CONSUMER

BEHAVIOUR LIVE
PROJECT
Determining the Consumer Perception
towards Maggi Noodles after the Ban
A Study in Kakkand Region

Members
Unnikrishnan Rajan - PGDM A
Fathima Siyana P - PGDM C
Thomas Varghese PGDM C
Abhishek T R PGDM C
Florian

Executive Summary
This study conducted with the recent controversial issue of Maggi Noodles
ban to understand the customers attitude towards the instant noodles
available in the market. This study helped us in identifying how people
perceive different issues related to quality of Maggi and how it influenced
the consumption pattern. The external and internal influences for the
consumers buying behaviour is also observed through this study. The
study was conducted for the consumers in Cochin, in Kakkanad region.
The sample consisted of young people from all walks of life.

Contents
Executive Summary............................................................................................... 2
INTRODUCTION...................................................................................................... 4
THEORY.................................................................................................................. 5
INSTANT NOODLE MARTKET IN INDIA..................................................................5
Trends in Indian noodle market...........................................................................8
Key players in Indian noodle market...................................................................8
BRAND STORY................................................................................................... 10
SWOT ANALYSIS OF MAGGI AS BRAND..............................................................13
STPD ANALYSIS................................................................................................. 14
CONSUMER BUYING BEHAVIOUR......................................................................15
MAGGI CONTROVERSY AFFECT ON NESTLE......................................................18
Statement of Market Research Problem............................................................20
Relevance of the study........................................................................................ 20
RESEARCH METHODOLOGY.................................................................................. 20
Objectives of the Study........................................................................................ 21
SCOPE OF THE STUDY.......................................................................................... 21
RESEARCH DESIGN.............................................................................................. 21
Tools of data Collection..................................................................................... 21
Concepts covered in the questionnaire............................................................21
DATA ANALYSIS AND INTERPRETATION.................................................................21
DEMOGRAPHIC VARIABLES............................................................................... 21
Present consumption pattern of Instant noodles..............................................25
PURCHASE INFLUENCE BY FRIENDS AND FAMILY POST BAN..............................27
POST BAN ATTITUDE ON INSTANT PRODUCT....................................................28
RESPONSE TO THE STATEMENT MAGGI A LESS HEALTHIER PRODUCT..............29
REFERENCES........................................................................................................ 36

INTRODUCTION
This study investigates the perception of consumers about the quality of
Maggi noodles after the ban on the brand. This study involves consumers
from Kochi, Kerala.
Maggi noodles first appeared in India in 1983 and for more than two
decades they enjoyed nearly 90% of the market share. Even when Top
Ramen came into Indian market in 1990s, it hardly was a competitor to
Maggi in India. Till recently India is the largest market for Nestls Maggi.
Maggi contributes about 20% of Nestls revenue in India. Nestle has had
a long relationship with India that goes back to 1912, when it launched in
the country as The Nestle Anglo-Swiss Condensed Milk Company (Export).
Milkmaid, a sweetened condensed milk, was the brand that the company
soon became synonymous with. In 1947 Nestle acquired Maggi and set up
its first factory in Mogga in Punjab state in 1961 to comply with the
governments emphasis on local production.
Maggi also produced a legion of Maggi "entrepreneurs" who have been
selling instant noodles in innovative ways and combinations. Nestle makes
variety of products including bouillon cubes, various Asian-type sauces,
and powdered soupsbut in India the word is essentially synonymous
with 2-Minute Noodles.
In the recent news the brand Maggi is being related to various
controversies and PR failures. It all started when the Food Safety and Drug
Administration (FSDA) Lucknow found a few samples to have lead beyond
permissible limits and the presence of Monosodium Glutamate (MSG) even
though the packet says 'No MSG'. Nestle India turned around and claimed
that they do not add any MSG to their product and the kind that was found
was natural MSG which is mentioned on the packet. MSG has been a
popular food additive for years and is usually regarded as safe, when used
in limited quantity only. But too much MSG in your food can lead to
headache, sweating, burning on the face, neck and other areas. It can also

cause to nausea and weakness. When MSG is consumed over a longer

period of time, it can also damage the nervous system.

Nestle committed a huge PR blunder by refuting the claims that Maggi

had MSG above permissible level and by not recalling Maggi from the
market. The startling findings of lead and MSG in Maggi were confirmed in
April 2015, the mainstream media picked up the issue, a month later, on
May 20th. There was a one month window for the food giant to get its act
together. They couldve recalled the product voluntarily (Nestle did that in
USA in 2014 over one complaint of incorrect packaging of Hagen-Dazs
ice-cream), and come clean saying that the safety of Indians takes
precedence over everything else.But instead they blocked all lines of
communication with consumers. For more than a fortnight, barring a
computer-generated

statement,

there

was

no

word

from

Nestle.

