Maggi

Nestl India is a subsidiary of Nestl S.A. of Switzerland. With seven factories and a large number of co- packers, Nestl India is a vibrant Company that provides consumers in India with products of global standards and is committed to long- term sustainable growth and shareholder satisfaction. The Company insists on honesty, integrity and fairness in all aspects of its business and expects the same in its relationships. This has earned it the trust and respect of every strata of society that it comes in contact with and is acknowledged amongst Indias Most Respected Companies and amongst the Top Wealth Creators of India.

Nestle was founded in 1867 in Geneva, Switzerland by Henri Nestle. Nestls first product was "Farine Lactee Nestle", an infant cereal. In 1905, Nestle acquired the Anglo-Swiss Condensed Milk Company. Nestls relationship with India dates back to 1912, when it began trading as The Nestl Anglo-Swiss Condensed Milk Company (Export) Limited, importing and selling finished products in the Indian market. After Indias independence in 1947, the economic policies of the Indian Government emphasized the need for local production. Nestl responded to Indias aspirations by forming a company in India and set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestl to develop the milk economy. Progress in Moga required the introduction of Nestls Agricultural Services to educate, advice and help the farmer in a variety of aspects. From increasing the milk yield of their cows through improved dairy farming methods, to irrigation,

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scientific crop management practices and helping with the procurement of bank loans. Nestl set up milk collection centres that would not only ensure prompt collection and pay fair prices, but also instill amongst the community, a confidence in the dairy business. Progress involved the creation of prosperity on an on-going and sustainable basis that has resulted in not just the transformation of Moga into a prosperous and vibrant milk district today, but a thriving hub of industrial activity, as well. In 1967, Nestle set up its next factory at Choladi (Tamil Nadu) as a pilot plant to process the tea grown in the area into soluble tea. Nestle opened its third factory in Nanjangud (Karnataka) in 1989. Thereafter, Nestle India opened factories in Samalkha (Haryana), in 1993 and two in Goa at Ponda, and Bicholim in 1995 and 1997 respectively. Nestl has been a partner in India's growth for over a long time now and has built a very special relationship of trust and commitment with the people of India. The Company's activities in India have facilitated direct and indirect employment and provides livelihood to about one million people including farmers, suppliers of packaging materials, services and other goods. The Company continuously focuses its efforts to better understand the changing lifestyles of India and anticipate consumer needs in order to provide Taste, Nutrition, Health and Wellness through its product offerings. The culture of innovation and renovation within the Company and access to the Nestl Group's proprietary technology/Brands expertise and the extensive centralized Research and Development facilities gives it a distinct advantage in these efforts. It helps the Company to create value that can be sustained over the long term by offering consumers a wide variety of high quality, safe food products at affordable prices. Nestl India manufactures products of truly international quality under internationally famous brand names such as NESCAF, MAGGI, MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID and NESTEA and in recent years the Company has also introduced products of daily consumption and use such as NESTL Milk, NESTL SLIM Milk, NESTL Fresh 'n' Natural Dahi and NESTL Jeera Raita. Nestl India is a responsible organization and facilitates initiatives that help to improve the quality of life in the communities where it operates.

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Organizational Structure
Like most corporations, Nestls governing body is the Annual General Meeting of shareholders (AGM). The companys executive body is the Board of Directors. Leading the company is the Chairman of the Board and Chief Executive Officer. Nestl allows the same person to hold both positions (the current Chairman and CEO is Peter Brabeck-Letmathe). Supporting the Board of Directors in corporate governance are four committees: Chairmans and Corporate Governance Committee, Compensation and Nomination Committee, Audit Committee, and Finance Committee. The Board currently has 14 members, 13 of which are independent. Nestl also has an Executive Board composed of company executives and department heads. The Executive Board manages the companys operations and implements strategy and policy created by the Board of Directors.

