maggi noodles was launched in india in 1984 by nestle
DESCRIPTION
maggiTRANSCRIPT
Maggi noodles was launched in India in 1984 by Nestle. It is today the highest sold
noodles in India. With 60% market share (2010 report)in its bowl, Maggi Noodles
continues to be an undisputed leader for almost 30 years.
Back in 1980’s, instant noodles was an entirely new category. Now, the challenge was
to establish an alien product and yet find a relevant consumption benefit in the market.
Maggi was therefore, positioned as snack made for children who like to experiment food
and was billed as a fast to cook and good to eat snack. The Rs. 2.50 per 100gm Maggi
was an instant success.
“Mummy Bhook Lagee- Bas Do Minute was a rendition of this approach. It fit well with
the mother’s child caring relationship. These ads became so popular that “Bas Do
Minute” instantly reminded Indian consumers of Maggi noodles.
Health Factor was gaining importance. Several other brands, for example, HUL
launched the Knorr Soupy noodles for a ‘healthy’ afternoon snacking option. Maggi did
not want to stay behind. It rolled out a new noodle with multi-grain variant called
Multigrainz and aggressively advertised it as a nutritious food for kids.
Apart from noodles, Maggi has sauces and soups available in various flavours. But,
Maggi tops it all by being the market leader with the maximum share. Some more
products in its kitty are Maggi Cuppa Mania, Maggi Masala and Maggi Magic Cubes.
Maggi Noodles
Maggi Noodles Marketing Strategy
1997-1999: Nestle changed the taste of Maggi noodles, but it proved to be a failure. In
1999, Maggi reintroduces the old formulation and revived sales with the punchline-
“Fast to Cook, Good to Eat”.
2000: Maggi noodles became the leader in instant noodles space.
2005: Marketing strategy to keep Maggi brand fresh and as a ‘health product’ with its
tagline – “Health Bhi -Taste Bhi” with the launch of Maggi Atta noodles.
2009- Maggi celebrates 25 years of Maggi noodles with ‘Me and Meri Maggi’ campaign
and the launch of Maggi Pazzta. This campign invited consumers to share their Maggi
moments. As a part of this promotional drive, magi launched a website, where the
consumer could upload their Maggi moments and their favourite recipes or stories hit
with the company will get a chance to be featured on Maggi packets or ads.
2012 – Maggi has generally stayed away from the celebrity endorsements. In general,
mother and child have been the celebrities for Maggi for the longest time. With its only
exceptions, when Preity inta promoted the Rs.5 Chotu Maggi and the family packs.
Recently, Amitabh Bachchan has been made the brand ambassador of Maggi. Maggi’s
“Do minute Mein Khushiyan” with Amitabh Bachchan was launched in 2012.
Of late, the brand had been facing some competition from other brands in the same
segment like, Top Ramen, Sunfeast Yippie, Wai Wai, etc. In addition, the brand was
feeling a disconnect with the newer generation who have many choices in food
indulgence. Big B in the new campaign is a story teller who narrates the stories given by
the consumers. The aim is to bring back the segments of consumers who moved away
from the brand since they have grown up. A powerful celebrity as a brand ambassador
adds a big boost which is the need of the hour for Maggi with so many competitors
around.
The problem with such a heritage brand is that the communication becomes boring over
a period of time. And it needs the right energy to move ahead and face the competition.
1. Submitted By:ABHISHEK SRIVASTAVA 002BEENA VENUGOPALAN
012JOTINDER SINGH 022NISHANT DHORELIYA 032 RADHA A
042SOUBHAGYA RATH 052YOGESHWAR DUTT 062
2. EXECUTIVE SUMMARYNestlé India is a subsidiary of Nestlé S.A. of
Switzerland. With six factories and a largenumber of co-packers, Nestlé
India is a vibrant Company that provides consumers in Indiawith products
of global standards and is committed to long-term sustainable growth
andshareholder satisfaction. The company is known for its brands in the
Milk Products &Nutrition, Prepared Dishes & Cooking Aids, and Chocolates
& Confectionery segments.Nestlé leads the value sales of noodles in India
with a market share of 79.3%. A testament toNestlés domination of the
sales of plain noodles is the fact that for its instant noodles brandMaggi,
among all its global offices, India accounts for the highest level of volume
sales forthe company.This marketing plan analyses the current marketing
mix of Maggi Noodles, studies thepopularity of the two new health variants
Vegetable Atta and Dal Atta Noodles and makessuggestions with regard to
introducing a new brand “Cup O Maggi” in the cup noodlessegment.
Various tools like surveys and secondary sources of information have been
utilizedfor the purpose of this analysis.
3. TABLE OF CONTENTS2. SITUATION
ANALYSIS.....................................................................................................
5 2.1 Market
Summary........................................................................................................
.... 5 2.1.1 TARGET
MARKETS ........................................................................................... 5
2.1.2 MARKET
DEMOGRAPHICS ............................................................................. 5 2.1.3
MARKET
NEEDS ................................................................................................. 6
2.1.4 MARKET
TRENDS .............................................................................................. 6
2.1.5 MARKET
GROWTH............................................................................................ 8 2.2
SWOT.............................................................................................................
............... 10 2.3
COMPETITION..............................................................................................
............. 11 2.3.1 TOP
RAMEN .......................................................................................................
11 2.3.2 ITC SUNFEAST
PASTA .................................................................................... 11 2.4
CURRENT MAGGI NOODLES
BRAND................................................................... 12
IDENTITY/KAPFERER’S
PRISM................................................................................... 12 2.5
PRODUCT
OFFERING .............................................................................................. 13
2.6 PRODUCT
DISTRIBUTION ...................................................................................... 13
2.7 KEYS TO
SUCCESS....................................................................................................
14 2.7 CRITICAL ISSUES AND
CHALLENGES ................................................................ 143. MARKETING
STRATEGY............................................................................................. 15
3.1
MISSION........................................................................................................
.............. 15 3.2 MARKETING
OBJECTIVES ..................................................................................... 15 3.3
INDUSTRY
SEGMENTATION .................................................................................. 16
3.4 TARGET SEGMENTS FOR MAGGI
NOODLES ..................................................... 22 3.4.1 MAGGI 2 MINUTE
NOODLES ........................................................................ 22 3.4.2 MAGGI
CUP O NOODLES ............................................................................... 23
3.5 POSITIONING OF
MAGGI ....................................................................................... 23 3.5.1
MAGGI 2 MINUTE
NOODLES ........................................................................ 23 3.5.2 CUP O
MAGGI....................................................................................................
234. MARKETING
MIX .......................................................................................................... 24
4.1 CONSUMER
SOLUTION ........................................................................................... 24
4.1.1 IMPROVING THE DAL ATTA
VARIANT..................................................... 24 4.1.2 NEW PRODUCT:
THE CUP-O-MAGGI ......................................................... 24 4.1.3
PACKAGING .................................................................................................
..... 24 4.2 CONSUMER
COST ..................................................................................................... 25
4.3
CONVENIENCE.............................................................................................
............. 26 4.4
COMMUNICATION........................................................................................
............ 27 4.5 MARKETING
RESEARCH ........................................................................................ 285.
FINANCIALS .................................................................................................
................... 31 5.1 BREAKEVEN ANALYSIS OF A 100 TONNE
CAPACITY PLANT OF CUP O MAGGI
NOODLES .....................................................................................................
