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CASE STUDY
On
“THE CHALLENGES FACED BY NESTLE MAGGI”
BACHELOR OF BUSINESS ADMINISTRATION
For Academic Year 2021-2022
DEPARTMENT OF HUMANITIES AND MANAGEMENT SCIENCES
MADAN MOHAN MALAVIYA UNIVERSITY OF TECHNOLOGY,
GORAKHPUR, U.P.
UNDER THE GUIDANCE OF:
DR. SONIA BHATT
Assistant Professor
SUBMITTED BY:
Khushi Agrawal
2020081024
2
DECLARATION
I Miss Khushi Agrawal, Student of BBA 2nd
year, Madan Mohan Malaviya University of
Technology, Gorakhpur hereby declare that the report on case study project work entitle “THE
CHALLENGES FACED BY NESTLE MAGGI” is been result of my work.
I declare that this submitted work is done solely by me and to the best of my knowledge, no such
work has been submitted by any other person for the award of under graduation degree.
I also declare that all information collected from various secondary sources has been duly
acknowledged in this project report.
PLACE: GORAKHPUR KHUSHI AGRAWAL
DATE: BBA 2nd
YEAR
SIGNATATURE: 2020081024
3
MADAN MOHAN MALAVIYA UNIVERSITY OF TECHOLOGY,
GORAKHPUR, U.P.
HUMANITIES AND MANAGEMENT SCIENCE DEPATRTMENT
CERTIFICATE
It is to certify that Khushi Agrawal (2020081024) of BBA 3rd
Semester, Session 2021-2022 has
completed the case study report entitled “THE CHALLENGES FACED BY NESTLE
MAGGI”. The report is the result of his effort and endeavors. This report is found worthy of
acceptance as case study project report for the BBA. She has completed the case study project
report under my guidance.
DR. Sonia Bhatt
Assistant Professor
HMSD
4
ACKNOWLEDGMENT
Ever work involves effect and input of various kinds and people. I am thankful to all those people
who have helpful enough to me to be extent of their being instrumental in the completion and
accomplishment of the report entitled “THE CHALLENGED FACED BY NESTLE MAGGI”.
Firstly, I would like to thank DR. S.N. SINGH for giving this opportunity. He found me credible
enough to work for capital relationship management and selected me for challenging project.
I sincerely acknowledge with deep sense of gratitude to my report guide DR. SONIA BHATT,
for enhancing my understanding of the subject and enabling me to appreciate finer nuances of the
subject. I would like to thank for their full co-operation in completion of my project as she guided
me throughout the project.
I would like to thank the entire department for their help and guidance, without which the
completion of report would have been extremely difficult.
Lastly, I would like to thank my friends and family who have also guided me a lot and helped me
out for completion my project.
KHUSHI AGRAWAL
2020081024
BBA 2nd
YEAR
5
PREFACE
This project report attempts to bring under one cover the entire hard work and dedicated put in by
me in this case study project work.
I have expressed my experience in my own simple ways. I hope you will go through this and find
it interesting and worth reading.
All the constructive feedback is cordially invited.
KHUSHI AGRAWAL
BBA 2nd
YEAR
2020081024
6
TABLE OF CONTENT
S. No. TOPIC Page No.
1 Introduction 7-8
2 Literature Review 9-16
History
Nestle
Maggi: SWOT Analysis
Brand Image of Maggi
The Maggi Ban
Maggi Revival: Timeline of Events
Strategies of Revive Maggi
3 Findings 17-18
4 Conclusion 19
5 Reference 20
7
Introduction
Maggi is now extremely popular with both youngsters and adults. The company was founded in
1872 by Julius Maggi of Switzerland. The industrial revolution, according to specialists in
Switzerland. Women had to go home and cook after working long hours in factories during the
industrial revolution. The Swiss Public Welfare Society enlisted Julius Maggi's assistance during
this time, and the Maggi noodles were born. Julius called the product after his surname at the time.
Julius Michael Johannes Maggi was his full name. Maggi was first introduced in Germany. Julius
prepared Maggi as a high-protein, ready-to-eat soup. His physician buddy Fridoline assisted him
greatly, and Maggi was formed in two minutes and was quite fond of it. In 1912, Maggi travelled
to the United States and France. Julius Maggi, however, died in 1912. When Nestle introduced
Maggi and its branding and marketing in 1947, Maggi was in every household and kitchen. Maggi
has been on the Indian market for 37 years. Maggi, who first entered the market in 1984, never
imagined it would be so well received and have such a positive reputation. The sole firm that
brought it to India is Nestle India Limited. Maggi may be made in just a minute and is enjoyed by
all, especially youngsters. Maggi was combined with Nestle, a Swiss firm, in 1947, and has been
Nestle's most famous brand ever since. Nestle spends over a hundred crores on advertising, with
Maggi receiving the most. Maggi is a highly valued brand that is technically a subsidiary of Nestle
and a Swiss firm, but most people know it as Nestle. (DNA WEB TEAM,2021)
Nestle introduced noodles under the Maggi name for the first time in the 1980s, and they quickly
became the finest snack option for city dwellers. The company entered the Indian market with
noodles. People's lifestyles began to shift over time. Maggi became a household need after 1999,
because it could be prepared in under two minutes. Nestle also released a number of other Maggi-
branded goods. Soups, roast masala, and Maggi kappa crazy quick noodles are among them. 90%
of Maggi products in India are particularly made with Indian culture in mind and are not available
elsewhere. In India, the Maggi brand has grown to account for 25% of Nestle's total revenues, with
yearly sales exceeding Rs 1000 crore. A half-dozen new brands have recently entered the market.
