PLC Product Life Cycle When We Talk Essay

Excerpt from Essay :


Product Life Cycle

When we talk about the strongest multinational companies of the world then Nestle is definitely one of the names that triggers in everyone's mind. Nestle is the world's No.1 food manufacturing company. Nestle is a Swiss multinational company whose product are available almost in every part of the world. Most of the Nestle products are in a market leading position. Nestle company was established in 1866 and since that day, it has proved itself as one the leading companies of the world with its improved quality, innovative ideas of marketing and attractive packaging (Nestle, 2007).

Nestle launched its first juice in 1996 and since then it has spread its product largely. The consumers' response to the flavored juices of the Nestle Company was upbeat. This further strengthened the position of the Nestle Company in the market as the unbeatable leader. Later on, the company innovate the product with the name of "Nestle Fruita Vitals," an eye-catching packaging and more flavors that differentiated the product with its competitors present in the market.

One of the fastest growing products of Nestle Company is juices that come under the brand name of "Nestle Fruita Vital" available in Pakistan. Nestle Fruita Vitals has tried its best to differentiate itself form the local products available in the country. The brand image of Nestle Fruita Vitals is getting finer day by day. They have made excellent marketing campaign for launching the product and latest technology usage in the operational field (Saaksvuori & Immonen, 2008).

The vision of "Nestle Fruita Vitals" is to have leading lace in the beverage industry and attain customer value by providing premium quality juices with high nutrition.


Introduction Stage

Nestle juices were introduced in late 90s and since then the product have always shown the best financial and marketing reputation among all its competitors. At first, the cost per unit was quite high as well and there was no such competition available in the market. People had experience of soft drinks like Pepsi and Coca Cola but the introduction of ready-made juices was a completely new product. Although the trial stage was quite risky, but the product was entirely new and according to their needs of instant drink that do not contain carbonic acid. Nestle juices were introduced with the idea of giving quick vitamin C drink that people can use in their daily life without the fear of carbonic acid intake. Demand for the product increased so rapidly that other companies also felt to invest in the juice industry and get maximum profit with customer loyalty. However, the brand image of Nestle is still in leading position (Jennings, 2012).

Growth Stage

The fixed cost of the product decreased due to high selling rate. The company began to get profit due to high sales volume. Moreover, people are getting health conscious day by day and the want such food products that are more nutritious. Therefore, the demand for the "Nestle Fruita Vitals" has also increased because instead of drinking soft drinks, people are now more concerned about the juices to get vitamins. The general view of people about the Nestle product is that it is good for health and environment friendly. The reason behind the excessive success of "Nestle Fruita Vitals" is that it is a 100% pure fruit extract and a good source of vitamin C to maintain a healthy lifestyle and increase the body resistance against diseases.

With the passage of time, other companies are also entering in the juice industry.

Many of the competitors that entered the market following "Nestle Fruita Vitals" have some market share as well but the leading position of "Nestle Fruita Vitals" is not threatened yet. These competitors include Shezan, Habeeb and Malee. The latest product launched by "Engro Foods Company" named "Olfrute" also has good market share with the passage of time.

Maturity stage

Now on reaching the maturity stage, "Nestle Fruita Vitals" have lowered the fixed cost a lot because of the increased production due to increased demand. Due to the leading position of the "Nestle Fruita Vitals" in the market, other competing companies have also started aggressive marketing campaigns and more facilitations and low price to attract the customers. In order to keep the market share maintain, "Nestle Fruita Vitals" is also cutting its cost to make the product available at low price like it competitors.

Product Innovation: The company has also diverse the flavors of the juices to a large range. These flavors include orange juice, mango juice, apple nectar, red grape nectar, pineapple nectar, peach nectar, chaunsa nectar, guava nectar and mixed orange mango juice. "Nestle Fruita Vitals" has given a diversified range of flavors that none of its competitors have launched yet.

Moreover, "Nestle Fruita Vitals" has also introduced new tetra packaging with easy opening cork. Tetra packaging keeps the juices fresh, safer, and healthier. "Nestle Fruita Vitals" have also changed its packaging with an entirely new design and new marketing campaign. Almost 70 million is spent on the research and development to continue the process of improvement and innovation.

Competitor Analysis: In order to understand the position of "Nestle Fruita Vitals" in the market and the problems that it can face in the near future, one must study about its competitors that prevail in the market. As described earlier, the competitors of "Nestle Fruita Vitals" are doing excessive marketing campaigns based on low selling price to attract the consumers, but none of the its competitors have yet managed to attain the position of the "Nestle Fruita Vitals." The product of Nestle Company is far better in terms of taste, quality, packaging and promotion (Morschett, Schramm-Klein, & Zentes, 2009).

Nestle has faced hard times in Pakistan due to the snatching of the market lead by other companies. The arrival of "Aquafina" by Pepsi decreased the demand and market share of Nestle pure (mineral water), "Olpers" by Engro Food Company decreased the demand of "Nestle Milkpak" and now the launching of "Olfrute" by Engro Food Company has threatened the position of "Nestle Fruita Vitals" in the juice industry as well. Concisely, the companies have tried their best to throw Nestle out of the leading position but its prompt actions have always saved it from being out of the market.

Distribution and Promotion

Intensive distribution of the product with complete support of the suppliers is the need of time. "Nestle Fruita Vitals" is also sponsoring many events to promote its juices especially in the sports events where health and physical fitness is highly important. "Nestle Fruita Vitals" has started excessive social media marketing through social media networks like facebook, twitter and google plus. Their electronic marketing via television is also quite impressive. Billboards are so eye catching that consumers feel to have them at once (Morschett, Schramm-Klein, & Zentes, 2009).

Available financial source in home country:

The Swiss bank located in the Switzerland can easily finance the Nestle Company. As the headquarters of the Nestle company is in Switzerland therefore it not a difficult task for a multinational company like Nestle to finance itself from any bank of the world. The world's No.1 food manufacturing company can have finance from anywhere in its home country.

Optimal financing source (Multilateral) for "Nestle Fruita Vitals":

To enhance the leading position of "Nestle Fruita Vitals" in Pakistan, the foreign direct investments (FDI) can provide the financial aid. In a country like Pakistan who has such a strong strategic position, FDIs will agree to invest their finance in the world's top most multinational "Nestle Company." Currently FDIs have invested USD 3.86 billion so if they were asked to finance, they will surely do it after observing the increased market demand.

Optimal financing source (Public Sector) for "Nestle Fruita Vitals":

The best public sector that can finance the Nestle Company in Pakistan is the central bank of Pakistan "State Bank." Since the government has started to give financial aid macroeconomic and financial sector for restructuring therefore the State Bank can provide enough financial sources to the company that it can easily innovate further in the juice industry. Getting finance from the State Bank is beneficial because it can provide large lump sum amount to the company. The company can use this amount for research and development or marketing strategies. Competing with the rivals and high productivity can also be achieved by this financing.

Even the non- bank financial institutions, stock markets and debt securities can also finance "Nestle Fruita Vitals" as the private sector investments and consumptions are the key factors that flourish the economy. Many privatized banks are also providing credit for financing in business on specific terms and conditions. The juice industry can also avail these credits to enhance their developmental progress further and to increase their market share (Franzen & Moriarty, 2009).

Available financial source for global investment:

The best financial source available to the Nestle Company is Russia. Russia has made contracts with the Nestle Company to provide it the finance…

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