Introduction.

Seldom do brands dominate markets as Maggi has dominated in India, it has been able to
distinguish itself and become synonym for noodles despite the rising competition. But it had a
fall from grace moment as ban was place on it over allegation that the product wasn’t safe for
consumption due to presence of lead above permissible amount. Moreover, the brand was held
guilty for wrongfully promoting the product was MSG free after the ingredient was found in the
product upon testing. The magnitude of these allegation could have ended any brand, but Maggi
mounted a miraculous comeback as the company after the upliftment of ban. The report thus
attempts to focus on the challenge ahead for Maggi and how the company can address them
effectively.

Background Overview.

Maggi one of the prominent bands, was introduced in India by its parent company Nestle in
1982. Arrival of Maggi marked the advent of new food category i.e. the instant food product in
the Indian market (Sahoo, Mishra, Sahoo, 2016). Maggi through its innovative product offering
and “two minute noodles” promotional campaigns has become a major contributor for success
of Nestle in India. Maggi and its products accounted for the one- third sales i.e. 30% of the sales
(Rs 90 billion in annual turnover) of the company (The Economic Times, 2018). Maggi was also
featured in the list of Top 50 Most valuable brands in India by Brand Z. The unprecedented
success that Maggi was enjoying over the decade came to a jolting halt when the noodles of the
company was termed unhealthy for consumption and subsequently banned by the government
in India.

Problem Statement.

Maggi was thrusted into a major crisis, when upon testing the noodles Central Food Laboratory
in Kolkata uncovered that the product contained MSG and 17.2 parts per million that exceeded
the permissible amount of 0.01-2.5 (ppm). In light of this revelation the government of India then
placed a ban on Maggi on June 2015 which had severe financial repercussion for the company
as Maggi’s market share crumbled to 42% from once dominant 77%. Consequently, the profit of
the company also declined to USD 5.63 billion in 2015 from USD 11.83 billion in 2014. (Garg,
2015)

The major challenge for Maggi however was to undo the severe damage that its brand value
and credibility endured through its public debacle in India. (Erdem and Swait, 2004) stressing
the severity of the problem states that Brand value and credibility triumphs over expertise when
it comes to affecting customer’s preference and consideration for a product.

Maggi has since the incident mounted a miraculous comeback and against all odds has been
working to reposition itself in the Indian market. The market share has risen to 60% and the
profit of the Maggi is also trending towards a positive increase, but the company still has to
weather lots of problem if it is to reclaim its lost glory while insuring success with its new
products.

Problem mapping.

In fierce market space, brand image becomes a differentiator in molding the decision of the
customers in the market space while also insuring customer retainability through fostering of
brand loyalty (Alhaddad, 2014). In case of Maggi the deterring of brand perception was a major
concern as the company’s brand and image in the market was a formidable competitive
advantage. This section through mapping attempts to list out how decline in customer’s trust
and rise in competition following the ban has resulted in dip in the brands standing in the
market.

Ultimate Loss of Market

Effect Share
Major Effect Decline in Financials Loss of market Harm to Brand Image
domination
Primary Comparatively Less Alternatives Perception of provider of quality product
Effect Product Sales available to diminishing from the customers.
customers Difficulty in launching new products
Core
Problem Dip In Brand
Credibility
Major Cause Decline in perception Rise in Competition Decline in the trust of the customer.
of product quality.
Primary  Inconsumable  Entry of  Ban imposed by the government
Cause amount of New  Product deemed harmful and
lead in competitors. unhealthy.
products.  Preference  Misleading marketing message
 Unable to of provided.
 meet the customers
safety towards
standard set new flavors.
by the
government.

Fig 1: Problem Mapping

Eisenhower Decision matrix.

Despite a heroic response to bring the company and its operation back on track following the
ban imposed by the government of India, the challenges confronting the company is still at
large. it is thus with the intention to address those problem by, effectively allocating resources
and forming a scheduled implementation of strategy Eisenhower matrix is used (Bast, 2016).
The Fig below thus shows the allocation of problems on the basis of their level of importance
and urgency.

