Analysis of effectiveness of Amul APO Retail business

GCMMF - AMUL

2012-2014

Kamal Chahal

12BSPHH010428

IBS HYDERABAD

ANALYSIS OF EFFECTIVENESS OF AMUL RETAILING BUSINESS


A REPORT ON

ANALYSIS OF EFECTIVENESS OF AMUL RETAILING

BUSINESS

BY

Kamal Chahal

12BSPHH010428

A report submitted in partial fulfilment of the requirements of MBA

Program of IBS HYDERABAD

DISTRIBUTION LIST

GCMMF – AMUL

Faculty Guide: Company Guide:

Prof. L Shridharan Mr. Debashis Chattopadhayay

Faculty, IBS Hyderabad Mr. Sohel Sachora

Date of Submission: 24th May, 2013


TABLE OF CONTENTS

Authorization i

Acknowledgement ii

Executive Summary iii-iv

1. INTRODUCTION 1

1.1 Background

1.2 Purpose and Objective

1.3 Methodology

1.4 Scope and Limitation

1.4.1 Scope

1.4.2 Limitation

1

2

2

3

3

2. LITERATURE SURVEY 4

2.1 Introduction

2.2 Abstract of Articles

4

4

3. INDUSTRY ANALYSIS 7

3.1 Background

3.2 SWOT Analysis of the Industry

3.3 Market Analysis

3.4 Competitor Analysis

3.5 Key Concerns in Dairy Industry

7

9

9

11

12

4. COMPANY ANALYSIS 14

4.1 Background

4.2 AMUL’s Business Model

4.3 Product Mix

4.4 SWOT Analysis

4.5 AMUL’s Positioning in the BCG Matrix

14

14

16

17

18


5.

PROJECT DETAILS

19

5.1 Project Background

5.2 Project in detail

5.2.1 Methodology

5.2.2 Results and Outcomes of study

5.2.3 Limitations

5.2.4 Recommendations

19

21

21

33

34

35

6. ANNEXURES 37

ANNEXURE I

ANNEXURE II

ANNEXURE III

37

38

40

7. REFERENCES 41


Page i

AUTHORISATION

I hereby declare that the Project entitled ”Analysis of Effectiveness of AMUL Retailing

Business”, submitted towards partial fulfilment of the requirements of MBA program is my

original work and no part of the project has been copied from any other reports or any

other work carried by someone else which has been submitted for any other degree/award.

However, any material taken from any other published source has been suitably referred

and acknowledged at various places.

Kamal Chahal


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ACKNOWLEDGEMENT

The study “Analysis of Effectiveness of AMUL Retailing Business” has been benefitted from

the work of many, directly or indirectly. I take this opportunity to gratefully acknowledge

the assistance and contribution of the people who had faith in this project. I would begin by

extending my sincere gratitude to Mr. Jugal Arora, Asst. GM (Marketng, GCMMF) for giving

me a chance to work with GCMMF.

I feel privileged to have worked with and enjoyed the support of my Company guide Mr.

Debasish Chattopadhyay (Dy Manager, GCMMF)) and Mr. Sohel Sachora (Assistant

Manager, Marketing). I am deeply indebted to them for all the help I received, without

which this project could not have come to pass. They took special interest in ensuring that I

get ample field exposure so that I could understand the intricacies of the business. They

showed faith and conviction in me, my ideas and my style of working.

I am extremely thankful to my faculty guide, Prof. L Shridharan (Senior Faculty, Operations &

IT), IBS Hyderabad. His constant guidance helped me overcome many barriers in the course

of my study. I am fortunate to have got such an encouraging guide who made me push my

limits and strive for bigger accomplishments.

Last but not the least; I would like to give my sincere thanks to Mr. Arvind Trivedi, Sales

Head, (Baroda Region, GCMMF) and Mr Rakesh (Sales, Baroda Region). He made available

all the resources that came handy in completion of this project. Regular discussions with

him regarding the progress of my project made sure that I was on the right track. His

guidance motivated me to give this project my best effort.


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EXECUTIVE SUMMARY

GCMMF, popularly known as AMUL is an Apex marketing organisation of ‘AMUL’ and ‘Sagar’

branded products. AMUL, few years back felt a need to come out with an innovative change

to make all its products get noticed, bringing them all on the same platform as other

successful AMUL products like milk & butter are; under same roof. And this gave birth to a

innovative concept of Exclusive Outlets called AMUL Preferred Outlets (APOs) bringing in all

the AMUL products together enabling the Company get benefits like better shelf space,

protection from private labels and most importantly a good source of free promotion for

the brand AMUL.

A need has been felt to study how well the APO market is benefitting the APO owners, what plus points these APO owners have over other vendors storing AMUL products and majorly to get a proper idea of the requirements of the APO owners. The project focuses on the idea of proving the APO concept beneficial to the APO owners the way it has proven for the Company.

The 12 week project undertaken – “Analysis of effectiveness of AMUL Retailing business” details about the study of GCMMF’s Retailing Business & Contribution of APO in the Performance of Depot’s Overall Business.

The study involves implementation of a Promotional action plan to improve franchise (APO)

profitability using Below-the-line1 (BTL) activities, which will enable GCMMF to understand

what effect Promotion has on APOs’ profitability.

This report details the research undertaken at APOs to get a fair idea about the need felt for

the changes to be brought in the Promotional strategy to increase profitability. It briefs

about the findings from the survey. Also it includes details of Action Plan undertaken in

accordance to the findings of the survey keeping in mind the motive of increasing franchise

profitability.

The project proposes to implement the Action Plan of Promotional Activities at a very small

scale i.e. on few parlours chosen from the sample of 25 APOs under study and record the

changes in the profit, if any. The positive changes will show the success of the project,

wherein those specific activities will be implemented at a larger scale.

The main objectives of the project at AMUL were following:

i) To identify the factors responsible for the low sales and profits at some of the

APOs in Baroda.

ii) To recommend appropriate remedial marketing strategy for the issue.

1 Below the Line (BTL) activities are part of Marketing activities carried out at the smallest level in a given

region.


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iii) To implement at least one of the suggested actions at selected APOs to increase sales.

Collection of Data - Following were the sources of collecting the data:

i) Observation

ii) Secondary Sources such as websites.

iii) Reponses of the Questionnaire.

Major Findings:

i) Offers on the daily consumption products like AMUL Milk don’t fetch much benefit

for the Company & the retailers.

ii) Many AMUL products like AMUL Pro, Ladoo, etc are not getting customer’s attention

due to less awareness of the product. It is important to bring these products into

their notice by either local ads or an appropriate display at the APOs.

iii) People within the age group of 30-50 years (approx.) are attracted towards offers.

This implies that offers on products like AMUL Gulabjamun, Cream, etc that are

targeted on mothers can create a positive difference in the sales rather than

discounts on Chocolates, ice creams, etc. which are targeted at children.

iv) 42% of APOs show positive change in sales due to Advertisements while 35% are more affected by offers.

Recommendations:

i) Round up the prices- it can be done by either increasing the price or decreasing the

price & the quantity (to a certain level) as well.

ii) Chocolate Dispensers should be provided (like those provided to Cadbury people). It

is a good way of promoting the fact that AMUL has a wide variety in chocolates.

iii) SCOOPING PARLORS – A very good way to promote the brand AMUL is by providing

AMUL printed Cups, Spoons & Straws. This will not only solve the problems faced by

Parlor owners, but also can prove as a good source of cost-effective Promotion.

iv) Need for INNOVATION in AMUL Ads – Ads are not up to the mark & their frequency

is also too low. It is important that AMUL comes up with innovative ads, where not

only the Brand is promoted or the product is brought into notice, but also USP of

AMUL products is brought into notice.

v) Each Outlet in Baroda should have run some BTL activities from time to time. Even if

it does not increase the sales it will surely establish the APO image in the minds of

the customer.

vi) BTL activities such as conducting a contest and giving away vouchers as the prizes

should be conducted more often.

vii) Newspaper ads should be given more frequently and in more newspaper.

viii) Promotional Campaign like “Lucky Fridays” can be run where first 25 customers for

the day will get a complimentary gift or a gift hamper.


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1. INTRODUCTION

1.1 BACKGROUND:

Looking at the current scenario, it is clear that a Company in order to survive should keep on

promoting its Brand and that too in an innovative way. This will prove out to be a

competitive advantage in long run. Same implies to the biggest Indian dairy brand AMUL,

which not only studied the market but also responded in such a way that it even today

outstands other brands.

AMUL, few years back felt a need to come out with an innovative change to make all its

products get noticed, bringing them all on the same platform as other successful AMUL

products like milk & butter are, under same roof. And this gave birth to a innovative concept

of Exclusive Outlets called AMUL Preferred Outlets (APOs) bringing in all the AMUL products

together enabling the Company get benefits like better shelf space, protection from private

labels and most importantly a good source of free promotion for the brand AMUL.

