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Global Marketing: Even Chocolate Poses Challenges
February 2006
STANFORD GRADUATE SCHOOL OF BUSINESS—When Ed Marra was put in charge of the pet division at Swiss food conglomerate Nestlé, he promptly went out and bought a family dog.
"I learned more from that dog than from all the PowerPoint presentations about dogs that they showed me at work," Marra recalled during a recent Stanford Graduate School of Business address. He emphasized the importance of executives leaving corporate offices and getting in touch with the people, or the animals, who consume their products.
Marra, who until his recent retirement had served as a vice president in charge of Nestlé's global business, said he also has visited many cramped apartments in China housing three generations to understand the way families cook, how much space they have available for food, and what sort of products would best be targeted at that market.
That level of attention on local cultures has over the years led Nestlé to create a staggering 4,300 brands. Best known for its Nestlé chocolate, Nescafé instant coffee, and Purina pet food, the company actually customizes its formulas to meet local tastes and regulations. Even its instant coffee is different from country to country. "When it comes to food, I don't think any two countries have the same regulations," said Marra.
This extreme level of product specification sometimes creates headaches for Nestlé's brand managers, but it presents big opportunities for the company as a whole. The Swiss firm derives less than 2 percent of its total revenues from Switzerland and strives to learn from all the disparate markets it serves. Marra said that while he speaks English, French, and Italian, his language skills pale in comparison to almost everyone else at the company's headquarters. Most company executives, he said, speak at least five languages.
Nestlé's field research, combined with intensive in-house research and development, has helped the company produce the world's leading coffee brand, calcium-fortified milk, and pet foods proven to extend the average lifespan of domestic animals, Marra said. While conceding that the company has been too slow to enter the organic products market, he argued that food additives often bring their own health benefits. Nestlé's calcium-fortified milk, for instance, has been effective in addressing nutritional concerns in some developing countries.
Now, as the company expands its presence in emerging markets like China, Marra said Nestlé is acquiring an abundance of information about the function of different food ingredients and has been able to verify with lab tests the effectiveness of many ancient home remedies.
If the value of this kind of data seems obvious, Marra warned that key business opportunities are often overlooked and only recognized in retrospect.
"If you ask where Starbucks came from, most people will say Seattle. But it really came from Milan, with all its espresso bars," he said, citing one big trend that Nestlé itself had missed.
"Shame on us for being a European company and not thinking that trend could take off around the world."
Marra's talk, part of the Global Speakers Series, was co-sponsored by the Business School's Center for Leadership Development and Research and the Global Management Program.
—Andrea Orr
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