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Brand Architecture of Nestle
Brand architecture is meant to reflect the current business strategy of the company. Nestle Company was founded more than a hundred years ago when little or no knowledge about brands was available to entrepreneurs. Presently, brand architecture is aligned with the companys needs, and it grows extremely complex alongside with the companys growth. The company possesses a portfolio of more than 8,500 thousand brands that can be classified by such levels as international, regional, and national. However, brand architecture is much more complicated than the suggested classification because it needs to match the desired companys attributes and factors to consider as well as include the reflection of business strategy, orientation on customers needs, flexibility, and consistency with brand values (Keller, 2014).
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Brand architecture of companies is an increasingly complex matter, and there exist several ways for assessing it. It can be pre-determined by three main criteria: corporate-dominant, product-dominant, and mixed, or hybrid (Keller, 2014). Brand architecture of Nestle Company belongs to the product-dominant type as the company explicitly creates a hierarchical system of relations between the brands while playing the role of an endorser. Additionally, it expands in new regions by acquiring power brands on a local scale. However, because of the quickly evolving markets, the structure of both corporate-dominant and brand-dominant architectures tend to turn more hybrid. This is also the case with the brand architecture of Nestle. The company has a number of local and regional brands that grow more interrelated across the markets due to the endorsement provided by the family brand.
Traditionally, brand architecture was assessed by slightly different criteria and was divided into the categories of monolithic, hybrid, brand, and endorsement. Particularly, Nestle Company has the endorsement structure of brand architecture. Endorsement is a viable strategy for a firm of such a scale and it provides consumers with certain associations that the family brand (Nestle itself) is characterized by. There are six so-called corporate brands of strategic importance for the company. They are Nestle, Nescafe, Maggi, Buitoni, Purina, and Nestea. The latter is also a joint venture with Coca-Cola Company. These brands overarch another very complicated structure of about seventy strategic international brands that are either incorporated within the six names or located right outside of them. Among them are Nesquik, San Pellegrino, Perrier, Lion, and others.
Brand architecture of a company is traditionally influenced by several significant factors such as imprimatur of previous generations of management, style of expansion, companys diversity, and the importance of the firms family brand recognition (Keller, 2014). The Nestle brand is known for its wide variety of different local products that are managed rather autonomously. Country and regional managers of the company enjoy a decentralized nature of the company, which is closely interrelated with a large amount of brands that exist under one regional or country cluster. Furthermore, the way of the companys expansion also plays a significant role in shaping its brand architecture. Nestle is known for acquiring successful local brands on a country and regional level. Moreover, the company did not just expand but it also diversified through the acquisition. In the period from the 1960s until the 1990s, it was necessary to introduce a new structure to the company in order to retain all the brands well centralized around the family one. Back then, Nestle branding was established the way it exists until now. The third factor that shapes brand architecture is the corporate identity. In the case with Nestle Company, the family brand is enshrined into each product by placing its small logo on the back of the package. The family brand is important for an endorsing company as it is a guarantor of the quality of the given product. Still, it benefits to the diversification of brands. Lastly, product diversity has its impact on the companys branding strategies and its architecture. Working in the area of fast moving consumer goods with a wide range of food and beverage products, Nestle targets similar audiences and occupies similar market segments. It has a consistent image among its consumers, which is associated with quality and healthy foods, among which are confectionaries, beverages, pet foods, seasoning, frozen foods, and others. It is desirable for Nestle to have associations among its brands, as all of them are concentrated in the food and beverages industry.
Brand architecture is also vastly influenced by the product market structure (Keller, 2014). The features of the target market that have a significance in this case are the degree, to which the product is embedded in the culture, nature, and the scope of the market as well as the degree of market integration. Nestle targets the same market segment worldwide, focusing on the quickly growing middle-class. Its representation in developing countries, where their potential audience grows quickly, serves as evidence to this statement. Secondly, market integration for Nestle is approximately similar across the world. Its main competitors are present in the different regions of the world in almost the similar manner, which contributes to the structure that incorporates a large amount of international strategic brands. This fact also endows Nestle with an image of a globally recognized player. Finally, the ways Nestle engrains its products into the local markets also contribute to its brand architecture. Nestle Company faces both homogeneous and uneven demand for its products on the market. As a food and beverage manufacturer, the company has to adapt greatly to the local tastes that cater to the preferences of consumers in the particular regions. It results in the creation of better sounding names for the international brands that are named differently on the local level or completely new local products that correspond to the traditional foods and tastes of the region. Therefore, no wonder that the company operates under more than 8,000 brands, out of which only 70 are purely international.