With APO concept’s success, GCMMF plans out to accomplish its forecasted plan of

increasing the Outlets to 10,000. For this, it is important for GCMMF to ensure that all its

existing APOs are in a profitable position. One of the major reasons for this study is to make

franchise owner benefit more over other Retail shops which sell AMUL products. The

profitability of APOs, if increases with such activities, it can help the company (GCMMF)

accomplish its plan; as the positive increase in the sales will create an even better brand

image in the minds of entrepreneurs.

This study, which was carried out over a period of 12 weeks covered different aspects of

marketing right from the basic Sales to Analysis of the Research Survey. The project can be

divided into 3 major parts:

i) Understanding the Market – It included Research Survey with the help of

Questionnaire filled by the APO Franchisees.

ii) Running the Market – Here various promotional activities like distributing free

samples and offer demonstration were carried out, with an objective of

increasing profits of the APOs.

iii) Analysing the Change in the Market – Last and the most important part of the

project was to see the effect of the whole project. It was done by comparing the

earlier recorded sales with the After-the-Activity sales.

The study was limited only to Baroda region with a range of 25 APOs. So the implication of

the study at a larger level might give different results.


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1.2 PURPOSE AND OBJECTIVES:

PURPOSE

The study proposes to understand GCMMF’s Retailing Business and suggest a Promotion action plan to improve Franchise (APO) Profitability using Below-the-Line (BTL) Activities. OBJECTIVES:

Following are the objectives of the study undertaken:

i) To study the effectiveness of the APOs - To find out whether APOs in any way

have influenced the consumers in buying more of AMUL products.

ii) To identify the factors responsible for the low sales and profits at some of the

APOs in Baroda.

iii) To come up with a solution that would increase profitability of the APOs.

iv) To implement at least one of the suggested actions at selected APOs to increase

sales.

v) To study the consumer response towards the Promotions.

vi) Identify the major needs of the APOs. (Area specific).

1.3 METHODOLOGY:

1. Defining the Objective: The basic objective of this project is to understand GCMMF’s

Retailing Business and to suggest some marketing strategies to improve Franchise (APO)

Profitability using Below-the-Line (BTL) Activities.

2. Background Study: Reading and Analyzing the Secondary data in order to understand the

issue better.

3. Collection of Data: Collecting the primary data from APO owners. The data was collected

by the following ways:

i) Observation

ii) Secondary Sources such as websites.

iii) Reponses of the Questionnaire.

4. Preparing the Questionnaire: A list of variables was identified by observation and initial

analysis based on secondary data. For each variable a question was framed in the

Questionnaire so as to enable proper and exhaustive analysis of the Footfall issue.

5. Analysis and Review: Analyzing the data collected through Questionnaires and

recommending the appropriate action.


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6. Report Preparation: The findings, analysis, conclusions and recommendations will be

presented to the organization in the form of a project report to enable proper reporting of

the findings.

1.4 SCOPE AND LIMITATIONS

1.4.1 SCOPE:

The awareness about new products is very low. Thus, carrying out various promotional

activities will enable customer not only to go for the existing products with offers, but also

will benefit them by getting free samples of the new products. This will boost sales.

i) Project has huge scope of learning in the field of dairy industry

ii) Analyzing the Consumer Buying Behavior and the key factors motivating the

consumer to purchase from APOs.

iii) This project will enable AMUL to know their strength and weakness in Retailing

Business through analysis of the data collected with the help of Questionnaire.

iv) The company will be able to formulate a Promotional strategy for the future so as to

increase franchise profitability and increase the number of APOs nationwide.

1.4.2 LIMITATIONS:

Though the project provided with ample amount of opportunities but had few limitations as

well:

i) The responses collected by the sample may not completely depict the actual

scenario.

ii) The analysis is done purely based on the primary data collected and the secondary

sources available so there may be a scope of error.

iii) The project is limited only to APO consumers in Baroda and does not take into

consideration the customers of other cities.

iv) Need of Middle-man: The APO owners do not provide important information like

profit margin, sales, etc without a Company associate being involved in it.

v) Time Constraint: The 12 week time is too less to get exact results of the Action Plan

implemented.

vi) Supply Constraint: A major problem is the irregular supply of products, which would

at a later stage influence the results of the study & the Plan effectiveness.

vii) Consumer is reluctant to provide accurate information because of the time constraint

i.e. interaction for them is a wastage of time.


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2. LITERATURE SURVEY:

2.1 INTRODUCTION

The study carried out is on India’s largest dairy Company - AMUL’s APO concept. The basic

idea behind the study is to understand its Retailing business and come up with different

ways to benefit the franchisee by increasing their profitability, ultimately benefitting the

Company.

To promote such a well built brand, it is important to understand the Indian Dairy Industry,

the retailing sector and most importantly its business which can be done through

understanding where in the market the Company and its products stand.

For the above mentioned purposes, few research papers have been made a part of this

section. The abstract of these research papers is given below, followed by the Interpretation

which includes the understanding and recommendations for the Company.

2.2 ABSTRACT OF ARTICLES

Paper Title: Indian Dairy Industry Analysisa

According to this research report, India is the world’s largest milk producer, accounting

17% of the global milk production. Besides, it is one of the largest producers as well as

consumers of dairy products. Due to the rich nutritional qualities, the consumption of dairy

products has been growing exponentially in the country, and considering such facts and

figures, the study anticipates that the milk production in India will grow at a CAGR

(Compound Annual Growth Rate) of around 4% during 2011-2015.

Paper Title: Potential of the Indian Dairyb

On the other hand, a research paper by Business Wire “Potential of the Indian Dairy”

quotes that the Indian dairy sector is characterized by high fragmentation. It is mainly

dominated by the unorganized sector which comprise of 70 million rural households. In

India, the per capita availability of milk stands at 289.4 grams per day. With a strong

domestic demand which is increasing every year, the per capita availability of milk is

anticipated to reach 336 grams per day in FY2017.

The fact lies that despite being one of the largest milk producing countries in the world,

India accounts for a negligible share in the worldwide dairy trade. The increasing domestic

demand for dairy products and a huge demand-supply gap could lead India to be a net

importer of dairy products in the near future.


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Interpretation: Above 2 research studies reveal the Indian Dairy Industry’s current scenario

from both the aspects – positive as well as negative. In any of the cases, AMUL has a huge

opportunity.

Positive - The booming figures in the “Indian Dairy Industry Analysis” research prove

that there is a huge scope for AMUL to accomplish its forecasted plan of coming up

with 10,000 APOs in order to cater the increasing needs, which at this moment no

other Company is able to due to many limitations like huge investments, intense

competition.

Negative – The negative aspect shown by the study is the ever increasing demand

and a large demand-supply gap in Indian domestic market. This shows a clear picture

of the untapped Indian dairy market, major portion of which is run by the

unorganised sector. AMUL has enough resources to increase the production and a

well built brand name to reach out consumers and turn them to customers.

Paper Title: Indian Retail Industry – Its Growth, Challenges and Opportunitiesc In India, Retailing is the largest employer after Agriculture. Currently, India is the 5th largest retail market in the world with just 5% organised retail sector in contrast with 80% in developed countries. The industry is expected to grow at the rate of 12% per annum for the next 5 years. This paper examines the increasing awareness and brand consciousness among people from different socio-economic backgrounds in India. It also reveals data about the upcoming urban markets that are witnessing significant growth. Food and grocery has become exceedingly important element of the retail trade, reason being the sheer size of consumer spending increasing at an increasing rate. Organised retail is at zenith in India. On the other hand, this fragmented retail structure has resulted in lack of investment in the supply chain, ultimately leading to inefficient storage and transportation of food products. Interpretation: The data clearly shows a huge scope in the retailing business. 5% of the market is held by the organised sector, which leaves behind 95% untapped market. This reduces the challenges AMUL could face in attaining its objective of reaching a figure of 10,000 in APOs. But the study also reveals some facts related to supply chain that could lead to demand-supply gap, which has to be taken care of.

Paper Title: An In-depth Study on Customer Awareness and Satisfaction Survey of AMUL

Flaavyo-Probiotic Yoghurtd

Dr. Sharif Memon (March 2012), explains in his paper the in-depth study of customer

awareness and satisfaction survey of AMUL Flaavyo-Probitic Yoghurt. According to Dr. Sharif,

it is necessary for AMUL, when getting into a new market, to make unique place in the market,

for which one of the factor to be considered is Promotion. The findings reveal that Out of

200 respondents surveyed, 68% are aware about product while 32% respondents are not

aware about the product.


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Interpretation: Promotion is an essential part of carrying out any business profitably and to

maintain/increase market share. The above survey data reveals that AMUL, though being

such a huge brand needs to promote as and when necessary. The failure of the same can

lead to loss of 38% customers every time a new product is launched.

