Major Assignment

MARKETING PLAN OF NESTLE (MALAYSIA)

BERHAD





























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TABLE OF CONTENTS

I. Executive Summary 5
II. Current Market Situation 6
2.1. Situational Analysis 6
2.2. Market Overview 6
2.2.1 Market Demographic and Needs 6
i. Culture and language 6
ii. Economic climate 7
iii. Political Climate 7
iv. Market Need 7
2.2.2 Market trends and target market growth 7
2.3. S W O T analysis 9
2.4 Competitive and Industry Analysis 11
2.5 Product Overview 12
2.6 Key to success and critical issues 12
2.6.1. Keys to success 12
2.6.2. Critical issues 13
III. Environmental Analysis 13
3.1 Macro environmental analysis 13
3.1.1 Demographic 13
3.1.2 Economy 14
3.1.3 InIrastructure 14
3.1.4 Laws 14
3.2 Micro environmental Iactors 14
3.3 Competitive strategy 15
IV. Marketing Strategy 15
4.1 Mission 16
4.2 Marketing Objectives 16
4.3 Financial Objectives 16
4.4 Target Market 17
4.5 Market Positioning 17
4.6 Strategy Summary 17
V. Marketing Mix 18
5.1 Product 18
5.2 Pricing 20
5.3 Promotion 20
5.4 Packaging 21
5.5 Channel oI Distribution 21
5.6 Services 21
5.7 Internal Marketing 22
VI. Marketing Research 22
VII Financial Analysis 23
7.1 Sales or revenue Forecast 23
7.2 Marketing expenses and budget 23
7.3 Break even Analysis 24
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7.4 ProIit and Loss analysis 24
VIII. Control 25
8.1 Implementation 25
8.2 Marketing Organization 26
8.3 Contingency Planning 26
ReIerences 27
Appendixes 30
Appendix 1
Appendix 2
Appendix 3
Appendix 4
Appendix 5
Appendix 6
Appendix 7
Appendix 8
Appendix 9
Appendix 10
Appendix 11
Appendix 12
Appendix 13
Appendix 14
Appendix 15
Appendix 16

EXECUTIVE SUMMARY


Contemplating Nestle`s situation as the Dominant Iirm in the beverage industry and
market leader in the Malaysian market, the principle aim oI this marketing plan is to:
reinIorce market perception oI nestle products, expand total market, protect current
market share, and gain additional share. (Kotler P. & Armstrong G., 2001)

As such, the strategy that Nestle adopt in this marketing plan are as Iollow: (a).
Keeping local brands that suit Malaysian taste while going global with its technology.
(b). Fashioning products Ior Malaysia Irom natives ingredients, employ local
employee (c). Promote its image brand as concern to the health (d). An attractive
packaging innovation. (e). Be socially responsible by providing a couple oI
scholarship program to the Malaysian citizen.

In this marketing plan, a new channel oI distribution which is public transportation,
buses that cater the outstation route is been introduced. This by itselI predicted may
boost the revenue by 5. Furthermore, a new packaging is introduced as well.
Besides being attractive and durable, this new packaging also able to cut cost oI
production by 2. A suggestion card is attached in this new packaging enable a
Ieedback Irom customer.

An especially important to take note oI is that a new product is introduced in this
marketing plan. It is a new coIIee-mate that has 2 new Ilavors on top oI the original
taste,Hazelnut Flavored and French Vanilla Flavored.

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II. CURRENT MARKET SITUATION
2.1. Situational Analysis
As the world's leading Iood company, Nestle is dedicated to providing the best
nourishment to people each day, throughout their lives. Its recipe Ior success comes
Irom an intimate understanding oI consumer needs and the ability to meet those needs
through its global resources. All around the world, Nestle contributes to the well-
being oI individuals, Iamilies, communities, nations - to enhance their quality oI liIe.
Especially in the beverage dairy product, Nestle oIIer kick-starting the morning with
NESCAFE

to winding down the day with a mug oI warm, chocolaty MILO

, Nestle
beverages have always played an important part in the day oI almost every man,
woman and child in Malaysia. In Iact, enjoying a Iavorite Nestle beverage has
become part oI Malaysian liIe, whether it`s at the local mamak` stall or at a Iancy
restaurant(Nestle Malaysia, 2004
2.2. Market Overview

2.2.1. Market Demographics and need

i. Culture and Language
Malaysia has a population oI approximately 25 million people. Race and religion are
diverse with ethnic Malays Iorming about 66 per cent, Chinese - 25 per cent and
Indians - seven per cent oI the population.
Sunni Islam, a moderate and tolerant version oI the Islamic Iaith, is the religion oI
more than halI oI the population and is primarily identiIied with the Malays. Thus,
halal issues are signiIicantly important. Other major religions include Buddhism,
Taoism, Hinduism and Christianity. Muslim do not consume pork related product
whereas Hinduism and Buddhism generally avoid beeI.
The urban population oI Malaysia has a relatively high standard oI living and the
society is gaining in aIIluence. Many Malaysians are exposed to Western culture
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through education, the media and travel and have incorporated various Western tastes
in their liIestyles (InIostream, 2004)
ii. Economic Climate
Following the impact oI the global economic slowdown in 2001-02, the threat oI
terrorism and the outbreak oI SARS in the region, the Malaysian economy began to
rebound in the second halI oI 2003. The industrial production index grew by 11.7 per
cent year on year in November largely due to strong growth in the export oriented
manuIacturing sector 14.9 . Domestic oriented industries grew more
moderately. Exports raised 7.4 per cent in November - the Iourth consecutive month
oI growth. Imports also continued to raise by 6.2 per cent, however, Malaysia`s trade
surplus widened to around RM6.3 billion. The trade surplus Ior the Iirst 11 months oI
2003 was recorded by to be not less than the amount oI RM68.9billion.

