The Consumer Decision Making Process in Relation with Nestlé

BRIEFING PAPER

INTRODUCTION

Nestlé is a food and beverages company that have been in Malaysia for more
than 100 years ago. Nestlé began in Malaysia in 1912 as the Anglo-Swiss Condensed
Milk Company in Penang and later, growth and expansion made a move to Kuala
Lumpur necessary in 1939. Since 1962, with its first factory in Petaling Jaya, Nestlé
Malaysia now manufactures its products in 8 factories and operates from its head
office in Mutiara Damansara.

Consumer behaviour is the study of consumers and the processes they use to
choose and consume or dispose of products and services. Understanding consumer
behaviour is crucial for any organisation before releasing or launching any kind of
product. Consumer behaviour helps organisation to make the consumers aware of the
products that is being launched.

As a marketing executive for Nestle, briefing paper was asked to be prepared.

In this briefing paper, we will include four points that will be elaborated with facts and
figures.

 Consumer Decision Making concepts and models of Nestle

 Path to Purchase of Nestle
 Conclusion

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Consumer Decision Making Behaviour

According to Euan Johnston (2016), consumer decision making process is a

process which each consumer took before buying a product. There are five consumer
decision making process. Which is Need Recognition, Information Search, Evaluation
of Alternatives, Purchase Decision and Post-purchase Behaviour.

There are various factors that have influenced the decision making towards
consumers. Thus, models from various experts have been used to help in
understanding the consumers’ behaviour in decision making and one of them is the
Input, Process and Output Model.

INPUT, PROCESS AND OUTPUT MODEL

Figure 1: Input, process and output model

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INPUT

FIRM’S MARKETING EFFORTS

PRODUCTS

Firstly, there are the firm’s marketing efforts on products, promotion, price and
channel of distribution (Shazeed, 2015). For products, firstly it should be creating a
sense of need towards the consumers. Thus, firms that produce a product needs to
ensure the relevancy of a product to the market and have a strong image of the brand
for consumers to be able to see in the market.

For example, Nestlé. Nestlé brand have become one of the world’s top ten most
reputable company (Nestlé, 2013). This proves that Nestlé have a strong brand image
that allows consumers to know the brand name Nestlé. Also, the products that Nestlé
sell in the market have created a sense of need towards consumers. As an example,
Hikmal Hakim (2015) have stated that, in Malaysia, Nestlé’s Milo have become
Malaysians’ favourite drink since the 1950s. Malaysian creatively use the Milo powder
to innovate the Milo drink itself, making the usage of Milo in Malaysia high. Thus,
Nestlé have created a new Milo-based ice cream, giving Malaysian a new taste for
Milo.

PROMOTION

Next, the promotion. For promotion, it is all about the awareness of the
products (Hakim, 2015). Promotion is needed for both new and old products. This is
because, promotion is one of the factors that can make consumers and future
consumers to remember the product or the brand. Promotion is done also to make
consumers know and aware of the products.

For example, Nestlé have done several successful promotions like Nestlé KitKat
and Nestlé Maggi. Both of these product have already created a name of itself. Nestlé
put its out after assuring that their product is at its highest quality. One of the latest
Nestlé promotion campaign is Maggi. According to Hitesh Bhasin (2018), Maggi have
pushed its promotional campaign through the consumers’ experience with Maggi. This

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promotional campaign allows consumers to feel emotionally attached towards the
product.

PRICE

After that, the price. According to Purely Branded (2018), price will impact the
firms in terms of margins, supply, demand and marketing strategy. Pricing can
influence the position and strategy of the different product or brand. This is because,
price will affect the sales of a product.

For Nestlé, the pricing differs for every products. This is because, Nestlé
believes that some of their products are the leaders in the market while the others still
needs to compete with competitors (Bhasin, 2018). As an example, Nestlé’s Nescafe
and Maggi. Both Nescafe and Maggi are considered as leaders to be compared with
other competition. Thus, Nestlé putting the prices for both of them higher but even
so, consumers would not switch to other brands due to the good quality of those
products.

CHANNELS OF DISTRIBUTION

After that, the channels of distribution. According to Martin (2014), the

distribution of a product is the key element of placement. Placement or distribution of
product is important and must follow where the targeted customer buys or shop the
product. Food and Beverages product may be distributed to the retail shop while if the
product is more towards electronics, products may be distributed to electronic shops.

