Maggi Term Paper

This research paper tries to find a solution to a reallife problem of Maggi to launch its products as a Healthy Product - Maggi Term Paper introduction. The introduction providesthe company background, operational & other important information provided by thecompany which would assist in taking the decision for the right brand extension strategy forMaggi. 4 5. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management INTRODUCTION The industrial revolution in Switzerland in the late 1800s created factory jobs for women, who were therefore left with very little time to prepare meals.

This wide spread problem grew to bean object of intense study by the Swiss Public Welfare Society. As a part of its activities, the Society asked Julius Maggi miller to create a vegetable food product that would be quick to prepare and easy to digest. Born on October 9, 1846 in Frauenfeld, Switzerland, Julius Michael Johannes Maggi was the oldest son of an immigrant from Italy who took Swiss citizenship. Julius Maggi became a miller and took on the reputation as an inventive and capable businessman.

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In 1863, Julius Maggi came up with a formula to bring added taste to meals. Soon after he was commissioned by the Swiss Public Welfare Society, he came up with two instant pea soups and a bean soup – the first launch of the Maggi brand of instant foods in 1882 – 83. Towards the end of the century, Maggi & Company was producing not just powdered soups, but bouillon cubes, sauces and other flavourings. The Maggi Company merged with Nestle in 1947. Today, Maggi is a leading culinary brand and part of the NESTLE family of fine foods and beverages.

Under the Maggi brand, which is today known world wide for quality and innovation, Nestle offers a whole range of products, such as packaged soups, frozen meals, prepared sauces and flavourings. MAGGI BRAND IN INDIA Maggi Comes to India – teething troubles Maggi noodles was launched in India in the early1980s. Carlo M. Donati, the present Chairman and Managing Director of Nestle India Ltd, brought the instant noodle brand to India during his short stint here in the early eighties. At that time, there was no direct competition.

The first competition came from the ready-to-eat snack segment which included snacks like samosas, biscuits or maybe peanuts, that were usually ‘the bought out’ type. The second competition came from the homemade snacks like pakoras or sandwiches. So there were no specific buy and make snack! Moreover both competitors had certain drawbacks in comparison. Snacks like samosas are usually bought out, and outside food is generally considered unhygienic and unhealthy. The other competitor, ‘homemade’ snacks overcame both these problems but had the disadvantage of extended preparation time at home.

Maggi was positioned as the only hygienic home made snack! Despite this, Nestle faced difficulties with their sales after the initial phase. The reason being, the positioning of the product with the wrong target group. Nestle had positioned Maggi as a convenience food product aimed at the target group of working women who hardly found any time for cooking. Unfortunately this could not hold the product for very long. In the course of many market researches and surveys, the firm found that children were the biggest consumers of Maggi noodles.

Quickly they repositioned it towards the kids segment with various tools of sales promotion like colour pencils, sketch pens, fun books, Maggi clubs which worked wonders for the brand. Why the specific Brand positioning? Maggi was positioned as ‘2-minute noodles’ with a punch line that said ‘Fast to cook! Good to eat! ’ And this gave the implied understanding to the consumer that it was a ‘between meals’snack. The company could have easily positioned the product as a meal, either lunch or dinner.

But, it chose not to do so, because the Indian consumer mindset did not accept anything other than rice or roti as a meal. Hence trying to substitute it with noodles would Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management have been futile. The firm did not position it as a ‘ready-to-eat’ meal either, as the housewife prefers to ‘make’ a meal for her kids rather than buy it for them. And if she can make it in two minutes with very little effort, then obviously it’s a hit with her! What’s more, if kids also love the taste, the product is as good as sold!

So the ‘2-minute’ funda coupled with the ‘yummy taste worked! BRAND STORY Launched in 5 flavours initially – Masala, chicken, Capsicum, sweet & sour, and Lasagna –Maggi had to fight hard to be accepted by Indian consumers with their hard-to-change eating habits. The packaged food market was very small at this time, Nestle had to promote noodles as a concept, before it could promote Maggi as a brand. It therefore devised a two-pronged strategy to attract mothers on the ‘convenience’ plank and lure kids on the ‘fun’ plank.

Gradually, the market for instant noodles began to grow. The company also decided to focus on promotions to increase the brand awareness. In the initial years, Nestle promotional activities for Maggi included schemes offering gifts( such as toys and utensils) in return for empty noodles pack. According to analysis the focus on promotion turned out to be the single largest factor responsible for Maggi’s rapid acceptance. Nestle’s Managers utilized promotions as measured to meet their sales target. Gradually, sales promotion became a crutch for Magginoodles sales.

