Post on 17-Sep-2019
Reviving Maggi Noodles “REVIVE AND THRIVE”
A PRESENTATION TO: NESTLE INDIA LTD. UPPER MANAGEMENT BROCK CONSULTING
ABDUL, VERA, KAJSA, YANQI
Problem and SoluLon PROBLEM
How can Maggi Noodles regain its pre-‐crisis market share?
SOLUTION
Phased approach: -‐ Admit the mistake -‐ Fix quality issues -‐ Create distance with crisis -‐ PromoAonal campaign
Narayanan’s Challenges Problem: How to regain pre-‐crisis market share 1. Quality Control or Crisis Control? • How to ensure no permanent damage is done
2. CommunicaAon Strategy • What should have been its corporate communicaAon strategy post-‐crisis? • What should be NIL’s communicaAon strategy to win its customers back?
3. How to address compeAtor challenges
QualitaLve Analysis
Current SituaLon • August 2015 • NaAon-‐wide food scare beginning in March 2014 • MSG • Lead • Result • NIL did not calm public; statement made 16 days aVer crisis • Several Indian states banned Maggi products • NIL was deemed “safe and hazardous” • NIL ordered to withdraw all 9 products in market • New MD, Suresh Narayanan
Key Issues • Industry-‐wide product safety issues
• NIL product safety issues • MSG contrary label claim • Illegal lead levels
• Lacked clear crisis management strategy • Destroyed Rs.3 billion worth of product without further tesAng • Urgency • CompeAtors are rushing into the Indian market
Current Financial SituaLon: NIL Rs. 98 billion in revenue, with 24% contributed by Maggi Noddle( 23.52 billion). Average 8.3% revenue growth in past 3 years. Experienced the first loss(0.64 billion) in Q2 2015 since its existence. Lose Rs. 40 billion market share on instant noodle. stable Net Profit Margin( net income/total revenue) : 13% inventory management issue Quarterly inventory turnover ( Total revenue/ inventory) = 1.9
Current Financial SituaLon: NIL
0.00
5.00
10.00
15.00
20.00
25.00
2011 2012 2013 2014
Maggi Noddle sale ( in billion Rs.)
Market Segment Analysis Price-‐Sensi=ve Market
Target Market • Children
• Bachelors • College students
• Snack eaters on the move
• Working mothers
CompeLtor Analysis • ITC • Major compeAtor • No product quality issues
• Capital Foods • Product recall • Exited noodle category
• Nissin Foods • Product recall
• Hindustan Unilever • Product recall
• Patanjali Ayurveda • New product launching • No MSG and No Lead labels
MarkeLng Mix Product
-‐ High quality -‐ 3rd party tesAng Safety-‐ensured Noodles
Price -‐ Reduce unit price to gain market share
PromoAon -‐ PR team -‐ Social media -‐ Town hall
Place -‐ ExisAng channels -‐ Kiosks -‐ Stores, supermarkets
QuanLtaLve Analysis
ProjecLon of Recovery: AssumpLon
2016 2017 2018 2019 2020 ● Quality Control System Yes Yes Yes Yes Yes ● Personnel replacement, training Yes Yes ● Public Rela=onship Campaign Yes Yes ● Promo=on Yes Yes Yes Yes Yes ● Research & Development Yes Yes Yes Yes Yes Unit Price 90% 90% 90% 100% 100% revenue growth 2% 4% 6% 8% 10%
ProjecLon of Recovery: Expenses ( in Rs. Billion)
2015 2016 2017 2018 2019 ● Quality Control System 0.5 0.2 0.2 0.2 0.2 ● Personnel replacement, training 0.15 0.15 ● Public Rela=onship Campaign 0.05 0.05 ● Promo=on: 0.1 0.1 0.05 0.05 0.05 ● Research & Development 0.2 0.2 0.2 0.2 0.2
Total Cost 1.00 0.70 0.45 0.45 0.45
ProjecLon of Recovery: Revenue & Income ( in billion Rs.)
2015 2016 2017 2018 2019 Revenue 24.12 25.09 26.59 28.72 31.59 Income 3.14 3.26 3.46 3.73 4.11 Recovery Cost (1) (0.7) (0.45) (0.45) (0.45)
Net Income 2.14 2.56 3.01 3.28 3.66
RecommendaLon
RecommendaLon • Public Apology • New MD, Suresh Narayanan • Admimng to the product safety issues • CommunicaAng product safety issues across industry • CommunicaAng emphasis of safety to consumers
• Marke=ng Campaign • Raise awareness that this is an industry-‐wide issue • TV adverAsements that appeal to the “good Ames” • Product re-‐packaging with focus on safety • Isolate to Indian market only to reduce effect on other Nestle products
RecommendaLon • Internal Communica=on • Communicate quality across the organizaAon • Review and implement strict quality control standards • 3rd party regular tesAng of products
• External Communica=on • PR representaAve • Open lines of communicaAon • Personal apology to customers affected • Feedback channels on social media • Town Hall
ImplementaLon
ImplementaLon Plan Short-‐Term Med-‐Term Long-‐Term
1. Public Apology by CEO -‐ Town hall with journalists -‐ New MD for India
Immediately
2. Replace personnel following inves=ga=on -‐ InvesAgate quality control issues -‐ Hold personnel accountable
Immediately
3. Communicate -‐ Industry-‐wide issue -‐ Reduce compeAtors’ gain from crisis
Immediately
4. Address quality concerns -‐ 3rd party tesAng
1-‐2 months
ImplementaLon Plan Short-‐Term Med-‐Term Long-‐Term
5. New product packaging -‐ Create a gap between crisis and new strategy
+ + +
6. Promo=on -‐ Price decrease
+ + +
7. Crisis Management Strategy -‐ PR team to insAll sense of urgency -‐ Develop crisis procedures -‐ Engage regulators to gain confidence
+
8. Quality Assurance -‐ Monitor and control -‐ Kaizan philosophy of conAnuous improvement
+ +
Risk MiLgaLon RISKS
• Brand reputaAon • Impact on sister brands
• Effect of low price on profits
MITIGATION
• PR team and crisis management procedures
• Communicate that issue is isolated to India
• PrioriAzing market share; strategic choice
Conclusion PROBLEM
How can Maggi Noodles regain its pre-‐crisis market share?
SOLUTION
Phased approach: -‐ Admit the mistake -‐ Fix quality issues -‐ Create distance with crisis -‐ PromoAonal campaign
Revive and Thrive