NESTLE

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APPLICATION OF
SALES AND
DISTRIBUTION
MANAGEMENT
In Nestle
By : Akshay Surana (2015-17)
Roll no: 15007
12th
September 2016.

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SERIAL
NO
TOPIC PAGE NO.
1 INTRODUCTION 3
2 COMPANY PROFILE 4
3 MAJOR COMPETITORS & PRODUCT
PORTFOLIO OF NESTLE
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4 MARKET SHARE 6
5 MARKETING MIX( 4 P’S) 7
6 FINANCIAL SYNOPSIS 8
7 SUPPLY CHAIN MANAGEMENT 9
8 DISTRIBUTION CHANNEL 10
9 SALES FORCE MANAGEMENT 11
10 SWOT ANALYSIS & BCG MATRIX 12-13
11 ORGANISATIONAL STRUCTURE 14
12 Annual report 15
13 BIBLIOGRAPHY 16

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INTRODUCTION
Nestlé was formed in 1905 by the merger of the Anglo-Swiss Milk Company,
established in 1866 by brothers George Page and Charles Page, and Farine Lactée
Henri Nestlé, founded in 1866 by Henri Nestlé (born Heinrich Nestle). The company
grew significantly during the First World War and again following the Second World
War, expanding its offerings beyond its early condensed milk and infant formula
products. The company has made a number of corporate acquisitions, including
Crosse & Blackwell in 1950, Findus in 1963, Libby's in 1971, Rowntree Mackintosh
in 1988, and Gerber in 2007.
Nestle is a Swiss transnational food and drink company headquartered in Vevey,
Vaud, Switzerland it was founded in 1866 by Henri Nestle. It is the largest food
company in the world measured by revenues, and ranked 72 on the Fortune Global
500 in 2014.
Nestle is based on the principle of decentralization
which means each country is responsible for running
its business- including the recruitment of its staff.
Distribution system of nestle is one of major source of
competitive edge over its existing rivals. Nestle has its
own distribution network equipped with all necessary
transportation facilities. They transport their product
at major regional sales offices, which are situated at
different cities of India. These sales offices have their
own vans with sales people who sell and transport
goods to small retailers.Nestlé’s products include
baby food, medical food, bottled water, breakfast
cereals, coffee and tea, confectionery, dairy products,
ice cream, frozen food, pet foods, and snacks. Twenty-nine of Nestlé’s brands have
annual sales of over CHF1 billion (about US$1.1 billion), including Nespresso,
Nescafé, Kit Kat, Smarties, Nesquik, Stouffer’s, Vittel, and Maggi. Nestlé has 447
factories, operates in 194 countries, and employs around 339,000 people. It is one
of the main shareholders of L’Oreal, the world’s largest cosmetics company.

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COMPANY PROFILE
Nestlé India is a subsidiary of Nestle S.A. of Switzerland. With seven factories and a
large number of co-packers, Nestlé India is a vibrant Company that provides
consumers in India with products of global standards and is committed to long-
term sustainable growth and shareholder satisfaction.
The Company insists on honesty, integrity and fairness in all aspects of its business
and expects the same in its relationships. This has earned it the trust and respect
of every strata of society that it comes in contact with and is acknowledged
amongst India's 'Most Respected Companies' and amongst the 'Top Wealth
Creators of India'.
NESTLÉ India is a subsidiary of NESTLÉ S.A. of Switzerland. With eight factories and
a large number of co-packers, Nestlé India is a vibrant Company that provides
consumers in India with products of global standards and is committed to long-
term sustainable growth and shareholder satisfaction.
The Company insists on honesty, integrity and fairness in all aspects of its business
and expects the same in its relationships. This has earned it the trust and respect
of every strata of society that it comes in contact with and is acknowledged
amongst India's 'Most Respected Companies' and amongst the 'Top Wealth
Creators of India'. The NESTLÉ Corporate Business Principles are at the basis of our
Company’s culture, developed over 140 years, which reflects the ideas of
fairness, honesty and long-term thinking.
VISION: Nestlé's vision is "to be a leading, competitive, nutrition, health and wellness
company delivering improved shareholder value by being a preferred corporate
citizen, preferred employer, and preferred supplier selling preferred products."
MISSION: "Nestlé is...the world's leading nutrition, health and wellness company. Our
mission of 'Good Food, Good Life' is to provide consumers with the best tasting,
most nutritious choices in a wide range of food and beverage categories and eating
occasions, from morning to night."

