BM Term Paper

7/16/2019 BM Term Paper

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P.E.S Institute of Technology

Department of MBA

“Business Marketing Term Paper on Amul”

Submitted To:

Mr Avinash Rao

Professor of Management

Department of MBA

P.E.S Institute of Technology

Bangalore

Submitted By:

Puneet. S

III Semester MBA

Marketing Cohart-2



Company History:

Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF) is India'slargest food product marketing organisation with annual turnover (2011-12) US$ 2.5 billion. Its daily milk procurement is approx. 13 million lit

(peak period) per day from 16,117 village milk cooperative societies, 17

member unions covering 24 districts, and 3.18 million milk producer

members.

It is the Apex organisation of the Dairy Cooperatives of Gujarat, popularlyknown as 'AMUL', which aims to provide remunerative returns to the farmersand also serve the interest of consumers by providing quality products which aregood value for money. Its success has not only been emulated in India butserves as a model for rest of the World. It is exclusive marketing organisation

of 'Amul' and 'Sagar' branded products. It operates through 47 Sales Officesand has a dealer network of 5000 dealers and 10 lakh retailers, one of the largestsuch networks in India. Its product range comprises milk, milk powder, health

beverages, ghee, butter, cheese, Pizza cheese, Ice-cream, Paneer, chocolates,and traditional Indian sweets, etc.

GCMMF is India's largest exporter of Dairy Products. It has been accorded a"Trading House" status. Many of our products are available in USA, Gulf Countries, Singapore, The Philippines, Japan, China and Australia. GCMMF

has received the APEDA Award from Government of India for Excellence inDairy Product Exports for the last 13 years. For the year 2009-10, GCMMF has

been awarded "Golden Trophy' for its outstanding export performance andcontribution in dairy products sector by APEDA.

For its consistent adherence to quality, customer focus and dependability,GCMMF has received numerous awards and accolades over the years. Itreceived the Rajiv Gandhi National Quality Award in1999 in Best of AllCategory. In 2002 GCMMF bagged India's Most Respected Company Award

instituted by Business World. In 2003, it was awarded the The IMCRamakrishna Bajaj National Quality Award - 2003 for adopting noteworthyquality management practices for logistics and procurement. GCMMF is thefirst and only Indian organisation to win topmost International Dairy FederationMarketing Award for probiotic ice cream launch in 2007.

The Amul brand is not only a product, but also a movement. It is in one way,the representation of the economic freedom of farmers. It has given farmers thecourage to dream. To hope. To live.



GCMMF - An Overview:

Year of Establishment 1973

Members17 District Cooperative Milk Producers' Unions (16

Members & 1 Nominal Members) No. of Producer Members 3.18 Million

No. of Village Societies 16,117

Total Milk handlingcapacity per day

13.67 Million litres per day

Milk Collection (Total -2011-12)

3.88 billion litres

Milk collection (Daily

Average 2011-12) 10.6 million litres (peak 13 million)

Milk Drying Capacity 647 Mts. per day

Cattlefeed manufacturingCapacity

3690 Mts. per day

Sales Turnover -(2011-12) Rs. 11668 Crores (US $2.5 Billion)

The story of AMUL inspired 'Operation Flood' and heralded the 'White

Revolution' in India. It began with two village cooperatives and 250 litres of

milk per day, nothing but a trickle compared to the flood it has become today.

Today Amul collects processes and distributes over a million litres of milk and

milk products per day, during the peak, on behalf of more than a thousand

village cooperatives owned by half a million farmer members. Amul has

become a symbol of the aspirations of millions of farmers; creating a pattern of

liberation and self-reliance for every farmer to follow. The „AMUL revolution‟

started as awareness among the farmers grew and matured into a protest

movement. Over four decades ago, the life of a farmer in Kaira District was

very much like that of his counterpart anywhere else in India. His income was

derived almost entirely from seasonal crops. The income from milch buffaloes

was undependable. Private traders and middlemen controlled the marketing and

distribution system for the milk. As milk is perishable, farmers were compelled

to sell it for whatever they were offered. Often, they had to sell cream and ghee

at throwaway prices. In this situation, the one who gained was the private trader.

Gradually, the realization dawned on the farmers that the exploitation by thetrader could be checked only if marketed their milk themselves.



