Nescafe

I. Market Background Nestlé, one of the most successful companies in the world is well-known in the Philippines for offering diverse products in the market and one of them is Nescafé. Nescafe is now at its maturity stage and is considered as the market leader in the instant coffee industry. The history of Nescafé can be traced back as far as the 1930's. Its coffee guru, Max Morgenthaler, together with his team thought of the need to produce high quality coffee that could be prepared by simply adding hot water while still being able to retain the coffee's natural aroma. It took them seven years of  research in their Swiss laboratories until finally, they found the solution. The new generation of instant coffee was first introduced on April 1, 1938 in Switzerland. It was called Nescafé as a combination of Nestlé and café. Although it has been a huge breakthrough in the coffee industry, it didn't become a big success in Europe due to World War II. Shortly after its release in the market, it was exported to other countries like France, Great Britain and the USA. It became a huge success in America and because of this Nescafé was able to re-launch r e-launch itself in Europe. It rapidly grew in popularity and by the 1950's, teenagers were already flocking in to coffee-houses. In 1965, Nescafé unveiled its Gold Blend which introduced freeze-dried soluble coffee. The invention of new technology made it possible for Nescafé to make the ‘full aroma' process which captured more aroma and flavor in every single coffee bean. This is what made the unique quality and character of Nescafé even better. Nescafé made its grand debut in the Philippines during the 1960's. It captured the attention of the Filipinos due to its huge multimedia exposure. During that time, Nescafé can be seen in prints, TV commercials, and heard on the radio. There signature jingle, originally sung by Zsa Zsa Padilla, is still being used today. "Let's sit and talk awhile, in the one world of Nescafé." Although the lyrics have been slightly altered, this catchy phrase means that coffee isn't just

something that you drink during breakfast or when you're tires; rather, Nescafé coffee can be used to socialize and catch up with the people whom you haven't had time to talk to for awhile. You drink coffee when you want to patch up things with your wife, when you want to take a rest, or even when you just want to have fun. Since Nescafé has a vast and diversified target market, they had to launch different varieties of their instant coffee to suit the needs of their c ustomers. Starting from their Nescafé Classic, they now have 15 different variants of instant coffee which come in different sizes. Before, they used to sell Nescafé coffee in a diamond glass which acts as a drinking cup once all the coffee powder was consumed. Now, they sell it in jars and aluminum packs. Their consumers can buy it in different sizes like the family pack, economic pack, sulit pack and gift set. The different variants of Nescafé instant coffee are Nescafé Classic, Nescafé Decaf, Nescafé Gold Blend, Nescafé First Pick, Nescafé Choco Fudge, Nescafé Viva Vanilla, Nescafé Intense 3-in-1, Nescafé Hazalnut, Nescafé Original 3-in-1, Nescafé Sweet ‘n Creamy, Nescafé Sugar Free 3-in-1, Nescafé Decaf 3-in-1, Nescafé Fit with Teavigo, Nescafé Lingzhi with Ganoderma Extract and Nescafé Relax Decaffenaited Coffee with Chamomile, and Nescafé Protect. Nescafé 3-in-1 coffee contains coffee, sugar, and creamer just enough for those who want there coffee in an instant. Price varies depending on the flavor and size. Their price range estimate is from P25.00 to P450.00 depending on the amount of coffee bought. Place is very important in marketing because it is how the products get to the consumers. There are many distribution channels, market coverage whether  inclusive, exclusive or selective, warehousing, distribution centers, transportation, inventory management, order processing and reverse logistics that needs to be considered. In the case of Nescafe 3in1, it is distributed through warehouses to wholesalers and retailers. It can be bought by the consumers in the supermarkets,

convenience stores and sari-sari stores around in different countries around the world. Given that Nescafé caters to a vast number of consumers and that there are a lot of competing brands in the market, they have to continue to promote their product using different media. Nescafé can be seen in billboards, newspapers, magazines, TV commercials, and even the internet. Recently, Nescafé became part of an online game called FLYFF. In the game, the players go on a quest and retrieve the different products that are needed in order to make Nescafé coffee. Drinking the Nescafé coffee will boost the player's health and other special powers. Aside from this, Nescafé also uses celebrities to promote their product. Some celebrities who've endorsed Nescafé are Kim Chiu and Gerald Anderson, John Lloyd Cruz, Bamboo, Toni Gonzaga and Sam Milby, and Francis M. and Ramon Bautista. Nescafé has some of the most interesting commercials in the Television. Recently, they've unveiled a new commercial where in a freshman student was surrounded by aliens. Its message was simple: Nescafé can make you feel at home even if you're in a new environment. Truly, Nescafé's commercials appeal to the heart of their viewers. Also, most of their advertisements are being shown during rainy seasons. One of their most famous tagline, "Sarap mag-Nescafé classic pag umuulan ‘no?, promotes Nescafé as the perfect drink during rainy days.