Product Mix and Brand Portfolio (product width and length)

Milk Products and Nutrition Nestl India has a wide portfolio for Milk Products and Nutrition. Nestl has a very clear Charter of ethics and responsible behaviour in selling infant nutrition products. Nestl India follows this Charter and also complies with The Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992 that guides the sale of infant nutrition products in India. Nestl India does not advertise its Infant Nutrition products.

NESTL EVERYDAY Dairy Whitener NESTL EVERYDAY Slim NESTL EVERYDAY Ghee

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NESTL Milk NESTL Slim Milk NESTL NESVITA PRO- HEART Milk NESTL Fresh n Natural Dahi NESTL Fresh n Natural Slim Dahi NESTL Jeera Raita NESTL NESVITA Dahi NESTL NESVITA Fruit Yoghurt NESTL CEREVITA NESTL MILKMAID NESTL MILKMAID Fruit Yoghurt NESTL MILKMAID FUNSHAKES

Beverages

NESCAF CLASSIC NESCAF SUNRISE NESCAF CAPPUCINO NESCAF MILO SMART PLUS Ready-to-drink NESCAF MILO SMART PLUS NESTEA ICED TEA WITH GREEN TEA NESTEA ICED TEA NESTL NESQUIK

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Chocolates and Confectionery NESTL KIT KAT NESTL KIT KAT CHUNKY NESTL MUNCH NESTL MUNCH POP CHOC NESTL MILKYBAR NESTL MILKYBAR CHOO NESTL BAR-ONE NESTL Milk Chocolate POLO NESTL clairs

Prepared Dishes and Cooking Aid MAGGI 2-MINUTE NOODLES MAGGI Vegetable Aata Noodles MAGGI Dal Aata Noodles MAGGI Rice Noodles Mania MAGGI CUPPA MANIA MAGGI Sauces MAGGI Pizza Mazza MAGGI Bhuna Masala MAGGI MAGIC Cubes MAGGI Healthy Soups MAGGI Healthy Soups- Sanjeevni

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What is the brand that comes to your mind when the word noodles is mentioned? Why Maggi of course! Ever since its launch in India in 1983, this brand has become synonymous with noodles. The bright red and yellow colour of the packet with the brilliant blue 2-minute noodles printed on it has found a place on every kitchen shelf and into the hearts and stomachs of millions as the Fast to cook! Good to eat!

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MAGGI the Companys History
MAGGI owes its name to founder Julius Maggi (1846 - 1912), entrepreneur and inventor of the first product to bear the brand - MAGGI Soup Seasoning. 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 widespread 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, a 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 flavorings. The Maggi Company merged with Nestl in 1947.

Maggi- the taste of Asia

As the leading culinary brand in Asia, MAGGI has long been recognized as the trusted brand for flavour and meal enhancement products in Asian kitchens. Indians eat most Maggi noodles in the world. What Xerox is to photocopier and Colgate to toothpaste, Maggi is to noodles in India. And this is no idle boast. Hear it out from Nestle India chairman and managing director Carlo Donati. India has emerged as the largest consumer of Maggi noodles across all Nestle operations in the world, Donati told ET. It was Donati who brought the instant noodle brand to the country during his short stint in the early 1980s. Maggi went on to create a whole new product category and caught the fancy of kids across the country in no time. Today, while India tops in world-wide Maggi sales, the latter has grown to an estimated Rs 260270 crore brand contributing as much as 10-14% to Nestle Indias top line. Maggi noodles sell in most Asian countries, Australia and Africa. However, FMCG analysts are not impressed. They

