INDIVIDUAL ASSIGNMENT 2.

Course: Marketing Management.

Topic: Case Study.

Submitted By: Chhaya Bardia.

Enrolment No.: JU2022MBA14157.

Section: D.

Submitted To- S. Hemanth Kumar.

Attached Case study-

Nestle India Maggi Noodles Ban Case Study Solution

INTRODUCTION:
MAGGI, a product of Nestle India Pvt. Ltd.” deals with the study of the case of MAGGI ban,
which happened in 2014. The long term success of any company can be effectively measured in
terms of brand value it creates in the market place, but more than that it is the brand image in the
consumer’s heart which matters the most. The unique selling proposition of a particular product
has to be the impact on environmental, social and human health criteria.

Today, organizations are operating not only by fulfilling the government regulations, but arc
partnering for the sustainability and responding to the increased concerns from the consumers
and society about human health impact of the products, operations and resources depletion. The
company that moves beyond the self-interest and operate selflessly for the betterment of all
sectors it affects can actually secure self-interested achievements in the end. Food products
industries have to be even more responsive as intake of bad quality product can cause
irremediable harm to the health of the consumer and sometimes become the cause of death too.
The Nestle India controversy these days have become an eye opener for many on one hand it
shows that we Indians easily believe on what is said and not on what the reality is, it is very easy
to be fool innocent consumers and make millions and billions of money. Many literate consumers
also do not bother to read the ingredients except the expiry date or price on the pack which is
their prime concern and it results because of the blind-folded faith in the brand. Even for the past
more than 25 years our government, its officials were least bothered about the Indian masses.
Till today the things have turned against Nestle India, which has landed the company to its
dismal fate, the Indian government has filed case on the company to pay damages, the first case
in India of this kind on the other hand company has firm opinion that the product is safe but the
future of Maggi’s return is unpredictable.

Competitors of Nestle MAGGI:

Maggi instant noodles, foods major Nestlé’s flagship brand that has dominated the Indian instant
noodles market for nearly three decades, is losing market share on a monthly basis to newer
entrants such as Patanjali Noodles, GlaxoSmithKline’s (GSK) Horlicks Foodies, Hindustan
Unilever’s (HUT.) Knorr Soupy noodles, Big Bazaar’s Tasty Treat, Top Ramen and several other
smaller players.
The Nestle MAGGI BAN – Case Study Solution:
It all started back in march 2014 in Uttar Pradesh, where the authorities informed nestle that
MSG was detected in a sample of MAGGI Noodles that carried a “No added MSG” claim on the
pack. In the first half of 2015, Nestle India decides to temporarily stop selling MAGGI Noodles
in India until the situation with the authorities is resolved. The Food Safety and Standards
Authority of India (FSSAI) issues an order to Nestle India which includes, among others, the:
 Recall of all nine variants of MAGGI Noodles from the market
 Halt of commercial activities related to the product, including sale and production. Removal
of the “No Added MSG” claim from product packs.
 Withdrawal / recall of MAGGI oats Noodles as it did not have ‘Product Approval’.

In June 2015, Nestle India files a legal petition with the Bombay High Court, seeking a judicial
review of this order. While legal proceedings arc ongoing, Nestle continues to comply with the
FSSAI order and destroys over 35,000 tonnes of the product, though the Bombay High Court
allows Nestle India to continue exporting MAGGI Noodles. As the year passed, in the second
half of the year in August 2015, The Bombay High Court overturns the government’s ban on
MAGG3 Noodles, arguing that the move was “arbitrary” and “that principles of natural justice
were not followed.” The court rules that Nestle India can bring the product back to the market if
fresh tests – conducted in three accredited laboratories on the existing samples and subsequently
on the freshly manufactured product – find the product safe.
In October 2015, Test results from all three laboratories mandated by the Bombay High Court
show MAGGI Noodles to be safe, with lead content well within the permissible limits. In
compliance with the orders of the Bombay High Court, Nestle India commences manufacturing
MAGGI Noodles and submits the new batches for fresh tests to reconfirm they are safe for
consumption. In November 2015, All three NABL (National Accreditation Board for Testing and
Calibration Laboratories) accredited laboratories – mandated by the Bombay High Court – find
samples of the newly manufactured MAGGI Noodles to be safe for consumption, with lead
content well within permissible limits. Now that the orders of the Bombay High Court have been
complied with, Nestle India has made MAGGI Noodles available for sale once again.