II. Objectives We feel that it is necessary to investigate how the service workers consume the Nescafe 3-in-1 because we need to know how the market prioritizes drinking coffee. This research should aim to gain a clear understanding of  customers' perceptions and experiences. Also, this paper will be useful for those people who might want to invest some time, their potential and expertise, in finding his/her way in the instant coffee world business. After some discussions among the group members, we agreed that the overall objective is "to evaluate the response of the service workers to the Nescafe 3-in-1 product". This objective may be segregated into the following sub-objectives which will define the main objective of the group: • To examine how the Nescafe 3-in-1 affect the service workers in their daily consumption of the product. • To gather some information among the selected service workers and their  experiences regarding the product using the UAI. • To determine how the Nescafe 3-in-1 behave in the market with the target consumers like the security guards. • To segment a total market patronizing Nescafe 3-in-1 and then describe and profile the different identified market segments by each segment's brand awareness, category usage and purchase practices, category and brand attitudes, and category and brand images, as well as by its socio-demographics • To find out the brand's most distinctive product benefit positioning in the market and relative to competitors. • To spot/explore new opportunities in the instant coffee market. • To measure the brand's share of mind, brand awareness, and the brand share of  market. • To analyze the consumers' brand positioning behavior using the GAP and SWOT Analysis.

III. Market The study will be conducted to service workers around Metro Manila, specifically to security guards from various establishments from Malate, Manila. Security guards from establishments which sell coffee products such as Starbucks, McDonalds, Figaro and the like are to be excluded from the sample since their answers might be biased and alter the objectivity of this research. Aside from this segment, there are no more restrictions on the sample population of this study. Generally, the group sets target security guards from banks, schools, convenience stores and restaurants who don't serve coffee.

IV. Research Method A quantitative research method would be conducted in order to asses the response of service workers on the new Nescafe 3-in1 coffee mix. The group would conduct a survey to gather information on the different viewpoints of  service workers regarding the product. To yield a meaningful response, a sample size of 100 service workers would be needed. Aside from conducting survey, the group would conduct an interview with an individual who has a high interest or  experience with regards to the coffee industry of the country. Secondary data about the different promotional activities made by the Nescafe Company would also be studied to know how it affects consumer consumption and how effective do they market their product.

V. Findings A. STEP Analysis SOCIAL Increasing numbers of Filipinos are becoming health conscious. According to an article featured in the website of an Islamic organization, Filipinos are indeed starting to take an effort in order to improve their health condition. With this in

mind, they are becoming mindful of their daily routines especially when it comes to food intake. Coffee has a lot of health benefits to offer such as it prevents the early signs of aging due to its antioxidants; it stimulates the mind and reduces discomfort and fatigue thus, promoting mental alertness; it also prevents diseases such as Parkinson's, liver illness and heart problems. These are just some of the health benefits of coffee which are not known to many Filipinos. In our study of the instant coffee addressed to service workers specifically security guards, the group learned that security guards care the least to the health benefits of coffee among its product attributes. When they were asked to rate the attributes and health benefits we mentioned, most of them were not actually aware of its health benefits. Moreover, they even hold the traditional misconceptions of coffee being a nerve wracking product that's why non-users have not even tried drinking. TECHNOLOGICAL Technology has created a society which expects instant results. This is very evident in the sprouting of stores, internet cafes and fast food chains that offers 24/7 service. In the urban setting like Manila, instant products are very much appreciated since it lessens the burden of a consumer. Instant products such as coffee and noodles are especially present in these 24/7 stores. The pace of technological change is so fast now and it is utilized by all age groups. Technological findings will continue to evolve and impact on consumer  habits and expectations. The instant coffee market must take advantage of the internet and the different media that can encourage new trends in order to live up to the standards of its consumers. Nestle Philippines, for instance, has taken advantage of their spent coffee grounds to generate energy. This is one way for  the company to promote technological advancement in a productive way.

