A STUDY ON

CONSUMER BUYING PATTERN TOWARDS AMUL MILK

Dissertation Submitted to the

Padmashree Dr. D.Y. Patil University

in partial fulfilment of the requirements for the award of the Degree of

MASTERS IN BUSINESS ADMINISTRATION

Submitted by:

ROHAN.P.NAIK)

(Roll No.MBA-CORE-C-011179)

Research Guide:

Prof Vinod Dumbre

Department of Business Management

Padmashree Dr. D.Y. Patil University

CBD Belapur, Navi Mumbai

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DECLARATION

I hereby declare that the dissertation “CONSUMER BUYING PATTERN

TOWARDS AMUL MILK” submitted for the MBA Degree at Padmashree Dr.

D.Y. Patil University’s Department of Business Management is my original work and

the dissertation has not formed the basis for the award of any degree, associate ship,

fellowship or any other similar titles.

Place: Navi Mumbai

Date:

Signature of the Student

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CERTIFICATE

This is to certify that the dissertation entitled “CONSUMER BUYING PATTERN

TOWARDS AMUL MILK “is the bona fide research work carried out by

Mr. ROHAN .P. NAIK student of MBA, at Padmashree Dr. D.Y. Patil University’s

Department of Business Management during the year 2011 -2013, in partial

fulfilment of the requirements for the award of the Degree of Master in Business

Management and that the dissertation has not formed the basis for the award

previously of any degree, diploma, associate ship, fellowship or any other similar

title.

(Mr Vinod Dhumbre)

(Dr. R. Gopal,

Director,

Department of Business Mgt,

Padmashree Dr. D.Y. Patil University)

Place: Mumbai

Date:

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ACKNOWLEDGEMENTS

In the first place, I thank the Padmashree Dr. D. Y. Patil University, Department of

Business Management, Navi Mumbai for giving me an opportunity to work on this

project. I would also like to thank Mr. Vinod Dhumbre, Lecturer, Department of

Business Management, Padmashree Dr. D.Y. Patil University, Navi Mumbai for

having given me his valuable guidance for the project. Without his help it would

have been impossible for me to complete the project.

I would be failing in my duty if I do not acknowledge with a deep sense of gratitude

the sacrifices made by my parents and thus have helped me in completing the

project work successfully.

Place: Navi Mumbai

Date:

Signature of the student

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TABLE OF CONTENTS

CHAPTE

R NO.

Title Page

No

1 GENERAL INFORMATION

1.1

1.2

1.3

INTRODUCTION AND HISTORY

INDUSTRY PROFILE

OBJECTIVE OF THE RESEARCH

9

22

25

1.4 LITERATURE REVIEW 26

2

2.1

2.2

About the Topic

Consumer Behaviour

Consumer Satisfaction

46

50

3 Marketing Research 51

4 Research Methodology 56

5 Data Analysis And Interpretation 61

6 SWOT Analysis 71

7 News Articles 73

8 GCMMF Overview: 79

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9 Conclusion of (Amul milk) 111

10 Comparative Study 114

11 Annexure:

a)Bibliography & Webliography

b) Questionnaire

125

127

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PREFACE

Today the business environment is rapidly changing in this competitive environment

the popular trend is also striving for maintaining its positions therefore it become

essential for the companies that they should know about their preference & taste.

Regarding a particular product it is of almost necessary to know the consumers

satisfaction to the value offered by the company in case of dissatisfactory result it is

essential to ascertain whether the dissatisfaction is for entire product or part of it is

and what value do the consumers expect from it?

The research will provide the relevant information to the organization about

consumer’s attitude towards their products & services.

The research work is sincere effort to find out the ultimate requirement of

consumers for the betterment of research as well as the organization.

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Executive Summary

This final project was undertaken with the objective of “CONSUMER BUYING

PATTERN TOWARS AMUL MILK”

In the year 1946 the first milk union was established. This union was started with 250

liters of milk per day. In the year 1955 AMUL was established. In the year 1946 the

union was known as KAIRA DISTRICT CO-OPERATIVE MILK

PRODUCERS’ UNION. This union selected the brand name AMUL in 1955.

The brand name Amul means “AMULYA”. This word derived form the

Sanskrit word “AMULYA” which means “PRICELESS”. A quality control

expert in Anand had suggested the brand name “AMUL”. Amul products have been

in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul

Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice

cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in

India. (The total sale is Rs. 6 billion in 2005). Today Amul is a symbol of many

things like of the high-quality products sold at reasonable prices, of the genesis of a

vast co-operative network, of the triumph of indigenous technology, of the marketing

savvy of a farmers' organization. And have a proven model for dairy development

(Generally known as “ANAND PATTERN”).

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1

INTRODUCTION AND HISTORY

In the year 1946 the first milk union was established. This union was started with 250

liters of milk per day. In the year 1955 AMUL was established. In the year 1946 the

union was known as KAIRA DISTRICT CO-OPERATIVE MILK

PRODUCERS’ UNION. This union selected the brand name AMUL in 1955.

The brand name Amul means “AMULYA”. This word derived form the

Sanskrit word “AMULYA” which means “PRICELESS”. A quality control

expert in Anand had suggested the brand name “AMUL”. Amul products have been

in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul

Ghee, Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice

cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in

India. (The total sale is Rs. 6 billion in 2005). Today Amul is a symbol of many

things like of the high-quality products sold at reasonable prices, of the genesis of a

vast co-operative network, of the triumph of indigenous technology, of the marketing

savvy of a farmers' organization. And have a proven model for dairy development

(Generally known as “ANAND PATTERN”).

In the early 40’s, the main sources of earning for the farmers of Kaira district

was farming and selling of milk. That time there was high demand for milk in

Bombay. The main supplier of the milk was Polson dairy limited, which was a

privately owned company and held monopoly over the supply of milk at Bombay

from the Kaira district. This system leads to exploitation of poor and illiterates’

farmers by the private traders. The traders used to beside the prices of milk and the

farmers were forced to accept it without uttering a single word.

However, when the exploitation became intolerable, the farmers were

frustrated. They collectively appealed to Sardar Vallabhbhai Patel, who was a

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leading activist in the freedom movement. Sardar Patel advised the farmers to sell the

milk on their own by establishing a co-operative union, Instead of supplying milk to

private traders. Sardar Patel sent the farmers to Shri Morarji Desai in order to gain

his co-operation and help. Shri Desai held a meeting at Samarkha village near

Anand, on 4th January 1946. He advised the farmers to form a society for collection

of the milk.

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These village societies would collect the milk themselves and would decide the prices

at which they can sell the milk. The district union was also form to collect the milk

from such village co-operative societies and to sell them. It was also resolved that the

Government should be asked to buy milk from the union.

However, the govt. did not seem to help farmers by any means. It gave the

negative response by turning down the demand for the milk. To respond to this action

of govt., the farmers of Kaira district went on a milk strike. For 15 whole days not a

single drop of milk was sold to the traders. As a result the Bombay milk scheme was

severely affected. The milk commissioner of Bombay then visited Anand to assess

the situation. Having seemed the condition, he decided to fulfill the farmers demand.

Thus their cooperative unions were forced at the village and district level to

collect and sell milk on a cooperative basis, without the intervention of Government.

Mr. Verghese Kurien showed main interest in establishing union who was

supported by Shri Tribhuvandas Patel who lead the farmers in forming the Co-

operative unions at the village level. The Kaira district milk producers union was thus

established in ANAND and was registered formally on 14th December 1946. Since

farmers sold all the milk in Anand through a co-operative union, it was commonly

resolved to sell the milk under the brand name AMUL.

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1

At the initial stage only 250 litres of milk was collected everyday. But

with the growing awareness of the benefits of the cooperativeness, the collection of

milk increased. Today Amul collect 11 lakhs litres of milk everyday. Since milk was

a perishable commodity it becomes difficult to preserve milk flora longer period.

Besides when the milk was to be collected from the far places, there was a fear of

spoiling of milk. To overcome this problem the union thought out to develop the

chilling unit at various junctions, which would collect the milk and could chill it, so as

to preserve it for a longer period. Thus, today Amul has more than 150 chilling

centres in various villages. Milk is collected from almost 1073 societies.

