PROJECT REPORT

ON
“PRODUCT
LIFE
CYCLE”

SUBMITTED BY:-
VERMA NARESH S.
ROLL NO:- 26.
T.Y.BMS.
CERTIFICATE

1
I PROF. KOMAL KAMRA, hereby certify that VERMA NARESH S.
student of R K Talreja college of T.Y.BMS (SEM V) has successfully
completed project on PRODUCY LIFE CYCLE in the academic year
2009-2010,& the information submitted in this projected is and fair to
my best knowledge.

Sign of project co-ordinator

(KOMAL KAMRA)

Sign of principal of college/ Institute

(R K TALREJA COLLEGE)

Sign of External Examiner

DECLARATION

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I VERMA NARESH S. OF R K TALREJA OF T.Y.BMS(SEM V), hereby declare
that I have completed this project on “PRODUCT LIFE CYCLE” in the academic
year 2009-2010.

The above information submitted is true and original to the best of my knowledge.

DATE:

PLACE:

Signature of student

(VERMA NARESH S.)

ACKNOWLEDGEMENT

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Studying the topic PRODUCT LIFE CYCLE in theory aspect isn’t a very easy task.
But the journey through all these days has been a great and enjoyable one because
of the continued guidance of my guide KOMAL KAMRA.

Finally, I would like to thank my college professors who helped me in a situation

when I required them.

OBJECTIVE OF PROJECT REPORT

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  To learn how actually PLC is practiced in industries or industrial life. We
always read this in the books but now I do have the practical knowledge
of how PLC is important and essential for the company.

 To study the important functions of PLC. To watch how the different

stages are managed properly in the life cycle. It’s very difficult to
manage all the things in real practice.

 Analyze business life cycle.

 To expand the practical knowledge.

 How to make all the marketing strategies used worth fully.

METHODOLOGY
This project is prepared with the help of theory based knowledge as well as practical
knowledge and a pool of advise and suggestions from the concerned professors of

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the subject, for this information is also searched from the internet. The theoretical
part is taken from various books available on the topic.

Finally the task of completing this project report is been completed with the
combination of all things and it contains the information which is factual and to the
best of my knowledge.

INTRODUCTION:

The product life cycle describes the sale pattern of a product over
time. After launching the product the management wants the product to enjoy a
long and happy life. Although it does not expect the product to sell forever, the
company wants a decent profit to cover all the effort and risk that went into

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launching it. Management is aware that each product will have a life cycle,
although the exact shape and length is not known in advance.Generally the time
span begins with products introduction in the market and ends with its
obsolescence and replacement. While the form of the life cycle is fairly standard
and is subject to variations.

The product life cycle is based upon the biological life cycle. For example, a seed is
planted (introduction); it begins to sprout (growth); it shoots out leaves and puts
down roots as it becomes an adult (maturity); after a long period as an adult the
plant begins to shrink and die out (decline).some products may have a short life
cycle, whereas others may enjoy a longer life. Product life cycle refers to the
progression or products sales and profits over its lifetime.

It’s said that a product has a life cycle is to assert four thongs:

1. Products have limited life.

2. Product sales pass through distinct stages ,each posing different challenge
oppurtunities, and problems to seller.
3. Profits rise and fall at different stages of product life cycle.
4. Product require different marketing, financial, manufacturing, purchasing,
and human resource strategies in each life cycle stage.

The concept underlying the premises of product life cycle is that all
products pass through the stages outlined below:

1. Introduction stage.
2. Growth stage.
3. Maturity stage.
4. Decline stage.

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STAGES OF PRODUCT LIFE CYCLE

GRAPHICAL REPRESENTATION OF STAGES OF PRODUCT

LIFE CYCLE

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9
 BASIC STAGES IN PRODUCT LIFE CYCLE

The first and foremost stage of products life cycle is the INTRODUCTION
stage. The INTRODUCTION stage starts when the new product is first launched.
Introduction takes time and the sales growth tends to be slow at this stage.
Because it takes time to roll out a new product and fill dealer pipelines .if the
product introduction proved to be successful, rapid GROWTH stages are reached
and sales increase markedly. According to the concept of life cycle, the market for
any product is limited, and sales will generally fall short of their potential. When
this point is reached , the market enters the maturation stage. The life cycle goes
on further to assume that each product eventually is replaced by another or that
initial rapid growth will end in decline.

