Food and Customer Satisfaction

8 August 2016

Nestle has become the world number one largest food in the world. Many other company investigating how nestle become profitable. Nestle used the customer satisfaction as a key of Nestle becoming the world largest food in the world. Under customer satisfaction system Nestle shows how good Nestle manage the customer fulfillment needs and to get the loyalty to the product. Nestle has been done a lot of things to fulfill the customer satisfaction needs like food quality,safety and reliability,health,wellness &nutrition,perception of foods,customer futre expectation and promotion.

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3 Justification The writer’s undergraduate course will be ‘marketing and management’. The course is about monitoring the marketplace, organizing and analyzing the results of data collection, and developing strategies for future marketing activities. The topic of this report focuses ‘Why customer satisfaction is the key for Nestle becoming the number one food company in the world? ’ The reason why I chose this topic is because customer satisfaction deals with the very hearts of customers’ needs and fulfillment.

As a crucial attribute for any product based or service company, customer satisfaction is increasingly hard to achieve with rising consumers’ expectations. Secondly, customer satisfaction is a very broadly defined concept which many companies failed to grasp successfully. Furthermore, customer satisfaction comes hand-in-hand with branding and is one of the major attributes in achieving successful branding. As a result, one needs to carefully examine customer satisfaction, and thereby being able to better understand how companies are able to achieve their overall business targets by attaining customer fulfillment.

Through this report of in-depth studying of Nestle, I am able to learn and study how Nestle maintains and improves customer satisfaction, and finally, using the power of loyal and satisfied customers to increase their market share to become the largest food business in the world. 4 1. 0History of Nestle Nestle which means the little nest(who become the logo of the company) was established by Henry Nestle in 1867 who was born in August 10, 1814.

Henry was a german expert pharmacist was make a Farine lacte, a combination of wheat flour,sugar and cow’s milk. It become the first product Henry launced in order to save the neighbour’s child and Farine lacte was become the fundamental of the company. in 1905,nestle merged with Anglo-Swiss Condensed Milk company who was found by Charles and George page after a few year of competition and to form the Nestle and Anglo-Swiss Milk Company. in 1914 the world war 1 become the disaster to nestle and the world.

it is difficult to get the raw material and because of the shortage of fresh milk in Europe,The government forced the industries to sell all the supply to the town but it will create a new demand for nestle and it become the opportunity to nestle and in the end of ward,around 40 company was bought by nestle. in the 1925 where there is the economy crisis,nestle has been create the new product other than dairy milk. Chocolate is the new product that nestle has been made and it become the part of the business.

in 1938 nestle has been make a new product called nescafe and in 1940 nestle was launched another product called nescafe and both of them became success in short of time. Now Nestle product is not only about baby milk coffee,tea, and chocolate but there are a lot of new products like cereals,yogurt ,water,ice cream,frozen food,seasoning and many more. 5 In overall, Nestle owns close to 8000 brands and in 2011,Nestle was become the Number one as the world’s most profitable food company. Today Nestle has around 450 factories and it was operate in 86 countries.

Nestle has been made 92. 2 CHF bn of group sales and in sales category,20 chf bn is from powderen and baverage,18. 6 chf bn from milk and ice cream product,7. 2 chf bn from water,10. 7 chf bn from nutrition and healthcare,10. 8 chf bn from pet care,10. 4 from candy and chocolate and the country that has been made the biggest sales was American following with Europe and AOA. 2. 0Customer satisfaction defined Craig Cochran mentioned that certain elements are within the control of the organization such as the characteristics and the quality of its products.

However, the largest factor of customer satisfaction – customer’s perceptions, is not one that an organization can fully control. (Craig,2003,1) On the other hand, Huseyin Gungor defines customer satisfaction being the combination of cognitive satisfaction and emotional satisfaction. (Huseyin Gungor,2003,18) Overall, customer satisfaction can mean a variety of things and is very subjective to each consumer. Sometimes it is a complicated mix of all these characteristics and more. Furthermore, in the case of Nestle, it has numerous products lines and the importance of each variable can differ widely.

Therefore, I will list out the general characteristics which are important: a)Food quality d)Safety and reliability f)Wellness & nutrition g)Managing customer’s expectations h)Investigating perception of foods i)Promotion 3. 0Food quality The quality of something is how good it is and safety is the state of being safe from harm or danger. (Collins dictionary) It is important for Nestle to know the quality and safety of product whether the quality is under fulfilling or over-fulfilling customers’ needs. As a global food business, the top priority to Nestle is quality.

One of the example is coffee farming and production. Nestle has been trained the farmer for new technologhy to minimize water usage in the coffee production process because many of the coffee farmer are smallholders abd they did not have enough recources of clean water. This techonolgy had been improved the coffee quality,water saving and also increase profit for coffee farmer. 7 4. 0Safety and reliability To guarantee its food safety, Nestle uses five systems quality management system, from farm to fork to Hazard Analysis to minimize food hazards.

One of such examples is Nestle uses Hazard Analysis and Critical Control Points (HACCP) to ensure that their system is able to accurately identify, evaluate, and control food hazards. Nestle has verified their HACCP systems by external certification bodies against international ISO 22’000:2005/ISO 22002-1 standards. In fact, many of Nestle factories are awarded with such management systems certifications. In general, ensuring food safety and reliability does not necessarily mean customer’s satisfaction will increase.