In order to do that they needed to form some sort of an organization. This

realization is what led to the establishment of the Kaira District Cooperative

Milk Producers' Union Limited (popularly known as Amul) which was formally

registered on December 14, 1946.

Currently AMUL has 2.28 million producer members with milk collection

average of 5.08 million litres/day. Today AMUL is a symbol of many things.

(High-quality products sold at reasonable prices, genesis of a vast co-operative

network and a proven model for dairy development). The Kaira Union began

pasteurizing milk for the Bombay Milk Scheme in June 1948.

The Birth of Amul:

It all began when milk became a symbol of protest

Founded in 1946 to stop the exploitation by middlemen

Inspired by the freedom movement

The seeds of this unusual saga were sown more than 65 years back in Anand, a

small town in the state of Gujarat in western India. The exploitative trade practices followed by the local trade cartel triggered off the cooperative

movement. Angered by unfair and manipulative practices followed by the trade,

the farmers of the district approached the great Indian patriot Sardar

Vallabhbhai Patel for a solution. He advised them to get rid of middlemen and

form their own co-operative, which would have procurement, processing and

marketing under their control.

In 1946, the farmers of this area went on a milk strike refusing to be coweddown by the cartel. Under the inspiration of Sardar Patel, and the guidance of

leaders like Morarji Desai and Tribhuvandas Patel, they formed their own

cooperative in 1946.

This co-operative, the Kaira District Co-operative Milk Producers Union Ltd.

began with just two village dairy co-operative societies and 247 litres of milk

and is today better known as Amul Dairy. Amul grew from strength to strength

thanks to the inspired leadership of Tribhuvandas Patel, the founder Chairman



and the committed professionalism of Dr Verghese Kurien, who was entrusted

the task of running the dairy from 1950.

The then Prime Minister of India, Lal Bahadur Shastri decided that the same

approach should become the basis of a National Dairy Development policy. Heunderstood that the success of Amul could be attributed to four important

factors. The farmers owned the dairy, their elected representatives managed the

village societies and the district union, A they employed professionals to

operate the dairy and manage its business. Most importantly, the co-operatives

were sensitive to the needs of farmers and responsive to their demands.

At his instance in 1965 the National Dairy Development Board was set up with

the basic objective of replicating the Amul model. Dr. Kurien was chosen to

head the institution as its Chairman and asked to replicate this model throughout

the country.

The Product Range:

Bread spreads Amul Butter, Amul Lite, Delicious Table Margarine

Cheese Range

Amul Pasteurized Processed Cheddar Cheese, Amul

Processed Cheese Spread, Amul Pizza (Mozarella) Cheese,Amul Emmental Cheese, Amul Gouda Cheese, Amul MalaiPaneer (cottage cheese), Utterly Delicious Pizza

Fresh Milk Amul Gold Full Cream Milk 6% fat, Amul ShaktiStandardised Milk 4.5% Fat, Amul Taaza Toned Milk 3%fat, Amul Slim & Trim, Amul Cow Milk

UHT Milk RangeAmul Gold 4.5% fat Milk, Amul Shakti 3% fat Milk, AmulTaaza 1.5% fat Milk, Amul Lite Slim-n-Trim Milk, AmulFresh Cream

Milk PowdersAmul Full Cream Milk Powder, Amulya Dairy Whitener,Sagar Skimmed Milk Powder, Amulspray Infant Milk Food,Sagar Tea and Coffee Whitener

Milk Drink Amul Kool Flavoured Milk, Amul Kool Cafe, Amul KoolKoko,Amul Kool Milk Shake, Amul Kool ChocolateMilk,Nutramul Energy Drink

Health Drink Stamina Instant Energy Drink

Brown Beverage Nutramul Malted Milk Food

Curd Products Amul Masti Dahi (fresh curd), Amul Masti Spiced Butter



Milk, Amul Lassee, Amul Flaavyo Yoghurt

Pure Ghee Amul Pure Ghee, Sagar Pure Ghee

Sweetened

Condensed Milk

Amul Mithaimate

Mithaee Range(Ethnic Sweets)

Amul Shrikhand, Amul Mithaee Gulabjamuns, AmulBasundi,Avsar Ladoos

Ice-cream Sundae Range, probiotic,,sugar free and probiotic

Chocolate &Confectionery

Amul Milk Chocolate, Amul Fruit & Nut Chocolate, AmulChocozoo, Amul Bindass, Amul Fundoo