If a product enters a market that has already moved into MATURE stage .
competition is intense because the product must compete for share of an existing
market thai is not experiencing growth.Once the market enters the DECLINE stage
,new products are not entering the market and demand levels are falling. At this,
the objective is to increase market share to maintain stable sales levels.

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 INTRODUCTION STAGE
Introductory stage is (also called as market pioneering stage)is the first stage in the life cycle
of the product.

During the introduction stage, the product is just introduced to the market . In this stage, the
firm seeks to build product awareness and develop a market for the product.Sales revenue
begins to grow along with demand but rate of growth is rather slow.There may not be ready
market for product.Sales are low, the product undergoes teething troubles; profit seems
remote possibility;demands have to be created & developed; & the customers have to be
promted to try out the product. The profit during this stage may be less due to low sales that
also supplemented by heavy production & distribution cost. The expenditure on advertising will
also be heavy. Consumer will purchase on trail basis. 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.

 Promotion is aimed at innovators and early adopters. Marketing communications seeks

to build product awareness and to educate potential consumers about the product.

Sales revenue begins to grow along with demand but the rate of growth is rather slow. There
may not be ready market for the product .Sales are low, the product undergoes teething

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troubles; profit seems a remote possibility; demands have to be created & developed; &the
customer have to be promoted to try out the product. The profit during this stage may be less
due to low sales that also supplemented by heavy production & distribution costs. The
expenditure on advertising will also be heavy .Consumer will purchase the product on trail
basis.

The stage poses several problems for the marketer. The complexity of the problems & the
duration of the stage depend upon the nature of the product, its price, its technological
newness & the consumer’s view of the product. In this stage , the demand has to be created &
developed so the firm has to invest heavily in the promotion & wait for the reward.

Introduction stage is characterized by:

*Low sales.

*High promotional expenditure.

*Low or no competition if the product is innovative.

*Loss or negligible profits.

*Survival problems, if there is strong competition.

*Higher dealer’s incentives.

GROWTH STAGE:

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 Growth stage is the second stage in the life cycle of the product.

During the growth stage, the product is accepted by the consumer and traders.
The market demand for the product increase and the size of the market grows
and the sales increase with speed. The profit from the sales also increases. The
firm gives special attention to raise the volume of sales.

Then when during this stages, the introductory is setting down with is product,
competitors enter into scene with similar or slightly improved version of the
product. The introductory may have to alter his product at this stage. He has to
stay ahead of his competitors and persuade the customer to prefer his brand.

For this, sales promotion measures at consumer level and dealer level should be
given consideration. Advertisement should also be made extensively so as to have
new customer for the product .The dealers should be encouraged to repeat
orders. Competition-oriented pricing is useful during this stage. Similarly,
marketing and distribution efficiency becomes decisive factors at this stage.

In this way, during the growth stage, the volume of sale increases with speed. The
new customers join the existing users of the product. As a result, the sales and
profits of the company keep on increasing.

The impact on the marketing mix in growth stage is as follows:

Product: New product features and packaging options are introduced and the product
is diversified. There is improvement of product quality.

Price: The price usually remains high due to entry of competitors.

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 Distribution: Distribution becomes more intensive. Trade discounts are minimal if
resellers show a strong interest in the product.

Promotion: Increased advertising to build brand preference.

Growth stage is characterized by:

* Rapid growth in sales.

* Rise in profits.

* Repeat purchases and brand loyalty.

* Increasing competition.

* Introduction of more product models.

* Intensive promotional effort.

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MATURITY STAGE
Maturity stage is the fourth stage in life cycle of the product

In maturity stage, sales turnover reaches to the highest level. Demand tends to reach a
saturation point. This maturity stage normally lasts longer than the previous stages and it poses
strong challenges to the marketing management. Most products are in the maturity stage of
the life cycle, and therefore most of the marketing management deals with the mature
products. Price competition becomes intense. The marketing expenditure goes on increasing
and this brings the margin of profit down. Additional expenditure is also incurred for product
modification, improvement, differentiation and development. Even broadening of the product
line will be necessary in order to face pressure of competition.

