Академический Документы
Профессиональный Документы
Культура Документы
306
CONSUMER BEHAVIOUR
mpany has been able to innovate in a cluttered market, and come up with differentiated products
in the mass and premium segments. Its deep pockets and willingness to pump money into the
foods business helped, but Dar says it hasn't quite been a cakewalk. The company's first biscuit,
called iBisc, bombed. Dar says iBisc was ahead of its time. "We realised that though we wanted
to be different, it was also important to be strong in conventional categories," he says.
rivals," says Dar. "We realised that... we need to understand the consumer and make the
experience better. But consumer preference may not be the only driver. Therefore the need for
innovation - for having something differentiated in terms of packaging, communication or
product - would be very important for Sunfeast to become a strong brand."
The gap that the company could take advantage of was at the premium end. It would also
improve profitability, as margins were considerably higher than for basic biscuits and atta.
What followed was months of effort, with Welcomgroup chefs trying to perfect recipes that
could become successful brands. Dar says the chefs created as many as 40 or 50 options, and
some became successful premium brands such as Dark Fantasy, Chocofills, Choco Melts,
Delicious and, most recently, Farmlite.
Devendra Chawla, CEO of the Future Group's Food Bazaar, says ITC Foods succeeded in the
market because it went above the value chain and developed a market for value-added categories
above the basic level.
The strategy was timed well, as India was moving up the consumption curve, and even
consumers in small towns wanted premium products. For example, Dark Fantasy, priced at Rs 30
for a 75g pack sells in 450,000 outlets nationwide, out of which 100,000 outlets are rural.
Regional Preferences
Few customers are aware that the Aashirvaad atta in Delhi or Lucknow is not the same as in
Bangalore or Chennai. Dar says that special blends and granulations for different markets has
been key to ITC's success in a category where rivals have gone horribly wrong. He says: "We
realised that the blend that people like in the North may not be the same in the South. In the
South, which is not an atta-consuming market, atta has entered homes because it is considered a
healthy option. In the North, atta is consumed daily, and the look and granulation required there
are different." He says it took ITC three years of research before the atta finally hit the market.
Future Foods' Chawla agrees that customising food for regional preferences is important.
"Preferences change every 200 km," he says. "The dal in Maharashtra tastes different in Pune
and in Kolhapur. Similarly, the paratha in North India is made of wheat flour, but the one in
Kerala is
ITC realised it has a starting-point advantage in distribution, and knew how to reach big and
small outlets: Raghu Vishwanath MD, Vertebrand
Brand specialist Harish Bijoor, CEO of Harish Bijoor Consults, says: "India needs and demands
possibly 40 types of attas. ITC needs to invest in this through their R&D efforts. Catering to the
commonality-run market will dry up as an opportunity, as consumers flock to brands that offer
differentiations that they possibly don't even know they could crave."
Atta is emotional subject with Indians
MUMBAI: Atta is an emotional subject with Indian consumers and the quality of chappatis determines the mood
around the dining table. "If you have won that round, you are in business" says Ravi Naware, divisional chief
executive of ITC foods division in an exclusive interview.
QUESTIONS
Q 1 Traditionally atta market is dominated by local flour mills ,but ITC has changed
the scenario, what further is needed to grow ?
Q 2 In India 68 % population is rural based .What ITC needs to do to gain this
market share
SOLUTIONS
SWOT ANALYSISITC FOOD DIVISION
STRENGTH
1
2
3
4
WEALNESS
1 Margins are constrained as it is a generic product
2 Many customers really cannot differentiate between quality product and
local product
Key concepts
MBA SEM I
106 BASICS OF MARKETING
UNIT II Case Study
Seeking cooperation from authorities, he said: "It is my endeavour and those of my colleagues
that we come to with respect, with cooperation, with support from the authorities, I am not in a
confrontational frame.
"...Nestle is a part of this country. We will be a part of this country as we have been for the last
100 years respecting the laws of the land and also respecting all the authorities. It is my hope that
we are able to find a solution and we are able to move forward."
He, however, declined to 'hazard a guess' on how soon Maggi will be back on shelves saying the
matter is sub-judice as Nestle India has challenged the ban on Maggi by central food safety
regulator FSSAI in the Bombay High Court.
