A MINOR PROJECT REPORT

ON

“PRODUCT MIX OF MAGGI”

SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE AWARD OF

THE DEGREE OF BACHELOR IN BUSINESS ADMINISTRATION

UNDER THE GUIDANCE OF:

Ms. SWEETY GUPTA

ASSISTANT PROFESSOR, RDIAS

SUBMITTED BY:

Name of the Student: MANISH BISHT

Enrollment No.: 00680301711

BBA (II SHIFT), Semester III

Batch 2011- 2014

RUKMINI DEVI INSTITUTE OF ADVANCED STUDIES

NAAC Accredited, ‘A’ Grade

Category A+ Institute

High Grading 81.7% by Joint Assessment

An ISO 9001:2008 Certified Institute

Approved by AICTE, HRD Ministry, Govt. of India

Affiliated to Guru Gobind Singh Indraprastha University, Delhi

2A & 2B, Madhuban Chowk, Outer Ring Road, Phase-1, Delhi-110085

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TABLE OF CONTENTS

Page no.

Student Declaration 3

Certificate from Guide 4

Acknowledgement 5

Executive summary 6-7

CHAPTER 1- PLAN OF THE STUDY 8-14

1.1 Introduction

1.2 Purpose of the study

1.3 Literature Review

CHAPTER -2 15-33

About the industry/Company profile

CHAPTER -3 34-45

Reasearch Methodology

CHAPTER -4 46-58

Data Analysis and Interpretation

CHAPTER -5 59-61

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Findings and Conclusion

CHAPTER-6 62-63

Recommendations

Bibliography 64-65

STUDENT‘s DECLARATION

This is to certify that I have completed the Project titled “PRODUCT MIX OF

MAGGI” under the guidance of “Ms. SWEETY GUPTA” in the partial fulfilment

of the requirement for the award of the degree of “Bachelor in Business

Administration” from “Rukmini Devi Institute of Advanced Studies, New Delhi.”

This is an original work and I have not submitted it earlier elsewhere.

Name of the Student- MANISH BISHT

Enrollment No. - 00680301711

Class & Section- BBA II

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CERTIFICATE OF GUIDE

This is to certify that the project titled “PRODUCT MIX OF MAGGI” is an

academic work done by “MANISH BISHT” submitted in the partial fulfilment of the

requirement for the award of the degree of “Bachelors in Business Administration”

from “Rukmini Devi Institute of Advanced Studies, New Delhi.” under my guidance

and direction.

To the best of my knowledge and belief the data and information presented by her

in the project has not been submitted earlier elsewhere.

Name of the Faculty- Ms. SWEETY GUPTA

Designation of the Faculty- Assistant professor

RDIAS

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ACKNOWLEDGEMENT

I offer my sincere thanks and humble regards to Rukmini Devi Institute Of

Advanced Studies, GGSIP University, New Delhi for imparting us very valuable

professional training in BBA

I pay my gratitude and sincere regards to MS. SWEETY GUPTA my project

Guide for giving me the cream of her knowledge. I am thankful to her as she has

been a constant source of advice, motivation and inspiration. I am also thankful to

her for giving her suggestions and encouragement throughout the project work.

I take the opportunity to express my gratitude and thanks to our computer Lab

staff and library staff for providing me opportunity to utilize their resources for

the completion of the project.

I am also thankful to my family and friends for constantly motivating me to

complete the project and providing me an environment which enhanced my

knowledge.

Name of the Student- MANISH BISHT

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Enrollment No. – 00680301711

Class & Section- BBA- II

EXECUTIVE SUMMARY

In this chapter the basic introduction of the project is given. In this topics like Plan of

the study, objectives of the study along with literature review are introduced. It also

covers the the introduction of the study, the data used and the limitations occurred

during the project making are also covered. The real aim of this project is to study the

effectiveness and responses towards marketing strategies adopted by Nestle maggi.

But many sub objectives are also included under this project so as to make it

comprehensive one.

It is important to understand that the total feasible market is the portion of the market

that can be captured provided every condition within the environment is perfect and

there is very little competition. In most industries this is simply not the case. There are

other factors that will affect the share of the feasible market a business can reasonably

obtain. These factors are usually tied to the structure of the industry, the impact of

competition, strategies for market penetration and continued growth, and the amount

of capital the business is willing to spend in order to increase its market share.

The objective behind the making of the project is to study the Importance and

development of product mix, to study present and future product mix of maggi, To

study the growth of the company.

In this chapter the company is studied in detail i.e the companies policies, operations,

executive head etc. and its operations in India. History of the company and its future

operations are also covered. The internal study of companies- history, vision, business

areas etc. to analyse how well poised the company are to compete or rather just exist

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in the market that is providing itself to be the most competitive in post liberalization

Indian economy. The “SECONDARY DATA” has been used in this project to collect

the useful information.

This chapter discusses about the findings made during the making of the project i.e

the marketing mix of the company, marketing strategies of the company. Here SWOT

analysis of the company are also covered. Indian economy is emerging one and is

growing very fast in market competition level among their over all product mix. New

competition is coming which will intensify the competition. New products and new

schemes are being offered by the company itself. The need for large information

capacity has grown tremendously due to the demand of real information.

As Indian Market is Brand conscious, other competitors are coming up with more

Indianized brand of products, and as Indian being more aware of their culture and

large segment being typical and conservative about their culture, there care more

chances that NIL would be successful if it create a brand close to Indian culture in

wording to positioning. As India is growing, Old Indian Brands are also regaining

momentum worldwide, NIL could catch the trend of market.

By doing so, NIL could avoid the draw backs associated with the Maggi brand. It

could position new brand in competition with other competitor’s brand where there is

no fit of product with the Maggi brand.

NIL other option is acquiring products manufacturers of different products like

biscuits, chips and snacks as it is very essential for it’s market leader position. Other

companies have advantage of such products. ITC has biscuits to it, Hindustan Lever

has tea to it. India is huge market where distribution advantage plays major role and

economies of scale pays back. So it’s is important for NIL to concentrate on other

ready to eat category to benefit consumers from economies of scale reflect in price.

In this chapter we conclude about the project in brief and expressing personal opinion.

.

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CHAPTER -1

PLAN OF THE STUDY

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INTRODUCTION

The product mix of a company, which is generally defined as the total composite of

products offered by a particular organization, consists of both product lines and

individual products. A product line is a group of products within the product mix that

are closely related, either because they function in a similar manner, are sold to the

same customer groups, are marketed through the same types of outlets, or fall within

given price ranges. A product is a distinct unit within the product line that is

distinguishable by size, price, appearance, or some other attribute. For example, all

the courses a university offers constitute its product mix; courses in the marketing

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department constitute a product line; and the basic marketing course is a product item.

Product decisions at these three levels are generally of two types: those that involve

width (variety) and depth (assortment) of the product line and those that involve

changes in the product mix occur over time.

PRODUCT MIX involves planning and developing the right type of product that will

satisfy fully the needs of customers. A product has several dimensions. These

dimensions are collectively called product mix. Product mix for example may consist

of size and weight of the product, volume of output, product quality, product design,

product range, brand name, package, product testing, warranties and after sales

services and the like.

