ACKNOWLEDGEMENT

TABLE OF CONTENTS
1. EXECUTIVE SUMMARY……………………………………………………………….…04

2. INTRODUCTION…………………………………………………………………………...05

3. MAGGI BRAND IN INDIA………………………………………………………………….05

4. BRAND STORY……………………………………………………………………………..06

5. PRODUCT VARIENTS……………………………………………………………….…….10

6. MARKET SHARE…………………………………………………………………………....11

7. RESEARCH METHODOLOGY…………………………………………………………....12

8. OBJECTIVE………………………………………………………………………………….12

9. RESEARCH PLAN…………………………………………………………………………..12

10. DATA COLLECTIO PLAN…………………………………………………………………13

11. METHODOLOGY……………………………………………………………………… 13

12. SURVEYRESULT………………………………………………………………………….14

13. SWOT ANALYSIS OF MAGGI BRAND…………………………….……………………19

14. STPD ANALYSIS OF MAGGI BRAND………………………………….………………..20

15. CUSTOMER-BASED BRAND EQUITY PYRAMID (CBBE) ……………………..……..21

16. BRAND PRISM OF MAGGI………………………………………………………………..22

17. CONCLUSION…………………………………………………………………………….23

18. RECOMMENDATION…………………………………………………………………. 23

19. FUTURE PLAN…………………………………………………………………………….24

20. LIMITATION…………………………………………………………………………….....24
 EXECUTIVE SUMMARY

The report entitled “A study of Maggi Brand Repositioning and Extension” deals with the
study of Maggi brand that was launched in India in the year 1983, by Nestle India Limited,
which became synonymous with noodles. This research paper tries to find a solution to a real
life problem of Maggi to launch its products as a Healthy Product. The introduction provides
the company background, operational & other important information provided by the
company which would assist in taking the decision for the right brand extension strategy for
Maggi.
 INTRODUCTION
The industrial revolution in Switzerland in the late 1800s created factory jobs for women,
who
were therefore left with very little time to prepare meals. This wide spread problem grew to be
an object of intense study by the Swiss Public Welfare Society. As a part of its activities, the
Society asked Julius Maggi miller to create a vegetable food product that would be quick to
prepare and easy to digest. Born on October 9, 1846 in Frauenfeld, Switzerland,
Julius
Michael Johannes Maggi was the oldest son of an immigrant from Italy who took Swiss
citizenship. Julius Maggi became a miller and took on the reputation as an inventive and
capable businessman. In 1863, Julius Maggi came up with a formula to bring added taste to
meals. Soon after he was commissioned by the Swiss Public Welfare Society, he came up
with two instant pea soups and a bean soup - the first launch of the Maggi brand of instant
foods in 1882 - 83. Towards the end of the century, Maggi & Company was producing not
just powdered soups, but bouil on cubes, sauces and other flavourings. The Maggi Company
merged with Nestlé in 1947. Today, Maggi is a leading culinary brand and part of
the
NESTLÉ family of fine foods and beverages. Under the Maggi brand, which is today known
world wide for quality and innovation, Nestle offers a whole range of products, such as
packaged soups, frozen meals, prepared sauces and flavourings.
 MAGGI BRAND IN INDIA

Maggi Comes to India – teething troubles Maggi noodles was launched in India in the
early1980s. Carlo M. Donati, the present Chairman and Managing Director of Nestle India Ltd, brought
the instant noodle brand to India during his short stint here in the early eighties.
At that time, there was no direct competition. The first competition came from the ready-to-eat
snack segment which included snacks like samosas, biscuits or maybe peanuts, that were usual y ‘the
bought out’ type. The second competition came from the homemade snacks like pakoras or
sandwiches. So there were no specific buy and make snack!
Moreover both competitors had certain drawbacks in comparison. Snacks like samosas are usually bouht
out, and outside food is generally considered unhygienic and unhealthy. The other competitor,
‘homemade’ snacks overcame both these problems but had the disadvantage of extended
preparation time at home. Maggi was positioned as the only hygienic home made snack!
Despite this, Nestlé faced difficulties with their sales after the initial phase.The reason being, the
positioning of the product with the wrong target group.
Nestle had positioned Maggi as a convenience food product aimed at the target group of working women
who hardly found any time for cooking. Unfortunately this could not hold the product for very long. In
the course of many market researches and surveys, the firm found that children were the biggest
Consumers of Maggi noodles. Quickly they repositioned it towards the kids segment with various tools of
sales promotion like colour pencils, sketch pens, fun books, Maggi clubs which worked wonders for
the brand.

