As opined by Bailey and Burch (2017), consumers or the end users of the services or products offered by the organizations form an integral part of the entire business process of the organizations and it is on them that the business prospects of a business enterprise depends to greatly. The organizations are thus required to take into effective consideration the needs or the demands of the customers and integrate them in an effective within the domain of the products or services offered by them (Kumar et al. 2016).
However, in the recent times it is seen that the buying behavior of the customers have changed greatly and this behavior of the customers depends significantly on the brand image of the organizations. Han et al. (2016) are of the viewpoint that this change in the behavior of the customers has made it imperative for the organizations to take into effective consideration the entity of brand or market image. The net result of this is the fact that even one small incident can substantial affect the business prospects of a business enterprises as becomes evident from the case of Nestle’s Maggie in India which lost 80% of its market share because of an allegation. This report will discuss the notion of consumer behavior in the particular light of the issue that Nestle’s Maggie faced in India.
Food and Beverage Industry in India
Thomason (2018) is of the viewpoint that the food and beverage industry in the nation of India within a very short span of time has become one of the major spokes in the economic wheel of the nation and contribute more than $400 billion towards the national economy. More importantly, out of this $400 billion, more than $130 billion is being contributed by food processing sector itself (Dhanesh and Sriramesh 2018). Two of the major industries operational in India in this regard are Nestle and Unilever. The below given graph indicates the growth rate of this industry of the nation from 2015 onwards-
The growth rate of the Indian food and beverage industry which is currently 11.4% is one of the highest ones of the world (Dhanesh and Sriramesh 2018). More importantly, with the food industry of the concerned nation noodles are one of the most preferred choices of the people and this is perhaps one of the main reasons for the unprecedented success attained by the organization Nestle, whose main product is the Maggie noodle, in India (Desai 2016).
Nestle India
Nestle, founded by Henri Nestlé in 1866 is a Swiss organization which is related to the food and beverage industry (Nestle.com 2018). The organization is known for the wide range of products it offers to the customers like Maggie, Kit Kat, Nescafe, Smarties and others (Nestle.com 2018). More important, the organization is currently the largest food manufacturing organization of the world with annual revenue of more than CHF89.791 billion (Nestle.com 2018).
In addition to this, the organization is currently operational in more than 189 different nations of the world and recruits roughly around 339,000 from the different parts of the world (Nestle.com 2018). The organization takes the help of the slogan of “Good Food, Good Life” for the effective promotion as well as marketing of the food products offered by the organization to the customers (Nestle.com 2018).
The organization entered into the business market of India in the year 1912 and until the year 1947 was operational under the brand name of “The Nestle Anglo-Swiss Condensed Milk Company (Export) Limited” (Nestle.com 2018). The organization initially focused on the dairy sector of the nation and thus the major factories of the organization were established in Punjab, Gujarat and others similar states (Nestle.com 2018).
The organization under discussion here in the year 1984 launched the product Maggie Noodles which was to become the primary food product offered by the organization in a very short time (Nestle.com 2018). It was for the effective promotion as well as the marketing of this product that the organization used the “2 minutes” advertisement campaign (Nestle.com 2018). The below given figure indicates the growth of the sale of this product offered by the organization
Issue faced by Nestle Maggie Noodle in India
Pandey and Puntambekar (2016) are of the viewpoint that the prospects of an organization depends to a great extent on the effectiveness as well as efficiency of an organization depends to a great extent on the manner in which they are being able to resolve the various business issues or problems that they face during the course of their business operations. In this regard, it needs to be said that the lead related that the organization Nestle faced in India regarding its product Maggie Noodles cost the organization more than half billion dollars in addition to the loss in brand image and reputation.
It is pertinent to note that the organization and its product Maggie has enjoyed a monopoly in the noodles business market of India for more than 30 years however this monopoly was shattered to a significant extent by the incident (Mishra 2017). A food-safety commissioner of Uttar Pradesh in 2015 found that the noodles that the organization offered to the customers contained high level of lead which if consumed can cause serious damage to the health of the people (Taneja 2017).
This rumor soon became viral all the nation and although the organization came up with the results of its own tests which showed that the percentage of lead that the noodles offered by the organization was within the permissible level yet that was of no aid (Maurya 2017). Laws suits were filed against the organization and it had to pay more than $1.6 billion for the settlement of different kinds of disputes (Nichols 2017). More importantly, the organization ended up losing a substantial part of customer base and also its brand image in the nation.
