Amul Model for marketing

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Project: - Market of Amul

(Anand Milk United Limited)Institute : - Nirma Institute of

Management.

Subject : - Marketing Management.

Term : - II.

Professor : - P. K. Yadav

Prepared by: - Ajay Nyati


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Introduction

The largest food brand in India and world's Largest Pouched MilkBrand 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," (meaningPriceless) and was actually suggested by an employee of Gujarat Co-

operative 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 economicnetwork 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 atthe 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 oragents 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.


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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 andprocess milk in the District of Kaira in 1946.

Milk collection was also decentralized and village level cooperativeswere established to organize the marginal milk producers in each ofthese villages.

The brand Amul was formally registered on December 14th, 1946Formation of GCMMF

Later on with the help of Dr. Verghese Kurien and Shri H M Dalayathis 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 theWorld Food Prize & the Magsaysay Award winner, is responsible forthe grand success of brand Amul.


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AMUL

Business ModelIn a recent survey,

GCMMF ranked amongst the top ten FMCG firms inthe country

AMUL rated the second most recognized brand inIndia amongst all Indian and MNC offerings

What makes AMUL successful???

Business Model Objective :

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

Additional objective Develop the supplier over the long term through socialchange.

Success depends on Developing Demand

Consumers- Limited Purchasing power Modest consumption levels of milk Lowcost price strategy


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Products affordable & attractiveDistribution 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 servicesBy Third Parties

Co-ordination


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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 electedthrough village societies

The federation handles the distribution of end products andcoordination 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 centresMarketing and Advertising StrategiesGCMMF 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 fromlong-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


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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 & organolepticstandardmain 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.


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Product Scope StrategyPerspective of the product mix of a company

Different products of Amul and its variantsBread spreads

Amul Butter Amul Lite Low Fat Bread spread Amul Cooking Butter Delicious MargarinePure Ghee Sweets

Amul Shrikhand & Amrakhand Amul Mithaee Khoya Gulabjamaun Amul BasundiMilk Powders

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

Amul MithaimateFresh 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 MilkCurd Products


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Yogi Sweetened Flavoured Dahi (Dessert) Amul Masti Dahi (fresh curd) Amul Lite Dahi

Amul Prolife probiotic Dahi Amul Masti Spiced Butter Milk Amul LasseeChocolate & Confectionery

Amul Fruit & Nut Chocolate Amul Bindazz Amul Rejoice Amul kesarBrown Beverage

Nutramul Malted Milk FoodAmul Ice creams

Vanilla Royale 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, FreshStrawberry, Black Currant, Santra Mantra, Fresh Pineapple)

Sundae Range (Mango, Black Currant, Sundae Magic, DoubleSundae)

Assorted Treat (Chocobar, Dollies, Frostik, Ice Candies, Tricone,Chococrunch, Megabite, Cassatta)

Utterly Delicious (Vanila, Strawberry, Chocolate, Chocochips, CakeMagic)


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Milk Drink

Amul Kool Flavoured Milk (Mango, Strawberry, Saffron,Cardamom, Rose, Chocolate, Butterscotch)

Amul Kool Cafe

Amul Kool KokoHealth Beverage

Amul Shakti White Milk FoodProduct PositioningPlacing a product in that part of the market where it will receive afavorable 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 KoolKoko. 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


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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 JALDHARAbut 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 OverlapSituation 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 GeneralAmul Processed Cheese Vs Cheese Spread

USP:

Cheese spread is highly accepted spread for regular use.

Milk DrinksNutramul Energy Drink Vs Amul Kool


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Product EliminationProduct 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 thedesire 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-to-

eat 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 otherco-operative milk brands Aggressive moves against FMCG and F&B brands like Britannia,

Nestle and Mother Dairy among others.


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Segmentation

Wide range of product categories caters to consumers across allmarket 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 tomixed 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 thecountry, 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-visitedin 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


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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 increasedbrands fan following.

Below-the-line activity has grown too such as the Amul foodfestival, 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 recipesusing as many Amul products as possible, and is conducted at city,

state and national level.

Digital Advertising

Amul CompetitorsButter

Britannia NestleCheese

BritanniaBaby Food

Nestle HeinzDairy Whitener Segment

Nestle BritanniaIce creams

HLL


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Amul CompetitorsChocolates & Confectionaries

Cadbury NestlePizza

Pizza Hut Dominos Nirulas Frozen pizzaCurd

Nestle Mother DairyUltra High Treated Milk Nestle BritanniaPeriod 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 acquiredKwality, 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 thelaunch 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 cheesefrom pizza making companies like Pizza Hut and Domino's Pizza was


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expected to give Amul's cheese sale an additional push.

In August 2001, Amul decided to enter the ready-to-eat stuffedparatha, cheeseburger, cheese and paneer pakoda, and cheese

sandwich segments. The products were marketed under the

SnowCap brand. The SnowCap brand also included tomato sauceand 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 (butterand 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 allsegments. 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. Theentry into the confectioneries market was another avenue for

increasing milk consumption

Amul's obsession with keeping down manpower costsand 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


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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 yearin 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 beingdeveloped, building a strong base for the future.

Amul dairy plants have now received ISO 9000 and HACCP certification, helpingit to obtain the required Export Inspection Agency plant certification for dairy

products.

AMULS Indian desserts are very well liked in countries likeSingapore 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 leadinginternational stores like Wal-Mart and Mustafa in Singapore after its successful

foray into the United Arab Emirates (UAE).


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Mission 2020 of Amul

Amul envisages that the dairy cooperatives of Gujaratwill 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 milkshed 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 demandfor 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 perday, 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.


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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.


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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 auto-

components (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


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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, withappropriate coordination mechanisms to ensure consistency in the system.

Amul Model for marketing

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