The majority of retail chains have their own label. [DNA WEB TEAM,2021]
Maggi has encountered many challenges in the past year. Maggi was confronted with a recent
difficulty in 2014. In the year 2014, Maggi was outlawed in India. Nestle's 'unhealthy' food
controversy was the challenge. The Maggi noodles problem in 2015 became one of Nestle India's
8
largest consumer relationship roadblocks, sparked by laboratory testing revealing that the popular
2minute Maggi was hazardous and dangerous to human health. (INDIA TODAY WEB
DESK,2021)
9
HISTORY
Julius Maggi took over his father's mill in Switzerland in 1884, and the company was born. Julius
has the desire to provide delicious and nutritious food because working ladies do not have time to
prepare it correctly, so he resolves to do it. He developed powdered pea and bean soup to provide
nutritious, quick-to-prepare meals. The introduction of ready-to-use soups and liquid seasoning
came two years after the original Maggi. Nestle purchased the Maggi brand in 1947, and it has
already been over 120 years. (WIKIPEDIA) Maggi noodles were initially introduced in India in
1983, the same year that India won the World Cup for the first time. They immediately captured
the nation's attention. Nestle introduced Maggi to Switzerland in order to help working women
who didn't have time to cook for their families due to the Industrial Revolution. In India, Maggi
noodles were introduced with the same niche in mind: working women. Nestle was taught to target
the Indian market because the female population there is higher than in other countries. However,
it failed because people have a strong habit of eating rice and roti, which is difficult to break.
Maggi was competing against consumer behavior rather than competition items. Nestle realized
that spending a lot of money on advertising wouldn't change people's minds. They chose to conduct
extensive research to gain a better understanding of Indian consumers. Nestle discovered that it is
difficult to break Indian consumers' daily dietary habits for lunch and supper, therefore the business
began looking for occasions where habits would be weak, as this process of change would be
relatively straightforward to commence. They also saw that when children returned home from
school in the evening, they were generally hungry, and mothers had to make something quick and
give them evening snacks. The mothers were having a dilemma, and it was causing them a great
deal of agony since their infants were hungry, and they needed to feed them right now. Nestle
realized that "Maggi" needed to be positioned as a "in-between" meal product and an alternative
to "evening snacks" after doing extensive study. Nestle also discovered how much the kids enjoy
Maggi noodles. Nestle shifted their focus from women to children as a result. Compared to older
folks who were still committed to their habits, youngsters were the ones who accepted the
delectable Maggi meal. Nestle made Maggi noodles available in all local supermarkets by
leveraging its existing distribution channels. The company distributed free Maggi samples in
schools to help children develop a habit. (SAINATH REDDY,2020)
10
NESTLE
Nestle is a Swiss international food and beverage corporation founded by Henri Nestle and
headquartered in Vevey, Switzerland. Nestle expanded its product line beyond baby food and
condensed milk during the first world war, and by the time of the second world war, the firm had
grown significantly. Nestle is a global company with a presence in over 200 countries and over
2000 brands under its umbrella.
(a) Nestle India- Nestle's link with the Indian market dates back to 1912, when it began
functioning as 'The NESTLE Anglo-Swiss.' In 1947, administrators devised initiatives aimed at
the country's economic wellbeing, which led to Nestle's entry into India. NESTLE formed and
established its business in India in response to Indian economic policies, opening its first
manufacturing plant in the Moga District of Punjab in 1961. Nestle was asked by the government
to build and grow India's milk economy by introducing technologies in the Indian market that
yielded high milk production. Since its inception, NESTLE has been a strong supporter of the
country's development. Nestle created a special link of trust, commitment to serve, and loyalty
with Indian citizens after the country's independence. The Company's expansion in the Indian
market has resulted in direct and indirect employment, influencing the livelihoods of
approximately 1 million people. Farmers who offer farm harvests, packaging material suppliers,
organizational employees, and so on are all employed. The company is constantly working to
understand and adapt to the changing needs and aspirations of Indian consumers, and to create
goods that are tasty and nutritious to fit their changing lifestyle.
(b) Nestle Maggi- Maggi is a well-known multinational brand that sells a wide range of items
such as tomato ketchup, noodles, and soups. Maggi has been a Nestle brand since 1947. Julius
Maggi, the company's founder, started it in the year 1886.Maggi is known around the world for
two major characteristics: quality and innovation. Nestle, its parent business, delivers a diverse
product line to its customers, making it one of the world's most successful corporations. In the
1980s, the concept of instant 2minute Maggi noodles was introduced. "MAGGI is like our mother,"
says Maarten Geraet's General Manager, "always understanding our lives as we develop,
anticipating our needs, preparing for and nurturing them, recognizing the shift in our personalities
and speaking our language."(Pallavi Rajain, Rupa Rathee, Ekta Batra, 2019)
11
MAGGI: SWOT ANALYSIS
(a) Strengths
(i) High Market Share: When it comes to noodles, Maggi had the largest market share in India. A
client always thinks of Maggi when it comes to noodles. Before the ban, Maggi had a certain
image.
(ii) Image of brand: Maggi is regarded in India as the "Family Brand" because anyone, regardless
of age, may enjoy a bowl of Maggi anytime and anyplace. Maggi has a significant product mix
that gives it an advantage over its market competitors.
(iii) Leader of the Market: In the category of instant 2minute noodles, Maggi was the market leader.
Despite the prohibition, Maggi resurrected its brand and reclaimed market leadership.
(iv) Pull Strategy: Maggi uses a pull approach to attract customers, which is a major asset for the
business.
(v) Distribution Channel: The key to its success is a well-connected distribution channel. (Pallavi
Rajain, Rupa Rathee, Ekta Batra, 2019)
(b) Weaknesses
(i) Maggi Controversy Affected its Brand Value: The ban dispute lowered the value of its brand
to the point where its market share in India fell from 70% to 0%. Its competitors took advantage
of the crisis and gained market share during that time period. Yippie Noodles was the first to
respond to the Maggi incident. After 5 months of being banned, Maggi's brand value was revived
in the minds of Indian customers thanks to effective marketing campaigns and methods that
targeted their emotional intelligence.
(ii) Dependency on one brand: Nestle's Maggi brand generates the majority of its profits, therefore
it runs the risk of becoming overly reliant on it.
(iii) Health Awareness: People are getting more health concerned these days, which is a weakness
for Maggi. (Pallavi Rajain, Rupa Rathee, Ekta Batra 2019)
12
(c) Opportunities
(i) Expansion: One of Maggi's opportunities is to expand its product portfolio. Maggi can grow
its business into cereals, pickles, and other products.
(ii) Repositioning the Maggi: Maggi's repositioning was difficult and simple at the same time. It
was difficult because Maggi has been a well-known brand in India for years, and it was difficult
because its image had been twisted, and it is not something that doctors would recommend to their
patients. It has such a wide reach that many consider it to be India's third most important food after
wheat and rice. According to estimates, it is estimated to be worth Rs 16,000 crore in India and is
one of the top five brands in the country, but competition is fearful for the first time since the ban.
