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SYNOPSIS

1. INTRODUCTION

2. PROCESS OF MAKING CHOCOLATE

3. HISTORY OF CHOCOLATE

4. NESTLE COMPANY PROFILE

5. DEALERS PROFILE

6. ANALYSIS OF CONSUMER SURVERY AND

FINDINGS

7. SUGGESTIONS AND CONCLUSIONS

8. CONSUMER QUESTIONNAIRE BIBLIOGRAPHY

1 NESTLE CHOCOLATES
CHAPTER – 1

INTRODUCTION TO PROJECT REPORT

 INTRODUCTION

 INTRODUCTION TO PROJECT REPORT

 INFORMATION NEEDS

 METHODOLOGY

2 NESTLE CHOCOLATES
INTRODUCTION TO PROJECT REPORT

This report is based on “Marketing Management of Nestle

Products with special reference to chocolates” and its

particular case study is of the “Sri Vinayaka Enterprises”

which is the sole distributor of the Nestle Products in Shimoga.

This Project report speaks of various aspects like History of

agency, Manufacturer of Chocolate, History of the Company

etc.

This Project has been prepared with the help of the answers

received from the informants a case study of “Sri Vinayaka

Enterprises”.

INFORMATION NEEDS:

ON COCOA

Brief study on “Nestle India Ltd”

Perception of the various Chocolate

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Spending Habits.

Having influences.

Buying Pattern.

Preferences of Attributes.

Strategy

Packaging Options.

Grievances and Suggestions.

METHODOLOGY:

This project Report has been completed using both

Primary and Secondary Data.

Primary Data is the Original data gathered specifically on

the Project at hand. It gives latest information. In this report,

Questionnaire techniques have been used to get desired

information. 50 persons have responded and this has helped

to draw conclusions.

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For the collection of primary data, respondents from all

the areas of Shimoga City have been taken into consideration.

Shimoga is divided into different sections, consumers of each

section are interviewed and information is collected.

Information relating to a past period have been collected

from secondary data were magazines, News Papers, Internet

and Records of the Company.

The areas covered under the survey are Gandhi Bazar,

Vinobha Nagar, Nehru Road, Kuvempu Road, Garden Area,

RMC Yard etc.

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CHAPTER – 2

PROCESS OF MAKING CHOCOLATE

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PROCESS OF MAKING CHOCOLATE

The manufacture of chocolate begins with a thorough

cleaning of the beans. Beans are blended to achieve delicate

nuances of flavour and then roasted. When cooled, the cocoa

beans are broken and winnowed by separating the nib from

the shell in an air current. The waste shell is totally removed.

The clean, cool cocoa nib is ground under rotating stones,

desires, or rollers. The resulting chocolate libuor, more than

50 percent fat (cocoa butter) is liquid above 32c (90f) with a

proper mix of chocolate liquor, sugar, cocoa butter, and milk

solids (for milk chocolate), the production of chocolate begins.

These ingredients automatically weighted and conveyed to

large five – roll refiners. These heavy machines, with rollers

from 100 to 150cm (40 to 60 in) long and 30 to 40cm (12 to

16 in) in diameter crush the mixture four times. The particles

are reduced the smoothness typical of fine eating chocolate.

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The chocolate is now conched, a unique process that

completely mixes the chocolate at high temperatures (540 –

710c/1300 - 1600f) while exposing it to a blast of fresh air.

During concluding, complex chemical changes take place that

further develops the chocolate’s delicate flavour.

The addition of venilla or other natural or artificial

flavours provides a final flavour note. Lecithin, an emulsitier

derived from the soyabean, is also added this establishes the

precise viscosity necessary for proper flow in molding or

eating.

The chocolate is now ready for use in molded bars,

hollow molded bunnies or Easter eggs, or as the coating

around a candy. Whatever, the product chocolate is probably

the world’s favourite flavour and truly deserves the

designation. The obroma cocoa, given it by the Swedish

botanist carolus Linnaeus in 1728 when he classified the

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cocoa plant as the “FOOD OF THE GODS”. Major Documents

process of making Chocolates. Raw materials.

The important factors responsible for good taste of the

chocolate are the ingredients involved in it. The ingredients to

be mixed to make a good tasting chocolate should be of ideal

quality grown in climate which is favourable for its good

growth. The process of mixing the ingredients for making a

Chocolate is a complicated one.

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The ingredients involved in making Chocolate are as follows:

Particulars Unit SCB 2000 QTY Amount % of


rates 100 1000 RS. total
units units usage
RAW
MATERIALS
COCOA Kgs 21611 5964 131 30
BUTTER
EVERYDAY Kgs 9445 6967 58 13
SP
EVERYDAY Kgs 8285 6233 52 12
DIARY
WHITENER
COCOA Kgs 12553 3508 44 10
PASTE
SUGAR Kgs 1520 26398 40 9
R H P K OIL Kgs 6610 3544 24 5
PALKHENA Kgs 8340 2814 24 5
RICE Kgs 7539 1666 13 3
CRISPIES
WHEAT Kgs 1303 6880 9 2
FLOUR
LIQUID Kgs 1689 5086 9 2
GLUCOSE
COCOA Kgs 6792 1094 7 2
POWDER
ED GHEE Kgs 11852 354 4 1
H V FAT Kgs 3876 1071 4 1
OTHER 12 3
ITEMS
TOTAL 430 100

10 NESTLE CHOCOLATES
CHAPTER – 3

HISTORY OF CHOCOLATES

 COCOA

 HARVESTING AND TREATMENT

 GRADES AND MARKETING

 MANUFACTURE AND USES

11 NESTLE CHOCOLATES
HISTORY OF CHOCOLATES

CHOCOLATE:

Chocolate is the food made by combining

the roasted kernel of the cacao bean with

sugar and cocoa butter, the fat released

when the bean is ground. Chocolate may

also contain natural or artificial flavours,

emulsifiers, and in the case of milk

chocolate milk solids.

Federal standards define several kinds of chocolate

products. Bitter chocolate, or chocolate liquor, is the roasted

ground kernel (nib) of the cacao bean; it is commonly known

as bakers, or baking, chocolate. A minimum of 15 percent

liquor mixed with sugar and cocoa butter is sweet chocolate.

When the amount of chocolate liquor is greater than 35%, the

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product is bittersweet chocolate. A combination of at least

12% dry whole milk solids, sugar, cocoa butter and at least

10% chocolate liquor produces milk chocolate.

