AProject Repot

on“BRANDING”

(Case study of MAGGI as a Brand)

Under the Guidance of- Prof. Nikhil Rao.

Project By

JAYSHREE KATKARXMBA-09

ITM, VashiRoll No. VA09MBA09P03

CONTENTS

• Brand• Brand Building• Brand Equity• Brand Personality• Brand Repositioning• Case Study-Maggi

What is Brand ?

A brand is the identity of a specific product, service, or business. A brand can take many forms, including a name,sign, symbol, color combination or slogan. The word brand began simply as a way to tell one person's cattle from another by means of a hot iron stamp. A legally protected brand name is called a trademark.

The word brand has continued to evolve to encompass identity - it affects the personality of a product, company or service.

A brand is the name of a particular business enterprise. There are several reasons why a brand is important. A brand can help to differentiate a particular company from others in a market.

The brand is the sum total of the consumer's impressions about the product and service. The less distinctive these impressions, the greater the risk that a competitor's products or services may gain a stronger perception—and competitive advantage.

Brand management is a process that combines various techniques and strategies that go into making a particular brand. Marketing plans are important parts of the process. Since brands are essential to the success of the company it is important to work hard at the creating a brand.

Famous Brand-

Brand Building

It has been noticed that brand loyalty is an important factor in maintaining the number one position. The fact that brands are a part of the company equity is now a universal concept, however what this awareness implies has not yet been fully analyzed. As is often the case, phrases such as ‘brands are our equity’ become company leitmotivs. The truth is that, when taken at its word, this brand equity awareness has actually revolutionized operational marketing.

Brand Equity is imperative for a company to succeed in today's market to have a decent brand development system in place.

Brand equity involves both the component value of a brand and brand value. Brand equity enhances the value of a product and creates a positive environment for the company to increase prices.

Brand Equity is defined as the aggregation of two aspects of a product. The first being the component value of a Brand i.e a product value prior to marketing. The second is brand value I.e. the increased value of a product due to branding.

Branding has been shown to transform the perceived value of a product by making it well known to customers through aggressive promotion and marketing. It has been observed that this transformation infuses a value into the name and consequently increases its price.

There are many apparel companies for a product in domestic as well as foreign markets. But only a few have qualified themselves as a brand . Clearly, the price range of these well known brands is much higher than the others. The main factor behind this price differential is the added brand value. Thus, brand equity of such product includes its component as well as the brand value.

Brand equity refers to the intangible value that accrues to a company as a result of its successful efforts to establish a strong brand. A brand is a name, symbol, or other feature that distinguishes the company's goods or services in the marketplace. Consumers often rely upon brands to guide their purchase decisions.

The positive feelings consumers accumulate about a particular brand are what makes the brand a valuable asset for the company that owns it.

Many companies structure their marketing programs around building and preserving their brand equity. "To be a strong brand, a company must instill a clear, unwavering consumer perception of the distinctive emotional or functional benefits of its products and services,"

Building Brand Equity

The basis of brand equity lies in the relationship that develops between a consumer and the company selling the products or services under the brand name. A consumer who prefers a particular brand basically agrees to select that brand over others based primarily on his or her perception of the brand and its value. The buyer may even pay a higher price for the company's goods or services because of his commitment, or passive agreement, to buy the brand. In return for the buyer's brand loyalty, the company essentially assures the buyer that the product will confer the benefits associated with, and expected from, the brand.

In order to benefit from the consumer relationship allowed by branding, a company must painstakingly strive to earn and maintain brand loyalty. Building a brand requires the company to gain name recognition for its product, get the consumer to actually try its brand, and then convince the buyer that the brand is acceptable. Only after those triumphs can the company hope to secure some degree of preference for its brand.

Name awareness is a critical factor in achieving brand success. Companies may spend vast sums of money and effort just to attain recognition of a new brand. But getting consumers to recognize a brand name is only half the battle in building brand equity. It is also important for the company to establish strong, positive associations with the brand and its use in the minds of consumers. The first step in building brand equity is for the company to define itself and what it hopes to represent for consumers. The next step is to make sure that all aspects of the company's operations support this image, from its product and service offerings to its marketing programs to its customer service policies. When all of these elements support a distinctive image of the company and its products in the minds of consumers, the company has established brand equity.

