A PROJECT REPORT

ON

SUBMITTED TO:

Mr.VIJESH JAIN

SUBMITTED BY: GROUP 13

-BHARAT BAGARI
-LAXMIKANTH SHARMA
-PROMIL KHARNOKHYA
-SAURABH DABAR
-ANAMIKA SINHA
-NEHA BHATIA
-NANDINI BAGAIT

INTRODUCTION AND HISTORY

In the 1940s, in the district of Kaira in the State of

Gujarat, India, a unique experiment was conducted
that became one of the most celebrated success
stories of India. At that time, in Gujarat, milk was
obtained from farmers by private milk contractors
and by a private company, Polson's Dairy in Anand,
the headquarters of the district. The company had a
virtual stranglehold on the farmers, deciding the
prices both of the procured as well as the sold milk.
The company arranged to collect, chill and supply
milk to the Bombay Milk Scheme, which supplied
milk to the metropolis of Bombay, and to cities in
Gujarat. Polson's Dairy also extracted dairy products
such as cheese and butter. Polson's Dairy exploited
its monopoly fully; the farmers were forced to
accept very low prices for their products, and the
decisions of the company regarding the quality and
even the quantity of the milk supplied by the
farmers were final.

In 1946, inspired by Sardar Vallabhbhai Patel, a

local farmer, freedom fighter and social worker,
named Tribhuvandas Patel, organised the farmers
into co-operatives, which would procure milk from
the farmers, process the milk and sell it in Bombay
to customers including the Bombay Milk Scheme.
Purely by chance, in 1949, a mechanical engineer
named Verghese Kurien, who had just completed his
studies in engineering in the USA, came to India and
was posted by the Government of India to a job at
the Dairy Research Institute at Anand. Settling down
in Anand was hardly a part of his career plans;
however, a meeting with Tribhuvandas Patel
changed his life and changed India's dairy industry.

What Mr Patel requested of Dr Kurien was hardly to

bring about such a revolution. All he wanted was
help in solving various problems with bringing into
working order some of the equipment just
purchased by his co-operative, especially the
chilling and pasteurising equipment. These items of
equipment malfunctioned, leading to the rejection
of large quantities of milk by the Bombay Milk
Scheme.

Dr Kurien's involvement with the Kaira District Co-

operative Milk Producers' Union Limited (KDCMPUL;
the registered name of the co-operative) grew
rapidly. Initially he merely provided technical
assistance in repairing, maintaining and ordering
new equipment but subsequently he became
involved with the larger sociological issues involved
in organising the farmers into co-operatives and
running these co-operatives effectively. He
observed the exploitation of farmers by the private
milk contractors and Polson's Dairy, and noted how
the co-operatives could transform the lives of the
members.

The most important feature of these co-operatives

is that they are run purely as farmers' co-
operatives, with all the major decisions being taken
by the farmers themselves. The co-operatives are
not 'run' by a separate bureaucracy with vested
interests of its own; the farmers are truly in charge
of their own decisions. Any farmer can become a
member by committing to supply a certain quantity
of milk for a certain number of days in a year and
shall continue to be a member only if he keeps up
this commitment. Each day, the farmers (or
actually, in most cases, their wives and daughters)
bring their milk to the village collection centres
where quantity of milk is checked in full view of all
and quality (milk fat content) is checked using a
simple device, again in full view of all. The farmers
are paid in the evening for the milk they supplied in
the morning, and in the morning for the evening's
milk. This prompt settlement in cash is a great
attraction to the farmers who are usually cash
starved. Thanks to the above system, there are no
disputes regarding quantity or quality of the milk
supplied by each farmer.
It was soon realised that it was not enough to
merely act as the collection and selling agents for
the farmers. A variety of support services were also
required to enable the farmers continue selling milk
of adequate quality and to avoid disasters such as
the death of their cattle (for a family owning just
one or two cattle and depending on its/their milk for
their income, death of a cow could indeed be a
disaster). The farmers were progressively given new
services such as veterinary care for their cattle,
supply of good quality cattle feed, education on
better feeding of cattle and facilities for artificial
insemination of their cattle. All these were strictly
on payment basis; none of the services were free.

