PROJECT REPORT

ON

NESTLE MAGGI

SUBMITTED TO: SUBMITTED BY:

PIMG MUNENDRA CHAUHAN

MBA (INT.)

5TH SEM
 DECLARATION BY THE CANDIDATE

I hereby declare that the Project Report on NESTLE MAGGI submitted by me to Prestige
Institute of Management, Gwalior in fulfillment of the requirement for the award of Masters of
Business Administration Integrated is a record of my original work carried out by me under the
guidance of Prof. Rishita Sengar I, further declare that the work reported in this report has not
been submitted, and will not be submitted, either in part or in full, for the award of any other
degree or diploma of this University or to any other institute or university.

Date:

Place: MUNENDRA CHAUHAN

 CERTIFICATE FROM FACULTY GUIDE

This is to certify that MUNENDRA SINGH CHAUHAN Student of Masters of Business

Administration Integrated Program has prepared this Project Report on NESTLE MAGGI under
my guidance.

His performance during the project was excellent.

Date:
Place: PROF.RISHITA SENGAR
 ACKNOWLEDGEMENT

It is privilege to express my gratitude & a sincere thanks to Prestige Institute of Management,

Gwalior for giving me an opportunity to prepare this project report on NESTLE MAGGI I am
also thankful to Prof. Rishita Sengar, for her valuable guidance and support throughout the
process.

Date: - MUNENDRA
CHAUHAN

Place: - Gwalior MBA(Int.) 5th sem

Table of Contents

S. No Topic Page No.

1 Introduction to the project 01

2 Objectives of the project 02

3 History of nestle 02

4 Nestle mission and vision statement analysis: 03-04

5 Macro environment and micro environment analysis: 04-06

6 Marketing mix 07-09

7 Marketing & promotional strategies 09-10

8 Swot analysis: 10-11

9 Maggi in ban 11-13

10 strategies adopted by nestle: 14

11 Repositioning of Nestle 14

12 Conclusion 15

13 References 16
 INTRODUCTION TO THE PROJECT

The company targeted working women on the premise that Maggi noodles were fast to cook.
However, this approach failed as was evident from the fact that the sales of Maggi noodles were
not picking up despite heavy media advertising. To get to the root of the problem, NIL conducted
a research, which revealed that it was children who liked the taste of Maggi noodles and who
were the largest consumers of the product. After this, NIL shifted its focus from working women
and targeted children and their mothers through its marketing. The product was aggressively
promoted through several schemes like distribution of sample, free gifts, inside Kids games, gifts
on the return of empty packs, etc. It advertised too much to convey the benefits of the product to
the customers. Through advertising, the Maggi was positioned as a ‗fun food ‘for kids which
mothers can easily cook. Its taglines like ‗Mummy, bhookh lagi hai‘, ‗Bas 2-Minute‘and ‗ Fast
to Cook Good to eat‘ effectively communicated message amongst the consumers to consume the
Maggi Noodles when they are feeling hungry. The several studies show that these ads are so
popular that the tagline ‗ Bas 2-Minute ‘sustained in the minds of the Indian consumers even
several years after the ads were taken off the TV. Its first product extension was Maggi instant
soups launched in 1988. Martial Rolland, chairman and managing director, Nestlé India Ltd., in
2006 rightly said that the Maggi has managed to enter Indian homes to change the traditional
food habits of Indian children on their promise of convenience. This brand has understood the
psychology of Indian mothers and positioned itself for mother-child indulgence. The Project
entitled “ANALYSIS OF MARKETING AND PROMOTIONAL STRATEGIES OF MAGGI”
deals with the study of the Maggi Brand that was launched in India in the year 1983, by Nestle
India Limited, which became synonymous with noodles. Mainly, this project studies the
Marketing and Promotional strategies that are adopted by Nestle India Limited for Maggi over
the years. And also to know about the market position of Maggi as a Brand, how they survived in
the past, what all strategies they adopted to become a well-known and well established brand.
After this, NIL shifted its focus from working women and targeted children and their mothers
through its marketing. The product was aggressively promoted through several schemes like
distribution of sample, free gifts, inside Kids games, gifts on the return of empty packs, etc. It
advertised too much to convey the benefits of the product to the customers. its focus from
working women and targeted children and their mothers through its marketing.

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OBJECTIVES OF THE PROJECT:

 To Understand the Marketing and Promotional Strategies adopted by Nestle Maggi

 To understand the brand performance of Maggi product.
 To understand Brand Imagery, Brand Quality perceived by customers, Brand Credibility,
consideration, superiority.
 Brand extension of Maggi in terms of product diversity.

