Demand Analysis Of Maggi Noodles

Submitted toDr. Geeta Jaglan Faculty, Economics AIBS

Submitted byNaman Shrivastava-A1802011033 Asif Unia- A1802011365 Satyaneesh Dubey- A1802011074 Nishith Simon- A1802011020

Maggi noodle is a brand of instant noodles manufactured by Nestl. The brand is popular in Australia, India, SouthAfrica, Brazil, Nepal, NewZealand, Brunei, Malaysia, Singapore, Sr i Lanka, Bangladesh, Pakistan, and Philippines. Maggi noodles are part of the Maggi family, a Nestl brand of instant soups, stocks, and noodles. Maggi noodles recently introduced a new variety of its noodles, to cater for the health conscious like 'No MSG', 'Less Salt', and 'No Trans fat'. Whole-wheat flour based noodle variation marketed by the name "Vegetable Atta Noodles" has been introduced in India (Atta flour is used in preparing most forms of wheat based breads in India) and caters to health conscious buyers wary of the refined flour used in the regular Maggi noodles. This move helps the brand in India as suburban mothers, who feed the noodles to children as an afterschool snack, are the primary customers of the brand. Recently, a line of rice noodles and whole wheat with pulses, carrots, beans, and onions has also been introduced in India. In fact, "Maggi" has become a well-known brand for instant noodles in India and Malaysia. Over the years, Maggi noodles has become a popular snack food product in India.

Maggi noodles have availability even in the remotest locations of India like Kedarnath, Ladakh, Amarnath. These are places where there is no proper supply of even electricity but maggi is still available for the foodys appetite. The Economic Times has applauded maggi with the following quote-

What Xerox is to photocopier, Colgate to toothpaste, Maggi is to Noodles in India.

Fast to Cook, Good to Eat

 Law Of DemandDemand for a commodity increases when its price decreases and falls when its prices rises while the other things remaining constant.

Factors affecting Demand of MaggiPrice of CommodityQuantity Price 100 g ` 10 200 g ` 20 400 g ` 40 600 g ` 59

700 600 500 400 300 200 100 0 Weight Price 1 100 10 2 200 20 3 400 40 4 600 59

Income of ConsumersIncome Group Lower Middle 5 Upper Middle 5 Higher 6

Demand(packs/month) 3

Pack/Month
7 6 5 4 3 2 1 0 Lower Pack/Month 3 Middle 5 Upper Middle 5 Higher 6 Pack/Month 3 5 5 6

As seen from the above graph the maggi demand goes up as the income level goes up. The middle and the Upper middle have the same level of consumption.

Income ElasticityIf the income rises by 20% then the demand will rise by 10% the curve is positively sloped means that elasticity of Income is >0 and <1.

Demand Graph of Income Elasticity

Price of Related Goods MaggiQuantity Price Top RamenQuantity Price 170 g ` 18 280 g ` 35 480 g ` 50 800 g ` 75 100 g ` 10 200 g ` 20 400 g ` 40 600 g ` 59

1800 1600 1400 1200 1000 800 600 400 200 0 Price (Top Ramen) Top Ramen Packet (g) Price (Maggi) Maggi Packet(g)

Price (Top Ramen) Top Ramen Packet (g) Price (Maggi) 1 18 170 10 100 2 35 280 20 200 3 50 480 40 400 4 75 800 59 600 Maggi Packet(g)

The graph here shows that price and quantity of Maggi were in much better range than Top Ramen and thus the demand of maggi sustained in the market.

Price ElasticityMaggi is a brand loyal product. Even if the price is increased the customers are still ready to purchase maggi. Thus the elasticity is positive.

Cross ElasticityIf there is an increase in the price of Top Ramen or Knorr by 20% to 25% then the demand for maggi will increase by 8%.

o Cross Elasticity for Complementary Goods: If the price of the Maggi Ketchup, Maggi Tastemaker and other complementary goods like plastic packaging materials will increase constantly than the cost of the production will increase and by this the price of the relevant product will also increase but the demand of the dairy milk will remain constant because of it is a normal good. o Short run and Long run impact in the elasticity of the demand In the Short run period of time, the demand for the Maggi is less elastic because if the price of maggi suddenly increases Rs.10 to Rs.15, than the demand of the product will also decrease but in the long run the demand may not be much affected. There are some criteria that also affects and they are like: Our product should be in the monopolistic competitive market product. No change in the taste and quality. In the Long run period of time, the demand for the maggi is more elastic because if the price of the maggi in the 2007 was Rs.10 and in 2010 it is Rs.15 and, the quantity and the quality remaining the same and the if other products dont change any of the things like price, quality and quantity than it will greatly affect the demand of the maggi and it will started decreasing day by day. Assumptions: I. There are possibilities of change in technology & chances of Product innovation in the long run. II. There are possibilities of increasing good quality chocolate manufacturing units.

Taste and Preferences

Economy Pack (Super Saver/Money Saver/Family Pack) Change in Traditional Food Habits Loved by Kids Youth-Quick and Odd time Snack Office People-Convenience These factors make maggi a popular fast food snack that has ruled heart of millions for years together.

Sales DataMaggiMonth of Sale January February March April May Number of Cartons Sold 15 12 16 14 15

Top Ramen-

Month of Sale January February March April May

18 16 14 12 10 8 6 4 2 0 Maggi Cartons Sold Top Ramen Cartons Sold January February 15 10 12 8 10 9 8 15

Number of Cartons Sold 10 8 9 6 12

16 15 14 12 12

Maggi Cartons Sold 6 Top Ramen Cartons Sold

March 16 9

April 14 6

May 15 12

Conclusion Maggi has achieved a great position in market and this position has little affect of its competitors ( Top Ramen, Wai Wai, etc.) Law of Demand Lower the price higher the quantity demanded and vice versa does not totally work in the case of maggi. People are ready to purchase a bit costlier maggi but they want the taste maggi has set in their minds. Maggi for last 25 years had managed to remain unbeaten in the market because it has always given more preference to the taste of people.

Thus Maggi happens to be the number one choice of Indian customers.

!!!!Maggi, Maggi-Maggi!!!!