Case: Nestle – Integrating Marketing  Communication into Daily Operations

Case: Nestle – Integrating Marketing  Communication into Daily Operations

With more than 2000 brands, from global icons to local favourites, and  present in 190 countries, Nestlé is one of the world’s largest food-and beverage companies. It operates in four different strategic business units:  beverage. milk and milk products, prepared dishes and cooking aides, and  chocolates. To design a proper marketing mix for all four product groups,  Nestlé employs country -and market- specific marketing teams to design  an IMC strategy, regardless of the product group.

Figure 1. Some Nestlé brands. Source: Rankia.com

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Have a Break from TV. Have a KitKat.

KitKat serves as a good representative of Nestlé’s promotional strategies.  Its “take a break” message enjoys high-level recognition in more than 80  countries globally. The official website follows that philosophy faithfully: it  literally just asks the visitor to take a break and have a KitKat. The brand’s  promotion is concentrated mainly in TV commercials and posters, where  the powerful colours of the pack and the product reinforce the marketing  message.

Advertising plays an important role in the confectionery industry, which  Nestlé is a part of, so it is not surprising that the company heavily invests  in it. In 2016, for example, it spent £10 million on advertising for KitKat.  The brand has a history of very successful campaigns, like one in 2012,  in which customers who discovered one of the six GPS-enabled chocolate  bars were delivered a prize of £10,000 by helicopter. The campaign drew  a huge number of visitors to its website and Facebook and Twitter pages,  all eager to see how many bars were yet to be found. Building on its  success, an additional contest was organized to win £2,012, the year in  which the campaign was launched, by entering the code on the inside of  their KitKat wrapper into a custom-made Facebook application.  Customers were only allowed to enter after they had liked the KitKat page.

Another creative ad was the KitKat’s 2015 Christmas commercial,  which showed a blank screen for 30 seconds -a break from the holiday  noise of the season. More conventionally, for the 2019 winter season in  the UK and Ireland, KitKat launched on-pack promotion where customers  who found a golden ticket in their KitKat won a “holiday break” to one of  ten sunny exotic locations. The winning chocolate bar featured the name  of the destination written on it in white chocolate. Besides the ten holidays,  the company offered other prizes to be won every day, like beach towels,  luggage tags, sun visors, and KitKat-branded passport covers.

Besides advertising, Nestlé has used a wide range of IMC tools for  KitKat, including sales promotion activities. Personal selling is costly, but  large companies like Nestlé can afford it. One of its classic campaigns  was a direct vendor selling activity in the summer months of June, July,  and August in Lahore, Pakistan, during which a team of vendors clad in  branded t-shirts, caps, and jackets, sold chilled 0.5-liter bottles to  commuters on all major intersections. The brand got great mileage out of  this innovative idea of personal selling in terms of brand awareness, paid  trial, image, as well as real sales.

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KitKat has become a particular obsession in Japan, where sales and  profits are higher than in any other market. The introduction of KitKat  Green Tea (Uji Matcha) in 2004 has not only expanded the over 350 KitKat  varieties that have been available in Japan over the years but also drawn  more attention to the brand and increased sales volume. After its massive  success in Japan, in February 2019, the KitKat Matcha was introduced in  Europe.

In direct marketing, Nestlé has even used physical mail creatively. For  instance, it sent out a mailer made to look like the card left by postal  workers when they are unable to deliver a parcel, saying that the package,  the KitKat chunky, was “too chunky for your letterbox.” The recipients  could exchange their card at their local news agency for a free KitKat  Chunky.

Direct and Digital Marketing

Apart from being the most used channel, digital marketing now has the  highest audience reach. Nestlé is active in social media marketing and  connects and interacts with more than 11 million Facebook fans, 250,000  followers on Twitter, and more than 180,000 followers on Instagram. The  company makes sure that its products are positioned for the wider but also  the most appropriate audience using brilliant ideas for creative  advertising. A campaign launched in India in 2015 provided a fresh take  on its signature tag line. This campaign was about “celebrating the  breakers,” and recognized that people take many different types of  breaks. Animated videos and ad photos of people snoozing at their desk,  listening to music, and partying all night were posted with the hashtag  #mybreak on Instagram, which was the ideal platform to tell this story  visually and engage followers. The campaign was a success, with a 42- point lift in ad recall and 6-point lift in message association.

