Nestle Strategic Marketing Failure | Crisis | Business Ethics | MBA case study example with solution
Summary
TLDRThis video script addresses the historical and ongoing controversy surrounding infant formula marketing in developing countries. It highlights how incorrect use of formula can increase infant mortality and the role of multinational corporations in promoting formula over breastfeeding. The script discusses the creation of the World Health Organization's marketing guidelines, the challenges of enforcing these guidelines, and Nestle's controversial marketing practices. It concludes with the importance of effective regulation and the need for multinational corporations to prioritize infant safety over profits.
Takeaways
- 🌐 The script discusses the global impact of infant formula marketing and its consequences, particularly in developing countries.
- 🍼 Historically, breastfeeding has been the norm, but the introduction of infant formula has changed feeding practices, especially with aggressive marketing by multinational corporations.
- 📉 Incorrect use of infant formula has been linked to increased infant mortality and morbidity rates in developing countries due to factors like poverty, unsanitary conditions, and illiteracy.
- 🏥 Hospitals have played a role in promoting formula feeding by separating mothers and infants at birth and providing free formula samples, which can lead to a preference for bottle feeding over breastfeeding.
- 💼 Multinational corporations (MNCs) have been criticized for their marketing strategies that encourage the use of breast milk substitutes, often at the expense of breastfeeding.
- 📜 The World Health Organization (WHO) developed marketing guidelines for breast milk substitutes to address the issue, but their effectiveness has been limited due to controversy and lack of enforcement.
- 🚫 Nestlé, a major player in the infant formula industry, faced an international boycott due to its marketing practices, which were seen as irresponsible and harmful.
- 🔄 In response to criticism, Nestlé made changes such as stopping mass media advertising of infant formula and working with UNICEF to develop educational materials and labels.
- 🏛️ The WHO code is not legally enforceable, relying on individual countries to adopt and implement it, which has been a challenge in ensuring its effectiveness.
- 🌱 The script highlights the need for third-world governments to take a strong stance against MNCs to protect the health of infants and promote breastfeeding as the optimal feeding method.
Q & A
What is the main issue discussed in the video script?
-The main issue discussed is the controversy surrounding the marketing and use of infant formula in developing countries, which has led to increased infant mortality and morbidity rates due to improper use.
Why did formula feeding begin to spread in third-world countries?
-Formula feeding spread in third-world countries due to promotional campaigns by multinational corporations, which made it more difficult to control the use of potentially dangerous infant formula.
What role did the World Health Organization play in addressing the infant formula issue?
-The World Health Organization created the International Code of Marketing of Breast-milk Substitutes to regulate the marketing of infant formula and protect breastfeeding practices.
What are the key problems with the WHO code mentioned in the script?
-The key problems with the WHO code are its lack of legal enforceability and ambiguity in its provisions, which has led to disagreements and controversies over its implementation.
How did Nestle's marketing practices contribute to the controversy?
-Nestle's marketing practices, including mass advertising and free samples, were seen as promoting infant formula over breastfeeding, leading to health risks for babies in developing countries.
What was the international response to Nestle's marketing practices?
-An international boycott of Nestle was initiated in 1977 by consumer groups, urging people to boycott Nestle products until the company stopped promoting infant formula.
What steps did Nestle take to address the controversy?
-Nestle agreed to work with UNICEF, limit gifts for health workers, and make supplies free or low cost for mothers who needed to bottle feed. They also promised to include statements declaring the superiority of breastfeeding with their products.
What was the outcome of the Nestle boycott?
-The seven-year boycott against Nestle officially ended in 1984 with Nestle and NGOs declaring a truce after clarification conferences, leading to Nestle committing to not engage in certain marketing practices and to support educational materials for breastfeeding.
Why is it important for third-world governments to enforce an effective code regarding infant formula?
-Enforcing an effective code is crucial for third-world governments to ensure the safety of infants and to promote breastfeeding, which is vital for the health and development of babies.
What is the underlying message of the video script regarding product safety and multinational corporations?
-The underlying message is that product safety is context-dependent and that multinational corporations must be held accountable for their marketing practices, especially in developing countries where the consequences can be severe.
Outlines
👶 The Controversy of Infant Formula Marketing
This paragraph discusses the historical shift from breastfeeding to formula feeding, which began with the advent of modern technology. It highlights the dangers of incorrect formula feeding in developing countries, leading to increased infant mortality and morbidity. The paragraph emphasizes the role of multinational corporations (MNCs) in promoting infant formula through aggressive marketing campaigns, which have been criticized for making it difficult for mothers to breastfeed. The World Health Organization's code of marketing guidelines for breast milk substitutes was introduced to address these issues, but its effectiveness is limited due to controversies and ambiguous provisions. The paragraph also details the marketing strategies of MNCs, such as donating free formula to hospitals and promoting it through healthcare staff, which have contributed to a preference for formula over breast milk.