Main Business:

AMUL is mainly into the business of marketing, transporting and distributing

the milk and milk products manufactured by its owners. Besides creating urban

employment in dairy plants, marketing, transporting and distribution, it has

helped to provide farmers with a sustainable rural employment program. AMUL

has always tried to be a step ahead of the market. It has always been a model to

which other cooperatives have looked up as an example and inspiration as well

as one from which many have benefited. AMUL was one of the first major

organizations in India to have a website. This site has been used both to develop

an intranet of AMUL distributors as well as a cyber-store for consumers, one of

the first examples of e-commerce activity in India.

Indian Dairy Industry – A Profile:

India‟s modern dairy sector has expanded rapidly. India is recognized as a biggest and fastest growing market in the world for milk and milk products.

India's dairy market is multi-layered. It's shaped like a pyramid with the base

made up of a vast market for Chocolate. The bulk of the demand for Chocolate

is among the rural areas whose requirement is large.

India‟s dairy sector is expected to triple its production in the next 10 years in

view of expanding potential for export to Europe and the West; so all the

countries are looking at Indian dairy industry markets for exports. As per GATT

agreement the export subsidy is reduced. Because of this India is expecting



major changes in dairy industry of North America, Europe and Australia. It may

also get some advantage in this situation. After reduction in subsidies given by

other countries India would be able to compete with their products efficiently on

price in international markets. At present India has a negligible export to

international markets.

Both public and private sector have contributed to the dairy industry growth in

India. Government dairy distributes 90% of its milk in sachets or in containers

while remaining 10% is marketed as butter, ghee etc. On contrary, private sector

only markets 20% of milk and remaining 80% of milk is made into preparations

suitable for exports. Amul have Chocolate as their main product.

Though India is No. 1 in milk production, it is unfortunate that we are importing

milk products from other countries. Since we do not have good technology for

production of skim milk powder we are forced to import them from Europe and

New Zealand.

Organizational Procurement:

The Three-tier "Amul Model"

The Amul Model is a three-tier cooperative structure. This structure consists of

a Dairy Cooperative Society at the village level affiliated to a Milk Union at the

District level which in turn is further federated into a Milk Federation at the

State level. The above three-tier structure was set up in order to delegate the

various functions; milk collection is done at the Village Dairy Society, Milk

Procurement & Processing at the District Milk Union and Milk & Milk Products

Marketing at the State Milk Federation. This helps in eliminating not only

internal competition but also ensuring that economies of scale are achieved. As

the above structure was first evolved at Amul in Gujarat and thereafter

replicated all over the country under the Operation Flood Programme, it is

known as the „Amul Model‟ or „Anand Pattern‟ of Dairy Cooperatives.

Responsible for Marketing of Milk & Milk Products

Responsible for Procurement & Processing of Milk



Responsible for Collection of Milk

Responsible for Milk Production

Village Dairy Cooperative Society (VDCS):

The main functions of the VDCS are as follows:

Collection of surplus milk from the milk producers of the village &

payment based on quality & quantity

Providing support services to the members like Veterinary First Aid,Artificial Insemination services, cattle-feed sales, mineral mixture sales,

fodder & fodder seed sales, conducting training on Animal Husbandry &

Dairying, etc.

Selling liquid milk for local consumers of the village.

Supplying milk to the District Milk Union

Thus, the VDCS in an independent entity managed locally by the milk

producers and assisted by the District Milk Union.

District Cooperative Milk Producers’ Union (Dugdh Sangh):

The main functions of the Union are as follows:

Procurement of milk from the Village Dairy Societies of the District.

Arranging transportation of raw milk from the VDCS to the Milk Union.

Providing input services to the producers like Veterinary Care, Artificial

Insemination services, cattle-feed sales, mineral mixture sales, fodder &

fodder seed sales, etc.



Conducting training on Cooperative Development, Animal Husbandry &

Dairying for milk producers and conducting specialised skill development

& Leadership Development training for VDCS staff & Management

Committee members.

Providing management support to the VDCS along with regular

supervision of its activities.

Establish Chilling Centres & Dairy Plants for processing the milk

received from the villages.