Narayanan said due to the ban, "a whole business segment has been dismantled" and "the whole
system (of supply chain, manufacturing and distribution) is on freeze". Hit by ban on its Maggi
instant noodles, Nestle India reported a standalone loss of Rs 64.40 crore for the quarter ended
on June 30, 2015 -- its first quarterly loss in over three decades. It had posted a net profit of Rs
287.86 crore during the April-June quarter of financial year 2014-15.
Calling for an "introspection" within the company to overcome the challenge of Maggi ban, he
said: "As a consequence of what has happened we will be having a process of introspection as an
organisation, in terms of learning what was the thing happened, what was the thing that was right
what was the thing which we have done was not right."
This is going to be constituting the part of the learning of the organisation. All this is internalised
and taken for the future in terms of assuring that the company doesn't come by the unfortunate
incident again, he added.
When asked if the ban on Maggi has hurt sales of other products of the company, he said there
has been impact as the products were sold in the same geography as Maggi.
In order to overcome that, Narayanan said the company would be increasing the advertising and
marketing spend on other product categories.
Why Nestle Can't and Won't Forfeit Brand Maggi
As Nestle braces to regain consumer trust over safety of its popular noodles, the jolt on its India
operations will be severe, given the position "Brand Maggi" has enjoyed in its ecosystem,
analysts said. But all may not be lost either, for a marquee brand built over three decades.
Little wonder, the stock may have lost 15 percent in some six sessions since a sample of Maggi
noodles from a small town in India's most populous state, Uttar Pradesh, allegedly found higherthan-allowed levels of some harmful substances (lead), eventually resulting in India's food safety
watchdog banning its further production, sale and export.
But investors still appeared to have hope.
At noon on June 5, for example, when the packed press conference of Nestle, addressed among
others by its global chief executive Paul Bulcke, was in full swing at the Oberoi Hotel here - and
the food safety authority's order was out by then - the stock actually rose, from the day's low of
Rs.5,718 to a high of Rs.6,127.
"The fall in the Nestle stock isn't very significant. The price reflects investor sentiment, which is
driven by consumer sentiments. Nestle's consumers are now anxious," said Dipen Seth, head of
institutional research at leading brokerage HDFC Securities.
What the analysts did concede was that the developments would affect the stock for some time.
"Nestles effort towards driving premiumisation and improving the overall growth trajectory may
take a hit because of change in focus to damage control and revive the Maggi brand," said
Edelweiss, an investment advisory, maintaining that costs on this can hit margins.
"Also, during this phase, the brand may lose market share to rivals like ITCs Yippee, adding
further fuel to fire," it said. "In a bid to revive the brand, the company will have to invest heavily
to communicate that its products are safe -- similar to what Cadbury did in 2003."
A closer look at the numbers on Nestle's operations reveals how Maggi dents its top line.
Among the four divisions of Nestle India, the category of "prepared dishes and cooking aids",
which broadly translate into Maggi, accounted for 31.5 percent of sales in 2014, as per the last
presentation the company made before analysts.
Among the remaining divisions, the category of "milk products and nutrition" had the largest
share of 47.1 percent, followed by 12.2 percent for "chocolates and confectionery" and 9.2
percent for "beverages".
The Maggi unit saw a 1.8 percent increase in volumes in 2014 over the previous year and 8.1percent rise in value at Rs.21.4 billion. "Value market share stable at 80 percent in noodles. Good
response to Maggi oats noodles. Strong performance of fortified seasoning," it said.
What about exports?
"Nestle India currently exports small quantities of Maggi noodles to the US, Canada, UK,
Australia, Singapore and Kenya," Nestle said. "We also make Maggi noodles in other countries
and these are not affected by the situation in India," it added.
"We are working closely with the regulators in each country to explain the situation in India and,
where they want to test the products, we are cooperating fully with them."
Globally, the consolidated revenues from Maggi alone for 2014 are not available. But the
category of "prepared dishes and cooking aids" accounted for 13.54 billion Swiss francs ($14.4
billion) out of the total group sales of 91.6 billion Swiss francs ($97.5 billion).
Also Brand Finance, the London-based intangible asset valuation consultancy, in its latest report
for 2015 ranked Maggi 23rd globally, with a value of $2.4 billion. Nestle, its parent, topped the
list with an assigned value of $21.2 billion.
This apart, the brand, which extends to a range of products, has a significant share in the annual
global market for instant noodles of 102.74 billion packets. In India and Malaysia, where Maggi
has significant presence, the market size is estimated at 5.34 billion and 1.34 billion packets,
respectively.
