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maggi noodles

  1. 1. Submitted By:ABHISHEK SRIVASTAVA 002BEENA VENUGOPALAN 012JOTINDER SINGH 022NISHANT DHORELIYA 032 RADHA A 042SOUBHAGYA RATH 052YOGESHWAR DUTT 062
  2. 2. EXECUTIVE SUMMARYNestlé India is a subsidiary of Nestlé S.A. of Switzerland. With six factories and a largenumber of co-packers, Nestlé India is a vibrant Company that provides consumers in Indiawith products of global standards and is committed to long-term sustainable growth andshareholder satisfaction. The company is known for its brands in the Milk Products &Nutrition, Prepared Dishes & Cooking Aids, and Chocolates & Confectionery segments.Nestlé leads the value sales of noodles in India with a market share of 79.3%. A testament toNestlés domination of the sales of plain noodles is the fact that for its instant noodles brandMaggi, among all its global offices, India accounts for the highest level of volume sales forthe company.This marketing plan analyses the current marketing mix of Maggi Noodles, studies thepopularity of the two new health variants Vegetable Atta and Dal Atta Noodles and makessuggestions with regard to introducing a new brand “Cup O Maggi” in the cup noodlessegment. Various tools like surveys and secondary sources of information have been utilizedfor the purpose of this analysis.
  3. 3. TABLE OF CONTENTS2. SITUATION ANALYSIS..................................................................................................... 5 2.1 Market Summary............................................................................................................ 5 2.1.1 TARGET MARKETS ........................................................................................... 5 2.1.2 MARKET DEMOGRAPHICS ............................................................................. 5 2.1.3 MARKET NEEDS ................................................................................................. 6 2.1.4 MARKET TRENDS .............................................................................................. 6 2.1.5 MARKET GROWTH............................................................................................ 8 2.2 SWOT............................................................................................................................ 10 2.3 COMPETITION........................................................................................................... 11 2.3.1 TOP RAMEN ....................................................................................................... 11 2.3.2 ITC SUNFEAST PASTA .................................................................................... 11 2.4 CURRENT MAGGI NOODLES BRAND................................................................... 12 IDENTITY/KAPFERER’S PRISM................................................................................... 12 2.5 PRODUCT OFFERING .............................................................................................. 13 2.6 PRODUCT DISTRIBUTION ...................................................................................... 13 2.7 KEYS TO SUCCESS.................................................................................................... 14 2.7 CRITICAL ISSUES AND CHALLENGES ................................................................ 143. MARKETING STRATEGY............................................................................................. 15 3.1 MISSION...................................................................................................................... 15 3.2 MARKETING OBJECTIVES ..................................................................................... 15 3.3 INDUSTRY SEGMENTATION .................................................................................. 16 3.4 TARGET SEGMENTS FOR MAGGI NOODLES ..................................................... 22 3.4.1 MAGGI 2 MINUTE NOODLES ........................................................................ 22 3.4.2 MAGGI CUP O NOODLES ............................................................................... 23 3.5 POSITIONING OF MAGGI ....................................................................................... 23 3.5.1 MAGGI 2 MINUTE NOODLES ........................................................................ 23 3.5.2 CUP O MAGGI.................................................................................................... 234. MARKETING MIX .......................................................................................................... 24 4.1 CONSUMER SOLUTION ........................................................................................... 24 4.1.1 IMPROVING THE DAL ATTA VARIANT..................................................... 24 4.1.2 NEW PRODUCT: THE CUP-O-MAGGI ......................................................... 24 4.1.3 PACKAGING ...................................................................................................... 24 4.2 CONSUMER COST ..................................................................................................... 25 4.3 CONVENIENCE.......................................................................................................... 26 4.4 COMMUNICATION.................................................................................................... 27 4.5 MARKETING RESEARCH ........................................................................................ 285. FINANCIALS .................................................................................................................... 31 5.1 BREAKEVEN ANALYSIS OF A 100 TONNE CAPACITY PLANT OF CUP O MAGGI NOODLES ........................................................................................................... 31 5.1.1 BREAK-EVEN ANALYSIS................................................................................ 31 FINAL TOTAL COST ANALYSIS ............................................................................ 33 5.1.2 ANALYTICAL BREAK-EVEN ANALYSIS.................................................... 33 5.1.3 GRAPHICAL BREAK-EVEN ANALYSIS ...................................................... 34 5.2 SALES FORECAST..................................................................................................... 34APPENDIX A: INDIAN INSTANT NOODLES MARKET GROWTH GRAPHS ........ 36APPENDIX B: NESTLE MAGGI NOODLES FORECAST RETAIL SALES .............. 37
  4. 4. 1. INTRODUCTIONEver since its launch in India in 1983, this brand has become synonymous with noodles. Thebright red and yellow colours of the packet with the brilliant blue “2-minute Noodles”printed on it has found a place on every kitchen. Over the years, Maggi has grown as a brandand positioned itself as a “Fast to cook! Good to Eat! “food product.The history of this brand traces back to the 19th century when industrial revolution inSwitzerland created factory jobs for women, who were therefore left with very little time toprepare meals. Due to this growing problem Swiss Public Welfare Society asked a millernamed Julius Maggi to create a vegetable food product that would be quick to prepare andeasy to digest. Julius, the son of an Italian immigrant came up with a formula to bring addedtaste to meals in 1863. Soon after he was commissioned by the Swiss Public Welfare Society,he came up with two instant pea soups & a bean soup- the first launch of Maggi brand ofinstant foods in 1882-83.Towards the end of the century, Maggi company was producing notjust powdered soups, but bouillon cubes, sauces and other flavourings.However in India (the largest consumer of Maggi noodles in the world!) it was launched in1980 by Nestle group of companies. Maggie had merged with Nestle family in 1947.When launched it had to face a stiff competition from the ready to eat snack segments likebiscuits, wafers etc. Also it had other competitor the so called home made snacks which aretill today considered healthy and hygienic. Hence to capture the market it was positioned as ahygienic home made snack, a smart move. But still this didn’t work, as it was targetedtowards the wrong target group, the working women.After conducting an extensive research, the firm found that the children were the biggestconsumers of Maggi noodles. Quickly a strategy was developed to capture the kids segmentwith various tools of sales promotion like pencils, fun books, Maggi clubs which workedwonders for it. No doubt the ads of Maggi have shown a hungry kid saying “Mummy bhookhlagi hai” to which his mom replies “Bas do minute!” and soon he is happily eating Maggienoodles. Further the MAGGI 2-MINUTE Noodles has been renovated to provide 20% of theRDA 1 of Calcium and Protein for the core target group building on the nutrition proposition“Taste bhi health bhi”. The company could have easily positioned the product as a meal, butdid not, as a study had shown that Indian mentality did not accept anything other than rice orroti as meal. They made it a easy to cook snack that could be prepared in just two minutes.The formula clicked well and Maggi became a brand name.1 Recommended Dietary Allowances for children of 7–9 years as per “Nutritive Value of Indian Foods”, published by IndianCouncil of Medical Research, Reprinted ‘04.