Product mix, also known as product assortment, refers to the total number of product lines

that a company offers to its customers. For example, a small company may sell multiple lines

of products. Sometimes, these product lines are fairly similar, such as dish washing liquid and

bar soap, which are used for cleaning and use similar technologies. Other times, the product

lines are vastly different, such as diapers and razors. The four dimensions to a company's

product mix include width, length, depth and consistency.

The tools for product mix are :

Width

The width of a company's product mix pertains to the number of product lines that a

company sells. For example, if a company has two product lines, its product mix

width is two. Small and upstart businesses will usually not have a wide product mix.

It is more practical to start with some basic products and build market share. Later on,

a company's technology may allow the company to diversify into other industries and

build the width of the product mix.

Length

Product mix length pertains to the number of total products or items in a company's

product mix, according to Philip Kotler's textbook "Marketing Management:

Analysis, Planning, Implementation and Control." For example, ABC company may

have two product lines, and five brands within each product line. Thus, ABC's

product mix length would be 10. Companies that have multiple product lines will

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sometimes keep track of their average length per product line. In the above case, the

average length of an ABC Company's product line is five.

Depth

Depth of a product mix pertains to the total number of variations for each product.

Variations can include size, flavor and any other distinguishing characteristic. For

example, if a company sells three sizes and two flavors of toothpaste, that particular

brand of toothpaste has a depth of six. Just like length, companies sometimes report

the average depth of their product lines; or the depth of a specific product line.

Consistency

Product mix consistency pertains to how closely related product lines are to one

another--in terms of use, production and distribution. A company's product mix may

be consistent in distribution but vastly different in use. For example, a small company

may sell its health bars and health magazine in retail stores. However, one product is

edible and the other is not. The production consistency of these products would vary

as well.

Product Market Mix Strategy

Small companies usually start out with a product mix limited in width, depth and

length; and have a high level of consistency. However, over time, the company may

want to differentiate products or acquire new ones to enter new markets. A company

can also sell the existing products to new markets by coming up with new uses for

their product.

The product lines are defined in terms of academic departments. The depth of each line is

shown by the number of different product item source offerings offered within each product

line. (The examples represent only a partial listing of what a real university would offer.) The

state university has made the strategic decision to offer a diverse market mix. Because the

university has numerous academic departments, it can appeal to a large cross-section of

potential students. This university has decided to offer a wide product line (academic

departments), but the depth of each department (course offerings) is only average.

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PRODUCT MIX-MANAGEMENT AND RESPONSIBILITIES

It is extremely important for any organization to have a well-managed product mix.

Most organizations break down managing the product mix, product line, and actual

product into three different levels.

Product-mix decisions are concerned with the combination of product lines offered by

the company. Management of the companies' product mix is the responsibility of top

management. Some basic product-mix decisions include: (1) reviewing the mix of

existing product lines; (2) adding new lines to and deleting existing lines from the

product mix; (3) determining the relative emphasis on new versus existing product

lines in the mix; (4) determining the appropriate emphasis on internal development

versus external acquisition in the product mix; (5) gauging the effects of adding or

deleting a product line in relationship to other lines in the product mix; and (6)

forecasting the effects of future external change on the company's product mix.

Product-line decisions are concerned with the combination of individual products

offered within a given line. The product-line manager supervises several product

managers who are responsible for individual products in the line. Decisions about a

product line are usually incorporated into a marketing plan at the divisional level.

Such a plan specifies changes in the product lines and allocations to products in each

line. Generally, product-line managers have the following responsibilities: (1)

considering expansion of a given product line; (2) considering candidates for deletion

from the product line; (3) evaluating the effects of product additions and deletions on

the profitability of other items in the line; and (4) allocating resources to individual

products in the line on the basis of marketing strategies recommended by product

managers.

Decisions at the first level of product management involve the marketing mix for an

individual brand/product. These decisions are the responsibility of a brand manager

(sometimes called a product manager). Decisions regarding the marketing mix for a

brand are represented in the product's marketing plan. The plan for a new brand would

specify price level, advertising expenditures for the coming year, coupons, trade

discounts, distribution facilities, and a five-year statement of projected sales and

earnings. The plan for an existing product would focus on any changes in the

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marketing strategy. Some of these changes might include the product's target market,

advertising and promotional expenditures, product characteristics, price level, and

recommended distribution strategy.

OBJECTIVES OF THE PROJECT

1. To study the various products of Nestle Maggi.

2. To study about the Maggi and its competitors.

3. To make an analysis of it through SWOT and STP and its marketing

strategies.

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4. To get to know what is Product mix

5. To come across different problems being faced in Product Mix.

6. To study the PLC.

LITERATURE REVIEW

Product Mix as a management function which in its simplest term refers to the basic

functions of management namely planning, organizing, leading and controlling

(POLC). These four functions are necessary for the achievement of organizational

goals. It is important that these activities should operate in harmony with one another

since they are interrelated. For instance, according to Cole (1996), a manager cannot

just do planning and ignore the other aspects. Although these four functions do not

tell the whole story about what constitutes management, they are a convenient way of

describing most of the key aspects of the roles of management.

A Product Mix Rooted in History and Culture

Developing an appropriate product mix is key to Gallardo's achieving its growth

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ambitions and to successfully move to sell and market its products south of the border

in Mexico. We know for certain that people in Mexico still place flavor above

convenience, so developing products that are only convenient would lead to certain

failure for Gallardo's in Mexico. To date, the company has achieved its success by

offering a product mix that includes sauces, seasonings and salsas that were aligned

with its Tex-Mex restaurant flavors. Though this mix helped the company earn

significant market share in major areas of the United States, modifying this mix will

be key to helping it achieve similar success, and what Eric Meyer, CEO of Gallardo's

Salsa and Sauces, would consider a "win," in Mexico. And, more importantly, for

Gallardo's to differentiate itself from California brands, its main competitor in the

Mexico.

Gallardos must include the main staples of Mexican flavors into its products. These

include: chilies, beans, tomatoes, fruit and a variety of spices. But in order to revise its

product mix for Mexican markets, Gallardo's needs to take a variety of key issues into

consideration. Several of these have already been researched at length by Gallardo's

management team, such as special demographic characteristics, relevant emotional,

psychological and functional needs related to cooking—particularly the enjoyment of

the whole cooking process and its role as an outlet to express and receive familial love

and affection by Mexican women—and the special role cooking aids can play in

creating enhanced flavors and dishes.

CHAPTER – 2

COMPANY PROFILE

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INTRODUCTION

MAGGI

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Maggi is a Nestlé brand of instant stocks,

cubes, ketchups, sauces, seasonings and instant noodles.

The original company came into existence in 1872 in Switzerland, when Julius

Maggi took over his father's mill. He quickly became a pioneer of industrial food

production, aiming to improve the nutritional intake of worker families. Maggi was

the first to bring protein-rich legume meal to the market, and followed up with a

ready-made soup based on legume meal in 1886. In 1897, Julius Maggi founded the

company Maggi GmbH in the German town of Singen, where it is still based today.