This experiment of organising farmers into co-

operatives was one of the most successful
interventions in India. A very loyal clientele was
built up who experienced prosperity on a scale they
could not have dreamt of 10 years earlier. With
good prices paid for their milk, raising milch cattle
could become a good supplementary source of
revenue to many households. The co-operatives
were expanded to cover more and more areas of
Gujarat and in each area, a network of local village
level co-operatives and district level co-operatives
were formed on a pattern similar to that at Anand
(the so called Anand Pattern). In 1955, KDCMPUL
changed its name to Anand Milk Union Limited,
which lent itself to a catchy abbreviation, Amul,
which meant priceless in Sanskrit. The word was
also easy to pronounce, easy to remember and
carried a wholly positive connotation. It became the
flagship brand name for the entire dairy products
made by this union.

In 1954, Amul built a plant to convert surplus milk

produced in the cold seasons into milk powder and
butter. In 1958, a plant to manufacture cheese and
one to produce baby food were added—for the first
time in the world, these products were made from
buffalo milk. Subsequent years saw the addition of
more plants to produce different products. Starting
from a daily procurement of 250 litres in 1946, Amul
had become a milk giant with a large procurement
base and a product mix that had evolved by
challenging the conventional technology.

On his visit to Anand in 1965, the then Prime

Minister of India, Lal Bahadur Shastri, was
impressed by what he saw—a system that procured,
processed and delivered high quality milk to distant
markets cost efficiently. Shastri could also see the
difference that the income from milk had made to
the standard of living of farmers in the area. What
impressed him the most was that Amul had done all
this without government assistance, in marked
contrast to a number of government sponsored
dairy programmes that were doing poorly in terms
of procuring and marketing good quality milk and
boosting farmers' incomes. Shastri asked Dr Kurien
to replicate Anand's success all over India.

A pattern similar to the Anand Pattern was to be

built in other states of India. This was carried out
under a programme launched by the Government of
India, entitled 'Operation Flood'. The operation was
co-ordinated by the National Dairy Development
Board (NDDB), a body formed by the Government of
India with this specific objective.
Operation Flood
Objectives of this programme were:

1. To enable each city's liquid milk scheme to

restructure and capture a commanding
share of its market
2. To identify and satisfy the needs of milk
consumers and producers, so that consumers'
preferences can be fulfilled economically and
producers can obtain a larger share of the
rupees paid by consumers for their milk
3. To facilitate long-term productive investment
in dairying and cattle development and
4. To ensure a sufficient supply of personnel to
handle each facet of the project.
Plants:

First plant is at ANAND, which engaged in the

manufacturing of milk, butter, ghee, milk powder,
flavored milk and buttermilk.

Second plant is at MOGAR, which engaged in

manufacturing chocolate, nutramul, Amul Ganthia
and Amul lite.

Third plant is at Kanjari, which produces

cattelfeed.
Fourth plant is at Khatraj, which engaged in
producing cheese.
List of Products Marketed:
Breadspreads:

• Amul Butter

• Amul Lite Low Fat Breadspread

• Amul Cooking Butter

Cheese Range:

• Amul Pasteurized Processed Cheddar Cheese

• Amul Processed Cheese Spread
• Amul Pizza (Mozarella) Cheese
• Amul Shredded Pizza Cheese
• Amul Emmental Cheese
• Amul Gouda Cheese
• Amul Malai Paneer (cottage cheese)
 • Utterly Delicious Pizza

Mithaee Range (Ethnic sweets):

• Amul Shrikhand (Mango, Saffron, Almond Pistachio,

Cardamom)
• Amul Amrakhand
• Amul Mithaee Gulabjamuns
• Amul Mithaee Gulabjamun Mix
• Amul Mithaee Kulfi Mix
• Avsar Ladoos

UHT Milk Range:

• Amul Shakti 3% fat Milk

• Amul Taaza 1.5% fat Milk
• Amul Gold 4.5% fat Milk
• Amul Lite Slim-n-Trim Milk 0% fat milk

• Amul Shakti Toned Milk

• Amul Fresh Cream
• Amul Snowcap Softy Mix

Pure Ghee:

• Amul Pure Ghee

• Sagar Pure Ghee
• Amul Cow Ghee
Infant Milk Range:

• Amul Infant Milk Formula 1 (0-6 months)

• Amul Infant Milk Formula 2 ( 6 months above)
• Amulspray Infant Milk Food

Milk Powders:

• Amul Full Cream Milk Powder

• Amulya Dairy Whitener
• Sagar Skimmed Milk Powder
• Sagar Tea and Coffee Whitener

Sweetened Condensed Milk:

• Amul Mithaimate Sweetened Condensed Milk

Fresh Milk:

• Amul Taaza Toned Milk 3% fat

• Amul Gold Full Cream Milk 6% fat
• Amul Shakti Standardised Milk 4.5% fat
• Amul Slim & Trim Double Toned Milk 1.5% fat
• Amul Saathi Skimmed Milk 0% fat
• Amul Cow Milk

Curd Products:

• Yogi Sweetened Flavoured Dahi (Dessert)

• Amul Masti Dahi (fresh curd)
• Amul Masti Spiced Butter Milk
• Amul Lassee

Amul Icecreams:

• Royal Treat Range (Butterscotch, Rajbhog, Malai

Kulfi)
 • Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale,
Fruit Bonanza, Roasted Almond)
• Nature's Treat (Alphanso Mango, Fresh Litchi, Shahi
Anjir, Fresh Strawberry, Black Currant, Santra Mantra,
Fresh Pineapple)
• Sundae Range (Mango, Black Currant, Sundae Magic,
Double Sundae)
• Assorted Treat (Chocobar, Dollies, Frostik, Ice
Candies, Tricone, Chococrunch, Megabite, Cassatta)
• Utterly Delicious (Vanila, Strawberry, Chocolate,
Chocochips, Cake Magic)

Chocolate & Confectionery:

• Amul Milk Chocolate

• Amul Fruit & Nut Chocolate

Brown Beverage:

• Nutramul Malted Milk Food

Milk Drink:

• Amul Kool Flavoured Milk (Mango, Strawberry, Saffron,

Cardamom, Rose, Chocolate)
• Amul Kool Cafe

Health Beverage:

• Amul Shakti White Milk Food

Business OBJECTIVES
AMUL’s Journey towards Excellence
The essences of AMUL’s efforts were as follows:
• It combined market and social development in an
emerging economy. It recognized the inter-
linkages between various environments that
governed the lives of marginal milk farmers and
the unmet needs of consumers. It also changed
the supply chain paradigm in order to reduce the
cost to the consumer while increasing the return
to the supplier.

• It realized that in order to achieve their

objectives, it had to benefit a large number of
people – both suppliers and consumers. While
large scale had the danger of failure due to poor
control and required more resources, it also had
the advantage of creating a momentum that
would be necessary to bring more people into the
fold and thereby help more suppliers and
consumers.

• It also realized that its goal could only be

achieved in the long run and this required
developing values in people and processes that
were robust, replicable and transparent.

• It also realized that the cooperative would not be

independent and viable in the face of
competition if it were not financially sound. This
implied that AMUL had to develop distinct
capabilities that would deliver competitive
advantage to its operations. This would include
long term cost containment, world-class
deployment of technological resources and R&D,
and better leveraging of scarce resources.
The Business Model
The objective of the network was to deliver
profitable and equitable returns to a large number
of farmers for a long period of time. This follows
rather directly from the fact that the member
farmers own essentially the network Of
cooperatives. Given the weak economic status of
these members, an additional objective was to
develop the supplier over the long term through
social change. Consequently, the business model
had to include both the costs and benefits of
services that would be needed to deliver milk with
high productivity as well as to assist farmers in
improving their social environment.

The success of the network depended on high

collection rate of milk. This required increasing
membership with more VSs, raising the number of
members per VS, and improving the milk yield (i.e.,
better cattle management), constant concern about
the cost to farmers in the network and delivering
quality to customers at low prices.

The cooperative had decided as part of its value:

• To charge for each service provided to the
supplier
• To purchase all milk that member farmers
produced
• To sell liquid milk at affordable prices so as to
serve a large number of consumers
• To develop and deliver services that will improve
lives of people in the network
• To hire professional managers, to run the
federation and unions, whose values
included upliftment of rural poor.

