Marketing research

Executive Summary

PT Indofood Sukses Makmur is an Indonesia-based processed foods company. The company,

through its subsidiary is busy in manufacturing, packaging and distributing instant noodles,

flour, pasta, food seasonings, snack foods and special food. It is also busy in study and

improvement, oil palm seed breeding, development as well as branding and marketing of

cooking oils, margarine and so on. The company provide two flour mills in Jakarta and

Surabaya; cooking oil, margarine production facilities are located in Jakarta, Surabaya, Bitung

and Medan; and three copra crushing mills in Sulawesi and Tobelo.

PT Indofood Sukses Makmur financial analysis review is a totally business, financial analysis

of PT Indofood Sukses Makmur Tbk. There are two direct competitors for our share of the

market in Indonesia and outside. Although both of them seem to be successful, there are a

numbers of fronts on which we are competing. Price is the strongest factor to the competitor

inside Indonesia sells their products at lower prices than our product, but outside Indonesia

the competition is about quality. In addition, both competitors have focused primarily on

marketing to the instant noodle consumer. PT Indofoof Sukses Makmur fully express the

professionalism by bring instant noodle product with import quality not only local quality

inside the country. Besides that, it also brings the professionalism of fair trade in order to

provide its raw material.

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1. Introduction

Indomie is a brand of instant noodles by Indofood Sukses Makmur, the world's largest instant

noodle manufacturer, located in Indonesia. It is distributed in Australia, Asia, and Africa, the

United States and European and Middle Eastern countries. Indofood is one of Indonesia's

largest pre-packaged food companies, and was founded in 1990 by Sudono Salim.Indomie is

a form of instant noodle, but spiced for the Indonesian palate. The most popular flavor is

Indomie Mi Goreng, followed by Indomie Soto Mie, Indomie Ayam Bawang (Chicken

Onion), Indomie Kari (Curry), Indomie Kaldu Ayam (Chicken) and Indomie Ayam Spesial

(Special Chicken).Both Indomie and IndoMie can be used to describe the brand.Several

advertisements in Indonesia shows a variety of customers enjoying Indomie, usually ended by

the chorus "Indomie, Seleraku"

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1.1 Company Background

PT Indofood Sukses Makmur Tbk (Indofood) is the largest processed food producer in

Indonesia with most of its products, including instant noodles, wheat flour, cooking oil,

margarine, children’s foods and modern snack foods that have a leading share of the market in

Indonesia. Indofood also produces food seasonings and biscuits which makes Indofood,

leading market share holder of flexible packaging in Indonesia.

Bogasari world’s largest flour, currently Indofood is the world’s largest instant noodles

producer with an install annual capacity of over 13 billion processed packs and 23

manufacturing throughout Indonesia (PT. Indofood, 2008). Indofood brands, distributed in

Indonesia through one of their own distribution and internationally Indofood subsidies by the

third party distribution agency. Especially for instant noodles products, the well-known and

trusted brands of Indofood include community names such as Indomie. Indomie has been

launched since 1982 and now available in many countries, such as USA, Australia, England,

Middle East and others. Indofood continue to benefit from its significant competitive

advantages in Indonesia. In 1998 the shared business enterprise between Salim’s Group’s

Food, First Pacific and Nissin Food Products Co. of Japan, the company’s position in the

market become stronger by making advances into international market share.

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4

Wheat

Seasoning

Flour

Distribution

Market Place

Packaging

Noodles

Plantations

Palm Oil

Cooking oil

Plantations

2. Analytical Segmentations

2.1 Strength

2.1.1 Indofood's brand names and the market shares. Indofood's product range includes

some of the best-known household brand names in Indonesia such as Indomie for instant

noodles. Almost 37 years in the Indonesian market instant-noodle products always be the

leading market since it has formed in 1968, which the 90% market share is the highest as

compared to its competitors.

2.1.2 Indofood's capabilities and Network. The business of Indofood's businesses provides

strong protection against other price in any one element of the production process. For

example, within the noodles business, Indofood's activities include process flour, palm oil

plantation observatories to process the noodles, producing the seasoning, packaging for the

seasoning and noodles, and operating a nationwide in-house distribution network. See fig 4

shows all in-house capabilities for Indofood.

Figure 4 Supply in Indofood Instant Noodles Processing as Major Strength

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3.1.3 Indofood's abilities to expand regionally and globally. Indofood have more capability

to increase speed its increase into regional markets. Moreover, Indofood’s instant noodles last

year, the company exported products to more than 35 countries, which accounted for

approximately 15% of revenues and it is expected that there is room to significantly increase

this proportion. (Indofood Annual Report, 2008).