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 it’s a hit with her! What’s 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!
 BRAND STORY
Launched in 5 flavors initially – Masala, chicken, Capsicum, sweet & sour, and Lasagna – 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 awreness. 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 analysits the focus on promotion turned out to be the single largest factor
responisible for Maggi’s rapid acceptance. Nestle\’s Managers utilized promotions as
measured to meet their sales target. Gradually, sales promotion became a crutch for Maggi noodles
sales. Later many of the Maggi’s extensions also made considerable use of promotional
schemes. The focus of all Maggi’s 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 “mummi bhookh lagi hai, bas do minute” and fast to cook good
to eat Maggi’s popularity became highly attributed to its “extremely high appeal to children”. As a result,
Maggi’s annual growth reportedly touched 15% during its initial years.
 Maggi’s Brand Extension:

In 1998, Nestle launched Maggi’s 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 Maggi’s brand name, and was never very serious about the segment.

In 1993, “Sweet Maggi”, the first variant of Maggi noddles 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 tonns 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 cheapeer packaging material, the company also introduced “money
saver multi packes” in the form of 2-in-1 pack and 4-in-1 packs. As a result volume increases
phenomenally to 9700 tonnes in 1994 and further to 13000 tonnes in 1995. Maggi’s
euphoroia was, however, short lived, as sales stagnated in 1995 at the previous years level. With soup
business being threatned by a new entrant “Knorr soups” launched in 1995, offering 10 flavors against
Maggi’s 4 the company started rethinking its strategies towards the soup market.

In order to stretch Maggi’s brand to include Indian ethenic 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
untabbed 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 Nestlé 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, Nestlé had set a
sales target of 25,000 tonnes for the year. However, Maggi couldn’t cross even 14,000 tonnes. Adding to
the company woes was the failure of Maggi Tonite’s Special, a range of cooking sauces aimed at
providing ‘restaurant-like-taste’ 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, Nestlé 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, Nestlé 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 Macaroni’s launch was backed by a multi-media advertisement campaign
including radio, television, outdoors and print media with the tagline, ‘Tum Roz Baby.

The product’s 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, Nestlé failed to
justify this price-value anomaly to customers, who failed to see any noted value addition in Maggi
Macaroni (packaging and flavor 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 wel and
consequently did not taste very good. The interest generated by the novelty of the product soon
died out and sales began tapering off. Eventual y, Nestlé had to withdraw Maggi Macaroni completely
from the market.
Nestlé had not even recovered from Macaroni’s 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, ‘It’s different.’ However, during mid-1997, HLL
began promoting its Kissan range of sauces aggressively and launched various innovative
variants in the category.
Nestlé 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 stil languishing between 13,000-14,000 tonnes.
 Pricing and Product Development:

It was at this point in time that Nestlé decided to change the formulation of Maggi noodles. The purpose
was not only to infuse ‘fresh life’ into the brand, but also to save money through this new formulation.
The company used new noodle-processing technology, so that it could air-dry instead of oil-fry the
noodles. The tastemaker’s manufacturing process was also altered. As a result of the above
initiatives, costs reportedly came down by 12-14%. To cook the new product, consumers had to add two
cups of water instead of one-and-a-half cups. The taste of the noodles was significantly different from
what it used to be. The customer backlash that fol owed the launch of the new noodles took Nestlé by
surprise. With volumes declining and customer complaints increasing, the company began to
work on plans to relaunch ‘old Maggi’ to win back customers. In addition, in 1998, Nestlé began
working out a strategy to regain Maggi’s position in the soup segment. To counter the Knorr threat, the
company relaunched Maggi soups under the ‘Maggi Rich’ brand in May 1998. The soups were not only
thicker in consistency than those produced earlier, the pricing was also kept competitive and the
packaging was made much more attractive. However, Knorr took Nestlé by surprise by launching one-
serving soup sachets priced as low as Rs 4. HLL too launched two-serving sachets of Kissan soup priced
at Rs 7. As Maggi did not have any offerings in this price-range, it lost a huge portion of its market
share to Knorr.

