Indian Institute of Management Amritsar

2022-24

Term - 3

Business Research Methods

Final Group Project

Group 10

Research Proposal: New Product Development for Nestle’s

Maggi Schezwan Sauce
Submitted to Prof. Aswathy Asokan Ajitha

Submitted by:

1. Rohin Srivadsan(MBA/08/224)
2. Sanyam Bhutani (MBA/08/228)
3. Shubham Bansal (MBA/08/233)
4. Gajanan Shukla (MBA/08/235)
5. Shubham Ushekwar (MBA/08/236)
ABSTRACT

Nestle Maggi has a strong presence in instant noodles market. The company’s foray into
the sauce segment has been a successful move. The market for Schezwan sauce, a spicy condiment
in India has been steadily growing thanks to its popularity among the people for its bold and
flavorful taste. The Schezwan market is expected to continue growing for the coming years with
increasing demand from urban and sub urban areas, thanks to the rise of e-commerce and online
grocery stores.

The study aims to assess the potential of inclusion of a new Schezwan sauce in the
company’s product portfolio. The study aims to analyze a variety of factors such as consumer
preferences, the company’s brand reputation, competitors, consumers perception of products from
competitors, etc. to understand the potential impact of launching an all-new Maggi’s very own
Schezwan sauce, company’s commitment in meeting customer’s needs and pave way for future
innovation in its products to best serve the consumer’s taste.

INTRODUCTION

There is not a single household in India that doesn’t have a packet of Nestle Maggie instant
noodles in their kitchen shelves. First introduced in India in 1984, Nestle Maggie quickly gained
popularity amongst the people for its unique taste and ease of preparation, making it the go-to
option of consumers looking for a quick and satisfying meal. The company prioritized on
constantly improving the quality and taste of its product over the yeas to better adapt to the
changing consumers’ needs and taste preferences. The company also extended its product portfolio
to sauces, soups and pasta. The company’s success can be attributed to its ability to cater to the
consumers’ changing preferences and a strong supply chain network. The brand’s focus on
innovation and success has helped it stay ahead of it’s competition and maintain it’s position as a
trusted and beloved household name in India.

Maggi’s sauces have been particularly well received, with the consumers appreciating the
quality and taste of the product. The sauce market in India has seen a steady growth thanks to the
product’s versatile nature to enhance the taste of a variety of dishes. The market is dominated by
local and regional players with brands like Kissan, Ching’s Secret apart from Maggi being the
most popular and international players like Heinz and Tabasco adding to the premium product line.
The Indian cuisine is specially known for its diverse and complex flavors and people loved dishes
with bold and spicy flavors. This promoted the rise of sauces with a plethora of flavors. Among
them, the Schezwan sauce was especially loved by the community for its flavor characterized by
Sichuan peppers, giving it a unique and distinct taste. The rise of Fusion cuisine in India also
contributed to the growth and future potential of the Schezwan sauce segment in the Indian sauce
market. The Schezwan peppers were also known for their anti-inflammatory and antioxidant
properties which made it popular among health-conscious consumers. The Indian Schezwan sauce
market was valued at 2.9 Billion USD with a CAGR of17.3% from 2017 to 2024. Despite the
market size and its growth potential, the market has been dominated by regional brands like
Ching’s Secret who offer a range of Schezwan sauces in different flavors such as garlic and ginger
and international brand like Del Monte who introduced gluten-free Schezwan sauce catering to
health-conscious consumers.

The study aims to analyze and understand the consumers’ behavior toward the brand
launching a new Schezwan sauce, identify the different target audience for the product, evaluate
the competitive landscape, asses market position and examine the potential growth of Nestle
Maggi in the food and beverage industry. The study will provide insights into consumer
preferences and purchase behavior, pricing and overall success/failure if the Schezwan sauce is
launched.

The following are the objectives of the study.

OBJ 1: Should Maggi expand its sauces product portfolio with Schezwan sauces

OBJ 2: How is price influenced by factors such as packaging

OBJ 3: Does taste influence the recommendation of Schezwan sauce

OBJ 4: Determine the price consumers will most likely be willing to pay for the Schezwan sauce.