The Malaysian economy continued to recover in the third quarter to 2003 Iollowing
relatively Ilat economic perIormance in 2002 and the Iirst halI oI 2003. This recovery
is being Iuelled by increased demand and higher prices Ior Malaysia`s key palm oil,
petroleum and electronics exports Irom major trading partners such as the USA,
Japan, Singapore and China. (BursaMalaysia, 2004)
In the third quarter oI 2003, the key economic indicators include:
N Gross Domestic Product: 5.1 per cent
N Consumer Price Index: 1 per cent
N Exports: 3.3 per cent
N Imports: 3.1 per cent
N Trade surplus: RM19.81 billion
N Private consumption: 5.4 per cent
(Source: Bank Negara, Central Bank oI Malaysia - Third Quarter 2003 Reports)
The government has also invested heavily in inIrastructure to Iacilitate both eIIicient
business and a high standard oI living, particularly in the major centres.
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iii. Political climate
Malaysia entered a new political era in November 2003 with the retirement oI long
serving Prime Minister Dr Mahathir Mohamad. Dr Mahathir has been succeeded by
his Iormer Deputy Prime Minister, Datuk Seri Abdullah Ahmad Badawi who has
stamped his Iirst 100 days as prime minister with a very active campaign on
corruption and cronyism in government. He has also moved quickly to improve
bilateral relations with ASEAN neighbors (Malaysian Macro environments, 2004).

Barisan Nasional (National Front) is the governing coalition and consists oI the
United Malays National Organization (UNMO), the Malaysian Chinese Association,
Gerakan (a Chinese-based party), the Malaysian Indian Congress plus a number oI
other parties including some based in Sabah and Sarawak. The current government
has been in power since 1955. (Malaysian Macro environments, 2004)
iv. Market need
The key 455479:3908 in the Malaysian dairy industry include: the inIant Iormula
and Iormulated milk powder, cheddar and non-cheddar cheese, butter, ghee, ice
cream. (Malaysian Food and Beverage Executives Association, 2004)
2.2.2. Market trends and target market growth
The dairy industry in Malaysia is relatively under developed. Domestic milk
production is around 30 million liters in Peninsular Malaysia and satisIies only 3.7
per cent oI Peninsular Malaysia's requirement Ior milk products. The raw milk
production is drawn Irom 36 milk-collecting centers throughout Peninsular Malaysia
and managed by the Veterinary Authority. (Malaysian Veterinary Authority, 2004)
The strong growth oI the hypermarket and supermarket sectors in Malaysia has led to
a greater availability oI shelI space Ior dairy products. In addition, increased
urbanization and a growing middle-income society have resulted in greater demand
Ior dairy products. (Federation oI Malaysian ManuIacturers, 2004)
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Malaysia aims to achieve at least 10 per cent selI-suIIiciency in milk products by
2010. Future plans are to Iocus on improving milk quality and improving the cold
chain distribution. (Nutrition Society Malaysia (NSM, 2004)
The country has a milk processing industry, which produces: the sweetened
condensed milk, yoghurt, pasteurized milk, recombined milk, UHT milk, ice cream.
The milk processing industry currently has seven to eight main corporations.
Sweetened condensed milk is widely used as a creamer and sweetener Ior warm
beverages such as coIIee, tea and cocoa Iollowed by powdered milk and milk drinks.
Due to a limited domestic supply oI milk and high capital investment, Malaysia does
not have a spray-dried dairy processing industry to produce dairy milk powder. Hence,
the dairy industry is oIIering a great opportunity Ior nestle to be explored Iurther.

2.3. SWOT Analysis

Strengths
Quality products
2. SuccessIully test marketed
globally
3. OIIer alternative to e-
commerce ventures
4. Skilled and committed
team
5. High margins on beverage
appliances
6. Outsourcing
7. Low set up costs
Capitalize on Strengths
Market entry and to gain market
knowledge
2. Favorable consumer perception
3. OIIers investor opportunity to balance
portIolio
4. Management has skills and experience in a
variety oI areas
5. Ability to negotiate on bulk purchases
6. Reduces capital costs
7. Reduces investor's risk and exposure

0,308808
Reliance on one client
initially
2. Exposure to Iluctuating
packaging costs
3. Management team(board
oI director) has not worked
together Ior long period
4. Board not yet Iinalized

Address Weaknesses
Committed to expansion
2. High margins provide Ilexibility
3. Independent Chairman appointed and
Corporate Governance structures in place
4. Positions to be oIIered to venture partners
5. ProIessional sales team recruited with
assistance oI venture partners who will
have aIIinity with, and experience in the
Iood/beverage industry
6. Addressed by introductions through
venture partners and independent
Chairman
55479:3908
Expanding inIant milk
market
2. Multiple repeat purchases
oI product Ior other outlets
operated by initial
purchasers
3. Introduction oI online
direct mail
4. Increasing awareness oI
specialty coIIees
5. Other markets (domestic
and coin vending)
6. Innovation in existing
market
Maximize Opportunities
Build consumer preIerence Ior La Barista
coIIee
2. Sell beneIits
3. Target diverse range oI users
4. Education oI La Barista style coIIee as
option to specialist more expensive blends
5. Ease, quality and consistency oI produce
ideal Ior introduction to home and coin
vending market
6. Commitment to relentless innovation
ensures market bench marks challenged
%70,98
Imitation products
2. Window oI opportunity
may be limited
3. High number oI
competitors
Minimize Threats
IP protection
2. Venture turn-key and ready to be actioned
3. Guaranteed demand through Nestle
distribution
4. Backing oI world's largest coIIee marketer


(ReIer to appendix 16 Ior Iurther explanation)
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2.4. Competitive and Industry Analysis
The table below described in detail the competitive analysis oI Nestle in the beverage
industry:
Competitive
Strategy Required Skills and Resources
Organizational
Elements Associated Risks
Overall cost
Leadership ~Tight cost control

~ Sustained Capital Investment and
access to capital ~Frequent, detailed reports
~ Rapid technology
change
~ Process engineering skills
~ Intensive supervision oI labor
~Structured organization
and responsibilities

~ Low cost oI
learning by industry
or imitators

~ Product designed Ior case oI
manuIacture
~Incentives based on
meeting strict quantitative
targets
~ Low cost distribution system



