DHAKA UNIVERSITY JOURNAL

OF

BUSINESS STUDIES

VOLUME XXVII NO. 2 DECEMBER 2006 ISSN.1682.2498

 No 2' December 2006
Journal of'lJusiness Studres' VoI XXVII'

TheProductDevelopmentP-ro.cess'ProductLevels'andthe
Maiketing Mix of Nescafe

Nlubina Khondkar

Abstract:Ne.scaJeislheglobalcolfeebranclfroml'{estle'whosesloganis"Good
to ilfering consumers
Foocl, Goocl Li1n"'" in'tin is committed '''t!Guarantee rs a
The Nestle seal of ''y:|'!^f?'"0^
procltrcts that are ,"ti",)ri and a/fordabte.
tvar I't' Nestte's profits
st'ntbot o.f'thi,s "";;i;*';;;' ;' ;h;"ff":;
o;f the lt/ortct

tlroppecl ft'on' SZO in 1938 SO in l939 lronicall1" the war helped

"lniiiion "iUiln
it buca-ntu the stapLe drink of t.he LIS ntilitary
'o and
tt.itlt the iriroclttction of Nescafe as changing
,.i Since then Ne-scafe passed through
,\,:sr/e prolits ,torltuA to inlrease. und locally' This paper
o vage both globatlv
the lVescafe's sttccess storyt lt
ptttlr artcl 'u"u'sfirt
'n)'inl'd)t
'u'i'1' t'he key underlyi-ng i;o'in' Ueniid
,n,,,i,ri'oll1'
pres€tlts all the components
cleieto"per), its clilferent lev-ek and
,/i sc,rris;.s rro..r tlte'ir"i"rr-irl.,
r.tr' rti: iii,it k:,,,rrl,l,ir"ii:i"':;;
hfr;:;":ion presenter) ^he.re ,been collected 'from
personnel of the
.!.r--i,/rLr.iil , ,r,,,n'""'i' in-clepth inteiiewing of the key
'i'|'ouin
or 3.t't:: cti:
-it i

Keywortls:\esctl|.e'Proclttct-DevelopmentProcess,Conceptselection'Price'
Distr ibtt ion. P r ottt oti on' B ttngl adesh'

1. Introduction

1.1 HistorY of Coffee

Whencoffeewastirstdrurrk?ltisverydifficulttoknowwhencoffeewasdrunkiirst.
Somesaythatcoff.eebeendrunkasfarbackasg00BC.onelegendhasittlratan
leapir-rg around after eating
curious to see his goats
Ethiopian goatherd named Kaldi was
acertaintypeofredclrerry.Kalditriedtheberrres.andfoundhimselfstrangely
energized.
gave them
the dried berries' which they fbund
Muslims rvere brewing a beverage from
extraenergyintheirlonghoursofprayers.Thisbeveragebecameknownas.Kahweh,. popular
after the Arabic for'invigorating'.
The practice of drinking cofi'ee became
15'f century. Coffee r'vas first drunk
in Europe
throughorit the Muslim *lrfa Ui tn.
aroundl620andthenincoffeehousesinLondonpeoplecametomeetandtotalkabout
(Moss, 1993)' The fashion for drinking coffee
soon
thrngs as well as to drink coffee by the 16tl'
and there \\,ere numerous coffee-hollses
or cafes throughout E'urope
sprcad

.Depar1rr,rentofMarketing,UniversityofDhaka.Dhaka-l000.
Bangladesh. E-mai1: mubinak@gmail com
282 Journal of Business Studies, Vol. XXVII, No. 2. Decerrber 2006

centllry. Over time. once what $,as a fashion gradually turned to our habit; and thanks are
due for Kaldi, the goatherd!

1.2 Introduction of Nescafe

The beginnings of Nescafe can be traced back to 1930, when the Brazilian government
first approached Nestle. At that time Brazil had a huge coffee surplus and it was felt that
coffee consumption rvould increase if a new product were deveioped. While there were
some forms of crystallized or liqurd in the market, they were not readily soluble and
tasted horrible. The Brazilian Coffee Institute approached Nestle's chainnan and asked to
develop coffee that u'ould be soluble in hot water but would retain its original flavor.

Our coffee guru, Mar Morgenthaler. and his team set out immediately to find a way of
developing a qualitl, cup of coffee that could be made simply by adding hot r.vater, yet
would retain the coffee's natural flavor. After seven long years of painstaking research at
the Nestle research centre laboratory in Switzerland, the scientist Max Morgenthaler
finally found the answer. On April i" 1938 Nescaf-e rvas first launclied in Switzerland.
The new product was named Nescafe - a combination of Nestle and caf-6.

1.3 Growth of Nescafe

In the year Nestle applied the technology at its Hays factory in London. For the first
san-re
half of the next decade, however, World War II hindered its success in Europe. Nescafe
was soon expofied to France, Great Britain and the USA. Without realizing it. American
played a key role in re-launching Nescafe on the continent by virtue of the fact that it was
included in their food rations. Nescafe became the staple beverage of the United States
armed forces during the World War IL Then it became so popular that the entire
production of its US plant, more than 1 million cases a )/ear was reserved for miiitary use
only. From then its popularity continued to grow and slowly became the r.vorld's best-
knorvn brands. Its popularity grew rapidly through the rest of the decade. By the 1950s
coffee had become the choicest ber.,erage of.teenagers, who were flocking to coffee
houses to listen to the nerv rock'n'roll music. In 1955 a power version was launched
u,ith strong and distinctively continental taste.

A milestone in corporate design came in the year 1961 when Nescafe rvas first sold in the
famous brou,n tin. This was replaced by thc famous Nescafe jars introduced in 1970.
Several modifications of both the product and its packaging follorved in the years after.
Nestle has strived for continuous improvements to its instant coffees using nerv
technologres and more innovation and it was the first mantifacturer to introduce coffee
u'ith a rich aroma. Today coffee is tl-re second iargest traded commodity and its worlh
over l2 billion US dollars in trade every year, mainly between developing countries
."vhere it i-s grou.n and industrialized countries where it is consumed. It is estimated that,
currentll on a\ erage. more than 3.000 cups of Nescafe are drunk every second.
 283
The Product D*'eloptnent Process, Product Levels

l.rlr)r- than 3.000 cups consumed every second, Nescafe is by

\\'irh far the world's leading
colte L,ran.1. It is also the world's second most valuable drinks brand, ie., after the Coca-
Cr.: \:scat'e is ranked as the world's 22"d biggest brand with a brand value of uS
S-I
-bn in 2000. It is ranked ahead of not jlrst Budweiser and Pepsi, but even of BMW
.:i \ike. Already available in literally hundreds of different variations, Nestle's most
mechanism to
r-cent incarnation of Nescafe came in cans with their own self-heating
pror ide steaming hot coffee literally anl.where within three minutes.

1.-l Nescafe in Bangladesh

As a global brand. \escate is ar ailable for a long time in Bangiadesh' In

the past'
\c-scatt uas it.l.r1,",on:J ihri,ilsh J,1i:rent business houses' TranScom Started
to impoft
packed in
\escalt it". .-:r-r J:.rt.3S.''':1h ..1:1..:r \esti: products. It rr.as manufactured and
The focus
T:,-..t..,:.: -11-.: lt-'--, ::,-: ::,:,ll-r th:r.- :nd lras merelr a tradins commodiq'here.
' '.-,,, j: r:a:.- :r lua$ uhen \estle took orer the entire sales and distribution
I _-.: . :: rt- . :r:-.s;,1:t anJ starte,J commercial se lling of the product under
the banner
l':-, : ::;-.:..,l3Sil \\ el1 structured marketing strateg)' been taken in order to ensure
with
:i,-i:J:;i,J1-S ... \escale. introduced as a youth brand, Nescafe been asSociated
r:t:nr clitte rent actir ities in Bangladesh and became a popular coffee drink' Although
initiaill the target market for this product was the youth group between 19-23 years of
age but no'nv sales have picked up and it is a highly demanded
product in fast food shops'
otfices. cafeterias, and restaurants. The most commonly sold form of this
product is
sachet, which is cheaper than thejar and available at general stores.