🌐 Nestle's Response to Infant Formula Controversy
The second paragraph delves into Nestle's specific role in the infant formula controversy, focusing on the company's initial denial of marketing malpractice and the subsequent international boycott that led to significant financial losses. It outlines the steps taken by Nestle to address the concerns, including participating in the development of the World Health Organization's regulatory code, redesigning formula labels, and forming the Nestle Infant Formula Commission. The paragraph also discusses the company's efforts to work with UNICEF on educational materials and labels, and its agreement to limit gifts for health workers. Despite these steps, the controversy persisted, leading to Nestle's promise in 1984 to provide supplies free or at low cost only to mothers who needed to bottle feed. The paragraph concludes with the end of the boycott against Nestle in 1984, following a series of clarification conferences and agreements with NGOs.
📢 Call to Action for Safe Infant Feeding Practices
The final paragraph serves as a call to action, urging viewers to subscribe to the YouTube channel for updates on case study videos. It emphasizes the importance of breastfeeding for the health of third-world babies and the need for effective enforcement of marketing codes to combat the dangers of improper infant formula use. The paragraph concludes with a reminder of the responsibility of third-world governments to take a stand against MNCs that do not follow the rules, ensuring that product safety is upheld and that the social and economic development of their nations is not hindered by preventable health issues related to infant feeding.
Mindmap
Keywords
💡Breastfeeding
💡Infant Formula
💡Multinational Corporations (MNCs)
💡World Health Organization (WHO)
💡Marketing Strategies
💡Infant Mortality
💡Code of Breast Milk Substitute Marketing
💡Nestlé Infant Formula Commission (NIFAC)
💡Boycott
💡Third World
Highlights
Learning organizational strategies through case studies
Breastfeeding has been the norm throughout history
Introduction of infant formula in the 20th century
Formula feeding increases infant mortality if used incorrectly
Multinational corporations' promotional campaigns complicate control of infant formula
Infant formula industry resists control over its promotion
World Health Organization code created to regulate breast milk substitute marketing
Controversy over ambiguous provisions in the WHO code
Infant formula MNCs use marketing to tempt mothers away from breastfeeding
Hospitals encourage bottle feeding over breastfeeding
Free samples can cause babies to become dependent on formula
Marketing techniques influence healthcare systems to support formula feeding
Nestle's controversial promotional practices in developing nations
UN awareness of infant formula advertising problems
WHO urged member nations to introduce restrictive advertising codes
International boycott of Nestle initiated in 1977
Nestle's announcement to stop mass media advertising of infant formula
Adoption of the WHO code by the 34th World Health Assembly in 1981
The WHO code is only a recommendation and not legally enforceable
Nestle's compliance with the code and redesign of infant formula labels
Criticism of Nestle's infant formula commission as a PR tool
Nestle's agreement with UNICEF to develop educational materials
End of the Nestle boycott in 1984 after clarification conferences
Misuse of infant formula has led to the death of millions of babies
The importance of third-world governments taking a stand against MNCs
Encouraging breastfeeding for the best chance of infant health
Transcripts
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throughout history women have
successfully breastfed their children it
has only been a century since modern
technology enabled women to feed
manufactured infant formula to their
babies
formula feeding began in developed
countries and quickly spread to the
third world
when formula feeding is used incorrectly
it directly increases infant mortality
and morbidity rates in developing
countries
through promotional campaigns
multinational corporations have made it
more difficult to control the use of
this potentially dangerous product
the infant formula industry which makes
healthy profits in the third world has
resisted outside attempts to control the
promotion of its product
the problem of infant formula was
brought to light by concerned citizens
in the third world
as a result the World Health
Organization code of breast milk
substitute marketing guidelines was
created
the effectiveness of this code is
severely limited by controversy over
ambiguous provisions
this disagreement has not been settled
as long as such legislation does not
exist the consequences of product misuse
will continue to plague developing
countries
infant formula mncs spend their money on
marketing and advertising strategies
that tempt mothers away from
breastfeeding and toward breast milk
substitutes
these strategies encourage lactating
mothers to use formula instead of breast
milk during her Hospital stay the
medical staff recommends formula feeding
for the mother
in addition manufacturers sell infant
formula by donating free supplies to
hospitals which encourages mothers to
choose bottle feeding over breastfeeding
many hospitals routinely separate mother
and child at Birth and administer
newborn formula which manufactures
supply to the institution at no or low
cost
from the initial feeding the infant and
mother are introduced to the bottle
as a result the hospital creates the
illusion that doctors prefer formula and
that milk substitutes are necessary to
maintain healthy infants
offering free samples as not only
psychologically effective for the mother
but it can also cause the baby to become
physiologically dependent on formula
furthermore marketing techniques aimed
at gaining the confidence and support of
Health Care Systems have led doctors in
the third world to support this shift
away from breastfeeding
formula must be carefully marketed in
developing countries due to the many
dangers involved
it'll make sure moms are aware of the
dangers of using it and can make
informed decisions
in the past years Nestle's promotional
practices have been problematic Nestle's
Mass advertising campaigns to Market
formulas in developing nations sparked
controversy in 1968.
