Synopsis

Table of Contents

Sr. No. Topics Page Nos.

1 Aim/objective of thesis

2 Industry Overview

3 Segmentation 3.1 – Theory 3.2 – Segmentation of Noodle Industry

4 Differentiation 4.1 – Theory 4.2 – Industry perspective

5 Positioning 5.1 – Theory 5.2 – Industry perspective

6 Category Product Life Cycle and Consumer Adoption process 6.1 – Product Life Cycle 6.2 – Consumer Adoption Process

7 Marketing Mix- Product - Price- Place - Positioning

8 Research Design and Objectives

9 Discussion on findings

10 Strategy and conclusion

1. Aim/Objective of Thesis The objective of this report is to study the Noodle Industry in general however the focus would be on understanding Instant Noodles Market and the current trends.

The study is also intended to understand that given an option of traditional snacks, burgers, etc. why users (kids, teens and youth) opt for noodles, specifically instant noodles as snacks or sometimes lunch or dinner.

The major players of instant noodles are trying to associate “health” with instant noodles. This study therefore attempts to understand whether instant noodles are perceived as “Healthy” food.”

2. Industry Overview:

Food Industry in India:India is the second largest producer of food and holds the potential to be the biggest on global food and agriculture canvas, according to a Corporate Catalyst India (CCI) survey. The food industry in India comprises the food production industry and the food processing industry. The food processing industry is one of the largest in India – it is ranked fifth in terms of production, consumption, export and expected growth. Growth Drivers of India’s food IndustryThe growth of the food industry is driven by:

Higher disposable incomes Change in spending pattern Increasing organised food retailing Increasing export opportunities Favourable regulatory environment and Government support and investment inflows

Market Size of Indian food IndustryThe Indian food industry is projected to grow by US$ 100 billion to US$ 300 billion by 2015, according to a report by a leading industry body and Technopak. The industry, estimated at US$ 200 billion in 2006-07, is projected to reach US$ 300 billion by 2015. During the period, the share of processed food in value terms is expected to increase from 43 per cent to 50 per cent.Food Processing IndustryFood processing Industry is one of the largest industries operating in India, and is highly fragmented. SegmentsThe Food Processing Industry operates across various segments that include:

Fruits & vegetables Meat & poultry Dairy Marine products, grains and consumer foods (that includes packaged food, beverages

and packaged drinking water).

Value addition of food products is expected to increase from 8 per cent to 35 per cent by the end of 2025. Fruit & vegetable processing is also expected to increase to 25 per cent of total production in 2025 from the current level of 2 per cent, states the CCI report. Dairy sector – that holds highest share in processed food market – holds large potential to be exploited. The report reveals that 37 per cent of the total dairy produce is processed of which only 15 per cent is done by the organised sector. Hence, there still lies a lot of scope for investment and development. The sector has attracted foreign direct investment (FDI) worth US$ 1,253.79 million from April 2000 to April 2011, according to the data provided by Department of Industrial Policy and Promotion (DIPP).The amount of FDI inflow for Food Processing Sector in India during the financial year 2010-11 up to November 2010 (8 months) is US$ 129.2 million.(source: http://www.ibef.org/artdispview.aspx?cat_id=498&art_id=29252&in=22 -website of India Brand Equity Foundation)

Industry Overview of Noodles, including Instant Noodles:

About Noodles:As per the research conducted by the Chinese Scholars, oldest known noodles, 4000 years old, were found in China at the Qijia culture Lajia site in Qinghai province (BBC News 12.10.2005). Hence they claim that noodles were originated in China. However controversies on origin of noodles still remains continued.

The website http://www.world-foodhistory.com, powered by Blogger shows history of Noodles as under:

5000 B.C. Wheat flour, believed to originate in the Middle East, serves as the basis of the first “noodles.” Chinese ate pasta as early as 5,000 BC.

2 B.C. Wheat was grown in northern China by end of the second millennium. By fourth and third centuries BC, version of pasta existed in many cultures. Indian called it sevika, or thread; the French, noulles; German, Nudeln and the English, noodles.

4 Guangzhou in China considered to be culinary mecca of China. When the first Arab merchants arrived in the fourth century to serve as intermediaries between the Chinese and Greek, they established a steady commerce between China, India, Africa and Europe.

It was via this route that the noodle is said to have found its way from China, through the Middle East to Europe.

300 The Chinese form whole grain paste into various noodle-like products.

500-600 Amidst numerous cultural exchanges, China shares Buddhism and the art of noodle-making with Japan. Buckwheat noodles become a staple of the Japanese tea ceremony.

1138 Arab geographer, Idrisi, travels to Sicily and writes about “triyah,” a food resembling threads and produced in large quantities.

1200 Explorer Marco Polo introduced pasta to Italy after encountered it at the court of Kublai Khan in China in 1295. However, the history shows that pasta, maccheroni and vermicelli were known foods before Marco Polo return to Italy.

1300 German bakers made a precursor to pasta in the 13th century, when they rolled dough into symbolic shapes such as swords, breads and stars, which they baked and served as bread.

1600 Early in the 1600s., the beginning of Japan’s Edo period, somen noodles and soba (buckwheat) noodles gained popularity in Tokyo and along the east coast. Because of a demand for soba as breakfast and festival food and street fare, farmer began sowing more grain.

1700 The very first spaghetti is produced in Napoli, Italy.

1800 Japanese specialty shops create noodles, similar to those eaten today, but requiring considerable preparation time and effort. It is believed that noodles originated from China as early as 5000 BC, then spread to other Asian countries.

The noodle is food made from different types of dough (rice, wheat, buckwheat, potato, maize, legume, nut), formed into long thin ribbons, strips, curly-cues, waves, helices, pipes, tubes, strings, or other various shapes, sometimes folded. They are usually cooked in a mixture of boiling water and/or oil. The word derives from the German Nudel (noodles). Chinese noodles, known collectively as mien.

Today, about 40% of the flour consumed in Asia is for Noodle manufacture. In recent years, noodles have also become very popular outside Asia and this popularity is likely to increase.

Types of Noodles:

Types of Noodle vary from Country to Country; however, they fall into three main categories.

Wheat Flour Noodles:

The most common are wheat flour noodles, which can be made with or without eggs. Depending on the remaining ingredients, wheat noodles can be white or yellow, thin as spaghetti or thick as fettucine, stiff or extremely elastic.

Wheat noodles are used for preparation of different noodle dishes in different countries as under:

Chūka men (Japanese) Used for ramen (Japanese Noodle Dish), chanpon (regional cuisine of Nagasaki, Japan) and yakisoba (a dish of fried noodles sold during festival time in Japan, but originates from China)

Thukpa (Tibetan : Wylie: thug pa)

Flat Tibetan noodles used to make Tibetan Noodle soup. It is popular in Tibet, Bhutan, Nepal and also in the states of Sikkim, Ladakh, Arunachal Pradesh and some other parts of India.

Kalguksu (Korean) hand made, knife-cut wheat flour Korean noodles are used for making Kalguksu

Lamian (Chinese) It is a type of hand-made or hand-pulled Chinese noodle. It is also the name of the dishes that use these noodles

Bakmi (Chinese) Bakmi is a wheat based noodle which was brought to Southeast Asia by Chinese merchants, and is today a common noodle dish, especially in Indonesia and in Thailand.

Mee pok (Chinese) Flat, yellow Chinese noodles, popular in Southeast AsiaSōmen (Japanese) Thin variety of Japanese wheat noodles, often coated with

vegetable oilSpätzle A Swabian (dialect spoken in Swabia region of Germany’s

southwestern state) type of noodle made of wheat and eggs. They are found in the cuisine of Germany and of Austria, Switzerland, Hungary, Alsace and South Tyrol.

Udon (Japanese) The udon noodle is made from wheat flour and is typically the largest and thickest noodle found in Japan.

Reshte (Central Asia) Central Asian, flat noodle, very pale in colour (almoste white).

Types of Noodles

Wheat Flour

Noodles

Rice

Noodles

Starch Based

Noodles

Reshte are Persian style noodles used in soups, mixed with rice or with deserts.

Erişte (Azerbaijan)Also known as Kesme (Turkish)

The term may refer to the noodles themselves, or the prepared dish made with them. It is flat, yellow or reddish brown wheat noodles. It refers to a traditional Central Asian noodle dish made by the Kazakhs or the Kyrgyz.

