Nestle Sales Management


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Fall 2006
Koç University Marketing 401 Sales Management
Final Project

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  • Good morning everyone. As we have guessed there are misssing class-mates right now. As a reward, students beeing in class on time, can have their chocolates from Nestlé. Burada sadece sınıftakilere ve hocaya birer tane Nestlé ürünü dağıtılacak Others will have the chance of getting their chocolte during or safter the presentation. As you are already aware, we are going to talk abut Nestlé’s sales management.
  • You can see the flow of our presentation on the screen. We will start by introducing you some fundemantal knowledge about Nestlé world and their activities and positions in Turkey. Organizaiton chart of Nestlé Turkey will be the following issue that we will focus on. Since nothing is all about the firm, you should consider the human factor too, it is time to talk about sales people. Then, their helpers will come: SAles Automation and ORder proccesing issues will be held.. After your possible quesitons and comments, our time wil be over.
  • You all have your Nestlé product. But one is never enough especially when we are talking about chocolate! Also we may have some new comers! Do the best guess and have your second Nestlé! When was Nestlé founded? En yakın cevabı verene bir çikolta daha ver!
  • In the 1860s Henri Nestlé, a pharmacist, developed a food for babies who were unable to breastfeed In 1905 Nestlé merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestlé's production had more than doubled. The first half of the 1990s proved to be favorable for Nestlé: trade barriers crumbled and world markets developed into more or less integrated trading areas.
  • Being one of the oldest FDI in our country, Nestlé met the Turkey market 8 years after its foundation, in 1875. Nestlé sold 1750 unit in its first year in Turkey with “Nestlé milked flour. Turkey was the 15th largest exporting market of Nestlé among the world when their seling volume reached 10.000 unit. Between 1995-2000 Nestlé get in the milk market by buying Mis Süt gradually. In 1996 by offering Nestlé kid Milk to consumers, created a new category. In 1998, they made children happy by entering the Breakfast cereal market and bringing Nesquik in Turkey. With a fast growth become the market leader in that category. In 2001 entered the water market with NESTLÉ® PURE LIFE .
  • Nestlé is competing mainly in four markets. Water, Yogurt, Milk, and ready-to –drink coffe. Except ready-to-drink market, in all other markets they compete with local competiotrs as well as global ones. Whereas in ready-to-drink market main competitors are all global. It looks like kurukahveci Mehmet Efendi doesn’t want to play in this ground. Even if many households enjoy with traditional Turkish coffee.
  • Since we all have a basic knowledge about Nestlé and its environment, we can zoom in to the firms organization. There are four Board Members directly reporting to CEO. Two of them are Sales and Marketing Directors. And it is them that we will focus on.
  • Let’s start with the Sales since it is what we studied in this course during the whole semester. They manage the sales under two different categories: Traditional and Modern Trade! Here! I want to take your attentions to the “Groceries” cell which is under both Modern and Traditional Trade categories.
  • But before talking too much, you also saw an important distribution of revenue genration among channles. Why do you think Nestlé tried hard to diverse its revenue almost equally among different channels? Cevapları dinle, en iyi cevabı verene çikoltayı ver. Ondan sonra devam et It is very improtant to divide the risk, not to concentrate on just one channel. Nestlé succeded it well. Their revenue is well balanced among three channels. Each contribute to the revenue equally.
  • Traditional Trade is directed vis two channels. Groceries is a common channel directed and used by both Traditional and Modern Trade categories. We will talk about it very soon. As all FMCG, Nestlé is also working hard for optimization rather than maximization. There are four regional Management units. They are in 25.000 sales point. Distributors are only used for Financial resource and warehousing. Distributors Sales Chiefs are employed by Nestlé all Human Resources issues are taking care of by Nestlé
  • Enough of chocolates, Wanna coffe?! Who do you think was the father of Nescafé all in 1 ? Bir paket nescafé bir aradayı en iyi cevabı verene ver!