1.4.1 Coffee Market in Bangladesh

The average coffee consumption in Bangladesh is very low. The current ratio of
coffee
is
and tea drinkers is approxirnately 1:800. The average per capita coffee consumption
0.,16 cup. In Bangladesh, Nescafe is the'market leader of coffee and
represents 95%

rrarket share. Although overall coffee market is growing every year but this grow'th rate
is insignificant in comparison with tea consumption. The challenge for coffee marketers
is to rapidly increase the growth and convert tea drinkers to coffee drinkers'

1.4.2 Nescafe: Bangladesh Strategy

Currently. Nescafe iras taken the following strategies in Bangladesh:

(A) Introduce familiarity: Ensure close to our every days life in different
moments: break, fun moments, sharing, celebration, etc'

(B) Introduce affordability: Make Nescafe as an affordable brand.

,

284 Journal of Business Studies. Vol. XXVII. No. 2. December

2006

(c) rntroduce availability: Ensure product to the anns reach of consllmers.

2. 1 Nescafe - the Product

Nescafe as a product is available in different pack sizes

designed to serve the demand of
different consumer segments and to ensLlre highest sales ol Nescafe
in the country.
Presently' six pack sizes are available for various target
user sroups in Bangladesh. The
descriptio, and ratio,ale of each product is summarized in table
1 belorv.

Table 1. Product and Target market

Target Users
Nescafe 200 grn.jar Out of home pack serving the bulk users. ie. tast
Ibods. restaurants. etc.
Nescafe 50 gm jar In home pack serving the daily usage needs of
households.
Nescafe3inl6gm o Out of home consumption.
sachet
o Containing right mix of coffee, creamer and sugar to
have right taste of coffee just by adding hot water.
o Convenient pack size of lg gm allowing the
consumers to carry it with them and have coffee
anytime anywhere.
Neacafe 1 gm sachet Affordable pack u ith broader consumer base.
Nescafe 10 gm sachet o Affbrdable pack ri tth broader consumer base.
Nescafe 36 gm sachet r Wide distrrbutton in retail outlets.
. Impofiant lbr those irho are srvitching from tea to
coffee.

2.2 The Bean Selection process

l,l : -

Cofl-ee necds to go through a number of processes

to conyert it from the fresh coff.ee
cherries to the green coffee beans, which are eventually
sold to roasters like Nestle. These
processes have a great effect ott the quality.
and therefore the price of the final green
coff'ee' Depending on their resources, growers may
be able to carry out more or iess of
the processing themselves before selling the beans
and so obtain a higher price for their
crop.
The Product Development Process, Product Levels 285

,! - .:: . :.cked by hand. For best quality, only the ripe, red cherries are selectively
: .-.:- .:,.-ring unripe cherries on the branches to ripen for picking later. As each tree
^'.: r,- iisited several times during the harvest this is a more expensive method.
-. .:::-.lti\.el),, the farmer may judge the time to harvest, and then strip the trees of ripe
*. : unripe chemies in one go. This is done by the pickers sliding their hands along the
.ranches. allor.ving the cherries to fall onto a tarpaulin spread beneath the tree, from
rihere they are collected. This is more efficient. but results in lower quality.

2.3 Drring and Hulling

E-,:: :: -.rr tuo coffee beans. which must be separated from the skin, pulp and
,'r'rnt3,ins
:--:-. -..: parchment' that surround them, and this is achieved by two alternative
:- : -.- ::.

' -: ::,rcessing, the chemies may be washed prior to drying in the sun. either directly
. i ::olrnd. on the plastic sheets, on drying tables, or on the cemented areas. This
-..-.: ,\\l or three weeks, during rvhich tirne the cherries are turned frequently. Larger
-:nS i113),have mechanical dryers which are used instead oi or in addition to, sun-
:ry ing. and these can dry the cherries in three or four days. Once dry, the cherries - now
biack and brittle - are fed into hulling machines, which break away the husk.

In rret processing. the cherries are tripped into running water, which cleans them and
carries them into de-pulping machines where abrasive disks or cylinders remove most of
the pulp. The remaining sticky pulp on the surface of the beans is removed either by
ttrmentation, or by using a machine called a demucilaginer, followed by a final wash.
This leaves beans with the papery parchment still on them, and these are dried in the sun
or in mechanical dryers. Once dry, the parchment coffee is fed through hulling machines
ro remove the parchment. The dry processing is easier and more economical than wet
Diocessing, and it is often the only methdd available. However, the wet processing
:rrduces better quality coffee and is therefore often used in conjunction with selective
:.ckrng of the cherries.

2.-1 Sorting, Grading and Packing

Green coffee beans are sorted by hand or by machine to remove stones or other foreign
lrarrers. pieces of pulp or parchment and darnaged or defective beans. All of these reduce
quality and price. Beans are then also sorted into different sizes or grades, normaliy by
:r:chines - the larger beans are higher quality and attract a higher price. Finally, the
r:'f,rS ire t-r11c-d into bags of around 60 kg.
 December 2006
Studies' VoI XXVII' No 2'
Journal olBusiness
286

2.5 Bulking ^ .-:^..1^r -",.1e in order

quufit,'.fxpofiers in the cottntnes

CompanieslikeNestleneedtobuylargequantitiesofcoffeeofaparticulargradeinorl.
are consisterr;;;;;gf-'
to ensure thar rheir Oil;; ,"*oh;;;?tou' t*uff batches of coffee which
,..0 to biend so o'l'tn
of origin may there#. f"'tfilt:::"peratives and ::T,
have been gro\\n and
o r d er t o m
processtd
ake up .i, o*.,.,l
"
"n
*,n *
11111""Oifft"nt

;1iH* ***'.Xtil'il',Xli;.lJi,,
]'"i,li'Jff:;
s,
d exported
Jl,'^,"',' iuo o*
d an
;. Ti:T:":: !;H
he

lf:fl:ilJi " "',c

Process - The Problem Identification

3.1 The Product Development

*^t g'"'ii back in 1930' It is

Theconceptofinstantcoffeearo^sefromthenecessityto,findawaytosuccessfully
pttO;ttd^u"'
commerciatize the'#;.
;i;;" ot .ott*',f*t tnt ott-it." shelf brands available
io,.."*t'';;t""d*
not rhat ,h.r. *ur"l3'0".,r*J
duringthattime*;;,ilil,r,1':""r1:l,T*i*};'m,l:'1';'il31*TJ'll;
have good tasttng ct for the dri,ker' Thus
oin.r"uttt'native to r* *'utiit
*","t'li,l*"r""'-" ot"rx"'tt' back in 1e30 to tind a
betore adding #r;ii*rri.''
the Braziiian co#
il;ir* ;noro""n.'i1i;"il;tt*"'
solution to this
"",
r."i,..
op i
J,o' i*.-r
*nl1-';;;' 1:
retarn rt: il fff ^ilffitJ;
rti:;
instffi't"itJft in hot rvater but also
shelf. will be
freshness'

