amul magnetic marketing

8/8/2019 Amul Magnetic Marketing

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A

Project Report

On

The Magnetic Marketing of

Amul

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CONTENTS

DECLARATION1

INTRODUCTION.2

AMUL THE ORIGIN..3

COMPANY PROFILE .4

KEY FEATURES OF AMUL6

PRODUCT THE SOUL OF AMUL...7

PRODUCTS AT A GLANCE.8

PLACE..

DISTRIBUTION NETWORK

THE NETWORK AT A GLANCE

SELECTION, MOTIVATION & EVALUATION

OF CHANNEL MEMBERS..

THE e-EXPERIENCE OF AMUL

CONCLUSION.

BIBLIOGRAPHY

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INTRODUCTION

India is the largest milk producing country in the world after US. In 1997, totalmilk production in the country was 72 million tonnes, accounting for 13% of the

worlds total milk production.During the last three decades, the progress made by the country in increasing milk

production is remarkable. Annual milk production in India has made a quantumjump from 22 million tonnes in 1970 to 74 million tonnes in 199899.

The Operation Flood launched in 1970 under Dr Verghese Kurien was successfulin modernizing the dairy sector in India and creating a strong network for

procuring, processing and distribution of milk through the co-operative sector.Operation Flood also organized dairy co-operatives in milk shed areas of villagesand links them to metros - the major market for milk .First dairy co-operative -

National Diary Development Board (NDDB), at Anand, Gujarat.

Amul's success led to the creation of similar structures of milk producers in otherdistricts of Gujarat. They drew on Amul's experience in project planning andexecution. Thus the 'Anand Pattern' was followed not just in Kaira district but inMehsana, Sabarkantha, Banaskantha, Baroda and Surat districts also.

Major milk procuring centres in India are: Anand (Gujarat), Mumbai(Maharashtra) , Chennai, Erode, Salem (Tamilnadu), Bangalore (Karnataka), NewDelhi, Hyderabad (Andhra Pradesh).

The milk market at a glance

Today in India the liquid milk production is 74 million MT / year and themilk production growing at around 5 % CAGR.

In India around 9 MT is pasteurized & packed while the rest is sold loose. The demand from metros for packaged milk - around 6 million MT which is

a potential market.

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Per capita milk consumption in India has grown from 132 gms / day to 233gms per day in 1997-98.

COMPANY PROFILE

The story of Amul inspired the 'Operation Flood' and heralded the 'WhiteRevolution' in India. It began with two village cooperatives and 250 liters of milk

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

Amul (Anand Milk Union Limited), formed in 1946, is a dairy cooperative

movement in India. It is a brand name managed by an apex cooperative

organization, Gujarat Co-operative Milk Marketing Federation Ltd.

(GCMMF), which today is jointly owned by some 2.6 million milk producers in

Gujarat, India.

AMUL is based in Anand, Gujarat and has been a sterling example of a co-

operative organization's success in the long term. It is one of the best examples of

co-operative achievement in the developing economy. "Anyone who has seen ...the dairy cooperatives in the state of Gujarat, especially the highly successful one

known as AMUL, will naturally wonder what combination of influences and

incentives is needed to multiply such a model a thousand times over in developing

regions everywhere. The Amul Pattern has established itself as a uniquely

appropriate model for rural development. Amul has spurred the White Revolution

of India, which has made India the largest producer of milk and milk products

in the world. It is also the world's biggest vegetarian cheese brand.

Amul is the largest food brand in India and world'sLargest Pouched MilkBrand with an annual turnover of US $1050 million (2006-07). Currently Amul

has 2.6 million producer members with milk collection average of 10.16 million

liters per day. Besides India, Amul has entered overseas markets such as

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Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a

few South African countries. Its bid to enter Japanese market in 1994 had not

succeeded, but now it has fresh plans of flooding the Japanese markets .Otherpotential markets being considered include Sri Lanka.

Dr Verghese Kurien, former chairman of the GCMMF, is recognized as the man

behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the

Banaskantha Union, was elected chairman of GCMMF.

