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 FloodObjectives 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 valuesincluded 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

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.