Marketing and Management: Success and Failure of Maggi Noodles

This case study examines the marketing and management strategies of Maggi noodles, a prominent brand in the FMCG market. It delves into the significance of advertising in building and maintaining brand popularity, analyzing Maggi's advertising strategies from a critical perspective. The study discusses the successes and failures of Maggi, particularly focusing on its brand repositioning efforts and recommendations for new product development. It highlights the impact of advertising channels, the evolution of Maggi's promotional campaigns, and the factors contributing to its market dominance. The analysis includes the brand's responses to market competition, the effectiveness of various advertising techniques, and the challenges faced in replicating success across different product segments. The study concludes with insights into Maggi's journey, providing a comprehensive overview of its marketing strategies and their impact on its brand performance. The case study also provides a detailed analysis of Maggi's strategies in the face of competition and how it has adapted to the changing consumer preferences. The study also highlights the importance of market research and the ability to understand consumer needs and preferences.

Running Head: Marketing & Management
Marketing & Management
A case study of MAGGI
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Running Head: Marketing & Management
Table of Contents
Introduction...........................................................................................................................................3
Significance of Advertising in creation and maintenance of Brand popularity..................................3
Advertising strategy of Maggi – a critical perspective.......................................................................4
Success and Failure of Maggi – a discussion.....................................................................................6
Maggi’s Brand repositioning and Recommendations for new product development.........................7
Conclusion.............................................................................................................................................8
References...........................................................................................................................................10
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Running Head: Marketing & Management
Introduction
The business environment is featured with complex and unpredictable elements and firms are
often incapable of understanding the elements which create difficult situations for firms to
cope with. FMCG market always passes through immense competition. This present
discussion is based on a case study of Maggi which has once been considered a market leader
in the particular products segment. Maggi noodles had market dominion and faced severe
competition from many organizations in the market. The firm is known to have taken all out
strategies for establishing products amid stiff competition. Maggi perhaps is the perfect
example of a FMCG brand that has efficiently utilized the mechanism of advertising to
transform societal behaviours of food consumption in the modern age. The brand’s potent
advertising strategy hinged on creating a balance between the fundamental elements of health
and taste in a consumable along with the striking feature of 2-minute preparation time which
instantly served the need of consuming a nutritious product among the new age fast-paced
working parents and their offspring. The strategic promotional aspect of combining taste,
health, less preparation time, and constant product innovation suiting the changing
preferences of the consumers catapulted the brand to be used as a reference to noodle in the
modern age. However, the successful strategies of business in the noodle segment could not
be replicated by NIL in the other product segments of the brand. The company has launched
some health products such as vegetable atta noodles as most important among those. At the
end of this discussion, some new product variants have been discussed and the products could
be introduced by the firm to strengthen its healthy products segment.
Significance of Advertising in creation and maintenance of Brand popularity
Organizations resort to advertising strategies considering needs of advertisements to shoot up
products’ saleability. Advertisements have several channels such as direct marketing, social
media advertisements, print, and electronic media and many others. All these channels of
advertisements do the basic things for a particular brand which is awareness development
among people or target customers about the particular product. This is the stepping stone for
the success of a brand. People often keep them busy in understanding a brand and its products
as it is believed that products or a brand do all the talking when is presented through a
channel of advertisements. Benefits of advertisements are manifold and the main factor is to
select the most suitable strategy for products promotion among target customers. A brand
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Running Head: Marketing & Management
with diminishing popularity could find acceptance afresh among customers if its
advertisements have the capacity to catalyze existing and potential customers to make a
purchase decision. Therefore, communication with target customers and present loyal
consumers is the most vital attribute of advertisements and the greater utility of products
finally justifies the advertisement. In several situations, advertisements help a brand to ensure
survival in competition and a good but frail brand achieves new lease of life. On the other
hand the popularity of an established brand goes up more. Through advertisements, brands
often reposition their products which create the new possibility of sales and revival process
amid competition could be ensured. This becomes possible when the popularity of products
increase and this is only because of advertising in relation to products.
Advertising strategy of Maggi – a critical perspective
Advertising efficacy remains most crucial to business success since the business could notch
a significant amount of profit from elevated sales triggered by promotion and advertisements.
On the other hand, a business might slump to failure if advertising strategies are not worked
upon better. The business of NIL based on its product Maggi has witnessed many roller
coaster rides and this portion of the report has shed a knowledge-based discussion based on
analysis of advertisement strategy taken by the company. Top Ramen was another company
that started building up its brand name and posed huge competition for the products under the
Maggi brand (Best, 2012).