  5. 5. 2. SITUATION ANALYSISNestlé’s Maggie noodles is the leading brand in the instant noodles segment in India, enjoyinga market share of 79.3%. The brand has grown to an estimated Rs 200 crore & contributes toaround 10% of Nestle India’s top line. Being the pioneer in the noodles market has given it afirst mover’s advantage over other brands. Maggi has regularly come up with new flavoursand has recently launched two variants- Vegetable Atta and Dal Atta noodles, catering to theincreasing demand for healthy snacks.2.1 Market Summary2.1.1 TARGET MARKETSPrimary target: Children (<16)Nestle plans to widen its target audience by launching new variants Vegetable and Dal attanoodles for health conscious people.2.1.2 MARKET DEMOGRAPHICSDemographics:Region: urban, semi-urban, rural (recent)Occupation: Housewives, working professionals, self-employedSex : UnisexIncome: 1,20,000 p.a. upwardsSocial class: Middle and upwardsFamily life cycle: Young, single, married with children.Behavioural:Occasions: Regular, Everyday user-urban, rural-depends on the temporal aspects of theconsumer’s life(varied usage in terms of time of time of day, week, month, year)User status: first time user-rural, potential users-semi-urban, heavy users-urbanUsage rate: Heavy user-urban, light-rural, medium-semi-urbanLoyalty status: hard core and shifting loyalsBuyer-Readiness Stage: rural-some are aware, semi-urban:some intend to buy(aware,informed),urban: informed(some desire,some intend to buy)Attitude toward product: Enthusiastic, positivePsychographics:Lifestyle: Hard pressed for time
  6. 6. 2.1.3 MARKET NEEDSThe urban Indian is used to having his dinner late from around 8:30 pm to as late as 11 pm.Hence a convenient snack between lunch and dinner is an often exercised option. In ruralareas, smaller priced packs stimulates demand.Maggi is a fun and convenience brand which sits strongly in its position as a "good to eat, fastto cook" anytime snack and is popular across different age groups. Opportunities inpractically all consumption categories arise in terms of "reach" and "medium ofconsumption". Hence the onus is on the company to make it easily available and affordableand in different sizes, catering to different categories of users like the new Maggi chota packconveniently priced at Rs 5 for 50gms. The Indian palate is not too adventurous in terms oftrying out new flavours.In fact today, Maggi have settled at standard flavours such as curry,masala, tomato and chicken and not much experimentation is necessarily required in thenoodles market. People prefer to have it easily available and affordable.2.1.4 MARKET TRENDS The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level is only 30% for Maggi Noodles in urban areas as well as per capita consumption for the Instant noodles and pasta segment is low indicating the untapped market potential. Urban Rural Population 2005-06 (mn household) 53 135 Population 2009-10 (mn household) 69 153 % Distribution (2005-06) 28 72 Markets (Towns) 3,758 62,700 Universe of Outlets (mn) 1 3.3 Urban profile Source:Statistical Outline of India (2005-2006) Burgeoning Indian population, particularly the middle class segments and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer upgrading in the matured product categories. At 4% constant value CAGR into the forecast period, value growth for packaged food is predicted to remain healthy. Growth will continue to be fuelled by convenience products such as noodles and ready meals with 200 million people expected to shift to processed and packaged food by 2010 Manufacturers are introducing low-priced goods in smaller pack sizes. As a result, the rural marketing efforts have pushed the demand for sachets in many consumer goods
  7. 7. markets. Priced at Rs0.50-1.00, sachets have proved to be extremely popular insmaller towns and villages, where households cannot afford to buy larger packs dueto financial constraints. Consumption pie Source: KSA Technopak Consumer Outlook 2004.An average Indian spends around 40 per cent of his income on grocery products. 1996 2001 2006Population (millions) 846 1,012 1,087Population <25 years of age 480 546 565Urbanisation % 26 28 31 Consumer Profile Source: Statistical Outline of India (2005-2006)Rapid urbanisation, increased literacy and rising per capita income, have all causedrapid growth and change in demand patterns, leading to an explosion of newopportunities. Around 45 per cent of the population in India is below 20 years of ageand the young population is set to rise further.While instant noodles are still not generally consumed as main meals in India, moreindividuals are bucking this trend and accepting them as an option. This is, however,mostly restricted to busy working adults who live independently or only with theirspouse, away from their parents, and who have little time to prepare their own mealsat home. Given the requirements for convenience and saving time, these individualsresort to easy-to-prepare meals, such as instant noodles.Increased health consciousness and abundant production of quality soyabean alsoindicates a growing demand for soya food segment.
  8. 8. 1200 1000 800 600 Incom e (US $/annum ) 400 200 0 2003 2015 Rise in disposable income (US$/annum) Source:Euro monitor, BRICs Report (Goldman Sachs) The BRICs report indicates that Indias per capita disposable income, currently at US$ 556 per annum, will rise to US$ 1150 by 2015 -another demand driver. Spurt in the industrial and services sector growth is also likely to boost the urban consumption demand. Only about 8-10 per cent of output is processed and consumed in packaged form, thus highlighting the huge potential for expansion of this industry. Currently, the semi processed and ready to eat packaged food segment has a size of over US$ 70 billion and is growing at 15 per cent per annum. FICCI Federation of Indian Chambers of Commerce and Industry has predicted an overall growth of culinary products/snack food (10%)2.1.5 MARKET GROWTHGeneral growth of the Indian Noodles sector FY 2005-2006 FICCI states that the culinary products and snack category, under which Maggi noodles is classified, has had a robust growth of 8%. Growing by a more than robust 21% in current value and 16% in volume, growth in noodles will be among the fastest in the various packaged food products in India. (Refer Appendix A: Indian Instant Noodle Market Growth Graphs) Current value sales of noodles in stood at slightly over Rs 9 billion, with pouch instant noodles accounting for more than 66% of the total value sales.Growth of Maggi Noodles FY 2005-2006 For the FY 2005-2006, the growth of Maggi noodles was an impressive 15%, with sales at Rs 6.75 billion and profit at Rs 2 billion.