Their social media response was a disaster. Robotic replies, sharing heavy
PDF files in the name of responses; Nestle Indias social media damage
control has been a joke.Nestle stayed in denial. For a situation of this
magnitude, the Nestle global site does not even acknowledge the
controversy in India. Maggi has reentered Indian market roping in USbased public relations firm APCO Worldwide.
The Bombay High Court on August 2015 set aside the countrywide ban on
nine variants of Nestls Maggi instant noodles, saying the national food
regulator had acted in an arbitrary manner and not followed the
principles of natural justice while banning the product. The court also
said that the food labs engaged by the FSSAI, which found excessive lead
in Maggi noodles, were not authorized under the FSS Act and
Regulations. Therefore, the results could not be relied upon.
Thus Indias favorite snack is back in the market. Thus this study looks
into Kochi consumers reaction to re-entrance of Maggi noodles into
market and how they perceive the quality and reliability of Maggi after the

legal fiasco. It also attempts to find out the internal and external
influences in those perceptions.

THEORY
INSTANT NOODLE MARTKET IN INDIA
The instant noodles category in India was, in a sense, created by Nestl
with the introduction of their Maggi brand in 1983. The concept of 2minute noodles, positioned as a quick snack option for children, found
acceptance with both the children and their mothers as well. Having built
and nurtured the categorys evolution, the brand name Maggi almost
became a synonym for the instant noodles category itself.
During the 1990s and 2000s, Maggi faced little competition. Despite the
entry of players like Top Ramen (Indo Nissin Foods) in 1991, Chings Secret
(Capital Foods) in 1996, and WaiWai (CG Foods) in 2005, Maggi continued
to retain its dominant position. However, in the past few years, we have
seen consumer goods giants ITC (Sunfeast Yippee!), Glaxo-Smithkline
(Horlicks Foodles), and Hindustan Unilever Limited (Knorr Soupy Noodles)
foray into this lucrative market with differentiated product offerings. These
brands have brought a competitive intensity to the space. This market
now also comprises private labels like Feasters (AV Birla Retail), Tasty
Treat (Future Group), and Smart Choice (Spencers). The instant noodles
market is estimated at INR 2200 crore (USD 402.7 million).
There are several reasons behind the growth this category has realized, in
India, some of which are mentioned below.

Changing consumer lifestyles - Over the years, the change in

consumers preferences and eating habits, and their wider global
exposure, along with an increasingly younger population, the
growth in the middle class, with more nuclear families, and the
growing time-poverty (as a result of the rise in the number of
working couples) has given a boost to the convenience food
segment. As a result, the instant noodles market has charted a high

growth trajectory thanks to its availability, affordability, anytimeanywhere consumption and convenience, being a quick meal
requiring minimal cooking. Instant noodles have also emerged from
being a snack food or an occasional, alternate eating option to a
mainstream food item of choice featuring regularly in consumers

grocery baskets.
Growing customer base - The emergence of instant noodles has
added a new dimension to consumers meals; noodles are being
consumed not just by kids (who are the core target audience) as an
evening snack or a tiffin meal but by consumers across all age
groups, as an eating option beyond the mundane ones. While it
continues to be a home snack, it is also increasingly being
consumed at workplace, colleges, etc. Geographically too, the
appetite for instant noodles is growing with players now eyeing the
semi-urban and rural markets. The categorys penetration is low in

India (~20-25%), thus presenting a lucrative opportunity for growth.

More options and variants: Players present in the space are
innovating and adding value to establish a unique brand proposition
in the consumers mind.
Some of the major developments in this direction include:

Introduction of new flavors: To kindle the consumers interest in the

category and also cater to the diverse and changing tastes of the
consumer, instant noodles brands constantly enhance their product
offerings by adding new flavors. In addition to the classic Masala
and Chicken flavors, a wide range of flavors including Indo-Chinese,
Chinese, tomato, etc. have been launched.
Growing focus on health: Despite their fondness for instant noodles,
consumers in India hold the notion that noodles are unhealthy,
being made from maida which is seen as not being as healthy as
atta. To address this concern, brands are proactively introducing
healthy offerings as part of their product portfolio. Maggi and Top
Ramen have their atta noodles, while Horlicks Foodles was
launched entirely on the health platform, with the noodles made

from wheat or multiple grains and including a vitamin-supplying

Health Maker. Additionally, HUL has also positioned its Knorr
Soupy Noodles as a healthy, fun-filled snack.
More packaging variants: Brands have introduced packs in different
sizes, right from single noodle packs of 50-75 gm. to value eight
noodle packs. Further, to increase the categorys penetration,
brands like Maggi and WaiWai have extended product offerings in an
even smaller pack size, priced at INR 5.
Category extension from pouch to cup noodles: A vital development
in the market was the extension from pouch noodles to cup noodles
that are ready-to-eat, on adding hot water, unlike pouch noodles
that require to be cooked. The driving factor here is that
convenience (the need for an on-the-go meal) is gaining in
prominence in consumers lives owing to the rise in a younger
working population and a migrant population, the increasing
population of double income households with more working women,
etc. Top Ramen offers different flavors in cup noodles, mini cup
noodles, and mug noodles. Maggi and WaiWai have extended to cup
noodles as well.
Trends in Indian noodle market
1. Increasing competition: Competition in instant noodle category
has intensified with players such as GlaxoSmithKline (Horlicks
Foodles),

ITC

(Sunfeast

Yippee

noodles),

Capital

Foods

and

Hindustan Unilever launching new products in the market. Private

label brands such as Tasty Treat by Future Group (Big Baazar retail
chain) have also been launched an it is expected that many more
private label brands may hit the market.
2. New product launches and extensive marketing: All players
new or old have been busy launching new products and marketing
campaigns. Maggi has launched an extensive campaign with their
new product vegetable multigrain noodle. Tasty Treat increased its
variants from two to five. Similarly, Foodles is stressing on the
health aspect of its products.