What does it take to recover from the crisis?
It is not going to be easy. The Maggi brand, which came into existence in Switzerland in 1872,
and came into the Nestle fold in 1947, has products ranging from soups and noodles to sauces
and seasonings.
In India, it was launched in 1982-83. Today, after 32 years, it ranks among the most recognised
brands, almost synonymous with instant noodles. While it cannot really fade away from
memories -- nor will Nestle allow it -- salvaging the trust will also require pro-active action by
the firm.
"The best way to get over this is: Nestle should start communicating with stakeholders. Written
communications are very important. The company should make some audio-visual and post it on
their site for people to see," said noted market analyst Deven Choksey.
"To recover from this, there are two key elements -- trust of consumer and trust of investors. The
business performance of the company originates from the consumer performance. At the end of
the day, the truth should come out whether the product is safe or not," Seth added.
The company, perhaps, also realises as much. Rebuilding trust and consumer confident was one
phrase that was repeated several times over at the press meet by chief executive Bulcke, who was
specifically dispatched to India to clear the air with all sections of stakeholders, from regulators
to consumers.
"Maggi has been trusted in India for over 30 years. Trust of our consumers and safety of our
products is our first priority anywhere in the world," Bulcke said, adding: "Our priority now is to
engage all stakeholders to clear the confusion. Maggi will be back on store shelves soon."
KEYWORDS
QUESTIONS
Q 1 How to regain the customers back at the same level of sales volume and
profitability ?
Q 2 Do you think that Indian Consumers will go back to the brand which has been
banned.
SOLUTIONS
SWOT ANALYSISNESTLE INDIA - MAGGI
STRENGTH
1
2
3
4
WEALNESS
1 Ban on product by various state govts has stopped business
2 Has incurred over 350 crores loss in recalling and destroying Maggi
4 Has suffered worst ever Image loss in co. s history
5 Company is overdependent on Maggi Noodles for its sales and
profits
OPPORTUNITIES
1 Market potential is very high
2 Nestle can operate at large scale PAN India
3 Indian consumers sill have confidence on cos product
THREATS
1 Local players ,competition can take advantage to establish their
brand
2 Consumers can develop taste for other alternatives for snacks.
3 Consumers can go back to traditional breakfast items ( Region wise)
SOLUTIONS
ALTERNATIVE I
1 Undertake a consumer survey for -- Image research and alternate
arrangements made by them in absence of Maggi.
2 To reintroduce the Maggi with a NEW tag giving correct information
and dispelling the doubts / questions bothering consumers
3 Ensure that the product information is available to customers giving
complete details for their evaluation and to make purchase decision
To use the marketing mix stimuli to have positive impact on
consumers.
ALTERNATIVE II
1 Reintroduce product with emphasise on Govt. Certification and
clarifications from FDA
2 T0 put appropriate marketing efforts to include Maggi Noodels in
the Mid Day Meal Schemes of various state govts. Which can give a
quantum jump in sales and profitability.
CONCLUSION / MY OPINION
The company can certainly regain its market in India over a period of time .
The real challenge is how soon .The company should adopt the Marketing
strategy to WIN consumer back by adopting combination of above both
solutions on a time frame.
QUESTIONS
Q 1 Traditionally atta market is dominated by local flour mills ,but ITC has changed the
scenario, what
CONSUMER BEHAVIOUR
INTRODUCTION
It has been a lost decade for Tata Motors. The 138,455 cars the company sold in India in 2013-14
are close to the number it clocked in 2003-04, even as the car market almost tripled during the
period, from 902,096 to 2.5 million units.
While car industry sales have grown, although slowly of late, Tata Motors market share has
fallen from a peak of 16.9 per cent in 2004-05 to 5.5 per cent in the past financial year.
Financial Year
Nano sales in #
2009-10
30350
2010-11
70432
2011-12
74527
2012-13
53848
2013-14
21129
2014-15
15933
Tata Nano
Alto 800
* The Nano's trunk is only accessible from inside * Maruti 800 initially had only an opening
the car, as the rear hatch does not open.[21]
rear-windscreen, but later got a full hatchback.
* One windscreen wiper instead of the usual pair
(also seen earlier on certain Citroen and
* Two windscreen wipers.
[5]
Mercedes models)
* No power steering initially, unnecessary due to
its light weight.[5] Added in higher variants in
* Power Steering only in higher variants.
later models.