Kumar et al. (2016) are of the viewpoint that the increasing number of organizations which are offering almost the same kind of products to the customers has increased the competition within the business world in a substantial manner. More importantly, this has increased the number of choices that are now available to the customers in the present times. For example, within the particular Indian noodles market it can be said that earlier the only option that was available to the customers was Maggie Noodles. However, in the recent times it is seen that there are various options to the customers like Top Ramen, Wai Wai and others (Mishra 2017).
The net result of this is the fact that the customers often tend to choose the products that are not only better in terms of quality but at the same time in terms of cost as well. Furthermore, the brand image and the reviews given by the customers also play a significant role in this process. This becomes apparent when the loss in good will that the organization faced post the lead-noodle issue is taken into consideration. For example, the organization Nestle from being the market leader (holding more than 63% of the market share) hit rock-bottom after the incident and the national government even banned the sale of the Maggie noodles (Sinha, Sinha and Gupta 2015).
The customers at that particular point of point thus resorted to the use of other kinds of noodles that were available to them. However, after 18 months of the issues the business of the concerned organization has once again started to flourish and it is expected that within the next few years the organization is likely to regain its monopoly back. This change in the customer behavior can be explained on the basis of the benefits that the noodle under discussion here offered to the customers. The major factors which motivated the customers to opt for the Maggie Noodles offered by the organization under discussion here are the cost effectiveness of the product, the taste as well as quality of the product, the ease with which the customers can cook the noodle and other aspects (Taneja 2017).
Bailey and Burch (2017) have stated that one of the major factors which affect the decision of the customers to opt for a particular product is the ease with which they can use the concerned product. In this regard, it can be said that the noodles offered by the concerned organization requires only a couple of minutes to cook the noodles and at the same time it is very easy to consume. This is one of the major reasons for the extreme popularity that the noodles holds among the travelers and also among the people related to the working class.
As opined by Sinha, Sinha and Gupta (2015), the decision of a customer whether to opt for a particular product or not depend on a plethora of factors like the cost, quality, brand image of the organization which is offering the product and others. More importantly, the precepts of Martin Fishbein and Icek Ajzen’s “Theory of Reasoned Action” are important to note in this regard. As per this theory of customer buying behavior, the customers can be seen as the rational actors who opt for the kind of services which are likely to provide the maximum amount of benefit (Sinha, Sinha and Gupta 2015).
In this regard, it needs to be said that the motivation of the customers to buy a particular product or service is an important factor which guides their buying behavior. In the particular context of the organization under discussion here it can be said that the organization offers noodles which are not only easy to cook but consume as well. Furthermore, the taste or quality of noodles, which are being offered by the organization are way better than the ones offered by the other organizations operational in the same sector. However, the issue that the organization faced in India in 2015 had adversely affected its brand image.
This is perhaps one of the major reasons for the drastic drop in the market share held by the concerned organization in India post the lead-noodle issue. Pandey and Puntambekar (2016) are of the viewpoint that in the contemporary times it is seen that the different business enterprises are utilizing the construct of corporate social responsibility not only for the enhancement of their brand image and also for the attainment of sustainability as well. These two notions are important since they are not only related to the sale of the products or the services that are being offered by the organization to the customers but also help in the enhancement of the profit earned by the organization as well.
Methodology
The researcher for the purpose of this research work has used the method of netnography, which is a new qualitative research methodology. This method which analysis the information provided by the online users over the online media channels to understand the nature of the factors that influence them and also the decision making process used by them (Bailey and Burch 2017). Furthermore, the use of this method offers various kinds of benefits to the researchers. Firstly, compared to the other research methods which are being used by the researchers this is a far less obstructive method (Bailey and Burch 2017). In addition to this, it offers a far better tool or framework to the researchers through which they can analyze the comments or the opinions of the users which they have offered over the various online platforms.
The primary reason why the researcher has opted for the method of netnography is the fact that this method allows the opportunity to the researchers to analyze the present context of the topic which has been selected by the researcher in the light of the present discussion that is being carried out in the media and related sources. For example, the use of this method will enable the researcher to understand the opinion of the people regarding the leas-issue that the organisation Nestle Maggie faced in India and also the manner in which they reacted to this allegation. The researcher has thus collected information from seven credible sources which are likely to shed insightful information on the issue under discussion here and also the opinion of the customers regarding the incident-
The researcher for the analysis of the above information related to the issue under discussion and also to find relevant answers to the research objectives and research question has taken the help of the method of thematic analysis and netnography. The use of this method will require the researcher to analyze the theme of each of these sources of information or reviews given by the customers in the particular context of the issue under discussion and then relate these findings with the case or issue under discussion here.
