TERM PAPER

On

‘Marketing and Product strategy of Amul’

‘A report submitted as a part of the requirements for the degree of

Master of Business Administration’

SUBMITED BY

Prerita Rawat

A2701409019

Batch 2009-11

UNDER THE GUIDANCE OF

Prof. Pranshu Chomplay

A PROJECTREPORT

ON

“MARKETING AND PRODUCT STRATEGY OF

AMUL”

Submitted To:-Professor Pranshu ChomplayProgram LeaderMBA-HM

Submitted By:-Prerita Rawat

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MBA-HM 2nd yearA2701409019

ACKNOWLEDGEMENT

While presenting this report I would like to express my sincerest thanks to Prof.. Pranshu Chomplay. He was always a constant source of inspiration during the whole time of project. His valuable feedbacks, guidance & motivation helped me to accomplish my task.

I would also like to thank every person individually who have devoted their valuable time and provided valuable inputs for completion of my project.

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GUIDE CERTIFICATE

This is to certify that the Project Report titled “Marketing and Product Strategy of Amul.” is a bona fide work carried out by Miss. Prerita Rawat of MBA-Hospitality Management (2009-11) program of Amity School of Hospitality for fulfillment of MBA-Hospitality Management course of Amity University, Noida.

Guide:

(Professor. Pranshu Chomplay)

Date:

Place:

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CONTENTS

1 COMPANY PROFILE

2 INTRODUCTION AND HISTORY

3 LIST OF PRODUCTS MARKETED

4 SWOT ANALYSIS OF AMUL.BCG MATRIX FOR AMUL GOODS.PEST ANALYSIS FOR AMUL.

5 4 P’s OF MARKETING

6 AMUL’S- BEST PRACTICES.

7 MARKETING STRATEGIES OF AMUL

8 PRODUCT STRATEGY OF AMUL

9 BIBLIOGRAPHY

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COMPANY PROFILE

If Amul has become a successful brand - if, in the trade lingo, it enjoys brand equity - then it is because we have honoured our contract with consumers for close to fifty years. If we had failed to do so, then Amul would have been consigned to the dustbin of history, along with thousands of other brands. For close to fifty years now, Amul has honoured its contract with the consumer. The contract that is symbolized by the Amul brand means quality. It means value for money. It means availability. And it means service."

- Varghese Kurien, Chairman GCMMF

AMUL AND THE COOPERATIVE MOVEMENT:

Amul embarked upon its illustrious journey as a beacon for the Indian cooperative movement in 1946. Since then, it has been undergoing a multidimensional evolution whose overarching objective has been the same throughout: serving the farmer and catering to consumer requirements.

A structural landmark in this evolution process was the formation of the GCMMF in 1974. Throughout these last 31 years, the company has demonstrated-again and again-that Amul both represents and reconciles diverse expectations and aspirations.

Gujarat Cooperative Milk Marketing Federation (GCMMF):

Gujarat Cooperative Milk Marketing Federation (GCMMF) is an India’s largest food product marketing organization. It is a state level apex body of milk cooperatives in Gujarat, which aims to provide remunerative returns to the farmers

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and also serve the interest of consumers by providing quality products, which are good value for money.

GCMMF consists of:

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Members: 12 district cooperative milk producers' Union

No. of Producer Members: 2.41 million

No. of Village Societies: 11,615

Total Milk handling capacity: 7.4 million litres per day

Milk collection (Total - 2004-05): 2.08 billion litres

Milk collection (Daily Average 2004-05):

5.71 million litres

Milk Drying Capacity: 511 metric tons per day

Cattle feed manufacturing Capacity:

2340 Metric tons per day

INTRODUCTION AND HISTORY

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The Brand Name - “AMUL”

AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality control expert in Anand. Variants, all meaning "priceless", are found in several Indian languages.

Amul products have been in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India. (Turnover: Rs. 29 billion in 2004).

Today “Amul” is a symbol of many things: -

Of high-quality products sold at reasonable prices.

Of the genesis of a vast co-operative network.