AMUL AT A GLANCE

Member 13 district cooperative milk

producers' Union

No. of Producer Members 2.79 million

No. of Village Societies 13,328

Total Milk handling capacity 11.22 million litres per day

Milk collection (Total - 2008-09) 3.05 billion litres

Milk collection (Daily Average

2008-09)

8.4 million litres

Milk Drying Capacity 626 Mts. per day

Cattle feed manufacturing

Capacity

3500 Mts per day

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TYPE Cooperative

ESTABLISHED 1946

NAME Anand, India

HEADED BYChairman, Gujarat Co-operative Milk

Marketing Federation Ltd. (GCMMF)

PRODUCTS Dairy

REVENUE $1.33 billion USD (in 2007-08)

SUPPLIERS 2.79 million milk producers

WEBSITE www.amul.com

GCMMF TODAY

GCMMF is India's largest food products marketing organisation. 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. GCMMF

markets and manages the Amul brand. From mid-1990's Amul has entered

areas not related directly to its core business. Its entry into ice cream was

regarded as successful due to the large market share it was able to capture

within a short period of time - primarily due to the price differential and the

brand name. It also entered the Pizza business, where the base and the recipes

were made available to restaurant owners who could price it as low as 30

rupees per pizza when the other players were charging upwards of 100

rupees.

In September 2007, Amul emerged as the leading Indian brand according to a

survey by Synovate to find out Asia's top 1000 Brands

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Despite of the economic slowdown Amul has managed to maintain its profitfigures. The sales turn over Amul for the year 2008-09 is Rs.67113 million.

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AMULS TARGET MARKET

Wide range of product categories caters to consumers across all

market segments. For example, Amul kool is targeted at

children, while teenagers prefer Kool Caf, as it has a coolimagery associated with it.

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KEY FEATURES OF AMUL

A mass market player

No premium offerings

Product level- movedfrom core benefit to expected benefit.

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Product type - consumable and perishable products

USP- Quality and affordability

Up against major players value addition to customers

Strength- Sheer size and scale of operation

First entry first mover advantage

Continuous New offerings for health conscious and vibrant India.

PRODUCT THE SOUL OF AMUL

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PRODUCT CLASIFFICATION

DURABILITY AND

TANGIBILITY

CONSUMER GOODS

TYPE

INDUSTRIAL GOODS

TYPE

NON DURABLE

GOODS(Amul)

CONVENIENCE GOODS MATERIAL AND PART

(RAW MATERIALS)

STAPLES

(Amul)

FARM PRODU

(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. Amul products have

been in use in millions of homes since 1946.

The product mix of a company, which is generally defined as the total composite

of products offered by a particular organization, consists of both product lines and

individual products. In this case forE.g. Bread spreads, milk drinks, cheese,

powder milk etc.

A product line is a group of products within the product mix that are closelyrelated, either because they function in a similar manner, are sold to the same

customer groups, are marketed through the same types of outlets, or fall within

given price ranges. Here ForE.g. Powder milk, Fresh milk, health drinks etc.

A product is a distinct unit within the product line that is distinguishable by size,

price, appearance, or some other attribute. E.g. Amul lassee, amul lite.

Like any other product Amuls product mix also has a certain width, length, depth

and consistency. These are summarized in the table next page.

The width of a product mix refers to how many different product lines Amul

carries, which are nine in no. as shown in table.

The length of a product mix refers to the total no. of items in the mix. Here

in the table it is 48.

TheDepth of a product mix refers to how many variants are offered of each

product in the line. Like here Amul Pure Ghee comes in two variants with

three diff. pack. Sizes, then it has depth of six.

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The Consistency of the product mix refers to how closely related the various

product lines are in end use, product lines, or some other way. Here Amuls

product lines are consistent insofar as they are consumer goods goingthrough same distribution channel.