In parts of Europe, Mexico, Malaysia, Brunei, German-speaking countries,

the Netherlands, the Czech Republic, Slovenia, Slovakia, Poland and France, "Maggi"

is still synonymous with the brand's "Maggi-Würze" (Maggi seasoning sauce) (in

Spain it is sold under name Jugo), a dark, hydrolysed vegetable protein-based sauce

which is very similar to East Asian soy sauce, except it does not actually contain

soy. It was introduced in 1886 as a cheap substitute for meat extract. It has since

become a well-known part of everyday culinary culture in Switzerland, Austria and

especially in Germany. It is also well known in Poland and the Netherlands. Maggi

Würze has huge popularity in Serbia and Macedoniadespite not being officially

available in those countries.

The bouillon cube or "Maggi cube", which was another meat substitute product, was

introduced in 1908. Because chicken and beef broths are so common in the cuisines of

many different countries, the company's products have a large worldwide market.

In 1947, following several changes in ownership and corporate structure, Maggi's

holding company merged with the Nestlé Company to form Nestlé-Alimentana S.A.,

currently known in its francophone home base as Nestlé S.A.

Today, Maggi is known throughout the world for its dry soups, seasoning sauce and

instant noodle dishes. In New Zealand, Maggi Onion Soup mix is often combined

with reduced cream to create an onion dip for potato chips that has come to be

generally accepted as a Kiwi favourite.

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In India, Maggi instant noodles are a favourite for an anytime meal. From dorm rooms

of colleges to late-night cooking in home kitchens, it’s an all-time favourite.

In Malaysia, Indonesia, Thailand and Vietnam, Maggi seasoning sauce is a popular

condiment, and the bottles are familiar sights on restaurant tables.

NESTLE

Nestlé S.A. is a Swiss multinational nutritional and health-related consumer

goods company headquartered in Vevey, Switzerland. It is the largest food company

in the world measured by revenues.

Nestlé's products include baby food, bottled water, breakfast cereals, coffee,

confectionery, dairy products, ice cream, pet foods and snacks. 29 of Nestlé's brands

have annual sales of over 1 billion Swiss francs (about $ 1.1

billion), including Nespresso, Nescafé, KitKat, Smarties, Nesquik, Stouffer’s, Vittel,

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and Maggi. Nestlé has around 450 factories, operates in 86 countries, and employs

around 328,000 people. It is one of the main shareholders of L’Oreal, the world's

largest cosmetics company.

Nestlé was formed in 1905 by the merger of the Anglo-Swiss Milk Company,

established in 1866 by brothers George Page and Charles Page, and Farine Lactée

Henri Nestlé, founded in 1866 by Henri Nestlé. The company grew significantly

during the First World War and again following the Second World War, expanding its

offerings beyond its early condensed milk and infant formula products. The company

has made a number of corporate acquisitions, including Crosse & Blackwell in

1950, Findus in 1963, Libby's in 1971, Rowntree Mackintosh in 1988 and Gerber in

2007.

Nestlé has a primary listing on the SIX Swiss Exchange and is a constituent of

the Swiss Market Index. It has a secondary listing on Euronext. In 2011, Nestlé was

listed No. 1 in the Fortune Global 500 as the world's most profitable

corporation. With a market capitalization of $ 200 billion, Nestlé ranked No. 13 in

the FT Global 2011.

HISTORY OF NESTLE

Nestlé's origins date back to 1866, when two separate Swiss enterprises were founded

that would later form the core of Nestlé. In the succeeding decades, the two

competing enterprises aggressively expanded their businesses throughout Europe and

the United States.

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In August 1867 Charles (US consul in Switzerland) and George Page, two brothers

from Lee County, Illinois, USA, established the Anglo-Swiss Condensed Milk

Company in Cham, Switzerland. Their first British operation was opened

at Chippenham, Wiltshire, in 1873.

Henri Nestlé

In September 1866 in Vevey, Henri Nestlé developed a milk-based baby food, and

soon began marketing it. The following year saw Daniel Peter begin seven years of

work perfecting his invention, the milk chocolate manufacturing process. Nestlé's was

the crucial cooperation that Peter needed to solve the problem of removing all the

water from the milk added to his chocolate and thus preventing the product from

developing mildew. Henri Nestlé retired in 1875 but the company under new

ownership retained his name as SociétéFarineLactée Henri Nestlé.

In 1877 Anglo-Swiss added milk-based baby foods to their products and in the

following year the Nestlé Company added condensed milk so that the firms became

direct and fierce rivals.

The logo that Nestlé used until 1966

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In 1905 the companies merged to become the Nestlé and Anglo-Swiss Condensed

Milk Company, retaining that name until 1947 when the name Nestlé Alimentana SA

was taken as a result of the acquisition of Fabrique de Produits Maggi SA (founded

1884) and its holding company Alimentana SA of Kempttal, Switzerland. Maggi was

a major manufacturer of soup mixes and related foodstuffs. The company’s current

name was adopted in 1977. By the early 1900s, the company was operating factories

in the United States, United Kingdom, Germany, and Spain. The First World War

created demand for dairy products in the form of government contracts, and, by the

end of the war, Nestlé's production had more than doubled.

After the war, government contracts dried up, and consumers switched back to fresh

milk. However, Nestlé's management responded quickly, streamlining operations and

reducing debt. The 1920s saw Nestlé's first expansion into new products, with

chocolate-manufacture becoming the company's second most important activity.

Louis Dapples was CEO till 1937, when succeeded by Édouard Muller till his death in

1948.

The Brazilian president, Lula da Silva, inaugurates a factory in Feira de Santana (Bahia), in

February 2007

Nestlé felt the effects of the Second World War immediately. Profits dropped from

US$20 million in 1938, to US$6 million in 1939. Factories were established in

developing countries, particularly in Latin America. Ironically, the war helped with

the introduction of the company's newest product, Nescafe ("Nestlé's Coffee"), which

became a staple drink of the US military. Nestlé's production and sales rose in the

wartime economy.

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The end of World War II was the beginning of a dynamic phase for Nestlé. Growth

accelerated and numerous companies were acquired. In 1947 Nestlé merged

withMaggi, a well-known manufacturer of seasonings and soups. Crosse &

Blackwell followed in 1950, as did Findus (1963), Libby's (1971)

and Stouffer's (1973). Diversification came with a shareholding in L’Oreal in 1974. In

1977, Nestlé made its second venture outside the food industry, by acquiring Alcon

Laboratories Inc.

In 1984, Nestlé's improved bottom line allowed the company to launch a new round

of acquisitions, notably American food giant Carnation and the British confectionery

company Row tree Mackintosh in 1988, which brought the Willy Wonka brand -

among others - to Nestlé.

The first half of the 1990s proved to be favourable for Nestlé. Trade barriers

crumbled, and world markets developed into more or less integrated trading areas.