The relaunch prompted market observers to compare Nestlé’s move with US soft drinks major Coca-
Cola’s ‘New Coke’ fiasco. However, the company disagreed, “It’s a hard-5 nosed strategy, that mixes
nostalgia with the consumer’s voiced preference for the product it has been bred and rought up on. The
reintroduction is Nestlé’s acknowledgement of the loyalty of the Indian mother and the child to the
original product.” By May 1999, Nestlé’s decision to bring back the ‘old Maggi’ seemed to have paid off.
Two months after the relaunch, the monthly average sales of Maggi noodles n the northern region rose
50% in comparison to the previous year. In July 1999, ‘Maggi’ the brand, was promoted as the
biggest brand in Nestlé’sportfolio of brands in India, overtaking brands such as Nestum and Cerelac.
Nestlé believed that Maggi had immense potential as it was a very ‘flexible’ brand under which regional
variants could be introduced to meet various market needs. Company sources claimed that with
reasonable price points and innovative products, Maggi could emerge as a top brand and a major growth
driver for the company. To further support the brand, Nestlé carried out various promotional activities as
wel . These included the August 1999 ‘Fun-Dooz’ campaign and Jungle Jackpot campaigns. 6 As a result
of the above initiatives, Nestlé claimed to have cornered an 81% market share of the 20,000 tonnes
noodles market by the end of 1999. Nestlé sources claimed that Maggi noodles outsold the competition
four times over and that more than four Maggi noodle cakes were consumed every second in the
country.
 RESEARCH METHODOLOGY
OBJECTIVES

To understand the influence of Maggi as a brand on consumers mind set.

 Sources of Brand equity of Maggi like Brand awareness, Brand image, Brand
association, Brand recall
To understand the Brand performance of Maggi products.

To understand Brand Imagery, Brand Quality perceived by customers, Brand

credibility, consideration, superiority and feelings.

Brand extension of Maggi in terms of product diversity.

 Analyses the repositioning of Maggi brand as a “Healthy product” and the consumers perseverance

towards the same.

RESEARCH PLAN

Research Design:
The research wil be carried out in the form of a survey which will be done in areas near to Delhi (NCR

region). The population has been segmented on the basis of salary Group and Age Group.

Sample Design:
The target population for our study is households. The sample will be selected by a simple random
sampling method .
Sample Size:
The sampling unit is 150 which are divided as follows:
NUMBER OF RESPONDENTS 150

AGE GROUP 10-45

MONTHLY HOUSEHOLD INCOME 25000-75000 INR

Survey Locations Delhi,Faridabad,Gurgaon,Noida.

SALARY GROUP NO 25K-40K 40K-60K 60K-75K

INCOME
NUMBER OF RESPONDENTS 30 50 70

AGE GOUPS 10-15 15-35 35-45

NUMBER OF RESPONDENTS 50 50 50
DATA COLLECTION PLAN

Data Gathering:
This study involves data col ection (primary research) from different households in

four different areas Delhi, Faridabad, Gurgoan, and Noida.

Literature Review
The research conducted as a part of our study would include Primary as wel as Secondary research.

Primary research would include a survey that would be conducted in selected localities of Delhi and

nearby areas where the responses of consumers would be recorded through a designed

questionair.Secondary research would include various aspects of Brand management through Internet ,

Journals, company reports , expert views etc.

METHOLODOGY

The research wil be carried out in the form of a survey. This wil include primary research in addition to
secondary research as stated below. The survey research method will be descriptive research
design. Each respondent wil be interviewed through a Questionnaire. The sample wil be selected by a
simple random sampling method. The survey will address the fol owing information area:
Information Areas:

The objective as spelt out can be elaborated into specific information areas to be studied.

How do customers perceive Maggi as a stable brand, their perception of noodles and how do they
associate themselves with Maggi?
Are the consumers aware of Maggi Brand or they associate noodles with some other brand?
Do they consider noodle as a healthy product or they are aware of the company’s strategy of
repositioning it to a healthy product by the launch of some of the new products?

Which product from the entire basket of Maggi products do the consumers consider as the best selling
product for Maggi and to which the consumers frequently buy?

Are the consumers willing to accept Maggi brand extensions to some other products like chocolate,
juices, chips etc?
SURVEY RESULTS:

1. Brand Associations:

Sources of Brand equity like brand association of Maggi as a Brand was found highest with the
age group of 10-25 and the product category associated with it was the noodles category (see exhibit 1).
Consumers in the age segment of 10-25 could easily relate Maggi to noodles.In the
income wise category the brand association was highest with the income group of 25k-40k were
more than 40 respondents associated Maggi with noodles ( see exhibit 2). The implications from the
findings discussed above seem that Maggi has good brand association in terms of noodles. Consumers
presume Maggi as Noodles and the company’s philosophy of projecting the brand as noodles brand
seem to be viable in this regard.

40
35
30
25
20
15
10
5
0

Noodle Fast Food Snacks None of

These

10yr -25yr
25yr -35yr
35yr -45yr