Later many of the Maggi’s extensions also made considerable use ofpromotional schemes. The focus of all Maggi’s extensions was more on below the lineactivities rather than direct communication. In addition to promotional activities, Maggiassociated itself with main stream television programme and advertised heavily on kidsprogramme and channels. After its advertisements with taglines like “mummi bhookh lagi hai,bas do minute” and fast to cook good to eat Maggi’s popularity became highly attributed to its“extremely high appeal to children”.

As a result, Maggi’s annual growth reportedly touched15% during its initial years. Maggi’s Brand Extension:In 1998, Nestle launched Maggi’s first brand extension, Maggi soup. At this stage, There wasno organized packaged soup market in India. Nestle planned to create a market for packagedsoup as it felt the category had a lot of potential. However, according to analyst, the companyhad introduced soups only to cash in on the Maggi’s brand name, and was never veryserious about the segment. In 1993, “Sweet Maggi”, the first variant of Maggi noddles was launched.

The companysupported the launch with a huge advertisement outlay that amounted to 75% of the totalyearly expenditure on the Maggi brand. However, the product failed to generate the desiredsales volume and Nestle was forced to withdraw it. At the end of the year, Maggi noodleswas generating sales volume of around 5000 tonns and remained a loss making propositionfor Nestle. 6 7. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand ManagementTo boost sales, Nestle decided to reduce the price of Maggi noodles.

This was madepossible by using thinner and cheapeer packaging material, the company also introduced“money saver multi packes” in the form of 2-in-1 pack and 4-in-1 packs. As a result volume increases phenomenally to 9700 tonnes in 1994 and further to 13000 tonnes in 1995. Maggi’s euphoroia was, however, short lived, as sales stagnated in 1995 at the previous years level. With soup business being threatned by a new entrant “Knorr soups” launched in1995, offering 10 flavors against Maggi’s 4 the company started rethinking its strategiestowards the soup market.

In order to stretch Maggi’s brand to include Indian ethenic foods the company tied up with aPune based chordia foods to launch pickles under the year 1995. The company also tied upwith Indian foods fermentation (IFF), a Chennai based food company to market popular southIndian food preparation such as sambher, dosa, vada and spices in consumer packs in Dec1995. The company reportedly saw a lot of untabbed potential in the market for ready to usesouth Indian market. In 1996, products from these two ventures received lukewarm response from the market;sales were rather poor in the regions in which they were aunched.

Analysts attributed thefailure of these Maggi extensions to the fact that Nestle seemed to be particularly bad atdealing with traditional Indian product categories. Maggi noodles performed badly in 1996. Despite slow sales in the previous two years, Nestle had set a sales target of 25,000 tonnesfor the year. However, Maggi couldn’t cross even 14,000 tonnes. Adding to the companywoes was the failure of Maggi Tonite’s Special, a range of cooking sauces aimed at providing‘restaurant-like-taste’ to food cooked at home. The range included offerings such as ButterChicken gravy and tomato sauce for pizzas.

Understanding these failures, and buoyed by the fact that the Maggi brand finally broke evenin 1997, Nestle continued to explore new options for leveraging on the brand equity of Magginoodles. The company realized that the kids who had grown up on Maggi noodles hadbecome teenagers by the late 1990s. As they associated the product with their childhood,they seemed to be moving away from it. To lure back these customers and to explore newproduct avenues, Nestle launched ‘Maggi Macaroni’ in July 1997. According to analysts,Maggi Macaroni was launched partly to deal with the growing popularity of competingnoodles brand Top Ramen.

Maggi Macaroni was made available in three flavors, Tomato,Chicken, and Masala. The company expected to repeat the success of Maggi noodles withMaggi Macaroni. As with most of its product launches, Maggi Macaroni’s launch was backedby a multi-media advertisement campaign including radio, television, outdoors and printmedia with the tagline, ‘Tum Roz Baby. The product’s pricing, however, proved to be a major hurdle. A 75-gm Maggi Macaroni packwas priced at Rs 11, while a 100-gm noodles pack was available at Rs 9.

According toanalysts, Nestle failed to justify this price-value anomaly to customers, who failed to see anynoted value addition in Maggi Macaroni (packaging and flavor variants were similar to thoseof Maggi noodles). In addition, customers failed to see any significant difference betweenMaggi Macaroni and the much cheaper macaroni that was sold by the unorganized sectorplayers. The biggest problem however was the taste of the new product. Since macaroni isthicker than noodles, Maggi Macaroni did not absorb the tastemaker well and consequently 7 8.

TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Managementdid not taste very good. The interest generated by the novelty of the product soon died outand sales began tapering off. Eventually, Nestle had to withdraw Maggi Macaroni completelyfrom the market. Nestle had not even recovered from Macaroni’s dismal performance, when it learnt to itshorror that Knorr had dethroned Maggi as the leader in the soup segment (end of 1997). Theonly saving grace for Maggi seemed to its ketchups and sauces, which were turning out tothe ‘rare’ successful extensions of Maggi.