(Pallavi Rajain, Rupa Rathee, Ekta Batra 2019)
(d) Threats
(i) Competitors: Nestle has a number of national and international competitors, many of whom
are important market players and pose a significant threat to Nestle.
(ii) Word of Mouth (WOM): Negative word of mouth on social media platforms and other
platforms is a huge danger to the company's reputation.
(iii) Commoditized name: Maggi has become a brand in and of itself. Everyone asks for Maggi
when it comes to noodles. In India, everyone says surf when it comes to laundry detergents.(Pallavi
Rajain, Rupa Rathee, Ekta Batra 2019)
BRAND IMAGE OF MAGGI
With a valuation of $1,127 million, Maggi was placed number 18 in the Brand Z Top 50 Most
Valuable Indian Brands study, conducted by Millward Brown and commissioned by WPP in 2014.
There was absolutely no competition for this brand after 25 years of domination with over 70% of
the market share. This is exactly what effective branding does to a product over time. The name
Maggi exemplified the power of branding. Maggi had a 70% market share in instant noodles, with
all the other brands vying for attention. With such a large market share, there is a lot of brand
loyalty and trust to defend. (Pallavi Rajain, Rupa Rathee, Ekta Batra 2019)
13
THE MAGGI BAN
Prior to the ban, Nestle's flagship brand or the most important brand under its banner Maggi
Noodles had sales of over Rs 2000 crore. Maggi's recall from retail shelves and those on their way
to shops cost the brand roughly Rs 3200 crore, and Nestle's brand devaluation cost the company
another Rs 1,270 crore. A FSDA (Food Safety and Drug Administration) officer from Uttar
Pradesh saw the phrase MSG on the package of Maggi and sent dozens of Maggi instant noodles
to be tested in the lab to determine the MSG concentration. The test was done in Uttar Pradesh,
and a follow-up test was done in Kolkata, which is a referral lab. The Gorakhpur lab tested the
Maggi for Monosodium Glutamate, despite the fact that the business claimed it contained neither
MSG nor lead. Both tests revealed MSG, as well as extremely high levels of lead (17.2 parts per
million) in the Kolkata lab. The UP FDA (Food and Drug Administration) filed a lawsuit against
Nestle Maggi at Barabanki Court based on the findings. On June 8, 2015, the Union Food Minister
requested that the statutory regulator, the Food Safety and Standards Authority of India (FSSAI),
conduct nationwide tests on Maggi in accordance with the Food Safety and Standards Rules, 2011.
MSG is a flavor enhancer that should not be added to any food item intended for infants under the
age of 12 months, such as cerelac. (Pallavi Rajain, Rupa Rathee, Ekta Batra 2019)
The sequence of events leading up to the ban is as follows:
● 21st
May, 2015- MSG and lead were discovered in Maggi Noodles samples analyzed by
the FSSAI in Barabanki, Uttar Pradesh (UP).
● 3rd
June, 2015- Maggi Noodle was temporarily banned in New Delhi by government
decision for a period of 15 days.
● 4th
June, 2015-Many more Indian cities followed suit and banned Maggi. The first was
Gujrat, which revealed elevated Lead concentration in the Maggi 2 Minute Noodles in 27
out of 39 tests. Meanwhile, Assam has imposed a one-month ban on Maggi's extra-
Delicious and Magic Masala Noodles variants. Many retailers, including Big Bazaar and
Easy Day, have prohibited selling Maggi noodles in their stores. This was followed by a
series of Maggi bans in India, affecting more than five states.
● 5th
June, 2015- 13 tastemaker sachet samples were gathered in Uttar Pradesh and evaluated
for lead content by Delhi officials. 10 of the 13 tastemaker sachet samples were found to
14
contain a high amount of Maggi products, which were banned in the state. Maggi was
recalled across the country.
● 6th
June, 2015- The Maggi Noodles have been banned by the Indian government for an
indefinite length of time.
● 4th
August, 2015- Maggi exported from India included no harmful ingredients. There was
no Lead content in the test report.
● 13th
August, 2015- The Bombay High Court temporarily lifted the ban on Maggi Noodles
and questioned the previously conducted test reports that led to the product's nationwide
suspension. These tests were not performed in National Accreditation Board Testing &
Calibration Laboratories-accredited laboratories (NABL).
● 19th
October, 2015-In a sting operation conducted by India today, it was found that the
FSSAI passes samples without testing in exchange for a bribe.
● 20th
October, 2015-The ban was removed by the Bombay High Court.
● 9th
November 2015- The restriction was lifted across India.
● 30th
November 2015- Maggi's five manufacturing units have resumed production.
Nestle produces Maggi. India is currently sold to Canada, the United Kingdom, Singapore, and
Kenya, among other countries. Except for Canada, the same noodles prepared for the Indian market
are exported to other countries. The seasoning in Maggi for Canada is made with a distinct sort of
salt. Packaging materials are created in accordance with each country's marketing strategies as
well as the regulatory requirements of the importing country. The Maggi samples from India were
also evaluated by food safety agencies in the United States, Canada, the United Kingdom,
Singapore, Australia, and New Zealand. Countries to which India exports Maggi were concerned
after the ban and tested Maggi samples. Despite the fact that the tests were negative and the Maggi
shipped to these countries is identical to that produced for the Indian market.
According to brand experts, Maggi's brand value has depreciated by at least 30%-40%. Retail
analysts estimate that sales have decreased by 60-70 percent, resulting in a loss of nearly Rs 1,000
crore (Chandran, 2015). The Maggi noodles issue in India had a negative influence on Nestle's
Zone AOA (Asia, Oceania, and Africa) growth, which was only 0.5 percent. Nestle's India
revenues could take three years to fully recover as a result of the Maggi episode, according to
15
popular thinking, but the Swiss food giant is working to speed up the process, according to its Asia
head.(Pallavi Rajain, Rupa Rathee, Ekta Batra 2019)
MAGGI REVIVAL: TIMELINE OF EVENTS
"Bringing the instant noodles brand back to the market was his main goal as he sought to strike a
conciliatory note with authorities," Suresh Narayanan added. Many different techniques were used
to bring the brand back to life in the Indian market. The entire incident can be viewed as a positive
reinforcement approach designed to assist Maggi to reclaim customers who have switched to rival
brands like Yippee, Knorr, and Wai Wai. This Maggi incident will undoubtedly assist Nestle in
presenting the brand with a greater promotional appeal, this time an emotional one, in order to
connect and reconnect with their countless followers.