ECONOMIC Global market of instant coffee is at $17 billion dollars. With this figure, Starbucks coffee, the market leader in the specialty coffee market has joined the instant coffee market. Moreover, this is also caused by the financial downturn happening in the US. With this new participant in the instant coffee market, there are possibilities of having new trends in coffee drinking especially that Starbucks is a respected brand in the coffee market. In the Philippines, the annual growth rate of coffee is at 5%. This is a great opportunity for the participants of the instant coffee market. But with the entrance of Starbucks instant coffee in the scene, the current participants need to exert additional effort in order to stay in competition. Although this doesn't greatly affect minimum wage earners, there is still the possibility of them trying other products. Moreover, their behavior towards coffee drinking might also change when new trends in the instant coffee market come about. Another economic aspect that may affect the operating environment of  coffee is the booming of the call center industry in the Philippines. This may increase the consumption of coffee especially by call center agents since coffee increases mental alertness especially during late hours. POLITICAL The coffee company has a governing body known as the Common Code of  the Coffee Community. It is a global association that engages stakeholders to be responsible in the economic, social and environmental stewardship of the coffee sector to continuously increase the sustainability of coffee. This code is also aimed at supporting livelihoods for the community especially the farmers. It has also an advocacy in protecting the environment. This code that governs the coffee market is a way for the participants of the coffee market to perform corporate

social responsibility aside from their aim to increase supply and demand for  coffee. In the Philippines, coffee advocate such as Nestle Philippines has been supporting coffee farmers by investing in farming especially in Mindanao. It also has a training team who advocates on issues concerning the environment. These practices of Nestle Philippines are in accordance to the Common Code for the Coffee Community. Through such code, the public is ensured that the coffee market is operating not only to their advantage but also to the benefit of the whole community. B. Market Size Estimation FIGURE 1 Unit Market Size= [target market segmentation x (% product catego ry/ pack size users)] x (365/ days the pack size lasts) = 17.56 M x 41% x (365/2) = 1.31B Total Market Size= number of segment buyers x spending amount x frequency of  purchase = 17.56M x 41% x P5.00 x (365/2) = 6.57B C. Spotting Opportunities Opportunities for Product Life Recycling and Extension FIGURE 2.1 Who else in the household uses instant coffee When we asked our respondents who else in their household drinks coffee, 42% of them said that it was their parents. 29% said that it was their siblings and 24% said that it was their wife/husband. The reason for this is that the generation of  our respondent's parents was the time when instant coffee was introduced in the Philippines. Some of our respondents even commented that Nescafe instant

coffee has already been part of their life, or as they've said it, "Nakasanayan na e". 3% of our respondent's children drink coffee. This is pretty low because coffee is not marketed as a drink for kids. Opportunities for Promotional and Product Extension FIGURE 2.2 What else is being used together with instant coffee Majority of our respondents said that they use Nescafe with bread or pandesal (50%). They said that they drink coffee in the morning and that for them; bread is the perfect complement for coffee. 31% of our respondents said that they use coffee with sugar and or creamer. This is subjective because it depends on their  preference in the sweetness and taste of their coffee. What surprised us was the 5% who answered that they use coffee with cigarettes. According to them, "pampagana ng yosi [ang Nescafe]". This is very unusual because Nescafe is promoting their product as something that has health benefits but some of its users drink it while smoking a cigarette. FIGURE 2.3 What else is being bought together with instant coffee Again, majority of our respondents said that they buy coffee together with bread/biscuit (34%). On the other hand, 31% said that they buy it together with other food and drinks like hotdog, corned beef, and food that they intake during breakfast. This shows that service workers, particularly security guards, drink coffee in the morning in order for them to stay awake. Opportunities for Market Development FIGURE 2.4 Where instant coffee was last bought Majority of our respondents said that they buy their instant coffee products from the sari-sari store (54%). 16% said that they buy it from supermarkets, 11% said

