Mm Course Project -10005

Maggi

A

PROJECT REPORT

ON

MAGGI

UNDER

MARKETING MANAGEMENT

SUBMITTED TO: PROF: BHAVESH VANPARIA

PREPARED BY: KAVITA AIYER

ROLL NO: 10005

P.G.D.M 2010-12

TOLANI INSTITUTE OF MANAGEMENT STUDIES

TABLE OF CONTENT

Tolani institute of management studies Page 1

Maggi

Sr. no Topic Page no

1 Product 22 About packaged food industry 23 competitors 24 advertisements 65 Marketing strategies 76 Value delivery process 27 Gathering information 28 Buying behavior process 29 Company orientation 210 Product mix 211 Porters model 212 Market segments 213 Market targeting 214 Product life cycle 215 Product classification 216 Product strategy 3617 Setting the price 38

PRODUCT

Maggi noodles are a brand of instant noodles by Nestle. It was founded by the Maggi family in Switzerland in the 19th century.

Maggi is the iconic brand of Nestle.


Maggi

Maggi has been Nestlé’s flagship culinary brand not only in India, but globally as well.

Maggi in India is best known for its flagship product noodles with its various desi sub segments such as the traditional dal Atta, veg Atta and rice noodles along with their various variants ,curry masala tomato ,chicken in the traditional and shahipulao lemon masala and chilly chow in the rice noodles segments.

It took number of years and lot of money for NESTLE to establish its Maggi brand in India.

NESTLE wanted to explore the potential for such an instant food in Indian market.

Currently NESTLE MAGGI enjoys 90% market share in India.

ABOUT PACKAGED FOOD INDUSTRY

The size of the packaged food market in India is estimated at $10 billion and is expected to reach $20 billion by 2014, while the share of packaged food in the food and grocery market is expected to touch 5 per cent by the same time.


Maggi

Factors that have fuelled this industry’s growth are the arrival of food multinationals, rising popularity of quick-service restaurants, modern retail trade, technological advancement, changing urban lifestyles and so on.

The main categories of packaged food are bakery products, canned/dried processed food, frozen processed food, meal replacement products and condiments.

Some emerging new categories in this segment are processed dairy products, frozen ready-to-eat foods, diet snacks, processed meat, probiotic drinks and so on.

Some key players in this industry are Hindustan Unilever (tea, instant coffee, biscuits, pulses, and instant beverages), Nestle (instant coffee, milk and milk products, ready-to-eat foods), PepsiCo (aerated drinks, fruit juices, cereals, snacks) and Haldirams (sweets, namkeens, syrups, crushes, snacks).

TOP COMPETITORS OF nestle MAGGI NOODLES

WAI WAI TOP RAMEN


Maggi

GSK FOODLES ITC

FEW ADVERTISEMENT OF NESTLE MAGGI


Maggi

DEVELOPING MARKETING STRATEGIES & PLAN AND

CREATING CUSTOMER VALUE, SATISFATCTION & LOYALTY.


Maggi

CUSTOMER PERCIEVED VALUE: (CPV)

CPV is the difference between the customer’s evaluation of all the benefits and all the cost of an offering and the perceived alternatives. If further clarify then

TOTAL CUSTOMER BENEFIT is perceived monetary value of the bundle of economic, functional and psychological benefits customers expect from given market offering because of the products, services, personnel and image involved.

TOTAL CUSTOMER COST is the perceived bundle of cost, customer’s expect to incur evaluating, obtaining, using and disposing of the given market offering, including monetary, time, energy and psychological costs.


CUSTOMER PERCEIVED

VALUE

Maggi

Value delivery process:

We all know that now a day traditional view of business process will not work in economies where people face abundant choices. So the smart competitor must design and offer for well design target markets.

Here Nestle Company has also created a different value chain to fulfill customer satisfaction and more marketing of their product.

Image benefit :

Nestle Maggi is a well-known brand all over the world and one of the oldest companies in India. Nestle have created an image in the minds of customer and were able to get the trust of customer towards the brand.


Total Customer Benefit

Product Benefit

Services Benefit

Personnel Benefit

Image Benefit

Total Customer Cost

Monetary Cost

Time Cost

Energy cost

Psychological Cost

Maggi

Product Benefit:

They are also providing Maggi in an attractive pack so kids are attracted by it. Working people are using it as a convenience product.

