Written by Nazia Sultana
Introduction
In this era of interconnectedness and active participation (Labrecque et al., 2013), some brands have leveraged it successfully creating a stronger brand presence online such as Coca-Cola or Nutella while others got destroyed in the social web such as Maggi in India. In this article, we will discuss the power of individual consumer voice online and how it destroyed a heritage brand like Maggi in India who failed to harness the power of consumers online to save their brand.
Maggi Lead Crisis: Destruction of One of the Most Beloved Brands of India
The story of Maggi Lead Crisis is no less than a nightmare for brands around the world. It teaches brands that no matter what their market position is the power of consumers can bring it down in minutes demonstrating the power of information dissemination in the social web. The Maggi lead crisis in India caused Nestlé half a billion dollar in losses within a span of 3 months which is estimated to take 3 years to recover (Fry, 2016).
Maggi was launched as the first instant noodles brand in India in 1983 and made itself an integral part of the daily lives of consumers in the last three decades (BBC, 2015). In 2014, Maggi was ranked number five at the most trusted brands survey by Brand Equity in India (Bureau, 2014) and number one in Most Trusted Food Brand (Channi-Tiwary, 2015) with 80% market share in 2014.
Figure 1: Nestle India in Numbers. Source: (Singh, 2015)
Maggi not only dominated the market share but they set the rules of the industry. Maggi is ubiquitous to instant noodle category in India. However, this loyal consumer base toppled down when Maggi was faced with a charge of containing lead beyond permissible limits and MSG in their instant noodle. How does a global giant like Nestlé find itself in a crisis and every decision they take backfires?
On May 1, 2015 the FSAI sent an official notice to Nestlé India regarding their findings of lead and MSG in Maggi noodles and in response Nestlé sent a stack of internal quality monitoring documents debunking the claims appealing to the FSAI to drop the charges.
Meanwhile, local newspapers in Uttar Pradesh got wind of the story and published the findings of the report by FSAI. On May 11, 2015 Nestlé digital team noticed the story being shared in social media platform and talks of speculated Maggi ban was quickly spreading (Fry, 2016). The story was picked up by national media and it spread at the speed of lighting in mass media and digital platform was well. To make matters worse, Nestlé India team did not issue a formal statement in the press and their social media which exacerbated the situation for Nestlé India. India was enraged that thought their beloved brand had betrayed them. Nestlé India had no more control over the story as it spread like wildfire in the social networking sites with hashtags like #Maggiinasoup, #Maggimess, #Maggikisideeffects and #Maggiban trending in Twitter and Facebook (Figure 2).
Figure 2: Twitter Reactions to Maggi Ban. Source: (Twitter, 2015)
In the moment of crisis, Nestlé CEO Paul Bulcke took a drastic decision to pull Maggi out of the market and relaunch. To counteract this action, the FSAI authorities issued a nationwide ban of Maggi from the market. This decision by the CEO made Nestlé India look guiltier and confirmed the doubt amongst the loyal followers of Maggi. The social media went on an overdrive talking about Nestlé India’s decision through rants, parody, memes and status updates in Facebook and Twitter (Figure 3a). The reaction was not only limited to the digital scape as protestors burned packets of Maggi on the street. Maggi India twitter account responded to this via a standardized response which disheartened the consumers more (Figure 3b).
Figure 3a: Maggi Meme. Source: (Twitter, 2015)
Figure 3b: Auto response by Maggi. Source: (S, 2015)
In June 2015 Nestlé India sued the FSAI for having issued ban orders without proper hearing and causing irreparable damage to the brand (Fry, 2016). On August 13, 2015 Nestlé India won the case against the FSAI and the court reversed the ban announcing Maggi safe for human consumption and relaunched on November 2015.
In a span of three months, Maggi lost its dominant position in the market (Figure 4a) and shares dipped in the market (Figure 4b). The instant noodle industry shrunk due to the Maggi crisis bringing other players in the industry under strict scrutiny (Figure 4c).
Figure 4a: Maggi Market Share. Source:(Fry, 2016)
Figure 4b: Nestle Stock Performance. Source:(Fry, 2016)
Figure 4c: Maggi Crisis Impact. Source:(Bhushan, 2016)
The Maggi fiasco not only affected India but also had a spill-over effects in its neighbouring countries like Bangladesh, Pakistan and Sri Lanka with Maggi losing shares in these markets as well.
The Maggi crisis is the perfect example of the how the power shift to consumers destroy a brand. Nestlé India’s responsiveness could have helped consumers sympathize with the brand who was facing harassment from the government authorities in India. Maggi failed to capitalize its social media platform and underestimated the impact it can have on the brand.
What Can Brands Learn from the Maggi Crisis?
The Maggi lead fiasco teaches us two overarching lessons about brand management in social media in times of crisis.
