Transnational Marketing

MKT 490

Tutor: Ibrahim Sirkeci

Paper Type: Group Case Study

By

Melis Yurtbay

S00603718

Generalization for Today’s Baby food industry in

UK

NESTLE

(This paper only offers the parts written by Melis Yurtbay for

Nestle Group Case Study)

Generalization for Today’s Baby food industry in UK

Baby food industry in UK has positive growth in UK despite

to the baby milk boycott. The organizations, that launch better

integrates, and new formula for baby milk gain the trust of

parents raise their value of company in sector. Due to the fact

that, The UK baby food, drink and milk market recorded a 53% leap

in value sales between 2007 and 2012 to reach £617 million

(Mintel, 2013). Baby milk is the biggest sector in the market and

recorded an 11.8% increase over 2011-2012 (Mintel, 2013). Baby

food in the UK is expected to increase in current value by 13% in

2013 (Mintel, 2014). This growth was primarily fuelled by price

inflation – particularly within baby milk – as overall volume

sales in the market climbed by 11% to 98 million kilograms over

the period (Mintel, 2013). According to the brand shares in the

market, Aptamil and Cow & Gate were the leading brands in this

respect in baby food in 2013.

Thanks to innovations of both prepared baby food and gaining

the confidence and trust of parents for baby milk, that records

positive value, it is expected to increase baby food in UK in

constant value at a CAGR of 5% over the forecast period, rising

to an estimated £1,046 million by the end of 2018 (Euromonitor,

2014 ).

In any industry, having strong competitive directs the

organization to make their products or service more valuable and

advanced according to consumer expectation in order to pull away

from the average to top of sector. The competitive environment

in milk formula industry remains essentially concentrated between

a handful of leading players which offer products with added

benefits and innovative packaging formats which allow them to

distinguish their brands. Following to this, some of the sector

leaders, which are Aptamil, Cow & Gate, and SMA (Nestle UK since

2013) all recently made changes ( Euromonitor, 2014).Those

innovative changes affect and support the industry growth

performance positively and invite to other brands to challenge .

The first of these was Hipp Nutrition’s relaunch of its baby

food under the Combiotic brand, which adds ingredients aimed at

simulating the contents of breast milk such as so-called

‘friendly bacteria’, pre-biotic oligosaccharides (GOS) and

various other ingredients such as long-chain polyunsaturated

fatty acids, omega 3 and omega 6 (Euromonitor, 2014).

Second, SMA Nutrition (Nestle UK since 2012) launched its

milk formula in unique bottle-and-teat combinations, which are

ideal for on-the-go consumption (Euromonitor, 2014).

Overall, although liquid cartons continued to dominate

volume sales of baby food in 2013, there was a clear shift

towards HDPE bottles, which are more convenient to carry around

than bricks, easier to reseal and also retard the depreciation of

vitamin C in the product. (Euromonitor, 2014). As s result of

market trends and development available, Baby food industry,

including baby milk has tends to increase market share and

increase their quality of food regarding to compliments from

parents and competitive in UK

Figure1: Brand Shares (by Global Brand Name), Historic, Retail Value RSP,% breakdown

(Euromonitor, 2013,)

However, according to the Figure 1, Nestle couldn’t have

valuable rates in UK Market share before 2012 because of Nestle

boycott in UK, supported by IBFAN. Nestlé which controls about

29% of the global baby milk market, bought Pfizer's SMA which was

the third leader of Baby milk industry in UK with 13.98% of

retail value in 2011, in order to go ahead with UK industry

(Euromonitor, 2014). As recorded, Nestle under the Name of SMA

had 23.1% market share on the baby milk formula in 2013.

(Euromonitor, 2013).

Intellectuality of Mothers and their Thoughts

Furthermore, Even the rates of breast- feeding have a climb

from 76% in 2007 to 81% in 2010 according to NHS data

(Euromonitor, 2013). There is still a high amount of usage of

prepared baby food and milk and s non-answered question in

parents mind for hesitation about feeding their babies with

homemade or prepared manufactured milks and foods that’s

highlighted in Figure 2.

Figure 2: Attitudes Towards Baby Food and Milk, March 2013 (Mintel, 2013)

Figure 2, shows research based on 754 parents with children

added between 0 and 4, 66% of parents found homemade baby food

safer than manufactured foods, 43% of them believe to the

importance of providing a variety of food for babies. However,

the parents that worry about salt or sugar rate of manufacturing

food that effects consumption of prepared baby food were 35%.

However, those factors shown on Figure 2., would be an another

effective reasons on the rates of consumption of Manufactured

foods for babies.

Forecast for Baby food industry

Figure 3: Forecast Number of British Live in UK (Mintel, 2013).

In Figure 3, the number of British and number of birth and

forecast in UK are shown. According to graphic, it is possible to

see rise in numbers of birth beginning from 2010.This can also

support the consumption of baby food in a positively. However,

Britain’s immigrant population is cited as the primary driver of

the birth rate increase, illustrating the importance for

manufacturers to be aware of any cultural differences surrounding

infant care and feeding among the UK’s ethnic communities.

