Organisational Buying Behaviour

According to the definition given in Marketing Management by Philip Kotler- " Organisational buying is the decision making process by which formal organisations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers".

Organisational buying behaviour deals with the purchasing decisions made by a business or other type of organisational entity. While sharing some characteristics with the buying behaviours of consumers, the purchasing habits of an organisation are often influenced by a number of factors that are associated with the culture of the entity as well as the nature of the industry in which the organisation functions.

FORCES AFFECTING ORGANISATIONAL BUYING BEHAVIOUR

The organisational buying behaviour is influenced by a wide array of forces both inside and outside the organisation. These forces include environmental, organisational, group and individual forces:

1. Environmental Forces -Everything is influenced by its environment and so is organisational behaviour. Organisational buying behaviour is affected by changing business conditions, new invention of technology and creation of new law.

2.Organisational Forces- Individual decision maker can be influenced in different ways. Every organisation has a set of different personalities and thus all the employees should be conscious about the culture of the organisation.

3. Group Forces- The organisational buying behaviour consists of a complex set of smaller decisions influenced by several individuals.

4. Individual Forces- Individual makes buying rather than organisation. Each individual involved in the buying decision have different organisational functions and perceptions for achieving personal and organisational behaviour.

The retailers or the franchisees or the mom-and-pop stores are the organisations that buy Maggi in bulk in order to sell in their shop. Bulk buying helps in getting the buyer better and cheap prices for that product.

Sales Management

AMA defines Sales Management as "the planning, direction and control of personal selling,including recruiting,selecting,equipping,assigning,routing,supervising, paying and motivating as these tasks apply to personal sales force". The term Sales Management includes managing of all the sales related activities including below the line advertising, sales promotion, physical distribution, pricing and product merchandising Sales Management involves an understanding of the effort that goes into the management of the sales force and the various processes of sales.

Sales Management entails numerous objectives which are executed by sales managers. There are mainly three such objectives:

1. Sales Volume
2. Contribution to profits
3. Continuous growth
4. Market Share
5. Corporate image

The sales of Maggi 2-Minute Noodles are typically in the retail stores. The consumer just has to ask for the product in some mom and pop store or if its a super market he just has to locate it and buy it.

Distribution Decisions

Distribution is the process of moving a product from its manufacturing source to its customers. Maggi follows the distribution channel of Nestle. Nestle has two distribution channels. One for Chocolates and the other for Maggi range, Nestle dahi, Aquafina etc. The distribution channel of Maggi is as given below:

Wholesalers are not a part of the formal structure of Nestle India’s distribution network for NCR.They make bulk purchases from the distributors directly thereby leveraging on the margins.

Today, Nestlé India has presence across India with 7 manufacturing facilities and 4 branch offices spread across the region.

Nestlé India’s first production facility, set up in 1961 at Moga (Punjab), was followed soon after by its second plant, set up at Choladi (Tamil Nadu), in 1967. Consequently, as Nestle launched Maggi Noodles, it set up factories in Nanjangud (Karnataka), in 1989, and Samalkha (Haryana), in 1993. This was succeeded by the commissioning of two more factories - at Ponda and Bicholim, Goa, in 1995 and 1997 respectively. The seventh factory was set up at Pantnagar, Uttarakhand, in 2006. The 4 branch offices in the country help facilitate the sales and marketing of its products. They are in Delhi, Mumbai, Chennai and Kolkata. The Nestlé India head office is located in Gurgaon, Haryana.

ATL and BTL

Maggi adopts a combination of Push and Pull Strategy, where more focus on Pull Strategy is observed. Maggi's campaigns were revolved around its "fast to make and Good to eat” qualities. Ready in “2 minutes” was a proposition that was well received by the market. The various tools used for Promotion are as follows:

ABOVE THE LINE(PUSH STRATEGY): ATL is a type of advertising through media such as television, cinema, radio, print and out-of-home to promote brand or convey a specific offer. This type of communication is conventional in its nature and is considered impersonal to customers.The ATL Strategies for Maggi are as follows:

•  TV Ads
•  Ad in newspapers
•  Shelf  Displays
• Free samples distributed in schools
• 4 in 1 pack
• For every 4 in 1 pack of Maggi masala, get a small Dal Atta pack free worth Rs. 5
• Trade promotion for new variants in Maggi – Will increase retailer’s margin from 9% to 9.5%

BELOW THE LINE(PULL STRATEGY): BTL sales promotion is an immediate or delayed incentive to purchase, expressed in cash or in kind, and having a short duration. It is efficient and cost-effective for targeting a limited and specific group. The BTL Strategies for Maggi are as follows:

•  Bright Yellow colored packaging
• Maggi Symbol
• Maggi’s interactive Website
• Sponsoring school sports events
• Me and Meri Maggi Contest
• Guess the Flavor Contest
• Organizing Maggi painting competition, for school children till std 7th
• Introducing Maggi newsletters for teenagers every month
• Moving Van, painted about Maggi, near colleges and shopping places which would provide cooked Maggi
• Nestle Fun Points in Schools
• Nestle Maggi outlets on Airport

Integrated Marketing Communications(IMC)

Integrated Marketing Communications(IMC) is an approach to achieving the objectives of a marketing campaign through a well coordinated use of different promotional methods that are intended to reinforce each other. As defined by the American Association of Advertising Agencies, IMC "... recognizes the value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines- advertising, public relations, personal selling and sales promotion and combines them to provide clarity, consistency and maximum communication impact."

IMC is designed to assure that all brand contacts received by a customer or prospect for a product service, or organization are relevant to that person and consistent over time. The IMC planning process has been compared to composing a musical score. In a piece of music, while every instrument has a specific task, the goal is to have them come together in a way that produces beautiful music. It is the same in IMC, where advertising might be your violin, social media your piano, public relations your trumpet and so on.


WHY IMC?

Five major shifts in the worlds of advertising,marketing and media caused an increased interest in IMC. These include:

A SHIFT FROM                                             TO

Traditional Advertising                             Digital/Interactive Media

Mass Media                                            Specialized Media

Low Agency Accountability                       High Agency Accountability

Traditional Compensation                        Performance Based Compensation

Limited Internet Access                           Widespread Internet Availability

These shifts are focusing organisations to look at the whole marketing picture, re-aligning their communications and seeing things the way the consumer sees them as a constant flow of information from indistinguishable source.

                            MAGGI'S IMC STRATEGIES

Market Scenario:New Entrant(1990s)

• Broadcasting during popular soap opera in doordarshan
• Communication through print ads that Maggi is a fast food
• Free samples in schools for promotion
• Gifts for sending 5 Maggi logos cut from packs

Market Scenario: Established Product(1990s)

• Ads highlighting different flavors
• Ads targeting children by conducting Maggi Quiz

Marketing Scenario: Dominant Product in Indian Noodles Industry(2000s)

• Creating curiosity among the customers about the new variety-Guess the taste
• Meri Maggi Campaign

Pricing Decisions

Pricing is the method adopted by a firm to set its selling price. It usually depends on the customer's perceived value of the product in comparison to his perceived value of the competing products. Different pricing methods place varying degree of emphasis on selection, estimation, evaluation of costs, comparitive analysis and market situation.

Consumer Psychology and Pricing

The cost of a product or service is relative to what the buyer thinks that cost should be. Based on his previous experiences, the customer will judge whether prices are too high, too low or on target.

1. Reference Price- The cost that consumers anticipate paying or consider reasonable to pay for a particular good or service is known as reference price. The marketing department of a business often attempts to assess the reference price for each of the products or services they are promoting in order to set pricing levels appropriately to achieve their marketing goal.

Example- Top Ramen is priced at Rs. 79 for 600 gms whereas Maggi 2-Minute Noodles is priced at Rs.76 for 600 gms. So  the buyer will keep in mind that the price range should be somewhere between Rs 75 and Rs 80. Hence the company has to price the product in this range taking into consideration the competition, its profit, etc.

2. Price-Quality Inferences- Consumers develop beliefs about the correlation between price and quality from their own consumption experiences. Some brands adopt exclusivity and scarcity as a means to signify uniqueness and justify premium pricing.

Example- Luxury watches,perfumes

3. Price cue- A price cue is defined as any  marketing tactic used to persuade customers that prices offer good value compared to the competitor's prices, past prices or future prices.

Example- The common use of Rs.2999 over Rs.3000 has long been a matter of pricing psychology and studies show that odd numbers are more commonly associated with lower prices than even prices;

Prices ending in 5 or 0 are easier for the customer to process and retrieve from memory

Other factor that plays into the perception of pricing includes availability. For example, in a one-day sale, the idea that availability is limited will encourage the customer to act quickly rather than mull over the purchase.

Pricing Of Maggi 2-Minute Noodles

Maggi has faced lot of hurdles in its journey in India. It came at a time when the Indian psyche was not prepared to accept noodles as a substitute for their evening snack. Thus Nestle had initially adopted a low-cost price strategy to make Maggi affordable to the consumers by guaranteeing them value for money. Despite stiff pricing competition from noodle brands like Top Ramen, Foodles, Wai Wai, Nestle ensured that it will continue providing Maggi at a basic and affordable price to appeal to the common masses. This helped Maggi to become a household name in India.

