Nestle Strategic Marketing Failure | Crisis | Business Ethics | MBA case study example with solution

Summary

This 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.