Of the triumph of indigenous technology.

Of the marketing savvy of a farmers organization.

Of a proven model for dairy development.

MILK PROCUREMENT

Total milk procurement by Member Unions during the year 2004-05 averaged 2.08 billion litres (7.4 million litres per day). Milk collection (Daily Average 2004-05): 5.71 million litres, representing a massive growth over 51.13 lakh kilograms (5.1 million kg) per day achieved during 2003-04.

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DISTRIBUTION

Alignment of four Distribution Highways of fresh, chilled, frozen and ambient products is a major factor for the company. The company is planning to increase our Distributor Network in smaller towns. The fast changing market scenario resulting from rise in household incomes leading to metamorphosis of rural and smaller markets, significant increase of middle class families and migration from rural areas to smaller developing towns has resulted in the emergence of growing markets in smaller towns all across the country.

An addition of almost 900 distributors in small towns was undertaken on a Time Based Military (TMT) technique. This initiative has already started yielding results in the form increasing availability of products in smaller towns and thereby generating additional business.

SALES

During the year, Federation's sales registered a growth of 1.4 percent to reach Rs. 2,922.53 crores (Rs.29.22 billion) including consignment sales of Rs.1.53 crores (Rs.0.02 billion). Despite intense competition, sales value of Amul Butter grew by 4.5 percent.

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LIST OF PRODUCTS MARKETED

Bread Spreads:

Amul Butter

Amul Lite Low Fat Bread spread

Amul Cooking Butter

Cheese Range:

Amul Pasteurized Processed Cheddar Cheese

Amul Processed Cheese Spread

Amul Pizza (Mozzarella) 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

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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:

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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 Standardized 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 Flavored Dahi (Dessert)

Amul Masti Dahi (fresh curd)

Amul Masti Spiced Butter Milk

Amul Lassee

Amul Ice creams:

Royal Treat Range (Butterscotch, Rajbhog, Malai Kulfi)

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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

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PEOPLE POWER: AMUL'S SECRET OF SUCCESSThe system succeeded mainly because it provides an assured market at

remunerative prices for producers' milk besides acting as a channel to market the

production enhancement package. What's more, it does not disturb the agro-system

of the farmers. It also enables the consumer an access to high quality milk and milk

products. Contrary to the traditional system, when the profit of the business was

cornered by the middlemen, the system ensured that the profit goes to the

participants for their socio-economic upliftment and common good.

Looking back on the path traversed by Amul, the following features make it a

pattern and model for emulation elsewhere.

Amul has been able to:

Produce an appropriate blend of the policy makers farmers board of

management and the professionals: each group appreciating its rotes and

limitations,

Bring at the command of the rural milk producers the best of the technology

and harness its fruit for betterment.

Provide a support system to the milk producers without disturbing their

agro-economic systems

Plough back the profits, by prudent use of men, material and machines, in

the rural sector for the common good and betterment of the member

producers.

Even though, growing with time and on scale, it has remained with the

smallest producer members. In that sense. Amul is an example par

excellence, of an intervention for rural change.

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The Union looks after policy formulation, processing and marketing of milk,

provision of technical inputs to enhance milk yield of animals, the artificial

insemination service, veterinary care, better feeds and the like - all through the

village societies. Basically the union and cooperation of people brought Amul into

fame i.e. AMUL (ANAND MILK UNION LIMITED), a name which suggest

THE TASTE OF INDIA.

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SWOT ANALYSIS OF AMUL

Strengths

Wide range of products Affordable price Effective ad campaign Distribution network Diversification Brand image

Weakness Need to focus on other products as well Improve on road transport infrastructure

Opportunity Export segment good market Entry in retailing Packaged sweet market Sports drink new market

Threats Increasing population Increasing requirement Adulteration Difficult to expand Population of milch animal

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BCG MATRIX FOR SBU’S OF AMUL

Star Amul butter tazaaUTH Amulya dairy whitener

Question mark Chocolate Masti dahi Lassi Mithaimate

Cash cow Mozarella chesse Amul pizza base Tazza fresh milk

Dog Infant milk range Amul Shakti Nutramul

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PEST ANALYSIS OF AMUL

 P

Since the budget range is decontrolled, no political effects are envisaged. 