Advertising strategy circling around Maggi products kicked off with a change in the
formulation of products Maggi noodles for ensuring that sales are revived. Formulation of
magi noodles was changed but this has not worked for the brand as customers refused it for
not having the previous taste. Therefore this was a fallible effort for changing the sales
fortune of the brand. Products promotion regarding this could not stand up to the expectation
and could not be anyway blamed since the new formulation was the main factor which
spoiled the sport. NIL introduced Maggi 2 minute noodles in the Indian market and was
unable to understand the mood of the conservative people of the country as they are more
interested to pick conventional dishes rather than packaged and canned food. This failure has
not persuaded the firm to undertake a thorough research in the market before launching the
product. Therefore, it is evident that the company did not take a logical strategy of
advertising and promotion. Later on, NIL identified the brand with fun quotients that could be
related to the moods of children (Hollensen, 2010). Accordingly, the tagline was changed to
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“fast to cook good to eat” and this was a fitting technique of promotion to maintain the pace
of products and competition in the market. This speaks more of positioning by the company
and is seemingly better than the previously failed one. However, the firm may not have
adopted market research but knowledge gathering by the company regarding children’s
fondness for the products is worth appreciating. NIL’s aggressive advertising strategy was a
delayed application of core strengths to promote its products but the wait was worth it
(Mullins et al 2010).
Some subsets of advertising strategies of the firm are distribution, communication with target
customers and repositioning and the all paid off more or less for the firm. The tagline like ‘as
2 minutes’ was hugely emotive and customers would relate the products to their needs and
demands amidst their tight schedules. Promotion of sauces and ketchup took the support of
brand extension along communication with target customers about the products’ usefulness
and time-saving and taste bud teasing elements (Anderson, Narus, and Narayandas, 2009).
The first product extension of Maggi was instant soups that became successful in the Indian
market. This sheds adequate light on knowledge development of promotional strategies of
NIL which had focused on seizing on the market opportunities by depending on the brand
name Maggi. Therefore, the initial hiccups from products failure were managed by NIL and
the advertising strategy that garnered criticism became commendable which is attributable to
the inclusion of some elements or techniques of advertising into the broad and simplified
promotional views. NIL’s promotions were split into some categories. Aggressive advertising
was preceded by a change in formulation accompanied by a minuscule volume of effort to
adopt a reasonable level of advertising effort. Distribution, the offer of free samples,
positioning, and repositioning, better communication with target customers are the existent
elements of overall planning of advertisement.
NIL’s celebrity endorsement for promoting Maggi sauce was successful and was not essential
since the brand started regaining its position in the market. However the tagline ‘it’s
different’ was catchy and worth watching as two then most popular stars Pankaj Kapoor and
Javed Jaffrey made the ad funny and attractive. But NIL had to count possibly a hefty price
for the endorsement although product related success was of all justifying the celebrity
endorsement as a strategy of advertisement for promoting Maggi sauce (Wilson and Gilligan,
2012). NIL got small packs of Maggi noodles endorsed by renowned actress Preity Zinta and
it was expected by the company that leading position of the brand and the products will not
be swayed by the recession hit market from the perspective of FMCG sector. However, the
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strategy of products promotion by the popular actress was supportive for the firm as small
packs of Maggi noodles had played an influential role in strengthening the financial position
of the overall brand and the company in the competitive market (Belz and Peattie, 2012).
Success and Failure of Maggi – a discussion
Magi instant noodles had been the important product category under the brand Maggi.
Initially, the market was not responsive to the new formulation of noodles but later on, sales
were survived when NIL re-launched the old and preferred noodles in the market. At the
initial phase the brand experienced hurdles in the noodles segment. Advertisements were not
even supportive for causing an escalated sale. But gradually the product Maggi noodles
started gaining its position in market and people started liking this item as easy to cook the
product. Particularly for women and children, the product achieved huge popularity. There
are some reasons for the brand to sustain the leading position in the market especially in the
Maggi noodles segment (Beverland and Lindgreen, 2010). Old formulation of noodles was
the cause the product achieved huge acceptance and preference among customers and the
immediate result was the achievement of 80 percent share by NIL in Maggi noodles segment.
During the FMCG recession in 2001and 2002, the sale of magi noodles was not affected
much as NIL launched small packs that came less pricey. The distribution network of the firm
was strengthened and availability of the small packs of noodles was ensured by the company.
NIL took an aggressive approach to make products available through its distribution network.
This is the reason Maggi noodles sold hugely and the position of leadership was sustained in
the market even at the time of recession in the FMCG sector seeped in. The success of Maggi
noodles was also due to the market penetration strategy was taken by the firm in the guise of
small pack availability of Maggi noodles (Malhotra and Peterson, 2014). As markets slowly
revived from the recession, more large sizes of packets started fetching extra sales for the
brand. From the second quarter of 2002, the market was captured by Maggi noodles and Top
ramen slackened its grip and sales were eaten up by Maggi noodles. The brand image of
Maggi noodles became higher and competitive position was favorable for the brand and
leadership like situation prevailed for the brand depending on Maggi noodles (Michaelidou,
Siamagka, and Christodoulides, 2011).