Needs
3.2 IdentifYing Customer
date the
time of 1930' To this
Themarketforcoffeehaslristoricalll''alrr.a1'sbeetrrobust.SoNescafeinitiallywasnotso
active in tr.,. ur.u-oi.onsumer
,.r.ur.,i'ii,i;;;;ned i' gto*ing markets of Thailand
and
extensive *urtttt research
company has undertaken j.r.t *arket research in Bangladesh'
they are not so active tj ",
India, although

pto,,'''it*'in these attributes' Nestle

BraziliaborCuban'spicyornYoy-lu'o''darkorrich'instantcoffeeorcoffeebeans-
.'tyi", unl "tt *'tt' of coffee'
in the sub
these are ,o*" ot rt coffee is sold most
needs to ,.t..i *t.,i.h
type/flavor.*rio'"i-".**
Nestle are:
customer needs for
continentar-,dwhoweueorintingtt,..t,or*coffeetypes'Thusthecompanyneedsto
analyze.rrr"r.,.r-".;;r.
il. goals of identitying

oToensurethatthetypeofcoffeesuppiiedisfocusedonthecustomerneeds.
oToprovidefactbaseforjustifyingproductspecificationstomatchthecustomer
ttceds'

oToensurethatcustomerneedisnotmissedarrdthoroughlylookedinto'
ol.ocontrnuallyfollowupandassesscustomersatisfactionlevelswiththecoffee.
 281

_, - - is a foremost important task for companies and Nestle is not

...t .r-.: it.eds
=
,-: , : Lrril.)ate objective is to pinpoint who Nescafe's target market is in
:_ .
_ _ _-, .- ,..c,\\ tirel rvill serve this market with which sort/type of coffee. Therefore
- j:;:-. iirat firstly need are to be identifies followed by specifications of the

-1 .l Target \Iarket

'.:..": :s nrrr jusr simp11, selling a hot beverage drink rather they are selling a momentous
rr,,::r.tr';,-- that helps people to take time out, to listen to each other and to open up' This
! .-.: : .:::, r:t::sage they want to translate to their customers all around the globe.

-.: -i.: :::.'rkr-t in Bangladesh and in surrounding region is young aduits fiom 19 fo 23
,,-, - li-.: reason for targeting this age group is because at this stage most are
to
.-.,--- . -. .:rr-Cr as rvel1 as one's attitude and personality. Thus, by introducing coffee
-r'. r-.-. ,rrl\ thel,can drink it together and mingle with each other but also this habit
:..- :: pushed and carried to their future. Though affluence is a pre-requirement' the
i;:j.r rr&rket of Nescafe is expanding out to different income leveis through variety
:.l .i.I iJChcts.

3.-1 )Iethods of Gathering Data from Customers

).:srie Bangladesh does not conduct any specific marketing research here in Bangladesh
:i:er relr. on the results from its test center or research hub in Thailand' Whether it is
lackaging or identifying customer needs, the greater majority of these activities for the
.\-iian subcontinent (India, Pakistan, Bangiadesh. Sri Lanka, etc.) and countries
.,,.:rot-tnding Thailand (Vietnam, Cambodia, Malaysia, etc.) are underlaken in Nestle
-:r.,.,ltd's research hub. which is located about 30 miles outside Bangkok.

),,:.:,: Thailand uses large groups for focused group discussions (FGD) for gathering raw
trji.r. Iioln the customers. Groups can consist of 20-30 people at a time. There may be
ihr:e or four focus group session held over a period of two days which ultimately means.
iearnins the opinions of up to 120 people which are done periodically. They try to collect
triormation about customer's likings, dislikes, problems encountered with opening
sl.hers and making coffee, etc. The information helps to make improvements about the
p:1iucr itself. For example, approximately two years ago, 100 grams of Nescafe was sold
.r: glass containerthathad a lid, which required one to pull off and push back on. Users
 Journal of Business Studies. Vol XXVll, No' 2' December 2006 Thk
288

its stiffness and as a'rtsuit of this k E[r

complained of the hassie of pulling off the lid due to
A,elE
screw on/off caps'
discontent. all Nescafe coffee sold in jars had to have
€T.
usually video recording and note taking document the FGD
and follorving tasks done: #
&
.Thedataistransformedintoinformationintermsofcustomerneeds. bri
.Tlreneedsareanalyzedandthenplacedaccordingtopreference.
fdoc
countries around the
. The needs are made into a rePort and sent to various &cr
region. tfirc|,
sffi
Bangladesh and discusses the
Usually a representative of Nestle Thailand visits Nestle bo&
customer needs and other information obtained from
FGDs. Snippets of the video may he
is conversed in Thai and onl-v rEl
shown, but the entrre video is not shown since every.thing
into Engiish' Therefore' Nestle
certain sections of the video is shown rvhich is translated
Bangladesh uses the information obtained from Thailand
as a means to conduct business r.5l
operations out here'
DElf
Nevertheless Nestle has to understand precisely what
the Bangladeshi customer rvant atrd fur
group of hear'-v coff'ee drinkers' h.d I
for ihis they organize PGDs sometimes. They pick up a
The FGDs are conducted wrth a r;rrE
and ask them horv they would iike their morning coffee
nurnber of lead users r.vho are invited to attend a session
*tere they are given some ciues
the needs
.ft
to discuss upon regarding a fictional product. B-v hlerarchically arranging str
b-v the memb.rs and prioritizing them. the
results or findings are analyzed'
expressed ?Gm

3.5 Setting Target Specifications and Concept Selection Toil

drinkers wanted a coffee that
rcl
Results of FGDs conducted by Nestle,revealed that coffee prro
in taste, which would make
would be easy to prepare but would be'also aromatic and rich ItI
parameters in conceptualizing
them feel refreshed. Instant solubility and taste were key aD
the new product.
rol
iri
Thesekeyparametersgavepriorityontheproperbeansandalsohadtobesorledout
team first had to dql
which would give the desired flavor. For this the product development
explore the factors responsible for the final flavor in a cup
of coffee' Flavor, as perceived' -a
and the tastes perceived lcil
is a combination of the volatile components going into our noses
foilowed the taste where ine
on our tongues and palates. So aroma rs the first impression
origin with the
acidity, has been always recognized as a key attribute related to coffee's
attribute' Aroma is the
mouth-feel sensation known as body the last but no less important
 289
': P:.r.css' Product Levels

-' .-.'.- pro\ide you with the clues to the freshness and qllality of the
coffee'
-:, -
'.'.:''-IstSoundlikesomethirrgyouarenotlookingforwardtohaveinyour
---: :l-.i uhen coming from the inherited quality
of its origin it becomes the
- '
.'j.::-:'SIlspp}tastethatgivesyourcupofNescafeitszip.Bodycomplementstlre and
.-. ::'- i.s basrcally the oral texture perceived in your mouth
as the thickrress

..1 :: :rn:rts consider the Arabica to be the most flavorsome bean' It also happens to be

',.:'].-.,sterpensiveone.SuperiorArabicabeansaregrown600-2000metersabovesea
creating a
,:.:.. ,l: 3 \\arm. tropical climate. Tlre flavor is complex, aromatic and delicate.
has a robust taste and
, .. -- h:r cotJ'ee taste. The Robusta bean. as its name suggests,
- lower on the mountaitt'
,1. \\hich n-iakes for a strong flavor. Robusta beans are grown
_ . : .: jier than the Arabica and able to withstand a
wider range of temperatures'

,1,r:, Process Planning and Economic Feasibility

of the product the real challenge was the development of

-lr:spite the conceptualization
final product Nestle
:i.: r.nanufacturing process itself because in order to come up with the
was not available atthat
.,,J to find a ner.v process and manufacturingtechnology, which
stretch their
:.n:. Since instant coffee was a process intensive product, innovators had to
the
:. ,,rrS to the limit in order to find a way that was economic but would also refine
withtheinventionof the
:-,. r-e retretainitsoriginalflavor.Thiswasachieved in1937
::rcolation.

