2016

NESTLE MAGGI

SUBMITTED BY:
Group No. 11
12/25/2016

Hari Krishna(70)
Kirtee Kalpita(30)
Peeyush kharche(29)
Pratik Gentyal(23)
Shital Singh(59)
COMPANY PROFILE

The merger of Anglo Swiss Condensed Milk Company, founded in 1866 and the infant food
developed by Henri Nestle in 1867 led to the formation of Nestle Group in 1905. Nestle began
selling chocolates for the first time in 1904. Henri Nestle built up a brand with the help of a
logo (now the famous birds nest logo) and became one of the first Swiss manufacturers to do
so. The Maggi company merged with Nestle in 1947. Today, Maggi is the leading culinary
brand and part of nestle family of fine foods and beverages.

Nestles relationship with India dates back to 1912, when it began trading as the Nestle Anglo
Swiss Condensed Milk Company in the Indian market. It set up its first factory in 1961 at
Moga, Punjab.

Today, Nestle has over 2000 brands worldwide, spread over 189 countries and employs more
than 335000 people. Its businesses include Nestle Health Science, Nestle Nespresso, Purine Pet
care, Skin Health and Nestle Waters. It has joint ventures with Coca-Cola (for Nestea) and
General Mills (as cereal partner).

As of 2015, Nestle recorded sales of 88,785 CHF and market capitalization of 229,947 CHF. In
December 2015, Nestle had 157,422 registered shareholders.
In June 2016, Nestle India had net operating income of 22,716 million rupees and net profit of
Rs. 2,308.4 million.

MISSION AND VISION:

Nestle has put nutrition as the core of their business. Health and nutrition is their main focus.

SRTATEGY:

The Company continuously focuses its efforts to better understand the changing lifestyles of
India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness
through its product offerings. The culture of innovation and renovation within the Company
and access to the Nestl Group's proprietary technology/Brands expertise and the extensive
centralized Research and Development facilities gives it a distinct advantage in these efforts. It
helps the Company to create value that can be sustained over the long term by offering
consumers a wide variety of high quality, safe food products at affordable prices.
(Reference:WWW.NESTLE.IN)
ORGANISATIONAL STRUCTURE:
PRODUCT CATEGORY: INSTANT NOODLES

Instant noodles are pre-processed and dried noodles block which are generally packed
with seasoning or taste maker, except for cup noodles where the taste maker is added
loose in the cup. These instant noodles need to be cooked or soaked in boiling water to
make them ready to eat. Instant noodles were invented by Taiwanese-Japanese inventor
Momofuku Ando and were first marketed under the brand name of Chicken Ramen, by
his company, Nissin, on August 25th 1958.

Under the regulation of US department of Agriculture , Instant Noodles can contain

Wheat flour , water , salt , palm oil, seasoning, sodium phosphates , potato starch , gum
and other ingredients e.g. Hydrocolloids etc.

Dried noodles block are made using two types of process: i). hot air drying; ii).Frying.
Hot air dried noodles are made by subjecting fresh noodle blocks to hot air for 30-40
mins at temperature of 70-90 C , resulting in decrement of moisture content to about 8-
12%. Fried instant noodles are dried by frying the fresh noodles in oil for 1-2 mins at
140 -160 C, this decreases the moisture content from 30-40% to 2-5 %. The shelf life
of instant noodles is approximately 4-12 months depending on the environmental
factors.

Instant noodles are popular all over the world differentiating in tastes to match up with
the local tastes. According to World Instant Noodles Association, China and Indonesia,
dominate world instant noodle consumption.
 The instant noodle market in India was, in a way, introduced by Nestle with the
introduction of Maggi in mid-1980s, which has now developed into a market of more
than Rs 1300 crores

This products strong annual growth of approx. 15 % and wider consumer acceptance ,
makes it a profitable option for various players. Some of the major drivers for the
growth of this product category are as follows :-
Growing Youth and working Population
Increment in incomes, hence, purchasing power
Availability of variety ranging from pouch to cup noodles and diverse flavors
Higher brand consciousness

Comparision of Maggi with Yippee

3.1 Product: Maggi Noodles

1) Core Product:
The core benefit of Maggi is it satisfies hunger. It is a stress buster, instant food and gives relief
from the cooking process.