HISTORY:

The term chocolate was originally applied to a drink

similar to today’s hot chocolate. The explorer Hernan Cortes

introduced the drink to Spain upon returning from his Mexican

expedition (1519). Gradually spreading from Spain through

Europe and in to England, the chocolate drink became

increasingly popular. In the 17th century, chocolate houses

were the social meeting places of the day.

In 1828, the Dutch made chocolate powder by squeezing

most of the fat from finely ground cocoa beans. The cocoa

butter from pressing was soon being added to a powder –

sugar mixture, and a new product, eating chocolate, was born.

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In 1876, a Swiss firm added condensed milk to chocolate,

producing the world’s first milk chocolate.

From the three chets of cocoa beans that Cortez’s

exported to Spain, cocoa bean exports in the world reached

an annual 2 million metric tons in the mid 1980s. One fifth of

all the exports went to the United States. With this

tremendous usage of chocolate, the United States still ranks

tenth in the world with a per capita consumption of 4 kg

(9.71b) annually, for behind the first place Swiss, who eat 9.5

kg (211b) per person annually.

COCOA:

The tropical tree from which cocoa powder chocolate are

derived. Cocoa trees are of the family sterculiaceae, generally

the obroma cocoa rarely T. Penetagona or T. Spherocarpa;

they are not to be confused with the coconut palm. (Cocos

nucifera)

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The cocoa tree, a native of central and South America,

may attain a height of 40ft, in a natural condition; however, in

cultivation it is generally pruned to 15-25ft. For ease in

harvesting the fruit. It has a wide branching habit; the downy

surfaced twigs support dropping leathery leaves, often a foot

long. Small pinkish blossoms borne directly on the tree trunk

and on larger branches are followed by green, pod like fruits,

which when ripe range in colour from yellow – orange – to dark

reddish – purple. The pods, resembling enlarged cantaloupes

or cucumbers, are five ribbed and woody; within 25-50

almonds shaped, whitish, lavendor or purplish seeds are

imbedded in a white or pinkish, mucilangious pulp.

The fact that there seeds provide materials useful as

food and drink was well known to the pre-Columbian natives

of its source area, tropical Middle America, particularly to the

Mayans and Aztecs who used the beans also as a beverage,

the ground roasted seeds being whipped up in hot water and

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flavoured with vanilla and spices. On his fourth voyage in

1502, Columbus took back cocoa beans to Spain where the

drink was greatly improved by the addition of sugar. For

nearly 100 years the Spaniards kept their secret, but the use

of cocoa spread slowly to other parts of Europe. In 1657 a

French man opened a shop in London, at which solid chocolate

for making the beverage could be ourchaed at 105 to 155 a

pound. At this price only the wealthy could afford to drink it,

and there appeared in London, Amsterdam and other

European capitals fashionable chocolate famous clubs. About

1700 the English improved chocolate by the addition of milk.

The reduction of the cost of the beverage was hampered in

great Britain by the imposition of high import duties on the

raw cocoa bean, and it was not until 1853, when the duty was

lowered to a uniform rate 1d. a pound, that chocolate became

popular.

Chocolate manufacture started in the American colonies

in 1965 at Dorchester, mass, using beans brought in by New

16 NESTLE CHOCOLATES
England sea captains from their voyage to the West Indies.

James baker financed the first mill, which was operated by an

Irish immigrant John Hanan. Waterpower was used for

grinding the beans.

Eating chocolate became popular around the middle of

the 19th century and coating chocolate for use on candies and

biscuits (cookies) came in to use soon afterward. Milk

chocolate was introduced in Switzerland in 1876. M.D. Peter

and its popularity spread throughout the world introduced

CULTIVATION:

Preparation of the area for planting consists mostly in

slashing and burning existing vegetation, perhaps girdling tall

trees and leaving others for shade, planting, except under

more advanced management, is by rather closely spaced

seeding, sometimes later thinned to keep the stronger plants.

In other cases, nursery grown and selected seedlings are

transplanted when about two feet or more apart. there is

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some of more certain vegetative propagation of superior

strains by cuttings and bud grafting, shade by food plants,

especially bananas, is provided in most areas for the thinner

plantings. The tree, which would grow eventually to 30 to 40

feet, in height, is generally pruned to 15 to 25ft to aid

harvesting. There is little cultivation or fertilization other than

slashing undergrowth. The tree begins to bloom and fruit

three or production about the eighth year. There is

disagreement as to the length of fruiting life, but 30 to 40

years is common and nearly 100 years is reported.

HARVESTING AND TREATMENT:

A full – grown tree produces annually approximately

6000 small pink blossoms directly on the trunk and main

branches, of which from 20 to 40 nature in to fruit pods.

Though these ripen intermittently throughout the year, most

ripen in one or two main periods. Four – fifths of the world

crop is harvested in the period from September to March. The

pod is simply cut from the tree and the tough, fibrous hull

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opened with a machete, after which the seeds and fermented.

The fermenting, whether carried out in a primitive pile on the

ground or in a more modern preformatted box or tank under

cover and high temperature, takes 3 to 10 days depending on

the type of cocoa, and involves draining away the juicy.

“Sweating” of the pulp and the mixing and stirring of the

beans to obtain an even fermentation and to avoid under or

over-fermentation. The heat kills the germ in the seed,

temperatures as high as 124 feet develop and at this time are

formed the precursors responsible for chocolate flavour when

the beans are roasted. The beans become plump and full of

moisture; the interior develops an even, reddish- brown tint

and a heavy, sharp fragrance. The pulp is easily removed.

The beans are then dried, in some cases after washing.

Drying is sometimes done on special mats or racks and it may

be by sun or artificially; it takes a few days or weeks, until the

water content is reduced to 6% to 8%. The beans may then

be bagged in burlap for handling.

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GRADES AND MARKETING:

Cocoa is classified in World trade as base or flavour

grades, or as ordinary and fine. In general, these grades

relate not to difference on processing but to varieties, of

which there are many, the two main groups being criollo and

forastero. Approximately 10% of world production is of the

fine or flavour grades called criollos, trinitarious or high

forastero, marketed especially under the trade names of

arriba, Maracaibo, caracos and Trinidad estates and produced

mostly in Venezuela, Ecyador, the West Indies, Ceylon and

java. They are largely grown under a plantation system

utilizing 100ac or more. Forastero types constitutes the base

or common grades marketed as Accra from Ghana (where

they constitute half the export trade and the main source of

income for the majority of the people) and Bahia from Brazil,

as well as Lagos from Nigeria and Sanchez from the

Dominican Republic. They usually constitute about 90% of the

world’s crop, are hardies and give larger yields of medium

quality beans selling for lower prices than the flavour grades.

