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How has MAGGI’s GENIUS Marketing Strategy made it a Market Leader? Nestle’s MAGGI Business Case Study

Maggi India
Maggi India is one of the most iconic brands in Indian business history. And for our generation, it is even more special because it has been an integral part of our childhood. But from the business standpoint, the most fascinating thing about Maggi is that way back in 1983, both Maggi and instant noodles were completely alien to the Indian culture. And yet, Nestle single-handedly created a Rs 937 crore market and has been a market leader in the domain for 38 years. And despite giant rivals like ITC, Marico, and Unilever, even today, Maggi has a whopping 60% market share in the instant noodle segment.

 The question is, how did Nestle create a market for a seemingly alien dish in India? How did it almost establish a monopoly in the instant noodles market? And what are the lessons that we need to learn from Nestle’s genius marketing strategy?

This is a story that dates back to the 1950s, in Japan. During that time, the country was still recovering from the downfall of World War Two. So noodles were one of the most affordable foods in the market. But because the demand was too high, and it took a lot of time to prepare, it resulted in long lines and long wait times. This is when a curious Japanese man named Momofuku Ando decided to make a type of noodles that could be prepared quickly and cheaply. And after hundreds of iterations, he was finally successful in making a revolutionary product that we all know today as the instant Ramen noodles. Now although his newly invented instant ramen did not debut until 1958, the instant ramen noodles became a game-changing business during the economic boom in Japan. And as the country started developing rapidly, instant ramen became such a big hit that despite costing six times more than conventional noodles, the Japanese still bought instant ramen in large quantities. And soon enough, the instant ramen products started traveling abroad to the US to again become a massive hit. And even today, the parent company of ramen Nissin accounts for 50% of the billion-dollar instant noodle market in Japan.

And while all of this was happening, Nestle was carefully observing the market and realized that instant noodles are a goldmine product in Japan. But very, very cleverly, Nestle chose not to pursue the Japanese market, despite knowing that there was a billion-dollar worth of market share still left to be capitalized in Japan. The question is when there was a clear market for a scalable product that too in a booming economy, why didn’t Nestle enter the Japanese market? Now there are two seemingly logical reasons for that. Number one, Japan was not so liberal hence, it would have been very difficult to operate as a foreign company in Japan. And secondly, why go on to war against a monopoly when you can create your monopoly? Right? Well, that is why Nestle started exploring every other market except Japan to create a market for instant noodles. And one of the biggest markets was India.

And that is how ladies and gentlemen, Nestle entered the Indian market in 1983. And like I said before, both the concept of instant noodles and the Maggi brand were completely alien to us. We were still a closed country with hardly any foreign companies in the market. And the western influence over us was relatively very less. It’s almost like asking our parents to eat lasagna every single day. Then the question is, how did Nestle turn Maggi into such an integral part of our lives? Well, that is because Nestle very clearly understood both its customer and the consumers. To tell you about it if you look at instant noodles as a product, anyone and everyone could have noodles, right? It doesn’t matter whether it is a school kid or a 40-year-old man. And noodles by default are one of the most generic dishes in the market. So had it been some ordinary brands, they would have tried to capture the entire 740 million Indian customer base, and they would have tried to sell to every single Indian who could have had noodles.

And on the outset, it does seem like an obvious choice, right? Well, Nestle was no ordinary brand. And they understood the fundamental marketing principle that if you try to sell to everyone, you will end up selling to no one. So Nestle’s marketing team started finding the best niche profiles to see who could be their ideal target audience. And that is when they carefully picked two categories, and those mothers and children. Now, this begs the question, what was the thinking behind this? Now listen to this very, very carefully. For the adoption of an alien product, it has to meaningfully cater to the pain of the audience and the interest of the audience. Now, in the case of Nestle, there were two primary stakeholders, there is the customer and there is the consumer. The consumer is the child who eats Maggi and the customer is the mother who buys Maggi. And during 1983 there were two categories of mothers, working mothers, and homemakers. Both of them had one major pain which is to give their child something tasty and healthy when they come back hungry from school.

 The problem with working parents was that they were not at home and with homemakers, after running all morning, after sending the kids and husbands to school and work, they needed some time to rest before they could start working again for dinner. On top of that, the child had just eaten chapati-bhaji in school, so giving them the same for evening snacks would not be good enough. And at the same time, they needed to make something that was less tedious, but at the same time was tasty enough for the child to eat. So the two pains over here are working mothers wanted something that the children could make themselves and homemakers wanted something less tiring to make for their kids. And the interest was a tasty dish for their child to eat. And this is where ladies and gentlemen, Maggi became an opportunist and positioned itself as the perfect solution for mothers as a super easy and tasty meal alternative for their children. This is how the tagline “2-minute mein Maggi” was born.

And as we’ve seen in the commercial it showcases an act of a mother preparing Maggi for the kids only to see them happy and delighted by the taste. Apart from that, Nestle reached out to school kids with sponsored quizzes and events and even gave them a free hamper of Maggi products. This was followed by a widespread sampling with over 4 million new contacts every year. And as time passed, Nestle even began advertising on TV channels during peak times when people like you and me were watching Power Rangers, Dragonball Z, and Ninja Hatori.

