Maggi Brand Extension And Repositioning

Maggi daub Extension And RepositioningThis investigate paper fill ins with the study of Maggi nock which made its whole tone in India in the year 1983. Maggi is a cross off originated in India by Nestle India Limited. It has over the years become synonymous with noodles. This research paper tries to come across come give away of the closet the advanced areas and the market where Maggi layabout enter. Also, Maggi has always tried to play on the platform of a salutary Product. This paper analyses its success and the gives a aspect of Maggi as in the eyes of the consumer. The introduction provides the company background, operational otherwise important information provided by the company which would assist in taking the finis for the right scrape extension strategy for Maggi.The industrial revolution in Switzerland in the late 1800s created factory jobs for women, who were therefore left with real little epoch to prepare meals. This wide spread problem grew to be an object of intense study by the Swiss Public Welfare Society. As a fictitious character of its activities, the Society asked Julius Maggi miller to create a ve touch onable forage crossway 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 intelligence of an immigrant from Italy who took Swiss citizenship. Julius Maggi became a miller and took on the reputation as an inventive and capable line of reasoningman. In 1863, Julius Maggi came up with a formula to start added taste to meals. before long after he was commissioned by the Swiss Public Welfare Society, he came up with devil eye blink pea dope ups and a bean soup the first cast 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 flavorings. The Maggi Company merged with Nestl in 1947. Today, Maggi is a l eading culinary brand and part of the NESTL family of fine foods and beverages. Under the Maggi brand, which is today known worldwide for quality and innovation, Nestle offers a whole move of products, much(prenominal) as packaged soups, frozen meals, prepared sauces and flavorings.MAGGI BRAND IN INDIAMaggi 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 atom which included snacks like samosas, biscuits or maybe peanuts, that were usually the bought out type. The second competition came from the homemade snacks like pakoras or sandwiches. So there were no particularised pervert and make snack Moreover both competitors had certain drawbacks in comparison. Snacks like samosas are usually bought out, and out array food is generally considered unhygienic and unhealthy. The other competitor, homemade snacks overcame both these problems but had the disadvan quest fore of extended preparation time at home. Maggi was positioned as the nevertheless hygienic homemade snack Despite this, Nestl go about difficulties with their gross sales after the initial phase. The reason being, the positioning of the product with the wrong pit group. Nestle had positioned Maggi as a convenience food product aimed at the target group of working women who hardly found any time for forming. Unfortunately this could not hold the product for very long. In the course of many another(prenominal) 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 color pencils, sketch pens, fun books, Maggi clubs which worked wonders for th e brand.Why the specific provoker 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 cast 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 sift 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 lady of the house 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 workedBRAND STORYLaunched in 5 flavors initially Masala, chicken, Capsicum, sweet sour, and Lasagna Maggi had t o 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 plus the brand awareness. 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 analysts, the focus on promotion turned out to be the single largest factor responsible for Maggis rapid acceptance. Nestls managers utilized promotions as measured to meet their sales target. Gradually, sales promotion became a crutch for Maggi noodles sales. posterior many of the Maggis extensions also made considerable use of promotional s chemes. 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 programs and advertised heavily on kids program 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.Maggis shit ExtensionIn 1998, Nestle launched Maggis first brand extension, Maggi soup. At this stage, there was no organized packaged soup market in India. Nestle aforethought(ip) 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 Maggis brand figure, and was never very serious about the segment.In 1993, Sweet Maggi, the firs t variant of Maggi noodles was launched. The company supported the launch with a coarse 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 pull in ones horns it. At the end of the year, Maggi noodles was generating sales volume of or so 5000 tons and remained a loss do proposition for Nestle.To boost sales, Nestle decided to reduce the charge of Maggi noodles. This was made possible by using thinner and cheaper packaging material, the company also introduced money economiser multi packs 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. Maggis euphoria was, however, short lived, as sales stagnated in 1995 at the previous years level. With soup business being threatened by a new entrant Knorr soups launched in 1995, offering 10 flavors against Maggis 4 the company started rethinking its strategies towards the soup market.In coiffure to stretch Maggis brand to include Indian ethenic foods the company fix 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 to the south Indian food preparation such as sambher, dosa, vada and spices in consumer packs in Dec 1995. The company reportedly cut a lot of untapped 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 launched. Analysts attributed the failure of these Maggi extensions to the fact that Nestl seemed to be particularly bad at dealing with traditionalistic Indian product categories. Maggi noodles performed badly in 1996. Despite slow sales in the previous two years, Nestl had set a sales