Nestle - Adaptations to the Global Market &
Exposing Market Opportunities
Exposing Market Opportunities
What is the competitive advantage? Derived from this question is the single most important factor that to any business model. However, what might have been prosperous and successful two years ago might not be the case today. The global marketplace is constantly changing; with it, the needs and desires of consumers are rapidly evolving as well. Companies who adapt through refreshing innovations will emerge or continue their dominance while the less flexible will fall.
To further toss up the implications, not all cultures within the vast geographical regions are the same. This might not oppose a threat to a local business who operates under one municipality, but can be a huge road block for multi-national companies as they have to consider different strategies, for the different environments. Nestle, the world's largest health food company, is a prime example of doing things right - within the baby formula market anyways.
China's market demand can never be simplified in one piece of publication. However, there are unique features worth noting. With the one child policy enforced in most urban cities, parents value their child as top their priority and this starts from day one. Chinese parents spend as much as they can on their one and only child; they try to provide the best within, and sometimes outside of their capabilities. Like a business, capital is invested, intangibles are nurtured and competitive inputs are exhausted from resources all in hopes of a future return on investment.
In the western society, parents are comforted by the safety of the nutritional foods their babies consume. Baby formulas must be 100% safe and limited trust is displaced on any brand when it comes to checking the credibility and sources. However, many Chinese consumers equate the quality of the product, with the name of the brand. Instead, they are looking for other "upper hands" when purchasing baby formula. Formulas rich in DHA & RHA fatty acids, Omega 3 and Omega 6; formulas that will increase brain development from the earliest age possible.
An overwhelming majority of Chinese parents would not mind paying 150% the price for those added ingredients and commercialized claims and Nestle recognizes this market opportunity. In April 2012, Nestle acquired the baby food unit Pfizer for $11.9 billion USD. Why? Because this specialized company is pharmaceutically capable of enhancing product development through added nutritions that parents want to see. These strengths give Nestle the power to attract emerging markets while maintaining their reliable reputation domestically.
Nestle understands and exposes the values of the various countries in which they operate under; they do not fail in making the right moves to advance in the ever-changing global market. China has been a primary target throughout the years and those initiatives, as a return, have paid off substantially.