Measuring and Protecting Brand Equity

Although measuring brand equity can be difficult, it can also provide managers with a good indication of their company's future profitability. "Companies which develop good measures of their brand equity have an early warning indicator of likely future profit trends, and can get a much better feel of the dangers of short-termism," Mitchell noted. "If brand equity is

falling, you're storing up trouble for yourself…. If brand equity is rising, you're investing in future performance, even if it's not showing through in profits today. Real business performance therefore equals short-term results plus shifts in brand equity."

Unfortunately, measuring brand equity is not as simple as counting the number of people who recognize a brand name or symbol. It is also dangerous to assume that simply because its brand is well-known, a company enjoys strong or growing brand equity. In fact, the most powerful brands can easily be diluted by company missteps or inconsistent marketing messages. Mitchell explained that the best way to measure brand equity depends on the particular company and its industry. For example, in some cases assessing consumer perceptions of product quality may provide the best indication of brand equity. In other cases, more traditional business measures such as customer satisfaction or market share may be more closely correlated with brand equity.

Finding an appropriate measure of brand equity is vital in order for companies to ensure that they protect this valuable asset. In his Risk Management article, Knapp claims that managers must remain constantly vigilant to protect their brand equity, since a declining brand image poses a significant risk to company earnings. If a brand loses its distinctive image in the minds of consumers, then the branded product becomes more like a commodity and must compete on the basis of price rather than value. Customer loyalty decreases, which has a corresponding negative effect on market share and profit margins. In order to prevent this decline, Knapp recommends that companies consider the impact of major decisions on consumer perceptions and brand equity. Every action taken by management—including the introduction of new products or advertising strategies, or the decision to lay off employees or relocate a factory—should be assessed for its effect on brand equity.

Brand Repositioning:-

Brand Repositioning - changing the appeal of a brand in order for it to attract new market segments; brand repositioning may or may not involve modifying the Product . Brand Repositioning is an attempt to change consumer perceptions of a particular brand.

Repositioning is a change, principally about triggering the vision, mission and values in a new direction that is more suited for the brand in future.

The location of a brand in relation to its competitors in some pre-defined space. The space may be defined by criteria used by consumers, such as "value for money" or "age of consumer" etc.”

Following are main factors that plays an important role in defining a brand repositioning.

1. Brand Attributes -What the brand delivers through features and benefits to consumers.

2. Consumer Expectations -What consumers expect to receive from the brand.3. Competitor attributes -What the other brands in the market offer through

features and benefits to consumers.4. Price -An easily quantifiable factor – Your prices vs. your competitors’

prices.5. Consumer perceptions -The perceived quality and value of your brand in

consumer’s minds (i.e.,does your brand offer the cheap solution, the good value for the moneysolution, the high-end, high-price tag solution, etc.?)

Brand Personality –

Brand Personality is a set of human characteristics associated with a brand. Personality is how the brand behaves. Gender, age, socio-economic class, psycho graphic, emotional characteristics. Following are few examples-

• Marlboro is masculine while Virginia slims is feminine.

• IBM is ‘Older’ while Apple is ‘ Younger’.

• India Today is ‘old fashioned’ while Out Look is ‘trendier’.

• Coke is ‘confirming’ while Pepsi is ‘irreverent’.

Brand Personality, is like human personality, is both distinctive and enduring. In other word brand personality’s is weighted average of previous impression. In consumer’s mind, these impressions merge to form overall concept of what to expect from brand.

Importantly, brand personality is often a sustainable point of differentiation. Sustainable because it is very difficult to copy a personality.

Brand Personality is eagerly searched by brand strategies and researches. Differences in responses from different consumers provides useful insights.

Personality traits are what the brand will live and die for. Activities such as events sponsored by the brand will influence its personality. Ponds sponsoring Femina ‘Miss India’ contest. Pepsi sponsoring Cricket matches.

A symbol can be the powerful influence of the brand personality since it can be controlled and can have extremely strong association. e.g –

a) Apple’s bitten apples. b) Nike swoosh c) Metlife’s peanuts characteristics.

The personality that’s represents a functional benefits or attribute may be relatively ineffective if it lacks a visual image established in consumer’s mind. A country or region of origin can add credibility to an identity. It can generate a strong personality that provides a quality cue and a key point of differentiation.

The Maggi Brand in India

Case Background

Nestle India Limited is the market leader in Indian Noodle Market with it’s Maggi Brand of Noodles which was pioneer brand launched in 1983 in the packaged food market of India. It took the challenge and established Maggi in Indian market considered to be conservative and typical about food consumption. It appropriate realization of target segment, effective positioning and effective promotion and sales made Maggi to Noodles in India as Xerox it to photocopier.