  9. 9. Maggi Market Share in Instant Noodles Category 79.5 79 Market Share (%) 78.5 78 77.5 77 2000 2001 2002 2003 2004 2005 2006 Maggi Market Share in Instant Noodles Category (2000-2005) Source: Euromonitor International Packaged Food in India May 2006 It has maintained a market share of around 78% despite increasing competition. The relative performances of the Maggi variants has been presented using the BCG matrix The Boston Consulting Group’s Growth-Share Matrix High STARS QUESTION MARKS ( MAGGI Veg Atta Noodles) (MAGGI Chicken, Dal Atta Noodles)MarketGrowthRate CASH COW DOGS (MAGGI Masala flavour) (MAGGI Tomato, Curry Low flavours) High Low Relative Market Share
  10. 10. 2.2 SWOTStrengths Weakness Strong brand recall and the product is Tagged as a product having no health value. almost eponymous to the brand. It has tried to bring in innovation but has Market leader with 79.3% market failed.(Dal Atta Noodles refer survey share in terms of value. noodles). Highest advertising share(72% (TV The product features have remained almost AdEx 2004-05)). constant since inception in 1983 with any Emotional relationship with the trial of innovation misfiring. consumer. Market share has fallen from the 80% in A strong distribution network of the 1998-99 to 79.3% in 2005-06. parent company Nestle.Opportunities Threats The instant noodles segment is Competition is increasing with established projected to grow at a tremendous competitors in other segments are foraying rate with the market size doubling by into the noodles segment seeing the 2010. capacity of growth. Increase in the potential consumer Top ramen the prime competitor has come base i.e. single working professionals up with new exciting instant noodle and student population offerings like cup noodles and mug noodles Rapid economic growth and rising which threatens to eat into Maggi’s market disposable incomes make a strong share. case for a premium brand like Maggi. Foreign players like Wai Wai and Rum Upward trend of convenience food Pum have forayed into the noodles market consumption. and have made their brand presence in Huge untapped serviceable upward eastern markets while indigenous class rural base. Parle is threatening to offer their distribution network to international noodle brands wishing to make an entry. Top Ramen has repositioned itself on a health platform with a new baseline “Get on Top” fortifying its product with calcium and vitamins. The product as priced higher than its main rival Top Ramen.
  11. 11. 2.3 COMPETITION2.3.1 TOP RAMENDont be a noodle, be a Smoodle, was the ad that brought the Top Ramen brand intolimelight when it was launched in 1991.Market share FY 2005-2006: 14%Variety:a) Packet Noodles: Macho Masala, Funky Chicken, Oye Tomato, Curry Smoodles.b) Cup Noodles: Spicy Vegetable, Tangy ChickenPackaging and Pricing: Pack Size Price Top Ramen (gm) (Rs) Packet Noodles 50 5 100 10 400 34 Cup Noodles 80 20Distributor: Marico IndustriesDistributor strength: About 130000USP: Dont be a noodle, be a Smoodle, innovative flavours and its cup noodles2.3.2 ITC SUNFEAST PASTAITC launched Indias first instant pasta snack, Sunfeast Pasta Treat in 2005. Made from highprotein Durum wheat, Sunfeast Pasta Treat is not fried and does not contain maida, making ita nutritious snack. This ready to cook pasta comes with a sauce maker inside the pack.
  12. 12. Market share FY 2005-2006: The ready-to-eat Sunfeast Pasta Treat has clocked 6% of thebranded noodles volume in just one year.Variety: It is currently available in four exciting flavours: Masala, Tomato and Cheese, SourCream Onion and Cheese.Pricing: priced at Rs. 12/- for the Masala flavour and Rs.15/- for Tomato and Cheese, SourCream Onion and Cheese.Packaging: Each pack is an 83 gm pack with a 15 gm sauce makerDistributor: ITC LimitedUSP: Sunfeast is made from durum wheat and is promoted as a healthy alternative to instantnoodles made from the less healthy maida (a type of wheat flour that is slightly lower inquality).2.4 CURRENT MAGGI NOODLES BRAND IDENTITY/KAPFERER’S PRISM Physique Personality Yellow packaging, Playful children, Tasty Hurried youth Relationship Culture Fast to cook and good to Maggi Noodles Family, eat, Dual Income, “Mummy bhookh lagi”, “Taste bhi health bhi Self Image Reflection Kid, Family oriented Independence Fun-loving
  13. 13. 2.5 PRODUCT OFFERINGMaggi Noodles comes in 4 variants: 1. MASALA: This is the original and most widely liked flavour of Maggi and hence has been brought out in 6 different packaging sizes; the maximum in any variant 2. CHICKEN 3. CURRY 4. TOMATO 5. VEGETABLE ATTA NOODLES: Launched in April 2005, this variant had contributed to 11 per cent in value to the instant noodle category within 7 months of its launch; this was the beginning of the “Taste bhi Health bhi” focus 6. VEGETABLE DAL ATTA NOODLES: Continuing the healthy snacks trend, this variant was launched in May 2006. Pack Size Price MAGGI 2 Minute Noodles (gm) (Rs) Masala 50 5 100 10 200 20 400 38 600 54 800 72 Chicken 100 10 Curry 100 10 Tomato 100 10 Vegetable Atta Noodles 100 13 400 50 Vegetable Dal Atta Noodles 100 13 400 50 Variants, Packaging, Prices Source: Nestle India2.6 PRODUCT DISTRIBUTIONMaggi Noodles is being sold through 2,60,000 outlets (FY 2005-2006), which comprise ofgrocers, convenience stores, supermarkets and miscellaneous channels. The average Indianstill prefers shopping through the traditional grocers or “kiranas” as can be inferred from thehigher distribution of 62.8%.The rising popularity of the “mall-culture” in the urban andsemi-urban areas also reflects on the slight increase in distribution through supermarkets /hypermarkets. Channel 2005 2006 Traditional grocers 63.0 62.8 Convenience stores 20.0 20.0 Supermarkets/hypermarkets 16.6 16.8 Others 0.4 0.4 Overall 100.0 100.0India Dried Pasta & Noodles off-trade distribution channels, by value, 2005-2006 (%) Source: Denis Mason, Datamonitor
  14. 14. 2.7 KEYS TO SUCCESS Maggi has had the first mover advantage with respect to the Instant noodles segment in the Indian market. Continued innovation in terms of flavours and themes – from an ordinary 2 minute bite to a healthy snack.2.7 CRITICAL ISSUES AND CHALLENGES To sustain its growth and maintain its position as the leader in the Instant Noodles segment: Nissin’s Top Ramen and recently ITC’s Sunfeast pasta have been eating into Maggi Noodles’ market share of the Instant Noodles Market. To be increasingly viewed as the preferred snack of Indians.