~ Inability to see
required product or
marketing change
due to attention
placed on cost
Differentiation ~ Strong marketing Abilities


~ Product engineering with creative
Ilair
~ Strong coordination
among Iunction in R&D,
product development, and
marketing

~ Strong capability in basic
research


~ Long tradition in the industry,
combination oI skills and
experience

~ Subjective measurement
& Incentives instead oI
quantitative measures

~ Strong cooperation Irom channels

~ Amenities to attract highly
skilled labor, scientist or
creative people


~ The cost
diIIerential between
low-cost
competitors and
diIIerentiated Iirm
becomes too great
Ior diIIerentiation
to hold brand
loyalty. Buyers thus
sacriIice some oI
the Ieatures,
services or image
posed by the
diIIerentiated Iirm
Ior cost saving





~ Imitation narrows
perceived
diIIerentiation, a
common occurrence
as industries mature
4.:8


~ Combination oI the above
policies directed at the particular
strategic target
~ Combination oI the above
policies directed at the
particular strategic target



~ The diIIerences in
desired products or
services between
the strategic target
and the market as a
whole narrows





~ Competitors Iind
submarkets within
the strategic target
and out Iocus the
Iocuser
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The Iollowing table shows the current estimated market share oI major competitors in
the beverages dairy product market:

Estimated Market Share AnaIysis (Estimated by revenue)
Competitor
Current
Share
Nestle (Malaysia) Berhad 31%
Malaysia Dairy Industries 18%
New Zealand Milk 12%
Dutch Lady Milk Industries Berhad 17%
East Asiatic Company 5%
Fraser & Neave Holdings Berhad 8%
Others 9%

2.5. Product Overview

We ensure that our products are oI the highest or premium quality and also aIIordable.
Innovation and renovation play a major role in the development oI milk based
products. Milk base products are our core business when nestle started. Products are
produce according to the WHO and UNICEF requirement and are oIten developed
together to ensure that the consumers will beneIit Irom taking our products.
We continue creating new and value- added products, not only to satisIy customer
appetite and tempt customer senses but also to provide health beneIits to complement
the overall wellness concept. ( Nestle Malaysia, 2004)


2.6. Keys to Success and Critical Issues

2.6.1. Keys to Success

Nestle is dedicated to providing the best nourishment to people each day, throughout
their lives. Its recipe Ior success comes Irom an intimate understanding oI consumer
needs and the ability to meet those needs through its global resources.

Operational eIIiciency which is eIIicient use oI resources and better satisIaction oI
customer requirement are the deIinite key oI success oI Nestle. Operational eIIiciency
Iocuses on our eIIorts to harness our resources not just across the country, but around
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the world, to deliver optimum perIormance in a sustained manner Ior long-term
growth and proIitability.

2.6.2. Critical Issues

Nestle in Malaysia Iaces several critical issues:
a.Nestle product known widely more expensive than its competitor brand.
Among its competitor brand, Nestle`s product known to be slightly more expensive
b.Halal issues
In Malaysia, thus Iar Nestle has been Iacing 11 (eleven) cases regarding halal mater.
It has been argued that some component in Nestle`s product recipe do not comply
with halal requirement. (Royal Customs and Excise Department Malaysia, 2004)
c.Diversity oI background
Nestle claimed that its product adapt to local appetite. It claimed that in various land,
Nestle try to manipulate the custom recipe in order to be accepted by its market. In
Malaysia, though, Nestle Iace dilemma in come out with a custom recipe that
represent local market`s appetite since it consist oI people with a diversiIied
background, taste and preIerences.


III. ENVIRONMENTAL ANALYSIS

Macro environmental Factors

The Macro Environmental Iactors that may explicitly aIIect the perIormance oI
Nestle are as Iollow:
3.1.1. Demographic:

Malaysian urban population relatively has a high standard oI living and through
advance in education develops a concern toward health, willing to spent a bit more to
attain quality product.
Age structure: 0 14 years 35, 15-64 years 61 and above 65 4. Targeted
market oI nestle is inIant toward adult, which represent more than 80.
Birth rate: 2.08. It is an opportunity Ior the inIant milk product. (Statistic, 2004)

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3.1.2. Economy:

Purchasing power parity Rm 10,300 (year 1999) Malaysian is experiencing
economy growth by 5 , household income increase by 3 . Consumption in the
beverage/ Iamily was rm. 412 in 2002 and rm. 430 in 2003, which indicate an
increase oI 4.3
61 oI Malaysia`s population comprises the nation`s middle to upper income group.
All this Iactors aIIect positively toward Nestle.

3.1.3 InIrastructure:

Well equipped basic inIrastructure- communication, water, electricity transportation,
and rood. New retail outlets are continuing to open, providing better access to
consumer on a nationwide basis. These businesses are looking Ior the product Ior
their retail outlets.

3.1.4. Laws:

The Food Act 1983 (reIer appendix 9) and Food Regulations 1985 set product
standards and particular labeling requirements Ior milk and milk based products.

3.2. Micro environmental Factors

1.The threat oI entry by new competitors. (high barriers to enter the market)
- Economies oI Scale
- DiIIerentiation
- Capital requirement
- Switching cost
- Government regulation diIIicult to comply
2.The intensity oI rivalry among existing competitors.
- Numerous rivals, equally balanced
- High Iixed cost
- Low switching cost
- High exit barriers
- Diverse competitors
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3.Pressure Irom substitute products.
- Numerous rivals promote high substitutes products.
4. The bargaining power oI buyers. (High customer buying power)
- Buyers has all the relevant inIormation
- Low switching cost
- Purchase is not very important Ior the buyers
- Low proIit margin
5. The bargaining power oI suppliers (High supplier bargaining power)
- Dominated by Iew supplier (Komnas, Twenty20, Rawnas)
- High switching cost
- DiIIerentiated product
- Supplier`s input is crucial

3.3.Competitive Strategy

Nestle`s competitive strategies include: (a). Keeping local brands that suit Malaysian
taste while going global with its technology. (b). Fashioning products Ior Malaysia
Irom natives ingredients, employ local employee (c). Promote its image brand as
concern to the health (d). Attractive packaging innovation. (e). Be socially
responsible by providing a couple oI scholarship program to the Malaysian citizen. (I).
In developing countries, like Malaysia Nestle Iirst establish sales channels by making
basic mass-produced IoodstuII that the locals can aIIord. Then as consumer grow
richer, pump higher-valued products through these same channels.

