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With the increase in the availability of liquid milk and Western dairy products,

refinement in the marketing network and significant improvement in per capita income,

there is an increased pressure for the restructuring of the indigenous milk product

industry. Now, the organized sector has started showing keen interest in processes and

equipment for manufacturing traditional products standardization of products, as well

as refinement in packaging and improvement in safety and shelf life. Any innovationwhich can enable the organized sector to manufacture and market indigenous milk

products on an industrial scale can have a far reaching impact on the dairy industry as

well as on the economic condition of milk producers. The market for indigenous

products far exceeds that for Western dairy products like butter, milk powder and

cheese. A great scope exists for further expansion of the market for indigenous milk

products, provided quality and safety are ensured and the shelf life is extended to

facilitate distribution over larger areas. Major innovations are needed in manufacturing,

quality assurance, packaging and process engineering to adapt these products to

current marketing and consumer requirements. Some commercial processes have been

developed to manufacture ghee, khoya, shrikhand and gulabjamun, but much is

required to be done.

The dairy industry is dominated by the co-operative sector. About 60% of the installed

processing capacity is in the co-operative sector.

The National Dairy Development Board (NDDB) is a major player in the market with its

major brand, Amul. Leading brands like Amul, Nestle, Mother Dairy and Britannia are in

the race to tap the growing market.

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GCMMF: AN OVERVIEW

AMUL- THE

TASTE OFINDIA

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Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food

products marketing organization. It is a state level apex body of milk cooperatives in

Gujarat which aims to provide remunerative returns to the farmers and also serve the

interest of consumers by providing quality products which are good value for money.

Members: 12 district cooperative milkproducers' Union

No. of Producer Members: 2.28 million

No. of Village Societies: 11,132

Total Milk handling capacity: 6.7 million litres per day

Milk collection (Total - 2002-03): 1.86 billion litres

Milk collection (Daily Average 2002-03):

5.08 million litres

Milk Drying Capacity: 510 metric Tons per day

Cattle feed manufacturing Capacity: 1450 Mts per day

The main stakeholder of GCMMF is the farmer member for whose welfare GCMMF

exists. GCMMF states that its main objective is the carrying out of activities for the

economic development of agriculturists by efficiently organizing marketing of milk and

dairy produce, veterinary medicines, vaccines and other animal health products,agricultural produce in raw and/or processed form and other allied produce.

THE BRAND NAME - AMUL

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AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit

"Amoolya," was suggested by a quality control expert in Anand. Variants, all meaning

"priceless", are found in several Indian languages.

Today Amul is a symbol of many things: -

Of high-quality products sold at reasonable prices.

Of the genesis of a vast co-operative network.

Of the triumph of indigenous technology.

Of the marketing savvy of a farmers organization.

Of a proven model for dairy development.

HISTORY OF AMUL

In 1929, Peston Edul Polson established Polson Model Dairy at Anand to manufacture

butter, ghee and casein and in 1944; the Bombay Municipal Corporation Milk Supply

was inaugurated. Monopoly rights were awarded to Polson for Procuring milk from

Kaira. Amul's genesis is linked to the freedom movement in India. Sardar Vallabhbhai

Patel, an eminent Indian freedom fighter encouraged the dairy farmers from the Kaira

district in Gujarat to form a cooperative to counter the 'exploitatively' low prices offered

for their milk by the monopoly milk supplier of the area, Polson's Dairy. The dairy

farmers met in Samarkha (Kaira district, Gujarat) on the 4th of January 1946, and

decided to set up a milk producers' cooperative that would deal directly with the

Bombay government, the final buyer of their milk. This was the origin of the Anandmodel.

Initially, when the Bombay government refused to deal with the cooperative, the

farmers called a strike. The government finally relented when Bombay went without

milk for a fortnight. The successful union registered itself as the Kaira District

Cooperative Milk Producers' Union Ltd. (KCMPUL), Anand, in Gujarat in December

1946. And so did GCMMF and brand AMUL establish consequently.

AMUL FACT-FILE

Type: Cooperative

Headquarters: Anand, India

Key people: Chairman, GCMMF - P. G. Bhatol

Industry :Dairy Products

Revenue :INR 67.11 billion, $15.04 billion USD (08-09)

Employees: 735 employees of Marketing Arm. However, real pool consist of 2.8

million

MISSION

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GCMMF endeavour is to satisfy the taste and nutrition requirements of the customers of

the world through excellence in marketing by their committed team. Through

cooperative marketing, they are committed to offer quality products that provide best

value for money.

Their mission is expansion of distribution network, creative marketing, consumer

education and product innovation.

VISION 2020

In the last years report, the chairman of Amul, Dr. V.Kurien, had shared their

perspective plan for the year 2020 for the member unions envisaging a capital

investment of Rs. 2600 crores (Rs. 26 billion) and a projected group sales turnover of

Rs. 27000 crores (Rs. 270 billion). Their Mehsana Union has expanded capacity to 9.61

lakh litres per day at its dairy at Manesar near Delhi. Banaskantha Union too has

embarked on installing new powder plant and cattle-feed plant which shall becommissioned soon. New cattle-feed plants are being put up by Mehsana and Valsad

Unions as well.

AMUL PLANTS

First plant is atANAND, which engaged in the manufacturing of milk, butter, ghee,

milk powder, flavoured milk and butter milk. It is establish in 1973.

Second plant is atMOGAR , which engaged in manufacturing chocolate, Nutramul,

Amul Ganthia and Amul Bite. This plant establish in 1973. It is situated on Anand

Vadodara Highway No. 8.

Third plant is atKanjari, which produces cattle feed. Old plant establish in 1964

&new plant in 1980.

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Fourth plant is atKhatraj, which engaged in producing cheese. It is situated

between Nadiad Ahmadabad

STRATEGYAmul follows a systematic and well defined pattern of strategy, which can be

categorized as:

Minimum expenditure on advertisement

Focus on delighting customers

Expanding its distribution network for maximum reach of customers

Minimize its expenditure and pay only 0.5% of its turnover on salaries against

other 7% FMCG Companies

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 was as follows:

It combined market and social development in an emerging economy. It

recognized the inter-linkages between various environments that governed thelives 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.

AMUL'S SECRET OF SUCCESS

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The system succeeded mainly because it provides an assured market at remunerative

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

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

It also enables the consumer an access to high quality milk and milk products. Contrary

to the traditional system, when the profit of the business was cornered by the

middlemen, the system ensured that the profit goes to the participants for their socio-economic upliftment and common good.

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

and model for emulation elsewhere.

Amul has been able to:

Produce an appropriate blend of the policy makers farmers board of

management and the professionals: each group appreciating its rotes and

limitations,

Bring at the command of the rural milk producers the best of the technology andharness its fruit for betterment.

Provide a support system to the milk producers without disturbing their agro-

economic systems,

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

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

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

producer members. In that sense. Amul is an example par excellence, of an

intervention for rural change.

The Union looks after policy formulation, processing and marketing of milk, provision oftechnical inputs to enhance milk yield of animals, the artificial insemination service,

veterinary care, better feeds and the like - all through the village societies. Basically the

union and cooperation of people brought Amul into fame i.e. AMUL (ANAND MILK

UNION LIMITED), a name which suggestTHETASTE OF INDIA.

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THE AMUL MODEL

The Amul Model of dairy development is a three-tiered structure with the dairy

cooperative societies at the village level federated under a milk union at the district

level and a federation of member unions at the state level.

