Introduction of Maggi in Indian market
• Maggi is a food product that is ready to cook in 2 mins, this instant noodle product was introduced to Indian customers by nestle India ltd.
• It was initially founded by the Maggi family in Switzerland in 19th century and hence the name Maggi.
• Nestle being a well versed in FMCG wanted to explore the potential for such instant food among Indian market.
• That being a right decision, now Maggi enjoys around 90% market share in this segment. It is also the most popular instant food (especially in residential colleges).
• Going ahead with its popularity, Maggi also launched many products under its brand name such as Maggi Atta noodles, Maggi multigrain, Maggi Cuppa mania etc. ANNEXURE – 1 enclosed
Product Strategy adopted
Inceptive Strategies used by Maggi in India:
• Although Maggi is a highly accepted product today, it did not receive the same success in its initial stages.
• Maggi had to face a lot of difficulties in its product launch in India.
• The biggest problem was Indian mentality. The period when Maggi was introduced Indian customers were new to ready to eat products, they were not welcoming and had a pre-determined notion that instant food was a bad innovation.
• Nestle’s target market was working women, since it was more convenient to them to cook while following a busy schedule and marketing Maggi to them would be the best idea.
• Even after investing heavily on advertisement Maggi was not picking up sales.
• To beat this situation, Nestle conducted heavy research and repositioned its product as ‘convenience’ for mothers and ‘fun’ for kids.
• They made effective taglines for communication like “fast to cook, good to eat”, “2-mins to cook” etc.
Market Mix :
Swot Analysis of Maggi
To be branded, products must be differentiated. Nestle has also given importance to this aspect and created product differentiation advantage for Maggi.
Nestle Maggi Product Mix
Maggi is the food brand in the umbrella of Nestle one of the world’s largest food and beverage company. Maggi has introduced various food items in the market based on the needs and preferences of the consumers.
The product mix of Maggi in India includes :
Product Line Length Analysis:
The product line length is influenced by the company’s objectives.
Maggi has various products in its product line. Product line are group of products which are closely related and have similar features. Maggi lengthened its product length with line stretching and Line Filling.
• Down market stretch:
o In this case, the company wanted to introduce products for the lower market segment. This was done due to counter competition and to also bring in more volume sales.
o Maggi similarly came up with ‘Maggi Chotu’, for noodles and another segment of ‘Maggi Pichkoo’ for ketchup in small pouches. Also, by decreasing the quantity, Maggi offers a wide range in its soups and masalas at low prices.
• Up market stretch:
o Maggi recently came up with its new range of products in cubes of chicken and vegetables. It also has new varieties in cooking and seasoning sauces for pastas and pizza.
o To cover the upper market segment, it also expanded into coconut milk powders and a new range of healthy soups under ‘Excellence’ like cream of corn, green pea with coriander etc.
• Two-way stretch:
o The company serves the middle market and expands its line in both directions.
o Maggi has stretched its product line up and down to create a product line differentiated by benefits, varieties, ingredients, quantity and price.
• Maggi came up with Atta Noodles, Multigrain Noodles and Oats Noodles and Masala and Chicken ‘Cuppa Noodles’, catering the needs of the consumers.
• It also launched four new flavours in the same category of noodles naming – “Hot Heads” with similar pricing.
At first nestle attempted to position the noodles in the stage of comfort focusing on the working women. However, Maggi’s sales were not increasing in spite of overwhelming Media Advertising . To beat this nestle directed an examination, which uncovered that it was youngsters who enjoyed the essence of Maggi noodles and who were the biggest buyers of the item. So, they thought of maggi 2-minutes noodles with cost of Rs. 2.10 with an end of 100% edge.
Maggi still comes in truly moderate costs beginning from Rs. 5, they decreased the amount as opposed to expanding cost.
Maggi utilizes a cost based evaluating methodology to tap in to different markets in the world. The aggressive costs are repaid with high volumes of the items. This demonstrates that competitors and cost are the two main considerations in the marketing mic pricing strategy of Maggi.
As a result of rising costs in different nations Maggi has shrewdly begun decreasing the amount to keep the costs unaltered. Nestle endeavors to catch most extreme piece of the overall industry with low costs and top notch guidelines. As Maggi is attempting to take advantage of all portions of pay class it keeps differential costs in depending areas and crosswise over nations. Likewise its contributions are accessible in wide assortment of bundles with the goal that individuals can purchase as indicated by their requirements. As of late Maggi has begun concocting new items like the cup range and Hot Heads noodles which it focuses for the higher salary level sections and consequently are priced at higher range.
Maggi likewise has penetration pricing strategy since it realizes it needs to enter the whole market of the world. There are numerous indirect contenders to Maggi also. Maggi has an obvious approach with respect to its costs. From its underlying years it has kept low estimating strategy since, its shoppers generally have a place with the normal working class gathering. To make the item moderate they needed to tone down their costs however the volumes the item creates has helped the organization in keeping up a sound benefit. Along these lines, the costs have dependably been kept typical with no sensational changes. With the end goal to keep with the changing monetary occasions Maggi has diminished the amount, rather than the costs. Alongside this, to oblige the center and low pay class clients, Maggi offers distinctive sizes of bundles at different costs so the client can purchase according to the budget.
