Marketing Strategy of MAGGI

Integrated Marketing Communication Assignment

Submitted By: Diksha MBA II Human Resources

Diksha Human Resources Roll No. - 33185

Roll No. - 33185

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 bouillon cubes, sauces and other flavourings. The Maggi Company merged with Nestle in 1947. Today, Maggi is a leading culinary brand and part of the NESTLE 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. Competitions: 1. The first competition came from the ready-to-eat snack segment which included snacks like samosas, biscuits or maybe peanuts, that were usually the bought out type. 2. The second competition came from the homemade snacks like pakoras or sandwiches. So there were no specific buy and make snack! Maggi was positioned as the only hygienic home made snack! Despite this, Nestle faced difficulties with their sales after the initial phase. 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.

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Human Resources

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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 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!

BRAND STORY
Launched in 5 flavours 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. 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. 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 mummi 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.

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Maggis Brand Extension

1993 - Sweet Maggi, the first variant of Maggi noodles was launched. Huge advertisement outlay of 75% of the total yearly expenditure on the Maggi brand. Product failed and withdrawn

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.

Maggi brand finally broke even in 1997. The company realized that the kids who had grown up on Maggi noodles had become teenagers by the late 1990s.

Price Reduction of Maggi Noodles to Boost Sales - Use of thinner and cheaper packaging material Money saver multi packs in the form of 2in-1 pack and 4-in-1 packs. Volume Increase to 9700 tonnes in '94 and further to 13000 tonnes in '95.

1996 - Products from these two ventures failed; poor sales. Maggi noodles performed badly in 1996.

To lure back these customers and to explore new product avenues, Nestle launched Maggi Macaroni in July 1997. Product failed and withdrawn

1995 - With soup business being threatened by a new entrant Knorr soups , offering 10 flavours against Maggis 4 the company started rethinking its strategies towards the soup market.

1995 - To stretch Maggis brand to include Indian ethnic foods - Tie up with Pune based chordia foods to launch pickles. Tie up with Indian foods fermentation (IFF), to market popular south Indian food preparation such as sambher, dosa, vada and spices in consumer packs. The company reportedly saw a lot of untabbed potential in the market for ready to use south Indian market.

Launch of Maggi Hot & Sweet sauce. Used the tagline, Its different.

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Pricing and Product Development

It was at this point in time that Nestle 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 tastemakers 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 followed the launch of the new noodles took Nestle 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, Nestle began working out a strategy to regain Maggis position in the soup segment. To counter the Knorr threat, the company launched 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 Nestle 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 Nestles move with US soft drinks major Coca-Colas New Coke fiasco. However, the company disagreed, Its a hard-5 nosed strategy that mixes nostalgia with the consumers voiced preference for the product it has been bred and brought up on. The reintroduction is Nestles acknowledgement of the loyalty of the Indian mother and the child to the original product. By May 1999, Nestles decision to bring back the old Maggi seemed to have paid off. Two months after the relaunch, the monthly average sales of Maggi noodles and the northern region rose 50% in comparison to the previous year. In July 1999, Maggi the brand, was promoted as the biggest brand in Nestles portfolio of brands in India, overtaking brands such as Nestum and Cerelac. Nestle 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, Nestle carried out various promotional activities as well. These included the August 1999 Fun-Dooz campaign and Jungle Jackpot campaigns. 6 As a result of the above initiatives, Nestle claimed to have cornered an 81% market share of the 20,000 tonnes noodles market by the end of 1999. Nestle 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.