(Wikipedia)

Rice Noodles:

Rice based noodles can be：1. Extruded from a paste and steamed into strands of noodles2. Steamed from a slurry into sheets and then sliced into strands

These noodles are typically made only with rice and water without the addition of salt. Although unorthodox, some producers may choose add other plant starches to modify the texture of the noodles.Rice noodles can also be thick or very thin - almost resembling long strings of coconut. The same is true of rice sticks. There are also rice paper wrappers which come in either circular or triangular shape. Thin rice noodles are also known as Rice Vermicelli. Idiyappam is Indian rice noodles.

Starch based noodles

These noodles are made using various plant starches like Mung Bean Starch or Potato Starch. Mung bean starch noodles will often be cut with tapioca starch to make them more chewy and reduce production costs.

Other variant of starch based noodles is ‘cellophane noodles’. Cellophane noodles (also known as Chinese vermicelli, bean threads, bean thread noodles, crystal noodles, or glass noodles) are a type of transparent noodle made from starch (such as mung bean starch, yam, potato starch, cassava or canna starch), and water.

Hand-pulled Noodle:In China, making "hand-pulled" noodles is an art involving holding the stretched out paste in both hands and whirling it around several times. Then the paste is laid out on a board and folded and refolded repeatedly. Eventually the paste is transformed into long, thin, noodles. While in China it is still possible to watch vendors make hand-pulled noodles, today most

1958

noodles are made by machine.

About Instant Noodles:

Instant noodles are dried or precooked noodles and are often sold with packets of flavoring including seasoning oil. Dried noodles are usually eaten after being cooked or soaked in boiling water for 2 to 5 minutes, while precooked noodles can be reheated or eaten straight from the packet. Instant noodles were invented by Momofuku Andō of Nissin Foods, Japan.

History of Instant Noodles

Momofuku Ando Nissin Foods invented "CHICKEN RAMEN ™", the world's first instant

noodle product

Mr. Momofuku established the Japan Convenience Foods Industry Association to promote the growth of the instant noodle

industry

Worl'ds first "CUP NOODLE ®" was developed by Mr. Momofuku.

1964

1971

Space Ram (first instant noodle to be consumed in outer space) developed by

Momofuku Ando and the product was carried into space by Japanese astronaut Soichi

Noguchi aboard the Space Shuttle Discovery in July 2005.

About 95 billion servings of instant noodles are eaten world wide

The development of Instant NoodlesThe technology of "CHICKEN RAMEN ™" developed by Momofuku Ando in a humble shed behind his home involved rapidly drying noodles through flash-frying in oil. This method became the basis for all instant noodle production. His revolutionary "CUP NOODLE ®" concept in which a single container serves as packaging, cooking vessel and serving dish was the basis for cup-type instant noodles. These two inventions by Momofuku Ando revolutionized culinary culture on a global scale.Sub-Category of Noodles:The sub-category of instant noodles includes cups, bowls and pouches. The former category includes Indo Nissin’s Top Ramen mainly, and now even Maggi has a cup variant. But most of the other new entrants have been sticking to the pouch model with the taste maker as an additive, which Horlicks Foodles prefers to call the health maker.

Market Size:

Market Size of Packaged Food Sector:“Noodles” falls in ‘Packaged Food Sector’ category. The size of the packaged food market in India was estimated at US$ 10 Bn in 2008 and is expected to reach US$ 20 Bn by the year 2014. Packaged food was 4 per cent of the overall Food and Grocery (F&G) market in 2008 and it is expected to reach 5 per cent of F&G market by 2014.

2005

2010

The main categories of packaged food include baby food, bakery products, canned/ dried processed food confectionery, dairy products, frozen processed food, ice cream, meal replacement products, noodles nutrition/staples, pasta, ready meals, sauces, dressings and condiments, snack bars, soup, spreads sweet and savoury snacks, etc.

Market Size of Noodles:Noodles other than instant noodles are largely produced by small and medium enterprises. Market size could not be found for this category. However, in India, the largest category within Noodles is “Instant Noodles”. Therefore, market size of instant noodles as per different news articles is studied and given here under.

Market Size of Instant Noodles:The Market size of instant noodle is of Rs. 1300 crore ($ 0.29 Bn where exchange rate is $1= Rs. 45). The category is growing at the rate of 15-20%. Taking this growth rate year-on-year, the market size is expected to be of Rs. 3,000-3,500 crore ($ 0.67 Bn at an exchange rate of Rs. 45 to a dollar).

Major Players of Instant Noodles in India:

Major players in the industry are Maggi of Nestle India, Top Ramen from Indo Nissin, Ching's Secret from Capital Foods, Foodles from GlaxoSmithKline (GSK) and Wai Wai from CG Foods also wooed the space.

Maggi was the first brand of Instant Noodle introduced in India by Nestle India in the year 1982/1983. Nestle India pioneered the convenience food segment in the country by introducing Maggi. The Brand became a synonymous with instant noodles much as Cadbury with Chocolate.

Until 1988, instant noodle category was monopolized by Maggi. In 1988 Japanese noodle giant – Nissin Food Products Co. Ltd – entered in India through an Indian subsidiary, Indo Nissin Foods Ltd. Momofuku Ando, the founder of Nissin Foods, had invented instant noodles as a quality, convenient food product that is ready to eat just by adding some hot water, in 1958. Hence in the world market, Nissin Food Products Co. Ltd. was the pioneering firm, which introduced instant noodle category. They launched Top Ramen and Cup Noodle in India in 1991.

In 1996, Mumbai based Capital Foods Ltd., launched Authentic Chinese Food Ingredients Brand “Ching’s Secret” and International Food Brand ‘Smith & Jones’ in India.

In 2002-2003, Chaudhary Group of Nepal, incorporated ‘CG Foods India Pvt.Ltd.’ in India to introduce their flagship Brand “Wai Wai”. Wai Wai was launched in the year 2005.

In the year 2009, GlaxoSmithKline (GSK) introduced Foodles, dried instant noodles, under its mother Brand Horlicks.

In the year 2010, ITC has launched noodles under its mother Sunfeast brand in Chennai, Coimbatore and Kerala. The Brand name for ITC’s Instant Noodle is ‘Sunfeast Yippie’AA Nutritions, based in Meghalaya, has also stepped into the instant noodle market with its Ready-to-Eat 'Yummy' Noodles.

As per May 2009 edition of Progressive Group Magazine by Juhi Sharma, the instant noodle category today also accommodates a host of private labels offered by modern food and grocery retailers such as More, Spencer’s, Food Bazaar, Reliance Fresh, Aditya Birla Retail etc. Besides them, imported brands such as Wan Thai Foods Industry Co., Ltd.’s yum-yum instant noodles, Ko-Lee instant noodles etc. also share retail space in the category now.

According to Euromonitor International’s Global report on packaged food that came out in 2009 (it comes out every two years) the brand share of the players in the instant noodle category included Maggi at 80.8%, Top Ramen at 9.9%, Chaudhary Group’s Wai Wai at 5.9%, Nissin at 1.4%, private labels at 0.7% and others at 1.4%.

Brand Share of the players in Instant Noodle category (Euro Monitor's Report of 2009)

Maggi , 80.80%

Top Ramen9.90%

Others,1.40%

Pvt Labels,0.70%Nissin, 1.40%

Wai Wai,5.90%

As per news report by Ratna Bhushan, Economic Times Bureau dtd. Aug 30, 2010, Maggi's share of instant noodles, on an all-India basis, across urban markets, has slipped consistently between December '09 to July '10. While Maggi instant noodles (minus vermicelli) had a 90.7% share in December '09, the share dropped to 86.5% in July '10 on an all-India basis.

The report further says that with new competition, Maggi's market share is certain to get impacted , but add that Nestle has the potential to expand the Rs 1,300-crore instant noodles category – which itself is growing at a rapid 15% annually.

Apart from HUL and GSK which have positioned their noodles as 'healthy' snacking options targeting kids and mothers, others like Indo-Nissin's Top Ramen, Capital Foods' Ching's Secret and CG Foods's Wai-Wai , though around for long, are stepping up marketing efforts to take advantage of category growth. Besides, private brands like Big Bazaar's Tasty Treat and Aditya Birla Retail's Feasters are notching up share.

Manoj Menon, FMCG analyst at brokerage firm Kotak Securities, wrote in a report: "Maggi faces product substitution risk and brands like Knorr and Foodles could potentially impact its incremental growth. Nestle faces a challenging competitive environment in culinary."

GSK, which entered the category in December 2009, has taken away share from Maggi mainly in the South and East riding on the equity of Horlicks and its well-entrenched distribution in the regions.

GSK's executive VP, marketing, Shubhajit Sen, said: "Consumers were looking for a choice in instant noodles; combined with that, the equity of Horlicks is leading to a lot of trails. The initial response to Foodles is much higher than our expectations."