Along with this, special sales promotion measures are necessary in order to stimulate demand
and face market competition. Thus special attention needs to be given for raising marketing
effectiveness.In short, relatively low price , increased marketing costs, keener competition and
lesser profits are faced in this stage. This situation continues for some period and this leads to
saturation position.

It’s a stage when sales turnover reaches to a specific level, which is a saturation point. Orders
are only of replacement orders. Consumption achieves a constant rate. It is not possible to
raise the volume of sales to higher level. Efforts are required to be made to maintain the
position in the market by facing the competitiors effectively.

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Maturity stage is characterized by:

*Stagnation of sales.

*Decline in profits.

*Intense competition.

*Retentive or reminder advertising.

Although many products in the mature stage appear to remain unchanged for long periods,
most successful ones are actually evolving to meet consumer needs. Product managers should
do more than simply ride along with or defend their mature product a good offense is the best
defense. They should consider modifying the market, product, and marketing mix.

The company can try modifying the marketing mix improving sales by changing one or more
elements.

 It can cut prices to attract new users and competitor’s customers.

 It can launch a better advertising campaign or use aggressive sales promotions trade
deals, cents-off, premiums, and contests.

 The company can also move into larger market channels, using mass merchandisers.

 Finally, the company can offer new or improved services to buyers.

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The company might also try modifying the product changing characteristics such as quality,
features, or style to attract new users and to inspire more usage.

 It might improve the product’s quality and performance its durability, reliability, speed,
or taste.

 It might add new features that expand the product’s usefulness, safety, or convenience.

 Finally the company can improve the product’s styling and attractiveness.

The company might try to expand the market for its mature brand by working with the two
factors that make up sales volume:

Volume= number of brand users * usage rate per user

It can try to expand the number of brand users:

 By converting non users

 By entering into new segments

 By winning competitors customers.

The impact on the marketing mix in maturity stage is as follows:

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 Product: Products are modified again, this time in reaction to competitor products. The
packaging may also change to exploit new segments sometimes (e.g. shampoo sachets
introduced to make shampoo accessible to lower income groups).

Price: Since sales volumes are high, prices come down and discounts are more frequent.
Pricing wars break out among competitors as they vie for the ever shrinking new-customer
base in a saturating market. Sometimes a product may not reduce prices but increase them
to distinguish themselves as a superior product.

Distribution: New distribution channels are explored and incentives are provided to
resellers in order to avoid losing shelf space to competitors.

Promotion: Emphasis on differentiation and building of brand loyalty. The promotion

budget may be a little lesser than previous stages.

DECLINE STAGE
Decline stage is the fourth and last stage of product life cycle.

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The sales of most product forms and brands eventually decline. Sales decline for many reasons,
including technological advance, shifts in consumer tastes, and increased in competition, entry
of new products or due to reduction of the support of customer. Sales drops severely in due
course and the product fail to get support from the market.

Carrying a weak product can be very costly to a firm, and not just in profit terms. There are
many hidden costs. A weak product may take up too much of management’s time. It often
requires frequent price and inventory adjustments. It requires advertising and sales force
attention that might be better used to make “healthy” products more profitable. A product’s
failing reputation can cause customer concerns about the company and its other products. The
biggest cost may well lie in the future. Keeping weak products delays the search for
replacements, creates a lopsided product mix, hurts current profits, and weakens the
company’s foothold on the future.

For these reasons, company need to pay more attention to their highest aging products. The
firm’s first task is to identify those products in the decline stage by regularly reviewing the sales,
market shares, costs, and profit trends. Then management must decide whether to maintain,
harvest or drop each of these declining products.

Management may decide to maintain the brand without change in the hope the competitors
will leave the industry.