...... 31 5.1.1 BREAK-EVEN
ANALYSIS................................................................................ 31 FINAL
TOTAL COST ANALYSIS ............................................................................
33 5.1.2 ANALYTICAL BREAK-EVEN
ANALYSIS.................................................... 33 5.1.3 GRAPHICAL BREAK-
EVEN ANALYSIS ...................................................... 34 5.2 SALES
FORECAST....................................................................................................
. 34APPENDIX A: INDIAN INSTANT NOODLES MARKET GROWTH
GRAPHS ........ 36APPENDIX B: NESTLE MAGGI NOODLES FORECAST
RETAIL SALES .............. 37
4. 1. INTRODUCTIONEver since its launch in India in 1983, this brand has
become synonymous with noodles. Thebright red and yellow colours of the
packet with the brilliant blue “2-minute Noodles”printed on it has found a
place on every kitchen. Over the years, Maggi has grown as a brandand
positioned itself as a “Fast to cook! Good to Eat! “food product.The history
of this brand traces back to the 19th century when industrial revolution
inSwitzerland created factory jobs for women, who were therefore left with
very little time toprepare meals. Due to this growing problem Swiss Public
Welfare Society asked a millernamed Julius Maggi to create a vegetable
food product that would be quick to prepare andeasy to digest. Julius, the
son of an Italian immigrant came up with a formula to bring addedtaste to
meals in 1863. Soon after he was commissioned by the Swiss Public
Welfare Society,he came up with two instant pea soups & a bean soup- the
first launch of Maggi brand ofinstant foods in 1882-83.Towards the end of
the century, Maggi company was producing notjust powdered soups, but
bouillon cubes, sauces and other flavourings.However in India (the largest
consumer of Maggi noodles in the world!) it was launched in1980 by Nestle
group of companies. Maggie had merged with Nestle family in 1947.When
launched it had to face a stiff competition from the ready to eat snack
segments likebiscuits, wafers etc. Also it had other competitor the so called
home made snacks which aretill today considered healthy and hygienic.
Hence to capture the market it was positioned as ahygienic home made
snack, a smart move. But still this didn’t work, as it was targetedtowards
the wrong target group, the working women.After conducting an extensive
research, the firm found that the children were the biggestconsumers of
Maggi noodles. Quickly a strategy was developed to capture the kids
segmentwith various tools of sales promotion like pencils, fun books, Maggi
clubs which workedwonders for it. No doubt the ads of Maggi have shown
a hungry kid saying “Mummy bhookhlagi hai” to which his mom replies
“Bas do minute!” and soon he is happily eating Maggienoodles. Further the
MAGGI 2-MINUTE Noodles has been renovated to provide 20% of theRDA
1 of Calcium and Protein for the core target group building on the nutrition
proposition“Taste bhi health bhi”. The company could have easily
positioned the product as a meal, butdid not, as a study had shown that
Indian mentality did not accept anything other than rice orroti as meal.
They made it a easy to cook snack that could be prepared in just two
minutes.The formula clicked well and Maggi became a brand name.1
Recommended Dietary Allowances for children of 7–9 years as per
“Nutritive Value of Indian Foods”, published by IndianCouncil of Medical
Research, Reprinted ‘04.
5. 2. SITUATION ANALYSISNestlé’s Maggie noodles is the leading brand
in the instant noodles segment in India, enjoyinga market share of 79.3%.
The brand has grown to an estimated Rs 200 crore & contributes toaround
10% of Nestle India’s top line. Being the pioneer in the noodles market has
given it afirst mover’s advantage over other brands. Maggi has regularly
come up with new flavoursand has recently launched two variants-
Vegetable Atta and Dal Atta noodles, catering to theincreasing demand for
healthy snacks.2.1 Market Summary2.1.1 TARGET MARKETSPrimary
target: Children (<16)Nestle plans to widen its target audience by
launching new variants Vegetable and Dal attanoodles for health conscious
people.2.1.2 MARKET DEMOGRAPHICSDemographics:Region: urban,
semi-urban, rural (recent)Occupation: Housewives, working professionals,
self-employedSex : UnisexIncome: 1,20,000 p.a. upwardsSocial class:
Middle and upwardsFamily life cycle: Young, single, married with
children.Behavioural:Occasions: Regular, Everyday user-urban, rural-
depends on the temporal aspects of theconsumer’s life(varied usage in
terms of time of time of day, week, month, year)User status: first time user-
rural, potential users-semi-urban, heavy users-urbanUsage rate: Heavy
user-urban, light-rural, medium-semi-urbanLoyalty status: hard core and
shifting loyalsBuyer-Readiness Stage: rural-some are aware, semi-
urban:some intend to buy(aware,informed),urban: informed(some
desire,some intend to buy)Attitude toward product: Enthusiastic,
positivePsychographics:Lifestyle: Hard pressed for time
6. 2.1.3 MARKET NEEDSThe urban Indian is used to having his dinner
late from around 8:30 pm to as late as 11 pm.Hence a convenient snack
between lunch and dinner is an often exercised option. In ruralareas,
smaller priced packs stimulates demand.Maggi is a fun and convenience
brand which sits strongly in its position as a "good to eat, fastto cook"
anytime snack and is popular across different age groups. Opportunities
inpractically all consumption categories arise in terms of "reach" and
"medium ofconsumption". Hence the onus is on the company to make it
easily available and affordableand in different sizes, catering to different
categories of users like the new Maggi chota packconveniently priced at Rs
5 for 50gms. The Indian palate is not too adventurous in terms oftrying out
new flavours.In fact today, Maggi have settled at standard flavours such as
curry,masala, tomato and chicken and not much experimentation is
necessarily required in thenoodles market. People prefer to have it easily
available and affordable.2.1.4 MARKET TRENDS The FMCG market is set
to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015.
Penetration level is only 30% for Maggi Noodles in urban areas as well as
per capita consumption for the Instant noodles and pasta segment is low
indicating the untapped market potential. Urban Rural Population 2005-06
(mn household) 53 135 Population 2009-10 (mn household) 69 153 %
Distribution (2005-06) 28 72 Markets (Towns) 3,758 62,700 Universe of
Outlets (mn) 1 3.3 Urban profile Source:Statistical Outline of India (2005-
2006) Burgeoning Indian population, particularly the middle class segments
and the rural segments, presents an opportunity to makers of branded
products to convert consumers to branded products. Growth is also likely
to come from consumer upgrading in the matured product categories. At
4% constant value CAGR into the forecast period, value growth for
packaged food is predicted to remain healthy. Growth will continue to be
fuelled by convenience products such as noodles and ready meals with
200 million people expected to shift to processed and packaged food by
2010 Manufacturers are introducing low-priced goods in smaller pack
sizes. As a result, the rural marketing efforts have pushed the demand for
sachets in many consumer goods
7. markets. Priced at Rs0.50-1.00, sachets have proved to be extremely
popular insmaller towns and villages, where households cannot afford to
buy larger packs dueto financial constraints. Consumption pie Source: KSA
Technopak Consumer Outlook 2004.An average Indian spends around 40
per cent of his income on grocery products. 1996 2001 2006Population
(millions) 846 1,012 1,087Population <25 years of age 480 546
565Urbanisation % 26 28 31 Consumer Profile Source: Statistical Outline
of India (2005-2006)Rapid urbanisation, increased literacy and rising per
capita income, have all causedrapid growth and change in demand
patterns, leading to an explosion of newopportunities. Around 45 per cent
of the population in India is below 20 years of ageand the young population
is set to rise further.While instant noodles are still not generally consumed
as main meals in India, moreindividuals are bucking this trend and
accepting them as an option. This is, however,mostly restricted to busy
working adults who live independently or only with theirspouse, away from
their parents, and who have little time to prepare their own mealsat home.