With the financial help from UNICEF, assistance from the govt. of New

Zealand under the Colombo plan, of Rs. 50 millions for factory to manufacture milk

powder and butter was planned. Dr.Rajendra Prasad, the president of India laid the

foundation on November 15, 1954. Shri Pandit Jawaharlal Nehru, the prime

minister of India declared it open at Amul dairy on November 20, 1955.

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ACHIEVEMENTS:

Amul : Asia’s largest dairy co-operative was created way back in1946 to make

the milk producer self-reliant and conduct milk- business with pride. Amul has

always been the trend setter in bringing and adapting the most modern technology to

door steps to rural farmers.

Amul created history in following areas:

a) First self motivated and autonomous farmers‟ organization comprising of

more than 5000000 marginal milk producers of Kaira District.

b) Created Dairy co-operatives at village level functioning with milk collection

centres owned by them.

c) Computerized milk collection system with electronic scale and

computerized accounting system.

d) The first and only organization in world to get ISO 9000 standard for its

farmer’s co-operatives.

e) First to produce milk from powder from surplus milk.

Amul is the live example of how co-operation amongst the poor marginal

farmers can provide means for the socio-economic development of the under

privileged marginal farmers

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AWARDS:

Amul a co-operative society and its co-operation has led many different

awards in its favor.

Magsaysay award for community leadership presented in manila,

Philippines to Shri Tribhuvandas Patel, Shri D N Khurody and Shri V. Kurien

1964: “Padmabhusan” award given to Shri T.K. Patel

1965: “Padmshri awarded was given to V. Kurien, general manager, by

the president of India

1987: “Best Productivity” awarded by national productivity council for

the year 1985-86 awarded to Amul dairy.

1988: “Best Productivity” awarded for the second successive year 1986-87

by the president of India, Mr. R. Venkatrao to kaira union.

1993: “ICA” Memenoto towards genuine and self sustaining co-

operative worldwide ICA regional office for Asia and pacific, New Delhi,

1996.

1999: G.B.Birla award.

Moreover the Amul union has achieved the prestigious ISO 9001-2000 and

HACCP Certificate and effects are got to obtain ISO 14000.

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Amul in abroad:

Amul is going places. Literally. After having established its presence in China,

Mauritius and Hong Kong, Gujarat Cooperative Milk Marketing Federation

(GCMMF), India‟s largest milk cooperative, is waiting to flood the Japanese market.

Then, GCMMF is also looking at Sri Lanka as one of its next export destinations.

Amul products are already available on shelves across several countries, including

the US, China, Australia, West Asian countries and Africa.

GCMMF recorded a turnover of Rs 2,922 crore last fiscal. Its products include

pouch milk, ultra heat treated (UHT) milk, ice-cream, butter, cheese and buttermilk.

PEOPLE POWER: AMUL'S SECRET OF SUCCESS

The system succeeded mainly because it provides an assured market at

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

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

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

1

products. Contrary to the traditional system, when the profit of the business was

cornered by the middlemen, the system ensured that the profit goes to the participants

for their socio-economic upliftment and common good.

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

and model for emulation elsewhere.

Amul has been able to:

Produce an appropriate blend of the policy makers farmers board of

management and the professionals: each group appreciating its rotes and

limitations,

Bring at the command of the rural milk producers the best of the

technology and harness its fruit for betterment.

Provide a support system to the milk producers without disturbing their

agro-economic systems,

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

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

producers and

The Union looks after policy formulation, processing and marketing of milk,

provision of technical inputs to enhance milk yield of animals, the artificial

insemination service, veterinary care, better feeds and the like - all through the village

societies. Basically the union and cooperation of people brought Amul into fame i.e.

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AMUL (ANAND MILK UNION LIMITED), a name which suggest THE TASTE

OF INDIA.

Plants:

First plant is at ANAND, which engaged in the manufacturing of milk, butter,

ghee, milk powder, flavoured milk and buttermilk.

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Second plant is at MOGAR, which engaged in manufacturing chocolate,

nutramul, Amul Ganthia and Amul lite.

Third plant is at Kanjari, which produces cattelfeed

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Fourth plant is at Khatraj, which engaged in producing cheese.

Today, twelve dairies are producing different products under the brand name

Amul. Today Amul dairy is no. 1 dairy in Asia and no. 2 in the world, which is

matter of proud for Gujarat and whole India.

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PRODUCT PROFILE:-

S.No. NAME TYPE FAT SOLID NATURAL

FATS

1. Tazaa Toned Milk 3.0% min. 8.5% min.

2. Slim &

Trim

Double Toned Milk 1.5% min. 9% min.

3. Gold Full Cream Milk 6% min. 9% min.

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I ndu s t ry P r o f il e : -

The World Dairy Situation:

According to a report published by International Dairy Federation (IDF)

on the World Dairy Situation 2007 the worldwide milk production is

expected to grow at a slower pace in 2007-08 and is estimated at 655

million tonnes, only 9 million tonnes more than the production of 2006 –

2007. The strongest growth would be in Asia, notably in China and India.

Milk production is projected at36 million tonnes in China and 94.60

million tonnes in India. India would continue to be the largest milk

producer, followed by the US, with projected production of 82.60 million

tonnes.

Major changes are not expected in dairy products basket. World butter

production increased for two years, in 2004 and 2005 and then declined

in 2006-07. It is expected to decline again in

2007-08. Industrial cheese production is continuing to grow. The major cheese producing regions are Europe and North America and both areas are expected to have a faster growth rate.

The production of condensed and evaporated milks is subject to a

declining trend for many years in the developed market. It has been

replaced by many other dairy products, especially liquid milks of UHT

type, coffee cream and coffee whitener including some of the non-dairy

origin.

World trade in dairy products after a period of relative stagnation,

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started recovery in the second half of 2006-07 and it continued in the

first half of 2007-08. The recovery is due to prosperity resulting from

economic demand. However, the bullish price situation is not likely to

continue long and would level down.

Export of butter and butter-oil recovered in 2006-07 and this recovery continued in early2007-08. The total volume of the world trade in cheese has accelerated and this trend is likely to continue in the year 2008.

The outlook for the trade in dairy commodities for 2007-08 appears

bright. However, since the new market equilibrium, in respect of

prices has to be found, the question is whether international trade in

dairy products will continue its growth in 2007-08 at the same momentum

as in previous years. Because of the price situation in 2007-08, one may

ask whether demand can follow the expected trends, but it would be

premature to expect stagnation in the trade. In established markets, the

potential for demand to reduce slightly can release the additional

supplies, which are needed to maintain the growth of trade.

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I nd i a n Da i r I n du s t ry —

A Profile:

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

years in veiw of expanding potential for export to Europe and the West.

Morever with WTO regulations expected to come into force in coming

years all the develope countries which are amoung big exporters today

would have to withdraw the support and subsidy to their domestic milk

product sector. Also India today is the lowest cost producer of per litre of

milk in the world, at 27 cents, compared with the US’

63 cent. Also to take advantage of this lowest cost of milk production and

increasing production in yhe country multinational companies are

planning to expand their activities here. Some of those milk producers

have already obtained quality standard certificates from the authorities.

This will help them in marketing their products in foreign countries in

processed form.

The urban market for milk products is expected to grow at an accelerated pace of around33% per annum to around Rs.83, 500 crores by year 2010.

This growth is going to come from the greater emphasis on the

processed food sector and also by increase in the conversation of milk

into milk products. By 2010, the value of Indian dairy produce is

expected to be Rs 10, 00,000 million.Presently the market is valued at

around Rs7, 00,000mn.

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OBJECTIVE OF THE RESEARCH

To know awareness of people towards Amul products

To know the preference of Amul products with comparison to

other competitive brands.

To know the factors which affects consumer’s buying behaviour while

purchase milk.

Swot analysis of Amul

To study various factors such as quality, price, easy available etc. Is

influencing lot and influences positively

Ideas about to increase the sale of the “Amul

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LITERATURE REVIEW

Abstract

In this paper we describe a case study of a dairy cooperative, AMUL, in western

India that has developed a successful model for doing business in large emerging

economy. It has been primarily responsible, through its innovative practices, for India

to become world’s largest producer of milk. This paper draws various lessons from

the experiences of AMUL that would be useful to cooperatives globally as well as

firms that are interested in doing business in large emerging markets like India and

China.