These products were supported by a popularadvertisement campaign for the Maggi Hot & Sweet sauce brand. These humorousadvertisements, featuring actors Pankaj Kapoor and Javed Jafri, used the tagline, ‘It’sdifferent. ’ However, during mid-1997, HLL began promoting its Kissan range of saucesaggressively and launched various innovative variants in the category. Nestle responded with a higher thrust on advertising and different size packs at differentprice points. Though Kissan gained market share over the next few years, Maggi was able tohold on to its own market share.

Meanwhile the operational costs of Maggi noodles hadincreased considerably, forcing the company to increase the retail price. By early 1997, theprice of a single pack had reached Rs 10. Volumes were still languishing between13,000-14,000 tonnes. Pricing and Product Development:It was at this point in time that Nestle decided to change the formulation of Maggi noodles. The purpose was not only to infuse ‘fresh life’ into the brand, but also to save money throughthis new formulation. The company used new noodle-processing technology, so that it couldair-dry instead of oil-fry the noodles.

The tastemaker’s manufacturing process was alsoaltered. As a result of the above initiatives, costs reportedly came down by 12-14%. To cookthe new product, consumers had to add two cups of water instead of one-and-a-half cups. The taste of the noodles was significantly different from what it used to be. The customerbacklash that followed the launch of the new noodles took Nestle by surprise. With volumesdeclining and customer complaints increasing, the company began to work on plans torelaunch ‘old Maggi’ to win back customers.

In addition, in 1998, Nestle began working out astrategy to regain Maggi’s position in the soup segment. To counter the Knorr threat, thecompany relaunched Maggi soups under the ‘Maggi Rich’ brand in May 1998. The soupswere not only thicker in consistency than those produced earlier, the pricing was also keptcompetitive and the packaging was made much more attractive. However, Knorr took Nestleby surprise by launching one-serving soup sachets priced as low as Rs 4. HLL too launchedtwo-serving sachets of Kissan soup priced at Rs 7.

As Maggi did not have any offerings inthis price-range, it lost a huge portion of its market share to Knorr. The relaunch prompted market observers to compare Nestle’s move with US soft drinksmajor Coca-Cola’s ‘New Coke’ fiasco. However, the company disagreed, “It’s a hard-5 nosedstrategy, that mixes nostalgia with the consumer’s voiced preference for the product it hasbeen bred and rought up on. The reintroduction is Nestle’s acknowledgement of the loyalty ofthe Indian mother and the child to the original product. ” By May 1999, Nestle’s decision tobring back the ‘old Maggi’ seemed to have paid off.

Two months after the relaunch, themonthly average sales of Maggi noodles n the northern region rose 50% in comparison to the 8 9. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Managementprevious year. In July 1999, ‘Maggi’ the brand, was promoted as the biggest brand in Nestle’sportfolio of brands in India, overtaking brands such as Nestum and Cerelac. Nestle believedthat Maggi had immense potential as it was a very ‘flexible’ brand under which regionalvariants could be introduced to meet various market needs. Company sources claimed thatwith reasonable price points and innovative products,

Maggi could emerge as a top brandand a major growth driver for the company. To further support the brand, Nestle carried outvarious promotional activities as well. These included the August 1999 ‘Fun-Dooz’ campaignand Jungle Jackpot campaigns. 6 As a result of the above initiatives, Nestle claimed to havecornered an 81% market share of the 20,000 tonnes noodles market by the end of 1999. Nestle sources claimed that Maggi noodles outsold the competition four times over and thatmore than four Maggi noodle cakes were consumed every second in the country.

PRODUCT VARIENTS Maggi’s Brand Extension and Repositioning Subject: Product And Brand ManagementThe product mix of Maggi is divided into various categories defined below. The company haslaunched various products under each category as mentioned below. 1. Noodles • Maggi 2-Minute Noodle ( Masala , Chicken, Curry and Tomato) • Maggi Dal Atta Noodles ( Sambhar taste) • Vegetable Atta Maggi Noodles • Maggi Rice Noodles (Lemon Masala, Chilly Chow and Shahi Pulao) • Maggi Cuppa mania (Masala yo, Chilli chow yo) 2.