target of 2 5,000 tonnes for the year. However, Maggi couldnt cross plain 14,000 tonnes. Adding to the company woes was the failure of Maggi Tonites Special, a direct 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, Nestl 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, Nestl launched Maggi Macaroni in July 1997. According to analysts, Maggi Macaroni was launched partly to deal with the growing popularity of competing noodles brand aggrandisement Ramen. Maggi Macaroni was mad e 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 Macaronis launch was backed by a multi-media advertisement campaign including radio, television, outdoors and print media.The products pricing, however, proved to be a major hurdle. A 75-gm Maggi Macaroni pack was priced at Rs 11, temporary hookup a 100-gm noodles pack was available at Rs 9. According to analysts, Nestl 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 identical 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 absor b the tastemaker well and consequently did not taste very good. The interest generated by the novelty of the product soon died out and sales began tapering off. Eventually, Nestl had to withdraw Maggi Macaroni completely from the market.Nestl had not even recovered from Macaronis 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 thanksgiving 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, utilise the tagline, Its different. However, during mid-1997, HUL began promoting its Kissan range of sauces aggressively and launched various innovative variants in the category.Nestl responded with a higher thrust on advertising and different size packs at d ifferent 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 increase considerably, forcing the company to increase the retail price. By early 1997, the price of a single pack had reached Rs 10. Volumes were still languishing between 13,000-14,000 tonnes.Pricing and Product DevelopmentIt was at this point in time that Nestl 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 by dint of 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 supra 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 significan tly different from what it used to be. The customer backlash that followed the launch of the new noodles took Nestl 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, Nestl began working out a strategy to regain Maggis 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 Nestl 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 percent of its market share to Knorr.The relaunch prompted market observers to compare Nestls 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 easy preference for the product it has been bred and rought up on. The reintroduction is Nestls acknowledgement of the loyalty of the Indian mother and the child to the original product. By May 1999, Nestls 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 Nestls portfolio of brands in India, overtaking brands such as Nestum and Cerelac. Nestl 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 dri ver for the company. To further support the brand, Nestl carried out various promotional activities as well. These included the appalling 1999 Fun-Dooz campaign and Jungle Jackpot campaigns. 6 As a result of the above initiatives, Nestl claimed to have cornered an 81% market share of the 20,000 tonnes noodles market by the end of 1999. Nestl 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.PRODUCT VARIENTSThe product mix of Maggi is divide into various categories defined below. The company has launched various products under each category as mentioned below.RESEARCH METHODOLOGYOBJECTIVES 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 fellowship, Brand recall To understand the Brand performance of Maggi products. To understand Brand Imagery, Brand Quality perceive by custome rs, Brand credibility, consideration, superiority and feelings. Brand Extension of Maggi in terms of product diversity. Analyse the repositioning of Maggi brand as a Healthy product and the consumers perseverance towards the same.RESEARCH PLANResearch figure of speechThe research give 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 DesignThe target population for our study is households. The sample will be selected by a simple random take in method .Sample SizeThe sampling unit is 150 which are divided as followsNumber of answerings 150 Age-group 10 45 Monthly Household Income 25000 75000 INR Survey Locations Delhi, Faridabad,Gurgoan,Noida,Greater Noida Salary Group No income 25K 40K 40K 60K 60K 75K Number of Respondents 30 50 70 Age Group 10 25 25 35 35 45 Number of Respondents 50 50 50 DATA COLLECTION PLANData GatheringThis study involves d ata collection (primary research) from different households in four different areas Delhi, Faridabad, Gurgoan, and Noida.Literature check intoThe research conducted as a part of our study would include Primary as well 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.METHOLODOGYThe research will be carried out in the form of a survey. This will include primary research in addition to secondary research as stated below. The survey research method will be descriptive research design. Each respondent will be interviewed through a Questionnaire. The sample will be selected by a simple random sampling method.The survey will care the pursuit information areaInformation AreasThe 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 companys 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 RESULTS1. Brand AssociationsSources 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 cogitate 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 defineings discussed above seem that Maggi has good brand association in terms of noodles. Consumers presume Maggi as Noodles and the companys philosophy of projecting the brand as noodles brand seem to be viable in this regard.2. Brand disavowFrom the Exhibit 3 4 given below it seems a clear trend that Maggi has a good brand recall as compared to its competitors like Top Ramen, Surya noodles etc. Consumers could easily associate Maggi with noodles. In the Age wise