3.1.4 Indofood's strong cash flows. Indofood has delivered strong cash flows at the

operating level, and has continued to do so over the course of the economic crisis. Operating

profit is approximately three times that required to cover interest payments on debt, and

approximately 30-40% of net earnings is normally paid out as extra. Moreover, the company's

heavy investment in recent years in enhancing production capacity and efficiency such as

introducing Information Technology in noodle business to make the exact distribution more

effectively means that capital expenses is likely to be diffident over years ahead.

2.2 Weaknesses

3.2.1 The new products investment. Indofood has stake of new products and brands,

especially with in Indomie. Since 2000, they launch new 52 regional flavours.

3.2.2 Instant Noodles as Processing Food. Consider to the health awareness for

consumption of food, instant noodles in general and Indomie, in particular, instant noodles is

an instant processing packaged food contained the preservatives. Indomie has difficulty in

capture the consumer with highly health conscious consumers because of the nature of their

product. Particularly in rural areas the preferences of instant processed food is less as they

prefer to cook rather than doing instantly. As taken from 85g pack "Indomie Mi goreng".

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Per Serving Per 100g

Energy 1620kJ (390Cal) 950kJ (230Cal)

Protein 8g 5g

Fat (total) 17g 10g

Fat (Saturated) 11g 6g

Carbohydrate 52g 30g

Sugars 8g 4g

Sodium 830 mg 490 mg

2.3 Opportunities

2.3.1 Modern retailers as new opportunities. Even though the long-term strength of

traditional outlets, the modern retail region continues to grow strongly, especially

in the major urban markets. 25% of retail food sales are modern retail outlet chain

such as Carrefour, Giant, and Makro, in Jakarta compare to 20% average

Indonesian local departmental stores such as Matahari, Hero. These modern

outlets are the back of Indofood’s growth as well as sales in existing future.

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2.3.2 The restructuring of operations. The management of Indofood has redefined

the operations, changing from a past focus on divisional profitability to core

product profitability. It impact to better coordination, tighter supply chain

management and lower working capital needs are expected to begin to be evident

in improvements in both sales and margins.

2.3.3 Changed social-family values. It is resulted from the fact that many women are

more independent economically. as a result, effectiveness in preparing food is the

most favourable in daily life. Therefore, Indomie Indofood instant noodles are the

best choices to serve.

2.4 Threats

3.4.1 The Indonesia political situation. The political situation in Indonesia is uncertain for

these recent years. Even, Indonesia has lead by new presidents, but the terrorist attack still

being threats for Indofood as company on the whole, Economic situation is still in healing

process and the purchasing power for normal Indonesian is still is not as high as been

expected in recent year of time even on staple food consumption.

3.4.2 The new competitors. Indofood facing vicious competition from companies like

Wings. For year ahead, Indomie facing numbers of competitors which most persistent in the

lower-price segments. For instance, sources famous that some companies are experimenting

with new flavors, and smaller brands, such as Alhami (Olagafood), a local brand that has

made remarkable sales achievement in Medan, Indonesia’s third-biggest city, by undercutting

Indofood on price as well as by taking up an Islamic image for its noodles and show that its

noodles are (HALAL), or for Muslims. Another potential threats competitor is Mie Sedap

(Wings Group), which is offering the new kinds of various, flavors in low price same as

Indomie.

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3 TOWS Analysis

3.1 Opportunities and Threats

Indofood operation was one of the major of success, in the mid 1990s, the market increase

and the market growth really fast. To maintain its growth rates and revenues, Indofood had

globally well-known and Indofood presence is now in more than 45 countries. This became a

burden on the Indofood company because need a lot of training, supervising, management

assistance and technology transfer for the partner. This is along with inability to engage in

global strategic coordination. However, the success of Indofood is not only to its aggressive

expansion but also to product innovation. Indofood came out with new products to attract

customers on different periods. Also diversification was one of the factors that Indofood

started to apply even on a small initiated base. That along with instant noodle, snacks, pasta,

flour mill and so on.

3.2 Strength and Opportunities

Indofood is the biggest food supplier in Indonesia, which has great taste and suite to all

people's tongue. For instance, Indomie is one of the best product in Indofood’s company

because it is easy to serve and delicious indeed. Beside it, indomie is affordable and suitable

for all age. Since also there are many Asian people in Australia, Indonesia specifically, they

must have known Indofood products.