Management may decide to reposition or reformulate the brand in hopes of moving it back into
the growth stage of the product life cycle. For that the firm has to reduce the price to maintain
the support of the customers. Expenditure on advertising and sales promotion will have to be
bought down as such expenditure is not adequately rewarded.

In a study of company strategies in declining industries, Kathryn Harrigan identified five decline
strategies available to the firm:

 Increasing the firm’s investment (to dominate the market or strengthen its competitive
position).

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  Maintaining the firm’s investment level until the uncertainties about the industries are
revolved.

 Decreasing the firm’s investment level selectively, by dropping unprofitable customer

groups, while simultaneously strengthening the firm’s investment to recover cash
quickly.

 Harvesting (“milking”) the firm’s investment to recover cash quickly.

 Divesting the business quickly by disposing of its assets as advantageously as possible.

In short, the marketing mix may be modified as follows:

 Product - The number of products in the product line may be reduced. Rejuvenate
surviving products to make them look new again.

 Price - Prices may be lowered to liquidate inventory of discontinued products.

 Prices may be maintained for continued products serving a niche market.

 Distribution - Distribution becomes more selective. Channels that no longer are

profitable are phased out.

 Promotion - Expenditures are lower and aimed at reinforcing the brand image for
continued products.

Decline stage is characterized by:

 Entry of substitute.

 Decline in sales.

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 Decline in profits at a rapid pace.

 Minimum promotional effort.

 Withdrawal or modification in products.

 Repositioning of product.

MARKETING
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STRATEGIES

INTRODUCTION STAGE
That following are the various strategies at the introduction stage

a) Product strategies:

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 Normally, the firm will concentrate on the single product which is introduced. The
firm may not go for product line extension. Again, the firm may not come up with various
models to cater the different market segments.

The firm may spend addittional funds on research and development to further improve the
product, if need to be more so in the case of consumer durable such as automobiles, in order to
correct the defects, if any, noticed after launching the product.

b) Price and promotion strategies:

In relation to price and promotion, a firm may follow one of the following four
strategies.

a) Rapid skimming:

The product can be launched at high price and with high promotional expenditure.

This strategies is suitable:

 When the market is large in size.
 When a large part of the market is unaware of the product and therefore, high
promotion, is required.
 When the buyers are willing to pay a higher price.
 Where there is a need to build brand image or preferences as competition are likely in
near future.

This strategy brings certain benefits:

 The firm may generate profit at the introduction stage, which will enable the firm to
cover up either partly or wholly the development expenses .
 This strategy will enable the firm to build a good brand image which will enable to face
competition effectively as and when the competitors enter the market.

b) Slow skimming:
The product can be launched at high price and with low promotional expenditure.

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 This strategy is suitable:
 When the market size is limited
 When the potential buyers are aware of the products features, uses, etc. and therefore,
low promotion.
 Where buyers are willing to pay a high price.

This strategy brings certain benefits:

 The firm may generate profits at the introductory stage.

 It requires less promotional expenditure and as such low marketing overheads.

c) Rapid penetration:
The firm can launch the product at low price and with high promotional
expenditure.

This strategy is suitable:

 When the market is large in size

 When a large part of the market is unaware of the product, and therefore high
promotion.
 Where the buyers are price sensitive.
 Where there is possibility of strong competition in near future, so high promotional
expenditure to build brand image or preference
 Where the company is in a position to achieve economic of large scale production and
distribution.
This strategy brings certain benefits:
The firm can capture a large market share
It may build good brand image, which will enable to face competition effectively as and
when the competitors enter the market.

d) Slow penetration:
e) The product can be launched at a low price and with low promotional expenditure.

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This strategy is suitable:

 When the market is large in size, so low pricing.

 When the large part of the market is aware of the product’s feature, uses, etc and so
low promotion.
 Where the buyers are sensitive.
 When there is possibility of limited competition in future may be due to high
development expenditure for new entrants.
 Where the company is in a position to achieve economies of large scale production and
distribution.