The network explicitly includes secondary services

to the farmer-suppliers.
Several of the entities in the network are organized
as cooperatives linked in a hierarchical fashion.
Strengths
 1. The company is having Indian origin thus
creating feeling of oneness in the mind of the
customers.
2. It manufactures only milk and milk products,
which is purely vegetarian thus providing
quality confidence in the minds of the
customers.
3. It is aiming at rural segment, which covers a
large area of loyal customers, which other
companies had failed to do.
4. People are quite confident for the quality
products provided by Amul.
5. Amul has its base in India with its butter and so
can easily promote chocolates without fearing
of loses.
6. The prices of chocolates of Nestles are
comparatively cheap as compared to other
companies.
Weaknesses
1. There are various big players in the chocolate
market, which acts as major competitors
restricting their growth.
2. Lack of capital invested as compared to other
companies.
3. Improper distribution channel in India.
Opportunities
 1. There is a lot of potential for growth and
development as huge population stay in rural
market where other companies are not
targeting.
2. The chocolate market is at growth stage with
very less competition so by introducing new
brand and intensive advertising there can be a
very good scope in future.

Threats
1. The major threat is from other companies who
hold the majority share of consumers in Indian
market i.e. Cadburys and Nestle.
2. There exists no brand loyalty in the chocolate
market and consumers frequently shift their
brands
AMUL’s business strategy is driven by its
twin objectives
(i) long-term, sustainable growth to its
member farmers, and
(ii) Value proposition to a large customer
base by providing milk and other dairy
products a low price. Its strategy, which
evolved over time, comprises of
elements described below.
Simultaneous Development of Suppliers and
Customers:

From the very early stages of the formation of

AMUL, the cooperative realized that sustained
growth for the long-term was contingent on
matching supply and demand. The organization also
recognized that in view of the poor infrastructure in
India, such development could not be left to market
forces and proactive interventions were required.
The time AMUL was formed, the vast majority of
consumers had limited purchasing power and was
value conscious with very low levels of consumption
of milk and other dairy products. Thus, AMUL
adopted a low price strategy to make their products
affordable and guarantee value to the consumer.
The success of this strategy is well recognized and
remains the main plank of AMUL's strategy.

 On the supply side, as mentioned earlier,

the member-suppliers were typically small
and marginal- farmers had severe liquidity
problems, were illiterate and had no prior
training in dairy farming. AMUL and other
cooperative Unions adopted a number of
strategies to develop the supply of milk and
assure steady growth.
First, for the short term, the procurement prices
were set so as to provide fair and reasonable
return.
Second, aware of the liquidity problems, cash
payments for milk supply was made with
minimum of delay.
For the long-term, the Unions followed a multi-
pronged strategy of education and support. only
part of the surplus generated by the Unions is
paid to the members in the form of dividends. A
substantial part of this surplus is used for
activities that promote growth of milk supply and
improve yields. These include provision of
veterinary services, support for cold storage
facilities at the village societies etc. In parallel,
 the Unions have put in place a number of
initiatives to help educate the members.
The dual strategy of simultaneous
development of the market and member
farmers has resulted in parallel growth of demand
and supply at a steady pace and in turn assured
the growth of the industry over an extended
period of time.

Cost Leadership:

AMUL’s objective of providing a value proposition to

a large customer base led naturally to a choice of
cost leadership position. Given the low purchasing
power of the Indian consumer and the marginal
discretionary spending power, the only viable option
for AMUL was to price its products as low as
possible. This in turn led to a focus on costs and had
significant implications for managing its operations
and supply chain practices.

Focus on Core Activities

It chose a strategy to focus on core dairy activities

and rely on third parties for other complementary
needs. This philosophy is reflected in almost all
phases of AMUL network spanning R&D, production,
collection, processing, marketing, distribution,
retailing etc.

For example, AMUL focused on processing of liquid

milk and conversion to variety of dairy products and
associated research and development. On the other
hand, logistics of milk collection and distribution of
products to customers was managed through third
parties.
 But, it played a proactive role in making support
services available to its members wherever it
found that markets for such services were not
developed. For example, in the initial stages, its
small and marginal member farmers did not have
access to finance, veterinary service, knowledge
of basic animal husbandry etc. Thus to assure
continued growth in milk production and supply,
AMUL actively sought and worked with partners
to provide these required services.

Managing Third Party Service Providers:

Well before the ideas of core competence and the

role of third parties in managing the supply chain
were recognized and became fashionable, these
concepts were practiced by GCMMF and AMUL. From
the beginning, it was recognized that the core
activity for the Unions lay in processing of milk and
production of dairy products. Accordingly, the
Unions focused efforts on these activities and
related technology development. Marketing efforts
(including brand development) were assumed by
GCMMF. All other activities were entrusted to third
party service providers. These include logistics of
milk collection, distribution of dairy products, sale of
products through dealers and retail stores, some
veterinary services etc.