Indomie has composition of Indonesian famous spices and herbs, that make Indomie has

unique and heavenly tasteful compare to its competitors. So the opportunity to enter the

market is wide open with huge benefit outcome in the future. Supported also by its strength of

Indofood's product, from its taste, price and quick serve.

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4. Market Segmentation

4.1 Market Targeting

Indomie (or more specifically Mie Goreng Fried Noodles) primarily markets their product as

a substitute to staple foods. Demographically targeting of people aged older than 5 years old

we categorized for all ages, from children, teenager to older. Indomie targets an extensive

sector of the consumer population; the Mie goreng variant of the brand appealing to

individuals of all ages and lifestyles. Therefore, Indomie adopts a policy of ‘full market

coverage’; an undifferentiated marketing strategy centralized around mass production, mass

distribution and mass promotion. (Kotler, 2003).

However, despite Indomies inclusive marketing strategy, analysis of the market trends of

2004 also identified the need for identifying and establishing specific target markets, to gain a

competitive advantage. Particularly, analysis identified that, of the markets targeted, strategies

which penetrated a consumer base of lower income demographics tended to succeed. While

other companies frequently set about broadening the customer base for a given product,

Indomie recognized the imperative of appealing to a more select range of people; their

primary market vested in those of a lower socio-economic class, with their secondary target

group concentrated on residents of urban areas. The latter, was marketed via the message

“convenient and efficient eating”, highlighting the accessibility of the product, which was also

a key motivator for the lower income group. Finally, Indomie determined individuals with

origins or residence in Asian nations as a desirable target group, reaffirming the appeal of Mie

Goreng as an alternative, yet traditional, staple food.

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4.2 Positioning Strategy

Indomie has established a message of accessibility, permanence and reliability to it is

consumer base through its consistent shelf-availability for the last 20 years. Through a series

of psychological ‘reminders’ of Indomies customer loyalty (and consequent customer

reliability), Indomie has more or less earned a title as a ‘house hold name’, creating a unique

niche in the customer mentality as well as the consumer market. (Kotler, 2003). Through this

label, Indomie is able to reduce the threat of similar competitors by enforcing its product

positioning to be seen as a necessity rather than a luxury item. As previously mentioned,

Indomie utilizes its position as an accessible and non discriminatory product, to appeal to the

populous lower socio-economic class, as well as consumers overall. It therefore relays the

slogan “Smart Price for Anywhere, Anytime, and Anyone”.

In addition, Indomie uses a strategy of price flexibility to affirm customer loyalty and

maintain a reputation as a socially aware and responsible company. Due to its relatively

unthreatened position in the market place, Indomie uses special occasions such as the month

of fasting, Hari Raya or Mothers Day, to establish a unique marketing campaign. Through the

introduction f a new lower price, Indomie is able to more clearly articulate the message that

they understand community and customer needs, and are willing to alter their prices and their

products to suit the customer’s needs. Once again, Indomie provides customer support and

rewards for customer loyalty, to a higher standard than their competitors, underpinning

Indomies overall marketing strategy; Me Goreng is a product for everyone.

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5. Company Strategy Analysis: 4P Marketing Mix

5.1 Product Strategy

Packaging

Indomie (mi goreng) has a variety of taste and has a big market change, it can be said that

they understand the Indonesian people taste, which are different in each island, each province

and event in each city. Below is the packaging design, which is produced by PT. Indofood.

The important and fundamental principles of packaging technology are to protect, to preserve,

to contain and to inform. Principally, the purpose of packaging is to contain and protect a

product throughout its distribution and sale. Packages perform the primary purpose of

containment and protection, but vary enormously in appearance, texture, graphic, shape, cost

and structure. (Denison& Cawthray, 1999).

Packaging Design elements Indomie (mi goreng)

Colour Soft colour

Illustrator/ Character No character

Photography Instant noodle photo

Typography Alphabet

Band typography Medium without logo

Brand name position Upper left side

Food name typography Medium character

Food name position Below

Brand : Indomie

Food name : Mi Goreng

Taste : Instant fried noodle meal

Result in gr. : 84 gr.

