Good Problems And Opportunities Case Study Example

International Business

International Business

The Nestle highlights a problem that health organizations had with a Nestle company product. The company’s infant baby formula was accused in 1974 of killing children in developing countries. This generated a series of campaigns against the company’s product and later on, some human rights organizations and consumer activists such as Action for Corporate Accountability advocated for boycott of more products by company aside from the infant baby formula. Nestle was accused of taking advantage of mothers from developing countries to sell its product. A number of accusations were leveled against the company even though it came out to defend itself. The cause of this problem, however, was the lack of information and knowledge from majority of the mothers in developing countries. Poverty can also be said to have contributed especially in situations where mothers would dilute an infant baby formula meant to be used by one child for three days and instead used for two weeks by two children.

Situation Analysis

The Nestle case presents a socio-cultural problem. The company is selling a new product to market that does not have much information about the product, and it does not take the initiative to properly educate its consumers about the proper use of the product. This ends up causing malnutrition problems to children in developing countries. Mothers in those countries are accused of over-relying on the infant baby formula and putting so much belief on the product because it comes from a superior society. Most mothers have substituted breastfeeding with the product. This coupled with the fact that the product is not administered in the correct way has compounded the problem further leading to the deaths of kids.

Strategic Marketing Issues

Strategic marketing issues, in this case, involve negative publicity that has faced Nestle Company due to the effects of the infant baby formula in developing countries. Apparently, the company's marketing campaign has not done much to help the situation. The marketing strategy used gave no information on the correct use of the product, and the result was wrongful use of the formula. This case illustrates the need for multinationals to have a proper marketing strategy when introducing a new product to the market. Nestle company had to re-engineer their marketing strategy several times in a bid to portray a good image of their product that had already been tarnished by activist groups. The company should have done a proper of the target market to realize that they needed to be educated before the introduction of the product.

SWOT Analysis

Strengths
The product’s strength is that it was effective in supplementing breast milk for mothers who had a low quantity due to hardships in developing countries. It is due to this fact the infant baby formula continued to post good sales despite the controversies that surrounded it.

Weaknesses

The product’s main weakness was the introduction strategy that was used. The company did not divulge full information concerning the product’s use before introducing it to the market. Nestle company needs to deal with negative publicity that has been directed against it which gives it a disadvantage over its competitors.

Opportunities

The fact that the product posted positive results amidst the controversies implies that most of the consumers liked it. The infant baby formula, therefore, has the opportunity to re-invent itself in the third world countries and be the number baby formula.

Threats

The infant baby formula is threatened by continued negative campaigns against it by health organization and consumer groups. Competitors are likely to take advantage of the situation and phase out the Nestle product from the market.

Alternative Courses of Action

In light of the HIV scourge, the company should rebrand the product and market as an alternative to breast feeding for infected mothers and comply fully with the WHO Code.
The company should rebrand the product, conduct a proper civic education about the product to potential customers and continue selling to all potential customers.

Recommendation

The company should analyze the above two alternatives and chose the most one. Given the bad name that the company has already gotten in its current market, it should seek a new market. The new market would be to rebrand and go for the first option.

Justification

When the product is rebranded and introduced as a new product in linen with the WHO Code, consumers are likely to view it as a new and different product. It would difficult for consumer groups to oppose a product meant to help children whose parents are living with the HIV. The company should, however, develop a better product introduction strategy and not be seen as if it is sneaking a harmful product to the market.