On the other hand, HUL, which rolled out Knorr Soupy noodles in the South this February, had to postpone the brand's national launch due to capacity constraints because of heavy consumer offtake. An HUL spokesman said: "We are very pleased with the performance of Knorr Soupy noodles."

Private brands are whetting appetites of consumers too. According to Devendra Chawla, business head, private brands, Future group: "The category boundary is set to be re-drawn. From a snack food targeted at children, instant noodles category has evolved as a mainstay meal even for grown ups."

Mr. Chawla said Tasty Treat was the second biggest instant noodles brand in its Big Bazaar stores after Maggi. The brand packaging was revamped last year and Future plans to roll out additional variants in a month's time taking the number of variants to nine from the existing three.

While Nestles’s Maggi was the first instant noodles in pouch form, it is Indo Nissin, who were pioneering in Cup Noodles and are the market leaders in Cup Noodles market having 90% share in cup noodles market. Maggi has recently entered the cup-noodles market with its brand Cuppa- Mania.

As per the Euromonitor’s statistical information given in its research report, published in September 2008, the market size of instant noodles was around Rs. 11346.3 million in 2008, of which Rest. 11171.7 million was the share led by pouch instant noodles and remaining Rs 174.6 million was held by instant cup noodles.

National Trends in Instant Noodles DemandsUpdated on May 10, 2011

Country / Region 2007 2008 2009 2010 Total 947.2 913.1 918.0 953.91 China, Hong Kong 458.1 425.3 408.6 423.02 Indonesia 149.9 137.0 139.3 144.03 Japan 54.6 51.0 53.4 52.94 Vietnam 39.1 40.7 43.0 48.25 USA 39.0 39.5 40.8 39.66 Republic of Korea 32.2 33.4 34.8 34.17 India 12.3 14.8 22.8 29.48 Thailand 22.2 21.7 23.5 27.19 Philippines 24.8 25.0 25.5 27.0

10 Brazil 15.0 16.9 18.7 20.011 Russia 27.1 24.0 21.4 19.012 Nigeria 10.8 14.0 16.0 16.713 Malaysia 11.8 12.1 12.0 12.214 Mexico 9.0 8.6 8.6 8.315 Taiwan 8.8 8.4 8.2 7.816 GCC Countries * 6.7 6.9 7.3 7.617 Nepal 4.3 5.1 5.9 7.318 Ukraine 5.0 5.2 5.419 Cambodia 2.1 2.4 2.4 3.320 Poland, Hungary, Czech 2.7 3.0 3.1 3.121 UK 2.6 2.6 2.6 2.622 Myanmar 2.2 2.1 2.1 2.423 Canada 2.0 2.0 2.0 2.124 Germany 1.8 1.8 1.8 1.825 Australia 1.5 1.5 1.6 1.626 Singapore 1.2 1.3 1.3 1.227 Fiji and outskirt islands 0.8 0.8 0.9 0.928 South Africa 0.8 0.9 0.9 0.929 Bangladesh 1.5 0.6 0.630 New Zealand 0.4 0.4 0.4 0.431 France 0.4 0.4 0.4 0.432 Norway, Finland, Sweden, Denmark0.3 0.3 0.3 0.333 Costa　Rica 0.2 0.2 0.2 0.234 Netherlands 0.2 0.2 0.2 0.2

Country / Region 2007 2008 2009 201035 Peru 0.2 0.2 0.2 0.236 Belgium 0.1 0.1 0.1 0.137 Others 2.0 2.0 2.0 2.0

Total 947.2 913.1 918.0 953.9

Unit : 100 Million Packets (Bags/Cups)*Gulf Cooperation Council Countries (United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar

and Kuwait)Estimated by World Instant Noodles Association (WINA)

The “Instant Noodles” category has shown tremendous growth in last few years. The growth possibilities, increasing demand for ready-to-eat packaged food and changing food habits of the Urban Indian Toddlers, Teens and Youth has compelled Global FMCG players like Unilever and GlaxoSmithkline Consumer Healthcare to enter in instant noodle market.

While HUL introduced “Knorr Soupy Noodles” - a mix of soup and noodle, GSK introduced Foodle a dried noodle version with “health” perception to earn market share in this category.

Changing Food Habits:

Brand consultant Harish Bijoor estimates that from a single meal eaten in a restaurant in a month a decade ago, the average urban Indian in the top eight metros is now consuming 7.8 meals a month in restaurants. Not only this, market sizes of Powdered soups (estimated market size: US$55 million), cooking pastes and purees (US$33 million), instant pasta (US$22 million) and ready-to-eat meals (US$17 million) reflects the shift in food habits.

Harminder Sahni, managing director of Wazir Consultants describes reasons for change in Indian food habits: 1) the country's young demographic profile, 2) increasing family income, 3) accelerating urbanization, 4) the cosmopolitization of major urban centers, 5) unprecedented interstate migrations, 6) increasing number of working couples, 7) time constraints, 8) shortage of household help, 9) global travel, 10) increasing exposure to global cuisine and so on.

He further adds that “The localization of cuisines to match customer tastes regionally has played a major role in the acceptability of different cuisines in the country.”

These are the drivers of growing interest and action in the instant noodles market.

There is one more element which has contributed to changing food

Other factors include – - growth of retail sector – better visibility, depth and length of assortments generates

awareness amongst the customer this results in impulse purchase. - new product introduced by various brands – e.g. atta noodles by Maggi, dried noodles

(Foodles) by GSK, Smith & Jones’ Curry Noodles, Schezwan, Manchuria, Chiken, Hot Garlic Instant Noodles by Ching’s Secret, etc.

Segmentation of Instant Noodles:

Understanding Segmentation: Segmentation is essentially the identification of subsets of buyers within a market who share similar needs and who demonstrate similar buyer behavior. Market segmentation aims to increase a company’s precision marketing.

The world is made up from billions of buyers with their own sets of needs and behavior. Segmentation aims to match groups of purchasers with the same set of needs and buyer behavior. Such a group is known as a 'segment'. Think of your market as an orange, with a series of connected but distinctive segments, each with their own profile.

Of course you can segment by all sorts of variables. The diagram above depicts how segmentation information is often represented as a pie chart diagram - the segments are often named and/ or numbered in some way.Segmentation is a form of critical evaluation rather than a prescribed process or system, and hence no two markets are defined and segmented in the same way. However there are a number of underpinning criteria that assist us with segmentation:

Is the segment viable? Can we make a profit from it? Is the segment accessible? How easy is it for us to get into the segment? Is the segment measurable? Can we obtain realistic data to consider its potential?

There are many ways that a segment can be considered. For example, the auto market could be segmented by: driver age, engine size, model type, cost, and so on. However the more general bases include:

by geography - such as where in the world was the product bought. by psychographics - such as lifestyle or beliefs. by socio-cultural factors - such as class. by demography - such as age, sex, and so on.

A company will evaluate each segment based upon potential business success. Opportunities will depend upon factors such as: the potential growth of the segment the state of competitive rivalry within the segment how much profit the segment will deliver how big the segment is how the segment fits with the current direction of the company and its vision.

Bases for Segmentation Geographic Segmentation

Geographic segmentation calls for dividing the market into different geographical units such as nations, states, regions, counties, cities, or neighborhoods. The company can operate in one or a few geographic areas or operate in all but pay attention to local variations.

Variables of Geographic Segmentation: o Region - of the world or country, East, West, South, North, Central, coastal, hilly,

etc.o Country - size/country size: Metropolitan Cities, small cities, towns.o Density of Area - Urban, Semi-urban, Rural.o Climate - Hot, Cold, Humid, Rainy.

Geographic Segmentation is considered for designing product, pricing and communication. Geographical segmentation can be used for various purposes. The followings are geographic segmentation examples; Shop outlets: Locations for new shop outlets can be identified. Advertising: Areas for advertisement can be identified. Segmentation can also reveal

information for advertisement media. Product selection: Different geographic segments have differing consumption

patterns. Introducing different products for different geographic segment can bring more sales!

Military recruitment: Military recruits have certain demographic attributes. Focusing on geographic segments with such profiles, military can find new recruits more efficiently.

Catalog sales: In catalog sales direct marketing, generally demographic information of customers is not available. Census information derived from geographic data can be used to develop better customer segmentation and predictive models.