Many of these economies have underdeveloped markets and fragmented supply

bases. Market failures for many of these small producers are high. On the other hand,

the size of both, markets and the suppliers is large. As a result, firms that identify

appropriate business strategies that take into account these characteristics are more

likely to succeed in these markets. The following are some key message from

AMUL’s success: firms in these environments need to simultaneously develop

markets and suppliers to synchronize demand and supply planning, develop or

become a part of network of producers (i.e., cooperatives in this case) to obtain scale

economies, focus on operational effectiveness to achieve cost leadership to enable

low price strategy. In addition, a central focus to bring the diverse element together

and a long-term approach are required.

In emerging economies different industrial sectors may be at different stages of

development. In some of the sectors all of the above environmental characteristics

faced may not hold. However, a subset of strategies followed by AMUL would still

be very useful. Thus, firms that are contemplating addressing large undeveloped

markets or have an intention of taking advantage of extensive but marginal supplier

base would still benefit.

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Introduction

Since the turn of 19th century, Cooperatives have existed as dominant forms of

organization in the dairy industry around the world. Sometimes they have played the

role of developing infant industry while at other times they have been used to

strengthen weak production bases in an environment where market failures tend to be

higher for marginal producers. In some other cases, a network of small producers

have organized themselves to better market their products. Management of these

cooperatives have also led to some interesting managerial insights for managers in

emerging as well as developed economies.

Large emerging economies, e.g., India and China, have complexities that range

from development of markets (where the largest segment of population is the one

which has low purchasing power) to integration of low cost suppliers who are

predominantly very small. For firms that aspire to conduct substantial business in

such markets, such complexities have to be recognized and then overcome. The

challenge is to understand the linkages between markets and the society. This would

also require development of a new business model that helps a firm grow in such

environments. This paper is about one such successful model. The Kaira District

Milk Cooperative Union or AMUL in India is an example of how to develop a

network of firms in order to overcome the complexities of a large yet fragmented

market like those in emerging economies by creating value for suppliers as well as

the customers. AMUL has led the milk dairy revolution in India that has now

emerged as one of the largest milk producers in the world.

In this article we will describe the breakthrough vision that led to the

simultaneous development of the market and supply side through a process of social

development and education at AMUL. Clearly, implementation of this vision in a

competitive environment and maintaining sustained growth and profitability requires

1

development of competitiveness on several dimensions and operational effectiveness.

This article provides insights into management of very large supply chains by

adapting and integrating a variety of strategies and techniques. This includes building

networks, developing trust & values in the network, developing fair mechanisms for

sharing benefits across the supply chain, coordination for operational effectiveness,

innovation and new technology for gaining competitiveness. It is noteworthy that

these successes were achieved within the framework of a network of cooperatives

organized in a hierarchical manner. There are many lessons in AMUL’s success not

only for the cooperative sector but also for firms who intend to do business in

emerging markets.

The AMUL Story

The Kaira District Cooperative Milk Producers’ Union Limited was established on

December 14, 1946 as a response to exploitation of marginal milk producers in the

city of Anand (in Kaira district of the western state of Gujarat in India) by traders or

agents of existing dairies. Producers had to travel long distances to deliver milk to the

only dairy, the Polson Dairy in Anand – often milk went sour, especially in the

summer season, as producers had to physically carry milk in individual containers.

These agents decided the prices and the off-take from the farmers by the season. Milk

is a commodity that has to be collected twice a day from each cow/buffalo. In winter,

the producer was either left with surplus unsold milk or had to sell it at very low

prices. Moreover, the government at that time had given monopoly rights to Polson

Dairy (around that time Polson was the most well known butter brand in the country)

to collect milk from Anand and supply to Bombay city in turn (about 400 kilometers

away). India ranked nowhere amongst milk producing countries in the world in 1946.

The producers of Kaira district took advice of the nationalist leaders, Sardar

1

Vallabhbhai Patel (who later became the first Home Minister of free India) and

Morarji Desai (who later become the Prime Minister of India). They advised the

farmers to form a cooperative and supply directly to the Bombay Milk Scheme

instead of selling it to Polson (who did the same but gave low prices to the

producers). Thus the Kaira District Cooperative was established to collect and

process milk in the district of Kaira. Milk collection was also decentralized, as most

producers were marginal farmers who would deliver 1-2 litres of milk per day.

Village level cooperatives were established to organize the marginal milk producers

in each of these villages. The first modern dairy of the Kaira Union was established at

Anand (which popularly came to be known as AMUL dairy after its brand name).

The new plant had the capacity to pasteurise 300,000 pounds of milk per day,

manufacture 10,000 pounds of butter per day, 12,500 pounds of milk powder per day

and 1,200 pounds of casein per day. Indigenous R&D and technology development at

the Cooperative had led to the successful production of skimmed milk powder from

buffalo milk – the first time on a commercial scale anywhere in the world. The

foundations of a modern dairy industry in India had just been laid as India had one of

the largest buffalo populations in the world.

We move to year 2000. The dairy industry in India and particularly in the State

of Gujarat looks very different. India has emerged as the largest milk producing

country in the world (see Table 1). Gujarat emerges as the most successful State in

terms of milk and milk product production through its cooperative dairy movement.

The Kaira District Cooperative Milk

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Producers’ Union Limited, Anand becomes the focal point of dairy development in

the entire region and AMUL emerges as one of the most recognized brands in India,

ahead of many international brands1.

Starting with a single shared plant at Anand and two village cooperative

societies for milk procurement, the dairy cooperative movement in the State of

Gujarat had evolved into a network of 2.12 million milk producers (called farmers)

who are organized in 10,411 milk collection independent cooperatives (called Village

Societies). These Village Societies (VS) supply milk to thirteen independent dairy

cooperatives (called Unions). AMUL is one such Union. Milk and milk products

from these Unions are marketed by a common marketing organization (called

Federation). Figure 1 gives the hierarchical structure of this extensive network of

cooperatives. Gujarat Cooperative Milk Marketing Federation or GCMMF is the

marketing entity for products of all Unions in the State of Gujarat2. GCMMF has 42

regional distribution centers in India, serves over 500,000 retail outlets and exports to

more than 15 countries. All these organizations are independent legal entities yet

loosely tied together with a common destiny! (In a recent survey GCMMF was

ranked amongst the top ten FMCG firms in the country while AMUL was rated the

second most recognized brand in India amongst all Indian and MNC offerings).

Interestingly, the Gujarat movement spread all over India and a similar structure was

replicated (all are at different levels of achievement but their trajectory appears to be

quite similar). Two national organizations, the National Dairy Development Board

(NDDB) and the National Co-operative Dairy Federation of India (NCDFI) were

established to coordinate the dairy activities through cooperatives in all the States of

the country. The former provides financing for development while the latter manages

a national milk grid and coordinates the deficit and surplus milk and milk powder

across the states of India. In the early nineties, AMUL was asked by the Government

of Sri Lanka to establish a dairy on similar lines in Sri Lanka. Interestingly, while

Polson folded up sometimes in 1960s, the cooperatives are faced with new 1

competition in liberalizing India – from multi-national corporations (MNCs) that

brought in new and improved product portfolio, international network and immense

financial support. The Cooperatives face new challenges that test the robustness of

their approach and their commitment to the movement and a new style of

management thinking.

Today AMUL is a symbol of many things. Of a promise to member farmers

who are assured a guaranteed purchase of all the milk that they produce at pre-

determined prices. Of high-quality products sold at reasonable prices to consumers.

Of developing and coordinating a vast co-operative network. Of making a strong

business proposition out of serving a large number of small and marginal suppliers.

Of the triumph of indigenous technology. Of the marketing savvy of a farmers'

organisation.

In the remaining part of the paper, we first review the role that cooperatives have

played in the development of dairy industry globally and how is this sector adjusting

to new global challenges. Next, we look at AMUL within this context and highlight

their journey towards excellence. Specifically, we study how AMUL achieved this

exalted status, what were the ingredients of its success, how did the belief in

cooperation transform the business environment and the lives of people, and what

lessons does it hold for other businesses.