CONCLUSION

The above discussed research papers show the current scenario of the Indian Dairy Industry

and Indian Retail Industry. Also one of the papers discusses AMUL’s Flaavyo-Probiotic

Yoghurt. The Research papers provide insightful information for building a base for the

study. It gives detailed information of the market in which AMUL’s retailing business – APO

works. The understanding of these papers can be summoned up into recommendations that

are as follows:

i) AMUL has a huge scope of expanding its retail business in Indian market, with

just 5% organised sector being covered in total.

ii) Unorganised sector mainly consists or rural India, which is not been covered by

any of the competitors. AMUL holds a good chance of covering the rural India by

bringing in organised sector there using ‘Wholesale-Retail Model’ rather than

Pure Retailing Model, keeping in mind the local requirements.

iii) To keep a hold in the Retailing business and to increase its share in the same,

AMUL will have to keep in mind that promotion holds a very important role in

successfully launching a new product as well as maintaining and increasing the

sales of existing ones.


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3. INDUSTRY ANALYSIS

3.1 BACKGROUND

Dairy industry is of crucial importance to India. India is the world’s largest milk producer,

accounting for almost 13% of world’s total milk production. Along with being the largest

producer, it is the world’s largest consumer of dairy products, consuming almost 100% of its

own milk production.

More than half of the Indian population lives in rural areas. Small and marginal farmers

account for three-quarters of these households owning livestock. In 1986-87, about 73% of

rural households own livestock. This shows the huge dependency of rural population on

Dairy Industry.

The above mentioned fact can be proved with the help of data obtained through surveys

which reveals that India is known to have the largest livestock population in the world

having 50% of the buffaloes and 20% of the world’s cattle population, majority of which are

milch cows and milch buffaloes. India’s dairy industry is considered to be one of the most

successful development programmes.

To get a better idea about the Dairy Industry, the analysis is divided into various sections:

MILK PROCESSING

In the year 2006-07 the total milk production in the country was over 94.6 million tonnes

with a per capita availability of 229 gms per day. The industry has been recording a constant

annual growth of 4% in 1993-2005, which is 3 times the average growth rate of the dairy

industry in the world. Milk processing in India is around 35%, of which the organized dairy

industry account for 13% of the milk produced, while the rest of the milk is either consumed

at farm level, or sold as fresh, non-pasteurized milk through unorganized channels.

Today Dairy Cooperatives hold a major share of the processed liquid milk marketed in the

India. The tremendous rise in milk production is primarily the fallout of the dairy farming

policy reflected in Operation Flood. Milk is processed as well as marketed by 170 Milk

Producers’ Cooperative Unions, which federate into 15 State Cooperative Milk Marketing

Federations. Over the years, several brands have been created by cooperatives like Amul

(GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini (Karnataka), Milma

(Kerala) and Gokul (Kolhapur)

But few facts and figures reveal the real picture of the Milk Processing Industry. The milk

processing industry is not huge as compared to the huge amount of milk produced every


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year. Only 10% of all the milk is delivered to around 400 dairy plants. A specific

phenomenon prevalent in India is the unorganised sector of vendors and milkmen who

collect the milk from local producers and then sell the milk in urban as well as non-urban

areas, which holds around 65-70% of the national milk production.

In the organised dairy industry, the cooperative milk processors have a 60% market share.

These cooperative dairies process 90% of the collected milk in the form of liquid milk

whereas the private dairies process the remaining 10% and sell only 20% of the milk

collected as liquid milk and 80% for other dairy products with a focus on value-added

products.

UP, Gujarat, Punjab, AP, Haryana, Rajasthan, Maharashtra, Karnataka and Tamil Nadu are

the milk surplus states in India. The manufacturing of milk products is higher in these milk

surplus States than other states. Exports of dairy products have grown at the rate of 25%

per annum, not only in the terms of quantity terms but also 28% in terms of value since

2001. Significant investment opportunities exist for the manufacturing of value-added milk

products like milk powder, packaged milk, butter, ghee, cheese and ready-to-drink milk

products.

TRADE

Despite being the largest milk producer, India is a very minor player in the world Dairy

market. Being a import dependent country in the early seventies, the demand-supply gaps

of milk were met by importing milk and dry milk powders for the Urban population. But

Operation Flood Programme changed the scenario dramatically and commercial imports of

dairy products came to a halt except occasional imports of very small quantities.

It was in the 1990s, India started exporting surplus dairy commodities like butter and ghee.

Till 1990 the Agricultural and Processed Food Products Export Development Authority

(APEDA) regulated the import and export of dairy products. However, later in the new EXIM

Policy announced in April 2000, the Union Government allowed free export and import of

most dairy products.

The major destinations for Indian dairy products are US, UAE, Bangladesh and Philippines. But these exports are occasionally seen when the Indian Dairy faces surplus. On the other hand, India has seen a sharp increase in the import of dairy products like Milk powders post liberalisation. As per the report of Foreign Trade Statistics of December 2010, the imports of dairy products like cream and milk has reached a total of 22.145 million tonnes for the period April - March 2009, as compared to only 1473 million tonnes for the same period during the previous year. The main reasons for sharp rise in imports are huge export subsidies given by developed countries like US and EU.


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3.2 SWOT ANALYSIS OF INDIAN DAIRY SECTOR

STRENGTHS

i) Improved purchasing power of consumer.

ii) Improved transportation and supported infrastructure to enable movement of dairy

products.

iii) India’s vast natural resources that offer immense growth and development of Dairy

sector.

iv) Increasing number of Dairy plants, private as well as cooperatives.

WEAKNESSES

i) Tropical climate conditions.

ii) Lack of marketing avenues for the dairy produce.

iii) Major portion of the Dairy sector being unorganised.

THREATS

i) MNCs entering Indian Dairy sector after liberalisation.

ii) Introduction of foreign products in Indian market.

iii) Poor quality of milk, not meeting the international standards.

OPPORTUNITIES

i) Increasing demand for milk and milk products in the Indian as well as

international market.

ii) Liberalised policies in dairy sector.

iii) Availability of large resources as well as animal production technologies for

effective implementation and faster development.

3.3 MARKET ANALYSIS

With the increasing use of dairy products, the market for dairy products has also been

flourishing. The packaged milk segment is being dominated by the Dairy Cooperatives.

GCMMF is the largest player. About 60% of the installed processing capacity is in the co-

operative sector. Other local Dairy Cooperatives have their own local brands – Verka in

Punjab, Gokul in Maharashtra, Vijaya in AP, etc. Other private dairy players are J K Dairy,

Indiana Dairy, etc.

Considering the Dairy products, in the category of cheese AMUL, Britannia Dabur (Le Bon)

are the leading players including others like Verka, Vadilal, Vijaya and Nandini.


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

as its major brand. Leading brands like AMUL, Mother Dairy, Nestle and Britannia are in the

race to tap the growing market.

Nestlé India, SmithKline Beecham Consumer Healthcare and Heinz India are amongst those

large MNCs which dominate the high-value milk products market. Other players include

Jagatjit Industries Ltd, Indiana Dairy Specialties and various other state cooperatives.

Table 1: Milk Utilisation Pattern in India, 1943-2004

Year 1943* 1956 2004

Milk Production (million tonnes) 23.5 17.8 91

Mil Utilisation (Percentage) 100 100 100

Liquid Milk 28.0% 39.2% 46.0%

Traditional Products 72.0% 60.8% 50.0%

Ghee/Makhan (clarified butter) 58.7% 46.0% 33.0%

Dahi (Yogurt-like) 5.2% 8.8% 7.0%

Khoya (Partially desiccated Milk 5.0% 4.4% 7.0%

Chhana and Paneer (unprocessed cottage cheese) 3.1% 1.6% 3.0%

Western Products: Milk Powder, etc Neg Neg 4.0%

*Includes Pakistan and Bangladesh

Source: Handbook on Technology of Indian Milk Products

The upsurge in milk production has thrown up challenges in milk marketing. India is blessed with an enormous domestic market because of the following factors: low level of per capita milk consumption, large population and its continuous growth and hence large size of potential, with latent demand, increasing purchasing power, which is very well in evidence, will transform the huge latent demand into real demand.

The groups of dairy products offering exciting marketing opportunities are liquid milk itself, which accounts for a sizeable part of the milk consumption products, in which Indian dairy industry already has demonstrated considerable expertise, like butter, milk powders and ghee. The ability to manufacture the relatively new and sophisticated products like cheese and ice cream alongside the traditional products like khoya, paneer and milk-based sweets are now being manufactured on a large scale.


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Indian Dairy holds of milk and milk products, which can be divided into following:

PRODUCT PERCENTAGE

Fluid Milk 46.0%

Butter 6.5%

Ghee (clarifies butter) 27.5%

Yoghurt 7.0%

Paneer (cottage cheese) 2.0%

Milk Powder 3.5%

Khoa (condensed milk) 6.5%

Others, including cream, ice cream 1.0%

Table 2 - INDIAN DAIRY’s PRODUCT MIX (2009)

3.4 COMPETITORS

Indian Dairy Industry holds immense competitive market with following major brands fighting for their shares. These are the leading brands. There are many other small dairy plants, private or cooperatives which hold small share of the Dairy sector’s market share.