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Shape Square

Size Small

Point of interest photography

Table 2. Packaging design element

Its packaging is using photography to attract customer buying attention. The lay out

packaging design of Indomie is almost same in every packaging, in these cases the main task

of the product or the product as packaged is to attain recognition

BCG & PLC portfolios

We identify the products/markets competitive advantage and attractiveness using two of the

portfolio analysis. This BCG matrix method (see Figure 1) will assess Indomie(Mie goreng)’s

the current position in terms of market growth rate and market share in the market (Stern&

Stalk 1998). The next analysis is the product life cycle (see Figure 2) to see the condition of

Indomie(Mie goreng)’s sale from the stage based on the time, the PLC is to decide the

marketing strategies.

High Low High Stars Question Mark

Market Growth Rate Cash Cow Dogs

Low Indomie (Mie Goreng) Fried noodle

Relative Market Share

Figure 1: The BCG Portfolio Matrix of Indomie (Mie Goreng) Fried Noodle

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Introduction Growth Maturity Decline

Sales & Profit

Product development Stage

Losses/ Investment

Time

Indomie(Indofood)

Figure 2: The Stage of Indomie (Mie goreng) Fried Noodle In Product Life Cycle (PLC)

As we can see from the Figure1 & 2, the product of Indomie (Mie goreng) Fried Noodle has

been achieving the maturity stage, since facing the new growing number of competitors and

the position has been shifting from stars to cash cow where is low growth, high market share

because the sales and market growth has been decrease. The maturity stage will be

appropriated by the product modification such as quality or features. According to Kotler et al

“a slowdown in sales growth results when many producers have many products to sell. In

term, this overcapacity leads to greater competition. Competitors make down price, increase

their advertising and push up R&D budgets to find better versions of the product (2006).”

Thus we are going to change the product’s characteristics. There are two strategies that we are

focusing, firstly, the strategy of quality improvement of the raw material such as high quality

wheat flavour with the implementation of the food fortification such as protein, severe

malnutrition and vitamin A in Indomie (mie goreng) fried noodles. Secondly is the strategy of

the style improvement to increase the attractiveness of the product. We still keep on our

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original flavour. The additional ingredients and health food label will be added in the

packaging. The extra ingredients such as small pieces fish crackers will make the instant

noodles more attractively served.

5.2 Place Strategy

The place is where we can expect to find your customer and sale is realized. Distribution

channel is important to reach our customer.

Raw material & Manufacturer

Raw materials which manufacture Indomi (mi goreng) are wheat flour, palm oil, salt, garlic

powder, onion powder, pepper, soy bean, sesame oil, spices and so on (Indofood). Most of

raw materials get from Indonesian manufactured because is one of the largest spices countries

in the world. And Indomi (mi goreng) manufacturer is in Indonesia as well.

Retailers

Asian grocery store: As we mentioned Indomi target at Asian countries. A large portion of

sales is expected to be contributed by Asian consumers.

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Supermarket (IGA, Coles, Safe Way): Advantage of supermarket for sale is convenience.

Supermarket is spread whole city and many supermarkets operate 24hours. Thus customers

are easy to purchase Indomi anywhere and anytime.

5.3 Pricing Strategy

Survival

Indomie has been launched since 1982 and now available in many countries, such as: USA,

Australia, England, and Middle East (Indofood). The company produces Indomie (mi gogeng)

with high technology machine and hygienic. And the Company produces a wide range of

instant noodle products with prices that cover the low-end, mid-range and high-end retail

market segments in Indonesia (Natadjaja). Now, it is distributed in Australia, Asia, Africa, the

United States and many European countries.

Competitive pricing

The competition price becomes big challenge for Indomie to make price strategy for next

year marketing plan. The company is competing with rivals especially Wings food, whose

Mie Sedaap noodle brand is 20 percent cheaper than Indofood's main Indomie. For the same

brand and flavour of fried noodle, Indomie selling price is Rp. 910 and Mie Sedap is Rp. 650.

Brand : Indomie

Food name : Mi Goreng

Taste : Instant fried noodle meal

Result in gr. : 84 gr.

Price : 910 Rp

Brand : Wings

Food name : Mie Sedaap

Taste : Instant fried noodle meal

Result in gr. : 88 gr.

Price : 650 Rp

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There are others competitors such as Salami or Mie Selera Rakyat who penetrate the market

in lower price. Our market in maturity stage has greater competition. Competitors try to mark

down prices (Kotler et al, 2006). We will offer the greater benefit for consumers with the

super-value strategy (see Figure 3). The price will be cut for 30%, so that the new price will

be set Rp.625 in the market. Based on the market research and other’s health food issues,

Indomie (Mi goreng) fried noodle more valuable based on the quality, reliability, and

availability.