Since 1996, there have been various acquisitions, including San

Pellegrino (1997), Spillers Petfoods (1998), and Ralston Purina (2002). There were

two major acquisitions in North America, both in 2002 – in June, Nestlé merged its

U.S. ice cream business into Dreyer's, and in August a US$2.6 billion acquisition was

announced of Chef America, the creator of Hot Pockets.

In the same time-frame, Nestlé came close to purchasing the iconic American

company Hershey's, one of its fiercest confectionery competitors, although the deal

eventually fell through. Another recent purchase included the Jenny Craig weight-loss

program, for US$600 million.

In December 2005, Nestlé bought the Greek company Delta Ice Cream for

€240 million. In January 2006, it took full ownership of Dreyer's, thus becoming the

world's largest ice cream maker, with a 17.5% market share.

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Nestle Headquarters in Vevey

In November 2006, Nestlé purchased the Medical Nutrition division of Novartis

Pharmaceutical for $2.5B, also acquiring, in 2007, the milk-flavouring product known

as Ovaltine.In April 2007, returning to its roots, Nestlé bought US baby-food

manufacturer Gerber for $5.5 billion.In December 2007, Nestlé entered into a

strategic partnership with a Belgian chocolate maker, Pierre Marcolini.

Nestlé agreed to sell its controlling stake in Alcon to Novartis on 4 January 2010. The

sale was to form part of a broader US$39.3 billion offer, by Novartis, for full

acquisition of the world’s largest eye-care company.

On 1 March 2010, Nestlé concluded the purchase of Kraft Food’s North American

frozen pizza business for $3.7 billion.In July 2011, Nestlé SA agreed to buy 60

percent of Hsu Fu Chi International Ltd. for about $1.7 billion. On 23 April 2012,

Nestlé agreed to acquire Pfizer Inc.'s infant-nutrition unit for $11.9 billion. Before the

acquisition, there was a 'bidding war' between the three shareholders Nestlé, Mead

Johnson Nutrition and Danone. Each of the companies held a share, with Nestlé

holding the biggest share (17%) (Johnson held 15%, Danone 13%).

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HISTORY OF MAGGI

In Switzerland in 1863, Julius Michael Johannes Maggi developed a formula to bring

added taste to meals. This marked the beginning of the Maggi brand and its lines of

convenient food products. 

In 1882, the Swiss Public Welfare Society commissioned Maggi to create a vegetable

food product that would be quick to prepare and easy to digest to help with the

problem of women having less time to prepare meals as more and more worked

outside the home. The results — two instant pea soups and an instant bean soup –

were a huge success. By the turn of the century, Maggi & Company was producing

not only powdered soups, but also bouillon cubes, sauces and flavourings. Maggi

merged with Nestlé in 1947. Maggi® has been offering high quality and innovative

products ever since.

MAGGI BRAND IN INDIA

Maggi Comes to India – teething troubles Maggi noodles was launched

in India in theearly1980s. 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 s n a c k s l i k e p a k o r a s o r

s a n d w i c h e s . S o t h e r e w e r e n o s p e c i f i c b u y a n d m a k e s n a c k !

Moreover both competitors had certain drawbacks in comparison.

Snacks like samosas are usually bought out, and outside food is generally considered

unhygienic and unhealthy.

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Theo t h e r   c o m p e t i t o r ,   ‘ h o m e m a d e ’   s n a c k s   o v e r c a m e   b o t h   t h e s e  

p r o b l e m s   b u t   h a d   t h e disadvantage of extended preparation time at

home. Maggi was positioned as the only hygienic homemade snack!

Despite this, Nestlé faced difficulties with their sales after the initial phase.

The reason being, the positioning of the product with the wrong target group.

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.

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 company could have easily positioned the product as a meal, either lunch

or dinner. But, i t 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 it’s a hit

with her! What’s more, if kids also love the taste, the product is as good as sold!

So the ‘2-minute’ fund a coupled with the ‘yummy taste worked.

MAGGI’S BRAND EXTENSION

In 1998, Nestle launched Maggi’s first brand extension, Maggi soup. At this stage,

there was no organized packaged soup market in India. Nestle planned to create a

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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 Maggi’s brand name, and was never very serious about the segment.

In 1993, “Sweet Maggi”, the first variant of Maggi noodles was

launched. The company supported the launch with a huge 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 withdraw it. At the end of the year, Maggi noodles were generating

sales volume of around 5000 tons and remained a loss making proposition for Nestle.

To boost sales, Nestle decided to reduce the price of Maggi noodles.

This was made possible by using thinner and cheaper packaging material,

the company also introduced “money saver 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.

Maggi’s euphoria was, however, short lived, as sales stagnated in 1995 at the

previous year’s level. With soup business being threatened by a new entrant “Knorr

soups” launched in1995, offering 10 flavours against Maggi’s 4 the company

started rethinking its strategies towards the soup market. In order to stretch

Maggi’s brand to include Indian ethnic foods the company tied 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 south Indian food preparation such as sambhar,

dosa, vada and spices in consumer packs in Dec1995. The company reportedly saw 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 Nestlé seemed to be particularly bad at dealing with traditional Indian

product categories.

26

PRODUCT PROFILE

Pricing and Product Development

It was at this point in time that Nestlé 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 tastemaker’s 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 Nestlé by

surprise.

With volumes declining and customer complaints increasing, the company began to

work on plans to prelaunch „old Maggi‟ to win back customers. In addition, in 1998,

Nestlé began working out a strategy to regain Maggi’s 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 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 Nestlé’s move with US soft

drinks major Coca-Cola’s „New Coke‟ fiasco. However, the company disagreed, “It’s

a hard -5 nosed strategy, that mixes nostalgia with the consumer’s voiced preference

for the product it has-been bred and rough up on.

27

The reintroduction is Nestlé’s acknowledgement of the loyalty of the Indian mother

and the child to the original product.” By May 1999, Nestlé’s decision to bring back

the „old Maggi‟ seemed to have paid off.

Two months after the prelaunch, 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 Nestlé’s portfolio of brands

in India, overtaking brands such as Nestum and Cerelac.

MAGGI BOUILLONS

1. Vegetable Bouillon

2. Chicken Less Salt Bouillon

28

3. Chicken Bouillon

4. Beef Bouillon

5. Mutton Bouillon

MAGGI SOUPS

1. Rich Tomatoes

2. Mixed Vegetable

3. Creamy Chicken

4. Cream Of Mushroom

5. Hot & Sour Vegetable

6. Sweet Corn Vegetable

7. Masala Noodle Soup

29

8. Tangy Tomato Soup

9. Broccoli Soup

10. Chicken with ABC Pasta Soup

MAGGI BHUNA MASALA

30

MAGGI SAUCES

1. Rich Tomato Sauce

2. Hot & Sweet Chilly Sauce

3. Chilly Garlic Sauce

MAGGI AND ITS COMPETITORS

31

Maggi versus Knorr

There is a pitched battle between Nestle Nigeria Plc, producers of Maggi seasoning

and Unilever since Unilever Nigeria Plc took over the manufacturing and sale of

Knorr seasoning from Cadbury Nigeria Plc in December 2005.