20 NESTLE CHOCOLATES
MANUFACTURE AND USES:

The United States ahs the World’s largest industry,

ordinarily taking as much as 30% of the World’s export and

reducing the raw cocoa beans to the several products. There

are also major cocoa manufacturing centers is several western

European countries and in Canada, Australia, India and Japan.

PROCESSING COCOA BEANS:

After being cleared and sometimes washed, the beans

are carefully roasted at 275 to 350 feet to develop flavour,

colour and aroma and to aid shelling; they are then broken

into particles called nibs by a rolling or cracking process and

winnowed to remove the fibrous shells, the shells, 10% - 14%

of the total weight, may be used for cocoa tea but usually are

used in fertilizers. The nibs of designed grades and flavours

are blended and ground to a cocoa mass or chocolate liquor,

21 NESTLE CHOCOLATES
which after cooling sets is to a hard brown block. Part of the

natural fat cocoa butter may then be removed by hydraulic

pressure. Various type of chocolate may result, depending on

the amount of butter remaining of flavoring added and further

processing. Unstructured chocolate are banking. Chocolate is

the ground moulded in to bars. Sweet drinking chocolate has

had sugar added and ahs been somewhat refined. Eating

chocolate continuing more cocoa butter and flavoring.

SWEET CHOCOLATE:

In the manufacture of sweet chocolate, granulated as

pulverized sugar is mixed with the chocolate liquor and then

resulting paste is ground by passing it over steel roll refiners.

As the addition of sugar reduces the overall fat content,

additional cocoa butter must be supplied to the mix to

maintain sufficient fat to permit further processing and

molding. A typical sweet chocolate contains 42% chocolate

liquor, 42% sugar and 16% added cocoa butter. After the

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processing, the sweet chocolate is cooled and molded into

cakes for use by the candy industry as a coating for centers or

it may be cost directly into small bars suitable for eating.

MILK CHOCOLATE:

Milk chocolate is sweet chocolate

in which flavour been modified by the

addition of whole milk solids. The

U.S., Standard calls for a minimum of

12% whole milk solids, but good quality chocolates may

contain as much as 20% to 22%.

WAFER CHOCOLATE:

It is a wafer biscuit in a delicious chocolayer. The

chocolayer is made of a compound, which gives a ‘chocolatey’

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feel and flavour. This type of chocolates therefore, cannot be

(technically) referred to as a ‘chocolate’.

24 NESTLE CHOCOLATES
CHAPTER – 4

NESTLE COMPANY PROFILE

 HISTORY OF COMPANY

 HISTORICAL DEVELOPMENT

 MAIN BRANDS

 ACCELERATING GROWTH IN 1999

25 NESTLE CHOCOLATES
NESTLE COMPANY PROFILE

HISTORY OF COMPANY:

The story of chocolate began in the new world with the

Mayans, who drank a dark brew called “cacahuaquchtl”, later

the Aztecs consumed chacahoua and used the cocoa bean for

currency. In 1523, they offered cocoa beans to Cortez, who

introduced chocolate in the old World, where it swiftly became

a favourite food among the rich and noble of Europe.

From the beginning, turning raw, bitter cocoa beans into

what one 17th century writer called, “the only true food of the

gods” has been a fine art, a delicate mixture of alchemy and

science. Centuries ago it was discovered that by fermenting

and roosting the beans, an almost otherworldly flavour could

be created. In 1875, after years of trying a 31 year old candy

maker in every named Daniel Peter figured out how to

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combine milk and cocoa powder. The result was milk

chocolate.

Peter, a friend and neighbor of Henri Nestle, started a

company that would quickly become the world’s leading

maker of chocolate. For three decades the company called

Peter, Cailler, Kohler relied on Nestle for milk and marketing

expertise.

In 1929, the almost inevitable merger took place as

Nestle acquired Peter, Cailler, Kohler.

The key factor, which drove the early history of the

enterprise that would become the Nestle Company, was Henri

Nestle’s search for a healthy, economical alternative to

breastfeeding for mothers who could not feed their infants at

the breast.

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In the mid – 1860s Nestle, a trained pharmacist began

experimenting with various combinations of cow’s milk,

wheat flour and sugar in an attempt to develop an alternative

source of infant nutrition for mothers who were unable to

breast feed. His ultimate goal was to help combat the

problem of infant morality due to malnutrition. He called the

new product Farine Lactee Henri Nestle.

Nestle’s first customer was a premature infant who could

tolerate neither his mother’s milk nor any of the conventional

substitutes, and had been given up for lost by local

physicians. People quickly recognised the value of the new

product, after Nestle’s new formula saved the child’s life and

within a few years, Farine Lactee Nestle was being marketed

in much of Europe.

Henri Nestle also showed early understanding of the

power of branding. He had adopted his own coat of arms as a

trademark; in Swiss German, Nestle means ‘little nest’. One

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of his agents suggested that the nest could be exchanged for

the white cross of the swiss flag. His response was firm; “I

regret that I cannot allow you to change my nest for a Swiss

cross …. I cannot have a different trademark in every

country, anyone can make use of a cross, but no-one else

may use my coat of arms”.

Meanwhile, the Anglo-Swiss condensed Milk Company,

founded in 1866 by Americans Charles and George Page,

broadened its product line in the mid-1870s to include cheese

and infant formulas. The Nestle Company, which had been

purchased from Henri Nestle by Jules Monnerat in 1874,

responded by launching a condensed milk product of its own.

The low companies remained fierce competitors until their

merger in 1905.

Some other important first occurred during those years.

In 1875 every resident Daniel Peter figured out how to

combine milk and cocoa powder to create milk chocolate.

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Peter, a friend and neighbor of Henri Nestle, started a

company that quickly became the world’s leading maker of

chocolate and later merged with Nestle. In 1882, Swiss miller

Julius Maggi created a food product utilising legumes that was

uqick to prepare and easy to digest. His instant pea and

bean soups helped launch Maggi and Company. By the turn

of the century, his company was producing not only

powdered Soups, but bouillon cubes, and sauces and

flavorings.