through billboard ads and pictorials
Nestle made people think infant formula
was safe and easy to use in the third
world
the United Nations became aware of the
problem with infant formula advertising
in 1970.
the UN protein calorie Advisory Group
warned that poverty unsanitary
conditions and illiteracy could lead to
the misuse of infant formula
the pag recommended careful regulation
and supervision of the marketing and use
of breast milk substitutes
until 1974 infant formula marketing
remained and regulated despite a clear
link between misleading formula
promotions and infant mortality
Additionally the who
urged member nations to review infant
formula marketing and introduce
restrictive advertising codes
while Nestle denied any marketing
malpractice the industry was worried an
international boycott of nestle was
initiated in 1977 after Nestle's
marketing practices were repeatedly
ignored by Active consumer groups
they urged people everywhere to boycott
Nestle products until the company
stopped promoting infant formula it
includes all direct advertising to
Consumers free samples milk nurses and
health workers promoting the product
Nestle announced in 1978 that it was
planning to stop advertising infant
formula in the mass media
as a means of resolving the conflict
industry Representatives requested a
World Health Organization meeting
in collaboration with the United Nations
Children's Fund and who the UN organized
and sponsored an international Forum on
infant health and breast milk
substitutes
to control the inappropriate marketing
practices of infant formula suppliers a
regulatory code was needed
after rejecting four drafts the World
Health assembly considered the final
version
it was adapted as a recommendation by
the 34th World Health assembly on May 21
1981.
there's one big problem with the who
code it's only a recommendation
it's not legally enforceable or binding
due to the fact that wha recommendations
don't have any legal Force without
ratification by individual countries
affected governments have been urged to
implement legislation adopting the
international code
another problem with the code as its
inherent ambiguity in addition the code
allowed free supplies to be given to
institutions and whether hospitals were
considered institutions became a
controversy
as a result of these discrepancies the
wha launched an international effort to
clarify these terms
according to Nestle since the code was a
recommendation for governments the
industry wasn't obligated to enforce it
in spite of that Nestle promised to
support the objectives of the code while
doing its part to interpret its
ambiguous terms
Nestle says the code shouldn't restrict
specific industry behavior in response
to alleged marketing violations in the
third world Nestle formed the Nestle
infant formula Commission
in compliance with the code Nestle
redesigned infant formula labels and got
rid of old marketing materials
Nestle released reports reassuring the
public that its code specs were followed
since nifac relies completely on Nestle
for funding critics questioned the
commission's objectivity despite the
chair's assurances
rather than reveal the company's flaws
the public saw the commission as a
public relations tool
the boycott cost Nestle a lot of money
and forced the company to take firmer
steps towards resolving the issues
the company agreed to work with UNICEF
to develop and test upcoming educational
materials and labels that incorporate
the code
in addition it agreed to limit gifts for
health workers to inexpensive utility
items
Nestle couldn't resolve the controversy
over article despite their best efforts
Nestle finally promised in 1984 that it
would make supplies free or low cost
only for those mothers who needed to
bottle feed their babies
Nestle would use its own definition of
need until who or UNICEF clarified it
the seven-year boycott against Nestle
officially ended in 1984 with Nestle and
the ngos declaring a truce after the
Nestle and UNICEF clarification
conferences
Nestle specifically said the company
would not engage in advertising or give
free samples to mothers
Nestle assured the ngos that it would
include statements with its products
declaring the superiority of
breastfeeding
finally Nestle promised to make
educational materials for doctors to use
with patients
although all parties hailed this
agreement as a success ngos and who
Representatives continued to disagree
with Nestle
the misuse of infant formula in
developing countries has led to the
death of millions of babies and slowed
down their social and economic
development
using infant formula improperly as a
human-made problem because modern infant
feeding Innovations have been pushed too
quickly onto Nations that aren't ready
despite more than 20 years of
controversy the infant formula problem
reminds industrialized nations that
product safety depends directly on where
the product is used
to combat the dangers inherent in this
product third world governments need to
take an effective stand against mncs
if multinationals don't follow the rules
they'll be threatened with serious
penalties
by enforcing an effective code third
world babies will have the best chance
of being breastfed
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