Importance/ Urgent Not Urgent

Urgency
Important 1. Maintain the production 1. Tackle the rising and
function to meet the rising diverse nature of
demand in the market. competition.
2. Maintain and upheld the quality 2. Strengthening Customer
standard set by the trust.
government.
3. Maintain effective distribution
channel for supply of product.
Not Important 1. Emphasis on strengthening the 1. Focus on expanding
PR and Disaster management. the production facility.

Fig. 2 Eisenhower Decision Matrix.

Convey with regards to the Eisenhower matrix has suggested that significant time for strategy
formulation and implementation must be allocated towards the Important but Not urgent section
as these problems are often ignored for its lack of urgency. Convey further stresses that
addressing these issue could guide the organization towards achieving its goals and missions
(Mckay and Mckay, 2013). Adhering to this concept of the matrix, rising level of completion and
decline in customer trust will be addressed as the major problem Maggi has to encounter
moving forward.

Problem and Alternative analysis.

Problem 1: Decline in Customers trust.

Rivai et al, 2020 states that in a competitive setting it is prerequisite that the business
understands its customers prior to understanding its competitors for it is the satisfaction of the
customers that ultimately insures success of any business. Given the significance of the
customers it can be deduced that generation of customer’s trust towards the products and the
brand itself is a major asset that the organization can generate in its lifetime (Chiou and Dorge,
2006). This invaluable asset of Maggi was severely threatened when the Government of India
announced ban on the production and sales of the product in the country.

Maggi has since its inception been promoting and positioning itself in the minds of the customer
as a symbol of the healthy and delicious products in India. Thus there was an environment of
blind trust among customers that Maggi would deliver quality product. Thus when Maggi got
accused of mixing harmful and inconsumable elements in its product that was marketed by the
company to target children and mothers the trust among the customers towards the product was
faltered (Jain, 2016). Moreover, as it is the perception among the customers especially
perception of trust and faith that helps shape and strengthen brand image in the market the
image of Maggi was severely distorted during this period (Kanibir and Nart, 2009).

Maggi since the debacle of 2015 has started the campaign of reintroducing and repositioning its
product, it has also been able to win back its loyalist customers back. But given the public and
viral nature of the scandal company faced there are still doubters of the product in the market
place that has prevented Maggi from achieving its formal market share (Mishra, 2017). The
company should thus strengthen its quality control measures and strengthen its communication
approach with customer in order to trend in the right direction and regain its lost market share.

Possible Alternative1: Combining Six Sigma and Lean Kaizen to insure quality of product.
Brand Image that gave the perception of quality was once a Unique selling proposition for Maggi
but the perception is under shaky ground, hence to maintain the belief among customers that
Maggi is still purveyor of quality products quality control has to be the primary focus of the
company. Quality of the product always garners a key consideration among customers of Fast
Moving Consumer Goods (FMCG) such as noodles, the customers of these products thus
choose quality of the product over the price of the goods (Tariq et al, 2013). Product being one
of the key aspect of marketing mix becomes an identity of the brand thus it becomes extremely
rudimentary for Maggi to address this issue and maintain stringent control on the production
process to insure no such debacle occurs in the near future. Maggi could consider using quality
management process such Six Sigma to insure quality control of the final product in the
production process and also consider the use of Kaizen as the key objective of its philosophy is
quality control (Dasing, 2017).

Lean Kaizen has proven its valor among various FMCG company in eliminating gaps by
effective implementation of production leveling tools, process improvement tool, productivity
improvement tools etc. resulting in improvement in quality and operational capabilities (RIB
Consulting, 2020). This Lean Management has also proven to be effective in Turkey where a
FMCG company named Perfetti Van Melle Turkey has implemented it in packaging lines and
have subsequently experienced decline in overproduction, over processing and defects among
other wastes (Emir et al, 2018).