Given the requirements for convenience and saving time, these
individualsresort to easy-to-prepare meals, such as instant
noodles.Increased health consciousness and abundant production of
quality soyabean alsoindicates a growing demand for soya food segment.
8. 1200 1000 800 600 Incom e (US $/annum ) 400 200 0 2003 2015 Rise
in disposable income (US$/annum) Source:Euro monitor, BRICs Report
(Goldman Sachs) The BRICs report indicates that Indias per capita
disposable income, currently at US$ 556 per annum, will rise to US$ 1150
by 2015 -another demand driver. Spurt in the industrial and services sector
growth is also likely to boost the urban consumption demand. Only about
8-10 per cent of output is processed and consumed in packaged form, thus
highlighting the huge potential for expansion of this industry. Currently, the
semi processed and ready to eat packaged food segment has a size of
over US$ 70 billion and is growing at 15 per cent per annum. FICCI
Federation of Indian Chambers of Commerce and Industry has predicted
an overall growth of culinary products/snack food (10%)2.1.5 MARKET
GROWTHGeneral growth of the Indian Noodles sector FY 2005-2006
FICCI states that the culinary products and snack category, under which
Maggi noodles is classified, has had a robust growth of 8%. Growing by a
more than robust 21% in current value and 16% in volume, growth in
noodles will be among the fastest in the various packaged food products in
India. (Refer Appendix A: Indian Instant Noodle Market Growth Graphs)
Current value sales of noodles in stood at slightly over Rs 9 billion, with
pouch instant noodles accounting for more than 66% of the total value
sales.Growth of Maggi Noodles FY 2005-2006 For the FY 2005-2006, the
growth of Maggi noodles was an impressive 15%, with sales at Rs 6.75
billion and profit at Rs 2 billion.
9. Maggi Market Share in Instant Noodles Category 79.5 79 Market Share
(%) 78.5 78 77.5 77 2000 2001 2002 2003 2004 2005 2006 Maggi Market
Share in Instant Noodles Category (2000-2005) Source: Euromonitor
International Packaged Food in India May 2006 It has maintained a market
share of around 78% despite increasing competition. The relative
performances of the Maggi variants has been presented using the BCG
matrix The Boston Consulting Group’s Growth-Share Matrix High STARS
QUESTION MARKS ( MAGGI Veg Atta Noodles) (MAGGI Chicken, Dal
Atta Noodles)MarketGrowthRate CASH COW DOGS (MAGGI Masala
flavour) (MAGGI Tomato, Curry Low flavours) High Low Relative Market
Share
10. 2.2 SWOTStrengths Weakness Strong brand recall and the product is
Tagged as a product having no health value. almost eponymous to the
brand. It has tried to bring in innovation but has Market leader with 79.3%
market failed.(Dal Atta Noodles refer survey share in terms of value.
noodles). Highest advertising share(72% (TV The product features have
remained almost AdEx 2004-05)). constant since inception in 1983 with
any Emotional relationship with the trial of innovation misfiring. consumer.
Market share has fallen from the 80% in A strong distribution network of
the 1998-99 to 79.3% in 2005-06. parent company Nestle.Opportunities
Threats The instant noodles segment is Competition is increasing with
established projected to grow at a tremendous competitors in other
segments are foraying rate with the market size doubling by into the
noodles segment seeing the 2010. capacity of growth. Increase in the
potential consumer Top ramen the prime competitor has come base i.e.
single working professionals up with new exciting instant noodle and
student population offerings like cup noodles and mug noodles Rapid
economic growth and rising which threatens to eat into Maggi’s market
disposable incomes make a strong share. case for a premium brand like
Maggi. Foreign players like Wai Wai and Rum Upward trend of
convenience food Pum have forayed into the noodles market consumption.
and have made their brand presence in Huge untapped serviceable
upward eastern markets while indigenous class rural base. Parle is
threatening to offer their distribution network to international noodle brands
wishing to make an entry. Top Ramen has repositioned itself on a health
platform with a new baseline “Get on Top” fortifying its product with calcium
and vitamins. The product as priced higher than its main rival Top Ramen.
11. 2.3 COMPETITION2.3.1 TOP RAMENDont be a noodle, be a
Smoodle, was the ad that brought the Top Ramen brand intolimelight when
it was launched in 1991.Market share FY 2005-2006: 14%Variety:a)
Packet Noodles: Macho Masala, Funky Chicken, Oye Tomato, Curry
Smoodles.b) Cup Noodles: Spicy Vegetable, Tangy ChickenPackaging and
Pricing: Pack Size Price Top Ramen (gm) (Rs) Packet Noodles 50 5 100
10 400 34 Cup Noodles 80 20Distributor: Marico IndustriesDistributor
strength: About 130000USP: Dont be a noodle, be a Smoodle, innovative
flavours and its cup noodles2.3.2 ITC SUNFEAST PASTAITC launched
Indias first instant pasta snack, Sunfeast Pasta Treat in 2005. Made from
highprotein Durum wheat, Sunfeast Pasta Treat is not fried and does not
contain maida, making ita nutritious snack. This ready to cook pasta comes
with a sauce maker inside the pack.
12. Market share FY 2005-2006: The ready-to-eat Sunfeast Pasta Treat
has clocked 6% of thebranded noodles volume in just one year.Variety: It is
currently available in four exciting flavours: Masala, Tomato and Cheese,
SourCream Onion and Cheese.Pricing: priced at Rs. 12/- for the Masala
flavour and Rs.15/- for Tomato and Cheese, SourCream Onion and
Cheese.Packaging: Each pack is an 83 gm pack with a 15 gm sauce
makerDistributor: ITC LimitedUSP: Sunfeast is made from durum wheat
and is promoted as a healthy alternative to instantnoodles made from the
less healthy maida (a type of wheat flour that is slightly lower inquality).2.4
CURRENT MAGGI NOODLES BRAND IDENTITY/KAPFERER’S PRISM
Physique Personality Yellow packaging, Playful children, Tasty Hurried
youth Relationship Culture Fast to cook and good to Maggi Noodles
Family, eat, Dual Income, “Mummy bhookh lagi”, “Taste bhi health bhi Self
Image Reflection Kid, Family oriented Independence Fun-loving
13. 2.5 PRODUCT OFFERINGMaggi Noodles comes in 4 variants: 1.
MASALA: This is the original and most widely liked flavour of Maggi and
hence has been brought out in 6 different packaging sizes; the maximum in
any variant 2. CHICKEN 3. CURRY 4. TOMATO 5. VEGETABLE ATTA
NOODLES: Launched in April 2005, this variant had contributed to 11 per
cent in value to the instant noodle category within 7 months of its launch;
this was the beginning of the “Taste bhi Health bhi” focus 6. VEGETABLE
DAL ATTA NOODLES: Continuing the healthy snacks trend, this variant
was launched in May 2006. Pack Size Price MAGGI 2 Minute Noodles
(gm) (Rs) Masala 50 5 100 10 200 20 400 38 600 54 800 72 Chicken 100
10 Curry 100 10 Tomato 100 10 Vegetable Atta Noodles 100 13 400 50
Vegetable Dal Atta Noodles 100 13 400 50 Variants, Packaging, Prices
Source: Nestle India2.6 PRODUCT DISTRIBUTIONMaggi Noodles is
being sold through 2,60,000 outlets (FY 2005-2006), which comprise
ofgrocers, convenience stores, supermarkets and miscellaneous channels.