NIL had introduced sauces, ketchups and soups under Maggi brand to reap benefit of brand popularity and image and contribute to financial gains by 1990.Maggi also became successful in sauces, ketchups and soups Market in India. Though NIL tried to extend to other ready to eat products like pickles, cooking aids and paste, It was unsuccessful so dumped those products. Maggi Brand of products sustained recession in 2000 and 2001 in India by introducing economy packets.

To fulfill novelty needs of customers and revitalize Maggi Noodles Brand NIL made different attempts by introducing new formulation to new taste but customers resisted change and Maggi had to reintroduce Maggi Noodles in same taste. Maggi Noodle had till 2005 five product line on noodles with four variant in Maggi 2 Minutes Noodle. In 2006 in compliance with NIL target to be “health and Wellness Company” Maggi repositioned it as health and taste food products. NIL has also introduced with taste and product line in Sauces and Soup Market under Maggi to catch new segment, revitalize brand, compete with other producers and fulfill expectation of customers.

In 2005 Maggi brand worth was 3.7 billion from 1.7 billion market worth in 1.7 billion in 2003. Maggi Noodle is Market leader with around 80% market share in Noodles/Pasta and Maggi Sauce is market leader with almost 37% of market share in 2005 in 1.8 billion market of India. Knorr has taken over Maggi in Soup market recently.

In 2005 Maggi was the highest spender in the Promotion and Sales in the Indian Market in the Noodles Category.

Maggi is competing with Heinz Sauces and Ketchup, Knoor Soups, Kissin Sauces and Ketchup, Top Ramen, Sunfeast Pasta Wai Wai and 2 PM in corresponding categories of products and variants

Maggi Comes to India – teething troubles Maggi noodles was launched in India in the early1980s. Carlo M. Donati, the present Chairman and Managing Director of Nestle India Ltd, brought the instant noodle brand to India during his short stint here in the early eighties. At that time, there was no direct competition.

The first competition came from the ready-to- eat snack segment which included snacks like samosas, biscuits or maybe peanuts, that were usually ‘the bought out’ type.

The second competition came from the homemade snacks like pakoras or sandwiches. So there were no specific buy and make snack! Moreover both competitors had certain drawbacks in comparison. Snacks like samosas are usually bought out, and outside food is generally considered unhygienic and unhealthy.

The other competitor, ‘homemade’ snacks overcame both these problems but had the disadvantage of extended preparation time at home. Maggi was positioned as the only hygienic home made snack! Despite this, Nestlé faced difficulties with their sales after the initial phase.

The reason being, the positioning of the product with the wrong target group. Nestle had positioned Maggi as a convenience food product aimed at the target group of working women who hardly found any time for cooking.

Unfortunately this could not hold the product for very long. In the course of many market researches and surveys, the firm found that children were the biggest consumers of Maggi noodles. Quickly they repositioned it towards the kids segment with various tools of sales promotion like colour pencils, sketch pens, fun books, Maggi clubs which worked wonders for the brand.

Why the specific Brand positioning? Maggi was positioned as ‘2-minute noodles’ with a punch line that said ‘Fast to cook! Good to eat!’ And this gave the implied understanding to the consumer that it was a ‘between meals’ snack. The company could have easily positioned the product as a meal, either lunch or dinner. But, it chose not to do so, because the Indian consumer mindset did not accept anything other than rice or roti as a meal. Hence trying to substitute it with noodles would have been futile. The firm did not position it as a ‘ready-to-eat’ meal either, as the housewife prefers to ‘make’ a meal for her kids rather than buy it for them. And if she can make it in two minutes with very little effort, then obviously it’s a hit with her! What’s more, if kids also love the taste, the product is as good as sold! So the ‘2-minute’ funda coupled with the ‘yummy taste worked!

BRAND STORY Launched in 5 flavors initially – Masala, chicken, Capsicum, sweet & sour, and Lasagna – Maggi had to fight hard to be accepted by Indian consumers with their hard-to-change eating habits. The packaged food market was very small at this time, Nestle had to promote noodles as a concept, before it could promote Maggi as a brand. It therefore devised a two-pronged strategy to attract mothers on the ‘convenience’ plank and lure kids on the ‘fun’ plank. Gradually, the market for instant noodles began to grow. The company also decided to focus on promotions to increase the brand awareness. In the initial years, Nestle promotional activities for Maggi included schemes offering gifts( such as toys and utensils) in return for empty noodles pack.