Personal Benefit:

According to customer interest they are giving different type of flavor and according to the varying tastes in India they are serving them accordingly.

Time Cost

Time cost means how much time customer is spending in choice, use & disposal of product of that product. If we consider the case of Maggi, consumers are not spending much of their time in consuming it but yes it does cost them.

Energy Cost:

When consumers prepare Maggi it is one kind energy is being wasted in that. So it involves cost too.

Psychological Cost:

Too much consumption of Maggi is not good for health so it indirectly or directly affects the individual’s health.

Value Delivering process:

The view of marketing is that the firm makes something and then sells it. In this view, marketing takes place in the second half of the process. Companies that subscribe to this view have the best chance of succeeding in economies marked by goods shortage where consumers are not fussy about quality, feature, or style. But now this tradition view totally changed and it’s become vast and wide. So


Maggi

they have to realized that what exactly value delivery process of product. The Value Delivery and creation sequence can be divided into following three phrases,

VALUE DELIVERY PROCESS

1) Choose the value:

For deciding the value, some special kind of research is required. From they can survive market.

Customer segmentation: Before launched maggi in the market, the research has been conducted by NESTLE and concluded that the customers of maggi products would be.

Kids in the age group of 5-10 years School children aged 10 to 15 years Working women, office goers

Market selection: Maggimainly focuses on mainly on where there are maximum working class people.

Value positioning: To give customer satisfaction, great taste, attracting packing, discounting, other offer to attract the target customer.

2) Provide the value:

Product development: Extensive researches have been conducted by NESTLE about the tastes and preferences of customers of various regions.


Communicate the valueProvide the valueChoose the value

Sales force

Sales promotion

Advertising

Product development

Service development

Pricing

Customer segmentation

Market selection/focus

Maggi

Service development: service means provide best feasibilities to the target market for making loyal and regular customer.

Pricing: The most important element of Value Delivery Process is to decide price. Maggi is available in different prices, e.g. Rs.5, Rs10, Rs 20 etc. Various prices of packing have various quantities. Some factors affecting prices,

o Internal: Cost, Pricing objectiveso External: Customers, Suppliers, Competitors.

Sourcing making: It defines that sourcing of Maggi raw material and how the supply chain had been managed, what are different sources to attract customer for buying their product.

Distributing servicing: Maggi are distributed through a network of 4000 redistribution stockiest covering 6.3 million retail outlet reaching the urban population and about 250 million rural consumers.

3) Communicating the value:

Sales forces: As above mention, through the distribution network the sales have been made. Maggi is available in different packing with different prices and varieties.

Sales promotion: Nestle Maggi have been promoting their product basically in rural schools by arranging competition and distributing free samples.

Advertising: advertisement is essential for building brand awareness and developing strong customer perception about the brand. Maggi using Television as the medium of advertisement.


Maggi

GATHERING INFORMATION AND SCANNING THE ENVIRONMENT

Marketers always have to observe external environmental changes, competitor’s strategies and need extensive information about how consumption pattern of customers changing across.

Here, my product is NESTLE MAGGI and from the Maggi marketer point of view he must have to keep himself up to date with all below information:

1) Which are the decisions he has to make regular basis?2) Which information does he need on regular basis?


Maggi

3) Which kind of special studies he has to do regularly or periodically?4) What are the magazines and newspapers he has to see on

daily/weekly/monthly basis?5) What data analysis program he want?

If one wants answer of all above questions then one must have rich source of internal records and marketing intelligence.

Internal Records and Marketing Intelligence

For taking any kind of information about internal things then a marketer must require data regarding orders, sales, prices of competitors, inventory levels, receivables and payables and so on. So for that he must have-

1)The order-to-payment cycle : Many seller of maggi like small Karana shops normally purchases Maggi packets on wholesale basis. So, the payment is on credit basis and the payment will be made after decided time by both parties which may be of 15 days and may be of 1 month also. Generally as per the order to pay concept if the payment cycle is not properly maintained then a seller or a marketer need to take care of it and make it on time so that the order to payment cycle and move smoothly. Also purchasers of such wholesale products get some benefit on bulk purchase. Sometimes they get some quantity free of cost and sometimes the get other things free, like jar, wall-clock, key-chains etc.

2)Sales Information System : Whenever any customer purchases Maggi packets from any retail shop then the marketer will be able to have information regarding how much total number of sales is happened and according to this information he get idea about how much to produce and how much inventory should be maintained.