Six Sigma has proven itself to be another effective quality control tool that utilizes data driven
system to identify and then promptly limit mistakes and defects in the production process (Kwak
and Anbari, 2006). Sigma has a strong emphasis on cycle time improvement while maintaining
aim of limiting manufacturing defects to no more than 3.4 occurrences per million events or
units. The effective of Six Sigma can further be realized through the examples of actual
companies such as, Hazard Analysis and Critical control program that uses the tool to
thoroughly analyze various aspect of production process to identify and prevent possible
hazards. (Ismaeel, Al-Hameed and Aljalealy, 2012)

Under Sigma Six to a stronger consideration has to be placed on the customers hence a
concept called Critical to Quality could be introduced as this concept prioritizes only on the
process and outcomes that are critical for customer’s satisfaction for further improvement
(Gerger and Firuzan, 2012).
The use of Six Sigma and Kaizen can help strengthen the quality of the product but most
importantly as product is one of the component of marketing mix and helps to shape the
perception of customers towards the company or brand (Beneke et al., 2013). Thus, having a
product offering with unquestionable quality can act as unique selling proposition while
marketing the product or the brand itself.

Critical Analysis of the Alternative 1.

Six Sigma is well used approach in Nestle to insure quality but given the nature of the scandal
the company has faced it might be time to improve upon the approach. Nestle could consider
the use of the above suggested kaizen and six sigma as by assessing the internal process of
the organization through these tools helps uncover hidden problem while also insuring that no
obviously glaring problems are overlooked (Smith 2003).

The major criticism directed towards six sigma is that it effective only in organizations operating
in a stable condition. Stating the focus of Six Sigma on efficiency and variance reduction various
critics have questioned the effectiveness of the tool in dynamic environment that faces a
dramatic rate of technological changes (Gutierrez-Gutierrez, 2020). Further, Six Sigma because
of their focus on the existing customers may hinder in the organization’s innovation for new
customers. Thus these are questioned for their ability to deliver desired result in the
organizational environment operating at fast pace and with high level of innovation and change
(Parast, 2011).

The implementation of change in its already existing system for quality control could also require
Maggi and Nestle to collectively work on changing its organizational culture while also
introducing training for the employees to incorporate the tools. These activities apart from being
time consuming are also financially draining in the short run, even for Nestle who is now staring
recovery phase operating in market with high competition and high bargaining power among
customers. But in the long run if the production effectiveness of the company could be marketed
properly better reputation could be earned in the market.

Possible Alternative2: Alteration in its crisis communication approach.

Organization from its inception engages in various forms of communication with its various
stakeholders, thus effective communication is prerequisite for insuring the survival and longevity
of a business. The role of communication becomes even more prevalent in time of crisis where
the organization faces may threat primarily public safety, reputation loss and financial loss
(Sturges, 1994). Given the tremendous backlash that Maggi faced for its communication
approach during the crisis Maggi needs to sort its crisis communication approach to redeem the
brand image in the mind of the customers.

Nestle has always undertaken an aggressive approach in marketing and advertising to create
strong relationship and environment of trust among the customers, but after the eruption of the
crisis the company went completely silent. The passive approach of Nestle in dealing with the
crisis created a communicative vacuum which was then filled by main stream and social media
spreading negative news about the company thus discrediting its brand perception (Dhanesh
and Sriramesh, 2018). Nestle has since made a comeback by creating nostalgic advertisement
to target its ardent and loyal customers but to regain its prior position the company needs to
reconsider its crisis management and communication approach.

On a crisis management front Maggi could create a new website to address the crisis that the
organization faces as Taylor and Kents 2007 research uncovers that forming a crisis website is
a best response to the use of internet during the crisis. Corporate leadership council (2003)
further stresses the importance of crisis website by stating that these sites have proven to be
beneficial for organization while communicating the information about product recall with the
customers. Maggi certainly could have utilized the benefit of this form of website as the
organization was forced to recall its product at its time of crisis.

Moreover, upon assessing the negative response on Maggi’s robotic and unpassionate
response to the crisis, it would have been favorable for the company to have expressed
sympathy/ concern towards the victims of the crisis. As Kellerman (2006) stresses that it would
be appropriate for companies to express regret if they are guilty of wrong doing as it helps
soften the inevitable reputational and financial blow that the company faces. Experiments
conducted by Dean (2004) further supports the claim stating that in his study he discovered that
organizations that expressed genuine concern towards the victims faced less reputational
damage as oppose to those that lacked expression of concern.