  15. 15. 3. MARKETING STRATEGY3.1 MISSIONTo be considered as the number one snacking option of India combining the values ofconvenience, taste and health.3.2 MARKETING OBJECTIVES Increase value market share to 80% in the instant noodles market by 2007-08 from the current 79.3%. To promote Maggi noodles as a healthy ready to eat convenient food among mothers and single working professionals. To provide line extension by introducing Cup Noodles/Mug Noodles. To upgrade the existing product features viz. packaging, ingredients, special additives based on consumer feedback. The objectives were arrived at based on the analysis of Ansoff’s Grid. ANSOFF’S PRODUCT/MARKET EXPANSION GRID Existing products New products MARKET PENETRATION PRODUCT DEVELOPMENT Existing Markets ( Upgrade existing variants of (Introduce new variants of MAGGI) MAGGI) New MARKET DEVELOPMENT DIVERSIFICATION Markets (Finding new markets for (Launch totally new variants of existing variants of MAGGI) MAGGI in totally new markets)
  16. 16. 3.3 INDUSTRY SEGMENTATION The taste preferences and eating habits of consumers bear a high correlation with their age. Based on this, we can segment the market into the following age groups: 1990 1995 2000 2005 2010 2015Children: (2-9 years old) 169,999 181,521 187,940 189,211 184,457 184,376Tweenagers: (10-14 years old) 89,781 100,560 109,302 114,583 117,137 114,226Teenagers: (13-19 years) 120,293 127,645 142,432 153,781 160,728 162,495Studying Age: (18-22 years old) 80,812 85,918 92,074 103,179 110,642 115,126Young Adults: (15-29 years old) 230,839 249,149 270,576 294,103 319,267 336,193Middle-Aged Adults: (30-59 years old) 243,295 277,343 316,065 358,164 398,405 440,655Baby Boomers: (40-59 years old) 134,212 151,646 174,986 202,754 232,801 261,349Pensioners: (aged 60+) 57,029 65,643 75,712 86,585 99,728 117,168 Age wise break up and forecast of the population Source: UN census data, Euromonitor database Age wise break up of the population (2005) 86,585 189,211 202,754 Children: (2-9 years old) 114,583 Tweenagers: (10-14 years old) Teenagers: (13-19 years) Studying Age: (18-22 years old) 153,781 Young Adults: (15-29 years old) Middle-Aged Adults: (30-59 years old) 358,164 103,179 Baby Boomers: (40-59 years old) Pensioners: (aged 60+) 294,103 Agewise Breakup of Population, 2005 1) CHILDREN Children as an age group are a marketer’s delight. With “pester power” children play a significant role in decision making and purchase choices of just about anything ranging from food items to beverages to chocolates. As consumers, children know exactly what they want and do not experiment too much with flavour or colour. Children rule Indian families consider children to precious gifts of God, and parents in all income groups do all they can for their offspring. Indian parents are still not completely comfortable with paid
  17. 17. baby sitters or day care help and use the larger extended family or friends to help with careand supervision of children.Rush for pre-school admissionsThroughout urban India, parents of nursery age children are looking to send them in the bestprivate school they can afford. Pre-schools for toddlers in the 2-3 age group are mushroomingall over the country, as anxious parents recognise the perceived benefits these can bring.000 1990 1995 2000 2005 2010 2015Male 87,953 93,797 97,055 97,624 95,041 94,897Female 82,046 87,724 90,885 91,588 89,416 89,478TOTAL 169,999 181,521 187,940 189,211 184,457 184,376as % of 20.29 19.67 18.63 17.37 15.82 14.88totalpopulation Children (2-9 years old) 1990-2015 Source:Euromonitor International from national statistics and UN2) TWEENAGERSThe tweenagers age group consists of children on the threshold of adolescence and as asegment are a difficult lot. Though they are not sure about their choices on an emotionalplane, they are a trendy new group that is extremely savvy and self assured when it comes totaking decisions regarding consumer goods and wants. Urban children in this age groupwould have some amount of pocket money with an upper limit of Rs100 per month. Thoughallowances have gone up, parental control still exists over this market segment. Impulse foodsrule the preference scale as far as the buying behaviour of tweenagers in India is concerned.In fact, the top six expense items for tweenagers seem to be impulse foods: 17% of the totalpocket money spent on ice creams, 12% on chocolates and 10% each on soft drinks and fastfood according to a newspaper report in the “The Times of India”.A key role to play in decision makingWith increased awareness through television and advertising, tweenagers are an importantinfluence on family decision-making in urban India. They have also mastered the art ofnagging their parents into making purchases of gadgets or products that they want. Among theareas where they make their influence felt are the purchase of such items as a newly launchedchocolate bar, instant noodles and breakfast cereal.With a penchant for hi-tech and an ease with new technology far superior to their parents,these tweenagers are more familiar with operating mobile phones, the TV remote, DVDplayer and computer programmes, as well as the product features.Cricket-crazy boysCricket is the obsession and passion of boy tweenagers in India. This interest cuts acrossincome and socio-economic groups. Low income boys will play on the streets with makeshiftbats and stumps, middle-income children can be seen playing in gardens and at school, whileboys from more well-to-do families go and play in organised coaching camps. With theireducation demanding less time at this age, parents are generally quite happy to see their boysspending so much time on cricket.
  18. 18. Lifestyle concerns in urban IndiaA 2005 study of 10-16 year olds in urban India revealed a sedentary lifestyle among 72% ofthe 20,000 children sampled by Lifetime Wellness Rx Ltd in the cities of Allahabad in thenorth and Hyderabad in the south. Of those sampled, 52% of children showed a risk ofdeveloping chemical dependence, with the problem probably attributable to a scarcity ofplaygrounds and too much TV viewing.Even television channels are zeroing in on this segment in recognition of this fact. There isnothing subtle about the age group any more. They like to hear it straight and then make theirindependent choices and judgements. On the flip side, they are becoming increasinglyvulnerable to media blitzkrieg.000 1990 1995 2000 2005 2010 2015Male 46,682 52,240 56,672 59,329 60,571 58,960Female 43,098 48,320 52,630 55,254 56,565 55,266TOTAL 89,781 100,560 109,302 114,583 117,137 114,226as % of 10.71 10.90 10.84 10.52 10.04 9.22totalpopulation Tweenagers (10-14 years old) Source: Euromonitor International from national statistics and UN3) TEENAGERSOn the brink of adulthood, teenagers like to emphasize and express themselves in a mannerthat catches attention. They have experimental with their food with a preference towardsinnovative offerings but form strong opinions which they carry forward in life. They are alsopredisposed towards snack items as they tend to feel hungry between traditional meals. Theyhave a lot of say about the food that they want to consume with limited parental control.Mobile phonesThis is the mobile phone generation in India. They are completely at ease with newtechnology and are heavy users of value-added services like SMS, ring tone downloads andcricket score updates. Most still depend on their parents for pocket money but are heavy usersof these services. In many urban, middle-income households teenagers are now given a pre-paid SIM card with a certain value for the month, in addition to allowances for travel andentertainment.Hard pressed for timeTeenagers like buying books, music and expensive branded footwear, as well as watchingfilms and socialising with friends. Older college-going teenagers high school pupils tend tofrequent coffee bars, which are a relatively new focal point for socialising. Teenagers are alsoamong the regular users cinema multiplexes and entertainment zones.This age group is extremely conscious of their facial and physical looks. They are expected tofuel demand for skin care products as well as health and nutrition-related goods. Urbanteenagers are far more socially active today and find some difficulty in balancing their schoolroutines with their personal schedules.