 This is how by positioning itself accurately to cater to the pain and interest of both its consumers and customers, Maggi established itself as an integral part of our lives. Now the question is if Maggi could establish a name in the market, so could others, right? Because there were already other big guns like ITC, Unilever, and Nissin. Then the question is, why couldn’t they compete with Maggi? Well, there are three specific reasons for that. Number one, Nestle had evolved its supply chain for 25 long years, which was next to impossible to replicate. And on top of that, it controls the supply chain end to end. But when Nissin the parent company of ramen tried to enter the market, it struggled to find national distribution partners, and its alliances with both Hindustan Unilever and Mariko to solve this problem completely failed. Secondly, Nestle achieved an unmatched level of penetration even in tier three and tier four cities of India. And more people knew the term Maggi than they knew about the actual product which is instant noodles.

 So no one asked for instant noodles they just asked for a packet of Maggi. This was because, from 2005 onwards, the marketers of Nestle conducted exclusive studies and did everything in their capacity to make Maggi accessible to the bottom of the pyramid of India. And in technical terms, based on socio-economic status, the Indian audience could be categorized into eight categories, ranging from A-1 to E-2. The top segment consisted of SEC classes as in socio-economic classes of A-1, A-2, and B-1, the middle segment was B-2 and C and the bottom segment was D, E-1 one, and E-2.

The top and middle segments were already captured by 2005 through Maggi’s conventional marketing efforts, and they saw that the real opportunity was in SEC classes C and D which represented over 40% of the market. And after an extensive study, the first product to be launched was Chotu Maggi, which was priced at just Rs 5 and was aimed at penetrating the lower segment of the market. The communication was carefully designed in local vernacular languages, and the distribution system was intricately designed with strategic wholesalers and redistributors to reach up to 2.2 million outlets all across the country. And because of this extensive effort, the household penetration numbers of Maggi shot from just 45% to 71% for the C class, and from 31% to 62% for SEC classes D and E in just four years from 2006 to 2010. This is the reason why when ITC and Unilever entered the market, they found it very difficult to achieve this level of penetration and brand recall value. And lastly, it was the impeccable connection that Maggi had established with its customers. And this is something that does not need any explanation, but a classic demonstration of the same was seen in 2015 when this happened to Maggi.

As soon as this bad happened, Maggi disappeared from the stores for five long months and their market share nosedived from 75% to 0% within no time. But you know what, guys? As soon as Maggi came back they came up with something called the ‘#WeMissYouToo’ campaign wherein the brand asked fans to share their stories about how much they missed Maggi on social media. Now you see, this is not some Michael Jordan’s Nike product or a revolutionary iPhone that we’re talking about. It is just an instant noodle brand expecting fans to share their memories. But as we all saw, it turned out to be one of the most successful campaigns Nestle had ever executed, and fans from all across the country started pouring their love for Maggi. Snapdeal sold out a whopping 60,000 Maggi welcome kits within five minutes of the Maggi flash sale. And hashtags such as ‘#DilKiDealWithMAGGI’ started trending on Twitter after the sale resumed.

This was the extraordinary level of connection that Maggi had established with its audience. And not so surprisingly, it was very, very difficult for Unilever or Nissin to achieve this level of connection with a player like Maggi in the market. And guess what? By 2017, Maggi was back to the number one spot in the market with a whopping 60% market share in the instant noodles market. This is the iconic story of the Maggi brand. Now, this brings me to the most important part of the episode, and that is the lessons from Maggi’s genius marketing strategy.

Moving on, there are four lessons that we need to learn from Nestle’s incredible business strategy. Lesson number one always remembers while most brands spend time and resources to find out how to penetrate a market only a few brands spend time and money to find out which market to penetrate. And so the most revolutionary products in the market are more often than not the products that have created a market for themselves. And it’s not just Nestle. Even Apple never tried to compete with Rolex to make mechanical watches, they instead created a market for smartwatches. And now they’re way ahead of any other watch company in the world. Similarly, Henry Ford had the option to compete with luxury cars, but he instead created a market for the bottom of the pyramid. And in our case, Maggi created a market for instant noodles in India, instead of going head-on with Nissin in Japan.

Lesson number two, if you’re selling a generic product, your first instinct would be to sell to every single person in the market. But always remember, if you try to sell to everyone, you will end up selling to no one. So always try to find a specific target audience to sell your generic product. And drop a comment about if you know any other brand that sells a generic product to a specific audience. And for the people who have done the communication masterclass you already know which brand I’m talking about.

 Lesson number three the golden recipe to market penetration lies in identifying the pain and interest of the audience. And your accuracy in spotting this pain and interest is directly proportional to the ease of adoption of your product. In this case, it was Nestle’s intricate understanding of the mother’s pain of being too tired to make an evening meal for the children. And the interest was so beautifully captured through Nestle’s initiatives to interact with children by the means of cartoon channels and school competitions.

And lastly, like I’ve said many times before, while good brands sell you a product, great brands sell you an emotion. And even if you’re selling something as simple as a dry cake of noodles, if you connect with the audience at an emotional level, you will stand out from the rest of the crowd. As a legend once said, “people might forget what you said but they never forget how you made them feel”. That’s all from my side for today guys.



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