that they buy it from department stores, and 10% said that they buy it from grocery stores. The traditional outlets for coffee products are the supermarkets and grocery stores. However, in the survey that we conducted, it appears that service workers would prefer to buy instant coffee in non-traditional outlets like the sarisari store and the department store. Since service workers comprise about 50% of the Philippine population, this is something that Nescafe needs to look at. FIGURE 2.5 How often instant coffee is being purchased On average, our target market buys instant coffee either daily or weekly depending on the pack size. Those who said that they buy it daily buy the smallest pack size of instant coffee (12g). Those who said that they buy it weekly also said that they buy the 100g pack size of instant coffee. Opportunities for Better Brand Loyalty and Switching Strategies FIGURE 2.6 Brands Previously Used vs. Brands Currently Used From Figure 2.6 we can see that Nescafe is the market leader and the biggest share gainer. It has the highest percentage for the previously and currently used brand by the consumers of instant coffee. Its users increased by 13% from 37% to 50%. San Miguel follows Nescafe and is considered as the No.2 brand in the market. We can see that both Kaffe de Oro and Complete Coffee Mix are the biggest share losers having 3% of their consumers replace them with other  brands. FIGURE 3.2 Percentage of Mind and Market Share This figure shows the percentage of the mind share and market share of the different brands of instant coffee. The mind share is the same as the first mention (FM) in Figure 3.1. It shows that Nescafe is the first brand that comes to the respondent's mind whenever the topic is about instant coffee. Although San Miguel is the highest brand in the other mention category, it is not the top of the mind brand that consumers think of.

Nescafe still has the highest percentage when it comes to market share. It just shows that a lot of the people who've tried Nescafe are loyal to the product. One reason for this is that Nescafe is the pioneer when it comes to instant coffee products. Also, Nescafe offers a wide variety of instant coffee which suits the different needs of its target market. San Miguel has the second highest market share at 27% followed by Kraft Maxwell, Kopiko and Barako Energy at 22%, 21% and 20% respectively. FIGURE 3.3 Reach, Conversion and Retention Ratio of Top 5 Brands Figure 3.3 shows the reach, conversion, and retention ratio of the top five brands of instant coffee. The first column is the reach ratio. This shows us the level of awareness of the consumers with the brand. Nescafe has the highest reach ratio with 100%. Not far behind is San Miguel who has a 92% reach ratio. Great Taste, Café Puro, and Kopiko have a reach ratio of 88%, 82% and 78% respectively. This implies that the top five brands of instant coffee have been doing well in their ad campaigns. Having a high reach ratio means that the brand has a lot of potential consumers. Advertisement wise, Nescafe is still the best among the other instant coffee. The second column shows the conversion ratio. This shows the percentage of consumers who have tried the product. In the table, it shows that Nescafe has the highest conversion ratio with 90%. San Miguel, Kopiko, Café Puro and Great Taste have a conversion ratio of 53%, 53%, 46% and 39% respectively. Although Great Taste is the third brand when it comes to the reach ratio, it is the fourth brand in the conversion ratio. For Nescafe, this result implies that it has better consumer promo/pricing compared to the other brands. The third column is the retention ratio. This shows the percentage of the consumers who use the brand most often. Again, Nescafe has the highest retention ratio with 74%. This is followed by San Miguel, Kopiko, Café Puro and Great Taste with 48%, 37%, 30% and 15% respectively. This implies the product quality of the brands.

The last column shows the market share. It shows how much percentage of the market the brand has. Nescafe has the highest market share with 41%. This is followed by San Miguel, Kopiko, Café Puro and Great Taste. E. Brand Positioning Behavior  FIGURE 4.1 Brand Attributes 1. GAP Analysis Figure 4.1 shows the brand position of the five brands of instant coffee based on the top five attributes chosen by the respondents. Nescafe, which is the market leader, has been able to get the highest ranking in all the five attributes. This means that Nescafe is able to deliver or even surpass what the respondents need or expect from an instant coffee. Although there are still some rooms for  improvement for Nescafe in terms of its health benefits and in terms of the stress relieving factor, its rating is still pretty high compared to its competitors. When it comes to the coffee's aroma, the respondents rated Nescafe and San Miguel equally at 3.6. This is also true when it comes to the most important factor  of instant coffee, can keep you awake, wherein both Nescafe and San Miguel got a rating of 3.8. When it comes to the coffee's flavor, health benefits and stress relieving properties, Nescafe has made a gap with its serious competitor which is San Miguel. The respondents favored the flavor of Nescafe instant coffee more than San Miguel with a difference of 0.2 in the ratings. Nescafe has also dominated its market in terms of its health benefits and stress relieving properties. Nescafe has made a big gap between its other competitors which are Kopiko, Café Puro and Great Taste. This is a good sign for Nescafe because there are less threats for them in the market.