* Three lug nuts on the wheels instead of the
* Four lug nuts per wheel.
usual four (also seen on Smart)[22]
* Only one wing mirror on base models. Higher
* No option for both side ORVMs in any
variants fitted with passenger side ORVM from
variant.
2012 onwards.[5]
* Radio or CD player is optional (the idea picked
on some basic car models in North America and * Radio/CD Player is optional.
all basic cars in India) [5]
* 10 airbags on any model[23]
* 10 airbags in any variant.
* 624cc rear engine has 2 bigger cylinders (312cc * 800cc front engine has 3 smaller cylinders
each)[5]
(266cc each).
* No air conditioning in base model (as on most
* No air conditioning in base model
basic car models in Europe and North America)[5]
* Front passenger seat same as the driver seat,
* Front passenger seat same as the driver seat,
Negative publicity
There were reports of several fire incidents involving the Nano.[36] The company denied those
were connected to the cars design or its parts and blamed "foreign electrical equipment" found
on top of the exhaust system.[36] The company offered to retrofit the exhaust and electrical
systems but refused to recall the cars.[36] Tata extended the warranty on the car, including those
already sold, from 18 months to four years in early December 2010.[36]
The Nano has received a tepid reception from Indian consumers. Reasons given have included
that it is still too expensive compared with a motorcycle.[37] Also it is identified as the cheapest
car,[38] whereas a secondhand car that was more expensive when new has more social cachet.[39]
The fires and other safety issues have also been nominated.[37]
Damage control
Within a fortnight of Tata Group chairman Ratan Tata's admission that there have been mistakes
in the marketing and distribution of the Nano, an official at Tata Motors has said all elements of
its strategy are in place to push sales. Initiatives to reach out to various sections of target
customers, including initiatives to undo the perception that the Nano is a poor man's car, have
already begun to yield positive results and improve sales, said R Ramakrishna, the company's
vice-president said. "Quite a lot of marketing activity is in place now - reaching out to the target
segments; network strategy; handling the customers at the dealerships ; tie-ups with various
financiers ," he said in Hyderabad on Friday, "Every single element is falling in place now."
Questions
1 ) Why consumers buying behavior changed from very positive to very
negative ?
2 ) What should be the future Marketing Strategy for winning customers
confidence back ?
SOLUTIONS
SWOT ANALYSISTata Nano
STRENGTHS
1
The company has large resources at its disposal in terms of finance vendors etc.
The company has access to best automobile techonoligies in world as it has acquired
prestigious brands such as Jaguar , Land Rover from Ford.
The company has excellent sales and service & spares network across India and has total
coverage of Rural India
WEALNESSES
1 The company has an image of a commercial vehicle manufacturer rather than as a car
manufacturer due to its Indica range .
2
The initial image of Nano was a cheap car but over a period prices have escalated
and consumer does not perceive it as a chap car.
OPPORTUNITIES
The market for small cars in India is still very large and with growing middle class the potential
will remain for years to come.
Even though MNC may offer small cars still Nano can be an alternative choice for consumers
especially of rural areas.
THREATS
1
Competition can enter small car market with still economy varients
SOLUTIONS
ALTERNATIVE 1
ssss
1 The company has not been able to gain customers confidence inspite of its strong
marketing efforts across marketing mis such as New varients / colours Heavy
advertising on print as well as electronic media .
2
The consumer is still hesitant to make purchase decision for Nano due to past
experience and negative publicity.
The company can have rub off effect of its other MNC car brands being sold world
wide.
ALTERNATIVE 2
1 To introduce niche market models such as CNG version Bifuel vehicles etc to
get some volume in exixting markets
2
To launch innovative marketing schemes such as buy back after 5 years at pre
fixedprice Zero maintenance for 5 years etc .
To adopt alternative channels of sales as Direct marketing to gain some volume and also
get direct customer feedback which can be used for further marketing strategy
formulations.
To focus on Rural markets b & c class of towns for promoting existiong models /
varients of Nano.
CONCLUION / MY OPINION
1 It is very challenging task of reviving a product such as TATA NANO in India in such
a adverse market scenario with strong customer resistence.
It is a classic case for any marketing student and professional to find out a solution to win
the customer for this product.
2 In view of such a complex situation the company should adopt combination of both
the above alternatives for short term volume gain and long term objective to gain
customer confidence.
Key Concepts
Consumer buying behavior , decision process , marketing mix , stimulus, negative
publicity for product , customer confidence ,