Sauces • Teekha masala • Tomoto chatpat • Imli khata mitha • Tomato ketchup • Hot and sweet • Tomato pudina • Ginger, Garlic & Coriander • Maggi Oriental Chilli Garlic • Ginger, Garlic & Coriander 3. Maggi Pichko 4. Soups Healthy • Chef Style – Cream Mushroom – Sweet Sour Tomato Noodles – Tangy Tomato Vegetables • Home Style – Creamy Chicken – Mixed Vegetable – Rich Tomato • Chinese Style – Chinese Hot Sour Chicken – Chinese Sweet Corn Chicken – Chinese Sweet Corn Vegetables – Chinese Hot & Sour Vegetables 5. Maggi soup sanjivni Maggi’s Brand Extension and Repositioning Subject:

Product And Brand Management • Amla • Badam • Spinach • Dal • Tomato 6. Maggi bhuna masala • Bhuna masala for gravy dishes • Bhuna masala for vegetable dal7. Maggi magic cubes • Chicken • Vegetarian masalaMARKET SHARE Maggis Market Share in Ketchup Maggis Market Share in Noodles Category Category 20% 45% Maggi Maggi 55% Others Others 80% RESEARCH METHODOLOGYOBJECTIVES To understand the influence of Maggi as a brand on consumers mind set. Sources of Brand equity of Maggi like Brand awareness, Brand image, Brand association, Brand recall To understand the Brand erformance of Maggi products. 11 12. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management To understand Brand Imagery, Brand Quality perceived by customers, Brand credibility, consideration, superiority and feelings. Brand Extension of Maggi in terms of product diversity. Analyse the repositioning of Maggi brand as a “Healthy product” and the consumers perseverance towards the same. RESEARCH PLAN Research Design:The research will be carried out in the form of a survey which will be done in areas near toDelhi (NCR region).

The population has been segmented on the basis of salary Group andAge Group. Sample Design:The target population for our study is households. The sample will be selected by a simplerandom sampling method . Sample Size:The sampling unit is 150 which are divided as follows: Number of 150 respondents Age-group 10 – 45 Monthly Household 25000 – 75000 INR Income Delhi, Survey Locations Faridabad,Gurgoan,Noida,Greater Noida 25K – 40K – 60K – Salary Group No income 40K 60K 75K Number of Respondents 30 50 70 Age Group 10 – 25 25 – 35 35 – 45 Number of Respondents 50 50 50 12 13.

TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management DATA COLLECTION PLAN Data Gathering:This study involves data collection (primary research) from different households in fourdifferent areas Delhi, Faridabad, Gurgoan, and Noida. Literature ReviewThe research conducted as a part of our study would include Primary as well as Secondaryresearch. Primary research would include a survey that would be conducted in selectedlocalities of Delhi and nearby areas where the responses of consumers would be recordedthrough a designed questionair.

Secondary research would include various aspects of Brandmanagement through Internet , Journals, company reports , expert views etc. METHOLODOGYThe research will be carried out in the form of a survey. This will include primary research inaddition to secondary research as stated below. The survey research method will bedescriptive research design. Each respondent will be interviewed through a Questionnaire. The sample will be selected by a simple random sampling method.

The survey will address the following information area:Information Areas:The objective as spelt out can be elaborated into specific information areas to be studied. How do customers perceive Maggi as a stable brand, their perception of noodles and how do they associate themselves with Maggi? Are the consumers aware of Maggi Brand or they associate noodles with some other brand? Do they consider noodle as a healthy product or they are aware of the company’s strategy of repositioning it to a healthy product by the launch of some of the new products?

Which product from the entire basket of Maggi products do the consumers consider as the best selling product for Maggi and to which the consumers frequently buy? Are the consumers willing to accept Maggi brand extensions to some other products like chocolate, juices, chips etc? 13 14. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand ManagementSURVEY RESULTS:1. Brand Associations:Sources of Brand equity like brand association of Maggi as a Brand was found highest withthe age group of 10-25 and the product category associated with it was the noodles category( see exhibit 1).

Consumers in the age segment of 10-25 could easily relate Maggi tonoodles. In the income wise category the brand association was highest with the income group of25k-40k were more than 40 respondents associated Maggi with noodles ( see exhibit 2). Theimplications from the findings discussed above seem that Maggi has good brand associationin terms of noodles. Consumers presume Maggi as Noodles and the company’s philosophyof projecting the brand as noodles brand seem to be viable in this regard.

Brand Association(Agewise) 40 35 30 25 10yr – 25yr 20 15 25yr – 35yr 10 35yr – 45yr 5 0 Noodles Fast Food Snacks None of These Exhibit 1 Brand Association(Incomewise) 50 40 Noodles 30 Fast Food 20 Snaks 10 None of These 0 No Income 25K – 40K 40K – 60K 60K – 75K 14 15. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management Exhibit 22. Brand Recall:From the Exhibit 3 & 4 given below it seems a clear trend that Maggi has a good brand recallas compared to its competitors like Top Ramen, Surya noodles etc. Consumers could easilyassociate Maggi with noodles.

