Product life cycle of maggi

1. PRODUCT LIFE CYCLEPRODUCT LIFE CYCLE
PRESENTED BY
VISHAL KUMAR

2. Product Life CycleProduct Life Cycle
 There are four stages to the LifeThere are four stages to the Life
CycleCycle
IntroductionIntroduction
MaturityMaturity
GrowthGrowth
DeclineDecline

3. Graph of a Product Life Cycle

4. Product Life CycleProduct Life Cycle
What is a Sales CurveWhat is a Sales Curve
Is the up and down sale of unitsIs the up and down sale of units
throughout a products Life Cyclethroughout a products Life Cycle

5. Product Life CycleProduct Life Cycle
 Introduction StageIntroduction Stage
Sales are generally low and somewhat slow to take off
Production costs are high because of significant
scale economies
Marketing costs for costumer awareness,
interest and trial are high
Profits are low, because to low sales
Competitors tend to be few in number

6.  High failure ratesHigh failure rates
 •• No competitionNo competition
 •• Frequent product modificationFrequent product modification
 •• Limited distributionLimited distribution
 •• High marketing and production costsHigh marketing and production costs
 •• Promotion focuses on awareness and informationPromotion focuses on awareness and information
 •• Nestlé India Ltd. (NIL), the Indian subsidiary of the global FMCG major,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 ofNestlé SA, introduced the Maggi brand in India in 1982, with its launch of
Maggi 2 Minute Noodles,Maggi 2 Minute Noodles,
 an instant noodles productan instant noodles product
 •• With the launch of Maggi noodles, NIL created an entirely new foodWith the launch of Maggi noodles, NIL created an entirely new food
category - instant noodles - in the Indian packaged food market. Becausecategory - instant noodles - in the Indian packaged food market. Because
of its first-mover advantage, NIL successfully managed to retain itsof its first-mover advantage, NIL successfully managed to retain its
leadership in the instant noodles categoryleadership in the instant noodles category

7. Product Life CycleProduct Life Cycle
 GrowthGrowth
– Sales increase rapidlySales increase rapidly
Positive word of mouthPositive word of mouth
Increasing number of competitorsIncreasing number of competitors
Promotion effectPromotion effect

8. Product Life CycleProduct Life Cycle
 GrowthGrowth (continued)(continued)
– Costs are declining because of longerCosts are declining because of longer
production runs due to increased salesproduction runs due to increased sales
– Profits are increasing significantlyProfits are increasing significantly
– Customers are the early adopters (theCustomers are the early adopters (the
word of mouth people)word of mouth people)
– Competition continues to growCompetition continues to grow
throughout this stagethroughout this stage

9.  Increasing rate of salesIncreasing rate of sales
 •• Entrance of competitorsEntrance of competitors
 •• Initial healthy profitsInitial healthy profits
 •• Promotion emphasizes brand adsPromotion emphasizes brand ads
 •• Prices normally fall • Development costs are recoveredPrices normally fall • Development costs are recovered
 •• 10 yrs. back it enjoyed around 50% market share in this segment which was10 yrs. back it enjoyed around 50% market share in this segment which was
valued at around 250 crores.valued at around 250 crores.
 •• During the 1990s, the sales of Maggi noodles declined, due to growingDuring the 1990s, the sales of Maggi noodles declined, due to growing
popularity of Top Ramen , another instant noodles product.popularity of Top Ramen , another instant noodles product.
 •• In order to improve sales , NIL changed the formulation of Maggi noodles inIn order to improve sales , NIL changed the formulation of Maggi noodles in
1997.1997.
 •• However, this proved to be a mistake, as consumers did not like the taste of theHowever, this proved to be a mistake, as consumers did not like the taste of the
new noodles.new noodles.
 •• In March 1999, NIL reintroduced the old formulation of the noodles, afterIn March 1999, NIL reintroduced the old formulation of the noodles, after
which the sales revived. Over the years, NIL also introduced several otherwhich the sales revived. Over the years, NIL also introduced several other
products like soups and cooking aids under the Maggi brand.products like soups and cooking aids under the Maggi brand.

10. Product Life CycleProduct Life Cycle
 MaturityMaturity
– Sales continues to grow in the earlySales continues to grow in the early
stages of maturitystages of maturity
– Costs continue to riseCosts continue to rise
– The only remaining customers to enterThe only remaining customers to enter
the market are the Late majority andthe market are the Late majority and
the laggardsthe laggards (Those most hesitant to adopt new products)(Those most hesitant to adopt new products)
– Competition is the most intenseCompetition is the most intense

11.  Declining sales growthDeclining sales growth
 •• Saturated marketsSaturated markets
 •• Extending product lineExtending product line
 •• Stylistic product changesStylistic product changes
 •• Heavy promotions to dealers and consumersHeavy promotions to dealers and consumers
 •• Prices and profits fallPrices and profits fall

12. Product Life CycleProduct Life Cycle
 DeclineDecline
– Sales continue to deteriorate throughSales continue to deteriorate through
declinedecline
– Profits continue to erode during thisProfits continue to erode during this
stagestage
– Customers are primary laggardsCustomers are primary laggards
– Generally are a significant number ofGenerally are a significant number of
competitors still in the industry at thecompetitors still in the industry at the
beginning of the decline stagebeginning of the decline stage

13.  Long-run drop in salesLong-run drop in sales
 •• Large inventories of unsold itemsLarge inventories of unsold items
 •• Elimination of all nonessential marketing expensesElimination of all nonessential marketing expenses
Rate of decline depends on change in
tastes oR adoption of substitute pRoducts