IN 1903, NESCAFE IS HONOURED BY THE U.S. ARMY

AND NAVY FOR SERVICES RENDERED IN WWII

The effects of the onset of World War II felt immediately

by Nestle Profits dropped from $20 million in 1938 to $6

million in 1939. Neutral Switzerland became increasingly

isolated in a Europe at war and the company transferred many

of its executives to offices in Stamford, Connecticut.

30 NESTLE CHOCOLATES
The first truly global conflict ended forever the

traditional company structure. To overcome distributing

problems in Europe and Asia, factories were established in

developing countries, particularly in Latin America.

Ironically, World War II helped speed the introduction of

the company’s newest product, Nescafe. After the United

States entered the war, Nescafe became a staple beverage of

American servicemen serving in Europe and Asia. Annual

production levels reached one million cases by 1943.

As in World War O, production and sales rose in the

wartine economy. Nesle’s total sales jumped from $100

million in 1938 to $225 million in 1945. As the end of the war

approached, Nestle executives found themselves

unexpectedly heading up a worldwide coffee concern, as well

a company built upon Nestle’s more traditional business.

31 NESTLE CHOCOLATES
FOLLOWING WWII, NESCAFE LEADS THE WAY FOR

NESTLE’S TREMENDOUS GROWTH

The close of world War II marked the beginning of the

most dynamic phase of Nestle’s history. Throughout this

period, Nestle’s growth was based on its policy of diversifying

within the food sector to meet the needs of consumers.

Dozens of new products were added as growth within the

company accelerated and outside companies were acquired.

In 1947, Nestle merged with Alimentana S.A. the

manufacturer of Maggi seasonings and soups, becoming

Nestle Alimentana Company. The acquisition of Cross and

Blackwell, the British manufacturer of preserves and caned

foods, followed in 1950s as did the purchase of Findus Frozen

Foods (1963), Libby’s fruit juices (1971) and Stouffer’s frozen

foods (1973).

Meanwhile, Nescafe continued its astonishing rise. From

1950 to 1959, sales of instant coffee nearly tripled, and from

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1960 to 1974, they quadrupled. The company’s total sales

doubted twice in the 15 years after World War II. The

development of freeze – drying led to the introduction, of

Taster’s Choice instant coffee, in 1966.

Finally, Nestle’s management reached the decision to

diversify for the first time outside the food industry. In 1974,

the company became a major shareholder in L’Oreal, one of

the World’s leading makers of cosmetics.

NESTLE AIM TO MAKE A STRONG IN THE ASIAN MARKETS:

The first half of the 1990s proved to be a favourable time

for Nestle Trade barriers crumbled and world economic

developed into a series of more or less integrated trading

areas. The opening of Central and Eastern Europe, as well as

Chine, and a general trend towards liberalization of direct

foreign investment bode well for a company with interests as

far flung and diverse as Nestle.

33 NESTLE CHOCOLATES
Nestle opened the 20th century by merging with the

Anglo-Swiss condensed Milk Company to broaden its product

range and widen its geographical scope. As we go into a new

millennium, Nestle is the undisputed leader in the food

industry, with more than 500 factories in over 70 countries

and sales of more than CHF 70 billion.

Consolidation since 1996 has been demonstrated by the

acquisition outright of the Italian mineral water concern San

Pellegrino (1997), the acquisition of Spillers Pet foods of the

UK (1998). And also with the decision to divest the Findus

brand in order to concentrate on high added value frozen food

products (1999). The acquisition of Spillers Pet foods

strengthens Nestle’s European position in the pet food market

which was lacked out in 1985 with the purchase of Camation

and its Frishies brand.

34 NESTLE CHOCOLATES
Nestle’s recent decision to divert its roast and ground

business in the U.S. (Hills Bros, MJV, Chase & Sanborn) will

allow us to focus our US coffee strategy on the new premium

line of Nescafe which was launched in September 1999 on the

west coast.

Maintaining a leadership position under rapidly changing

circumstances requires a degree of agility not normally

associated with a company the size of Nestle. The Company’

Strategy will continue to be guided by several fundamental

principles. Nestle’s existing products will grow through

innovation and renovation while maintaining a glance in

geographic activities and product lines. Long-term potential

will never be sacrificed for short-term performance. The

Company’s priority will be to bring the best and most relevant

products to people, wherever they are, whatever their needs,

throughout their lives.

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HISTORICAL DEVELOPMENT:

1866 – Company’s Foundation.

1905 – Merger between Nestle and Anglo Swiss condensed

Milk Company.

1929 – Merger with Peter – Cailler – Kohler, chocolate,

suissessa

1947 – Merger with Alimentana SA (Maggi)

1971 – Merger with Ursina – Frack (Switzerland)

1985 – Acquisition of carnation (USA)

1988 – Acquisition of Buitoni Pergina (I)

1992 – Acquisition of Perrier (F)

MAIN BRANDS:

Dairy products:

36 NESTLE CHOCOLATES
Nido, Nespray, Carnation, Milkmaid/ La Lechera, Gloria,

Neslac, barenmarkee.

Soluble coffee:

Nescaffe, Taster’s choice, Ricore, Ricoffy.

Roast and ground coffee:

Bonka, Zoegas, Loumidis.

Mineral water:

Nesquick, Nescau, Mestea, Milo, Carnation, Libby’s.

Breakfast cereals:

Nestle.

Coffee creamers:

Coffee – mate.

Frozen foods:

Stouffer’s, Buitoni, Maggi.

37 NESTLE CHOCOLATES
Ice creams:

Nestle, Frisco, Dairy farm, Mognolia, Motta, Camy, etc.

CHOCOLATE AND CONFECTIONARY:

Nestle, Crunch, Cailler, Frigor, Chokito, Sarothi, Galak,

Milky bar, Yes, Kit-Kat,

Quality Street, Smarties,

After Eight, Baby Ruth,

Butter finger, Lion, Nuts,

Rolo, Aero, Polo, etc.

FOOD SERVICES AND PROFESSIONAL PRODUCTS:

Chef, Davogel, Santa Rica.

PET CARE:

Friskies, Fancy Feast, Alpo, Mighty Dog, Gourmet.

OPHTHAL MOLOGICAL PRODUCTS:

Alcon

38 NESTLE CHOCOLATES
COSMETICS:

Eoreal.