Price

High Medium Low

Pro

duct

Qua

lity

High 1. Premium 2. High-Value

3. Super-

Value

Strategy Strategy Strategy

Mediu

m

4.

Overcharging

5. Medium-

value 6. Good-value

Strategy Strategy Strategy

Low 7. Rip-off

8. False-

economy 9. Economy

Strategy Strategy Strategy

Figure 3 the Price-Quality Strategy

In addition, Indomie (Mi goreng) fried noodle also use the price-adjustment strategy to

regulate the prices, for low-cost shoppers or in other words who lives in poverty line and still

can afford the Indomie product for consumption.

Some of the strategies are quantity discount such as buy 5, 1 free and with special offer

valuable pricing for household in eye-catching package and seasonings from that alluring

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pricing strategy plan, we are optimistic to achieve the objectives for increase the minimum

2% sales, and gross profit.

5.4 Promotion Strategy

Marketing is more than just distributing goods from the manufacturer to the final customer. It

comprises all the stages between creation of the product and the after-market which follows

the eventual sale. One of these stages is advertising. Without advertising, producers and

distributors would be unable to sell, buyers would not know about and continue to remember

products or services, and the modern industrial world would collapse (Jefkins, 1991, pp.1-2).

As we mentioned in SWOT, Indofood’s performance was slipping because of Indofood facing

fierce competition. For year ahead, in addition, Indomie facing numbers of competitors which

most persistent in the lower-price segments. Indomie output is to be maintained profitably,

advertising must be powerful and continuous (Jefkins, 1991, p2). So Indofood will spend big

budget for support the Indomie (Mie-goreng) fried noodle promotion strategy. With the

largest market share and product quality of instant noodles, Indomie (Mie goreng) fried

noodle must generally spend more on advertising to maintain its share and the need to

convince the consumer that the product is unique and reliable. It will be allocated with the

promotion mix strategy, using the methods of advertising.

Advertising media consist of any means by which sales message can be conveyed to potential

buyers. The variety of media is immense. Almost anything can and has been used as an

advertising medium (Jefkins, 1991, pp.63-64). So it could be the television, radio, billboards,

the internet, newspaper. Indomie (mi goreng) focuses on the television for advertising.

Advertising on television allows you to show and tell a wide audience your product. You can

show how your product works and how it's packaged so prospective customers will know

what to look for at the point of sale (All business). In addition advertising on television is

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bringing the audio and visual together, so it makes people more attract. On the other hand,

there are several disadvantages advertising through the television. Television advertising is to

take up company’s large amount of budget. Producing the ad pays for not only air time but

also hiring script writers, actors, and film editors. Another disadvantage is it is difficult make

it change. Whereas, newspaper advertising is easy to update sale pricing or special offers.

Clutter is one of disadvantages of television advertising as well.

As we mentioned Indomie (mi goreng) targets at students and working people in having the

meal between the busy times. So we suggest Indomie has a free food-tasting in school

campuses and make school students perceive noodle is enough for a meal and highlight fast.

Another suggestion is to put handbills of Indomie at supermarkets such as Coles and Safe

Way.

The most important in doing the promotion is the message that we want to deliver to our

target market. And Advertising has to influence choice and buying decisions (Jefkins, 1991,

p12). For instance, in the commercial TV of the Valentine period shows an availability of

delicious Indomie noodles as a lovers' delight, or during the Moslem’s fasting month festival,

people have more lists in their household budget, Indomie (mie goreng) fried noodle will be

the smart choice for the consumers. The consumer can buy some packs of Indomie in one

attractive package with offering others Indofood’s household in low-valuable price.

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6. Conclusion

From our report, we are talking about the market trend, there are significant of market growth

and volume. Through the macro environment analysis, the price legal environment and

economic both giving some opportunities and also challenges. In the mid of 1990s , we are

going to face threats from competitors, Indomie have many strength and opportunities as the

market leader and its experience able to attack back the competitors. Meanwhile, the increase

of wheat price and health consciousness also becomes issues. 

Based on the SWOT analysis looking into the market and macro environment, the product of

Indomie (Mie goreng) fried noodle will combine all the marketing mix strategy in a year

ahead. Indomie still win in emotional image and brand loyalty through their target market.

Develop the quality product, Reducing the price, develop on distribution channel, aggressive

advertising and premium offer become the strategy for next year. With this strategy, Indomie

(Mie goreng) fried noodle optimist to increase the sales and profits at 2% rate minimum. For

the prevention and evaluation, the contingency plan and control has been prepared for the

marketing plan.

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References

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