The discussion above represents the market leadership of Maggi noodles in the market. This
was supported by better pricing strategy and small packs of noodles to support penny wise
customers at the time of prevalent recession. Therefore it was obvious for NIL to replicate the
strategy for other products and the effort followed without any delay but success was not
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possible and varieties of reasons were behind this. Maggi soup in for-one serve pack was
priced at Rs 3 but the competition from Knorr soups was high and the idea of the small pack
at the small price was not successful for NIL in the soup segment as packages soup segment
was dominated by Knorr soups (Lovelock, Wirtz and Chew, 2009). Maggi pickles performed
badly in markets and from NIL’s side, there was forced discontinuation of Maggi pickles
since customers were not loyal to branded pickles. Ready to cook a mix of the recipe was
launched but the market was already flooded with products of competitors and NIL was
unable to pervade the existing competition and the same strategy could not be successfully
replicated. Competitors such as HLL and ITC posed a huge level of competition and their
spices, as well as a paste of cooking, was in economic range unlike premium category of
items of NIL. Top ramen launched cup noodles that competed with Maggi noodles and
HLL’s soupy snacks were available in four types which were positioned against Maggi
noodles (Hutt and Speh, 2012). The price was affordable as only Rs 5 for the product.
Therefore the company had to undergo a lot of struggles to replicate the same strategy that
worked for Maggi noodles but other product categories were not benefitted and the company
was not able to successfully replicate the strategy. Additionally price competition was big
with other players such as Heinz and Kissan and this is another reason NIL could not make
it's all products equally successful as Maggi noodles in the market. Nature of competition in
the market was aggressive and presence of many brands together with price competition
worsened the situation for NIL to taste success in each and every product category in the
FMCG market in India (Moutinho, 2011).
Maggi’s Brand repositioning and Recommendations for new product development
Importance and success of healthy products are judged on several counts and these are health
perspectives, acceptance among customers and sales as well as profit increment for the
particular brand. The healthy products of NIL accounted for vegetable atta noodles rich in
fiber, minerals, and vitamin. NIL dodged the question of whether Indian customers were
conservative or not and focused on wellness and health of customers through its nutritional
products (Gaddam, 2008). The repositioning of Maggi products as a healthy product by NIL
was a fitting and justified as the concept became popular among customers who are always
health conscious. Customers had changing preferences and highlighted aspects were taste and
health factors. NIL got to be aware that customers were not as much conservative as were in
the 1980s. Instant healthy products were accepted by them and NIL on basis of this
knowledge captured the opportunities and market situation was brought in its favor. Maggi
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Running Head: Marketing & Management
healthy soups were available in several types and were accepted by many customers. On
basis of the discussion herein, it is not difficult to conclude that NIL has rightly repositioned
Maggi as a healthy product and market was eventually dominated by the products and
financial benefits were also availed by the company based on health products (Reid and
Bojanic,2009).
NIL has been able to position Maggi as an established brand in every household in India
although competition is prevalent. From this ground, the firm can think of introducing some
healthy products which can be averse to competitions thinking on the font that competitors’
products do not include new products segment (Grönroos, 2011). The company must not
forget that the price of the products and pricing strategy could be the important determinants
for success even products are enriched with quality and health factors. With these aspects
intact, NIL could think of launching three more products variants in health products segment
to meet with growing needs among customers. These products could be vitamin water, fruit
water, and healthy cooking oil to serve the requirements of customers who are most
considerate on health-related aspects included in products (Sherlekar and Gordon, 2010).
Vitamin water, fruit water, and healthy cooking oil are important for the company. Firstly the
products are not in the current product portfolio of NIL. Secondly, Competition could be less
if the three types of products can be of actual quality without any kind of adulteration.
Additionally, the company needs to focus on sourcing better and organic ingredients to
produce the end products (Alvarez, Casielles and Martín, 2009). Vitamin water and fruit
water can be accepted by the customers if the products could detoxify their physical system.
Healthy cooking oil could pull in huge customers since maximum customers have a great
amount of qualm regarding conventional cooking oil. Therefore genuinely prepared and
purely produced healthy cooking oil can be a game-changing plan for the company and
customers can be delighted if these products are of organic ingredients. It should be
considered by the company that utmost level of care to be taken so that the makings of
products stay away from any kind of adulteration (Bresler and Lubbe, 2014).
Conclusion
Maggi noodles became a pioneer in the market and during the recession also, the brand was
efficiently functional in the market. The advertising strategies included positioning and
repositioning, communication, distribution, and products promotion through free offers. NIL
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also adopted celebrity endorsement to promote the products in competitive markets. Small
packs of Maggi noodles helped the company to steer through a phase of recession but the
same strategy was not equally successful for other products. However, the Maggi noodles
maintained leadership in markets. The brand focused on health products and vegetable atta
noodles were the most important product of the firm in this segment. The firm needs to take
utmost care for launching its health products such as vitamin water, fruit water, and healthy
cooking oil so that the products could be kept free from adulteration.
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