● 9th
November 2015- The sale of Maggi has resumed.
● 4th
November 2015- Laboratories evaluated new Maggi samples and declared them safe to
eat.
● 16th
October, 2015-MAGGI Noodles are safe, according to test results from all three
laboratories mandated by the Bombay High Court, with lead content far under acceptable
limits Manufacturing at Maggi plants has resumed in preparing Timeline of Events of
Revelation for more testing.
● 13th August 2015- The Bombay High Court overturns the government's ban on MAGGI
Noodles, claiming that it was arbitrary and that natural justice standards were not followed.
Nestle India has been given permission to reintroduce the product to the market if new tests
conducted in three certified laboratories on current samples and then on the newly
manufactured product find it safe.(Pallavi Rajain, Rupa Rathee, Ekta Batra 2019)
STRATEGIES TO REVIVE MAGGI
(a) Emotional Touch-Maggi's advertising strategies are always emotional in nature in order to
entice customers. Maggi sought to add emotions in their advertising for the brand's resurrection
this time as well.
16
(b) Television Commercials-Maggi spent a lot of money on television advertising in an attempt
to regain the trust of its customers.
(c) Various Sources for Promotion-Nestle made a number of attempts to resurrect its brand. New
advertisements were shown, as well as social media involvement.
(d) Exclusive Availability-To generate interest and demand, Maggi made their Noodles available
exclusively through Snapdeal. Maggi made a brilliant decision. This was a calculated move. Maggi
was only available on Snapdeal until supply ran out, and the stock only lasted a few minutes
because it was a limited-time special. (Pallavi Rajain, Rupa Rathee, Ekta Batra 2019)
17
FINDINGS
When Nestle India used several strategies to resuscitate Maggi noodles, some notable
improvements happened. Nestle India used to spend 4.2-4.8 percent of its revenue on advertising
and sales promotion, but after 2015, the company spent Rs 525.21 crore on promotions, or around
6.42 percent of total sales, a significant increase. The company has also worked to reduce the
complexities in its organizational structure by reducing layers in order to cut processing time by
30-40% using strategies such as empowerment in decision making. Prior to the Maggi debacle, the
company had been extremely confident, but that confidence had given way to complacency. The
Maggi problem has changed their perspective and made them more adaptive, making doing
business with them easier. Another key move by the corporation was its entry into new product
categories like coffee, pet care, healthcare, and skincare. Nestle Ceregrow, for example, was the
company's first foray into cereals. The company is looking to tap into the middle class and working
women in order to maintain profitability. Due to intense competition from multinationals and
domestic firms, such as yoga guru-turned-businessman Baba Ramdev's Patanjali Ayurved Ltd, the
company's overall market share has practically halved in the last four to five years (2013-17).
Ramdev debuted noodles just a week after Nestle India relaunched Maggi noodles, in addition to
explicitly confronting Nestle on various issues. ITC Ltd's Yippee noodles and CG Foods' Wai Wai
noodles gained market share during the period when Maggi noodles were prohibited, filling a gap
in the Rs3,182-crore noodle market. Because of the competitive landscape and rapidly changing
customer behavior, the Swiss firm's local affiliate is looking for at least one, if not two, brands that
might compete with Maggi noodles in terms of sales volume. Over the next ten years, Nestle India's
Chairman and Managing Director, Suresh Narayanan, expects the business will shift its focus from
packaged food to health and nutrition products.
In order to reclaim its market share, Nestle Maggi must take some bold moves. Nestle must
prioritise the preservation of its most cherished brand, which it did not do, resulting in millions of
dollars in losses. It allowed authorities to cast doubt on the product's quality, and they did not
respond quickly enough with substantial evidence to back up the product's quality. As a result,
Maggi became the subject of debates, damaging its reputation.
18
Nestle should have a strategy. It can't make up for what it lost in the early days of the debate by
sitting silent and allowing the matter to calm down. In order to reach as many consumers as
possible, a proactive approach is required. Nestle began its internet marketing effort in the later
phases of its polemics, with the goal of reaching as many consumers as possible, which should
have been done from the outset. It began by responding to consumer questions with answers that
served the brand's best interests. It voiced powerlessness in the face of a misunderstanding between
Maggi and the relevant government officials, and stressed that the quality of Maggi's product was
not compromised.
Nestle should not have dismissed the possibility of discovering lead and MSG in Maggi, as
indicated by government officials based on laboratory test results.
An alternative approach should have been used, with the corporation expressing their desire to
investigate the problem. Nestle Maggi has developed an emotional bond with its customers over
the course of 30 years. This could be one of Maggi's marketing initiatives for regaining market
share in the noodle business. Quotes like "Maggi is back" should be plastered all over television,
newspapers, radio, billboards, and magazines.
To promote Maggi's pre-launch and re-launch, digital marketing on social networking sites such
as Facebook and Twitter should be employed widely. Fan pages and articles with keywords like
"no MSG," "no lead," and "meri same original Maggi" can be pushed, and hashtag moments like
“We Miss Maggi” and “Bring Maggi Back” can be added to the already established hashtag
moments.
Nestle should enlist the help of reputable public figures to undertake quality checks on Maggi
during the manufacturing process and label it as safe to eat. National Geographic and Discovery
should be asked to produce a documentary about the factory's manufacturing process, as well as a
chemical analysis of the product and any dangerous or non-harmful impacts. Small packs of maggi
can be placed near the billing counters at grocery shops to boost awareness of “We are back” and
reposition the brand at the same aisle levels as the consumer, according to a marketing manager.
Furthermore, giving free samples to students in schools can result in sales.
19
CONCLUSION
As a result, we see how Maggi was engaged in too many problems and how the government issued
a ban that cost the company millions of dollars. Furthermore, it disappointed Indian consumers
who had been eating Maggi since childhood and hence had an emotional tie to the brand. Now that
Maggi is planning to return after passing a few more tests mandated by the Bombay high court
over the next six weeks, the market is at a loss as to what marketing approach the company would
use to reposition its brand in the minds of consumers and reclaim its early market share of 80%.