Establishment of a direct

linkage between milk

producers and consumers by

eliminating middlemen

Milk Producers (farmers)

control procurement,

processing and marketing

Professional management

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The Amul model has helped India to emerge as the largest milk producer in the world.More than 13 million milk producers pour their milk in 1,28,799 dairy cooperative

societies across the country. Their milk is processed in 176 District Co-operative Unions

and marketed by 22 State Marketing Federations, ensuring a better life for millions.

THE PRODUCT RANGE

Breadspreads 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 Malai Paneer (cottage cheese), Utterly Delicious

Pizza

Fresh Milk Amul Gold Full Cream Milk 6% fat, Amul Shakti

Standardised Milk 4.5% Fat, Amul Taaza Toned Milk 3%

fat,Amul Slim & Trim, Amul Cow Milk

UHT Milk Range Amul Gold 4.5% fat Milk, Amul Shakti 3% fat Milk, Amul

Taaza 1.5% fat Milk, Amul Lite Slim-n-Trim Milk, AmulFresh Cream

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Milk Powders Amul 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 Caf, Amul Kool

Koko,Amul Kool Millk Shaake, 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, Amul

Basundi,Avsar Ladoos

Ice-cream Sundae Range, probiotic, sugarfree and probiotic

Chocolate &

Confectionery

Amul Milk Chocolate, Amul Fruit & Nut Chocolate, Amul

Chocozoo, Amul Bindass, Amul Fundoo

AMUL RECENT ACHIEVEMENTS

The organization which symbolizes taste of India achieved a historical milestone by

crossing the 2 billion dollar mark. During the financial year 2010-11, GCMMF registered

impressive top line growth of 22.1%, achieving turnover of Rs. 9774 crores. While

commenting on the results, Shri Parthibhai G. Bhatol, Chairman, GCMMF informed that

this performance is even more remarkable, when viewed from the perspective that the

organization was able to achieve 1 billion dollar turnover in the 33rd year of its

formation while it took only just four more years to add another 1 billion dollar to its

turnover. Turnover of GCMMF registered CAGR of 23% during the last 4 years. During

the year 2010-11, GCMMF paid Rs. 8345 crores to its 30 lakhs farmer members. Payout

to farmers also registered 23% CAGR in last 4 years.

Sales of Amul Butter have also shown an impressive growth of 26% in 2010-11. Sales of

Amul Milk in pouches have grown by 34%. Sales of Amul Processed Cheese have shown

consistent and very impressive growth of 29%. Amul beverage range including

Flavoured milk, Buttermilk and Lassi has shown an impressive growth of 28% over the

last year. Sales of Amul Masti Dahi also grew by 39%. With enhanced focus on fresh and

fermented products, GCMMF launched Amul Probiotic Lasee in ready to drink cups,

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Amul Probiotic Buttermilk in PET bottles and flavoured yoghurt under the brand name

Amul Flaavyo. In the Infant Milk Food category, their brand Amulspray registered

growth of 20% and achieved the unique distinction of becoming a Rs. 1000 crore mega-

brand.

AMULs BEST PRACTICES

Developing demand

At the time Amul was formed, consumers had limited purchasing power, and modest

consumption levels of milk and other dairy products. Thus Amul adopted a low-cost

price strategy to make its products affordable and attractive to consumers by

guaranteeing them value for money.

Introducing higher value products

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

products.

Despite competition in the high value dairy product segments from firms such as

Hindustan Lever, Nestle and Britannia, GCMMF ensures that the product mix and the

sequence in which Amul introduces its products is consistent with the core philosophy

of providing milk at a basic, affordable price.

The distribution network

Amul products are available in over 500,000 retail outlets across India through itsnetwork of over 3,500 distributors. There are 47 depots with dry and cold warehouses

to buffer inventory of the entire range of products.

GCMMF transacts on an advance demand draft basis from its wholesale dealers instead

of the cheque system adopted by other major FMCG companies. This practice is

consistent with GCMMF's philosophy of maintaining cash transactions throughout the

supply chain and it also minimizes dumping.

Wholesale dealers carry inventory that is just adequate to take care of the transit time

from the branch warehouse to their premises. This just-in-time inventory strategy

improves dealers' return on investment (ROI). All GCMMF branches engage in route

scheduling and have dedicated vehicle operations.

Umbrella brand

The network follows an umbrella branding strategy. Amul is the common brand for

most product categories produced by various unions: liquid milk, milk powders, butter,

ghee, cheese, cocoa products, sweets, ice-cream and condensed milk.

Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya and

Nutramul. The edible oil products are grouped around Dhara and Lokdhara, mineral

water is sold under the Jal Dhara brand while fruit drinks bear the Safal name.

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By insisting on an umbrella brand, GCMMF not only skillfully avoided inter-union

conflicts but also created an opportunity for the union members to cooperate in

developing products.

Managing the supply chain

Even though the cooperative was formed to bring together farmers, it was recognisedthat professional managers and technocrats would be required to manage the network

effectively and make it commercially viable.

Coordination

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

decentralised responsibility for various activities, effective coordination is critical for

efficiency and cost control. GCMMF and the unions play a major role in this process and

jointly achieve the desired degree of control.

Buy-in from the unions is assured as the plans are approved by GCMMF's board. Theboard is drawn from the heads of all the unions, and the boards of the unions comprise

of farmers elected through village societies, thereby creating a situation of interlocking

control.

The federation handles the distribution of end products and coordination with retailers

and the dealers. The unions coordinate the supply side activities.

These include monitoring milk collection contractors, the supply of animal feed and

other supplies, provision of veterinary services, and educational activities.

Managing third party service providersFrom the beginning, it was recognised that the unions' core activity lay in milk

processing and the production of dairy products. All other activities were entrusted to

third parties. These include logistics of milk collection, distribution of dairy products,

sale of products through dealers and retail stores, provision of animal feed, and

veterinary services.

It is worth noting that a number of these third parties are not in the organized sector,

and many are not professionally managed with little regard for quality and service.

This is a particularly critical issue in the logistics and transport of a perishable

commodity where there are already weaknesses in the basic infrastructure.

Establishing best practices

A key source of competitive advantage has been the enterprise's ability to continuously

implement best practices across all elements of the network: the federation, the unions,

the village societies and the distribution channel.

In developing these practices, the federation and the unions have adapted successful

models from around the world. It could be the implementation of small group activities

or quality circles at the federation. Or a TQM program at the unions. Or housekeeping

and good accounting practices at the village society level.More important, the network has been able to regularly roll out improvement programs

across to a large number of members and the implementation rate is consistently high.

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For example, every Friday, without fail, between 10.00 a.m. and 11.00 a.m., all

employees of GCMMF meet at the closest office, be it a department or a branch or a

depot to discuss their various quality concerns.

Each meeting has its pre-set format in terms of Purpose, Agenda and Limit (PAL) with a

process check at the end to record how the meeting was conducted. Similar processes

are in place at the village societies, the unions and even at the wholesaler and C&F agentlevels as well.

Examples of benefits from recent initiatives include reduction in transportation time

from the depots to the wholesale dealers, improvement in ROI of wholesale dealers,

implementation of Zero Stock Out through improved availability of products at depots

and also the implementation of Just-in-Time in finance to reduce the float.

The most impressive aspect of this large-scale roll out is that improvement processes

are turning the village societies into individual improvement centres.