The average Indianstill prefers shopping through the traditional grocers or
“kiranas” as can be inferred from thehigher distribution of 62.8%.The rising
popularity of the “mall-culture” in the urban andsemi-urban areas also
reflects on the slight increase in distribution through supermarkets
/hypermarkets. Channel 2005 2006 Traditional grocers 63.0 62.8
Convenience stores 20.0 20.0 Supermarkets/hypermarkets 16.6 16.8
Others 0.4 0.4 Overall 100.0 100.0India Dried Pasta & Noodles off-trade
distribution channels, by value, 2005-2006 (%) Source: Denis Mason,
Datamonitor
14. 2.7 KEYS TO SUCCESS Maggi has had the first mover advantage with
respect to the Instant noodles segment in the Indian market. Continued
innovation in terms of flavours and themes – from an ordinary 2 minute bite
to a healthy snack.2.7 CRITICAL ISSUES AND CHALLENGES To sustain
its growth and maintain its position as the leader in the Instant Noodles
segment: Nissin’s Top Ramen and recently ITC’s Sunfeast pasta have
been eating into Maggi Noodles’ market share of the Instant Noodles
Market. To be increasingly viewed as the preferred snack of Indians.
15. 3. MARKETING STRATEGY3.1 MISSIONTo be considered as the
number one snacking option of India combining the values ofconvenience,
taste and health.3.2 MARKETING OBJECTIVES Increase value market
share to 80% in the instant noodles market by 2007-08 from the current
79.3%. To promote Maggi noodles as a healthy ready to eat convenient
food among mothers and single working professionals. To provide line
extension by introducing Cup Noodles/Mug Noodles. To upgrade the
existing product features viz. packaging, ingredients, special additives
based on consumer feedback. The objectives were arrived at based on the
analysis of Ansoff’s Grid. ANSOFF’S PRODUCT/MARKET EXPANSION
GRID Existing products New products MARKET PENETRATION
PRODUCT DEVELOPMENT Existing Markets ( Upgrade existing variants
of (Introduce new variants of MAGGI) MAGGI) New MARKET
DEVELOPMENT DIVERSIFICATION Markets (Finding new markets for
(Launch totally new variants of existing variants of MAGGI) MAGGI in
totally new markets)
16. 3.3 INDUSTRY SEGMENTATION The taste preferences and eating
habits of consumers bear a high correlation with their age. Based on this,
we can segment the market into the following age groups: 1990 1995 2000
2005 2010 2015Children: (2-9 years old) 169,999 181,521 187,940
189,211 184,457 184,376Tweenagers: (10-14 years old) 89,781 100,560
109,302 114,583 117,137 114,226Teenagers: (13-19 years) 120,293
127,645 142,432 153,781 160,728 162,495Studying Age: (18-22 years old)
80,812 85,918 92,074 103,179 110,642 115,126Young Adults: (15-29
years old) 230,839 249,149 270,576 294,103 319,267 336,193Middle-
Aged Adults: (30-59 years old) 243,295 277,343 316,065 358,164 398,405
440,655Baby Boomers: (40-59 years old) 134,212 151,646 174,986
202,754 232,801 261,349Pensioners: (aged 60+) 57,029 65,643 75,712
86,585 99,728 117,168 Age wise break up and forecast of the population
Source: UN census data, Euromonitor database Age wise break up of the
population (2005) 86,585 189,211 202,754 Children: (2-9 years old)
114,583 Tweenagers: (10-14 years old) Teenagers: (13-19 years) Studying
Age: (18-22 years old) 153,781 Young Adults: (15-29 years old) Middle-
Aged Adults: (30-59 years old) 358,164 103,179 Baby Boomers: (40-59
years old) Pensioners: (aged 60+) 294,103 Agewise Breakup of
Population, 2005 1) CHILDREN Children as an age group are a marketer’s
delight. With “pester power” children play a significant role in decision
making and purchase choices of just about anything ranging from food
items to beverages to chocolates. As consumers, children know exactly
what they want and do not experiment too much with flavour or colour.
Children rule Indian families consider children to precious gifts of God, and
parents in all income groups do all they can for their offspring. Indian
parents are still not completely comfortable with paid
17. baby sitters or day care help and use the larger extended family or
friends to help with careand supervision of children.Rush for pre-school
admissionsThroughout urban India, parents of nursery age children are
looking to send them in the bestprivate school they can afford. Pre-schools
for toddlers in the 2-3 age group are mushroomingall over the country, as
anxious parents recognise the perceived benefits these can bring.000 1990
1995 2000 2005 2010 2015Male 87,953 93,797 97,055 97,624 95,041
94,897Female 82,046 87,724 90,885 91,588 89,416 89,478TOTAL
169,999 181,521 187,940 189,211 184,457 184,376as % of 20.29 19.67
18.63 17.37 15.82 14.88totalpopulation Children (2-9 years old) 1990-2015
Source:Euromonitor International from national statistics and UN2)
TWEENAGERSThe tweenagers age group consists of children on the
threshold of adolescence and as asegment are a difficult lot. Though they
are not sure about their choices on an emotionalplane, they are a trendy
new group that is extremely savvy and self assured when it comes totaking
decisions regarding consumer goods and wants. Urban children in this age
groupwould have some amount of pocket money with an upper limit of
Rs100 per month. Thoughallowances have gone up, parental control still
exists over this market segment. Impulse foodsrule the preference scale as
far as the buying behaviour of tweenagers in India is concerned.In fact, the
top six expense items for tweenagers seem to be impulse foods: 17% of
the totalpocket money spent on ice creams, 12% on chocolates and 10%
each on soft drinks and fastfood according to a newspaper report in the
“The Times of India”.A key role to play in decision makingWith increased
awareness through television and advertising, tweenagers are an
importantinfluence on family decision-making in urban India. They have
also mastered the art ofnagging their parents into making purchases of
gadgets or products that they want. Among theareas where they make
their influence felt are the purchase of such items as a newly
launchedchocolate bar, instant noodles and breakfast cereal.With a
penchant for hi-tech and an ease with new technology far superior to their
parents,these tweenagers are more familiar with operating mobile phones,
the TV remote, DVDplayer and computer programmes, as well as the
product features.Cricket-crazy boysCricket is the obsession and passion of
boy tweenagers in India. This interest cuts acrossincome and socio-
economic groups. Low income boys will play on the streets with
makeshiftbats and stumps, middle-income children can be seen playing in
gardens and at school, whileboys from more well-to-do families go and
play in organised coaching camps. With theireducation demanding less
time at this age, parents are generally quite happy to see their
boysspending so much time on cricket.