Selling liquid milk & milk products within the District.

Process milk into various milk & milk products as per the requirement of

State Marketing Federation.

Decide on the prices of milk to be paid to milk producers as well on the

prices of support services provided to members.

State Cooperative Milk Federation (Federation):

The main functions of the Federation are as follows:

Marketing of milk & milk products processed / manufactured by Milk

Unions.

Establish distribution network for marketing of milk & milk products.

Arranging transportation of milk & milk products from the Milk Unions

to the market.

Creating & maintaining a brand for marketing of milk & milk products

(brand building).

Providing support services to the Milk Unions & members like Technical

Inputs, management support & advisory services.



Pooling surplus milk from the Milk Unions and supplying it to deficit

Milk Unions.

Establish feeder-balancing Dairy Plants for processing the surplus milk of

the Milk Unions.

Arranging for common purchase of raw materials used in manufacture /

packaging of milk products.

Decide on the prices of milk & milk products to be paid to Milk Unions.

Decide on the products to be manufactured at various Milk Unions

(product-mix) and capacity required for the same.

Conduct long-term Milk Production, Procurement & Processing as well

as Marketing Planning.

Arranging Finance for the Milk Unions and providing them technical

know-how.

Designing & providing training in Cooperative Development, Technical& Marketing functions.

Conflict Resolution & keeping the entire structure intact.

Today, there are around 176 cooperative dairy Unions formed by 1.25 lakh

dairy cooperative societies, having a total membership of around 13 million

farmers on the same pattern, who are processing and marketing milk and milk

products profitably, be it Amul in Gujarat or Verka in Punjab, Vijaya in Andhra

Pradesh, Milma in Kerala, Gokul in Maharashtra, Saras in Rajasthan or a

Nandini in Karnataka. This entire process has created more than 190 dairy

processing plants spread all over India with large investments by these farmers‟

institutions. These cooperatives today collect approximately 23 million kgs of

milk per day and pay an aggregate amount of more than Rs.125 billion to the

milk producers in a year.



Buying Model or Buying Concept of Amul:

The Amul model has helped India to emerge as the largest milk producer in the

world. More than 15 million milk producers pour their milk in 1,44,246 dairy

cooperative societies across the country. Their milk is processed in 177 District

Co-operative Unions and marketed by 22 State Marketing Federations, ensuring

a better life for millions.

Market Segmentation:

Market Segmentation is the act of sub dividing a market into distinct sets of

customers who merit attention. Targeting these customers for marketing by

evaluating, selecting, and concentrating becomes a corollary to segmentation.

Market segmentation assumes importance in the context of intense competition

market is bombarded with. A market consists of buyers, and buyers differ in oneor more ways. They may differ in their wants, resources, locations, products



requirements. These variables have to be considered in the process of

segmentation.

There are different levels of market segmentation. They are mass marketing,

segment marketing, niche marketing and micro marketing. Markets can besegmented on the geographical basis, demographical basis, psychological basis,

behavioural basis and loyalty status.

AMUL segments its market on the following basis:

1. Geographical Basis:

This segmentation is done on the basis of the lifestyle of people in different

regions and their tastes and consumption patterns which are distinct according

to their geographical situation. AMUL has segmented India geographically into

5 zones.

2. Demographical Basis:

Amul has segmented its market on the basis of the socio-economic status

of the customers i.e. on the basis of their purchasing power and income

level as follows:

GROUP‟A‟:

Consumers falling in this group are from higher social and economic class.

GROUP‟B‟:

Consumers falling in this group are from middle socio-economic class.

GROUP‟C‟:

Consumers falling in this group are from the lower middle class.

Amul has segmented his product in different age group

For kids: Amul kool, chocolate milk, Nutramul energy drink.

For Youth: Amul cool kafe.

For women and older people: Amul calci+, Amul Shakti energy drink



Market Targeting:

After segmenting the market, company evaluate the various segments and

decides how many and which ones to target. Generally the market is targeted in

three ways:-

Undifferentiated Marketing

Differentiated Marketing

Concentrated Marketing

AMUL uses undifferentiated marketing strategy for targeting its customers as

far as its milk and milk product line is concerned. While the companyimplements differentiated marketing strategy for targeting its customers for the

other product lines that are ice creams and chocolates, wet products and dry

products. Differentiated marketing means market coverage strategy in which a

firm decides to target several market segments and designs separate offers for

each. AMUL targets its customers according to the segments like geographic

and demographic.