39 NESTLE CHOCOLATES
ACCELERATING GROWTH IN 1999:

The Nestle Groups consolidated sales for the first ten

months of 1999 amount to CHF 60.5 billion, an increase of

2.2% over the period January to October of 1998 and 3.6% at

comparable structure and constant exchange rates.

In spite of a difficult economic environment in Eastern

Europe and in South America, the Group confirmed its

acceleration of sales throughout the first ten months.

Cumulative real internal growth at the end of October 1999

stood at 3%. At today’s press conference the Group’s

Management disclosed further that the negative impact of

exchange rates with –2.4%, is decreasing, while acquisition

net of divestitures contributed one percent to sales growth.

Finally, price adjustments account for 0.6%, reflecting overall

low inflation rates and favourable raw materials costs.

40 NESTLE CHOCOLATES
Nestle expects the positive trend to continue for the

remaining weeks of 1999 and looks forward to consolidated

sales of more than CHF 73 billion for the year as whole profits

should grow at a rate corresponding at least to the growth of

sales.

NEW CORPORATE STRATEGY OF NESTLE INDIA:

Nestle along with Hindusthan Lever, offers the best

exposure to the value added processed foods market. The out

looks for this business view of the extremely low penetration,

rising awareness, growing urbanization and growth of

convenience foods. With a well driver brands, Nestle is well

placed to capitalize on the future growth of the foods business

in India. Its growth drivers would be Coffee, Products,

Chocolates and Confectionery.

Under the leadership of a new Managing Director, Mr.

Carlo Donati, Nestle India has drawn up a new corporate

41 NESTLE CHOCOLATES
strategy that is fundamentally changing the way the company

has looked at the India market and consumers in the past.

The company is now revisiting its pricing strategy to enhance

its customer base in the domestic market. Nestle is also

working on repositioning its self as a key player in the foods

business. Simultaneously, the company has taken aggressive

steps towards widening its supply chain, creating

supplementary distribution channels and putting in place a

remuneration policy linked to employee productivity. We

believe that Nestle will begin to reap the benefits of its new

strategy in the current year. We expect the stock to trade at

over Rs.750 in 12 months time.

A WHOLE SOME FOODS COMPANY:

Nestle now wishes to be recognised as an important

foods company instead of a milk and coffee company, a goal it

plans to achieve in the next 5 years. The company’s five

thrust areas within the foods business are beverages, culinary

42 NESTLE CHOCOLATES
products, infant foods, chocolates and confectionary items.

While, ‘Nescafe’ will be the torchbearer, the other focus

brands are ‘Allen’, ‘Cerelac’, ‘Kitkat’, ‘Milo’, Maggi’ and ‘Polo’.

Any product that fails to make it to leadership position in its

segment will be shelved. Unlike the past, when the company

had tended to rush into new segments and product categories

just to get volumes, Mr. Donati’s plans are to consolidate

current resources.

LOW-FAT, HIGH BULK DIET:

Nestle India has previously followed a strategy of milking

its brands by way of regular price increases, sometimes at the

cost of volumes. Market research has shown that Nestle’s

products form a small percentage of the food consumption

basket of families at the lower end of the target market.

Realizing this, the company is now revisiting its present

strategy to enhance its customer base in the domestic

market. While it has always had a number of products in the

43 NESTLE CHOCOLATES
niche segments, the company is now also focusing on the

lower end of the market. The purpose is to increase volumes

as well as profitability.

A PINCH OF A DASH OF THAT:

In line its strategy, Nestle is now offering a Rs. 10

discount on Nescafe. This is the first time that the company

has cut prices in the product, and the move has already

boosted volumes. Nestle’s ubiquitous brand, Maggi, had been

witnessing a decline in growth and market share ever since a

change in the product about 18 months ago. The relaunch of

Maggi Noodles via a return to the original recipe (“Phir Pehle

Jaisa”) has been a success. Our interaction with some of their

dealers suggests that sales have now gone through the roof

and are growing at over 35% (while the number is not

representative of the whole country, we believe it is well

above management’s expectations). To increase its presence

in the confectionery segment, the company is planning to

44 NESTLE CHOCOLATES
launch the fox range, a bestseller brand from its international

hamper.

BETTER AFTER-TASTE?

There has been a sharp drop in Nestle’s export of coffee

to Russia in the first quarter, and it seems like it will be a while

before we see a turnaround. While we cannot rule out a

negative impact on overall sales going forward, the impact on

profits will be much lower, since the price risk for these sales

was and will continue to be borne by nestle Russia.

STOCK UP ON THE GOODIES:

Nestle’s new strategy should result in strong sales

growth over the next few years and profits should grow even

faster thanks to the company’s efforts at improving

efficiencies.

45 NESTLE CHOCOLATES
A BIG BARGAIN:

As India’s economy grows, the Indian consumer will

become more sophisticated and there will be a growing

preference for branded foods. Nestle stands to benefit the

most as it is spread across all categories of branded food.

Another strong case for buying into nestle is the fact that it is

going through a process of extensive restructuring both on the

product portfolio as well as cost structure that will lead to a

sustained improvement in operating margins.

Sales turnover of Nestle India for the following years.

Years Sales turnover (in crores)

1999 711.72
2000 996.33
2001 1204.73
2002 1425.60
2003 1599.90

46 NESTLE CHOCOLATES
GRAPH SHOWING SALES TURNOVER OF NESTLE COMPANY

47 NESTLE CHOCOLATES
Net profit of nestle company for the following years

Years Net profit (in crores)


1999 40.47
2000 53.16
2001 54.26
2002 74.33
2003 86.19

GRAPH SHOWING NET PROFIT NESTLE COMPANY

48 NESTLE CHOCOLATES
Operating profit of nestle India for the following years.

Years Operating profit


1999 80.39
2000 118.27
2001 134.28
2002 174.71
2003 197.73

GRAPH SHOWING OPERATING PROFIT OF NESTLE COMPANY

49 NESTLE CHOCOLATES
Equity dividend of nestle company for the following years.

Years Equity dividend


1999 32.14
2000 41.78
2001 35.35
2002 57.85
2003 62.67

GRAPH SHOWING EQUITY DIVIDEND OF NESTLE COMPANY

50 NESTLE CHOCOLATES
Equity dividend in percentage of nestle company for the

following years.