Company Brands Major Products

Nestle India Limited

Milkmaid, Cerelac, Lactogen, Milo, Everyday

Sweetened condensed milk, malted foods, milk powder and Dairy whitener

Milkfood Limited Milkfood Ghee, ice cream, and other milk products

SmithKline Beecham Limited

Horlicks, Maltova, Viva Malted Milkfood, ghee, butter, powdered milk, milk fluid and other milk based baby foods.

Indodan Industries Limited

Indana Condensed milk, skimmed milk powder, whole milk powder, dairy milk whitener, chilled and processed milk

Gujarat Co-operative milk Marketing Federation Limited

Amul Butter, cheese and other milk products

H.J. Heinz Limited Farex, Complan, Glactose, Bonniemix, Vitamilk

Infant Milkfood, malted Milkfood

Britannia Milkman Flavoured milk, cheese, Milk Powder, Ghee

Cadbury Bournvita Malted food

Table 3 - Leading Dairy manufacturers in India


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3.5 KEY CONCERNS IN THE DAIRY INDUSTRY

Indian Dairy industry should focus on following aspects in order to maintain its No. 1

position not only in the Milk Producers’ list, but also to come up to this position in the

category of Exporters of Dairy products.

i) Production, processing and marketing infrastructure

To emerge as an exporting country, India should develop proper production, processing and

marketing infrastructure, which is capable enough in meeting the international quality

requirements. A strategy for producing safe and quality dairy products should be formulated

with suitable legal backup.

ii) Competitiveness cost of production, productivity of animals etc.

The demand for quality dairy products is increasing and production is also rising in many

developing countries. The countries having low cost of production are the ones which are

expected to benefit most from such increase in world demand for dairy products.

Therefore, in order to increase the Indian dairy industry’s competitiveness, efforts should be

made to reduce cost of production. This can be done by increasing productivity of animals,

management of dairy animals and improved health care and breeding facilities can reduce

the cost of milk production. The Government and dairy industry plays a vital role in this

direction.

iii) Import of value-added products and export of lower value products

With the trade liberalisation, the imports and exports have increased. Despite the attempts

of Indian companies to develop their product range in order to increase exports, there are

chances in the future that more value-added products will be imported and lower value

products will be exported. The industry has to prepare itself to meet the challenges and

maintain its position.

iv) Focus on buffalo milk based speciality

Indian Dairy industry is unique with regard to the availability of large proportion of buffalo

milk. Hence, India can focus more on buffalo milk based speciality products, like Mozzarella

cheese, customized to meet the needs of the target consumers. Moreover, it can prove to

be beneficial in exporting as it meets the International requirements.


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CONCLUSION

India’s milk production has increased tremendously over time with significant technical and institutional support. This has led to significant changes in the Indian dairy sector. In fact, the increasing figures of the Milk production reveals that the Indian dairy sector has undergone significant structural changes over time and some interesting patterns are unfolding along the milk value chain.

Noteworthy among all are the changes in composition of the livestock, production of milk,

marketing of liquid milk pioneered by cooperative networks and the ever increasing participation of private players in the milk-processing sector.

With increase in income and urbanization, the demand for milk is expected to increase

further. From the data available online, an estimate is made of the domestic demand of milk

rising to 209 million tonnes in 2026-2027, up from 127.3 million tonnes in 2011-2012.

Supply projections indicate that with the existing growth rate of milk production seen during

the last decade, India will be self-sufficient in milk by 2026-2027.

However, any deceleration can jeopardize the self-sufficiency status of milk production. If focused efforts are made to accelerate the growth of milk production, soon India can turn out to be one of the biggest exporters of milk and milk products as India has competitive advantage being the largest producer of milk. Producer prices of milk, here in India are lower as compared to those in the leading international exporting countries. It holds a good opportunity to export milk to neighbouring countries, most of which are not able to meet their requirements with domestic production. The current status of developing infrastructures and their delivery is still not up-to the mark and continuous efforts are required to bring desired improvement. Most important aspect to ensure sustainable growth of Indian Dairy sector is through the strengthening of market linkages, which can either be done through facilitating contract farming arrangements or by expansion of cooperatives.


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4. COMPANY ANALYSIS:

4.1 BACKGROUND

AMUL is Asia’s no. 1 and world’s second number co-operative dairy. It has large market and

dairy network in every state of India and across the India, like central Asian countries,

Bangladesh, Thailand, Indonesia, Malaysia, Singapore, etc. It was started with 250 litres of

milk and 2 societies and now, it produces 10 lakhs litters milk per day and has 1113 societies

and more than 6 lakes farmer members. It produces milk and milk products.

The main aim of AMUL is to provide quality products to the consumers at minimum cost.

The goal of AMUL is to provide maximum profit in terms of money to the farmers. The

AMUL apparition was to run the organization with the co-operation of four main parties, the

farmers, the representatives, the marketers, and the consumers.

4.2 AMUL’S BUSINESS MODEL

AMUL collects approximately 7 million litres of milk everyday from 2.6 million farmers, convert the milk into branded packaged milk and milk producers and delivers to retail outlets across the country. Its supply chain is one of the most complicated in the world.

The milk collected, after Pasteurisation in further bifurcated into three:

RAW MILK

CONDENSED

Ghee

Butter

Cream

PACKAGED MILK

Ice Cream Beverages

PASTEURISATION

DRIED

Skimmed Milk

Powder


Page 15

THE AMUL MODEL

The Consumer

State Co-op. Milk

Marketing

Federation

District Milk Co-op

Union

Village Dairy Co-op

Milk Producer


Page 16

4.3 PRODUCT MIX AMUL is into manufacturing of many milk products. This variety of products is mainly classified into 4 different sections keeping in mind distribution network:

Product Category based on Distribution Network

PRODUCT CATEGORY PRODUCTS

i) AMBIENT Milk powder, ghee

ii) CHILLED/WET Butter, Cheese, Shrikhand

iii) FROZEN Ice-Cream, paneer

iv) FRESH ITEMS Fresh milk, Yogurt, curd

AMUL’s product portfolio can be classified under: i) Traditional Brands (Relatively low on Impulse Value)

a. Pouch Milk b. Butter c. Cheese d. Milk Powders e. Ghee etc

ii) Value Added Brands (Higher on Impulse Value) a. AMUL Ice-Creams b. AMUL Kool (Beverage Range) c. Flaavyo (Yoghurt brand)

4 P’s OF AMUL:

Product: Tracks consumer needs and their changing lifestyles. Accordingly develops products to suit their needs. For e.g. Amulya Milk powder used as a substitute of milk. Pricing: The main USP of AMUL brand is its low pricing. Its “BACKWARD INTEGRATION2” strategy proves out to be its competitive advantage and helps it in cost reduction. Place: Any food company requires a dedicated cool chain network for distribution of its products. AMUL has the largest cold chain network (18000 refrigerators) in India, as compared to any other company. Promotion: AMUL spends not more than 1% (approx.) of revenues on advertising. They carry out

umbrella branding which caters to AMUL as a brand and not to its products separately. It

believes separate branding and marketing initiatives increase the asking price. 2 Backward Integration Strategy is a form of vertical integration that involves the purchase of suppliers.


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4.4 SWOT ANALYSIS

STRENGTHS:

• Huge Market Share

• Robust Distribution Network

• Brand Name

• Highly diverse product mix

WEAKNESS:

• Lack of Aggressive Marketing

• Being a Co-operative society, it faces delays in implementation of new strategies

• Lack of infrastructure to suffice international norms

• Risk of highly complex Supply chain system

• Inability to meet market demand in peak seasons

OPPORTUNITIES

• Untapped Market

• Huge presence in Developing countries

• Huge Loyal Customer Base

• Increase production capacity to meet the increasing demands

THREATS

• High dependency on milk vendors, the unorganized sector

• High competition from MNCs like Brittania, Nestle, etc in milk products

• Low profit margin to retailers can cause risk of them switching to other brands

SWOT


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4.5 AMUL’s POSITIONING IN THE BCG MATRIX:

The above analysis gives an overview of the Company. But the Company holds a diversified portfolio of products. These products can be categorised and plotted on the BCG Matrix. The Matrix has four classifications:

i) STARS – Leaders in market. Consumes a lot of cash and generates a lot of revenue.

ii) CASH COWS – Generates huge revenues with fewer investments. The Company is in a mature stage in this case.

iii) QUESTION MARKS – Business requires a lot of cash to hold its share. These can either be turned out to Stars or Cash cows with good strategy or into Dogs with poor strategy.

iv) DOGS – Low market share and low growth business or products. They might generate cash to maintain themselves but do not promise to be a large source of cash.

