Nestle Company’s Relationship Marketing

Introduction

Relationship marketing has been hailed as one of the effective means through which businesses can achieve and sustain competitive advantage and also maintain, develop and establish better market relationships with stakeholders and consumers. Studies indicate that intense competition among businesses in the global market arena and the need for success has compelled business management to strategize on customer relationship management programs.

It is against this backdrop that most business scholars unanimously agree that developing customer relationship coincides with relationship marketing and is also a key component in business growth. Prohaska (2011, p. 64) points out that the diverse goals businesses have such as loyalty to customers, quality of services and high performance motivate them to implement customer relationship management. This paper applies six market models to examine relationship marketing practice by Nestle UK Ltd as well as the institutional, infrastructural and internal issues that impact relationship marketing. It concludes by giving recommendations for facilitating effective customer relationships.

Background of Nestle UK Ltd

Nestle UK is a subsidiary company of Nestle SA, the leading business in the provision of health, nutrition and wellness products. In the UK, nestle is a major player in the food industry with approximately 7000 employees working across its 19 factory sites (Pollitt 2004, p. 27). It is important to note that Nestle produces quality brands such as Shreddies, Go Cat, Buxton, Smarties, Nescafe and Kit Kat among others and sells a diverse range of products like nutritional supplements, bottled water, pet food, cheese, pasta, candy, breakfast cereals, beverages and infant foods in Britain. The company has twenty-three manufacturing facilities and a headquarters for its confectionery business located in New York (Pollitt 2004, p. 27).

The concept of relationship marketing

Internal markets

Krishna (2011, p. 340) points out that the effect of relationship marketing has since ancient times grown and became hyper-competitive through established relationships between suppliers, buyers sellers. This genuine paradigm shift as indicated by Gummesson’s list of 30 business relationships has been termed by marketing analysts as a move towards a better relationship marketing, and which is a concept that encompasses relational marketing, working partnerships, relational contracting, co-marketing alliances, strategic alliances, symbiotic marketing, and internal marketing.

Payne, Christopher, and Ballantyne indicate in their six markets model that employees and departments within an organization in an organization as they form part of both internal suppliers and customers in an organization. In Nestle Company UK, relationship marketing plays a pivotal role in its policy-making towards creating internal markets, demands, channel partners, suppliers, stakeholders, and customers to develop a high degree of competency, technical ability and a public relationship that is customer-centric (Pollitt 2004, p. 27). Also, it has been able to provide its customers and suppliers with maximum value through customer-centric thinking and by creating procurement and purchasing departments that are relationship-oriented.

Internal markets and Gummesson’s network-distribution channel relationships

Philip Kotler, a famous marketing guru argues that relationship marketing is a shift adopted by businesses which intend to establish long-term relationships which are mutually satisfying with key-parties such as distributors, suppliers, and customers to earn as well as retain them in their businesses (Krishna 2011, p. 338). Also, relationship marketing creates a mutual bond that connects a company with suppliers, distributors, and customers while ensuring that they all benefit.

Besides, relationship marketing also extends to partnerships with other businesses to gain resources and boost performance. Brown (2011, p. 42) points out that true marketing companies have arisen within functionally specialized organizations and have networks whose interrelationships are driven by norms besides the fact that they are coordinated and held together by organizations whose marketing methods are based on trust, commitment and sharing.

Alliance and supplier markets that enhance change in the market mechanism

Hamel Prahald points out in his model of strategic intent that the global dynamics of networking have somewhat resulted in the paradoxical nature of the trend in the market today of relationship marketing. He adds that to effectively compete in the global market and economy, a business must be in a network as a trusted cooperator. Business ethicists like Ki, Choi and Lee (2012, p. 267) concur with Prahald’s arguments and reflects Gummesson’ perspective which indicates that currently in global business, the practice of predatory and flat out competition is over and has been replaced by collaboration between companies both local and multinational as favorable competition requires that businesses cooperate.

