CASE STUDY OF NESTLE
CASE STUDY OF NESTLE
With the increase in competitions among companies in every industry, the marketing
strategies have become innovative and are more focused on attractive people by providing
attractive contents (Ottman 2017). Along with innovative marketing strategies, these
companies are also focusing on producing innovative products which can attract more
customers. Food and Beverages companies have been trying new innovations in products
which have different tastes which many people prefer (Truong et al. 2017). But in order to
produce innovative food products, these companies are reducing or changing the quality of
food. To cope up with the strong competitions, many companies are making use of unethical
marketing strategies and not maintaining honesty about their food qualities. This report will
analyze the case study of Nestle, in which it violated their ethics in marketing and created
nutritional differences in their products. There will be discussion on the ethics that the
company violated on quality of their products. Some examples will be provided on the
similar violation of ethics by some other companies. The legal issues will be discussed
further. Lastly, the ethical decision making processes will be outlined.
Overview of the case study:
Nestle is a Swiss company which is known as the largest Food and Beverages
company in the world (Nestle.com, 2018). Nestle has got long reputation for producing a
wide varieties of quality food and milk products for babies. But in a recent report, the
company has reportedly violated the ethics of marketing and manipulated customers with
misleading nutritional claims on the baby milk products (Neslen, 2018). Nestle reportedly
marketed their baby milk formulas as inspired by human breast milk and this marketing
strategy was prohibited by World Health Organization (Babymilkaction.org, 2018). It was
also reported that Nestle mostly ignored nutritional advice of its products in the
advertisements. These reports are bound to have an effect on the long reputation of the
company. Moreover, it’s marketing on nutritional information have been different on some
countries like Hong Kong, South Africa and Brazil. These differences in various products of
Nestle in different countries have not been well accepted by consumers. Baby food products
should have high nutritional values with healthy benefits (Kent 2015). Moreover, the qualities
of products should have been equal in all the countries where Nestle operates. Nestle has
been reported to be misleading their customers on the products with dishonest information on
the quality of the products. Due to this arising issue, Nestle can face legal issues if the
company fails to omit the mistakes.
Violating the ethics:
Ethics and corporate governance add to the success of a company (Tricker and
Tricker 2015). The companies which maintain strong and planned ethics have been mostly
successful. Producing baby food products needs to be maintained in ethics of society as
parents are mostly extremely careful about the health of their babies. Therefore, any
degradation in quality can lead to serious issues as it deals with health of the infants. Nestle,
being the most reputed company for baby food products failed to keep up its reputation and
went on only focusing on its short time profits. Rather on concentrating of short time success,
maintaining ethics on quality of baby food would have kept its long reputation enact. Being a
1 CASE STUDY OF NESTLE
popular company, the advertisements of Nestle, bound to have some effect on the customers
as they have long trust on its products. This trust has been misused by the company, as it has
involved in misleading the customers with nutritional claims. This comes under the violation
of marketing ethics. The products of Nestle are made with the objectives to provide healthy
nutrition to the children. Nestle could have experimented with the tastes of the products but
the nutritional quality should have been same in all the countries. This violation of ethics can
lead to downfall of reputations of the company. With these issues, Nestle also violated the
corporate social responsibility and corporate citizen ethics. Nestle, should have been more
responsible on maintaining its social responsibility and this can affect all the stakeholders of
the company. Misleading customers with nutritional claims is a huge crime and can lead to
strong legal issues as it deals with the health issues of their children. Any ill effect on the
health issues on the children can lead to huge downfall of the company. The ethics of
marketing should be maintained irrespective of market competitions.
Examples of companies violating marketing ethics:
There have been many companies which have violated their ethics on food
manufacturing. Coca-Cola is one such example. The beverage company has been reported of
using making use of water supplies from some rural communities which has resulted in
falsifying the environmental data (Ethicalconsumer.org, 2018). This has resulted in loss of
reputation of Coca-Cola. There have been many cigarette companies which have violated
their marketing issues stating that some of their products are beneficial for the health. Nestle
has maintained its reputation in the market for a long time and this recent issue is sure to
bring its reputation down. Many companies which have breached with ethics have faced legal
issues which have either resulted in closure of their business or have suffered due to heavy
Ethical decision making process:
Making ethical decision in a business is an important factor for the success of a
company (Ferrell and Fraedrich 2015). The ethical decisions should be taken by the leaders
of the companies and they should make the stakeholders aware of all the ethics and policies
of the respective companies. They should regularly supervise the whole process of
manufacturing and marketing of products. Being a multinational company, it is difficult for
the leaders of Nestle to maintain similar ethics in all the countries that the company is
operating. But, the ethics should be in accordance with the cultures of each countries and
most importantly quality of food should be equal everywhere regards of cultures. The
products of Nestle should suit all the health needs of children around the world. As discussed
above, the company might experiment with the tastes of the products but the quality should
be same in all the countries that it is distributing the products. The planning should be started
from beginning as required changes in the whole operations are needed to be done. All the
management individuals from the production department to the marketing departments
should be made aware of all the ethics on baby food products. The marketing should be done
with honest contents and it should not violate the ethics of marketing (Murphy, Laczniak and
Harris 2016). Manipulating customers are done by most of the companies in order to attract
them more towards their products (Gatignon and Le Nagard 2015). But, manipulation should
not be conducted in a wrongful manner. The products should be attractive enough in quality
so that customers get attracted to them naturally. Making the packaging of the products might
attract the customers for a shorter time, but if the quality of food is not on standard
requirements then customers will bound to get them detached with the use of those products
further. Since, customers are the main pillars of success of a company, so all the companies
1 CASE STUDY OF NESTLE
should focus on providing best quality products to the customers. By doing this, they will not
only able to attract more customers but will be also able to successfully retain them. Quality
in products can make the customers keep faith on the company and despite of strong
competitions in the market, the customers will stick to the choice of their trusted products.
