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Summary and case analysis: Nestle’s Maggi: Pricing and repositioning a

recalled product IVEY Publishing


Situation Analysis & problem statement

In June 2015, the Indian food regulatory body, the Food Safety and Standards Authority of India, banned
Nestle's brand of noodles, Maggi declaring it unsafe for human health. FSSAI observed that the product
is having 17 ppm of lead where the allowed limit is only .01 ppm although Nestle refuted all the claims.

Being 2nd largest market, to retain the trust of consumers, Nestle recalled Maggi from all store shelves in
the country. This recall costed Nestle a cost of around INR 3.2 billion including stock, material and
various stages supply chain. Nestle India occurred a direct loss of 20% revenue. Their stock fell by 15%.
Not only that, it affected entire ecosystem including venders for Maggi. Not only that, the incidents
were reaching other countries as well which was not good for the brand.

Having a market share of 63%, nestle was nowhere in a position to avoid this product line. To recover all
the losses, it became imperative for Nestle to design a comeback. Management was then grappling with
an improved re-positioning strategy to help Nestle retain its considerable market share in India.

SWOT Analysis

Strength Weakness
- People trust brand value
- Multiple successful marketing - Unhealthy Food content
campaign - Current crisis
- Reachability
Opportunities Threat
- Market demand for quick food is high - Competition
- People’s inclination toward Patanjali
- Loss of trust due to current crisis

Product, pricing, positioning & promotion

Product:

India has a big noodle market around INR 40 billion. However, from market share perspective, out of
total market, Maggi has control over 63% of market share. They have multi flavored products in the
market to target people with different taste and preferences.

Pricing:

During the crisis, Maggi was priced at INR 25/ packet for 200grms. Until 2013, Maggi has been seeing
good growth at 8.7% per year in India. However, in 2014, Nestle has seen slowest growth in last 5 year.

At the same time India’s fastest growing Aurvedic company Patanjali has also launched noodles and
claim to have superior value compare to Maggi at lesser price of INR 15/-.

Prepared By: Group 6 (Chandan, Siddharth, Mahesh & Kavipriya), PGPBM 2018-20
Summary and case analysis: Nestle’s Maggi: Pricing and repositioning a
recalled product IVEY Publishing
One of the major issue that Nestle needed to resolve was what role pricing would play in influencing
consumer purchase decisions during the proposed product relaunch. They could take the following
strategy:

1. Increased value when keeping same price


2. Increase value with lower price
3. Increased value with higher price.

Positioning:

All the past promotions campaigns for Maggi has consistently communicated a sense of happiness.
Some of the most successful campaign of Maggi are

- Me and meri Maggi


- Meri Maggi- Two Minute main khusiyan
- #HealthyIsEnjoyable

Maggi has enjoyed 25 years of successful business and connecting with people using its campaign.

Promotion:

Almost all of the promotion campaign that Maggi has launched in pas has been successful. “Me and meri
maggi” was launched to celebrate 25 years of Maggi. Not only the professional filming, they have used
platform and asked people to send their stories to Maggi and published few of them as ads to connect
with people emotionally. They also published 50 stories on the rapper of the product. They have tried
connecting with audience of all age group including kids and adults and across all the ads they have tried
to communicate happiness in their advertisement. For few of their campaign, they have also gone with
star endorsement and social media for reaching out to people.

Recommendation

1. They should come back with awareness campaign to communicate that they are safe for human
consumption and now it’s verified by FSSAI where the same thing could not be said about other
brands
2. They should not reduce price, instead should communicate their value and connect with people
with nostalgia
3. They should launch some more products with healthy base like Atta, oats to compete with
competition

Prepared By: Group 6 (Chandan, Siddharth, Mahesh & Kavipriya), PGPBM 2018-20

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