Project: - Market of Amul

(Anand Milk United Limited)

Institute : - Nirma Institute of Management. Subject Term : - Marketing Management. : - II.

Professor : - P. K. Yadav

Prepared by: - Ajay Nyati

Introduction
The largest food brand in India and world's Largest Pouched Milk Brand Amul is a brand name managed by Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF). This name has its origin in the Sanskrit word "Amoolya," (meaning Priceless) and was actually suggested by an employee of Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF) The Gujarat Cooperative Milk Marketing Federation Ltd, Anand (GCMMF) is the largest food products marketing organisation of India and is the apex organization of the Dairy Cooperatives of Gujarat.

With a turnover of INR 67.11 billion GCMMF has created an economic

network that links :

millions of consumers in India and abroad, 2.8 million village milk producers, a cooperative system that includes 13,141 Village Dairy Cooperative Societies (VDCS) at the village level, further affiliated to 13 District Cooperative Milk Producers Unions at the District level and GCMMF at the State level.

History Condition of dairy farmers Plea of dairy farmers and role of Sardar Vallabh Bhai Patel Formation of first District Co-operative Kaira Formation of GCMMF Condition of dairy farmers There was exploitation of marginal milk producers by traders or
agents of existing dairies in the small town named Anand (in Kaira District of Gujarat) and Polson Dairy .

Other problems faced by dairy farmers in Gujrat.

3

Role of Sardar Vallabh Bhai Patel Unfair trade practices and minimal returns angered dairy farmers. So under the leadership of Tribhuvandas Patel dairy farmers
approached Sardar Vallabh Bhai Patel for a solution.

Formation of District Co-operativeKaira Thus the first District Cooperative was established to collect and
process milk in the District of Kaira in 1946.

Milk collection was also decentralized and village level cooperatives were established to organize the marginal milk producers in each of these villages. The brand Amul was formally registered on December 14th, 1946

Formation of GCMMF Later on with the help of Dr. Verghese Kurien and Shri H M Dalaya
this revolution spread to most of the districts in Gujrat.

Thus GCMMF came into being in the year 1973. Initially, the brand name Amul was with Kaira district dairy cooperative, but later they decided to give it to GCMMF

Father of White Revolution The father of the White Revolution, Dr. Verghese Kurien and the
World Food Prize & the Magsaysay Award winner, is responsible for the grand success of brand Amul.

AMUL Business Model

In a recent survey,

GCMMF ranked amongst the top ten FMCG firms in the country AMUL rated the second most recognized brand in India amongst all Indian and MNC offerings

What makes AMUL successful???

Business Model

Objective :

Deliver profitable and equitable returns to a large number of farmers for a long period of time

Additional objective

Develop the supplier over the long term through social change.

Success depends on Developing Demand

Consumers- Limited Purchasing power Modest consumption levels of milk Low cost price strategy
5

Products affordable & attractive

Distribution Network
Dry and cold warehouses to buffer inventory Transactions on an advance demand draft basis Just-in-time inventory strategy improves dealers' return on investment (ROI) All branches -dedicated vehicle operations.

Umbrella brand
Common brand for most product categories produced by various unions: liquid milk, milk powders, butter, ghee, cheese, cocoa products, sweets, ice-cream and condensed milk Avoided inter-union conflicts Opportunity for the union members to cooperate in developing products.

Third Party Service Providers

Unions' core activity -milk processing and the production of dairy products. Marketing efforts , brand development - By GCMMF Logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, and veterinary services By Third Parties

Co-ordination
6

Large number of organisations and entities in the supply chain GCMMF and the unions play a major role in achieving control Interlocking control - The board is drawn from the heads of all the unions, and the boards of the unions comprise of farmers elected through village societies The federation handles the distribution of end products and coordination with retailers and the dealers. The unions coordinate the supply side activities.