Technology and e-initiatives

GCMMF's technology strategy is characterized by four

distinct components: new products, process technology,

and complementary assets to enhance milk production

and e-commerce.Automation in processing and packaging areas is

common, as is HACCP certification. Amul actively

pursues developments in embryo transfer and cattle breeding in order to improve cattle

quality and increases in milk yields.GCMMF was one of the first FMCG (fast-moving consumer goods) firms in India to

employ Internet technologies to implement B2C commerce.

Today customers can order a variety of products through the Internet and be assured of

timely delivery with cash payment upon receipt. Another e-initiative underway is to

provide farmers access to information relating to markets, technology and best

practices in the dairy industry through net enabled kiosks in the villages.

GCMMF has also implemented a Geographical Information System (GIS) at both ends of

the supply chain, i.e. milk collection as well as the marketing process. Farmers now have

better access to information on the output as well as support services while providing a

better planning tool to marketing personnel.

Advertising and Sales Promotion

Over the years, Amul's advertising philosophy had been "to be simple, fresh and

innovative". The clean, emotion-based ads refrained from using hi-tech special effects,

and aimed at maintaining the perfect balance between the traditional and the modern.

Looking Ahead

Analysts wondered whether a co-operative with limited financial means could stand upto the might of these MNCs, and if its low pricing strategy would continue to stay

relevant. MNCs like Pizza Hut, Domino's, Hindustan Lever Limited and Cadbury had also

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become competitors. Amul had proved its detractors wrong and firmed up ambitious

growth plans.

4 PS OF MARKETING

1.PRODUCTOver the years, Amul has come up with many products. There has been product lineextension as well as product category extension. The picture below is a snapshot of

various SBUs of Amul.

Using the BCG matrix for product analysis, we can know which of these SBUs is of

utmost importance to the company or the brand Amul.

Looking at the matrix above, we may say that Amul needs to perform product

innovation if it wants to convert Amul chocolates, masti dahi , Amul mithai mate, Amul

lassi to star products. The above matrix also indicates that, Amul may also choose to

disinvest in Nutramul and Amul shakti.

The following table describes the market share that Amul holds for each product

line.

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In ice cream, HUL is just above the market share i.e., 28.22 %, with Mother Dairy in the3rd place with 8.66 %. In chocolates, Cadbury has the maximum share of 70 % and

Nestle has 20 % of the market share.

AMUL, being a co-operative union offers variety of services to the members of village

and district level co-operative societies. The main services offered by AMUL are:

Medical Facilities for the Cattle of Farmers

AMUL provides medical facilities to cattle of farmer at a concessional rate of Rs.

50/- includes medicines, treatment charge.

Cattle FeedingAMUL provide the Dan to the cattle of member farmers. AMUL produces the

by pass protein Dan and Purk Dan to the cattle of farmers at reasonable cost.

Artificial Insemination (Cattle Breeding)

AMUL has established Artificial insemination center at Ode village near Anand.

Free Animal Vaccination

Often Animals are caught up in unknown diseases. To protect the animals from

such diseases periodical Vaccination programme are arranged by AMUL.

Farmer Education Programmed

Generally, farmers believe in superstitions. Further, he is often not aware abouthow the animal should be taken care which things should be given prime

concern while milking the animal. AMUL provide guidance and education

through arranging seminar on periodic basis.

2.PRICINGDecided by the GCMMF by conducting market surveys to check the validity and

feasibility of prices in the market and accordingly decides the prices of AMUL products.

Price is inclusive of several elements like,

Cost of milk

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Labour cost

Processing cost

Packaging cost

Advertising cost

Transportation cost

Sales promotion costs Taxes etc.

3.PLACEAmuls success today is partly because of its strong supply chain design. Below is the

schematic diagram of Amuls supply chain.

With products being highly perishable, the supply chain ought to have to maintain

correct temperature, humidity etc and the chain should move fast.

To reach out its consumers more directly and let them the total brand experience, Amul

has come up with Amul parlours. These are called Utterly delicious parlours. They

have come up in major cities like Ahmadabad, Bangalore, Baroda, Delhi, Mumbai,

Hyderabad and Surat already, and many more starting up real soon. Till date there are

about 400 Amul parlours across the country. These parlours are set at prominent

locations such as campuses of Infosys, Wipro, IIM-A, IIT-B, temples, Metros etc.

Amul has franchisee plans in regards of the Amul parlours. This might start pretty soon,

since the talks are almost at the end.

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Now, going back to the supply chain of Amul, Amul has gone the e- commerce way. The

1stinitiatives taken for an ERP system was in 94. Tata Consultancy Services was hired

to guide in its implementation. The implementation project was named as Enterprise-

wise Integrated Application System (EIAS). Automatic Milk Collection System units

(AMCUS) at village societies were installed in the first phase to automate milk

producers logistics. Amul also connected its zonal offices, regional offices and membersdairies through VSATs for seamless exchange of information. Amul is also using

Geographic Information Systems (GIS) for business planning and optimization of

collection processes. Indian Institute of Management Ahmedabad supplemented

Amuls IT strategy by providing an application software Dairy Information System

Kiosk (DISK) to facilitate data analysis and decision support in improving milk

collection. There are plans to introduce features like Internet banking services and

ATMs which will enable the milk societies to credit payments directly to the sellers

bank account. Distributors can place their orders on the website www.amul2b.com

especially meant for accepting orders from stockists and promoting Amuls products via

e-commerce.

4.PROMOTIONOne of the most conservative FMCG entities GCMMF spends a mere 1% of its

turnover on promotions. Amul has written and re- written the rules of the game. Amul

butter girl is one of the longest run ad campaigns in the country for 43 years!!!

The reason Amul topicals are so successful because, it doesnt plead the customer to go

buy Amul instantly. Instead, Amul captures latest news headlines and showcases themin such a way that the moment we see it, we register it in our brains. The basic aim here

is to make butter synonymous to Amul. Next time we go to buy butter, the first brand

that will come to the mind is Amul. Amul uses rotational promotion strategy to be in

touch with customers/ consumers throughout. After every 3-4 years, Amul comes up

with something new and a promotional campaign for the same is placed.

Amul Ice-cream 1996

Category re-visited in 1999, in order to improve availability of the product and

make it affordable

Amul Cheese in 2001 Amul Masti Chaas in 2004-05

Nutramul and Kool Kafe in 2006

Amul Koko cold chocolate drink in 2009

Amul promotes itself by conducting various contests such as:

Chef of the year- in this, the participants are required to use as many Amul

products as possible.

Amul Maharani of the year in this, the participants are required to fill up

questionnaires and then there is a lucky draw.

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Amul promotes itself by sponsoring various movies, and TV shows. For example

Amul publishes some books periodically. Basically they are related to Amul or

dairy industry as such.

Amul also gives away academic excellence awards for school children every year.

They are called Vidya Shree for 10th std. and Vidya Bhushan for 12th std

students.

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Amul Hits

Amul hits of the year 2012 Amul hits of the year 2011

Amul hits of the year 2010 Amul hits of the year 2009

Amul hits of the year 2008 Amul hits of the year 2007

Amul hits of the year 2006 Amul hits of the year 2005

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Amul hits of the year 2004

Amul hits of the year 2003 Amul hits of the year 2002

Amul hits of the year 2001 Amul hits of the year 2000

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AMULS STP

SEGMENTATION

Segmentation is not so easy because of mixed audience and various culinaryapplications of Amul products. Nevertheless, we may do segmentation based on:

Consumer type:

For Kids- Amul kool, Amul chocolates, Nutramul, etc

For Women-Amul Calci +

For Youth-Utterly delicious pizza, cheese variants etc

For the calorie conciuos-Amul lite, Amul lite slim trim milk etc

For health conscious-Nutramul, Amul shakti etc.