Today, Knorr and Maggi are competing in the menu recipe of many Nigerian homes

for top spot in the seasoning market. Virtually, in almost every meal served in the

restaurants or in any social gathering, be it stew, vegetable soup, jollof rice, fried rice,

beans porridge, moimoi, you will not miss the wonderful taste of these seasonings,

which are definitely used while preparing any meal.

Maggi, which had occupied a big space in the hearts of consumers before now, has

managed to endear the brand to customers thanks to its marketing communication

activities. For example, its annual “Cook for Mama” competition and recently, its

Maggi Million and More Promo have produced 13 millionaires in 13 weeks.

Moreover, some advertising materials created by Nestle not only strengthened its

market presence but also entrenched the brand’s relevance in the market.

32

On the other hand, Knorr launched the Cook ‘n’ Win promotion where winners

received cars as prizes as if it confirms that it is not left out in the fray. Furthermore,

the Power of Meal Times campaign project was introduced by organising family

picnics, as a way of preaching meal times bonding. In order to push the brand

messages, Integrated Marketing Communication (IMC) concept was used as an

effective tool.

According to the results of a recent random survey conducted by Vanguard

investigation in Lagos, Abuja, some parts of the North, East, and South-South, Maggi

controls about  43 per cent of the market compared to Knorr’s 41 per cent. Although

Maggi is the oldest in the market, there is no doubt that Maggi is facing a serious

challenge in the leadership position, by losing its first comer advantage in the market.

Probing further into public acceptance and perception of the brands, it was found

that both seasonings are readily available at supermarkets, open markets and street

shops, and well packaged too, which respondents say they liked. However, 45 per

cent of the respondents said the price of Knorr was worth the value offered by the

product, while 55 per cent said the price was on the high side compared to Maggi. On

taste, 60 per cent preferred Knorr taste for its salt level, against Maggi’s 40 per cent.

For example, a house wife interviewed in the survey, namely Mrs. Josephine Ikechi,

said that she switched over to Knorr from Maggi due to the salty nature of Maggi. She

added that Maggi made her miscalculate the amount of salt to add to her cooking.

33

However, 60 per cent of respondents admit they are aware and could easily recall

Maggi’s marketing communication tools on television, radio, billboards, posters,

magazines, internet and directional signs and other below-the-line platforms, as well

promotional items, compared to 40 per cent respondents who recall Knorr’s

promotional activities.

It seems that Knorr, working assiduously to outwit Maggi, has something wrong in

advertising and promotional activities to endear the brand in the perception of

customers. According to the respondents, the reason why Knorr lags behind is about

its promotional engagements.

34

CHAPTER – 3

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

35

MEANING OF RESEARCH

Research in common parlance refers to a search for knowledge. Once can also define

research as a scientific and systematic search for pertinent information on a specific

topic. In fact, research is an art of scientific investigation. The Advanced Learner’s

Dictionary of Current English lays down the meaning of research as “a careful

investigation or inquiry especially through search for new facts in any branch of

knowledge.” Redman and Mory define research as a “systematized effort to gain new

knowledge.”

Some people consider research as a movement, a movement from the known to the

unknown. It is actually a voyage of discovery. We all possess the vital instinct of

inquisitiveness for, when the unknown confronts us, we wonder and our

inquisitiveness makes us probe and attain full and fuller understanding of the

unknown. This inquisitiveness is the mother of all knowledge and the method, which

man employs for obtaining the knowledge of whatever the unknown, can be termed as

research.

Research is an academic activity and as such the term should be used in a technical

sense. According to Clifford Woody research comprises defining and redefining

problems, formulating hypothesis or suggested solutions; collecting, organising and

evaluating data; making deductions and reaching conclusions; and at last carefully

testing the conclusions to determine whether they fit the formulating hypothesis.

D. Slesinger and M. Stephenson in the Encyclopaedia of Social Sciences define

research as “the manipulation of things, concepts or symbols for the purpose of

generalising to extend, correct or verify knowledge, whether that knowledge aids in

construction of theory or in the practice of an art.”

Research is, thus, an original contribution to the existing stock of knowledge making

for its advancement. It is the persuit of truth with the help of study, observation,

comparison and experiment.

In short, the search for knowledge through objective and systematic method of finding

solution to a problem is research. The systematic approach concerning generalisation

and the formulation of a theory is also research.

36

As such the term ‘research’ refers to the systematic method consisting of enunciating

the problem, formulating a hypothesis, collecting the facts or data, analysing the facts

and reaching certain conclusions either in the form of solutions(s) towards the

concerned problem or in certain generalisations for some theoretical formulation.

37

OBJECTIVES OF RESEARCH

The purpose of research is to discover answers to questions through the application of

scientific procedures. The main aim of research is to find out the truth which is hidden

and which has not been discovered as yet. Though each research study has its own

specific purpose, we may think of research objectives as falling into a number of

following broad groupings:

1. To gain familiarity with a phenomenon or to achieve new insights into it (studies

with this object in view are termed as exploratory or formulative research studies);

2. To portray accurately the characteristics of a particular individual, situation or a

group (studies with this object in view are known as descriptive research studies);

3. To determine the frequency with which something occurs or with which it is

associated with something else (studies with this object in view are known as

diagnostic research studies);

4. To test a hypothesis of a causal relationship between variables (such studies are

known as hypothesis-testing research studies).

38

TYPES OF RESEARCH

The basic types of research are as follows:

Descriptive vs. Analytical: Descriptive research includes surveys and fact-finding

enquiries of different kinds. The major purpose of descriptive research is description

of the state of affairs as it exists at present. In social science and business research we

quite often use the term Ex post facto research for descriptive research studies. The

main characteristic of this method is that the researcher has no control over the

variables; he can only report what has happened or what is happening. Most ex post

facto research projects are used for descriptive studies in which the researcher seeks

to measure such items as, for example, frequency of shopping, preferences of people,

or similar data. Ex post facto studies also include attempts by researchers to discover

causes even when they cannot control the variables. The methods of research utilized

in descriptive research are survey methods of all kinds, including comparative and

correlational methods. In analytical research, on the other hand, the researcher has to

use facts or information already available, and analyze these to make a critical

evaluation of the material. the term Ex post facto research for descriptive research

studies. The main characteristic of this method is that the researcher has no control

over the variables; he can only report what has happened or what is happening. Most

ex post facto research projects are used for descriptive studies in which the researcher

seeks to measure such items as, for example, frequency of shopping, preferences of

people, or similar data. Ex post facto studies also include attempts by researchers to

discover causes even when they cannot control the variables. The methods of research

utilized in descriptive research are survey methods of all kinds, including comparative

and correlational methods. In analytical research, on the other hand, the researcher has

to use facts or information already available, and analyze these to make a critical

evaluation of the material.