3)Data base, Data warehousing, Data mining : The data which is collected for an example of available stock- if he had 140 Maggi noodles then he has to categories that data accordingly like he had 140 packets of Maggi noodles.


Maggi

Analyzing the Micro-environment

The Demographic Environment:

The demographic environment includes worldwide population and population age mix. Population is directly affecting factor on the demand of Maggi, the more the number of people the more who are working and younger generation and thus the demand of the Maggi will increase. We can also say that the population age mix also affecting the demand of Maggi noodles. The age group between 15 and 35 is the target customer.

Economic Environment:

As the per-capita income of citizen increase their living standard will go up and relatively their lifestyle changes. The stressful working hour will increase and it will directly lead people to search for something which will relief them from cooking for long hours. So, as the country gets its growth the demand of Maggiwill increase as the stress level will increase.

Social-cultural Environment:

The social-cultural environment largely includes people will different religion and of different culture. As we all are aware about western culture, the people living over there consume products like Maggi in normal life. People in India now a day blindly follows culture of western nation and try to be like them.

BUYING BEHAVIOR PROCESS:

The buying behavior process is a five step model.

PROBLEM RECOGNITION:

Following are the reasons why people buy Magginoodles?

Convenient cooking Alternative to snacks To reduce stress


Maggi

Information search:

It includes from where people get information about maggi.

PERSONAL

Family Neighbor Friends

COMMERCIAL

Advertisement Display

PUBLIC

Media (newspaper, books)

EXPERIENCE

From the experience of someone who has already used Maggi noodles.

Evaluation of Alternatives:


Total Set

Maggi

Top ramen

ITC

Foodless

WaiWai

Awareness Set

Maggi

Top ramen

ITC

Foodless

ConsiderationSetMaggi

Foodless

Top ramen

ChoiceSet

Maggi

Top ramen

DecisionMaggi

Maggi

Brand/Criteria Taste

Brand Price Flavor Total

Maggi 9 8 9 10 36

Top ramen 8 7 8 8 31

Foodless 8 6 7 6 27

Total 91

According to my survey I have given weight to each brand according to criteria its 40% to Taste, 30% to Brand, 10% Price and 20% to flavor.

Maggi = 9*(.40) +8*(.30) + 9*(.10) + 10 *(.20) = 33/91 = 8.9 Highest Marks

Top Ramen = 8*(.40) + 7*(.30) + 8*(.10) + 8* (.20) = 30/91 =7.7

Foodless = 8*(.40) + 6*(.30) + 7*(.10) + 6*(.20) = 28/91 = 6.9

1) Purchase decision According to evaluation we will choose NESTLE MAGGI as it contains 8.9 marks.In evaluation of alternative also decision it’s MAGGI. So decision is MAGGI

2) Post Purchase Behavior

POST PURCHASE SATISFACTION Post purchase behavior is behavior of person after use of the product. In case of MAGGI person may get habituated toward that product. Person


Maggi

may also give result according to problem.If person is not satisfied then marketer need to take post purchase action.

POST PURCHASE ACTION:

If consumer is not satisfied then they may return the product. Consumer may also take legal action and can also complain other groups.

For Ex: Consumer is using MAGGI and suddenly consumer realize that quality is different than regularity then first he will complain to that shop from where he used to buy and if he still not satisfied then he may wrote letter to COMPANY.

POST PURCHASE USE AND DISPOSAL :

How buyer use and dispose that product. If disposal is not appropriate and affecting the environment then marketer needs to work upon that.

EX.Consumer is using MAGGI and packing of product is not a concern so marketer should need not worry.

Company orientation toward the marketplace

Production concept:

The production concept is one of the oldest concepts in business. Nestle also used this concept for brand named Maggi. They concentrated on achieving high production efficiency, low cost and mass distribution.

Product concept:

The product concept proposes that consumers favor products that offer most quality, performance or innovative feature.Nestle has over the years tried to offer


Maggi

its product in various flavors depending upon the tastes in various regions of India.

Selling concept:

The NESTLE most, therefore, undertakes an aggressive selling and promotion effort for Maggi. This concept aim is to sell what they make, rather than make what the market wants. Maggi brand doing the attractive promotional activities like distributing free samples in schools at rural market.

Marketing concept:

Selling is only focuses on needs of seller while marketing is focuses on needs of buyer. Marketing concept hold that the key to achieving organizational goals is being more effective than the competitors in creating, delivering, communicating the superior customer value to your chosen target market.