Toda1, soluble coflee is made exactly the same way as

roasted and ground coffee; beans
the beans are
:re blended. roasted and ground. However, with Nescafe soluble coffee,
sprayed or frozen dried to
::rcolated. After percoiation, the brewed coffee is then either
through a spray nozzle
:-,:r]c\e u,ater. Spray drying involves passing the brewed coffee
-- .:, a cor.rtinuous stream of hot
air to atomize the liquid into fine particles' These particles
found
::r rh3n $,et and freeze dried again to form the agglomerated or clustered granules
.11 t,lrs of soluble coffee. with freeze drying
brewed coffee is snap frozen at minus 40
l
j:gr:e centigrade then ground into the required particle size. These grains are then heated
:r a 1o$, temperature in special vacllum chambers so that the ice crystals evaporate
result
.::r ing freeze-dried coffee granules ready to go into the jar. Using these techniques
.n a superior flavored coffee. The flow chart for this is shown
in figure 1.
 Journal of Business Studies'
Vol' XXVIi' No 2' Decernber 2006
290

of Nescafe
Figure 1. The Production Process

Tha Frsdtlfi $tT Pro*'es*

Hor velt &.

t&P H*r-ve*-
FTC
ffi ffi u**shir"l
\r1'ash i nn
tug
;;,;; ffi ,ffi r,ruir:; fttE
F'ulFr:1'; :: nullrng l$cd
FerrnErtatro* @ ffi
wa hilc ffi ffi Ncs
Dn'1rg Pxl
.vt [sp
ffi1
I
ftu
Hr:lling wJYffi Fh
mhr,,l,n'3 fr Roasting
hr
rh
ct
Al-nrrrs s*Parotic'n Htt pratrr additi':n 3tl
Pe t'cc'latin n Elirnirratinn r:f
c,,rlT*e grorlnds
i ;" tractia n c'f *ol'-rhl*s )
hc
{arrce ntralts tr by e'l apor*trc'rr
r* r(r"atjtrt'r b 1t * v ap i: raiiin:n
Corr

Drging b3 etnrnisatian
Crry ing by Ilciphili::at:i*rr -r
Fc
f reezinq dh
Atomiratiqn *nd drt'ina ''if .]te r e xtra,:ij,: rr EGI
A rror!-1.3 r"e P la cem* nt rfi
Ar,nrrra rePlacernent
'd& -|'\
riE
Pr:kaeirr-1
F ac,k.:qrn,J {} {} Til
d
Ih
NEi
3.7 Development Process and
Organizations
tu
id
AnenterprisemusttaketwoimportantdecisionsaboutthewayitcalTiesoutproduct
development.ltmustdefinebotlraproductdevelopmentprocessandaproduct
developmentorganization.Ar,vell-defineddevelopmentprocesshelpsassureproduct
quality,tacilitatecoordinationamongstteammembers,planthedevelopmentprojectand
continuouslf improve the process'
 , - r -:r-::'.: PlLraass. Prodttct Levels 291

-. : i :,: .)i the main categories where a well-defined development

: -, :,: be useful. Quality is one of the main areas focused by Nescafe.
r- '.: rien amongst their utmost priorities. For this pllrpose, Nestle has
-, -- -,:r.Lties all over the world, and in Asia such faciiities are there in

-- - ' j --.:lrtationpointof view,Nestlehashigh level of coordination, especiallvat

- : . :: supplr'-chain management. Nestle has a good coordination system starling
- i r.rr-ri ler el grorvers to processors, from processors to dealers and from dealers to
- r i.c r ersa.

' -:--,I hrs already been benchmarked and rated to be the best coffee brand in the world.
rr.-;-SSeS are standardized and it carries a brand image. Nescafe l-ras been going
' r -: Jontinuous improvising process. For some products, the production process
--:i,:.,-rconstraintsontheproperliesoftheproductsothattheproductdesigncannot
' - : ,: -::iid even at the concept development phase, from the production process design.
-":.-' products are identified as process-intensive products. Nescafe falls under this
, :.J,-.)rr from the definition and also because it is produced in very high volun-res.

j,S Product Planning

' ::se of Nescafe, product planning hasn't only been done during initial days of
.- ,., :tior-r rather it has been all through an integral part of the product development

: ..rss u,hich evoived through all these years. People's awareness towards Nescafe grerv
.-...rer the world and also in Bangladesh. Earlier Nescafe was targeted towards the
:r.nasers and younger generation. Nestle had identified Nescafe as an alternative to tea.
,,rhich has been more prominent as a beverage in Bangladesh. Initially the upper class
,.,,-s targeted as the prime segment for the..rnarket penetration in Bangladesh. They came

":t the prominent instant coffee jars, which had already been successful all over the
:.:. Afterwards, it r.vas found that there was a high demand for coffee in general.
- :-,:::Ibre. Nescafe was introduced in smaller sachets at a lower price in the market.
'.-'sr.e evaluated the market demand and found that the smaller sachets were more in
j:mand than the traditionaljars. So they prioritized on marketing the smaller sachets of
.r.stant coffee and emphasized on its country-wide availability.

T:: competitive strategy followed by Nestle was customer focused. They strived to
::tisi\ customers by offering high quality coffee at a reasonable price. They also added
-rtr.in br making the product available in convenient locations, i.e. it has been made
:r ::1able u'idel1,' for the customers to buy from anyrvhere they want. In Bangladesh the
 2006
Journal of Business Studies'
Vol XXVll''No 2' December
292

projectoflaunchingNescafecanbeidentifiedaSan.incrementalimprovementsto
for the
existingproducts,Category,ThisisbecauseNescafeintroducedproductvarietiesand
to make it more convenient
to the local demand
I

different pack sizes i, i.rp"ra

cllstomers'

3.9 Product SPecifications

oncecuStomerneedshaveidentified.the.vhaveto the needs and hence' are sold'

used
so th;;those specifications fif in rvith
specifications, customer needs include:
marke, r"rirtv them. In Bangladesh. some
by the target
"J
o Coffee that is easilY soluble
taste
o Coftee that has a long lasting

o Not too rich or better coffee

oMilkpowderthatcanbesolubleincoffeewithoutitcreatinglumps
price'
o Coflee that is accessible
within an affordable/feasible
Sc
Sirrcetheneedslravebeenidentit]ed.NestlehastoComeupwithaparticularcoffeeora cffir
range of coffees that address
tirese needs' iBft
sFEi,
Coffeeisahval,sexamitlesbaseduponitsrichness.compierityandbalance.lthasbeen
r1ltln* n * eolll
tlar or of tofftt pultll Otl-:id,t-"i ':'1i1t:"
mentioned alreadl that the
RobustatypeofbeanasrreilasontlreCountryitisgrownin.Table2presentsvarietyof l.rrl
flavors and the countr) of ongrn'
Origin
C-r
According to Country of r*t
Table 2. Variety of Flavors
lu3rr
CountrY of Origin DescriPtion of Flavor Ttc I
Braz\l
fih
gi"' u 'h6tJge to E"'optun ttptttto blt'ldt Fft
I Cameroon High ..idit)'t1.,ut
Rich and nuttl'
Columbia As;
Costa Rica Aromatic
trooE
t
Cuba Smokl'flavor Ncil
EthioPia
sH:
I
Indonesia Rich and has a rvine aftertaste rSCI
n r,oti.,;t"*Y und ul*o
tt thgtol'fy cci
I Yemen

I
 293
ln: Product Developrnent Process, Producl Levels

There are a number of factors that are considered by Nestle u'hen supplying coffee
here

.u Bangladesh. These factors are :

Bangladesh is not rvell known fbr its coffee drinking to the extent as tea for
examplc. Therefore. question is what type of coff'ee is required here?

instant coftee is fast, convenient and is easily dissolvable in water yet its taste
is

no$here as aromatic. purc and its true original taste as coffee beans that can be

grounded in a coffee grinder'

Srnce the rnajority, of people use milk powder in teas, would this same milk
pou der easily dissolve in the coffee?

