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, Accredited, ‘ A’ Grade
Category A+ Category A+ Institute High Grading 81.7% by Joint Assessment An ISO 9001:2008 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 Delhi-1100 85
1
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
Findings and Conclusion
CHAPTER-6
62-63
Recommendations
Bibliography
64-65 2
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
3
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
4
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 Enrollment No. – 00680301711
Class & Section- BBA- II
5
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 in the market that is providing itself to be the most competitive in post liberalization Indian economy. The ―SECONDARY DATA‖ has been us ed 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
6
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
8
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 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.
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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 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 10
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.
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 11
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 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.
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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. 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.
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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 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.
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CHAPTER – 2 COMPANY PROFILE
15
INTRODUCTION
MAGGI
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.
16
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. 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.
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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
billion), including Nespresso, Nescafé, KitKat, Smarties, Nesquik,
$
1.1
Stouffer‘s, Vittel,
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.
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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. 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.
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The logo that Nestlé used until 1966
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 ado pted 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 20
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.
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 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. Theot 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 ms
but had
t h edisadvantage
both these proble
of extended preparation time at home. Maggi 23
was pos iti oned as the onl y 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, it chose not to do so, because the Indian consumer mindset di d not ac ce pt 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 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
neve r ve ry serious about the segment. 24
In 1993, ―Sweet Maggi‖, the first variant of Maggi noodles was launched.
The co mpa ny 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.
25
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 oilfry 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 M aggi 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 promp ted 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. 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 26
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 3. Chicken Bouillon 4. Beef Bouillon 5. Mutton Bouillon
27
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 8. Tangy Tomato Soup 28
9. Broccoli Soup 10. Chicken with ABC Pasta Soup
MAGGI BHUNA MASALA
29
MAGGI SAUCES
1. Rich Tomato Sauce 2. Hot & Sweet Chilly Sauce 3. Chilly Garlic Sauce
30
MAGGI AND ITS COMPETITORS
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 i ts market presence but also entrenched the brand‘s relevance in the market.
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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.
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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. 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.
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CHAPTER – 3 RESEARCH METHODOLOGY
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RESEARCH METHODOLOGY
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.
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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. 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.
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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).
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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‘ or ‗basic‘ research.‖
Research concerning some natural phenomenon or relating to pure mathematics are examples 38
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 guidance from experimental psychologists. practice is relatively a difficult job and therefore, while doing such research, one should seek guidance from experimental psychologists.
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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. 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. 41
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. 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.
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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:
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.
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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 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 44
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.
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CHAPTER – 4 DATA ANALYSIS AND INTERPRETATION
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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 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.
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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´
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.
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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:
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 400s (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 51
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.
Distribution is selective until consumers show acceptance of the product. 52
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.
Decline Stage
As sales decline, the firm has several options:
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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 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.
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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 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 55
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
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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
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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
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