18. Lifestyle concerns in urban IndiaA 2005 study of 10-16 year olds in
urban India revealed a sedentary lifestyle among 72% ofthe 20,000
children sampled by Lifetime Wellness Rx Ltd in the cities of Allahabad in
thenorth and Hyderabad in the south. Of those sampled, 52% of children
showed a risk ofdeveloping chemical dependence, with the problem
probably attributable to a scarcity ofplaygrounds and too much TV
viewing.Even television channels are zeroing in on this segment in
recognition of this fact. There isnothing subtle about the age group any
more. They like to hear it straight and then make theirindependent choices
and judgements. On the flip side, they are becoming increasinglyvulnerable
to media blitzkrieg.000 1990 1995 2000 2005 2010 2015Male 46,682
52,240 56,672 59,329 60,571 58,960Female 43,098 48,320 52,630 55,254
56,565 55,266TOTAL 89,781 100,560 109,302 114,583 117,137
114,226as % of 10.71 10.90 10.84 10.52 10.04 9.22totalpopulation
Tweenagers (10-14 years old) Source: Euromonitor International from
national statistics and UN3) TEENAGERSOn the brink of adulthood,
teenagers like to emphasize and express themselves in a mannerthat
catches attention. They have experimental with their food with a preference
towardsinnovative offerings but form strong opinions which they carry
forward in life. They are alsopredisposed towards snack items as they tend
to feel hungry between traditional meals. Theyhave a lot of say about the
food that they want to consume with limited parental control.Mobile
phonesThis is the mobile phone generation in India. They are completely at
ease with newtechnology and are heavy users of value-added services like
SMS, ring tone downloads andcricket score updates. Most still depend on
their parents for pocket money but are heavy usersof these services. In
many urban, middle-income households teenagers are now given a pre-
paid SIM card with a certain value for the month, in addition to allowances
for travel andentertainment.Hard pressed for timeTeenagers like buying
books, music and expensive branded footwear, as well as watchingfilms
and socialising with friends. Older college-going teenagers high school
pupils tend tofrequent coffee bars, which are a relatively new focal point for
socialising. Teenagers are alsoamong the regular users cinema
multiplexes and entertainment zones.This age group is extremely
conscious of their facial and physical looks. They are expected tofuel
demand for skin care products as well as health and nutrition-related
goods. Urbanteenagers are far more socially active today and find some
difficulty in balancing their schoolroutines with their personal schedules.
19. 000 1990 1995 2000 2005 2010 2015Male 62,853 66,433 74,027
79,765 83,246 84,033Female 57,440 61,212 68,405 74,017 77,482
78,462TOTAL 120,293 127,645 142,432 153,781 160,728 162,495as % of
14.35 13.83 14.12 14.12 13.78 13.11totalpopulation Teenagers (13-19
years old) Source: Euromonitor International from national statistics and
UN4) STUDYING AGEA rise in the number of colleges and institutions of
higher learning both government ownedand privately financed has enabled
a larger number of youth to graduate from their portals.This population
grew since 2000 but is set to stagnate in the forecast period with
couplesactually postponing the child bearing decision and some even
rejecting the idea of having oneat all. This age group has taken up to
snacking as a way of life as they keep missing regularmeals due to erratic
schedules. They have longer waking hours and due to this the
traditionalthree meals does not suffice with the need for filling
snacks.Rising financial freedomWith growing aspirations on the academic
front and shrinking global boundaries this agegroup has an unquenchable
thirst for information whether through their PCs or cell phones.With a rise in
employment opportunities in the Business Process Outsourcing (BPO)
sector,more and more consumers in this age group are juggling jobs along
with their studies for thesake of the financial freedom it gives them.Summer
jobsUntil the 1990s, summer vacations were a time to relax, read and
catch up with friends. Thisis no longer the case. Now, teenagers either find
a summer job, or undertake activities such asa trek in the mountains, river
rafting or rock climbing. Summer jobs may cover a range ofactivities from
delivering newspapers to working in a restaurant.000 1990 1995 2000
2005 2010 2015Male 42,311 44,932 47,947 53,651 57,402 59,638Female
38,501 40,986 44,127 49,528 53,240 55,489TOTAL 80,812 85,918 92,074
103,179 110,642 115,126as % of 9.64 9.31 9.13 9.47 9.49
9.29totalpopulation Studying age (18-22 years old) Source: Euromonitor
International from national statistics and UN5) YOUNG ADULTSYoung
adults (15-29 years old) represent the largest spending segment in the
country.Youngsters are part of a middle-class boom in India. Of the US$30
billion spent by Indians onthemselves in 2003, young adults spent close to
US$10.5 billion with their spending levels
20. rising 12% each year at twice the pace of the economy’s growth
according to various tradepress publications. Young adults grew 8% in
numbers over the 1999-2004 period and is likelyto grow at approximately
the same pace.Rising disposable incomesCollege graduates and students
still studying are landing well-paying jobs in a host ofemerging industries
that barely existed at the start of the new millennium – retail chains,
fastfood restaurants, mobile phone companies, call centres and data
processing firms. Many haveaccess to disposable incomes of Rs8,000-
10,000 per month thanks to the BPO boom in India.This age group still
does not have responsibilities of running a household, marriage or
worryabout their children’s education. Thus, this income is almost entirely
spent on non-essentialitems. Most purchases made by this age group are
on impulse. There are 16 million urbanconsumers in the 20-25 age
group.Need for convenienceMany single working professionals have to live
away from their parents due to the demand ofthe jobs. This yuppies (young
upwardly mobile professionals) class has a hard time preparingfood and for
them convenience is major issue. They are ready to pay a premium for
qualityand convenience. Also always being on the move they have a need
for food item that can beeasily consumed and disposed of.000 1990 1995
2000 2005 2010 2015Male 120,916 130,305 141,223 153,026 165,790
174,236Female 109,923 118,843 129,353 141,077 153,477
161,957TOTAL 230,839 249,149 270,576 294,103 319,267 336,193as %
of 27.55 27.00 26.83 27.00 27.38 27.13totalpopulation Young adults (15-29
years old) Source: Euromonitor International from national statistics and
UN6) MIDDLE-AGED ADULTSThese middle aged men have strict
preferences over food and they generally stick to theirchoices. They
experiment less and go for products that will enhance their social
status.The women in this age group are ones who the primarily buy food
items for the entirehousehold though their choices are shaped by the
preferences of the household members. Thewomen in this segment play
an important role as most of the choices of food items have topass their
scrutiny before it is consumed in the household.ResponsibilitiesBetween
the ages of 45 and 55, men find themselves with children who are able to
leaveschool or facing crucial board examinations. Some may also have
wives with settled careers.These factors make them reluctant to leave or
move from their city of residence and theywould rather resign and move to
another job rather than displace the family. Others findthemselves
redundant in the new hire and fire labour environment. There is a trend for
suchpeople to enter the BPO sector as well.
21. Mid-life career changeIn urban India, among the middle class, there are
a significant number of men who are makingcareer switches, some out of
choice and others out of necessity. Tired of their current salariedjobs, some
are taking the entrepreneurial plunge, setting up businesses such as small
IT-service firms, adventure tourism companies or leadership training
consultancies.000 1990 1995 2000 2005 2010 2015Male 125,217 143,223
163,764 186,055 206,920 228,338Female 118,079 134,120 152,300
172,109 191,486 212,317TOTAL 243,295 277,343 316,065 358,164
398,405 440,655as % of 29.03 30.06 31.34 32.89 34.16
35.56totalpopulation Middle-aged adults (30-59 years old) Source:
Euromonitor International from national statistics and UN7) BABY
BOOMERSThe concept of baby boomers may not be that relevant to India
notwithstanding the impact ofand its participation in World War II. This
generation has virtually seen it all right fromIndian Independence (1947) to
the Indo-Pakistan war (1965). However, having been born inan age of
constrained resources, this segment is somewhat cautious about its
approach toconsumerist tendencies although it is adopting some of them.