Given what Nestle did and could have done, it is clear that there was a communication breakdown
between Maggi and its customers during the issues, which has to be addressed. There is also some
mistrust between the government and the Maggi that needs to be cleared up. Certain corrective
steps will be required in order to maintain what Nestle has enjoyed for years, namely high brand
loyalty and brand connect. It should return to the market as soon as the issue is entirely fixed with
a better quality product that fulfills the criteria and resume its place in the Indian market.
20
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case study khushi (1).docx

  • 1. CASE STUDY On “THE CHALLENGES FACED BY NESTLE MAGGI” BACHELOR OF BUSINESS ADMINISTRATION For Academic Year 2021-2022 DEPARTMENT OF HUMANITIES AND MANAGEMENT SCIENCES MADAN MOHAN MALAVIYA UNIVERSITY OF TECHNOLOGY, GORAKHPUR, U.P. UNDER THE GUIDANCE OF: DR. SONIA BHATT Assistant Professor SUBMITTED BY: Khushi Agrawal 2020081024
  • 2. 2 DECLARATION I Miss Khushi Agrawal, Student of BBA 2nd year, Madan Mohan Malaviya University of Technology, Gorakhpur hereby declare that the report on case study project work entitle “THE CHALLENGES FACED BY NESTLE MAGGI” is been result of my work. I declare that this submitted work is done solely by me and to the best of my knowledge, no such work has been submitted by any other person for the award of under graduation degree. I also declare that all information collected from various secondary sources has been duly acknowledged in this project report. PLACE: GORAKHPUR KHUSHI AGRAWAL DATE: BBA 2nd YEAR SIGNATATURE: 2020081024
  • 3. 3 MADAN MOHAN MALAVIYA UNIVERSITY OF TECHOLOGY, GORAKHPUR, U.P. HUMANITIES AND MANAGEMENT SCIENCE DEPATRTMENT CERTIFICATE It is to certify that Khushi Agrawal (2020081024) of BBA 3rd Semester, Session 2021-2022 has completed the case study report entitled “THE CHALLENGES FACED BY NESTLE MAGGI”. The report is the result of his effort and endeavors. This report is found worthy of acceptance as case study project report for the BBA. She has completed the case study project report under my guidance. DR. Sonia Bhatt Assistant Professor HMSD
  • 4. 4 ACKNOWLEDGMENT Ever work involves effect and input of various kinds and people. I am thankful to all those people who have helpful enough to me to be extent of their being instrumental in the completion and accomplishment of the report entitled “THE CHALLENGED FACED BY NESTLE MAGGI”. Firstly, I would like to thank DR. S.N. SINGH for giving this opportunity. He found me credible enough to work for capital relationship management and selected me for challenging project. I sincerely acknowledge with deep sense of gratitude to my report guide DR. SONIA BHATT, for enhancing my understanding of the subject and enabling me to appreciate finer nuances of the subject. I would like to thank for their full co-operation in completion of my project as she guided me throughout the project. I would like to thank the entire department for their help and guidance, without which the completion of report would have been extremely difficult. Lastly, I would like to thank my friends and family who have also guided me a lot and helped me out for completion my project. KHUSHI AGRAWAL 2020081024 BBA 2nd YEAR
  • 5. 5 PREFACE This project report attempts to bring under one cover the entire hard work and dedicated put in by me in this case study project work. I have expressed my experience in my own simple ways. I hope you will go through this and find it interesting and worth reading. All the constructive feedback is cordially invited. KHUSHI AGRAWAL BBA 2nd YEAR 2020081024
  • 6. 6 TABLE OF CONTENT S. No. TOPIC Page No. 1 Introduction 7-8 2 Literature Review 9-16 History Nestle Maggi: SWOT Analysis Brand Image of Maggi The Maggi Ban Maggi Revival: Timeline of Events Strategies of Revive Maggi 3 Findings 17-18 4 Conclusion 19 5 Reference 20
  • 7. 7 Introduction Maggi is now extremely popular with both youngsters and adults. The company was founded in 1872 by Julius Maggi of Switzerland. The industrial revolution, according to specialists in Switzerland. Women had to go home and cook after working long hours in factories during the industrial revolution. The Swiss Public Welfare Society enlisted Julius Maggi's assistance during this time, and the Maggi noodles were born. Julius called the product after his surname at the time. Julius Michael Johannes Maggi was his full name. Maggi was first introduced in Germany. Julius prepared Maggi as a high-protein, ready-to-eat soup. His physician buddy Fridoline assisted him greatly, and Maggi was formed in two minutes and was quite fond of it. In 1912, Maggi travelled to the United States and France. Julius Maggi, however, died in 1912. When Nestle introduced Maggi and its branding and marketing in 1947, Maggi was in every household and kitchen. Maggi has been on the Indian market for 37 years. Maggi, who first entered the market in 1984, never imagined it would be so well received and have such a positive reputation. The sole firm that brought it to India is Nestle India Limited. Maggi may be made in just a minute and is enjoyed by all, especially youngsters. Maggi was combined with Nestle, a Swiss firm, in 1947, and has been Nestle's most famous brand ever since. Nestle spends over a hundred crores on advertising, with Maggi receiving the most. Maggi is a highly valued brand that is technically a subsidiary of Nestle and a Swiss firm, but most people know it as Nestle. (DNA WEB TEAM,2021) Nestle introduced noodles under the Maggi name for the first time in the 1980s, and they quickly became the finest snack option for city dwellers. The company entered the Indian market with noodles. People's lifestyles began to shift over time. Maggi became a household need after 1999, because it could be prepared in under two minutes. Nestle also released a number of other Maggi- branded goods. Soups, roast masala, and Maggi kappa crazy quick noodles are among them. 90% of Maggi products in India are particularly made with Indian culture in mind and are not available elsewhere. In India, the Maggi brand has grown to account for 25% of Nestle's total revenues, with yearly sales exceeding Rs 1000 crore. A half-dozen new brands have recently entered the market. The majority of retail chains have their own label. [DNA WEB TEAM,2021] Maggi has encountered many challenges in the past year. Maggi was confronted with a recent difficulty in 2014. In the year 2014, Maggi was outlawed in India. Nestle's 'unhealthy' food controversy was the challenge. The Maggi noodles problem in 2015 became one of Nestle India's
  • 8. 8 largest consumer relationship roadblocks, sparked by laboratory testing revealing that the popular 2minute Maggi was hazardous and dangerous to human health. (INDIA TODAY WEB DESK,2021)