  • When it comes to modern trade Channel, we saw the groceries again. The reason of it will be stated in few minutes! In those few minutes we are going to talk about Key accounts. They are managed by 7 Key account managers. Carrefour + Gima Migros + Tansaş Bim Dia Tesco (Kipa) Kiler MEtro + +real However, Key account managers are prefering to manage their customers according to 4 channels a. Discount channel: A ccepts only the market leader or cheapest product. Example: Has N escaf é but not J acops . N ot sell every product , produce ther own b. Cash & Carry: They do not target the end user, but the retailer. There are complementary product for restaurant owners, groceries, cafés. Before it was only working via cash but things are changing and now they accept credit card. c. Supermarkets d. Hypermarkets
  • Now we can talk about why groceries are in the intersection zone of modern and traditional Trades. It is because, they are maanged by, Key account Managers (who were under Modern Trade category) but the distribution of them is held by distributors (who were under traditional trade)
  • As you can see, Sales and Marketing department are coworkers. Not subordinates of each other. They are like parts of a machine that should work togeher in an harmonized way. For this reason before Both Sales and Marketing were managed by a Vice President But they decided they should be managed separetly So, Sales Director and Marketing director are separated and are both members of the B oard O f D irectors Coordination between Sales and Marketing Departments is taken car of by Category Channel Sales Development (CCSD)
  • Beside, providing coordination to Sales and Marketing departments, Category Channel Sales Development, has other duties. 1.They have to provide information about new product 2.Do SWOT analyses for all channels 3. DEvelop next year’s plan by interacting with both departments They take care of promotion materials that target to customers meaning accounts as a service to sales department They take care of promotion amterials taht targer to end-users (consumers) as a favor to marketing department.
  • That is how the mechanism works. But the most important unit of the mechanism is human. Let’s take a look how does this part is initiated to the mechanism. Sales people are hired after taking tests about character analysis, analitical understanding. They hire during all the day but, new graduates are mostly participate to the Nestlé family in April. Training issue is very important for sales people because there are trained buyers at the other side of the table, so sellers also have to be well trained. All new employees have to get management trainee degree. There are many other opportunities of training. You can apply to any training program held in the organizaiton. It doesn’t matter if you work in this area or not. You can have the training just because you are cuious about. In trainings they share the best oractice examples among the organization. They also are trained about a tool of sales force automation system: “SAP” a hand terminal used by sales people.
  • Before stating Sales motivation tools used by Nestlé can anybody refresh our memory about Expactancy Theory System, since we had talked about it, in the lecture a lot. Cevabı ilk söyleyen bir ya da birkaç kişiye çikolata ver!
  • Since, we remembered why do we have to motivate sales people now we can talk about how? To prepare the motivation tools of sales people is also one of the duties of Category Channel Sales Development. Nestlé is trying to motivate its sales people with some different systems. The winner seller every season is announced to the hole firm via e-mail. It is a good way to get promoted because the mail is received by direct supervisors beside CEO etc. Bonuses are given a according to Operational Planning . First a monthly target is set and when they reach and passes the traget they can receive bonuses. But in order to be eligible for a bonus, monthly sales target is not enough, as we had talked in the lectures, some unselling activiteis should also be completed. They are named “Key Perforfmance Indicators”
  • To automate Sales Force they are using a machine named SAP (sales automation protocole) It consists of a palm. This palm tells sales people, who to visit, when to visit, how to visit, how long to stay there. Receives immediate order, always connected to the network. It facilitates the order processing
  • Order processing issue can be examined under two points. First one is the distributor, We have already stated that they were used as warehouses in order to keep the stocks. They also provide the opportunity of security stocks. The second point is the Key accounts; They are a little bit more complicated than distributors. CArrefour order everyday because they have no place to keep stocks. Carrefour and Metro have a system that Nestlé can log on and receive the order digitally in time. The System is called EDI. And the recevier of this order is supply chain department. Gima orders twice a week. Order is generated via e-mail. And if the order is accepted than the delivery occurs the day after. Migros is the most important B2B customer of NEstlé. O rder is controlled by assistants and headquarter and than received by S upply Chain depertment. Lead time is the time between the receiving of order and delivering it. It is a very imprtant issue taht should be interested in seriously because late delivery can cause Nestlé availibility problems as well as breaking up the relations with customers.
  • Each distributors have an id number So if the product is sold anywhere else than they can find out from which distributor the products are given. We had said that it is not good to concentrate on one channel. Diverse the risk.