Coffee is meant to be stored in a cool place. With Bangladesh's hot and humid
climate, will coffee remain fresh?

Considering what sort of coff-ee is selected and marketed' what rvill be the
price
of a cup of coffee?

> :.;:both cttstomers needs have been identified along with the product specifications
of
- -,i!-e. it is the task of Nestel to match the needs with the type of coffee made available
- :h: markets of Bangladesh. However, it is always kept in mind by Nestle that
,::,...-ications reflect not only customer needs, but also to differentiate products from
the

. -'-::..tive products as well as being technically and economically realizable'

-1 ,I rr Concept Generation

- :::i generation is a key aspect in the product development process. The degree to
- depends to a
- ., rroduct satisfies customers and can be successfully commercialized
-----::s,.rreonthequalityoftheunderlyiirgconcept.ForNescafe,thecaseisthesame.
. " -,.Ji rs not so simple that some may perceive. Various granules and beans with
r,rS add to the complexity of choosing the right kind of coffee for a
-;,,

-' - ---::\-t.

, -- .r .::ntioned, coffee is imported from Thailand, where it is partially

- , " . - ---:.:kaged. Since 1998, during its real promotional push in Bangladesh,
.--- -:-,--:jss the factors mentioned in product specifications part and decide
, ,, -l shor-rld be supplied here. Demography, income and other factors such
- -- - - :: 1rr be looked into. Initially, there were three options that Nestle were
-. -- juce andmarket inBangladesh:
---- :
294 Journal of Business Studies. Vol. XXVII. No. 2. December 2006

1. The traditional instant coffee is easily dissolvable in water - this is Brazilian and
has a rnild-neutral taste.

Z. Colombian coffee for the more in-depth rich flavor seruing a different segment of
the market. This too is instant coffee with a disadvantage being it requires some
tirne to dissolve in water.

3. Kenyan coffee beans for the true coffee lovers wl-ro appreciate and value the
taste. This requires grinding the coffee hence a coffee grinder is needed.

3.11 Concept Selection

Out of alt different types of flavors and beans available, Nescafe used Arabica beans and
selected gentle roasting for its product to be used in Thailand, India and Bangladesh.
This
is the traditional instant coff-ee that is easily dissolvable - it is Brazilian and has a mild-
neutral taste. Instant coffee was selected for markets such as Bangladesh, India arrd
Thailand as tl"re culture hasn't fully developed in cotfee drinking culture. Solubility rvas
also a ke1. issue. The rnini pack sachet r.vas introduced with milk. Nescafe 's tindings are
that people i1 India (closell,related to Bangladesh) like to add rnilk to their hot beverage.
This also made it possible tor people to der elop coffee drinking culture at a lo*'er cost.

3.12 Concept Testing

As Thailand is the hub ior \escafe in conducting most of its product development
activities. concept testing uas also done there. Individuals in the age range of 19 - 23
were intervierved face to face. they included university and college students, working
people etc and tested the concept ofinstant coffee.

4.1 Analyzing Product Levels of "Nescafe Classic Deluxe Instant Coffee"

Marketers need to plan through the five levels of the product. Each level adds more
customer value and the five constitute a customer value hierarchy (Kotler, 2003). Figure
2 presents the five levels of product-
 . -- :,:::.?:.'j'lctl,erels 295

Figure 2. The five levels of product

. -- -. Classic Deluxe lnstant Coffee is sold in smail glass jar. This product is an

, - \escaf-e coffee beans and it costs Tk.85 only. The five product levels of Nescafe
: ,rstant Cotfee are discussed below.

. The Core product is the most fundamental service or benefit that the customer is
:, r buving. The core benefit of the "Nescafe Classic Deluxe Instant Coffee" is
-.-:.-shment' fbr most users. When sorneone buys coffee of any brand or any qualiry
: ::rain thing he or she is looking for is generally refreshment. Yet the core benefit
.-. L,: mentioned also as 'a good start of the day' for some users. It can be said that
-. -i bombarding buyers with advertisemeuts conlaining messages like "Start the day
.- \escaf-e freshness" the consumers who will move to Nescafe eitl"rer switching
:--r other brands or for the first time, the expected core benefit r.vill not only be
::-i-:shment but also a good starting of the day. The consumers who rvill perceive'a
:-,:,i start of the day' as the core benefit are likely to pay more for the product than
:ir :r refreshing drinks.

I The basic product is the basic version of the product or the generic product that is the
.r.j:k.rL-r's basic conversion of the core benefit into a tangible outcome. The basic
--:,,rlicr is 50 grams of roasted coffee beans processed to keep the "full-bodied" flavor
,. ,-.:i cinal coffee beans.
 Journal o1'Business Studies. Vol. XXVil. No 2. December 2006

expect
3. The expected product is a set of attributes and conditions that bttyers normally
and agree to rvhen thcy purchase the product. The expected product consists of

o The brand 'Nestle' and the brand 'Nescafe' I

o A glass container. designed to keep coffee fresh before and afler purcltase and

opening

A seal to ensure intactness ofthe product before opening of container for the first
time

Written instructions for the preparation of the coffee required for first-tirne LISers tt
or coltsumers r.vho don't know how to use instant coffee for preparation of hot
coffee drink. Tb
Bq
4. The augmented product includes additional services and benefits that distinguish
the 'str
company's offer from competitor's offer. The product under discussion has no clear helr
augmentation. However, it has an invitation for comments on the product
priuted on
OG
the label of the glass jar. The invitation is in the followrng pattern: \Vc'd like to hear hq
from you: NESTLE CONSUMER SERVICES. P.O. Box No. - I 1037. Uttara. Dhaka.
This can be treated as an augmentation of the product. Though the augmentation is hr
very hard to notice. those rvho care about the product rvill find this invitation fbr
comments appealing. Another augmentation is the extra classification of the cotfee
by !E
the word ,,Classic Deluxe". In a recent surve-y it r,vas found that American coffee
rl
il
drinkers are spending more after coffee in the recent years but drinking less coffee.
The survey analyzed the results and found out that it was because coffee drinkers rvere Fa
drinking less coffee but due to augmentation in the coffee that was available in the fbr
market e.g. shade grown coffee.-extra cream coffee, etc. the average price per ctlp of ftu
coffee rose tremendously. This is an example of a market where the competition is in po6i
the augmentation level. This also indicates that we may find other potential Difi
enhancement of the coft-ee products to come up as product augmentation in future.
rh
5. The potential product comprises of allthe augmentations and transformations that
the d
product might uitimately undergo in the future. Whereas tl-re augmented product H
describes rvhat is included in the product today, the potential product points out to its ad
possible evolution. It is not only beyond expectation but also beyond imagination of a
consumer. Though the prornotional message on the coffee jar "Coff-ee at its best" rh
denotes that there is low potential enhancement of this product, it is not the case. The d,
product ulder discussion has lTuge potential. As the brand loyalty of both 'Nescaf-e' hi
 297
Product Levels
The Product Development Process'

normal' ordinary
'Ncstle' is on the rise and as people are mov-irg'
-,r'^o ":*that the product hold
refreshment irink, it is 1ikely
r:rieshnient drinks to special
foilowing fields'
pi.,*,i"i itl tcrms of enhancement in the
potential'1 - More environment friendly' More
o Contaitier of the product (high
etc'
easy to use, Acsthetic enhancement'

