Maggi Brand in India Essay Example
Maggi Brand in India Essay Example

Maggi Brand in India Essay Example

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Case Analysis The Maggi Brand in India Brand Extension and Repositioning Background of Maggi: Nestle India Ltd. (NIL) is the Indian subsidiary of the global FMCG major, Nestle SA. Maggi Brand was introduced to the Indian consumers by NIL with the launch of Maggi 2 Minute Noodles, an instant food product, in 1982. With the launch of Maggi noodles, NIL created an entirely new food category - instant noodles - in the Indian packaged food market. Initially Nestle tried to position the Noodles in the platform of convenience targeting the working women.

At that time, Indian consumers were rather conservative in their food habits, preferring to eat traditional Indian dishes rather than canned or packaged food. But it found that the sales are not picking up despite heavy promotion . Research then showed that Kids were the largest consumers of th

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e brand. Realizing this, NIL shifted its focus from working women to children and their mothers and repositioned the brand towards the kids using sales promotions and smart advertising.NIL aggressively promoted Maggi with taglines such as “Mummy Bhook Lagi”, “Bas 2Minute”, “Fast to cook, good to eat” and through several schemes of free samples, gifts on return of empty packs, etc. Later was observed that people of all age group started liking Maggi.

Over the years, NIL extended the Maggi brand to a variety of culinary products like soups, sauces and ketchups, and cooking aids among others. In 2005, NIL started offering a range of new 'healthy' products under the Maggi brand, in a bid to attract health-conscious consumers. Case Synopsis:This case concentrates on various phases in the product life cycle of Maggi noodles in India.

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It talks about the various measures and marketing strategies undertaken by Nestle India Ltd. (NIL) to keep the Maggi brand fresh in the minds of Indian consumers and reposition Maggi as a 'health product'. The case also focuses on the various extensions of the Maggi brand and tries to analyze why only the sauces and ketchups category, among all the other product extensions, managed to succeed.

This case has also done the competitor analysis which shows the potential threats to Maggi and its xtension products from the potential competitors. The case ends with a discussion whether NIL would be successful in sustaining this new image for Maggi in the market. Issues: 1. What are the strategies undertaken by NIL to create and establish a new product category? 2. What are the problems faced by Maggi in sustaining the image of a popular brand? 3.

What are the strategies adopted by NIL in repositioning Maggi noodles among the consumers? 4. What are the strategies adopted by NIL to fight the competition from the competitors? 5. What are the issues involved in the brand extensions?Analysis: 1. The Brand, its Positioning and Equity NIL was first company to launch noodles in the Indian market in the early 1980's. Nestle wanted to explore the potential for such an instant food among the Indian market.

It took several years and lot of money for Nestle to establish its Noodles brand in India. Now it enjoys around 50% market share in this segment which is valued at around 250 crores. Maggi has faced lot of hurdles in its journey in India. The basic problem the brand faced is the Indian Psyche.

Indian Palate is not too adventurous in terms of trying new tastes.So a new product with a new taste that too from a different culture had a great deal of difficulty in appealing to Indian market. Initially Nestle tried to position the Noodles in the platform of convenience targeting the working women. But it found that the sales are not picking up despite heavy promotion. Research then showed that Kids were the largest consumers of the brand. Realizing this, Nestle repositioned the brand towards the kids using sales promotions and smart advertising.

Now Maggi is the number one brand in the noodles. Maggi was positioned as ‘2-minute noodles’ with a punch line that said ‘Fast to Cook Good to Eat’.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.The kids also loved the taste, thus the ‘2-minute’ funda coupled with the ‘yummy taste’ worked. NIL’s promotions positioned the noodles as “convenience product”, for mothers and as a “fun” product for children. The tag lines such as “Fast to Cook Good to Eat”,

“2-minute noodles” and “Taste Bhi, Health Bhi” are the strong brand elements of Maggi which have helped in building brand equity.

2. The Branding Strategy: Maggi also used the branding strategy by leveraging the success of the Noodles to other food products like sauces, tastemakers, soups etc.NIL launched several new products under Maggi brand, in an effort to leverage on the popularity of the brand among consumers. With the launch of Maggi soups, NIL had become a pioneer in the organized packaged soup market in India.