2) Actual Product:
The actual product is Maggi two minutes instant noodles. Branded as Maggi Noodles with
taglines such as Me n meri maggi, taste bhi health bhi. These are easy to make noodles
with a specific flavor packed with them. These noodles can be made in two minutes and come
with a masala mix.
3) Augmented Product:
The Nestle has made a special place in customers mind with Maggi Noodles. The special
masala that comes with noodles has a unique position in the customer's mind. Nestle with is
advertising and promotions had related Maggi with the past memories of people having Maggi
in their childhood. This altogether created a different image of Maggi in people's mind.

Major Rival : Sunfest Yippee Noodles

1) Core Product:
The core benefit of Yippee noodles: Satisfies Hunger.

2) Actual Product:
The actual product is a Yippee Masala Noodles comes in round shape. Promoted as noodles
made from Ashirwad atta ,long ,non-sticky and tasty. The noodles are extra long and dont
form lump even after cooking for 30 minutes.

3) Augmented Product:
ITC had promoted Yippee noodles as the healthy noodles made from Ashirwad Atta. Doesnt
form lump even after cooking for a long time also taste and texture of noodles remains same
when consumed after 20 minutes after cooking.

Product Brand Relationship:

Maggi: The maggi has become the synonym for noodles in India. The product-Brand
relationship between Noodles and its brand Maggi is very strong. Nestle promoted it with
taglines and songs like Mummy bhook lagi hai, bas do minute, Maggi maggi maggi Do
minute maggi noodles etc . This type promotion over years created a very strong product-
brand relationship.

Yippee: Introduced in 2010 is largest competitor to Maggi in India. The product-Brand

relationship is not so strong in Yippee Noodles. The Noodles are basically promoted as Long
non-sticky atta noodles. Yet yippee is to create a special place in people's mind about its
Yippee noodles like Maggi has created.
Suggestions:
Although Maggi is a market leader its market share is declining due to recent course of
events and new entrants in the market like patanjali, ITC Yippee Noodles, Top ramen etc.
To maintain is market share maggi needs to promote its noodles as healthy and safe to eat
noodles.
It needs to improve maggi noodles so that they can be consumed even after some time after
cooking.
Come up with new flavors for competitors new product launch.

3.2 Price:

Pricing Strategy of Maggi:

Maggi was well aware that its consumers belonged to average middle class group so
maintained a low pricing policy in its initial years. This let Maggi to penetrate deep into the
market following a penetration pricing strategy. Prices were almost kept constant so that
consumers took Maggi at affordable prices. Even if there is a change in economic situations,
instead of varying the price of the pack Maggi reduced the volume of the pack keeping the
price constant. In this way they could get the loyal customer base. To reach out rural areas and
low income class groups, Maggi varied its volume packs and reduced its prices much further.
This reduction in volume and price made Maggi available in the budget price for the
consumers.

Pricing strategy of Yippee:

Yippee almost had the similar strategy as that of Maggi. Since it was a competitive and price
sensitive market the prices for the product didnt differ much. The same volume of packs were
produced and sold like that of competitor.

Fitness of pricing strategy: Due to competition the pricing strategy used is apt for Maggi. At a
competitive price and giving out better taste value to the product made Maggi the market
leader in the market. Having produced at larger volumes is giving out best possible profits to
the company

Suggestions:
Current pricing strategy is better but in adverse economic effects the volume of the
product cannot be reduced much lower as consumer is well aware of the pack size.
As Maggi is the market leader while introducing a new masala or flavour Maggi could
take the advantage as a first mover and market leader to set a high price for the product.

3.3 Channel:
Existing marketing Channel of Maggi: Being a brand product of Nestle Maggi has followed the
distribution channel of Nestle.

Nestle Distribut Retailer Consumer

or r
The corresponding production of the plant is dependent on the requirement in the market and
each plant is responsible for its own production following a decentralized model for
production. The distribution follows a two path fold with the production made available to
every local store then the production is made available for malls and shopping centres.

One of the main important marketing mix of Maggi is its distribution channel. Maggi has a
good relationship with the distributors. Distributors prefer to promote or sale more Maggi when
compared to other brands. The reason behind is that distributors have a fair margin of around
6% by paying advance to the company. Distributors then supply it to the retailers. Retailers a
margin of around 15% over promotional products and atleast 10% margin on normal products.