STARS

- Amul ice creams

- Amul cheese spread

-Amulya Dairy Whiteners

- Amul Kool

- Amul Pure Ghee

QUESTION MARKS

- Amul Lassi

- Amul Masti Dahi

- Amul Mithai

CASH COWS

- Amul Mozarella Cheese

- Amul fresh Milk range

- Amul Butter

DOGS

- Amul Pizza

-Amul Pro

- Amul Chocolates

RELATIVE MARKET SHARE

MA

RK

ET G

RO

WTH


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5. PROJECT DETAILS

OBJECTIVE:

“To study GCMMF’s Retailing Business and suggest a Promotion action plan to

improve Franchise (APO) Profitability using Below-the-Line (BTL) Activities.”

5.1 PROJECT BACKGROUND:

Looking at the current Indian marketing scenario, we can say that we are moving back in

time. Kotler says that in the evolution of marketing, before the marketing concept became

popular, there was a selling concept which states that “customers and businesses, if left

alone will ordinarily not buy enough of the organizations products. The organisation must

therefore undertake an aggressive selling and promotion effort.” In the present scenario, it

is true that companies will survive only if there is an efficient promotional strategy adopted.

Same applies for GCMMF.

Consumers very well know the existence of brand AMUL. 63 years old has made a good

brand image in Dairy products and then in ice-cream. GCMMF, the apex marketing

organisation has successfully been able to make Amul the brand AMUL – The Taste of India.

It is the biggest Indian dairy brand with a diversified portfolio holding a variety of products,

other than milk, for which AMUL came into existence.

But in today’s scenario, a business proves out to be profitable through one major Marketing

factor i.e. Promotion. This relates to a popular phrase in Hindi “JO DIKHTA HAI, VO BIKTA

HAI”, meaning that Selling can be made, if it is made visible to the consumer. AMUL has

created a good brand image but the question here is “Has AMUL, in respect with all its

products, been visible enough to stand out unique in such a competitive market?”

As per the statistics, AMUL spends not more than 1% (approx.) of revenues on advertising.

In such a case it becomes necessary to know if people are aware of what Co (GCMMF) is up-

to in regard with the launch of new products as well as to know the existence & changes

made in the existing products.

To cater this need, GCMMF few years back, came out with retailing models like AMUL

Preferred Outlets (APO), AMUL Ice-Cream Parlors and Café AMUL, which proved to be

successful and sustainable. These models are franchise.

This was done to increase the width and depth of distribution and also to reach consumers,

which through other retail shops wasn’t possible. Moreover these Outlets were expected to

create an impulse for purchase within the customers.


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APOs are Exclusive Outlets with only AMUL products displayed in the shelves. The basic

idea behind APOs was to fulfil following motives:

i) To provide more & better Shelf space, this is not possible in Retail shops. APOs give a

wide space to wide range of AMUL products.

ii) Moreover it proves to be beneficial when it comes to selling of products in APOs rather than in Modern Chains3 like Big Bazaar, D Mart, etc where there are chances to lose customer to competitors because of the numerous options available. Also it provides a benefit of lower Margin in the APOs as compared to Modern chains.

iii) Protection from Private Labels4. iv) A better way to promote AMUL as a brand & also helps in promoting newly launched

products. Each product gets proper needed space, thus making it noticeable to the customer.

AMUL Preferred Outlet (APOs) has proved to be a profitable concept, adopted by GCMMF

to keep the market updated by selling AMUL products through such exclusive outlets. The

data available shows the benefits AMUL as a brand has availed with the concept of APOs.

The success of this concept is clearly visible from the increasing number of APOs, which at

present is 7000 across the country. Despite of such huge number, the fact lies that there are

Outlets that are not able to retain even the investments. Is it the problem with the non-

acceptance of products or the APO concept still needs a refinement?

Have these APOs enabled GCMMF to answer the following questions:

Are the consumers aware of varied range of products AMUL sells?

Are the (AMUL’s) promotional strategies effective enough to grab consumers’

attention?

If yes, then why is the launch of new products like AMUL Pro not picking up the

market as expected?

While GCMMF is considering customer benefits, ultimately increasing its profits, a need has been felt to study GCMMF’s Retailing Business & Contribution as well as the effectiveness of APO in the Performance of Depot’s Overall Business.

This need has given rise to a need of undertaking a study, which would not only focus on

customers but also take into consideration the APO owners and analysis of the study would

enable GCMMF to come up with better strategies to benefit the APOs.

3 Modern Chains are discount stores that share a brand, offering a choice of variety of brands under one roof,

at variable price points. 4 Private Label products or services are those manufactured or provided by one company for offer under other

company’s brand, placed at lower prices.


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This implies that the study focuses to make franchise owner benefit more over other Retail

shops which sell AMUL products. The profitability of the APOs, if increases with such

activities, it can help the company (GCMMF) accomplish its forecasted plan of increasing the

Outlets to 10,000; as the positive increase in the sales will create a even better brand image

in the minds of entrepreneurs, motivating them to invest more in AMUL Parlors.

In order to accomplish the above goals, a study of the market and promotional activities

were carried out at a small level with a small budget in Baroda region. The study involves

implementation of a Promotional action plan to improve franchise (APO) profitability using

Below-the-line (BTL) activities, which will enable GCMMF to understand what effect

Promotion has on APOs’ profitability.

The Promotion was carried out at a small level i.e. on few parlours chosen from the sample

of 25 APOs under study. The success of any of the activity will then be implemented at a

larger scale.

It will provide good grounds to prove if Promotions affect sales in positive manner. If the

customers are benefitted from these activities, they (customers) will definitely switch from

other brands to AMUL.

Though the study was well framed, there were few major problems that affected the study.

Those were:

The irregular supply of the products, due to expansion of production unit.

Lack of awareness amongst consumers about the offers and products.

Low promotional budget.

These issues negatively affected the study in some or the other way leading to chances of getting

inaccurate results of the study.

At whole the project involved Research, analysis of the collected data, Live Market work (at

APOs) and recommendations on the basis of the study done. It will be carried out in 4 major

steps:

i) STUDY OF APOs

ii) ACTION PLAN

iii) MEASURING THE RESULTS

iv) IMPLEMENTING AT A LARGER SCALE


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5.2 PROJECT IN DETAIL:

5.2.1 Methodology:

To get a fair idea about the project to be undertaken, it was necessary to get into the

market and observe customer behaviour. An overview about the Company and the project

made the theoretical base for the study. Later for the practical base, 3 minor project

activities were undertaken:

i) PROJECT 1 - Base Building: 8 APOs including the Scooping Parlors were visited within a span of 2 days. The basic objective behind this activity was to observe and interact with the APO owners and build a base for the project i.e. to get basic idea about the APO concept.

Findings – Observation and informal interviewing gave a clear picture about the working and

the selling pattern of the APOs. Many informative data was given by few APOs related to

peak hours for sales, competition in the specific area, etc.

ii) PROJECT 2 - Offer Demonstration: To carry out the main project, it was necessary to have a fair idea about how APOs work and also to know consumer behaviour better through observations and interactions. For this a week long activity was carried out at a selected APO. Many products were put on display on the roadside, where Offer Demonstration was carried out and customer reactions were noted. These products were made available at discounted prices.

Findings - A general observation during the activity enables to make few conclusions like

teenagers less responsive to offers and dairy products are not much affected with such

offers.

Moreover a very important fact that came out of this activity is that regular customers, who

visit APOs on daily basis for purchase of Milk, Lassi, curd, etc, are not indifferent towards

discount. This implies that a different mode of offering discount, like given coupons or

adding points on every purchase and then giving discounts, etc should be carried out to

attract these customers to make them purchase other products as well.

iii) PROJECT 3 - Wet Sampling5:

In order to know the customer response towards promotional activities like Wet sampling and majorly to promote the product, free samples of newly launched AMUL Pro were distributed at GPS School in Baroda. It gave fair insightful idea about Consumer Behaviour towards Promotional Activities. To benefit from the activity and to see consumer behaviour towards Discounts, various discounts were offered on different packs of AMUL Pro.

5 Wet Sampling is a product sampling method used to invite customers to test the product. It involves

distribution of ready to eat or drink products from a central location, for immediate consumption.


Page 23

Findings – This activity proved to be the most beneficial one as the response was very good.

Teachers and students were not only given a sample to taste, but also a benefit of discount

was added. These two combined factors proved to be mind changers.

To authenticate the above data, some snaps of Promotional Activity of Wet Sampling being

carried at Gujarat Public School are being attached.

All these activities gave fair amount of practical knowledge of the market. Also through the

observations made, it was easy to decide over the variables to be undertaken for the

preparation of Questionnaire. The project was carried out in 4 major steps. Following is the

process flow of the Project undertaken:

(I) STAGE I – STUDY OF APOs

This involves Primary Data Collection through interaction with the APO owners. Basic objective of this interaction was to know average monthly Sales, Expenses & Profitability. Data collection was done through Questionnaire & Observation.

SAMPLE SIZE: 25 such APOs were studied & the above data was collected.

Before and after Experimental Design6 – (O X O’) was used for the study

O - Represents the Sales and profits.

X – Represents the experiment i.e. the Promotional Activities carried out.