Findings and Discussion
Source 1: https://www.nestle.in/media/statements/maggi-india-noodles-lead-recall-ban
This was the official justification offered by the organisation Nestle for the issue which under discussion here that overnight changed the prospects of the organisation in the nation of India. The organisation after the allegations made by the food investigation officer had conducted its test related to the issue and found that the percentage of lead in the noodles that it offered to the customers of India was 2.5% which was the permissible level in India (Nestle.com 2018). The representatives of the organisation thus state that the allegations made by the food investigation officer are completely baseless and should not be taken seriously.
The source at the same time reveals the manner in which the decisions as well as the perceptions of the customers change drastically overnight because of misrepresentation of the brand by the media. In the case under discussion here, it was seen that the media represented the information related to the issue and this affected the buying behaviour of the customers in a significant manner. The net result of this was the fact that the organisation not only lost a significant amount of its market share but at the same time its brand image because of the incident. This clearly has correlation with the second research objective which has been selected by the researcher in this paper.
Source 2: https://www.downtoearth.org.in/news/health/maggi-gate-why-india-must-face-up-to-a-bigger-problem-than-instant-noodles-50279
This online source sheds light on the third research objective which has been selected by the researcher. The source sheds light on the manner in which the issue lead to the banning of the concerned product in the nation of India and also the manner in which this adversely affected the prospects of the concerned organization in India. This is important not only from the perspective of the concerned organization but at the same time from that of the customers as well. More importantly, this source clearly reveals the manner in which the brand image of the organizations plays a vital role in the sale of the products or the services offered by them to .
the customers and also the manner in which they affect the buying behavior of the customers as well. It can be said that the modern customers rather than looking at the possible benefits that the products offered to them are more concerned regarding the brand image of the organization which is manufacturing those products. Thus, it can be said that the organization in order to regain the market monopoly that it once held in the business market of India needs to improve its brand image so as to affect the buying behavior of the customers in the best possible manner.
Source 3: https://www.independent.co.uk/news/business/news/maggi-noodles-go-back-on-sale-in-india-after-lead-recall-a6726961.html
The source sheds light on the major factors which has made the noodles offered by the organization under discussion here one of the most loved food product of not only the people of India but of the other nations of the world as well. For example, the source clearly reveals that there are various gratifications which make the customers opt for the noodles which are being offered by them to the customers.
According to the source some of the most important ones are the ease with which they can cook the noodle and also consume it, the taste of the noodles and others. For example, the majority of the customers who have given reviews regarding the noodles under discussion here in the source are of the viewpoint that the taste as well as the quality of the noodles offered by the organization Nestle is better than the ones offered by the other organizations.
More importantly, these attributes are the ones which has not only helped the noodles offered by the organization under discussion here to become one of the most loved ones of the customers but at the same time form the motivational factors which influence the customers to opt for them. This is clearly is related to the first research objective that the researcher has selected for the purpose of this research work.
Source 4: https://blogs.wsj.com/indiarealtime/2015/06/02/nestle-tells-indias-maggi-lovers-lead-levels-in-our-noodles-are-safe/
This blog of The Wall Street Journal sheds light on the lead issue that the Maggie noodles faced in India and also the reaction of the customers to it. For example, majority of the customers concur on the point that the major gratification factors which propelled them to opt for the noodle offered by the organization Nestle were the taste, quality and also the ease with which they could cook the noodle. However, the information was a completely shocking one for them and most of customers were highly disappointed with the news since they had opted for the noodles offered by the organization on the basis of their positive image. Thus, it can be said that in this regard, the positive brand image of the organization Nestle influenced the buying behavior of the customers.
Source 5: https://www.mouthshut.com/product-reviews/Maggi-Noodles-reviews-925042346
This is an important source from the perspective of this assignment since this source is an open forum wherein customers not only from India but from the other nations of the world wherein Maggie is being sold can post their comments or reviews related to the products. In addition to the reviews, the customers can also provide feedback regarding the changes that they want the organization to make in the product. An analysis of the reviews given by the customers reveals the fact that the high amount of lead and gluten which has been found in the noodles is a major cause of concern for them.