HISTORY OF NESTLE:

MAGGI Malaysia is a Malaysia based company which mainly produce noodles, sauces,
seasonings, mixes and etc. In 1869, Julius Maggi created the MAGGI brand and the
MAGGI brand was actually originating from Switzerland. In that era of evolution, Julius
needed to invent an easy cooked and save time recipe for the working women. She got it
succes s. MAGGI brand is succes sfully capturing the favoritism of the market
in Switzerland. While since 1947, MAGGI brand was acquired by Nestle Company. Then,
the MAGGI brand started to build up relationship and trust among their customer and it is being
passed around the world especially Asia countries. Until 1969, under administration of Nestle,
MAGGI brand set up in Malaysia. MAGGI® Tomato Ketchup and MAGGI®Chilli Sauce are
the earlier products manufacture by local company in Malaysia. The company dates to 1867,
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 of 1867 Charles A. and George Page, two
American brothers from Lee County, IL, established the Anglo-Swiss Condensed Milk Company
in Cham. Their first British operation was opened at Chippenham, Wiltshire in 1873.In
September 1867, Henri Nestlé developed a milk-based baby food and soon began marketing it.
Henri Nestlé retired in 1875, but the company, under new ownership, retained his name as Farine
Lactée Henri Nestlé. established the Anglo-Swiss Condensed Milk Company in Cham. Their
first British operation was opened at Chippenham, Wiltshire in 1873.In September 1867, Henri
Nestlé developed a milk-based baby food and soon began marketing it. Henri Nestlé retired in
1875.

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Nestle Mission and Vision Statement Analysis:

Nestle mission statement is “the world’s leading nutrition, health, and wellness company. Our
mission of “Good Food, Good Life” is to provide consumers with the best tasting, most
nutritious choices in a wide range of food and beverage categories and eating occasions, from
morning to night.” This statement indicates that Nestle ranks the experiences of its customers at
the top of its priorities. It has these major points:
1. Boosting health
2. Improving lives
3. Improving communities
For years, nestle has been recognized for its diligence in ensuring that all the food products that it
produces comply with the minimum health standards and requirements. The company does this
to ensure that it keeps all the people protected from contaminations while at the same time
offering them quality foods to meet their needs. Moreover, in the second point, nestle recognizes
that the physical, social and economic stability of people comes first before other profiteering
objectives. By doing this, nestle has constantly boosted the overall health of communities.

Vision Statement
Nestle vision statement is “to be a leading, competitive, Nutrition, Health and Wellness
Company delivering improved shareholder value by being a preferred corporate citizen,
preferred employer, preferred supplier selling preferred products.” Setting pace and steering
others in the right direction is what Nestle is good at based on this statement. The following
components relate to this statement.
1. Be a leading company
2. Delivering improved values
Based on its long experience that extends as far as the early 1900s, nestle has learned the art
leadership. Today, the company has been credited in nudging many other corporations in the
right direction quality-wise. It does this through its extricated services to everyone it serves.

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Core Values
Nestle core values are “full legal compliance, honesty, fair dealings, integrity, and respect.” It is
not a wonder that Nestle has managed to cultivate positive practices among all its staffers in all
corners of the globe. These guiding principles encourage doing things right while adhering to the
approved processes. It also emphasizes on the presence of proper interrelationships between
different parties as well

Macro Environment and Micro Environment Analysis:

NESTLE Micro Environment Analysis Example

Nestle operates in over 130 countries and in order to understand the business environment they
operate in analysis on the external factors that lie outside the control of Nestle has to be
conducted (Grant et al. 2011, 101). The tool tasked with conducting an external analysis of the
macro environment is PEST while the external micro environment will be analyzed with the help
of Porter's Five Forces. However, it is worth mentioning that Nestle is not however exclusively
influenced by the mentioned factors below (Shaw 2004).

Macro Environment Analysis:

Political: Nestle is a global company and in the food and beverage industry one of the most
important factors to consider is globalization. According to Jose Lopez, Nestlé’s Vice President
of operations explained the impact of globalization on Nestle to has been very different from first
expected initially we thought it meant developing countries opening up their markets but on
hindsight it turned out that rather than being globalized we had to understand how to react to
global markets (Bell 2009, 10). Another factor to consider is the impact regulations has had on
Nestle. The global food and beverage industry is one of the most highly regulated industries in
the world. Nestle for example has had to face multiple tiers of regulations when have inevitably
affected their products (Nestle 2008).