E Increasing per capita income resulting in higher disposable income Growing middle class/urban population, increase in demand. Low cost of production, better penetration. 

S Per capita consumption expected to increase Increasing gifts culture, increase in demand. Lower cholesterol than ‘Mithais’ (sweet meat), substitute demand

 T Will have to reinforce technology to international levels

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SWOT ANALYSIS OF DAIRY INDUSTRY

Strengths- Demand profile Margins Product mix flexibility Availability of raw material

Weakness- Perishability Lack of control over yield Procurement logistics Problematic distribution

Opportunities- Export potential Value addition

i) New productsii) Complete utilisation of resources.

Threats- The un-organised sector.

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4 P’S OF MARKETIN G

 1) Product:-Satisfaction suffices. But delight dazzles the average company will compete for customer by conforming to their expectations consistently. But the winner will surpass them by constantly exceeding their expectation, delivering to their door step additional benefits which they would never have imagined possible. The wide variety of products offered by the company proves the same.

2) Pricing:- Second P of marketing is not another name for blindly lowering prices and relying on this strategy alone to increase sales dramatically. The strategy used by Amul is for matching the value that customer pays to buy the product with the expectation they have about what the production is worth to them. AMUL   has launched various products which cater to all customer segments. So every customer segment has different price expectation from the product. Therefore maximizing the returns involved, identifying right price level for each segment, and then progressively moving through them.

3) Physical distribution-place:- In a product and price parity situation, the brand that sells more is the one that reaches the highest number of customers. Amul stats read at -India ± 1 billion people, 155 million household has over 4 million retail outlets in 5351 urban markets and 552725 villages, spread cross 3.28 million sq.  

4) Promotion:-If an advertisement is to communicate effectively, the receiver must at least half want it to, and be prepared to take step towards the sender. Effective advertising is rarely hectoring or loudly explicit. It often both attracts and generates warm feelings. More often than not, a successful campaign has a stronger element of the unexpected, a quality that goods advertising shares with much worthwhile

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literature. To penetrate into the inner recesses of their memory, communication must first ensure exposure, grab their attention evoke their comprehension, grab their acceptance and then extract retention competing with thousands of other units of communication trying to do the same.

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AMUL’s BEST PRACTICES

Developing demand

At the time Amul was formed, consumers had limited purchasing power, and modest consumption levels of milk and other dairy products. Thus Amul adopted a low-cost price strategy to make its products affordable and attractive to consumers by guaranteeing them value for money.

Introducing higher value products

Beginning with liquid milk, GCMMF enhanced the product mix through the progressive addition of higher value products while maintaining the desired growth in existing products.

Despite competition in the high value dairy product segments from firms such as Hindustan Lever, Nestle and Britannia GCMMF ensures that the product mix and the sequence in which Amul introduces its products is consistent with the core philosophy of providing milk at a basic, affordable price.

The distribution network

Amul products are available in over 500,000 retail outlets across India through its network of over 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products.GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other major FMCG companies. This practice is consistent with GCMMF's philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping.

Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch warehouse to their premises. This just-in-time inventory strategy improves dealers' return on investment (ROI). All GCMMF branches engage in route scheduling and have dedicated vehicle operations.

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Umbrella brand

The network follows an umbrella branding strategy. Amul is the 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.

Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya and Nutramul. The edible oil products are grouped around Dhara and Lokdhara, mineral water is sold under the Jal Dhara brand while fruit drinks bear the Safal name.

By insisting on an umbrella brand, GCMMF not only skillfully avoided inter-union conflicts but also created an opportunity for the union members to cooperate in developing products.

Managing the supply chain

Even though the cooperative was formed to bring together farmers, it was recognised that professional managers and technocrats would be required to manage the network effectively and make it commercially viable.