Name of Product Quantity Price
Maggi 2-minute noodles(Chicken) 95 gms Rs. 12.00
Maggi 2-minute noodles(Curry) 100 gms Rs.13.00
Maggi 2-minute noodles(Masala-spicy) 100 gms Rs. 12.50
Maggi Rice noodles 95 gms Rs. 15.00
Maggi 2-minute noodles(Veg Atta) 200 gms Rs.30.00
Maggi Dal atta noodles 100 gms Rs.13.00
Promotion Mix of Maggi
Maggi followed an Integrated Market Communication channel by inculcating different methods of promotion. Over a period of time, Maggi gradually restructured its promotion mix as per the needs of the time and the platforms that customers were interacting most with.
An overview of the promotion mix is depicted in the diagram below;
How did Maggi’s promotion mix evolve? (Annexure 3)
• During it’s launch, Maggi put it’s focus to targeting mothers for their popular product – Maggi noodles, and largely used TV ad campaigns.
o The brand was positioned as ‘convenient, quick and easy.’
o The tagline used was – Fast to cook! Good to Eat!
o Maggi’s investment in Print ads was limited and most of its budget was set to TV ads to reach its target market.
o The brand also associated with popular celebrities to improve its brand appeal.
• Maggi also had to occupy the retail outlets and this required a high level of Personal selling and Sales Promotions. The different methods used by Maggi to promote their noodles as well as upcoming products such as masala cubes and ketchup. They used the following tactics to attract new customers and also build demand for their less popular products,
o Price-off offers
o Exchange schemes for empty packs
o Scratch and win offers
o Moneyback offers
o Free trials in schools and offices
• Around the early 2000s, tackling questions regarding ‘HEALTH’ had become a priority for Maggi. This is when, Public Relations was carefully integrated into Maggi’s marketing mix.
o The brand was reinforced with a new tagline- ‘ Taste Bhi, Health Bhi!’
o Maggi sponsored kids’ events and began the ‘Maggi Club’ for children with games, gifts and more.
o Maggi also organised school quizzes and contests in schools.
• With great brand recall, Maggi now saw many competitors entering the market and picked up its product line and promotion differently.
o Different variants in flavours with the theme ‘Masalas of India’ and the tagline ‘Ab Har Taste Apna.’
o Leveraging on the ‘Nostalgia Factor’ and reinstating the duration for which the brand has been with the customer in India.
• As the millennial age caught up, Maggi did not leave the social media space untouched with it’s new products such as soups and Cup Noodles
o With heavy spend allocated to TV campaigns, it now focused on social media to reach out to it’s target of college and school students, travellers, and other new target markets evolving online.
• Overcoming the Maggi Ban
o Post the Maggi Ban, Maggi extensively marketed itself with different stand points such as nostalgia, trust, emotional connect and health with consumers. (Annexure 4)
o Its promotion mix now skewed more to online platforms, in order to effectively eliminate doubts that the brand had emitted during its ban and the negative press it had gained on social media.
o It also heavily invested in print to reach out to the educated customers and eliminate any doubts regarding the product.
o The tagline for it’s comeback was, – Your Maggi is safe, it always has been!
o Angling promotions with emotional connect also began to play a huge role. Such as,
? Meri Maggi story
? Biggest Maggi Fan, and others.
• While Maggi extensively promotes its star product, Maggi noodles, more promotion is to be done for its other products to establish brand recall across its entire product length.
• Maggi still chalks out a chunk of it’s marketing spend to TV ads. The same can be allocated effectively on Digital mediums since the Maggi’s ideal target market is gradually shifting online.
• Maggi can also venture into ‘Content Marketing’. With this, it can connect with the consumer on the uses of its products, the benefits and maintain thought leadership. This is necessary especially when other brands like Patanjali are positioning themselves as healthier and more ‘Indian’.
• Bringing back sales promotions with a view of creating a buzz over several other competitors can be beneficial for the brand.
Nestle’s Distribution Retail Channel
Nestle follows Intensive distribution system, it has made its product available to their end consumer through its vast network of distribution.
A schematic figure represents the distribution channel of Nestle India for the product like Maggi Chocolate and Milk products.
Advantages of having their own distribution system.
? Retail Distribution.
1. Nestle owns its distribution network with all the logistics equipped
2. They transport to major RSO (Region sales offices) which are situated in every state
3. They have divided the country distribution centres to 15 clusters
• Each cluster caters the region which it falls under it.
• They will customize accordingly to the consumers tastes and preferences.
• This strategy is introduced to increase the sales volume it’s also called has hyper local push strategy.
• A separate team comprising of 10-20 people form supply chain, category marketing and trade marketing or each of the clusters.
• This ensures and helps in better penetration in existing markets and expand further.
• Before they had a market reach around 5 Million after the Maggi crisis it dropped to 3 million, through this strategy they have boosted up their sales to 4.2 million as of now.
1. Nestlé wants to establish direct channels (E-commerce) with consumers so it can offer better service and direct buying ability.
2. This has boosted their sales by 5% according to the recent data.
3. They have tied up with Amazon for the better reach of their product especially their star product Maggi.
Problems and suggestions in distribution system
1. Channel Conflict: When the higher hierarchy level among the distribution channel by pass the lower level to get the maximum profit this conflict arises, this can be resolved by defining the following
a. The % margins allotted to each level
b. Their rights and roles
c. The overall Goal or target to be achieved
2. Invasion of Territories: Usually the retail distributor to increase their profitability will expand their sales across different regions to avoid this each retail distribution agency has to be given specific territories or clusters to reduce such ambiguity.
3. Incentive plans: To increase the sales volume the members of the channel are given attractive incentives upon reaching the specific targets.