Economic: Food is a basic human need and is therefore a necessity for survival. In economic
terms this means that the basic demand for food will always be high. Although food eating
patterns might change and vary from place to place. Nestle has adjusted to these variations in

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preference and sensitivity to price in different places that it operated. One of Nestlé’s example is
opening up factories in different places that caters to the local market from its packaging, to
pricing, to taste. Majority of these new factories are located in developing countries because it is
estimated that come 2010 around 90% of the world's population will reside in these countries.

Socio-Cultural: Culture, religion and average age of population tends to dictate or are at the
very least have an influence on food consumption patterns. Currently there is a growing interest
from the public for addictive free products that are made from natural ingredients. Nestle is
aware of this and can be seen in a few of their products one example is Maggi soups in Germany,
China and Indonesia have different flavors and textures to meet local taste (Nestle 2012).

Technological: The food industry in general has adapted more advance technologies in an
attempt to deliver healthier, fresher and variety. However, this requires improving the quality of
raw material used which is rather challenging given the scope of operations that Nestle has.
Furthermore technology has enabled better packaging of products which has boasted efficiency
and reduced costs.

Micro Environmental Analysis:

 Porter's Five Forces Model: Industrial analysis can be performed using the five forces. These
five forces will examine the food and beverage industry's competitiveness and attractiveness
(Reckless 2001). These five forces include the threat of new entrants, threat of substitutes, buyer
and supplier power and rivalry among competitors. Threats of New Entrants (Low- Moderate):
As lucrative as the food and beverage industry might be there are several barriers that make the
treat of new entrant’s low-moderate. These include the high startup capital required, supply-side
economies of scale, unequal access to distribution channels and the demand-side benefits of
scale. However, it has to be noted that several firms still enter this industry and because of
Nestlé’s high market share, they have become a constant target.

Power of Buyers (High): The power of buyers in the food and beverage industry is high. This is
because typical buyers are large retailers like Wal-Mart, Carrefour etc. these retailers are
financially strong and prefer to have long term agreements with market players. Furthermore,

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majority of buyers are integrated backwards, while several retailers offer their own branded food
and beverages.

Power of Suppliers (Low): The power of supplies in this industry is low because of the sheer
number of available suppliers and markets to purchase from. It is important to point out that the
raw materials in question here are fruits, meat, fish, grains and cereals just to name a few which
can easily be purchased in open markets as well. Read interesting comparison Unilever vs Nestle
Furthermore some firms have integrated backwards and produce their own raw material
handicapping the suppliers further (Bradley et al. 2005).

Threat of Substitute (High): Given the lack of switching cost between alternative for the
consumer and the availability of cheaper alternatives to packaged food this has caused the threat
of substitutes to be high (Bradley et al. 2005; Hager n. d.). The industry has experienced a surge
in private label products and organic food which has caused consumers to experiment with new
products.

Rivalry amongst Existing Competitors (High): The food and beverage industry is vast creating
more opportunities for market players. According to Porter (2008), the intensity of rivalry is
highest when competitors are many, industry growth is slow and exit barriers are high causing
the overall competitiveness of this industry to be high as well. Furthermore, coupled by the
variation in consumer preference and ability of competitors like Kraft, Grouped Danone and
Unilever offering equally good if not better alternatives have led to high competition among
market players.

Summary of Porter's Five Force Model: Nestle is a powerhouse in the food and beverage
industry and according to Porters' Five Force Model, they operate in a highly competitive and
unstable industry environment. The model emphasizes Nestle comfortable position within this
industry even though there is a constant threat to its market share from new entrants. However, in
order for Nestle to continue operating profitably they must adhere to customer needs as they are
various other substitutes available for them, there is no switching cost for the consumer.

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MARKETING MIX

PRODUCTS OF
MAGGI:

 NOODLES.
 SOUPS.
 SAUCES.

 PASTA.

PRICE OF MAGGI:

 Considering the price points in the market for Maggi, it should continue to position itself
in the “snack” category itself, since few would be willing to accept it as a meal.

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  The company is taking no chances and is extending its distribution reach to smaller towns
and cities. Maggi happens to be Nestlé’s most widely distributed brand in the country.
Through independent channels, it reaches those villages where the company has no
presence, according to Hegde. This is also the time that Maggi’s value-for-money pack
priced at Rs 5 is expected to come handy. (The regular pack comes for Rs 10.)
 Affordable by all income groups.

PLACE(DISTRIBUTION);

 The distribution network is well spread.

 Easily available in all retail stores.
 Distribution channel – PRODUCER - DISTRIBUTOR - RETAILER – CONSUMER

EXAMPLE OF MAGGI PLACE (DISTRIBUTION)

PROMOTION OF MAGGI:

 They promote their product very effectively through television.