Maggi sauces are another success story as Maggi has a market share of 45% in the 180 crores ketchup market in India. Maggi leveraged the brand equity very effectively. The product quality was good and the communication was excellent. The brand was positioned as a "Different" sauce with the baseline “Its different". 3. Brand Extensions:Riding on the success of noodles, Nestle India, tried to make extensions of the Maggi brand to a number of products like, sauces, ketchups, pickles, soups, tastemakers and macaroni in the mid-1990s.

Maggi has both good and bad experiences of brand extension. Extended products such as Maggi Sauces and Maggi Soups were successful in the market whereas the macaroni and pickles didn’t pick up as expected. Maggi Macaroni was directly positioned against Maggi Noodles in the market cannibalizing the parent brand and eating its market share. Therefore, NIL eventually withdrew Maggi Macaroni form the market.The preference for pickles varied from region to region in the country, and the consumers were generally not loyal to branded pickles. Therefore Maggi pickles had been performing badly in the market so, NIL also discontinued Maggi Pickles.

The soups and

sauces did somewhat fine, gathering considerable sales volumes and have a satisfactory presence even today. NIL had failed to extend the Maggi brand systematically. NIL had even been unable to sustain the popularity and sales of its flagship product, Maggi Noodles, let alone achieve successful product extensions. 4.The Competitors: At that time when Maggi Noodles were first launched in India, 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, ‘home made’ 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.

Maggi Noodles, which built itself on the taste-and-convenience platform through the 80s and early 90s, started facing the heat from Indo Nissin’s Top Ramen brand during 90s. Top Ramen managed to get a 25% market share by the mid-1990s. Maggi Noodles also faced competition from its own product i. e. Maggi Macaroni.

Another player in the instant noodles segment was Wai Wai brand of noodles owned by Chaudhary Group, a Nepalese conglomerate.Maggi Noodles also faced competition form ITC’s Sunfeast Pasta Treat, a ready-to-eat pasta product which was cooked in more or less the same way as Maggi Noodles. To add to NIL’s problems, the organized soups market saw the entry of

a new player, Knorr Soup in 1996. Soon Knorr Soups started giving stiff competition to Maggi Soups and grabbed a major share of the organized packaged soup market within a short space of time. In the sauces and ketchups segment, NIL started facing competition form Kissan sauces launched by Hindustan Lever Ltd.

(HLL) in mid-1990s. During 2004, Heinz India Pvt.Ltd. introduced Heinz Ketchup with premium pricing which impacted Maggi’s Sauces as its market share came down form 41. 9% to 39. 7%.

5. The Competitive Strategy: To beat the competition NIL changed the formulation of Maggi noodles in 1997. However, this proved to be a mistake, as consumers did not like the taste of the new noodles. In March 1999, NIL reintroduced the old formulation of the noodles with much fanfare after which the sales revived. The company spent Rs. 200 million on an advertising campaign to communicate to consumers that it had relaunched the “old Maggi”.

In the early 2000s, NIL started introducing new “healthy” products in accordance with the Nestle Group’s global strategy to transform itself into a health and wellness company. NIL also adopted the same strategy for the Maggi brand with the launch of the Maggi Vegetable Atta Noodles and Dal Atta Noodles in 2005. To counter the competition form Top Ramen, NIL reduced the price of Maggi noodles and introduced new economy packs. It also launched Maggi Macaroni in 1997.

The brand has been innovating constantly to keep share.Maggi adapted to local tastes and withstood competition over the years and has continuously sensitized itself to the evolving Indian consumer. NIL resorted to two-pronged strategy. It came up with different line extensions

and tastes such as: •Maggi Noodles was available in four variants: –Maggi noodles masala –Maggi noodles tomato –Maggi noodles curry –Maggi noodles chicken •NIL repositioned soups as ‘Maggi Healthy soup’ with the tag line ‘Taste bhi, health bhi’.