PRODUCT-MIX WIDTH

Bread

Spreads

Milk

Drinks

Powder

Milk

Fresh

Milk

Cheese Desserts Pasteurized

Milk

Health

Drink

For

Cooking

AmulButter

Amul KoolMillk

Shaake

AmulyaDairy

Whitener

AmulFresh

Milk

AmulPasteurise

d

Processed

Cheese

Amul IceCreams

Toned Nutramul Amul /Sagar Pur

Ghee

Amul Lite Amul Kool Sagar Tea

Coffee

Whitener

Amul

Gold

Milk

Amul

Emmental

Cheese

Amul

Mithaee

Gulab

Jamuns

Double toned Amul

Shakti

Health

Food

Drink

Amul Mala

Paneer

Delicious

TableMargarine

Amul Kool

Cafe

Sagar

SkimmedMilk

Powder

Amul

TaazaDouble

Toned

Milk

Amul Pizza

MozzarellaCheese

Pure Khoya

GulabJamums

Full cream Mithai

Mate

Kool Koko Amul

Instant

Full

Cream

Milk

Powder

Amul

Lite

Slim

and

Trim

Milk

Gouda

Cheese

Amul

Chocolates

Probiotic milk Sweetene

Condense

Milk

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Nutramul

Energy

Drink

Amul KoolChocolate

Milk

Amul

Spray

Infant Milk

Food

Amul

Fresh

Cream

Amul

Cheese

Spreads

Amul

Lassee

Flavored milk Masti Dah

PRODUCT PORTFOLIO

CATEGORY MARKET

SHARE

MARKET

POSITION

Butter , Ghee 85% 1

Milk Powder 40% 1

Cheese 50% 1

Ice cream 24.75% 2

Sweets 50% 1

Chocolate Drink 90% 1

Chocolate 10% 3

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PLACE

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Amul has effectively managed flow of its products. It has always focused on easy

consumer accessibility. The products are available in small shops as well as in

large retail outlets also.

Amul has recently entered into direct retailing through "Amul Utterly Delicious"

parlours created in major cities Ahmedabad, Bangalore, Baroda, Delhi, Mumbai,

Hyderabad and Surat. Amul has plans to create a large chain of such outlets to be

managed by franchisees throughout the country. Amul Parlours were created at

some prominent locations in the country, which are run by the company or its

wholesale dealers.

1. Delhi Metro Rail Corporation

2. The Somnath Temple

3. National Institute of Design

4. Infosys Technologies in Bangalore, Mysore & Pune

5. Wipro campus in Bangalore

6. L.J. College, Ahmedabad

7. Ahmedabad Airport

8. Surat Municipal Corporation

9. Delhi Police

10.Gujarat State Raod Transport Corporation11.Jubilee Mission Medical College, Trichur, Kerala

12.Sanjay Gandhi Hospital Parlour, Amethi

13.Indian Institute of Management, Kolkata

14.Cafe Amul, MDG, Gandhinagar

"Amul Utterly Delicious" parlours are an excellent business opportunity for

investors, shopkeepers and organizations. In order to come closer to the customer,

we have decided to create a model for retail outlets, which would be known as

"Amul Preferred Outlets"(APO).

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DISTRIBUTION NETWORK

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THE CHANNEL NETWORK

First Leg (From Manufacturing Unit)

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GCMMF

GCMMF

Depot.. Depot..

WD1 WDn

Retail..Retail1

Third leg

Second leg

Manufacturing


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Procurement ChannelDistribution

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GCMMF

Head Office

MU1 MU...n

VCS1 VCSn

Village Village

Upstream flow


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SCM AND MARKET LOGISTICS

THE NETWORK AT A GLANCE

Milk is procured from the villages and collected at Village Cooperative Societies

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

processed into various products.

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

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

from there to the retailers.

THE FACT SHEET Milk is procured twice a day from 2 million from Gujarat alone

The payment is made under twelve hours of procurement

There are 10000 village cooperative societies There are 3600 wholesale distributors in the country

45 depots

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

offices

There are approximately 4,50,000 retailers spread all over India

Total house hold consumers covered are 100,000

The milk procured per day is 5 million liters

Where the total capacity of operation is 7 million liters per day

The peak processing till date has been 6 million liters per day

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

GCMMF

CHANNELS

Upstream Channel: In which milk is procured from the farmers to the

manufacturing units.

1. In the first step, the milk is taken to the VCS by the farmers on foot orbicycles in small quantities

2. The second step involves the transportation of milk from the co-operatives to the manufacturing units this is done in special truckswhich are equipped with tankers to carry milk.