For example, a number usemobile phones for their functional use but frown
on the use of credit cards and buyingbranded clothing.Health-related
products, children’s education, automobiles, retirement planning,
insuranceproducts and vacations form the bulk of their expense.000 1990
1995 2000 2005 2010 2015Male 68,010 77,278 89,882 104,720 120,490
135,142Female 66,202 74,368 85,105 98,034 112,310 126,207TOTAL
134,212 151,646 174,986 202,754 232,801 261,349as % of 16.02 16.43
17.35 18.62 19.96 21.09totalpopulation Baby boomers (40-59 years old)
Source: Euromonitor International from national statistics and UN8)
PENSIONERSIn the 1950s and 1960s, government jobs were among the
few acceptable job occupations forpeople from respectable households.
Changing technology and globalisation have changedthat with
unconventional income opportunities now presenting themselves to
Indians. Somepensioners have sought and enjoyed success in information
technology-related endeavourswhilst others have put their considerable
English language skills to good use in serviceindustries. Pensioners have
been the hardest hit section of the population. With declininginterest rates,
they have had to play a more active role in financial management. Some of
22. them are even trying to keep abreast of current happenings and
learning how to use acomputer or access the Internet.There food
preferences are shaped by their health conditions and they stick to their
preferredfood items.Independent living on the riseFrom the 1980s
onwards, there has been a steady migration of young adults and students
tothe US, in search of better opportunities. Most have chosen to settle and
make their lives inthat country. Therefore, their ageing parents have had to
learn to continue to liveindependently.Retirement communities viewed as
an optionRetirement homes were previously viewed negatively in India. If
the elderly went there, itmeant they had no one to care for them, and were
in a sense for the destitute elderly. In thenew urban India, however, well-
appointed retirement communities are mushrooming, andcouples in their
60s are going there of their own volition.While the numbers are not yet
significant, a trend is likely to increase in line with growth inthe numbers of
India’s elderly. It is also now an option for the middle-income and
salariedclasses. In families where there is a proprietary business, or a
family practice, two-to-threegenerations will continue to live together.000
1990 1995 2000 2005 2010 2015Male 28,085 31,905 36,292 41,109
47,286 55,928Female 28,944 33,737 39,420 45,476 52,441 61,240TOTAL
57,029 65,643 75,712 86,585 99,728 117,168as % of 6.81 7.11 7.51 7.95
8.55 9.45totalpopulation Pensioners (aged 60+) Source: Euromonitor
International from national statistics and UN3.4 TARGET SEGMENTS
FOR MAGGI NOODLES3.4.1 MAGGI 2 MINUTE NOODLESMaggi 2
Minute Instant Noodles is already associated with convenience and taste
and iscurrently accepted as a valid filling snack between meals. Maggi will
continue to leverage itsbrand equity and target the following segments for
this product. Children and Tweenagers: This is a large segment and is
Maggi’s stronghold. The age group between 4 and 14 years has largely
similar tastes and is traditionally targeted by Maggi. These segments
perceive Maggi instant noodles as a welcome change in taste from the
regular Indian fare and they are fascinated by the curly shaped noodles.
For these segments innovative products also have novelty value, however,
certain dominant preferences emerge. Realizing this early, Maggi shifted
focus from the lady of the house to the end consumer i.e. children
themselves ending up as the market leader of the instant noodles segment.
Early buy in of this segment will help Maggi to sell in other segments in
future.
23. Studying Age: The studying age segment though not traditionally
targeted specifically has been devouring Maggi 2 minute noodles. The
proposition of convenience of cooking as well as that of a tasty filling snack
attracts this segment which due to erratic schedules keeps missing their
regular meals.3.4.2 MAGGI CUP O NOODLESMaggi Cup O Noodles is
Maggi’s answer to Nissin’s Cup Noodles. With reduced cookingtime of ½ a
minute, ease of preparation and no need of separate plates Maggi Cup O
Noodlespromises to appeal to anyone in need of a quick, convenient bite.
Maggi Cup O Noodles beinga premium priced product, the segment
targeted should one which is ready to pay a premiumfor a quality
convenient food. The following segment promises to be the best bet.
Young Adults: The growing class of affluent young adults does not mind
paying higher prices for quality products. They are hard pressed for time
and would pay a premium for convenience. This segment has a good top
of the mind recall of Maggi as a brand as the current members of this
group were the targets of Maggi in the 1980’s and they retain fond
memories of Maggi, a emotional bond which can be leveraged to win them
over to Maggi Cup O Noodles. This segment is growing and has the
potential of accepting Maggi as a mainstream food item as they see instant
noodles as a natural part of Indian food culture.3.5 POSITIONING OF
MAGGI3.5.1 MAGGI 2 MINUTE NOODLESMaggi 2 Minute Noodles will
continue with its current positioning of convenience and as a“fast to cook,
good to eat” snack as this seems to be working well. To prevent Top
Ramen,the main competitor, from eating into its market share some
product innovation is required asotherwise Maggi may get stereotyped as
an unexciting product.Top Ramen is following a cost differentiation
technique. To deal with this Maggi has toposition itself as a differentiated
product. The market is very sensitive to taste and rejects anyflavour it
dislikes with Maggi having learnt it the hard way, thus the product can not
begreatly differentiated with on basis of taste. On the other hand Maggi has
to deal with thenegative perception of Maggi has of being unhealthy in an
increasingly health consciousmarket, a major threat in the current scenario.
Both these problems can be tackled bypositioning Maggi as a snack with
nutritional value. The recent launch of “Veg Atta Noodles”and “Dal Atta
Noodles” with the promise of good nutritional value ventures in this
area.Another3.5.2 CUP O MAGGIThe main USP of Cup O Maggi is
convenience without compromising on taste. Nissin’s CupNoodles is a
huge hit with the consumers liking the concept of noodles served in a cup
and theextra convenience of not dealing with cleaning/needing plates and
the lesser time required forpreparation. Cup O Maggi is targeted towards a
segment that values time and convenience aswell as is getting increasingly
health conscious. So Cup O Maggi with added nutrition andwholesome
components will position itself as a healthy and convenient food option that
canbe had anywhere, anytime. The crux of positioning will be “Healthy
Snack Anywhere,Anytime”.
24. 4. MARKETING MIX4.1 CONSUMER SOLUTIONThe instant noodles
segment of Maggi is the market leader in its segment. Available in
4flavours, the Masala flavour is the hot favourite by a huge margin followed
by MaggiVegetable Atta and Tomato flavour. The Maggi Dal Atta variant
shows a poor response.4.1.1 IMPROVING THE DAL ATTA
VARIANTMaggi Dal Atta variant ranks really low on taste as suggested by
the Marketing ResearchSurvey. The existing Sambar taste doesn’t go too
well with consumers even from the southIndian market. For which we plan
to replace the existing Tastemaker with a SpicierTastemaker to go with the
traditional Spicy Indian taste.4.1.2 NEW PRODUCT: THE CUP-O-
MAGGIMaggi is market leader in its segment but it still has no product to
challenge the growingthreat posed by Cup Noodles from Top Ramen, its
closest competitor. The cup noodle marketis expanding rapidly and there is
a huge scope for gaining further market share by enteringthis segment
which is currently dominated by Top Ramen. To challenge this threat
wepropose to launch a new product to directly compete in this segment
with the name Cup- O –Maggi.Features of Cup –O – Maggi To be made
available in two flavours Masala and Chicken to cater to the overall market
palate. The noodles will be available in a Plastic cup and just require hot
water to be added to prepare them. This is to capture the market which has
a growing demand towards convenience foods. Dried Vegetables and
Dried Chicken chunks to be made available inside the cup The new
improved spicier Tastemaker also to be added to the cupThe Market
Research Survey importuned us to improve the taste and provide better
healthbenefits. For this purpose the improved Tastemaker has been added
to Cup-O-Maggi. To caterto the demands of the growing health conscious
people nutritious veggies and chicken chunkshave also been added. These
extra pieces are already available with the Maggi range of soupsand the
same can be used in Cup-O-Maggi also thus dispenses the need for
setting up of anew processing factory specially for the manufacturing of
food pieces.4.1.3 PACKAGINGMajor changes are required in the
packaging of Maggi noodles as suggested by the MarketingResearch
Survey: Maggi noodles packets to be flimsy which require to be torn apart
carefully so as to not spill the contents. Another issue is with the multi brick
packets. Once opened they cannot be stored as it is and the contents have
to be transferred to another container.
