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Nestle's Baby Infant Formula Presentation

MGX3100
by

Alexandra Rutman

on 25 May 2011

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Transcript of Nestle's Baby Infant Formula Presentation

Drug Companies – Bristol Myers, Abbott Laboratories, American Home Products

• Providing free samples to new mothers in the hospitals and attempting to educate them on the importance of formula compared to breast milk

Food Companies – Nestle, Borden’s

• Intensive mass media (advertising, including sound trucks, newspapers, television, radio, popular magazines and billboards) “Huge advertisements appear on the sides of panel trucks in Nigeria or stationwagons in Thailand.
In the maternity ward of Philippine hospitals there are full-color calendars and posters depicting bright, healthy babies next to large cans of Nestlé's "Lactogen" and "Pelargon" formulas.
In Uruguay newspaper ads display a new Nestlé formula: "Eledon" . . .
Radio has become an extensive advertising medium for formula marketers in the third-world. In Kenya, for example, infant formula ads made up almost 13 percent of all Swahili radio advertising in 1973; nine-tenths of this advertising was for Nestlé's Lactogen.
In Malaysia, where the poor and rural tend to listen to the radio while the relatively rich and urban watch television, Nestlé ran three and a half times as many formula ads on radio as on TV in 1976.
"Mothercraft nurses," hired by the companies to talk to new mothers about infant care and feeding . . . bring cans of their company's formula when they visit mothers on the maternity wards or in their homes, and often leave [free] samples behind. In their crisp white uniforms, the nurses are seen as medical authorities, and their explicit endorsement of bottle-feeding is a powerful reinforcement of the media message. Such advertising persuades third-world women that formula is the modern, healthy, and Western way to feed babies. Bottle-feeding becomes a status symbol; breast-feeding, a vulgar tradition” • Undifferentiated VS Differentiated Marketing •United States; infant formula markets are heavily marketed, both in mass advertising and free samples

•United Kingdom; infant formula advertising has been illegal since 1995

•Third World Countries (i.e. India, South Africa, Peru, Guatemala), outlined previously Marketing Communication Techniques: Marketing Strategy Nestle Used: Nestle Company Mission Statement: "At Nestle we believe that research can help us make better food so that people can live a better life"

"Good Food is the primary source of Good Health throughout life" Synopsis of Nestle Case: Nestle introduced infant formula which they mass marketed in third world.

Lack of research, proper distribution and education about the use of the product resulted in infant deaths in developing countries

The tropical conditions in many of these countries meant the infant formula had to be sold in powdered form and mixed with local water.

Many of these women were poor, uneducated and illiterate meaning the preparation of infant formula was compromised and many infants suffered malnutrition and as a result died

Many mothers would dilute the mixture for prolonged use or mixed it with populated local water.

This resulted in a global boycott of Nestle products. Lack of Execution: Before the Launch of Formula:
Lack of Research

No impact analysis carried out

After the Launch of Formula:
Nestle neglected the product in the marketplace

Nestle continued to sell the product in third world countries Difference in Marketing Campigns between Countries: Description of Advertising Practices in Third World Countries: Amani, 34

After struggling to fall pregnant, Mia gave birth to Baako, now 6 months
Approached by nurses who aggressively asserted their case for infant formula
Mia lives in a small village in Eastern Kenya
No access to clean water
Illiterate
Husband passed away from HIV
Has difficulty providing for her family Ethical Issues and Lessons: Managers should recognise the following points about the appropriateness of products in developing nation markets

1. Products which are appropriate and acceptable in one social environment may be inappropriate in another nation

2. Good products may still be inappropraite because of the riskiness of the environment in which the products are to be used

3. Companies may not neglect a product once it is sold.

4. Products which have been sold to consumers who cannot safely use them must be de-marketed

5. Marketing strategies must be appropriate to the circumstances of consumers, the social and economic environment in which they live Nestle Promotion Techniques: Sales women in nurses outfits were used to promote their baby formula

Nestle ‘donated’ office equipment to doctors in an attempt to get doctors to promote bottle feeding to mothers.

How did nestle’s promotional techniques affect mothers of third world countries? 'The Baby Killer' & 'Nestle Kills Babies': 'The Baby Killer' written by Peter Muller in 1974

Article drew attention to artificial feeding methods and malnutrition in third world countries

Also tries to reach a conclusion as to why mothers would bottle feed opposed to breast feed

'Nestle Kills Babies' written by Peter Muller and published in 1975 by a Third World Action Group

Nestle immediately took legal action against the action group

The outcome? The Nestle Boycott: Official Boycott started on the 4th of July 1977 by a group called INFACT

What was the underlying reason for the boycott?
Through nestle refusing to stop marketing their breast milk substitutes

How did the church become involved in the Boycott?

Boycott was finally suspended by the INBC (International Nestle Boycott Committee) Shareholder vs StakeHolder
Approach: Shareholder view:
A narrow focused view which concentrates on generating maximum profits for shareholders with in the law.

Stakeholder view
A wider view where the company also has responsibilities to external parties not only its shareholders. Examples of external parties include:
- Consumers
- Debtors
- Creditors

Nestle adopted a shareholder in regard to the boycott instead of adopting a stakeholder view Deontology vs Consequentialist
Ethics Recommendations: Nestle could have developed the formula so it would only break down in boiling water

Market their product as a luxury good, therefore targeting the upper class society who are able to interoperate instructions The Importance of The Marketing Process: According to the case, “The fundamental ethical dilemma for MNE managers is whether such a product can be marketed when it cannot be guaranteed, or reasonably expected, that it will be used by people who meet the minimum conditions necessary for safe use”. The Development of the Marketing Discipline Since the rise of capitalism, marketing has seen no bounds.

Varying political environments and ideological trends have profoundly influenced marketing practices in developing countries. Market Exchange: Market exchange is process in which goods and services are traded over domestic and international markets through currency.

An ideal market exchange is difficult to achieve. Therefore Holley (1998) proposed the idea of an “Acceptable Exchange”

- Adequately informed
- Adequately rational
- Free from compulsion Information Disclosure Continuum: 1. Minimal Information Rule
2. Modified Minimal Information Rule
3. Fairness Rule
4. Mutual Benefit Rule
5. Maximal Information Rule

According to Holley:

The Mutual Benefit Rule is the appropriate standard by which sellers should disclose information.

The Maximal Information Rule is considered by Holley as a very extreme standard to pursue. Consumer Vulnerability: “Consumer vulnerability is a state of powerlessness that arises from an imbalance in marketplace interactions from the consumption of marketing messages and products” (Shultz II and Holbrook, 2009). Paternalism: Paternalism is, “The interference with a person’s liberty of action justified by reasons referring exclusively to the welfare, good, happiness, needs, interests or values of the person being coerced” (Ebejer and Mordern, 1998).

Nestle’s marketing strategy was motivated by worthy cause, but ineffectively and immorally executed.

They aggressively and vehemently advocated their case for infant formula, despite knowing the requirements needed to effectively administer it Interactive Discussion Do you think Nestle's Actions were ethical and justified or unethical and unjustified? Were Nestlé's intentions good or bad?
- Nestle marketed their product with good intentions.

Adopted a Deontology approach, where their infant formula would provide adequate nutrition to new born babies, as the actions were not of major importance to Nestle.

Nestle failed to adopt a consequentialist position as they had not taken into account the consequences of marketing a first world product in a third world country.
- If Nestle would have taken into account their actions of their product they may have avoided the consumer boycott against nestle products.
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