B C G M A T R I X

Nestle India and BCG Matrix

With headquarters at Vevey, Switzerland and established in 1866, Nestle has growth today to be the worlds biggest food and beverages company. Established in the strong foundation of growth through innovation and renovation, the company is known today by its several strong brands which are dominating the markets the world over. Nestle India is a subsidiary of Nestle S.A. of Switzerland. With six factories and a large number of co-packers. Nestle India is a vibrant company offering a number of products in the Indian market. In the first nine months of 2010, it achieved strong growth of around 21% A number of brands are offered by the company in the country of which while some have already established a strong hold, many others exhibit enormous prospects to dominate the market and are only waiting for a favourable opportunity or appropriate and sizeable promotional campaign by the company.

Nestle India limited

Riding on the growth of its power brands, Nestle has extended its dominance in food business in India as well. However, a number of its brands require a repositioning.

The present exercise is an attempt to analyse the position of the different brand offered by Nestle India.
BCG matrix of Nestle and all the different brands offered by Nestle in India have been analysed along with a critical insight and also specific suggestion have been made therein.

NESTLE BRANDS
MILK PRODUCTS AND NUTRITION PREPARED DISHES AND COOKING AIDS

1. 2. 3. 4. 5. 6. 7.

Nestle Everyday Dairy Whitener Nestle Everyday Ghee Nestle Milk Nestle Slim Milk Nestle Milkmaid Nestle Dahi Nestle Neslac
BEVERAGES

1. 2. 3. 4. 5. 6. 7.

Maggi 2 minute Noodles Maggi Atta Noddles Maggi Cupa Mania Maggi Soups Maggi Suces Maggi Bhuna Masala Maggi Pazzta
CHOCOLATES AND CONFECTIONARY

1. 2. 3. 4. 5. 6. 7.

Nescafe Classic Nescafe Sunrise Premium Nescafe Sunrise Classic Nescafe Cappuccino Nescafe Ice Tea Nescafe Hot Tea Mixes Nestle Pure Life

1. 2. 3. 4. 5. 6.

Nestle Kitkat Nestle Milkybar Nestle Bar-One Nestle Munch Nestle Eclairs Nestle Polo

The objectives
(i) To place the various brands of Nestle in India in the matrix as suggested by the Boston Consultancy Group, as based upon the Secondary data collected.

(ii) To analyse the brands so placed and critically compare their placement. (iii) To compare the outcomes so obtained and generate suggestions.

BCG Matrix
The beauty of BCG Matrix, a Matrix developed by a group known as Boston Consulting Group, USA, is that it seeks to place the different products of an organization in different grids such as to analyze them in a comparative manner in terms of profitability or in terms of (a) percentage growth in sales and (b) market share position, to be exact. Thus

it gives an opportunity of self assessment to the organization to reassess its product positioning and come out with alternative solution if the original placement of the products in the market does not meet the desired level of growth. these classes have a different meaning attached to them and can be represented on the matrix .

BCG Matrix explained

Thus, when all the products of the company are put in four cells (thus it actually provides an opportunity to reassess the entire position of the company in terms of all the products it offers to the market), the market standing of the company can be analysed in four different classes namely, stars, cash cows, dogs and question marks.3 Each of these classes have a different meaning attached to them and can be represented on the matrix .

BCG MATRIX
STARS
BUSINESS GROWTH RATE
HIGH

QUESTION MARKS
1. 2. 3. 4. 5. 6. 7. Milo Nestle Kitkat/Barone/ Munch Maggi Sauces Maggi Soups Nestle Butter Nesvita Milk

Nescafe Maggi Noodles

LOW

1. Nestle Maggi Pickles 2. Nestle Butter

CASH COWS Ceralac

DOGS
1. Nestea 2. Milky Bar 3. Nestle Crunch
LOW MARKET SHARE

HIGH

Product: Nescafe Position: Star

S- 60% M-+6% CAGR

Reasons for present positioning: (1) Nescafe is one of the leading coffee brands in the Indian market. (2) It has find a dominance which is unparalleled by any other brand in the country. (3) Not only does it have a high market share but it growth rate is also significantly high. (4) The name Nescafe has become generic with coffee.

