Nestle Infant Formula Case
...eads and uses unethical marketing techniques to promote its infant formula. The real problem in these Third World countries was being nutritional. It became a debate whether not to give infants breast milk or formula; how to supplement the mothers milk with adequate nutritional foods when needed. Although this is the primary problem, the way Nestle approached a country and promoted its infant formula to uneducated mothers, was what made this a horrid issue. As a result, the misuse of the formula was said to be a contributing factor to the deaths of many Third World infants whose mothers were incompetent of using them properly. However, Nestle denied the accusations of their unethical and immoral behavior after the company came under fire. One recommendation should have research the target market in which its products will be introduced. They should not have just transfer their marketing strategy in the United States to Third World countries but adapted and focus their strategy to fit the targeted environment better. Since Nestle was introducing a new product, they could be more considerate of the cultural factors in countries where the practical or dysfunctional changes occurred as a result of the new product introduction. Therefore, it was their responsibility to make more ethical, thought-out decisions regarding the introduction and promotion. In order to understand where Nestlé’s strengths lie and how this can help them when entering a new market, they should have used the Self Referencing Criteria (SRC) process. This process can determine a decision whether or not to introduce a product in a foreign market. It helps to establish a company’s own cultural values, experiences, and knowledge. 1. Define the business problem in the home country which includes cultural traits, habits, and norms. 2. Define the business problem in foreign cultural traits, habits, and norms. 3. Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem. 4. Redefine the problem without the SRC influence and solve for the optimum business goal situation. If Nestle had followed this process they would have understood that the United States and the Third World countries need to use two different strategic plans. They would have understood that Americans already established a habit of nursing with formula and becoming a cultural norm. On the other hand, there were many red flags that should indicate to Nestle that Third World cultures have no knowledge background to read or write. It could then have been reasonably assumed that with a low literacy rate in these countries that they would not use the product correctly. Even if this process was followed, a company still has to make a conscious decision of how and if to introduce their product. This creates an ethical dilemma for the company. In Nestlé’s case, there was a lack of government regulations, and the company neglected to conduct thorough research about the environment. With research of the environment and regulations, they could foresee some of the consequences. In the end they took advantage of the situation and the innocent people involved and decided to make a poor choice. Ultimately, it did not matter how much money they made because their reputation was ruined as a result. With more research, strategic thinking, SRC analysis, and organizational analysis, many of the adverse effects could have been prevented. To some extent the marketing problems was combining a highly-educated, mechanized, free-enterprise western culture with cultures that are poor, less literate, and less adjusted to the “Sakes Fifth Avenue” style of advertising techniques. When infant formula companies were first informed of the risks created by their products, they denied they were responsible and refused to change their practices. As the party with greater awareness of the problem they had a responsibility to avoid creating harm for those who were less able to fend for themselves. After numerous unsuccessful efforts to persuade Nestlé and other companies to change their policies, several religious groups boycott Nestle products, in hopes that the loss of revenues would persuade the company that it should change its promotional policies. Marketing Strategy In 1982, Nestle under immense pressure by the World Health Organization (WHO) stated a new policy for their worldwide promotions of t...