Industry type:

Milk- Ice cream manufacturer, restaurants, coffee shops etcButter/Cheese/Ghee-Bakery, pizza retailers, snack retailers

TARGETINGAfter segmentation, one has to decide where to find this market segment and what

should be the size of this segment. Example, Amul has identified youth as one of its

potential segments.

Now it has to decide where to find youth who will actually go get their product and the

number of youth that the company, i.e., Amul requires. Amul has come up with Amul

parlours for this reason.

POSITIONING

A mass market player, no premium offerings

USP Quality with affordability

Amul as Taste of India - creating value for everyone in the value chain, both

customers and farmers.

New offerings for health conscious and vibrant India in the form of Probiotic

wellness ice-cream, sugar free delights for the diabetic patients and Amul kool

caf for the youth of today.

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3 CS MODEL

1. COMPANY Largest milk brand in Asia. It is no. 1 in Asia and no. 2 in the world

More than 30 dairy brands

Market leader in ghee and butter with 85% market share Very strong supply chain

Enjoys fine reputation. Though the company has grown so big, it never left its

key players- the milk suppliers

Quality with affordability

2. CUSTOMER Are extremely satisfied

Moved from loose milk to packaged milk. Moving consumers from loose mil to

packaged milk and then gradually moved them up the value chain i.e., the tetrapacks.

Being exposed to a brand, its natural for a customer to try more products. This

the Umbrella strategy that Amul follows.

Improved socio-eco conditions of the customers, has changed their lifestyle and

thus the scope for product innovation has increased.

3. COMPETITOR Amul has to defend against Mahananda, Vijaya, Milma, and other cooperative

milk brands

Aggressive moves against Britannia, Nestle, Mother Dairy, Kwality

Amul has a competitive sustainable advantage. This lies in the procurement part.

Its ability to collect 7 million liters of milk from 2.6 million farmers and convert it

into Rs. 6 crore worth products and distribute them to 5 lakhs retailers is a tough

job.

Intelligent marketing

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SWOT ANALYSIS OF AMUL

STRENGTHS

Demand profile: Absolutely optimistic. Milk being a necessity product, the

demand will stay and the sales at GCMMF are bound to increase over a period of

time.

Margins: Quite reasonable, even on packed liquid milk. The margins are enough

to limit the entry of potential entrants.

Flexibility of product mix: Tremendous. With balancing equipment, GCMMF

has kept adding a wide array of products to its product line. Availability of raw material: Abundant. Presently, more than 80 per cent of

milk produced is flowing into the unorganized sector, which requires proper

channelization. Amul & GCMMF have leveraged this and has got itself a strong

base of suppliers who provide them milk throughout the year .

Technical manpower: Professionally trained, technical human resource pool,

built over last 30 years is the strength that GCMMF has. The employees of GCCMF

are highly recognized in the industry and have earned name for themselves as

well as the federation.

Enhanced Milk Production: Increase in the milk production with consequentlyincreased availability of milk processing has led to increase in consumption and

faster access to the consumers through effective distribution. The technology is

brought from Denmark and the production of milk has benefited from that.

Transportation: The transportation facilities and the easy availability of the

special trucks have provided a boost. Cold refrigerated trucks are there in place

and the warehouses also have the cold storage facilities that facilitate the

transportation.

Vast resources: Country has vast natural resources which offer immense

potential growth and development for dairying. Moreover the financial resources

available with the federation are immense and the reputation is such that in case

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of any further requirements, it can approach any institution and raise any form

of capital.

Increasing purchase power and changing tastes of the consumers: The

purchasing power of the residents is increasing. As a result a lot of products are

being consumed. Moreover, the consuming habits are changing. As a result, the

demand for products such as butter and cheese is increasing at a very rapid rate.

WEAKNESSES

Perishability: Pasteurization has overcome this weakness partially. UHT gives milk

long life. Still perishability is there at the milkvendors end. This does result in loss of

some production. But Amul Dairy is taking steps to store milk at the vendors end.

Surely, many new processes will follow to improve milk quality and extend its shelf life.

Lack of control over yield: Theoretically, there is little control over milk yield. A

lot depends upon the monsoon in the country. This is because of the quality of

cattle feed that would be available will not have the required nutritional content.

Steps are taken to provide awareness regarding these and the penetration of

quality feed is being increased. Moreover, increased awareness of developments

like embryo transplant, artificial insemination and properly managed animal

husbandry practices, coupled with higher income to rural milk producers should

automatically lead to improvement in milk yields.

Logistics of procurement: Woes of bad roads and inadequate transportation

facility make milk procurement problematic. All these factors lead to

perishability of the procured milk. But with the overall economic improvement

in India, these problems would also get solved.

Erratic power supply: The erratic power supply would cause harm in the

processing of milk.

Underdeveloped systems: There still exist underdeveloped raw milk collection

systems in some parts of the country. However steps are being taken such as

setting up of cold storage points at key collection centers to combat the situation.

Lack of proper implementation: Dairy development programmes have not

been fully implemented as per the needs of the region in different agro-climatic

zones.

Infrastructure: The infrastructure that is available is not up to the current

world standards. Also lack of infrastructure for offering dairy business

management programmes to the trained personnel is creating a hindrance.

OPPORTUNITIES

"Failure is never final, and success never ending. Dr Kurien bears out this statement

perfectly. He entered the industry when there were only threats. He met failure head-

on, and now he clearly is an example of never ending success! If dairy entrepreneurs

are looking for opportunities in India, the following areas must be tapped:

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Competition: With so many newcomers entering this industry, competition is

becoming tougher day by day. But then competition has to be faced as a ground

reality. The market is large enough for many to carve out their niche. Moreover

due to competition, there is a chance to better serve the market with innovative

products.

Value addition: There is a phenomenal scope for innovations in productdevelopment, packaging and presentation. Given below are potential areas of

value addition.

Export potential: Efforts to exploit export potential are already on. Amul is

exporting to Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the

new GATT treaty, opportunities will increase tremendously for the export of

agri-products in general and dairy products in particular. There is a strong basis

of cost efficiency, which GCMMF can leverage in the world market.

Markets: The market for the traditional as wells as processed dairy products is

expanding both at the domestic and international front. IT support: Software is now available for project formulation for dairy

enterprise. It has also computerized its production processes. Mother Dairy was

the first fully computerized dairy in India. In its Anand plant all products are

processed computerized, which does not have any hand touch during any stage

of process.

THREATS

Milk vendors, the un-organized sector: Today milk vendors are occupying the

pride of place in the industry. Organized dissemination of information about the

harm that they are doing to producers and consumers should see a steady

decline in their importance.

Infestation: There are increasing incidents of chemical contaminants as well as

residual antibiotics in milk.

Quality: The quality of the milk is found to be poor as compared to the

international standards. One of the reasons for these according to the EU and

America is the method of milching the milk. In these nations the milk is hands by

the farmers owning the cattle do milched with the help of machines, while in

India.

Exploitation: The liberalization of the Dairy Industry is likely to be exploited by

the multinationals. They will be interested manufacturing the milk products,

which yield high profits. It will create milk shortage in the country adversely

affecting the consumers.

Subsidy by Western Nations: There have been incidences wherein the Western

nations subsidizing the dairy products by a few means like transportation.

Because of such reasons the final price of the product goes below the prices

prevailing in the Indian Market. Hence it proves a threat to GCMMFs and other

Indian dairy products.

