Is this the ‘marketing moment’ Maggi’s rivals have been waiting for?

In a market where availability is clearly more important than advertising and distribution has become the most important ‘P’ in the marketing mix, we take a quick look at the instant noodles segment. There’s a lot of anecdotal evidence about brands like Nissin’s Top Ramen and ITC’s Sunfeast Yippie making their way into the kitchens of Maggi’s patrons.

Here’s what author and brand consultant (founder, Brand-Building.com) MG Parameswaran aka Ambi told afaqs! in a freewheeling chat on the subject.

Edited excerpts:

The upsurge in demand has a lot to do with the repercussions of the lockdown; due to the lack of availability of restaurant food, consumers, especially bachelors, who would regularly eat out and cook noodles maybe twice a week, now depend on it every day. One needs to understand that these trials (of other instant noodle brands) are happening because of availability issues. Now if these brands (Maggi’s rivals) can offer some uniqueness like taste, flavour, shape, etc., then they can manage to attract new consumers or grab a hold of the existing pie.

When Maggi ran into the lead controversy and was forced to run out of the market, all other brands jumped at the opportunity. But it came back after about 6 months and within another 6 months, they were back into the market, like nothing had actually changed. The consumer moved on to other brands because of the lack of availability but when the brand is available and communicating, the consumer comes back – that's the philosophy. Even today, the situation is no different; just because there is a shortage, the consumer is switching brands and chances are that this time too, the end result will be the same.

That time, Maggi did a smart thing – when they came back they invested heavily in image communication and were hence able to retain the consumers who had drifted away. And others like Yippee were able to increase their market share, in comparison to pre-controversy share, because of their strong brand building.

Today, if these (rival) brands can come up with new flavours, they might have a chance to hang on. While putting out more and more product units will do at this moment, to sustain, thrive and attract new and modern customers, brands need to innovate. Otherwise, when the dust settles, Maggi will be able to recover its share of consumers. What needs to be understood here is that consumers are not blaming Maggi. Their product is not bad, lousy or sub-standard; it’s just a matter of shortfall in supply, which under these extraordinary circumstances, is understandable. And the biggest advantage that a strong brand has is intense consumer loyalty and their readiness to forgive.

Socio-cultural trends…

A huge socio-cultural trend that will emerge is cooking at home. This will give a major push to the packaged food industry, not just the noddle segment but also to the ready-to-cook market. Brands like MTR, ITC, Gits, etc. are likely to see a boost in sales, attributable to the disappearance of local eateries and restaurants.

The communication angle in the FMCG sector will dramatically change as it is a 'feel-good' category. And once the lockdown is lifted, I believe, brands in this segment will be communicating the same. For other categories, it depends on how they open up, what are the restrictions, etc. Manufacturers have to actively stimulate demand, advertise heavily, offer discounts and deals, and more importantly, create disruption to push the consumer towards the shopping experience. The smart ones who take this route will come out of this and others who don’t, especially those that cut down on their advertising budgets, will eventually suffer.

Once business resumes, the top priority for companies should be to get production going, which is completely stalled right now. Additionally, getting rid of the existing inventory, as some of the products have a shelf-life, will also be on their immediate to-do list.

The sale of FMCG products on online platforms and organised retails is fairly low, about 7-8 per cent and 10 per cent, respectively. Today, local grocers seem to won the COVID battle as majority of the consumers are buying their groceries and other essentials there. While the battle is between these three verticals, direct buying and selling from farmers has been gaining traction as a model. Quite a few housing societies in Mumbai are dealing directly with farmers for fruits and vegetables; they make the delivery on a weekly basis. Though, whether this will continue for the next six months or so, is uncertain. Hence, will there will be a shift in consumer preference post lockdown, and how things will stabilise is difficult to predict.

As told to Debashish Chakraborty