Holistic Marketing:

The holistic marketing concept is based on the development, design and implementation of marketing programmed, process and activities that recognize their breadth and interdependencies. Its provides a schematic overview of four broad components characterizing holistic marketing: internal marketing, relationship marketing, integrated marketing.

Relationship marketing:

Nestle maggi brand Marketing network consist of the company and its supporting stakeholder- customer, employee, supplier, distributor, retailer, ad agency, research. They properly manipulate these all component very well through various. Its products are widely distributed across India including penetration in rural market also.

Integrated marketing:

The marketer’s task is to devise marketing activities and assemble fully integrated marketing programs to create, communicate, and deliver value for customers.


Maggi

Marketing has a four broad tool that called ‘4P. That is price, promotion, place, and product. Maggi considers very widely concept in term of customer perspective. Nestle maggiare available in various size, different design, affordable price, different packaging, qualitative, and you can find everywhere with appropriate list price, size, shape. That is called excellent marketing mix that why they got.

Internal marketing:

Smart marketer recognizes that marketing activities within the company can be as important as or even more important than marketing activities directed outside the company.

PRODUCT MIX WIDTH

NESTLE HOME

Candy and chocolate

Frozen foods

Backing

Ice-cream

Pet foods

beverages

Specialty items

Baby foods

Maggi soup

Maggi noodles


Maggi

PRODUCTIN LINE

LENTH

Baby Ruth

Butterfinger

Carlos V

Chunky

Nestle crunch

Nips

Raisinets

Kit Kat

Bar one

Runts

Sweet tarts

Lean cuisine

Hot pockets

La lecher

Libby’s pumpkin

Nestle tollhouse morsels

Dreyer’s(ice creams, frozenyogurts, fruit bars)

Nestle push ups

The skinny cows(ice cream)

Alpo

Frosty paws(dog ice cream treats)

Gourmet one

Coffee-mate

Jamba(bottled smoothie and juices)

Nescafe

Naquin

Nestea

Nestle juicy juice

Nestle milk chocolate

Maggi seasonings

Maggi taste of Asia

Nestle good start

Cerelac

Nestum

Cook up soups

Instant soups

Chicken

Vegetable

Pizza

Rice Atta

Curry

Porters Five Force Model


Maggi

1) POTENTIAL ENTRANTS:In the market there are so many brand of national and international noodles are available so competition is highso here in this condition entry is not too tough and too easy but it’s moderate. But after entry create a good image is little tough. So today it is tough for new company to with stand in this market with government rules regulation and increasing tax rate.

2) Threat of substitute: Chowmeen, fast food and pizza can be a substitute for Maggi. Customers may think of these options at some point of time.

3) Threat of buyers’ bargaining power: Nestle Maggi noodleshave low price and high quality. It is affordable by the consumer in rural and urban area so alltype of people can buy it .It is also as per the consumer aspirations, specification and taste. Company is also


Industry Competit

ors

Potential Entrants

BuyersSubstitut

es

Suppliers

Maggi

maintaining steady margin of its sale volume. So here no need for buyer to bargain.

4) Threat of suppliers’ bargaining power: If company has its manufacturing plant in favorable placesthan suppliers bargaining power is less because some cities may have cheaper resources available.

5) Threat of competitors ITC, Top Ramen are the main competitor of Gold flake cigarette Because these companies are famous at international level and also famous as a brand with affordable price so consumer prefer to buy it.

IDENTIFYING MARKET SEGMENTS AND TARGETS


Maggi

Market segment are two different words where by market means people/organization with certain needs/wants and the ability & willingness to buy goods.

At the same time segment means nothing but “A sub group of people/organization sharing one or more characteristics that cause them to have similar product needs”

Here we would like to throw some light on the meaning of market segmentation which means “The process of dividing a market into meaningful, relatively similar, identifiable segments or groups”.

Bases for segmenting consumer market.

Some researchers try to define segments by taking into consideration different characteristics and then try to examine segments with needs or product responses.

Mainly there are four bases for segmentation which are as follows

Geographic Demographic Psychographic Behavioral

Let’s have brief look in each segment with the example of NESTLE MAGGI.

GEOGRAPHIC SEGMENTATION :


Maggi

As stated above in the diagram Geographic segmentation includes region, city and rural & semi urban area. In NESTLE MAGGI Geographic segmentation can be all the three ways.

