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BRIEFING PAPER
INTRODUCTION
Nestlé is a food and beverages company that have been in Malaysia for more
than 100 years ago. Nestlé began in Malaysia in 1912 as the Anglo-Swiss Condensed
Milk Company in Penang and later, growth and expansion made a move to Kuala
Lumpur necessary in 1939. Since 1962, with its first factory in Petaling Jaya, Nestlé
Malaysia now manufactures its products in 8 factories and operates from its head
office in Mutiara Damansara.
Consumer behaviour is the study of consumers and the processes they use to
choose and consume or dispose of products and services. Understanding consumer
behaviour is crucial for any organisation before releasing or launching any kind of
product. Consumer behaviour helps organisation to make the consumers aware of the
products that is being launched.
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Consumer Decision Making Behaviour
There are various factors that have influenced the decision making towards
consumers. Thus, models from various experts have been used to help in
understanding the consumers’ behaviour in decision making and one of them is the
Input, Process and Output Model.
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INPUT
PRODUCTS
Firstly, there are the firm’s marketing efforts on products, promotion, price and
channel of distribution (Shazeed, 2015). For products, firstly it should be creating a
sense of need towards the consumers. Thus, firms that produce a product needs to
ensure the relevancy of a product to the market and have a strong image of the brand
for consumers to be able to see in the market.
For example, Nestlé. Nestlé brand have become one of the world’s top ten most
reputable company (Nestlé, 2013). This proves that Nestlé have a strong brand image
that allows consumers to know the brand name Nestlé. Also, the products that Nestlé
sell in the market have created a sense of need towards consumers. As an example,
Hikmal Hakim (2015) have stated that, in Malaysia, Nestlé’s Milo have become
Malaysians’ favourite drink since the 1950s. Malaysian creatively use the Milo powder
to innovate the Milo drink itself, making the usage of Milo in Malaysia high. Thus,
Nestlé have created a new Milo-based ice cream, giving Malaysian a new taste for
Milo.
PROMOTION
Next, the promotion. For promotion, it is all about the awareness of the
products (Hakim, 2015). Promotion is needed for both new and old products. This is
because, promotion is one of the factors that can make consumers and future
consumers to remember the product or the brand. Promotion is done also to make
consumers know and aware of the products.
For example, Nestlé have done several successful promotions like Nestlé KitKat
and Nestlé Maggi. Both of these product have already created a name of itself. Nestlé
put its out after assuring that their product is at its highest quality. One of the latest
Nestlé promotion campaign is Maggi. According to Hitesh Bhasin (2018), Maggi have
pushed its promotional campaign through the consumers’ experience with Maggi. This
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promotional campaign allows consumers to feel emotionally attached towards the
product.
PRICE
After that, the price. According to Purely Branded (2018), price will impact the
firms in terms of margins, supply, demand and marketing strategy. Pricing can
influence the position and strategy of the different product or brand. This is because,
price will affect the sales of a product.
For Nestlé, the pricing differs for every products. This is because, Nestlé
believes that some of their products are the leaders in the market while the others still
needs to compete with competitors (Bhasin, 2018). As an example, Nestlé’s Nescafe
and Maggi. Both Nescafe and Maggi are considered as leaders to be compared with
other competition. Thus, Nestlé putting the prices for both of them higher but even
so, consumers would not switch to other brands due to the good quality of those
products.
CHANNELS OF DISTRIBUTION
Lastly, market segmentation. According to Hitesh Bhasin (2018), there are four
types of market segmentation. Which is demographic segmentation which focuses on
segmenting population according to age, gender, income or nationality. Next,
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behavioural segmentation which focus on the basics of choices that consumers make.
After that, psychographic segmentation which focuses on the lifestyle of the
consumers and lastly, geographic segmentation which divides consumers based on
geographic.