In the Age wise category, the respondents of the age group of25-45 were highly cautious of Maggi brand and seemed to be consuming Maggi more ascompared to other age segments. Brand Recall(Agewise) 50 40 30 10yr – 25yr 20 25yr – 35yr 10 35yr – 45yr 0 Maggi Top Ramen Surya Anil Noodles Noodles Exhibit 3In the gender wise category the company’s strategy of positioning of Maggi brand for workingwomen seems to be adaptive and gaining shape as women respondents had a brand recallmore than male. Brand Recall(Genderwise) 25 20 15 Brand Recall(Incomwise) 10 Maggi 50 5 Top Ramen 40 0 Surya Noodles

Maggi 30 Anil Noodles M M M M e e e e a a a a Top Ramen l l l l m m m m e e e e a a a a F F F F l l l l 20 Surya Noodles 10 No Income 25K – 40K 40K – 60K 60K Anil Noodles – 75K 0 15 No Income 25K – 40K 40K – 60K 60K – 75K 16. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management Exhibit 33. Brand Awareness:From the responses of the respondents in the conducted survey it was evident than Maggi’sBrand awareness was very high in terms of noodles were around 65 %of the respondentsassociated maggi as noodles and only 20 % of the respondents knew ,Maggi as a Ketchup,9% as soup etc.

Masala Brand Awareness 6% Soup 9% Ketchup 20% Noodles 65%The trend indicated that Maggi’s brand extension strategy to increase its basket has not beenquite successful in other food segments . This might be because of the larger share of marketcaptured by the competitors hence Maggi has a high potential in markets like ketchup, soupsetc. Brand Awareness(Agewise) 40 35 30 25 10yr – 25yr 20 25yr – 35yr 15 10 35yr – 45yr 5 0 Ketchup Noodles Soup Masala 16 17.

TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management4. Repositioning Maggi as a healthy product:The company’s strategy to reposition Maggi as a “Healthy product” was not found conduciveas per the survey results. The survey showed that consumers did not perceived Maggi as ahealthy product with 53% of them consumed Maggi’s traditional products as compared to therest who consumed other variants of Maggi’s brand that were positioned as “Healthyproducts”.

Maggi rice Repositioning Awareness noodles mania Others 7% 3% Maggi dal atta noodles 14% Maggi masala Maggi (Regular) vegetable atta 53% noodles 23%From the pie chart given below it can be clearly seen that Maggi is still perceived as a nonhealthy products by the consumers and in spite of the efforts to position Maggi as a healthyproduct by the company the brand is still perceived as a “ready to eat” food brand that has ahigh market share in the noodle category in India.

Perception of Maggi Noodles As a Healthy Product 40% As a non Healthy Product 60% 17 18. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management Tasty/Fun Perception of Maggi Product Eating Good for 10% Health 15% Junk Food 23% Ready to Eat 52%SWOT ANALYSIS OF MAGGI BRANDThe SWOT analysis of Maggi brand clearly indicates the strengths of Maggi as a Brand inIndian market. The Brand was found to be a leader in its category of Noodles, with strongcustomer loyalty.

Intensive distribution of Maggi as a Brand was seen in urban areas of thecountry. The major threats of the brand as shown in the figure below indicates that Maggi hasmade several attempts to revamp itself as a ‘Healthy Product” but till date its perseverancetowards the tag line is low by the consumers. The brand is in the growth stage of product lifecycle with a strong inclination towards the maturity stage. 18 19.

TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management STRENGTH WEAKNESS Market leader in their segment Product are dependent on each Strong brand loyal consumer base other Wide range of distribution channel Not so much presence in rural Product according to the need of market Indian consumer Innovative Product SWOT ANALYSIS OPPORTUNITY THREAT Increasing number of working youth Price war with competitors.

Product has been acceptable in youth Strong presence of regional category competitors Shift to rural market Consumers don’t perceive it as Changing preference of consumer a “Healthy Product” towards Chinese food and fast food. Can foray into other food markets with its strong Brand name STPD ANALYSIS OF MAGGI BRAND Segmentation: Market Segmentation divides the heterogenous market into homogenous groups of customers who share a similar set of needs/wants and could be satisfied byspecific products. Maggi Brand have segmented the market on the basis of lifestyle andhabits of URBAN FAMILIES.

Target: Market Targeting refers to evaluating and deciding from amongst the variousalternatives, which segment can be satisfied best by the company. The Maggi Brand havemainly targeted the Kids, Youth, Office Goers & Working Woman which falls into the category 19 20. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Managementof “convenience-savvy time misers” who would like to get something instant and be over withit quickly. Positioning: Market Positioning is the act of designing the company’s offerings and image tooccupy a distinctive place in the minds of the target market.