Years Equity dividend (%)


1999 50
2000 65
2001 45
2002 60
2003 65

EQUITY DIVIDEND IN PERCENTAGE OF NESTLE COMPANY

70

60

50

40

30

20

10

0
1999 2000 2001 2002 2003
YEAR

51 NESTLE CHOCOLATES
Nestle India Ltd has reported a 14 percent increase in its

net profit. 98.5 crores for the year ending December 31, 1999

as against Rs. 86.2 in the year ago period. The company’s

board has recommended divided of Rs4.50 per share taking

the total dividend to Rs. 8.50

Domestic sales for the year were higher at Rs.1,315.6

crores (1232.9cr), while export sales were down at Rs.228.3

crores. According to the Company, export sales fell because

of the economic and depressed market conditions in the

Russian economy along with more competitive sourcing of

coffee into Russia.

Net sales were Rs.1543.9 crores (Rs.1599.9 cr.), while

other income Rs.8.3 crores (Rs.12.8 cr). Total expenditure

was Rs.1317.5 crores. Interest was Rs. 26.5 crores (Rs.4.39

cr); and taxation Rs.59.7 crores (Rs.37.4 cr); impairment of

fixed assets accounted for Rs. 12.3 crores provision for

contingencies Rs. 14.2 crores (Rs.7.1cr)

52 NESTLE CHOCOLATES
CHAPTER – 5

DEALERS PROFILE

SRI VINAYAKA ENTERPRISES -A CASE STUDY

53 NESTLE CHOCOLATES
SRI VINAYAKA ENTERPRISES

Sri Vinayaka Enterprises is located at 2nd cross Tilak

Nagar in Shimoga city. It was started in 1994 with an initial

capital of 4 lakhs.

Mr. Lakshmikanth L.V. is the proprietor of Sri.Vinayaka

Enterprise is the distributor of Nestle India Ltd. Apart from this

they are distributors of Philips India Ltd, Joy Co India Private

Ltd, MTR Foods Ltd, Parrys confighnory, Laxmi Agerbattis, Agni

Matham, Temple Briefs, Jyothi Laboratories.

ORGANISATION STRUCTURE

Sri Vinayaka Enterprises was established as a sole

trading agency, in the year 1994. it was started with an initial

investment of Rs. 4 lakhs. The proprietor of Sri Vinayaka

Enterprises is L.V. Lakshmikanth.

54 NESTLE CHOCOLATES
Their transaction is with the State Bank of Mysore. They

have a profit margin of 5.8%. They pay Rs.7500 per month for

shop and godown rent. They distribute the products through

their own vehicles and they get 3000 sq feet of 2 godowns to

store the stocks. They pay Rs. 800 per month for electricity bill

including godown and office.

Sri Vinayaka Enterprises has given employment to 20

persons. To look after a accounts section an accountant have

been appointed. To deliver the products 6 delivery boys have

been appointed. A 6 salesman and 2 others have also been

appointed.

MARKETING MIX

Marketing mix refers to a combination of various

marketing activities that are co-ordinated to reach a particular

market segment. The elements of a marketing mix are the

55 NESTLE CHOCOLATES
4’p’s that is product, price, promotion and distribution. It is the

optimum combination of all marketing, ingredients in the light

of all marketing ingredients on the light of the current

marketing environment.

PRODUCT

Product is a set of tangible and intangible attributes,

which provide want satisfying benefits to a buyer in an

exchange. Such attribute includes color, price, packaging and

the reputation and services of the manufactures and the

middlemen.

Sri Vinayaka Enterprises deals with the Nestle India Ltd.,

Nestle India Ltd., produces two kinds of products i.e., Baby

Foods and Cereals and also Chocolates. Baby Foods and

Cereals includes Nestle Milo, Cerelac Nestum etc. chocolates

are of many verities like Nestle Munch, Kit-Kat, Polo Mint,

Nestle Crunch etc.

56 NESTLE CHOCOLATES
PRICE

Price is the index of value. It is what we pay for what we

get. It is what the consumer pays or is expected to pay or is

expected to pay in exchange and anticipation of the expected

utility.

The manufacturers fix the price of the products. Sri

Vinayaka Enterprises sells the products according to the price

fixed by the Nestle India Ltd.

PROMOTION

Promotional strategy focuses upon making the product

flow through the marketing channels to the target market.

Promotion is any marketing effort whose function is to inform

or persuade actual or potential consumers about the merits of

a given product. Four major tools of promotion are

Advertising, Sales Promotion, Publicity and Personal selling.

57 NESTLE CHOCOLATES
Advertising refers to any paid form of non-personal

presentation of ideas, goods or services by an identified

sponsor.

Nestle India advertises through various media like

Television, Radio, News Papers, Outdoor Posters etc. Sri

Vinayaka Enterprises has no problem with advertising. They

go directly to the market.

DISTRIBUTION

A channel of distribution for a product is the route taken

by the ownership or title to the product as it moves from the

products to the ultimate consumer.

Sri Vinayaka Enterprises has their own vehicles for

distribution of products. They distribute the Nestle Chocolates

58 NESTLE CHOCOLATES
through Auto and a Van and spot booking and spot delivery in

a case of out station through van.

MARKETING CHANNELS

NESTLE INDIA LIMITED

C AND F AGENT AT HUBLI

SRI VINAYAKA ENTERPRISES

RETAILER

CONSUMER

59 NESTLE CHOCOLATES
Sales and Analysis

Comparative analysis of sales of Nestle products and

Chocolates by Sri Vinayaka Enterprises.

Year Total Sales of Total sales of Nestle


Nestle Products Chocolates
(in Lakhs of Rs) (in Lakhs of Rs)

1999-00 85 12.5

2000-01 90 14

2001-02 99 20

2002-03 105 30

60 NESTLE CHOCOLATES
Graph showing sales of Nestle products and Chocolates

by Sri Vinayaka Enterprises.

160

140

120 30

20
100
14
12.5

80

60
105
99
85 90
40

20

0
1999-00 2000-01 2001-02 2002-03

Total Sales of Nestle Products Total sales of Nestle Chocolates

61 NESTLE CHOCOLATES
ORGANISATIONAL CHART

PROPRIETOR

ACCOUNTANT

SALES REPRESENTATIVE

HELPERS DELIVERY BOYS

62 NESTLE CHOCOLATES
Terms and conditions governing company’s sales:

 Delivery against advance cheques given and to be

preserved by the company immediately after dispatch.

 Orders to be placed on weekly basis on the average sales.

 Door delivery of products, lotty freight paid by the

company.