The Burnt From Maggi:

Affected by a countrywide recall and destruction of its instant noodle brand, Maggi, India’s
largest food company by revenue, Nestle India, posted its first quarterly loss in 17 years. The
Indian subsidiary of the world’s largest food company reported a Rs 64.4-crore net loss in what
was its most challenging quarter to date. Thanks to the recall and ban of Maggi on June 5
(trouble for it began towards the end of May when sales began falling after detection of
contaminants in some of the product’s samples), the company took a one-time charge of Rs 452
crore which hit its bottom line.
Market Share/ Share Price:
Nestle India’s nine variants of Maggi noodles accounts for nearly 60% of the instant noodles
market, which took a massive hit when a blanket ban was imposed on the product. After the ban
was imposed on June 5, the company’s share price tanked. On June 8, three days after the pan-
India ban was imposed, Nestle India’s share price was down to Rs 5,539.8, the lowest level it had
seen all year. Since then, the company’s scrip has seen major volatility, regaining the highest
level since the ban at Rs 6,831.95 per share on August 5. On the date, Goa deputy chief minister
Francis D’Souica had said that he favored the re-think on the Maggi ban after the latest tests
conducted by a central government laboratory in Karnataka found the instant noodles safe for
consumption.

Profits / Sales:
Nestle added while releasing its results that the June quarter of this year was not comparable
with the corresponding period last year. “Results for the quarter have been affected by the Maggi
noodle issue,” it. said in its statutory statement. “Recent developments and growing concerns
about the product had led to an environment of confusion, leading to the product being
temporarily taken off shelves,” the company said. “Without question, trust has been hit and for
Nestle to win that back will not be easy,” a senior industry executive from a rival company said.
“While Maggi contributed some 22 per cent to the company’s revenue in 2008, it is now at 30
per cent,” this executive said. “In the same period, revenue contributions of Nestle’s ‘chocolate
& confectionery’ and ‘beverages’ businesses have together come down to some 25 per cent from
32 per cent,” he added. As things stand today, Nestle India derives 46 per cent of its revenues
from milk products and nutrition, 29 per cent from prepared dishes and cooking aids, 13 per cent
from beverages and 12 per cent from chocolates.

Fine:
The Corporate Affairs Ministry imposed a nearly-Rs 640 crore fine on Nestle India, in lieu of
finding MSG and lead beyond the permissible limit in Maggi noodles. The government filed a Rs
640-crore class action suit before the consumer forum National Consumer Disputes Redressal
Commission (NCDRC). Out of this Rs 284.45 crore was sought in basic damages, and another Rs
355.5 crore in punitive damages. However, the government had said that the penalty could go
higher as it was still calculating further damages to be sought.

Management:
Nestle India’s managing director Etienne Benet was called back by the parent company on July
24. On August 1, Suresh Narayanan was appointed as the company’s new managing director. On
Thursday, after announcing the Jul-Sep results, the company’s board appointed Narayanan as the
company’s chairman too. The move came after Nestle India’s chairman Antonio Helio Waszyk
retired on October 1.
Operations:
Nestle India shut down Maggi production at all of its eight production units in India. However,
since the ban was set aside, Nestle India has started production at three of the eight factories. and
wants to start production at all the factories soon. “We have resumed manufacturing of Maggi
Noodles at three of our plants, at Nanjangud (Karnataka), Moga (Punjab) and Bicholim (Goa),”
said a Nestle India Spokesperson.

Advertising:
With the ban now kept aside and Maggi cleared for production, Nestle India is gearing to
relaunch the instant noodles. For this, the company has said that it. Will be advertising
aggressively, increased its spending on TV commercials. During the ban, Nestle India had come
up with a series of advertisements to the theme #WeMissYoutoo.