Financial Strategy:

AMUL’s financial strategy may be characterized by

two elements:

a) Retention of surplus to fund growth and

development.
 b) Limited/ no credit, i.e., all transactions are
essentially cash only.

Marketing

GCMMF is the marketing arm of the network and

manages the physical delivery and distribution of
milk and dairy products from all the Unions to
customers. GCMMF is also responsible for all
decisions related to market development and
customer management.
GCMMF’s demand growth strategy may be
characterized by two key elements:

(i) Developing markets for its high value products

by graduating customer segments from low
value products, and

(ii) Maintaining a healthy level of customer base

for its base products (low value segment).
This strategy often requires GCMMF to
allocate sufficient quantity of milk supply to
low value products, thereby sacrificing
additional profits that could be generated by
converting the same to high value products.

GCMMF provides umbrella branding to all the

products of the network. For example, liquid milk as
well as various milk products produced by different
Unions is sold under the same brand name of AMUL.
The advertising has centered on building a common
identity (e.g., a happy & healthy “cartoon” AMUL
girl) and evoking national emotion (e.g., the key
advertising slogan says “AMUL - The Taste of
India”).

Retailing of GCMMF’s products takes place through

the FMCG retail network in India most of whom are
small retailers.

Operations & Supply Chain Management

The strategy, design and practices in AMUL’s
network are strongly driven by the objective of
establishing and operating an efficient supply chain
from milk production and procurement to product
delivery to customers. Management of this network
is built around two key elements –

(a) Coordination of the diverse elements of the

network and

(b) Use of appropriate technology that includes

product, process and information technology and
managerial practices and systems.

Coordination for Competitiveness

Robust coordination is one of the key reasons for

the success of operations involving such an
extensive network of producers and distributors at
GCMMF. Some interesting mechanisms exist for
coordinating the supply chain at GCMMF. These
range from ensuring fair share allocation of benefits
to various stakeholders in the chain to coordinated
planning of production and distribution. More
importantly, the reason for setting up of this
cooperative is not amiss to anyone in this large
network organization. Employees, third part service
providers, and distributors are constantly reminded
that they work for the farmers and the entire
network strives to provide the best returns to the
farmers, the real owners of the cooperative. It may
be remembered that coordination mechanisms have
to link the lives and activities of 2.12 million small
suppliers and 0.5 million retailers!

There appear to be two critical mechanisms of

coordination that ensure that decision making is
coherent and that the farmers gain the most from
this effort. These mechanisms are:

• Inter-locking Control

• Coordination Agency: Unique Role of

Federation

Inter-locking Control
Each Village Society elects a chairperson and a
secretary from amongst its member farmers of good
standing to manage the administration of the VS.
Nine of these chairpersons are elected to form the
Board of Directors of the Union. The Chairperson of
the Union Board is elected from amongst these
members. The managing director of the Union, who
is a professional manager, reports to the
chairperson and the board. All chairpersons of all
the Unions form the Board of Directors of GCMMF.
The managing director of GCMMF reports to its
Board of Directors. Each individual organization, the
Union or GCMMF, is run by professional managers
and highly trained staff.

Coordination Agency: Unique Role of the

Federation
In addition to being the marketing and distribution
arm of the Unions, GCMMF plays the role of a
coordinator to the entire network within the State –
coordinating procurement requirements with other
Federations (in other states), determining the best
production allocation for its product mix from
amongst its Unions, managing inter-dairy
movements, etc.

It works with two very clear objectives:

 To ensure that all milk that the farmers

produce gets sold in the market either as milk
or as value added products and

 To ensure that milk is made available to an

increasingly large sections of the society at
affordable prices.

 In making allocations to Unions, GCMMF is

guided by two main objectives:

• Maximizing the network surplus.

• Maintaining equity among unions for the

surplus realized. In this regard, very often
GCMMF is willing to sacrifice realizable
surplus and allocate products to “less
efficient” Unions in order to achieve better
balance in surpluses accruing to the Unions.
Technology for Effectiveness

Technology or knowledge that was embodied in

products, processes, and practices became an
important factor in delivering effectiveness to the
network of cooperatives. One distinguishing feature
of AMUL (in comparison with other similar
cooperatives globally) is the large variety in their
product mix. AMUL dairy led the way in developing
many of these products and establishing the
processes for other member Unions.