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Creation of Non Tariff Barriers by Developed Nations: The Developed

Nations have created Non Tariff Barriers related to Quality of the milk

specifically. They want that the milk be processed with potable Air and Water.

They also want that the milching of cattle be done with the help of machines.

However this type if system is yet to evolve in India. Because of these reasons

they are reducing the market potential of Indian made products, where GCMMFholds a lions share.

MICHAEL PORTERS FIVE-FORCE ANALYSIS

The success of the national and local competitors brands includes effective distribution

system, advertising, good pricing policy etc. The factors ascribed by porter are:

Threats of new entrants

Bargaining power of suppliers

Bargaining power of buyers

Rivalry among competitors

Threats from substitutes

These factors can be explained in context to GCMMF as below:

THREATS OF NEW ENTRANTS

Economies of Scale: GCMMF enjoys economies of scale, which is difficult to

match by any other competitor. It is because of this reason that no regional

competitor has grown to a national level.

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Cost and Resource advantages: Amul dairy is co-operative society. That means

cooperation among competitive is the fundamental principle. Amul dairy is

managed under the norms of GCMMF and market the products under the brand

name Amul, which has a very good reputation at domestic and international

level. Here, the raw material procurement is very difficult for the new entrants.

Consequently Capital requirement is also high. Still new entrants are emergingsuch as domestic and international players. So the threats of new entrants are

moderate.

Brand Preferences and Consumer Loyalty: There is an immense level of Brand

Preference of Amul in the minds of the people. The level of preference

specifically in the liquid milk sector is that they would go to other retailer if the

retailer does not have milk.

Access to Distribution Channels: The distribution channel of GCMMF is a very

planned and perfect one. For any new entrant to enter it would be a very difficult

task. For GCMMF the result is years of hard work and its investment in itsemployees as well as at different levels in the distribution network.

Inability to match the technology and specialized know-how of firms

already in the industry: The technology used by Amul is imported from

Denmark. It is a state of art technology. To get this technology in India, a firm

would require a huge amount of resources.

Capital Requirements: The total investment required in the industry is huge

and is a decision worth considering even for MNCs. The investment decisions

cover the processing costs as well as the marketing costs. To compete with the

brand Amul in India is difficult as Amul is synonymous to Quality.

BARGAINING POWER OF SUPPLIER

The objective of Amul dairy is not profiting. As it is a part of co-operative society,

it runs for the benefit of farmers those are the suppliers of milk and users of milk

products. According the concept of the cooperative society supplier has

bargaining power to have a good return on his or her supply. However, supplier

has limited rights to bargain with the cooperative society because it is made and

run for the sake of mass and not for individual benefit. But it is made sure that

the supplier gets his fair share of return.

There is appropriate bargaining power of the supplier. In olden days there were

not any kind of cooperative societies as the farmer was exploited. But, nowadays

the farmers rights are protected under the cooperative rules and regulations,

which ultimately results in moderate power of bargaining from the supplier.

BARGAINING POWER OF BUYERS

Cost of switching to competitor brands: The switching of brands is seen very

much in products such as ice cream, curd, milk powders, milk additives etc. but itcan be seen comparatively less in liquid milk category. Even if the buyers shift to

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the other brands of milk, the value that they get is less than they would get from

consuming Amul.

Large no. of buyers: Milk is a necessity product and hence is a mass product. It

has a considerable share of the rupee spent by any Indian. Moreover the buyers

are spread evenly over the country and do not have any bargaining power.

RIVALRY AMONG COMPETITORS

Demand for the product: The demand of the products of GCMMF is increasing

at a very healthy rate. To stand against the rivalry GCMMF is coming with a wide

range of products.

Nature of Competitors: In different business category GCMMF faces

competition from different players. In the Milk powder category it faces

competition from Cadbury & Nestle, in the chocolate category also I faces

competition from Cadbury & Nestle. While in the ice cream market it facescompetition from Kwality Walls Max and Havmor. In butter and chesses it faces

competition from Britannia. Moreover in almost all categories there is presence

of local retailers and processors and milk vendors. Rivalry intensifies as each of

the competitors has different lines and this would in turn depend on the

importance the line holds for the competitor.

Mergers and Acquisitions: As such in the industry there are no mergers or

acquisitions. However if any MNC wishes to enter through this route then the

competition might be severe.

THREATS OF SUBSTITUTE

Availability of attractive priced substitutes:Different substitutes are available

for different category of products. There is ample availability of low priced

substitutes from local vendors and retailers. This is a front where GCMMF is still

finding hard to combat.

Satisfaction level of substitutes: Customers do consider these products as

equal on quality if not better then the products of GCMMF. Hence the rate of

customers switching to the substitutes is very high. Moreover the buyers alsocan switch to the customers easily without any hurdles.

Not immediate substitutes: Distant substitutes are present in many of the

categories of business of GCMMF. For example in the Masti Buttermilk category it

faces competition from cold drinks and ice cream.

These 5 forces interact among themselves at different degrees over a period of time.

Moreover it will get intense or loosen up depending upon the moves of its competitors,

buyers, suppliers, etc. However GCMMF has been able to outperform on almost all

fronts excluding a few lines of business.

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MOTHER DAIRY

Mother Dairy was set up in 1974 under the Operation Flood Programme. It is a wholly

owned company of the National Dairy Development Board (NDDB). Mother Dairy

MOTHER

DAIRY

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manufactures, markets & sells milk and milk products under the Mother Dairy brand

(Milk, Cultured Products, Ice Creams, Paneer and Ghee), Dhara range of edible oils, Safal

range of fresh Fruit & vegetables, Frozen Vegetables, Processed Fruit & Vegetable

Products, Fruit Pulps & Concentrates in bulk aseptic packaging and fruit juices at a

national level through its sales and distribution networks for marketing food items.

Mother Dairy sources significant part of its requirement of liquid milk from dairy

cooperatives. Similarly, Mother Dairy sources fruits and vegetables from farmers /

growers associations. It is Mother Dairys constant endeavour to ensure that milk

producers and farmers regularly and continually receive market prices by offering

quality milk, milk products and other food products to consumers at competitive prices

and uphold institutional structures that empower milk producers and farmers through

processes that are equitable.

Mother Dairy markets approximately 3.2 million litres of milk daily in the markets of

Delhi, Mumbai, Saurashtra and Hyderabad. Its milk has a market share of 66% in thebranded sector in Delhi where it sells 2.5 million litres of milk daily and undertakes its

marketing operations through around 1400 retail outlets and over 1000 exclusive

outlets of Mother Dairy.

The company derives significant competitive advantage from its unique distribution

network of bulk vending milk booths, retail outlets and mobile units. Mother Dairy ice

creams launched in the year 1995 have shown continuous growth over the years and

today boasts of approximately 62% market share in Delhi and NCR. Mother Dairy also

manufactures and markets a wide range of dairy products that include Butter, Mishti

Doi, Paneer, Dahi, Ghee, Cheese, UHT Milk, Pro-biotic Products, Lassi & Flavored

Milkand most of these products are available across the country.

Safal is the market leader in the organized fruit & vegetable retail business in Delhi NCR

where it sells an average of 300 MT/day through a network of 350+ exclusive retail

outlets under brand name Safal/ Safal Pure Veg, supported by a state-of-the-art large

and ultramodern Central Distribution Facility located in Delhi with an annual capacity

to handle and process 2, 00,000 MT of fresh fruits and vegetables.