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say Maggi has done little to expand the noodles category per se. Nestls investment on Maggi has been squarely disproportionate to the growth of the brand, Mumbai-based equity research firm ASK Raymond James senior vice-president (research) Nikhil Vora said. Today, after 20 years of flogging the Maggi brand, the size of instant noodles market is a small Rs 300 crore. Yet, most analysts agree that Nestle India has done well to leverage the brand to enter a large number of culinary products. Just for the record, In 10 years, I want to sell two and a half times of what I am selling today, said Donati. So, the learning curve is shrinking. Launched in early 1980s, Maggi was positioned on the convenience plank, which yielded good results. Looking at the success of noodles, Nestle India decided to extend the brand to a number of products such as sauces, soups, pickles and macaroni in mid-1990s. Maggi macaroni bombed and pickles didnt do well either. Maggi soups and sauces chugged along and today have a decent presence in the market. Maggi noodles acceptance among Indian consumers didnt come easy. Nestle changed its formulation some time back which was rejected by the consumer. So, the company had to revert to the original make. Since then, it has been a smooth sailing for the brand. Interestingly, it is only now, during Donatis second stint, in the country that the brand has established. Maggi noodles have seen a robust double-digit growth in sales during the last four years, said Donati. Last year, Nestle India launched Chinese Noodles as a snack food for the adults.

Maggi Comes to India teething troubles

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Maggi, as a brand, has been known in the market, particularly in the western world, for quite some time as the maker of Bouillon or Soup Cubes. In fact, when Nestl decided to introduce Maggi in India, it started by introducing the Bouillon Cubes. In 1974 the company introduced Maggi bouillon in Kerala, as a test marketing operation. The initial result was not encouraging. Having realized that maybe the dietary habits of Keralites are not conducive to the idea of drinking soup at a meal, the company decided to extend the distribution of this product to Goa. It was argued that since Goan food habits have some similarity with western habits they may take to having soup with their meals. Fortunately for the company, its analysis turned out to be more or less correct. Maggi soup cubes became a success in a limited way, and still are. There is one other point. The flavor of soup cubes jells well with non- vegetarian food, but since the majority of Indians are vegetarians, the company realized that Maggi soup cubes would therefore take time to be a big seller. They thus, decided to wait for sometime before further extension.

Entry of Maggi 2 minute noodles Segmentation of Maggi

Nestle India Ltd. was first company to launch noodles in the Indian market in the early 1980's as Maggi 2 minute noodles. Maggi noodles was launched in India in the early 1980s. 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 usually 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 bought out, and outside food is generally considered unhygienic and unhealthy. The other competitor, home made snacks overcame both these problems but had the disadvantage of extended preparation time at home. Maggi was positioned as the only hygienic homemade snack!

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Despite this, Nestl faced difficulties with their sales after the initial phase. Maggi has faced lot of hurdles in its journey in India. The basic problem the brand faced is the Indian Psyche. Indian Palate is not too adventurous in terms of trying new tastes. So a new product with a new taste that too from a different culture had a great deal of difficulty in appealing to Indian market. Another reason for the low sales was the positioning of the product with the wrong target group. Initially Nestle tried to position the Noodles in the platform of convenience targeting the working women. At that time, Indian consumers were rather conservative in their food habits, preferring to eat traditional Indian dishes rather than canned or packaged food. But it found that the sales are not picking up despite heavy promotion .Research then showed that Kids were the largest consumers of the brand. Realizing this, Nestle India Ltd. shifted its focus from working women to children and their mothers and repositioned the brand towards the kids using sales promotions and smart advertising. Maggi has segmented the consumer market as: Basis for segmentation Demographic Age Income Psychographic and behavioural Lifestyle, eating habits and benefits Kids All income groups Working & busy people Working women Youth Taste bhi health bhi 2- minute noodles and fast to cook good to eat Targeting Positioning

The main target market of Maggi is the children but its consumers include people from all age group. Because of its low pricing and affordability and the ease of preparing, even the low income group consumes the product as a snack. Thus its target market more or less consists of the entire population as even the adults now like to have it.