SOCIOCULTURAL ENVIRONMENT
Next is the socio-cultural environment. In the external source, there are sources
that firms or marketers could not have total control on (Shazeed, 2015). This is
because, there are sources from communication and reference group, family, social
class, culture and subculture, opinion leadership and diffusion of innovation and public
policy and consumer’s protection.
Firstly, the communication and reference group. Reference group can influence
consumer behaviour in two ways, which is setting up level of aspiration and defining
the actual product or service (Sirgy, Rahtz, & Portolese, 2018). For an example,
Nescafe by Nestlé, there are a lot of coffee with different standards. Thus, if a
consumer is in a specific group that lifestyle is considering Nescafe as a high standard,
the consumer may only buy Nescafe.
FAMILY
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SOCIAL CLASS
PROCESS
Psychological Factors
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Perception
Learning
NEED RECOGNITION
Need recognition is the first stage. In need recognition, there are two states
which is the Actual State and the Desired State. Actual state is the state where
consumers is having a problem with the current state with the product or service,
while the desired state is what the consumers want their current state to be in with
the product that triggers the decision process ((Sirgy, Rahtz, & Portolese, 2018).
For example, Nestlé have focused more on creating healthier and nutritious
product and making sure the consumers is well informed with the nutrition in their
products. Some programs like “Our Start Healthy Stay Healthy” that was held by Nestlé
to ensure consumers know what they eat and what is given to the consumers’ families
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(Nestlé, 2018). Since Nestlé focus on healthy food, consumers may lean towards
buying Nestlé product as Nestlé triggers the need for consumers to buy healthier food.
PRE-PURCHASE SEARCH
According to Joshua (2016), after the need is identified by the consumer, the
consumer will seek help or search for the solution of the problems. In searching for
help on the problem, there are two ways which is internal information and external
information. Internal information which is experiential sources which is through
experience of the consumers using or buying the product. While external information
like personal sources which is information that the consumers get through friends or
family, commercial sources which is from advertisements, websites or packaging and
public sources which is the mass media (Sheikh, 2013).
For example, Milo by Nestlé. Milo itself is not a new name in the industry.
Malaysians have heard and used Milo since 1950 (Hakim, 2015). Thus, the product is
already a household brand. Thus, Milo can already gain popularity through word of
mouth like through family or the internet. But Nestlé did not stop on just trusting the
word of mouth, Nestlé have provided enough advertisements and promotion for Milo
such as billboards and advertisements that attracts their target market which is
students and active people.
EVALUATION OF ALTERNATIVES
For Nestlé’s Milo, the competitors like Oligo and Horlicks will be in the list for
consumers. Nestlé have been focusing more on healthy and nutritious products which
also includes Milo. Milo have only 6% sugar and 3% of the sugar is natural sugar (The
Star Online, 2018). Thus, consumers may choose Milo for a healthier drink.
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OUTPUT
Purchase
Lastly, the third stage is the Output stage. The output stage consist of purchase
and post-purchase evaluation. According to Joshua (2016), once the consumers is
done with finding the best solution on the problem or need, the consumers are able
to differentiate between products or services and the purchasing happens. Every
decisions is made by consumers depends on the information that was made by them.
For every purchase, there are two types. Which is the trial purchasing and repeat
purchasing. Trial purchasing is when consumer wanted to purchase a product for the
first time while repeat purchasing is when the consumer is satisfied with the product
and wanted to buy the product again.
For example, for Nestlé, Milo have won the Putra Award for Putra Brand of the
Year. These award was a voting award and Milo has won over 6000 respondents and
crowned the award (Star Online, 2016). This proves that Malaysian have been
purchasing the product for a long time to make it their favourite.
Post-purchase Evaluation
After the consumer purchased the product or services, the evaluation of the
product will begin. This evaluation consist of whether the purchased made is enough
to fulfil the needs and solve the problem the consumers had (Joshua, 2016). For
example, Nestlé Milo is promoted to be giving the consumers energy that could last
for the day, so, consumers will have to evaluate the given statements by Nestlé
themselves. If the consumers feel satisfied, brand loyalty towards Nestlé will happen
between the consumers.