 They have applied the strategy of brand extension.
 They also sponsor various cookery shows to promote alternate usage of products.
 They also use strategy of free product samples to promote it.
 Celebrity endorsements. Eg. Javed Jafferi PROMOTION
 Less promoted as compared to maggi.
 No particular celebrity endorsement.

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  The utter confusion regarding the long-term strategy for Kissan brand was visible through
the experiments that were conducted on this brand by Hll.
 So all through the period 2001-2005, Kissan was in a sticky wicket. But now according to
reports, the brand mandarins of HUL is now clear about Kissan as a brand for processed
food like Jams , ketchups and like, That change is visible in the recent campaign of
Kissan which takes a unique view of Ketchup. Taking the tagline " Aao banaye pakode
behtar" translated to " Making Pakode taste better".
 In these series of ads, the brand plays a second fiddle to the main snack. The brand takes
the positioning of a "Great Accompaniment "

MARKETING & PROMOTIONAL STATEGIES

PRODUCT LIFE CYCLE OF MAGGI:

 The Product launched keeping in mind the working women and children’s.

 It was the pioneer in instant noodle market.

 Distribution Stage PRODUCER – DISTRIBUTORS – RETAILERS – CONSUMERS.

 PRICING: The initial pricing strategy was low pricing strategy to make product
affordable.

 PROMOTION

- Promoted with tag line “BAS 2 MINUTE.”

- Promotion done by giving gift on empty packs.

- Promotion in school.

GROWTH:

 Increased No. of sales.

 Accepted as ready to eat food.
 Enjoyed 50% market share valued at 250 crores.
 Profits begin to rise.

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  Maggi become the No. 1 brand in Instant noodles market.
 PRICING: Prices were kept normal.
 PRODUCT: No any new changes
 PROMOTION: Promoted with the tag line “Good to eat fast to cook”

MATURITY:

 Declining sales growth.

 Saturated market.
 Extending product line.
 Large promotional offers.
 Entrance of new players - During the period of 90’s MAGGI faces the tough competition
from TOP RAMEN.
 PRODUCT: MAGGI introduced wide variety of products like Dal Atta noodles, chicken
Maggi, Maggi cups mania.
 PRICE: Maggi still comes in very affordable prices starting from Rs. 5, they reduced the
quantity instead of increasing price.
 DISTRIBUTION: Distribution become more intensive. Various intensive programs for
encouraging products over other competitors.
DECLINE:

 Sales saw a decline in 1990’s – Formulation changed from fried base to air dried base.
 New product launched but failed- Dal atta noodles sambar flavor.
 Tough competition from Top Ramen.
 Failure of other products like Soups, Cooking aids etc.

SWOT ANAYSIS:

STRENGTH:

 Established Family Brand.

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  Strong Global Corporate Brand(NIL).
 Specialization in food processing category marketing and distribution in urban market.
 Presence of other product segments of food category: dairy product, chocolate, infant
foods.
 Pioneer and leader so mover advantage in Noodles, Sauces, Ketchups and Soup market.
 Nestle symbolization of warm, family & shelter.
 Research and development division in India.
 New Noodles plant in Uttaranchal.

WEAKNESS:

 Generic brand to Noodles in India.

 Low rural market presences constraints.
 Uniform brand for all food category.
 Brand proliferation.

OPPURTUNITIES:
 Growing package and canned food market in India by15% annually.
 High brand awareness of Indian consumers.
 Other product category like Biscuits, Chips and ready to eat market still unexplored.
 Opportunities to be substitute to other snacks category of food products.

THREATS:

 Competitors with long history in product category Internationally like, Heinz sauce and
Ketchups of Heinz Indian, Top Ramen in Noodles and Knorr soups.
 Less entry barriers in the market segment for product category.
 ITC’s strong base in Indian market.
 Substitute product to product segment.

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Maggi in Ban

Nestlé’s woes began last year, on the eve of Holi - India's spring festival of colors and a time of
indulgence for many - when inspectors were on the lookout for adulterated foods at retailers in
Burbank, a town of 150,000 populations in Uttar Pradesh. India ‘s Food safety administration.

Why was Maggi banned …?

Initially, there were several complaints about the MSG level which was found in processed
foods. MSG is mono sodium glutamate also known as lead and is allowed till 2.5 ppm in India. It
was found that the MSG level was especially high in Maggi. But there were variations in MSG
content across states because the manufacturing plants are different. In goa for example – the
MSG level is less but it is very high in places like Delhi where the manufacturing is from a
different plant. But is this excusable?