This strategy brings certain benefits:

 It will enable the firm to capture a large share of the market

 It requires less promotional expenditure and as such low marketing overheads.

c) Distribution stratigies:

a) Concentrated distribution strategy:

The firm may follow concentrated distribution strategy, i.e distribution of the product
through specific dealers in a particular market area. Distribution efforts are directed to
satisfy market segments.

b) Mass distribution strategy:

The firm may also follow mass distribution strategy i.e distribution of the product
through all the possible dealers over a large market area, even at the national level.
However it makes sense to go for concentrated, distribution strategy at the introduction
stage.

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 GROWTH STAGE

The growth stage is characterized by the entry of competitors, sales grow, profits increase,
and price and promotion may remain the same or may change depending upon demand,
competition and other market forrces.

During this stage, the firm may follow several strategies to sustain rapid growth as long as
possible.

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 1. Product strategies:

a) Product improvement:

The firm may undertake product improvement so as to face the competition effectively.
Product improvement can be in terms of its features, packing, design, shape, quality, etc.

b) Introduction of new models:

The firm may introduce different models of the product, targeting to different
market segments. Each model may have different brand name or there may be
brand extension with certain addition to the brand name, such as model number.

2. Price and promotion strategy:

a) Penetration pricing

The firm may reduce the price due to economic of large scale production and distribution.
The low pricing strategy is followed so as to face the competition effectively. New entrants may
find it difficult to compete with low prices.

B) Push and pull promotion strategies:

The firm, may adopt push and pull promotion strategy. A push promotion strategy requires
trade promotion activities (incentives) so as to induce dealers to stock and push the product in
the market.

A pull promotion strategy requires promotional efforts directed at customers, such as various
sales promotion schemes and advertising so that the consumers demand the product from the
dealers.

3. Distribution strategies:

a) New market segments:

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The firm may look for new segments to increase the sales. For instance, if the is directed mainly
as young generation, the firm may also direct it to order generation, as in the case of pepsi and
cadbury’s dairy milk.

b. Increase in distribution converge:

The firm may increase distribution coverage from local to regional and from regional to national
level. The increase in distribution coverage will enable the firm to have rapid growth in its sales.

c.) New distribution channels:

The firm may also introduce new distribution channels to increase its sales. The firm may go for
setting up chain stores or enter into franchise agreements to increase the sales.

MATURITY STAGE:
A majority of the products are in the maturity stage. At this stage, the sales remain more or less
the same. This stage normally lasts longer as compared to the previous two stages, and
marketers have to come up with various strategies to stay in the market. The following are the
marketing strategies at maturity stage.

1. Product modification:
The marketers may place lot of emphases on product improvement in respect of quality,
features, design, etc. The product modifications are intended to increase product’s
performance such as greater speed, longer durability, etc and to generate enhanced
customer satisfaction.
Therefore, the company has to place a lot of focus on Research & Development for the
purpose of product improvement.

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 2. Price and promotion strategies:

The firm may follow the same (price and promotion) strategies as followed during the
growth stage, i.e

3. Penetration pricing:
The firm may reduce the price due to economies of large-scale production and
distribution. The low pricing strategy is followed as to face the competition effectively.
New entrants may find it difficult to compete with low prices.

4. Push and pull promotion strategies:

The firm, may adopt push and pull promotion strategy. A push promotion strategy
requires trade promotion activities (incentives) so as to induce dealers to stock and push
the product in the market.

A pull promotion strategy requires promotional efforts directed at customers, such as

various sales promotion schemes, and advertising so that the customers demand the
product from the dealers.

The firm has to come up with innovative promotion schemes such as:

 Exchange offers, exchanging old products with a new one as in the case of TVs, washing
machines etc.
 Sales on installment facility at low or no interest charges .
 Extending warranty for longer period.
 Providing quick and efficient after-sale-services.
 Maintaining and enhancing customer and dealer relationship through gift, contest, etc.

3. Distribution strategies:

 Focus on profitable segments:

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 The marketers may concentrate on profitable market segment, and may exit
from unprofitable segments. This enables the firm to reduce its overheads and
increase the profits.

 Focus on improvement channels of distributions:

The firm may have to concentrate on important channels of distributions and

discard expensive or unprofitable channels of distribution.This would enable the
firm to maintain and enhance good relation with important channels of
distribution. This would enable the firm to maintain and enhance good relation
with important channels of distribution.

