Market segmentation of Nestle

Hallo Necafé lovers!

This time I will inform you how Nescafé / Nestle segmented his market

Before a company segmenting the market, the company must identify the following variables for the business market: Personal characteristics of buyers, personal approach, situational factors, demographics

As we find out last week, Nescafe does not sell his product directly to consumers, first potential distributors like supermarket or big wholesalers apply a request to become a distributer of Neste. Nestle will study the company and will take it look if the company will meet the requirements of Nescafe and after permission of Nestle they can do business and be partners.
This shows us that Nestle is active in the Business market

Business market: Individuals or groups that purchase a specific kind of product to resell, use directly in product in other products or ruse in general daily operations (Dibb, 2016)

If we describe the market of Nestle is will looks like follows

-       Nestle only sells his product directly to distributers if we link potential distributors who have a huge market share in the Netherlands we can think about Albert Hejin (supermarket) and Hanos (wholesaler in the food branch)

-       Accord to the Requirements of Nestle (Nestle, 2016)

-       DMU of Nestle will argue if this company is a healthy company and will look what kind of benefit it will bring and what kind of danger it will bring for Nestle. (Nestle cares about the environment and message the consumers also about it, it is bad for the image if they will cooperate with distributer who does not care about the environment for example)

(Nestle, 2016)

As mentioned in the source and during the lectures there were 3 kind of strategies mentioned, these strategies are:

-       Undifferentiated strategy:

Using one promotion for the hole market

-       Concentrated strategy

Focus on one segment of the market and leaving the other segments for the competitors

-       Differentiated strategy

  Target more segments and can use more promotion on one segment
for example krehalon focus on quality and service of product
Other example producing underwear for men and woman

(Youtube, 2016) (Dibb, 2016) (http://www.globalspec.com, 2016)

I watched different kind of commercial of Nescafe on YouTube, it maked clear Nescafe want to identify Nescafe with the following slogan ‘It all start with Nescafe’. Every commercial of Nescafe uses a difficult time in life and after they drink Nescafe they saw an opportunity how the handle this hard period. As I found out they are using the same commercial message in different countries for example India, Pakistan and china.
That’s why I came to the following answer, Nescafe is using an undifferentiated strategy but they are using in China for example Chinese actors but the message is the same. (Youtube , 2016) (Youtube, 2016)

The main criteria what Nescafe can use to segment the market is the STP.

-       Segmentation (S)

• Divide the clients in supermarkets and big wholesalers in experiences in the market and compare them with the mission and vision (their requirement) of Nestle

-       Targeting (T)

• Nestle is focusing on huge distributors with a huge market share and long experience in the market for instance supermarkets like Jumbo, Albert Heijn and wholesalers like Hanos

-       Positioning ( see below)

Neste uses the following positioning strategy

To find out what kind of positioning strategy Nestle uses, I used the positioning explanation in the PowerPoint of chapter 8 (Targeting and positioning) that is made by Mr. Tartarin and Mr. S. van Renssen. (Mr. Tartarin, 2016)
The best strategy that fits with the Nescafe coffee is the Transformational positioning / Lifestyle positioning.
If we look at the website of Nescafe the coffee is describes as follows; It all starts with a Nescafe.

 (Youtube, 2016) (Dibb, 2016) (Mr. Tartarin, 2016) (Nescafe, 2016)

The basic conditions for effective segmentation of the market are: Responsive, Accessible, Sustainable, Measurable. If we link this with Nestle it will looks like as follows

-       Responsive (How distributers or consumers will react to the message)

o   Distributors will react because the market share of Nestle and will connect Nestle to sell their products (marketing for this is brand name and market share)

o   Consumers will react by purchasing more coffee of Nescafe, the reason can be promotions or commercials

-       Accessible (how will the message reach the consumer or distributor)

•    Distributors will be interested and will connect Nestle by themselves if they like to be the distributors. If Nestle find a prospect they can does not need to make big message to this prospect they can use his brand name and experiences in the market as USP
• Consumers; they will use television or social media although not in every country they have access to this technology so they can use some image in bus station or train station or in supermarket because the target consumers will be at this places daily

-       Sustainable (how big is the market size and demand to make profit)

• The distributors should be a huge company and with a long experience in the market, this will be also profitable for nestle this means the distributor have long experience and loyal clients who will purchase a huge amount
• Consumers: the price of the coffee is not expensive almost every consumer can purchase this coffee and it is a routine response behavior the purchase of coffee of Nescafe is reasonably stable. So, the forecast will be approximately the same as previous period

-       Measurable:

• Clients: evaluate a period without using a marketing mix and evaluate a period with using a marketing mix and see what kind of result it have

(http://www.segmentationstudyguide.com, 2016) (Nestle, 2016)

References

Dibb, S. P. (2016). Marketing concepts and strategies. United Kingdom: Cengage Learning EMEA.

http://hubpages.com/. (2016, 11 23). The Four Criteria for Successful Market Segmentation with an Example Target Market. Opgehaald van http://hubpages.com/: http://hubpages.com/business/The-Four-Criteria-for-Successful-Market-Segmentation-with-an-Example-Target-Market

http://www.globalspec.com. (2016, 11 23). undifferentiated concentrated and differentiated targeting strategies. Opgehaald van http://www.globalspec.com: http://www.globalspec.com/reference/47105/203279/undifferentiated-concentrated-and-differentiated-targeting-strategies

http://www.segmentationstudyguide.com. (2016, 11 23). criteria for effective market segmentation. Opgehaald van http://www.segmentationstudyguide.com: http://www.segmentationstudyguide.com/understanding-market-segmentation/criteria-for-effective-market-segmentation/

Mr Tartarin, S. v. (2016, 11 23). Powerpoint: Ch 7: Market segmentation. Saxion.

Mr. Tartarin, M. S. (2016, 23 11). Powerpoint: Ch 8: Targeting & Positioning. Saxion.

Nescafe. (2016, 11 23). https://www.nescafe.nl/. Opgehaald van https://www.nescafe.nl/: https://www.nescafe.nl/

Nestle. (2016, 11 23). Distributors . Opgehaald van http://www.nestle.com/: http://www.nestle.com/asset-library/documents/library/documents/suppliers/supplier-code-english.pdf

Nestle. (2016, 11 23). Nestle. Opgehaald van Nestle.com: www.nestle.com

Youtube . (2016, 11 23). #StayStarted with NESCAFÉ | RJ Rishi’s story | 2016 . Opgehaald van https://www.youtube.com/: https://www.youtube.com/watch?v=0tBqrioLag4

Youtube. (2016, 23 11). Intro to Marketing: Segmentation, Targeting, and Positioning - Flipped Classroom . Opgehaald van youtube.com: https://www.youtube.com/watch?v=pVsHd1XaIiM

Youtube. (2016, 11 23). NESCAFÉ Cartoonist ‪TVC . Opgehaald van https://www.youtube.com/: https://www.youtube.com/watch?v=OC1hQUxfmoA