Market Research :

AMUL conducts basically two types of market research. One is for products

and another for the advertising conducted by the company. These research

results serve as an input in future decision making. The company basically

collects feedback from the customers, about the effectiveness of its advertising

campaign and liking of the product especially in case of new products launched.

It tries to find out by conducting a survey in a target market whether or not the product is liked by the consumers and ask for their suggestions for

improvement. However AMUL is not much into conducting research before the

launch of the product. Most of its research is done only once when the product

is already launched in the market. It doesn‟t have any separate department for

this purpose but its sales agents themselves do the work of research for the

company. Yet the results are almost comparable to those conducted by

professionals.



Successful Product Strategy of AMUL:

1. Product Positioning Strategy:

Low price Amul Ice – Creams.

Chocolate milk was launched „Amul Kool koko‟.

2. Product Re-Positioning Strategy:

Jaldhara – Narmada Neer.

3. Product Overlap Strategy – :

Amul Processed Cheese Vs. Cheese Spread.

Nutramul Energy Drink Vs. Amul Kool.

4. Product Design Strategy:

Use of Utterly – Butterly Girl since 1967

5. Product Elimination:

Eliminated Jaldhara – bottled water.

6. Diversification Strategy:

Dairy Products

Eg: Fresh Milk, Milk Drinks & Desserts, Bread Spreads and Cheese Products.



New Product Development:

New product development means development of original product or product

improvement or modification or new brands through Research & Development

efforts .New product development has become more difficult with the passageof time, due to shortage of new ideas, keen competition, government and

environmental constraints .It is an expensive affair which involves lot of crucial

decision making.

A number of decisions are taken by AMUL with regards to launch plans and

strategies for the new product, which are as under:

Deciding the target customers

Designing the promotional campaign

Deciding the price

Market analysis

Deciding the sales force to be employed

Deciding the marketing mix

Deciding whether to launch the product across the country or in the

selected area

Appointing distributors

Conducting market research

Product Life Cycle Stages:

A product passes through distinct stages during its life in market, each posing

different challenges, opportunities and problems .Profits rise and fall at different

stages of the product life cycle. There are four different stages of product lifecycle, namely



1. Introduction Stage

2. Growth Stage

3. Maturity Stage

4. Decline Stage

Different products of AMUL are in different stages in the product life cycle.

Products like milk, butter, chocolate and cheese are in the maturity stage, while

ice-creams, chocolates and shrikhand are still in the growth stage. On the other

hand, products like milk powders, infant food, frozen food items and mix are in

introduction stage. The company adopts aggressive selling techniques for those

products which are in the introductory stage, while very less promotional

programmes are carried out for those products which are in the growth or

maturity stage.

Distribution Channel:

The network

Milk is procured from the villages and collected at Village Cooperative

Societies (VCS), from there the milk is taken to manufacturing units where the

milk is processed into various products.

The products are then transporters to the company Depots located in various

parts of the country. The products are then sent to Wholesale Distributors (WD)

and from there to the retailers.

The fact sheet

Milk is procured twice a day from 2 million from Gujarat alone.

The payment is made in less than twelve hours of procurement.

There are 10000 village cooperative societies.

There are 3600 wholesale distributors in the country.

AMUL has 45 depots.



The C&F agents are not fixed and are decided by the local company

offices.

There are approx. 4,50,000 retailers spread all over India.

Total house hold consumers covered are 100,000.

The milk procured per day is 5 million litres.

Where the total capacity of operation is 7 million litres per day.

The peak processing till date has been 6 million litres per day.

These co-operative societies are bound to supply there produce only to

GCMMF

AMUL has three-level distribution channel, i.e. it employs carry forward agents,

wholesaler and retailers to carry its products to the final consumers. Till today,

the major development on the distribution front is the development andalignment of four distribution highways - those of Fresh Products, Chilled

Products, Frozen Products and Ambient Products. This is a significant

achievement because it allows AMUL to develop synergies among all their

product lines and to leverage these highways to introduce and distribute new

products as per market demand. No other organization in India has been able to

develop this kind of channel synergy so far.