Payne, Christopher and Ballantyne’s six markets model strongly supports the above arguments and indicates that developing relationships between organizations and networking is important for gaining basic systems or equipment as well as acquiring raw material. For instance, Nestle Company UK is involved in alliances and joint ventures with companies like General Mills to enhance its business performance.

Nestle UK and relationship marketing strategies

Customer markets

Building customer loyalty and retaining them has been identified by scholars and practitioners in relationship marketing as a major challenge in successful selling. Payne, Christopher, and Ballantyne argue in their 6 markets model on customer markets that customers are key individuals in relationship marketing and retaining them is the ultimate goal. Reimann, Schilke, and Thomas (2010, p. 188) concur with the argument and point out that lack of thorough and proper communication between business, stakeholders, and customers is a real issue of concern when setting up the most viable strategies to use in marketing.

It is important to underscore the fact that, business organizations that have not properly invested in developing strategies for creating customer loyalty and retention miss out on significant marketing share against their competitors. The latter explains why Nestle Company is putting more emphasis on building effective communication strategies to develop customer confidence, retention as well as loyalty. It has been able to retain its customers by developing effective and efficient visionary planning and strategic customer relationship management to eliminate weak customer relations which leads to dysfunctional organizational behavior and low profitability.

In their publication, Shalton and West (2010, p. 1100) point out that recognizing what motivates customers to buy products is an important factor in understanding brand switching behavior of customers as well as their loyalty. A customer shows loyalty to a brand through repeat purchase, preference, and commitment. Kaj Storbacka, Tore Strandvik, and Christian Grönroos point out in their loyalty business model that when there is lack of relationship marketing, stakeholders and customers may fail to be satisfied by products and services and hence be unsuccessful in showing important components such as an intention to re-buy, a liking towards a brand preference due to superior qualities of a brand (Shalton and West 2010, p. 1100).

However, customer loyalty and retention can be realized in a business environment where strategic relationship marketing has been put in place with the help of effective communication to obtain feedback. Indeed, Nestle Company UK has used various relationship marketing methods which include social media marketing as a viable relationship marketing tool largely due to its flexibility and viability in reaching out targeted market (Pollitt 2004, p. 28). Studies indicate that the emergence of the internet with emphasis on social media has introduced a lot of dynamism in relationship marketing alongside improving the loyalty of customers towards particular brands.

Use of social media in relationship marketing for Customer retention

Social media as a marketing platform has been invaluable in ensuring customer retention by allowing two-way communication between customers or stakeholders and businesses leading to active marketing where consumers’ views are considered. This, as Weinberg and Pehlivan (2011, p. 275) point out, enhances customer retention as a business that relates to its customers easily understands their needs, improves on the quality of their products to meet the needs of consumers, and establish relationships which eventually results to customer retention. Social media has enhanced the ability of manufacturers and marketers to appeal to their consumers with ease.

According to Laverick (1998, p. 405), social media and web marketing have been regarded as some of the most significant marketing tools that have been utilized in the market to reach and retain both potential and actual customers. Social media and websites can be accessed by millions of people across the world and as such are efficient for marketing and gathering feedback on products. They have afforded employers and investors opportunities to meet with their clients through a virtual environment. The Web as a marketing tool has undergone technological innovation and as a result, entrepreneurs are increasingly switching to the website for marketing and advertising their merchandise.

Increasing the use of social media in customer relationship management in nestle company the UK has been noted by analysts as a viable marketing campaign in its current operations. Moab (2011, p. 27) argues that social media usage is a revolutionary method that many organizations in the global economy are utilizing for brand recognition. Of importance as already mentioned is Nestle Company UK that has been able to reach and develop effective communication with its stakeholders and customers through social media campaigns.

This has been made possible through social media platforms created by current advancements in technology. Warren is categorical in his model of strategic dynamics where he indicates that any company wishing to gain and retain customers must effectively utilize modern methods of marketing using social media to enhance relationship marketing. Studies indicate that some of the social media platforms include Facebook, Twitter, YouTube, and Google. Facebook and Twitter have become some of the common platforms used today in relationship marketing. In essence, companies that do not use social media in their communication lose a big portion of their loyal customers to their competitors.