(Mintel, 2013)

As a result, if we sum up the Baby milk and food industry in

UK, including Nestle, which bought SMA group, had rise against to

the baby milk boycott factors. There is more intellectual mother

community that supports the importance of breast-feeding and

hesitation about manufactured food or milk. Due to the fact that,

baby milk and food industry in UK has positive rise on market

values and had a climb to 26% (Euromonitor, 2014).

HighPrice

Figure 4: Brand Positioning

Where Nestle sits in Market?

Perceptual mapping is a technique that allows the marketing

managers to present the perception of consumer of competing

products or services in two-dimensional space (Pizam & Mansfeld,

1999, p.313). In the Figure 4, perceptual mapping of Baby food

companies in the UK is shown. According to the market share and

price Cowgate group including Abtdamil is the market leader in

both high and low price option that targeting different segments.

However, the SMA food is located between Cowgate group companies.

As previously given on rate tables, Nestle wouldn’t be able to

make success on market in UK until Nestle bought the company

called as SMA (previously owned by Pfizer), which is the customer

centric and gained the trust of consumer for purchasing procedure

thanks to the innovation they made. This would be rather because

of Nestle baby milk boycott or other factors Nestle faced over

Low Budget BrandShare

LowPrice

the past years.

If Nestle still uses SMA (previously owned by Pfizer)’s brand

values, some relevant question still waits to be answered;

Is Nestle cheating the Segment Target by using Pfizer’s existing

brand identity? Is that ethic?

Most of big multi national companies, which have some similar

issues with in the specific market, generally find solution by

looking for a Fly by Night Company to buy that has premium status

in the market. Because money talks industries are quite open to

exploit consumer-buying power unethically with fake identity.

There are still so many parents, who thought they still

boycotting nestle. Therefore, they don’t know SMA is owned by

Nestle and still consume their products as usual. In addition,

maybe Nestle Baby Milk Boycott can be affected by the immigrant’s

consumption. However, in cross-cultural literature, ethical

judgment may differentiate among national groups (Jackson, T,

2011, p82.). In such transnational cases, it is possible to see

different symptoms in different groups that either ignoring or

supporting the boycott.

How Nestle Milk boycotts are affective on Nestlé’s market share

under SMA name.

Before Nestle bought Pfizer’s SMA, SMA had 28.8% market share in

2009. Since that it lost 5.6% value in two years and they

downgrade to 23.2% during 2011 just before they sell it to the

Nestle. However, they were still one of the market leaders as

SMA. That’s why they became the purpose of Nestle transformation.

After SMA became a part of Nestle Group, rates keep average

around 23.1%. Therefore, it has been only two years since Nestle

uses SMA brand Identity in UK and to early to evaluate how Nestle

survives with Boycott’s speculations in UK under SMA name.

Due to the lack of communication, it seems like Nestle Baby Milk

Boycott is not that emphatic anymore in UK for SMA according to

share rates. It shows that, existing consumer target of SMA who

trust the brand, that doesn’t want to change their habits and

keeps their brand loyalty active, and marks Nestle Baby Milk

Boycott less effective or nearly non-exist.

Recommendations

As I previously highlighted, there is communication problem among

people who support Nestle Baby Milk Boycott.Therefore

familiarness for boycott should be supported with other

communication mix channels. Such as, Internet and social media.

Because whatever subject is, to be successful, using Internet and

social media effectively in a relevant way, is vital to apply in

today’s cyber world.

In addition, finding Celebrity who support Nestle Baby Milk

Boycott as social responsibility and using celebrity endorsement

would be beneficial informatively to reach high amount of people.

Also for the organization, ignoring important people to society,

would be kind of taking risk. Therefore, using celebrity

endorsement would be easier way to open the doors and make

origination hear your voice in an easier aspect.

Reference

Baby Food and Drink - UK - Consumer market research report - company profiles - market trends. (2013). (online). Available at:http://academic.mintel.com/display/638100/. (Accessed 11 March

2014).

Euromonitor International. (2013). Baby Food in the United Kingdom. (online). Available at: https://www.portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.aspx (Accessed 10 March 2014)

Euromonitor International. (2013). Brand Shares (by Global Brand

Name), Historic, Retail Value RSP, % breakdown. Available at:

http://www.portal.euromonitor.com/Portal/Pages/Search/SearchResul

tsList.aspx. (Accessed 11 March 2014).

Jackson, T. (2011). International Management Ethics. A Critical ,Cross-Cultural Perspective, Cambridge. Cambridge University Press

Mintel. (2013). Attitudes Towards Baby Food and Milk. (online). Available at: http://academic.mintel.com/display/638100/. (Accessed 11 March 2014).

Mintel. (2013). Baby Food and Drink - UK. Executive Summary. Mintel oxygen reports. (online). Available at: http://academic.mintel.com/display/638100/. (Accessed 11 March 2014).

Mintel. (2013). Forecast Number of British Live in UK. (online).

Available at http://academic.mintel.com/display/638100/.

(Accessed 11 March 2014).

Pizam, A., & Mansfeld, Y. (Eds.) (1999). Consumer behavior in

travel and tourism.

Baby Milk Action. (2012). Nestle purchase of Pfizer's SMA and other baby milk brands bad news for babies. (online). Available at: http://info.babymilkaction.org/pressrelease/pressrelease23apr12. (Accessed 11 March 2014).