Equally impressive are the achievements on

process technology. While several continuous
innovations to equipment and processes have
been done at AMUL, the most significant one has
been the development of processes for using
buffalo milk to produce a variety of end products.
Gujarat (and most of India) is a buffalo
predominant area. As more farmers joined the
cooperatives, the need to develop a mechanism
for storage of increasing quantities of milk
became intense. The need to store milk in
powder form increases as excess milk quantities
in winter seasons could then be used in lean
summer seasons.Demand for liquid milk was not
growing along with growth in milk production. No
technology existed worldwide to produce powder
from buffalo milk. Engineers at AMUL successfully
developed a commercially viable process for the
same – first time in the history of global diary
industry. Subsequently, it also developed a
process for making baby food out of this milk
powder. It has also developed a unique process
for making good quality cheese out of buffalo
milk thereby converting a perceived liability into
a source of comparative advantage – the task
was done through process technology research.
Most of its plants are state of art and automated.
Similar efforts in the area of “embryo transfer
technology” have helped create a high yield
breed of cattle in the country.
AMUL’s innovations in the areas of energy
conservation and recovery have also contributed
to reduction in cost of its operations. AMUL also
indigenously developed a low cost process for
providing long shelf life to many of its perishable
products.
TQM at the grassroots has been a strong
movement to develop leadership, operational and
strategic capabilities in the entire network –
farmers, village cooperatives, dairy plants,
distributors and wholesalers and retailers. Key
elements of this TQM movement have been:

 Friday Departmental Meetings: Each

Friday, at a prescribed time, every one in the
network (from the farmers to the carry &
forwarding agents) joins their respective
departmental meeting to discuss quality
initiatives and share policy related information.

 Training for Transformational Leadership

so that individuals are able to control their
thoughts, feelings and behavior and take more
responsibility in one’s life and surrounding
environment.
 Application of Hoshin Kanri principles to
bring about a bottom-up setting of objectives –
aligning policies for effective management of
Unions & village societies on hand with those
of channel member on the other hand.
ISO/HACCP certification was obtained for all the
Unions and each village society is in the
process of obtaining the same.

 Training for farmers and their families

emphasizing the need for good health care for
not only cattle during its pregnancy and
feeding but also for expecting and feeding
mothers and the whole family. This effort has
brought about a significant social change
towards such issues in villages that have
cooperative milk societies.

 Retail Census: GCMMF undertakes a census

of all retail outlets (over 500,000) to evaluate
customer perceptions and distribution efficacy
of their network. This is being done by
wholesalers in their respective territories at
their own cost. This information is used for
policy deployment exercise.

The extent of IT usage includes a B2C ordering

portal, an ERP based supply chain planning
system for the flow of material in the network, a
net based dairy kiosk at some village societies
(for dissemination of dairy related information),
 automated milk collection stations at village
societies and a GIS based data network
connecting villages societies to markets. Milk
collection information at more than 10,000
villages is available to all dairies (or Unions) to
enable them make faster decisions in terms of
production & distribution planning, and disease
control in more than 6,700,000 animals. This is
linked with information at all 45 distribution
offices and 3900 distributors. This network is
being extended to cover all related field offices in
the network. The GCMMF cyber store delivers
AMUL products at the doorsteps of the consumers
in 125 cities across the country.

Market Penetration Strategy

This strategy involves achieving growth through
existing products in existing market. Amul’s market
penetration strategy involves its expanding its
customer base in the existing market. Currently
Amul is trying to expand its customer base through
the following measures –

• Amul is set to build up 10,000 `Amul Parlours'

across the country during the year. These stores will
sell the entire product range of Amul products, in
addition to the existing retail network for ice cream,
milk and other products.
• It is trying to get more and more customers
through a more intensive distribution. It is opening
more stores at Highways, Railway stations, Airports,
Bus stations, Schools, Colleges, and Industrial
Canteens etc.
• It is trying to find place in various retail outlets,
the latest story being Amul trying to acquire a shelf
in the yet to come Wal-Mart.
• Opening small Amul-exclusive stores in each and
every neighborhood to reach to the very near of the
consumer.