63 NESTLE CHOCOLATES
CHAPTER – 6

 ANALYSIS OF CONSUMER SURVEY AND FINDINGS

 KEY FINDINGS OF THE STUDY

64 NESTLE CHOCOLATES
ANALYSIS OF CONSUMER SURVEY AND FINDINGS

Analysis of survey of “Nestle Chocolates” with particular

reference to marketing management.

The survey is conducted among different class and age

group of people residing in Shimoga city. To secure more

items of information from a sample of responds of informants

representative of a large group, questionnaire method is

adopted. Information gained from respondents are analyzed

and classified. The main aim of this survey is to study the

people’s attitude towards Nestlé’s chocolates.

The consumers questionnaire has responded by 50

persons and made this survey success. The percentage wise

opinion has also shown in all the tables formed below for this

purpose.

65 NESTLE CHOCOLATES
Table - 1

This table shows the number of informants belonging to

different age groups responding to the questionnaire.

Informants Number of No.of informants

informants In percentage (%)


Children 10 20%
Teenagers 30 60%
Adults 10 20%
Total 50 100%

66 NESTLE CHOCOLATES
PIE CHART SHOWING NUMBER OF INFORMANTS

Adults Children
20% 20%

Teenagers
60%

From the above table it is clear that out of 50 persons a

major portion who have responded to the questionnaire is

teenagers followed by children and adults.

67 NESTLE CHOCOLATES
Table – 2

Table showing the monthly income of the respondents family

(adults)

Income Total Percentage


Below - 3000 1 10
3000-5000 3 30
5000-7000 4 40
7000-and above 2 20
Total 10 100

68 NESTLE CHOCOLATES
PIE CHART SHOWING MONTHLY INCOME OF RESPONDENTS

Below- 3 50 30 0-57an -70 0dabove

Below - 3000 3000-5000 5000-7000 7000-and above

From the above table – 2 it is clear that respondents

whose family income is Rs.5000-Rs.7000 and Rs.3000-Rs.5000

have responded more compared to respondents whose family

income is above Rs.7000 and below Rs.3000.

It is clear from the information gained from informants

that income does not effect chocolate consuming. It was said

69 NESTLE CHOCOLATES
that they are tempted to chocolate and so cannot away from

it.

70 NESTLE CHOCOLATES
Table – 3

Table showing the pocket money of the teenagers who use

chocolates.

Pocket money Total Percentage (%)


From 50-100 8 26.7
100-200 10 33.3
200 and above 8 26.7
No pocket money 4 13.3
Total 30 100

By this table we came to know that most of them get

pocket money. Majorities of them get pocket money from

Rs.100-200 followed by 26.7% of them get 200 and above.

26.7% of them get pocket money 50-100. only a few that is

13.3% of them do not get pocket money.

71 NESTLE CHOCOLATES
Graph showing the pocket money of the teenagers who use chocolates.

72 NESTLE CHOCOLATES
Table –4

Table showing the number of informants who consume

chocolates.

Informants Total Percentage (%)


Consuming 47 94
Non-consuming 3 6
Total 50 100

Although a very little section of people are far away from

chocolates, it becomes clear from the table that 94% of the

informants consume chocolates.

73 NESTLE CHOCOLATES
Graph showing the number of informants who consume

chocolates.

Non-consuming
6%

Consuming
94%

74 NESTLE CHOCOLATES
Table – 5

The following table shows the sources influencing the

purchase of chocolates.

Sources Percentage (%)


Elders 12
Peer groups 17
Advertising 47
Impulse 6
Display 10
Shop keeper 8
Total 100

75 NESTLE CHOCOLATES
The following Graph shows the sources influencing the

purchase of chocolates.

8% 12%
10%

6% 17%

47%

Elders Peer groups Advertising


Impulse Display Shop keeper

76 NESTLE CHOCOLATES
 The greatest influence for the purchase of chocolates was

by advertisement.

 This was followed by peer groups.

 Followed by elders influence followed by display.

 Impulse and shopkeeper influence was least.

Key findings of the study:

Children below 10 years:

 Mostly influenced decision-makers and use buyers.

 Accompanied by elders.

 Impulse buying behaviour.

 Display and advertising influences is great.

 No brand loyalty.

 Spending ability is less.

 Shopkeeper influence is great.

Children between 10 and 15 years:

 Greater brand awareness.

 Spending ability is more.

77 NESTLE CHOCOLATES
 Greater brand loyalty.

 Sensitive influence by peer groups.

 Lesser influence by shopkeeper.

Teenagers between 15 and 20

 Characterized by greater spending ability.

 Propensity towards bar chocolates, cool drinks, on

cosmetics, fast foods, cigarettes etc.

 Greater influence by peer groups and advertising.

Young Adults:(20-25 Years)

 Occasional buyers.

 No standard buying pattern.

Adults (25 and above):

 Greater influence by shopkeeper .

 They are of the opinion that it spoils teeth and melts very

quickly.

78 NESTLE CHOCOLATES
Table – 6

Table showing the top the mind awareness of the informants.

Brand Unaided Aided recall Unaware


Cadburys 80 15 5
Nestle 76 17 7
Campco 67 22 11
Amul 59 20 21
Alpenleibe 20 14 66

Cadburys enjoyed the maximum top of mind awareness

followed by nestle followed by campco followed by amul

followed by alpenleibe.

79 NESTLE CHOCOLATES
Graph showing the top the mind awareness of the informants

80

70

60

50

40

30

20

10

0
Cadburys Nestle Campco Amul Alpenleibe
BRAND

Unaided Aided recall Unaware

80 NESTLE CHOCOLATES
Key findings of the study:

Regarding taste:

Nesle, Cadburys, Campo, Amul, Alpenleibe.

Regarding reputation of the brand and packaging:

Cadburys, Nestle, Amul, Alpenleibe.

Regarding price:

It was said that they would continue to purchase

chocolate if the price increases also. Consumer’s perception

was that higher price would influence more purchase.

81 NESTLE CHOCOLATES
Table –7

Table showing preferences in advertisement by the

informants.

Advertising Percentage (%)


Music 26
Song 24
Presentation 26
Humor 14
Animation 10
Total 100

 The more preferred aspect of an advertisement was the

MUSIC and the PRESENTATION.

 The second most preferred in SONG.

 The next preferred forms are HUMOUR and ANIMATION.

