Maggi-Nestle’s Problem Child ?

Case Study

Presented By:-Aon AmrutAnkitaArijitBhuvanChristopher DeepanshuDarshan

Index

• Case Content• Background• SWOT Analysis• Problems • Measures & Outcomes• Extensions• Recommendations• Learnings & Conclusion

Content

• Examination of brand & Line extension strategies

• Promotion & Advertisement strategies

• Rationale behind the launches & failures under the Umbrella Brand: MAGGI

• Problems Maggi faced during the years

• Strategies formulated to overcome the problems

• Recommendations & Conclusion

Background

• Nestlé S.A is a multinational packaged foods company founded and headquartered in vevey, switzerland

• Set up in 1866 by Henri Nestlé• Produces Beverages,milk products,cooking

aids,processed foods,chocolates etc.• Presence in 83 Countries worldwide with 509

factories spread across the globe• World leader in coffee,mineral water & chocolates• Ranked 55 in 2002 Fortune 500 list and established

itself one of the most successful FMCG company

Continued….

• Entered India in 1959 through Nestle India

• Manufacturing Operations began in 1962 from Moga,Punjabto produce condensed milk brand “Milkmaid”

• In 1964 production of Nescafe started at the same factory

• Some of the products including Condensed milk(100%),baby food(87%),Coffee(60%) & Ketchup(43%) were market leaders in their respective categories

• By 2001 Nestle India was able to generate revenue of 18bn rupees with a net profit of 1.7bn

• Was adjudged the third largest food company after HUL and Amul

Giant In The Making

• Maggi was founded by maggi family in Switzerland in 19th century & was merged with NESTLE in 1947.

• Introduced in India in 1982

• Launched Instant Noodles,Soups,Ketchups & Pickles

• Created Noodles market from scratch

• Launched Maggi with a tagline “Fast to cook & Good to eat”

Contd….

• Need recognition of Indian Consumer

• Varieties: Tomato,Masala,Curry,Chicken

• No competition

• Because of its first-mover advantage

SWOT Analysis

Strengths:

• Market leader in its segment

• Strong brand,loyal Consumer base

• Wide range of distribution channel

• Effective Advertising

• Innovative product range

Weakness:• New Innovations were not always successful• Lack of research • Undermines Competitor’s threat

Opportunity:• Product has been acceptable in youth category• Shift to rural market• Changing preference of consumer towards fast

food

Threats:

• Price war with competitors

• Strong presence of regional competitors

Problems,Measures & Outcomes

Traditional food preference by Indian consumers

• Company’s deviced a two point stratergy to attract mothers on the convenience plank & lure kids on fun plank

• Promotional activities of maggi included schemes offering gifts in return of empty noodles packs

• Taglines like ‘Mummy bhookh lagi hai’, ‘Bas 2-minute’ , ‘Fast to cook –Good to eat’ became part of indian advertising

In 1993, “Sweet Maggi” variant of maggi noodles was launched only to withdraw it at the end.

• As the product was launched without any reseach,it failed to generate the desired sales. Nestle brought down the price of 100 gram pack of noodles to Rs 5 from Rs 7 which resulted into increase sales

• Used thinner & cheaper packaging material,Moneysaver Multipacks

Sales stagnated in 1995 at the previous year’s level

• Nestle was in a fix to solve this issue during the year

Knorr entered into soup business and launched ten flavours against Maggi’s four backed up by strong vegetarian theme

• Maggi relaunched its soups under the maggi rich brand . Packaging was made much more attractive along with key competitive prices

Forayed into Pickles under the maggi brand & south indianfood preparations

• Very limited success Failure of Maggi Tonite’s special • As the product was launched without any market research

so the response to the whole range was very poor Competition from rival brand TOP RAMEN• Maggi macaroni was launched to deal with the growing

popularity of noodels brand top ramen Pricing issues between Maggi macaroni & noodles• Company failed to justify price anomalies between the two

amounting to decrease in market share

• Taste of the new product i.e Maggi macaroni leads to its complete wipeoutKnorr dethroned maggi as leader in soup

segment in the end of 1997• Relaunched maggi soups under the “Maggi rich”

brand in 1998 to counter Knorr threat but was not counter-productiveNew formulation lead to decline of maggi in 1997• Brought back old maggi due to customer backlash

with the tagline’ Ab sab kuch pehle jaisa’ in march 1999

Extensions

• The company continuously focuses its efforts to understand the changing lifestyles of modern India and anticipate consumer needs in order to provide convenience, taste, nutrition, and wellness through its products.

• Launching of new flavours• Packaged Coconut milk• Maggi tamarind sauce and Chinese Noodles• An offering that exemplifies ‘taste bhi health bhi’, MAGGI

Vegetable Atta noodles is sucessful because it is loaded with everyone’s favorite MAGGI ‘masala’ and healthy because it now has more real vegetables and is packed with the power of fiber.

Recommendations

• Emphasis on segments with age goups 25-35 and above

• Advertise its products by depicting attributes related to health like nutritional values

• Help customers perceiving the product as healthy

• Foray into other food products like Chips,Chocolate etc. under its sole brand name

Learnings&

Conclusion