.Brandingoftheproduct(higlrpotentiai)-ClassicDeluxe.ClassicSuprenre,
Changing the writing style
of the word 'Nescafe" etc'
services (rnediun-r potential)
Communication and after sales
--:)l
Tasteofcoffee(lorvpotentialasthecoffeehasalreadyreaclredatitsbesttaste).

of 'oNescafe 3-in-1"
1.1 -\nal-vzing Product Levels
a'r\

t ,.rt
cotJ'ee consumPtion in
.

: prodtict is nerv to the market t',1 ll ilt:-,::. 1::t,":: therefore envisaged as

,,: ;;;1e are more "'1"11..1'1il who il'ii
l:f" rvill later graduate to betng
:lre .j.i:=ii;J'";.;;
."rr".'l'0""t'it-to o'in' in new consumers
rr 1 i- is an instant beverage
.,il'' .,;;';ii"JJu*'' p"tl"* '
o'"',11 -^^r^ 1

**0.'"*)-l::::,.'-l:
- . ::1r can be
sugar in an 18 gm sachet and
1
,r11
:,1,,,1,]-"ir!i.ffi:Tn",Jrl.""ro
-I-rI ' '..:ht for Tk.6 Per Pack'

.:
-.:lrrerirrgmarketsharetlreproductspecificallytargetscollsumersinthelsto30age
-f
.-'.:The-vareyollllg.Trendy,anddonothesitatetStasteanewdrink.Bcsides,singles
-r:\' '.'..Jelllsrvhoresideinhostelsorpeoplervhoareprimarilyconcernedrvith
(uSP) of the
The unique selling proposition
- :,.:Iience u,ill tjnd it extremely lucrative'
--...Iisthattlrereisnomessfloatirrgontopandthattheentiremixdissolvesinstantly.
good things come in
Nestie pt"t"O the concept that
.1 ! I t

-. the .,-rr.t the -Young consumers

-..:
f
01
:j.-Ihrcecuddlypups,forexample-thecatchphraseslroutsoutNescafe3-irr-1.s
,s in ...1I.r93Suhotb.,".age-cum.softdrinkwitlr..lt,s.hot.It.sfurr..It.shappening...
'- -: . Lrf i-)duct levels of Nescafe 3-in-i are discussed
below'

]:,..I-gproductisthecorebenefiti'e.refreshmentandinfactallNescafevending
..::]-:ltlrecatclrphrase..Refreshmentsoidhere,.ItissuggestedthatNescafecan
,,1 tl-re
' Nescafe 3-in-1 pack can come
up with the catchphrase
1,,^+
-- - .lLlLL - .-- :his image' Each
to its I: -
- ::
-.::-. t'.i itlside"'
ofa
best" f...|rasicprocluctisobviorrsiyadrink.Asthecoffeemixinstantlysolutesinbothhot
Tlie ---,"':tr-r.theconsllmergetsahoto'utotacoffeestraightaway'Butofcoursethe
are coffee' milk and sugar'
e ,: - '-': :--;t lnclrldes the com*ponents whrch
298 Journal of Business Studies. Vol. XXVII. No. 2. December 2006

The expected product comprises tire consumer's expectations that the product will taste
as perfect as other blends of coff-ee, it rvill smell great and will be available. However
expectation may differ from person to person. Some will want a stronger blend of coffee
rvith less milk and sugar; while there rvill be others who are looking for more milk and
sugar. But in general a regular customer of Nescafe 3-in-1 will rvant everything in rtght
proporlion so that rt is neither too strong nor too sweet. Besides the nerv users will also
expect that it will instantly dissolve, easy to prepare, and will be found in the nearest
grocery.

The augmented product in case of Nescafe 3-in-1 is the convenience to the consumer.
Consurners don't need to arrange for milk and sugar in addition to prepare a mug of
coffee. But the point to make is that this is augmentation to users who are already into the
habit of drinking coffee and r.vas looking for something that they can use conveniently
and affordably. To the new users this is expectation as they switched to the brand because
of this benefit. To surprise them or create augmented benefit for this segment who are
new to the consumption the company can take the coffee right at the door of the
consumers through sales promotion r.vhere consumers by purchasing a certain number of
packs rvill receive ticket to the unplugged concefi that is organized and sponsored by
thern. it will definitelv attract the young and trendy segment that they are pnrnarily h
concerned with. This sales promotion strategy has alread.v been adopred b1, another q
Nestle product Kit Kat. The same strateg,v can be adopted for Nescafe 3-in-1 so that its aoE
target market can get some extra benefit frorn the purchase. At the same time Nescafe 3-
in-1 can make an alliance with Kit Kat and can promote both the products at the same h&
time with empty pack exchange offers, etc. It can promote the strategy with the Gil
catchphrase "what goes better than Kit Kat with Nescafe 3-in-1?" q
dd
The potential product can be launch of different versions of Nescat'e 3-in-l packs u,here $1
one versiorr will contain decaffeinated coffee so that those consumers who are intolerant
with caffeine can be served. Besides it can also be graded strong or sweet in regard of the f"!h
proportion of coffee, milk and sugar.

5. Nescafe - it's Price

I&E
U
Nescafe's pricing strategy- is different for different pack size to meet the demand of CDI
various target market. I

Nescafe 200gm jar: Nescafe 200gm jar has the highest price. The unit price for the
IK
consumers is Tk.250. Since the product is positioned to meet the requirements of bulk
rEc i

users, it has basicaily the lowest price per gram of the product compared to other pack
Itt
sizes. rel
frE
 The Product Development Process, Product Levels
299 -

,,-..,:. i{r gm jar:ThepriceforNescafe50gmjarisTk.80perunit.Thesearemainly

.,- :,.rld use with high tiequency usage per day. The high frequency home users are
- - br,rr this relatively bigger pack that makes 50 cups of Nescafe and save some
> .r rhe 5 Ogm j ar also has the higher unit price but a lower
cost per gram compared
. -:m Pack.
\;scrle 3 in 1: The retailprice of Nescafe 3 in 1 is Tk.6 per unit. It has a higlier per cup
- - - ...1u an1 other Nescafe pack. Yet those who are rvilling to incur extra cost to avoid
- -s).3 of preparing coffee, prefers it.