These are the current prices that Nestle is offering for Maggi 2-Minute Noodles:

50 gm- Rs.5

75 gm-Rs.10

150 gm-Rs.20

300 gm-Rs.40

450 gm-Rs.60

600 gm- Rs.76

Branding and Brand management

A Brand is a distinguishing symbol, logo, name, word or sentence that enables a product to publicly distinguish itself from other products so that it can be easily communicated and marketed. Over time this image becomes associated with a level of credibility, quality and satisfaction in the consumer's mind.

Branding is defined as the process involved in creating a unique name and image for a product in the consumer's mind, mainly through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers.

Elements Of Branding

Brand Name : Maggi 2-Minute Noodles

• Maggi has been named after its founder Julius Maggi
• Maggi has become a synonym for noodles all around the world
• It claims to have added value to our life without taking '2-minutes' of our daily life
• Easy to memorise and perform

Brand Logo:

• Maggi's first logo was developed by a French painter named Etienne Bouisset
• The distinctive red and yellow Maggi logo is well known all over the world
• Maggi's logo is also used to promote its range of sauces,pastas and cup noodles

Brand Slogan :

• Maggi was positioned as '2-Minute Noodles' with a punch line that said "Fast to cook Good to eat"
• The jingle "Maggi, Maggi, Maggi" quickly grasped the attention of consumers all over India
• The slogan "Taste bhi,Health bhi" is a strong brand element of Maggi

Brand Promise :

• Maggi has been providing its customers a guarantee of quality, consistency and reliability for over 25 years now
• Maggi has managed to create a strong brand image of itself by promising authenticity to its consumers

Services and Services Marketing

A Service can be defined as an activity or an advantage which can be given by a party to another party which is mostly tangible and cannot affect ownership and its production or is not related to any tangible product. A service may normally but not necessarily take place in interactions between the customer and service employee.

 There are four unique characteristics that define the nature of a service and are mentioned as follows:

1. Service Intangibility- Service Intangibility means that the service cannot be experienced before it is      bought and thus in order to make the service tangible sellers show evidence of its quality. In case of a  popular Italian eatery in Los Angeles, the owner has placed signed photographs of celebrities who frequently visit the restaurant. In that way, the perception of good taste and high standards is projected. Same is the case with Maggi. Amitabh Bachchan's association with Maggi speaks volumes about its high standards and good taste.

2.Service Inseparability- Service Inseparability means that the provider and the buyer are intricately linked and must be present in order for the service to be rendered. In the case of a soda pop machine, the user interface, mechanical moving parts and soda transfer-all are connected in order to deliver the product to the customer after they drop the change into the slot. Without the machine, the soda cannot be obtained.

3.Service Variability- Service Variability is determined by the particular entity or circumstances surrounding the service. We can take the example of a shoe shiner posted next to the restroom facilities of a casino at a hotel resort in Las Vegas. The shiner may be an old gentleman with a geat deal of personal experience who is able to both shine the shoes and tell a great story at the same time. Thus, the value of being entertained is added to the value of the shoeshiner.

4. Service Perishability- Service Perishability describes the characteristic that services must be rendered on the spot and cannot be stocked for a later time. For example, if one were to call a taxi to arrive and take one to the airport, one is by necessity obligated to be present to get inside the cab and ride to the airport.

                                                      Types Of Services

1. Core Services- A service that is the primary purpose of the transaction. For example, services offered by a barber.

2. Augmented Services- Services that are rendered as a collolary to the sale of a tangible product. For example, product warranty offered to a customer.

                                                   Maggi's Service Quality Model

                           

   

                         SERVICES MARKETING

Services Marketing can be defined as a form of marketing that focuses on selling products. Services marketing is the endorsement of economic activities offered by a company to its consumers, it is considered to be a special subset of marketing because it focuses on how rendering services can affect both the customer attitude and the marketing strategy. Services Marketing includes public relations, developing quality of service, advancing customer loyalty, handling relationships and complaint management.

In case of Maggi 2- Minute Noodles the association of the customer will be with the customer care number provided on the packet in case the customers have any grievance or feedback. The official company website too gives information about the product.

Product Mix

Product Mix refers to the total number of product lines that a company offers to its customers. Sometimes referred to as product assortment, a true product mix has to do with the number and type of products offered in each line and the relevance of those products to the consumers who are presented with the opportunity to buy the products. Retailers are often very concerned with the range of products they offer,since stocking the right product mix helps to ensure that the target consumers will be reached and sales will be generated.

The four dimensions to a company's product mix include width, length, depth and consistency :

1. Product Width- The width of a company's product mix pertains to the number of product lines that a           company sells. Small and upstart businesses usually do not have a wide product mix whereas Maggi being     an established brand for quite some time now has a wide product mix.                 