While profit maximization has been considered as the ultimate goal of business management, customer relations have been cited as an important factor when considering profit maximization. Weinberg and Pehlivan (2011, p. 279) argue that the presence of and use of social media in relationship marketing has enhanced good customer relations through feedbacks to pertinent questions and engaging them regularly.

This, in turn, enhances customer retention and loyalty. The ultimate gain, therefore, becomes maximizing the production of goods and the provision of services to loyal customers and other prospective buyers. It is imperative to note that the buying trends and behaviors of customers in the market today have been heavily altered by the emergence of social media. It is, therefore, a strategic measure of management to enhance relationships through social media since ignoring it may mean losing out on important customers, stakeholders, and general business growth.

Public relations in Nestle Company relationship marketing

Public relations form one of the most critical areas in the relationship marketing practices of Nestle Company for creating the correct image, generating harmony and interlinking all stakeholders for sustained profitability. Public relations allow the company to create a highly responsive system that proactively enables it to address its issues without negative effects. Besides, as Shalton and West (2010, p. 1098) explain, public relations is an important area of specialization that focuses on the management and maintenance of products and services and image of organizations as well as of customers and stakeholders who are important to a business.

The image is largely projected outwards and creates a lasting effect on the organization resulting in higher profitability. Success in Nestle Company as Boyd and Ellison (2008, p. 210) continue to indicate is largely built on the perceptions and feedback of its customers. It is important to note that what people say about an organization strongly affects its repute. Therefore, public relations becomes a factor of winning competitive advantage since different sectors are in the constant drive to grow and develop

Public relations and Payne’s influence markets

According to Krishna (2011, p. 339), though public relations is an important part of enhancing holistic capabilities to sell goods and services, it is aimed at creating the correct image of an organization. It defines and influences the way people view and think about an organization in making them establish better relations either in its services acquisition or building loyalty.

Nestle Company enhances its image in the public domain through press releases and persuasion in the media. This has attracted influential individuals such as corporate executives, state legislatures, trustees, the board of directors and friends who have benefited the organization (Pollitt 2004, p. 27). It has turned to online public relations campaigns to reach more audiences and remain in constant communication with its customers and stakeholders.

According to Kunz and Hackworth (2011, p. 10), PR remains the best factor in managing problems during the crisis. While the crisis in organizations will always occur either due to human error or natural causes, they greatly reflect the preparedness of an organization and the value it holds for its consumers. Under special market relationships, Gummeson indicates that how an organization reacts to the different crises may strengthen its customer’s positive or negative views about it.

In his famous article “Marketing strategy and marketing performance measurement system: Exploring the relationship”, Lamberti and Noci (2010, p. 140) argue that organizations and their management should be very proactive in assessing, identifying and addressing issues. Though many plans often fail to work because most problems are accidental and acts of nature that cannot be avoided, being proactive helps in maintaining fast response and reducing the overall losses. PR helps has been key in aiding Nestle Company to communicate these preparations and consequently build confidence in their customers.

Recommendations

Increasing product variety and increasing Gummesson’s supplier-customer-competitor triangle relationship

In his marketing myopia theory, Levitt Theodore explained that organizations should seek to modify their products in line with the market demand as opposed to focusing on their potential and internal structures. While Nestle UK Ltd has over the years sought to focus on consumers, there is a great unexploited niche to capitalize on. In particular, the company should evaluate the market to develop new products for consumers to choose from. It is worth noting that over the years, international companies have continued to produce newer products which sprout new competition to Nestle UK products in the market. Producing diverse products will not only enhance customer retention but also strengthen the company’s competitive edge.

In line with marketing myopia theory, focusing on consumers when designing new products will further reflect the emerging tastes of the people which continue to change with time. Lamberti and Noci (2010, p. 140) argue that globalization forces have continued to provoke the need for greater focus towards the market in maintaining proactive systems that can respond to consumer needs.