3. Stress on health and wellness: As on all other food categories,

players are stressing on health and wellness aspects of their
products. Maggi launched Atta noodles and multigrain noodles to
woo customers while GlaxosFoodles also stresses on the multigrain
aspect of their product
4. Traditional flavors still dominate: Masala, chicken and tomato
are most popular flavors in the market
5. Addressing rural market: Noodles are primarily consumed in
urban India and to expand this market companies such as Nestle
have introduced small sized and low cost products to address the
demand of rural market.

Key players in Indian noodle market

The instant noodle market is dominated by MNCs; very few local players
have a sizeable presence. Some of the key players in the market along
with their brands are:
1. Nestle (Maggi)
2. Hindustan Unilever (Knorr Soupy Noodles)
3. GlaxoSmithKline Consumer Healthcare (Foodles)
4. Capital Foods Ltd. (Ching's Secret)
5. ITC (Sunfeast Yippee noodles)
6. CG Foods India Pvt. Ltd.(waiwai)
7. Future Group (tasty Treat)

Why the specific Brand positioning?

Maggi was positioned as 2-minute noodles with a punch line that

said Fast to cook! Good to eat! And this gave the implied

understanding to the consumer that it was a between meals snack.

The company could have easily positioned the product as a meal,
either lunch or dinner. But, it chose not to do so, because the Indian
consumer mindset did not accept anything other than rice or roti as
a meal. Hence trying to substitute it with noodles would 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 its a hit with her! Whats more, if kids also
love the taste, the product is as good as sold! So the 2-minute
funda coupled with the yummy taste worked! Nestle India Ltd. (NIL)
the Indian subsidiary of the global FMCG major, Nestl SA, and
introduced Maggi brand in India in 1982.

Maggi is the iconic brand of Nestle.

With the launch of Maggi noodles, NIL created an entirely new food
category Instant Noodles in the Indian packaged food market.

Being the first mover, NIL successfully managed to retain its

leadership in the instant noodles category even until the early
2000s.

It has now become a generic name for noodles.

Maggi in India is best known for its flagship product of instant

noodles with its various desi sub-segments such as the traditional
dal atta, veg atta and rice noodles along with their various variants,
Curry, Masala, Tomato, Chicken in the traditional and Shahi Pulao,
Lemon Masala and Chilly Chow in the rice noodle segments.

BRAND STORY
Launched in 5 flavours initially Masala, chicken, Capsicum, sweet & sour,
and Lasagne Maggi had to fight hard to be accepted by Indian
consumers with their hard-to-change eating habits. The packaged food
market was very small at this time; Nestle had to promote noodles as a

concept, before it could promote Maggi as a brand. It therefore devised a

two-pronged strategy to attract mothers on the convenience plank and
lure kids on the fun plank. Gradually, the market for instant noodles
began to grow. The company also decided to focus on promotions to
increase the brand awareness. In the initial years, Nestle promotional
activities for Maggi included schemes offering gifts (such as toys and
utensils) in return for empty noodles pack.

According to analysts the focus on promotion turned out to be the single

largest factor responsible for Maggis rapid acceptance. Nestles Managers
utilized promotions as measured to meet their sales target. Gradually,
sales promotion became a crutch for Maggi noodles sales. Later many of
the Maggis extensions also made considerable use of promotional
schemes. The focus of all Maggis extensions was more on below the line
activities rather than direct communication. In addition to promotional
activities, Maggi associated itself with main stream television programme
and advertised heavily on kids programme and channels. After its
advertisements with taglines like mummy bhookh lagi hai, bas do
minute and fast to cook good to eat Maggis popularity became highly
attributed to its extremely high appeal to children. As a result, Maggis
annual growth reportedly touched 15% during its initial years.
Maggis Brand Extension:

In 1998, Nestle launched Maggis first brand extension, Maggi soup. At

this stage, There was no organized packaged soup market in India. Nestle
planned to create a market for packaged soup as it felt the category had a
lot of potential. However, according to analyst, the company had
introduced soups only to cash in on the Maggis brand name, and was
never very serious about the segment.

