Brand Extension: Maggi

BRANDING STRATEGY
It reflects the number and the nature of the common and the distinctive brand elements a firm applies to the products. Choices for the branding strategies: 1. Development of new brand elements for new products. 2. Application of the existing brand elements. 3. Combination of the above.

BRAND EXTENSION
When a firm uses an established brand to introduce a new product, it is called brand extension. The combination of the new brand with the existing brand creates a sub-brand.

Types of brand extension:

1. Line Extension 2. Category extension

BRAND EXTENSION
ADVANTAGES: DISADVANTAGES:

New product acceptance

Facilitates marketing communication. Low cost of introductory launch campaign. Improves customer loyalty and credibility of the company.

Causes brand dilution

Failure of the extended brand can dilute parent brand equity Shift of emphasis from the core business. Can lead to preemptive cannibalization.

Improves customer loyalty and credibility of the company

Inability to create a new brand with unique brand identity.

SUCCESS OF BRAND EXTENSION

Evaluation of success of the extended brand: Advertising campaign emphasizing the product rather than the parent brand. Market penetration of the parent and the extended brand. Evaluation of the existing brand equity. Contribution to the parent brand equity. Perception of fit between the parent and the extended brand based on production or situational complementarities.

BRAND PORTFOLIO

It is the aggregation of all the brands and the brand lines a firm can offer in a market category or segment. Advantages of a good brand portfolio: Increasing shelf presence. Attracting consumers from other brands. Yielding economies of scale. Increasing internal competition within the firm.

1. 2. 3. 4.

MAGGI-A BRIEF OUTLINE

Brand Maggi was launched in India in 1983 by Nestle India with its flagship product: Maggi noodles. Flavors offered included: chicken, masala, capsicum, lasagna, sweet and sour.

Competitors: It enjoyed a first mover advantage in the segment. Competition from homemade and ready-to-eat outside snack items were rife. It was portrayed as a clean and nutritious substitute for the ready-to-eat snacks.

TARGET MARKETING AND POSITIONING

It had a catchy tagline: fast to cook and good to eat. Noodles was portrayed as a helping hand for the working women who had little time to cook healthy food. The brand was positioned for the working women but children were the biggest consumers, causing initial failure. Early Brand repositioning: It developed the 2 pronged convenience-fun strategy. Sales promotion was done by offering freebies for empty containers and packs.

Marketing Mix

Product

Ready to cook meal Variants for different segments Advertising focused on kids Distributing free samples initially. Sponsoring cookery shows Differentiated packaging Lower price strategy Wide Distribution network, spread across Kirana stores, retail outlets etc

Promotion

Price

Place

Marketing Strategies Adopted

Segmentation Age Eating habits youth Lifestyle of urban families

Targeting Kids Youth Office goers, working people

Positioning Mummy bhookh Lagi 2-minute noodles Taste bhi health bhi

Differentiation Taste Flavor Packaging

Product Lifecycle
Introduction

High Marketing and Production Costs Promotion focus on awareness and information

Growth

Increasing sales and profits Entrance of competition with Top Ramen

Mature

Extending and introducing new product lines Repositioning as healthy products

Maggis Food Family

Noodles Maggi 2 minute Maggi Aata Noodles Maggi Rice Noodles Maggi Vegetable Aata Noodles Maggi Cuppamania Sauces Teekha Masala Tomato Chatpat Imli Khatta Meetha Tomato Ketchup Hot & Sour Tomato Pudina Oriental Chilli Garlic Soup Cream Mushroom Sweet n Sour Tangy Tomato Creamy Chicken Mixed Vegetable Rich Tomato Soup Sanjivani Amla Badam Spinach Dal Tomato

Other Extensions Bhuna Masala ( Both for Gravy and Dry Dishes ) Maggi Magic Cubes ( Chicken & Vegetable Seasoning )

Problems with Noodles Market

1993 First Variant of Maggi Huge Advertisement 75% of yearly expenditure

Maggis Soup story in Soup

Maggi Soups launched in early 1990s

1996 - Knorr entered the market with extensive distribution and heavy marketing. Knorrs substantial share in a very short span of time.

Instance 1 : Maggi v/s Indian Taste

In 1995,

Tied up with Pune based Chordia Foods to launch pickles Tied up with Indian Food Fermentation, Chennai based company to market popular south Indian food preparations in consumer packs

1996

Luke warm response from the market for both the ventures Maggi had failed to deal with Indian Food Category

Optimist Maggi set target of 25000 tonnes , could meet just 14000 tonnes. Adding to woes Maggis Tonite Special, a range of cooking sauce failed miserably

Instance 2: Macaroni a Failed Experiment

Vision

Kids who had grown up on maggi had become teenagers They seemed to move away from a product associated with childhood New Product to lure them back

July 1997, Maggi launched Maggi Macaroni

Backed by multimedia advertisement campaign Tag Line Tum Roz Baby

Problem 1

75 gm pack priced at Rs 11 as against 100 gm pack of maggi noodles at 9 Customers failed to see any noted value addition No significant difference between Magi Macaroni and much cheaper macaroni available in the unorganized sector. Problem with the taste Macaroni being thicker, did not absorb the tastemaker well and thus did not taste well

Problem 2

Results

Sales began tapering off Nestle WITHDREW the product completely out of the market.