Demographic Segmentation:In demographic segmentation, the market is divided into groups on the basis of age, family size, gender, income, etc. Demographic segmentation variables are amongst the most popular bases for segmenting customer groups. This is partly because customer wants are closely linked to variables such as income and age. Also, for practical reasons, there is often much more data available to help with the demographic segmentation process. The main demographic segmentation variables are summarised below:

AgeConsumer needs and wants change with age although they may still wish to consumer the same types of product. So Marketers design, package and promote products differently to meet the wants of different age groups. Examples include the marketing of toothpaste – Jr. Colgate with different flavors for the age group of 7-15 years. Ginny and Jony concentrates only on kids’ wear where segmentation is done for infants (just born up to 6 months) and toddlers (1 to 5 years) too. Family SizeImportant for the products like food grains where the packaging sizes could start from 1 kg (considering nuclear families) or 5 to 10 kgs (considering joint families). Another good examples are family or party packs of ice-creams and soft drinks.Life-cycle stage

A consumer stage in the life-cycle is an important variable - particularly in markets such as leisure and tourism. For example, contrast the product and promotional approach of Club 18-30 holidays with the slightly more refined and sedate approach adopted by Saga Holidays.GenderGender segmentation is widely used in consumer marketing. The best examples include clothing, hairdressing, magazines and toiletries and cosmetics.IncomeAnother popular basis for segmentation. Income segmentation is a long-standing practice in such categories as automobiles, boats, clothing, cosmetics, and travel. E.g. Armani shirts for premium market where income levels are pretty high. For expanding sales in highly competitive markets many FMCG companies introduced sachets or small packets to suit low income group or poor section’s demand, where price is the only factor to buy a product. Automobile sector highly dependent on income levels of the consumers. They design cars to suit the affordability of their customers.Social classMany Marketers believe that a consumers "perceived" social class influences their preferences for cars, clothes, home furnishings, leisure activities, reading habits, retailers, etc. There is a clear link here with income-based segmentation. LifestyleMarketers are increasingly interested in the effect of consumer "lifestyles" on demand. Unfortunately, there are many different lifestyle categorisation systems, many of them designed by advertising and marketing agencies as a way of winning new marketing clients and campaigns!Generations: Each generation is profoundly influenced by the times in which it grows up—the music, movies, politics, and events of that period. Some marketers target Generation Xers (those born between 1964 and 1984), while others target Baby Boomers (those born between 1946 and 1964). 15 Meredith and Schewe have proposed a more focused concept they call cohort segmentation. 16 Cohorts are groups of people who share experiences of major external events (such as World War II) that have deeply affected their attitudes and preferences. Because members of a cohort group feel a bond with each other for having shared these experiences, effective marketing appeals use the icons and images that are prominent in the targeted cohort group’s experience. Other Variables include

o Occupation - Professional and technical; managers, officials, and proprietors; clerical, sales; craftspeople; forepersons; operatives; farmers; retired; students; homemakers; unemployed; Banking professionals, BPO/Call Centre people, etc.

o Education - Grade school or less; some high school; high school graduate; some college; college graduate

o Religion: Catholic, Protestant, Jewish, Muslim, Hindu, other

Psychographic Segmentation:

Psychographics is the science of using psychology and demographics to better undertant consumers. In psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits, lifestyle or values. People within the same demographic group can exhibit very different psychographic profiles.

The main types of psychographic segmentation are:

Lifestyle – different people have different lifestyle patterns and our behaviour may change as we pass through different stages of life. For example, a family with young children is likely to have a different lifestyle to a much older couple whose children have left home, and there are, therefore, likely to be significant differences in consumption patterns between the two groups. One of the most well-known lifestyle models, the “sagacity lifestyle model”, identifies four main stages in a typical lifestyle:

Dependent (e.g., children still living at home with parents); Pre-family (with their own households but no children); Family (parents with at least one dependent child); and Late (parents with children who have left home, or older childless couples).

Each group is then further subdivided according to income and occupation.

Titan watches have a wide range of sub-brands within their Titan range such as Edge, Ragalia, Nebula, and Raga. To appeal different lifestyle segments. Fastrack brand appeals youth and Titan’s value-for-money brand Sonata targeted at people who want to own good-looking watches at affordable prices.

But lifestyle segmentation does not always work: Nestlé introduced a special brand of decaffeinated coffee for “late nighters,” and it failed, presumably because people saw no need for such a specialized product.

Personality: Marketers can endow their products with brand personalities that correspond to consumer personalities. Apple Computer’s iMac computers, for example, have a friendly, stylish personality that appeals to buyers who do not want boring, ordinary personal computers.

Values: Core values are the belief systems that underlie consumer attitudes and behaviors. Core values go much deeper than behavior or attitude, and determine, at a basic level, people’s choices and desires over the long term.

Marketers who use this segmentation variable believe that by appealing to people’s inner selves, it is possible to influence purchase behavior.

Behavioral variables:

In behavioural segmentation marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product.

Many marketers believe that behavioral variables - occasions, benefits, user status, usage rate, loyalty status, buyer-readiness stage, and attitude—are the best starting points for constructing market segments.

Opinions, interests and hobbies – this covers a huge area and includes consumers’ political opinions, views on the environment, sporting and recreational activities and arts and cultural issues. The opinions that consumers hold and the activities they engage in will have a huge impact on the products they buy and marketers need to be aware of any changes. Good recent examples include the growth of demand for organic foods or products that are (or are “perceived” to be) environmentally friendly

Occasions – this segments on the basis of when a product is purchased or consumed. For example, some consumers may only purchase flowers, wine or boxes of chocolates for celebrating birthdays or Christmas, whereas other consumers may buy these products on a weekly basis. Marketers often try to change customer perception of the best time to consumer a product by promoting alternative uses for a product. For example, recently Kellogg’s has attempted to change the image of cereals to that of an ‘any time’ snack, rather than simply a breakfast meal. Cadbury’s brand Celebration introduced to replace Sweet Meat as a gift to offer at the time of various festivals like Diwali, Raksha Bandhan, etc.

Benefits sought – Here, buyers are classified according to the benefit sought. Many product categories offer different sets of benefits. This requires marketers to identify and understand the main benefits consumers look for in a product. Toothpaste, for example, is not only bought to maintain healthy teeth and gums, but also because of its taste and in order to help combat bad breath! Shampoos offer benefits such as basic cleaning of hair, conditioning effects, medicinal properties and suitability to hair types.

Usage status – Every product has nonusers, ex-users, potential users, first time user and regular user. It is essential for the marketer to understand whether a it is consumer’s attitude, belief, behaviour or lack of knowledge of product or brand benefits and usage?

The company’s market position also influences its focus. Market leaders focus on attracting potential users, whereas smaller firms try to lure users away from the leader.

Usage Rate – Markets can be segmented into light, medium, and heavy product users. Heavy users are often a small percentage of the market but account for a high percentage of total consumption. Marketers usually prefer to attract one heavy user rather than several light users, and they vary their promotional efforts accordingly. In mobile phone service market, heavy users account for a significant proportion of the

revenue and hence mobile service providers target this segment by giving special package or offer to retain their patronage.

Buyer-readiness stage – A market consists of people in different stages of readiness to buy a product: Some are unaware of the product, some are aware, some are informed, some are interested, some desire the product, and some intend to buy. The relative numbers make a big difference in designing the marketing program. It is nothing but a consumer adoption process, which as simple as - at what stage “kamwali bai” would adopt mobile telephony. Another example – suppose a health agency want to encourage women to have annual Pap test to detect cervical cancer. At the beginning most of the women may be unaware of the Pap test. The marketing effort therefore should go into awareness building advertising using simple message. Later advertising should dramatize the benefits of the Pap test and risk of not taking it.

Loyalty status – Buyers can be divided into four groups according to brand loyalty status: (1) hard-core loyals (who always buy one brand), (2) split loyals (who are loyal to two or three brands), (3) shifting loyals (who shift from one brand to another, and (4) switchers (who show no loyalty to any brand).

Each market consists of different numbers of these four types of buyers; thus, a brand-loyal market has a high percentage of hard-core loyals. Companies that sell in such a market have a hard time gaining more market share, and new competitors have a hard time breaking in. One caution: What appears to be brand loyalty may actually reflect habit, indifference, a low price, a high switching cost, or the nonavailability of other brands. For this reason, marketers must carefully interpret what is behind observed purchasing patterns.

Attitude – Five attitude groups can be found in a market: (1) enthusiastic, (2) positive, (3) indifferent, (4) negative, and (5) hostile.

So, for example, workers in a political campaign use the voter’s attitude to determine how much time to spend with that voter. They may thank enthusiastic voters and remind them to vote, reinforce those who are positively disposed, try to win the votes of indifferent voters, and spend no time trying to change the attitudes of negative and hostile voters.