Marketing Strategy By Nestle Post Ban:

In today’s world of citizen journalism, news goes viral in a flash. And if it is bad news, it
acquires a spin and speed that is virtually impossible to stop. Brands, therefore, are more
susceptible to a tarnished image today, than in any other day and age. The cocktail of the online
and offline world, consumer and shareholder activism, random decisions by government bodies,
volatile social groups, and hatchet jobs by competing firms make it all too easy to fall from
grace. And the loss of goodwill can play out in the form of decreased revenue, loss of clients or
suppliers and loss of market share. Maggi re-launched with a digital media campaign
“WeMissYouToo” and they have been promoting it forcefully on all brand’s social media
channels. This as well as the brand has turned to a great degree brief in answering to their fan’s
post. Be it loving their presents or answering on them, Maggi is trying to include an individual
touch in their correspondence. In an interview, Narayanan said the organization is taking a look
at setting up 24×7 sans toll customer services too keeping in mind the end goal to “get the
connect, and network with the product consumer. Suresh Narayanan, chairman and managing
director, Nestle India, said, “Our promotional strategy will be across three platforms. We will
use traditional media to reassure our consumers regarding the safety of our product. We will
connect digitally with our target group. Besides, there will be a lot of events tor brand
activation.” The Swiss food major has also partnered with online marketplace Snap deal for
selling Maggi.
 Case Study / Maggi’s battle.
-Crisis and repositioning in India.

Maggi, a subsidiary product of Nestle of Switzerland, is very well-known brand for its instant two
minutes noodles in India since 1983. It had been the bestselling brand in the past 39 years, and faced
many twists and turns in its journey to success. The Maggi noodles are doubtlessly one of the top famous
fast-food products as
it is known for a quick
snack one could crave
for when there is a
shortage of time to
make a wholesome
meal.

The various Maggi products are instant noodles, pasta, soups and ketchup. The varieties of Maggi are 2-
minute noodles, Maggi, masala-ae-magic, Maggi sauce, Maggi rice mania, Maggi magic cubes. The
products are manufactured in highly technologically advanced factories of Nestle situated in Tamil Nadu,
Punjab, Karnataka, Goa, Uttarakhand and Himachal Pradesh. Maggi Noodles is a segment of around 70%
of urban households. Thus, Maggi products added iron in every packet which provide customers 15% of
their daily iron requirement.

Marketing Strategy of Maggi.

Maggi’s marketing strategy comprises of the marketing mix framework, which includes the 4P’s-
Product, Price, Place, Promotion. The methods that it used contributed to the brands success. This
strategy assisted in the brands competitive positioning in the market and resulted in the achievement of
their objectives and goals.

Marketing Mix Strategy of Maggi.

1. Product Strategy-

Maggi is one of the leading fast-food brands of Nestle all

across the globe. Maggie has a wide array of products and
variety of ranges for each region. Its products are majorly categorised into instant noodles, pasta, soups,
ketchups and seasonings. Maggi well understood its customers wants and manufactured a wide range of
products to place it in every region of the world.

2. Price Strategy-

Nestle seeks to attain a high market share with minimum price and maximum quality standards. As Maggi
is trying to tap into different segments of income factors, it keeps different price depending on different
locations. It supplies products in variety of packages so that people can buy according to their needs and
willingness to pay. For example, Maggi has recently launched Hot head noodles and cup noodles which
targets on higher income segment and hence are priced higher.

3. Place and Distribution Strategy-

The distribution strategy of Maggi, nestle is from Producers to Distributors to wholesalers. Maggi
products are directly forwarded from factories to agencies who store in warehouse and then forward it
into the market among retailers and small businessmen as per the demand.

4. Promotion Strategy-

Initially they focused on kids and working women with playing advertisements on kids’ channel with
different taglines. After their ban Maggie used the tagline of “Miss you Maggi” to regain its consumers.
As of sales strategy it distributed free goodies with its products such as fun books, toys and free samples.
They also offered scratch and win schemes, discounts. It also used many celebrities for brand
development.

Competitors.
Maggi is the top leading brand in noodle industry but there are many other brands that give tough
competition to it such as,
i. Top Ramen.
ii. Yippie
 iii. Knorr
iv. Ching’s and
v. Patanjali noodles.