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MAJOR COMPETITORS & PRODUCT
PORTFOLIO of nestle
MAJORCOMPETITORSOFNESTLE:
MAJOR CHALLENGES FACED:
As Nestle opens its global R&D center in Manesar, it plans to also come up with
new products in various categories. India, which contributes just less than 2 per
cent of its overall business, will see an increased focus in the premium category
products by the Switzerland-based company. Nandu NandKishore, executive vice-
president Nestle S.A.,tells Dilasha Seth that in the semi-urban to rural category it is
more of a price-point challenge, whereas in the affluent category, it is more of an
innovation challenge. The U.S. Food and Drug Administration has started testing
samples of the Nestlé noodles, the company said Nestlé sells noodles in the U.S.
that are imported from India and other countries. Earlier Nestlé said the food-
safety agency in Singapore, another market for its India-made noodles, had cleared
the product.
DABUR AMUL
ITC EMAMI

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MARKET SHARE
Higher-than-expected margins in March quarter drove Nestle India shares 8 per
cent higher on Friday. Nestle's EBITDA (Earnings before interest, taxes,
depreciation and amortization) margin of 22.8 per cent was 350 basis points higher
sequentially and ahead of Street estimates. Analysts expected the company's
margin to fall on account of higher ad spends in the March quarter.
Nestle's net profit declined 19 per cent year-on-
year to Rs 259 crore, but on a sequential basis,
profit was up 27 per cent. Similarly, Nestle's
revenue declined 8.5 per cent annually to Rs 2,302
crore, but there was a 17.5 per cent improvement
over the December quarter. Nestle India shares
closed 7.61 per cent higher at Rs 6,145 apiece
compared to 1.17 per cent fall in the broader
Sensex. In November, when the company
relaunched Maggi after five-month ban, it had
10.9 percent of the market share, which climbed
to 35.2 percent in December, according to a Nestle India presentation made to
financial analysts and institutional investors. Nestle India's most-famous noodle
brand Maggi, which was in the news for wrong reasons last year and faced product
ban, has retained its numero uno position here by clocking 56 percent share of the
market in June this year. The company managed to wrestle back its once dominant
position in the noodle space at a time when competition from other private biggies,
including Baba Ramdev's Patanjali, has been intensifying over last few months.
Within nine months of its re-launch, Maggi noodles now accounts for 57.1 percent
market share of the instant noodles segment riding on its marketing /branding
initiatives and new variants. In November, when the company relaunched Maggi
after five-month ban, it had 10.9 percent of the market share, which climbed to
35.2 percent in December, according to a Nestle India presentation made to
financial analysts and institutional investors. In March 2016, it had 51 per cent
market share. Nestle has launched four variants of Maggi Cuppa Noodles and Maggi
Hotheads each, the presentation said. Besides, it has also launched 'No Onion No
Garlic" noodles.

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Marketing mix
The Marketing mix of Nestle discusses the 4P’s of one of the strong FMCG
companies of the world. The Nestle marketing mix shows Nestle has a strong
product line which boosts its marketing mix. Below are the products, price,
placement and promotions of Nestle.
a. Product: Products of nestle is categorized into 4 categories Beverages, Milk
& Milk products, Chocolates, Prepared dishes and cooking aides. The two
major brands of Nestle are a very high contributor to its Brand equity –
Nescafe and Maggi. These are two brands sold across India in small as well
as big shops and super markets. The appreciable factor in Nestle is that
quality maintenance of products is upto mark this is a major achievement for
a company which relies majorly on food products.
b. Price: The price is dependent on the market of each individual products and
strength of pricing for Nestle comes from its packaging or consumption
based pricing. Thus, with the variety available, customer can make his own
choice based on his consumption.
c. Place: Nestle follows the FMCG strategy of distribution which involves
breaking the bulk. The typical distribution strategy of Nestle is as follows.
Manufacturing >> C & F agent >> Distributors >> Retailers >> Consumer
Manufacturing >> Bulk buyers >> Consumer. These are the two different
forms of distribution which Nestle has. It is typical of any FMCG company.
However, the Nestle channel is known to be strong with a good marketing
and sales network for channel distribution. Nestle regularly introduces trade
discounts and various tactics to keep the channel motivated.
d. Promotion: One of the most widely known tunes is the Nescafe tune. It was
one of the best advertising campaigns and was launched at least 2 decades
back. However, that campaign brought Nescafe strongly in the market. The
major push expected of a FMCG company is in sales promotions at the
ground level. This is where Nestle really rocks. Nestle focuses on its strength
which is Maggi, Nescafe and Kitkat which are the most
promoted brands in the market on ground level. Promotions for other
products too is done smartly.

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FINANCIAL SYNOPSIS
Operating Profit gives an indication of the current operational profitability of the
business and allows a comparison of profitability between different companies
after removing out expenses that can obscure how the company is really
performing.
Interest cost depends on the management's choice of financing, tax can vary
widely depending on acquisitions and losses in prior years, and depreciation and
amortization policies may differ from company to company.

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SUPPLY CHAIN MANAGMENT
In the midst of significant change, our supply chain function is a great platform for
driven, collaborative supply chain professionals. You’ll help us gain a real
competitive edge with our supply chain. Whether you join us in Demand and Supply
Planning, Procurement, Physical Logistic or Customer Service, you’ll bring us closer
to customers by making sure our products are there at the right time in the time
condition.