 Exit from un-profitable market areas:

The firm may also exit from unprofitable market areas and concentrate on those
market areas, which generate good sales and profits.

DECLINE STAGE

The decline stage is characterized by decline in sales at low level, and also profits decline
considerably. The firm may follow the following strategies at the decline stage:

1. Product strategies :

 Withdrawal of weaker brands:

The firm may withdraw weaker brands and concentrates on selectively brands,
which generate sales and profits.

 Introduction of new product:

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 The firm may also introduce a new product, which has a good potential in the
market, and market it profitably.

 Wait and watch strategy:

At times the firm may adopt a wait and watch policy. The firm may not withdraw
the weaker brand, but wait for other firms who are facing the same problem of
lower sales to withdraw the then getting the bigger share of the market.

 Price and promotion strategies :

The firm has to maintain the same price, as lowering the price may not be
feasible. The promotional expenditure may reduced depending upon the
availability of funds and market situation.

3. Distribution strategies:

The firm may follow the distribution strategies:

 Continued focus on profitable segments.

 Emphasis on selective segments.
 Distributions through selective channels.

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PRODUCT LIFE CYCLE AS AN EFFECTIVE TOOL IN MANAGING
CUSTOMERS.

Customer’s experience with the company changes as the product passes through it’s product
life cycle, as such PLC can be effective tool managing customers. When a product is moving
through the various phases of its life cycle, the customers of the product is also moving in a
certain path in relation to his experience of the product. Though this change is represented by
shifts in the nature of the demand in the PLC stages it is essential for the marketing man to
know what actually happens to the consumers has some implication for the” company-
consumer relationship” and consequently, knowledge of this change would help effective
management of customers.

Buyers of various products, especially hi-tech products, evolve from stage of inexperienced
generalist to experienced specialist. As the experience level of customer’s changes, the benefits
they seek from the company also keep changing. Companies who can sense and anticipate this

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customer experience factor can be ready with suitable strategies to keep the customers with
them.

The seller of the product has to understand when and how a transition is taking place in the
experience level of the customer, as his product moves along its life cycle. The changing
expectations and the demands of the customers can be handled through different strategy
routes- strengthening the company- customer relationship, augmenting the product, improving
service support or modifying the pricing approaches.

EXAMPLE:-
In India, the phenomenon of product evolution and customer experience change is taking place
in computer business. The introduction stage of the product life cycle is over. When the product
was in its early growth stage, there were dozens of manufacturers were already there were
competiting offers. The buyers who were in experienced at that time were fast becoming
experienced. When they were totally novoice buyers, they were not bothered about the
performance-price ratios of different product offers. They were primarily concerned about
proven, comprehensive solutions to their problems. They went solely by the offers of
companies with unassailable reputations for reliability. They wanted total service, even at a
very high price. Since the product complexities could not be handled or understood by them,
they were interested in keeping the risk of purchase low. But slowly things changed. The
corporate buyers of large computer systems today do not expect a total and comprehensive
package of benefits in the product. The product has passed that stage. Now, the buyers can
compare systems of two companies, assess them and evaluate them. They can even buy an
unbundled product, different components from different sources, at lesser cost and greater
efficiency. They are more interested in the total price-performance trade off then in buying safe
and easy-to-handled systems.

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METHOS OF MEASUREMENT

34
 METHODS OF MEASUREMENT

The concept of the product life cycle has become contral to market forecasting. The stages of
the life cycle form a framework that you can use to analyse the dynamics and the primary
factors that can impact markedly segment and product sales.

The basic stages of the product life cycle can be expanded into a more comprehensive model
that better explains the various parts of the life of a product in the market.