  19. 19. 000 1990 1995 2000 2005 2010 2015Male 62,853 66,433 74,027 79,765 83,246 84,033Female 57,440 61,212 68,405 74,017 77,482 78,462TOTAL 120,293 127,645 142,432 153,781 160,728 162,495as % of 14.35 13.83 14.12 14.12 13.78 13.11totalpopulation Teenagers (13-19 years old) Source: Euromonitor International from national statistics and UN4) STUDYING AGEA rise in the number of colleges and institutions of higher learning both government ownedand privately financed has enabled a larger number of youth to graduate from their portals.This population grew since 2000 but is set to stagnate in the forecast period with couplesactually postponing the child bearing decision and some even rejecting the idea of having oneat all. This age group has taken up to snacking as a way of life as they keep missing regularmeals due to erratic schedules. They have longer waking hours and due to this the traditionalthree meals does not suffice with the need for filling snacks.Rising financial freedomWith growing aspirations on the academic front and shrinking global boundaries this agegroup has an unquenchable thirst for information whether through their PCs or cell phones.With a rise in employment opportunities in the Business Process Outsourcing (BPO) sector,more and more consumers in this age group are juggling jobs along with their studies for thesake of the financial freedom it gives them.Summer jobsUntil the 1990s, summer vacations were a time to relax, read and catch up with friends. Thisis no longer the case. Now, teenagers either find a summer job, or undertake activities such asa trek in the mountains, river rafting or rock climbing. Summer jobs may cover a range ofactivities from delivering newspapers to working in a restaurant.000 1990 1995 2000 2005 2010 2015Male 42,311 44,932 47,947 53,651 57,402 59,638Female 38,501 40,986 44,127 49,528 53,240 55,489TOTAL 80,812 85,918 92,074 103,179 110,642 115,126as % of 9.64 9.31 9.13 9.47 9.49 9.29totalpopulation Studying age (18-22 years old) Source: Euromonitor International from national statistics and UN5) YOUNG ADULTSYoung adults (15-29 years old) represent the largest spending segment in the country.Youngsters are part of a middle-class boom in India. Of the US$30 billion spent by Indians onthemselves in 2003, young adults spent close to US$10.5 billion with their spending levels
  20. 20. rising 12% each year at twice the pace of the economy’s growth according to various tradepress publications. Young adults grew 8% in numbers over the 1999-2004 period and is likelyto grow at approximately the same pace.Rising disposable incomesCollege graduates and students still studying are landing well-paying jobs in a host ofemerging industries that barely existed at the start of the new millennium – retail chains, fastfood restaurants, mobile phone companies, call centres and data processing firms. Many haveaccess to disposable incomes of Rs8,000-10,000 per month thanks to the BPO boom in India.This age group still does not have responsibilities of running a household, marriage or worryabout their children’s education. Thus, this income is almost entirely spent on non-essentialitems. Most purchases made by this age group are on impulse. There are 16 million urbanconsumers in the 20-25 age group.Need for convenienceMany single working professionals have to live away from their parents due to the demand ofthe jobs. This yuppies (young upwardly mobile professionals) class has a hard time preparingfood and for them convenience is major issue. They are ready to pay a premium for qualityand convenience. Also always being on the move they have a need for food item that can beeasily consumed and disposed of.000 1990 1995 2000 2005 2010 2015Male 120,916 130,305 141,223 153,026 165,790 174,236Female 109,923 118,843 129,353 141,077 153,477 161,957TOTAL 230,839 249,149 270,576 294,103 319,267 336,193as % of 27.55 27.00 26.83 27.00 27.38 27.13totalpopulation Young adults (15-29 years old) Source: Euromonitor International from national statistics and UN6) MIDDLE-AGED ADULTSThese middle aged men have strict preferences over food and they generally stick to theirchoices. They experiment less and go for products that will enhance their social status.The women in this age group are ones who the primarily buy food items for the entirehousehold though their choices are shaped by the preferences of the household members. Thewomen in this segment play an important role as most of the choices of food items have topass their scrutiny before it is consumed in the household.ResponsibilitiesBetween the ages of 45 and 55, men find themselves with children who are able to leaveschool or facing crucial board examinations. Some may also have wives with settled careers.These factors make them reluctant to leave or move from their city of residence and theywould rather resign and move to another job rather than displace the family. Others findthemselves redundant in the new hire and fire labour environment. There is a trend for suchpeople to enter the BPO sector as well.
  21. 21. Mid-life career changeIn urban India, among the middle class, there are a significant number of men who are makingcareer switches, some out of choice and others out of necessity. Tired of their current salariedjobs, some are taking the entrepreneurial plunge, setting up businesses such as small IT-service firms, adventure tourism companies or leadership training consultancies.000 1990 1995 2000 2005 2010 2015Male 125,217 143,223 163,764 186,055 206,920 228,338Female 118,079 134,120 152,300 172,109 191,486 212,317TOTAL 243,295 277,343 316,065 358,164 398,405 440,655as % of 29.03 30.06 31.34 32.89 34.16 35.56totalpopulation Middle-aged adults (30-59 years old) Source: Euromonitor International from national statistics and UN7) BABY BOOMERSThe concept of baby boomers may not be that relevant to India notwithstanding the impact ofand its participation in World War II. This generation has virtually seen it all right fromIndian Independence (1947) to the Indo-Pakistan war (1965). However, having been born inan age of constrained resources, this segment is somewhat cautious about its approach toconsumerist tendencies although it is adopting some of them. For example, a number usemobile phones for their functional use but frown on the use of credit cards and buyingbranded clothing.Health-related products, children’s education, automobiles, retirement planning, insuranceproducts and vacations form the bulk of their expense.000 1990 1995 2000 2005 2010 2015Male 68,010 77,278 89,882 104,720 120,490 135,142Female 66,202 74,368 85,105 98,034 112,310 126,207TOTAL 134,212 151,646 174,986 202,754 232,801 261,349as % of 16.02 16.43 17.35 18.62 19.96 21.09totalpopulation Baby boomers (40-59 years old) Source: Euromonitor International from national statistics and UN8) PENSIONERSIn the 1950s and 1960s, government jobs were among the few acceptable job occupations forpeople from respectable households. Changing technology and globalisation have changedthat with unconventional income opportunities now presenting themselves to Indians. Somepensioners have sought and enjoyed success in information technology-related endeavourswhilst others have put their considerable English language skills to good use in serviceindustries. Pensioners have been the hardest hit section of the population. With declininginterest rates, they have had to play a more active role in financial management. Some of
  22. 22. them are even trying to keep abreast of current happenings and learning how to use acomputer or access the Internet.There food preferences are shaped by their health conditions and they stick to their preferredfood items.Independent living on the riseFrom the 1980s onwards, there has been a steady migration of young adults and students tothe US, in search of better opportunities. Most have chosen to settle and make their lives inthat country. Therefore, their ageing parents have had to learn to continue to liveindependently.Retirement communities viewed as an optionRetirement homes were previously viewed negatively in India. If the elderly went there, itmeant they had no one to care for them, and were in a sense for the destitute elderly. In thenew urban India, however, well-appointed retirement communities are mushrooming, andcouples in their 60s are going there of their own volition.While the numbers are not yet significant, a trend is likely to increase in line with growth inthe numbers of India’s elderly. It is also now an option for the middle-income and salariedclasses. In families where there is a proprietary business, or a family practice, two-to-threegenerations will continue to live together.000 1990 1995 2000 2005 2010 2015Male 28,085 31,905 36,292 41,109 47,286 55,928Female 28,944 33,737 39,420 45,476 52,441 61,240TOTAL 57,029 65,643 75,712 86,585 99,728 117,168as % of 6.81 7.11 7.51 7.95 8.55 9.45totalpopulation Pensioners (aged 60+) Source: Euromonitor International from national statistics and UN3.4 TARGET SEGMENTS FOR MAGGI NOODLES3.4.1 MAGGI 2 MINUTE NOODLESMaggi 2 Minute Instant Noodles is already associated with convenience and taste and iscurrently accepted as a valid filling snack between meals. Maggi will continue to leverage itsbrand equity and target the following segments for this product. Children and Tweenagers: This is a large segment and is Maggi’s stronghold. The age group between 4 and 14 years has largely similar tastes and is traditionally targeted by Maggi. These segments perceive Maggi instant noodles as a welcome change in taste from the regular Indian fare and they are fascinated by the curly shaped noodles. For these segments innovative products also have novelty value, however, certain dominant preferences emerge. Realizing this early, Maggi shifted focus from the lady of the house to the end consumer i.e. children themselves ending up as the market leader of the instant noodles segment. Early buy in of this segment will help Maggi to sell in other segments in future.