The nutritional value of baby food products needs to be maintained irrespective of any
products. In recent few years, some companies have arise in the market which are making
baby food products. Therefore, if Nestle fails to maintain its quality in products and violate
the marketing ethics, the these companies will bound to be attract the customers of Nestle
towards them and this will result in downfall of the company. The ethical decision should be
made according to the need of the society and what values doe the stakeholders expect from
the companies (Dugan and Taylor 2016). Any individual breaching the ethics should be given
strict punishments by the leaders of the company. Nestle can conduct some surveys and
feedback sessions with the customers, which will help the company understand the faults in
the products and further can help the company improve its products (Bulsara and Thakkar
2015). Nestle can consult with the customers on the required changes they want in the
products and this should be done in all the companies that the company operates. The main
policy of the company should be maintaining the same quality in all of their products around
the world and further not violate the marketing ethics.
In recent years, many companies have implemented different marketing strategies to
promote their products for customers around the world. But, this has even led to breaching of
ethics by some companies which have degraded the reputation of those companies.
Maintaining ethics and providing customers with quality products should be the ultimate
motto of the company rather than focusing on short time profits. Being the largest Food and
Beverages company in the world, Nestle should have kept their reputation enact. Rather, the
company violated the ethical issues of marketing and manipulated the customers with
misleading nutritional claims on the baby milk products. This report focused on analyzing the
case study of Nestle, in which the company violated the marketing ethics. All the violated
ethics and legal issues have been discussed with the overview of the case study. Examples of
companies violating marketing ethics have been evaluated. Lastly, all the ethical decision
making process have been discussed.
1 CASE STUDY OF NESTLE
Babymilkaction.org. (2018). WHO states that follow-up formula is not necessary and that
marketing may mislead parents | Baby Milk Action. [online] Available at:
http://www.babymilkaction.org/archives/704 [Accessed 18 May 2018].
Bulsara, M. and Thakkar, H., 2015. Customer Feedback-based Product Improvement: A Case
Study. Productivity, 56(1), p.107.
Dugan, M.T. and Taylor, G., 2016. Ethical Issues Related to Earnings Management: An
Instructional Case. Journal of the International Academy for Case Studies, 22(3), p.84.
Ethicalconsumer.org. (2018). Five unethical companies. [online] Available at:
aspx [Accessed 18 May 2018].
Gatignon, H. and Le Nagard, E., 2015. Manipulating Consumers is Not Marketing: A
Commentary on Cass R. Sunstein's' Fifty Shades of Manipulation'.
Kent, G., 2015. Global infant formula: monitoring and regulating the impacts to protect
human health. International breastfeeding journal, 10(1), p.6.
Murphy, P.E., Laczniak, G.R. and Harris, F., 2016. Ethics in marketing: International cases
and perspectives. Taylor & Francis.
Neslen, A. (2018). Nestlé under fire for marketing claims on baby milk formulas. [online] the
Guardian. Available at: https://www.theguardian.com/business/2018/feb/01/nestle-under-fire-
for-marketing-claims-on-baby-milk-formulas [Accessed 18 May 2018].
Nestle.com. (2018). [online] Available at: https://www.nestle.com/stories#/category/featured-
stories/1 [Accessed 18 May 2018].
Ottman, J., 2017. The new rules of green marketing: Strategies, tools, and inspiration for
sustainable branding. Routledge.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and
practices. Oxford University Press, USA.
Truong, Y., Klink, R.R., Simmons, G., Grinstein, A. and Palmer, M., 2017. Branding
strategies for high-technology products: The effects of consumer and product innovativeness.
Journal of Business Research, 70, pp.85-91.