As an example, Nestlé as a food manufacturer, may distribute the products to

retail stores worldwide. Take Maggi, Nescafe and Purina for an example. Both Maggi
and Nescafe can be seen in any retail store in Malaysia such as Tesco, Giant or AEON.
While Purina which is food for cats and dogs can also be seen around retail stores in
Malaysia and also selected pet stores. It is easier to buy Purina while shopping for
other things in retail store and also focusing at pet store for ease of consumers

Lastly, market segmentation. According to Hitesh Bhasin (2018), there are four
types of market segmentation. Which is demographic segmentation which focuses on
segmenting population according to age, gender, income or nationality. Next,

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behavioural segmentation which focus on the basics of choices that consumers make.
After that, psychographic segmentation which focuses on the lifestyle of the
consumers and lastly, geographic segmentation which divides consumers based on
geographic.

As an example, Nestlé has a lot of products that differs in terms of

segmentations. Nestlé targets the Nescafe coffee for the coffee drinkers especially
people that loves instant coffee (Erdem, 2018). This is because, Nescafe is made for
working individuals or students due to their lack of time to waste.

SOCIOCULTURAL ENVIRONMENT

Next is the socio-cultural environment. In the external source, there are sources
that firms or marketers could not have total control on (Shazeed, 2015). This is
because, there are sources from communication and reference group, family, social
class, culture and subculture, opinion leadership and diffusion of innovation and public
policy and consumer’s protection.

COMMUNICATION AND REFERENCCE GROUP

Firstly, the communication and reference group. Reference group can influence
consumer behaviour in two ways, which is setting up level of aspiration and defining
the actual product or service (Sirgy, Rahtz, & Portolese, 2018). For an example,
Nescafe by Nestlé, there are a lot of coffee with different standards. Thus, if a
consumer is in a specific group that lifestyle is considering Nescafe as a high standard,
the consumer may only buy Nescafe.

FAMILY

Then, family. According to Abhijeet Pratap (2017), family is an important role

for every consumer buying decision making. This is because, children will be
influenced by the parents and the family culture. Take Milo by Nestlé as an example,
if the family has always been drinking and buying Milo, the children may adapt and
continue buying Milo.

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SOCIAL CLASS

Social class in consumer behaviour is considered as divisions of members of the

society into different status classes like income, authority, education or wealth (Kasi,
2018). This means that some products or services is given and specifically for a specific
class. Take KitKat chocolates as an example. The KitKat chocolates have strong
competitors like Cadbury or Ferrero Cher. Thus, different social class prefers different
chocolates.

CULTURE AND SUBCULTURE

Next is the culture and subculture influenced on decision making of consumers.

According to Jeetesh Kumar (2010), culture is total of learned beliefs, values, customs
that influence the peoples’ behaviour. While subculture is much more specific cultural
group like religion, age and gender. For example, in Malaysia, the breakfast culture is
made heavy, to give energy in the morning. Thus, Milo have been one of Malaysian
favourite drink for breakfast as it gives energy and easy to be made at home or even
buy at any convenient stores.

PROCESS

Psychological Factors

Motivation and Need

Needs motivates consumers buying behaviour. As an example, the basic needs

in the Maslow’s Hierarchical Pyramid of Needs is psychological needs which focuses
on food, water, warmth and rest or safety needs which focuses security. This shows
that the more basic the need is, the greater for consumers to be triggered by the
buying behaviour (Mott, 2018). For Nestlé, as a company that sells food and
beverages, Nestlé also focuses on healthier product which completes two needs shown
on the Maslow’s Hierarchical Pyramid of Needs, which is psychological needs and
safety needs.

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Perception

According to Business Jargons (2018), perception is an important influence on

both brand and product. The perception is the information that was gathered by
consumers but different consumers may have different perceptions on the same
brands based on the consumers’ lifestyle or beliefs. For example, Nestlé has been
putting out various kind of advertisements for their products. Thus, perception of
consumers towards the brand is more towards the positive side. Milo Malaysia
Breakfast Day was held by Nestlé to increase the consumers’ trust on the product (The
Sun Daily, 2017).

Learning

According to Business Jargons (2018), learning is depending on the skills,

knowledge and intentions of the consumers. Skills of consumers is basically gained by
the consumers through practicing of using the product or service. While the knowledge
and intentions of the consumers are experience on using the product or service. For
example, consumers who have been using Nestlé’s product before may know the pros
and cons of the product while the consumers that use the product for many times may
know the better of that product.

Consumer Decision Making

NEED RECOGNITION

Need recognition is the first stage. In need recognition, there are two states
which is the Actual State and the Desired State. Actual state is the state where
consumers is having a problem with the current state with the product or service,
while the desired state is what the consumers want their current state to be in with
the product that triggers the decision process ((Sirgy, Rahtz, & Portolese, 2018).

