie after detecting a harmful ingredient in the item.
After the Maggie fiasco, Nestle went into a diversification spree, revamping Maggie and added 35 products to its portfolio.
Why? Because the company realized putting all its eggs in one basket—in Nestle’s case, its flagship brand—would be unwise and launched a new range of products.
Nestle has been playing with product diversification as a growth strategy for a long time. Every time Nestle hits a wall, the company introduces horizontal product diversification.
KitKat is a classic example. Nestle’s frequent tinkering with KitKat flavor is the reason the brand is still widely preferred.
At present, Nestle’s product portfolio is spread out to 12 food and beverage categories, from infant nutrition, confectionery to dairy items.
2. Multiple Price Strategies
Just like its product diversity, Nestle uses multiple price strategies to capture a wide audience.
If you check out any of Nestle’s products, say Nido, the company offers several packaging to target different income groups. On the other hand, when you take a peek at Nestle’s statistics, you’ll notice the chunk of revenues comes from its beverages—particularly from its premium product Nescafe.
Baffling. Isn’t it?
Companies typically determine their product prices based on either its market worth or its perceived value. If you set market prices, you’ll generate high sales but earn low margins. If you sell premium products, you’ll get high returns but risks the chance of low sales.
Nestle balances both competitive and value-based price strategies to stay afloat.
Meaning, the company offers its core products at market prices to distribute risks while earns majorly from its premium brands.
3. Product Mix Strategy
A product mix essentially means the number of products your company offers. And the one benefit of having a large product line is the ability to employ a product mix strategy.
Nestle takes advantage of its vast portfolio and uses it to attract cost-conscious prospects.
The company frequently releases buy-one-get-one price promotions, discounts, sales deals, and giveaways. In other words, Nestle practices a product mix strategy.
Many companies—specially FMGC brands—offer bundle deals to introduce a new product or sell unpopular items. These sales promotions allow them to increase the visibility of their low-growth products, make their premium products appear affordable, and help them get rid of low-demand stock.
You’ll find tons of similar examples in your local grocery store and nearby fast-food restaurants.
Even in the service industry, businesses apply these sales techniques to improve customer acquisitions. Think Saloon deals.
If your product line comprises everyday items, visit a superstore and study Nestle’s product mix sales promotion.
4. Product Driven Advertising
You must have heard many times customer-centric strategy generates more profits than others. Yet, Nestle’s marketing strategy is largely product-based.
Why? Because Nestle’s product line is extensive and a customer-centric approach would be impractical in this case.
Let me put it this way.
A large product lines demand an even larger marketing budget. Since Nestle has a diverse portfolio, the company at a time targets a wide audience through TV commercials, print ads, and events. Therefore, FMCG brands often stick to commercials to increase their visibility.
For example, KitKat advertisements aren’t restricted to age groups. The brand presents itself as a light snack and merely uses demographic culture to personalize the Ad.
Product-driven marketing centers on product features and availability. The idea is to produce quality products and makes it easier for your target market to find them.
If you boost a diverse product line—like Nestle—go for product-based marketing.
5. Brand Equity
Brand equity is the self-worth of any company.
Sometimes—in fact, most of the time—a brand’s name attracts buyers more than the product itself. The recognizable the name is, the higher becomes your brand value.
Nestle has incredibly strong brand equity because it primarily focuses on two areas.
One, the company prioritizes its product quality and usually creates promotional Ads around it.
Most of the Nestle advertisements send a subliminal message to the audience. Such as nutrition, flavor, safe. The different perspectives settle people’s minds, and they purchase the product with little fear.
Second, Nestle maintains a consistent brand image in its advertising and packaging.
For instance, what color do you associate with KitKat? Red, right?
KitKat wrapper has always been in the red. In the mid-1990s, the company tried to change the color to blue, but it didn’t work out. Nestle changed it back to the original red, and KitKat still enjoys its classic color.
Brand equity is a significant part of an effective marketing strategy. It helps you earn customer loyalty, gives you a competitive advantage, and creates your unique identity.
Cultivate your brand to the point where people become familiar with your company.