\,.cafe 1gm sachet: The price of Nescafe 1gm sachet is only Tk'2 per unit' These are
- -: : irleinil, for the low frequency users. Despite higher cost per gm compared to
- :::-, :nd 5Ogm jar, it is more affordable price. These people usually buy 4 to 5 sachet
'-,' :,-trchase as they like to spend less at a time'

",r::r]fB 36gm sachet: the price of Nescafe 36gm sachet is Tk.50 which is used for
,- _ r-.g 30 cups of coffee. This pack size is especially attractive for organizational
-- -i;- and official use.
\s:caf€ 10gm sachet: The price of Nescafe 10gm wliich is used for
sachet is Tk.15
:-:::r.11s 8 cups of coffee. Moderate users usually buy either 36gm or 1Ogm sachet to
-- ..:lizeoncost.
- -:.:ladesh, coffee is still perceived as an expensive drink. Moreover, ollr consumers
- r:.. price sensitive. Considering both the aspects, 1gm sachet is a perfect fit for our
. : -.r-.;-rS" ri'hrch is sold at a price of Tk.2 per unit. The current vending price for per cup
- - -,:: is also perceived by majority as high price. It is sold at Tk.10 to consumers. If
- ::... decreases, the potentiality of coffee sale will increase many folds.
:. '.lll
- \rscafe - it's Distribution

. - - : : ::ch pack size and variety requires different distribution strategy. In order to
- .-- , \-.scafe ts made available to maximum number of retail outiets, Nestle has
I - t-ri . -, i - : -.-h distributors throughout the country with specific area demarcation.
=

-: -:.: I ,-:: and 50gm jars are distributed mainly in urban areas and limited suburban
. :he -,,: : ,.:,:,.-rs. modern traders, restaurants and fast food shops. These two pack sizes
-:,rlk
' : -,:k --: -.: .,:.e n around 10000 retail outlets. Nescafe 3 in t has got wider coverage with
- -. -.-.- rSl,rti0 retail outlets. The low per unit price and the level of convenience
- - r' :h.. product has helped to penetrate in more retail outlets'
- -
-
al_

300 Journal of lJusiness Studies. Vol. XXVII. No 2. December 2006

Nescafe lgn sachet helpcd the increased distribution coverage to a signifrcant extcnt by
penetrating in small grocers and tobacco sellers in both urban and suburban areas' In
addition to these. Nescafe vending helps to make the drink available to consttmers in
ready to ilrink fonn. It helps to bring Nescafe rvithin the hand reach of students in thc-
universities" cxecutives in the oftlces and consumers in the fast food shops and in
restaurants.

7.1 Nescafe - it's Promotion

Investment in promotional activities is very important to ensure a sustainable market

grorvlh of Nescafe and to achieve the company's long-term vision. Nescafe basically
communicates itself as "The taste that gets you starled off and the taste that gets you
going on,,. Nestle has taken up a series of promotional activities to promote this global
brand in Bangladesh and these are discussed below.

7.2 Advertisement

In 2000. Nestle had the third largest advertising spending worldwide, which rvas $1.887
million (Belch and Belch. 2004). Bangladesh. Nestle uses different t1'pes of media for
advertiscment. Among different media" electronic media is a u idell' used one.
Telcvision commerciai (TVC) is the most eflectiYe rnedia to create a\\'arelless abor-rt the
brand and to lcad people tou.ards the purchase decision. Nestle has taken an open and
corrmon concept for global level" n'hich is a very popular TVC for all over the world. In
align rvith the global concept. each country market develops loca1 commercial based on
culture. traditions. language and local target market. The current theme of Bangladesh's
Nescafe commercial is "iaugo, Nescufe Shaucl-e iaago". This is also used as a regional
campaign for the South Asia. The current TVC has highlighted on life style of young
generation. .

T.Z.lprint media: It is also heavily used by Nestle to promote Nescafe in Bangladesh.

Adverlising in nervspapers. magazines, etc. are useful tools to generate awareness of
Nescafc among the potential consumers and to persuade them to buy the product'
Although the cost per contact for this type of adverltsing is quite high, it helps people to
know about the brand. its key, selling benefits, which, in tum helps to increase product
demand. Nescafe adveftisements are published in Jugantar, Prothom Aio, Daily Star, etc.
The new printed advertisements are focused on functionai and emotional benefits and
emphasis has been given on price and consumer benefits. For example, an advertisement
of the Nescafe iOgm sachet usually printed in the sports page target the cricket fans and
depicts 8 friends with S cups of Nescafe are rvaiting for 8 runs to win.

I
I

I
 Th'e Frduct Development Process, Product Levels 301

-: : >hrp Signage: In order to ensure that the consumers remain loyal to Nescafe and
' , . :i to new brand rt is necessary to continuously rernind them of the brand.
, - - . has installed several shop signages in different important outlets as reminder
: -_3

- I -1 In-store Communication: A consumer consumes the product and not necessarily

- : ..s:s it. A shopper purchases the product from the retail outlets. Nestle considers
--- :Jrs on this fact that a consLrmer and a shopper can often be different. Although the
r :r S ro invest in both electronic and print media and also to remind the brand through

-. - - ,-,r activities, the company is aware that it is highly important to ensure that enough
'. .'-'\ rs spend to influence the consumers at the final stage of the decision making
: ,JSS,

::-:;e is both a planned purchase and an unplanned purchase for many consumers. In a
,- : . : J purchase. the shopper/consumer has decided to buy Nescafe before even going to
: while in the unplanned purchase the shopper does not decide either to buy
-,:-rtrp.
- - : e or which brand to buy before getting into tlie shop. To trigger the impulse of these
:.:lrned buyers, Nestle is trying to increase Nescafe's visibility inside the store.
.:,r . -:-.:tngs. danglers, shelf talkers, product holders, route markers, etc. are some tools that
- : .:iluencing the consumer's point-of-purchase decisions inside the store.

-
-r Sales Promotion: In achieving the sales targets of Nescafe, sales promotion is an
in - , -'::l tool in the whole promotion process. The key kinds of sales promotions
'11 :-
. .,lueS used by Nestle are discussed belorv.
-'\
- 3.i Consumer-oriented sales promotions are effective tool for increasing trial rate.
' r : :\amples are: Mug: Buy one 200gm jar and get one red mug, Cup and saucer: Buy
' ' rsm jar and get a cup and saucer, Spoon: Buy one 50gmjar and get a spoon. These
I

-. .,; consumer promotions are given for short period, which help to reach specific
'-, . :or a parlicular period. Besides, the company has also tried out some cross brand
.' ..,rnal activities like promoting Nescafe and coffee mate together in the Nescafe
-
- : -'.-. -,-ruple contest.

- i I \estle organized a series of Nescafe Lrnplugged Concerts by famous band music

- -. --,: the country and presented the audience with the pure essence of Bengali and
: -. .:. ,-lassics. The approach was different from the very beginning, which has changed
.- l
:-,u

: r : s rdea about concerts. In these concerts, apart from the usual electric guitars,
rnJ ., ::js and different instruments were used and music lovers experienced pure
- - -,,-: ntusic.
 Journal of Business Studies. VoI XXVII' No 2' December 2006 TLH
302

tools to ensure trial of coffee' wet

Effi
7.3.3 Sampling, both wet and dry are very useful ml&il
sampling is basically providing samples to consumers
in ready to drink form' wet
and also through diff-erent agencies' Dry
sampling can be done through vending machines
to try it out at home' Both types of
-15 t
sampling is giving arvay the products to the consumers ffi
new consumers' Figure 3 shows the H
sampling help to ensure a higher trial and create
month-rvise Nescafe samPl ing' tnd
*ELl
&Lt
Bigure 3. Month-wise Nescafe Sampling
-l
Month -urise Ff, esc*fe $ampil*rrfl
E

14fr**
1::ff*ft
ffi
1*0s*
aell
c
s,(ffi*
r!ii;
s. sffiff
;s
,# 4ffi$
u;
?**e
*

*S.-g'ou*-.- Sf *S df ad
[dEnttt

*
7.3.4 Trade-oriented sales promotion is any activity where the distributors or
also conducts trade-
middlemen receive an incentive to sell a product and Nescafe
oriented sales promotion from time to time. For instance,
if traders buy 6 units of Nescafe
they will get I unit of Nescafe 50 gm jaf free. If traders
buy 1 case (12 units)
2OLgmjar,
of Nlscafe 200gm jar, they will get 2 units of 400gm coffee mate free.