Effective SegmentationEven after applying segmentation variables to a consumer or business market, mar keters must realize that not all segmentations are useful. For example, table salt buyers could be divided into blond and brunette customers, but hair color is not relevant to the purchase of salt. Furthermore, if all salt buyers buy the same amount of salt each month, believe all salt is the same, and would pay only one price for salt, this market would be minimally segmentable from a marketing perspective. To be useful, market segments must be:

Measurable: The size, purchasing power, and characteristics of the segments can be measured.

Substantial: The segments are large and profitable enough to serve. A segment should be the largest possible homogeneous group worth going after with a tailored marketing program.

Accessible: The segments can be effectively reached and served. Differentiable: The segments are conceptually distinguishable and respond

differently to different marketing mixes. If two segments respond identically to a particular offer, they do not constitute separate segments.

Actionable: Effective programs can be formulated for attracting and serving the segments.

Targeting StrategyDefinitionAfter identifying the market segments, the marketer then decides which segment presents the greatest opportunity, that means which are its Target Markets. For each target market, the firm develops a market offering that it positions in the minds of the target buyers as delivering some central benefit (s).

In evaluating different market segments, the firm must look at two factors: 1) The segment’s overall attractiveness - whether a potential segment has the characteristics

that make it generally attractive, such as size, growth, profitability, scale economies, and low risk.

2) The company’s objectives and resources - whether investing in the segment makes sense given the firm’s objectives and resources.

Having evaluated different segments, the company can consider five patterns of target market selection, which are as under:

1) Single Segment Concentrate

M1 M2 M3

P1

P2

Meaning – offering one product to one market and concentrating on one segment only. Through concentrated marketing, the firm gains a thorough understanding of the segment’s needs and achieves a strong market presence. Furthermore, the firm enjoys operating economies by specializing its production, distribution, and promotion; if it attains segment leadership, it can earn a high return on its investment. However, concentrated marketing involves higher than normal risks if the segment turns sour because of changes in buying patterns or new competition. For these

P3

P = Product M = Market

reasons, many companies prefer to operate in more than one segment.

E.g. Mahindra and Mahindra , Farm Equipment Division concentrates only on tractors, primarily targeted at agricultural market.

2) Selective Specialization

M1 M2 M3

P1

P2

P3

Meaning – a firm selects a number of segments, each objectively attractive and appropriate. There may be little or no synergy among the segments, but each segment promises to be a moneymaker. This multi-segment coverage strategy has the advantage of diversifying the firm’s risk. E.g. P & G when introduced Crest Whitestrips, initial target segment included newly engaged women and brides.

3) Product SpecializationM1 M2 M3

P1

P2

P3

Meaning - Another approach is to specialize in making a certain product for several segments.An example would be a microscope manufacturer that sells microscopes to university laboratories, government laboratories, and commercial laboratories. The firm makes different microscopes for different customer groups but does not manufacture other instruments that laboratories might use. Through a product specialization strategy, the firm builds a strong reputation in the specific product area. The downside risk is that the product may be supplanted by an entirely new technology.

4) Market SpecializationM1 M2 M3

P1

P2

P3

Meaning - With market specialization, the firm concentrates on serving many needs of a particular customer group. An example would be a firm that sells an assortment of products only to university laboratories, including microscopes, oscilloscopes, and chemical flasks. The firm gains a strong reputation in serving this customer group and becomes a channel for further products that the customer group could use. However, the downside risk is that the customer group may have its budgets cut.

5) Full Market Coverage M1 M2 M3

P1

P2

P3

Meaning - Here a firm attempts to serve all customer groups with all of the products they might need. Only very large firms can undertake a full market coverage strategy.

E.g. IBM (computer market), General Motors (vehicle market), and Coca-Cola (drink market).

Only very large firms can undertake a full market coverage strategy. Large firms can cover a whole market in two broad ways: through undifferentiated marketing or differentiated marketing.

A) Undifferentiated Marketing: The firm ignores market-segment differences and goes after the whole market with one market offer.

Focusing on a basic buyer need, it designs a product and a marketing program that will appeal to the broadest number of buyers.

Presumably, the company can turn its lower costs into lower prices to win the price-sensitive segment of the market.

B) Differentiated Marketing:The firm operates in several market segments and designs different programs for each segment.

Products Segment Benefit Area P1 S1 B1 P2 S2 B2 Pn Sn Bn

General Motors does this with its various vehicle brands and models; Intel does this with chips and programs for consumer, business, small business, networking, digital imaging, and video markets.

Differentiated marketing typically creates more total sales than does undifferentiated marketing. However, the need for different products and marketing programs also increases the firm’s costs for product modification, manufacturing, administration, inventory, and promotion.

Because differentiated marketing leads to both higher sales and higher costs, we cannot generalize regarding this strategy’s profitability. Still, companies should be cautious about oversegmenting their market. If this happens, they may want to use countersegmentation to broaden their customer base. For example, Johnson & Johnson broadened its target market for its baby shampoo to include adults. Smith Kline Beecham introduced Aquafresh toothpaste to attract three benefit segments simultaneously: those seeking fresh breath, whiter teeth, and cavity protection.

Segmentation Basis for Instant Noodle Category:

Based on the above theoretical explanation, Segmentation for Instant Noodles is as under:

Geographics

- Region Urban, Semi-urban and Rural

Demographics - Age 5 to 12 – Kids – primary

13 to 18 – Teens – primary 20 to 35 - Young adults - secondary

- Family size 3 to 5 family members, where husband and wife both are working.

- Family life cycle Young, single, married with children - Income 1,20,000 p.a. upwards - Occupation Working Professionals, Self employed, Working Women

Psychographics - Lifestyle Working professionals, Hard pressed for time, Less time for

cooking. - Personality Out going, fond of tasty, western and chinese food, bachelors,

migrates (to abroad or cities). - Socio-Economic Class Middle class upwards

Behavioural - Occasions Kids, teens and bachelors/singles are regular users. Generally,

kids would like to have instant noodle as their friends too have the same plus taste and influence of advertisements created focusing kids and mothers. For Young adults instant noodle is convenient food and they consume it when time is a constraint.

- Benefits Instant noodles are now creating awareness on “Health” and “Nutritional value” benefit to attract health conscious mothers (e.g. knorr soupy noodles, Maggi atta and dal noodles) and young adults (e.g. Foodels).

- Buyer’s readiness stage Awareness about instant noodles in metros is higher than that in rural India. However, wide ad campaign through multiple channels of communication PAN India helped creating awareness of “Instant Noodles” in emerging cities and smaller towns. TV ads play major role in creating awareness. Brands like Maggi and Wai Wai (particularly North-East India) have spread their reach to Rural India too.

- Attitude towards product Enthusiastic and positive - Loyalty Status Hard Core and Shifting Loyals - Usage Rate Urban – heavy user

Semi-urban – medium Rural – light

- Usage Status First time users – Senior citizens, people staying in rural areasRegular users – urban kids, teens and bachelorsPotential users – Kids, teens and young adults of semi-urban area, Elders if instant noodles are perceived as healthy snacks or healthy food.

Segmentation of Instant Noodles:

In India, Maggi was the first brand of Instant Noodles, introduced by Nestle India. Nestle introduced Maggi in 1982-83, with its traditional 2 minutes noodles in its masala, tomato and chicken flavors, followed by its curry flavor some years down the line.

Nestle visualized that there would be demand for the product that provides good quality food and at the same time it is convenient to prepare so that time is saved for other works. The benefit areas they concentrated were “good food” and “time saving”.

Nestle segmented the customers based on following parameters 1) Lifestyle – Saving time in preparation and Convenience to make food 2) Eating Foods habits of Indian consumers 3) Focus was mainly on age and appetite of the urban families

When Maggi introduced in India by Nestle, their target audience was working women, however, they failed in attracting this target audience and after conducting detailed research, Nestle targeted kids for their product to be acceptable in India.

Maggi was launched in India at the time when instant noodle was not that well known a category. When Nestle India launched maggi in country, it used the tagline, ‘fast to cook and good to eat’, to not only promote the product’ but also to educate the ever growing aspirant consumer about the advantages of using it.

Indo Nissin Foods, the first competitor of Nestle also targeted kids for their initial offerings, Top Ramen Smoodles. To beat the competition, however, Indo Nissin introduced Cup Noodles in Indian Market targeting adults who can consume the instant noodles on the move. Top Ramen’s Curry Noodle were also targeted to youth of India.The key audience for the instant noodles category continues to be children for players like Top Ramen, Wai Wai, Smith & Jones, Yippie and other private labels etc. However Ching’s Chinese Instant Noodles and to some extent Foodles are targeting the grown ups, individuals aged between 14 to 25 years.

Instant Noodles are marketed in two forms 1) Pouch forms2) Cup Noodles

The recent instant noodle makers are targeting kids, youth and adults by creating perception “healthy food to eat”, which can replace other evening snacks or second meals.