Applied vs. Fundamental: Research can either be applied (or action) research or

fundamental (to basic or pure) research. Applied research aims at finding a solution

for an immediate problem facing a society or an industrial/business organisation,

whereas fundamental research is mainly concerned with generalisations and with the

formulation of a theory. “Gathering knowledge for knowledge’s sake is termed ‘pure’

39

or ‘basic’ research.” Research concerning some natural phenomenon or relating to

pure mathematics are examples of fundamental research. Similarly, research studies,

concerning human behaviour carried on with a view to make generalisations about

human behaviour, are also examples of fundamental research, but research aimed at

certain conclusions (say, a solution) facing a concrete social or business problem is an

example of applied research. Research to identify social, economic or political trends

that may affect a particular institution or the copy research (research to find out

whether certain communications will be read and understood) or the marketing

research or evaluation research are examples of applied research. Thus, the central

aim of applied research is to discover a solution for some pressing practical problem,

whereas basic research is directed towards finding information that has a broad base

of applications and thus, adds to the already existing organized body of scientific

knowledge.

Quantitative vs. Qualitative: Quantitative research is based on the measurement of

quantity or amount. It is applicable to phenomena that can be expressed in terms of

quantity. Qualitative research, on the other hand, is concerned with qualitative

phenomenon, i.e., phenomena relating to or involving quality or kind. For instance,

when we are interested in investigating the reasons for human behaviour (i.e., why

people think or do certain things), we quite often talk of ‘Motivation Research’, an

important type of qualitative research. This type of research aims at discovering the

underlying motives and desires, using in depth interviews for the purpose. Other

techniques of such research are word association tests, sentence completion tests,

story completion tests and similar other projective techniques. Attitude or opinion

research i.e., research designed to find out how people feel or what they think about a

particular subject or institution is also qualitative research. Qualitative research is

specially important in the behavioural sciences where the aim is to discover the

underlying motives of human behaviour. Through such research we can analyse the

various factors which motivate people to behave in a particular manner or which

make people like or dislike a particular thing. It may be stated, however, that to apply

qualitative research in practice is relatively a difficult job and therefore, while doing

such research, one should seek guidance from experimental psychologists. practice is

relatively a difficult job and therefore, while doing such research, one should seek

40

guidance from experimental psychologists. practice is relatively a difficult job and

therefore, while doing such research, one should seek guidance from experimental

psychologists.

Conceptual vs. Empirical: Conceptual research is that related to some abstract

idea(s) or theory. It is generally used by philosophers and thinkers to develop new

concepts or to reinterpret existing ones. On the other hand, empirical research relies

on experience or observation alone, often without due regard for system and theory. It

is data-based research, coming up with conclusions which are capable of being

verified by observation or experiment. We can also call it as experimental type of

research. In such a research it is necessary to get at facts firsthand, at their source, and

actively to go about doing certain things to stimulate the production of desired

information. In such a research, the researcher must first provide himself with a

working hypothesis or guess as to the probable results. He then works to get enough

facts (data) to prove or disprove his hypothesis. He then sets up experimental designs

which he thinks will manipulate the persons or the materials concerned so as to bring

forth the desired information. Such research is thus characterised by the

experimenter’s control over the variables under study and his deliberate manipulation

of one of them to study its effects. Empirical research is appropriate when proof is

sought that certain variables affect other variables in some way.

“MY RESEARCH IS DESCRIPTIVE IN NATURE”

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SIGNIFICANCE OF RESEARCH

“All progress is born of inquiry. Doubt is often better than overconfidence, for it leads

to inquiry, and inquiry leads to invention” is a famous Hudson Maxim in context of

which the significance of research can well be understood. Increased amounts of

research make progress possible. Research inculcates scientific and inductive thinking

and it promotes the development of logical habits of thinking and organisation.

The role of research in several fields of applied economics, whether related to

business or to the economy as a whole, has greatly increased in modern times. The

increasingly complex nature of business and government has focused attention on the

use of research in solving operational problems. Research, as an aid to economic

policy, has gained added importance, both for government and business. Research

provides the basis for nearly all government policies in our economic system. For

instance, government’s budgets rest in part on an analysis of the needs and desires of

the people and on the availability of revenues to meet these needs. The cost of needs

has to be equated to probable revenues and this is a field where research is most

needed. Through research we can devise alternative policies and can as well examine

the consequences of each of these alternatives.

Data Collection

Data collection is any process of preparing and collecting data, for example, as part of

a process improvement or similar project. The purpose of data collection is to obtain

information to keep on record, to make decisions about important issues, or to pass

information on to others. Data are primarily collected to provide information

regarding a specific topic.

42

Data collection usually takes place early on in an improvement project, and is often

formalised through a data collection plan which often contains the following activity.

Pre collection activity — agree on goals, target data, definitions, methods

Collection — data collection

Present Findings — usually involves some form of sorting analysis and/or

presentation.

Prior to any data collection, pre-collection activity is one of the most crucial steps in

the process. It is often discovered too late that the value of their interview information

is discounted as a consequence of poor sampling of both questions and informants and

poor elicitation techniques. After pre-collection activity is fully completed, data

collection in the field, whether by interviewing or other methods, can be carried out in

a structured, systematic and scientific way.

A formal data collection process is necessary as it ensures that data gathered are both

defined and accurate and that subsequent decisions based on arguments embodied in

the findings are valid. The process provides both a baseline from which to measure

from and in certain cases a target on what to improve.

Other main types of collection include census, sample survey, and administrative by-

product and each with their respective advantages and disadvantages. A census refers

to data collection about everyone or everything in a group or Statistical population

and has advantages, such as accuracy and detail and disadvantages, such as cost and

time. A Sampling (statistics) is a data collection method that includes only part of the

total population and has advantages, such as cost and time and disadvantages, such as

accuracy and detail.

There are two basic types of data:

PRIMARY DATA

Data that has been collected from first-hand-experience is known as primary data.

Primary data has not been published yet and is more reliable, authentic and objective.

43

Primary data has not been changed or altered by human beings; therefore its validity

is greater than secondary data.

SOURCES OF PRIMARY DATA

Sources for primary data are limited and at times it becomes difficult to obtain data

from primary source because of either scarcity of population or lack of cooperation.

Regardless of any difficulty one can face in collecting primary data; it is the most

authentic and reliable data source. Following are some of the sources of primary data.

Experiments: Experiments require an artificial or natural setting in which to perform

logical study to collect data. Experiments are more suitable for medicine,

psychological studies, nutrition and for other scientific studies. In experiments the

experimenter has to keep control over the influence of any extraneous variable on the

results.

Survey: Survey is most commonly used method in social sciences, management,

marketing and psychology to some extent. Surveys can be conducted in different

methods.

Questionnaire: is the most commonly used method in survey. Questionnaires

are a list of questions open-ended or close -ended for which the respondent

gives answers. Questionnaire can be conducted via telephone, mail, live in a

public area, or in an institute, through electronic mail or through fax and other

methods.

Interview: Interview is a face-to-face conversation with the respondent. In

interview the main problem arises when the respondent deliberately hides

information otherwise it is an in depth source of information. The interviewer

can not only record the statements the interviewee speaks but he can observe

the body language, expressions and other reactions to the questions too.