IV. Marketing Strategy

4.1. Mission



Be the leading multinational company in Iood, nutrition and wellness.

Produce and sell world-class products oI the highest consistent quality, reliability and
convenience based on business excellence principles throughout our operations

Maximize the use oI good quality local raw materials

Be an exemplary employer with a progressive human resource and social policy; with a
management style that is based on "Management Commitment and People
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4.2. Marketing Objectives

Our primary Marketing Objectives are to:
N Increase product awareness to targeted market by 5
N Develop and introduce one new product by this year
N Decrease/remove potential customer resistance to buy the product lead to 2
increase in sales
N Experience an increase in new customer who are turned into long term loyal
customers
N InIorm targeted audience about the Ieatures and beneIits oI our product and its
competitive advantage, leading to a 2.5 increase in sales

4.3. Financial Objectives

Nestle`s Iinancial objectives are as Iollows:
N $,08'4:20 10 increase in sales (please reIer appendix 10 a)



N !7419,-9: Increase 22 in net proIit (please reIer appendix 10 b)



N 5479: Target export 13 oI total sales (please reIer to appendix 11)





Involvement"


Be a responsible corporate citizen, IulIilling all obligations to Government,
shareholders, customers, communities and consumers.

Protect the environment by being committed to environmentally sound business
practices and taking into account the need to preserve natural resources and save
energy.

Guarantee that all products manuIactured, imported and distributed by Nestle Malaysia
are certiIied HALAL by JAKIM.

Deliver shareholder value through the achievement oI sustainable and proIitable long-
term growth
Year 1999 2000 2001 2002 2003 2004
SaIes 1,952,571.00 $ 2,202,451.00 $ 2,585,708.00 $ 2,479,649.00 $ 2,656,989.00 $ 2,922,687.00 $
Year 1999 2000 2001 2002 2003 2004
Profit 240,659.00 $ 202,452.00 $ 203,949.00 $ 182,585.00 $ 161,989.00 $ $198,724.00
Year 2001 2002 2003 2004
Export 119.50 $ 229.30 $ 325.00 $ 338.50 $
% saIes 11% 12% 12.50% 13%
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4.4. Target Market

The target market segment strategy will not be signiIicantly diIIerent to address the
two groups. Both groups, regardless oI income, typically belong to the same group oI
having a relatively high living standard. ThereIore, to reach the diIIerent groups does
not require a distinctly diIIerent strategy.
Those two distinct target populations are:

1. Middle class of income (Rm 24,000-48,000 /year)
This group oI people does not have huge amounts oI disposable income, however in
their economic circumstances they don`t too sensitive toward price diIIerences.
2. Upper class of income (~Rm 48,000/ year)
Typically, this group is characterized by a wealthy one income Iamily. This group oI
market that goes and look Ior quality and concern toward healthy product

4.5. Market Positioning.

Nestle will positioning itselI as Iollow:
NPosition itselI as healthy concern product and quality product
Today`s consumers are discerning, well-educated and inIormed. They demand
consistent quality in products and innovation, and strive to maintain good health
through active liIestyles, wholesome Ioods and general well-being.
NValue the local taste
Its recipe Ior success comes Irom an intimate understanding oI consumer needs and
the ability to meet those needs through its global resources
NModern and convenience liIestyle
Nestle contributes to the well-being oI individuals, Iamilies, communities, nations - to
enhance their quality oI liIe by provide the convenience liIestyle.

4.6.$97,90$:22,7

The single objective oI Nestle is to increase the market share and maintain the cash
cow situation. The marketing objectives will seek to Iirst increase customer
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awareness regarding their product, reduce the potential customer resistance, develop a
customer base, and work toward building customer loyalty and reIerrals.

The message that Nestle seek to communicate is that Nestle oIIers the highest quality,
most innovative beverage producer among the competitors. This message will be
communicated through two main ways:
First, marketing innovation by the introduction oI online the Dear Nestle` direct
mailer pack that has been developed to strengthen the bond with the loyal consumers.
This Ieature not only provides updated inIormation on Nestle activities but is also a
direct channel oI communication Ior Ieedback and exchange oI ideas.
Second is the innovation in the distribution. Beyond homes Nestle Iood services
hotels, airlines, vending machines, quick-serving restaurants, and even the humble
mamak` stalls. Particularly, Ior this marketing plan we start in expanding our wing
even to the Bus that caters the outstation route.

V. Marketing Mix
Nestle`s marketing mix is comprised oI the Iollowing approaches to product, pricing,
promotion, and distribution program.
5.1. Product
The Products that is covered in this marketing plan is beverages. Following are those
products complete with its details:



Depend on the brand that's been trusted
since 1889. Use CARNATION to turn
every dessert into a sweet success.


The #1 brand of sweetened beverage
creamer in Malaysia.



The #1 beverage with the great
chocolatey taste that has been a
Malaysian household favourite since
1951.
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The delicious and nutritious malted
drink alternative.


Wonderfully creamy with great-
tasting goodness, Nestl Full Cream
makes every creation delicious.


Low in fat, high in great taste and
the wholesome goodness of fresh
milk.


Serve a totally refreshing taste that
will leave your customers thirsty for
more.


A real beverage refresher that is
100% natural, 100% satisfying.


Juice up your beverage selection
with the refreshing, 100% natural
NESTL MANGO DRINK.


The world's #1 sparkling mineral
water, PERRIER is the choice
beverage of chic and sophisticated
consumers.

