Summary and case a nalysis: Nestle’s Maggi: Pricing and repositioning a recalled product IVEY Publishing Situation Analysis & problem statement
In June 2015, the Indian food regulatory body, the Food Safety and Standards Authority of India, banned Nestle's brand of noodles, Maggi declaring it unsafe for human health. FSSAI observed that the product is having 17 ppm of lead where the allowed limit is only .01 ppm although Nestle refuted all the claims. Being 2nd largest market, to retain the trust of consumers, Nestle recalled Maggi from all store shelves in the country. This recall costed Nestle a cost of around INR 3.2 billion including stock, material and various stages supply chain. Nestle India occurred a direct loss of 20% revenue. Their stock fell by 15%. Not only that, it affected entire ecosystem including venders for Maggi. Not only that, the incidents were reaching other countries co untries as well which was not good for the brand. Having a market share of 63%, nestle was nowhere in a position to avoid this product line. To recover all the losses, it became imperative for Nestle to design a comeback. Management was t hen grappling with an improved re-positioning strategy to help Nestle retain its considerable market share in India.
SWOT Analysis
Strength
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People trust brand value Multiple successful marketing campaign Reachability
Opportunities
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Market demand for quick food is high
Weakness
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Unhealthy Food content Current crisis
Threat
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Competition People’s inclination toward Patanjali Loss of trust due to current crisis
Product, pricing, positioning & promotion Product:
India has a big noodle market around INR 40 billion. However, from market share perspec tive, out of total market, Maggi has control over 63% of market share. They have multi flavored products in the market to target people with different taste and preferences. Pricing:
During the crisis, Maggi was priced at INR 25/ packet for 200grms. Until 2013, Maggi has been seeing good growth at 8.7% per year in India. However, in 2014, Nestle has seen slowest growth in last 5 year. At the same time India’s fastest growing Aurvedic company Patanja li has also launched noodles and
claim to have superior value compare to Maggi at lesser price of INR 15/-.
Prepared By: Group 6 (Chandan, Siddharth, Mahesh & Kavipriya), PGPBM 2018-20
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Summary and case a nalysis: Nestle’s Maggi: Pricing and repositioning a recalled product IVEY Publishing One of the major issue that Nestle needed to resolve was what role pricing would play in influencing consumer purchase decisions during the proposed product relaunch. They could take the following strategy: 1. Increased value when keeping same price 2. Increase value with lower price 3. Increased value with higher price.
Positioning:
All the past promotions campaigns for Maggi has consistently communicated a sense of happiness. Some of the most successful campaign of Maggi are -
Me and meri Maggi
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Meri Maggi- Two Minute main khusiyan
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#HealthyIsEnjoyable
Maggi has enjoyed 25 years of successful business and connecting with people using its campaign. Promotion:
Almost all of the promotion campaign that Maggi has launched in pas has been successful. “Me and meri maggi” was launched to celebrate 25 years of Maggi. Not only the professional filming, they have used platform and asked people to send their storie s to Maggi and published few of them as ads t o connect
with people emotionally. They also published 50 stories on the rapper of the product. They have tried connecting with audience of all age gr oup including kids and adults and across all the ads they have tried to communicate happiness in their advertisement. For few of their campaign, they have also gone with star endorsement and social media for re aching out to people. Recommendation
1. They should come back with awareness campaign to communicate t hat they are safe for human consumption and now it’s verified by FSSAI where the same thing could not be said about other
brands 2. They should not reduce price, instead should communicate their value and co nnect with people with nostalgia 3. They should launch some more products with healthy base like Atta, oats to compete with competition