For ex: Region & States & Metro cities: South India, Western Region, North, and East .As consumer preference and purchase habits change across different regions, across different countries, and across different states in this countries but MAGGI is global brand so it’s available in each and every region though taste and preferences of people towards instant food is different from region to region and cities to cities.

DEMOGRAPHIC SEGMENTATION:


GEOGRAPHIC

REGION

CITYRURAL &

SEMI URBAN AREA

Maggi

MAGGI has following demographic segmentation basis:

Age: All age groups.

Family size: All like single, young, married all can eat it.

Gender: Regardless of the gender, MAGGI is accepted by all.

Income: Due to its competitive pricing, it is affordable to all.

Occupation: Initially it was targeted at working women, but it still is a boon for office goers and working women.

Education: Now a day everyone knows what MAGGI is all about and irrespective of education it is preferred by all.


DEMOGRAPHIC SEGMENTATION

AGE

FAMILY SIZE

GENDER

INCOME

OCCUPATION

EDUCATION

Maggi

PSYCHOGRAPHIC SEGMENTATION:

If we take example of MAGGI in terms of psychographic segmentation then it will be as follows.

Socioeconomic classification: A1, A2 which indicates highest purchase potential

Life style: Generally people who are busy in their hectic schedules and have outdoor oriented jobs prefer MAGGI.

Personality: As quoted above that MAGGI is global brand so person who will consume it will be having ambitious kind of personality.

Behavioral segmentation:


PSYCHOGRAPHIC

SEGMENTATION

SOCIOECONOMIC

CLASSIFICATION

LIFESTYLEPERSONALITY

Maggi

Occasions: Nowadays MAGGI is being preferred even in breakfast for kids. So it is used in daily life.

Benefit: People consume MAGGI because it is a convenient way of cooking and also saves considerable time and energy in this fast paced life.

User status: Some don’t know name of MAGGI called Nonuser, some people are trying it First time who called first time user and consumers who are consuming it on daily basis are Regular user, In case of MAGGI there are lot many REGULAR USER.

Usage rate: There are lots of users using it regularly called Medium usage rate and consuming daily called Heavy usage rate.

Loyalty status: Generally people are loyal to MAGGI but if there is large difference in price then there are people change the brand so segmentation of MAGGI is medium and Strong

Attitude toward product: as per observation consumers are always Enthusiastic about their habits and they take this habit as Positive. So people are having positive attitude towards MAGGI.


BEHAVIORAL

OCCASION

BENEFITS

USER STATUS

USAGE RATES

LOYALTY STATUS

READYNESS STAGE

ATTITUDE TOWARD PRODUCT

Maggi

MARKET TARGETING

Effective segmentation criteria: Market segments must rate favorably on five key criteria:


Maggi

Segmentation must be MEASURABLE in terms of size, purchasing power and profile of segment.

Segment must be LARGE enough to attract those customers who are having purchasing power ability and interest in your product.

Segment must be ACCESSIBLE in each and every part of the world. One of the most important criteria that segment must be DIFFERENTIAL in

terms of services and schemes. Last thing that segment must have ACTIONABLE activity.

Evaluating and selecting the market segment

NESTLE is covering full market segment because they are concentrating on each and every product like chocolates, beverages, FMCG, etc. so we can say its covering full market they are not concentrating on one product or segment

PRODUCT LIFE CYCLE


M1 M2 M3

P1

P2

P3

Maggi

A company‘s positioning and differentiation strategy must change as the product, market, and competitors change over the Product Life Cycle (PLC). To say that a product has a life cycle is to assert four things;

1. Products have a limited life2. Product sales pass through distinct stages, each posing different

challenges, opportunities, and problems to the seller3. Profits rise and fall at different stages of the product life cycle4. Products require different marketing, financial, manufacturing,

purchasing, and human resource strategies in each life cycle stage.

Product Life Cycle


Maggi

Life cycle have four stages

Introduction: A period of slow sales growth as the product is introduced in the market. Profits are nonexistent because of the heavy expenses of Product introduction. Also there is frequent modifications and high production costs.

Nestle India ltd, the global FMCG subsidiary of Nestle India launched maggi in India with maggi two minutes’ noodles. With this launch Nestle entered the instant food industry in the Indian market.

Growth: A period of rapid market acceptance and substantial profit improvement.