  • 9. 9 HISTORY Julius Maggi took over his father's mill in Switzerland in 1884, and the company was born. Julius has the desire to provide delicious and nutritious food because working ladies do not have time to prepare it correctly, so he resolves to do it. He developed powdered pea and bean soup to provide nutritious, quick-to-prepare meals. The introduction of ready-to-use soups and liquid seasoning came two years after the original Maggi. Nestle purchased the Maggi brand in 1947, and it has already been over 120 years. (WIKIPEDIA) Maggi noodles were initially introduced in India in 1983, the same year that India won the World Cup for the first time. They immediately captured the nation's attention. Nestle introduced Maggi to Switzerland in order to help working women who didn't have time to cook for their families due to the Industrial Revolution. In India, Maggi noodles were introduced with the same niche in mind: working women. Nestle was taught to target the Indian market because the female population there is higher than in other countries. However, it failed because people have a strong habit of eating rice and roti, which is difficult to break. Maggi was competing against consumer behavior rather than competition items. Nestle realized that spending a lot of money on advertising wouldn't change people's minds. They chose to conduct extensive research to gain a better understanding of Indian consumers. Nestle discovered that it is difficult to break Indian consumers' daily dietary habits for lunch and supper, therefore the business began looking for occasions where habits would be weak, as this process of change would be relatively straightforward to commence. They also saw that when children returned home from school in the evening, they were generally hungry, and mothers had to make something quick and give them evening snacks. The mothers were having a dilemma, and it was causing them a great deal of agony since their infants were hungry, and they needed to feed them right now. Nestle realized that "Maggi" needed to be positioned as a "in-between" meal product and an alternative to "evening snacks" after doing extensive study. Nestle also discovered how much the kids enjoy Maggi noodles. Nestle shifted their focus from women to children as a result. Compared to older folks who were still committed to their habits, youngsters were the ones who accepted the delectable Maggi meal. Nestle made Maggi noodles available in all local supermarkets by leveraging its existing distribution channels. The company distributed free Maggi samples in schools to help children develop a habit. (SAINATH REDDY,2020)
  • 10. 10 NESTLE Nestle is a Swiss international food and beverage corporation founded by Henri Nestle and headquartered in Vevey, Switzerland. Nestle expanded its product line beyond baby food and condensed milk during the first world war, and by the time of the second world war, the firm had grown significantly. Nestle is a global company with a presence in over 200 countries and over 2000 brands under its umbrella. (a) Nestle India- Nestle's link with the Indian market dates back to 1912, when it began functioning as 'The NESTLE Anglo-Swiss.' In 1947, administrators devised initiatives aimed at the country's economic wellbeing, which led to Nestle's entry into India. NESTLE formed and established its business in India in response to Indian economic policies, opening its first manufacturing plant in the Moga District of Punjab in 1961. Nestle was asked by the government to build and grow India's milk economy by introducing technologies in the Indian market that yielded high milk production. Since its inception, NESTLE has been a strong supporter of the country's development. Nestle created a special link of trust, commitment to serve, and loyalty with Indian citizens after the country's independence. The Company's expansion in the Indian market has resulted in direct and indirect employment, influencing the livelihoods of approximately 1 million people. Farmers who offer farm harvests, packaging material suppliers, organizational employees, and so on are all employed. The company is constantly working to understand and adapt to the changing needs and aspirations of Indian consumers, and to create goods that are tasty and nutritious to fit their changing lifestyle. (b) Nestle Maggi- Maggi is a well-known multinational brand that sells a wide range of items such as tomato ketchup, noodles, and soups. Maggi has been a Nestle brand since 1947. Julius Maggi, the company's founder, started it in the year 1886.Maggi is known around the world for two major characteristics: quality and innovation. Nestle, its parent business, delivers a diverse product line to its customers, making it one of the world's most successful corporations. In the 1980s, the concept of instant 2minute Maggi noodles was introduced. "MAGGI is like our mother," says Maarten Geraet's General Manager, "always understanding our lives as we develop, anticipating our needs, preparing for and nurturing them, recognizing the shift in our personalities and speaking our language."(Pallavi Rajain, Rupa Rathee, Ekta Batra, 2019)
  • 11. 11 MAGGI: SWOT ANALYSIS (a) Strengths (i) High Market Share: When it comes to noodles, Maggi had the largest market share in India. A client always thinks of Maggi when it comes to noodles. Before the ban, Maggi had a certain image. (ii) Image of brand: Maggi is regarded in India as the "Family Brand" because anyone, regardless of age, may enjoy a bowl of Maggi anytime and anyplace. Maggi has a significant product mix that gives it an advantage over its market competitors. (iii) Leader of the Market: In the category of instant 2minute noodles, Maggi was the market leader. Despite the prohibition, Maggi resurrected its brand and reclaimed market leadership. (iv) Pull Strategy: Maggi uses a pull approach to attract customers, which is a major asset for the business. (v) Distribution Channel: The key to its success is a well-connected distribution channel. (Pallavi Rajain, Rupa Rathee, Ekta Batra, 2019) (b) Weaknesses (i) Maggi Controversy Affected its Brand Value: The ban dispute lowered the value of its brand to the point where its market share in India fell from 70% to 0%. Its competitors took advantage of the crisis and gained market share during that time period. Yippie Noodles was the first to respond to the Maggi incident. After 5 months of being banned, Maggi's brand value was revived in the minds of Indian customers thanks to effective marketing campaigns and methods that targeted their emotional intelligence. (ii) Dependency on one brand: Nestle's Maggi brand generates the majority of its profits, therefore it runs the risk of becoming overly reliant on it. (iii) Health Awareness: People are getting more health concerned these days, which is a weakness for Maggi. (Pallavi Rajain, Rupa Rathee, Ekta Batra 2019)
  • 12. 12 (c) Opportunities (i) Expansion: One of Maggi's opportunities is to expand its product portfolio. Maggi can grow its business into cereals, pickles, and other products. (ii) Repositioning the Maggi: Maggi's repositioning was difficult and simple at the same time. It was difficult because Maggi has been a well-known brand in India for years, and it was difficult because its image had been twisted, and it is not something that doctors would recommend to their patients. It has such a wide reach that many consider it to be India's third most important food after wheat and rice. According to estimates, it is estimated to be worth Rs 16,000 crore in India and is one of the top five brands in the country, but competition is fearful for the first time since the ban. (Pallavi Rajain, Rupa Rathee, Ekta Batra 2019) (d) Threats (i) Competitors: Nestle has a number of national and international competitors, many of whom are important market players and pose a significant threat to Nestle. (ii) Word of Mouth (WOM): Negative word of mouth on social media platforms and other platforms is a huge danger to the company's reputation. (iii) Commoditized name: Maggi has become a brand in and of itself. Everyone asks for Maggi when it comes to noodles. In India, everyone says surf when it comes to laundry detergents.(Pallavi Rajain, Rupa Rathee, Ekta Batra 2019) BRAND IMAGE OF MAGGI With a valuation of $1,127 million, Maggi was placed number 18 in the Brand Z Top 50 Most Valuable Indian Brands study, conducted by Millward Brown and commissioned by WPP in 2014. There was absolutely no competition for this brand after 25 years of domination with over 70% of the market share. This is exactly what effective branding does to a product over time. The name Maggi exemplified the power of branding. Maggi had a 70% market share in instant noodles, with all the other brands vying for attention. With such a large market share, there is a lot of brand loyalty and trust to defend. (Pallavi Rajain, Rupa Rathee, Ekta Batra 2019)
