- lack of foresight/planning
- smeared image
- Market leadership
- Strong brand
- Financial stability
- R&D capability
purchasing power in the developing countries
vs.
purchasing power in the developed countries
- Consultations with WHO and UNICEF
- Audit commission to ensure the company’s compliance with the code
SWOT Analysis
Point of
View
PESTLE Analysis
- Rivals/Competitors
- Continuous negative attacks and accusations from various groups
Problem
- Valid need for a nutritional substitute to breastfeeding
- Growing population
- Findings on HIV transmission via breast milk
scientific findings on breast milk superiority
1. All developing countries have the same characteristics in terms of resources, information dissemination, etc.
2. HIV/AIDS- affected mothers may transfer the virus to their babies through breastfeeding.
Rural vs Urban communities
A. How should Nestle respond to the following:
1. bad publicity or issues of different organization
2. HIV/AIDS issues
B. What could Nestle have done in marketing their infant formula to 3rd world countries/LDCs? What should other companies do to protect themselves in the future?
Flow of Discussion
- Case context
- Company Background
- Development of Nestle
- Market expansion
- Issues
- Assumptions
- Problem Statement
- POV
expensive for third world market causing them to stretch supply
- Strong association with country of origin, making it “aspirational”
- As a supplement for infant nutrition v breast milk substitute
- Still not as nutritious as breast milk
- Powder form, must be mixed with water
Marketing Mix
- Analysis
- 4Ps
- PESTLE
- SWOT analysis
- Recommendations
- Company Updates
hospitals and clinics
widespread distribution
sales representatives
- free samples given out to nursing moms
- mainstream ads
- promotion to doctors and nurses
- promoted infant formula as “substitute” for breast milk
- lack of product education efforts
Case Context
Case Context
Company Background
Nestlé SA
Recommendations
4. How other companies can prevent a similar concern and to protect itself in the future
A. Death of Third World Infants
- 1974 - British journalist Mike Muller published a report -Death of Third World Infants
- Third World Working Group - “Nestle Kills Babies”
- a Multinational Manufacturing Corp. (MNC) headquartered in Vevey, Switzerland
- factories in more than 80 countries
Case Context
- Understand the local culture of the nation/geography
- Practice ethical and social responsibility
- Work with local government and any national health organization
- Market products with different approaches in different societies
- Educate the local with adequate information about their product to avoid misuse
- One size doesn't fit all
- objective: "Good Food, Good Life.
- Leader in Nutrition, Health, & Wellness.
- Trusted company by consistently delivering their promises
- 2001 - 3.8M worldwide had contracted HIV at their mother’s breast, 90% from developing countries
Some Products
Baby foods
Bottled water
Cereals
Chocolate & Confectionery
Coffee
Culinary, chilled and frozen food
Dairy
Drinks
Food service
Healthcare nutrition
Ice cream, Extreme
Petcare
Case Context
1866 - foundation of Anglo Swiss Condensed Milk Co. by the Page Brothers of the United States
1867 - Henri Nestle infant cereal was developed
1905 - Nestlé and Anglo Swiss Condensed Milk Co. (new name after merger)
20th century - diversification (chocolate, cheese, coffee, bottled water, petcare, ice cream
1929 - Merger with Peter, Cailler, Kohler Chocolats Suisses S.A. (Milo and Nescafe)
1947 - Nestlé Alimentana S.A. (new name after merger with Maggi)
1977- Nestlé S.A. (new company name)
concerns
- switch to the bottle just to be safe
- or continue to breastfeed to avoid being stigmatized
2004 - demand for infant formula in South
Africa outstripped supply as HIV-infected
mothers made the switch to formula
THE CHARGES
- formula found its way to Amazon tribes - jungles of Peru
- highly contaminated river as water supply
- formula diluted to stretch their supply
- decrease in the incidence of breast feeding
- radio jingles - “white man’s powder that will make baby grow and glow”
- “milk nurses” - providing samples to moms in hospitals
Recommendations
2. To address issues with HIV
- Prevention of HIV-infection during breastfeeding by recommending that if a patient has HIV, formula should be used
- Partnership with government to sell milk at discounted prices to HIV positive mothers
- Provide education on HIV
- Tie-up with medical providers/health authorities
- Partner with government health agencies to promote awareness
- “Breastfeeding is still best for babies”
- vital role in proper infant nutrition as a supplement & as a substitute when a mother cannot breastfeed.
- mothers in developing nations - dietary deficiencies
- work schedules that will not permit breastfeeding
- weaning foods as either native cereal (with two basic dangers) or commercial manufactured milk formula.
- real nutritional problem in the Third World - how to supplement mother’s milk with nutritionally adequate foods when they are needed
1974 - Nestle reviewed its marketing practices
on a region-by-region basis
1977 - Third World Institute launched a boycott
against many Nestle products
1978 - Nestle banned mass media advertising
worldwide
1981 - 118 member nations of WHO endorsed a
voluntary code
1982 - Nestle formed the Nestle Infant Formula
Audit Commission (NIFAC)
1988 - Action for Corporate Accountability - call to resume Nestle boycott
1997 - Interagency Group on Breastfeeding Monitoring (IGBM) - claimed that Nestle continues to systematically violate the WHO code
2008 - International Baby Food Action Network (IBFAN) - accused Nestle and other manufacturers of violating the code or stretching the restrictions
1984 - INBC suspended boycott activities;
- Nestle pledged continued support of
the WHO code
Expanding into new market with existing products . It may be:
New geographical market
New market segments
New users for products
market
development
strategy
One of Nestlé’s oldest products.
Principal product until the early 1900s.
Nestle sought entry into NEW MARKETS with their EXISTING PRODUCTS
Safe in developed countries where:
1. high quality drinking water is available
2. bottles & preparation equipment can be effectively sterilized
3. increased risk of illness can be treated
Recommendations
Western Europe maternity leave legislation empowers women who wish to stay at home and breastfeed their babies in first 6 months
Powerful regulatory agencies such as FDA in the develop countries
Enabled nursing mothers to maintain employment outside the home; helpful, if not essential, in combating poverty.
- Fund research on infant feeding
- Continue strict compliance to the WHO Code
- Suspend consumer advertising & direct sampling for moms
- Continue efforts on social responsibility by sponsoring events for healthy pregnancy, int'l medical & nutrition conferences, and events like celebrating Family Day
- Become involved w/the Baby-Friendly Hospital Initiative
- Keep its internal Nestlé instructions to Nestlé employees updated and up to standards to avoid any more problems.
- Provide sufficient education towards Third World consumers about healthy pregnancy
- Continue Nestlé’s stand against giving up breastfeeding and that breast milk is still best for babies
Recommendations
Nestlé, Infant Formula, & Developed Countries
3. What could Nestle have done to avoid the accusations?
- Used global market model, adapt strategies that are cost effective and culturally appropriate
- Conducted more intensive research prior to entering a new market
- Made advertisements more informative for the local market
- Developed health education programs
- Promoted breastfeeding and been more clear that infant formula is only supplementary
- Did not distribute samples to hospitals
- Tied-up with medical experts on properly informing the nursing moms
- Segmented & Targeted the new markets and Positioned their products properly
- Nestle has now promised to drop its “natural start” claim in accordance with International Code Article 9.2 which states that “Neither the container nor the label should have pictures or text which may idealize the use of infant formula.
- In the Philippines, statutory warnings are required on labels in English and Filipino and prohibit claims.
Nestle recommends that breast milk is the optimal feeding choice
Nestlé
The Infant Formula Controversy
BA 236
Alcantara. Flores. Ramirez. Salazar. Sia. Taguinod.