Use of social media could also be an effective approach is setting the narrative for the company
in the crisis given the reach and increasing usage of social media by the customers to gather
information. Social media could thus play a catalyst to foster customer interaction at the time of
crisis which could lessen the severity of reputational damage of the organization. (Wigley and
Zhang, 2011)
Maggi should however stress on ethical marketing/ communication for any approach of crisis
communication to be successful, as the company has been accused of false promotion in the
crisis where it allegedly promoted the product to be MSG free when upon testing proved the
opposite.

Critical analysis of the alternative 2.

The organization through crisis website could provide a quick response to the crisis but the
website but lack of planning and preparation in response could result in misinformation being
conveyed thus creating further conflict. Moreover, Organization using sympathy and concern
over silence could also be perceived as accepting problem within the organization thus causing
more harm to the reputation than good (Cheung and Leung, 2016). Further, Social Media
instead of assisting the organization in the time of peril could bring forth new challenges such as
fragmented media channels, issues of image management and dynamic process in crisis
communication (Gilpin, 2010).

The use of alternate approach to crisis management might bring challenges instead of simple
remedies and might depend on the organization’s culture on its success. The above suggested
approach can result in preventing mismanagement of crisis as an immediate effect and could be
a progressive force in building customer’s engagement and trust in the long run.

Recommendation.

Among the proposed alternative solutions of combining six sigma and lean kaizen to insure
quality and alteration of crisis communication approach in response to the problem of decline of
trust among the customers. The effort to insure quality of the product as an applicable solution
would be effective. Even though both the solutions are designed with the intent to build trust
among the customers and eradicate any doubts and objection from the mind of them, improved
quality of the product can be a proof that the organization is actually working towards rebuilding
its system for the better. Amendment in crisis communication cannot prove effective until crisis
occurs and the improvement of communication though important will not show actual visual
change in the operation of the organization which is the root cause for the crisis in Maggi.
Problem 2: Intense Competition.

The five-month ban that was imposed on Maggi apart from affecting the company’s brand image
and its mission and vision for the future also drastically altered the competitive landscape of
Noodle industry in India. The absence of Maggi from the market resulted in a competitive
vacuum thus allowed many existing and new entrants company to compete for the share
previously commanded by Maggi.

Among the competitor new companies such as Patanjali reaped the benefit of Maggi’s absence
as the company acquired 11.8% share in the Indian Market to become a fastest growing brands.
The long time competitors of Maggi in India such as ITC food’s Yippie, Uniliver’s Knorr, Capital
Food India’s Chings and Top Ramen began capitalizing on the absence of maggi noodle and by
strategically co-existing in the market and began taking over Maggi’s Share resulting in the drop
of company’s share from 70% to 45% (Bhushan, 2016). The ban and its damage on Maggi in
terms of both financial and reputational left the company vulnerable to the threats from the
market forces.

Maggi despite the rise of competition and the blemish of ban, upon its return was able to
establish itself as one of the key players in the noodle market by recapturing some of its lost
share but it still needs to tackle the threat of competition in order to capitalize on the
opportunities of the marketplace. Further, the forecast that Indian noodle markets are poised to
grow at a CAGR of 5.6% from (2019-2024) could act as an incentive for Maggi to address the
competition and reaffirm the once lost superiority of its brand (Mordor Intelligence, 2019).
Therefore, in order to make a well informed and effective decisions or strategies to navigate the
challenges that Maggi faces a study of the external market is done through the utilization of
Porter’s Five force model.

Porter’s Five Force Model.

Understanding of the industry forces and intensity of competition is considered rudimentary for
the successful formulation of informed and educated strategies. Especially for Maggie where
one of the major problem that the company faces is increased competition, the model could be
useful in analyzing the strategies developed. Therefore, the Five force model for India’s Noodle
industry in formed in Fig 3.

Buyer Power.
1. The Primary distribution channel for
noodle market is convinience stores that
accounts for 61.1% of market value.
2. Buyer have higher bargaining power
because of the average size of the buyers.
3. The Switching cost for the buyers in the
market is low as there are many market
players making similar products.
Supplier's Power.
1. The primary suppkiers are ususally
farmers and growers.
2. But majority of the product is purchased
from large wholesalers such as Nestle that
trades in regional and global scale and also
offers preliminary processing.
3. The supplier is expected to meet certain
quality benchmark.
4. Substitute to the main productss aare
available but often lack in quality.