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PRODUCT LIFE CYCLE OF MAGGI NOODLES:
INTRODUCTION:

Maggi noodles is a brand of instant noodles manufactured by Nestlé. The brand

is popular in India, South Africa, Brazil, Nepal, New Zealand, Australia, Malaysia, Singapore, Sri
Lanka , Bangladesh, Pakistan and the Philippines; in several countries it is also known as "maggi
mee" (mee is Indonesian/Malaysian for noodles). Maggi noodles are part of the Maggi family, a
Nestlé brand of instant soups, stocks and noodles. In Malaysia, there are fried noodles made
from maggi noodles known as Maggi goreng. Maggi noodles recently introduced a new variety
of its noodles, to cater for the health conscious like 'No MSG', 'Less Salt' and 'No Tran’s fat'. A
wholewheat flour based noodle variation marketed by the name "Vegetable Atta Noodles" has
been introduced in India (Atta flour is used in preparing most forms of wheat based breads in
India) and caters to health conscious buyers wary of the refined flour used in the regular Maggi
noodles. This move helps the brand in India as suburban mothers, who feed the noodles to
children as an afterschool snack, are the primary customers of the brand. Recently a line of Rice
noodles and Whole wheat with pulses, carrots, beans and onions has also been introduced in
India. In fact, "Maggi" has become a genericized name for instant noodles in India and Malaysia.

In mid 2008, New Zealand supermarkets introduced replacement formulations for its Beef,
Oriental and Curry flavours. A new feature is an extra sachet containing dehydrated vegetables.
Maggi claims the new range contains 88% less total fat and 86% less saturated fat than the
average of top-three (unnamed) 2-minute-noodle competitors. The new Maggi range also has
considerably lower fat than its own previous formulation. However, the salt content has been

36
increased by 31 percent. Consumers have not reacted well to the new formulations,
complaining that they want the original chicken flavour back.

Preparation

Maggi noodles take around 2 minutes to cook, hence the name "2 minute noodles". The Maggi
noodle cake and seasoning is added into boiling water for two minutes and it is ready for
consumption. Egg, seaweed or lemon can also be added to the noodles for a better flavour.

Flavours and Variety

Maggi Noodles are available in a large assortment of different flavours. They are:

 Original Flavour
 Chicken
 Curry (a healthier alternative is also sold in supermarkets)
 Kari Letup (Extremely Spicy Curry) in Malaysia
 Laksa Lemak (discontinued)
 Tom yam
 Chicken & Corn
 Beef
 Oriental
 Masala
 Prawn
 Dal Sambar (whole wheat noodles)
 Asam Laksa
 Cheese
 Pizza (only in Saudi Arabia, was available for a period of time in Australia)
 Sup Tulang (bone soup) (in Malaysia)
 Chatpata
 Tomato
 Stronger Chicken
 Vegetable Atta Noodles (whole wheat noodles) mostly in India
 Shahi Pulao (rice noodles)
 Chilly Chow (rice noodles)
 Lemon Masala (rice noodles)
 Mi Goreng Char Mee
 Mi Goreng Kicap Bawang

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  Mi Goreng Pluz Asli
 Capsica (discontinued)

Maggi noodles also produces cup noodles known as "Hot Bowl", and sells cup noodles branded
"Cuppa Mania" in India.

ISSUES

•Different phases product life cycle of maggi

•Why atta noodle was a failure?

•Strategies taken to establish new product category

•What measures NIL should take to sustain the image of a popular brand image.

•Stage at which maggi is in the product life cycle.

Introductory Stage

•High failure rates

•No competition

•Frequent product modification

•Limited distribution

•High marketing and production costs

•Promotion focuses on awareness and information

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•Nestlé India Ltd. (NIL), the Indian subsidiary of the global FMCG major, Nestlé SA, introduced the Maggi
brand in India in 1982, with its launch of Maggi 2 Minute Noodles, an instant noodles product.With the
launch of Maggi noodles, NIL created an entirely new food category - instant noodles - in the Indian
packaged food market. Because of its first-mover advantage, NIL successfully managed to retain its
leadership in the instant noodles category.

Market Penetration

 Promotional campaigns in school.

 Advertising strategies: - focusing on kids.
 New product innovation according to the need of consumers:

– Veg. Atta Noodles.

– DalAtta Noodles.

– Cuppa Mania.

 Availability in different packages:

– 50 gms.

– 100 gms.