Market Development Strategy

This strategy is concerned with creating business
through developing new markets with existing
products in hand. Amul is using this strategy to
capture new and unexplored sectors without
creating new products

• Amul is now shifting its focus from urban to

rural markets and smaller towns. In 2005, Amul
added 900 new stores all across small towns to
increase its reach.
• Amul is capturing the market of diabetic and
health conscious people through sugar free
ice-cream, which is a variation of an existing
product.
• Amul will expand its fresh milk markets to
Kanpur and Lucknow and other smaller towns
this year, thereby increasing its market base
for the existing products.
• Amul is also increasing its market base for
milk through a new version – the Amul Tazaa.
Tazaa is the long-life version of milk which has
a longer shelf life as compared to normal fresh
milk. This product is highly picking up in the
domestic and export market.

Product Development Strategy

Product development deals with producing new
products for the existing customer base. Amul has
vastly capitalized on this strategy by constantly
coming up with newer products

• Amul-Cool (milk based cool drink) and Amul-

Kool café – these are the products aimed at the
youth of the country with synonymous
marketing campaigns.
• It is coming up with a chain of pizza corners.
This chain would consist of around 2000 stores
all over India.
• Stamina – the instant energy whey based
sport drink has been launched to provide its
customers with a totally new product.
• Amul has recently launched a new variation
of ice-cream, the sundae swirl to its existing
base of ice-cream customers.
• Amul-Masti, the packaged buttermilk is
aimed to be another non-carbonated cool drink
in the Amul Cool range which is not only aimed
at the youth but also at the more mature
chunk of the society.
Diversification Strategy
Diversification is a high-risk strategy as it involves
taking a step into a territory where the parameters
are unknown to the company. Amul has identified
the need to increase its presence in newer markets
and thus have come up with many new such
strategies for increasing its presence in the entire
market.

There are different types of diversification process

that any company can adopt they are as follows:

• Concentric Diversification Strategy

• Conglomerate Diversification Strategy
• Horizontal Diversification Strategy
Concentric Diversification Strategy: Amul
has identified a segment for the health conscious
people and is introducing two pro-biotic ice cream
ranges, Amul Sugarfree and Amul Profile and both
of these products will be available in five different
flavors this is apart from the various regular ice
cream products that it offers. They have identified
the working class women as a new segment and has
introduced frozen easy to cook stuffed parathas,
matar paneer and paneer pakoras which makes
them easy to cook quality tasty food in less time.

Conglomerate Diversification Strategy:

Amul in this concern has come up with an idea of
introducing an altogether new spots drink named
"Stamina" which will be the first sports drink by an
Indian company and it will be priced at only Rs 12
for 200ml which will be lower than its competitors
whose price ranges around 60 to 75 Rs. In this they
have also introduced the Amul Pizza in order to
enter the pizza market. They have also come up
with flavored milk and also flavored lassis to enter
newer markets.

Horizontal Diversification Strategy

In this concern Amul is to provide something new to
its older and loyal customers have come up with a
facility whereby they could order the food through
the internet and this was at a time when internet
was heard by very few in India during 1996.
AMUL’s Best Practices

• Umbrella Brand Strategy:

The most successful strategy of Amul has been the
Umbrella Brand strategy. The GCMMF skillfully
avoids inter-union conflicts through this strategy by
giving every union and sub-brand the opportunity to
contribute in the developing products. Amul is the
common brand for most of the product categories
rolled out by the unions and there are also some
sub-brands of Amul which come out with variants
like Amulspray, Amulya, Amulspree and Nutramul.

• Improvement Programs
Another intriguing feature about Amul is that it
constantly encourages improvement programs. For
instance, all employees of the GCMMF meet every
Friday between 10 to 11 am to discuss quality
issues at a depot, department or branch. Every
meeting has a Purpose, Agenda and Limit (PAL) and
such meetings are held in the village societies,
union and at the wholesellers’ level too.

• Constant Innovation:
Constant innovation is another typical trait of Amul.
However, the cooperative ensures that the
sequence and product mix of high value brands is
consistent with Amul’s philosophy of low pricing and
affordability. For instance, when Amul entered the
Pizza business, the price of a pizza was, at Rs 30
was much lesser than what the other players
charged.
Product Strategy of Amul

Product Positioning strategy

 India’s First Pro-Biotic Wellness Ice cream &

Sugar Free Delights for Diabetics.