Differentiation:

Definition of differentiation -

It is the act of identifying distinguished/distinctive features, attributes, advantages/benefits that help the brand to move away from competition and gives the buyer that preferential reason to purchase the brand over competition.

The extra value proposition (EVP) should help the company to realize a higher price for the same product offering as compared to competition. Successful differentiation is the key strategy to achieve competitive advantage. The differentiation variable selected is communicated to the targeted segment through creative advertising.

Principles of Differentiation:

It should be credible, believable and should be perceived as value by consumers It should help the firm move away from the competition due to its “distinct identity”

created by credible differentiation which helps it realize a better price. Differentiation is “Brand’s Promise” which has to be fulfilled during product delivery. No

amount of good advertising can help to sell a “bad product” since the consumer does not perceive value delivery, repeat purchases may not occur.

A company should initiate differentiation in all ‘internal value chain activities’ starting from procurement of Raw Materials as well as in all internal Value driven processes.

Do not attempt to over differentiate since raising levels of differentiation adds to the ‘input cost’ and may/may not be realized pricing.

Differentiation Variables:

Product Service Personnel Channel Image Form Features Customizatio

n Performance

Quality Conformance Durability Reliability Repairability Style Design

Ordering ease

Delivery Installation Customer

training Customer

consulting Maintenance

and repair Miscellaneou

s

Competence Courtesy Credibility Reliability Responsivenes

s Communicatio

n

Coverage Expertise Performanc

e

Symbols Media Atmospher

e Events

Product Differentiation: Physical products vary in their potential for differentiation. At one extreme we find products that allow little variation: chicken, steel, aspirin. Yet even here, some differentiation is possible: Venky’s Chiken, Bayer’s Aspirin and Tata Steel, each with a separate brand identity. At the other extreme are products that are capable of high differentiation, such as automobiles and furniture.

Here the seller faces an abundance of design parameters, including:

Form – i.e. the size, shape, or physical structure of a product. E.g. most of the instant noodle variants are in rectangular form however, Sunfeast Yippie Noodles have differentiated the product giving round shape to the same and the TVC also gives information on its new shape.

Features - Features are the characteristics that supplement the product’s basic function. In case of instant noodles, the followers have created different varieties of instant noodle to differentiate their product from Maggi’s basic Masala and Chicken variants (a chart on different varieties introduced by Top Ramen, Ching’s Secrete, etc. is given in the next section). Not only this, Top Ramen had introduced a new category under Instant Noodles, i.e. Cup Noodles, which is easier to prepare and available in different flavours too. Maggi had to create this category and it launched Maggi Cupa Mania. Similarly. Ching’s secret has created a niche to cater Chinese food lovers by offering Chinese Instant Noodles in four different flavours.

However, it is essential for a marketer to identify and select appropriate new features by surveying recent buyers and then calculating customer value v/s. company cost for each potential feature. E.g. Mr. Ajaay Gupta of Capital Foods India says - “It has been a great innovation and movement from pouch/bag to cup noodles. However, our belief is that price sensitivity is very strong for cup noodles. In terms of need, cup noodles are more of product consumed by people on the move. At this point of time, Indians as consumers are not consuming a lot of noodles on the move; noodle consumption is largely restricted to homes. So, for consumers, paying a premium for cup noodles doesn’t make sense, as they are priced slightly higher than pouch noodles.”

Customization – Differentiating product by making it customized to an individual. Mass Customization is the ability of a company to meet each customer’s requirement – to prepare on a mass basis individually designed products, services, programs and communications. However, for FMCG products like instant noodles, customization would not be possible.

Performance Quality – Performance quality is the level at which the product’s primary characteristics operate. The Strategic Planning Institute found a significantly positive correlation between relative product quality and return on investment. Yet there are diminishing returns to higher performance quality, so marketers must choose a level suited to the target market and rivals’ performance levels.

Conformance Quality – Buyers expect products to have a high conformance quality, which is the degree to which all of the produced units are identical and meet the promised specifications. The problem with low conformance quality is that the product will disappoint some buyers.

Durability – Durability, a measure of the product’s expected operating life under natural or stressful conditions, is important for products such as vehicles and kitchen appliances.

However, the extra price must not be excessive, and the product must not be subject to rapid technological obsolescence. Duracell advertise itself as a long lasting battery and brand commands a premium price.

Reliability – Buyers normally will pay a premium for high reliability, a measure of the probability that a product will not malfunction or fail within a specified time period. Maytag, which manufactures major home appliances, has an outstanding reputation for creating reliable appliances.

Repairability – Buyers prefer products that are easy to repair. Repairability is a measure of the ease of fixing a product when it malfunctions or fails. An automobile made with standard parts that are easily replaced has high repairability. Ideal repairability would exist if users could fix the product themselves with little cost or time.

Style – Style describes the product’s look and feel to the buyer. Buyers are normally willing to pay a premium for products that are attractively styled. Aesthetics have played a key role in such brands as Apple computers, Montblanc pens, and Harley-Davidson motorcycles. Style has the advantage of creating distinctiveness that is difficult to copy; however, strong style does not always mean high performance.

Design – As competition intensifies, design offers a potent way to differentiate and position a company’s products and services. Design is the integrating force that incorporates all of the qualities just discussed; this means the designer has to figure out how much to invest in form, feature development, performance, conformance, durability, reliability, repairability, and style. To the company, a well-designed product is one that is easy to manufacture and distribute. To the customer, a well-designed product is one that is pleasant to look at and easy to open, install, use, repair, and dispose of. The designer has to take all of these factors into account.

Service differentiation:When the physical product cannot be differentiated easily, the key to competitive success may lie in adding valued services and improving their quality. The main service differentiators are:

Ordering ease – refers to how easy it is for the customer to place an order with the company. Baxter Healthcare has eased the ordering process by supplying hospitals with computers through which they send orders directly to Baxter.

Delivery – refers to how well the product or service is delivered to the customer, covering speed, accuracy, and customer care. E.g. Domino’s delivers pizza within 30 minutes.

Installation – refers to the work done to make a product operational in its planned location. Buyers of heavy equipment expect good installation service. Differentiation by installation is particularly important for companies that offer complex products such as computers.

Marketers of refrigerators, air conditioners, washing machines, etc. install the products in customer’s premises.

Customer training – refers to how the customer’s employees are trained to use the vendor’s equipment properly and efficiently. General Electric not only sells and installs expensive X-ray equipment in hospitals, but also gives extensive training to users of this equipment.

Customer consulting – refers to data, information systems, and advising services that the seller offers to buyers.

Maintenance and repair – describes the service program for helping customers keep purchased products in good working order, an important consideration for many products.

Personnel Differentiation:Companies can gain a strong competitive advantage through having better-trained people. Singapore Airlines enjoys an excellent reputation in large part because of its flight attendants. The McDonald’s people are courteous, the IBM people are professional, and the Disney people are upbeat. Well-trained personnel exhibit six characteristics: competence, courtesy, credibility, reliability, responsiveness, and communication.

Channel DifferentiationCompanies can achieve competitive advantage through the way they design their distribution channels’ coverage, expertise, and performance. Caterpillar’s success in the construction-equipment industry is based partly on superior channel development. Its dealers are found in more locations, are better trained, and perform more reliably than competitors’ dealers. Dell Computers has also distinguished itself by developing and managing superior direct-marketing channels using telephone and Internet sales.

Image DifferentiationBuyers respond differently to company and brand images. Identity comprises the ways that a company aims to identify or position itself or its product, whereas image is the way the public perceives the company or its products. Image is affected by many factors beyond the company’s control. In ready-made apparel and accessory category, brands such as Park Avenue, Louis Philippe, Van Heusen, ColorPlus, etc. works hard to develop a distinctive image for their brands. An effective image establishes the product’s character and value proposition; it conveys this character in a distinctive way; and it delivers emotional power beyond a mental image. For the image to work, it must be conveyed through every available communication vehicle and brand contact, including logos, media, and special events. Maggi ranked as 9th Most Trusted Brand of India as per the Brand Equity's (Economic Times) Most Trusted Brands survey.

How to derive fresh consumer insights to differentiate products and services:In “Discovering New Points for differentiation”, Ian C. MacMillan and Rita Gunther McGrath argue that if companies examine the customers’ entire experience with a product or services –

the consumption chain – they can uncover opportunities to position their offerings in ways that neither they nor their competitors thought possible. MacMillan and McGrath list a set of questions marketer can use to help them identify new consumer-based point of differentiation.

How do people become aware of their need for your product and service?

