How MAGGI's GENIUS Marketing Strategy made it a Market Leader?: Nestle Business Case Study — Transcript

Full transcript

1. 0:00Hi everybody.
2. 0:01Maggi is one of the most iconic
3. 0:02brands in the Indian business history.
4. 0:05And for our generation, it's even more special
5. 0:07because it has been an integral part of our childhood.
6. 0:10But from the business standpoint, the most fascinating
7. 0:13thing about Maggi is that way back in 1983, both Maggi and
8. 0:17instant noodles were completely alien to the Indian culture.
9. 0:21And yet, Nestle single-handedly created a Rs 937 crore market
10. 0:26and has been a market leader in the domain for 38 years.
11. 0:30And in spite of giant rivals like ITC, Marico,
12. 0:32and Unilever, even today, Maggi has a whopping
13. 0:3660% market share in the instant noodle segment.
14. 0:39The question is, how did Nestle create a
15. 0:41market for a seemingly alien dish in India?
16. 0:44How did it almost establish a monopoly
17. 0:46in the instant noodles market?
18. 0:48And what are the lessons that we need to
19. 0:49learn from Nestle's genius marketing strategy?
20. 0:53This episode is brought to you buy NaVi health
21. 0:55insurance but more on this at the end of the video.
22. 0:57This is a story that dates back to the 1950s,
23. 0:59Japan.During that time, the country was still
24. 1:02recovering from the downfall of World War Two.
25. 1:04So noodles were one of the most affordable foods in the market.
26. 1:08But because the demand was too high, and
27. 1:10it took a lot of time to be prepared, it
28. 1:12resulted into long lines and long wait times.
29. 1:15This is when a curious Japanese man named
30. 1:17Momofuku Ando decided to make a type of noodles
31. 1:21that could be prepared quickly and cheaply.
32. 1:23And after hundreds of iteration, he was finally
33. 1:25successful in making a revolutionary product that
34. 1:28we all know today as the instant Ramen noodles.Now
35. 1:32although his newly invented instant ramen did not
36. 1:34debut until 1958, the instant ramen noodles became a
37. 1:38game-changing business during the economic boom in Japan.
38. 1:41And as the country started developing rapidly, the
39. 1:43instant ramen became such a big hit that in spite of
40. 1:46costing six times more than the conventional noodles, the
41. 1:49Japanese still bought instant ramen in large quantities.
42. 1:53And soon enough, the instant ramen products started
43. 1:55traveling abroad to the US to again become a massive hit.
44. 1:58And even today, the parent company of ramen Nissin accounts
45. 2:02for 50% of the billion-dollar instant noodle market in Japan.
46. 2:06And while all of this was happening, Nestle was
47. 2:08carefully observing the market and realized that
48. 2:11instant noodles are a goldmine product in Japan.
49. 2:14But very, very cleverly, Nestle chose not to
50. 2:17pursue the Japanese market, in spite of knowing
51. 2:19that there was a billion-dollar worth of market
52. 2:21share still left to be capitalized in Japan.
53. 2:24The question is when there was a clear market for
54. 2:27a scalable product that too in a booming economy,
55. 2:29why didn't Nestle enter the Japanese market?
56. 2:32Now there are two seemingly logical reasons for that.
57. 2:35Number one, Japan was not so liberal hence, it would have
58. 2:38been very difficult to operate as a foreign company in Japan.
59. 2:41And secondly, why go on war against a monopoly
60. 2:44when you can create your own monopoly?
61. 2:47Right?
62. 2:48Well, that is why Nestle started exploring every other
63. 2:51market except Japan to create a market for instant noodles.
64. 2:54And one of the biggest markets obviously was India.
65. 2:58And that is how ladies and gentlemen,
66. 2:59Nestle entered the Indian market in 1983.
67. 3:02And like I said before, both the concept of instant noodles
68. 3:06and the Maggi brand was completely alien to us.We were still a
69. 3:09closed country with hardly any foreign companies in the market.