Literature Review

This paper examines the impact of brand on influencing consumers to purchase a product. Primary
research was conducted continuously during the period of six months in 2014 in Slovakia. Original
primary data was collected by using a quantitative method of questionnaire. Partial results of the
complex research are subject to the content of the paper. Two hypotheses were formulated to
investigate the relationship between the age of respondents and purchasing branded products and
preference of brand origin. (Chovanová, Korshunovb, & Babčanová, 2015)

This paper discusses two aspects of Chinese food served in India: Indianization and Chineseness.
Indian Chinese restaurants mostly use Indian spices, flavors, and materials to make Chinese food,
which is served in a bowl and eaten with spoon, fork. Symbolic elements such as red color, random
Chinese scripts, images of Chinese temples, paintings or statues of Buddha, symbols of wok,
picture of fat Chinese chef, picture of dragon, and symbols of bowl and chopsticks are used to
create a Chineseness in the menu. The author argues that this creates a new cuisine category Indian-
Chinese cuisine which is neither Indian, nor Chinese. (Sankar, 2017)
Monosodium Glutamate (MSG) is an extensively used additive in food industry as a taste enhancer
and found naturally in fruits and vegetables. A pilot study was conducted to examine and assess
the use of taste enhancers and correlate with the amount of salt (sodium) in instant noodles sold in
the Omani market. Results showed that public perception towards MSG is better among Asians
and that large numbers of noodles products contain MSG in addition to other additives.
Consumption of instant noodles is influenced by the culture or media or the surrounding. (Al-
Azawi, Dima, Salma K, & Majed Mamoun, 2020)

Research suggests that reactions to brand extensions are influenced by the fit between the parent
brand and the extension product category. The boundaries of prior research are explored by testing
whether the fit-extension relationship generalizes to scenarios that include relatively more or less
familiar competitor brands. Support is found for this relationship in non-competitive scenarios, but
is diminished by competitors' relative brand familiarity. Perceived risk mediates the effects of fit
in non-competitive settings and competitor brand familiarity in competitive settings. (Milberg,
Sinn, & Goodstein , 2010)

This paper investigates the impact of core brand quality, price of the extension category, and the
price of the extended brand on consumer evaluation of the brand extension. Results show that core
brand quality is an important factor influencing the success of the extension, and that a downward
price extension is more likely to be accepted than an upward price extension. (Lahiri & Gupta)

The authors argue that brand-extension price premiums accrue due to the ability of a known brand
to reduce the perceived risk customers experience in making purchase decisions. They manipulated
perceived fit between a brand and extension products and three dimensions of extension product
category risk to determine the relationship between price premiums and perceived fit. They found
that price premiums are positively related to the perceived fit between the brand and the extension
category, but this relationship varies depending on the levels of financial and social risk associated
with the extension product category. Implications for theory, practice, and future research are
discussed. (DelVecchio & Smith , 2005)

Theoretical Model And Hypothesis Development

Hypothesis testing to identify if Maggi should go for product diversification in the sauce line and
introduce Shezwan Sauce.

H1:

Null Hypothesis: There is no significant difference in factors such as taste influencing the
recommendation of Schezwan Sauce.
Alternate Hypothesis: There is a significant difference in factors such as taste influencing the
recommendation of Schezwan Sauce.

H2:

Null Hypothesis: There is no significant difference in factors such as hygiene influencing the
recommendation of Schezwan Sauce.

Alternate Hypothesis: There is a significant difference in factors such as hygiene influencing the
recommendation of Schezwan Sauce.

H3:

Null Hypothesis: There is no significant difference in factors such as taste influencing the
recommendation of Maggi Schezwan Sauce.

Alternate Hypothesis: There is a significant difference in factors such as taste influencing the
recommendation of Maggi Schezwan Sauce.

H4:

Null Hypothesis: There is no significant difference in factors such as age influencing the
recommendation of Maggi Schezwan Sauce.