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Importance of Mapping a Path to Purchase
The buyer journey or path to purchase is what the consumers go through when
they want to buy a product or service. The path to purchase model shows the various
stages of consumers from the point they are aware of the product to the point they
purchased the product (Study.com, 2018). Path to purchase model has four stages,
which is awareness, consideration, action and loyalty.
As example, Nestlé have being busy promoting and helping consumers aware
of their product by making events and releasing interesting advertisements. The Milo
advertisement is always targeting the youth like students and athletes. The interesting
part of the advertisements is even though Nestlé targeted youth, the parents will be
attracted to Milo to give the product for their children.
As an example, Nestlé Milo have competitors like Oligo and Horlicks but due to
Milo having a brand name that is trusted by Malaysian, the product becomes the
chosen ones. Milo have been promoting through events and promotion like Milo
Breakfast Day to make consumers convinced on buying Milo.
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taking is making a purchase or anticipating in the delivery. The consumers will decide
on what exactly the product to buy and which brand will be chosen.
IMPORTANCE
The path to purchase of consumers is important for marketers to now know
the detailed of the consumers experience and how the product is interacted with the
consumers.
As an example, Coffee enthusiast may want to try Nescafe but Nescafe is not
a typical brew coffee, instead it is an instant coffee more focused towards the
consumers who wants to get fast coffee. Thus, Nestlé have given out information
through mass media, billboards and advertisements in television and promoting
Nescafe, to ensure that customer is well aware of the product.
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Next, path to purchase helps marketers to identify the buying stages that needs
more and proper attention. A consumer path to purchase journey has real consumer
data that allows marketers to constantly monitor the consumers’ behaviour on the
product (Keane, 2017). The data is able to be used to measure the time taken for
each consumer to complete each buying journey.
For example, Nestlé Maggi. When the awareness stage for Maggi takes a little
more time to make consumers aware of the product, Nestlé may lose profit, thus,
making the product flopped in the market. So, to ensure this does not happen with
the product, Nestlé focuses on the awareness of the product more.
Lastly, the path to purchase guides business objectives in the right direction.
Every companies have their own business objectives that the company wants to
achieve. With path to purchase, companies can help overall performance of the
company to increase (Keane, 2017).
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CONCLUSION
The conclusion that can be drawn for this briefing paper is that Nestlé have
used the input, process and output model successfully. In the input stage, there are
firms’ marketing effort that focuses on Nestlé’s marketing efforts from products to
marketing segmentation and sociocultural environment that focus on the family,
culture and social class of consumers. Each marketing effort made by Nestlé have
proven to be working successfully as they are currently at the top of the food and
beverages industry against many other companies like Coca Cola, and Pepsi (McGrath,
2017).
The process in the model states the three processes that consumers take before
purchasing a product or services. These processes is important as they focus more
towards what the consumers go through before buying a product or services. There
are also psychological factors that could influence a consumer like motivation,
perception and attitudes of consumers towards the product and services. Thus, Nestlé
have proved that the products that they sell have been successful as Nestlé take every
measures to cater to every consumer’s need of information.
Then, there are output stage. In the output stage, there is purchase and post-
purchase evaluation. In the purchase, there are two types of purchase which is trial
and repeat purchase. In Nestlé, the product have proved to the Malaysian market as
the consumers repeated their purchase especially Milo as Milo won the Putra Award.
Then, the post-purchase evaluation is when consumers made the purchase and
evaluate the product based on their opinion.
Then, mapping of path to purchase. This strategy is used by Nestlé and the
usage can be prove by the improvement in gaining 90 billion dollars in revenue and
8.6 billion dollars in profit. This is because, by using the path to purchase model,
employees can understand better on what to focus more in work.
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