To conclude, it would be worth noting that the brand architecture of the company presently shows great agility and flexibility. When expanding, Nestle manages its brand recognition very wisely as it has been the case with Maggi brand management in Eastern Europe. The Maggi brand was widely used for manufacturing seasonings and sauces when it gained a huge popularity in the region. After noticing it, the company management further expanded the brand name to frozen foods, although another name for these products, Findus, had already been successfully introduced in other regions.
Assessment of Long-Term Potential of Nestea
Although Nestea products have been mocked in the English-speaking countries for the resemblance of its name to the word nasty, it has proven to be a great success to the Nestle Company also because of its direct association with its endorser. The product is the result of a joint venture cooperation with Coca-Cola Company. Perhaps, this cooperation has influenced the way the brand has been aligned with the values of both companies and it has suffered a relative breakdown in sales a few years ago because of the value inconsistencies. As of 2012, Nestea is no longer manufactured by Coca-Cola, and it is entirely in possession of Nestle. This opened a new perspective for the brands revitalization that seems promising overall. The brands longevity and perspective will be assessed by four main criteria: brand alignment, brand execution, brand strategy, and brand communication (Balmer, Illia, & Gonzalez del Valle Brena, 2013).
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When the joint venture between the two food and beverage giants, Nestle and Coca-Cola, began, the situation seemed to be benign for the chilled tea segment of the market as the main competitor was the famous Lipton Ice Tea manufactured by Pepsico/Unilever. Nestea has reported taste preferences by consumers expressed in numbers 70:30 as compared to their competitors (Bouckley, 2014). That data was obtained in 2014 when sales from Nestea reached CHF3.7 billion, which constituted about 6% of global Nestle sales worldwide, and that had shown 10% of organic growth (Bouckley, 2014). Despite those positive indicators, the Euromonitor beverages senior has written that Nestea seems to be a neglected branch of Nestles complicated portfolio (Bouckley 2014).
After its comeback, the Nestea ice tea has some strong advantages over its competitors by all four criteria. The brand strategy has been such that the product is developed as a genuinely-tasting tea. It gives the product an advantage over its major competitor Lipton that has manufactured ice teas with openly artificial and often odd flavors, for example, mojito. Many consumers find such variations repelling, and they choose to buy Nestea as a more traditional, lightly-flavored drink. The strategy for the drink has also been stirred as far away from sodas as possible. Thus, calories and sugar levels have been reduced, the taste profiles have been changed significantly to ensure that tea is treated like tea, something that Coca-Cola Company has failed to do (Bouckley, 2014). Instead of changing Nesteas tastes to completely unfathomable for a tea brand, Nestle has taken up the strategy of improving the design of the bottle as well as targeting certain audiences with an allegedly healthier product.
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Secondly, the brand has been re-aligned with the company values. Nestle has a famous company slogan that says Good food, good life and promotes consumption of quality and healthy products that have a good taste. Through a significant calorie-cut as well as the production of a zero-version, the Nestea Brand has been revitalized all over the world, especially in the countries with the greater market integration. Now that the image of the brand has been aligned with the companys values, the brand would be able to make a good fit to any market across the world (Keller & Lehmann, 2009). While the company did not opt for an inefficient global standardization, it had shown a strong preference for an efficient culture-dependent segmentation and adoption. Nestea has been finally stirred on the path of becoming a global brand.
Brand execution and communication have also been done impeccably in the past few years. Nestea has a perfect perspective of growth and eventually, it can become a leader of iced teas on the global market. Brand communication is unified across the borders, although execution is not. Nesteas famous slogan Nestea. Refreshes your feelings appeals to broad audiences regardless of the geographical borders. It does not contain culturally strong elements, and this can be called a global semi-standardized brand. Plunge is the new communications platform that has been launched for the brand and that has proven to be successful (Ellett, 2014). The execution of the new campaign has witnessed a great deal of consumer response. Nestea celebrated its anniversaries of being present on the market and it had massive giveaways of products and flash mobs that incorporated huge amount of participants that would receive Nestea products free of charge after participating. It has generally focused on the younger audience as its main target audience has already grown up and got used to the refreshing beverage. By becoming a sponsor during festivals and other events that involved many young people, Nestea has perpetuated itself as a brand in the minds of consumers for many years to come.
Ready-to-drink iced teas are known to oust the traditional refreshing beverages, such as sodas, away from the market, following the general trend on healthier and more natural choices that consumers make. Innovation, research, and investment in this area would certainly leverage much great profits to Nestle Company should it choose the path of further promoting the Nestea brand.
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