In the early 1990, the demand for maggi started to fall due to entry of Top Ramen another instant food producer.

In the march 1999, NESTLE INDIA re-launched the older version of maggi after which the sales revived.

Maturity: A slowdown in sales growth because the product have achieved acceptance by most potential buyers. Profits stabilize or decline because of increased competition.Heavy promotions to dealers and consumers.Also extending product lines.


Maggi

In 2003, NESTLE launched liquid snack named ANAPURNA in competition to Nestle’smaggi. Like maggi, soupy snax also targeted children and office goers.

Decline: Sales show a downward drift and profits erode. Unnecessary marketing expenses are removed.

Style, Fashion, and Fad Life cycles

Style:We can say that a style is a basic and distinctive mode of expression appearing in a field of human endeavor. As the product like Maggi young generation consume it may be for style.


Maggi

Fashion:A Fashion is a currently accepted or popular style in a given field. We can say that now a day’s young people follow because of some factors are influencing.

PRODUCT CLASSIFICATION

Durability and Tangibility

1. Non-durable goods are tangible goods which generally consumed one or a few uses. For instance; food, soft-drinks, shampoo, soap. These kinds of


Maggi

goods are consumed frequently and usually maybe we can say some of them are on the daily basis. In case of Nestle Maggi, a person is purchasing it frequently and once it is consumed then he has to purchase other so we can say that Maggi is non-durable goods.

Consumer-goods Classification

1. Convenience goods are frequently, immediately and with a minimum of effort purchased. If a person wants to have something instantly then he will purchase it easily as it is available at the corner of each road, with mostly negligible price! He need not have to put extra effort for having one pack of Maggi is a convenience type of product.

Staple goods: Maggi is a staple product because it is purchased frequently on the routine basis by consumers.

Emergency goods: Some kids are addicted to Maggi so much that sometimes if they want to have it then nobody can stop them and they will some anyhow at that point of time so we can say according to some situations and persons cigarette is emergency product also. Because it has been said that too much consumption of Maggi is not good for the health.

PRODUCT DIFFERENTIATION

FORM:

Ready to eat noodles are now a days being offered by many companies so differently with different flavors, more flavors and with variety in size and price. So, what happens is more competition NESTLE have to face as a marketer of


Maggi

Nestle Maggi. Maggi is available in variety of size, with different size filters, flavors, price and shapes.

FLAVOURS:

As per the different varieties Maggi have wide varieties with different features with we can say pioneer in this field by providing instant noodles.

PACKAGING:

The packaging of Maggi itself makes it an attractive option for consumers. NESTLE makes its packaging which differentiates the product from other company items.

SETTING PRODUCT STRATEGY

Product levels: the Customer-Value Hierarchy


Maggi

1) CORE BENEFIT:

Core product basically includes what customer is actually demanding. A person who is consuming Maggi is expecting a core benefit as a stress buster or relief from cooking.


POTENTIAL PRODUCT

AUGMENTED PRODUCT

EXPECTED PRODUCT

BASIC PRODUCT

CORE BENEFIT

Maggi

2) BASIC PRODUCT:

In basic product marketer turn core benefit into actual basic product. In this case we can say a marketer of Maggi is turning “stress buster or “relief” into product called Maggi which include specific flavors, variety etc.

3) EXPECTED PRODUCT:

Then marketer of Maggi prepares a set of attributes of customers into normally what they actually expecting from the product. Here, we can say an educated customer while having Maggi expects various flavors and new and new varieties from it.

4) AUGMENTED PRODUCT:

Actually when customer get his/her expected product their expectations will increases so according to their expectations marketer will try and build some more benefits in his product and try to satisfy customer’s need in a better way. For this marketer of Nestle had developed a specific brand of his product like Maggiwhich will occupy some specific space in the customer’s mind. For instance; by providing specifically prepared masala along with Maggithe marketer had developed different image of Maggi in the mind of customer.

5) POTENTIAL PRODUCT:

Potential product includes all the possible augmentations and transformations the product or offering might undergo in the future. In a simple way we can conclude that the company Nestle (Maggi) will find some more change which can enhance customer satisfaction level. For instance; company may think in the way of producing such ready to cook food which will be more convenient than Maggi also.