Unit reporting to
T.4DirectMarketing: In Bangladesh, Nestle has consumer Services
different queries from
the Marketing Department of the company. This unit replies
customers. Also, the company maintains a detailed address
list of food service customers
are shared with
in connection with coffee sales. The relevant offdrs and other features
in maintaining regular
food service customers from time to time. The company believes
-: . ire Product Development Process. Product Levels 303

Jtillt&ct with their cousumers. Their Consumer Relationship Panel with the words "Talk
\r- ,t ' \cstle" cxprcsses the same comlnitment.
Itn -.5 Vending Machine Operation: Nestle is selling vending machines to different
:. Ol
:nstitutions and organizations. This has created opportunity for additional business for
.he
\escafe. The machines are placed also at fast food shops and at places of public
.:theriirg. Since 2002 the company started to gradually increase vending machines.
,.hich has significantly contributed in Nescafe's saies volume increase. Figure 4 presents
:h: increased number of vending machines.

Figure 4. Month-wise Increased Number of Vending Machines

**n11 +r l** lrending finsrh$n*

* 30fi
..rlU
:4'
IdI
E 700
:m
:* lii
rF iuv
{} gn
ri
u
:

:
sS ,-ddf.-S-d*u,C.#.sod
*
:r Of

t. ::fg
-J Personal Selling: For selling Nescafe Nestle uses the wholesalers and retailers AS
--'ts) :sr:t'urion channel. In addition to normal sales channel, Nescafe has taken other steps in
mkr to get benefits from personal selling.
- - -';hlic Relations (PR): As the largest lood company. Nestle enjoys a positive image
.r.,l to
. * :r:.it Fr:rthermore, both the company and Nescafe have taken number of steps to
-:om ". -
'.r3rs :.. .r:.r:s: in the market. Nestle provides free supply of Nescafe in different
;..rith
: :. - -:,n:rences. Usually coffee is served branded Nescafe booth. The usual
. ar
r. -:.- .-: t:.s klnd of activity is different universities. professional associations,
-Ll1
: . " -:i.,rlS .orporate level PR activities. As a socially responsible company,

T
l-

Journal of Business Studies. Vol. XXVil. No 2. December 2006

304

nutrition for
Nestle took many good initiatives in differer-rt sectors with a major
focus
the benefit of the citizens of Bangladesh'

International Trade
7.8 Trade Fair Activities: Every year Nestle parlicipates in Dhaka
of traders and consumers'
Fair where the company effectively interacts with large number
and increased sales of
Through this activity it also achieves significant brand awareness
Nescafe.

8. I Recommendations

years have been passed but its

Nescafe's operations in Bangiadesh started in 1998, so six
operation*s are limited to oniy importing coffee from
Thailand and selling it in the iocal
within Bangladesh:
market. Nescafe can do the following to improve its operations

o Establish marketing research entities that help efforts for new Product
introductions.

promote coffee jars more instead of sachets, as selling jars are more profitable'

concentrate on product development for new products. For €ry

example, the
savory and
company can try to introduce coffee from Yemen (exotic, creamy.
almost chocolaty) or Jamaican (very full. with prominent fruit
flavors. sweet and ffr
rnellow). m*
trntroduce sarnpling first to test its acceptance within the market.
h,
l!{ake ail varieties of Nescafe rvidely available to ensure convenience to the

consumers all the time so that target market can get their choicest
item within 'ffi,r
their proximity. frfu
,Nescafe coffee ,hops' in Bangladesh and serve coffee in different ways
Open up
such as Mocha (one-third espresso, one third chocolate and one third
steamed

milk) or Latte (espresso with steamed miik and frothed milk on top)'

8.2 Conclusion

In Bangiadesh, although, overall coffee market is growing but this is insignificant

in
through a series of
comparison with tea market. Nescafe is trying to expand its market
and effective
rnarketing activities. It is continuously promoting its product with attractive
slogans such aS, "get recharged", "making time for friends ..'.. and
yourself', "Jago ""
Shacle j ago", and most recently with "j ago ' ' ' "" '
 --]
305
, r ,- :-i.nt Process. Product Levels

: : r-ri marketing mix of Nescafe indicates that it is well structured and

, -: thc context of Bangiadesh. Specially, introduction of sachets have changed
:-.

._ .ls consumers now can afford this renowned brand at a very low price.
.. maintains its high quality standard and unique product taste' The new
- j jrraregy has been aligned in the line with its regional positioning strategy' To

:-. 'i - ::,j,cr n,here the market is, Nestle has taken steps to ensure wider distribution
.--- :r..1 senti-urban areas. The vending operation is continuously growing which is
-:.:r.rins to the overall business. Through this vast availability at an affordable
, ,..: ;hoicest brand with continuous promotion, it is expected that the global brand
-, : :-:' \\ r1i enjoy market boom soon.

-,, ; -;f cIlCBS

.Jt
.- G E. and Belch, M.A., 2004, Advertising and Promotion: an Integrated
\Iarketing communications Perspective, 6th Edition, TATA McGraw-Hill
Publishing Co. Ltd', India.

-- l
-: :lte Affairs Department, Nestle Bangladesh Limited'
-, tu
- ..-1
:-;u .. i:, P.. 2003. Marketing Management, 1 lth Editlon, Pearson Education Ltd., India'
-. : .ne Department, Nestle Bangladesh Limited'

, ? . 1993, The Oxford History Project, oxford university Press. Hong Kong.

,. .,:.tttl - :Jsource. official r,r'ebsite of Nestle: www'nestle'com

: - :JSource, official website of Nescafe product: www.nescafe.com

''.,) S
:r- -,:d

in
of
 Contribution in this Issue
Mubina Khondkar
The Product Development Process, Product Levels,
and the Marketing Mix of Nescafe
Md. Rafiqul Islam
Md. Razib Alam
M-Commerce: An Overview Along with the Success
Factors from Consumer's Viewpoint
MD. Sharif Hossain
Md. Kamal Uddin
lmpacts of Some Selected Macroeconomic Variables
on Agricultural Production in Bangladesh
Farzana Lalarukh
Shabnaz Amin
Performance Behavior of Dse20 lndex
Javed Sicldiqui
Arifur Rahman Khan
Determinants of Audit Delay in Bangladesh:
An Empirical Study
Prof. Anwarul Islam
Prof. Md. Entazul Huque
Quality'Assurance: A Model in the perspective
of Highier Education
Nausheen Rahman
Farzana Laizu
A review of Heckscher Ohlin Theorem's Leontiels
Paradox-lts validity in Bangladesh Export sector
Md. Masudur Rahman
Mohammed Masum Iqbal
Syed Maruf Reza
The Insight of Custorner Retention Management:
Ban gladesh Perspective

Ainul Islam
A K M Waresul Karim r
Tony van Zijl
The Economics of Auditor Independence
Asma Jahan
Bilkis Akter
Analysis of the Loan S1'ndication Process and
Prospect in Bangladesh
Chowdhury Golam Hossan
M. Hclal f-ddin Ahmed
Arifur Rahman
Nakibur Rahman
Predicting Consurner Buying Pattern: A Low
Cost Data Mining Approach for SME,s