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Debopriya BhattachariyaKrishnadas MaitiNeha PandeyArindam ChoudhuryNisant Agarwal

TOPICTOPIC

Porter`s five forces analysis for Maggi

noodles

IntroductionIntroduction Maggi noodles is a brand of instant

noodles manufactured by Nestle. The brand is popular in Australia, India, South africa, Brazil, Singapore etc. In several countries, it is also known as "maggi mee" (mee is Indonesian/Malay/Hokkien for noodles). Maggi noodles are part of the Maggi family. a Nestlé brand of instant soups, stocks and noodles. In Malaysia, there are fried noodles made from maggi noodles known as Maggi goreng. Maggi noodles recently introduced a new variety of its noodles, to cater for the health conscious.

INTRODUCTIONINTRODUCTIONNestlé India Ltd (NIL) offered a variety

of culinary products such as instant noodles, soups, sauces and ketchups, cooking aids (seasonings), etc., under the Maggi brand . Of these, instant noodles had been NIL's main product category in the culinary segment since the launch of Maggi 2 Minute Noodles (Maggi noodles) in 1982. Over the years, Maggi noodles became a popular snack food product in India. In fact, the word Maggi has become a synonymous term for any brand of instant noodles in India and Malaysia.

PORTER`S FIVE FORCESPORTER`S FIVE FORCES

The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you are considering moving into.

POTENTIAL NEW ENTRANTS INTO POTENTIAL NEW ENTRANTS INTO THE INSTANT NOODLES MARKET IN THE INSTANT NOODLES MARKET IN INDIAINDIA

Initially, Maggi noodles with its “two minute formula” dominated the Indian noodles market.

Report published by The Economic Times on 30th august, 2010 shows that Maggi is losing its market share because of entry of newer entrants like GlaxoSmithKline's (GSK) Horlicks Foodles, Hindustan Unilever's (HUL) Knorr Soupy noodles, Big Bazaar's Tasty Treat, Top Ramen and several other smaller players, according to data by market research firm Nielsen.

Others like Capital Foods' Ching's Secret and CG Foods's Wai-Wai, Spencer’s smart choice noodles, Aditya Birla Retail's Feasters are notching up share.

HUL and GSK have positioned their product as ‘healthy snacking’.

Foodles comes with the punch line of “Noodles without the ‘No’: Available only in the multi-grain and wheat variant, the product is being promoted as having higher nutritional value compared to other popular brands. The main unique selling proposition (USP) of Foodles is the vitamin-packed health-maker sachet that comes with the pack.

The data shows that Maggi's share of instant noodles, on an all-India basis, across urban markets, has slipped consistently between December '09 to July '10. While Maggi instant noodles had a 90.7% share in December '09, the share dropped to 86.5% in July '10 on an all-India basis.

A regional split of the data shows that Maggi's instant noodles' value market share has fallen across the east, south, north and west zones for the same period.

Noodles war ends Maggi’s monopoly.

Manoj Menon, FMCG analyst at brokerage firm Kotak Securities, wrote in a report earlier this month: "Maggi faces product substitution risk and brands like Knorr and Foodles could potentially impact its incremental growth. Nestle faces a challenging competitive environment in culinary."

Market estimates put the instant noodles sector in the country currently at around `1,300 crore (US$288 million) and growing at around 15% to 20% annually. 

THREAT OF SUBSTITUTESTHREAT OF SUBSTITUTES

Substitute of noodles are also products like PASTA, SOUP,VEG CAKES which many customers are now preferring due to increased health consciousness.

The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives.

.

Relative price performance of substituteBuyer switching costsPerceived level of product

differentiationNumber of substitute products available

in the marketEase of substitution. Information-based

products are more prone to substitution, as online product can easily replace material product.

Quality depreciation

Top Noodle Brands in Top Noodle Brands in IndiaIndia

MaggiSunfeastSmith & JonesChing'sTop RamenWai wai

BRANDS ABROADBRANDS ABROAD IndoMie Mi GorengKoka noodlesMr. NoodlesPot NoodleSapporo IchibanShin CupShin ramyunSuper NoodlesWai-Wai (food)Nissin noodlesSmith & Jones NoodlesTop Ramen

Maggi is sold in some supermarkets, and the logo is fairly widely recognisable across the UK. However, they are not nearly as popular as they are in the Far East, India, Australia, NZ etc.

The most popular instant noodles in the UK is Pot Noodle (a cup noodle founded by Golden Wonder in the late-1970s).

BARGAINING POWER OF BARGAINING POWER OF CUSTOMERSCUSTOMERSMaggi noodles faces various

competitors in market those increases the customer`s bargaining power of customer

YIPPEE (ITC) WAI WAI (C.G FOODS) Knorr Soupy Noodles(HUL) Horlicks Foodles(GlaxoSmithKline)Feasters(Aditya Birla Group’s)Top Ramen(Nissin Food Products Co.)Big Bazaar’s Tasty Treat

YIPEEWheat is the key ingredient of the noodle blockAashirvaad India`s no 1 atta is used.Do not lump even after 30 mins of cooking.WAI WAI noodles are pre cooked, flavored and fried. It has 3 seasonings varieties to add to the taste buds.KNORR SOUPYKhao Peeo KheloTarget kidsHORLICS FOODLESGood for health

WHAT MAGGI DIDWHAT MAGGI DIDVery intelligently Maggi had taken different type of

strategies to held their existing customer and to attract new customers. They began to repesent or promote the product in the following way:

1. They said it is very easy to cook and tasty also.2. It takes only 2 minutes to prepare.3. They presented the tag line “Taste bhi Health bhi”4. Bring different types of variety with different flavour Maggi 2 minutes noodle`s Flavour Chicken Vegetable Pizza Curry Cheese Tomato masala etc 5.They target Kids, office goers,youths, working

women

6. They began to make a brand image using high promotion

7. Promotional campaign in schools

8.Packing is the biggest plus point of maggi (even in different sizes).

9.Introducing a fictitious character who can connect with kids for better recall.

10.Organizations contests, games and industrial visits for school kids to further strengthen brand image.

11. Inviting housewives to send new innovative recipes made from maggi and introduce rewards for them.

12. They had given enough supply to the sellers and gave them different types of offers that made them motivated to sell the product more.

BARGAINING POWER OF BARGAINING POWER OF SUPPLIERSSUPPLIERSBargaining power of a brand only increase

, when there are more availability of suppliers for the raw materials.

The vice-versa effect takes place when there are less availability of suppliers.

With the consideration of all the above both the brand as well suppliers have to keep in their mind about the quality of the product.

The Raw Materials are required:

Wheat flour Sugar SaltMix spices Vegetable oil Vegetables Since these materials are readily

available with a plenty of suppliers , the bargaining power of Maggi (Nestle) is much higher.

COMPETITION WITHIN COMPETITION WITHIN INDUSTRYINDUSTRY1.Maggi instant noodles,food major

Nestle’s flagship brand that has dominated the indian instant noodle market for nearly three decades,is losing market share on a monthly basis to newer entrants such as,Glaxosmithkline’s Horlicks Foodles,HUL’S Knorr soupy noodles,Big Bazaar’s Tasty Treat,Top Ramen and several other smaller players.

2.The latest to join the battle ,business conglomerate ITC Ltd.has decided to take its instant noodle brand,Sunfeast Yipee,Pan-India after tasting initial success in South India.

3.WAI WAI1-2-3 noodles.

Thank you

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