GROUP 6AvinashRanjith

ShushantaSwaitlanaThanmai

BRAND EXTENSION OF MAGGI

• The Company was founded in 1866 by Henri Nestlé in Vevey, Switzerland

• Employs around 2,80,000 people• Has factories or operations in almost every country in the world

The Indian Story• 1912: Began trading as The Nestlé Anglo-Swiss Condensed Milk Company (Export) Limited, importing and

selling finished products in the Indian market.• set up its first factory in 1961 at Moga, Punjab, where the Government wanted Nestlé to develop the milk

economy• Manufactures products under internationally famous brand names such as NESCAFÉ, MAGGI, MILKYBAR,

KIT KAT, BAR-ONE, MILKMAID, NESTEA ,NESTLÉ Milk, NESTLÉ SLIM Milk, NESTLÉ Dahi and NESTLÉ Jeera Raita

• In India Maggi was launched in 1980s by Nestle group of companies• Maggi had merged with Nestle family in 1947.• The brand is popular in Australia, India, South Africa, Brazil, New

Zealand, Brunei, Malaysia, Singapore, Sri Lanka, Bangladesh, Fiji and the Philippines

Offerings under Maggi brand in India:

A BRIEF HISTORY

44%

28%

14%14%

Revenue %

Milk Products & Nutrition

Prepared dishes & Cooking aids

Chocolates & Confectionaries

Beverages

India’s food consumption grows at CAGR of 5.3% to reach $230 Bn in 2013

Increasing rural consumption of instant foods

By constantly launching new products and leveraging the distribution network NIL has doubled its revenues by growing at CAGR of 20.6%

Company enjoys high brand equity. Profitability growth at 25.1% CAGR

Expected growth (CAGR CY11-13E) in prepared dishes & cooking aids (Maggi) to be 20.5% (volume growth of 17%)

A POSITIVE OUTLOOK

*Source: Research by ICICIdirect.com dated March 23, 2012

With the instant noodles market estimated at 1500 crore (FY11) the total consumption is only 1500 million packs (considering | 10/pack) thereby accounting a mere 1.3 packs/person per annum

With the segment growing at 20% p.a. and expected to reach 3200~3500 crore by 2015 consumption would only reach 2.7 packs/person per annum

In the last two years, many new players have entered the noodles category like GSK’s Foodles, ITC’s Sunfeast Yippee and HUL’s Knorr soupy noodles.

Simultaneously, most of the brands have been launched in different variants like multi grain, masala and atta noodles.

A survey conducted by Nielsen shows that Maggi’s market share has fallen by around 15 percent since the launch of these new brands

Escalating competitive pressure could slightly trim NIL’s volume growth (CAGR) to 17.0% and the price led growth to 3.0%,

Volume growth in CY11 has been 7.7% as against average 14.2% in the previous five years

Maggi brand is feeling a disconnect with the new generation customers who now have more choices for indulgence other than noodles

SHIFT IN LANDSCAPE

*Source: Research by ICICIdirect.com dated March 23, 2012 www.valueresearchonline.com

CURRENT BREAKFAST MARKET

2011 2012 2013 2014 2015 20160

200400600800

1000120014001600

Packaged breakfast market (Crores)

Packaged breakfast market (Crores)

• There is a steady growth in the number of households adopting new breakfast categories at around 30% and the penetration of breakfast cereals has doubled*

• Marketers estimate that this handsome growth rate will only increase, with key drivers being growing affluence, double-income couples and increasing acceptance of non-Indian foods.*

• Market for Oats was estimated at 150Cr in 2012. By considering growth rate in the segment, by 2016 this market can grow to 577Cr**

Source: *Times of India report dated July 11,2011 **Times of India report dated June 21,2012

StrengthsHealthyTime savingPortableFlexibility in usage

WeaknessesRequirement of steam / hot waterHigh distribution network requiredPerceived to be tasteless

OpportunitiesIncreasingly health conscious audienceMicrowave skepticsNeed for convenience foodLesser number of players

ThreatsLow entry barriersHighly established competitorsCurrent breakfast trends

SWOTNestle to enter Oats market

PRODUCT The attributes of the product

PRICE

PROMOTION

The marketing strategies and what needs to be conveyed

PLACEDistribution techniques

FORAY INTO OATS MARKET

The pricing strategy

BCG Matrix : Nestle

NescafeCerelac

MiloMaggi SauceMaggi SoupKit-KatNestle MilkOats

Maggi Noodles NesteaMilky BarMunch

Relative Market Share

Gro

wth

rate

High Low

Low

Hig

h

PRODUCT

Objective: To identify the essential attributes and values that consumers look for in a breakfast productMethodology: Conjoint analysis based on questionnaire and ladder technique based on FGD

As the initial market share would be low, Oats product would be in the ‘question mark’ quadrant. As it gains popularity it is expected to move to ‘star’ or ‘cash cow’ quadrant

CONJOINT ANALYSIS LADDERING TECHNIQUE

RESULTThe product features: Brand name, Nutrition and ConvenienceValue to be delivered: Sense of belonging, Self esteem, Accomplishment and Responsibility

PRODUCT:CONJOINT ANALYSIS

Each respondent is asked to rate the intent to purchase based on the following parameters:• Brand Name (B)• Nutrition (N)• Form (F)• Taste (T)• Convenience/Minutes to cook (M)• Price (P)Base case:• Brand – Kellogg's• Nutrition- High• Form- Snack bar• Taste- Sweet• Convenience- 0 min• Price- High (> Rs.130)

S /N Brand Form Nutrition Value (% of RDA)

