Brand Extension of Maggi

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Maggi’s Brand Extension:

In 1998, Nestle launched Maggi’s first brand extension, Maggi soup. At this stage, There was no organized packaged soup market in India. Nestle planned to create a market for packaged soup as it felt the category had a lot of potential. However, according to analysis, the company had introduced soups only to cash in on the Maggi’s brand name, and was never very serious about the segment. In 1993, “Sweet Maggi”, the first variant of Maggi noodles was launched. The company supported the launch with a huge advertisement outlay that amounted to 75% of the total yearly expenditure on the Maggi brand. However, the product failed to generate the desired sales volume and Nestle was forced to withdraw it. At the end of the year, Maggi noodles were generating sales volume of around 5000 tons and remained a loss making proposition for Nestle. To boost sales, Nestle decided to reduce the price of Maggi noodles. This was made possible by using thinner and cheaper packaging material, the company also introduced “money saver multi packs” in the form of 2-in-1 pack and 4-in-1 packs. As a result volume increases phenomenally to 9700 tons in 1994 and further to 13000 tons in 1995.Maggi’s euphoria was, however, short lived, as sales stagnated in 1995 at the previous year’s level. With soup business being threatened by a new entrant “Knorr soups” launched in1995, offering 10 flavors against Maggi’s 4 the company started rethinking its strategies towards the soup market. In order to stretch Maggi’s brand to include Indian ethnic foods the company tied up with a Pune based chordia foods to launch pickles under the year 1995. The company also tied up with Indian foods fermentation (IFF), a Chennai based Food Company to market popular south Indian food preparation such as sambher, dosa, vada and spices in consumer packs in Dec1995. The company reportedly saw a lot of untabbed potential in the market for ready to use south Indian market. In 1996, products from...
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