The 2015 Maggi Crisis

Abstract.
Maggi was leading the 60% market in noodle industry since 1982. Maggi was in every nook of the
country, this was because of how affordable, portable and instant these noodles are. However, as all good
things come to an end, Maggi faced a temporary ban in 2015.  FSSAI (Food Safety and Standards
Authority of India) conducted a surprise inspection for testing any possible food adulteration issues to be
there in edible products. The test on Maggi’s manufacturing unit in the Barabanki district of Uttar Pradesh
found higher levels of lead and the presence of Monosodium Glutamate (MSG) when reports were sent to
FSSAI labs. This created a major issue as these substances are unsafe, hazardous and are banned to use
for consumable products. Government asked Nestle to recall its products all over the world.
Initially Nestle rejected the claim and said there had been no order placed to recall the products. They also
stated their innocence on social media accounts. But later as it could not prove its stand Nestle stepped
back and decided to take Maggi off the shelves from all over
India. This led to nationwide ban on sale of Maggi products for
5 months on 9 June 2015.
th

The Ban period.

Nestle had been in firefighting mode during the ban period. The
brands reputation and sales were greatly suffered. Nestle had
a loss of over 35,000 tonnes of Maggi worth Rs. 320 crores. This
period also had its effects on the Brand Ambassadors of
Maggi, who were criticised for endorsing the brand. It was
then, when its competitors started marketing their noodles as
healthy as they had 60% of market open for them.
Things turned more worst for Maggi when government filed a case against and charged Rs640 crores for
damages.
But, as we all know Maggi had its brand image and had touched the hearts of people of all ages, from kids
to senior citizens, its disappearance caused a huge disappointment to the customers who had a soft spot
for Maggi. They trusted the product and were not ready to let it go.
The brand conducted surveys and was connected to its customers through social media posts from
Facebook, Instagram, Twitter. A loyal set of customers regularly posted on their social media pages
showing how much they want their favourite snack to return. Responding to this, they also ran a
campaign showing how they too are missing their customers and promised that they will be back soon.
The winning period. (Post-ban)
As we all know there’s a fresh bright morning to the dark night, Maggi launched its WELCOME BACK
campaign- an emotional campaign that won the hearts of its customers.
On October 26th 2015, nestle relaunched its Maggi products after receiving approval from food testing
labs when Bombay High Court removed restrictions on all nine Maggi varieties. To gain their market
position, they also launched 15 new variations of Maggi. To become the market leader, they teamed with
e-commerce giants and sold the welcome kits which contained 12 Maggi packs. There was an
unimaginable response, Snapdeal sold 60,000 Maggi kits in just 5 minutes after the launch. These well-
received packages
included a Maggi
date- book
2016, a Maggi
ice chest magnet,
Maggi

postcards, and a welcome return note. It quickly grew to 3.9 million retail locations.
There were regular tests on Maggi products, its newly launched products were also tested and were
declared to be safe for consumption.

 Nestle takes Maggi off the shelves- TOI- https://youtu.be/_SG5YaC32is

  Maggi campaign- We miss you too- https://youtu.be/tWfvOMK6Mqs

 Maggi relaunch ad- https://youtu.be/wuHkXi3xBzY

Conclusion- A market crisis can occur due to many reasons. These variables impact the brand
marketing and image. Through this case we could clearly see the emotional connect and dedication of
Maggi had towards their customers.

Intensity of the Case

Intensity Urgent Not urgent

Important 1. Higher MSG levels than 1. Drop in price of stock
permissible. market.
2. Reformulation of Maggi 2. Competition created by
3. Loss of trust of competitors.
customers.
4. Drop in market share.

Unimportant 1. Fast spread of bad news.

2. Brand ambassadors too
were targeted due to
- criticism.
3. Controversies that
questioned its reputation.

Reasons.

1. Important and urgent- The primary issue was the high levels of MSG found in Maggi and thus it is
important that this issue is solved and as per order Maggi reformulates the product. Due to ban
 there was a huge drop in market share of the Maggi and the only way to resolve this was to regain
customers trust.
2. Important and not urgent- The drop in price
market shares would be controlled only when there
is supply and demand, which requires the product to
be reformulated and reposition itself in the market.
So repositioning is what is important as share
price is not in control of the company.
The competition raised due to the ban of Maggi, once
Maggi revives its competitors will automatically
be defeated. The way the company works to revive is important here.
3. Unimportant and not urgent- The spread of bad news, being trolled, criticisms controversies is not
what company should look at, these are one of the situation which a company would face at any
period of time. The company should not deviate itself by concentrating on these. Instead, it should
work on how to increase its brand image.
The accusation of brand ambassadors is typically a reaction, which is obvious. It can be a thought
but it should not be considered as an issue which needs immediate solution. After all its about
marketing which can be done in several other ways.

