9-1 Final Assignment mkt 675

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MKT 675

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Jan 15, 2025

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9-1 Final Project: Analysis and RecommendationsAkyah Leak-Williams July 14. 2024MKT 675

Introduction to NestléNestlé S.A., founded in 1866 by Henri Nestlé, is a Swiss multinational food and beverage conglomerate headquartered in Vevey, Switzerland. As one of the largest food companies in the world, Nestlé's portfolio includes a wide array of products such as baby food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks. Some of its well-known brands include Nescafé, KitKat, Gerber, and Purina.Nestlé's primary competitors are other global food and beverage giants like Unilever, PepsiCo, The Coca-Cola Company, and Mondelez International. These companies compete across multiple product categories, striving for market share in the highly competitive food and beverage industry.Recent Unethical Marketing PracticesNestlé has been embroiled in several unethical marketing practices over the years, with one of the most notable being its aggressive promotion of infant formula in developing countries. This practice dates back to the 1970s but has seen recurrent issues into recent years. Nestlé's marketing strategies included distributing free samples of infant formula to hospitals and mothers, undermining breastfeeding by suggesting that formula was equivalent or superior, and using misleading claims about the health benefits of their products. This practice has had severe health implications, as many mothers in developing countries switched from breastfeeding to formula feeding, often without access to clean water or the means to afford formula consistently, leading to malnutrition and increased infant mortality rates.Legal Implications

The marketing tactics employed by Nestlé have resulted in legal and regulatory scrutiny globally. Various countries have implemented stringent regulations on the marketing of breast milk substitutes. For instance, the International Code of Marketing of Breast-milk Substitutes, established by the World Health Organization (WHO) in 1981, sets out principles to regulate the marketing of formula milk. Nestlé's practices have often been found in violation of these international guidelines, resulting in fines, legal battles, and widespread public backlash.Ethical Norms and Values ViolatedNestlé's marketing practices violated several ethical norms and values, particularly those outlined by the American Marketing Association (AMA). The AMA's ethical framework emphasizes honesty, fairness, transparency, and responsibility in marketing. Nestlé's actions contravened these principles in the following ways:1.Honesty: The AMA insists on truthful communication. Nestlé's marketing campaigns often made misleading claims about the benefits of their infant formula, which did not accurately represent the potential risks and disadvantages compared to breastfeeding.2.Fairness: The AMA stresses the importance of balancing justly the needs of the buyer with the interests of the seller. By promoting infant formula in developing regions where resources are limited, Nestlé exploited vulnerable populations, prioritizing profit over the well-being of infants.3.Transparency: Transparency in marketing ensures that all relevant information is disclosed to consumers. Nestlé's omission of critical health information and the risks associated with improper formula use failed to provide mothers with the full picture needed to make informed decisions about infant feeding.

4.Responsibility: Marketers should accept responsibility for the consequences of their activities and make efforts to ensure that their decisions and actions are in the best interests of society. Nestlé's practices contributed to public health crises in numerous developing countries, demonstrating a significant lapse in corporate responsibility.In summary, while Nestlé is a global leader in the food and beverage industry with a diverse range of products and a formidable presence worldwide, its unethical marketing practices, particularly related to infant formula, highlight significant ethical breaches. These actions not only attracted legal repercussions but also violated fundamental ethical principles as outlined by the AMA, underscoring the need for greater accountability and adherence to ethical standards in marketing.Strategy Analysis of NestléIntroductionLeading international food and beverage giant Nestlé has been involved in several ethical scandals throughout the years, most involving its marketing strategies. It is necessary to examine their current tactics in detail and determine how ethical standards are met to comprehend these problems. The present study aims to examine Nestlé's marketing techniques and assess their compliance with ethical norms. Specifically, price, product safety, and competitive intelligence will be the main areas of focus. To find any potential holes in their tactics, the underlying cause of any unethical marketing techniques will also be investigated.Marketing Techniques That Are Unethical