O–Represents the Sales and profit after the completion of the above mentioned

experiment. 6 Before and after Experimental Design is a type of Experimental Design conducted by measuring the

dependent variable, before and after the manipulation is done with the independent variable.


Page 24

Basically Stage I involves data collection from Secondary sources as well in order to get more idea about Promotion. Primary Data was collected with the help of:

a. Questionnaires- These are Personally Administered Questionnaires. It has a combination

of Open ended (Completely Unstructured) & close ended questions. (ANNEXURE II)

b. Observation was also a part of the study at Stage I. The behaviors of customers towards offers, etc were observed and used to check the impact of AMUL products, APOs and offers given. Major findings of the Questionnaire were:

(1)

The above chart gives a fair idea that most of the Parlors are located on the Main Roads.

This is beneficial as the Brand is promoted by getting into the eyes of the people. Some

attention creating factors like attractive Banners, Ambience of the Parlors, innovative ways

of displaying Offers, discounts & new products can increase sales.

Another thing to be brought into notice is that some Amul products like ice-cream &

chocolates need to grab teenagers’ attention, which is possible either through

Advertisement on the kids’ channels or by reaching the Schools & colleges. APOs, especially

the Scooping Parlors can prove out to be a place to hang out for the youth (Eg. Jyoti

Hardware Scooping Parlor).

Main Road 48%

Outskirts 17%

School/College 13%

Others 22%

AREA WISE APOs


Page 25

(2)

As known through the survey, it is clear that both the categories i.e. Dairy & Ice-cream get equal response. This implies that in order to attract new customers & retain the old ones, ultimately increasing the sales, Amul should come up with better Ads showcasing the USP of Amul products. It should also focus on the local Ads, Offers & discounts and the most important thing to be taken care of, is the regular Supply of products. But a very interesting point that can be brought into notice is that if Demand is categorised

only on the basis of the 2 categories, not including ’both’ category; a huge demand can be

seen for ice-cream. There are many competitors in this sector, like Kwality Walls, Vadilal,

Havmor, etc. but AMUL holds a better market share as compared to others because of 2

reasons –

1. High Quality at a reasonable price

2. Able to reach customer, reason being its large distribution network and numerous retail

outlets.

But to maintain its stand, it needs to maintain its regular supply at the outlets. Also from the

questionnaire responses, it is clear that AMUL, if wants to grow, will have to keep coming

out with new flavours every season.

Ice Cream 46%

Dairy Products 8%

Both 46%

PRODUCT CATEGORY WISE DEMAND


Page 26

(3)

An important point suggested by all the APO owners is the Need for VARIETY. The pie chart

shows that 69% of the customers give a positive & immediate response to newly launched

AMUL products. But the interval of coming out with new products is too long.

There is a very high demand in seasonal flavours in Ice-cream, which are provided by

competitors like Havmor, Vadilal & Kwality Walls. Moreover a major problem faced by the

APOs is the irregular supply of the products. Many AMUL products get a good start when

launched but due to irregular supply are losing out customers.

Another way to cater customer demands is to keep on changing the packaging at regular

intervals. It was found during the survey that many customers holds back for its improved

packaging.

Yes 69%

No 31%

CUSTOMER RESPONSE TO NEW PRODUCTS


Page 27

(4)

Today business works on merely one thing and that is PROMOTION. Amul has created a very good

Brand name but it is important to maintain it which is possible only when it keeps on reminding

people about its existence and keep proving its innovative side to the customers through launch of

new products.

Some AMUL products are not picking up in the market like other successful AMUL products like

Amul Butter, Cheese, etc. Though these products have an edge over the competitors’ products, a

reason for its not proving out to be as per the expectation is the poor Advertisements.

The above chart clearly shows that 42% that is almost half the population is attracted towards AMUL

products through Advertisement. But AMUL ads have not seen any kind of innovation since long.

Moreover the frequency of these ads is very less.

New products like AMUL Pro did not get at good launch. Had it been done through heavy Ad

promotion like Bournvitta & Horlicks, AMUL Pro could have done better (though AMUL Pro is picking

up in the market but at a very slow rate). Similar is the case with Flaavyo & Ladoos.

Advertisements

42%

Offers 35%

No Effect 23%

PROMOTION EFFECTIVENESS


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FINDINGS OF THE SURVEY

When asked for Suggestions from the APO owners, who directly interact with the customers on daily

basis, they gave some useful points which they noticed to be a part of customer needs. These have

been categorised into the 4 P’s of Marketing.

PRODUCT

1. New Flavours in Ice Cream (Sitafal most demanded) & Candy (Kachi Kary)

2. Variety in Chocolate

(Like Cadbury Dairy Milk Silk)

PACKAGING

1. Small packs of condensed milk, cow ghee & butter (200 gms), cheese & cream (500gms).

2. Printing of price of the product to be done in white.

PRICE

1. Prices should be rounded up

PROMOTION

1. Local Ads should be given in the Local newspaper.

2. New Ads should be telecasted at a bigger level, showing contents of the product.

SUGGESTIONS (BY THE RETAILERS)


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(II) STAGE II – ACTION PLAN:

The next was the Action Plan i.e. to come up with a Plan to increase Sales & Profitability of the APOs. This involved carrying out Promotional Activities, Visual Merchandising and various other ways to increase the Sales. The ultimate Objective behind this was to make AMUL Retailing Business a profitable one for the Franchises. SAMPLE SIZE: Out of 25 APOs surveyed, 5 Parlors were selected for implementation of this PLAN. (Right now only 1 Parlor is being considered for the Activity).

Hypothesis: There was an irregular supply of some products at the APOs, which were to be included in the Promotional Activities. The supply was assumed to be regular while the Activity was carried out. Following ACTION PLAN was submitted to promote AMUL products and thus increase sales, on approval of which, a budget was to be assigned:

i) TOKEN – AMUL Pro can be promoted using another product. We can come up with AMUL

Milk tokens. When certain numbers of tokens (that will be specified by the Co) are collected

by the customer, he/she can submit it at the APO & get AMUL Pro in return.

Reason for the Activity - This way, we can not only promote AMUL Pro, but also reach our

target audience (children) at a very reasonable rate. This activity can turn out to be effective

because it’s been long there has been no new milk additive launched in the market. A

change can prove a benefit for the Company.

ii) AMUL BREAKFAST COMBO – AMUL Breakfast Special Kit can be a way to increase sales. A

Combo of AMUL Butter, Milk & Bread (Cheese if needed) can be made and sold at a

comparatively low rate.

[Another way is to give AMUL special toy or AMUL Mug as a gift. The gift will create a

unique image in the minds of the customers.]

Reason for the Activity – Daily consumption products like Milk, Bread, etc which are to be

consumed as per requirement & immediately; are not much affected by offers. Why would a

person who doesn’t want to have AMUL KOOL, purchase it just because of Rs 5 discount?

So the customer should be made purchase in more quantity so that even if he doesn’t want,

he will consume more (keeping in mind the Expiry date). So make the customer buy in bulk

to make him consume more.

iii) VISUAL MERCHANDISING – A product sells only when it grabs the consumers’ attention.

The ‘Not so Popular’ products can be displayed in such a way at the APOs that it attracts the

attention of the customers and this can result into sales.


Page 30

Reason for the Activity – There is a popular phrase in Hindi “JO DIKHTA HAI, VO BIKTA HAI”,

meaning that Selling can be made, if it is made visible to the customer. Few APOs need to

focus on this aspect. All the products should be displayed in such a way that it comes into

notice even at a glance, which is not the case in few APOs.

NOTE: The right place for the right product is important, which can be confirmed by the

behaviour of the customer (where his focus is while purchasing a product). So the above

activity will be performed within a span of days, once the Promotional Activities have

begun.

The above mentioned activities can be performed at APOs. But to reach out more

consumers, we can come up with following activities which will be carried out beyond the

scope of APOs (Reason for not carrying out the following activities at APOs is the

unavailability of enough Space to manage the crowd)

a) FREE SAMPLES – Free Samples can be used for products not much in demand. Free

Samples can be distributed in schools or even at the APOs. It gives customers who are very

conscious about taste and spending, an opportunity to use the product once and then make

decision. It also creates a positive image in the minds of the customers.

A Free Sample Activity at Gujarat Public School (Baroda) for AMUL Pro proved to be more

successful than expectations. Many teachers at the school, after tasting AMUL Pro not only

purchased the product, but also proved to be a source of good word of mouth Marketing.

b) COMPETITIONS – A very good source to sell is to make the product noticeable and to do so, it is important to attract crowd. AMUL can start with organising competitions at the stores. Competition can be a cooking competition wherein the participants will be asked to use only AMUL products and come up with new recipes.

NOTE: This is a way AMUL can be promoted. But this might need some time to show results.

RETAILER LEVEL ACTIVITIES

Other than Promotion, a very important aspect to be taken care of is Retailer Promotion.