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DISTRIBUTION CHANNEL
 Nestle products are sent to the C&F Agents of the company from its
manufacturing unit
 Later it flows from the manufacturing unit to distributor and super
stockiest
 The distributor is responsible to manage the availability of products in
his area
 Super stockiest supplies the goods to the Re-Distributor who is in
charge of managing thee availability outside the region of the
distributor.
 The distributor and Re- distributor then supplies the products to
wholesaler and retail in their respective region or area
 Nestle has its own distribution network equipped with all necessary
transportation facilities. They transport their products at major
regional sales offices, which are situated at different cities of India.
 These sales offices have their own vans with sales people who sell and
transport goods to the small retailers.

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SALES FORCE MANAGMENT
Nestle India had initiated an aggressive market growth strategy which was difficult
to implement because of the increasing turnover of the distributors' salesmen. The
challenge was likely to get aggravated in future because of increasing employment
options for the salesmen as well as increasing competition for retail shelf space.
The salesmen were in the payrolls of the channel partners, and the diversity of the
management practices of channel partners made the intervention even more
difficult. The competitive analysis of the benchmarked companies and relevant
data were collected to decide on the appropriate steps to manage the problem. It
was very critical to take a well-considered judgment on the issue as it affected the
entire revenue engine of the company.
Nestle India had initiated an aggressive market growth strategy which was difficult
to implement because of the increasing turnover of the distributors' salesmen. The
challenge was likely to get aggravated in future because of increasing employment
options for the salesmen as well as increasing competition for retail shelf space.
The salesmen were in the payrolls of the channel partners, and the diversity of the
management practices of channel partners made the intervention even more
difficult. The competitive analysis of the benchmarked companies and relevant
data were collected to decide on the appropriate steps to manage the problem. It
was very critical to take a well-considered judgment on the issue as it affected the
entire revenue engine of the company.
SWOT ANALYSIS

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STRENGTH:
1. Product diversity: As of October 2014, the company had 29 operating brands
under which 8000 products were being sold in the market. This show the very
diversity in the product line which yield a great strength for nestle.
2. Distribution channels: Nestle is successfully operating in more than 100
countries which gives a real strength to its distribution channel. Including direct
and indirect channels, it has operations in 197 countries. (Nestle Web,
retrieved: September 2015)
3. Nestle’s R&D: Nestle has a strongest research and product designing teams with
great capabilities. They introduce new products through the year, which
strengthen nestle’s competitive advantage.
WEAKNESS:
1. Less ability to provide good foods consistently: As consumers always look for
good tasting and healthy foods, a company should consistently provide healthy
foods. Nestle is often blamed for many products due to poor supplies. It is
hurting the image of Nestle which is a great weakness.
2. Incident in India: Recently in this year, India government sued Nestle for $100m
over one of their popular product Maggi noodles, for unfair trade practices. This
will bring a negative effect on sells for the long run.
OPPURTUNITIES:
1. Demand for healthier food products: Great intensity of buying and consuming
quality foods is increasing among people. Nestle frequently tries to provide
quality foods to its consumers.
2. Strong R&D: As it has strong R&D teams, it has great advantages of introducing
new product in the future.
3. Broad Sale Channel: Nestle has been broaden its selling channel in developing
countries in Africa.

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THREATS:
1. Trend toward healthy eating: As people’s concentration is increasing toward
healthy foods, Nestle will have to make sure healthy foods at any cost.
2. Changing trend: Chocolate and chocolate related products are the major
products of Nestle. But some recent research showed that peoples becoming
more health conscious toward their health which may be the main reason of
decline sales of chocolate in future.
3. Raising Prices of Raw materials: With the growth of the economy of the world,
the price of raw materials is increasing which may harm its competitive price in
future.
BCG MATRIX:

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Organization STRUCTURE
STRATEGY of nestle:

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ANNUAL REPORT
Net Sales for the year has decreased by 17.2% largely due to the impact of MAGGI
Noodles issue. Net Domestic Sales decreased by 18.3%.Net Sales worth Rs.3,034.0
million have been reversed during the year in relation to MAGGI Noodles stock
withdrawn from trade partners and market. Export Sales decreased by 1.3%
impacted by MAGGI Noodles issue and lower coffee exports partially offset by
export of milk and nutrition products. The Company supplemented the Provision
for Contingencies with further amount of Rs. 634.6 million (net) for contingencies
resulting mainly from issues, which are under litigation/dispute and other
uncertainties requiring management judgment. This was after the reversal,
utilization/settlement of contingency provision of Rs.160.0 million due to the
satisfactory settlement of certain litigations and settlement of obligations under
free replacement warranty for which provision is no longer required.
The Board of Directors has recommended a final dividend of Rs. 18.50 per equity
share (Face value Rs. 10 per equity share) for 2015, amounting to Rs. 1,783.7
million. This is in addition to the interim dividends of Rs.14.00 per equity share and
Rs. 16.00 per equity share paid on 2nd June,2015 and 23rd December, 2015
respectively.

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Bibliography
a. www.scribd.com
b. www.12manage.com
c. www.docstoc.com
d. www.citeman.com
e. www.wikipedia.org
f. www.Codeproject.com
g. www.Projectstoday.com
h. www.Freelancer.com
i. www.Slideshare.net
j. www.nestle.in