Coordination

Given the large number of organisations and entities in the supply chain and decentralised responsibility for various activities, effective coordination is critical for efficiency and cost control. GCMMF and the unions play a major role in this process and jointly achieve the desired degree of control.

Buy-in from the unions is assured as the plans are approved by GCMMF's board. The board is drawn from the heads of all the unions, and the boards of the unions comprise of farmers elected through village societies, thereby creating a situation of interlocking control.

The federation handles the distribution of end products and coordination with retailers and the dealers. The unions coordinate the supply side activities.

These include monitoring milk collection contractors, the supply of animal feed and other supplies, provision of veterinary services, and educational activities.

Managing third party service providers

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From the beginning, it was recognised that the unions' core activity lay in milk processing and the production of dairy products. Accordingly, marketing efforts (including brand development) were assumed by GCMMF. All other activities were entrusted to third parties. These include logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, and veterinary services.

It is worth noting that a number of these third parties are not in the organized sector, and many are not professionally managed with little regard for quality and service.

This is a particularly critical issue in the logistics and transport of a perishable commodity where there are already weaknesses in the basic infrastructure.

Establishing best practices

A key source of competitive advantage has been the enterprise's ability to continuously implement best practices across all elements of the network: the federation, the unions, the village societies and the distribution channel.

In developing these practices, the federation and the unions have adapted successful models from around the world. It could be the implementation of small group activities or quality circles at the federation. Or a TQM program at the unions. Or housekeeping and good accounting practices at the village society level.

More important, the network has been able to regularly roll out improvement programs across to a large number of members and the implementation rate is consistently high.

For example, every Friday, without fail, between 10.00 a.m. and 11.00 a.m., all employees of GCMMF meet at the closest office, be it a department or a branch or a depot to discuss their various quality concerns.

Each meeting has its pre-set format in terms of Purpose, Agenda and Limit (PAL) with a process check at the end to record how the meeting was conducted. Similar processes are in place at the village societies, the unions and even at the wholesaler and C&F agent levels as well.

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Examples of benefits from recent initiatives include reduction in transportation time from the depots to the wholesale dealers, improvement in ROI of wholesale dealers, implementation of Zero Stock Out through improved availability of products at depots and also the implementation of Just-in-Time in finance to reduce the float.

Kaizens at the unions have helped improve the quality of milk in terms of acidity and sour milk. (Undertaken by multi-disciplined teams, Kaizens are highly focussed projects, reliant on a structured approach based on data gathering and analysis.) For example, Sabar Union's records show a reduction from 2.0% to 0.5% in the amount of sour milk/curd received at the union.

The most impressive aspect of this large-scale roll out is that improvement processes are turning the village societies into individual improvement centres.

Technology and e-initiatives

GCMMF's technology strategy is characterized by four distinct components: new products, process technology, and complementary assets to enhance milk production and e-commerce.

Few dairies of the world have the wide variety of products produced by the GCMMF network. Village societies are encouraged through subsidies to install chilling units. Automation in processing and packaging areas is common, as is HACCP certification. Amul actively pursues developments in embryo transfer and cattle breeding in order to improve cattle quality and increases in milk yields.

GCMMF was one of the first FMCG (fast-moving consumer goods) firms in India to employ Internet technologies to implement B2C commerce.

Today customers can order a variety of products through the Internet and be assured of timely delivery with cash payment upon receipt.

Another e-initiative underway is to provide farmers access to information relating to markets, technology and best practices in the dairy industry through net enabled kiosks in the villages.

GCMMF has also implemented a Geographical Information System (GIS) at both ends of the supply chain, i.e. milk collection as well as the marketing process.

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Farmers now have better access to information on the output as well as support services while providing a better planning tool to marketing personnel.

Advertising and Sales Promotion

Over the years, Amul's advertising philosophy had been "to be simple, fresh and innovative". The clean, emotion-based ads refrained from using hi-tech special effects, and aimed at maintaining the perfect balance between the traditional and the modern...