Source 6: https://www.socialsoup.com/review/MaggiNoodles/?title=Maggi+Noodles
This source just like the above mentioned source highlights the various concerns as well as disappointment faced by the customers post the lead issue that the organization faced in India. For example, the reviews clearly indicate the customers were highly disappointed and thus they had to switch over to the other brands because of the issue.
Source 7: https://www.consumercomplaints.in/maggi-b100477
This source offers a record of the various complaints of the diverse customers who opt for the noodles offered by the organization Nestle. For example, it is seen that there are many customers who have complained regarding the deteriorating quality of the noodles, insects beings found in the noodle packets, the high level of lead content in the noodles and others.
Conclusion
To conclude, the buying behavior of the customers has undergone a substantial amount of change in the present times and this is adversely affecting the prospects of the cotemporary business enterprises in a substantial manner. More importantly, it is seen that the brand image of the organizations rather than the quality or the price of the products or services offered by the customers is the major factors which affect the buying decisions of the customers in the contemporary times.
This becomes clear when an analysis of the change in prospects that the organization Nestle faced in the nation of India post the lead issue. For example, it was seen that before the issue the organization held monopoly in the Indian noodle however after the issue the products of the organization were banned in the nation. Some of the measures that the organization can use for the improvement of its prospects in the concerned nation are-
References
Bailey, J.S. and Burch, M.R., 2017. Research methods in applied behavior analysis. Routledge.
Desai, P., 2016. Predicament Management During Product Recall of Maggi. IBMRD’s Journal of Management & Research, 5(2), pp.21-26.
Dhanesh, G.S. and Sriramesh, K., 2018. Culture and Crisis Communication: Nestle India’s Maggi Noodles Case. Journal of International Management, 24(3), pp.204-214.
Fortune.com 2018. Nestlé’s Half-Billion-Dollar Noodle Debacle in India. [online] Available at: https://fortune.com/nestle-maggi-noodle-crisis/ [Accessed 1 Dec. 2018].
Han, J., Ding, H., Qian, C., Xi, W., Wang, Z., Jiang, Z., Shangguan, L. and Zhao, J., 2016. Cbid: A customer behavior identification system using passive tags. IEEE/ACM Transactions on Networking, 24(5), pp.2885-2898.
Ibef.org 2018. Indian Food Industry, Food Processing Industry in India, Statistics. [online] Ibef.org. Available at: https://www.ibef.org/industry/indian-food-industry.aspx [Accessed 1 Dec. 2018].
Kumar, A., Bezawada, R., Rishika, R., Janakiraman, R. and Kannan, P.K., 2016. From social to sale: The effects of firm-generated content in social media on customer behavior. Journal of Marketing, 80(1), pp.7-25.
Maurya, M., 2017. ” Maggi Muddle”-Failing the Test of Consumer Trust. Vilakshan: The XIMB Journal of Management, 14(2).
Mishra, S., 2017. The Importance of “Consumer Type” in the Attribution of Crisis Responsibility: The Case of the Maggi Noodles Crisis in India. International Journal of Strategic Communication, 11(3), pp.224-243.
Nestle.com. 2018. Home. [online] Available at: https://www.nestle.com/ [Accessed 1 Dec. 2018].
Nestle.in. 2018. MAGGI Noodles and lead concerns | MAGGI Noodles. [online] Available at: https://www.nestle.in/media/statements/maggi-india-noodles-lead-recall-ban [Accessed 1 Dec. 2018].
Nichols, C., 2017. Millets, milk and maggi: contested processes of the nutrition transition in rural India. Agriculture and Human Values, 34(4), pp.871-885.
Pandey, M. and Puntambekar, G.L., 2016. Maggi Noodles Sales Trend: Before and After Controversy. International Journal of Multidisciplinary Approach & Studies, 3(3).
Sinha, S., Sinha, D. and Gupta, G., 2015. Maggi as a Youth Icon in India: A Case of Cultural Branding. Proceedings of ICRBS, 2015.
Taneja, G., 2017. Nestle India Maggi: Rebuilding Trust. Indian Journal of Marketing, 47(5), pp.37-47.
The Independent. 2018. Indians are celebrating the return of Maggi noodles. [online] Available at: https://www.independent.co.uk/news/business/news/maggi-noodles-go-back-on-sale-in-india-after-lead-recall-a6726961.html [Accessed 1 Dec. 2018].
Thomason, R., 2018. Case Analysis I: Challenges MNCs Face in Emerging Markets: The Nestlé Experience. Vision, 22(2), pp.232-234.
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