Another major initiative undertaken is the Time-based Military Technique

(TMT) of distribution. This has been deployed to effect a nationally

synchronized mass distribution of their products with the objective of achieving

total channel penetration on a single day. After Distributor Salesmen in the

previous year and Distributors in the year before last, it was the turn of the top

Retailers across the country to participate in the Amul Yatra Programme which

is a unique experiment conducted by Amul to bring their channel partners face

to face with their cooperative institutions, activities, culture and achievements

through a guided tour in and around Anand. A total of 114 Distributor Salesmen

and 482 top retailers from across the country participated in the Amul Yatra this



year. With the opening of several new milk markets and 3 separate Milk Sales

Offices at Mumbai, New Delhi and Boisar, the number of Milk Area Delivery

Agents has increased.



Managing The Supply Chain:

Even though the cooperative was formed to bring together farmers, it was

recognized that professional managers and technocrats would be required to

manage the network effectively and make it commercially viable.

Coordination:

Given the large number of organizations and entities in the supply chain and

decentralized 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 unionscomprise 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:

From the beginning, it was recognized 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 activitieswere 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 perishablecommodity 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: thefederation, the unions, the village societies and the distribution channel. In



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

society level. More important, the network has been able to regularly roll outimprovement programs across to a large number of members and theimplementation rate is consistently high.

Pricing:

The amount of money charged for a product or service or the sum of the valuesthat consumers exchange for the benefit of having or using the product or service is called its price. A company‟s pricing decisions are affected by bothinternal factors like company‟s objectives, marketing mix strategy, cost andorganizational considerations and external factors like nature of the market anddemand, competition and other environmental elements.While deciding the price of its products AMUL takes into consideration all the

below mentioned factors, this is true for all the products.

Cost of raw materials.

Cost of labour.

Profit margin of distributors.

Various administrative and manufacturing overheads.

Prices of the competitors.

Demand and supply position in market.

Fair return to the farmers.

AMUL believes that the company with largest market share will enjoy lowestcost and highest long run profit to become the market leader. They set prices aslow as possible.



Pricing Approach of AMUL:

AMUL employs different pricing policies for different products depending uponthe life cycle stage of the product, market condition and the nature of product.

In case if the product is newly launched in the market the company doesn‟temphasize on the profit margin and keeps its prices as low as possible so as to

penetrate in the new market.However in case of the already established products the company uses a mix of cost plus pricing approach and competitor based pricing approach i.e. it sets its

prices keeping in view the cost of production, desired profit margin and pricesof competitor‟s products.

Cost-plus pricing:

Cost-plus pricing is the simplest pricing method. The firm calculates the cost of producing the product and adds on a percentage (profit) to that price to give theselling price. This method although simple has two flaws; it takes no account of demand and there is no way of determining if potential customers will purchasethe product at the calculated price. This appears in two forms; Full cost pricingwhich takes into consideration both variable and fixed costs and adds a % mark-up. The other is direct cost pricing which are variable costs plus a % mark-up,the latter is only used in periods of high competition as this method usuallyleads to a loss in the long run.

Competitive Pricing:

Setting the price of a product or service based on what the competition is

charging. Competitive pricing is used more often by businesses selling similar

products, since services can vary from business to business while the attributes

of a product remain similar. This type of pricing strategy is generally used once

a price for a product or service has reached a level of equilibrium, which often

occurs when a product has been on the market for a long time and there are

many substitutes for the product.

Promotional Strategies of AMUL:

Amul has just been ranked as the No. 1 Indian brand by Campaign magazine inits list of Top 1000 Brands of Asia for the third consecutive year. Amul is one

brand which truly deserves this accolade.

The Amul mascot, a cute and chubby girl usually dressed in a polka dot dress, isuniversally recognisable in India. And the tagline, „Utterly Butterly Delicious



Amul‟ is just as catchy. Together, these two elements are a fantasticcombination of brand elements for Amul. And get this, the Amul mascot has

been the same since its inception in 1967. That‟s almost 45 years ago. But the

Amul girl is still as relevant as ever. The Amul girl was the brainchild of

Sylvester daCunha, the managing director of the advertising agency AS. Theads were designed as a series of hoardings with designs relating to day-to-dayissues. The beauty of these ads is that instead of using a celebrity, a character was created from scratch and associations built around it. The brand recall for the Amul girl is phenomenal across India today. And the biggest reason for thisis the topical nature of the ads.The Amul ads have witty one-liners which capture relevant events that havecaught the fancy of the nation. This instantly creates a connect with the

populace and helps them to identify with the brand in a surrogate manner. Apartfrom this, the humour is incisive and funny. The style of drawing is also verydistinctive, and there is instant recognition of the brand without even needing totake a close look. While today‟s advertising revolves around creating stylistic

ads and abounds in celebrity endorsements, Amul is like a breath of fresh air that has held onto its roots and yet managed to stay relevant over the years.

