NAME: SHUBHAM KUMAR

STD: FY MBA (GEN)

SUBJECT: ECONOMICS
SUBMITTED TO: DR SHILPA MISHRA

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ABSTRACT:
The word two minutes is synonymous with the brand Maggi. Maggi a flagship
brand of Nestle has grown with times and has witnessed acceptance across all age
groups. Be it a school child, mother or loving grandmother it has been in the
shopping list of all. However in the recent past Maggi has seen accusations, ban
and has been on headlines for all wrong reasons. Maggi as a brand has always been
the favourite of consumers and post the crisis has recovered and is back in the
market with full range of flavours. Maggi classic masala has been the most
preferred flavour among the consumers.

Maggi cameback after the crisis with full range of product line extensions. The
introduction of many new flavours in Maggi pushed behind the bad memories of
the ban and the crisis. Consumers were targeted with full line promotions. The
retailers were well stocked with all flavours anticipating demand. However,
whether was it a wise move on the part of Nestle to introduce so many flavours?
The articles cited in Harvard Business review indicates that such an aggressive
tactic may not really work. With the comeback Nestle has to be more careful about
the brand and has to take measures to consolidate its image as line extensions can
actually weaken the brand image and can be considered a desperate move by the
competition.

Most companies are pursuing product-expansion strategies—in particular, line

extensions— full steam ahead. But as John A. Quelch and David Kenny argue in
―Extend Profits, Not Product Lines‖ (September–October 1994), more and more
evidence indicates that such aggressive tactics can be hazardous.1 The pitfalls of
such aggressive expansion if it is not well managed: hidden cost increases,
weakened brand images, and troubled relations with distributors and retailers.
Marketers argue for more line extensions to serve an increasingly segmented
marketplace, and sales managers use extensions to justify hiring more salespeople.

While manufacturing managers are concerned about the complexity of production

and the finance department has a clear interest in cost control, the information
systems needed to cull the data that would justify a more focused product line are
often not in place.2 This study analyses the consumer attitude towards the different
flavours of Maggi and whether the strategy of line extension is a wise move?

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HISTORY OF PRODUCT:
The MAGGI brand was initially originated in Switzerland in 1884. It was formed
with a purpose by Swiss entrepreneur Julius Maggi who had the vision to make
food with good taste and nutritious and should be accessible to busy and working
families especially for women who are working and do not get time to prepare
healthy food. Initially, he invented a powdered pea and bean soup, to provide
nutritious and easy to cook food.

In 1947, Maggi was acquired by Nestle and now after 120 years, we strive to build
on Julius Maggi's creation of making delicious, quality and nutritious food which
are accessible to all.

BRAND HISTORY:
Maggi Comes to India – teething troubles Maggi noodles was launched in India in
the early 1980s. Carlo M. Donati, the Chairman and Managing Director of Nestle
India Ltd, brought the instant noodle brand to India during his short stint here in
the early eighties. At that time, there was no direct competition. The first
competition came from the ready-to-eat snack segment which included snacks like
samosas, biscuits or maybe peanuts, that were usually ‘the bought out’ type. The
second competition came from the homemade snacks like pakoras or sandwiches.
So there were no specific buy and make snack! Moreover both competitors had
certain drawbacks in comparison. Snacks like samosas are usually bought out, and
outside food is generally considered unhygienic and unhealthy. The other
competitor, ‘homemade’ snacks overcame both these problems but had the
disadvantage of extended preparation time at home. Maggi was positioned as the
only hygienic homemade snack! Despite this, Nestlé faced difficulties with their

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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 color pencils, sketch pens, fun
books, Maggi clubs which worked wonders for the brand.

COMPETITION:
There are several brands in the market which are competing for the same set of
customers. Below are the top 3 competitors of Maggi:

1. Nissin Top Ramen

2. Foodles
3. Private brands like Tasty Treat
This article has been researched & authored by the Content & Research Team. It
has been reviewed & published by the MBA School Team. The content on MBA
School has been created for educational & academic purpose only.
Similar analysis has also been done for the competitors of the company belonging
to the same category, sector or industry. Browse marketing analysis of more brands
and companies similar to Maggi. This section covers SWOT Analysis,
Competitors, Segmentation, Target Market, and Positioning & USP of more than
2500 brands from over 20 industry sectors.
FACTORS AFFECTING ON DEMAND:
1. Price of the Given Commodity:
It is the most important factor affecting demand for the given commodity.

Generally, there exists an inverse relationship between price and quantity

demanded. It means, as price increases, quantity demanded falls due to decrease in

the satisfaction level of consumers.

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2. Income of the Consumer:
Demand for a commodity is also affected by income of the consumer. However,

the effect of change in income on demand depends on the nature of the commodity

under consideration.

i. If the given commodity is a normal good, then an increase in income leads to rise

in its demand, while a decrease in income reduces the demand.

ii. If the given commodity is an inferior good, then an increase in income reduces

the demand, while a decrease in income leads to rise in demand.

3. Tastes and Preferences:

Tastes and preferences of the consumer directly influence the demand for a

commodity. They include changes in fashion, customs, habits, etc. If a commodity

is in fashion or is preferred by the consumers, then demand for such a commodity

rises. On the other hand, demand for a commodity falls, if the consumers have no

taste for that commodity.

4. Expectation of Change in the Price in Future:

If the price of a certain commodity is expected to increase in near future, then

people will buy more of that commodity than what they normally buy. There exists

a direct relationship between expectation of change in the prices in future and

change in demand in the current period. For example, if the price of petrol is

expected to rise in future, its present demand will increase.

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CONCLUSION:
Maggi’s consistent quality, skill to identify the needs of society, and continued
innovations have allowed it to grab 90%of market share today, in instant food
products LOB. Maggi has continuously been broadening its product line, which
leaves the so-called “ONE PRODUCT CONCENTRATED BRAND” behind.