Alternate Hypothesis: There is a significant difference in factors such as age influencing the
recommendation of Maggi Schezwan Sauce.

H5:

Null Hypothesis: There is no significant difference in factors such as consumption influencing the
trial of Maggi Schezwan Sauce.

Alternate Hypothesis: There is a significant difference in factors such as consumption influencing

the trial of Maggi Schezwan Sauce.
H6:

Null Hypothesis: There is no significant difference in factors such as consumption influencing the
recommendation of Maggi Schezwan Sauce.

Alternate Hypothesis: There is a significant difference in factors such as consumption influencing

the recommendation of Schezwan Sauce.

H7 :

Null Hypothesis: There is no significant difference in the price of the product influencing its
packaging.

Alternate Hypothesis: There is a significant difference in the price of the product influencing its
packaging.

Research Methodology

Launching a new product involves a lot of information regarding consumer preferences, behaviour,
and willingness to pay to decide whether the product should be launched and, if yes, at what price
it should be launched. Primary and secondary research was conducted to gain insights into these
data points.

Primary Research
Data were collected from participants using In-depth interviews and surveys through
questionnaires.

● In-depth interviews: A sample of 5 people was chosen using a clustered sampling method
under which strata were divided based on age.
Then semi-structured format interviews were conducted with this sample of 5. This
involved asking open-ended questions to the participants. A laddering format was used
while performing these interviews, i.e. follow-up questions were asked based on
participants' answers to delve deeper into their thought processes. The in-depth interviews
were conducted to understand better the buying process, purchase behaviour, and
perception of consumers.
 Few of the Insights from In-depth interviews

1. Existing consumers of Maggi products were likelier to try new products launched
by Maggi regardless of whether they had tried them before.
2. People were more inclined towards Maggi products as compared to their
competitors.
3. In the case of a new product, people were willing to switch from their competitors
to Maggi upon hearing good reviews or trials.
4. Recommendations heavily influenced the chances of the trial.

● Survey through the questionnaire: Random sampling was done between people aged 14 -
35 (the target market of Maggi ). A sample of 54 participants was taken to perform the
survey. The survey was designed on Google forms and floated via Whatsapp messages.
Based on the insights from the survey, a few data points were taken, such as brand
preference, Maggi sauce awareness, purchase probability, willingness to pay, etc.
Questions were then devised, keeping these factors into consideration. The quantitative
data collected from the survey would be further analysed to draw inferences for the
population.

Some of the questions asked were:

1. How much would you pay for Maggi's Schezwan sauce (200g)?

A. <45
B. 45-50
C. 50-55
D. 55-60
E. 60<

2. What factors influence your decision to purchase Maggi's schezwan sauce? (select
all that apply)

A. Brand awareness
B. Packaging
C. Price
D. Availability
E. Taste

3. Would you be interested if Maggi introduced Schezwan Sauce?

 A. Yes
B. No
C. Maybe

4. How likely are you to recommend Schezwan sauce to someone else?

A. 1
B. 2
C. 3
D. 4
E. 5

5. What is your preferred brand of Schezwan sauce?

A. Ching’s Schezwan Stir Fry Sauce

B. Veeba Dip And Stir Fry Schezwan Sauce
C. Kissan Schezwan Sauce
D. Chef Boss Schezwan Cooking Sauce
E. Dr Oetker Funfoods Schezwan Sauce

6. Have you ever tried Schezwan sauce before?

A. Yes, I love it
B. Yes, but I don’t like it
C. No, But I am willing to try
D. No, I don’t think I would like it

Secondary Research
The secondary research was conducted to learn about the sauces industry and the product category.
This involved researching the Chinese sauces' current market size in India and the future growth
rate in the class. The research helped perform competitor analysis to assess their profitability and
revenue. Moreover, it showed consumers' willingness to pay by assessing the price of different
brands schezwan sauce.
Data Analysis:

We collected data from the questionnaire and entered it in PSPP for analysis

Independent Variable:

Age

Tried Maggi Products

Taste

Hygiene

Packaging

Consumption of Maggi Products

Maggi Sauce preference

Dependent Variable:

Recommendation of schezwan sauce

Interested in Product

Price

Since both IV and DV were non continuous, we used one way anova to analyze the data and test
the hypothesis.
H1:

Since the p-value is greater than 0.05, we reject the null hypothesis.