New Entrant.
1. The Indian noodle market forecasts
growth trend thus presenting encouraaging
sign for new comers.
2. The new entrants will have to compete
with the strengh of existing brands.
3. High degree of regulation has been
imposed by the governement to insure the
quality of the product.
Degree of Rivalry.
1. the top players in the noodle market are
Neslte, ITC ltd, Capital foods and Nissin
Foods and Holding
2. All the competitors have smimilar product
offering.
3. the increase in rivalry suggests that the
market fluctuation affects the companies in
the similar way.
4. The high nature of fixed cost makes the
exit for the existing companies difficult.

Substitutes.
1. The threat of substitues are accessed to
be moderate.
2. Due to similar nature of products
switching cost couldn't accurately be
accesed, rather it depends on the profit
margin of the items.

Fig 3 Porters Five force model (Marketline, 2019)

Alternative 1: Product Diversification strategy.

Business organization’s prime responsibility is to design the products to cater to the requirement
or preference of the customers as it correlates into better profitability for the organization. Over
the years’ organizations have realized that the needs of its customers are seldom standard,
their taste and preference differ due to geographical, cultural and other factors (Malerba et al.,
2007). Thus with the realization most major organizations are now employing product
diversification as a growth strategy to accelerate sales and increase its profitability.

The noodle market in India has also experienced shift in its customer’s preference towards
products as they are no longer drawn by standard flavors but instead on a hunt for new taste
and flavors such as mix masala, Chinese etc (Mordor Intelligence, 2019). The importance of
diverse taste as a crucial market driving factor can be stressed from the rise of companies such
as Patanjali offering atta noodles and Chings providing Chinese flavored noodle (Marketline,
2019). This dynamic in the industry has prompted many noodle companies in India to adopt
product diversification in its production process.

Maggi also responding to the diverse preference has adopted a product diversification strategy
as it has introduced sub brand to its instant noodle i.e. Hot heads, Nutri-licious targeting the
segment of young adults, it has also been providing variation of taste targeting the Indian
customers such as masala, chicken, tomato, oats etc (Saxena, 2016). However, these flavors
introduced by Maggi hasn’t been able to capture the imagination of the customers as expected
by the company. Therefore, Maggi has to reconsider optimal mix of product attributes it wants to
offer to its customer base (Netessine and Taylor, 2007).

Further, Aleson and Escuer, (2002) through their study on performance pf companies involved
in product diversification have concluded that firms engaging in either high or low level of
product diversification have significantly lower performance while the firms engaged in
intermediate level of product diversification projects higher performance. The organization thus
while being cautious of the competitors must not blindly copy them rather it must consult its
customers base and facilitate a form of customer engineering interaction to effectively plan its
product portfolio (Sadeghi and Zandieh, 2011).

Since the company operates in the market where the bargaining cost of the customers are
extremely high and the switching cost among the customer is extremely low, creating products
that appeals to the customers could prove financially beneficial (Marketline, 2019). Therefore,
Customers concern coupled with effective production process should be prioritized for the
formation of maximizing shared surplus model that takes into consideration the preferences of
the customer, their choice probability along with the platform based product costing which
facilitates effective planning of product portfolio problem (Jiao and Zhang, 2005).
Critical Analysis Alternative 1.

Potential criticism for product diversification strategy is the question of if the organization is able
to uphold the quality standard across the range of product it offers (Aleson and Escuer, 2007).
Indian customers have become extremely health conscious and are overly cautious about the
ingredients involved especially in case of packaged goods thus organization needs to be
considerate about this while diversifying its product. Given the cost involved in the application of
product diversification strategy any short coming in the performance of the newly introduced
product can have negative financial repercussion for the company.

Overall the strategy is necessity for many organizations that can afford it because of diverse
demand in the market place but this strategy in the short run can increase the fixed cost for the
organization unless it is sold in the market after which in the long run if all things align could
result in profit. The company could also face a catastrophe loss in the long run as it depends on
the performance of the product.

Alternative 2: Running suitable social media campaign.