Best practices

Small group activities or quality circles at the federation TQM program at the unions Improvement programs across to a large number of members and the implementation rate is consistently high For example, every Friday, Meeting without fail, between 10.00 a.m. and 11.00 a.m to discuss quality concerns Village societies becoming individual improvement centres

Marketing and Advertising Strategies

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. These activities, which range from long-term planning to medium-term and short-term operational decisions are described below. As mentioned earlier, introduction of new products and choice of product mix and markets should be consistent with the growth strategy, and synchronous with growth in milk supply. GCMMFs 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
7

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. Interestingly, advertisement & promotion (a la FMCG) was not considered to be enough of value addition and hence the budget was kept relatively small. Instead, GCMMF preferred a lower price with emphasis on efficiency in advertising. In this context, 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 are sold under the same brand name of AMUL. Interestingly, the advertising has centered on building a common identity (e.g., a happy & healthycartoon AMUL girl) and evoking national emotion (e.g., the key advertising slogan says AMUL - The Taste of India).

1) Quality

No brand can survive long if its quality is not equal or exceed customer expectations.

Incase of food product hygienic, taste, bacteriological & organoleptic standard main essence. 2) Value for money Customers get more than what they pay. Keep price fair & do best to ensure that retailers dont gain at the expense of customer. 3) Availability Brand available when and where customers want. Amul has nations finest distribution network. 4) Service Committed to total quality.

Product Scope Strategy

Perspective of the product mix of a company

Different products of Amul and its variants

Bread spreads

Amul Butter Amul Lite Low Fat Bread spread Amul Cooking Butter Delicious Margarine

Pure Ghee Sweets Amul Shrikhand & Amrakhand Amul Mithaee Khoya Gulabjamaun Amul Basundi

Milk Powders Amul Full Cream Milk Powder Amulya Dairy Whitener Sagar Skimmed Milk Powder Sagar Tea and Coffee Whitener

Sweetened Condensed Milk Amul Mithaimate

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

9

Yogi Sweetened Flavoured Dahi (Dessert) Amul Masti Dahi (fresh curd) Amul Lite Dahi Amul Prolife probiotic Dahi Amul Masti Spiced Butter Milk Amul Lassee

Chocolate & Confectionery Amul Fruit & Nut Chocolate Amul Bindazz Amul Rejoice Amul kesar

Brown Beverage Nutramul Malted Milk Food

Amul Ice creams Vanilla Royale Royal Treat Range (Butterscotch, Rajbhog, Kulfi) Malai

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)

10

Milk Drink Amul Kool Flavoured Milk (Mango, Strawberry, Saffron, Cardamom, Rose, Chocolate, Butterscotch) Amul Kool Cafe Amul Kool Koko Health Beverage

Amul Shakti White Milk Food

Product Positioning
Placing a product in that part of the market where it will receive a favorable reception compared to competing products.

A mass market player, no premium offerings USP Quality with affordability Up against niche players value addition to customers Sheer size and scale of operation New offerings for health conscious and vibrant India Indias First Pro-Biotic Wellness Ice cream & Sugar Free Delights For Diabetics. Low Priced Amul Ice Creams made Kwality Walls life hell.

Flank Attack.. Age Wise.. 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

11

Amul Launches Fresh Paneer (Free From Any Harmful Chemicals) Flank AttackExpanding its Cheese Segment. Current market share 65%.

Product Repositioning

New Competition Change in consumer preference Wrong original positioning 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
Situation where company decides to compete against its own brands. 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

12

Product Elimination
Product reaches the stage where continued support is no longer justified where performance is falling short of expectations, it is desirable to pull the product out of the market place. It eliminated JALDHARA a decade ago as Bottled water product do not have potential customers.

Current Market Share Defense Strategy

Moving consumers from loose milk to packaged milk and gradually move them up the value chain (tetra pack to beverages, all available under the Amul brand) A sound strategy likely to work. Being exposed to a brand, it is natural for a customer to try more products Improving socio-economic condition of the customer anchors the desire to enhance lifestyle

Amul defending its turf

Largest milk brand in Asia marketing more than 30 different brands of dairy products like cheese, ice-cream, condensed milk, ready-toeat pizza, beverages etc. Amul is the market leader in ghee and butter Amul Kool and Kool Caf doing well Defending against names like Mahananda, Vijay, Milma and other co-operative milk brands Aggressive moves against FMCG and F&B brands like Britannia, Nestle and Mother Dairy among others.