The goal of positioning is tolocate the brand in the minds of consumers to maximise the potential benefit to the firm. Maggi has positioned itself in the SNACKS category and not in the meal category sinceIndians do not consider noodles as a proper food item. Therefore Maggi have developed itsbrand image of instant food products with positioning statements such as “2 minutes noodles”and “Easy to cook, good to eat”. Differentiations: Points-of-difference (PODs) are attributes or benefits consumers stronglyassociate with a brand, positively evaluate and believe they could not find to the same extentwith a competitive brand.

The Maggi Brand have also differentiated its brand image from itscompetitors in terms of taste, flavours and packaging. Maggi have launched wide varieties ofproducts in different flavours which can attract larger set of customers. Maggi products arealso available in different sizes catering to different customer needs. CUSTOMER BASED BRAND EQUITY PYRAMID (CBBE)Maggi’s customer based brand equity pyramid seems to be equally strong on left hand sideand right hand side, it is also strong from bottom to top enjoying the highest brand awarenessof any fast food noodle brand in India as well as repeat purchase rate and high customerloyality. 0 21. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management zzzBRAND PRISM OF MAGGI 21 22. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management BRAND PRISM OF MAGGICONCLUSION 22 23. TITLE: Maggi’s Brand Extension and Repositioning Subject: Product And Brand Management The food processing business in India is at a nascent stage. Currently, only about 10% of the output is processed and consumed in packaged form thus highlighting huge potential for expansion and growth.

Traditionally, Indians believe in consuming fresh stuff rather then packaged or frozen, but the trend is changing and the new fast food generation is slowlychanging. Riding on the success of noodles, Nestle India, tried to make extensions of the Maggi brandto a number of products like, sauces, ketchups, pickles, soups, tastemakers and macaroni in the mid-1990s. Unfortunately, the macaroni and pickles didn’t pick up as expected. The soups and sauces did somewhat fine, gathering considerable sales volumes and have a satisfactory presence even today. Maggi Noodles’ itself faced a bit of difficulty with respect to‘taste’, and nearly lost its position in the minds of Indian consumers in the late 1990s. WhenNestle changed the formulation of its tastemaker, the ominous packet that came along withMaggi Noodles, a major chunk of consumers were put-off and sales started dropping. Also, Maggi’s competitor ‘TopRamen’ took advantage of the situation and started a parallel aggressive campaign to eat into Maggi’s market share. But the company quickly realised thisand went back into making the original formula coupled with a free sampling campaign.

This helped Maggi to win back its lost consumers and pushed up its sales volumes again! Maggi Today The year 2008 saw India leading in world wide Maggi sales. The brand has grown to an estimated value of Rs 160-170 crore and contributes at least 8–9% to Nestle India’s top line. All the same, some FMCG analysts feel that the brand has not done much to expand the noodles category. Even after 25 years of its launch, the size of the instantnoodles market is yet quite small at Rs 300 crore. But yes, the parent company, Nestle IndiaLimited has certainly encouraged the brand to enter into other culinary products.

RECOMMENDATION After the conducted study following recommendations could be sited for Maggi Brand. – To gain maximum leverage in terms of profit the company should pay emphasis on segments with age groups 25-35 and above . Advertising is the key to success. Targeting these segments will not only enhance the company’s profit margins but also it will leverage the brand image of Maggi. – The company should advertise its products by depicting attributes related to Health like Nutrition values, % of Vitamins, Proteins etc. This would help in customers perceiving the product as Healthy. Foray into other food products like chips, chocolates etc under its sole brand name would not only help in Brand extension but will also enhance Maggi’s market share. FUTURE PLANS 23 MAGGI INTRODUCTION TO MAGGI Maggi is a Nestle brand of instant soups, stocks, bouillon cubes, ketchups, sauces, seasonings and instant noodles. The original company came into existence in 1872 in Switzerland, when Julius Maggi took over his fathers mill. It quickly became a pioneer of industrial food production, aiming at improving the nutritional intake of worker families.

It was the first to bring protein-rich legume meal to the market, which was followed by ready-made soup based on legume meal in 1886. In 1897, Julius Maggi founded the company Maggi GmbH in the German town of Singen where it is still established today. Maggi Comes to India – teething troubles Maggi noodles was launched in India in theearly1980s. Carlo M. Donati, the present Chairman and Managing Director of Nestle India Ltd, brought the instant noodle brand to India during his short stint here in the early eighties.

At that time, there was no direct competition. The first competition came from the ready-to-eat snack segment which included snacks like samosas, biscuits or maybe peanuts, that were usually ‘the bought out’ type. The second competition came from the homemade snacks like pakoras or sandwiches. So there were no specific buy and makesnack! Moreover both competitors had certain drawbacks in comparison. Snacks likesamosas are usually bought out, and outside food is generally considered unhygienic and unhealthy.

