Maggi  Noodles  in  India:  The  Revival  Challenge MOORE  SCHOOL  OF  BUS INESS

BRETT  BURNS ,  ASHL ING  GR IFF IN ,  ELL IE  GARDNER ,  ROSS  HOGAN

JANUARY  5 ,  2016

MeeHng  ObjecHves I.  Analyze  Maggi’s  current  posi6on  in  the  market  

II.  Evaluate  alterna6ves  to  resolve  crisis  

III.  Determine  ac6onable  steps  in  moving  forward  to  regain  market  share,  restore  consumer  confidence,  and  restore  our  brand  

CriHcal  Success  Factors

Consumer  Confidence  

Market  Share  

Brand  Reputa6on  

BoGom  Line  

Key  Performance  Indicators

Measuring  Success:  

Posi6ve  Press  Recep6on  

Quality  Control  

Achievements  Restore  Sales   Posi6ve  Net  

Income  Response  Time  

Ideal  Crisis  CommunicaHon  Strategy

Establish  Single  Point  of  Contact  

Hire  Legal  support  

Hire  PR  firm  with  specialty  in  crisis  management  

Set  up  blog,  website,  twiGer,  facebook  page  to  communicate  ac6ons  

Ideal  Crisis  CommunicaHon  Strategy Internal  Communica6on  •  Employees  should  not  comment  to  media  

External  communica6on  •  Fast  response  6mes  •  Keep  media  abreast  as  much  as  possible  

Fix  the  Problem  •  Internal  &  external  inves6ga6on  

Ensure  it  does  not  happen  again  

Analysis

Our  Customer Students   Kids   Bachelors   Moms  

Commuters   Major  Purchaser  

Affordable  Easy  Snacks  vs.  Meals  Safe  

Our  customer  hasn’t  changed  –  we  just  need  to  reassure  them  Maggi  is  safe  

Indian  Market

Popula6on:  1.2  billion  

GDP  1.88  trillion  

Median  age  27  

IMF  predicts  7%  growth  through  2024  

Large  rural  markets  largely  

untapped  

Fast-­‐Moving  Consumer  Goods  Market

One  of  India’s  fastest-­‐growing  markets  

Includes  ready-­‐to-­‐eat  foods,  soaps,  shampoo  

products,  etc.  

Only  reaches  about  1/3  of  the  popula6on  via  urban  

markets  

Market  Analysis

Maggi  Noodles,  24%  

Other  Products,  76%  

Nestle  India  Ltd.  Revenue  

Maggi  Noodles,  90%  

Other  Brands,  10%  

Noodle  Market  Share  

$40  B  Rs  Market  

Financial  Performance

77.0  

86.1  91.0  

98.5  

2011-­‐12   2012-­‐13   2013-­‐14   2014-­‐15  

NIL  REVENUE  IN  RS  BILLIONS  

Net  Profit  Margins

-­‐2  

0  

2  

4  

6  

8  

10  

12  

14  

Net  Profit  M

argin  (%

)  

Profit  Margins  

Jun-­‐14   Mar-­‐14   Dec-­‐14   15-­‐Mar   Jun-­‐15  

Stable  Profit  Margin  

un6l  crisis  

CompeHHon

AlternaHves

AlternaHves • Put  crisis  behind  us  • Move  on  to  regain  share  “Fresh  Start”  

• Overhaul  systems  • Delay  product  launch  Wait  it  Out  

• QA  &  Crisis  Control  • Implement  changes  • Move  on  to  regain  market  share  

Address,  Fix,  and  Move  On  

AlternaHves • Put  crisis  behind  us  • Move  on  to  regain  share  “Fresh  Start”  

• Overhaul  systems  • Delay  product  launch  Wait  it  Out  

• QA  &  Crisis  Control  • Implement  changes  • Move  on  to  regain  market  share  

Address,  Fix,  and  Move  On  

ImplementaHon  Plan

Quality  Assurance Chief  Quality  Control  Officer  

External  Quality  Reviews  

Revamp  Quality  and  Safety  Standards    •  Implement/6ghten  scorecard  systems  among  suppliers  • Tie  compensa6on  to  QC  and  safety  objec6ves  • Training  for  employees  and  managers  around  safety  and  quality  

Supply  Chain  Audit  • Review  against  new  quality  standards  • Consider  switching  if  standards  not  met  