Maggi under Nestle has always utilized aggressive marketing and promotional campaign to
target prospective customers, the intensity in promotion has further increased after the ban but
despite the efforts of Maggi apart from the classic brand other sub brands of Maggi with various
flavors are yet to attract similar interest in the Indian market. Competing in a market with high
level of competition Maggi cannot afford to miss out on the market share because of lack of
information among the customers relating to their product portfolio.

The company should thus prioritize niche marketing by marketing and providing the diverse
range of product of the company to specific targeted segment of the market as this will foster
loyalty among particular segment of the market towards the company (Choudhary, 2014). The
approach of Niche marketing could further be facilitated by customized messaging through
social media, whereby Maggi can create customized message for its sub brands to create
awareness in the market (Saravanakumar and SuganthaLakshmi, 2001).

Digital and social media marketing approach for Maggi could be considerably easier as it has
used its measure to reintroducing the brand and regaining the market share following the ban.
Further, social media has always allowed the company to make and spread message which is
customized yet consistent with broad vision of the organization. Social and digital media is also
a proven medium for creating buzz or trend for new product among customers in the market and
with the improvement in internet this benefit is not limited to urban customers but to certain
extent among the rural customers too. (Chandran, 2015)

Moreover, as Maggi is primarily targeting youths with appetite for experimenting with different
flavors social media could be an ideal medium to initiate interaction with the target customers.
Maggi could also focus on packaging which is part of marketing mix that has been used as a
promotional trick by many companies to introduce more products in cup/bowls as it is preferred
among the customers for its ease of use and ready to eat nature (Mordor Intelligence, 2019).
The company should also continue and to some degree prioritize use of online sale of product
through Snapdeal as the current situation of lockdown amidst pandemic has boomed the use of
ecommerce for essential products.

Critical Analysis of Alternative 2.

Though online media has been a dominant medium in garnering customer attention there is
large section of customer especially in rural areas of India who are informed about the product
after they are noticed in their nearby local convenient stores thus this channel of distribution
should also be placed into higher importance (Mordor Intelligence, 2019). Moreover, even in
urban areas supermarket/ hypermarkets are still a major channel of distribution for its
accessibility and convenience of use (Mordor Intelligence, 2019). Thus Maggi should combine
the use of both traditional as well as modern approach of distribution and marketing of its
product as this will help company create widespread awareness in the short run while facilitate
to build unwavering trust in the long run.

Recommendation:

Upon assessing the aforementioned strategies i.e. Product diversification strategy and Running
suitable social media campaign on the basis of cost benefit analysis. The strategy of running
suitable social media campaign appears to be more beneficial for the company. The rationale
behind this statement is that upon stressing on further diversifying the product offering the
company could just stack up more of fixed cost which doesn’t guarantee positive result but if the
company were to effectively use its already existent resources to promote its wide range of
product it can generate more in return financially while maintaining comparatively lower cost.
Conclusion.

Through the thorough study of the case of Maggi it was deduced that the two problems plaguing
the company are that of declining trust among the customers towards the company and rising
competition in the marketplace. Following the identification and analysis of these problems
various alternatives were suggested to counter the challenges. Among the suggested
alternatives two strategies i.e. the use of sigma six and lean kaizen for product control and use
pf suitable social media campaign is suggested as it provides positive yield based on cost
benefit evaluation. Moreover, these recommended strategies coincides with the current direction
of the company and they could also play role of major catalyst in fostering the marketability of
company’s brand and product.

Executive Summary.

Maggi has successfully navigated through one of the greatest crisis in the history of its
organization but the whole experience has left the company susceptible to other challenges in
the market which were nonexistent before. Thus after careful analysis of the case the
challenges hovering around Maggi was broadly narrowed down to Decline in the trust among
customers and Rising level of competition in the marketplace. The report has then proceeded to
provide solutions in forms of various alternatives to meet and overcome the challenges of the
future. Among the key alternatives suggested after informed evaluation strategy to strengthen
the product offering and using of social media to disseminate targeted information were
considered ideal for the organization. The main motive behind these recommendations are to
strengthen the product offering to facilitate effective marketing and building trust and to inform
customers about diverse range of products through social media.

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