2. Product Length- Product mix length pertains to the number of total products or items in a company's           product mix. For example, XYZ company may have 2 product lines and 5 brands within each product           line. Thus, XYZ's product mix length would be 10. Maggi's product mix length consists of a large number     of variants.

3.Product Depth- Depth of a product mix pertains to the number of variations of each product. Variations     can include size, flavor and any other distinguishing characteristic. For example, if a company sells 3 sizes       and 2 flavors of toothpastes, that particular brand of toothpaste has a depth of 6.

4. Product Consistency- Product mix consistency pertains to how closely related product lines are to one      another in terms of use,production and distribution. A company's product mix may be consistent in                distribution but vastly different in use.

                                                    Maggi's Product Mix

Product Life Cycle

                                                     

Product Life Cycle is used to map the life of a product. There are four stages in the life of a product.These four stages are Introduction Stage,Growth Stage,Maturity Stage and Decline Stage. The following graph illustrates the four stages of the Product life cycle:

1.Introduction Stage- Th introduction stage is the most important stage in the Product Life Cycle. In this stage the product is initially promoted. Maggi’s Introduction Stage dates back to the 1980’s when it had entered the Indian market. The product was launched keeping in mind the working women and children. Maggi was a pioneer in the instant noodles market.

2.Growth Stage-The product starts to grow in the Growth stage. In this stage large amount of money is spent on advertisement. Maggi entered into its Growth Stage in the early half of the 1990’s where a huge amount of money was spent by Nestle to make it a household name.Maggi was accpeted as a ready to eat food. There was a drastic increase in sales and profit too began to rise.

3.Maturity Stage-The third stage in the Product Life Cycle is the Maturity Stage. After the completion of the Introduction and Growth Stage a product spends a great deal of time in the Maturity Stage.During the latter half of the 1990’s maggi faced tough competition from Top Ramen.Large promottional offers were made and many new players aslo entered the market.Maggi currently is in its Maturity Stage.

4.Decline Stage-Decline Stage is the stage in which sales of the product begins to fall. Maggi has not entered its Decline Stage. It continues to introduce new varieties and product lines.

                                             
                                                PRODUCT LIFE CYCLE-SUMMARY 

	INTRODUCTION	GROWTH	MATURITY	DECLINE
PRODUCT	Maggi 2 Minute Noodles	More flavours in 2 minute noodles	Healthy Atta Noodles and Dal Noodles
VARIANTS	5 flavours		3 product lines
TARGET GROUP	Working women	Children and mothers	Children and working professionals
TAGLINE	“Fast to cook,Good to eat”	“Fast to cook,Good to eat”, “Mummy Bhook Lagi Hai”,”Bas 2 Minute”	“Taste Bhi Health Bhi”
MARKETING TOOLS	Advertisement,TV,Print	Avertisement,TV,Print	2004-Preity Zinda promoted ‘Chota Maggi’, 2009-“Me and Meri Maggi” competition, 2010- Guess the taste , 2012- Amitabh Bachan promoted the “Me and Meri Maggi” campaign by narrating consumers’ Maggi experiences

Market Structure and Competition

                             

Porter’s Five Forces Model is one of the most popular frameworks in management. Porter’s Five Forces Model helps analyze competitive scenario in an industry. The following framework determines the competitive scenario for Maggi:

1.       Competitor Rivalry -  Competitor rivalry is the intensity of competition among existing competitors in the market. Intensity of rivalry depends on the number of competitors and their capabilities. In this case the strong competitors of Maggi are ‘Top Ramen’ and ‘Wai Wai’.

                                        

   2.      New or Potential Entrants- A new entry of a competitor into the market also weakens the power.             Threat of new entry depends upon entry and exit barriers. The potential entrants in the instant noodles           market are Sunfeast Yippee Noodles and Aditya Birla Group’s ‘Tasty Treat’.

                                           

   3.   Threat of Substitute Products-Threat of substitute product means threat of a new product                          susbstituting the company’s product. In case of Maggi noodles a substitute could be pasta,chowmein              and fast food.

      4.     Bargaining Power of Buyers- Bargaining power of buyer is the power exercised by buyers to drive         down the product’s price. In this case Maggi is the only major player in the market,therefore the buyers         do not have bargaining power.

        5.  Bargaining Power of Suppliers- Bargaining power of suppliers determines the strength of the seller. In        this case too Maggi holds a very strong position and is thus very popular.

          Analysing Competitors- Maggi’s market share is about 86% and it has no market challengers as other       companies together own the remaining 14% market share. Thus Maggi has no market challengers.