Downstream Channel: It is the distribution part of the supply chain from the

manufacturing units to the retailers.

1. First legFirst leg of transport is from the manufacturing unit to the companydepots. This is done using 9 and 18 MT trucks any lesser quantitywill be uneconomical to the company there fore is some time the

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quantity ordered is lesser then club loading is done which means thatthe product ordered is supplied with some other products.

a. Frozen food the temperature of these trucks is kept below-18C

b. Dairy wet the temperature of these trucks is kept between0-4C

2. Second legIt is from the depot to the WDs, this transport is carried out ininsulated 3 and 5 MT TATA 407s here a permanent dispatch plan

(PDP) is prepared where the distributor plans out the quantity ofvarious products to be ordered on a particular date.

3. Third legThis is the flow of good from WDs to retailers, a beat plan is

prepared and transportation is done on auto-rickshaws, rickshaws andbicycles.

SELECTION, MOTIVATION &EVALUATION OF CHANNEL MEMBERS

Selection:

The company takes into consideration a host of factors while selecting the channel

members. This is because GCMMF believes that selection of channel members is a

long run decision & the rest of the decision regarding the supply chain dependsupon the efficiency & coverage by the channel members. The following are the

host of factors considered by the company in selecting the channel members:

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Authentication is required by the regarding the identity of the channelmembers, which includes the name & address, photograph of the location.

Proof of solvency which requires name & address of the channel membersbankers

Safety of the inventory, which means that the distributor/ dealer should get thestock of the company insured.

Inventory or the perishable goods kept by the distributor/ dealer should be in

good condition which means a detail of storage space & Refrigeration facility isto be provided. Refrigeration system should have deep freezers, cold room &walk in coolers.

Details of the delivery vehicle, which includes Light Commercial Vehicles,Matador, 3 Wheeler Van, Tricycle Van & Hand/Push cart. The number &model of each of the vehicle needs to be furnished to the company.

GCMMF acknowledges the fact that it needs to be sensitive to the marketdemands. For this it requires that a number of salesmen needs to be present onthe field. The salesmen too are divided into various categories like the Fieldsalesmen & Counter salesmen. Also the details of Clerical Staff & Mazdoorsare to be provided. The technical competence of the salesmen needs to bementioned

Details of the product kept of other companies have to be provided. The annualsales of these products too have to be mentioned. Also details of

complementary products & product lines need to be mentioned.

Dealers of the company must carry a good reputation. This is due to the factthat the company believes reputation of the dealer affects the clientele.

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Market coverage by the distributors needs to be defined which includes detailsof Geographic coverage & Outlets per market area.

The company also requires the dealers to furnish any Advertising & Salesinitiative undertaken by them on behalf of the company.

Motivation of Channel Members

GCMMF strongly believes in maintaining a good relationship with the channel

members so that they are genuinely motivated to work for the company. Also if the

channel members are motivated, they can also initiate advertising & sales

promotion schemes on behalf of the company. However to keep the channel

members motivated to work, the company has to incur certain costs but the

benefits of it are felt in the long run. The following are the motivation programs

run by the company:

Distributors

One of the main factors, which keep the distributors motivated, is the margin.Usually the margins offered by the company are 8% & it is raised to 8.5%.Volume wise this comes out to be a big figure since Amuls product has a gooddemand in the market. However compared to the other companies the margins

are still lower since the new players in the market offer a much higher margin.But the very fact that Amuls products have good demand in the marketmotivates the distributors to stock it.

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Amul being a cooperative cannot afford to give heavy monetary incentives.Amuls products are considered to be value for money since the company does

not believe in charging high margins. In fact all monetary incentives are just theshort run means to promote the companys product. In order to keep theChannel members motivated in the long run, Amul builds on the concept ofTrade Marketing which makes the dealers & the distributors believe that thecompanys products are worthy of being pushed in the market.

The company is organizing various Total Quality Management initiatives &workshops. Here various counseling measures are undertaken by the companyto improve the overall working of the distribution network.

Vision and mission statement: the company cascades down the vision to thevarious channel members, this is done through various events organized by thecompany at different locations where the values of the company are made clearand enforced to the channel members.