The Thing that clicked ..!!

Amidst all this One thing did exceptionally well for Maggi

Maggis Its Different Brand

Launched with a series of humorous commercial *ing

Javed Jaffery and Pankaj Kapoor

Maggi Ketchup and Sauce became the leaders in the segment Faced threats from brands like Kissan in late 1990s But survived and continued to do well..

Relaunch
Core Brand Maggi Products after some alterations were relaunched in 2001 In July 2001,Maggi replaced Nescafe as Nestl's Core Brand New Focus Focus was on Maggi so as to provide new impetuses to the culinary segment of the company New Variants Launched a Tomato and Curry flavoured noodles in 2001 Also launched a Tamarind flavoured Imli Sauce the same year

Strategic Brilliance
Countering Recession During recession Maggi came up with small packs of noodles priced cheaply at Rs5 Reworking Distribution Company overhauled its distribution channel so as to increase availability of its products and make it more accessible to consumers Tapping New Market Maggi aggressively distributed its products in small towns all over India Boosted sales of new smaller packs

Milestones achieved by Maggi

Dominance By 2003, India had emerged as the largest consumer of Maggi Noodles across all Nestl markets in the world. Maggi Noodles had, in fact, become synonymous with instant noodles in India. High Brand Value Maggi brand had an estimated value of Rs. 1.7 billion and was contributing almost 9 per cent to NIL's total revenues in 2003 Maggi-The Brand Despite the growing competition, Maggi Noodles managed to remain the leader in the instant noodles segment. In 2003, it led the instant noodles segment with a market share of 80 per cent while Top Ramen remained a distant second with a 19 per cent market share

Competition
Top Ramen Knorr Wai Wai

In July 2003, Top Ramen introduced a new product called Cup Noodles which was positioned as a 'between-meals' snack

. In October 2003, HUL launched Knorr Annapurna Soupy Snax 16, available in four variants, at an affordable price of Rs. 5 per pack. This product too, was pitted against NIL's Maggi Noodles as a 'between-meals' snack, and was targeted at all age groups, particularly office-goers

Wai Wai, which had a major presence in the northeastern region of India, was yet another player in the instant noodles segment.

Competition
Heinz Knorr Maggis response

In 2004, Heinz (which had entered the sauces market in 2000) shed its premium tag by bringing down the price of its ketchup by as much as 30 per cent. This had an impact on Maggi Sauces as their market share came down to 39.7 per cent during the period of January to September 2004, from 41.9 per cent for the same period in 2003

. In October 2003, HUL launched Knorr Annapurna Soupy Snax 16, available in four variants, at an affordable price of Rs. 5 per pack. This product too, was pitted against NIL's Maggi Noodles as a 'between-meals' snack, and was targeted at all age groups, particularly office-goers

However, NIL did not resort to any pricecutting measures. Instead, it increased the advertising for Maggi sauces and ketchups. In 2004, NIL signed on Ranvir Shorey and Vinay Pathak, popular television personalities in India, to promote Maggi sauces

Competition

Despite the growing competition, Maggi Noodles managed to remain the leader in the instant noodles segment. In 2003, it led the instant noodles segment with a market share of 80 per cent while Top Ramen remained a distant second with a 19 per cent market share Despite competition, Maggi constitutes of around 42% of the total indian sauce market followed by kissan at 26%.

Brand Repositioning

Nil introduced Maggie, in 1982 at that time consumer were conservative and preferred traditional Indian dishes. NIL was trying to create new food category, instant noodles in India, initially company targeted working women as Maggie noodles was fast to cook and offered convienience but it failed, NIL conducted research which revealed that children liked Maggie and were biggest consumers.

After this NIL shifted focus from working women and targeted children and their mother through marketing. NIL positioned noodles as convince product for mother and fun product for children The noodles tagline Fast to cook and good to eat was also in keeping with this repositioning. With time NIL changed tagline from Bas 2 minutes to Healthy bhi, tasty bhi and this has hit Indian consumers.

Repositioning-2005

Introduced Maggi Vegetable Atta Noodles

To meet the new needs of the Indian consumer who now wants to include health and wellness in their foods in a convenient manner
Contributed 11% value in the first seven months

2006 Launched Dal Atta Noodles combination of whole wheat and dal (pulses)

Outlook

Food and Beverage Survey by FICCI in Feb 2006:

Health foods, health food supplements, convenience foods and branded foods are the rapidly rising segments of F&B Industry Market for branded food products growing at a rate of 15% in early 2000s Reasons for growth: changing lifestyles, eating habits, increasing purchasing power of middle income group

Future

Tap consumer wants further. Launch products that have good potential for growth. leverage the parent company's expertise for innovative insights into further developing the brand. Nestl worldwide spends a lot of money on R&Dto give consumers what they want in terms of taste, health and convenience. At the end of the day consumers don't buy strategy but good products.

Suggestion

Focus more on the core brand i.e. Maggi 2 minutes noodles.

Spend on R&D and promote as health product. Further penetrate the rural market Introduce innovative products with different brand name i.e. go for multi-branding strategy.