In addition to those products above, we Iind it necessary to introduce a new product
in order to capture the new market that has not been captured so Iar. Following are
the details oI it:
New COFFEE-MATE

in 2 diIIerent Ilavors: which are the Hazelnut Flavored and

the French Vanilla Flavored

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5.2. !7.3
We make sure that our products are reasonably priced. We seek to inIorm our
customer and to make sure that the consumers know the quality oI our products. As
our competitors may have lower prices, it may aIIect our grip on the market share.
Given the current economic situation, many consumers look Ior the lowest priced
goods so we much accommodate but we guarantee that we do not compromise our
quality.
Following are the approximate price oI our major product:

Approximate pricing for nestIe major products
Product Price
Nestle Carnation $ 5.60
Nestle Tea Pot $ 3.60
MLO $ 10.90
Nestomalt $ 12.00
Nestle Full Cream $ 6.00
Nestle Low Fat Milk $ 15.00
Nestea $ 5.00
Nestle Orange Juice Drink $ 2.60
Nestle Mango drink $ 2.60
Perrier $ 1.50
Coffee- Mate $ 10.00

5.3. !7424943
Our primary strategy oI promotion would be the 'Dear Nestle direct mailer pack that
has been developed to strengthen the bond with our loyal customers. This mailer pack
provides the updated inIormation on Nestle activities and promotion. Beside that
nestle also holds public Iorums in an eIIort to promote and educate nutritional
wellness among consumers. These Iorums also helped to Ioster a better relationship
between the company and consumers. (Appendix 13)
Another mode oI promotion Ior nestle is sponsoring major and rural sport events.
Milo a brand Irom nestle always sponsors sporting events like badminton to bowling
to the Commonwealth Games. This kind oI promotion will always lead to the
awareness oI our customers (appendix 12)
Advertising on mass media is also used, which is through television and national
newspaper advertisement. Last but not the least mode oI promotion is the sales
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promotion that will be taking place during the months oI May, June, July and
December. During this sales promotion some Iree giIts such as: cute Jars, plates and
spoon will be given. Beside, Iree extra pack will be attached in order to attract the
customer.

5.4. Packaging
Since packaging is an integral part oI our product, we propose new packaging in this
marketing plan that is not only attractive and durable, but also Iunctional too. Our
innovative packaging strive to ensure every product packaging guarantees Ireshness,
saIety, convenience and whenever possible environmentally Iriendly too.
In this new packaging, we have reduced packaging materials use by 8, which
cutting the cost oI production by 2.

5.5. Channel of Distribution
Beyond homes, Nestle supplies its product to hotels, airlines, vending machines,
quick-serve restaurants, supermarket, retailers and even the humble mamak` stalls.
Wherever, whenever and however, nestle bring innovative solutions that guarantee
high quality products and services. In this marketing plan we are please to introduce a
new channel oI distribution which is the public transportation (Buses that cater the
outstation route).

5.6. Services
Nestle plans a multiIaceted service strategy. Nestle Foodservices provides a wide
range oI services to help you grow your business and make the most oI your budget.
This service which is totally Iree oI charge, give tips Irom expert to help build
business with nestle. This service also gives access inIormation and support related to
the use and maintenance oI nestle Iood and beverages equipment Iurther arrange Ior
product delivery.
Nestle Ioodservices also provides wellness articles that educate consumer about
healthy liIe style and inIormation regarding certain health problems. Furthermore, this
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service provides recipes that are created by proIessionals using high quality delicious
Nestle branded products. New recipes are added all the time.

5.7. Internal Marketing
In order that the entire organization Iocus on the customer and support Iully Ior this
marketing plan, there are some internal marketing strategies that have been developed.
- Conduct a regular (semi-monthly) staII meeting to update the marketing
workIorce on the current plans, implementation and achievements.
- Maintain an open internal marketing communication through intranet, internal
newspaper on each week`s activities and any changes that are being made.
- Provide recognition and rewards Ior exceeding the planned sales level.
- To encourage Nestle`s staII to consume nestle products, 5 discounts is given
to all nestle staII should they purchase any oI the nestle products.

VI. Marketing Research

Nestle is using Marketing Research to support this marketing plan in a number oI
ways:
1. The Dear Nestle` direct mailer
This is an online pack that has been developed to strengthen the bond with our loyal
customers. The mailer pack is a direct channel oI communication Ior Ieedback and
exchange oI idea Irom the valued customers
2. The suggestion card in every package oI nestle product
An additional source oI market research is a Ieedback mechanism based on a
suggestion card system. This suggestion card will be attached on all the packaging oI
nestle product. The suggestion card has several statements that customer are asked to
rate in terms oI scale given. There are also several open ended question that allow the
customers to Ireely oIIer some suggestion or critics. Customer will be asked to Iill
those Iorms and best suggestion will be rewarded monthly.
3. Focus group
In a Iocus group, we will bring together a group oI users oI nestle product to discuss
issues and concerns about the Ieatures oI our product such as packaging taste and also
22
how acceptable the range oI the price to them. The group typically lasts about two
hours and is run by a moderator who maintains the group's Iocus.

VII. Financials

7.1. Sales or Revenue forecast.


For this marketing plan we targeted an increase oI 10 in sales which is an increase
Irom $2,656,989 to $2,922,687. There are Iew bases Ior this target, which are:
1. The introduction oI a new channel oI distribution to the Buses that cater the
outstation route. Contemplating the volume oI its route and number oI its
passenger, it may boost 5 increase in sales(appendix)
2. The introduction oI the new packaging innovation that serve as the pull strategy.
3. The emphasize that have putted in the sales promotion.
4. Economic growth oI Malaysia which predicted to be 5

Following are the detail oI the sales Iorecast respective oI its channel oI distribution
and respective oI the months throughout the year covered by this marketing plan.