•To fight the competition in sauces and ketchup segment NIL came up with the following differentiations: –Maggi sauces ?Tomato Chatpat ?Tomato Pudina Masala chilli ?Chilli Garlic –Maggi ketchup ?Tomato sauce ?Tomato ketchup ?Hot and sweet sauce 6. Marketing Strategy: The advertising of Maggi has always been children-centric in keeping with the target audience – whether it is a hungry kid coming back from school or play or a child opening his lunch box expecting Maggi. The jingle used for the Maggi instant noodles campaign was pretty catchy which went down well with the target audience, children. The ads of Maggi became so popular that the tagline “Bas 2-Minute” immediately reminded Indian consumers of Maggi noodles even several years after the ads were taken off the TV.This had created a strong brand recall value.

Other places where the company targets children are shops and stores where Maggi is sold. Children are often taken out by moms when they go for shopping, hence the Maggi packs are usually placed in low counters, shelves or hung in twine baskets within their eye level. The reason for this is, children often influence purchases by pestering their parents to buy things on seeing them. Incidentally the company also came up with smaller packs of Maggi at Rs 5/- to initiate trial purchase and boost sales.It increased the sales volume since the value for money is main concern of Indian consumers. During 2001-02

FMCG sector faced recession, in order to fight this slump NIL introduced smaller packs at lower price points.

During recession, people prefer to buy smaller packs which helped in building brand loyalty and penetration. Distribution network was improved so as to increase accessibility of customers. This move proved successful as the smaller packs of Maggi noodles sold extremely well. This strategy was also used in its other products like coffee and confectionery.NIL began to offer Nescafe sachets and chocolate products in smaller packs. Maggi soups were also available in different sizes.

Maggi soups available in sachets were introduced in the market in order to counter the competition from Knorr Soups. NIL improve the sales of the small packs through vending machines placed at busy locations such as offices and railway stations. It worked as a fabulous marketing strategy and NIL was the only company that did not lose significantly during the recession which was mainly due to the pricing strategy that the company adopted. 7.Strengthening of the brand - Creating Brand Awareness and Maintaining Brand Image: To maintain the image of the brand Maggi, NIL had adopted the 360 degree marketing strategy. They promoted the product as a health product.

Initially NIL aggressively promoted Maggi noodles through several schemes like distributing free samples, giving gifts on there return of empty packs, etc. the company has spent a huge amount of money in communicating the product’s benefit to the target consumers. They have spent the huge amount on various small events for the kids and on advertisement of the Maggi like electronic and print advertising.NIL has use the celebrity endorsement strategy to endorse Maggi noodles in

order to strengthen the brand’s image. Celebrity was endorsed in the advertisement because India is a country where people are star-struck by film stars, cricketers, politicians, and even criminals and brand communication messages delivered by celebrities and famous personalities generate a higher appeal, attention and recall than those executed by non-celebrities. In 2004-NIL roped in Preity Zinta to endorse Maggi noodles and it was focused on promoting small packs of Maggi noodles so as to strike a chord with the consumers.

NIL did not resort to any price cutting, rather it signed on Ranvir and Vijay, popular T. V. personalities in India to grab sauces market. NIL spent heavily on the advertising campaign for Vegetable Atta Noodles compare to other noodles or pasta brands in India which is shown in the pie chart below. 8.

SWOT Analysis: Strengths: •NIL was first to introduce instant noodles and packaged soup in the Indian market hence the Maggi had the first mover advantage and had opportunity to capture the untapped market. Maggi had the strong parent brand and brand recall value. •Capable of keeping the Maggi brand fresh in the minds of Indian consumers •The taste of the Maggi was like by most of the Indian consumers •Has a strong distribution channel •Maggi was able to capture the market share of 80% in the instant noodles market •The company had strong research and development facilities •NIL was able to offer ready-to-eat healthy food products such as fortified noodles, healthy soups with low fat, low cholesterol, real vegetables and without preservatives, artificial color or MSGWeakness: •Maggi had unsystematic brand extension •NIL did brand extension by introducing Maggi Macaroni without taking

into concern its threat of cannibalizing its own noodles segment. •Products were launched without doing proper market analysis like introduction of sweet noodles which was later withdrawn form the market. •Maggi focused mostly on the noodles and sauces segments in creating the brand awareness to its consumers due to which other product categories were not able to succeed in the market. Opportunities: Growing population leading to growth in the consumer market •Market for branded food products was growing at a healthy rate •changing lifestyles and eating habits of Indian consumers •increasing purchasing power of the growing middle income group Threats: •Entry of new competitors in the market •Inflation in the Indian as well as international market •Competitors introducing new brands with local taste capturing the local market.