Positioning

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A specific positioning by Maggi. Maggi was positioned as 2-minute noodles with a punch line that said Fast to Cook Good to Eat. 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 its a hit with her. The kids also loved the taste, thus the 2-minute funda coupled with the yummy taste worked. Nestle India Ltd.s promotions positioned the noodles as convenience product, for mothers and as a fun product for children. The tag lines such as Fast to Cook Good to Eat, 2-minute noodles and Taste Bhi, Health Bhi are the strong brand elements of Maggi which have helped in building brand equity.

Brand Concepts
Brand image

A brands image is formed by the consumers perception and value of a brand in their eyes which is formed by all the experiences that they gain by using the product and the knowledge that they have about the brand. The brand Maggi is perceived by its users as a product which offers convenience, taste, a good between meal snack which can be prepared at any time without much effort and its new product cuppa mania reduces the effort even more. Its interesting range of prepared foods includes an array of convenience flavours that makes cooking an enjoyable experience! Maggi has over the years established a trusted bond with consumers through its consistency and dependability.

Brand association

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Brand association is anything that a consumer thinks of with the brand in mind. The value of the product is associated with the brand which forms a basis for purchase decision and brand loyalty. Whenever, the brand name Maggi is mentioned a consumer relates it firstly to noodles. It is also associated with its application i.e. ease of cooking and the various products such as soups, ketchups, various varieties of noodles etc. which cooking and make it easier and quicker. It is usually associated with people who need something to make cooking easier such as working people, students who stay in hostels etc.

Potential Maggi- ready to eat noodles, more new flavors, more healthy and nutritious noodles Maggi atta noodles- vegetable and sambhar, cuppa mania, rice mania Different flavours of maggi noodles-Curry, chicken, tomato etc. Maggi noodles- masala Core Maggi noodles

Augmented

Expected

Generic

Levels of product- Maggi Noodles Brand essence

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The tag lines such as Fast to Cook Good to Eat, 2-minute noodles and Taste Bhi, Health Bhi are the strong brand elements of Maggi which have helped in building brand equity which forms the brand essence of Maggi. These words explain the fundamental nature and quality of the product which conveys its benefit of convenience, taste, quickness, and healthy and hygienic product. The brand has created a loyal customer base with this essence and is assumed to continue to gain popularity and maintain the market share that it has achieved. Brand promise

The CONVENIENCE Factor that Maggi promises. One important aspect of the Maggi brand is the convenience factor attached. Every product is made with an aim to offer convenience to the consumers cooking or to help the housewife cook up something quickly! For instance, Maggi seasonings are used as cooking aides; Maggi soups are used as accompaniments with the meal; Maggi sauces and ketchups make good side dishes; and Maggi noodles are fast to cook! Maggi provides easy solutions to complicated methods of cooking for todays consumers who are under various pressures of time, budget, long-drawn traditional methods of cooking and a never-ending search for variety. Its interesting range of prepared foods includes an array of convenience flavours that makes cooking an enjoyable experience! Thus Maggi gives a functional and self expressive promise of convenience. Brand personality

The personality of a brand is formed by the customers view of the brand. How the consumer sees and feels about the product and what he says and the words that he uses to describe the brand totals up to the personality of the brand. When asked about Maggi, people often use adjectives like yummy, easy to make, tasty, convenient etc. This shows that the main and the strongest asset that the brand holds is its convenient factor. It is often seen on internet websites and even heard that people describe it as Maggi meri jaan. It clearly shows how successful Maggi noodles are in creating a space in the consumers mind and heart. Brand portfolio

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Maggi has established itself as a very strong brand and holds a very good position in the market. Maggi is a leading 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 range of products, such as packaged soups, frozen meals, prepared sauces and flavorings. It has formed a broad brand portfolio with a variety of products with various attributes. The following figure shows the entire brand portfolio of Maggi.

Brand architecture Nestle Maggi Maggi noodles, Maggi Soups, Maggi Ketchup, Maggi Seasonings

Corporate Brand Parent Brand Sub- Brand

The corporate brand of Maggi is Nestle India Limited (NIL) which is the company. The parent brand is Maggi which has various product categories under it. The sub- brands include Maggi noodles, Maggi soups, Maggi Ketchup and Maggi Seasonings which have further variations in flavor, ingredients etc.

