Business Synoptic 1f Essay Example | Topics and Well Written Essays - 4000 words

Business Synoptic 1f - Essay Example Other major brands include Arrowhead and Perrier, baby foods like Gerber, cereals like Cheerios, ice cream including the famed Haagen-Daaz, microwavable food like Hot Pocket and Stouffers, health lines like PowerBar and Jenny Craig products, pet food like Dog Chow and Friskies, and professional food products (Nestle, 2010). With a few exceptions like Perrier and Haagen-Daaz, Nestle tends to target the lowest common denominator of the market, and most of their products are worldwide household names. They sell a tremendous variety of products, but all of their products have something to do with nutrition or food. They do sometimes attempt to control all sectors of the market. For example, they sell both the low-end Drumstick ice cream bar and the higher end Haagen-Daaz; similarly, Stouffers and Hot Pockets sell to radically different demographics. Nestle realized that their growth rate, while constant over the 20th century and producing many beloved brands, was unsustainable in the lon g term. â€Å"Nestle realized by the early 1990s that it faced significant challenges in maintaining its growth rate. The large Western European and North American markets were mature. In several countries, population growth had stagnated and in some there had been a small decline in food consumption. The retail environment in many Western nations had become increasingly challenging, and the balance of power was shifting away from the large-scale manufacturers of branded foods and beverages and toward nationwide supermarket and discount chains†. Many companies would experiment with different branding options, opening up new markets, new marketing schemes, etc. but would try to keep the core structure of the company intact. Nestle did these things: Its brand portfolio, as we've seen above, goes from luxury to bargain, is targeted at numerous demographics and income levels, and is increasingly expanding to try to get into different markets. Yet that is not all they did, and the ir choice of a new structure helps explain their success. Nestle's strategy for entering new markets and avoiding the inundation of existing ones is simple: â€Å"In general, the company's strategy has been to enter emerging markets early-before competitors and build a substantial position by selling basic food items that appeal to the local population base, such as infant formula, condensed milk, noodles, and tofu. By narrowing its initial market focus to just a handful of strategic brands, Nestle claims it can simplify life, reduce risk, and concentrate its marketing resources and managerial effort on a limited number of key niches. The goal is to build a commanding market position in each of these niches. By pursuing such a strategy, Nestle has taken as much as 85 percent of the market for instant coffee in Mexico, 66 percent of the market for powdered milk in the Philippines, and 70 percent' of the markets for soups in Chile. As income levels rise, the company progressively mov es out from these niches, introducing more upscale items such as mineral water, chocolate, cookies and prepared foodstuffs†. This is a disruptive strategy (Malstrom, 2008a; Malstrom, 2008b). Disruptive strategies involve creating a new market: â€Å"