1. Collective Power of Individual Voices in Social Media
In the past marketers have looked into brand communities (Muniz & O’Guinn, 2001) to interact with their consumers. Muniz & O’Guinn, (2001) developed the concept of brand community and defined it as “a specialized, non-geographically bound community, based on a structured set of social relationships among admirers of a brand”. In the era of web 2.0, online brand communities have become a strong tool for marketers to monitor what their consumers are talking about (Albert, Merunka & Valette-Florence, 2008), identify lead users (von Hippel, 1986) and involve consumers through collaborations and co-creation in the social mediascape (Christodoulides, 2009). But marketers have failed to take into account the non-communitarian communication (Kozinets, 2002) in social media which are less structured and transient (Arvidsson & Caliandro, 2015). These non-communitarian communications have been defined by Arvidsson & Caliandro (2015) as “Brand Public” which is an “organized media space kept together by a continuity of practices of mediation” such as the hashtag and “results from an aggregation of a large number of isolated expressions that have a common focus” which adds “publicity value” to the brands. A tweet or a status update about aparticular brand using a mediation device such as the hashtag can tell marketers what are consumers talking and sharing about their brand.
From the context of Maggi, their digital team failed to look into what individuals were saying about the brand during the crisis. The brand public kept talking and sharing about the crisis in their social media feed using the hashtags #Maggiban, #Maggiinasoup, etc. This was overlooked by the Nestle India digital team causing an epidemic of negative online word of mouth marketing. The story of Maggi crisis spread like wildfire to a stage where it was beyond Nestle’s control. There was a lack of strategy to deal with the consumers talking about the brand crisis which had a detrimental effect on the brand reputation and market share. Nestle India could have devised a strategy to interact with these brand public and explain their stance to keep the consumers on their side. Their lack of response to the brand public and action during the initial days of the crisis let the situation go out of hand causing irreparable damage to the brand.
2. Implication of Underestimating Consumer Power in the Internet
n the era of Web 2.0, brands are no longer the broadcasters rather the orchestrators of conversation among their consumers (Edelman, 2010). The diffusion of internet into the mass altered the power structure in favour of the consumers in four dimensions: “Technologic”, “Economic”, “Social” and “Legal” as defined by Kucuk & Krishnamurthy (2007). Technologic power source enables the consumer to be always on, economic power increased the bargaining power through access to more options and legal power through access and awareness of the law. Consumers gained the most power through social power source which provided easy access to social networks, experts and communities. Through social power consumers are able to shape company strategies by giving feedback or creating pressure in a public platform making consumers an integral part of value creation. Increased social power meant that consumers have a say at what they want to see and hear which initiated permission-based marketing (Godin, 2008) marking loss of brand power over consumer power. (Labrecque et al., 2013) further furnishes the literature of customer empowerment online and their sources of power by segmenting it in two broad categories of individual based power (demand-based power and information based power) and network based power (network based power and crowd based power). The evolution of power sources is explained in Figure 5.
Figure 5: Evolution of Consumer Power Sources. Source: (Labrecque et al., 2013, p-3)
What does this power shift mean for brands? Traditional marketing had a bowling approach where the brands used marketing tools (the ball) to hit its target customer (the pin) and mass media (bowling alley) worked as intermediaries (Hennig-Thurau, Hofacker & Bloching, 2013). Social web marketing has been described as a pinball game (Hennig-Thurau et al., 2010; Hennig-Thurau, Hofacker & Bloching, 2013) due to the increased active participation and network interconnectedness of consumers which shape the fate of the brand. In the pinball game, the marketing content (the ball) is provided in the environment (the pinball machine) to reach the consumers. The outcome of the content is unpredictable due to consumers having greater power in controlling the message(Labrecque et al., 2013; Umit Kucuk & Krishnamurthy, 2007). The pinball game implies the loss of control of brands in the market where the brands struggle to manage consumer reactions while fulfilling its internal goals. Marketing is not about domination anymore it is striving to fit in the interconnected social network (Deighton & Kornfeld, 2009) making them more accountable. To minimize the impact of power shift brands need to relinquish autonomy and opt for co-creation of brand stories involving their active consumers (Gensler et al., 2013).
From the context of the Maggi crisis, the digital team made two grave mistakes that exacerbated the crisis further in the consumer end. Firstly, Nestle India remained quiet in the initial stages of the crisis and ignored the consumer queries or comments on the issue. Before launching an official statement, Nestle India refrained from communicating with their consumer in digital media. Secondly, when they communicated in digital media they used an automated response for every query posted with #MaggiIndia. This impersonal approach enraged more consumers than mitigate the situation as they were expecting reactive listening rather than standardized output used for mass media. Nestle India digital team failed to listen to their customers, respond and maintain transparency in the whole crisis. Maggi could have minimized the impact of the crisis by capitalizing on its loyal followers by simply keeping them informed and responding to their queries individually. Consumer in the digital space can play both the role of attacker and defendant of brands. In Maggi’s case simply clarifying their stance could have created an army on Maggi’s side fighting the government with them. Nestle maintained an autonomous power over the situation and failed to capitalize on the network based power of the consumer (Labrecque et al., 2013).
Conclusion
In the social web brands need to be on 24/7 like their consumers are and maintain proactive communication. The Maggi case is a cautionary tale that teaches that organizations should be watchdogs always ready to detect and react to any anomaly. As Edelman (2010) describes brand teams should monitor their consumers online on these three levels – “what they see”, “what they say” and “what they do” and react on it.
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