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PRODUCT VARIENTS
The product mix of Maggi is divided into various categories defined below. The company has launched various products under each category as mentioned below. 1. Noodles Maggi 2-Minute Noodle (Masala, Chicken, Curry and Tomato) Maggi Dal Atta Noodles (Sambhar taste) Vegetable Atta Maggi Noodles Maggi Rice Noodles (Lemon Masala, Chilly Chow and Shahi Pulao) Maggi Cuppa mania (Masala yo, Chilli chow yo) 2. Sauces Teekha masala Tomoto chatpat Imli khata mitha Tomato ketchup Hot and sweet Tomato pudina Ginger, Garlic & Coriander Maggi Oriental Chilli Garlic Ginger, Garlic & Coriander 3. Maggi Pichkoo 4. Soups Healthy Chef Style - Cream Mushroom - Sweet Sour Tomato Noodles - Tangy Tomato Vegetables Home Style - Creamy Chicken - Mixed Vegetable - Rich Tomato Chinese Style - Chinese Hot Sour Chicken - Chinese Sweet Corn Chicken - Chinese Sweet Corn Vegetables - Chinese Hot & Sour Vegetables 5. Maggi soup sanjivni Amla Badam Spinach Tomato 6. Maggi bhuna masala Bhuna masala for gravy dishes
Diksha Human Resources Roll No. - 33185

 Bhuna masala for vegetable dal 7. Maggi magic cubes Chicken Vegetarian masala

SWOT ANALYSIS OF MAGGI BRAND

Customer Perception Poll

Good for Health 10% 23% 52% 15% Ready to Eat Junk Food Tasty/ Fun Snack

The SWOT analysis of Maggi brand clearly indicates the strengths of Maggi as a Brand in Indian market. The Brand was found to be a leader in its category of Noodles, with strong customer loyalty. Intensive distribution of Maggi as a Brand was seen in urban areas of the country. The major threats of the brand as shown in the figure below indicates that Maggi has made several attempts to revamp itself as a Healthy Product but till date its perseverance towards the tag line is low by the consumers. The brand is in the growth stage of product life cycle with a strong inclination towards the maturity stage.

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STRENGTH 1. Market leader in their segment 2. Strong brand loyal consumer base 3. Wide range of distribution channel 4. Product according to the need of Indian consumer 5. Innovative Product other 2. Not so much presence in rural market WEAKNESS 1. Product are dependent on each

SWOT ANALYSIS
OPPORTUNITY 1. Increasing number of working youth 2. Product has been acceptable in youth category 3. Shift to rural market 4. Changing preference of consumer towards Chinese food and fast food. 5. Can foray into other food markets with its strong Brand name THREAT 1. Price war with competitors 2. Strong presence competitors of regional

3. Consumers dont perceive it as a Healthy Product of conveniencesavvy time misers who would like to get something instant and be over with it quickly.

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CONCLUSION
The food processing business in India is at a nascent stage. Currently, only about 10% of the output is processed and consumed in packaged form thus highlighting huge potential for expansion and growth. Traditionally, Indians believe in consuming fresh stuff rather then packaged or frozen, but the trend is changing and the new fast food generation is slowly changing. Riding on the success of noodles, Nestle India, tried to make extensions of the Maggi brand to a number of products like, sauces, ketchups, pickles, soups, tastemakers and macaroni in the mid1990s. Unfortunately, the macaroni and pickles didnt pick up as expected. The soups and sauces did somewhat fine, gathering considerable sales volumes and have a satisfactory presence even today. Maggi Noodles itself faced a bit of difficulty with respect to taste, and nearly lost its position in the minds of Indian consumers in the late 1990s. When Nestle changed the formulation of its tastemaker, the ominous packet that came along with Maggi Noodles, a major chunk of consumers were put-off and sales started dropping. Also, Maggis competitor Top Ramen took advantage of the situation and started a parallel aggressive campaign to eat into Maggis market share. But the company quickly realised this and went back into making the original formula coupled with a free sampling campaign. This helped Maggi to win back its lost consumers and pushed up its sales volumes again! Maggi Today The year 2008 saw India leading in world wide Maggi sales. The brand has grown to an estimated value of Rs 160-170 crore and contributes at least 89% to Nestle Indias top line. All the same, some FMCG analysts feel that the brand has not done much to expand the noodles category. Even after 25 years of its launch, the size of the instant noodles market is yet quite small at Rs 300 crore. But yes, the parent company, Nestle India Limited has certainly encouraged the brand to enter into other culinary products.

Diksha

Human Resources

Roll No. - 33185