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Cooperatives and the Global Dairy Industry

Three broad questions have intrigued researchers and practitioners on cooperatives3:

what are the objectives of cooperatives, what determines the success and failure of

cooperatives and how do cooperatives act as organizations of social and economic

change. While most of the observations are based on normative judgments of what

the cooperatives are supposed to do, some studies reflect the true behavior of agents

within a cooperative framework thereby making the debate on cooperatives more

complex but also interesting. To these themes we add another question that reflects in

some ways our own enquiry through this paper: are mechanisms of cooperation that

cooperatives employ any different from those used by other industrial organizations?

Traditionally, cooperatives have been established to serve the needs of its

members in order to maximize their returns. Governments have usually seen these

organizations as effective mechanisms for delivering their own programmes (e.g.,

sector development or poverty reduction, etc.). Researchers have looked at

cooperatives as channels for re-distributing wealth, improving the opportunities for

the weaker sections of the society, alternative institutions for property ownership,

efforts in democratic and participative governance of organizations4 etc. (this

discussion draws from Shah, 1995). In that, the cooperatives have often sought

protection of sorts from uncertainties in the market place. Globally, modern day

cooperatives are agglomeration of many such small groupings that serve some of the

above objectives but have now moved from being protected entities to becoming

market driven. This makes such cooperatives an interesting organizational alternative

to traditional business enterprises (i.e., investor owned firms) in terms of concern for

shareholders, distributional effectiveness and ability to provide product/service

variety5.

In emerging economies, cooperatives have been used as institutions to organize

marginal producers thereby providing scale effects to a network of such producers.

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Sometimes, it is the government that organizes these marginal producers and may

also manage the collective (as in

various cooperatives in former Soviet Union and Africa). On other occasions,

producers themselves come together to produce and distribute their own products (as

in the case of AMUL, majority of cooperatives in North America etc6.). While control

and subsidies from the government distort the performance of former, producer-

driven cooperatives have to develop systems and processes that respond to market

requirements and be competitive. In that, the determinants of success for this kind of

cooperatives are no different from those of other commercial organizations.

Moreover, they recognize that in order to optimize the objective function of the

marginal producers, they have to serve the market very effectively7. Cooperatives are,

however, different from other commercial organizations in one respect – they are

bound to serve the suppliers (i.e., the producers of goods & services who happen to be

the members of the cooperatives) in good and bad times. In that, they present an

interesting model to other commercial organizations on strategic management of

resources and their conservation.

Globally, cooperatives have played the role of preventing market failures for small

producers especially in the dairy industry8. Traditionally, a large number of these

cooperatives have had small membership and produced predominantly raw products

(i.e., fluid milk) or products with some value addition (i.e., dry powder, butter etc.).

This situation has been changing dramatically in the last decade and especially in the

last three years. There has been a spate of mergers all around the world to create

fewer but larger dairy cooperatives. In many cases, these cooperatives look very

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different from the merged entities. Cooperative dairies that operate with small

membership have retained a certain focus (i.e., geographical or product related) in

their offerings9. There have been several factors driving the restructuring of the dairy

business (which has chiefly been organized around cooperative principles). These

include efficiencies in managing fewer large plants versus a number of under-utilized

small plants, need for more milk supply (and declining membership), need to offer

wide variety, improvements in trucking & milk handling thereby facilitating long

hauls, opening of new international markets (also markets for new products), seeking

marketing clout and need to bring investment from outside the cooperatives. In USA,

for instance, there were 592 cooperatives (with a membership of 281,065 producers)

that marketed milk to plants and handlers in 1973. This number reduced to 226 (with

87,938 members) in 1997. However, the share of milk delivered by the cooperatives

increased by 9 percent during this period though the share of dairy sales of small

cooperatives reduced from 43.8 percent in 1975 to about 30 per cent in 1998

(Blayney and Manchester, 2000)10. The two largest dairy cooperatives in the US,

Dairy Farmers of America and Land O’Lakes had annual sales of US$ 7.9 and 5.1

billion respectively11.

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Dairy Farmers of America was formed by the merger of four large cooperatives in the

US in 1998. It consists of 25,499 members across 45 states of USA12. Consolidation

in cooperatives during the last five years was also in anticipation of (and reaction to)

the consolidated Federal Milk Marketing Order of 2000 which removed geographical

anomalies in minimum support prices for dairy products hence reduced the need to

locate spatially distributed processing centers to take advantage of varying prices. It

helped dairy cooperatives to forge alliances with firms in various regions.

European (and especially Scandinavian) dairy cooperatives have also seen

tremendous consolidation. Danish cooperatives, mostly producers’ cooperatives, have

often faced difficulties in raising capital internally for investment (though government

support has been quite strong on this count) and have been re-structuring since mid-

70s (Hansen et al. 1980). Dairy coops in Denmark have reduced to 45 units in 2002

from 1500 in 1930s with one large dairy processing 90 per cent of the available milk.

The Danish Dairy Board, however, invests in R&D, allots quota for milk supply to

individual farms, regulates prices and quality, and supports the efforts of the

cooperatives in international markets. It believes that its competition is from dairies

outside Denmark13. Similar has been the experience of dairy farmers in other parts of

Europe with a higher involvement of government in reshaping the structure of the

industry. Many Irish cooperatives have, however, converted to non-cooperative forms

(Hamm, 2001). Outside Europe and USA, the experience of dairy cooperatives in

New Zealand is instructive. The New Zealand Dairy Board (NZDB) zealously guards

the structure of the industry, which had an annual worldwide sale of NZ$3.5 billion in

1996. Dairy cooperatives collect milk from individual farmers and sell processed

products in the domestic markets and to NZDB for exports14. Akoorie and Scott-

Kennel (1999) argue that this structure looks more like strategic partnership between

producers and the board (the global marketing arm) with the later providing capital

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for growth and innovation. Interestingly, the form that a producing organization

should take and the relationship that it should have with its marketing has been the

center of debate in managing dairy cooperatives. AMUL in India has learnt from

many of these experiences and has been influenced by practices in dairies around the

world especially in its formative years. It has, however, formed it own organizational

structure (i.e., AMUL is a cooperative of village cooperatives) to bring about a

change in the lives of marginal farmers of India.

in the region of the cooperative, the sociology of cooperation, interface of the dairy

cooperative and the rural power structure, relation of the State and the Cooperative

and the role of government in its growth (interestingly, AMUL has successfully

managed to exercise its independence from the government unlike other cooperatives

in India), elements & replicability of the cooperative movement at Anand, cost

effectiveness of subsidies to AMUL (in its initial years) etc.15

A few studies have evaluated the operational effectiveness of the operations at

AMUL16. Studies have reported usage of mobile veterinary dispensaries, wireless sets

to link mobile units to service centers as early 1951, developing a programme of cross

breeding of cows in early 1970s etc. that have led to a phenomenal rise in

productivity of milk (Patel, 1988).

We have, however, not come across any research paper or study that looks at the

entire supply chain to understand the role of managerial practices in achieving its

objectives successfully. There have been no studies that look at managerial practices,

efficiency and performance of cooperatives either. We now present, how AMUL

developed a robust organization based on sound values and commercial interests.

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AMUL’s Journey towards Excellence

AMUL’s journey towards excellence is marked by some critical understanding of the

business environment in large emerging economies like India where markets have to

be developed by combining efficiency related initiatives with increasing the base of

marginal suppliers and consumers. The essence of AMUL’s efforts were as follows:

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

recognized the inter-linkages between various environments that governed the

lives of marginal milk farmers and the unmet needs of consumers. It also changed

the supply chain paradigm in order to reduce the cost to the consumer while

increasing the return to the supplier.

• It realized that in order to achieve their objectives, it had to benefit a large number

of people – both suppliers and consumers. While large scale had the danger of

failure due to poor control and required more resources, it also had the advantage

of creating a momentum that would be necessary to bring more people into the

fold and thereby help more suppliers and consumers.

• It also realized that its goal could only be achieved in the long run and this

required developing values in people and processes that were robust, replicable

and transparent.

It also realized that the cooperative would not be independent and viable in the face

of competition if it were not financially sound. This implied that AMUL had to

develop distinct capabilities that would deliver competitive advantage to its

operations.