Looking Ahead

The liberalization of the dairy industry in 1991 had seen a number of multinational players like Britannia, Le Bon, Dabon and Hi-Life enter the sector.

Analysts wondered whether a co-operative with limited financial means could stand up to the might of these MNCs, and if it’s low pricing strategy would continue to stay relevant. MNCs like Pizza Hut, Domino's, Hindustan Lever Limited and Cadbury had also become competitors. Amul had proved its detractors wrong and firmed up ambitious growth plans...

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MARKETING STRATEGY OF AMUL

MARKET PENETRATION STRATEGY:- Amul is set to build up 10,000 Amul Parlors across the country Amul trying to acquire a shelf in the yet to come Wal-Mart.

MARKET DEVELOPMENT STRATEGY:- Amul is now shifting its focus from urban to rural market and smaller towns. Amul is capturing the market of diabetic and health conscious through sugar

free ice cream which is a variation of the existing product. 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.

PRODUCT DEVELOPMENT STRATEGY:- Amul- Cool (milk based cool drink) and Amul-kool café Stamina- the instant energy whey based sports drink has been launched. Packaged butter milk is aimed to be another non-carbonated cool drink.

CONCENTRIC DIVERSIFICATION STRATEGY:- Ice cream ranges, Amul Sugar Free and Amul Profile. Identified the working class women as the new segment and has introduced

frozen easy to use stuffed paranthas, matar paneer and paneer pakoras which make them easy to cook quality tasty food in less time.

CONGLOMERATE DIVERSIFICATION STRATEGY:- Priced at only Rs 12 for 200ml which will be lower than its competitors

whose price ranges are Rs. 50 to Rs 60.

HORIZONTAL DIVERSIFICATION STRATEGY:- Newer products with newer technologies. Order the food through the internet.

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PRODUCT STRATEGY OF ‘AMUL-THE TASTE OF INDIA’

PRODUCT STRATEGY Product Positioning Strategy Product Re-Positioning Strategy Product Overlap Strategy Product Design Strategy Product Elimination Diversification Strategy Value Marketing Strategy Product Scope Strategy

1. PRODUCT POSITIONING STRATEGYPlacing a product in that part of the market where it will receive a favourable reception compared to competing products.

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.

Aug 25 2007Amul 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”.

Flavours: Masala, Mint and Tomato.

New Product Activity.

Nov 26, 2007: Amul Launches “Fresh Paneer” (Free From Any Harmful Chemicals)

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Flank Attack—Expanding its Cheese Segment.Current market share 65%

2. PRODUCT REPOSITIONING STRATEGY 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”.

3. PRODUCT OVERLAP STRATEGYSituation where company decides to compete against its own brands

Powdered MilkHealth and price Conscious.“SAGAR vs. Amulya”.USP:Sagar is affordable whitener for health conscious one.

Cheese SpreadsSpecific 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 Koo

4. PRODUCT DESIGN STRATEGY“Whether to offer standard or customized products.”

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.

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5. PRODUCT ELIMINATION STRATEGYProduct 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 products do not have potential customers”.

6. DIVERSIFICATION STRATEGYSeeking unfamiliar products or markets or both in the pursuits of growth.

Secrets of Amul’s Diversification Philosophy: Progressive addition of higher value products while maintaining the desired

growth in existing products. Amul introduced products with consistent value addition but never left the

core philosophy of “providing milk at a basic, affordable price ”amul’s product diversification

Dairy (milk. Milk drinks and desserts, cheese products, bread spread), non-dairy(vegetable oils, snacks, instant food)

BENEFITS OF DIVERSIFICATION High Growth Expansion of network Advantage of each underlines objectives.

7. VALUE MARKETING STRATEGYProviding 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

8. PRODUCT SCOPE STRATEGY“Perspective of the product mix of a company”

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BIBLIOGRAPHY

1. www.amul.com

2. www.amuldairy.com

3. www.google.com

4. www.marketresearch.com

5. www.dairy.com

6. Research Methodology. ( Harper W.Boyd, C. R. Kothari )

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