Low Priced Amul Ice Creams made Kwality Walls life

hell.

Flank Attack applied in AMUL product on Aug 25

2007
  Amul launches Chocolate milk under brand
name of ‘Amul Kool Koko’.

 This is targeted at teenagers and youths.

 Nov 11, 2007: Amul in Multinational Arena With

Snack Launch:
 “Munch Time”.
Flavors: Masala , Mint and
Tomato .
 New Product Activity.

 Nov 26, 2007 : Amul Launches “Fresh Paneer”

(Free From Any Harmful Chemicals)
Flank Attack—Expanding its Cheese Segment.
Current market share 65%.

Product Repositioning

 Amul marketed bottled water product named

“JALDHARA” but due to less potential in the
market it turned out to be blunder.
 Now Amul is all set to launch bottled water
“NARMADA NEER”.
Product Overlap

 Powdered Milk

 Health and price Conscious.

“SAGAR Vs Amulya”.
USP: Sagar is affordable whitener for health
conscious one.

 Cheese Spreads
 Specific Vs General
“Amul Processed Cheese Vs Cheese Spread”
USP:
Cheese spread is highly accepted spread for regular
use.
 Milk Drinks
“Nutramul Energy Drink Vs Amul Kool”
 Product Design Strategy

 Amul has offered a mix of both standard and

customized products.

 Use of Utterly - Butterly Girl:

 Using since 1967.
 Entered in the Guinness Book Of World
Records for being the longest running
campaign ever.

Product Elimination strategy

It eliminated “JALDHARA” a decade ago as

Bottled water product do not have potential
customers
Diversification

AM U
 Value Marketing Strategy

Providing a product that works as claimed, is

accompanied by decent service, and is
delivered on time.
 Commitment to quality.
 Value for money
 The generation for awareness.
 Fostering Of Loyalty
 Conclusion

It is well recognized that markets that are

fragmented or producers that are too small to build
competitive infrastructures or those who are unable
to manage technological changes in their
operational processes would benefit the most
through a cooperative organization.. The example of
AMUL provides a number of lessons for
organizations to compete successfully in the face of
increasing globalization and competition. More
generally, the AMUL case presents a successful
model for operating in emerging economies
characterized by both large under-developed
suppliers and markets with high potential.
The largest segment of the market in emerging
economies desires value for money from its
purchases. Development of such markets
requires careful nurturing and a long-term
approach. Initial success in these markets is
typically based on a low price strategy (providing
value for money) supported by cost leadership.
This strategy helps to grow the market
exponentially by focusing on the largest segment
of the population, the middle and the lower
middle class. In this context, it is important for
global players to note that the value proposition
perceived by consumers is influenced to a large
extent by the state of markets and the economy
and cultural factors. Development of an
appropriate value proposition suitable for large
 mass markets in India requires a thorough
understanding of the environment and a focus on
costs. This in turn, requires designing the
organization structure and practices in a manner
that it delivers continued market share through
cost leadership. AMUL is a good example of this
strategy. Firms that are able to develop control
processes through better use of operational
practices and supply chain coordination are the
ones that are able to serve large volumes and
enjoy top line growth in revenues.
Development of suppliers likewise requires
nurturing with a long-term perspective. This was
achieved by AMUL through a process of education
and social development activities - activities that
are not usually considered to be standard
business practices. This type of ‘out of the box’
vision is essential for developing innovative
mechanism in new, unfamiliar environments
where building of relationship with consumers
goes much beyond marketing messages and
useful product offerings.

Environments with underdeveloped markets and

suppliers (as in the case of AMUL) add one more
dimension of complexity relating to the relative
pace of growth of these two areas. Through its
pricing strategy, AMUL has been able to balance
the growth in markets and suppliers and has
achieved some degree of synchronization.
Otherwise, gaps between demand and supply
would require complementary strategies.
In this Project, using the example of AMUL, we have
presented a robust business model for operating in
large emerging economies characterized by
underdeveloped markets, infrastructure and
suppliers. Cooperative network with interlocking
arrangement as in GCMMF is one example of
success in managing such complex supply chain. Of
course, the long-term challenge in such cases is to
bring more members into the network and increase
their capabilities.