In 1993, Sweet Maggi, the first variant of Maggi noodles was launched.
The company supported the launch with a huge advertisement outlay that
amounted to 75% of the total yearly expenditure on the Maggi brand.
However, the product failed to generate the desired sales volume and
Nestle was forced to withdraw it. At the end of the year, Maggi noodles
was generating sales volume of around 5000 tons and remained a loss
making proposition for Nestle.
To boost sales, Nestle decided to reduce the price of Maggi noodles. This
was made possible by using thinner and cheaper packaging material, the
company also introduced money saver multi packets in the form of 2-in1 pack and 4-in-1 packs. As a result volume increases phenomenally to
9700 tonnes in 1994 and further to 13000 tonnes in 1995. Maggis
euphoria was, however, short lived, as sales stagnated in 1995 at the
previous years level. With soup business being threatened by a new
entrant Knorr soups launched in 1995, offering 10 flavours against
Maggis 4 the company started rethinking its strategies towards the soup
market.
In order to stretch Maggis brand to include Indian ethnic foods the
company tied up with a Pune based chordia foods to launch pickles under
the year 1995. The company also tied up with Indian foods fermentation
(IFF), a Chennai based Food Company to market popular south Indian food
preparation such as sambher, dosa, vada and spices in consumer packs in
Dec 1995. The company reportedly saw a lot of untapped potential in the
market for ready to use south Indian market.
In 1996, products from these two ventures received lukewarm response
from the market; sales were rather poor in the regions in which they were
aunched. Analysts attributed the failure of these Maggi extensions to the
fact that Nestl seemed to be particularly bad at dealing with traditional
Indian product categories. Maggi noodles performed badly in 1996.
Despite slow sales in the previous two years, Nestl had set a sales target
of 25,000 tonnes for the year. However, Maggi couldnt cross even 14,000
tonnes. Adding to the company woes was the failure of Maggi Tonights

Special, a range of cooking sauces aimed at providing restaurant-liketaste to food cooked at home. The range included offerings such as
Butter Chicken gravy and tomato sauce for pizzas.
Understanding these failures, and buoyed by the fact that the Maggi
brand finally broke even in 1997, Nestl continued to explore new options
for leveraging on the brand equity of Maggi noodles. The company
realized that the kids who had grown up on Maggi noodles had become
teenagers by the late 1990s. As they associated the product with their
childhood, they seemed to be moving away from it. To lure back these
customers and to explore new product avenues, Nestl launched Maggi
Macaroni in July 1997. According to analysts, Maggi Macaroni was
launched partly to deal with the growing popularity of competing noodles
brand Top Ramen. Maggi Macaroni was made available in three flavors,
Tomato, Chicken, and Masala. The company expected to repeat the
success of Maggi noodles with Maggi Macaroni. As with most of its product
launches, Maggi Macaronis launch was backed by a multi-media
advertisement campaign including radio, television, outdoors and print
media with the tagline, Tum Roz Baby.
The products pricing, however, proved to be a major hurdle. A 75-gm
Maggi Macaroni pack was priced at Rs 11, while a 100-gm noodles pack
was available at Rs 9. According to analysts, Nestl failed to justify this
price-value anomaly to customers, who failed to see any noted value
addition in Maggi Macaroni (packaging and flavour variants were similar to
those of Maggi noodles). In addition, customers failed to see any
significant difference between Maggi Macaroni and the much cheaper
macaroni that was sold by the unorganized sector players. The biggest
problem however was the taste of the new product. Since macaroni is
thicker than noodles, Maggi Macaroni did not absorb the tastemaker well
and consequently did not taste very good. The interest generated by the
novelty of the product soon died out and sales began tapering off.
Eventually, Nestl had to withdraw Maggi Macaroni completely from the
market.

Nestl had not even recovered from Macaronis dismal performance, when
it learnt to its horror that Knorr had dethroned Maggi as the leader in the
soup segment (end of 1997). The only saving grace for Maggi seemed to
its ketchups and sauces, which were turning out to the rare successful
extensions of Maggi. These products were supported by a popular
advertisement campaign for the Maggi Hot & Sweet sauce brand. These
humorous advertisements, featuring actors Pankaj Kapoor and Javed Jafri,
used the tagline, Its different. However, during mid-1997, HLL began
promoting its Kissan range of sauces aggressively and launched various
innovative variants in the category.
Nestl responded with a higher thrust on advertising and different size
packs at different price points. Though Kissan gained market share over
the next few years, Maggi was able to hold on to its own market share.
Meanwhile the operational costs of Maggi noodles had increased
considerably, forcing the company to increase the retail price. By early
1997, the price of a single pack had reached Rs 10. Volumes were still
languishing between 13,000-14,000 tonnes.
SWOT ANALYSIS OF MAGGI AS BRAND
Strengths

Established Family Brand

Strong Global Corporate Brand ( NIL )

Specialization

in

food

processing

category

marketing

and

distribution in Urban market

Presence of other product segments of food category : Dairy

Products, Chocolate, Infant foods

Pioneer and Leader so 1st mover advantage in Noodles, Sauce,

Ketchups and Soup market.

Nestle symbolization of warm, family & shelter.

Good communication strategy

Pricing strategy in recession

Weakness

Generic Brand to Noodles in India

Low rural market presence constraints

Uniform Brand for all food category

Brand Proliferation

Opportunities

Growing package and canned food market in India by 15% annually.

Penetration

through

vending

machine,

changing

tastes

and

preferences of the youth

High brand awareness of Indian consumer

Other product category like Biscuits, Chips and Ready to Eat Market
still unexplored.

Opportunity to be substitute to other snacks category of food

products.

Threats

Competitors with long history in product category Internationally

like, Heinz Sauce and ketchups of Heinz Indian, Top Ramen in Noodle
and Knorr Soups.

Single product focused competitors like Heinz sauce and Wai Wai
Noodles.

Less Entry Barriers in the Market segment for product category

ITCs strong base in Indian Market.