SETTING THE PRICE OF NESTLE MAGGI

A firm must set a price when it develops a new product, when it introduces its regular product into a new distribution channel or geographical area, and when it enters bids on new contract work. Generally marketers have three to five price


Maggi

different price points. In my product MAGGI there are also so many verities with almost sameprices. There are so many factors which are considers for seating pricing policy. Like (1) Selecting the ricing objective (2) Determining demand (3) Estimating costs (4)Analyzing competitor costs, prices and offers (5) Selecting a pricing methods (6) Selecting the final price.

(1) Selecting the pricing objective

First of all company have to select objectives the easier it is to set price.

Survival: It is major objective if NESTLE are plagued with intense competition. Prices covers variable costs and some fixed costs, the company stays in business.

Maximum Market Share: NESTLE wants maximum market share. They believe that a higher sales volume will lead to lower unit’s costs and higher long run profit.

Product quality: Maggi brands strive to be affordable luxuries products by high levels of perceived quality, tests and status with a price.

(2) Determining demand

Each different price has different level of demand, which have different impact on company’s marketing objectives. Generally price and demand have inverse relationship.

Price senility: The first step in estimating demand is to understand what affects price sensitivity sometime customer are les price sensitive to low cost items or items they buy frequently. Same cases happen with MAGGI people generally buyMaggi frequently and price is also low. So people are not so much price sensitive.

Estimating demand curves: For estimating demand NESTLE Companyhas to make some attempt to measure their demand curves using several different methods.


Maggi

Surveys: Company have to explore how man units consumers would buy at different proposed prices, although there is always the chance they might understate their purchase intention.

Statistical analysis: For making statistical analysis company have to check past prices, and its demand also, quantities sold, and other factors can reveal their relationships. Advance in database management have improved companies abilities to optimize pricing.

(3) Estimating cost:

Generallycompany wants to charge a price that covers its cost of producing distributing, and selling the product.

Types of costs and levels of production: Total cost divide in two parts fixed cost and variable cost. Fixed cost is cost which is not varying with changing production units. Variable cost is cost which changing with production units.

For producing Maggi company bears some fixed cost like administration cost labor cost electricity charges while for the variable cost like raw material, packaging cost etc.

For estimate the real profitability of selling to different types of retailers or customers, the manufacturer needs to use activity based cost accounting instead of standard cost accounting. ABC accounting tries to identify to identify the real costs associated with serving each customer.

Target costing: Target costing means costs changes with production scale and experience. NESTLE company find which are the target cost for the Maggi and try to reduce it like costs are designers, engineers, and purchasing agents cost.

(4) Analyzing competitor costs, prices and offers:

NESTLE Company must take competitors cost, price, and possible price reactions into account. The firm should first consider the nearest competitor’s price like ITC, GSK and TOP RAMEN competitors offer contains some features not offered by the firm the firm should subtract their value from its own price.


Maggi

The introduction of any price of the chance of any existing price can provoke a response from customers, competitions, distributors, suppliers and even government. Competitors most likely to react when the number of firms is few the products are homogeneous and buyers are highly informed.

(5)Selecting a pricing methods

After getting the customer’s demand schedule, the cost function, anD competitors prices any company is now able to select price. Generally company can setthe price through the three aspects like costs set a floor to the price; competitor’s prices and the price of substitutes provide an orienting point. There are different six price setting methods which are as follows. Mark up pricing, Target return pricing, Perceived value pricing, Value pricing,going rate pricing, and Auction- type pricing. As we see there are six different prices setting methods but NESTLE Company follows value pricing method

The firm set the lower prices for high quality offerings. Value pricing is thus not a matter of simply setting lower prices, it is a reengineering the company’s operations to became a low-cost producer without sacrificing quality, to attract a large number of value conscious customers.

(6 )Selecting the final price.

Selecting final price, NESTLE Company must consider additional factors including the impact of other marketing activities, company pricing policies, gain-and-risk sharing pricing and the impact of price on other parties.

Impact of other marketing activities:NESTLE Company considered the brands quality and advertising relative to the competition for selecting final price. They have to do classical study like examine the relationships among relative price, relative quality and relative advertising. The positive relationship between high prices and high advertising held most strongly in the later stages of the product life cycle for market leaders.


Maggi

Impact of price on other parties: They also considered the reactions of other parties to the contemplated price how sill competitors react. Will suppliers raise their prices when they see the company’s price? Seller must not collude with each other while fixing the price.All the price which is describes by company have some specific reason and descriptions without it are illegal.


Date post:	29-Nov-2014
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Mm Course Project -10005

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