25. To counter the problem, we plan to Increase the thickness of the plastic
sheets used in the Maggi Noodles packets to give more strength to the
packet and allow easy & safe opening of the pack To provide a Zip-Seal
facility along with the existing sealing to allow the packets to be stored
easily4.2 CONSUMER COSTPricing strategy for the existing variants of
Maggi Noodles is based on the objective of‘Maximising Market Share”.
These variants are competitively priced. As the segment ishighly price
sensitive, any price change initiates an instant price check reaction from
thecompetitor. Pack Size Current Price Revised Price MAGGI 2 Minute
Noodles (gm) (Rs) (Rs) Masala 50 5 5 100 10 10 200 20 20 400 38 36 600
54 54 800 72 72 Chicken 100 10 10 Curry 100 10 10 Tomato 100 10 10
Vegetable Atta Noodles 100 13 13 400 50 50 Vegetable Dal Atta Noodles
100 13 13 400 50 50 Maggi 2 Minute Noodles Proposed Revised Prices for
existing package sizesReducing the price of the 400g pack of Maggi
Masala is a very aggressive move to directlyattack the competitor whose
400g variant is priced at Rs 34. The effect of the downwardrevision in price
can be offset by the increase in sales volume.Pricing strategy for the
launch of Cup-O-Maggi is based on the objective of achieving“Product
Quality leadership”. Its segment is less price-sensitive so it will be premium
pricedto target the higher end customers. Creation of a premium brand
gives the company anopportunity to provide a differential pricing and
service offering to the customer therebycreating a key differentiator.
26. CUP-O-MAGGI Pack Size (gm) Price (Rs) Masala 80 20 Chicken 80 20
Cup O Maggi Proposed Pricing and PackagingProduct pricing is based on
offering high value to our customers compared to most pricepoints in the
market. Thus using the Competitive- Parity method, Cup-O-Maggi has
beenpriced at Rs 20 for an 80g pack of Masala and Chicken flavours to
directly compete againstthe competitor cup noodles which are also priced
at Rs 20 for an 80g pack.The pricing will be regularly revised according to
the changing forces in the marketenvironment.4.3 CONVENIENCETo keep
up with the growing trends in the Noodles sector, an intensive dealer-
distributornetwork is desired. Maggi has a well established distribution
network. As of now, the strengthof our already robust distribution network
could be leveraged to introduce and sell our newproduct: ‘Cup-o-Maggi’
noodles, as also the improved versions of the Dal Atta variant. Thetarget
markets of ‘Cup-o-Maggi’ are primarily present in the metropolitan cities as
well as thetier-II cities.In addition for Cup O Maggi we propose that: Maggi
Noodles have tie-ups with Corporate Houses Depending on the initial sales
of Cup O Maggi, introduce vending machines for the same at schools,
colleges as well as corporate houses.
27. 4.4 COMMUNICATIONPROMOTION OF CUP O MAGGIWith the
introduction of Cup-o-Maggi noodles, we propose to move away from the
‘Childand Mother’ approach of Maggi. The Cup noodles would be targeted
at the young singleprofessionals, as also the housewives, basically people
who might prefer to go for a quickmeal instead of cooking a whole
traditional Indian meal, specially in case of early work-daymornings or a
‘tired’-evening quick snack (in case of professionals). An associated
taglinewith the Cup-o-Maggi advertisement campaign could be: ‘Cup-o-
Maggi’: ‘Healthy SnackAnywhere, Anytime! “SUGGESTED FUTURE CUP
O MAGGI ADVERTISING CAMPAIGNWorld Cup 2007 (13th March 2007
to 28th April 2007)Families, couples, kids all enjoying their cricket with Cup
O Maggi; at home, drive-inscreens. Get a cricketer to endorse Maggi
noodles.GENERAL PROMOTIONEvents and Experiences: Hold the Online
Maggie Recipe Challenge, wherein innovativerecipes with Maggi Noodles
as a base are invited. Winning entries are compiled into an e-cookbook
which is published online.Celebrity endorsement: Maggi has associated
itself with celebrities like Bollywood actressPriety Zinta recently. The
reason being Maggi has always been the kids snack. The same isbrought
out and highlighted in the charms of Preity and her bubbly and vivacious
zing, withwhich she portrays the brand that is Maggi.Television
Advertisements: Portraying hassled double income families, finding relief at
theend of a tiring day with a quickly conjured up bowl of Maggi 2 Minute
noodles. Portraydifferent flavours available and focus on the health aspect
of the fortified 2 minute Noodlesand the Dal and Vegetable Atta Noodles.
Communicate the new improved east-to-usepackaging and the going spicy
of Dal Atta Noodles.
28. 4.5 MARKETING RESEARCHAn online survey was undertaken at
http://www.createsurvey.com/c/39191-OSMZz4/The following sections deal
with the results obtained on the basis of the 30 pointquestionnaire put forth
in the survey.4.5.1 Maggi Noodles Performance on various attributes 1400
1200 1000 800 600 400 200 0 ed ty ty e ila h e ck ste H g Va ts ic ag va alt
in gr bili rie n Pr Ta ag ie Im e nd Pa ra In A B4.5.2 Attributes on which Top
ramen smoodles performs better then Magginoodles Ingredients
Packaging No. of people ranking Top Taste Ramen smoodles better then
Maggi noodles Price 0 20 40 60 80 100 120 140
29. 4.5.3 Attributes on which Top ramen cup noodles performs better then
Maggi noodles Ingredients Convenience in cooking Packaging Taste 0 20
40 60 80 100 1204.5.4 Maggi Packaging size preference 800 gms 600 gms
400 gms 200 gms 100 gms 50 gms 0 0.1 0.2 0.3 0.4 0.5
30. 4.5.5 How do you like to consume your Maggi ? 11.02% 6.82% Plain
maggi 43.31% With vegetables With chicken 38.85% Your secret recipe
31. 5. FINANCIALS5.1 BREAKEVEN ANALYSIS OF A 100 TONNE
CAPACITY PLANTOF CUP O MAGGI NOODLESIn this analysis we will
look for the different costs involved in the production of Maggi cupnoodles
and then comparing it with the total sales to find out the minimum efficiency
at whichthe plant should operate in order to have a neither loss nor profit
relationship. This is done byfinding the Break-Even point of operation. If the
plant operates at the efficiency higher thanthat indicated by the Break-Even
point than the plant operates at a profit and vice-versa.5.1.1 BREAK-EVEN
ANALYSISThe cost involved in the production can be divided into two
categories viz. fixed cost andvariable cost. They can be defined asFixed
cost: This is the cost which is independent of the quantity of the product
produced e.g.Land &Building cost, plant & Machinery cost etc.Variable
Cost: this is the cost that varies with per unit of product produced e.g. Raw
materialcost, packaging cost etc.The break up of the various costs is
shown below1. Fixed CostA. Land and BuildingA plot of land of about 200
sq.mtrs. with built-up area of 100 sq.mtrs. is sufficient. Landwould cost
around Rs.60,000/- whereas cost of construction could be Rs.2.50 lacs.
