buildd

buildd

06-10-2022

04:21

Maggi is Nestle’s BIGGEST cash cow! - 90% market share for 25 years - Makes 30% of Nestle’s revenue - Beats giants like ITC & Nissin Maggi came to India in 1983, and we quickly fell in love with the brand. Here’s how Nestle’s startup turned Indians into Maggiholics 🧵

Structure: 1. Maggi's Origins: From Switzerland to Japan to India 2. Winning over Indian consumers: How Maggi positioned itself 3. Maggi's marketing strategy 4. The making of a HIT product!

1/ Maggi's origin story! Maggi is perceived as a super modern brand. But, its history spans two countries and dates back to ~150 years ago! Julius Maggi, a Swiss entrepreneur, invented precooked soup and Maggi sauce all the way back in 1886. (contd.)

The period marked a heavy influx of women participating in Switzerland's industrial revolution. So, Maggi was meant to nourish these women with quick, healthy meals. Nestle, another Swiss company, bought Maggi in 1947. (contd.)

But, it was not until the 1950s, that Maggi was turned into an instant noodle brand that we all know today. In 1958, Momofuku Ando invented instant noodles in Japan, and immediately the entire Japanese population was hooked. (contd.)

Nissin, the Japanese company, was exporting instant noodles all over the world. On the flip side, India was fairly unaware of this noodle wave. Now, Nestle of course wanted a piece of this emerging market and Maggi was its main product. (contd.)

But, Nissin had already captured the Japanese scene. So, instead, Nestle turned to India to sell Maggi. But, Nestle had a HUGE task ahead of them. They not only had to sell a product, but they also had to carve out a brand new market in a country which despised packaged foods!

2/ Winning over Indian consumers Maggi entered India in 1983, and they immediately targeted working women. But, unfortunately, that strategy didn't work. You see, in the 1990s, women in India were fairly accustomed to their traditional diet of roti and sabzi. (contd.)

So, changing their taste palette to a noodle-based diet, was nearly impossible. In fact, many believed that refined flour noodles were unhealthy. So, initially, Maggi was a flop product and Nestle had to think of a different way to penetrate the Indian market. (contd.)

Here's how Maggi repositioned themselves. A) Catch them young! Instead of targeting the adult population, Nestle sold Maggi as a snack for children, who were much more open to trying new food types. (contd.)

B) Understand the pain points Nestle recognized that working women and homemakers alike always struggled to make evening, after-school snacks for kids that were both filling and tasty. Nestle sold Maggi as that snack. (contd.)

C) Define product attributes — Since this was a mid-meal snack, the preparation had to be quick and simple! Maggi created the "2-min Maggi" brand. So, mothers became customers (who buy Maggi) and school-going children became their end consumers (who consume Maggi). (contd.)

This positioning was the winning recipe that quickly: a) carved out a whole new market for instant noodles in India b) and, naturally won Maggi a 90% market share, which persisted for 25 years! 💡 Lesson ➝ All startups seem like failures till they become an overnight success.

3/ Maggi's marketing strategy Now, the next step was to spread the word that a new snack was in town! Right from the bat, Nestle hammered hard on the fact that: 1) Maggi was a quick, easy snack that was meant to relieve the usual pressures all mothers face. (contd.)

2) And, even though the preparation involves just cooking the noodles and adding the spice mix, the credit for making "tasty" Maggi goes to the mother. So, all their marketing was aligned towards this messaging with taglines like: ⇒ "2-min Maggi" & "Mom's Magic" (contd.)

Here are some marketing strategies that Maggi used: A) Giving free hampers and taste samples  Maggi started distributing free samples in schools. The bet was that once kids get a taste of the product, they would demand their parents to buy Maggi periodically. (contd.)

B) Lower pricing to reach low-income households Nestle had captured the middle and upper class. But, the majority of the opportunity was in lower-income households. So, they introduced "chotu Maggi" for INR 5. With this, Maggi increased its rural penetration by 60%! (contd.)

C) On-point advertising Maggi has created some memorable ads and it has been one of their most effective marketing strategies. It is also a great example of how ads can help introduce new products in the market. Maggi's ads exactly portrayed their product messaging. (contd.)

For example, in the ad kid comes back home and demands a snack. The mother is tired from working all day, so she quickly grabs Maggi, and viola in 2-mins, the dish is ready! Now, if you were to watch this ad 10-times a day, you'd surely start craving some Maggi 😉

💡 Lessons: 1) No matter the competition or the present scenario, your startup’s story is unique. So, tell your story! 2) Great marketing involves "selling" while "helping". 3) Sell your solution, before selling your product. (contd.)

D) Double-down on distribution Finally, with Nestle's distribution networks and supply chain expertise, Maggi was able to reach every corner of the country in a cost-effective way. 💡 Lessons ➝ Poor product with great distribution BEATS great product with poor distribution

4/ The making of a HIT product! The journey of Maggi from being a nobody to becoming the go-to instant noodle in India is incredibly crazy. And, they were able to do all this because: a) They accurately read the pulse of the most common problem all Indians face. (contd.)

b) They positioned themselves in such a way that they're messaging directly targeted the sentiment of a very emotional population. c) They were able to distribute the product with great efficiency all thanks to the many resources that come with being a Nestle product. (contd.)

💡 Lessons ➝ If your startup is built based on popular trends. Also, make sure it actually solves real customer problems. But, it was not all easy sailing for Maggi. After a 30-year run, in 2015, Maggi was tested to have more than the permissible quantity of lead. (contd)

What followed was a full-fledged ban on all Maggi products. Which caused their market share to go from 80% to ZERO almost overnight! We'll be covering their recovery journey and more in a follow-up article. So, stay tuned! 😉

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