Integrated Marketing Communications Used By AMUL:

Advertising

Amul has had one of the most successful Ad campaigns in the country.Innovative and refreshing, Maul‟s Ads have, through the years, captured theimagination of the whole nation. Created in 1966 the topical, news-event-oriented ads are reportedly ready to enter the Guinness Book of World Recordsas the longest running advertising campaign ever.

Public Relation Tools And Programme

Public relation is another major mass promotion tool. It means building goodrelations with the company‟s concern parties by obtaining favourable publicity,

building up a good corporate image and handling of unfavourable rumours,stories and events.Amul maintains healthy public relations with all concern parties. It does nothave any department for this purpose but is carried out by corporatecommunication. It has also appointed F.S.R.s (Field Sales Representatives) for this purpose who looks after the complaints of the wholesalers and the retailers,they also contact the customers and try to find out if they have any complaint

regarding the product and present it before the appropriate authority. However there is no formal procedure to contact the authorities and any person wanting



to communicate can directly approach the concerned person. The plant and theadministrative office is kept open for public visits for two hours everyday.

Sales Promotion Tools And Programmes

Sales promotion consists of short term incentives to encourage the purchase or sale of the product or service. It comprises of a variety of promotional tools asshort term incentives. The purpose of sales promotion is to communicate aboutthe product to the customer to enable the buying decision. It is felt that sales

promotion helps break brand loyalty of consumers. Promotion with the help of price concessions is of short duration to make them effective.AMUL implements various sales promotion tools for wholesalers, retailers,sales force and customers. They offer 3% to 3.5% profit margin to stimulate its

wholesaler and retailers. The sales persons are given a commission on a fixed percentage on their sales. The profit of the company reaches directly to theowners i.e. the farmers in the way of increase in price of milk, other technicalassistance and subsidies. The company also introduces various schemes for thecustomers like more quantity at less price, free gifts and contests. The companyhad introduced a contest namely “AMUL MAHARANI CONTEST” in the

previous year for promoting its products.

Brand Equity:

Brand equity refers to the value of a brand, based on the extent to which it has brand loyalty, brand name awareness, perceived quality, strong brandassociations, and the other assets such as patents, trademarks and channelrelationship.It is evaluated on the basis of brand assets which are:

Brand Awareness: Awareness ultimately enhances brand equity.AMUL enjoys very high brand awareness among its customers. According

to the survey done by the company, brand awareness is as high as almost90%.

Brand Loyalty: Brand loyalty means the ability to retain the existingcustomers. AMUL is blessed with high brand loyalty among itscustomers. As it is one of the biggest market players it has

proportionately larger group of loyal customer, who are in turn a mediumof marketing/ advertising.

Brand Associations: Consumers associate the brand with certain tangibleand intangible attributes. Most of these associations are derived from



brand identity and brand image. Customers associate AMUL‟s brand with

high quality standards and reasonable price.

Brand Image: Brand image is the meaning consumers give to a product

based on the perceived values it delivers. AMUL has created brand image by offering excellent quality products at reasonable price. Perfectdistribution channel; continuous & effective advertising; use of different

promotional tools; wide loyal market share, has contributed to create anexcellent image in its trade operations.

Sales Force Management:

The organization of sales department is as under:

ZONAL INCHARGE

DEPOT INCHARGE

EXECUTIVES

F.S.R. (Field Sales Representative)

PSM (Pilot Sales man)

The total staff at AMUL is of nearly 750 people. The company conductsintensive training programme for its employees. The company sends any of itsemployees for training who will later train the other employees. It‟s not

necessary that the person sent for training must be someone from the top or middle management, he can be any employee. The company treats all itsemployees equally. Various training programmes like TQM, Self-managementProgrammes, etc. conducted so far. The turnover and absenteeism ratio isalmost negligible at AMUL which is the proof of the well-functioning of theHuman Resource Management. All the agents and sales force is giving a

percentage of sales as commission.