Marketing Channel of Yippee: Sunfeast Yippee a noodles brand of ITC has a wide and deep
distribution channel using existing ITC distribution channel. ITC having a well established and
deep penetration in the rural as well as urban India using its Tobacco business helped Sunfeast
Yippee to penetrate deep into the market.

ITC distribution channel started with HUB from where the products are being supplied to
distributors. From distributors the products are supplied to wholesalers, retailers, PanDabbas,
Malls. Sunfeast Yippee used the same distribution network except for the PanDabbas. Reatilers
received the supply from wholesalers.

Suggestions for Channel strategy:

1) ITC has a deep penetration in rural market with its tobacco business. If ITC
uses different strategy and comes up with an innovative product Maggi
might loose out on its market share. So Maggi must penetrate and reach out
into the rural market
2) With a good amount of advertising Maggi brand name reached out into rural
areas but not the product. Maggi must build a restructured model especially to
tap in for the rural market.

3.4 Promotion:

Channel of promotion for both Maggi and Yippee Noodles

Integrated Mass
communication of maggi

Advertising Public Sales Interacti

Relation promotion ve
Marketin

Competi Story
AD AD
tions telling
Campaign

Billboards Print TV ADs Others

ADs
 Objectives of Advertisement of Maggi noodles:

Retaining the old customers as Maggi had already acquired most of the
customers due to first mover advantage
Acquiring new customers mainly targeting the youth
To maintain the seasonal sales
Promotion of other products of nestle offered in bundling with Maggi. E.g.:
Nescaf sachets with Maggi pack
Surviving in the competition
At one point of time Maggi failed the lead test and they promoted heavily for
the re-entering in Indian market

Objectives of Advertisement of Yippee noodles:

Yippee wanted to create differentiation in the product to acquire the market
segment captured by Maggi noodles
Providing substitute to foodies by launching two different masala flavours like
Classic and Magic
Circular Shape of the content in the pack helps the whole content to be placed
in a circular utensil without breaking it
Most important factor which Yippee highlights is that other products loose its
taste if we dont consume it immediately, but unlike other products Yippee noodles retains its
taste

Though channel is same for promotion, there is difference in the percentage and ways
of usage of each of the channel:
1) Print Ads: None of them really rely on print adds
2) TV ads: Both of them heavily rely on TV AD but their target segment is different.
Yippee noodles mostly targets children and housewives whereas Maggi has created a
production differentiation and have products for different age groups and different tastes. So it
targets every member of the family initially 2 min instant noodles and afterwards it transformed
into khusiyo ki maggi
3) Interactive marketing: Maggi conducts marathon run in metro cities Named as MAGGI
RUN to promote the brand. Also, Maggi shares the experiences of the Customers on its
packets. Whereas no such brand promotions is done by yippee

Improvements Suggested:

Promotion channels like internet should be used more in order to target the youth. E.g.:
launching a short film.
Investing in some Reality shows which will help them building brand and experiences
shared by the stars or the participants can help them build trust amongst people.
Showing the manufacturing or packaging videos which will ensure and assure
customers of no adulteration.
 CONCLUSION
Maggi shares a emotional bond with every household in india and the
promotional strategy used by maggi to relate these emotions has created a very
strong product-brand relationship., Yippee noodles, The major competitor of
Maggi, promotes itself as long non-sticky atta noodles and healthy for Indian
population. In order to increase its consumer base, Maggi has followed a
penetration pricing strategy. In order to sustain itself in the highly competitive
noodles market, Maggi needs to introduce different flavor variants to gain the
first mover advantage. The decentralized model of production and strong
distribution network add to its advantages over other competitors. Maggi needs
to maintain its image as a healthy food and prevent itself from repeating the
failure of content tests, which had affected its market share and reduced it to
nearly 10%. Innovation in terms of shape and taste is a need to have a core
competence. Promoting maggi through reality shows would help create brand
stories and experiences, which would have a greater positive impact on the
consumers in terms of brand recall.

References:
https://www.nestle.in/
https://en.wikipedia.org/wiki/Nestl
www.englishteastore.com/nestle-history.html
www.marketing91.com/marketing-mix-of-maggi/
www.itcportal.com Businesses FMCG Foods
https://www.quora.com/Are-Yippie-noodles-safe-to-eat