For example, Nestlé have focused more on creating healthier and nutritious
product and making sure the consumers is well informed with the nutrition in their
products. Some programs like “Our Start Healthy Stay Healthy” that was held by Nestlé
to ensure consumers know what they eat and what is given to the consumers’ families

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(Nestlé, 2018). Since Nestlé focus on healthy food, consumers may lean towards
buying Nestlé product as Nestlé triggers the need for consumers to buy healthier food.

PRE-PURCHASE SEARCH

According to Joshua (2016), after the need is identified by the consumer, the
consumer will seek help or search for the solution of the problems. In searching for
help on the problem, there are two ways which is internal information and external
information. Internal information which is experiential sources which is through
experience of the consumers using or buying the product. While external information
like personal sources which is information that the consumers get through friends or
family, commercial sources which is from advertisements, websites or packaging and
public sources which is the mass media (Sheikh, 2013).

For example, Milo by Nestlé. Milo itself is not a new name in the industry.
Malaysians have heard and used Milo since 1950 (Hakim, 2015). Thus, the product is
already a household brand. Thus, Milo can already gain popularity through word of
mouth like through family or the internet. But Nestlé did not stop on just trusting the
word of mouth, Nestlé have provided enough advertisements and promotion for Milo
such as billboards and advertisements that attracts their target market which is
students and active people.

EVALUATION OF ALTERNATIVES

According to Joshua (2016), after the search on information, consumers will

start to list all the available product or services that could possibly solve their need or
problem. Consumers may look at the most suitable choice by objective characteristics
or the subjective characteristics of the product or services. The objective
characteristics is the features of the product that will be given and the subjective
characteristics is the value or brand reputation.

For Nestlé’s Milo, the competitors like Oligo and Horlicks will be in the list for
consumers. Nestlé have been focusing more on healthy and nutritious products which
also includes Milo. Milo have only 6% sugar and 3% of the sugar is natural sugar (The
Star Online, 2018). Thus, consumers may choose Milo for a healthier drink.

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OUTPUT
Purchase

Lastly, the third stage is the Output stage. The output stage consist of purchase
and post-purchase evaluation. According to Joshua (2016), once the consumers is
done with finding the best solution on the problem or need, the consumers are able
to differentiate between products or services and the purchasing happens. Every
decisions is made by consumers depends on the information that was made by them.
For every purchase, there are two types. Which is the trial purchasing and repeat
purchasing. Trial purchasing is when consumer wanted to purchase a product for the
first time while repeat purchasing is when the consumer is satisfied with the product
and wanted to buy the product again.

For example, for Nestlé, Milo have won the Putra Award for Putra Brand of the
Year. These award was a voting award and Milo has won over 6000 respondents and
crowned the award (Star Online, 2016). This proves that Malaysian have been
purchasing the product for a long time to make it their favourite.

Post-purchase Evaluation

After the consumer purchased the product or services, the evaluation of the
product will begin. This evaluation consist of whether the purchased made is enough
to fulfil the needs and solve the problem the consumers had (Joshua, 2016). For
example, Nestlé Milo is promoted to be giving the consumers energy that could last
for the day, so, consumers will have to evaluate the given statements by Nestlé
themselves. If the consumers feel satisfied, brand loyalty towards Nestlé will happen
between the consumers.

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Importance of Mapping a Path to Purchase

The buyer journey or path to purchase is what the consumers go through when
they want to buy a product or service. The path to purchase model shows the various
stages of consumers from the point they are aware of the product to the point they
purchased the product (Study.com, 2018). Path to purchase model has four stages,
which is awareness, consideration, action and loyalty.

The first stage in the past to purchase model is awareness. According to

Study.com (2018), awareness is when consumers at first are unaware on the product
existence. Thus, consumers go to the pre-purchase process to acquire more
knowledge on the product or brand. As consumers successfully has done the pre-
purchase process, consumers may be aware of the product or brand. Thus, companies
needs to focus on promoting and release information to the public.

As example, Nestlé have being busy promoting and helping consumers aware
of their product by making events and releasing interesting advertisements. The Milo
advertisement is always targeting the youth like students and athletes. The interesting
part of the advertisements is even though Nestlé targeted youth, the parents will be
attracted to Milo to give the product for their children.

Next is the consideration. Consideration is when consumers are narrowing or

made a shortlist of the products they are going to buy. This is because, as information
gathered and found, the likeable product will be on the list. (Study.com, 2018) Thus,
in the consideration stage, the marketer will have to convince the consumers harder
like using social media or email marketing.