How do consumers find your offerings?

How do consumers make their final selection?

How do consumers order and purchase your product or services?

What happens when your product or service is delivered?

How is your product installed?

How is your product or service paid for?

How is your product stored?

How is your product moved around?

What is the consumer really using your product for?

What do consumers need help with when they use your product?

What about returns or exchanges?

How is your product repaired or serviced?

What happens when your product is disposed of or no longer used?

Differentiation strategies adopted by various Instant Noodle Brands:

In case of instant noodle category, the major differentiation variables are ‘product differentiation, i.e. product forms, features (variants and flavours), packaging size and ‘Channel Differentiation’.

Growth of the Instant Noodle category is driven primarily by value addition and innovation, re-launches and makeovers coupled with convenience, taste and affordability features. The recent feature that has been stressed upon to differentiate is “Health” factor. Foodles, Knorr Soupy Noodles have compelled Maggi to introduced whole-wheat variant – Atta Noodles, Top Ramen has introduced Oat Noodles, and so on.

Further, value addition in terms of packaging is also one of the most important factors in pushing consumption in this category. Packaging introductions have added convenience, exciting graphics, shelf stable functionality, nutritional information about the product and most of all, variations in serving sizes to suit cross-functional needs. It has also helped in pushing impulse purchases, thereby generating awareness and wider consumption.

Differentiation done by different Instant Noodles Makers:

Nestle’s Maggi

When launched – Convenience and TasteCompetition from Top Ramen – Maggi Cupa Mania was introduced Competition from Other Instant Noodle Brands like Wai Wai – More flavours added with different healthy options like Veg. Atta Noodles, Veg. Dal Noodles, Maggi Rice Mania, Different Flavours like Tricky Tomato, Thrillin Curry, Romantic Capsica, etc.

Indo Nissin Food’s - Top Ramen

Introduced Curry Noodles and Cup Noodles to beat competition with Maggi On health front, Top Ramen Oat Noodles in three different flavours - Yummy Masala, Tangy Tomato and Creamy Cheese. Cup Noodles

Nestle India being pioneer in instant noodle category has made lot of effort to position “Maggi” to consume as snack instead of other traditional snacks. The brand maggi initially positioned on the platform of ‘convenience’ targeting the working women, however, it didn’t work.

After detailed research conducted by Nestle India, Maggi was positioned as 'convenience product', for mothers & as a 'fun' product for children. The tagline, 'Fast to Cook Good to Eat' was used not only to promote the product, but also to educate the ever-growing aspirant consumer about the advantages of using it.

Among its most iconic messages was of course, the ‘2-minute noodles’ legend to highlight the instant nature of the product at that point of time the target audience for Maggi was children. The brands commercials always highlighted Maggi noodles as an instant snack option for children, and one that was easy for mothers to prepare.

Over a period of time there was no change in the product features by maggi till Indo Nissin Foods entered launching “Top Ramen” in India by positioning it as “Smoodles”. To cope up competition with Nestle’s Maggi, Indo Nissin introduced curry noodle, a new variant and created Cup Noodles targeting at grown-ups.

With such innovations by Top Ramen, Nestle was compelled to introduce new variants with new flavours and Cupa Mania, a cup noodle category.

Speaking about Indo Nissin’s brand USP, M N V V Prasad, DGM, sales and marketing, Indo Nissin Foods Ltd. says, “Our USP is good quality product at a lower price. Competition has always been very stiff and our communication has always addressed our USP at point-blank range. We started communicating our instant noodle invention story on all our packs, and this has definitely given us an edge over competitors.”

Hence, Top Ramen’s differentiation variables are good quality at lower price, product features, flavours (Top Ramen Oat Noodles and Top Ramen Mug Noodles) and new variant Cup Noodles (cup noodles are also available in pani-puri and manchurian flavours).

ITC’s Sunfeast, however differentiate on different feature, which were missing in the existing Brands like Maggi, Top Ramen and Wai Wai. ITC Foods Divisional Chief Executive Chitranjan Dar says, “It has taken us a while to launch but we wanted to ensure we had a differentiated product.” Consumer research conducted by the company revealed a few traits as being high on the wish list of consumers of instant noodles, which the company has incorporated in its new product, informs Dar.

Yippie comes in round stacks, as opposed to the usual rectangular ones to ensure longer noodles strands. Also it resists clumping when served. “We are not playing the taste card because we are confident the flavours will play out over time. Instead, we are giving consumers what they had been missing in existing products all this while,” adds Dar.

Hence, ITC differentiates on the basis of circular shape of the instant noodle and new feature ‘resisting clumping’.

CG Foods deserves special mention because of its unique offerings. The company offers brown ready-to-eat noodles that can be eaten without cooking, just with the addition of taste maker and a small sachet of edible flavoured oil available in the pack. In the RTE format, the company offers brands and variants such as Wai-Wai 1-2-3 noodles in Veg, Spinach and Chicken flavours Wai-Wai Quick noodles in the flavours of Chicken Curry, Pizza and Masala Curry and Mimi noodles in Veg and Chicken flavours. CG Foods’ brand portfolio also has Wai-Wai X-Press instant noodles, which is an easy-to-cook format similar to Maggi and Top Ramen. It is available in Veg and Chicken flavours.

Capital Foods has gone a step ahead on innovation, which has led to a shift from regular or standard masala, chicken and tomato flavours to authentic Chinese-flavoured noodles. Capital Foods currently offers two instant noodles ranges. One is a premium Chinese range under the Ching’s Secret brand, which offers three scrumptious Chinese flavours Schezwan, Manchurian and Hot Garlic it had added a Chicken Roast Garlic variant to the Ching’s Chinese range in the same pack sizes and price tags. Capital Foods also offers Masala, Chicken and Curry Noodles under the popular range, which is branded Smith & Jones. This range offers instant noodles in pack sizes of 75g and 300g respectively. In February ’09, the company introduced another variant, namely Masala Tadka Marke, under its popular instant noodles range.

Global FMCG firm GlaxoSmithkline Consumer Healthcare announced its entry into the noodles segment in the year 2010. The brand has launched two variants of noodles. - Regular and Multi-grain. To tap the growing awareness among Indians of the importance of a healthy snack food, Foodles are being promoted as innovative options devoid of the pitfalls of traditional snack food. The main unique selling proposition (USP) of Foodles is the vitamin-packed health-maker sachet that comes with the pack.

Looking at the leader Maggi, the name is synonymous with instant noodles in India. It has built its brand equity on the ‘bas do minute’ promise, which actually meant riding on the convenience factor and became the generic name to define the category in the absence of competition for years. Even though Maggi has traditionally used the mother and kid connect to advertise its products, it is now increasingly using a cross section of the society to feature in its advertising. The brand has in fact gone a step ahead and now started a conversation with its consumers in recent times, which has worked well for the brand.

When it completed 25 years in the market it started a campaign called Me & Meri Maggi where it featured real life stories on people’s experiences with Maggi and came out with human stories that was both endearing and a perfect engagement platform with its consumers. People who shared their stories also had a chance to be featured on the pack of Maggi, which was a fabulous effort to recognise consumers who have made the brand no less than iconic in India. It once again managed to create a buzz with its ‘Guess the Taste’ campaign, which has been going on for its new flavour. It encompassed 360 degrees communication and leveraged the curiosity quotient very well. The campaign did good for the brand in terms of involving the consumers and hence making a greater connect.

Taking a cue from the competition, which has taken up positioning strategies hinging on variety in flavours, tastes and health to make inroads into this category, Maggi has also been expanding its portfolio. It now includes flavours like the old time hits Masala and Chicken with new flavours like Tricky Tomato, Thrillin Curry, and Romantic Capsica. Gauging the concerns over health issues, as maida is the main constituent for Maggi, Nestle also launched Maggi Vegetable Atta noodles with the tag line “Taste bhi, health bhi” and then later brought in Maggi Vegetable Multigrainz Noodles.

Channel Differentiation: ‘Channel differentiation’ also plays major role in the building brand images of these instant noodle brands.

Indo-Nissin’s Top Ramen, which has been around since 1991 has been able to hold on to its share of 6-8 per cent because of its clutch of loyalists. However, it has failed to move beyond that because of distribution debacles — its tie-ups with the then Hindustan Levers Limited and later Marico failed.

Menon of Kotak points out, “Till now, Nestle’s Maggi has been the all-India player, the other brands were sparsely distributed and restricted to modern trade. The new entrants have the potential to spread out quickly.”

While Nestle is having strong distribution network PAN India, GSK and ITC are the players who have got well-oiled supply chain networks, vast distribution reach and intricate marketing network in both urban and rural areas.