hoteIs
AirIines (air
asia)
vending
machine restaurant
mamak
staI
Bus
transionaI retaiIers supermarket TOTAL
Jan 20,226 17,000 19,485 24,356 24,356 12,000 36,000 80,000 233,423
Feb 21,789 17,000 19,485 24,356 24,356 12,000 36,000 80,000 234,986
Mar 21,789 17,000 19,485 24,356 24,356 12,000 36,000 80,000 234,986
Apr 22,789 17,000 19,485 24,356 24,356 12,000 36,000 80,000 235,986
May 40,000 17,000 19,485 24,356 24,356 12,000 37,600 81,122 255,919
Jun 35,000 17,000 19,485 24,356 24,356 12,000 37,600 81,122 250,919
JuI 28,825 17,000 19,485 24,356 24,356 12,000 37,600 81,122 244,744
Aug 28,825 17,000 19,485 24,356 24,356 12,000 36,000 80,000 242,022
Sep 28,825 17,000 19,485 24,356 24,356 12,000 36,000 80,000 242,022
Oct 28,825 17,000 19,485 24,356 24,356 12,000 36,000 80,000 242,022
Nov 28,825 17,000 19,485 24,356 24,356 12,000 36,000 80,000 242,022
Dec 45,000 17,588 19,485 24,356 24,356 14,134 37,600 81,122 263,641
350,718 204,588 233,820 292,272 292,272 146,134 438,400 964,488 2,922,692
(please reIer to appendix 2 , 5 ,7)

7.2. Marketing Expenses and Budgets.

We allocated the amount oI $ 350,722 Ior the total marketing expenses Ior this
marketing plan which will include: Advertising, Sales Promotion, Marketing
23
Research, Sales Training, and Customer Services. The very basis Ior this allocation is
contemplating past record whereby about 12 oI the sales is allocated Ior marketing
expenses. (ReIer appendix 6,15, 14)
Marketing Expenses Budget
2001 2002 2003 2004
Advertising 122752.7 35%
Sales Promotion 70144.4 20%
Marketing Research 35072.2 10%
Sales training 70144.4 20%
Customer service 52608.3 15%
Total Marketing expenses 332,883 294467 318838 350722
% of Sales 13% 12% 12% 12%

7.3. Break - Even analysis

(Please reIer appendix 3, 4, 5, 7, 8)

7.4. Profit and loss analysis

As a result oI the introduction oI the new packaging innovation the total expenses Ior
packaging reduced by 2 Iorm 751,568 to 736,536. Sales as been targeted will be
experiencing increase by 10 Irom 2,656,989 to 2,922,687, whereas the COGS
contemplating the past record expected to be 68 oI the revenue which is 1,987,427.
Thus, the total proIit will be 198,724 which is 22 increase Irom last Iiscal year.
Following are the detail oI it: (please reIer appendix 2& 15)
Profit and Ioss anaIysis
1999 2000 2001 2002 2003 2004
Sales 1,952,571 2,202,451 2,585,708 2,479,649 2,656,989 2,922,687
COGS 1,743,934 1,695,848 1,743,432 1,987,427
% over sales 67% 68% 66% 68%
Working capital 841,774 783,801 913,557 935,260
Total Expenses 637,825 601,216 751,568 736,536
Profit 240659 202452 203949 182585 161989 198,724

Variable Cost $10.00 per unit

Fixed Cost $907,989,335.00
Price $15.00 per unit
You will breakeven at
Break-even at
181,597,867 units
$ 2,723,968,005.00
24
VIII. Controls

Control is directed to monitor the quality and customers service satisIaction. Pivotal
control will enable us to react very quickly in correcting any problem that may occur.
We are also tightly controlling marketing schedule to assure timely implementation oI
planned programs.

A contingency plan has been developed Ior immediate implementation in the case oI
severe increase in the raw material price that may put pressure on cost oI production.

8.1. Implementation.

To guide the implementation oI this marketing plan, we have schedule the detailed
month-by-month activity Ior each marketing program include the managerial
responsibility. The schedule is as Iollow:

ImpIementation ScheduIe
Activity
Start
Date End Date Budget Manager Department
Marketing Plan 1-Oct-03 31-Dec-03 Dane Marketing
Advertising 1-Jan-04 31-Dec-04 $122,753 michy Marketing
Sales Promotion May, June, July, Dec $70,144 michy Marketing
Sales Training Jan, Feb, Mar $70,144 Dane Marketing
Customer Service 1-Jan-04 31-Dec-04 $52,608 michy Marketing
Marketing
research 1-Jan-04 31-Dec-04 $35,072 Dane Marketing

The Gantt Chart

Marketing PIan
Advertising
SaIes Promotion
SaIes Training
Customer Service
Marketing research

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

25
8.2. Marketing Organization

As the chieI Marketing oIIicer, Mr Ganeshan R. Ampalavanar holds the overall
responsibility Ior marketing strategy and direction, He also direct the channel sales
and all the marketing communication, and promotion activities.

Following the Sales Managers: Ang De Thiang, Fung Tan Shing, Lim Lorn Sun,
Yeap Siew lim, Ang Lay Lienh, Wong Chen Ping, David Lineder
Brand Manager: Wan Cheng Kim
Senior Client Support: Fara Muhammad
Mass and Media communication executive: Mr. Ian James Donald

8.3 Contingency Planning

Nestle has prepared a contingency plan to implement iI the Iollowing diIIiculties and
risk happen:
- Extremely lower demand until break-even unattainable
This may happen iI our product unacceptable to the market or the pricing strategies
doesn`t eIIective which resulting in extremely low demand. The possibility could be
that the break-even level unattainable.
- High inIlation that leads to increase in the cost oI good sold.
Though it hardly possible since Malaysia has a very stable economy situation, still
high inIlation may lead to an increase in the cost oI production which may eIIect
severely in the price and demand.

Should either one oI above risk taken place Nestle will try to cover the loss through:
- Bank Loan
- Liquidate some oI the asset to cover liabilities.





26
#010703.08

Ling, C S (2004). 'Nestle Join The NPC Sponsorship List New Straits Times April 17
th

2004 pg 18.