Growth Stage

•Increasing rate of sales

•Entrance of competitors

•Initial healthy profits

•Promotion emphasizes brand ads

•Prices normally fall

•Development costs are recovered

•10 yrs back it enjoyed around 50% market share in this segment which was valued at around 250
crores.  

•During the 1990s, the sales of Maggi noodles declined, due to growing popularity of Top Ramen ,
another instant noodles product.

•In order to improve sales , NIL changed the formulation of Maggi noodles in 1997.

•However, this proved to be a mistake, as consumers did not like the taste of the new noodles.

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•In March 1999, NIL reintroduced the old formulation of the noodles, after which the sales revived. Over
the years, NIL also introduced several other products like soups and cooking aids under the Maggi .

Maturity Stage:

Many consumer products are in Maturity Stage

•Declining sales growth

•Saturated markets

•Extending product line

•Stylistic product changes

•Heavy promotions to dealers and consumers

•Prices and profits fall

•In 2003 Hindustan Lever Ltd was all set to take on Nestle's bestselling Maggi 2-minute noodles by
launching a new category of liquid snacks under its food brand, Knorr Annapurna.

•The new product, called Knorr Annapurna Soupy Snax, was priced aggressively at Rs 5 and had four
variants: two chicken options and two vegetarian.

•Like Maggi, Soupy Snax will be an in-between-meals snack and will be targeted at all age groups,
particularly office-goers.

STPD Analysis

Segmentation to Differentiation:

■Classic Noodles –( 5 – 10 yrs).

■Veg. Atta Noodles – Health Conscious.

■Rice Mania – Teenage

■Cuppa Mania – Office goers,

Decline Stage If no product innovation brought:

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Rate of decline depends on change in tastes or adoption of substitute products

•Long-run drop in sales

•Large inventories of unsold items

•Elimination of all nonessential marketing expenses.

Extending the PLC

•Change product

•Change product use

•Change product image

•Change product positioning.

CATEGORIES OF NEW PRODUCT/REVISING THE

New-To-The-World

New Product Lines

Product Line Additions

Improvements/Revisions

Repositioned Products

Lower-Priced Products.

Analysis (why Atta Noodles Failed?)

• In 2005 Nestlé India launched MAGGI Vegetable Atta Noodles.

•Based on consumer needs and evolving trends for more whole grain based products.

• Extensive Research and Development expertise to develop Maggie Vegetable Atta Noodles.

• Maggi Vegetable Atta Noodles will provide the dietary fiber of whole wheat to facilitate good.

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FAILURE CAUSES FAILURE CAUSES

1. Indian psyche- The basic problem the brand faced is the Indian Psyche. Indian Palate is not too
adventurous in terms of trying new tastes. So a new product with a new taste that too from a different
culture will have difficulty in appealing to Indian market.

2. Price- The price of atta noodle was little more than maggi 2 minutes noodle

3. False claims- In October 2008, Nestle mistakenly aired an advert that noodle "help to build strong
muscles and bone". The British Advertising Standards Authority said that it was a false claim.

4. Not purely vegetarian- Maggi Noodles also contains the additives E150d and E627.E627 is partly
prepared from fish,and is thus not suitable for vegetarians.

5. Lack of essential nutrients- The new maggi atta noodles as can be seen from the fig. lacked essential
vitamins A, C,also the fat content was more then carbohydrates

6. Targeted health conscious people.

Suggestive Promotional Strategies

1.They should conduct test marketing before launching new product.

2.Focus on creating distinctive image, based on twin benefits of “INSTANT” and “HEALTHY”.
3.Conduct promotional campaigns at schools in small towns with population more than 10,000.

4.Strengthen the distribution channel of the rural areas within 100 KM of all the metros.

5.Launch new advertisement campaign (T.V., Radio and print media commercials) with the brand
ambassador.

Current Scenario of Maggi

Leading Brand in India as well as World.

Current Sales: Approx.

– 90000 boxes

– Rs. 4,79,49,000 in Mumbai

– 10,00,000 boxes

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– 55 cr. in IndiaReasonable competitive pricing.

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