Substitute Product to Product Segment.

STPD ANALYSIS
SEGMENTATION
Segmented the market on the basis of lifestyle and habits of urban
families
TARGETING
mainly targeted the Kids, Youth, Office Goers & Working
Woman

convenience-savvy time misers who would like to get something

instant and are over with it quickly.

POSITIONING
Has positioned itself in the SNACKS category
Maggi have developed its brand image of instant food
products with positioning statements such as 2 minutes
noodles and Easy to cook, good to eat.
DIFFERENTIATION:
Taste , flavours ,packaging
Maggi have launched wide varieties of products in different flavours
which can attract larger set of customers. Maggi products are also
available in different sizes catering to different customer needs
CONSUMER BUYING BEHAVIOUR
There are two factors mainly influencing the consumers for decision
making: Risk aversion and innovativeness. Risk aversion is a measure of
how much consumers need to be certain and sure of what they are
purchasing (Donthu and Gilliland, 1996).Highly risk adverse consumers

need to be very certain about what they are buying. Whereas less risk
adverse consumers can tolerate some risk and uncertainty in their
purchases. The second variable, innovativeness, is a global measure
which captures the degree to which consumers are willing to take chances
and experiment with new ways of doing things (Donthu and Gilliland,
1996).The shopping motivation literature is abound with various measures
of individual characteristics (e.g., innovative, venturesome, cosmopolitan,
variety seeking), therefore, innovativeness and risk aversion were
included in this study to capture several of these traits. Measures by
Donthu and Gilliland (1996) were used to measure innovativeness and risk
aversion.
A number of researches have been carried out by academics and scholars
on identifying and analyzing those factors affecting the consumers buying
behaviour and as a result, various types of factors have been identified.
These factors have been classified into different types and categories in
different ways by different authors. For instance, Wiedermann et al (2007)
classified them into internal and external factor. On the other hand, Winer
(2009) divided them into social, personal and psychological factors.
Despite the fact that they have been classified into different groups by
different authors they are similar in scope and purpose (Rao, 2007).
There is a wide range of factors that can affect consumer behaviour in
different ways. These factors are divided by Hoyer et al. (2012) into four
broad categories: situational, personal, social and cultural factors.
Situational factors impacting consumer behaviour may include location,
environment, timing and even weather conditions (Hoyer et al., 2012). In
order to benefit from situational factors major retailers attempt to
construct environment and situations in stores that motivate perspective
customers to make purchase decision. Range of available tools to achieve
such an outcome include playing relaxing music in stores, producing
refreshing smells in stores and placing bread and milk products in
supermarkets towards the opposite end of stores to facilitate movement of
customers throughout the store to make additional purchases etc.

The temporary nature of situational factors is rightly stressed by Batra and

Kazmi (2008).
Personal factors, on the other hand, include taste preferences, personal
financial circumstances and related factors. The impact of personal factors
on consumer decision-making is usually addressed by businesses during
market segmentation, targeting and positioning practices by grouping
individuals on the basis of their personal circumstances along with other
criteria, and developing products and services that accommodate these
circumstances in the most effective manner.
According to Hoyer et al. (2012) social factors impacting consumer
behaviour arise as a result of interactions of perspective consumers with
others in various levels and circumstances. Targeting members of society
perceived as opinion leaders usually proves effective strategy when
marketing products and services due to the potential of opinion leaders to
influence behaviour of other members of society as consumers.
Lastly, cultural factors affecting consumer behaviour are related to crosscultural differences amongst consumers on local and global scales. Culture
can be defined as the ideas, customs, and social behaviour of a particular
people or society (Oxford Dictionaries, 2015) and the tendency of
globalization has made it compulsory for cross-cultural differences
amongst consumers to be taken into account when formulating and
communicating marketing messages.
Consumer perception pertains to how individuals form opinions about
companies and the merchandise they offer through the purchases they
make. Perception of quality is the opinion, impression or feeling that
consumers have of products or services they consume. Such perceptions
are subjective, intangible, difficult to measure and always fluctuating. The
consumers perception on quality depends on various influences both
internal and external.The degree of uncertainty perceived by the
consumer as to the consequences (outcomes) of a specific purchase
decisionis defined as perceived risk. Consumers who perceive high risk in

a certain product limit their choices to safer alternatives. The study

attempts to find out whether media fiasco about Maggi containing MSG
and leadabove permissible level has made difference in the consumer
perceptions about quality.
MAGGI PR PROCESS
At the end of May 2015, Indias Food safety administration (FDA) ordered
Nestle India to recall its popular Maggi noodles after tests showed that the
product contained high levels of lead and MSG. The largest food company
in the world by revenue, known for its reticence over the years, is now
turning active on the communication front.
The scare over Maggi instant noodles, one of India's most popular snacks,
has

gripped

increasingly

health-conscious

consumers.