Taste Time to Cook (in

mins) Price

Your Preference

Rating 1 Quaker Snackbar High Sweet 0 High 2 Kelloggs Porridge Medium Salty 5 Medium 3 Britannia Porridge Low Spicy 2 Low 4 Saffola Additive High Salty 5 Medium 5 Saffola Porridge Medium Spicy 5 Low 6 Kelloggs Snackbar Low Salty 0 Medium 7 Quaker Porridge High Sweet 2 High 8 Britannia Porridge High Sweet 5 High 9 Quaker Snackbar Medium Salty 0 Medium

10 Kelloggs Porridge High Sweet 5 Medium 11 Britannia Snackbar Low Sweet 0 Low 12 Saffola Porridge Low Salty 2 High 13 Kelloggs Additive Low Salty 2 Low 14 Quaker Porridge Medium Sweet 5 Medium 15 Britannia Additive High Spicy 2 Medium 16 Quaker Snackbar Medium Spicy 0 High 17 Kelloggs Porridge High Salty 2 Low 18 Kelloggs Snackbar Medium Sweet 0 High 19 Britannia Porridge High Sweet 5 Medium 20 Quaker Porridge Medium Salty 2 Medium 21 Quaker Snackbar High Spicy 0 Low 22 Britannia Additive Low Salty 5 Low

Rule of thumb for sample sizenta/c > 1000

n : no: of respondentst : no: of tasksa : no: of alternativesc : largest no: of level for one attribute

PRODUCT:CONJOINT ANALYSISModel Summary

Model R R Square Adjusted R

Square

Std. Error of

the Estimate

1 .952a .928 .698 .86753

a. Predictors: (Constant), Pl, Bs, M2, Bk, Fa, Nm, Tp, Nl, Pm,

M5, Ta, BbANOVAa

Model Sum of

Squares

df Mean

Square

F Sig.

1

Regression 67.177 15 4.478 5.951 .018b

Residual 4.516 6 .753    Total 71.693 21      

a. Dependent Variable: Rat

b. Predictors: (Constant), Pl, Bs, M2, Bk, Fa, Nm, Tp, Nl, Pm, M5, Ta, Bb

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 6.111 .824   7.419 .000

Bk -1.076 .868 -.397 -1.240 .048

Bb -1.027 1.120 .669 -.918 .383

Bs -1.613 1.239 -.459 -1.302 .032

Fa 1.395 .938 .446 1.486 .171

Fp 1.256 .563 .195 1.067 .249

Nm -.147 .821 -.257 -.179 .062

Nl .092 .994 .934 .093 .928

Ta -.831 1.012 -.139 -.821 .433

Tp .292 1.056 .102 .277 .788

M5 .916 1.006 .965 .910 .386

M2 .486 .803 .188 .605 .056

Pm .490 .890 .200 .551 .595

Pl -.074 .981 -.029 -.075 .942

a. Dependent Variable: Rat

Each respondent is asked to rate the intent to purchase based on the following parameters:• Brand Name (B)• Nutrition (N)• Form (F)• Taste (T)• Convenience/Minutes to cook (M)• Price (P)Base case:• Brand – Kellogg's• Nutrition- High• Form- Snack bar• Taste- Sweet• Convenience- 0 min• Price- High (> Rs.130)

Standardized

Coefficients

B Std. Error Beta

(Constant) 6.111 0.824 7.419 0

Bk -1.076 0.868 -0.397 -1.24 0.048

Bb -1.027 1.12 0.669 -0.918 0.383

Bs -1.613 1.239 -0.459 -1.302 0.032

Fa 1.395 0.938 0.446 1.486 0.171

Nm -0.147 0.821 -0.257 -0.179 0.062

Unstandardized Coefficients t Sig.

Healthy Taste and Variety

Affordable

Sense of Belonging

Self Esteem Accomplishment: more from life

Responsibility

ConvenienceFast to cook

Saving time Shortage of time

Relax More work

Meeting ObjectivesSelf

Satisfaction

Good for bodyFunSatisfaction

Stress Buster

Inc. Concentration

Time for other activities

Save Money

•3 rounds of FGD with 10 respondents who indicate oats as their preferred breakfast• Laddering technique used to elicit response from participants (Attribute->Consequence->Value)

PRODUCT:LADDERING TECHNIQUE

•Price is not an important factor for products in this segment (breakfast) as understood from conjoint analysis•Pricing based on existing competitor’s offerings

PRICING

PROMOTION

Television• Ads which show the entire family consuming oats : children, parents and

grandparents• Scope to show the different variants of the product, catering to different segments

Print• Ads in health magazines such as Health, Stay Fit, Diabetic Living etc

Publicity• Press conference depicting the dual health+taste benefit of oats• Nestle’s history of expertise and innovation to be highlighted to create goodwill

Sales promotion• Consumer franchise building promotions • Sampling in schools, gymnasiums and retail stores (breakfast bars)

Place Advertising• Point of purchase advertising in the form of attractive posters in stores• In store strategies for effective product placements in retail outlets

• IMC to aim at overcoming the consumer perception about the negative correlation between taste and health • Focus on the values of accomplishment and self esteem which can be traced back to the attributes of health and

convenience

PROMOTION

Social media is becoming a huge part of our culture with Facebook fan pages, apps etc.

Customers now have more power to express their opinion and share their experience with their online social circles

Each one of your customer has a circle of 250 people – Thanks to the influence of social media

Special Occasion menus with oats on the website or Facebook page – to attract first timers

Regular updating with special offerings and promotions and sampling of new product, detailed customer feedback & review section

Social Media can be leveraged to build Word of Mouth publicity perceived as the most trusted source of advertising

PLACE

• Nestle ’s distribution channel to be leveraged• Can be introduced in tier one cities initially• Trade promotions in the form of financial incentives or discounts given to retailers, distributors, and

other members of the trade to stock, display, and in other ways facilitate the sale of the product can be given to push retail sales