The other competitor, ‘homemade’ snacks overcame both these problems but had the disadvantage of extended preparation time at home. Maggi was positioned as the only hygienic homemade snack! Despite this, Nestle faced difficulties with their sales after the initial phase. The reason being, the positioning of the product with the wrong target group. Nestle had positioned Maggi as a convenience food product aimed at the target group of working women who hardly found any time for cooking. Unfortunately this could not hold the product for very long.

In the course of many market research sand surveys, the firm found that children were the biggest consumers of Maggi noodles. Quickly they repositioned it towards the kids segment with various tools of sales promotion like colour pencils, sketch pens, fun books, Maggi clubs which worked wonders for the brand. Maggi was positioned as ‘2-minute noodles’ with a punch line that said ‘Fast to cook! Good to eat! ’ And this gave the implied understanding to the consumer that it was a ‘between meals’ snack. The company could have easily positioned the product as a meal, either lunch or dinner.

But, it chose not to do so, because the Indian consumer mindset did not accept anything other than rice or roti as a meal. Hence trying to substitute it with noodles would have been futile. The firm did not position it as a ‘ready-to-eat’ meal either, as the housewife prefers to ‘make’ a meal for her kids rather than buy it for them. And if she can make it in two minutes with very little effort, then obviously it’s a hit with her! What’s more, if kids also love the taste, the product is as good as sold! So the ‘2-minute’ funda coupled with the ‘yummy taste worked! Projectsformba. blogspot. com 6 * 7.

BRAND STORY Launched in 5 flavours initially – Masala, chicken, Capsicum, sweet & sour, and Lasagna– Maggi had to fight hard to be accepted by Indian consumers with their hard-to-change eating habits. The packaged food market was very small at this time, Nestle had to promote noodles as a concept, before it could promote Maggi as a brand. It therefore devised a two-pronged strategy to attract mothers on the ‘convenience’ plank and lure kids on the ‘fun’ plank. Gradually, the market for instant noodles began to grow. The company also decided to focus on promotions to increase the brand awareness.

In the initial years, Nestle promotional activities for Maggi included schemes offering gifts( such as toys and utensils) in return for empty noodles pack. According to analysis the focus on promotion turned out to be the single largest factor responsible for Maggi’s rapid acceptance. Nestle’s Managers utilized promotions as measured to meet their sales target. Gradually, sales promotion became a crutch for Maggi noodles sales. Later many of the Maggi’s extensions also made considerable useof promotional schemes. The focus of all Maggi’s extensions was more on below the line activities rather than direct communication.

In addition to promotional activities, Maggi associated itself with main stream television programme and advertised heavily on kids programme and channels. After its advertisements with taglines like “mummy bhookh lagi hai, bas do minute” and fast to cook good to eat Maggi’s popularity became highly attributed to its “extremely high appeal to children”. As a result, Maggi’s annual growth reportedly touched 15% during its initial years. Projectsformba. blogspot. com 7 * VARIOUS PRODUCTSThe product mix of Maggi is divided into various categories defined below. The companyhas launched various products under each category as mentioned below. 1. Noodles • Maggi 2-Minute Noodle ( Masala , Chicken, Curry and Tomato) • Maggi Dal Atta Noodles ( Sambhar taste) • Vegetable Atta Maggi Noodles • Maggi Rice Noodles (Lemon Masala, Chilly Chow and Shahi Pulao) • Maggi Cuppa mania (Masala yo, Chilli chow yo) * 2. Sauces • Teekha masala • Tomoto chatpat • Imli khata mitha • Tomato ketchup • Hot and sweet • Tomato pudina • Ginger, Garlic & Coriander • Maggi Oriental Chilli Garlic • Ginger, Garlic & Coriander * 3. Maggi Pichko * 4. Soups Healthy • Chef Style – Cream Mushroom – Sweet Sour Tomato Noodles – Tangy Tomato Vegetables • Home Style – Creamy Chicken – Mixed

Vegetable – Rich Tomato • Chinese Style – Chinese Hot Sour Chicken – Chinese Sweet Corn Chicken – Chinese Sweet Corn Vegetables – Chinese Hot & Sour Vegetables * 5. Maggi soup sanjivni • Amla • Badam • Spinach • Dal • Tomato6. Maggi bhuna masala • Bhuna masala for gravy dishes • Bhuna masala for vegetable dal7. Maggi magic cubes • Chicken • Vegetarian masala * 10. TASTE AND PREFERENCES OF CONSUMERS Health is the flavour of the season. Food companies in India are growing aware of the increasingly changing consumption trends and taste preferences among the Indian junta.

No surprises, but this is the reason more and more companies are coming up (or are actually re-marketing) with products that are healthy. Take for example Coke and Pepsi; both have already started looking into the non-carbonated drinks category section. Maggi first introduced in the market Maggi Atta Noodles – which it claimed was a healthy foodas it was made of wheat flour followed by soups. Nestle India, in an effort to carry on with its trend of providing the Indian consumer’s healthy food recently introduced a range of Healthy Soups.

