The supply and demand of Nestlé

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Product distribution (or place) is one of the four elements of the marketing mix. An organization or set of organizations (go-between) involved in the process of making a product or service available for use or consumption by a consumer or business user” (wikipedia.org).

This blog post has been written analysing the approach the world’s leading food company Nestlé uses in distributing its products to its consumers. Within this post the lineage of Nestlé will be look at, the advantages and disadvantages of its distribution methods and if there is room for improvement in distribution so the organisation can maintain its dominance in the food market.

 

The Nestlé Effect

Nestlé was formed in 1868 by Henri Nestlé who set up a sales office and by 1901, Nestle opened its first UK factory. The organisation is renowned for producing some of Britain’s best loved brands such as Kit Kat, Nescafe and Smarties. With around 95% of UK households consuming Nestlé’s brands and more than 2 billion products sold in the UK each year, the organisations dominance is clear. The way Nestle distributes its products can be accountable for its success.

The Distribution Channel

The term ‘channel’ is used to symbolise the flow of goods and services around the network” (Cannon, 1996).When distributing a product there has to be careful consideration from an organisation in deciding what channels /networks of intermediaries to use as this should be cost-effective but also meet its customers needs. The distribution chart below illustrates what channels are used by Nestlé in distributing its products to get to its consumers.

Distribution

Manufacturing is the use of machines, tools and labor to produce goods for use or sale” (wikipedia.org)”. Manufacturers act as the catalyst in the distribution channel as they transform raw materials into finished goods – products. With Nestlé having 15 manufacturing sites in the UK, the organisation manufactures a wide range of brands such as Kit Kat and Nescafe. The manufacturers bring together the sugar, cocoa and other materials to produce the chocolate products. Cocoa beans are converted into chocolate bars and other finished products.

Retailers

Intermediaries are “the link in the flow of goods from a supplier to a final customer” (Home Learning, 2009). When Nestlé’s products have been manufactured they are transported by truck (another intermediary) to retailers. Retailers help the manufacturer by making their products conveniently available to the consumer. As retailers act as “the middle men” in selling Nestlé’s products to the end customer, it is vital they are given support and Nestle provides this through the packaging, advertising and promotion of their products.

The consumer

Customers are the lifeblood of every company. A company that does not satisfy its customers needs will not stay in business over the long run” (Zikmund & d’Amico, 2001).  As Nestlé buys in bulk from exporters and suppliers, retailers buy in bulk from Nestle. This is because Nestlé has a range of products and retailers can promote these ranges at different sizes and prices which enables customers to make a choice which suits their needs best. For example, on Tesco’s website there is currently a special offer on Kit Kat’s 2 finger milk chocolate biscuit – 21 pack for £2 when it was originally £3.49 saving the costumer £1.49.

Advantages of Nestlé distribution

The distribution channel Nestlé uses from manufacturer to retailer to consumer is successful. From the method used, the manufacturer benefits from a wide distribution it never owned thus making Nestlé’s products easily accessible to the consumer. With Nestlé having a fleet of trucks   to transfer their products from the manufacturer straight to the retailer, it is the most efficient way of getting their products to the consumer and relatively low in cost.

Disadvantages of Nestlé distribution

“Globally, transport is responsible for approximately 20% of all CO2 missions” (www.nestle.co.uk).  By Nestlé using trucks as a transport method to distribute its products, the organisation is helping to create more pollution from emissions not to mention more congestion on roads. However, Nestlé is fully aware of this and is committed to reducing the environmental impact of its transport and distribution activities. By maximising the number of pallets per load and the number of products per pallet, Nestlé has increased lorry loads to a total of 23 tonnes which has helped reduce the number of vehicles on road.

 

In conclusion, Nestlé’s distribution channel is effective and successful. However the organisation should look at other forms of distribution. Nestlé currently uses intensive distribution in every possible outlet so there is enough exposure for the consumer to buy the product, however using exclusive distribution could also be beneficial. By Nestlé having an exclusivity deal on some of its products with a retailer this may gauge new customers. However, there is also the risk of potentially alienating and losing existing customers.

For Nestlé to maintain its dominance in the food market the organisation has to focus on the logistics of distribution from customer service all the way to transport options and the only way this is achieved is through communication. Quarterly meetings with members of the distribution channel should be put in place. This will ensure everyone has the same objectives in distributing Nestlé products in a timely and efficient manner to the customer which will result in profit for the organisation and everyone within the distribution channel. “The creation of dialogue, communication as a two-way street, is the lifeblood of creating that vital strategic cohesion of the organisation, getting everyone on side” (Irons, 1997).

Emmanuel #EksMarketingViews

No Strings Attached – What Pinocchio Teaches Us

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When you wish upon a star…” Growing up, Pinocchio was my favourite Disney character (still is today). Like all Disney films, the fictional wooden protagonist who wanted to be a real boy told an important life story but also an important marketing one.

Whether it is do with branding , creating or curating content , meeting and exceeding your customers expectations, never lie to your customers ; they are the lifeblood of an organization. Lying does not just mean false advertising, not delivering on a promise, it can also mean plagiarizing.

If you want your marketing and business to have a real connection with your target audience and customers don’t just look at data (that is very important though), always be truthful about the product/service that you provide. Otherwise, you could end up looking like an “ass” just like Pinocchio did and ruin your brand’s reputation. Always be clear and honest with your customers  and your dreams will come true as you will gain their respect , loyalty ,satisfaction and a return of investment.

 

Emmanuel #EKsMarketingViews

Whats-appening?