There are various unethical marketing techniques that Nestlé has been linked to. Notably, there has long been debate concerning its promotion of baby formula in underdeveloped nations. The business was charged with utilizing forceful marketing strategies topromote formula over breastfeeding, which allegedly compromised infant health due to improper preparation with unsafe water. These actions raise questions about whether such practices involved competitive intelligence, pricing strategies, or product safety concerns.Unethical Marketing PracticesNestlé has been implicated in several unethical marketing practices. Notably, its marketing of infant formula in developing countries has been a long-standing controversy. The company was accused of using aggressive marketing tactics to promote formula over breastfeeding, which allegedly compromised infant health due to improper preparation with unsafe water. These actions raise questions about whether such practices involved competitive intelligence, pricing strategies, or product safety concerns.Competitive Intelligence: Nestlé's strategy to gain a foothold in new markets by aggressively promoting infant formula can be seen as a form of competitive intelligence. By pushing their product through persuasive marketing, they aimed to outcompete local breastfeeding practices.Pricing: The pricing strategy for infant formula, especially in developing countries, may not be as relevant to the ethical concerns raised as the manner of promotion.Product Safety: The core issue was not the safety of the formula itself but the safety implications of its use, particularly in areas with unsafe water supplies and limited education on proper formula preparation.

Current Strategy AnalysisNestlé employs a robust marketing mix to maintain its global market position. This mix includes strategies related to competitive intelligence, pricing, and product promotion, all of which are crucial to understanding the ethical implications of their marketing practices.Competitive IntelligenceNestlé invests heavily in market research and competitive intelligence to understand consumer needs and preferences globally. This approach helps them tailor their products to meet local demands. However, the aggressive marketing of infant formula in developing countries suggests that competitive intelligence may have been used unethically. By prioritizing market penetration over ethical considerations, Nestlé's competitive intelligence strategy has sometimes led to practices that do not align with ethical guidelines.PricingNestlé's pricing strategies are designed to be competitive while maintaining profitability. The company often uses value-based pricing to reflect the perceived value of their products. While this strategy is generally ethical, it becomes problematic when combined with misleading promotional tactics, as seen in the case of infant formula. Ensuring that pricing strategies do not exploit vulnerable populations is crucial for maintaining ethical standards.Promotion of Safe ProductsNestlé promotes a wide range of products, emphasizing quality and safety. However, their promotional strategies have occasionally raised ethical concerns. For example, the marketing of

infant formula in developing countries was criticized for undermining breastfeeding, a practice recommended by health organizations for infant health. This issue highlights a gap in ensuring that promotional strategies align with the ethical promotion of safe products.Root Cause AnalysisThe root cause of Nestlé's unethical marketing practices appears to stem from a combination of aggressive competitive strategies and gaps in ethical oversight. The company acted against ethical marketing strategies by prioritizing market share and profit over the well-being of consumers. Specific issues include:Aggressive Market Penetration: The drive to dominate new markets led to the use of unethical promotional tactics.Lack of Ethical Oversight: There were gaps in the oversight mechanisms to ensure that marketing strategies adhered to ethical guidelines, particularly in vulnerable regions.Misalignment of Objectives: The focus on competitive intelligence and market dominance sometimes overshadowed the ethical implications of their strategies.Nestlé's current marketing strategies reveal a complex interplay between competitive intelligence, pricing, and product promotion. While the company has robust strategies in place, the ethical concerns raised by their marketing practices, particularly in developing countries, indicate significant gaps. Addressing these gaps requires a stronger focus on ethical oversight and aligning marketing objectives with the well-being of consumers. By doing so, Nestlé can better ensure that its strategies meet ethical standards and avoid future controversies.Competitive Intelligence

Many recommendations must be followed for Nestlé to enhance their marketing strategies and lower the likelihood of unethical marketing practices happening in the future. Nestlé must make use of “global competitive intelligence as it assists in facilitating effective decisions, it is instrumental in enabling firms to successfully launch products, compete effectively, or enter a new market in a timely and specific manner" (Tian & Tobar, 2000). With the use of competitive intelligence, Nestlé is better able to comprehend the market they are entering, as well as details about their rivals and any rival goods and services that may be available. presently available or soon to be released. To effectively maneuver through the murky waters of competitive intelligence, Nestlé must be aware of the guidelines established for gathering data about their rivals. This gray area includes information that may not be regarded as a company secret but is nonetheless not generally known. Because of this ambiguity, gathering competitive intelligence involves ethical considerations. Workers who are searching for information must know what is appropriate and inappropriate. These workers also must "account for ethics from the standpoint of the culture in any country where they will collect CI." Certain nations have more stringent ethical standards when it comes to collecting CI, while others call for more caution (Limacher & Fauconnet, 2019).Nestlé has two options for strategies: hiring outside vendors of competitive intelligence or educating staff members on how to successfully negotiate the murky waters of competitive intelligence. With better training on the ethics of competitive intelligence, Nestlé staff members could use the information they have gathered to produce a competitive analysis. On this route, though, these workers would have to continuously monitor the competitors because data is dynamic, and analysis needs to be updated often to maintain accuracy. These workers will only