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Leadership

While Kaira Union (or AMUL) had the support of national leaders who were at the

forefront of the Indian independence movement, its local leaders were trained in

Gandhian simplicity17 and had their feet rooted firmly amongst people whom they had

mobilized – the poor farmers of Anand. The foremost amongst them was

Tribhuvandas Patel18 who had led the movement for the formation of cooperatives of

small and marginal farmers in order to compete against investor owned enterprises on

one hand, and keep bureaucracy away on the other hand. Tribhuvandas was the first

Chairman of the cooperative. His skills lay in organizing the village producers, in

making them believe in the power of cooperation and their rights towards

improvement of human condition. He is remembered as fair and honest person whose

highest sense of accountability to the members of the union laid the foundation of

trust between network members19. Another important aspect of his remarkable

management style was his gentleness and ability to repose trust in people – he gave

complete autonomy to managers of the union and earned complete commitment from

them20. Verghese Kurien21 was one such manager who would, first, shape the destiny

of the Union and then the milk movement throughout the country.

Kurien emerged as the father of the dairy movement in India. He managed to keep the

government and bureaucrats away from the cooperative22 and gave shape to the

modern structure of the cooperative, worked tirelessly to establish the values of

modern economics, technology and concern for farmers within the cooperative. He

interfaced with global financing agencies to build new projects at AMUL. He worked

with the Unions to bring the best of technology to the plants. He worked with

marginal village farmers to create systems that would increase milk yields. He

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understood that without meeting the needs of customers he would not be able to

satisfy his obligations to the farmers. In short, Kurien shaped the destiny of the milk

movement in India through NDDB (as its Chairman) and particularly at GCMMF and

cooperatives in Gujarat. He helped build a modern organization with professional

management systems that would support the aspirations of farmers and customers.

Several young people left better paying jobs to help create a dream of making

India the milk capital of the world. Kurien had learnt the persuasive charm of

Tribhuvandas through plain speaking and had soon created a cadre of highly capable

managers to whom he had delegated both management as well as commitment. These

leaders were created at the village, district and state levels in different organizations

of the network.

He was charismatic in his communication and committed in his effort. Over a

period of time, he developed a very close link with the poor farmers who, as he

always says, “were his employers” at the cooperative. He would travel through the

villages along with Tribhuvandas and work out the details of how the milk collection

cooperative would work, how trucks would pickup milk from village societies, how

the cattle would have to be taken care of and how all of this would help the poor milk

farmer come out of poverty and the clutches of the middleman. Operational details

were meticulously planned and executed. And then, he along with two of his close

associates would work on the design of the dairy plant including conducting

experiments to create powder out of buffalo milk – a task that was ridiculed by all

who heard of it including the international aid agencies in the dairy industry.

Tribhuvandas and Kurien were able to convince the government also of the value of

his efforts and secured funding for several projects of the cooperative. He was slowly

laying the foundation of a modern dairy industry in India. Membership of the

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cooperative started to increase, professional managers started to join AMUL and

production capacity at AMUL started to expand (and this expansion was done

through innovative changes to processes at the plant and through equipment designed

and fabricated in-house). Kurien had transformed AMUL from a dream into a major

industrial entity – a network of plants, cooperative societies, research centers, an

institute for training future managers in rural management, secondary services like

veterinary/artificial insemination expertise/feed factory etc. Kurien’s biggest strength

lay in his ability to convince people that the cause of rural farmers was important thus

establishing an important shared value. Subsequently, he could convince the

government to replicate the AMUL model in almost all states of the country.

Strategy

AMUL’s business strategy is driven by its twin objectives of (i) long-term,

sustainable growth to its member farmers, and (ii) value proposition to a large

customer base by providing milk and other dairy products a low price. Its strategy,

which evolved over time, comprises of elements described below.

Simultaneous Development of Suppliers and Customers: From the very early stages

of the formation of AMUL, the cooperative realized that sustained growth for the

long-term was contingent on matching supply and demand. Further, given the

primitive state of the market and the suppliers of milk, their development in a

synchronous manner was critical for the continued growth of the industry. The

organization also recognized that in view of the poor infrastructure in India, such

development could not be left to market forces and proactive interventions were

required. Accordingly, AMUL and GCMMF adopted a number of strategies to assure

such growth. For example, at the time AMUL was formed, the vast majority of

consumers had limited purchasing power and was value conscious with very low

levels of consumption of milk and other dairy products. Thus, AMUL adopted a low

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price strategy to make their products affordable and guarantee value to the consumer.

The success of this strategy is well recognized and remains the main plank of

AMUL's strategy even today. The choice of product mix and the sequence in which

AMUL introduced its products is consistent with this philosophy. Beginning with

liquid milk, the product mix was enhanced slowly by progressive addition of higher

value products while maintaining desired growth in existing products. Even today,

while competing in the market for high value dairy products, GCMMF ensures that

adequate supplies of low value products are maintained.

On the supply side, as mentioned earlier, the member-suppliers were typically small

and marginal- farmers had severe liquidity problems, were illiterate and had no prior

training in dairy farming. AMUL and other cooperative Unions adopted a number of

strategies to develop the supply of milk and assure steady growth. First, for the short

term, the procurement prices were set so as to provide fair and reasonable return.

Second, aware of the liquidity problems, cash payments for milk supply was made

with minimum of delay. For the long-term, the Unions followed a multi-pronged

strategy of education and support. For example, only part of the surplus generated by

the Unions is paid to the members in the form of dividends. A substantial part of this

surplus is used for activities that promote growth of milk supply and improve yields.

These include provision of veterinary services, support for cold storage facilities at

the village societies etc. In parallel, the Unions have put in place a number of

initiatives to help educate the members.

To summarize, the dual strategy of simultaneous development of the market

and member farmers has resulted in parallel growth of demand and supply at a steady

pace and in turn assured the growth of the industry over an extended period of time.

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Cost Leadership: AMUL’s objective of providing a value proposition to a large

customer base led naturally to a choice of cost leadership position. Given the low

purchasing power of the Indian consumer and the marginal discretionary spending

power, the only viable option for AMUL was to price its products as low as possible.

This in turn led to a focus on costs and had significant implications for managing its

operations and supply chain practices (described later).

Focus on Core Activities: In view of its small beginnings and limited resources, it

became clear fairly early that AMUL would not be in a position to be an integrated

player from milk production to delivery to the consumer23. Accordingly, it chose a

strategy to focus on core dairy activities and rely on third parties for other

complementary needs. This philosophy is reflected in almost all phases of AMUL

network spanning R&D, production, collection, processing, marketing, distribution,

retailing etc. For example, AMUL focused on processing of liquid milk and

conversion to variety of dairy products and associated research and development. On

the other hand, logistics of milk collection and distribution of products to customers

was managed through third parties.

However, it played a proactive role in making support services available to its

members wherever it found that markets for such services were not developed. For

example, in the initial stages, its small and marginal member farmers did not have

access to finance, veterinary service, knowledge of basic animal husbandry etc. Thus

to assure continued growth in milk production and supply, AMUL actively sought

and worked with partners to provide these required services. In cases where such

partnerships could not be established, AMUL developed the necessary capabilities

and provided the services. These aspects are elaborated later in this section.

These include logistics of milk collection, distribution of dairy products, sale of

products through dealers and retail stores, some veterinary services etc. It is worth

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noting that a number of these third parties are not in the organized sector, and many

are not professionally managed. Hence, while third parties perform the activities, the

Unions and GCMMF have developed a number of mechanisms to retain control and

assure quality and timely deliveries (see the sub-section on Coordination for

Competitiveness later in the paper for more details). This is particularly critical for a

perishable product such as liquid milk.

Financial Strategy: AMUL’s finance strategy is driven primarily by its desire to be

self-reliant and thus depend on internally generated resources for funding its growth

and development. This choice was motivated by the relatively underdeveloped

financial markets with limited access to funds, and the reluctance to depend on

Government support and thus be obliged to cede control to bureaucracy. AMUL’s

financial strategy may thus be characterized by two elements: (a) retention of surplus

to fund growth and development, and (b) limited/ no credit, i.e., all transactions are

essentially cash only. For example, payment for milk procured by village societies is

in cash and within 12 hours of procurement (most, however, pay at the same time as

the receipt of milk). Similarly, no dispatches of finished products are made without

advance payment from distributors etc. This was particularly important, given the

limited liquidity position of farmer/suppliers and the absence of banking facilities in

rural India. This strategy strongly helped AMUL implement its own vision of growth

and development. It is important to mention that many of the above approaches were

at variance with industry practices of both domestic and MNC competitors of AMUL.