Chan, J (2004) 'Nestle Holds Public Forum Star Newspaper. May 18
th
2004 pg. 36

Boyd, H W jr., Walker O C., Mullins J., Larreche, J-C.(2002) 'Marketing Management:
A strategic Decision-Making Approach 4
th
Ed. McGraw-Hill Irwin: UK

Kotler P. & Armstrong G. (2001) 'Principles oI Marketing McGraw-Hill: USA

SchiIIman L.G & Kanuk L.L. (2004) 'Consumer Behavior Prentice Hall: USA

InIostream(2004). http://www.angelIire.com/ma/usmaret/artistic.html. Date access:
26/03/2004

Etzel M.J., Walker B.J. & Stanton W.J. (2001) 'Marketing Thompson Learning: US

Wood M.B. (2003) 'The Marketing Plan Prentice Hall: Australia

Parmerlee D. (2000) 'Preparing the Marketing Plan Prentice Hall: UK

Nestle Malaysia (2004) http://www.nestle.com.my date access: March May 2004.

BursaMalaysia(2004) http://www.bursamalaysia.com/website/listing/lc/nestle.htm.
Company proIile: Nestle (malaysia) Berhad. Date access: 23th /04/2004

Stockk (2004) http://quote.stockk.com/?idnestle Company search: Nestle(Malaysia)
Berhad. Date access: 23th /04/2004.

27
Food Quality Control Division, Ministry oI Health (2004)
www.moh.gov.my/Iqc/Index.htm date access: 13th/03/04

The Food Act 1983 (2004) www.moh.gov.my/Iqc/reIerence/Food Act/index.htm date
access: 15
th
/04/04

Food Regulations 1985 (2004)
www.moh.gov.my/Iqc/reIerence/FoodRegulations/index.htm date access: 24th/04/04

Royal Customs and Excise Department Malaysia (2004) www.customs.gov.my Date
access: 15th/03/04

Department oI Veterinary Services (2004) http://agrolink.moa.my/jph Date access:
13th/04/04

Malaysian Association oI Hotels (Iood and beverage trends) (2004) www.hotels.org.my
date access: 12/05/04

Malaysian Food and Beverage Executives Association (2004) www.mIbea.com.my Date
access: 18th

03 -2004

Food SaIety Unit, World Health Organisation (2004) www.who.org/IsI Date Access:
15/03/04

Federation oI Malaysian ManuIacturers (2004) www.Imm.org.my Date Access:
12
th
/04/04

Nutrition Society Malaysia (NSM (2004) www.nutriweb.org.my Date Access:
13
th
/03/2004

28
Malaysian Macro environments (2004) www.einnews.com/malaysia Date Access: 24th
/03/04

Statistic (2004) www.statistic.gov.my Date Access: 20
th
April 2004



























29
APPENDIXES
Appendix 1:
History of Nestle:


The origins oI the Nestle Company go all the way back to 1867, when Henri Nestle
created a nutritious product Ior inIants that could be used by mothers who were unable to
breast-Ieed. The Iirst commercially sold inIant Iormula; the Iirst condensed milk
produced in Europe; the Iirst milk chocolate; the Iirst soluble coIIee; the Iirst Ireeze-dried
coIIee; the Iirst granulated instant coIIee -- to name just a Iew.
Today, the Nestle Company has grown and expanded to include the widest range oI
wholesome Ioods Ior people throughout the world.
Nestle in Malaysia:
Nestle began in Malaysia in 1912 as the Anglo-Swiss Condensed Milk Company in
Penang and later moved to Kuala Lumpur due to growth and expansion in 1939.
By the year 1962, with its Iirst Iactory in Petaling Jaya, Nestle Malaysia now
manuIactures its products in 8 Iactories and operates Irom its head oIIice in Petaling Jaya,
and 6 sales oIIices nationwide. Since December 13 1989, Nestle have been public listed
in the KLSE.
The organization currently employs over 3,500 people and manuIactures as well as
markets more than 300 HALAL products in Malaysia.




















30


Appendix 2:




31


Appendix 3:














32


Appendix 4:











33


Appendix 5:











34

Appendix 6:


35
Appendix 7:

36




Appendix 8:
