The Dhara range of edible oils is marketed by Mother dairy. Today it is one of the

leading brand of edible oils and is available across the country in over 2, 00,000 outlets.

The brand is known for its PURITY and focuses on the indigenous oil. The brand is

currently available in the following variants: Refined Vegetable Oil, Refined Soybean

Oil, Refined Sunflower Oil, Refined Rice Bran Oil, Kachi Ghani Mustard Oil and

Filtered Groundnut Oil.

National Dairy Development Board

National Dairy Development Board NDDB is the National Dairy Development Board. It isan institution of national importance setup by an Act of Parliament of India in 1965. Dr.

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Amrita Patel is the current Chairman of the National Dairy Development Board, Anand.

NDDB's subsidiaries include Mother Dairy, Delhi. The main office is located in Anand,

Gujarat with regional offices throughout the country.

NDDBs ROLE

NDDBs ROLE It is the central cooperative board of the country and was created topromote, finance and support producer-owned and controlled organizations that we

have mentioned. Of these, two main players Amul of GCMMF and Mother Dairy of

NDDB are the leading brand in India. It has now integrated 96,000 dairy co-operatives

in what it calls the Anand Pattern, linking the village society to the state federations in a

three-tier structure. NDDB launched its Perspective Plan 2010 with four thrust areas:

Quality Assurance, Productivity Enhancement, Institution Building and National

Information Network.

VISION & MISSION

Vision- Provide quality food and beverages to consumers at affordable prices while

ensuring fair returns to the producers.

Mission-Mother Dairys heritage is intrinsically linked to the cooperative movement

in India. With determination & pride we will continue to serve our farmers, rural India

& our consumers. Our values reflect who we are & what we firmly believe in.

The objective of Mother Dairy is to: Ensure that milk producers and farmers regularly and continually receive

market prices by offering quality milk, milk products and other food products to

consumers at competitive prices and;

Uphold institutional structures that empower milk producers and farmers

through processes that are equitable.

At Mother Dairy, processing of milk is controlled by process automation whereby state-

of-the-art microprocessor technology is adopted to integrate and completely automate

all functions of the milk processing areas to ensure high product quality/ reliability and

safety.In addition to its market leadership in India, Mother Dairy is also active in the global

arena, exporting its range of dairy products to various international markets.

PRODUCT MIX

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S.No. Product Name Brand Name Items

1. Milk & MilkProducts

Mother Dairy

Packaged Milk (Full Cream, Standardised,

Toned, Double Toned Skimmed and Pro-

biotic), Butter, Dahi, Ghee, Cheese, Ice-Creams, UHT Milk, Lassi & Flavoured

Milk

2. Edible Oils Dhara

Refined Vegetable Oil, Refined Soyabean

Oil, Refined Sunflower Oil, Refined Rice

Bran Oil, Kachi Ghani Mustard Oil and

Filtered Groundnut Oil.

3.

Fresh & Frozen

Fruits &

Vegetables

SafalFruits, Vegetables, Rice, Processed items

(jams, juices, ketchup, pulp, etc.)

Financial Status of Mother Dairy

Financial Status of Mother Dairy Mother Dairy Foods Processing Ltd, also known as

Mother Dairy Fruit & Vegetable Private Limited, Patparganj, Delhi, has a turnover of

about $500 million. Mother Dairys turnover has been growing at the rate of 20%

(CAGR) over the last 3 years and has crossed the Rs.2700 crores mark in the fiscal 2008-

09. Mother Dairy plans to achieve a turnover of $1 billion USD by end of 2009.

Supply Chain Management

Supply Chain Management Milk Procurement: Mother Dairy sources its requirement of

liquid milk from dairy co-operatives and producer institutions. Milk is received from

farmer cooperatives through insulated road/rail tankers at very low temperature in

order to retain its freshness.

Milk Distribution: 79 tankers in the morning and 75 tankers in the evening bring in milk

from the regional collection centres. After collection the same tankers are utilized for

the delivery of the processed milk to the vendors and outlets. Mother Dairy has over

820 Milk Distribution Outlets in the National Capital Region. Each of these outlets place

their demand by raising an invoice one day in advance. The demand is also calculated

using the Calendar Scheme, in this depending on the pre-calculated seasonal demands

the outlets place their orders accordingly. In order to satisfy immediate demand, 20 to

25 tankers are provided with a buffer stock of 500 litres each day so that they can be

mobilized to cater the demand in an area. To coordinate its operations all the tankersare equipped with HAM radios.

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STRATEGIES IMPLEMENTED BY MOTHER DAIRY

Focused Approach

The cooperative is expanding its product portfolio further to match rival offerings

particularly those of Amul. For the first 22 years of its existence, liquid milk was the

only dairy product that Mother Dairy offered. It was in 1996 that it came up with ice-

creams. But the real spurt came about four years ago, when it introduced curd, flavored

milk, lassi and mishti doi. It introduced butter a year-and-a half ago; ghee and UTH milk

a year ago; and cheese, about 10 months ago. And under its frozen foods and vegetables

brand Safal, besides the introduction of corn and mixed vegetables, it has plans to come

out with frozen potato-based snacks in a few months. So, while the product portfolio has

been growing, Mother Dairy has plans for reach out to newer markets - but the strategy

here is more product-specific. In liquid milk, it will initially concentrate only on four

markets - Delhi, its home ground; the Junagarh region and Ahmedabad in Gujarat;

Mumbai, which it entered a year ago; and Hyderabad, where it moved in a little more

than a year ago. They have no plans to go everywhere with liquid milk. What's the need

to get into those markets that already have strong co-operative brands? Their objective

of getting into newer locations is not to make Mother Dairy larger, but to ensure thatthere is a large viable distribution network and consumer brand to take care of surplus

milk.

Wider Spread

However, as far as other dairy products are concerned, Mother Dairy plans to expand

across the board. Other than milk, for most state federations, dairy products are still a

small part of their operations. So they are taking their products to regions across India,

where they see enough market potential.

In ice creams, it was only two years ago that Mother Dairy entered its first marketoutside Delhi - UP and Punjab. Today, it's extended its operation to Haryana, Jaipur,

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Mumbai and Kolkata as well. Next year, it plans to go south to Hyderabad and

Bangalore.

Product Differentiation

While Mother Dairy still may not have a product portfolio as large as Amul, which is also

expanding across the country in a big way and is a much bigger player, it's doing its bit.Mother Dairy says the idea is not just to enter new markets, but to do well in those

markets - which mean bigger market shares in the different product categories in

whichever market it is present.

The drivers will be value created through quality of the offerings as well as innovations

in products. This will, of course, be backed by relevant marketing and promotion

campaigns. Mother Dairy is bringing in mass Indian flavors which are building up in

terms of absolute percentage of contribution. Their attempt is to make the taste

experience in ice creams as familiar as possible so as to increase consumption.

Take the case of curd. It started off very slow but today, Mother Dairy claims it'sgrowing at close to 60 per cent year-on-year in Delhi. Here again, the Indian flavour

formula seems to have worked. They formulated it to taste as close to home-made curd

as possible. If the offering fits well with the Indian consumer, the resistance is lower and

acceptance more.

PERSPECTIVE STRATEGIES APPLIED BY MOTHER DAIRY

Mother Dairy maps the future of dairying in India, setting realistic goals for

Strengthening Cooperative Business Production Enhancement

Assuring Quality

Creating an Information and Development Research.