SECONDARY DATA:

44

Data collected from a source that has already been published in any form is called as

secondary data. The review of literature in nay research is based on secondary data.

Mostly from books, journals and periodicals.

Sources of Secondary Data:

Published Printed Sources: There are varieties of published printed sources. Their

credibility depends on many factors. For example, on the writer, publishing company

and time and date when published. New sources are preferred and old sources should

be avoided as new technology and researches bring new facts into light.

Published Electronic Sources: As internet is becoming more advance, fast and

reachable to the masses; it has been seen that much information that is not available in

printed form is available on internet. In the past the credibility of internet was

questionable but today it is not. The reason is that in the past journals and books were

seldom published on internet but today almost every journal and book is available

online. Some are free and for others you have to pay the price.

Government Records: Government records are very important for marketing,

management, humanities and social science research.

Census Data/population statistics:

Health records

Educational institutes records

“MY REPORT IS BASED ON SECONDARY DATA.”

Limitation

Although the project has been worked out at its best, yet there are some limitations

which cannot be overlooked. Had these limitations been overcome the findings would

45

be accurate.

SOME LIMITATIONS:

1. Time Constraint

The project was vast and complex in nature, therefore it took time in

obtaining ,analysing and interpreting the data, which consumed a lot of time

leading to time constraint.

2. Data Constraint

The project is entirely made on secondary data, although data is reliable but

unavailability of primary data is a constraint to accuracy.

3. Limited Research

The research of the project is limited; I have not conducted PEST and BCG

analysis

which leads to limitation of limited research.

46

CHAPTER – 4

DATA ANALYSIS AND INTERPRETATION

47

SWOT ANALYSIS OF MAGGI BRAND

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

48

figure below indicates that Maggi has made several attempts to revamp itself as a

µHealthy 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.

Strength:

Market leader in their segment.

Strong brand loyal consumer base.

Wide range of distribution channel.

Product according to the need of Indian consumer.

Innovative Product.

Weakness:

Products are dependent on each other.

Not so much presence in rural market.

Opportunities:

Increasing number of working youth

Product has been acceptable in youth category

Shift to rural market

Changing preference of consumer towards Chinese food and fast food.

Can foray into other food markets with its strong Brand name

Threats:

Price war with competitors.

Strong presence of regional competitors

Consumers don’t perceive it as a ³Healthy Product´

49

STPD ANALYSIS OF MAGGI BRAND

Segmentation:

Market Segmentation divides the heterogeneous market into homogenous groups of

customers who share a similar set of needs/wants and could be satisfied by specific

products. Maggi Brand has 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 company’s 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 positioned 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:

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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 has 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

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MARKET ANALYSIS

Instant food means simple, fast and convenient food. The Indian instant food market

is growing at the rate of 30-35% per annum.

Trends fuelling the Indian instant food market :

1. Changing Demographics of the Indian population.

2. Convenience

3. Nutritional and Health Benefits

4. Urbanisation

5. Growth of Organisational Retail

6. Improvement in Packaging Technology

Maggi enjoys around 50% market share in this segment which is valued at around 250

crores. About 15-20 percent of the total stock of both the leading retail stores is

instant food. A survey carried out by the National Council of Applied Economics

Research named Maggi the country’s most valued FMCG brand.

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MARKET PENETRATION STRATEGIES

1. Promotional campaigns in school

2. Advertising Strategies:

Focussing on kids

3. New product innovation according to the need of the consumers:

Veg Atta Noodles

Dal Atta Noodles

Cuppa Mania

4. Availability in different packages:

50 gms

100 gms

200 gms

400 s (Family Packs)

5. Conducting regular market research

SUGGESTIVE PROMOTIONAL STRATEGIES

Focus on creating distinctive image, based on twin benefits of INSTANT and

HEALTHY with emphasis on health conscious and rural market – Conduct

promotional campaigns at schools in small town with population more than 10000 –

Strenghten the distribution channel of the rural areas within 100 km of all the metros

– Foray into other food products like chips, chocolates etc under its sole brand

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name would not only help in Brand extension but will also enhance Maggi’s market

share.

The Product Life Cycle

A new product progresses through a sequence of stages from introduction to growth,

maturity, and decline. This sequence is known as the product life cycle and is

associated with changes in the marketing situation, thus impacting the marketing

strategy and the marketing mix.The product revenue and profits can be plotted as a

function of the life-cycle stages as shown in the graph below:

      Product Life Cycle Diagram    

Introduction Stage

In the introduction stage, the firm seeks to build product awareness and develop a

market for the product. The impact on the marketing mix is as follows:

Product branding and quality level is established, and intellectual property

protection such as patents and trademarks are obtained.

Pricing may be low penetration pricing to build market share rapidly, or high

skim pricing to recover development costs.

54

Distribution is selective until consumers show acceptance of the product.

Promotion is aimed at innovators and early adopters. Marketing

communications seeks to build product awareness and to educate potential

consumers about the product.

Growth Stage

In the growth stage, the firm seeks to build brand preference and increase market

share.

Product quality is maintained and additional features and support services

may be added.

Pricing is maintained as the firm enjoys increasing demand with little

competition.

Distribution channels are added as demand increases and customers accept

the product.

Promotion is aimed at a broader audience.

Maturity Stage

At maturity, the strong growth in sales diminishes. Competition may appear with

similar products. The primary objective at this point is to defend market share while

maximizing profit.

Product features may be enhanced to differentiate the product from that of

competitors.

Pricing may be lower because of the new competition.

Distribution becomes more intensive and incentives may be offered to

encourage preference over competing products.

Promotion emphasizes product differentiation.

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Decline Stage

As sales decline, the firm has several options:

Maintain the product, possibly rejuvenating it by adding new features and

finding new uses.

Harvest the product - reduce costs and continue to offer it, possibly to a loyal

niche segment.

Discontinue the product, liquidating remaining inventory or selling it to

another firm that is willing to continue the product.

The marketing mix decisions in the decline phase will depend on the selected strategy.

For example, the product may be changed if it is being rejuvenated, or left unchanged

if it is being harvested or liquidated. The price may be maintained if the product is

harvested, or reduced drastically if liquidated.

PRODUCT-MIX ANALYSIS

Since top management is ultimately responsible for the product mix and the resulting

profits or losses, they often analyze the company product mix. The first assessment

involves the area of opportunity in a particular industry or market. Opportunity is

generally defined in terms of current industry growth or potential attractiveness as an

investment. The second criterion is the company's ability to exploit opportunity,

which is based on its current or potential position in the industry. The company's

position can be measured in terms of market share if it is currently in the market, or in

terms of its resources if it is considering entering the market. These two

factorspportunity and the company's ability to exploit itrovide four different options

for a company to follow.

1. High opportunity and ability to exploit it result in the firm's introducing new

products or expanding markets for existing products to ensure future growth.

2. Low opportunity but a strong current market position will generally result in

the company's attempting to maintain its position to ensure current

profitability.