70. 3:12And the western influence over us was relatively very less.
71. 3:15It's almost like asking our parents
72. 3:16to eat lasagna every single day.
73. 3:19Then the question is, how did Nestle turned
74. 3:21Maggi into such an integral part of our lives?
75. 3:24Well, that is because Nestle very clearly
76. 3:27understood both its customer and the consumers.
77. 3:29To tell you about it if you look at instant noodles as a
78. 3:33product, anyone and everyone could have noodles, right?
79. 3:36It really doesn't matter whether it
80. 3:38is a school kid or a 40-year-old man.
81. 3:39And noodles by default is one of the
82. 3:42most generic dishes in the market.
83. 3:43So had it been some ordinary brands, they would
84. 3:45have tried to capture the entire 740 million Indian
85. 3:48customer base, and they would have tried to sell
86. 3:51to every single Indian who could have had noodles.
87. 3:53And on the outset, it does seem like an obvious choice, right?
88. 3:56Well, Nestle was no ordinary brand.
89. 3:58And they understood the fundamental marketing principle that if
90. 4:02you try to sell to everyone, you will end up selling to no one.
91. 4:06So Nestle's marketing team started finding the best niche
92. 4:09profiles to see who could be their ideal target audience.
93. 4:13And that is when they carefully picked two
94. 4:15categories, and those were mothers and children.
95. 4:19Now, this begs the question, what was the thinking behind this?
96. 4:23Now listen to this very, very carefully.
97. 4:25For the adoption of an alien product, it
98. 4:27has to meaningfully cater to the pain of the
99. 4:29audience and the interest of the audience.
100. 4:32Now, in the case of Nestle, there were two primary
101. 4:35stakeholders, there is the customer and there is the consumer.
102. 4:38The consumer is the child who eats Maggi and the customer
103. 4:41is the mother who buys Maggi.And during 1983 there were
104. 4:44two categories of mothers, working mothers, and homemakers.
105. 4:48Both of them had one major pain that is to
106. 4:51give their child something tasty and healthy
107. 4:52when they come back hungry from school.
108. 4:55The problem with working parents was that they were not at home
109. 4:57and with homemakers, after running all morning, after sending
110. 5:00the kids and husbands to school and work, they needed some
111. 5:03time to rest before they could start working again for dinner.
112. 5:07On top of that, the child had just eaten
113. 5:09chapati-bhaji in school, so giving them the same
114. 5:11for evening snacks would not be good enough.
115. 5:14And at the same time, they needed to make
116. 5:16something that was less tedious, but at the
117. 5:18same time was tasty enough for the child to eat.
118. 5:21So the two pains over here are working mothers wanted
119. 5:24something that the children could make themselves and
120. 5:26homemakers wanted something less tiring to make for their kids.
121. 5:30And the interest was obviously a
122. 5:32tasty dish for their child to eat.
123. 5:34And this is where ladies and gentlemen, Maggi
124. 5:37became an opportunist and positioned itself as
125. 5:40the perfect solution for mothers as a super easy
126. 5:42and tasty meal alternative for their children.
127. 5:45This is how the tagline "2 minute mein Maggi" was born.
128. 5:49And as we've seen in the commercial it showcases
129. 5:51an act of a mother preparing Maggi for the kids
130. 5:53only to see them happy and delighted by the taste.
131. 5:56Apart from that, Nestle reached out to school
132. 5:58kids sponsored quizzes and events and even
133. 6:01gave them a free hamper of Maggi products.
134. 6:03This was followed by a widespread sampling
135. 6:06with over 4 million new contacts every year.
136. 6:08And as time passed, Nestle even began advertising on TV
137. 6:12channels during peak times when people like you and me were
138. 6:15watching Power Rangers, Dragonball Z, and Ninja Hatori.
139. 6:18This is how by positioning itself accurately to cater to
140. 6:21the pain and interest of both its consumers and customers,
141. 6:25Maggi established itself as an integral part of our lives.