Nestlé constantly responds to rapid technological changes in the  marketing environment. In 2011, the company launched the Digital  Acceleration Team (DAT) to design a better mix of traditional and digital  IMC tools and enhance its product marketing and e-commerce. Inspired  by hackathon culture, this involves an intensive and highly entrepreneurial  eight-month training program where diverse high potential leaders from  across the globe gather at Nestlé ‘s HO in Switzerland to exchange  marketing experiences. The DAT works on specific digital marketing  topics, and the team returns with the expertise needed to lead the digital  transformation in their home units. Beyond DAT, Nestlé has also  endeavoured to become more digitally connected by having an internal

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social network where more than 200 employees can engage with one  another, and by enabling employees to blog and inspire or influence  customers as daily practice.

Developing Effective Communications

At Nestlé, the process of developing an effective IMC strategy for  promotions begins with identifying the target audience, such as current  and potential customers and those who make the buying decision or those  who influence it. For KitKat the target audience is everyone -the mass  consumer market. Next, the communication objectives, such as building  awareness and knowledge, and providing information value for the  customers, are determined. As KitKat is already a well-known product  globally, the company advertises not so much to boost sales as to remind  the customers about their favourite chocolate bar. It then decides on the  suitable media, including personal and non-personal channels, for the  marketing message: should it choose personal address or a wide  exposure? Nestlé uses all possible channels, including print media  (newspapers, magazines, direct mail) for its cost effectiveness and non intrusiveness, which is a struggle in the digital era.

KitKat uses broadcast (radio, television) and display (billboards, signs,  posters) media to reach a broader target audience. It uses print media  mostly in form of posters that celebrate an event in a funny way, focusing  on the “Take a Break” slogan. In one example, when a “no Wi-Fi zone”  was introduced in downtown Amsterdam in 2013, a street sign was  installed with the “Take a Break” slogan. Nestlé also uses events: in 2013,  Android launched its new operating system using the KitKat name.  Another aspect of effective communications is message source selection

one of KitKat’s brand ambassadors is musician Chance the Rapper, who  has appeared in various ads since 2016, to appeal to his young Millennial  following.

Feedback is vital for measuring the effectiveness of communication  tools, so Nestlé analyses big data from retailers and internal processes  such as how many people bought a product, talked to others about it, or  visited a store. Insights from these analyses are then used by Nestlé for  suggesting changes in the IMC strategy or in the product offer itself.

Budget-Setting

Nestlé sets its promotion budget based on what it wants to accomplish,  defining specific promotion objectives, determining the tasks needed to  achieve them, and estimating the costs of performing these tasks. The

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sum of these costs is the proposed promotion budget, which is then  divided among various IMC tools. For example, KitKat announced that it  would double its media spend in 2015 with the launch of a £10 million  multimedia campaign after losing sales in the sweet biscuits category the  year before. Seeking to reclaim the 11 percent of sales lost, the campaign  involved heavy promotion in-store as well as on social media. Budget

setting is also in line with pricing policy: the price is dependent on the  market of each individual product, so market leaders Nescafe and Maggi  are priced with higher margins for the company as compared to the  competition. To deliver a clear, consistent, and compelling message about  the products, Nestlé ensures close cooperation with market- and  marketing-specific local-country teams to consider culture and market  differences.

Nestlé has worked hard to make sure that its traditional marketing  approaches blend well with newer, tech-savvy ones, like printing of QR  codes on candy bars and boosting social media engagement. Sales  promotion is also done through interactive and responsive websites. For  example, in the UK, the company printed individual codes on KitKat  packaging that could either be entered on a dynamic website or texted on  a mobile phone to win a prize-proof that traditional promotion can co-exist  with digital tools. The particular blend of channels -of traditional and digital  media- is based on observation of customer behaviour. For instance,  when marketing analytics indicate that a product appeals to a younger  generation, digital is clearly the way for the company to go. However, this  doesn’t mean that Nestlé should abandon more traditional approaches; it  continues to find ways to use traditional marketing to raise brand  awareness with creative ideas that reinforce the marketing message.

Through high-quality messages that increase ad recall, such as the  “celebrate the breakers” campaign, Nestlé maximizes returns on brand building investments as it leverages social media to drive marketing and  capitalize on digital channels. By developing a highly engaging customer  base and enhancing earned media benefits, the company keeps pace with  an ever-changing communication landscape. Digital and social media  marketing strategies, social network initiatives, and digital formats are  implemented across global operations.

To continue building attractive and rewarding brand experiences for  customers, Nestlé designs its IMC strategy collaboratively with other  groups, such as sales and e-business, R&D, technical applications, and  agency partners. Through these well defined steps in IMC and budget-

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setting, Nestlé has executed multiple campaigns with great success and  is all set to continue that trend in the future.

Questions to be answered:

3. How is the budget for IMC set at Nestlé? What factors might possibly  influence it?

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