Retailer is the intermediate between the Company and customers. Retailers, if taken care of

very well, can bring in tremendous change in a positive manner.

While promoting the selected APOs and increasing sales, other APOs (which are not a part

of the promotion) can also be made a part of the activity by organising a competition of

achieving a level of sales and awarding them points for the same. The APO with highest

points can be awarded with few AMUL products free of cost. This will motivate the APO

retailers to sell more.


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IMPLEMENTATION OF THE PLAN

The ACTION PLAN was approved and a budget was being assigned, details of which were

disclosed to Sales head of Baroda. As per the plan set of activities had to be performed one

after the other at different APOs unlike carrying out 1 activity at 1 APO for one month (as

per earlier planner).

The Implementation Plan constituted of 2 major activities:

i) AMUL BREAKFAST COMBO

ii) WET SAMPLING

i) AMUL BREAKFAST COMBO: The first activity to be carried out was the AMUL

BREAKFAST COMBO. It was carried out at one of the surveyed APOs – Arihant Store.

Objective – The idea behind the activity was to promote newly launched AMUL Cheese Spread flavours (Jeera, Oregano, Red Chilly) and also AMUL Sandwich Bread, which is not as much in demand as its competitor Super is. Activity - It was one week long promotional activity. Customers were given an option

to make a combo of any 3 products amongst the range given in Annexure I and get

discount on each product that was predefined by the Company.

Pre-test Data – The Parlor usually gets a weekly demand of 20-25 breads, 15-20 butter and a very less demand of Slice and Cheese Spread which keep varying. Post-test Results – There were 12 different Combos sold during the Activity. These were additional to the weekly sales. Limitations – Following are the problems faced during the Activity: a. Poor Demand - The Parlor faces more demand in Ice-cream. The demand for

these products was not very high. b. Time Constraint – The activity was limited to just a week. When the customers

started realising about the Offers, the offers were taken back. c. Irregular Demand – As per the Company requirements, the Combos sold were to

be in presence of the Company official. So there were times when sales were lost due to absence of the official.

d. Combo Constraint – Few more products like AMUL Pro and larger bread packs, if had been added to the Combo, the activity would have received a better response.

Findings – The Activity didn’t meet the expectations. The response was very low. Customers expected products like Milk, AMUL Pro, Masti Dahi, etc also to be added to the combo.


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ii) WET SAMPLING: Second activity to be carried out was WET SAMPLING. It was carried

out at another APO – Jail Road Parlor.

Objective – The motive behind this activity was to promote newly launched AMUL Pro, which in spite of being in the market since some time is not picking up sales. Activity - It was one week long promotional activity. Free samples of readymade

AMUL Pro added milk were distributed among customers. The activity was limited to

selected customers, mainly focused on parents accompanied with their children.

Pre-test Data – The Parlor usually has a varying weekly demand. It at times has 1 AMUL Pro pack sold in a week and at times NIL. This shows the poor performance of the product. Post-test Results – There were 17 packs, majorly of 200 Gms and some 500 Gms, sold during the Activity. On an average, each day 2-3 packs were sold. Limitations – Following are the problems faced during the Activity:

a. Time Constraint – The activity was limited to just a week. This implies that the impact of the activity might not be the same what it is presumed to be. A month long activity would have shown a better and clear picture of success/failure of the activity.

b. Irregular Demand – As per the Company requirements, Wet Sampling had to be done in presence of the Company official. So there were times when sales were lost due to absence of the official.

Findings – The activity received a very good response, surpassing the expectations. There were few very important points that came into notice during the week lomg activity:

a. Having an advantage of bringing in a Malt Beverage product then, when the market has become stagnant; not seen any change since a long time; AMUL is enable to capture the market. The major reason for this is low promotion and less advertising. 90 % of the customers didn’t know about existence of AMUL Pro.

b. To give a push to the sales of AMUL Pro, discounts should be given even on the 500 Gms along with 200 Gms. 75% of the customers bought 200 Gms, reason being the discount given on it.


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(III) STAGE III – MEASURING THE RESULTS:

After the Action Plan was being carried out, next was the Measurement & Comparison of

the results. It implies before and after Experimental design concept. New Sales i.e. the

change in Sales due to the activities carried out in the ACTION PLAN was measured &

compared with the earlier Sales.

The change in sales was:

i) AMUL COMBO OFFER: 12 additional breads and butter, 4 Cheese Spread and 8

Cheese Slices were sold.

ii) WET SAMPLING: 17 packs were sold.

This makes it clear that WET SAMPLING can increase sales tremendously because when

compared to earlier sales, it shows 17 times better results.

(IV) STAGE IV – IMPLEMENTING AT A LARGER SCALE:

As per the planner, if the activity proves out to be beneficial, it will be implemented at a

larger scale. WET SAMPLING can boost sales in huge numbers. This is supported by the mini

project carried out GPS, which got such good response that stock of almost 30 packs were

sold out in 3 hours. Also the above mentioned activity supports the claim.

As the activity involves expense of distributing free samples, such Promotional campaign

can be carried out first at a small level, say at the APOs in Baroda with highest sales.

Once the Company is able to reach and fit the taste of the customers, it can easily make its

way out to hold position number 1 even in other AMUL products like AMUL Pro.

5.2.2 RESULTS AND OUTCOMES OF THE STUDY

The findings of the report give a clear picture of the affect of WET SAMPLING, OFFERS and

DISCOUNTS on sales. This enables GCMMF not only to know the positive or negative or

neutral effect of the study i.e. Promotion, but also can prove to be of great help in

implementing, if positive, or redesigning the Marketing Strategies (if negative) in order to

make retailing business more effective and profitable one for loss making APOs.

The positive response is useful for the Company (GCMMF) increasing its sales and APO

profitability. Moreover, the research carried out to complete the study has thrown some


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light on the present scenario of the retailing business and the needs of retailers recorded

during the survey.

5.2.3 LIMITATIONS

i) Need of Middle-man: The APO owners do not provide important information like

profit margin, sales, etc without a Company associate being involved in it.

ii) Time Constraint: The 12 week time is too less to get exact results of the Action Plan

implemented.

iii) Supply Constraint: A major problem is the irregular supply of products, which would

at a later stage influence the results of the study & the Plan effectiveness.

iv) Consumer is reluctant to provide accurate information because of the time constraint

i.e. interaction for them is a wastage of time.

CONCLUSION:

Following are the outcome of the analysis:

1. Most of the Customers are clear about what product and brand they want to

purchase when they come out to purchase. Customer looks for “Value for Money”,

even for low priced dairy products. So it is not an easy task to attract those

customers. A company should focus more on the existing customers and offer

variety and quality.

2. AMUL has a decent hold in the Fresh and Frozen section but is weak in Ambient

section.

3. Havmor can become the biggest competitor for AMUL in ice-cream section, if it

doesn’t take needed action towards variety demands.

4. There are two types of customers. One who regularly visited APOs at least twice a

week. They are fully aware of existing and new products. Other type of customers

are those who rarely visit APOs and such customers have no idea about varied range

of products. Such customers need to be targeted by increasing advertising.

5. APOs are viewed as a Premium Store and low Pricing has a good impact on the

customers.

6. Most influential factor for the low sales of AMUL Pro is poor Marketing skills of the

APO owners. Most of the Customers know what they want when they enter the

store but APO owner can make him/her purchase other products as well, if handling

properly.


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7. Most of the people don’t remember from which source they heard about APOs or

new products like Yoghurt, which implies that no clear source of advertisement has

been dominant.

8. As per the interaction and observation, Customer Satisfaction and loyalty is found to

be high in AMUL. So there are good chances of increase in sales through positive

word of mouth.

User Reviews from Interaction:

“Poor quality of packaging that is not expected from a big brand like AMUL” – (Customer at

Param Parlor)

“The Company talk about expanding their business, but it is not able to meet the current

demand. How can it think of Expansion in such case?” (Customer at Jail Road Parlor)

5.2.4 RECOMMENDATIONS

From the study and live work done so far, I conclude with few Suggestions, which are as follows:

i) Round up the prices- it can be done by either increasing the price or decreasing

the price & the quantity (to a certain level) as well.

ii) Chocolate Dispensers should be provided (like those provided to Cadbury

people). It is a good way of promoting the fact that AMUL has a wide variety in

chocolates.

iii) SCOOPING PARLORS – A very good way to promote the brand AMUL is by

providing AMUL printed Cups, Spoons & Straws. This will not only solve the

problems faced by Parlor owners, but also can prove as a good source of cost-

effective Promotion.

iv) Need for INNOVATION in AMUL Ads – As already discussed above, the Ads are

not up to the mark & their frequency is also too low. It is important that AMUL

comes up with innovative ads, where not only the Brand is promoted or the

product is brought into notice, but also USP of AMUL products is brought into

notice.

For eg. Amul Dark Chocolate has more cocoa content than major competitors like Cadbury & the price is also comparatively less but this has never been brought into customer’s notice.

v) Benefit APOs – APOs owners hold a negative side of owning a APO as they cannot stock other branded products. In such a case, it is the responsibility of the Company to take care of their profits and requirements.