142. 6:29Now the question is if Maggi could establish
143. 6:31a name in the market, so could others, right?
144. 6:34Because there were already other big
145. 6:35guns like ITC, Unilever, and Nissin.
146. 6:38Then the question is, why couldn't they compete with Maggi?
147. 6:41Well, there are three specific reasons for that.
148. 6:44Number one, Nestle had evolved its supply chain for 25
149. 6:47long years, which was next to impossible to replicate.
150. 6:51And on top of that, it controls the supply chain end to end.
151. 6:54But when Nissin the parent company of ramen tried to enter
152. 6:56the market, it struggled to find national distribution
153. 6:59partners, and its alliances with both Hindustan Unilever
154. 7:02and Mariko to solve this problem completely failed.
155. 7:05Secondly, Nestle achieved an unmatched level of penetration
156. 7:08even in tier three and tier four cities of India.
157. 7:11And more people knew the term Maggi than they knew
158. 7:14about the actual product that is instant noodles.
159. 7:17So no one really asked for instant noodles
160. 7:19they just asked for a packet of Maggi.
161. 7:21This was because, since 2005 onwards, the
162. 7:24marketers of Nestle conducted exclusive studies
163. 7:27and did everything in their capacity to make Maggi
164. 7:30accessible to the bottom of the pyramid of India.
165. 7:30And in technical terms, based on socio-economic status,
166. 7:36the Indian audience could be categorized into eight
167. 7:37categories, ranging from A-1 to E-2.The top segment
168. 7:45consisted of SEC classes as in socio-economic classes
169. 7:45of A-1, A-2, and B-1, the middle segment was B-2 and
170. 7:49C and the bottom segment was D, E-1 one, and E-2.
171. 7:53For those who do not understand these terminologies,
172. 7:55I'll attach study material for you in the description.
173. 7:58So coming back, the top and middle segment was already
174. 8:00captured by 2005 through Maggi's conventional marketing
175. 8:03efforts, and they saw that the real opportunity was in SEC
176. 8:07classes C and D that represented over 40% of the market.
177. 8:12And after an extensive study, the first product to be
178. 8:15launched was Chotu Maggi, which was priced at just Rs 5 and
179. 8:18was aimed at penetrating the lower segment of the market.
180. 8:21The communication was carefully designed in local vernacular
181. 8:24languages, and the distribution system was intricately
182. 8:27designed with strategic wholesalers and redistributors to
183. 8:30reach up to 2.2 million outlets all across the country.
184. 8:34And because of this extensive effort, the household
185. 8:37penetration numbers of Maggi shot from just 45% to
186. 8:4171% for the C class, and from 31% to 62% for SEC
187. 8:45classes D and E in just four years from 2006 to 2010.
188. 8:50This is the reason why when ITC and Unilever entered
189. 8:52the market, they found it very difficult to achieve
190. 8:55this level of penetration and brand recall value.
191. 8:58And lastly, it was the impeccable connect
192. 9:01that Maggi had established with its customers.
193. 9:03And this is something that does not need any
194. 9:05explanation, but a classic demonstration of the
195. 9:07same was seen in 2015 when this happened to Maggi.
196. 9:46As soon as this bad happened, Maggi disappeared from
197. 9:49the stores for five long months and their market
198. 9:52share nosedived from 75% to 0% within no time.
199. 9:57But you know what, guys?
200. 9:58As soon as Maggi came back they came up with something called
201. 10:01'#WeMissYouToo' campaign wherein the brand asked fans to share
202. 10:06their stories about how much they missed Maggi on social media.
203. 10:09Now you see, this is not some Michael Jordan's Nike
204. 10:11product or a revolutionary iPhone that we're talking about.
205. 10:14It is just an instant noodle brand
206. 10:16expecting fans to share their memories.