Nestle Company UK should create evaluation and field analysis teams that will continuously evaluate not only the local market but international ones too. As Rossiter and Bellman (2005, p. 79) report, consumers drive the market as a company works towards ensuring that their consumers’ preferences and tastes take the center stage in product design and distribution.

Seeking to lower prices of their products compete favorably with others

Over the years, companies have sought to employ technologies that allow them to minimize the cost of their finished products and thereby make products more affordable to consumers. In line with the aforementioned strategy of increasing the number of products, prices should also be reviewed downwards. Leeflang (2011, p. 77) reports that many companies, especially in health and nutrition products, are moving their production to regions where cost is lower to enable them to reduce prices. A good example is the emerging dominance of Chinese products in the market. To grow the market of its products, the lower block of the social-economic class should be targeted with vitality to ensure they have access to Nestlé’s product they can afford.

Market segmentation should be pursued with greater vitality to ensure that the existing market is understood even better and newer avenues to sell the products identified. While Krishna (2011, p. 338) reflects that the UK offers a perfect market for Nestle’s products, there is needed to focus on other markets and most importantly the merging economies. Lower prices for products to these economies act as part of crucial customer attraction and retention factors and therefore essential marketing strategy for new product entry.

Perhaps, Nestle Company UK should consider partnering with local producers to further cut the cost of transportation and lower the final price of the consumer. Also, Nestle Company should seek to reduce the entire distribution chain by maintaining more stores especially in the new markets and cutting the additional costs that could have been added if the products followed the formal chain of distribution.

Other market segmentation that could result in greater sales includes consideration of individual groups’ behaviors to determine their exact preferences especially in the emerging era of great creativity. A significant proportion of the market, unlike the classic era, strongly calls for highly personalized designs. Nestle Company UK should, therefore, consider establishing such a system to respond to such demands especially in the newer markets.

Establishing more aggressive promotional models for the products

Product lifecycle, as explained by Rossiter and Bellman (2005, p. 77), indicate that products undergo a curve that develops from introduction through growth, maturity, and finally to decline. The greatest task for Nestle Company UK is ensuring that the stage of growth and maturity is extended and lengthened.

Using more aggressive promotional strategies would act as a renewing platform of products getting to the consumers. In line with the previously mentioned consideration of establishing new products, consumers would always have a sense of great pride as they get newer products that are more satisfying. It is however of great importance that the market is carefully understood to only provide the products that it is ready to uptake.

Promotion methods should be purposefully designed in a manner that more consumers can get the message on nestle product availability. As Shalton and West (2010, p. 1097) argue, organizations should seek to use methods that continuously inform the consumers about products and their suitability.

As such, the promotion mechanisms should highlight all utilities that nestle Company UK consumers would get. A good consideration at this point is an intensification of online promotion and the use of billboards to reach more consumers alongside the current methods. Notably, intensified online promotion would enable the company to reach more consumers even beyond the UK. However, greater care should be taken to ensure that the system is secure and its brand carefully guarded.

Increasing assessment of competitors

Porter’s five forces, threats of new entrants remain a major nightmare to managers and leaders of established organizations. Therefore, Nestle Company UK remains under great pressure to consolidate consumers and maintain their loyalty. An important factor to strengthen the products and maintain greater loyalty from consumers is assessing the competitors and ensuring that their focus is countered before it impacts significantly on the established market. Staff at nestle the UK should, therefore, be motivated to develop more creative products that are better compared to the competitor. Continued assessment should, therefore, be instituted at all stages of product development and distribution to draw greater loyalty from the consumers.

Conclusion

In the above discussion, this paper concludes by supporting the thesis statement that “relationship marketing is a means of maintaining, developing and establishing a market relationship with stakeholders and consumers and has been hailed as one of the effective means by which businesses can achieve and sustain competitive advantage”. Careful application of relationship marketing in terms of product, price, promotion, and place enabled greater cooperation and response by the company to consumer needs. Besides, as indicated in the recommendation, they are key aspects of customer retention. The paper concludes by calling for lowering of prices, diversifying products, aggressive promotion and continued assessment of competitors.

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