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ANALYSIS OF MAGGI
Maggi, one of the biggest and fastest growing FMGC product which is
popular leading noodles brand globally manufactured by Nestle. It was
the first to bring the protein rich legume meals to the market. This product
was introduced by julips Maggi 1897.
d
40
Price of Maggi (In Rs)
c
30
20 b
10 a
0 20 30 40 50
FLUCTUATIONS IN DEMAND-
1. VARIATION IN DEMAND ( PRICE )
• Expansion in Demand- Expansion in Demand refers to rise in
the quantity demanded due to change in price, other factors
remaining constant.
• Contraction in Demand- Contraction in Demand refers to the
quantity demanded decreases due to change in price of the
commodity, other factors remaining constant.
10(P2) 30(Q2)
D
A
PRICE OF MAGGI ( in RS.)
P1
B
P2
D
B
P2
PRICE OF MAGGI in RS.)
A
P1
In the above demand curve, we have the price and quantity demanded
for Maggie. In the case of Contraction in Demand, the price of Maggi
increases from RS. 20 to Rs.30, then the quantity demanded decreased
heavily from 30units to 10 units.
INCREASE IN DEMAND OF MAGGI
Price of Maggi (in RS.) Quantity Demanded(in
units)
10(P1) 20(Q1)
10(P2) 30(Q2)
In the below increase in demand curve, the price of Maggi (P1 & P2)
remains constant by RS. 10 whereas the quantity demanded Increased
from 20 units to 30 units, due to change in other factors.
A B
Price of Maggi (in Rs.)
P1
D2
D1
D1
D2
B
P1 A
Price of Maggi (in RS.)
D1
D2
0
Q2 Q1 Quantity of Maggi (in units)
4
PRICE
0
10 20 30 40 50
QUANTITY SUPPLIED BY A
SHOPKEEPER(Per packet of 1 2 3 4 5
RS10)
12
10
8
PRICE
0
10 20 40 60 80 100
QUANTITY SUPPLIED BY
1 2 6 8 10 12
NESTLE(PACKETS)
“In its full-year earnings declaration last week, Nestle had said that
growth of its Zone AOA (Asia, Oceania and Africa) region, at 0.5%, was
“seriously impacted by the Maggi noodles issue in India”.
In June last year, national food regulator Food Safety & Standards
Authority of India (FSSAI) had banned the instant noodle brand on
allegations of higher than permissible lead content and flavour enhancer
monosodium glutamate. The brand, which used to contribute 30% to
Nestle India’s to ..” This was the article posted by ET on 24th Feb,2016.
https://economictimes.indiatimes.com/industry/cons-
products/food/maggi-ban-impact-nestle-india-may-take-3-years-to-
recover/articleshow/51114562.cms?utm_source=contentofinterest&utm
_medium=text&utm_campaign=cppst
ELASTICITY OF DEMAND-
ELASTICITY
Elasticity measures the responsiveness of one variable with respect to
changes in the other variable. The concept of elasticity is used in
production and cost analysis to determine the effect of changes in the
input on the output and effect of output changes on costs.
ELASTICITY OF
DEMAND
PRICE
ELASTICITY OF
DEMAND
PRICE QUANTITY
10 100
15 95
20 85
25 80
quantity
Putting everything in the above formula we can find the Price elasticity of
demand is less than 1. Therefore we can comment that the price elasticity
of demand is relatively inelastic.
Y
P2
P1
X
O Q2 Q1
Maggi has been an all-time snack option for all classes of the society. The
brand has made an almost irreplaceable spot in the market and the
customer loyalty also helps it to flourish with a reasonable change in
price. In short run, the demand might fall because of change in price but
in the long run it won’t affect drastically. In popular opinion and also
Mumbai based marketing agency claims Maggi as a third staple for the
country.
Through the graph, we can see with increasing income group, there is an
increase in the consumption of Maggi.
As the income increases for a consumer, there won’t be a relevant effect
on demand of Maggi. Because Maggi is almost a necessity for the
consumer, therefore the increase in income of the consumer will be
allocated to other wants of the consumer.
Therefore, we can say the income elastic of demand is relatively inelastic.
The income elasticity of Maggi is more than 0 and less than 1.
Y D
Y2
10%
Y1
>10%
D
O Q1 Q2 X
CROSS ELASTICITY OF DEMAND
P2 15
ED >1
100 200
Q1 Q2
= 2 ED>1
P2 20
ED<1
100 150
Q2 Q1
= 0.5 ED<1
P2 20 D
ED=0
= NO CHANGE ED=0
YEAR
QUANTITY ADVERTISING
DEMANDED PRICE
FOR FOR
MAGGIE
MAGGIE
1 1000 50000
2 2000 200000
= ∆Q
Q
∆P
P
If the price of maggie increases by 10 percent then there will be increases
the supply of the maggie by more than 10 percent .The resources to
make additional supplies of Maggi are readily available and the total
cost would be minimal to ramp production up or down.
P2 20
10%
P1 10
100 250 x
Q1 Q2
= 150/100
10/10
= 1.5 = 1.5 ES > 1
1
ASSUMPTIONS:-
There are possibilities of change in technology and chances of product
innovations in the long run.
There are possibilities of increasing good quality cadbury
manufacturing units.
These factor make Maggi a popular food snack that has ruled heart of
millions for years together.
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