Case Study Of Nestle India

As per the results published by Nestle India, analyst and Industry estimates, Nestle lost 320 crore due to safety concerns and brand value affected by 1200 crore. Nestle spent 150 crore on advertising Maggi which is the biggest share of its advertising expenses. Extra expenses included 20 crore, paid to Aditya Birla group for incinerating recalled Maggi in cement plants.

Discussion

Indian consumers felt their health at stake so their confidence in consuming lessened. Due to this consumer concern, the retailers took Maggi of the shelves which resulted in fall of sales of Maggi noodles. It also affected other product line of Maggi as it was the Nestles’ most used brand. As discussed earlier, the company revenue got affected. The problem for

As it was closer competitor, it gave Yippee chance to increase its market share. It also provided opportunities to newcomers in the market as the market leader dominance was no longer there.

If we look into some of the things that Nestle did wrong in handling the crisis, we need not to go further. In India itself we had crises involving other organizations like Cadbury's that were dealt with poorly and provide clear insights on how a crisis should not be handled. Some of the insights has been brought forward.

Early denial

Nestle India has chosen to brazen it out. It has stated that MSG is found in the raw materials used to make the noodles. That lead is present in the soil and atmosphere! This brings back memories of how Cadbury blamed retailers for poor storage of chocolates that were found to be contaminated. It would be well to remember that in that case Cadbury was forced to accept responsibility, change its packaging and bring in Indian movie superstar Amitabh Bacchan to redeem its brand. The cost; loss of sales during the Diwali festival season.

Slow reaction When the issue was first reported, the reaction from Nestle India was slow. Further, it was all words and no action. The crisis quickly escalated thereafter and Nestle India has been playing catchup ever

They could have been displayed proactive-ness and taken off Maggi voluntarily from shelves for some time instead of doing the same later on under pressure of law. This was what Johnson & Johnson proceeded with when they had a crisis due to Tylenol poisoning in the US in 1982. However, it was later found out to be a case of sabotage. But the prompt and proactive action was appreciated by the public and the brand of Johnson & Johnson received a massive support. Now since, Nestle India has been given government orders in various states to take off Maggi off shelves; it is a major loss of face, not to mention the financial loss.

Trained spokesperson

It is evident from the evidences that there has been a lack of consistency in communication from Nestle India. It lacked a human face who could deal with communication crisis. It would have been better if the communication would have more direct to the media rather than statement release via press. A senior person from Nestle India leading from the front would have provided consumers gain more trust in the management of Nestle India.

Lack of empathy

Nestle showed little empathy towards its customers rather it seemed to be more interesting in technical reputation of allegations. Having empathized with the consumers and reassuring them would have helped him more in aligning with the consumers’