2. SWOT Analysis FIGURE 4.2

Strengths • International Market • Biggest share of mind - The leading market brand of instant coffee • Availability in the market is high • Many variants • Loyalty of the consumers • Has the highest rating in the top five attributes • Introduction of Antioxidants • Supports coffee farmers • Single serve packets Weaknesses • Price

Opportunities • Making known to the public its health benefits • Tie-up with other company/canteen to provide Nescafe Threats • New entrants coffee brands • Coffee shops • Other alternatives for instant coffee like hot drinks (tea, chocolate drinks) • Competitors like San Miguel and other brands Nescafe, the market leader in instant coffee products, has the same attributes as the other coffee brands. Nevertheless, the instant coffee consumers believe that it delivers better taste and quality. The main weakness of Nescafe is its price because the other brands of instant coffee are relatively cheaper. Even though Nescafe has it's weakness, it is still the most dominant instant coffee produc t in the Philippine market.

F. Market Segmentation

1. Activity-based dream positioning The commercial we chose is the first ever commercial launched in the Philippines. We chose this because Nescafe was launched here in the Philippines with its tagline "Sumasarap and Gising" that made an impact to the consumers. 2. Adventure-driven dream positioning The commercial we chose was the Nescafe commercial starring Bamboo. We chose this commercial because it is actually based on the whole day adventure of  Bamboo when he wakes up until he goes to his destinations. As the tagline of this commercial, "One good day coming up". Another commercial we chose was the Nescafe commercial Summer Reggae. It actually showcases the daring experience of a guy in a beach with all of the beautiful and sexy hot chicks. Every guys fantasize beautiful and gorgeous women. 3. Self-identity dream positioning The commercial we chose was the Nescafe commercial wherein John Lloyd was the main endorser. We chose this commercial mainly because John Lloyd now is a very famous matinee idol that they want women to be attached to their brand and John Lloyd would be the best option for the part. Since he has the charisma, it wouldn't be hard for women to notice the commercial.

VI. Summary Based on the information we gathered from our respondents, we can conclude that Nescafe is still the leading brand in the market. It is dominating the market in terms of market share (with a massive lead of a 2.18 share compared to the 0.46 share of the serious contender), brand loyalty (where it is the market leader and also the biggest share gainer), brand awareness (where all respondents are aware of the product and majority having mentioned it first), and

brand rating (where it got the highest ranking in all five attributes). It dominates all the four attributes in determining the brand's place in the market. Its closest competition is San Miguel Corporation. Nescafe and San Miguel coffee products dominate supermarket stalls as they have more space dedicated to their  different coffee variants. Kopiko is also becoming a serious contender in the social worker department mainly due to the price. Other contenders are Café Puro and Great Taste Coffee. There are various reasons for why Nescafe is the leading brand. First of all, they have more variants. Different variants attract different kinds of customers which just widens their market share. Next is its huge multimedia exposure. Nescafe is the biggest in terms of advertising with tons of TV commercials, newspaper ads, billboard ads and etc. Since they're also using celebrity endorsers, people remember their advertisements more. This boosts brand awareness and is also one of the main reasons why everyone is aware of  Nescafe. Lastly, Nescafe has credibility and a lot of people are already loyal with the product. As long as they continue maintaining their quality, for sure Nescafe will continue with its frontrunner status for a long time.

VII. Recommendation Nescafe is very popular in the Philippines and according to the service worker we interviewed majority of them prefer Nescafe because according to them Nescafe is the first coffee introduced to them. We have also found that most service workers like their coffee creamy and Nescafe 3in 1 is the best choice of  coffee because Nescafe 3in1 contains sugar, cream and coffee of course. If they prefer a much creamier coffee why not try the Nescafe Sweet and Creamy it will surely satisfy them. There are also variety flavors of Nescafe which they can choose from if they want to try something else. If they prefer bitter coffee then Nescafe Classic is the perfect choice.

Nescafe 3in1 is made up of high quality coffee that will surely to suit your  taste. The aroma of the coffee would make you crave for it. We prefer Nescafe because it has a good and high quality coffee and it's from a good brand, Nestle and the price is affordable. Coffee isn't really healthy but Nestle's Nescafe will guarantee that it is good for the health because their tag line is "choose wellness choose nestle", unless you drink too much it will be bad because too much of anything is bad. Coffee also helps delay signs of aging so it doesn't  just keep you awake or suit your taste/cravings it's also good for the body and mind. Given all these, you have more reason to choose Nescafe so as their tagline says "Let's sit and talk awhile, in the one world of Nescafé"