37

Appendix 9:
(Food Act 1983):
In this Act, unless the context otherwise requires -
"advertisement" includes any representation by any means whatsoever Ior the purposes oI
promoting directly or indirectly the sale or other disposal oI any Iood;
"analyst" means any analyst appointed under section 3;
"animal" includes any quadruped or bird either domesticated or otherwise, Iish, reptile or insect;
whole or part oI which are used Ior human consumption;
"appliance" includes the whole or any part oI any utensil, machinery, instrument, apparatus, or
article used Ior or in connection with the preparation, preservation, packaging, storage,
conveyance, distribution or sale oI Iood;
"approved laboratory" means any laboratory approved by the Minister;
"authorized oIIicer" means any medical oIIicer oI health or any health inspector oI the Ministry
oI Health or oI any local. authority, or any suitably qualiIied person, appointed by the Minister to
be an authorized oIIicer under section 3;
"Director" means the Deputy Director General oI Health (Public Health) oI the Ministry oI
Health;
"Director General" means the Director General oI Health oI the Ministry oI Health;
"entertainment" includes any social or other Iorm oI gathering, amusement, Iestival, exhibition,
perIormance, game, competition, sport or trial oI skill;
"Iood" includes every article manuIactured, sold or represented Ior use as Iood or drink Ior
human consumption or which enters into or is used in the composition, preparation, preservation,
oI any Iood or drink and includes conIectionery, chewing substances and any ingredient oI such
Iood, drink, conIectionery or chewing substances;
"Iood premises" means premises Ior or in connection with the preparation, preservation,
packaging, storage, conveyance, distribution or sale oI any Iood, or the re-labeling, reprocessing
or reconditioning oI any Iood;
"import" means to bring or cause to be brought into Malaysia by land, water or air Ior the purpose
oI sale Irom any place outside Malaysia but does not include the bringing into Malaysia oI any
Iood which it is proved is intended to be taken out oI Malaysia on the same vehicle, vessel, or
aircraIt on which such Iood was brought into Malaysia without any transshipment or landing;
"importer" includes any person who, whether as owner, consignor, consignee, agent or broker, is
in possession oI, or is otherwise entitled to the custody or control, oI the imported Iood;
38
"International Health Regulations" means the International Health Regulations as adopted by the
World Health Assembly in 1969 and as amended Irom time to time;
"label" includes any tag, brand, mark, pictorial or other descriptive matter, written, printed,
stenciled, marked, painted, embossed or impressed on, or attached to or included in, belonging to,
or accompanying any Iood;
"medical examination" includes physical, micro-biological, chemical, serological. and
radiological examination, and such examination may include the taking oI specimen oI any body
Iluid, tissue or waste product Ior examination or analysis;
"package" includes anything in which or any means by which Iood is wholly or partly cased,
covered, enclosed, contained, placed or otherwise packed in any way whatsoever and includes
any basket, pail, tray or receptacle oI any kind whether opened or closed;
"premises" includes -
(a) any building or tent or any other structure, permanent or otherwise together with the land on
which the building, tent or other structure is situated and any adjoining land used in connection
therewith and any vehicle, conveyance, vessel or aircraIt; and
(b) Ior the purposes oI section 4 any street, open space or place oI public resort or bicycle or
any vehicle used Ior or in connection with the preparation, preservation, packaging, storage,
conveyance, distribution or sale oI any Iood;
"preparation" includes manuIacture, processing and any Iorm oI treatment;
"seal" includes the detention in bulk oI any Iood, a sample oI which has been taken Ior analysis,
pending the result oI the analysis;
"sell or sale" reIers only to sale Ior human consumption or use includes barter and exchange,
oIIering or attempting to sell, causing or allowing to be sold, exposing Ior sale, receiving ,
sending, conveying or delivering Ior sale or exchange or in pursuance oI such sale or exchange,
supplying any Iood where consideration is to be received by the supplier Ior such supply either
speciIically or as part oI a service contracted Ior sale, or having in possession any Iood Ior sale or
exchange, or having in possession any Iood or appliance knowing that the Iood or appliance is
likely to be sold or oIIered or displayed or exposed Ior sale or disposed oI Ior any consideration,
and includes electronic sale;
"tobacco" means any product obtained Irom the leaI oI Nicotiana Tobacum plant or other related
plants and includes any tobacco product;
"tobacco product" means tobacco, cigarette or cigar or any other Iorm or tobacco including any
mixture containing tobacco which is designed Ior human consumption but excludes any
medicinal product controlled under the Poisons Act 1952 or the Control oI Drugs and Cosmetics
Regulation, 1984;
"vegetable substance" means any plant or part oI a plant, and includes the stem, root, bark, tuber,
rhizome, leaI, stalk, inIlorescence, bud, shoot, Ilowers, Iruit and seed, or an extract thereoI
39


Appendix 10 a:

Sales forecast






















Appendix 10 b:
Profitability Forecast

Rm miIIion
Year
SaIe s v o Iu me
Year 1999 2000 2001 2002 2003 2004
Sales $1,9 $1,9 $2,2 $2,5 $2,4 $2,6
1 2 3 4 5 6

Rm miIIion
Year
Pr of it abiIit y
ear 1999 2000 2001 2002 2003 2004
=ro:. t 912 921 920 920 918 919
1 2 3 4 5 6
40



Appendix 11:

Rm m iIIio n
Ye ar
T a r g e t Ex p o r t
Year 2001 2002 2003 2004
Ex por t $119.5 $229.3 $325.0 $338.5
1 2 3 4
41


Appendix 12:



(Source: News strait times, Tuesday 19
th
may 2004)

42


Appendix 13:




(Source: Star newspaper 17
th
April 2004)
























43


Appendix 14:

44


Appendix 15:






45
Appendix 16:

S W O T analysis
.
Strength

1. Expertise: Nestle has put aside a sum that is dedicated towards the research and
development. We employ highly skilled employees to assist with the development
process. Thorough research and testing have been done prior to introduction oI
new products.
2. Market share: Currently, nestle is the largest Iood company in the world and we
have a very large market share. We market over 8500 brands and 30000 products
world wide.

Nestle operates nearly 500 Iactories across 5 continents and employs
over 200,000 employees worldwide. In Malaysia alone, Nestle employs over
3,500 people and manuIactures as well as markets more than 300 HALAL
products
3. Range oI Products: Our products range Irom milk to ice cream to water and to
many more. Nestle have a very wide range oI products that are available
worldwide. Nestle oIten create and innovate new products to ensure that the
market share would remain and increase. Yearly we would introduce new
products to capture the ever changing market and consumer.
4. Stability: As an organization that has been through more that a hundred years oI
experience, Nestle is very stable and reliable. Through the years, we have
establish ourselves and the worlds best. Nestle has withstand the test over and
over again building up to a strong organization.

Weaknesses

1. Price: Nestle products are comparatively higher priced compared to our local
'Buatan Malaysia brands. This is because we want to ensure the quality and will
not compromise it. Even thought our prices are relatively not competitive but our
quality is our priority
46
2. Range oI Products: Nestle boost a very wide range oI products and it is actually
our strength to have the ability to produce these products. Nevertheless due to the
range oI products we are unable to Iocus on a particular segment thereIore it is
seen as a weakness.

Opportunities

1. Internet Business: The internet is a widely used tool today. Nestle can have an
online business to make sure that we cope well with the advancement oI
technology. We would not want to be leIt behind by our competitors that have
implemented the e-business method.
2. Market growth: According to the Malaysian statistics department, the Malaysian
market is expected to grow due to the increase oI liIe expectancy and increment in
expenditure. This will prove to be a major reason on why we expect our market
share to rise.
3. Technology: Nestle have set aside some resources Ior change. This change is
meant towards the technological side. This means that we may need or may
acquire new machine that is oI higher technology to cope with the demands.

Treats

1. Internet Business: Internet business can be seen as an opportunity and also a
threat. For example the e-business might not take oII and may incur losses to the
business. It is then not advisable to continue in this area.
2. Competitors: Competitors are always a threat no matter how advance our business
is and how large a market share we have. Our market share may erode due to
competition coming and we may lose our superiority. In our business competition
is very stiII and we need to innovate to ensure that we maintain our share oI the
market.