However, maintaining high standards of food safety and reliability is of utmost importance because customers, in general, are unforgiving with companies with stained records. In this aspect, Nestle has done very well by having only 3 major food incidents (Wikipedia – Nestle) since the company’s founding in 1866. 5. 0Health, wellness and nutrition More than 220 million people around the globe suffer from diabetes and approximately 18 million people have Alzheimer’s due to poor dietary consumption and lifestyles. 8

In 2005, Nestle recognized that the food consumption habits of the world’s population were changing. The founder then began to move away from selling processed food and confectionary, and started to move towards becoming a producer of food with health and nutrition benefits and ultimately, a provider of a wide range of products and services in the nutrition, health and wellness business. Nestle planned to invest $500 million in the next 10 years to improve its health and wellness products to ensure customers could eat their food without worrying about getting fat or diabetes.

Nestle also used its nutritional product system to control the composition of nutrition in the products. Since 2004, Nestle’s nutritional product system has been applied to various factories around the world. Under this system, Nestle has been able to control the composition of sugar, salt and trans-fatty acids into its food. 5. 11 Sugar & Salt Sugar is a sweet substantce used to sweeten food and drinks (Collins dictionary). Nestle has been reducing the composition of sugar for many years and nestle has been reduced 34% of sugar content from 2000 to 2010.

In order to make reduction of sugar level keep going especially in product of total dietary sugar intake. this include meals,baverage,snacks and also product for kids like cereals and milk,Nestle used the mandatory policy in 2007. Nestle make a limited use of sweeteners and reduced sugar and did not reduced the sugar level completely beacause it is to provide a sweet taste and in drinks,Nestle make the sweet taste for customer preferences. 9 Salt is a white substance found naturally in sea water.

it is used to flavor and preserve food (Collins dictionary). Salt has been our primary source of sodium in diet. Epidemiological studies have been linked that salt increase blood pressure and to reduce high pressure,is by reducing salt consumption and by reducing salt consumption,it can reduce risk of getting stroke and kidney disease. Nestle has been improving food for heatlh by reducing the level of salt in 2005. Nestle has been reduced salt level by 10% in the end of 2007. By the end of 2010 nestle has been made the reduction to reduce 5.

12Trans-fatty acids (TFA) Trans-fatty acids is the partial hydrogenation of vegetable oils and present in hardened vegetable oils, most margarines, commercial baked foods, and many fried foods. An excess of these fats in the diet is thought to raise the cholesterol level in the bloodstream (http://www. thefreedictionary. com/trans+fatty+acid). As part of Nestle’s health policy since 1999, Nestle has been committed to not exceeding the level of TFA in their products by 3% of the total fat in their foods and 1% for daily total energy intake.

The level of TFA in products for children or products that contain high levels of TFA like pizzas, snacks and instant food has been reduced by Nestle and instead, been substituted with non-fat or low-fat products for nutritional needs. 10 In order to meet high expectations of customers and their ever-changing lifestyles, Nestle has successfully transformed their overall strategy and product portfolio from unhealthy food to nutritious food that promotes health and wellness.

This demonstrated that Nestle had business foresight and understood very well the changing needs of consumers to meet their customers’ expectations and retain their loyalty. 6. 0Managing future expectations One instance of managing customer’s expectations is demonstrated when Nestle stated very clearly about the company investing its resources into the future of medical foods, and not simply continue its position as a maker of chocolate and candy confectionary, which is obviously not healthy in nature.

“If there’s one important thing in anything that we’re doing, it is scientific credibility,” Luis Cantarell, CEO of Nestle Health Science, told The Wall Street Journal. ” As a result, in 2011, Nestle aggressively publicized its foray and investment into medical food researching, with their food portfolio which will eventually be backed up by proper scientific research and not merely exaggerated claims. As such, customers’ future expectations of Nestle are one of greater confidence due to Nestle’s commitment into creating a new future of food. 11

Investigating perceptions of foods Through this investigation,the scientists has been use the “electroencephalography” to measure of electrical activity in the brain and with this data,scientist has been claimed that the food will taste better depends on the images of the food one of the examples is when they put the images of high-calories food such as hamburger or pizzas,the taste of food was been better than the images of low calories such as carrots or green bean. (http://www. nestle. com/media/newsandfeatures/food-appeals) 8. 0Promotions

According to Baker (1999, 310) the method of communicating the product offer which is made by a company to match the needs of the customers and to persuade them to try the product is Promotion. Promotion is also one of keys for customer satisfaction. Nestle has been used the promotion to introduced the customer about the new product and to increase the cutomer to buy the product of Nestle. Under promotion,there are 2 promotion tools such as Sales promotion and advertising. 12 8. 10Sales promotion One of promotion tools that nestle has been used was promotion selling.

Nestle has been given the promotion selling in terms of coupon,card or prize inside the product such as mug and toys. examples of promotion that nestle has been given are,when customer have a milo card,customer will get a 1$ off when cutomer buy a sixpact of milo. another examples will be when customer buy 2 pact of baby milk product,the customer will get 1 free baby milk. Nestle company has been make a duration for the promotion and when the promotion period done,the company will make another new promotion so that the customer will enjoy the product and it will increase the customer satisfaction.

Advertising Second promotion tools is advertising. Advertising is an announcement about something in the internet,newspaper,poster or on tv. Advertising has been used to stimulate or to give the detail of the advatage about the product that has been advertise to the specific audience and to give the motivation and response of the customer. 13 “Cognition, the ‘thinking’ dimension of a person’s response, and affect, the ‘feeling’ dimension, are portrayed as two major intermediate advertising effects” (Ambler, Vakratsas, 1999:26).

Nestle has been used the advertisement through media such as tv,newspaper,magazine,and the latest media nestle has was internet. Now with internet,customer can find the Nestle advertisement throught the Nestle website. 9. 0Measuring Nestle’s customer satisfaction According to American customer satisfaction index (ACSI),Nestle has become top 4 base index from year 1995 to 2012. As the customer satisfaction increase,customer will buy more of the product and the profit also increase.

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