It

has

also

highlighted shortcomings in the country's food safety network. Uttar

Pradesh, where the crisis began, has a population the size of Brazil's but
the state's Food and Drug Administration (FDA) has only five laboratories
- or one per 40 million people.
Maggi Noodles has been facing the brunt of consumer wrath due to high
contents of MSG and lead. The brand is being bashed and abused on
social media. Nestle, which earns over 50% of its revenue from Maggi,
has even called back the product.
When controversy hit them, Nestle, the cola majors and Cadbury did
respond at once by improving their offerings, but in all the cases it came
as an afterthought.
Meanwhile, sales of Maggi Noodles have dipped, though not wiped out.
Kirana store owners in Mumbai say that die-hard Maggi loyalists are trying
out other brands such as Sunfeast or Top Ramen. Raghu Vishwanath, MD
of brand valuation company, Vertebrand, says that Nestle should actually
use this crisis as an opportunity to look at further developing the product.
"They should come up with a new variant that is completely devoid of
MSG and lead," he says.

Indias market for processed, packaged and branded foods is a nascent

one where consumers are largely unaware of the ingredients, additives
and other attributes of what they buy and eat. Brand imagery, particularly
of those products that are backed by hefty marketing spends, dominates
and determines what is bought by consumers, who rarely bother to find
out too much about what really goes into making what they are buying.
As Nestle and the Indian authorities lock horns in court and Maggi noodles
remain off the shelves, a positive impact of this episode could be the
emergence of a more aware Indian consumer. And it is time that
happened. In more developed markets, consumer activism, particularly
when it comes to food, is a vibrant movement that often forces global food
brands into making changes in what they put into the products they sell.
The Indian packaged food market its consumers, regulators and even
the government agencies concerned is in a much less evolved phase.
Ingredient labels on packaged food hardly come under scrutiny (except
perhaps for brown dots, which denote non-vegetarian food, and green
dots for vegetarian). The ongoing Nestle episode may be fraught with
controversies: sparked by a zealous district food inspector, the Maggi
noodles issue quickly turned into high-decibel media frenzy; the initial
reaction of the company was inexplicably fuzzy; and the decision to order
the company to recall the brand on the basis of disparate lab results could
seem hasty. Still, if it does become a wake-up call to the Indian consumer
to watch what she eats, then it will have done some good.
MAGGI CONTROVERSY AFFECT ON NESTLE
Fall in the sales:
As states across the country banned the product, many retailers took
Maggi off the shelves. Future Group, which owns the supermarket chain
Big Bazaar, was one of the first to stop selling the noodles packs. Some
states such as Punjab, Karnataka and Uttarakhand also ordered Nestle to
stop production until further orders. As a result, Maggi sales fell 60%
across India since the controversy began in the last week of May.

Nestle revenue dented:

The fall in sales directly affects the revenues of the consumer company
since Maggi is a big revenue generator for Nestle India. It is the single
largest brand under Nestle India, which usually contributes about 22-25%
to its total revenue of the company, the Kotak report said. The fiasco has
forced Nestle to cut production by one-third. It also began recalling Maggi
from markets across India. Consequently, many analysts feel that Nestle
may lose about Rs 160 crore in revenue in the quarter to June 2015. This
is also expected to affect Nestle's overall profits. Maggi contributed 30%
of Nestle India's Rs 1,185 crore-worth profits in 2014-15, as per the media
reports.
Consumer confidence slumps:
Trust plays a major factor when a consumer buys a particular product.
With harmful chemicals like lead and MSG found in samples across the
country, consumers may feel their health is at stake. This has shaken
consumers' confidence. Nestle's public relations strategy also failed to
take consumers into confidence. Even consumer grievances on social
media were managed only with a standard automated response, which did
not impress its loyal consumers. The company voluntarily recalled Maggi
after calling its consumers 'confused', according to media reports. This
further damaged the reputation of the company. Ironically, Maggi was
adjudged the most powerful brand in India in 2014.
Financials to take a beat:
Ultimately, the controversy over Maggi's safety is likely to impact Nestle's
financial prospects as the demand has grown at a slow pace in the past
quarters. Most consumer goods companies have seen single-digit growth
in the recent past. Keeping this in mind, the current controversy is only
expected to add to Nestle's woes. Revenue growth may weaken in this
financial year in the aftermath of the controversy
What does it mean for the investors?

The Nestle India stock currently trades at 33 times the company's future
Earnings per Share (EPS), according to Kotak Institutional Equities report.
This means, investors pay 33 times more than the company's expected
profit in FY16 to purchase the stock. Importantly, the future EPS was
calculated by considering 55% growth in profit per share between 2014
and 2016. This is not valid any more. Experts foresee EPS to be hit by 1020% by the fall in Maggi sales. This means, the stock is even more costly trading at 37-40 times Nestle's FY16 EPS.
Statement of Market Research Problem
Nestle Maggi noodles who stood as the leader in the instant noodle
market since the point of its inception in the 1980 got a huge struck on its
recent controversy of lead content and excess MSG. Maggi which is highly
preferred by children and their mothers due to the variety of taste and
less time of preparation was one of the most reliable brand by the kids as
well as for the parents. This study focus whether the ban on the brand
Maggi has changed the customers buying behaviour towards this
particular brand or is it still accepted as a reliable brand which ensures
both taste as well health for its customers

Relevance of the study

Relevance of this study is to identify the perception about the brand Maggi
after being banned by FSSAI by claiming excess lead and mono sodium
glutamate. This study helps in identifying peoples perception towards this
particular brand as well other brand of instant noodles in general. This
study also investigates the extent to which people catch hold Maggi as a
reliable brand in the light of excess lead and MSG controversy.