  • Nestle Sales Management

    1. 1. Tutku Rüya Özmen Gözde Uğur Aslı Mustafa Mustafa Işık MKTG 450 SALES MANAGEMENT
    2. 2. Outline <ul><li>Nestlé Background </li></ul><ul><ul><li>Nestlé Global </li></ul></ul><ul><ul><li>Nestlé Turkey </li></ul></ul><ul><ul><ul><li>Market </li></ul></ul></ul><ul><li>Organization Chart </li></ul><ul><ul><li>Nestlé Turkey </li></ul></ul><ul><ul><li>Sales </li></ul></ul><ul><ul><li>Sales and Marketing </li></ul></ul><ul><ul><ul><li>CCSD </li></ul></ul></ul><ul><li>Sales People </li></ul><ul><li>Sales Automation </li></ul><ul><li>Order Processing </li></ul>
    3. 3. Wanna more? <ul><li>Can you guess when was Nestlé is founded? </li></ul>1200’s 1300’s 2000’s 1900’s 1800’s 1700’s 1600’s 1500’s <ul><ul><li>1860 </li></ul></ul>
    4. 4. Nestlé around the world <ul><li>1860s Henri Nestlé, a pharmacist, food for babies </li></ul><ul><li>1905 ; mergers and acquisition </li></ul><ul><li>1900s, Nestlé is now a Global Company </li></ul><ul><li>World War I: By the end of the war, Nestlé's production had more than doubled. </li></ul><ul><li>Globalization </li></ul>
    5. 5. Nestlé Turkey <ul><li>Oldest FDI in Turkey </li></ul><ul><li>First year in Ottoman market 1750 unit sold </li></ul><ul><li>Growth </li></ul><ul><ul><li>Turkey = Nestlé’s 15th market </li></ul></ul><ul><ul><li>Mis Süt = Nestlé in dairy products market </li></ul></ul><ul><ul><li>Nesquik, breakfast cereals </li></ul></ul><ul><ul><li>Nestlé Pure Life = Water category </li></ul></ul>
    6. 6. Markets <ul><li>4 markets </li></ul><ul><ul><li>Water </li></ul></ul><ul><ul><ul><li>Leader: Erikli (%60 owned by Nestlé) </li></ul></ul></ul><ul><ul><ul><li>Players: Nestlé, Saka, Hayat (Danone) , Pınar </li></ul></ul></ul><ul><ul><li>Yogurt </li></ul></ul><ul><ul><ul><li>Leader: Danone </li></ul></ul></ul><ul><ul><ul><li>Players:Sütaş, Nestlé, Pınar </li></ul></ul></ul><ul><ul><li>Milk </li></ul></ul><ul><ul><ul><li>Leader: Ülker </li></ul></ul></ul><ul><ul><ul><li>Players: Pınar, Mis (Nestlé), Danone </li></ul></ul></ul><ul><ul><li>Ready-to-drink coffee </li></ul></ul><ul><ul><ul><li>Leader: Nestlé </li></ul></ul></ul><ul><ul><ul><li>Players: Jacobs, Maxwell </li></ul></ul></ul>
    8. 8. Sales 1/3 of 1/3 of 1/3 of Sales Traditional Trade Modern Trade Distributors Groceries Carrefour + Gima Migros + Tansaş Bim Dia Tesco (Kipa) Kiler Metro + Real Ankara İzmir Trakya KAdıköy
    9. 9. One more chance! <ul><li>Why Nestlé tried hard to diverse its revenue almost equally among different channels? </li></ul>1/3 of 1/3 of 1/3 of Risk Diversion
    10. 10. Traditional Trade <ul><li>4 Regional Management Units </li></ul><ul><ul><li>İzmir </li></ul></ul><ul><ul><li>Ankara </li></ul></ul><ul><ul><li>Trakya </li></ul></ul><ul><ul><li>Kadıköy </li></ul></ul><ul><li>25.000 sales point </li></ul><ul><li>Used for </li></ul><ul><ul><li>Financial resource </li></ul></ul><ul><ul><li>Warehousing </li></ul></ul><ul><li>D isributor sales chief s </li></ul><ul><ul><li>Nestlé employee </li></ul></ul>Traditional Trade Distributors Groceries Ankara İzmir Trakya Kadıköy
    11. 11. Coffee? <ul><li>Who do you think was the idea to develop Nescafé 3 in 1? </li></ul><ul><ul><li>A sales chief </li></ul></ul>