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Organization

AMUL is organized as a cooperative of cooperatives (i.e., each village society, a

cooperative in itself, is a member of the AMUL cooperative) thereby deriving the

advantage of scale and uniformity in decision making. The founders of Kaira Union

realized that to fulfill their objectives, a large number of marginal farmers had to

benefit from the cooperative – a network of stakeholders had to be built. And once

built, it had to grow so as to draw more rural poor to undertake dairy farming as a

means of livelihood. The network had to have several layers – the organizational

network where the voice of the owners governed all decisions, a physical network of

support services and product delivery process and a network of small farmers that

could deliver the benefit of a large corporation in the market place. More importantly,

a process had to be put in place to build these networks.

Building an organizational network that would represent the farmers and the

customers was the most complicated task. A loose confederation was developed with

GCMMF representing the voice of the customers, the Unions representing the milk

processors and the village societies representing the farmers. Competition in the

markets ensured that the entire network was responding to the requirements of the

customers at prices that were very competitive. The task of ensuring that returns to

the farmers was commensurate with the objectives with which the cooperatives were

setup was achieved through representation of farmers at different levels of decision

making throughout the network – the board of directors of societies, Unions and the

Federation comprised farmers themselves. In order to ensure that most returns from

sales went to the producers, the intermediaries had to operate very effectively and on

razor thin margins. This turned out to be a blessing in disguise – the operations

remained very “lean” and started to provide cost based advantage to the entire

network.

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AMUL established a group to standardize the process of organizing farmers

into village societies. In addition to establishing the criteria for selecting members,

the group had to train the VS to run the cooperative democratically, profitably and

with concern for its members. This included establishing procedures for milk

collection, testing, payment for milk purchased from member farmers and its

subsequent sale to the union, accounting, ensuring timely collection and dispatch of

milk on milk routes established by the union, etc. The Village Societies Division at

AMUL acts as the internal representative of village societies in their dealings with the

Union. Cooperative development programmes at the village level for educating &

training its members have become an important part of the strategy to build this

extensive network.

Milk procurement activity at AMUL comprises development and servicing of

village societies, increasing milk collection, procurement of milk from societies & its

transport to the chilling locations, and resolving problems of farmers and village

societies. Their stated objective is to ensure that producers get maximum benefits.

The Village Societies Division coordinates these activities. Milk collection takes

place over a large number of pre-defined routes according to a precise timetable. The

field staff of this division also help village societies interface with the Union on

various issues ranging from improvement of collection, resolving disputes, repair of

equipments to obtaining financing for purchase of equipment etc. In addition, they are

also responsible for the formation of new societies, which is an important activity at

AMUL.

In essence, the organization structure of AMUL allows effective utilization of

resources without losing the democratic aspiration of individual members. It is

obvious that such a system needs charismatic leadership to achieve consensus across

issues – a process that has long-term benefits for any organization.

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ABOUT THE TOPIC:-

CONSUMER BEHAVIOUR:-

It is defined as all psychological, social and physical behavior of potential

customers as they become aware, evaluate, purchase, consume, and tell to

others about product and services.

Buying behavior involves both individual ( psychological) and group process.

Buyer behavior is reflected from awareness right through post purchase

evaluation indicating satisfaction and non satisfaction , from purchaser

Buyer behavior includes communication, purchasing and consumption

behavior

Consumer behavior is basically social in nature hence the social factors

play important roles in shaping buying behavior

Buyer behavior includes both customer and industrial behavior.

“Hence consumer behavior is an orderly process whereby the consumer

interacts with the environment for making a purchase decision on products “

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CONSUMER BEHAVIOR AND MARKETING MANAGEMENT

Marketing managements work around consumers which is actually the market for

them

Understanding their behavior is very vital in every segment to plan marketing

activities accordingly.

Both industrial and individual customers are vital in marketing management

DIVERSITY OF CONSUMER BEHAVIOR:-

customer and consumer words are referred as synonyms but the difference

exists

customer - the purchaser of product or service , may or may not be the end

user

consumer- the end user , may or may not be the purchaser

New age of business demands differentiation of customers by individual

differences in consumer expectations, preferences and influences.

Firms need to go into deep of consumer behavior to analyze and act to

achieve objectives

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CONCEPT & NEED FOR STUDYING CONSUMER BEHAVIOR:-

Consumer behaviour can be said to be the study of how individual make decision on

how to spend their available resources (time, money, effort) on various consumption

related items. This simple definition of consumer behaviour tells the markets to

resolve every activity around the ultimate consumers & gauge their behaviour by

specially focusing on:

Who buys products or services?

How do they buy products or services?

Where do they buy them?

How often they buy them?

Why do they buy them?

How often they use them?

These questions will help in understanding better what factors influences the

decision making process of the customers. The decision making process identifies

the number of people who are involve in this process & describes a role to them like

users, decides, influences & buyers.

It is believed that consumers or customers make purchase decision on the basis of

receipt of a small number of selectivity chosen pieces of information. Thus it will be

very important to understand what & how mush them to evaluate the goods &

services offerings.

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CONSUMER DECISION MAKING PROCESS:-

Stimuli- need, reasons, influences, gathering information

Information processing- process , analyze information about product

Decision making - on the basis of analysis , decision to go for

Response- response to buy without any prejudice

For industrial buyers the process is almost similar only with addition of re-

buy, modified re buy or new task.

FACTOR INFLUENCING BUYING BEHAVIOR:-

Individual factors

Cognitive thinking process – perception , attitudes , Needs/motives

Personal characteristics – demography, lifestyles ,personal traits

Environmental factors

Culture- values ,beliefs, sub cultural / cross cultural factors

Social class- social class , society

Influence groups – family, opinion leaders, reference group

Situational variables – purchase occasion , market communication,

shopping behavior, price , sales influence , product position

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CONSUMER SATISFACTION : -

All business firms have realized that marketing is a core element of management

philosophy & the key to its success lies in focusing more & more on the customers.

That is, it will be the customer who will decide where the firm is heading. Thus the

challenge before the marketer is to ensure that they should satisfy every customer.

Satisfaction is an important element in the evaluating stage. Satisfaction refers to the

buyers state of being adequately rewarded in a buying situation for the sacrifices he

has made one the customer purchase & use the product they may then become either

satisfy or dissatisfied.

The result of satisfaction to customer form the purchase of the product or services is

that more favourable post-purchase attitude, higher purchase intention & brand

loyalty to be exhibited that the same behaviour is likely to be exhibited in a similar

purchasing situation. The term ‘consumer’ is a typically used to refer to someone

who regularly purchase from a particular store or company.

Customers are people who are happy with the product & services & are willing to

come back & pay for it again.

Today the firms aim to give satisfaction to the customer through marketing concepts.

The firm try to help the buyers in the solving the problem then competitors. The

marketers must see that consumers with purchasing power constitute a potentials

buyers are identified. It is essential for the marketer to carry out the business in such a

way that they give satisfaction to consumers needed. When a firm markets a product

or service it should aim to enjoy consumer’s satisfaction & profit maximization.

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CONSUMER RESEARCH:-

Consumer research is the methodology used to study consumer behavior research

offer set diverse to identify consumer needs it is used to identify both felt & unfelt

needs, to learn how consumers. Perceive product & brand & stores. What their

attitudes are before and after promotional campaigns & how & why they make their

consumption decision.

MARKETING RESEARCH:-

Marketing research plays an important role in the process of marketing. Starting

with market component of the total marketing talks. It helps the firm to acquire a

better understanding of the consumers, the competition and the marketing

environment.

DEFINITION

“Marketing research is a systematic gathering, recording and analysis marketing

problem to facilitate decision making.”

- Coundiff & Still.

“Marketing research is a systematic problem analysis, model building and fact

finding for the purpose of important decision making and control in the marketing of

goods and services.