The plan was realized with the successful completion of the Operation Flood

Programme and has been developed by the State Milk Marketing Federations and the

Milk Producers' Cooperative Unions in consultation with the Dairy Board. The goals and

strategies to meet them have been drawn by its actual implementers - Federation and

Unions and supported by NDDB.

1. Strategy for Strengthening Cooperative Business Recruit, train and motivate increasing numbers of women to work for Mother

Dairy to achieve significant improvements in dairy husbandry, as they primarily

shoulder animal husbandry related responsibilities in rural India.

Consolidation and growth in milk and milk product marketing, promoting better

equity for regional cooperative brands and developing qualified and skilled

manpower.

Education of producer members, opinion leaders and trained professionals to be

expanded and strengthened.

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Empower local leaders, strengthen societies and equip their staff and members

with the skills and information they need.

Persuade the State and Central Governments to remove the shackles on

cooperative laws so dairy can compete on equal terms with other forms of

enterprise.

2. Strategy for Production Enhancement

Improve the production potential of indigenous breeds of cattle such as Sahiwal,

Gir, Rathi and Kankrej and breeds of buffalo such as Murrah, Mehsana and

Jaffarbadi through appropriate selection programme.

Cross non-descript cattle with Holestein Friesian in areas with adequate feed and

fodder and with Jersey in resource-poor areas.

Increase the production and use of high quality feed appropriate to local

conditions.

Increase production and availability of green and ensiled fodder Encourage unions, NGOs and cooperatives to put common property area under

improved pasture and fodder tree.

Expand first-aid coverage through village level societies.

Increase vaccination of animals against HS, BQ and FMD

Develop Mastitis and Brucellosis control strategies

3. Strategy for Assuring Quality Identify and address quality related problems at every stage from the producer

at the village cooperative, to the dairy plant and the process of final delivery to

the consumer.

Facilitate improvement of hygiene, sanitation, food safety and operating

efficiency in the dairy plants and sensitize dairy personnel to product quality

aspects as per international standards.

4. Strategy for Creating an Information and Development Research Link large cooperatives, Unions, Federations and NDDB in a national network

that collects, adds value and disseminates information.

Ensure availability of analytical information for Policy Planning and Decision

Support.

Mother Dairy has different plans for its dairy business, which includes flavoured

milk, lassi, curd, butter and cheese besides its toned milks. Each of these

products has a regional stronghold, with a shelf life of 10 days. However, the

company is looking at alternatives that would increase the shelf life and allow

the products to be distributed in other parts of the country as well. In the ice

cream segment, the company has been able to capture 15 per cent of the market,

and hopes to increase it to 20 per cent by 2008.

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CURRENT CHANNELS

Mother Dairy is the market leader in the Ice cream segment. Currently it has five

channels of distribution which are:-

1) Milk Shops

2) Retail

3) Vending4) Modern Retail Formats

5) Mother Dairy Food services

MILK SHOPS

Or booths are the most important channels of Mother Dairy. Mother Dairy products are

available in over 5000 outlets out of which about 680 are exclusive Mother Dairy

booths. Mother Dairy Booths are strategically located all across Delhi and NCR, making

it convenient to pick up the daily requirement of Milk, Flavoured milk, Butter, Dahi,

Lassi and Ice Creams. The lifeline of Delhi, Mother Dairy booths all across the city

provide milk early in the morning and at evenings.

The supply of milk and other milk products to these booths are made directly from the

Mother dairy plant. Each Booth in the NCR region is identified with its Booth ID

Number. The booth owners are currently given a margin of 5% on the sale of Mother

Dairy products.

Mother Dairy is providing ready built and fully equipped milk shops/booths to the Ex-

Servicemen, while its Fruit and Vegetable (Safal) Shops are opened for the ESM and

their dependent sons. A security deposit (refundable on termination) is required to be

made to Mother Dairy on selection. The concessionaire will undergo free training for

two to four weeks with Mother Dairy prior to allotment of booths/shops.

RETAIL CHANNEL

The retail channel includes small and big shops which sell Mother Dairy products with a

margin of 15%. Mother Dairy caters to the ice cream demands of this segment that

includes provision stores, bakeries, confectionaries, restaurants etc.

MODERN RETAILThis is a relatively newer channel which includes all the major retail outlets like

Spencers daily, Big Bazaar, More, Reliance retail, etc. Through this, Mother Dairy taps

the overwhelmingly successful organized retail format.

MOTHER DAIRY FOOD SERVICES (MFS)

This channel caters to hotels, banquet halls, the railways as well as airways. All these

come under the MFS. It is a one window stop to provide all Mother Dairy products

(including Dhara oil) to such customers. The margin given to them varies, as it is a

tender- based process. The purpose of this channel is to maintain a strong presence of

Mother Dairy in these areas and in the process gain profit.

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VENDING

It is the prime channel of sales of Mother Dairy Ice Creams. These vending carts are

placed strategically in high footfall areas for example outside schools, colleges, parks,

colonies, bus stops, cinema halls, major markets and therefore provides the mobility

and flexibility The supply of ice creams to the vending machines and the maintenance is

done by VRS (Vending Redistribution Stockist).Ice Cream vending Cart is ideal as a light weight cart that is very easy to push and store

ice creams. They are charged by plugging in to a power supply for 8 to 10 hours. These

vehicles are ideal for vending pre-packaged novelty ice cream. There are also high

capacity freezer on wheels which are specially located at India Gate. Dry ice carts are

also used in areas where no electricity is available.

The Vendor gets a margin of 14% on MRP on mother dairy ice creams. One vending cart

can store up to Rs. 5000 worth of ice creams at one time. The typical timings of vendors

going out for vending operation is from afternoon till midnight, depending on their

allocated area. Push carts are a key driver of growth as it contributes around 17% to thetotal revenues.

Mother Dairy has a chain of about 1850 vending carts in Delhi region.

DIVERSIFICATION MOVES BY MOTHER DIARY

After becoming a pan-India player recently, dairy chain Mother Dairy, a subsidiary of

the National Diary Development Board is now eyeing a turnover of one billion dollar in

the next two years.

The dairy chain's topline has been growing at a rate of 22-25 per cent per annum and isexpecting a turnover of Rs 2,700 crore this fiscal. Mother Dairy will be the second dairy

chain in the country after Amul to cross the one billion turnover milestone, if it achieves

the target.

For over three decades, Mother Dairy restricted its presence mainly in the National

Capital Region in the fresh milk and other milk products segment. This year it went for a

market expansion across the country. They have a plan to capture all the top six

markets in the milk and milk products segment in the country.

It has recently entered the fresh milk market in Hyderabad and simultaneously made

foray into curd, ice-cream and lassi segments in Mumbai market. Mother Dairy marketsdairy products such as fresh liquid milk, ice-creams, and other milk products. It also

markets Dhara range of edible oils and the Safal range of fresh fruits and vegetables and

fruit juices.

COMPETITION IN DIFFERENT PRODUCTS

The nature of competition varied among the different products. In the case of liquid

milk, competition is from private dairies and contractors. There was also competition

from newly emerging private dairies that had started supplying milk to the consumers

as well as sweet makers. There was intense competition for the supply of milk, which

was sought after, especially in the festival seasons, by the sweet makers who derived

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large profits from the sale of their sweets. Consumers were generally not very particular

about the brand of liquid milk, so that the sales depended to a large extent on dealer

push. However, there was scope to establish differentiation through apprising the

customers of the quality not only of the initial milk itself, but also the quality of the

supply chain, which ensured the stability of milk. For butter and cheese, new entrants

were making their mark. Britannia, a firm engaged in manufacture and sale of biscuits,had entered into foods business, and more particularly in milk and milk related

products such as butter. Britannia had introduced new forms of cheese such as cheddar

cheese slices, and supported its products with extensive advertising campaigns. It was

believed that advertisements played a powerful role in the demand for particular

brands of butter and cheese.