13

Segmentation

Wide range of product categories caters to consumers across all market segments. For example, Amul Kool is targeted at children, while teenagers prefer Kool Caf, as it has a cool imagery associated with it. Segmentation is not as easy in curd and low fat products, due to mixed audiences, various culinary applications , eg. ghee, butter and cheese. In India, the most used spread is ghee, then butter, cheese, low fat butter, margarine, cheese spread and mozzarella cheese.

Targeting

Changing retail environment Striking out on its own, with Amul Outlets or parlors to deliver consumers total brand experience Launched in 2002, there are now 400 Amul parlors across the country, which contributed 3% to the brands total turnover last year. High profile locations: Amul parlors are today present on campuses of Infosys, Wipro, IIM-A, IIT-B, Temples, Metro rail and railway stations in Gujarat.

Promotion

Given this wide product portfolio, Amuls approach is to promote its brands in a rotational cycle of two to three years. After ice-creams were launched in 1996, the category was re-visited in 1999, in order to improve availability of the product and make it affordable. The focus shifted to cheese in 2001, Amul Masti Chaas in 2004-05 (sales of Masti dahi grew by 25%), Nutramul and Kool Kafe in 2006
14

and Amul Koko cold chocolate drink in 2007

Uses a variety of media to communicate Most famous is billboard campaign The endearing polka dressed girl and pun at various issues increased brands fan following. Below-the-line activity has grown too such as the Amul food festival, which has been held for the last four year between October and December in about 50,000 retail outlets. The Chef Of India promo invites hotel chefs to come up with recipes using as many Amul products as possible, and is conducted at city, state and national level.

Digital Advertising Amul Competitors

Butter Britannia Nestle Cheese Britannia Baby Food Nestle Heinz Dairy Whitener Segment Nestle Britannia Ice creams HLL

15

Amul Competitors
Chocolates & Confectionaries Cadbury Nestle Pizza Pizza Hut Dominos Nirulas Frozen pizza Curd Nestle Mother Dairy Ultra High Treated Milk Nestle Britannia

Period of diversification

In 1996, B M Vyas, Managing Director, GCMMF, commissioned the Indian Market Research Bureau (IMRB) to conduct a consumer survey to identify the products consumers wanted from Amul .Based on the findings, Amul entered into the following areas: ice cream, curd, paneer, cheese, and condensed milk. In 1997, Amul launched ice creams after Hindustan Lever acquired Kwality, Milkfood and Dollops. Positioned as the 'Real Ice-cream,' Amul Ice cream was one of the few milk-based ice creams in the market. In 1999, Amul launched branded yoghurt in India for the first time, when it test marketed "Masti Dahi" in Ahmedabad first and then introduced it all over the country In January 2000, Amul re-entered the carton milk market with the launch of "Amul Taaza" in Mumbai. Amul Taaza was non-sweetened, plain, low fat milk. The product was positioned as a lifestyle as well as functional product. In November 2000, Amul decided to promote mozzarella cheese, which was used in pizza. The growing demand for mozzarella cheese from pizza making companies like Pizza Hut and Domino's Pizza was
16

expected to give Amul's cheese sale an additional push. In August 2001, Amul decided to enter the ready-to-eat stuffed paratha, cheeseburger, cheese and paneer pakoda, and cheese sandwich segments. The products were marketed under the SnowCap brand. The SnowCap brand also included tomato sauce and ketchup.

Why Diversification

With the liberalization of the Indian economy in the early 1990s, and the subsequent entry of new players, there was a change in lifestyles and the food tastes of people. The new team that took over the management of the GCMMF in the mid-1990s hoped to take advantage of the change. According to some analysts, this diversification was probably not entirely demand-driven. Being a cooperative, GCMMF was compelled to buy all the milk that was produced in Gujarat. And with milk production having increased since the mid 1990s, GCMMF had to make use of additional milk, and hence the pressure to make and market more and more processed-milk products. Amul had to expand the consumption base of milk-based products in India. It planned to make its products (butter and cheese) a part of the regular diet in most households. Amul launched its new products with the intention of increasing the offtake of its basic milk products, including cheese. This flurry of launches helped Amul broaden its appeal across all segments. Price was an advantage that Amul enjoyed over its competitors. Amul's products were priced 20-40 % less than those of its competitors. Analysts felt that Amul could price its products low because of the economies of scale it enjoyed. The pizzas were expected to increase the sale of its cheese. The entry into the confectioneries market was another avenue for increasing milk consumption Amul's obsession with keeping down manpower costs and dealer commissions added to the strength . In ice-creams for example, Amul's retail commission in Ahmedabad city was 17.5% which was 10% lower than what competitors offered. However, all said and done, Amul seemed to be all set to make
17