Mainproduction area would occupy around 50 sq.mtrs. whereas packing
room and storage areawould occupy balance area.Particulars Area (sq.
mtrs.) Cost (Rs.)Land 200 60,000Building 100 2,50,000 TOTAL 3,10,000B.
Plant and MachineryMarketing is the key success determinant and the
production capacity has to be finalizedaccordingly. Keeping in mind the
financial viability, the rated production capacity is assumedto be 100
tonnes per year with 300 working days and 2 shifts per day.
32. This would necessitate installation of following machines:Item Qty.
Price (Rs)Extrusion Machine 1 1,00,000Pre-conditioner 1 80,000Mixer ( 50
kgs capacity) 1 1,00,000Pouch Packing and Sealing 1
1,00,000MachineWeighing Scale 1 10,000 TOTAL 3,90,000C.
Miscellaneous AssetsOther assets like furniture and fixtures, storage
facilities, working tables, SS utensils, etc.would call for expenditure of Rs.
50,000/-.D. UtilitiesPower requirement shall be 20 HP whereas per day
water requirement would be 500-550liters. Annual expenditure at full
capacity utilization will be Rs. 1,10,000/-.2. Variable costsA.MANPOWER
REQUIREMENTSParticulars Nos. Monthly Total Monthly Salary (Rs)
Salary (Rs)Machine Operators 2 4,000 8,000Skilled Workers for 2 3,000
6,000PackingSemi-skilled Workers 2 2,000 4,000Helpers 2 1,000
2,000Salesman 2 2,000 4,000 Total 24,000B. Raw and Packing
MaterialsNoodles are made with the help of many ingredients with major
input being wheat flour.Other materials required are corn and rice flour,
protein isolates, salt, spices, edible oil,preservatives etc. All of them are
easily available. Packing materials are equally important.Colourful and
attractive pouches shall have to be printed and outer packing will be
corrugatedboxes.
33. This cost can be shown asProduct Qty. Price/Ton Value (Tonnes)
(Rs.)Raw Material 100 70,000 70,00,000Packing Material 100 @
Rs.20,000/ Ton of 20,00,000 Finished Goods Total 90,00,000C. Selling
ExpensesMarketing will be a key element. Expenses shall have to be
incurred on transportation,Publicity in local media like newspapers,
hoardings and TV scroll, selling commission, freeSampling etc. A provision
of 30% of sales value is made every year to take care of theseExpenses
since the product is new thus more emphasis is given on this section. This
expensecan be reduced once the product is well established in
market.FINAL TOTAL COST ANALYSISFIXED COSTS In Rs.Land and
Building 3,10,000Plant and Machinery 3,90,000Miscellaneous Assets
50,000Utilities 1,10,000TOTAL FIXED COST 8,60,000VARIABLE COSTS
Per tonne of productionManpower Requirements 24,000Raw and Packing
Materials 90,000Selling Expenses @ 30% of Total sales5.1.2
ANALYTICAL BREAK-EVEN ANALYSISLet total production be X tones.
Since the 80 gm pack of Maggi is available for Rs.20 i.e.Rs.250/kg so lets
say that Maggi Noodle is supplied to the market agent at Rs. 180/kgSo for
no profit no loss equation is860000+ (1,14,000*X) + (30/100)*X*1000*180=
(180*X*1000)860000 = (180000-114000-54000)*XX = 71.66 tonnes
34. Final conclusion: The plant must operate at the minimum efficiency of
71.66% in order toreach break-even analysis point i.e. not to suffer any
loss.5.1.3 GRAPHICAL BREAK-EVEN ANALYSISThe result obtained
above can be verified by plotting a graph between the total cost
andQuantity of Maggi produced. The graph is shown below. Break Even
Analysis 20 Rupees (in millions) 15 10 Variable Cost Revenue 5 Cash
Balance 0 0 20 40 60 80 100 120 -5 Sales (in tonnes)5.2 SALES
FORECAST5.2.1 MAGGI INSTANT NOODLESSales by valueFor the year
2007 Projected value of instant noodles category (Refer Appendix B)=
Rs.8,611.1 millionThe desired market share by value = 80%Therefore,
projected value the sales need to be 80% * Rs.8611.11 = Rs. 6888.88
million.Sales by volumeAverage retail price per 100 gms of Maggi (across
all SKUs) = Rs.9Price for one thousand Tonnes of Maggi = 9 * 10^7
rupeesProjected value of sales = Rs. 6888.88 millionTherefore, Projected
volume sales = (Projected Value of Sales / Price per thousand Tonnes) =
76.5 thousand Tonnes.For year 2007 projected category sales = 96.9
thousand Tonnes.Therefore, volume market share of 78.95 % for the year
2007 is projected.
35. 5.2.2 PROPOSED : CUP O MAGGI NOODLESSales by valueFor the
year 2007 Projected value of cup noodles category (Refer Appendix B) =
Rs. 143.1millionThe suggested target market share by value =
20%Therefore, projected value the sales need to be 20% * Rs.143.1 = Rs.
28.62 million.Sales by volumeSuggested retail price per 80 gms of Cup O
Maggi = Rs.20Price for one thousand Tonnes of Cup O Maggi = 20 /80*
10^9 rupeesProjected value of sales = Rs. 28.88 millionTherefore,
Projected volume sales = (Projected Value of Sales / Price per thousand
Tonnes) = 0.115 thousand Tonnes.For year 2007 projected category sales
= 0.6 thousand Tonnes.Therefore, volume market share of 19.17 % for the
year 2007 is projected.
36. APPENDIX A: INDIAN INSTANT NOODLES MARKETGROWTH
GRAPHS Indian Instant Noodles Market Retail volume growth trends
Indian Instant Noodles Market Retail value growth trends
37. APPENDIX B: NESTLE MAGGI NOODLES FORECASTRETAIL
SALES Nestlé India Ltd Shares of Packaged Food by Subsector 2001-
2004% retail valuersp 2001 2002 2003 2004Instant noodles 79.3 77.3 78.1
78.5 Forecast Retail Sales of Noodles by Subsector: Value 2005-2010Rs
million 2005 2006 2007 2008 2009 2010Instant 6,077.5 7,300.6 8,611.1
9,959.2 11,319.4 12,667.3noodlesCups/bowl 84.8 112.6 143.1 175.2 206.8
237.6instantnoodles Forecast Retail Sales of Noodles by Subsector:
Volume 2005-2010000tonnes 2005 2006 2007 2008 2009 2010Instant
59.9 71.6 84.0 96.9 110.1 123.1noodlesCups/bowl 0.3 0.5 0.6 0.8 0.9
1.1instantnoodlesSource: Trade press (The Economic Times, The Hindu
Business Line, Financial Express, Business Standard, India Infoline,
agencyfaqs.com, Mid-day, rediff.com), Company research, Trade
interviews, Euromonitor International estimates