Brand extension

Riding on the success of noodles, Nestle India, tried to make extensions of the Maggi brand in an area where they thought they might be able to leverage the brand with products like, sauces, ketchups, pickles, soups, tastemakers and macaroni in the mid-1990s. Maggi has both good and bad experiences of brand extension. Extended products such as Maggi Sauces and Maggi Soups were successful in the market whereas the macaroni and pickles didnt pick up as expected. Maggi Macaroni was directly positioned against Maggi Noodles in the market cannibalizing the parent brand and eating its market share. Therefore, Nestle India Ltd. eventually withdrew Maggi Macaroni form the market. The preference for pickles varied from region to region in the country, and the consumers were generally not loyal to branded pickles. Therefore Maggi pickles

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had been performing badly in the market so; Nestle India Ltd. also discontinued Maggi Pickles. The soups and sauces did somewhat fine, gathering considerable sales volumes and have a satisfactory presence even today. At the time the total market for ketchup was approximately 4000tons, and the brand leader was Kisan which held approximately 65% of the market. There were other local brands also. Kisan sold its ketchup in 500gm bottles. When Nestle decided to enter this market, it decided upon a 400gm bottle to give the consumer a price-point advantage. The company also decided to launch the product simultaneously in 80 cities of the country, virtually an all- India launch. The main talking point of their advertising was, what ketchup does to your food: tasty and more palatable. It was really a clever move because it paved the way for subsequent additions, such as: Tomato Chilli, i.e., Hot and Sweet, Masala Chilli, Chilli Garlic.

These additions made a point of difference (POD) against competitors Tomato Ketchup. One cannot forget the message carried in the ad:

Its different
Customers was intrigued as to what is different about the brand and was curious to try the sauce (may be surprised to find nothing different, but that is marketing!) The brand became very popular and thus had a good share in the market. Maggi have a market share of 45% in the 180crore ketchup market in India. Maggi leveraged the brand equity very effectively. The product quality was good and the communication was excellent Not only had the brand helped to increase the total market, but it had also taken over the leadership of the market. What is perhaps even more satisfying to Nestle is that Maggi brand has become a very profitable brand. Thus the investment that Nestle put in, for establishing the Maggi brand through its 2-minute noodles, paid handsome dividends, through its extension in Maggi Ketchup and Sauces. Maggi also extended by entering soup market and doing well. It also caters in the seasoning, frozen meals, flavourings etc.

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Product Extension In 2005 Nestle made a very smart move. It knew that although kids love noodles, the parents were bothered about the health aspect of Noodles which was made of Maida. Hence Maggi launched Maggi Atta Noodles and Maggi Dal Aata Noodles with the baseline " taste bhi health bhi" .Reports suggest that after 10 months of the launch , the product has been well received by Indian consumers. Maggi noodles are an example of a brand that knows the customer and willing to learn from the mistakes.

Marketing Strategy
The advertising of Maggi has always been children-centric in keeping with the target audience whether it is a hungry kid coming back from school or play or a child opening his lunch box expecting Maggi. The jingle used for the Maggi instant noodles campaign was pretty catchy which went down well with the target audience, children. The ads of Maggi became so popular that the tagline Bas 2-Minute immediately reminded Indian consumers of Maggi noodles even several years after the ads were taken off the TV. This had created a strong brand recall value. Other places where the company targets children are shops and stores where Maggi is sold. Children are often taken out by moms when they go for shopping, hence the Maggi packs are usually placed in low counters, shelves or hung in twine baskets within their eye level. The reason for this is children often influence purchases by pestering their parents to buy things on seeing them. Incidentally the company also came up with smaller packs of Maggi at Rs 5/- to initiate trial purchase and boost sales. It increased the sales volume since the value for money is main concern of Indian consumers.