be involved in data collection and analysis. Employing a third-party vendor to finish Nestlé's competitor intelligence allows them to assign their staff to other projects. These suppliers can navigate the murky waters of competitive intelligence if thoroughly screened. Furthermore, according to Limacher and Fauconnet (2019), "candid, sponsor-blind information Nestlé can't get directly" might be available to independent competitive intelligence vendors. Since the vendor would be regarded as an employee, Nestlé would be liable for any moral standards or legal violations the vendor may have committed. searching for information about competitors.Pricing StrategiesWith Nestlé’s marketing scandal in China, the company came under fire for utilizing acheap addition to their infant formula to pass quality control. Melamine is a substance created from heating cyanamide that closely mimics the chemical structure of protein. Due to this, Nestlé added it to their formula to deceive quality control into passing their formula to get it on the market quickly. This addition is responsible for the death of six infants due to damage to their kidneys as well as about 3,000 babies in China becoming sick from contaminated formula (Huang, 2014). This was a component of Nestlé's pricing strategy because melamine was an inexpensive addition. By using less expensive ingredients and maintaining a constant price, the business was able to increase profits. Even though businesses frequently use this tactic to boost profits, this addition is immoral and unethical. To address the high death rates among infants who could not be breastfed, Nestlé created its first infant product, known as "farine lactée" or "flour with milk," in 1867 (Nestlé, n.d.). Nestlé can employ these strategies for some of their other products rather than reducing costs or raising the price of a product meant to keep infants healthy. Nestlé has the

option to increase the cost of any one of their numerous candy bars or even decrease the size while maintaining the same price. Unlike formula, which is all an infant consumes, these products are meant to be an indulgence. Nestlé owns a vast array of products; they could profitably raise the price of all but the infant-focused products by a small amount while maintaining the formula's nutritional value. without any harmful additions. Promotion and Product LiabilityThe market in China is understandably cautious regarding infant formula after thescandal. Nestlé’s marketing department should address the situation head-on rather than attempt to brush it aside. With how cautious the market is, releasing a statement explaining each addition to the formula may be necessary to market overseas. Outlining the ingredients informs parents of what they are purchasing for their child and may put them at ease. Though Nestlé was not the only company caught adding melamine to their formula, if they purposely explain their ingredients, they may be able to win over more parents. While this also reveals competitor intelligence for Nestlé’s rivals, it could be overshadowed by the market swaying in Nestlé’s favor. Nestlé's marketers have an ethical obligation to confront the matter head-on if they find out that the company is marketing a product that is neither safe nor dependable. Speaking with higher-ranking staff members about the issue could help find a solution because they might be able to halt the production of the dangerous product and determine why it is dangerous in the first place. If talking about the issue within the company has no impact, this employee ought to inform the public about the product's dangerous nature.

ReferencesBaby Milk Action. (n.d.). Nestlé and baby milk. Retrieved June 2, 2024, from https://www.babymilkaction.org/World Health Organization. (1981). International Code of Marketing of Breast-milk Substitutes. Retrieved June 2, 2024, from https://www.who.int/nutrition/publications/code_english.pdfEthical Consumer Research Association. (n.d.). Nestlé S.A. Retrieved June 2, 2024, from https://www.ethicalconsumer.org/company-profile/nestle-saNestlé. (2023). "Nestlé in Society: Creating Shared Value and Sustainability Report 2022." Retrieved from Nestlé.Brady, J. (2012). "Marketing Breast Milk Substitutes: Problems and Perils throughout the World." Archives of Disease in Childhood, 97(6), 529-532. doi:10.1136/archdischild-2011-301299.Limacher, M., & Fauconnet, L. (2019, May). Legal and Ethical CI. THE LEGAL AND ETHICAL GUARDRAILS FOR SOUND COMPETITIVE INTELLIGENCE. https://inovis.global/insights/2019/2019-05-Pragmatic-article-legal-ethical-CI.htmlNestlé. (n.d.). The Nestlé company history. Nestlé Global. Retrieved April 10, 2021, from https://www.nestle.com/aboutus/history/nestle-company-historyTian, R., & Tobar, B. (2000, May 8). Challenges vs. opportunities: Competitive intelligence and global strategies.https://link.springer.com/content/pdf/10.1057/palgrave.jdm.3240017.pdf