  23. 23. Studying Age: The studying age segment though not traditionally targeted specifically has been devouring Maggi 2 minute noodles. The proposition of convenience of cooking as well as that of a tasty filling snack attracts this segment which due to erratic schedules keeps missing their regular meals.3.4.2 MAGGI CUP O NOODLESMaggi Cup O Noodles is Maggi’s answer to Nissin’s Cup Noodles. With reduced cookingtime of ½ a minute, ease of preparation and no need of separate plates Maggi Cup O Noodlespromises to appeal to anyone in need of a quick, convenient bite. Maggi Cup O Noodles beinga premium priced product, the segment targeted should one which is ready to pay a premiumfor a quality convenient food. The following segment promises to be the best bet. Young Adults: The growing class of affluent young adults does not mind paying higher prices for quality products. They are hard pressed for time and would pay a premium for convenience. This segment has a good top of the mind recall of Maggi as a brand as the current members of this group were the targets of Maggi in the 1980’s and they retain fond memories of Maggi, a emotional bond which can be leveraged to win them over to Maggi Cup O Noodles. This segment is growing and has the potential of accepting Maggi as a mainstream food item as they see instant noodles as a natural part of Indian food culture.3.5 POSITIONING OF MAGGI3.5.1 MAGGI 2 MINUTE NOODLESMaggi 2 Minute Noodles will continue with its current positioning of convenience and as a“fast to cook, good to eat” snack as this seems to be working well. To prevent Top Ramen,the main competitor, from eating into its market share some product innovation is required asotherwise Maggi may get stereotyped as an unexciting product.Top Ramen is following a cost differentiation technique. To deal with this Maggi has toposition itself as a differentiated product. The market is very sensitive to taste and rejects anyflavour it dislikes with Maggi having learnt it the hard way, thus the product can not begreatly differentiated with on basis of taste. On the other hand Maggi has to deal with thenegative perception of Maggi has of being unhealthy in an increasingly health consciousmarket, a major threat in the current scenario. Both these problems can be tackled bypositioning Maggi as a snack with nutritional value. The recent launch of “Veg Atta Noodles”and “Dal Atta Noodles” with the promise of good nutritional value ventures in this area.Another3.5.2 CUP O MAGGIThe main USP of Cup O Maggi is convenience without compromising on taste. Nissin’s CupNoodles is a huge hit with the consumers liking the concept of noodles served in a cup and theextra convenience of not dealing with cleaning/needing plates and the lesser time required forpreparation. Cup O Maggi is targeted towards a segment that values time and convenience aswell as is getting increasingly health conscious. So Cup O Maggi with added nutrition andwholesome components will position itself as a healthy and convenient food option that canbe had anywhere, anytime. The crux of positioning will be “Healthy Snack Anywhere,Anytime”.
  24. 24. 4. MARKETING MIX4.1 CONSUMER SOLUTIONThe instant noodles segment of Maggi is the market leader in its segment. Available in 4flavours, the Masala flavour is the hot favourite by a huge margin followed by MaggiVegetable Atta and Tomato flavour. The Maggi Dal Atta variant shows a poor response.4.1.1 IMPROVING THE DAL ATTA VARIANTMaggi Dal Atta variant ranks really low on taste as suggested by the Marketing ResearchSurvey. The existing Sambar taste doesn’t go too well with consumers even from the southIndian market. For which we plan to replace the existing Tastemaker with a SpicierTastemaker to go with the traditional Spicy Indian taste.4.1.2 NEW PRODUCT: THE CUP-O-MAGGIMaggi is market leader in its segment but it still has no product to challenge the growingthreat posed by Cup Noodles from Top Ramen, its closest competitor. The cup noodle marketis expanding rapidly and there is a huge scope for gaining further market share by enteringthis segment which is currently dominated by Top Ramen. To challenge this threat wepropose to launch a new product to directly compete in this segment with the name Cup- O –Maggi.Features of Cup –O – Maggi To be made available in two flavours Masala and Chicken to cater to the overall market palate. The noodles will be available in a Plastic cup and just require hot water to be added to prepare them. This is to capture the market which has a growing demand towards convenience foods. Dried Vegetables and Dried Chicken chunks to be made available inside the cup The new improved spicier Tastemaker also to be added to the cupThe Market Research Survey importuned us to improve the taste and provide better healthbenefits. For this purpose the improved Tastemaker has been added to Cup-O-Maggi. To caterto the demands of the growing health conscious people nutritious veggies and chicken chunkshave also been added. These extra pieces are already available with the Maggi range of soupsand the same can be used in Cup-O-Maggi also thus dispenses the need for setting up of anew processing factory specially for the manufacturing of food pieces.4.1.3 PACKAGINGMajor changes are required in the packaging of Maggi noodles as suggested by the MarketingResearch Survey: Maggi noodles packets to be flimsy which require to be torn apart carefully so as to not spill the contents. Another issue is with the multi brick packets. Once opened they cannot be stored as it is and the contents have to be transferred to another container.