3. High opportunity but a lack of ability to exploit it results in either (a)

attempting to acquire the necessary resources or (b) deciding not to further

56

pursue opportunity in these markets.

4. Low opportunity and a weak market position will result in either (a) avoiding

these markets or (b) divesting existing products in them.

These options provide a basis for the firm to evaluate new and existing products in an

attempt to achieve balance between current and future growth. This analysis may

cause the product mix to change, depending on what management decides.

The most widely used approach to product portfolio analysis is the model developed

by the Boston Consulting Group (BCG). The BCG analysis emphasizes two main

criteria in evaluating the firm's product mix: the market growth rate and the product's

relative market share. BCG uses these two criteria because they are closely related to

profitability, which is why top management often uses the BCG analysis. Proper

analysis and conclusions may lead to significant changes to the company's product

mix, product line, and product offerings.

The market growth rate represents the products' category position in the product life

cycle. Products in the introductory and growth phases require more investment

because of research and development and initial marketing costs for advertising,

selling, and distribution. This category is also regarded as a high-growth area (e.g., the

Internet). Relative market share represents the company's competitive strength (or

estimated strength for a new entry). Market share is compared to that of the leading

competitor. Once the analysis has been done using the market growth rate and relative

market share, products are placed into one of four categories.

Stars: Products with high growth and market share are know as stars. Because

these products have high potential for profitability, they should be given top

priority in financing, advertising, product positioning, and distribution. As a

result, they need significant amounts of cash to finance rapid growth and

frequently show an initial negative cash flow.

Cash cows: Products with a high relative market share but in a low growth

position are cash cows. These are profitable products that generate more cash

than is required to produce and market them. Excess cash should be used to

finance high-opportunity areas (stars or problem children). Strategies for cash

cows should be designed to sustain current market share rather than to expand

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it. An expansion strategy would require additional investment, thus decreasing

the existing positive cash flow.

Problem children: These products have low relative market share but are in a

high-growth situation. They are called "problem children" because their

eventual direction is not yet clear. The firm should invest heavily in those that

sales forecasts indicate might have a reasonable chance to become stars.

Otherwise divestment is the best course, since problem children may become

dogs and thereby candidates for deletion.

Dogs: Products in the category are clearly candidates for deletion. Such

products have low market shares and unlike problem children, have no real

prospect for growth. Eliminating a dog is not always necessary, since there are

strategies for dogs that could make them profitable in the short term. These

strategies involve "harvesting" these products by eliminating marketing

support and selling the product only to intensely loyal consumers who will buy

in the absence of advertising. However, over the long term companies will

seek to eliminate dogs.

As can be seen from the description of the four BCG alternatives, products are

evaluated as producers or users of cash. Products with a positive cash flow will

finance high-opportunity products that need cash. The emphasis on cash flow stems

from management's belief that it is better to finance new entries and to support

existing products with internally produced funds than to increase debt or equity in the

company.

Based on this belief, companies will normally take money from cash cows and divert

it to stars and to some problem children. The hope is that the stars will turn into cash

cows and the problem children will turn into stars. The dogs will continue to receive

lower funding and eventually be dropped.

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CHAPTER – 5

FINDINGS AND CONCLUSION

61

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 mid-1990s. Unfortunately, the macaroni and

pickles didn’t 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, Maggi’s competitor t

Top Ramen‟ took advantage of the situation and started a parallel aggressive

campaign to eat into Maggi’s 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 worldwide

Maggi sales. The brand has grown to an estimated value of Rs 160-170 crore

and contributes at least 8 –9% to Nestle India’s 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.

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FINDINGS

Maggi though has been able to differentiate itself from other Noodles, Maggi

being taken as generic to Noodles is hampering other extended product

category. Competitors have high grounds to capture the market differentiating

then from being Maggi. It makes others possible product category vulnerable

if lunched under Maggi.

So to avoid proliferation of brand and introduce new products to capture

opportunities in other snacks and ready to eat product category NIL has to

introduce new branding strategy.

As pasta of ITC has been seen as products capturing the market of noodles and

Maggi failing to lunch pasta under Maggi brand also support the argument for

new brand introduction by NIL.

As Indian Market is Brand conscious, other competitors are coming up with

more Indianized brand of products, and as Indian being more aware of their

culture and large segment being typical and conservative about their culture,

there care more chances that NIL would be successful if it create a brand close

to Indian culture in wording to positioning. As India is growing, Old Indian

Brands are also regaining momentum worldwide, NIL could catch the trend of

market.

By doing so, NIL could avoid the draw backs associated with the Maggi

brand. It could position new brand in competition with other competitor’s

brand where there is no fit of product with the Maggi brand.

NIL other option is acquiring products manufacturers of different products like

biscuits, chips and snacks as it is very essential for it’s market leader position.

Other companies have advantage of such products. ITC has biscuits to it,

Hindustan Lever has tea to it. India is huge market where distribution

advantage plays major role and economies of scale pays back. So it’s is

important for NIL to concentrate on other ready to eat category to benefit

consumers from economies of scale reflect in price.

Introduce different new brand or acquire emerging brand in biscuits,

chips and snacks category

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CHAPTER – 6

SUGGESTIONS AND RECOMMENDATIONS

64

SUGGESTIONS

Strenghten and use the Distribution-NIL should focus on distribution channels and

use of the distribution channels to expand its market to Rural India with products

targeted to the market. It is the way it could increase its volume of sales.

Increase the Usage of Maggi Brand Products – Since Maggi Noodles and Maggi

Sauce is market leader it has to adopt strategy to increase the usage of the product, to

product its market share. As it cannot further grow sales drastically in the same

segment, only ways is to increase product usage like noodles for breakfast and

ketchups for biscuits.

Launch Health Awareness Promotional Campaign – NIL should launch health

awareness campaign to educate consumers about the benefits of health food. It could

sponsors health camps, publish health information.

Enter into other product category like Biscuits, chips and snacks with Nestle

Brand – To enlarge its domain, NIL should enlarge its product segment. It would

spread economies of scale to customers in the form of price.

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BIBLOGRAPHY

66

BIBLIOGRAPHY

Books

Kothari, C.R, “Research Methodology”, 3rd edition, 1997, Vikas Publishing

House Pvt. ltd., New Delhi.

Dr. Gupta S.P & Dr. Gupta M.P., Business Statistics by Addition 2004, New

Delhi.

Websites

http://en.wikipedia.org/wiki/Maggi last accessed on Saturday, September 22,

2012, 10:45:45 AM

http://marketingpractice.blogspot.in/2006/01/maggi-its-different.html last

accessed on Sunday, November 23, 2012, 7:30:45 PM

http://en.wikipedia.org/wiki/Nestle last accessed on Sunday, October 7, 2012,

4:45:45 PM

http://mgmtfunda.com/swot-analysis-of-maggi/#last accessed on Saturday,

November 13, 2012, 5:40:10 PM

marketingpractice.blogspot.in/2006/01/maggi-its-different.html last accessed

on Sunday, November 11, 2012, 8:50:30 AM

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