RESEARCH METHODOLOGY
The research was conducted in Kakkanad, Cochin, Kerala. The target
sample is of age varying between 18 and 35.

Since many educational

institutions like Rajagiri College, Bharathmatha Management Institute,

Model Engineering College along with Info Park and SEZ resides in this
location which provides a good representative sample. People in all the

above phases of life are of the prescribed age group. Convenience

sampling method is used due to time and resource constraints. The
questionnaire was prepared with the approval of the faculty and was
circulated. A sample size of 350 was taken to arrive at more proper
conclusions.
Euromonitor International's Noodles in India market report offers a
comprehensive guide to the size and shape of the market at a national
level. It provides the latest retail sales data, allowing you to identify the
sectors driving growth. It identifies the leading companies, the leading
brands and offers strategic analysis of key factors influencing the market be

they

new

product

developments,

packaging

innovations,

economic/lifestyle influences, distribution or pricing issues. Forecasts

illustrate how the market is set to change.

Objectives of the Study

To identify people perception towards instant food products

To identify people perception towards the brand Maggi after its ban

SCOPE OF THE STUDY

This study is based on the survey conducted among people and residents
in Kakanad Ernakulum the sample includes the students, IT employees,
people residing in the apartments located in and around Kakkanad.

RESEARCH DESIGN
The research design used in this study is descriptive in nature.
Tools of data Collection
The tool for data collection is structured questionnaire
Concepts covered in the questionnaire
1. Questions examining the customer profile which include the
demographics

such

as

age

group,

gender,

educational background.
2. Consumer preference towards instant noodles

occupation

and

3. Peoples perception towards the brand Maggi in both pre and post
ban
4. Extent of loyalty towards the brand Maggi by examining its reliability
and the willingness to recommend this particular brand

DATA ANALYSIS AND INTERPRETATION

DEMOGRAPHIC VARIABLES
Age
TABLE.1
Age Group

Age Group
Freque Percentage
18-

ncy
208

69.3

25
26-

72

24.0

35
36-

12

4.0

45
46-

2.3

55
55-

.3

99
Tota 300
Inference

100.0

From the above table we could infer that 69.3% of the sample belong to
the age group of 18-25 with 24% of the population between 26 to 35
followed by 12%,7% and 1% in the age group of 36-45, 46-55 and 55-99
respectively.

Gender
TABLE .2
Frequen Percent Valid
cy

age

Percenta e
ge

Percentag
e
40.7
100.0

Male 122
Femal 178

40.7
59.3

40.7
59.3

e
Total

100.0

100.0

300

Gender
Cumulativ

Inference
The sample under this study comprises of 60% of female respondent and
40% of male respondents both belonging to the rural community. This
gives a representation of female in this study.

Education Qualification
TABLE.3
Frequen Percent Valid
cy

Percentag

Percentag

4.7

4.7

e
4.7

School
Graduate 66
Post207

22.0
69.0

22.0
69.0

26.7
95.7

Graduate
Others
13
Total
300

4.3
100.0

4.3
100.0

100.0

High

14

age

Education
Cumulativ

Present consumption pattern of Instant noodles

From the above table we could infer that 36% of the respondents
consumeinstant noodles which are 107 people in 300 whereas 64% of the
population on the other hand do not like to have instant noodles. This
indicates that majority of population prefer less to have instant noodles.
Consumption of Maggi after Ban
TABLE 5
Frequen Percentage
cy
Yes 100
No
200
Total 300

33.3
66.7
100.0

From the above table we could infer that only 33% of the population kept
away from Maggi due to recent controversy of lead and MSG content. This
indicates that people only prefer Maggi noodles when they wanted to have
instant noodles.

Brand preference in the instant noodles segment

TABLE 6
Frequen Percen Valid
cy

tage

Percentag e
e

Yes 227
No
73
Total 300

75.7
24.3
100.0

Cumulativ
Percentag

75.7
24.3
100.0

e
75.7
100.0

From the above table and pie chart we could infer that around 75.7% of
the population have a brand preference in instant noodles segment which
indicates people still look for a their brand of noodles when it comes to
their of choice of preference. This indirectly indicates peoples brand
attachment factor is comparatively high in the instant noodles segment.
Recommending others to have instant noodles
TABLE 7
Frequen Percen Valid
cy

tage

Cumulativ

Percentag e
e

Percentag

strongly

76

25.3

25.3

e
25.3

disagree
disagree
neutral
agree

171
40
11

57.0
13.3
3.7

57.0
13.3
3.7

82.3
95.7
99.3

strongly

.7

.7

agree
Total

300

100.0

100.0

100.0

From the above pie chart we could infer that more than 57% of the
respondents disagree to recommend a particular brand of instant noodles
and 27% of the respondents strongly disagree to it. Whereas 13.3% of
respondent is having a neutral argument followed by 3.7%and .7% of
agree and strongly agree argument.