According to analysits the focus on promotion turned out to be the single largest factor responisible for Maggi’s rapid acceptance. Nestle\’s Managers utilized promotions as measured to meet their sales target. Gradually, sales promotion became a crutch for Maggi noodles sales. Later many of the Maggi’s extensions also made considerable use of promotional schemes. The focus of all Maggi’s extensions was more on below the line activities rather than direct communication. In addition to promotional activities, Maggi associated itself with main stream television programme and advertised heavily on kids programme and channels. After its advertisements with taglines like “mummi bhookh lagi hai, bas do minute” and fast to cook good to eat Maggi’s popularity became highly

attributed to its “extremely high appeal to children”. As a result, Maggi’s annual growth reportedly touched 15% during its initial years.

Key Issues

• How Nestle India Limited is ahead in Noodles Market with brand Maggi since 1982

• How NIL extended it’s brand and line of products to leverage the brand and established Maggi as family brand.

• NIL’s positioning and repositioning strategy to catch market and consumer expectation.

• How to continue NIL capability to Maintian Point of Difference ( POD) and Point of Party (POP) while bradn extension and repositioning.

• Maggi’s challenge to protect it’s market leader position in situations where there is emergence of competitors like Hindustan Lever Limited, Indo Nissan, ITC, Dabur India, Heinz are competing with their corresponding brand on the product category.

BCG Martix ( Maggi Brand Products in 2006 )

STARQUESTION ?

CASH COWDOG

Relative Market Share

STARS : Maggi Noodles is the market leader with 80 % market share in Noodles Market and Maggi Sauces and Ketchup is leader with 37 % market share. Theproducts are producing cash for the company consistently. The Market is growing by 15 % in the Product Category of Noodles.

QUESTIONS ? : Maggi Soups is the category which is in Question mark as the market is growing and the brand as less market share then market leader Knorr brand of Hidustan Lever Limited. There are more chances for Maggi Soups to go to dog it does not stay competitive and increase market share in the category.

10 %

20 %

0 %10 x 1 x 0.1x

Maggi Noodles

Maggi Sauces

Maggi Soups

Market growth rate

SWOT Analysis of Maggi as Brand

Strengths

Established Family BrandStrong Global Corporate Brand ( NIL )Specialization in food processing category marketing and distribution in Urban

marketPresence of other product segments of food category : Dairy Products,

Chocolate, Infant foods Pioneer and Leader so 1st mover advantage in Noodles, Sauce, Ketchups and

Soup market.Nestle symbolization of warm, family & shelter.Research and Development Division in IndiaNew Noodles Plant in Uttarnchal

Weakness

• Generic Brand to Noodles in India• Low rural market presence constraints• Uniform Brand for all food category• Brand Proliferation

Opportunities

• Growing package and canned food market in India by 15% annually.• High brand awareness of Indian consumer • Other product category like Biscuits, Chips and Ready to Eat Market still

unexplored.• Opportunity to be substitute to other snacks category of food products.

Threats

• Competitors with long history in product category Internationally like, Heinz Sauce and ketchups of Heinz Indian, Top Ramen in Noodle and

• Knorr Soups.• Single product focused competitors like Heinz sauce and Wai Wai Noodles.• Less Entry Barriers in the Market segment for product category • ITC’s strong base in Indian Market.• Substitute Product to Product Segment.

Possible Alternatives :-

Strengthen and use the Distribution : NIL should focus on distribution channels and use of the distribution channel to expand it’s market to Rural India with products targeted to the market. It is the way it could increase it’s volume of sales.

Increase the Usage of Maggi Brand Products: Since Maggi Noodles and Maggi Sauce is market leader it has to adopt strategy to increase the usage of the product to protect it’s market share. As it cannot further grow sales drastically in the same segment, only way is to increase product usage like Noodles for breakfast Ketchups in biscuits.

Lunch Health Awareness Promotion Campaign : NIL should launch Health Awareness campaign to educate consumers about the benefits of health food. It could sponsors health camps, publish health information.

Enter into other product category like Biscuits, Chips and Snacks with New Brand : To enlarge it’s domain, NIL should enlarge it’s product segment. It would spread economies of scale to customers in the form of price.

BEST COURSE OF ACTION

Introduce different new brand or acquire emerging brand in biscuits, chips and snacks category.