I don’t think so considering that the manufacturing formula after all has been designed by
Nestle. The allegations were ignored a year back because MSG is allowed in several countries.
The US and China for example, have many processed foods high in MSG content. Naturally,
when this information became public, the government took the necessary action. Delhi
immediately banned Maggi across the state and after this, tests were carried out in other states
and the same PPM level was found. have many processed foods high in MSG content. Naturally,

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when this information became public, Thus, as on date, Maggi finds itself banned in 6 states
across India with the fear that more states will follow suit.

Maggi Crisis: Around 1,500 Workers Affected Across the Country

Around 1,500 workers involved in manufacturing of Maggi in India have been 'impacted' by the
stoppage of production after ban of the instant noodles brand. Besides, suppliers have also been
hit by the Maggi ban and Nestle India's largest supplier of spices, Moga-based Paras Spices Ltd,
has already ended services of "some workers" out of the 200 temporary employees it has. Nestle
India hasn't fired any of its permanent workers yet and is engaging them in different activities
but it hasn't taken a long-term view on their future in case the ban on Maggi prolongs.(Worms
Found in Nestle's Cerelac, Company Issues a Statement)"We have 115 workers who have been
working on the Maggi line here at the Moga plant.

Crisis Management by Nestle

The company rejected the allegation that the noodles are not safe. It is stated on the company’s
website that their top priorities are to provide safe and quality products. They claimed the strict
adherence of food safety and quality control at their Maggi factories. Also, they disagree with
their any kind of use of MSG in the Maggi Noodles. They regularly monitor the lead content for
the safety of the consumers. Nestle continued to keep its customers up to date on the
investigation into the safety of Maggi noodles in India. Nestle stated on the official Maggi
noodles Facebook page, Twitter and website, that extensive testing revealed no excess lead in
Maggi noodles. Nestle used their twitter and Facebook accounts to sort out the queries of their
consumers about the levels of MSG and Lead found in their product. They also launched a new
page i.e. FAQ page on their official site. Nestle decided to destroy more than $50million worth
of Maggi Noodles in India after they were deemed unsafe by regulators.

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 1. The quality and safety of our products are the top priorities for our Company. We have in
place strict food safety and quality controls at out Maggi factories… We do not add MSG
to Maggi Noodles, and glutamate, if present, may come from naturally occurring sources.

2. Nestle continued to keep its customers up to date on the investigation into the safety of
Maggi noodles in India. Nestle stated on the official Maggi Noodles Facebook page,
Twitter and website, that extensive testing revealed no excess lead in Maggi Noodles.
STRATEGIES ADOPTED BY NESTLE:

Nestle manages to create new product categories under the brand name of
“MAGGI”. They adopted the following strategies:

 Maggi introduced the magi sauce category and pizza variant. It is always easier to
promote a new product under the name of the established brand as the expenditure and
recognition time is less.

 Nestle also used the cultural base marketing in India as knowing the fact that Indian
people like Rice, they introduced Maggi Rice Noodles Mania.

 Nestle was able to successfully use the umbrella branding for Maggi. They introduced
many variant under the brand name of Maggi. By doing so, They were successful in
making the product popular.

 Maggi also successfully able to position its noodles in the minds of the consumers as the
fast food item.

 On the other hand, they also introduced some categories which are having the complete
diet in the form of noodles. They said that these contain some protein and calorie level
which is must for the children. By doing the emotional marketing they were successfully
able to promote these products: MAGGI Vegetable Atta noodles, Dal Atta noodles, Rice
noodle mania, Healthy soup etc.

Repositioning of Nestle

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After the lift of 5 months ban from Maggi Noodles, the production got started from its Tahliwal
plant, Himachal Pradesh with its other plants located at Nanjangud, Karnataka, Moga, Punjab
Bichelama, Goa and Pantnagar, Himachal Pradesh.

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 than
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
‘Top amen’ took advantage of the situation and started a parallel aggressive campaign to eat into
Maggi’s market share. But the company quickly realized 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 Maggi 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

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company, Nestle India Limited has certainly encouraged the brand to enter into other culinary
products.

References
http://www.scribd.com/doc/19730142/MAGGI-2

http://www.scribd.com/doc/36716132/21954079-Maggi-Project-Final

http://www.scribd.com/doc/13487983/The-Maggi-Brand-in-India-Case-Analysis

http://en.wikipedia.org/wiki/Nestle

http://en.wikipedia.org/wiki/Maggi

http://en.wikipedia.org/wiki/Fast-moving_consumer_goods

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