  25. 25. To counter the problem, we plan to Increase the thickness of the plastic sheets used in the Maggi Noodles packets to give more strength to the packet and allow easy & safe opening of the pack To provide a Zip-Seal facility along with the existing sealing to allow the packets to be stored easily4.2 CONSUMER COSTPricing strategy for the existing variants of Maggi Noodles is based on the objective of‘Maximising Market Share”. These variants are competitively priced. As the segment ishighly price sensitive, any price change initiates an instant price check reaction from thecompetitor. Pack Size Current Price Revised Price MAGGI 2 Minute Noodles (gm) (Rs) (Rs) Masala 50 5 5 100 10 10 200 20 20 400 38 36 600 54 54 800 72 72 Chicken 100 10 10 Curry 100 10 10 Tomato 100 10 10 Vegetable Atta Noodles 100 13 13 400 50 50 Vegetable Dal Atta Noodles 100 13 13 400 50 50 Maggi 2 Minute Noodles Proposed Revised Prices for existing package sizesReducing the price of the 400g pack of Maggi Masala is a very aggressive move to directlyattack the competitor whose 400g variant is priced at Rs 34. The effect of the downwardrevision in price can be offset by the increase in sales volume.Pricing strategy for the launch of Cup-O-Maggi is based on the objective of achieving“Product Quality leadership”. Its segment is less price-sensitive so it will be premium pricedto target the higher end customers. Creation of a premium brand gives the company anopportunity to provide a differential pricing and service offering to the customer therebycreating a key differentiator.
  26. 26. CUP-O-MAGGI Pack Size (gm) Price (Rs) Masala 80 20 Chicken 80 20 Cup O Maggi Proposed Pricing and PackagingProduct pricing is based on offering high value to our customers compared to most pricepoints in the market. Thus using the Competitive- Parity method, Cup-O-Maggi has beenpriced at Rs 20 for an 80g pack of Masala and Chicken flavours to directly compete againstthe competitor cup noodles which are also priced at Rs 20 for an 80g pack.The pricing will be regularly revised according to the changing forces in the marketenvironment.4.3 CONVENIENCETo keep up with the growing trends in the Noodles sector, an intensive dealer-distributornetwork is desired. Maggi has a well established distribution network. As of now, the strengthof our already robust distribution network could be leveraged to introduce and sell our newproduct: ‘Cup-o-Maggi’ noodles, as also the improved versions of the Dal Atta variant. Thetarget markets of ‘Cup-o-Maggi’ are primarily present in the metropolitan cities as well as thetier-II cities.In addition for Cup O Maggi we propose that: Maggi Noodles have tie-ups with Corporate Houses Depending on the initial sales of Cup O Maggi, introduce vending machines for the same at schools, colleges as well as corporate houses.
  27. 27. 4.4 COMMUNICATIONPROMOTION OF CUP O MAGGIWith the introduction of Cup-o-Maggi noodles, we propose to move away from the ‘Childand Mother’ approach of Maggi. The Cup noodles would be targeted at the young singleprofessionals, as also the housewives, basically people who might prefer to go for a quickmeal instead of cooking a whole traditional Indian meal, specially in case of early work-daymornings or a ‘tired’-evening quick snack (in case of professionals). An associated taglinewith the Cup-o-Maggi advertisement campaign could be: ‘Cup-o-Maggi’: ‘Healthy SnackAnywhere, Anytime! “SUGGESTED FUTURE CUP O MAGGI ADVERTISING CAMPAIGNWorld Cup 2007 (13th March 2007 to 28th April 2007)Families, couples, kids all enjoying their cricket with Cup O Maggi; at home, drive-inscreens. Get a cricketer to endorse Maggi noodles.GENERAL PROMOTIONEvents and Experiences: Hold the Online Maggie Recipe Challenge, wherein innovativerecipes with Maggi Noodles as a base are invited. Winning entries are compiled into an e-cookbook which is published online.Celebrity endorsement: Maggi has associated itself with celebrities like Bollywood actressPriety Zinta recently. The reason being Maggi has always been the kids snack. The same isbrought out and highlighted in the charms of Preity and her bubbly and vivacious zing, withwhich she portrays the brand that is Maggi.Television Advertisements: Portraying hassled double income families, finding relief at theend of a tiring day with a quickly conjured up bowl of Maggi 2 Minute noodles. Portraydifferent flavours available and focus on the health aspect of the fortified 2 minute Noodlesand the Dal and Vegetable Atta Noodles. Communicate the new improved east-to-usepackaging and the going spicy of Dal Atta Noodles.
  28. 28. 4.5 MARKETING RESEARCHAn online survey was undertaken at http://www.createsurvey.com/c/39191-OSMZz4/The following sections deal with the results obtained on the basis of the 30 pointquestionnaire put forth in the survey.4.5.1 Maggi Noodles Performance on various attributes 1400 1200 1000 800 600 400 200 0 ed ty ty e ila h e ck ste H g Va ts ic ag va alt in gr bili rie n Pr Ta ag ie Im e nd Pa ra In A B4.5.2 Attributes on which Top ramen smoodles performs better then Magginoodles Ingredients Packaging No. of people ranking Top Taste Ramen smoodles better then Maggi noodles Price 0 20 40 60 80 100 120 140
  29. 29. 4.5.3 Attributes on which Top ramen cup noodles performs better then Maggi noodles Ingredients Convenience in cooking Packaging Taste 0 20 40 60 80 100 1204.5.4 Maggi Packaging size preference 800 gms 600 gms 400 gms 200 gms 100 gms 50 gms 0 0.1 0.2 0.3 0.4 0.5
  30. 30. 4.5.5 How do you like to consume your Maggi ? 11.02% 6.82% Plain maggi 43.31% With vegetables With chicken 38.85% Your secret recipe
  31. 31. 5. FINANCIALS5.1 BREAKEVEN ANALYSIS OF A 100 TONNE CAPACITY PLANTOF CUP O MAGGI NOODLESIn this analysis we will look for the different costs involved in the production of Maggi cupnoodles and then comparing it with the total sales to find out the minimum efficiency at whichthe plant should operate in order to have a neither loss nor profit relationship. This is done byfinding the Break-Even point of operation. If the plant operates at the efficiency higher thanthat indicated by the Break-Even point than the plant operates at a profit and vice-versa.5.1.1 BREAK-EVEN ANALYSISThe cost involved in the production can be divided into two categories viz. fixed cost andvariable cost. They can be defined asFixed cost: This is the cost which is independent of the quantity of the product produced e.g.Land &Building cost, plant & Machinery cost etc.Variable Cost: this is the cost that varies with per unit of product produced e.g. Raw materialcost, packaging cost etc.The break up of the various costs is shown below1. Fixed CostA. Land and BuildingA plot of land of about 200 sq.mtrs. with built-up area of 100 sq.mtrs. is sufficient. Landwould cost around Rs.60,000/- whereas cost of construction could be Rs.2.50 lacs. Mainproduction area would occupy around 50 sq.mtrs. whereas packing room and storage areawould occupy balance area.Particulars Area (sq. mtrs.) Cost (Rs.)Land 200 60,000Building 100 2,50,000 TOTAL 3,10,000B. Plant and MachineryMarketing is the key success determinant and the production capacity has to be finalizedaccordingly. Keeping in mind the financial viability, the rated production capacity is assumedto be 100 tonnes per year with 300 working days and 2 shifts per day.