The entire range consists ofthe following; maggi tomato, mixed vegetable, tomato vegetable, mushroom, chicken, sweet corn chicken and hot and sour vegetable. The product is priced at Rs 25 for 70grams. Maggi became successful because it understood consumers. The brand never wanted to change Indian consumer’s habit. It did not had ambitions about changing Indians breakfast or dinner preferences. What Maggi did was to slowly attach itself to Indian consumers need without disruption. Maggi was also closely watching consumer preferences. When consumers wanted healthy food, Maggi launched Atta Noodle variants that were healthy.

More importantly this move addressed the concerns of Homemakers. The brand extended itself to multiple segments but without diluting the core brand equity. Maggi over these years have made lot of mistakes. It made mistakes because the brand was willing to experiment. More importantly the brand learned from those mistakes and corrected itself. Maggi also invested heavily in brand building. The campaigns for one of Maggis products were always there in the media which kept the brand fresh in the mind of the consumers. Maggi personifies the basic principles of understanding consumers, innovating and investing in the brand.

Maggi is one packaged food brand that has only seen its popularity grow in the past many years and the secret to the success is that instead of trying to change the food habits of consumers, it has tried to align itself with local tastes and preferences with the ‘fast tocook and good to eat’ promise. To commemorate its successful journey through a quarter of a century in the world’s largest consumer market, the brand, last year, launched an innovative campaign inviting its loyalists to share with it their Maggi stories and promised to broadcast them to the world at large, thereby, making them the superstars overnight.

Along with television commercials, which aired individual consumer stories of their lasting memories of Maggi, the brand displayed pictures of these loyal customers on the Maggi packs. Nestle also introduced a website Meandmerimaggi. in for engaging with them. The company also rewarded its consumers by adding to the Maggi portfolio, that hither to had sauces and soups in various flavours, a range of prepared dishes and cooking aids such as Maggi Bhuna Masala and Maggi Pazzta. So far focussed on urban consumers, the company also made a pitch for rural consumers by launching Maggi Rasile Chow noodles at an inviting price of Rs4.

Again, local tastes and recipes have been at the coreof all these marketing innovations. “Creating delight and happiness in everyday meals is not just about providing tasty food. It is about providing taste and health in a convenient combination,” says Shivani Hegde, general manager, foods. Projectsformba. blogspot. com 11 * DEMOGRAPHY AND PSYCHOGRAPHY OF CONSUMERS * Demography:- * 1) Age and sex: Maggi products are consumed by people of different age groups. They are consumed by children, teenagers, adults as well as old people. They are consumed by both genders male and female. 2) Income :- Maggi products are available at reasonable prices. So they are consumed by the lower, middle as well as the higher class. * 3) Religion and nationality:- Maggi products are famous and are consumed by people of all religions and nationality. * Psychography: * 1) Attitude:- Consumers of maggi have a positive attitude towards the product which makes it the leader in the market. Maggi dominates the market. * 2) Lifestyle:- Lifestyle determines the way of living of people. It describes how a consumer leads his life. Maggi products are consumed by all. MARKET SHARE Maggis Market Share in Ketchup Category Maggi has a 45% Maggi 55% others market share of 45% which is a high percentage. It dominates the market in the ketchup segment. Projectsformba. blogspot. com 13 * 14. Projectsformba. blogspot. com Maggis Market Share in Noodles Category 20% Maggi Others 80%Maggi has a market share of as high as 80% in the noodles segment. Itdominates the market. It is the leader in this segment * . SWOT ANALYSIS OF MAGGI BRAND * 15. The SWOT analysis of Maggi brand clearly indicates:- STRENGTH the strengths of Maggi as a Brand in Indian market. The Brand was found to be a leader in its category of Noodles, with strong customer loyalty. * Intensive distribution of Maggi as a Brand was seen in urban areas of the country. THREAT * The major threats of the brand as shown in the figure below indicates that Maggi has made several attempts to revamp itself as a ‘Healthy Product”but till date its perseverance towards the tag line is low by the consumers. The brand is in the growth stage of product life cycle with a strong inclination towards the maturity stage. WEAKNESS Market leader in their segment Product are dependent on each Strong brand loyal consumer base other Wide range of distribution channel Not so much presence in rural Product according to the need of market Indian consumer Innovative Product OPPORTUNITY * Increasing number of working youth Price war with competitors. Product has been acceptable in youth Strong presence of regional category competitors Shift to rural market Consumers don’t perceive it as Changing preference of consumer a “Healthy Product” towards Chinese food and fast food. Can foray into other food markets with its strong Brand name.

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