steady progress in the coming years with its products having become quite popular in both rural and urban households. Said Vyas, "We've handled liberalization and globalization far better than our transnational rivals.

Exports

GCMMF is India's largest exporter of Dairy Products. It has been accorded a "Trading House" status. GCMMF has received the APEDA Award from Government of India for Excellence in Dairy Product Exports for the last 11 years. Amul export turnover registered a 93 percent increase, over the previous year in 2009. Apart from regular exports of branded, consumer-packed dairy products to the US, Persian Gulf and Far East markets, they exported large quantities of skim and full cream milk powder. Nutramul, Amulya, Mithaimate and Amul paneer were launched in the Gulf countries. New markets like Sri Lanka ,Madagascar, Russia and Saudi Arabia are being developed, building a strong base for the future. Amul dairy plants have now received ISO 9000 and HACCP certification, helping it to obtain the required Export Inspection Agency plant certification for dairy products. AMULS Indian desserts are very well liked in countries like Singapore and Malaysia. Amul has list of products marketed to various countries few of its products are Amul butter, Amul cooking butter, Amul cheese spread, Amul pizza cheese, Amul shrikhand, Amul fresh cream etc. India's largest dairy brand Amul would soon be seen on the shelves of leading international stores like Wal-Mart and Mustafa in Singapore after its successful foray into the United Arab Emirates (UAE).

18

Mission 2020 of Amul

Amul envisages that the dairy cooperatives of Gujarat will have a group turnover of Rs.
27000 crores by the year 2020. This will be a three-fold increase over its current group turnover of approx. Rs. 9600 crores. Milk production in milk
shed area will increase to 231 lakh kg per day (23.1 million kg per day), at an annual growth rate of 4%.

Amul will create fresh avenues for growth by tapping the rising demand for new value-added products. Special emphasis will be given to strengthening their presence in the large market for liquid milk, in metropolitan cities. Plan to double to processing capacity of dairy plants to 20.7 million kg per day, by 2020. This would include multi-fold capacity expansion for major product categories including milk powders, Ice-cream, paneer, cheese, ethnic sweets, curd, ghee and other dairy products.

19

AMULs Journey towards Excellence

AMULs journey towards excellence is marked by some critical understanding of the business environment in large emerging economies like India where markets have to be developed by combining efficiency related initiatives with increasing the base of marginal suppliers and consumers. The essence of AMULs 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.

20

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. Consequently a large number of cooperatives have taken roots amongst producers of food (especially those that are perishable). However, there are interesting cooperative formations in India and China that are starting to emerge amongst small producers in autocomponents (especially those serving the replacement markets), amongst small scale dyeing communities and the power-loom operators in the textile industry. In these cases, the producers are coming together to develop a common brand that is based on stringent quality certifications that would distinguish them from other small producers and for usage of common property resources. The example of AMUL provides a number of lessons for such 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 either large under-developed suppliers and/or 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
21

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. It is interesting to note that 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 balance the growth in markets and suppliers and has achieved some degree of synchronization. Otherwise, gaps between demand and supply would require complementary strategies. The AMUL example is also instructive for multinational companies and others contemplating operations in emerging markets by taking advantage of the local small and medium enterprises. In such cases large businesses are built by forging linkages with these enterprises thereby changing the boundaries of the entering firm. Such a partnership reduces the operational risk while providing a credible source of understanding the behaviour of the consumer through the experience of partners. It also provides operational flexibility and makes the network responsive to changes within and outside. To be effective it is important that decision-making be decentralized to the extent possible, with appropriate coordination mechanisms to ensure consistency in the system.

22