H2:

Since the p-value is greater than 0.05, we reject the null hypothesis.
H3:

Since the p-value is greater than 0.05, we reject the null hypothesis.

H4:

Since the p-value is greater than 0.05, we reject the null hypothesis.
H5 & H6:

Since the p-value is greater than 0.05, we reject the null hypothesis of H5.

Since the p-value is greater than 0.05, we do not reject the null hypothesis of H6.

H7:

Since the p-value is greater than 0.05, we reject the null hypothesis.
Price Determination:

Through survey, we can find that consumers are willing to pay Rs45- Rs50.

Discussion and Implications of the study

Of all the 7 hypotheses tested, only one instance was there to tell that we cannot reject the null
hypotheses. (H6)

H6:

Null Hypothesis: There is no significant difference in factors such as consumption influencing the
recommendation of Maggi Schezwan Sauce.

Alternate Hypothesis: There is a significant difference in factors such as consumption influencing

the recommendation of Schezwan Sauce.

This investigation leads us to the conclusion that there is statistical support for the hypothesis that
the recommendation of Schezwan sauce is significantly influenced by the consumption of Maggi.

We may draw the conclusion that aspects like taste, hygiene, and packaging have an impact on
customer decision-making regarding purchases based on the research that was done. The age group
also has a significant impact on trying a new Maggi product.
Nestle can use this data to target a specific age group and can scale and place their product
accordingly. This study may help the company to diversify their product portfolio into Indian
markets.

Time Frame:

The research is expected to be completed in approximately six weeks.

● 1st & 2nd Week: Literature review, proposal and gathering information and formulation of
guidelines for selection of people to be interviewed
● 3rd Week: In depth interviews with selected candidates and creation of questionnaire based
on the interview.
● 4th Week: Questionnaire to be shared with a larger sample group and collection of data
● 5th Week: Coalition of data and analysing it
● 6th Week: Report Writing and Presentation

Budget:

S.No. Particulars Amount

1. Secondary Research 500

2. Primary Research 1500

3. Data Collection and Questionnaire 2000

4. Cost of Analysis & Literature Review 2000

Total Amount 6000

Conclusion:

Through this research, we have reached to the conclusion that Maggi can try expanding their
product portfolio and can introduce Schezwan Sauces in Indian Market.

We can conclude through this report that while various factors like taste and hygiene can affect
the buying preferences of consumers; on other hand, consumption of Maggi’s product doesn't
affect it recommendation of Sauces.
Limitations:

Since this research was done using sample collected from a small group of people, it can’t be relied
upon to make such a big decision. To implement this decision in real life, a similar research would
have to be conducted at a much larger scale since there is huge cost involved with the project.

Bibliography:

Al-Azawi, Dima, A., Salma K, A., & Majed Mamoun, A. (2020). Examining the Use of
Taste Enhancers in Instant Noodles and Public Perception of Monosodium
Glutamate in Muscat, Oman. Bentham Science Publishers.

Chovanová, H. H., Korshunovb, A. I., & Babčanová, D. (2015). Impact of Brand on

Consumer Behavior. Business Economics and Management .

DelVecchio, D., & Smith , D. C. (2005). Brand-extension price premiums: The effects of
perceived fit and extension product category risk. Journal of the Academy of
Marketing Science.

Lahiri, I., & Gupta, A. (n.d.). PRICE AND CORE BRAND EFFECTS ON BRAND
EXTENSION QUALITY.

Milberg, S. J., Sinn, F., & Goodstein , R. C. (2010). Consumer Reactions to Brand
Extensions in a Competitive Context: Does Fit Still Matter? Journal of Consumer
Research.

Sankar, A. (2017). Creation of Indian–Chinese cuisine: Chinese food in an Indian city.

Journal of Ethnic Foods.