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Since its emergence into the mainstream in 2008, mobile apps have helped revolutionize the tech and marketing industry. With an app nearly made for every and anything, it has resonated so much with consumers that they are now in the driving seat and help dictate to businesses what they want in an app and how it needs to meet their needs. Mobile apps are now a part of everyday life. Most of you reading this, use mobile apps for some reason or another so there is no denying its dominance.

Statistics from Smart Insights has showed that 80% of internet users own a smartphone and apps account for 89% of mobile media time, with the other 11% spent on websites. Does that really come as a surprise to you?

Curious to know consumers perceptions of mobile apps, I decided to ask a few people these two questions:

1) What app do you use the most and why?

2) What do you think are the benefits and disadvantages (if any) of apps?

Below are the responses:

Darren Somers – “I use a mixture of apps frequently. WhatsApp to communicate. Comixology to read comics I don’t otherwise have access to. Twitter to get news. Guardian to get real news. Cineworld’s app to check and book cinema times and Dictionary.com to enhance my vocabulary. The disadvantages of apps are that there are constant updates and information could fall into the wrong hands”.

Carl Bautista – “I use WhatsApp the most. The benefits? It’s an easy way to exchange text, audio, images and videos. It is widely used. Messages are somewhat encrypted. Also, it has a web based application that links to the mobile one. Well-presented interface. No limits on the length of audio messages you can leave. The disadvantages are that it can be somewhat addictive. Forwarding messages isn’t as intuitive as it can be in terms of the commands required, they toned down some of the emoji’s like the gun one”.

Peter Raymond – “So tough to answer, probably use Twitter the most. Reason being is it’s where I get most of my news. It aggregates so much information for me that I don’t need to use different apps or visit news sites directly, and search for content. Apps are beneficial if they provide genuine value vs a mobile website. Using API’s, you can bring together different information and use different services to build something that makes the user’s life easier. Twitter use’s API’s to embed news and external videos. It means I can get all this news without switching apps or loading loads of pages. I should also mention, the disadvantages of apps are that it’s difficult to acquire users if you have an app only, and no channel to drive adoption of it. If you don’t know about a product or service, why would you download an app for it? Whereas you use the YouTube, Twitter and Facebook apps to make your use of those platforms easier”.

Daisy Newman – “The eBay app. I love it – easy to use, fuss free and quick especially for buying. From a seller’s perspective, you can see all your listings, respond to messages and include images which is brilliant when you need to do something quick. The disadvantages are that I absolutely hate that the sellers address is visible on your account. Especially on your phone if you lose it and someone manages to unlock your phone and open the app. Well, your address is there in FULL. The other disadvantage would be you can’t open cases. I tend to go into safari and open eBay up that way and revert to desktop site to do that”.

Charlotte Amatt – “I use Facebook daily. Great for staying in the loop with mates and news. With most social media apps, my concern is always security; second and third parties gaining access to your account”.

Sherell Woods – “I’m a big user of WhatsApp. I love that you can make video calls as well as normal calls through the app. Disadvantages is the security. I don’t like that call and message records can be accessed by the apps issuer”.

Daniel McMahon – “The app I use the most is probably Instagram. As a freelance photographer, it is a great platform for me to showcase my work to a larger audience and network. The disadvantages are that some of the followers on the platform and other social media platforms are fake and usually they have a link to their ‘website’ which is usually a virus, so you must be cautious who to follow back”.

Ashley Stinson – “I use WhatsApp the most. It’s simply because I like it and can communicate with a large group of friends by creating a group WhatsApp. It saves me the hassle and time of messaging friends individually just to discuss the same thing. The disadvantages are that I hate getting frequent updates on my android phone to update my apps. I find it annoying at times”.

Ok, as the writer of this piece, I guess I should answer the questions too. The app (well in my case the apps) I use the most are WhatsApp to commute and share information with friends and family; most of these answers can from the mobile app. Its gives me option of creating my own community by allowing me to create my own WhatsApp groups. I use Twitter, Instagram and LinkedIn as a promotional tool to put myself out there and shown my passion. The disadvantages of apps for me are the constant updates and like Carl Bautista noted, it can become addictive and can take you way from reality. However, saying that, with technology and virtual reality become more dominant, mobile apps are part of reality.

All the answers given (mine included) to the questions I asked, one common denominator found is that people use mobile apps because they are hassle free and let you get on with your life hence why they are on a phone. As human beings, we always want something new, something better and something that can make our lives less hassle.  For example, mobile apps can give you give the platform to communicate with others whilst on the go and not be limited to being stuck in one place on a desktop.

With the constant rise in mobile apps, it will continue to evolve and create more opportunities for businesses to make their marketing more personal to consumers. Statistics from cloud computing and CRM solution company Salesforce, has shown that 71% of marketers believe mobile marketing is core to their business and people within the tech industry believe that mobile marketing is their top priority as it has shown a high return of investments.

However as big as the mobile app revolution is, not all companies should jump on the bandwagon. Why? Well as Peter Raymond pointed out “…. that it’s difficult to acquire users if you have an app only, and no channel to drive adoption of it. If you don’t know about a product or service, why would you download an app for it”?  To have a mobile app you should also take into consideration factors such as the product or service that you provide and how often would people use the application on their mobile device.  For example, if you are a pension company and have a mobile mention app, how often would customers use it? Do you need to check your pension on a regular basis? Some people also prefer checking any sort of finance in the comfort of their own homes, on a laptop as they feel it is more safe than doing it in public so it’s debatable.

One thing that is definite though is that mobile apps are not going anywhere anytime soon. Statistic from Smart Insights has proven that virtually all 18-34 year olds – 97% are mobile users. Mobile apps will continue to rise and it is an exciting time not just for consumers as they will see if companies will meet and satisfy their needs and vice versa for businesses and if they can or continue to get a return of investment.

Emmanuel #EKsMarketingViews