9. BCG Matrix: Star Maggi Noodles Maggi Sauces Maggi KetchupQuestion Mark Maggi Soups Cash CowDogAccording to the FICCI, “Food and Beverage Survey” in early 2006, the market for branded food products was growing at a rate of 15%. Similarly, the Maggi sauces had 37% and Maggi noodles had as large as 80% of the market shares. Since Maggi brand’s instant noodles and sauces and ketchups have relatively large market share and increasingly growing market share they are considered to be the “stars” in the BCG Matrix.

Similarly, the soup products are placed in the “question mark” category as they have small market share but increasing market rate with a number of competitors.NIL should concentrate on the soups as it has maximum potential to increase the market share and become a star with little efforts. If this product category is not improved in its marketing strategy its can eventually

decrease the market share and turn down to become a cash cow. Also if the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share or not.

0. Possible Alternatives: •As NIL has marketed coffee products brand under differ brand name of Nescafe. Different product category should be marketed under different brand names such as culinary products should be under one brand name, similarly noodles segment should be under on brand name. This strategy will help to create and position the new products as a strong brand.

Also this will not hamper the image of the parent brand. •NIL has worked hard to create brand awareness only in the noodles category by providing free test samples, free gifts and organizing the funfare for the kids.This strategy can also be applied in other product segments so as to attract the customers. •Use strategies to create awareness on health products •Maggi Noodles was positioned as the ‘in between meal’ snacks.

Likewise, NIL should position its new products as the other food types so that consumers are attracted. •In case of culinary products, advertisements should focus on women, as women are the one who make the purchase decisions in the culinary market. The opportunity of posting the recipes and other gift offers are to be introduced in order to attract Indian women. More healthy food products should be introduce with proper market research which would best suit the Indian

palate like the Maggi Dal Atta noodles was introduced. •Existing products should be fortified or contain nutrients so that the Indian consumers with conservative food habits who give importance to the perceived health benefits of traditional food are also attracted to switch their food habits.

•The celebrity endorsement strategy must be integrated with target market characteristics, and the other elements of the marketing mix such as product design, branding, packaging, and pricing.The message execution that will be mouthed by the celebrity must likewise be made clear and single-minded. This can be done cleverly by aligning the spirit of the brand to the product, or by using a celebrity because it ensures that people will notice you, and hopefully remember what the brand is saying. •The noodles segment has not been extended much. NIL should concentrate mostly on the noodles segment in terms of brand extension rather that extending the brand under different category. 11.

Best Course of Action: Giving new brand names to the different product category so that the consumers are not confused with the brand name and this might not dilute the brand image. •Advertising has its own small role in ensuring the brand message reaches the target audience, in the desired medium. The general belief among advertisers is that brand communication messages delivered by celebrities and famous personalities generate a higher appeal, attention and recall than those executed by non-celebrities. The quick message-reach and impact are all too essential in today's highly competitive environment.The celebrity appeal can successfully carrying out their jobs by giving the bottom lines of all the brands what they want - profit, market share and even recall.

•Economic

packs of the products are to be introduced in the market. 12. Recommendations and Suggestions: •The company should carefully identify the target consumers before creating the brand awareness. •The brand and its product should be advertised continuously and its benefits must be educated carefully to the target consumers. The celebrity endorsement strategy must be integrated with target market characteristics.

The most important thing to remember is that putting a celebrity in an ad is not an idea in itself. Unfortunately, this is how most celebrities are being used in Indian advertising, where they just become a prop. Ideally, there should be an idea that makes the celebrity relevant to the product and the consumer. A celebrity's presence in the ad should be contextual. •NIL must continuously invest in market researches for the product development and to increase the market share. Proper strategies must be developed and formulated before introducing new products into the market.

•The brand image should be maintained and should not be diluted with other brand extensions. •The products that are in the maturity stages such as noodles, sauces and ketchups need continuous innovation to sustain in the market and capture more market share. •Frequent gift offers, sponsorships, discount offers are to be provided to the consumers to compete with the competitors.

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