The other established players, namely ITC and Unilever, will leverage their core strength in distribution and marketing in the food category to make deeper inroads in noodles market. ITC has successfully established its potato chips brand ‘Bingo’ in the last two years and is giving Pepsi brand ‘Lays’ a run for its money. For FMCG behemoth Unilever promoting its noodles under the Knorr brand seems to be a well crafted strategy since Knorr is a direct competitor of Maggi in soup category. Therefore, the company is saved of establishing a relatively unknown brand from scratch. There is high recall of Knorr soups and some of it will rub off in the noodles space as well.

Wai-Wai, till recently, was restricted to the eastern market of West Bengal and Sikkim, where it controlled 70 per cent of the market. Its strategy was to first build-up the distribution network, which it successfully did - the brand was available on the shelves of super stores, as much as in the local Kirana stores. It was then that they started building the brand.

Modern Trade – Partners or rivals?New Retail Formats helping category to grow, however they are rivals too. Euromonitor’s findings suggest that a majority of noodles sales take place through small independent grocery stores, which dominate the retailing landscape in the country. In 2008 around 86 percent of noodles sales were accounted for by traditional grocers. Modern supermarkets/ hypermarkets are still emerging channels and contributed only percent of sales in the category.

Also, modern retailers themselves offer private labels instant noodles. Confirming private label growth in the category, Thomas Varghese, CEO of Aditya Birla Retail, says, “Our Feasters instant noodles has witnessed a very high level of consumer acceptance and has grown steadily in revenue share contribution. Feasters is the second largest brand within the category at More grocery stores.”

Supporting the evolution of modern retail formats, Mr. Ajaay Gupta, MD, Capital Foods, says, “Modern retail stores provide manufacturers with a platform to propagate their innovation. They have also helped in boosting consumption due to shelf visibility, as consumers get to see and compare competing products, along with their price points and pick the one that suits them best.”

Mr. Varghese states “Modern trade channels are especially a boon for emerging categories due to the larger shelf display and visibility offered by them in comparison with traditional grocers. Yes, private labels are also growing but are offered by only a few retailers as of now. New retail

formats also”. He further adds that even though some retailers can claim some private label share in the category, it will take more time for in-store brands to establish themselves as serious competition. Until now, there has been no significant sales loss for national brands in any of the retail chains who also offer private labels of instant noodles.”

Mr. Manoj K Sharma, GM of sales and marketing at CG Foods India Pvt. Ltd, says feels that while private labels do offer a certain degree of competition, in the long run in-store brands will only help in enlarging the consumer base in the category.

However, at present, Modern Retail chains do attract impulse purchases of instant noodles. The reasons are good shelf visibility, depth and length of the category provided by the retailers to all brands (e.g. all major Brands with all variants of Maggi, Yippie, Top Ramen),

today’s shopping trend in urban and semi-urban areas of India,

Positioning:

All products can be differentiated to some extent. But not all brand differences are meaningful or worthwhile. A difference is worth establishing to the extent that it satisfies the following criteria:➤ Important: The difference delivers a highly valued benefit to a sufficient number of buyers.➤ Distinctive: The difference is delivered in a distinctive way.➤ Superior: The difference is superior to other ways of obtaining the benefit.➤ Preemptive: The difference cannot be copied easily by competitors.➤ Affordable: The buyer can afford to pay for the difference.➤ Profitable: The company will find it profitable to introduce the difference.

Each firm needs to develop a distinctive positioning for its market offering.

Positioning is an act of designing company’s offerings and image to occupy a distinctive palce in the minds of the target markets.

It is the act of creating “top of mind” recall amongst the consumers by creating a special emotional connects of the “value proposition” in the minds and hearts of the consumers. Positioning and top of mind recall is created through superior advertising and communication.

The end result of positioning is the successful creation of a market-focused value proposition, a cogent reason why the target market should buy the product.

The word positioning was popularized by two advertising executives, Al Ries and Jack Trout. They see positioning as a creative exercise done with an existing product: “Positioning starts with a product. A piece of merchandise, a service, a company, an institution, or even a person. . . . But positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect.”

Ries and Trout argue that well-known products generally hold a distinctive position in customers’ minds; Coca-Cola, for example, holds the position of world’s largest soft-drink firm. To compete against this kind of position, a rival can (1) strengthen its own current position in the consumer’s mind (the way 7-Up advertised itself as the Uncola), (2) grab an unoccupied position (as Snapple did with its tea-based beverages), (3) deposition or reposition the competition, or (4) promote the idea that it is in the club with the “best.”

Types of positioning:

a. EST Method / Brand reinforcement:

e.g. Cheapest Airlines – Air Deccan, fastest relief – Eno, Best Sedan for Middle Class – Indigo, etc.

b. Single/Double/Triple point positioning:Single point positioning – Lux beauty soap Double point positioning – Maggi “Taste bhi Health bhi” Triple point positioning – Aquafresh toothpaste – three coloured toothpaste – red for anti-germ, blue for freshness and white for mouth paste.

More the numbers of positioning points lesser would be the positioning strength.

c. Over Positioning: e.g. Reliance Mobiles, Mountain Dew “Darr ke aage jeet hai”

d. Under Positioning: e.g. Sprite “bujaye pyas”

e. Leader Positioning: It is a method of brand reinforcement. E.g. Maruti Cars, largest no. of units sold, BMW increases customer’s aspirations, Bisleri – leadership in bottled drinking water.

f. Application Positioning: generally refers to mode of usage of the product in a specific benefits area e.g. Moove spray.

g. Competitor positioning: creating positioning value proposition on a higher perception scale vis-à-vis competition.

h. Quality: conveying quality at a penetrative price points. E.g. Big Bazar, Nirma, Mc Donald, etc.

Positioning of Instant Noodles:

Calorie count

Noodles Nestle Maggi Vegetable Atta Noodles 441.5 Nestle Maggi Dal Atta Noodles 441 Nestle Maggi 2 minute Noodles (masala) 435

Nissin Top Ramen Smoodles Masala (80 g - calories per serving specified)

369

http://www.toloseweight.org/caloriecount.html

Competition

Attack on Fort Maggi. One of the first attacks on Maggi Noodles came from unexpected quarters — from smaller players like Wai-Wai and Chings. Their secret weapon? They introduced a slew of flavours that customers could not get from Maggi. The customer now had choice: Veg, Spinach, Schezwan, Manchurian, Chicken Curry, Veg Curry, Chicken Pizza and Kimchi flavours among others now shared space with Maggi’s limited offering of Masala, chicken and prawn. The upstarts quickly captured 5 per cent market share at Maggi’s expense. Nestle took a beating but quickly corrected the situation. Now it has more than 10 flavours on the shelves.The biggest challenge though came from the biggies — HUL (Knorr Soupy noodles), ITC (Sunfeast Pasta), and GSK (Foodles) —who entered the market nearly simultaneously. The difference between these competitors and any Nestle has seen earlier is that they are deep-pocketed. ITC, for instance, is known to have no qualms about losing money in the first few years in any new category that it enters as long as it captures market share (think biscuits at the expense of Britannia). GSK Consumer and HUL are competitors that will be in for the long haul. It is estimated that Maggi’s market share could fall to around 82 per cent by FY12. More competition will also mean lower margins as Nestle will have to make do with lower pricing power than it has enjoyed in the past.

(Source: The taste of India – article by By Mohammed Ekramul Haque | Sep 12, 2011)

Who are the consumers

Becoming that staple can be done, even by foreign brands. Look at Maggi, an instant noodle with masala flavors, that was introduced for the local market 25 years ago by Nestle. Indian students going to university in India and abroad carry packets of it to give them a "taste of home" because they can't get their preferred spice mix in the instant noodle brands available across the world.India - a Continent of an Emerging MarketThe wall street journal - 30.09.2009By DEVITA SARAF Nestlé India, for example, re-launched Maggi Two Minute Noodles fortified with 20 per cent of the RDA of calcium and protein in 2008. (from report by Technopack “Opportunities in the packaged food market in India”)

maggi’s positioning http://www.authorstream.com/Presentation/kanishk029-166965-nestle-presentation-nestlle-education-ppt-powerpoint/

nestle’s distributionhttp://www.docstoc.com/docs/30195704/Distribution-and-marketing-communication-strategy-for-Nestle-Maggi

From the days of a fringe dish targeted at children the instant noodles category has come a long way. Today, it has been evolved as a mainstay meal even for grown-ups. With changing social ethos and the rise of demographic profile the fast food category will witness more action in the future. The noodles market will witness an interesting battle ahead.

Foram:

www.surveymonkey.comp.foramp/w – gate#156