Labour Welfare Scheme:

Medical Assistance Scheme:

The society has a comprehensive medical benefit scheme for itsemployees. The employee and his dependent family members are eligiblefor reimbursement of medical expenses in respect of any ailment, disease,injury, or disability suffered by them. For routine medical treatment theceiling is as under:

No. Of family members Ceiling for routine Medical Treatment (per annum)For 2 family members Rs. 2250

For 3 family members Rs. 4500In case of chronic diseases, specialized treatments, hospitalization, pathological and radiological tests special medical sanctions are given atactual. They have full-fledged dispensaries at our factories manned bydoctors, nurses and paramedical staff who provide Medicare facilities tothe employees and their dependents. Besides this, most of the goodhospitals and nursing homes in the vicinity are on the approval panel of AMUL, where the employees and their dependent family members can bereferred for treatment, according to requirement.

Canteen:

Canteens have been provided at our factories, which provide lunch, tea andsnacks. Canteen management committees consisting of the employees alsomonitor the menus, cleanliness, quality of food. Canteen Subsidy is paid @7% of the basic pay to officers and @ 5% of basic pay to workmen.

Transport Facilities :

AMUL is providing bus facility to its employees for coming to their workplace at their factories.



Recommendations:

Amul should go in for exclusive outlets in at least all the shopping mallscoming up these days and any location where footfalls are large in

number. The advantages of this channel will be:

i. Full range displayii. Easier to promote new productsiii. Easy to push impulse purchase productsiv. Brand building will be facilitated

Pushcarts should be increased in number in order to increase the market

reach this can provide with e very effective channel for ice creams andflavored milks.

Trade promotion should be formulated for newly launched productsinstead of just tagging them onto best sellers.

The company should start a home delivery where a particular householdwill order full range of products required by it over a period of time. For this the company could provide a deliveryman with cycle to reach the

different houses.

In order to motivate the channel members it is also very essential for thecompany to increase the margins for the hard selling items e.g. Amul dahiwhere it faces competition from Nestle & Mother dairy.

In order to remain sensitive to market demand, it is essential for thecompany to place additional salesmen on the field since the brand as suchcommands a high demand in the market but fails to match it with thesupply.

There is ample scope in the low priced segment as also in other

categories.

Amul has the opportunity to capture the more evolved young adults and

children who are open to new products provided they meet their

expectations.



Conclusion:

This is the vision of the future which the company sees for itself:„„AMUL will be an outstanding marketing organization, with specialization in

Marketing of food and dairy products, both fresh and long life with customer focus and information technology integration. The network would consist of over 100 offices, 7500 stockists covering at least every taluka head quarter town, servicing nearly 10 lakh outlets with a turnover of Rs.10,000 Crore, andserving several co-operatives. AMUL shall also create a market for its productsin the neighbouring countries.” AMUL has grown from being merely a differentiating factor to protect theinterests of producers and consumers. AMUL inspired 'Operation Flood' andheralded the 'White Revolution' in India. It began with two village cooperativesand 250 liters of milk per day, nothing but ooze compared to the flood it has

become today. AMUL distributes over a million liters of milk per day, it alsocollects and processes various milk products, during the peak, on behalf of morethan a thousand village individually owned by half a million farmer members.AMUL too has become a symbol of the aspirations of millions of farmers.As AMUL is recognised as the country‟s largest milk producing cooperative it

has tied up with global supermarket chain WALMART to sell its range of dairy products and have also tied up with Glaxo over the production of baby food inIndia. Amul added sweet buttermilk powder, a second brand of baby food and ahigh protein weaning food. It also sells its products to Nepal. Now India is

looking to capture neighbourhood markets like Pakistan, Bangladesh etc. Thesecountries import over 50,000 tonnes of milk each annually & Sri Lanka isflooded with an Indonesian brand, which is said to be of an inferior quality andalso costs less. These countries import tonnes of milk every year.Amul has the opportunity to capture the more evolved young adults andchildren who are open to new products provided they meet their expectations.

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