  • 13. 13 THE MAGGI BAN Prior to the ban, Nestle's flagship brand or the most important brand under its banner Maggi Noodles had sales of over Rs 2000 crore. Maggi's recall from retail shelves and those on their way to shops cost the brand roughly Rs 3200 crore, and Nestle's brand devaluation cost the company another Rs 1,270 crore. A FSDA (Food Safety and Drug Administration) officer from Uttar Pradesh saw the phrase MSG on the package of Maggi and sent dozens of Maggi instant noodles to be tested in the lab to determine the MSG concentration. The test was done in Uttar Pradesh, and a follow-up test was done in Kolkata, which is a referral lab. The Gorakhpur lab tested the Maggi for Monosodium Glutamate, despite the fact that the business claimed it contained neither MSG nor lead. Both tests revealed MSG, as well as extremely high levels of lead (17.2 parts per million) in the Kolkata lab. The UP FDA (Food and Drug Administration) filed a lawsuit against Nestle Maggi at Barabanki Court based on the findings. On June 8, 2015, the Union Food Minister requested that the statutory regulator, the Food Safety and Standards Authority of India (FSSAI), conduct nationwide tests on Maggi in accordance with the Food Safety and Standards Rules, 2011. MSG is a flavor enhancer that should not be added to any food item intended for infants under the age of 12 months, such as cerelac. (Pallavi Rajain, Rupa Rathee, Ekta Batra 2019) The sequence of events leading up to the ban is as follows: ● 21st May, 2015- MSG and lead were discovered in Maggi Noodles samples analyzed by the FSSAI in Barabanki, Uttar Pradesh (UP). ● 3rd June, 2015- Maggi Noodle was temporarily banned in New Delhi by government decision for a period of 15 days. ● 4th June, 2015-Many more Indian cities followed suit and banned Maggi. The first was Gujrat, which revealed elevated Lead concentration in the Maggi 2 Minute Noodles in 27 out of 39 tests. Meanwhile, Assam has imposed a one-month ban on Maggi's extra- Delicious and Magic Masala Noodles variants. Many retailers, including Big Bazaar and Easy Day, have prohibited selling Maggi noodles in their stores. This was followed by a series of Maggi bans in India, affecting more than five states. ● 5th June, 2015- 13 tastemaker sachet samples were gathered in Uttar Pradesh and evaluated for lead content by Delhi officials. 10 of the 13 tastemaker sachet samples were found to
  • 14. 14 contain a high amount of Maggi products, which were banned in the state. Maggi was recalled across the country. ● 6th June, 2015- The Maggi Noodles have been banned by the Indian government for an indefinite length of time. ● 4th August, 2015- Maggi exported from India included no harmful ingredients. There was no Lead content in the test report. ● 13th August, 2015- The Bombay High Court temporarily lifted the ban on Maggi Noodles and questioned the previously conducted test reports that led to the product's nationwide suspension. These tests were not performed in National Accreditation Board Testing & Calibration Laboratories-accredited laboratories (NABL). ● 19th October, 2015-In a sting operation conducted by India today, it was found that the FSSAI passes samples without testing in exchange for a bribe. ● 20th October, 2015-The ban was removed by the Bombay High Court. ● 9th November 2015- The restriction was lifted across India. ● 30th November 2015- Maggi's five manufacturing units have resumed production. Nestle produces Maggi. India is currently sold to Canada, the United Kingdom, Singapore, and Kenya, among other countries. Except for Canada, the same noodles prepared for the Indian market are exported to other countries. The seasoning in Maggi for Canada is made with a distinct sort of salt. Packaging materials are created in accordance with each country's marketing strategies as well as the regulatory requirements of the importing country. The Maggi samples from India were also evaluated by food safety agencies in the United States, Canada, the United Kingdom, Singapore, Australia, and New Zealand. Countries to which India exports Maggi were concerned after the ban and tested Maggi samples. Despite the fact that the tests were negative and the Maggi shipped to these countries is identical to that produced for the Indian market. According to brand experts, Maggi's brand value has depreciated by at least 30%-40%. Retail analysts estimate that sales have decreased by 60-70 percent, resulting in a loss of nearly Rs 1,000 crore (Chandran, 2015). The Maggi noodles issue in India had a negative influence on Nestle's Zone AOA (Asia, Oceania, and Africa) growth, which was only 0.5 percent. Nestle's India revenues could take three years to fully recover as a result of the Maggi episode, according to
  • 15. 15 popular thinking, but the Swiss food giant is working to speed up the process, according to its Asia head.(Pallavi Rajain, Rupa Rathee, Ekta Batra 2019) MAGGI REVIVAL: TIMELINE OF EVENTS "Bringing the instant noodles brand back to the market was his main goal as he sought to strike a conciliatory note with authorities," Suresh Narayanan added. Many different techniques were used to bring the brand back to life in the Indian market. The entire incident can be viewed as a positive reinforcement approach designed to assist Maggi to reclaim customers who have switched to rival brands like Yippee, Knorr, and Wai Wai. This Maggi incident will undoubtedly assist Nestle in presenting the brand with a greater promotional appeal, this time an emotional one, in order to connect and reconnect with their countless followers. ● 9th November 2015- The sale of Maggi has resumed. ● 4th November 2015- Laboratories evaluated new Maggi samples and declared them safe to eat. ● 16th October, 2015-MAGGI Noodles are safe, according to test results from all three laboratories mandated by the Bombay High Court, with lead content far under acceptable limits Manufacturing at Maggi plants has resumed in preparing Timeline of Events of Revelation for more testing. ● 13th August 2015- The Bombay High Court overturns the government's ban on MAGGI Noodles, claiming that it was arbitrary and that natural justice standards were not followed. Nestle India has been given permission to reintroduce the product to the market if new tests conducted in three certified laboratories on current samples and then on the newly manufactured product find it safe.(Pallavi Rajain, Rupa Rathee, Ekta Batra 2019) STRATEGIES TO REVIVE MAGGI (a) Emotional Touch-Maggi's advertising strategies are always emotional in nature in order to entice customers. Maggi sought to add emotions in their advertising for the brand's resurrection this time as well.