  32. 32. This would necessitate installation of following machines:Item Qty. Price (Rs)Extrusion Machine 1 1,00,000Pre-conditioner 1 80,000Mixer ( 50 kgs capacity) 1 1,00,000Pouch Packing and Sealing 1 1,00,000MachineWeighing Scale 1 10,000 TOTAL 3,90,000C. Miscellaneous AssetsOther assets like furniture and fixtures, storage facilities, working tables, SS utensils, etc.would call for expenditure of Rs. 50,000/-.D. UtilitiesPower requirement shall be 20 HP whereas per day water requirement would be 500-550liters. Annual expenditure at full capacity utilization will be Rs. 1,10,000/-.2. Variable costsA.MANPOWER REQUIREMENTSParticulars Nos. Monthly Total Monthly Salary (Rs) Salary (Rs)Machine Operators 2 4,000 8,000Skilled Workers for 2 3,000 6,000PackingSemi-skilled Workers 2 2,000 4,000Helpers 2 1,000 2,000Salesman 2 2,000 4,000 Total 24,000B. Raw and Packing MaterialsNoodles are made with the help of many ingredients with major input being wheat flour.Other materials required are corn and rice flour, protein isolates, salt, spices, edible oil,preservatives etc. All of them are easily available. Packing materials are equally important.Colourful and attractive pouches shall have to be printed and outer packing will be corrugatedboxes.
  33. 33. This cost can be shown asProduct Qty. Price/Ton Value (Tonnes) (Rs.)Raw Material 100 70,000 70,00,000Packing Material 100 @ Rs.20,000/ Ton of 20,00,000 Finished Goods Total 90,00,000C. Selling ExpensesMarketing will be a key element. Expenses shall have to be incurred on transportation,Publicity in local media like newspapers, hoardings and TV scroll, selling commission, freeSampling etc. A provision of 30% of sales value is made every year to take care of theseExpenses since the product is new thus more emphasis is given on this section. This expensecan be reduced once the product is well established in market.FINAL TOTAL COST ANALYSISFIXED COSTS In Rs.Land and Building 3,10,000Plant and Machinery 3,90,000Miscellaneous Assets 50,000Utilities 1,10,000TOTAL FIXED COST 8,60,000VARIABLE COSTS Per tonne of productionManpower Requirements 24,000Raw and Packing Materials 90,000Selling Expenses @ 30% of Total sales5.1.2 ANALYTICAL BREAK-EVEN ANALYSISLet total production be X tones. Since the 80 gm pack of Maggi is available for Rs.20 i.e.Rs.250/kg so lets say that Maggi Noodle is supplied to the market agent at Rs. 180/kgSo for no profit no loss equation is860000+ (1,14,000*X) + (30/100)*X*1000*180= (180*X*1000)860000 = (180000-114000-54000)*XX = 71.66 tonnes
  34. 34. Final conclusion: The plant must operate at the minimum efficiency of 71.66% in order toreach break-even analysis point i.e. not to suffer any loss.5.1.3 GRAPHICAL BREAK-EVEN ANALYSISThe result obtained above can be verified by plotting a graph between the total cost andQuantity of Maggi produced. The graph is shown below. Break Even Analysis 20 Rupees (in millions) 15 10 Variable Cost Revenue 5 Cash Balance 0 0 20 40 60 80 100 120 -5 Sales (in tonnes)5.2 SALES FORECAST5.2.1 MAGGI INSTANT NOODLESSales by valueFor the year 2007 Projected value of instant noodles category (Refer Appendix B)= Rs.8,611.1 millionThe desired market share by value = 80%Therefore, projected value the sales need to be 80% * Rs.8611.11 = Rs. 6888.88 million.Sales by volumeAverage retail price per 100 gms of Maggi (across all SKUs) = Rs.9Price for one thousand Tonnes of Maggi = 9 * 10^7 rupeesProjected value of sales = Rs. 6888.88 millionTherefore, Projected volume sales = (Projected Value of Sales / Price per thousand Tonnes) = 76.5 thousand Tonnes.For year 2007 projected category sales = 96.9 thousand Tonnes.Therefore, volume market share of 78.95 % for the year 2007 is projected.
  35. 35. 5.2.2 PROPOSED : CUP O MAGGI NOODLESSales by valueFor the year 2007 Projected value of cup noodles category (Refer Appendix B) = Rs. 143.1millionThe suggested target market share by value = 20%Therefore, projected value the sales need to be 20% * Rs.143.1 = Rs. 28.62 million.Sales by volumeSuggested retail price per 80 gms of Cup O Maggi = Rs.20Price for one thousand Tonnes of Cup O Maggi = 20 /80* 10^9 rupeesProjected value of sales = Rs. 28.88 millionTherefore, Projected volume sales = (Projected Value of Sales / Price per thousand Tonnes) = 0.115 thousand Tonnes.For year 2007 projected category sales = 0.6 thousand Tonnes.Therefore, volume market share of 19.17 % for the year 2007 is projected.
  36. 36. APPENDIX A: INDIAN INSTANT NOODLES MARKETGROWTH GRAPHS Indian Instant Noodles Market Retail volume growth trends Indian Instant Noodles Market Retail value growth trends
  37. 37. APPENDIX B: NESTLE MAGGI NOODLES FORECASTRETAIL SALES Nestlé India Ltd Shares of Packaged Food by Subsector 2001-2004% retail valuersp 2001 2002 2003 2004Instant noodles 79.3 77.3 78.1 78.5 Forecast Retail Sales of Noodles by Subsector: Value 2005-2010Rs million 2005 2006 2007 2008 2009 2010Instant 6,077.5 7,300.6 8,611.1 9,959.2 11,319.4 12,667.3noodlesCups/bowl 84.8 112.6 143.1 175.2 206.8 237.6instantnoodles Forecast Retail Sales of Noodles by Subsector: Volume 2005-2010000tonnes 2005 2006 2007 2008 2009 2010Instant 59.9 71.6 84.0 96.9 110.1 123.1noodlesCups/bowl 0.3 0.5 0.6 0.8 0.9 1.1instantnoodlesSource: Trade press (The Economic Times, The Hindu Business Line, Financial Express, Business Standard, India Infoline, agencyfaqs.com, Mid-day, rediff.com), Company research, Trade interviews, Euromonitor International estimates

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