The ice creams market was an emerging market in India, witnessing the entry of

numerous players. The national scene was dominated by Hindustan Lever with its

Kwality and Wallsbrands, accounting for about 45 percent of the market. GCMMF was

the other national player, with about 30 percent of the market. There were, in addition,

very powerful regional players such as Vadilal Ice Creams in the Western India who

commanded substantial (in excess of 30 percent) of the regional market shares. Ice

creams were largely promoted through local promotions, hoardings (billboards) and

advertisements. It could be expected that these companies would also expand their

operations in the coming years.

ADVERTISEMENT AND PROMOTION BY MOTHER DAIRY

On the marketing front, Mother Dairy says it'strying to take its product campaigns and

communications to a higher platform. For

instance, in the case of milk, the campaigns do

not talk about the obvious benefits - milk is

good for health, it has calcium and so on - but

rather it targets children and are created around

ideas such as "The country needs you, grow

faster".

As far as products such as butter, cheese and icecreams go, the campaigns have been created around "taste". For butter again, the focus

is on children. "Amul butter may be selling the most, but the advertising and promotions

are almost always targeted at adults," points out an analyst citing Amul's popular

Utterly-Butterly campaigns.

Here, Mother Dairy has dared to go different. Since 60 per cent butter is consumed by

kids, the company wants them to sit up and take notice of its butter. Makkhan Singh, a

sturdy jovial cow (a cartoon character) has been made its brand ambassador.

While Mother Dairy has been carrying out school programmes - games and activities

involving Makkhan Singh in Delhi, it has plans to take such activities to Mumbai andKolkata as well. It also runs a gaming website on the character to attract children.

Equity and empathy are being built for the brand, the values for which it stands, and the

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various other Mother Dairy products, which draw their core values from Mother Dairy

milk.

It's cheese for children again. A couple of months ago, Mother Dairy carried out a retail

activity: "Cheese khao superhero ban jao", where kids buying cheese at a retail outlet

were invited for a photo op - dressed as superheros - through Polaroid cameras; and the

framed photograph was presented to them. The activity was carried out in about 150outlets in Delhi and Mumbai, with about 20,000-25,000 snaps being taken.

It claims that the exercise resulted in better ties with retailers. A positive response

made Mother Dairy to repeat it in Kolkota as well. Clearly, Mother Dairy has aggressive

plans. But, strong regional brands and other co-operatives will continue to give it tough

competition. It will not be a cakewalk anymore.

SWOT ANALYSIS OF MOTHER DAIRY

STRENGTHS Indias best-known brand across all categories.

Mother Dairy has Indias one of the biggest frozen highway.

Well-established distribution and delivery network for dairy based product.

Biggest sourcing base for milk and dairy based product.

Mother Dairy has a wide portfolio in the pure milk based ice cream, rather than

frozen dessert.

Large variety of ice cream and its reasonable price gives the value for money to

customer.

Consumers have trust on the brand name of Mother Dairy, which is helping toMother Dairy build up a formidable image.

WEAKNESSES

The main weakness of Mother Dairy is that the advertising strategy is not as

competitive as Kwality walls and other brand.

The replacement policy of Mother Dairy is very tough, and because of this many

retailer dont want to go with Mother Dairy.

One of the major weaknesses is availability of product & services in odd seasons.

Company have no strategy for those canteen owners who don t want to invest in

deep freezer or financially weak.

OPPORTUNITIES

Mother Dairy has the opportunity to capture the most evolved young adult and

children market.

Take an advantage of other companys outlet by convincing the retailer and

provide them extra benefits for selling Mother Dairy ice cream.

In many areas people are not interested to invest big amount on ice cream so

Mother Dairy has a great chance to excel by introducing Ice cream of Rs. 2 or 3.

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THREATS

Increasing competition from the other brands.

Strong supply chain management by the competitors.

Strong marketing strategy by competitors by offering

The discount coupons to consumers and providing healthy commissions to the

retailers.

PORTERS FIVE FORCE MODEL

BUYER POWER

Buyer power is determined by various factors such as switching costs, the

relative volume of purchases, the standardization of the product, elasticity of

demand, brand identity, and quality of the products. On one end are the large institutional buyers i.e. big hotels and restaurants

which ask for discounts, extended credit periods and the other end are small

retail outlets like general stores which have no power to negotiate with the

firms.

The power of buyers is relatively high when buyers are large, consisting of

individual customers, grocery stores, convenience stores, and restaurants

nationwide. Since retailers purchase ice cream products in large quantities, this

gives buyers substantial leverage over price.

Customers are able to substitute one brand of ice cream to another at any point

in time. There are many ice cream products to choose from, so the buyerscost

of switching to competing brands is relatively low.

Mother Dairys strategy must include strong product differentiation so that buyers are

less able to switch over without incurring large costs. Mother Dairy upholds a strong

Brand Identity in the Delhi/NCR market. It is perceived as having a higher quality. Thus,

it is a strong point of differentiation.

SUPPLIER POWER

The suppliers to the ice cream industry include dairy farmers, paper container

manufacturers, and suppliers of various flavourings. The principal inputs are

commodities available in competitive markets.

Factors affecting the bargaining power of suppliers include the threat of forward

integration and the concentration of suppliers. There exist numerous potential

suppliers of ingredients. The ingredients provided by each supplier are not

unique or greatly differentiated. Furthermore, ice cream manufacturers are able

to switch between suppliers quickly and cheaply.

Also, many of the suppliersviability is tied to the well-being of large,

established companies. Therefore, the bargaining power of suppliers of

ingredients is rather low.

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However, Mother Dairy being a milk co operative has to empower the milk

producers and farmers so that they get a remunerative return. Therefore, a

certain power is vested in the hands of the farmer societies.

THREAT OF SUBSTITUTES

There is no perfect substitute to ice creams because of its very nature. However, manysubstitute products are available within the dessert and frozen food industry (cookies,

pies, Popsicles, cakes, chocolates, soft drinks) which are basically food items consumed

at leisure. Since substitute products are readily available and attractively priced, the

competitive pressures posed by substitute products can be considered moderate.

POTENTIAL ENTRANTS

The barriers to entry within the ice cream industry are moderate due to the

brand preferences and customer loyalty towards the larger and more established

companies.

Other obstacles to new entrants include the requirement for large sources of

capital, specialized mixing facilities and manufacturing plants.

In addition, the accessibility of distribution channels can be difficult for an

unknown firm with little or no brand recognition.

INDUSTRIAL RIVALRYThe principal competitors in the ice cream industry are large, diversified companies

with significantly greater resources such as Amul, Kwality Walls, Vadilal and Cream Bell,

besides a lower threat from local manufacturers (kulfi etc. manufacturers).Rivalry can be characterized as intense, given that numerous competitors exist, the cost

of switching to rival brands is low, and the sales-increasing tactics employed by other

rivals threatens to boosts rivals unit volume of production.

Also, recently there has been a surge in the number of ice cream parlours (such as

Baskin Robbins, Gianis) in and around Delhi. The growing popularity of such premium

ice cream parlours providing specialty ice creams will also tend to affect the business of

existing companies.

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