Product: Maggi Noodles Position: Star S- 80% M-+20% CAGR

Reasons for present positioning: (1) It is surprising to note that Maggi Noodles, which has found more households of consumption in India than any other country in the world and has become the first preference of Indian children in terms of instant food, but with other competition prospects are changing (2) The reason essentially lies in the fact that though Maggi Noodles has a significantly high market share in the Noodles market in India, the market growth rate of Noodle consumption is growing very high. (3) Though the number of repeat purchasers is high in case of Maggi, the rate of increase among the new purchasers is also growing.

Product: Ceralac Position: COW S- 85%

Reasons for present positioning: (1) Ceralac has become one of the leading baby food products (2) It has witnesses quite a long hold in its market share with its sales increasing on a continuous basis for almost more than one and a half decade. (3) Its different variants have kept competitors at bay and its finds a place easily at almost every general or provisional store in the Indian market.

Position: Question Mark Intended Placement: Star

(The reason why these are is not placed as a dog is that it has the potential to expand and also because the product lies in a market with high business growth rate. The retailers dont give much importance to these items as an item on the shelf but they also do not completely disregard it off their stores. WHY? These might have not seriously taken promotional drive. The main chunk of advertisements is seasonal Extensive promotional exercise meant to place it in the mindset of the Indian psyche. It has huge avenues for growth especially analyzing the extending Indian market.

Position: Question Mark Intended Placement: DISINVEST

Reasons for present positioning: (1) Maggi Pickles and, on account of its limited variety (especially in this taste crazy country) and comparatively higher prices, has been unable to acquire a market necessary for its bare minimum existence.

(2) The sales of Maggi Pickles has never really trigged since its launch. (3) The placement of Maggi Pickles is doubted for the twin reasons of its high price and packing, which seems to target it to the upper substrata while the lack of a significant number of variants poses it a challenge to maintain itself in such households.

(4) It is not a dog because it is not the market which has low growth rate. In fact the market of packaged pickle is growing but it is Maggi Pickles which is unable to gather a substantial share in this growing market.

 (1) Placing Maggi Pickles on the hearts and mind of the typical taste centric and money conscious Indian consumer will require an overhauling and huge investment. (2) Extensive price cuts are required but the matching returns are doubtful. (3) Pickles being a non-durable product and their success essentially related to the taste of the consumer, are not one of the core competencies of Nestle, which is better known to introduce standard taste in the country and get them approved by the consumers. (4) Thus it is better advised to disinvest in the business and focus on other brands.

 Reasons for present positioning: (1) Nestle Butter, though available in the market for some time now, has not found much support from the consumers primarily on account of the dislike of the taste of Nestle Butter. (2) Considered as salt less, Nestle butter again is yet to grow from its pre-launch position on account of the huge competition it faces from Amul, the market leader in this field. (3) Now, as the market growth rate is quite significant, yet as Nestle Butter has not acquired a better share in the market, it has been placed in the category of Question Mark.

 1) Facts do not favor Nestle to continue with its butter.

(2) Instead of no response, a significant number of retailers are of the opinion that Nestle Butter seems to be rejected by the consumers for the reason that its taste does not suit the Indian psyche.

(3) Thus it is advisable for Nestle to discontinue with butter, as it did with its water brand, Pure Life. Also, it would be better to concentrate on other brand than to go in for a head on collision with Amul, the market leader, which is inevitable on account of the same market which both the products cater to.

Product: Milky Bar Position: Dogs Reasons for present positioning: (1) It become quite popular in and around the year 2000 but it never reached the stage of a power brand.

(2) Primary tried by the Indian consumer as a craze which laid in trying the first no brown chocolate, Nestle Milky bar was a sweet chocolate with cream color. Thus the primary acceptance of Milky bar was not based on its core qualities but on the basis of certain peculiarities which it contained, differentiating it from other products in the same line.

(3) Milky Bar, as a chocolate, though has a growing market, yet it has been placed as a dog on account of the inherent lack of core quality which makes it generic with chocolates. This was the main reason why it was never considered a competitor by other chocolate manufactures and the consumers also treated it so.

Intended Placement: Disinvest

Comments: (1) Milky Bar has lost the primary battle which it had with mindset of the unaware Indian consumers who could never contemplate a non-brown chocolate. (2) The market positioning of Nestle Milky Bar has been only to children (as one can contemplate from the advertisements which relate only to children in the age group of 10 -15) and thus it has lost the adolescent consumer, which is also a major part of the entire consuming segment of chocolates. (3) The promotion style of Milky Bar has disappeared. The advertisements have been too soft and not too impressive. Thus success of Milky Bar requires rebuilding the image of Milky Bar.