Theme - The Impact of Product Recall on Brand Image and Perceived Product Quality

Title – Study of the effect of Nestle India’s recent recall of Maggi Noodles on it’s brand image, value and perceived product quality.

Product recall is a difficult decision and is usually taken by the manufacturing company when it is convinced that the product’s presence in the market will do more harm to its brand image than good to its revenues. An established defect, safety concerns or health hazards on usage leads a company to recall the particular batch of product. Product recall crisis is an expensive, labour intensive and time consuming excercise involving everyone in the manufacturing, selling or using process. The consequences are both short term (loss in revenue) and long term ( consumer’s brand image, brand attitude and perceived quality). Companies work hard to minimise the negative impact post such an event and establish the consumer’s trust and faith in the brand.

Maggi instant noodles, one of the most trusted brands in India by Nestle, was recently retracted from the market. This was after allegations that it had lead and monosodium glutamate (MSG) in excess of permissible limits and was unfit for consumption. The brand which was was ranked number 18 in the BrandZ Top 50 Most Valuable Indian Brands study, last year, with a valuation of $1,127 million, eroded in brand value by at least 30-40%. This project will study the implications of the product recall on the Brand Image and Perceived brand quality of Maggi. It will also answer if the brand enjoy the same customer loyalty as it did prior to the ban and recall in case it were allowed to sell again. It will also determine what should be the future course of action for Maggi to re-establish its brand value.