As an example, Nestlé Milo have competitors like Oligo and Horlicks but due to
Milo having a brand name that is trusted by Malaysian, the product becomes the
chosen ones. Milo have been promoting through events and promotion like Milo
Breakfast Day to make consumers convinced on buying Milo.

After that, action. According to Study.com (2018), in this stage, consumers is

now making an action in the action stage. The action that consumers is said to be

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taking is making a purchase or anticipating in the delivery. The consumers will decide
on what exactly the product to buy and which brand will be chosen.

As an example, according to Hannah Robert (2016), two of Nestlé product have

been crowned top ten of most purchased brands in the world. With number seven and
four, Nescafe and Maggi have been two of the most purchased brands in the world
that is from Nestlé. Nescafe have reached two million consumers while Maggi have
reached 2.4 million consumers. This clearly means that consumers have taken action
to purchase Nestlé products.

Lastly, the loyalty. According to study.com (2018), loyalty is when after

purchasing the product, the consumers that are satisfied with the product may repeat
purchase and soon become loyal ones and the consumers will tell their family and
friends on the products. For example, Nestlé Milo have won the Putra Brand Award
which have proved that Milo drink has its own fans and loyal consumers.

IMPORTANCE
The path to purchase of consumers is important for marketers to now know
the detailed of the consumers experience and how the product is interacted with the
consumers.

Firstly, path to purchase guides consumers towards purchasing. The path to

purchase provides a way and making consumers move from stage one, awareness to
stage four, consideration (Keane, 2017). For consumer to buy a product or service
without knowing any or only have a little information on a product will slow down the
process of making consumer satisfied. Thus, path to purchase allows consumers to
move to satisfaction after buying a lot quicker.

As an example, Coffee enthusiast may want to try Nescafe but Nescafe is not
a typical brew coffee, instead it is an instant coffee more focused towards the
consumers who wants to get fast coffee. Thus, Nestlé have given out information
through mass media, billboards and advertisements in television and promoting
Nescafe, to ensure that customer is well aware of the product.

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 Next, path to purchase helps marketers to identify the buying stages that needs
more and proper attention. A consumer path to purchase journey has real consumer
data that allows marketers to constantly monitor the consumers’ behaviour on the
product (Keane, 2017). The data is able to be used to measure the time taken for
each consumer to complete each buying journey.

For example, Nestlé Maggi. When the awareness stage for Maggi takes a little
more time to make consumers aware of the product, Nestlé may lose profit, thus,
making the product flopped in the market. So, to ensure this does not happen with
the product, Nestlé focuses on the awareness of the product more.

Lastly, the path to purchase guides business objectives in the right direction.
Every companies have their own business objectives that the company wants to
achieve. With path to purchase, companies can help overall performance of the
company to increase (Keane, 2017).

For example, Nestlé is focusing on nutrition and healthier products. Thus, if

Milo did not have strong nutritious values in them, it is considered as Nestlé not
following the business objectives to deliver healthier and nutritious food and
beverages products.

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CONCLUSION

The conclusion that can be drawn for this briefing paper is that Nestlé have
used the input, process and output model successfully. In the input stage, there are
firms’ marketing effort that focuses on Nestlé’s marketing efforts from products to
marketing segmentation and sociocultural environment that focus on the family,
culture and social class of consumers. Each marketing effort made by Nestlé have
proven to be working successfully as they are currently at the top of the food and
beverages industry against many other companies like Coca Cola, and Pepsi (McGrath,
2017).

The process in the model states the three processes that consumers take before
purchasing a product or services. These processes is important as they focus more
towards what the consumers go through before buying a product or services. There
are also psychological factors that could influence a consumer like motivation,
perception and attitudes of consumers towards the product and services. Thus, Nestlé
have proved that the products that they sell have been successful as Nestlé take every
measures to cater to every consumer’s need of information.

Then, there are output stage. In the output stage, there is purchase and post-
purchase evaluation. In the purchase, there are two types of purchase which is trial
and repeat purchase. In Nestlé, the product have proved to the Malaysian market as
the consumers repeated their purchase especially Milo as Milo won the Putra Award.
Then, the post-purchase evaluation is when consumers made the purchase and
evaluate the product based on their opinion.

Then, mapping of path to purchase. This strategy is used by Nestlé and the
usage can be prove by the improvement in gaining 90 billion dollars in revenue and
8.6 billion dollars in profit. This is because, by using the path to purchase model,
employees can understand better on what to focus more in work.

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