SWOT Analysis.

The tagline “2-minute noodle” and the stories on “Meri Maggi” shows the brand popularity of Maggi.
Such a company is bound to have more strengths and weaknesses. So let us delve into the Swot Analysis
of Maggi.

A. Strengths.

1. High Share in the market-

Maggi has 60% market share in noodle industry. When it comes to Maggi customer always recalls
Maggi, such was the brand image of Maggi.
2. Brand image- Maggi is considered as “Family snack”. No matter what age everyone enjoys a
bowl of Maggi. With its wide variety of taste and products it has ruled each and every corner of
the world.
3. Leader of the market- Maggi is considered as the market leader, this is the reason despite
allegations that it had customers believed on the product and Maggi revived. Maggi is what it is
today because it had gained the leader position in the market.
4. Pull Strategy- With the distinguish promotion, branding strategies Maggi attracts it customer in
an ease. Its taglines, offers, packaging had built a strong customer connection.
5. Distribution channel- The robust distribution channel of the parent company (Nestle) is helping
for the product to be made available in the market.
 B. Weaknesses.

1. Controversy effects-
The ban period effected the brand value of Maggi a lot. Its market share declined from 60 to nil.
This was the time when its competitors gained the markets share. Yippie was the first to target
Maggi. But after 5 months when Maggi revived with its strong marketing campaign by targeting
customers emotional intellect, they gained back their market share.
2. Dependency-
Nestle earns majorly through Maggi products. So, it is over dependent on Maggi.
3. Health Awareness-
Peoples who are more health conscious are threat to Maggi products.

C. Opportunities.

1. Expansion-
The range of products that Maggi is expanded in is one of the advantages to the brand because
it is the top leading snack. It also can get expanded into cereals, pickles etc.
2. Repositioning- Maggi’s repositioning was tough as well as easy. It was easy because Maggi
was a well-known brand in India and it was tough because it lost its market value and trust. It
is not a meal which doctors would suggest in their diet. Maggi is one of the top 5 brands in
India but feared for the first time during the controversy.

D. Threats

1. Competitors- There are many competitors to Nestle nationally and internationally who hold a
good position in the market and this is the major threat to Maggi.
2. Word of Mouth (WOM)- Negative words through social media or through ads can damage the
image of the product.
3. Commoditized name- Maggi itself has become a brand name. When someone says of noodles,
they immediately suggest Maggi. The parent company (Nestle) is highly dependent Maggi.

Findings-
 Compared to 2012, the net sales grew by 7.1% in 2013. In 2014 it grew by 8.2%.
 Then in 2015 it decreased by 17.2% due to the ban.
 Net domestic prices, exports prices, shares prices also got effected.
 Now Maggi contributes 30% to the company’s (Nestle) revenue.
  The Bollywood superstars who endorsed the brand are now facing the danger of FIR to be
lodged against them under various Indian Penal Acts.

Questions

1. Elaborate on the business environment faced by Maggi during the time of

crisis.
Maggi was the worst crisis that the company faced in 104 years of its existence. The chairman, Suresh
Narayan said that it was the most challenging and dramatic situation in his whole professional life. Nestle
was bought in a hurry to firefight the situation. It also had a huge loss in terms of inventory, customers,
brand image, and trust, exports and share prices. It had to face many allegations; comments and was
trolled all over social media. The brand ambassadors were also targeted. The competition by its
competitors also raised. But then the company believed that the food quality and safe elements are never
compromised and he successfully managed to restore Maggi’s erstwhile glory through its brand trust.

2. Is the use of social media for damage limitation a good idea for a company like
Nestlé in today’s times?
Yes, it was a good idea used by nestle to regain its popularity. It was through social media the company
was connected to its customers and posted the updates of the comeback of the product. Through this mean
the company constantly in-built trust in customers. It ran its campaign of “We miss you too” through
social media which was a major hit. Through twitter and face book it kept its customers engaged and up-
to-date which was very much required for the company to no loose its customers. Social media was one
of the major reason for the company to regain its market share.