Amul yatras: this includes taking the channel members on a guided tour of themanufacturing and procuring facilities in Gujarat. So that the channel memberscan have an experience of the working of the company and can pick up somequality measures that can help them to synchronize and improve their own

functioning at various levels. This in turn help the company to co ordinate theentire value chain, as the channel members understand the various constraintsand liberties the company goes through. The company has already got theRajiv Gandhi award for quality.

Retailers

Trade schemes: these are undertaken by the company only for the hard sellingitems e.g. Ice creams, flavored milk etc. for these the company raises themargins by 2%, also schemes like good packaging incase of butter and cheeseis undertaken by the company. However this is only a short-term initiative to

push the products of the company.

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Glow boards: the company puts up glow boards at the retailer and pays the

major portion of the cost.

Schedule of the salesmen: they provide the retails with this schedule so theretailers can pre estimate the quantities of the various products needed.

Infrastructure facilitation: the company facilitates the retailers to buy freezersand fridges by formulating an easy payment program and a commitment to buy

back the equipment at a reasonable price when the value of the equipment hasdepreciated.

Evaluation of channel members Beat plan: this plan is generated for the various product categories i.e. diary

dry, diary wet, Dhara and ice cream. A weekly schedule is prepared forvarious markets and the retailers the turnover for each of the product iscalculated for the wholesale dealers.

Cumulative performance: the performance of the dealers is averaged outover a period of three years where a comparison is made of the presentperformance vis--vis the previous ones.

Target versus achievement: the performance and the targets are comparedand therefore the gaps are identified which help in evaluating the WD and

planning for the next year as well. This is done for each of the productcategory.

THE e-EXPERIENCE OF AMUL

Enterprise resource planning

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The company at has implemented an ERP program as low as Rs. 3 corers incollaboration with TCS ltd. The company uses it, the data right from the

procurement from the farmers till the delivery of goods to the retailers is fed intothe system. The software enabling the channel members to use for thesynchronized working and best possible utilization of the available resourcesmaintains details regarding the inventory management. Market logistics dealswith the implementation of the SCM of the company.

The scale of operations of Amul is very large and complex because of the huge

supplier base the Gujarat Village cooperative society members. Amul makes about

10 millions payment daily amounting to transactions worth Rs.170 million in

cash. More than 500 trucks move the milk from villages to 200 dairy processing

plants twice a day. The IT initiatives of Amul started in 1994 IT became the major

thrust area of GCMMF as it can facilitate improvements in operational efficiency.

Since then GCMMF is marching in a big way starting from AMCUS to todays

DISK.

ROAD AHEAD FOR AMUL

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To improve further Amul can try out following ideas:

Amul can venture out on new products like toned milk, condensed milk that

can be used for sweets, baby products.

There are certain products like amul basundi, gulaab jamun, chocolates etc

which are not as popular as ice creams. Amul must try to understand the

cause of this through thorough market research and work on improving

these products.

Though amuls hoardings are a huge success, it can penetrate even better inthe rural areas by advertising through the media via cable channels and

newspapers. Sponsoring shows in TV, sports events can be of great help.

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CONCLUSION

Amul may justifiably take pride in having built the largest food product business in

the country; they do not pause to rest upon our laurels. In this environment, Amul

has survived and grown on the basis of its greatest strength: co-operative culture,

co-operative networking, market acumen and respect for both producer and

the consumeThus the magnificentmarketing mix of Amul has strengthened its

hold in the market beyond comparision.It is indeed magnetic as it has attracted &

retained customers, suppliers, emlopyees, stake holders for years long.

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EXIHIBIT

Figure 1- MILK OUTPUT IN INDIA

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BIBILIOG RAPHY

Books:

Marketing Managementby Kotler, Keller, Koshy, jha.

(13th edition- Reprint 2003)

Published by- Prentice Hall Publishers(P) LTD

Marketing Managementby Philip Kotler

Published by- Tata McGraw-Hill Publishing Company Limited,New

Delhi.

Web sources:

www.amul.tv

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www.amul.com

business .outlook india .com

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Thank You

amul magnetic marketing

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