CommunicaHon:  Internal Communicate  policy  changes  quickly  and  effec6vely  

Establish  a  crisis  response/communica6on  team  

Circulate  current  food  safety  data  

Open  communica6on  and  feedback  to  catch  problems  early  

Develop  a  crisis  response  strategy    

MarkeHng  Plan Price  and  Product  

•  Same  SAFE  product  

•  Lower  prices  • Core  Noodle  Products  

Place  

•  TV  •  Internet  •  Print  •  Social  Media  • Word  of  Mouth  

•  Supermarkets  •  Streetside  Kiosks  •  Schools  •  Sta6ons  

Promo6on  

• Bollywood  Product  Placement  

• Maggi  Returns  Party  

•  TV  and  Internet  Ads  

MarkeHng:  Transparency

Remind  customers  of  the  long  legacy  of  safe  consump6on  within  India  

Nostalgic  ads  showing  areas  noodles  were  made  

Video  ads  demonstra6ng  how  noodles  were  made  

Transparency  in:  Current  safety  standards  and  

metrics   Transparency  in  supply  chain   Highlight  new  leadership  

Sponsorships • Scenes  showing  lead  characters  enjoying  Maggi  Noodles  • Reaches  over  1  billion  people  • Leaves  impression  in  movie  watchers’  minds  

Bollywood  movies  

• Cricket  matches  • Children,  bachelors  &  students  Events  

• Bollywood  star  with  reputability  Influencers  

Maggi  Returns  Launch  Party Who:  All  customers  and  poten6al  customers  in  India  

What:  Product  sample  giveaways  •  Celebratory  Atmosphere  and  Balloons  •  Coupons  •  Noodle-­‐ea6ng  compe66on  among  C-­‐Suite  Leaders  

When:  November  2015  

Where:  •  Supermarkets  and  Kiosks  •  Central  Loca6on  within  India  

Why:  Promote  as  the  return  of  a  beloved  product  

Rural  Areas

FMCG  currently  servicing  2/3  of  popula6on  

Customers  want  inexpensive  &  quick  fare  

Contract  distribu6on  to  local  companies  •  Smaller  vendors,  more  scaGered  •  Informal  markets  

Is  a  longer  term  strategy,  with  tremendous  upside  

Timeframe  &  Budget

Immediate  Need   Future  Investment  

Increased  Marke6ng  Expenditures  

9,000   2,500  

Bollywood   1,625   325  

Quality  Control  Ini6a6ves  

5,500   3,250  

In  thousands  of  INR  

Ø  Assumed  increased  marke6ng  expenditures  at  0.5%  of  revenue  Ø  5  Bollywood  movies  at  a  cost  of  325,000  INR  per  film  Ø  QC  Control  objec6ves  as  a  percentage  of  revenues    

Risks  &  MiHgaHons Risks  

•  Social  Media  problem  persists  

•  Sales  lag  in  tradi6onal  market(s)  

•  Price  Wars  

Mi6ga6ons  

•  External  PR  firm  handles  response  

•  Expand  to  more  rural  areas  

• Not  a  long  term  strategy,  but  have  deep  pockets  

Thank  You

Q&A

Appendix   Our  Customer  

  Mee6ng  Objec6ves  

  Cri6cal  Success  Factors     Ideal  Crisis  Communica6on  Strategy  

  Indian  Market  

  Alterna6ves  

  Implementa6on  Plan  

  Quality  Assurance  

  Communica6on:  Internal  

  Marke6ng  Plan  

  Sponsorships     Maggi  Returns  Launch  Party  

  Rural  Areas  

  Risks  &  Mi6ga6ons  

  Budget  

  Compe6tor  Reac6on  

  Timeline  of  Events  

Timeline  of  Events

1947:    Nestle  acquires  Maggi  

1983:    NIL  enters  India  

March  2014:    Lab  Analyst  first  finds  MSG  in  Maggi  Noodles  

June  2015:    Maggi  product  

pulled  from  the  market  

August  2015:    NIL  India  appoints  Narayanan  and  issues  video  ads  

CompeHtor  ReacHon

If  we  lower  costs,  so  can  Sunfeast  &  Patanjali  • They’ve  recently  doubled  produc6on  and  just  launched  • Won’t  be  keen  on  matching  and  can’t  compete  long  term  

• Not  a  long  term  solu6on