PURCHASE INFLUENCE BY FRIENDS AND FAMILY POST BAN

TABLE-8

Question10
Frequency

Percentage

Valid Percentage

Cumulative

strongly disagree

.7

.7

.7

disagree

50

16.7

16.7

17.3

neutral

76

25.3

25.3

42.7

agree

115

38.3

38.3

81.0

strongly agree

57

19.0

19.0

100.0

Total

300

100.0

100.0

Percentage

From the above piechart we could infer that around 38.3% of respondent
says that they are discouraged to have maggi by family or friends post
ban of Maggi and 19% of people strongly agreeing to it.Whereas 25% of
respondent are with neutral argument towards it follwed by 16.7% and .
7% disagreeing and strongly disagreeing to it.

POST BAN ATTITUDE ON INSTANT PRODUCT

TABLE-9
Question11
Frequen Percen Valid
cy

tage

Cumulativ

Percentag e
e

Percentag

strongly

1.0

1.0

e
1.0

disagree
disagree
neutral
agree

65
86
112

21.7
28.7
37.3

21.7
28.7
37.3

22.7
51.3
88.7

strongly

34

11.3

11.3

agree
Total

300

100.0

100.0

100.0

From the above we could infer that post ban people try to avoid instant
products which is backed up by 37% of respondent agreeing to this fact
and 11% strongly agreeing to it. Whereas 28% of the respondent having a
neutral argument. But 21% of the respondent disagrees to it and 1%
strongly disagrees.

RESPONSE TO THE STATEMENT MAGGI A LESS HEALTHIER

PRODUCT
Question12
Frequen Percen Valid
cy

strongly
disagree

tage

.3

Cumulativ

Percentag e
e

Percentag

.3

e
.3

disagree
neutral
agree
strongly

42
89
130
38

14.0
29.7
43.3
12.7

14.0
29.7
43.3
12.7

agree
Total

300

100.0

100.0

14.3
44.0
87.3
100.0

Inference
From the above we could infer that 43.3 % respondent believe that Maggi
is less healthy product and 12.7% of respondent strongly disagreeing to it.
Whereas 29.7% with a neutral view followed by 14% agreeing and .3
strongly agreeing to it.

BELIEF THAT GOVERNMENT ENSURES SAFETY OF FOODS AVAILABLE IN

THE MARKET
Question13
Frequen Percent Valid
cy

age

Cumulati

Percentag ve
e

Percenta
ge

strongly

3.0

3.0

3.0

disagree
disagree
neutral
agree
strongly

47
78
121
45

15.7
26.0
40.3
15.0

15.7
26.0
40.3
15.0

18.7
44.7
85.0
100.0

agree
Total

300

100.0

100.0

From the above we could infer that 40.3% of respondent agree that
government would ensure that products are safe and consumable in the
market and 15% strongly agreeing to it and 26% of respondent with a
neutral response. Whereas 15.7% disagreeing to it and 3% of the them
strongly disagreeing to it.

BELIEF THAT MAGGI WOULD ENSURE SAFETY IN ITS ENTIRE PRODUCT IN

THE MARKET
Question14

Frequen Percen Valid

cy

tage

Cumulativ

Percentag e
e

Percentag

strongly

17

5.7

5.7

e
5.7

disagree
Disagree
Neutral
Agree
strongly

37
51
132
63

12.3
17.0
44.0
21.0

12.3
17.0
44.0
21.0

18.0
35.0
79.0
100.0

agree
Total

300

100.0

100.0

From the above we could infer that 21% of respondent strongly agree that
Maggi would ensure that their product are safe followed by 44% of
respondent agreeing and 17% of respondent with a neutral. Whereas 18%
of the respondent lies in both disagree and strongly disagree response
which indicates that people still doubt the brand Maggi whether it is safe
to consume.

IS MAGGI A RELIABLE BRAND

Question15
Frequen Percen Valid
cy

tage

Cumulativ

Percentag e
e

Percentag

strongly

57

19.0

19.0

e
19.0

disagree
disagree
neutral
agree
strongly

134
57
44
8

44.7
19.0
14.7
2.7

44.7
19.0
14.7
2.7

63.7
82.7
97.3
100.0

agree
Total

300

100.0

100.0

From the above table we could infer that 14.7% of respondent believe that
Maggi is a reliable brand with 2.7% of respondent strongly agreeing to it.
Whereas 19% of respondent is having a neutral argument followed by
44.7% of respondent with a disagree argument and 19% strongly disagree
argument.

BELIEF THAT MAGGI UPGRADED ITS QUALITY AFTER THE SCANDAL

Question16

Frequen Percen Valid

cy

tage

Cumulativ

Percentag e
e

Percentag

strongly

1.7

1.7

e
1.7

disagree
disagree
Neutral
Agree
strongly

32
70
144
49

10.7
23.3
48.0
16.3

10.7
23.3
48.0
16.3

12.3
35.7
83.7
100.0

agree
Total

300

100.0

100.0

From the above we could infer that 48% of the respondent believes that
Maggi would upgrade its quality after the sandal and 16.3% of the
respondent strongly believing that there would be an upgrade in its
quality followed by 23% of respondent taking a neutral stand to it.
Whereas 12.3 % of population believe that Maggi would still lack quality.

REFERENCES

www.euromonitor.com
www.businesstoday.in
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www.hindustantimes.com
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