- Phillip Kotler.

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MAIN STEPS INVOLVED IN MARKETING RESEARCH

Defining the Marketing Problem to be tackled and identifying the market research

problem involved in the task.

(1)Define the problem and its objectives.

(2) Identify the problem.

(3) Determine the information needed.

(4)Determine the sources of information.

(5)Decide research methods.

(6)Tabulate, Analyze and interpret the data.

(7)Prepare research report.

(8)Follow-up the stud

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1) Define the problem and its objectives :- This includes an effective job in planning and designing a research project that will provide the needed information. It also includes the establishment of a general framework of major marketing elements such as the industry elements, competitive elements, marketing elements and company elements.

2)Identify the problem :- Identifying the problem involves getting acquainted with

the company, its business, its products and market environment, advertising by means

of library consultation and extensive interviewing of company’s officials.

3)Determining the specific Information needed :- In general the producer, the

manufacturer, the wholesaler and the retailer try to find out four things namely :-

(1) What to sell

(2) When to sell

(3) Where to sell

4) Determine the sources of information :-

Primary Data :- Primary datas are those which are gathered specially

for the project at hand, directly – e.g. through questionnaires & interviews.

Primary data sources include company salesman, middleman, consumers, buyers,

trade association’s executives & other businessman & even competitors.

Secondary Data :- These are generally published sources, which have

been collected originally for some other purpose. Source are internal company

records, government publication, reports & publication, reports & journals, trade,

professional and business associations publications & reports.

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5) Decide Research methods for collecting data: - If it is found that the secondary

data cannot be of much use, collection of primary data become necessary. Three

widely used methods of gathering primary data are :-

A) Survey

B) Observation

C) Experimentation

A) Survey Method: - In this method, information gathered directly from individual

respondents, either through personal interviews or through mail questionnaires or

telephone interviews.

B) Observation Method: - The research data are gathered through observing and

recording their actions in a marketing situation. This technique is highly accurate. It

is rather an expensive technique.

C) Experimental Method: - This method involves carrying out a small scale trial

solution to a problem, while at the same time, attempting to control all factors

relevant to the problem. The main assumption here is that the test conditions are

essentially the same as those that will be encountered later when conclusions derived

from the experiment are applied to a broader marketing area.

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D) The Panel Research:- In this technique the same group of respondents is

contacted for more then one occasion; and the information obtained to find out if

there has been any in their taste demand or they want any special quality, color, size,

packing in the product.

Preparation of questionnaire

Presetting of questionnaire

Planning of the sample

6) Tabulate, Analysis and Interpret the Data:-

The report must give/contain the following information:-

a) The title of research

b) The name of the organization for which it has been Conducted

c) The objectives of research

d) The methodology used

e) Organization and the planning of the report

f) A table of contents along with charts and diagrams used in the reports

g) The main report containing the findings

h) Conclusion arrived at end recommendations suggested

i) Appendices (containing questionnaire / forms used sample design, instructions.)

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7) Follow-up the study :-

The researchers, in the last stage, should follow up this study to find if his

recommendations are being implemented and if not then why.

RESEARCH METHODOLOGY:-

RESEARCH PROBLEM

Seek the general perception of consumer towards Amul Milk.

To know the consumer psyche and their behaviour towards Amul Milk .

OBJECTIVE OF THE RESEARCH

To know the relationship of sales with the advertisement.

To know awareness of people towards Amul Milk.

To know which advertisement tool is mostly preferred by people.

To know the preference of Amul Milk with comparison to

Other competitive brands .

To know the factors which affects consumer’s buying behaviour to purchase

milk.

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Information requirement

First, I had to know about all the competitors present in the Milk

segment (Reputed and well established brands as well as Local brands).

Before going for the survey I had to know the comparative packs and

prices of all the competitors existing in the market.

Since Milk is a product that used daily hence I had to trace the market and

segment it, which mainly deals with people of various age groups.

The main information needed is the various types of brands available in the

market, their calorific value and various other facts.

As Amul milk advertisements are mainly done through hoardings but on television the advertisement is being telecasted timely and on the proper time or not.

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RESEARCH DESIGN

A Research design specifies the methods and procedures for conducting a particular

study. It is a map (or) blue print to which the research is to be conducted. Descriptive

research design has been considered as a suitable methodology for present study and

for data analysis.

SAMPLING DESIGN

The sampling design used was Convenience sampling, which is a non-probability

sampling method. The convenience factors were the availability and approachability

of the respondents.

POPULATION

All types of outlets that stock and sell Amul milk in the markets. The outlets have

been classified into as follows

Convenience stores: All kinds of shops including bakeries

Eateries: all kinds of eating joints

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SOURCES OF DATA

Primary sources

The primary data was collected through questionnaires. They were filled using the

scheduled method of data collection by the researcher.

Secondary sources

The secondary sources were used only for collecting information regarding the

sample; they were however not used for analysis

LIMITATIONS OF THE RESEARCH :-

The limitations of the research were as follows

1. Lack of proper experience on the part of the researcher in conducting such studies

in the past.

2. Time frame required was not enough to survey more number of outlets.

ANALYSIS TECHNIQUES

Quantitative analysis is performed using the data collected at each outlet to estimate

the presence of Amul milk. Tools Utilized

Percentage Analysis

Graph Chart

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SAMPLING

1. Sampling Technique: Non probability sampling

(A non probability sampling technique is

that in which each element in the

population does not have an equal

chance of getting selected)

2. Sample Unit : People who buy milk available

in retail outlets, superstores, etc

3. Sample size : 50

4. Method : Direct interview through questionnaire.

5. scale : Dycpnomic scale and likent scal

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DATA ANALYSIS AND INTERPRETATION:-

The collected data were not easily understandable, so I like to analyze the collected

data in a systematic manner and interpreted with simple method.

The analysis and interpretation of the data involves the analyzing of the

collected data and interpretation it with pictorial representation such as bar charts, pie

charts and others.

Which milk do you consume?a. Pouch milk b. Loose milk c. Both

Options No of Responded % of Responded

Pouch mik 20 40

Loose milk 20 40Both `10 20

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Are you satisfied with the milk you are consuming? a) Yes b) No

RESPONSE NO. OF RESPONDED

% OF responded

YES 32 64

NO 18 36

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What do you like? a) Quality b) Taste

c) Price d) Availability

Factors No. of Respondents Percentage %

quality 20 40

taste 15 30

price 10 20

availability 5 10

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Do you get milk pouch at…………..a)Doorstep b) From retailer

RESPONDED NO.OF responded % OF respondedDoor step 30 60

retailer 20 40

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What is total consumption of milk in a day?a) Pouch milk in litre…… b) Loose milk in litre……

RESPONDED NO.OF responded % OF respondedPouch milk in litre……

30 60

b)Loose milk in litre……

20 40

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What is your monthly expenditure in milk (in Rs.)? a)) 500-1000

b) 1000-1500 c) 1500 and above

RESPONSE NO. OF RESPONDED

% OF CONSUMERS

500-1000 25 50

1000-1500 15 30

1500 and above 10 20

In pouch milk which brand do you prefer?

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a)AMUL b) MOTHER DAIRY

c) GOKUL d) MAHANANDA e) WARANA f) OTHERS

RESPONSE NO. OF RESPONDED

% OF CONSUMERS

amul 15 30

Mother dairy 10 20mahananda 10 20Gokul 5 10Warana 5 10others 5 10

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Do you think the price of the product is high/low compared to competitors product?

a) Strongly agree b) Strongly disagree c) Agreed) Neither

RESPONSE NO. OF RESPONDED

% OF CONSUMERS

Strongly agree 15 30

Strongly disagree 10 20

agree 15 30 Neither 10 20

If you buy AMUL milk pouch which pack you purchase?

a) AMUL Gold b) AMUL Taaza

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c) AMUL Slim & Trim

RESPONSE NO. OF RESPONDED

% OF CONSUMERS

AMUL Gold 25 50

AMUL Taaza 15 30

AMUL Slim & Trim 10 20

CONSUMER’S OPINION TOWARDS PRODUCT

rating No of respondent % of consumer

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poor 15 30average 25 15good 7 14excellent 3 6

SWOT ANALYSIS

Strengths

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The company is having Indian origin thus creating feeling of oneness in the mind of

the customers.

