Sonali Sitoshna Nayak

Nestle
Maggi
MBA 2016-18
Pricing and
Positioning
Case Analysis

Introduction
Maggi, an instant food product from Nestle India Limited was
launched to the market in the year 1983. This Maggi 2-minutes
noodles gave rise to the instant noodles concept. The product
really created a long term place for itself in the market through
the services it delivered to its consumers, employees,
shareholders, business partners. The market of instant noodles
was growing very fast with a rate of around 200% growth in a
span of 4 years in India. During the year 2014 the consumption
of Maggie was 5340 million of cup or packets. Maggi
accumulated 70% market share in its market and 30% it
contributed to Nestls total turnover (9000 crores).

Background
In June 2015, there was ban on Maggi as the food safety and
standards authority claimed that it contains high level of lead
and monosodium glutamate (MSG). The sales of Maggi dropped
70% after that ban. There was an immediate need of making a
comeback to the market by Maggi. This is because: India was the
second largest market for Nestls Maggi, adding to it the ban
spread to the neighboring countries very fast making it more
difficult for the company. The situation stated growing worse day
by day with increasing number of food safety tests and bans from
different corner of the world. According to the FSSA, Maggi
contained 17ppm of lead (permissible limit is 0.01 ppm). On the
contrary Maggi India claimed that the lead content is below the
permissible limit and MSG is not added, rather it might come up
from the other sources used in its production naturally. This ban
made all the convenient stores, retailers, supermarkets and
hypermarkets discard their stocks from their stores. It became
challenging for Nestle to finally break the box and think of some
strategies to come back to its position again. Social Media played
a bitter role for defaming the brand and the product. The stocks
were collected and burnt away which was the first step from
Nestle India to regain faith in Maggi. This action relieved the

general public that there is no left out stock in the market which
were claimed to contain high levels of lead and MSG.

Key Problems
The problems that Maggi faced are:
- Social media defamation. These days anything can happen
in a span of seconds which is the power of social media. The
news about the lead content and MSG in Maggi spread like
fire in a forest which was unstoppable.
- The second problem is that Maggi has been put into the
courts of defamation several times before this situations
also. Nestle India has been ignoring those but never faced
any substantial losses because of that unlike the period of
June 2015.
- Due to the ban on Maggi, there were many other suppliers
of spices who got affected also.
- International market for Nestle was also getting affected
due to the presence of competitors.
Pricing of a product plays an important role in deciding its
penetration into a market. For Maggi, there was loss of both
tangible and intangible assets and that is trust of consumers.
There were three options for Nestle for re-launching Maggi:
- Increasing value, keeping the prices same
- Increasing value, lowering the prices
- Increasing value, increasing the prices
So it was clear that Nestle would be increasing the value of its
product i.e. making the product safer and promoting these
differentiated additional features appropriately to the consumers,
and the only concern was how to decide its pricing and
repositioning. From the sales volume forecasting, it was
predicted 50% increase in Maggi sales in the year 2019.
Maggi had successfully positioned itself in the past years by
adapting campaigns like Me and Meri Strategies, Two
minutes mein Khusiyan etc.

Proposed Solutions
From Exhibit 1, it is clear that Maggi has been providing similar
sorts of perceived benefits with a higher pricing to its
consumers.
So the re-launching should be done by following the below
mentioned points:
- Keeping the price same
- Improving the values
- Testing the products rigorously before re-launch in order to
ensure its safety and lift the ban on the product.
- Publicly releasing the safety test reposts for the newly
manufactured packets of Maggi, which would appeal to the
consumers. It is believed and found from the research that
instead of the ban, there were ardent Maggi lovers who
were not affected by the blames put on Maggie.
- So the right customer are needed to be targeted at first.
- Along with these, as previously organized campaigns had
always boosted the sales of Maggi, this time also Maggi
should come up with a new campaign in order to attract the
consumers and make it social.
- Marketing Mix to be taken care of:
Product: Lead and MSG free instant Maggi noodles
Price: Same as previous
Place: All tier cities of India, followed by the
international markets
Promotion:
Advertisements,
Social
Media,
supermarkets, hypermarkets
Exhibit 2 gives us the information that Maggi had been in the
highest position of the market share list. Looking at the current
trends, Maggi is slowly regaining its position and is again set to
rule in the instant noodles category. Net profits have increased
by 17% as compared to the last years crisis trend. Before relaunching Maggi, there was a campaign of how Maggi was
missed throughout the period of ban which were uploaded with

#WeMissYouToo hashtags. Those videos collectively were

circulated in the form of advertisement so as to connect with the
consumers. Even these were spread on social media which is the
fastest means of communication these days. So we can say that
Maggi regained its position by a blending the emotional quotient
of consumers with the safety standards.