Brand Extension: Maggi

BRANDING STRATEGY

It reflects the number and the nature of the common and the distinctive brand elements a firm applies to the products.

Choices for the branding strategies:

1.Development of new brand elements for new

products.

2.Application of the existing brand elements.

3.Combination of the above.

BRAND EXTENSION

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

Types of brand extension:

1.Line Extension

2.Category extension

ADVANTAGES: DISADVANTAGES:

New product acceptance Causes brand dilution

Facilitates marketing communication.

Failure of the extended brand can dilute parent brand equity

Low cost of introductory launch campaign.

Shift of emphasis from the core business.

Improves customer loyalty and credibility of the company.

Can lead to preemptive cannibalization.

Improves customer loyalty and credibility of the company

Inability to create a new brand with unique brand identity.

BRAND EXTENSION

SUCCESS OF BRAND EXTENSIONEvaluation of success of the extended brand: Advertising campaign emphasizing the product

rather than the parent brand. Market penetration of the parent and the

extended brand. Evaluation of the existing brand equity. Contribution to the parent brand equity. Perception of ‘fit’ between the parent and the

extended brand based on production or situational complementarities.

BRAND PORTFOLIO• It is the aggregation of all the brands and the

brand lines a firm can offer in a market category or segment.

• Advantages of a good brand portfolio:1. Increasing shelf presence.2.Attracting consumers from other brands.3.Yielding economies of scale.4. Increasing internal competition within the firm.

MAGGI-A BRIEF OUTLINE• Brand ‘Maggi’ was launched in India in 1983 by

Nestle India with its flagship product: Maggi noodles.

• Flavors offered included: chicken, masala, capsicum, lasagna, sweet and sour.

Competitors:• It enjoyed a first mover advantage in the segment.• Competition from homemade and ready-to-eat

outside snack items were rife.• It was portrayed as a clean and nutritious

substitute for the ready-to-eat snacks.

TARGET MARKETING AND POSITIONING

It had a catchy tagline: ‘fast to cook and good to eat.’ Noodles was portrayed as a helping hand for the

working women who had little time to cook healthy food.

The brand was positioned for the working women but children were the biggest consumers, causing initial failure.

Early Brand repositioning: It developed the 2 pronged convenience-fun strategy. Sales promotion was done by offering freebies for

empty containers and packs.

Marketing Mix• Product

– Ready to cook meal– Variants for different segments

• Promotion– Advertising focused on kids– Distributing free samples initially.– Sponsoring cookery shows

• Price– Differentiated packaging– Lower price strategy

• Place– Wide Distribution network, spread across Kirana

stores, retail outlets etc

Marketing Strategies Adopted

Product Lifecycle

Maggi’s Food FamilyNoodles Sauces Soup Soup

Sanjivani

Maggi 2 minute Teekha Masala Cream Mushroom

Amla

Maggi Aata Noodles

Tomato Chatpat Sweet n Sour Badam

Maggi Rice Noodles

Imli Khatta Meetha

Tangy Tomato Spinach

Maggi Vegetable Aata Noodles

Tomato Ketchup

Creamy Chicken Dal

Maggi Cuppamania

Hot & Sour Mixed Vegetable

Tomato

Tomato Pudina Rich Tomato

Oriental Chilli Garlic

Other Extensions

Bhuna Masala ( Both for Gravy and Dry Dishes )

Maggi Magic Cubes ( Chicken & Vegetable Seasoning )

Problems with Noodles Market1993 – First Variant of Maggi Huge Advertisement –

75% of yearly expenditure

Maggi’s Soup story in Soup Maggi Soups launched in early 1990s 1996 - Knorr entered the market with

extensive distribution and heavy marketing.

Knorr’s substantial share in a very short span of time.

Instance 1 : Maggi v/s Indian Taste In 1995,

Tied up with Pune based Chordia Foods to launch pickles Tied up with Indian Food Fermentation, Chennai based

company to market popular south Indian food preparations in consumer packs

1996 Luke warm response from the market for both the

ventures Maggi had failed to deal with Indian Food Category

Optimist Maggi set target of 25000 tonnes , could meet just 14000 tonnes.

Adding to woes Maggi’s Tonite Special, a range of cooking sauce failed miserably

Instance 2: Macaroni a Failed Experiment Vision

Kids who had grown up on maggi had become teenagers

They seemed to move away from a product associated with childhood

New Product to lure them back

July 1997, Maggi launched Maggi Macaroni Backed by multimedia advertisement campaign Tag Line – Tum Roz Baby

Problem 1 75 gm pack priced at Rs 11 as against 100 gm pack of

maggi noodles at 9 Customers failed to see any noted value addition No significant difference between Magi Macaroni and much

cheaper macaroni available in the unorganized sector. Problem 2

Problem with the taste Macaroni being thicker, did not absorb the tastemaker

well and thus did not taste well

Results Sales began tapering off Nestle WITHDREW the product completely out of the

market.

The Thing that clicked ..!! Amidst all this One thing did exceptionally well

for Maggi Maggi’s Its Different Brand

Launched with a series of humorous commercial *ing Javed Jaffery and Pankaj Kapoor

Maggi Ketchup and Sauce became the leaders in the segment

Faced threats from brands like Kissan in late 1990s But survived and continued to do well…..

Relaunch

Strategic Brilliance

Milestones achieved by Maggi

Competition

Competition

Competition Despite the growing competition, Maggi

Noodles managed to remain the leader in the instant noodles segment.

In 2003, it led the instant noodles segment with a market share of 80 per cent while Top Ramen remained a distant second with a 19 per cent market share

Despite competition, Maggi constitutes of around 42% of the total indian sauce market followed by kissan at 26%.

Brand Repositioning• Nil introduced Maggie, in 1982 at that time

consumer were conservative and preferred traditional Indian dishes.

• NIL was trying to create new food category, instant noodles in India, initially company targeted working women as Maggie noodles was fast to cook and offered convienience but it failed,

• NIL conducted research which revealed that children liked Maggie and were biggest consumers.

After this NIL shifted focus from working women and targeted children and their mother through marketing.

NIL positioned noodles as “convince product” for mother and “fun product” for children

The noodles tagline “Fast to cook and good to eat” was also in keeping with this re-positioning. With time NIL changed tagline from “Bas 2 minutes” to “Healthy bhi, tasty bhi” and this has hit Indian consumers.

Introduced Maggi Vegetable Atta Noodles

To meet the new needs of the Indian consumer who now wants to include health and wellness in their foods in a convenient manner

Contributed 11% value in the first seven months

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

• Food and Beverage Survey by FICCI in Feb 2006:

• Health foods, health food supplements, convenience foods and branded foods are the rapidly rising segments of F&B Industry

• Market for branded food products growing at a rate of 15% in early 2000s

• Reasons for growth: changing lifestyles, eating habits, increasing purchasing power of middle income group

Future• Tap consumer wants further.• Launch products that have good potential

for growth.• leverage the parent company's expertise

for innovative insights into further developing the brand.

• Nestlé worldwide spends a lot of money on R&Dto give consumers what they want in terms of taste, health and convenience.

• At the end of the day consumers don't buy strategy but good products.

Suggestion• Focus more on the core brand i.e.

Maggi 2 minutes noodles.• Spend on R&D and promote as health

product.• Further penetrate the rural market• ‡Introduce innovative products with different

brand name ± i.e. go for multi-branding strategy.