NESTLE MAGGI

Product Life Cycle

Submitted by: PAVAN S GHODKE

Product Life Cycle (PLC):The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

Each product may have a different life cycle PLC determines revenue earned Contributes to strategic marketing planning May help the firm to identify when

a product needs support, redesign, reinvigorating, withdrawal, etc.

May help in new product development planning May help in forecasting and managing cash flow

The PLC curve is typically divided into four stages:

Introduction – A period of slow sales growth as the product is launched in the market. This phase is characterized by high operational costs and so incurs initial losses.

Growth – A period of rapid market acceptance and substantial profit improvement.

Maturity – A slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased competition.

Decline – Sales show a downward drift and profits erode.

DeclineGrowth

Maturity

Time

Loss

Break-even

point

Profits

Profit

SalesIntroduction

Sales/Profits

Features Introduction

Growth Maturity Decline

Characteristics: Sales

Costs Profits Customers

Competitors

LowHigh

NegativeInnovators

Few

RisingAverageRisingEarly

adoptersGrowing

no.

PeakLowHigh

Middle majority

Stable no.

DecliningLow

DecliningLaggards

Declining no.

Marketing Objectives

Create product awareness &

trial.

Maximize market share.

Maximize profit while defending

mkt. share.

Reduce expenditure & milk the

brand.

Strategies: Product

Price

Distribution

Basic product

Cost plus charge

Selective

Product extension

To penetrateMarket

Intensive

Diversify brands

To match competitors

More intensive

Phase out weak

Cut price

Selective

Introduction To Nestle 2-Minute Maggi Noodles

◉It was found by the Nestle family based in Switzerland in the 19th century.

◉Nestle launched Maggi in India in year 1982.

◉Nestle wanted to explore the potential for instant food among the Indian consumers.

◉It took several years and investment on part of Nestle to establish itself in India.

◉Now it enjoys a 90% market share in this segment .

A concept that provides a way to trace the stages of a product's acceptance , from it's introduction {birth} to it's decline {death}.

Product Life Cycle

Introductory Stage

◉High failure rates◉No competition◉Frequent modifications◉High production costs◉Nestle India limited , an Indian subsidiary of the global FMCG major , Nestle introduced the Maggi brand in India with it's Maggi 2-minute noodles ◉With the launch of Maggi noodles , NIL create an entirely new food category - instant food in the Indian packaged food market .Since then NIL has been able to retain it's leadership in the instant noodles food category

Market Penetration➢Promotional campaigns in schools➢Advertising strategies : focus on young children➢New product innovations according to the needs of customers : vegetable Atta noodles , Cuppa mania , Dal Atta noodles ➢Different packaging : 50grms , 100grms packs

Some Maggi Noodles Advertisements

Growth Stage◉Increasing rates of sales◉Entrance of competitors◉Initial healthy profits◉Development costs are recovered◉In early 1990's the demand for Maggi noodles started to fall due to launch of Top Ramen ,another instant noodle product◉So in order to increase sales , NIL formulated the flavor of Maggi noodles which was not accepted by the consumers ◉In March 1999 NIL re- launched the old version of Maggi noodles , after which the sales revived

Maturity Stage

◉Declining sales growth◉Saturated market◉Extending product lines◉Heavy promotions to dealers and consumers◉Prices and profits fall◉In 2003 HLL introduced Knorr Annapurna , a liquid snack segment in competition to NIL's Maggi range◉The new product by HLL was priced at rs.5 and came in 4 variants◉Like Maggi ,Soupy Snax targeted all age-groups ,particularly office goers

Segmentation To Differentiation

❖Classic Noodles - 5 to 10 yrs❖Veg. Atta Noodles - health conscious❖Rice Mania - teenagers❖Cuppa Mania - office goers

Decline Stage{if no innovations are

made}◉Long drop in sales◉Large inventories of unsold items◉Elimination of all non-essential marketing expenses

The PLC concept can be used to analyze:o a product category (e.g. – liquor)o a product form (e.g. – white liquor)o a product (e.g. – vodka), oro a brand (e.g. – Smirnoff)

Not all products exhibit an s-shaped curve. Three common alternate patterns are described

here…

Sales grow rapidly when the product is introduced, then fall to a “petrified” level that is sustained by late adopters buying the product for the first time and early adopters replacing the product.

Often characteristic of small kitchen appliances such as handheld mixers and bread makers.

Sales Volume

Time

A company aggressively promotes its new product and this produces the first cycle.

Later the sales starts declining & the company gives its product another promotion push, which produces a second cycle of smaller magnitude & duration.

E.g. – sales of new drugs of a pharmaceutical company.

Sales Volume

Time

Primary CycleRecycle

Here, sales pass through a succession of life-cycles based on the discovery of a new product characteristics, uses & users.

The sales of nylon, for example, show a scalloped pattern because of the many new uses – parachutes, hosiery, shirts, carpeting, boat sails, automobile tires, that continue to be discovered over time.

Time

Sales Volume

saloni nanda

THE END