82 NESTLE CHOCOLATES
Graph showing preferences in advertisement by the

informants.

30

25

20

15

10

0
Music Song Presentation Humor Animation
Advertisement

83 NESTLE CHOCOLATES
Table – 8

Table showing the preferred packaging in chocolate.

Packaging Percentage (%)


Single sided twist wrapper 12
Double sided twist wrapper 35
Pillow pouche 25
Tear open 21
Others 7
Total 100

84 NESTLE CHOCOLATES
Graph showing the preferred packaging in chocolate.

Others

Tear open

Pillow pouche

Double sided twist wrapper

Single sided twist wrapper

0 5 10 15 20 25 30 35

85 NESTLE CHOCOLATES
∗ The most preferred form of PACKAGING was “DOUBLE

SIDED TWIST WRAPPER”.

Reason:

a. Traditionally most of the chocolate comes in double sided

twist wrapper.

b. Easy to remove and pop them in to mouth.

 The second most preferred form of PACKAGING was

“PILLOW POUCHES”.

Reason:

a. Greater fun to bite open.

b. Sealed properly hence taste would be preserved.

 The next preferred forms of packaging are “Tear Open”

followed by “SINGLE SIDED TWIST WRAPPER” followed by

“OTHERS”.

86 NESTLE CHOCOLATES
Table – 9

Table showing the suggestions of the informants for the

improvement of the nestle chocolates.

Suggestions Percentage (%)


Improve the taste 9
Maintain reasonable price 23
Increase in quality 68
Total 100

Nearly 68% have suggested to increase in quality and 23% to

maintain reasonable price and 9% to improve the taste.

87 NESTLE CHOCOLATES
Graph showing the suggestions of the informants for the

improvement of the nestle chocolates.

68
70

60

50

40

30 23

20
9
10

0
Improve the taste Maintain Increase in quality
reasonable price

88 NESTLE CHOCOLATES
CHAPTER – 7

 SUGGESTIONS AND CONCLUSIONS

89 NESTLE CHOCOLATES
SUGGESTIONS:

The following are some of the suggestions for the

company for the improvement of “NESTLE CHOCOLATES”.

1. The formulation of nestle chocolate could be bettered.

There were a lot of grievances voiced against the taste.

This negative attitude needs to be tempered. More

importantly because taste was considered as the most

improvement attitude.

2. PRICING:

Buyer’s believe in the implicit subjective process viz., if it

costs more, it must be better. Price of chocolate was

considered to be relatively high. Reasonable price is to be

maintained to reach the expected market share through a

compromise.

90 NESTLE CHOCOLATES
3. DISTRIBUTION:

Stock availability was also considered as the most

important attributes. Distribution could be made better.

4. PACKAGING:

Taste of the chocolate can be preserved in pillow

pouches. So, such type of packaging should be

encouraged.

All these put together helps to achieve higher demand

for the product and thus it increases in sales.

91 NESTLE CHOCOLATES
CONCLUSIONS:

To maintain steady place in the market against peer

brands, consumers are to be satisfied properly. Consumer

needs are always subject to the direct attack by competitors

who desire to serve those it needs in the market. So,

marketing executives must have adequate information

regarding factors influencing customer needs and behaviour

and thus they try to satisfy them.

Nestle has banged the competitors through advertising

and has created its company image. Company image is the

personality of the company as perceived by customers,

prospects, shareholders and the general public. The company

cannot be content their with present performance. There

should be strong claim as “superior to those peer brands”.

92 NESTLE CHOCOLATES
The company through research and development

department should undertake tasks to improve the quality of

the existing products and new product development.

Thus it can be concluded that nestle India ltd by regular

market research and realization of customers preferences can

attain market expansion.

93 NESTLE CHOCOLATES
CHAPTER – 8

 CONSUMER QUESTIONNAIRE

 BIBLIOGRAPHY

94 NESTLE CHOCOLATES
CONSUMER QUESTIONNAIRE

1. Name :

2. Address :

3. Do you get [palette money: Yes / No

if no, go to questions

a. If Yes, How Much (Per Month)

From Rs 50-100

Rs 100-200

Rs 200 & Above.

b. On what would you spend your pocket money?

4. What Are the Various Chocolates you are aware of ?

95 NESTLE CHOCOLATES
5. Have you heard of these chocolates?

a. Nestle much

b. Cadbury’s perk

c. Alpenleibe

d. Campco

e. Nutrine

6. Do you eat chocolates: yes / no

if yes continue.

7. How many chocolates do you consume per week?

8. In nestle’s chocolates, which one you prefer most?

a. Nestle munch

b. Nestle bar-one

c. Crunch snacks

d. Nestle kit-kat

e. Nestle classic milk choco

f. Nestle milky-bar

g. Nestle charg

96 NESTLE CHOCOLATES
9. You Are Influenced To Purchase Chocolate From

a. Elders

b. Peer groups

c. Advertising

d. Impulse

e. Display

f. Shop keeper

g. Taste

10. Now taking the various Chocolates you have tested, How

would you rank them.

Nestle Cadburys Kandus Campco


Taste
Stock
Availability
Reputation
Of the brand
Price
Packaging

11. Talking about taste that what appeals to you most in taste?

97 NESTLE CHOCOLATES
a. Sweet

b. Chocolate inside

c. Wafer biscuit with delicious chocolayer

d. Sticks to the mouth

e. Leaves the mouth with good feeling

f. Blend of chocolate and caramel

g. Any other [specify]

12. Which Packaging Would You Prefer The Most For Chocolate

a. Single sided twist wrapper

b. Double sided twist wrapper

c. Pillow pouch

d. Tear open

e. Any other [specify]

13. Do you see advertisements : yes \ no

if yes, continue.

14. What do you like the most in advertisements?

98 NESTLE CHOCOLATES
a. Music

b. Song

c. Humour

d. Presentation

e. Animation

15. If the price of your consuming chocolate goes up by (Say)

a. 50 paise

b. 1 rupee

c. 2 ruees & above

Would you still consume the same :yes/no

If yes, which one:

16. Are there any draw backs in : yes / no

Nestle’s chocolates

If Yes, Specify

BIBLIOGRAPHY

99 NESTLE CHOCOLATES
• MARKETING MANAGEMENT By: SHERLEKAR

• ENCYCLOPEDIA

• NEWSPAPER AND MAGZINES

• INTERNET

(www.nestleindia.com)

100 NESTLE CHOCOLATES

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