207. 10:19But as we all saw, it turned out to be one of the most
208. 10:22successful campaigns Nestle had ever executed, and fans from
209. 10:25all across the country started pouring their love for Maggi.
210. 10:29In fact, Snapdeal sold out a whopping 60,000 Maggi
211. 10:32welcome kits within five minutes of the Maggi flash sale.
212. 10:35And hashtags such as '#DilKiDealWithMAGGI' started
213. 10:38trending on Twitter after the sale resumed.
214. 10:41This was the extraordinary level of connection
215. 10:44that Maggi had established with its audience.
216. 10:46And not so surprisingly, it was very, very difficult
217. 10:49for Unilever or Nissin to achieve this level of
218. 10:52connection with a player like Maggi in the market.
219. 10:55And guess what?
220. 10:56By 2017, Maggi was back to the number one spot in the market
221. 11:00with a whopping 60% market share in the instant noodles market.
222. 11:04This is the iconic story of the Maggi brand.
223. 11:08Now, this brings me to the most important
224. 11:09part of the episode, and that are the lessons
225. 11:11from Maggi's genius marketing strategy.
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251. 12:30Moving on, there are four lessons that we need to
252. 12:32learn from Nestle's incredible business strategy.
253. 12:35Lesson number one always remember while most
254. 12:38brands spend time and resources to find out how
255. 12:41to penetrate a market only a few brands spend time
256. 12:44and money to find out which market to penetrate.
257. 12:47And so the most revolutionary products in the
258. 12:49market are more often than not the products
259. 12:52that have created a market for themselves.
260. 12:54And it's not just Nestle.
261. 12:55Even Apple never tried to compete with Rolex to make mechanical
262. 12:58watches, they instead created a market for smartwatches.
263. 13:02And now they're way ahead of any
264. 13:04other watch company in the world.
265. 13:06Similarly, Henry Ford had the option to
266. 13:08compete with luxury cars, but he instead
267. 13:11created a market for the bottom of the pyramid.
268. 13:14And in our case, Maggi created a market for instant noodles
269. 13:17in India, instead of going head-on with Nissin in Japan.
270. 13:21Lesson number two, if you're selling a generic
271. 13:22product, your first instinct would be to
272. 13:25sell to every single person in the market.
273. 13:27But always remember, if you try to sell to
274. 13:29everyone, you will end up selling to no one.
275. 13:32So always try to find a specific target audience to sell your
276. 13:35generic product.And drop a comment about if you know any other
277. 13:38brand that sells a generic product to a specific audience.
278. 13:41And for the people who have done the communication
279. 13:43masterclass you already know which brand I'm talking about.
280. 13:46Lesson number three the golden recipe to market penetration
281. 13:49lies in identifying the pain and interest of the audience.
282. 13:53And your accuracy with spotting this pain and interest is
283. 13:56directly proportional to the ease of adoption of your product.
284. 13:59In this case, it was Nestle's intricate
285. 14:02understanding of the mother's pain of being too
286. 14:04tired to make an evening meal for the children.
287. 14:05And the interest was so beautifully captured through
288. 14:09Nestle's initiatives to interact with children by the
289. 14:11means of cartoon channels and school competitions.
290. 14:14And lastly, like I've said many times before, while good
291. 14:17brands sell you a product, great brands sell you an emotion.
292. 14:21And even if you're selling something as simple as a dry cake
293. 14:24of noodles, if you connect with the audience at an emotional
294. 14:26level, you will stand out from the rest of the crowd.
295. 14:29Like a legend once said, "people might forget what you
296. 14:32said but they never ever forget how you made them feel".
297. 14:35That's all from my side for today guys.If you learned something
298. 14:38valuable, please make sure to hit the like button so that the
299. 14:41YouTube algorithm knows that you learned something valuable.
300. 14:42And for more such free business and political
301. 14:45case studies please subscribe to our channel.
302. 14:47Thank you so much for watching.
303. 14:49I will see you in the next one.
304. 14:50Bye-bye.
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