    12. 12. Modern Trade Modern Trade Groceries Key Accounts Discount Hyper market Super market Cash & Carry Dia Bim Carrefour Gima Real Metro Migros Kiler Tansaş Migros (5M)
    13. 13. Traditional Trade & Modern Trade Traditional Trade Modern Trade Groceries
    14. 14. Sales & Marketing BEFORE! AFTER! Commercial Director of Sales & Marketing Sales Marketing
    15. 15. Category Channel Sales Development <ul><ul><li>Duties: </li></ul></ul><ul><ul><li>Information about new product </li></ul></ul><ul><ul><li>SWOT analyses </li></ul></ul><ul><ul><li>Make next year’s plan </li></ul></ul><ul><li>Sales: all about customer (best shelf order, posters, umbrellas at the groceries) </li></ul><ul><li>Marketing: all about consumers (promotions etc) </li></ul>
    16. 16. Sales People <ul><li>Hiring </li></ul><ul><ul><li>Tests, </li></ul></ul><ul><ul><li>Every time of the year </li></ul></ul><ul><li>Training </li></ul><ul><ul><li>Trained buyers, requires trained sellers </li></ul></ul><ul><ul><li>Management Trainee </li></ul></ul><ul><ul><li>Many opportunities </li></ul></ul><ul><ul><li>“ Best practices” </li></ul></ul><ul><ul><li>SAP education </li></ul></ul>
    17. 17. Quiz! <ul><ul><li>With a reward! </li></ul></ul><ul><ul><li>Sales peole should be motivated. </li></ul></ul><ul><ul><li>Why? </li></ul></ul>Effort Performance Reward Expactancy Instrumentality Valence
    18. 18. Sales People Motivation <ul><ul><li>CCSD’s in charge </li></ul></ul><ul><ul><li>Give a target and reinforce the success </li></ul></ul><ul><ul><ul><li>The winner! </li></ul></ul></ul><ul><ul><ul><li>Bonuses monthly targets </li></ul></ul></ul><ul><ul><ul><li>Key Performance Indicators </li></ul></ul></ul><ul><ul><ul><li>The award is given in each quadrant </li></ul></ul></ul>
    19. 19. Sales Force Automation <ul><ul><li>SAP </li></ul></ul><ul><ul><ul><li>Palm </li></ul></ul></ul><ul><ul><ul><li>Who, when, how? </li></ul></ul></ul><ul><ul><ul><li>Takes order </li></ul></ul></ul><ul><ul><ul><li>Connected to HQ </li></ul></ul></ul>
    20. 20. Order Processing <ul><li>Distributors have warehouses , stocks a r e kept, </li></ul><ul><li>Key Accounts : There are some differences . </li></ul><ul><ul><ul><li>Everyday for Carrefour , </li></ul></ul></ul><ul><ul><ul><li>For Carrefour and Metro </li></ul></ul></ul><ul><ul><ul><ul><li>EDI System </li></ul></ul></ul></ul><ul><ul><ul><ul><li>received by Supply Chain </li></ul></ul></ul></ul><ul><ul><ul><li>Twice a week for Gima </li></ul></ul></ul><ul><ul><ul><li>For Gima : </li></ul></ul></ul><ul><ul><ul><ul><li>E -mail </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Delivery: next day </li></ul></ul></ul></ul><ul><ul><ul><li>M igros </li></ul></ul></ul><ul><ul><ul><ul><li>B2B is important </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Strictly controlled </li></ul></ul></ul></ul><ul><ul><ul><li>LEAD TIME </li></ul></ul></ul>
    21. 21. Key Points <ul><li>TO PREVENT SPOT: </li></ul><ul><ul><li>D istributors ID </li></ul></ul><ul><ul><li>Follow up SPOT </li></ul></ul><ul><li>Don’t concentrate on 1 channel. Diverse the risk. </li></ul><ul><li>Nestlé succeded it very well! </li></ul>. . . . . .
    22. 22. Questions Comments
    23. 23. Thanks.. <ul><li>Tutku Rüya Özmen </li></ul><ul><li>Gözde Uğur </li></ul><ul><li>Aslı Mustafa </li></ul><ul><li>Mustafa Işık </li></ul>