Maggi though has been able to differentiate itself from other Noodles, Maggi being taken as generic to Noodles is hampering other extended product category. Competitors have high grounds to capture the market differentiating then from being Maggi. It makes others possible product category vulnerable if lunched under Maggi. So to avoid proliferation of brand and introduce new products to capture opportunities in other snacks and ready to eat product category NIL has to introduce new branding strategy.

As pasta of ITC has been seen as products capturing the market of noodles and Maggi failing to lunch pasta under Maggi brand also support the argument for new brand introduction by NIL.

As Indian Market is Brand conscious, other competitors are coming up with more Indianized brand of products, and as Indian being more aware of their culture and large segment being typical and conservative about their culture, there care more chances that NIL would be successful if it create a brand close to Indian culture in wording to positioning. As India is growing, Old Indian Brands are also regaining momentum worldwide, NIL could catch the trend of market.

By doing so, NIL could avoid the draw backs associated with the Maggi brand. It could position new brand in competition with other competitor’s brand where there is no fit of product with the Maggi brand.

NIL other option is acquiring products manufacturers of different products like biscuits, chips and snacks as it is very essential for it’s market leader position. Other companies have advantage of such products. ITC has biscuits to it, Hindustan Lever has tea to it. India is huge market where distribution advantage plays major role and economies of scale pays back. So it’s is important for NIL to concentrate on other ready to eat category to benefit consumers from economies of scale reflect in price.

Repositioning of Maggi

Nestlé India Ltd. (NIL), the Indian subsidiary of the global FMCG major, Nestlé SA, introduced the Maggi brand in India in 1982, with its launch of Maggi 2 Minute Noodles,an instant noodles product.

With the launch of Maggi noodles, NIL created an entirely new food category - instant noodles - in the Indian packaged food market. Because of its first-mover advantage, NIL successfully managed to retain its leadership in the instant noodles category even until the early 2000s.

Over the years, NIL extended the Maggi brand to a variety of culinary products like soups, sauces and ketchups, and cooking aids among others. However, these product extensions were not as successful as the instant noodles. In 2005, NIL started offering a range of new 'healthy' products under the Maggi brand, in a bid to attract health-conscious consumers.

This case looks at the various phases in the product life cycle of Maggi noodles in India. It talks about the various measures taken by NIL to keep the Maggi brand fresh in the minds of Indian consumers. The case also talks about the various extensions of the Maggi brand and tries to analyze why only the sauces and ketchups category, among all the other product extensions, managed to succeed.

Maggi became successful because it understood consumers . The brand never wanted to change Indian consumer's habit. It did not had ambitions about changing Indian's breakfast or dinner preferences. What Maggi did was to slowly attach itself to Indian consumer's need without disruption.

Maggi was also closely watching consumer preferences. When consumers wanted healthy food, Maggi launched Atta Noodle variants that was healthy . More importantly this move addressed the concerns of Homemakers. The brand extended itself to multiple segment but without diluting the core brand equity.

Maggi did change the masala [taste maker]few years back and sales declined and the company was forced to go back to the old masala and nestle ran an add campaign ,that old taste is back.

The resultant yellow masala-flavoured spongy strands were wolfed down by us and before you could say noodles, Maggi became a quintessential Indian food. As a consumer, Maggi has been part of numerous memorable experiences of my life. From being a midnight snack to helping with early hours of mugging for exams to eating plates of cheese and ‘anda’ Maggi at the night canteen after an evening of drunken revelry.

From hot Maggi after getting drenched in the rain to it being the first cooking experience for numerous youngsters when the folks were away. From carrying

packets of it on a trek to carrying packets for friends who live abroad (they insist that the Indian flavours are unique). Everyone, rich or poor, has his or her own Maggi tale to tell.

As an observer of branding and advertising too, the brand’s a shoo-in for the India Marketing Hall of Fame, if such a hall were ever to be constituted. For starters this was the brand that pioneered the entire category of packaged food in India. Not easy in a country where freshly cooked food was the norm.

The outstanding sampling exercise apart, the first commercial for the brand was one of the most memorable commercials of its time (from that great ad agency of the 1980s, HTA Delhi). It was probably the first example of Hinglish in a mainstream commercial — from the opening ‘Mummy bhook lagi hai’ to the tag line that went ‘Fast to cook and good to eat, Maggi makes a tasty treat’ and ‘two minutes’ became a part of the popular lexicon.

It further discusses the measures taken by NIL to reposition Maggi as a 'health product'. The case ends with a discussion whether NIL would be successful in sustaining this new image for Maggi in the market.