  • 16. 16 (b) Television Commercials-Maggi spent a lot of money on television advertising in an attempt to regain the trust of its customers. (c) Various Sources for Promotion-Nestle made a number of attempts to resurrect its brand. New advertisements were shown, as well as social media involvement. (d) Exclusive Availability-To generate interest and demand, Maggi made their Noodles available exclusively through Snapdeal. Maggi made a brilliant decision. This was a calculated move. Maggi was only available on Snapdeal until supply ran out, and the stock only lasted a few minutes because it was a limited-time special. (Pallavi Rajain, Rupa Rathee, Ekta Batra 2019)
  • 17. 17 FINDINGS When Nestle India used several strategies to resuscitate Maggi noodles, some notable improvements happened. Nestle India used to spend 4.2-4.8 percent of its revenue on advertising and sales promotion, but after 2015, the company spent Rs 525.21 crore on promotions, or around 6.42 percent of total sales, a significant increase. The company has also worked to reduce the complexities in its organizational structure by reducing layers in order to cut processing time by 30-40% using strategies such as empowerment in decision making. Prior to the Maggi debacle, the company had been extremely confident, but that confidence had given way to complacency. The Maggi problem has changed their perspective and made them more adaptive, making doing business with them easier. Another key move by the corporation was its entry into new product categories like coffee, pet care, healthcare, and skincare. Nestle Ceregrow, for example, was the company's first foray into cereals. The company is looking to tap into the middle class and working women in order to maintain profitability. Due to intense competition from multinationals and domestic firms, such as yoga guru-turned-businessman Baba Ramdev's Patanjali Ayurved Ltd, the company's overall market share has practically halved in the last four to five years (2013-17). Ramdev debuted noodles just a week after Nestle India relaunched Maggi noodles, in addition to explicitly confronting Nestle on various issues. ITC Ltd's Yippee noodles and CG Foods' Wai Wai noodles gained market share during the period when Maggi noodles were prohibited, filling a gap in the Rs3,182-crore noodle market. Because of the competitive landscape and rapidly changing customer behavior, the Swiss firm's local affiliate is looking for at least one, if not two, brands that might compete with Maggi noodles in terms of sales volume. Over the next ten years, Nestle India's Chairman and Managing Director, Suresh Narayanan, expects the business will shift its focus from packaged food to health and nutrition products. In order to reclaim its market share, Nestle Maggi must take some bold moves. Nestle must prioritise the preservation of its most cherished brand, which it did not do, resulting in millions of dollars in losses. It allowed authorities to cast doubt on the product's quality, and they did not respond quickly enough with substantial evidence to back up the product's quality. As a result, Maggi became the subject of debates, damaging its reputation.
  • 18. 18 Nestle should have a strategy. It can't make up for what it lost in the early days of the debate by sitting silent and allowing the matter to calm down. In order to reach as many consumers as possible, a proactive approach is required. Nestle began its internet marketing effort in the later phases of its polemics, with the goal of reaching as many consumers as possible, which should have been done from the outset. It began by responding to consumer questions with answers that served the brand's best interests. It voiced powerlessness in the face of a misunderstanding between Maggi and the relevant government officials, and stressed that the quality of Maggi's product was not compromised. Nestle should not have dismissed the possibility of discovering lead and MSG in Maggi, as indicated by government officials based on laboratory test results. An alternative approach should have been used, with the corporation expressing their desire to investigate the problem. Nestle Maggi has developed an emotional bond with its customers over the course of 30 years. This could be one of Maggi's marketing initiatives for regaining market share in the noodle business. Quotes like "Maggi is back" should be plastered all over television, newspapers, radio, billboards, and magazines. To promote Maggi's pre-launch and re-launch, digital marketing on social networking sites such as Facebook and Twitter should be employed widely. Fan pages and articles with keywords like "no MSG," "no lead," and "meri same original Maggi" can be pushed, and hashtag moments like “We Miss Maggi” and “Bring Maggi Back” can be added to the already established hashtag moments. Nestle should enlist the help of reputable public figures to undertake quality checks on Maggi during the manufacturing process and label it as safe to eat. National Geographic and Discovery should be asked to produce a documentary about the factory's manufacturing process, as well as a chemical analysis of the product and any dangerous or non-harmful impacts. Small packs of maggi can be placed near the billing counters at grocery shops to boost awareness of “We are back” and reposition the brand at the same aisle levels as the consumer, according to a marketing manager. Furthermore, giving free samples to students in schools can result in sales.
  • 19. 19 CONCLUSION As a result, we see how Maggi was engaged in too many problems and how the government issued a ban that cost the company millions of dollars. Furthermore, it disappointed Indian consumers who had been eating Maggi since childhood and hence had an emotional tie to the brand. Now that Maggi is planning to return after passing a few more tests mandated by the Bombay high court over the next six weeks, the market is at a loss as to what marketing approach the company would use to reposition its brand in the minds of consumers and reclaim its early market share of 80%. Given what Nestle did and could have done, it is clear that there was a communication breakdown between Maggi and its customers during the issues, which has to be addressed. There is also some mistrust between the government and the Maggi that needs to be cleared up. Certain corrective steps will be required in order to maintain what Nestle has enjoyed for years, namely high brand loyalty and brand connect. It should return to the market as soon as the issue is entirely fixed with a better quality product that fulfills the criteria and resume its place in the Indian market.