During 2001-02 FMCG sector faced recession, in order to fight this slump Nestle India Ltd. introduced smaller packs at lower price points. During recession, people prefer to buy smaller packs which helped in building brand loyalty and penetration. Distribution network was improved so as to increase accessibility of customers. This move proved successful as the smaller packs of Maggi noodles sold extremely well. This strategy was also used in its other products like coffee and confectionery. Nestle India Ltd. began to offer Nescafe sachets and chocolate products in smaller packs. Maggi soups were also available in different sizes. Maggi

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soups available in sachets were introduced in the market in order to counter the competition from Knorr Soups. Nestle India Ltd. improved the sales of the small packs through vending machines placed at busy locations such as offices and railway stations. It worked as a fabulous marketing strategy and Nestle India Ltd. was the only company that did not lose significantly during the recession which was mainly due to the pricing strategy that the company adopted.

SWOT Analysis:
Strengths: Nestle India Ltd. was first to introduce instant noodles and packaged soup in the Indian market hence the Maggi had the first mover advantage and had opportunity to capture the untapped market. Maggi had the strong parent brand and brand recall value. Capable of keeping the Maggi brand fresh in the minds of Indian consumers. The taste of the Maggi was like by most of the Indian consumers. Has a strong distribution channel. Maggi was able to capture the market share of 80% in the instant noodles market. The company had strong research and development facilities. Nestle India Ltd. was able to offer ready-to-eat healthy food products such as fortified noodles, healthy soups with low fat, low cholesterol, real vegetables and without preservatives, artificial color or MSG. Weakness: Maggi had unsystematic brand extension. Nestle India Ltd. did brand extension by introducing Maggi Macaroni without taking into concern its threat of cannibalizing its own noodles segment.

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Products were launched without doing proper market analysis like introduction of sweet noodles which was later withdrawn form the market. Maggi focused mostly on the noodles and sauces segments in creating the brand awareness to its consumers due to which other product categories were not able to succeed in the market. Opportunities: Growing population leading to growth in the consumer market. Market for branded food products was growing at a healthy rate. Changing lifestyles and eating habits of Indian consumers. Increasing purchasing power of the growing middle income group.

Threats: Entry of new competitors in the market. Competitors introducing new brands with local taste capturing the local market.

Recommendations and Suggestions

Nestle India Ltd. has worked hard to create brand awareness only in the noodles category by providing free test samples, free gifts and organizing the funfair for the kids. This strategy can also be applied in other product segments so as to attract the customers.

Maggi Noodles was positioned as the in between meal snacks. Likewise, Nestle India Ltd. should position its new products as the other food types so that consumers are attracted.

The opportunity of posting the recipes and other gift offers are to be introduced in order to attract Indian women. More healthy food products should be introduce with proper market research which would best suit the Indian palate like the Maggi Dale Atta noodles was introduced. Existing products should be fortified or contain nutrients so that the Indian consumers

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with conservative food habits who give importance to the perceived health benefits of traditional food are also attracted to switch their food habits. The brand and its product should be advertised continuously and its benefits must be educated carefully to the target consumers. The celebrity endorsement strategy must be integrated with target market characteristics. The most important thing to remember is that putting a celebrity in an ad is not an idea in itself. Unfortunately, this is how most celebrities are being used in Indian advertising, where they just become a prop. Ideally, there should be an idea that makes the celebrity relevant to the product and the consumer. A celebrity's presence in the ad should be contextual.

The products that are in the maturity stages such as noodles, sauces and ketchups need continuous innovation to sustain in the market and capture more market share. Frequent gift offers, sponsorships, discount offers are to be provided to the consumers to compete with the competitors.

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BIBLIOGRAPHY
www.nestle.com www.wikipedia.org www.scribd.com thehindubusinessline.com www.mouthshut.com/review/

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