Ever heard of Android KitKat?
A few years back, Nestle and Google collaborated and introduced an operating system named Android KitKat. Nestle was facing a recent scandal with their pet product and wanted to capitalize on Google’s image. The move created a buzz and overshadowed the crisis.
Recently, Nestle struck another deal with Starbucks to kill two birds at one time. Nestle entered the new product development phase—i.e., roasted beans—and boosted its Nespresso brand by introducing a new range of Starbucks Nespresso Capsules.
Do you see how co-branding is helping Nestle?
Co-branding is an excellent way to break into a new market and broaden your reach. This type of marketing benefits startups hoping to create their brand awareness or launch a new product.
So, if you’ve reached a stagnant position, discover companies that complement your products and team up to run co-branding promotional Ads.
7. Culture Understanding
Multinational companies face innumerable challenges because of differences in culture and language barriers. Some well-known brands have made epic blunders that still plague the companies.
I mean, did you know, KFC, which is now pleasantly thriving in China, started its journey in the Asian market by wrongly translating “finger-licking good” to “eat your finger off.” While it sounds funny to us, it wasn’t to KFC at that time.
Nestle, too, has stumbled over the cultural obstacles many times. But when it comes to product development, the company conducts in-depth research.
Its Japan market penetration strategy is a good example.
In the late nineties, Nestle thought to introduce instant coffee to the Japanese market but failed miserably. When the company set out to discover the problem, it realized the Japanese liked their tea and would prefer to stick to it.
The company made a temporary retreat and later entered the market through coffee flavor candies to develop a taste for western food. This initiative helped Nestle to launch KitKat successfully as well.
The moral of the story is; thoroughly research your target market customs and tastes before introducing your product in the new market.
Nestle spends billions on community projects to reduce its carbon footprints.
Just last year, the company announced its plan to use food-grade recycled plastics. This year, Nestle has decided to invest over 700 million in Nescafe’s sustainable coffee production. Kitkat recently took an initiative to fight against deforestation.
The result? Nestle is now widely known as a sustainable brand.
Sustainability leaves a positive impact on your brand image. With such measures, you can not only take your fair share of ethical responsibility but subtly shifts climate-conscious people’s mind toward your brand.
Nestle uses its flagship brands to promote sustainability.
One example is its sustainable cocoa production.
When the chocolate industry came under fire for child labor in 2015, Nestle pledged to improve cocoa farm conditions and produce KitKat from only “sustainably sourced cocoa.”
Now, tell me, would you ever consider KitKat sustainable if the company hadn’t made concentrated efforts to portray the brand as such?
Think about it.
9. Clear Vision and Consistent Goals
Nestle wields uncountable tools to ensure it delivers good food to make a good life. The company never deviated from its original mission and has remained on track since its creation.
Look at Nestle’s chronicle records.
When Henri Nestlé saw a rise in infant death in the late 19th century, he introduced baby formula to boost child nutrition. In the mid-nineties, after women began to share the workplace, Nestle launched instant Nescafe and ready meals, which you now recognize as Maggi. Each year Nestle targets everyday kitchen challenges and continues to improve quality of life just as Henry originally intended.
Having a clear vision and commitment to your goals gives you a competitive advantage in the market. People trust those brands that are consistent in their message. That’s essentially how Nestle’s made a place for itself.
Whatever product or service you offer, make sure to have a definite vision in mind.
If you are not sure where to start, here’s an interesting article on the vision statement I came across at BusinessNewsDaily. Go ahead and check it out.
Nestle has come a long way from a condensed milk seller to a global giant.
The company focused on aligning its marketing strategy with its vision and stayed committed to it. Because of it, Nestle has survived two centuries of struggle, fought tough competition, and built an empire.
Today, you’ll find top-performing companies following Nestle’s lead and enjoying the fruit of their success.
For example. Alibaba reigns the eCommerce market by remaining true to its vision. Tesla has practically become a pioneer of electric vehicles while standing firm by its company’s mission. Apple prevails in the luxury tech niche by the sheer strength of its marketing.
Explore it and let me know if you find it useful. Good luck!