category, the respondents of the age group of 25-45 were highly cautious of Maggi brand and seemed to be consuming Maggi more as compared to other age segments.In the gender wise category the companys strategy of positioning of Maggi brand for working women seems to be adaptive and gaining shape as women respondents had a brand recall more than male.3. Brand AwarenessFrom the responses of the respondents in the conducted survey it was evident than Maggis Brand awareness was very high in terms of noodles were around 65 %of the respondents associated maggi as noodles and only 20 % of the respondents knew ,Maggi as a Ketchup, 9% as soup etc.The trend indicated that Maggis brand extension strategy to increase its basket has not been quite successful in other food segments .This might be because of the larger share of market captured by the competitors hence Maggi has a high potential in markets like ketchup, soups etc.4. Repositioning Maggi as a healthy productThe companys strategy to reposition Maggi as a Healthy product was not found conducive as per the survey results. The survey showed that consumers did not perceived Maggi as a healthy product with 53% of them consumed Maggis traditional products as compared to the rest who consumed other vari ants of Maggis brand that were positioned as Healthy products.From the pie chart given below it can be clearly seen that Maggi is still perceived as a non healthy products by the consumers and in spite of the efforts to position Maggi as a healthy product by the company the brand is still perceived as a ready to eat food brand that has a high market share in the noodle category in India. swot up abstract OF MAGGI BRANDThe 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 incl ination towards the maturity stage.picSTPD ANALYSIS OF MAGGI BRANDSegmentation Market Segmentation divides the heterogenous market into homogenous groups of customers who share a similar set of needs/wants and could be satisfied by specific products. Maggi Brand have segmented the market on the basis of lifestyle and habits of URBAN FAMILIES.Target Market Targeting refers to evaluating and deciding from amongst the various alternatives, which segment can be satisfied best by the company. The Maggi Brand have mainly targeted the Kids, Youth, Office Goers Working Woman which falls into the category of convenience-savvy time misers who would like to get something instant and be over with it quickly.Positioning Market Positioning is the act of designing the companys offerings and image to occupy a distinctive place in the minds of the target market. The goal of positioning is to locate the brand in the minds of consumers to maximise the potential benefit to the firm. Maggi has position ed itself in the SNACKS category and not in the meal category since Indians do not consider noodles as a proper food item. Therefore Maggi have developed its brand image of instant food products with positioning statements such as 2 minutes noodles and Easy to cook, good to eat.Differentiations Points-of-difference (PODs) are attributes or benefits consumers strongly associate with a brand, positively evaluate and believe they could not find to the same extent with a competitive brand. The Maggi Brand have also differentiated its brand image from its competitors in terms of taste, flavours and packaging. Maggi have launched wide varieties of products in different flavours which can attract larger set of customers. Maggi products are also available in different sizes catering to different customer needs.CUSTOMER ground BRAND EQUITY PYRAMID (CBBE)Maggis customer based brand equity pyramid seems to be equally strong on left hand side and right hand side, it is also strong from bottom to top enjoying the highest brand awareness of any fast food noodle brand in India as well as repeat purchase rate and high customer loyality.BRAND PRISM OF MAGGICONCLUSIONThe 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 involution 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 mid-1990s. 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 tas te, and close to 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 TopRamen 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 againMaggi 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 8-9% 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.RECOMMENDATIONAfter the conducted study following recommendations could be sited for Maggi Brand. To gain maximum leverage in terms of profit the company should pay emphasis on segments with age groups 25-35 and above .Advertising is the key to success. Targeting these segments will not only enhance the companys profit margins but also it will leverage the brand image of Maggi. The company should advertise its products by depicting attributes related to to Health like Nutrition values, % of Vitamins, Proteins etc.This would help in customers perceiving the product as Healthy. Foray into other food products like chips, chocolates etc under its sole brand name would not only help in Brand extension but will also enhance Maggis market share.FUTURE PLANS Nestl Indias objective is to manufacture and market the companys products in such a way s o as to create value that can be sustained over the long term for consumers, shareholders, employees and business partners. Maggis aims to create value for consumers that can be sustained over the long term by offering a wide variety of high quality, unassailable food products at affordable prices. The company continuously focuses its efforts to better understand the changing lifestyles of modern India and anticipate consumer needs in order to provide convenience, taste, eatable and wellness through its product offerings.LIMITATIONSThe present study is confined to a minimal sample size and may not reflect the opinion or response of the entire population in general. The results of our study are entirely confined to the responses of the Delhi consumers and might deviate in terms of actual population as a whole.Recomendations given after the study are entirely dependent on the survey and the secondary analysis done in the report.