Page 36

Most APO owners had complaint about Company supplying regularly to the

Modern Chains like D-Mart, Reliance Fresh. These Modern Chains sell those

products at a price lower than the price retailer pays to distributor.

This problem, if not solved, can lead to loss of APOs and may be even closure of

some. More importantly, it can lead to lack of trust of Entrepreneurs (APO

owners) in the Company.

For eg. Amul Dark Chocolate has more cocoa content than major competitors like

Cadbury & the price is also comparatively less but this has never been brought into

customer’s notice.


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6. ANNEXURES

ANNEXURE I

AMUL COMBO OFFER

AMUL COMBO OFFER was a part of ACTION PLAN of Promotional Activities carried out. It

constituted of various AMUL products. These products were given at discounted prices, if

the customer makes a combo of 3 or more products.

Combo constituted of: AMUL COMBO OFFER

AMUL product Weight Market Price Discounted Price

Sandwich Bread (400 gm) Rs 22/ Rs 20/

AMUL Butter (100 gm) Rs 31/ Rs 30/

Cheese Slice (200gm) Rs 96/ Rs 90/

Cheese Spread flavours - Rs 63/- Rs 60/


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ANNEXURE II

RETAILER QUESTIONNAIRE

The Retailer Questionnaire is a part of STAGE I – Study of APOs. 25 APOs were covered

under this activity. It is a personally administered Questionnaire. This survey was done at a

very small i.e. in Baroda region on 25 APOs.

The basic objective behind using Questionnaire was to get an approximated figure of

monthly sales, revenue and expenses, which later was to be used to compare with after-

promotional-activity sales. It also focused on getting basic information about APOs and

suggestions from the franchisees.

The Questionnaire contains open as well as close ended questions. It was a Personally

Administered Questionnaire.

Questionnaire

NAME:

PARLOR NAME:

Good morning/afternoon/evening. We are conducting a survey on Feasibility of Amul Parlors for which we need your valuable opinion. Please spare 10 minutes of your time and fill in the Questionnaire. Information given by you will be kept confidential.

Monthly Sales:

Revenue:

Expenses:

[1] In which area is your Outlet situated? (Please tick) Main Road Outskirts Near College/School Other (Please Specify)

[2] Do you keep packaged dairy products other than milk? (Please tick) Yes No


Page 39

[3] Among Amul dairy products, which product do you think that sells more? (Please Rank them) Ice Cream

Dairy Products

Both

[4] Are you and your parlor always updated with stock of all the newly launched Amul Products (e.g. Amul Pro, Flaavyo Yogurt)? Yes No

[5] Do consumers purchase newly launched Amul Products? Yes No [6] What, according to you is preferred the most by the customers; when promoting a Amul Product? Advertisements

Offers (includes Discounts)

No Effect

[7] What expectations do you have from the Company, in order to increase sales? Please Suggest. ____________________________________________________________________________________________________________________________________

ANNEXURE III

RETAILER QUESTIONNAIRE SEP

Retailer Questionnaire SEP contains data related to Sales, Expenses and Profits of the 25

APOs covered under the research through Questionnaire. The data is average monthly data.

This data was recorded in order to get a clear picture of the current profitability of each APO

and measure the change, if any, after the STAGE II – ACTION PLAN is accomplished. This

enabled to get a better idea about the positive or negative changes seen after Promotional

activities were carried out.


Page 40

PARLOR SALES EXPENSES PROFITS

Parmar Parlor 500 30 15--20

Snowfall Amul Parlor 350 25 Not provided

Jyoti Hardware (Scooping Parlor) 250 26 35

Dugdhraj Parlor 200-250 6--7 10--15

Gayatri Amul Parlor 200-250 15 10--15

Arihant Parlor 200-250 38 15

Santoshi Amul Parlor 200-250 20 8--10

Baba MohanRam Scooping Parlor 170-180 20 20-25

Cream & Dream 150 31 Not provided

Lakshmi Parlor 150 8 Not provided

Yamuna Amul Parlor 140-150 4 10--12

Patel Amul Parlor 100-125 12 5

Radhe Enterprise (Scooping Parlor) 100 30 4--5

Krishna Amul Parlor 100 12--13 3--4

Shiv Amul Parlor 70-80 5 8--10

Jai Jalaram Parlor 70-80 5 8--10

Hari Om Scooping Parlor 70-80 6--7 8

Umiya Amul Parlor 70-75 5 5

Santosh Amul Parlor 60-80 3 8--10

Narmade Amul Parlor 70 5.5 10--12

Harshraj Parlor 60-70 3-3.5 Not provided

Shriji Parlor 50-60 2.5 8--10

Kaka Amul Parlor 40-50 15 Not provided

Mittal Amul Parlor 40-50 2.5 5

Shri Somnath Amul Parlor 40--50 7 Not provided

Given below is a statement showing monthly sales, expenses & profits (SEP) of 25 parlors.

(Rs in 000's)

The data is arranged in descending order of monthly sales. It gives a fair idea about the highly profitable Parlors, ie those having the highest sales. But the point is that few parlors, though having high sales are not able to earn profits as per the expectation. A major reason for this is Expenses. But other than expenses, another issue that was brought into notice at almost every Parlor surveyed, was the Margin of the APO Owners. When asked for Suggestions & their expectations from the Co., most of the APO owners demanded a increase in the Margin.

Another matter of concern, which is highly affecting the Profitability of the APOs is the Offers and discounts provided by the Modern Chains, which take away their (APO) customers, directly affecting the Sales.


Page 41

7. References: APPENDIX 1 – PRINT MATERIAL REFERNCES

1. Deepak Chawla, Neena Sondhi, 2011 - Research Methodology Concepts and Cases.

New Delhi: Vikas Publishing House Pvt Ltd

2. Philip Kotler, Gary Armstrong, Prafulla Y. Agnihotri, Ehsan ul Haque, 2011 – Prinicples of Marketing 13th edition: South Asian perspective South Asia: Dorling Kindersley (India) Pvt Ltd

APPENDIX 2 – ELECTRONIC RESOURCES REFERENCES

1. www.google.com

2. www.amul.com

3. www.fao.org/docrep

4. www.investopedia.com

5. www.indairyasso.org

6. http://www.businesswire.com/news

7. http://theglobaljournals.com

8. http://www.nabard.org

APPENDIX 3 – TABLES

Table 1 - Milk Utilisation Pattern in India, 1943-2004e

Table 2 – INDIAN DAIRY’s PRODUCT MIX (2009)f

Table 3 – Product Category based on Distribution Networkg

ELECTRONIC REFERENCES a http://www.rncos.com/Report/IM368.htm

b Research and Market Paper by Dublin – Business Wires

http://www.businesswire.com/news/home/20130222005237/en/Research-Markets-Potential-Indian-Dairy-Industry-- c Research Paper by Dr M Dhanabhakyam and A. Shanthi (Bharathiar University)

http://www.fibre2fashion.com/industry-article/free-retail-industry-article/indian-retail-industry-its-growth-challenges-and-opportunities/indian-retail-industry-its-growth-challenges-and-opportunities1.asp d A Research Paper by Dr Sharif Memon in Paripex – Indian Journal of Research (March 2012)

http://theglobaljournals.com/paripex/file.php?val=MTQ3 e Table 1 in http://mofpi.nic.in/ContentPage.aspx?CategoryId=145

f Table 2 in http://cms.iuf.org/sites/cms.iuf.org/files/Indian%20Dairy%20Industry.pdf

g Data table from http://www.aavinmilk.com/dairyprofile.html

http://www.google.com/

http://www.amul.com/

http://www.fao.org/docrep

http://www.investopedia.com/

http://www.indairyasso.org/

http://www.businesswire.com/news

http://theglobaljournals.com/

http://www.nabard.org/

http://www.rncos.com/Report/IM368.htm

http://www.businesswire.com/news/home/20130222005237/en/Research-Markets-Potential-Indian-Dairy-Industry--

http://www.businesswire.com/news/home/20130222005237/en/Research-Markets-Potential-Indian-Dairy-Industry--

http://www.fibre2fashion.com/industry-article/free-retail-industry-article/indian-retail-industry-its-growth-challenges-and-opportunities/indian-retail-industry-its-growth-challenges-and-opportunities1.asp

http://www.fibre2fashion.com/industry-article/free-retail-industry-article/indian-retail-industry-its-growth-challenges-and-opportunities/indian-retail-industry-its-growth-challenges-and-opportunities1.asp

http://theglobaljournals.com/paripex/file.php?val=MTQ3

http://mofpi.nic.in/ContentPage.aspx?CategoryId=145

http://cms.iuf.org/sites/cms.iuf.org/files/Indian%20Dairy%20Industry.pdf

http://www.aavinmilk.com/dairyprofile.html


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Analysis of effectiveness of Amul APO Retail business

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