It manufactures only milk and milk products, which is purely vegetarian thus

providing quality confidence in the minds of the customers

It is aiming at rural segment, which covers a large area of loyal customers, which

other companies had failed to do.

People are quite confident for the quality products provided by Amul.

Amul has its base in India with its butter and so can easily promote chocolates

without fearing of loses.

Weaknesses

There are various big players in the chocolate market, which acts as major

competitors restricting their growth. 

Lack of capital invested as compared to other companies.

Improper distribution channel in India.

Opportunities

There is a lot of potential for growth and development as huge population stay in

rural market where other companies are not targeting.

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The chocolate market is at growth stage with very less competition so by introducing

new brand and intensive advertising there can be a very good scope in future.

Threats

The major threat is from other companies who hold the majority share of consumers

in Indian market i.e. Cadburys and Nestle.

There exists no brand loyalty in the chocolate market and consumers frequently shift

their brands.

New companies’ entering in Indian market like Fantasie fine poses lot problems for Amul.

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News articles

Verghese Kurien laid foundation for co-op dairy movement

Anand(Gujarat), Sep 9: The architect of 'white revolution', Verghese Kurien, who led

'Operation Flood' to transform India from a milk-deficient country to the world's

biggest milk producer, is credited with laying the foundation of the nation's co-

operative dairy model. Hailed as the undisputed 'Milkman of India', who created the

billion dollar brand Amul, Kurien, who passed away this morning at the age of 90,

had received both national and international recognition. The Indian government had

conferred on him the Padma Vibhushan while he was also the recipient of World

Food Price, Ramon Magsaysay award for Community Leadership, Carnegie-Wateler

World Peace Prize and International Person of the Year award from US. Born in

Kozhikode, Kerala on November 26, 1921, Kurien had graduated in science from

Loyola College in Chennai (1940) and obtained his degree in engineering from the

Guindy College of Engineering in Chennai. After a stint at TISCO, Jamshedpur,

Kurien got the Government of India's (GoI) scholarship to study dairy engineering.

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On his return to India, Dr Kurien was assigned to join Government Creamery located

at Anand in Gujarat to serve his bond period. By the end of 1949, Kurien got release

orders from his job at the creamery. Kurien joined Kaira District Cooperative Milk

Producers' Union Limited in 1949, on the request of Tribhuvandas Patel, the then

dairy chairman. The dairy was formed at the initiative of Sardar Vallabhabhai Patel.

Later, Patel asked Kurien to help set up a dairy processing plant, which saw the birth

of Amul. Amul's co-operative model became a success and it was replicated

throughout Gujarat. The different dairy unions were later brought under the banner of

Gujarat Co-operative Milk Marketing Federation (GCMMF). Dedicating his

professional life to empowering the Indian farmers through co-operatives, Kurien,

served GCMMF from 1973 to 2006, and Institute of Rural Management (IRMA)

from 1979 to 2006. Kurien's tenure at Anand changed the destiny of Indian dairy

industry. He began helping the fledgling dairy co-operative. The first dairy co-

operative union in Gujarat was formed in 1946 with two village dairy co-operative

societies as its members. The number of member societies has now increased to

16,100, with 3.2 million members pouring milk. Kurien is also credited with being

the first one to produce powder from buffalo milk, when elsewhere in the world, cow

milk was used to produce milk powder. Impressed by the success of Amul, then Prime

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Minister Lal Bahadur Shastri established the National Dairy Development Board

(NDDB) to replicate the Amul model across the country and Kurien was made its

chairman. NDDB launched 'Operation Flood' in 1970, making India the largest milk

producer in the world. He served as chairman of NDDB for 33 years from 1965 to

1998. The Board ensured replication of Amul model across India. It played an

instrumental role in increasing the milk production of the country significantly. India's

milk procurement increased from 20 million metric tonnes (MMT) per year in the 60s

to 122 MMT in 2011. Dr Kurien's main contribution was in designing of systems and

institutions, which enabled people to develop themselves, as he believed the

development of man can best be achieved by putting in his hands the instruments of

development. Interestingly, the 'milkman' of India did not consume milk himself. He

used to say, "I do not drink milk as I don't like it."

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Mother Dairy vs Amul in Delhi

TNN Jul 12, 2003, 02.30am IST

NEW DELHI: Read between the lines, however, Ms Patel's proposal entails marketing of the milk products sourced from NDDB under the Mother Dairy brand across the country, instead of the present arrangement where different state federations market them under their own respective brands, for example, Verka in Punjab and Milma in Kerala. Not only would this put Mother Dairy in direct competition against Amul, but it would also cannibalise the state brands under which milk is currently marketed.

The Amul Vs Mother Dairy competition is already being felt in Delhi. Amul has launched its ice-cream here, while Mother Dairy has hit back by launching its butter. Besides, Mother Dairy is now no longer buying the nearly 1 lakh litres of milk from GCMMF, nor are its outlets here selling Amul products. So ugly has the competition become that even the senior bosses at Amul and NDDB have been washing their dirty linen in public.

Source: Economic times

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Amul Secret Of Success:

The system succeeded mainly because it provides an assured

market at remunerative prices for producers' milk besides acting as a

channel to market the production enhancement package. What's more, it

does not disturb the agro-system of the farmers. It also enables the

consumer an access to high quality milk and milk products. Contrary to

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

the middlemen, the system ensured that the profit goes to the

participants for their socio-economic upliftment and common good.

Looking back on the path traversed by Amul, the following

features make it a pattern and model for emulation elsewhere.

Amul has been able to:

Produce an appropriate blend of the policy makers farmers board

of management and the professionals: each group appreciating its

rotes and limitations.

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

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

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

common good and betterment of the member producers

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Even though, growing with time and on scale, it has remained with the smallest producer members. In that sense, Amul is an example par excellence, of an intervention for rural change.

The Union looks after policy formulation, processing and

marketing of milk, provision of technical inputs to enhance milk yield of

animals, the artificial insemination service, veterinary care, better feeds

and the like - all through the village societies. Basically the union and

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

MILK UNION LIMITED), a name which suggest THE TASTE OF

INDIA.

Amul (Anand milk union ltd.) is based on four hands, which are

coordinated with each other. The actual meaning of this symbol is co-

ordination of four hands of different people by whom this

union is at the top position in Asia.

First hand is of farmers, without whom the organization would not have existed.

Second hand is of processors, who process the row material (milk) into finished goods.

Third hand is of marketer, without whom the product would have not reached the customers.

Fourth hand is of customers, without whom the products would have not carried on.

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GCMMF Overview:

Gujarat Cooperative Milk Marketing Federation (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.

Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) is

the largest Organisation in FMCG industry engaged in marketing of milk

& milk products under the brand names of AMUL and SAGAR with an

annual turnover exceeding Rs 5000 crores.

GCMMF is a unique organisation. It's a body created by Farmers,

managed by competent professionals serving a very competitive and

challenging consumer market. It is a true testimony of synergistic

national development through the practice of modern management

methods.

GCMMF will be an outstanding marketing organization, with

specialization in marketing of food and dairy products both fresh and long

life with customer focus and IT integrated. The network would consist of

over 100 offices, 7500 stockiest covering at least every Taluka. Head

quarter servicing nearly 10 lakh outlets with a turnover of Rs.10,000 Cr

and serving several co-operatives. GCMMF shall also create markets for

its products in neighbouring countries.

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The Gujarat Cooperative Milk Marketing Federation Ltd, Anand (GCMMF) is the largest food products marketing organisation of India. It is the apex organization of the Dairy Cooperatives of Gujarat. This State has been a pioneer in organizing dairy cooperatives and our success has not only been emulated in India but serves as a model for rest of the World. Over the last five and a half decades, Dairy Cooperatives in Gujarat have created an economic network that links more than 2.8 million village milk producers with millions of consumers in India and abroad through a cooperative system that includes 13,141 Village Dairy Cooperative Societies (VDCS) at the village level, affiliated to 13 District Cooperative Milk Producers’ Unions at the District level and GCMMF at the State level. These cooperatives collect on an average 7.5 million litres of milk per day from their producer members, more than 70% of whom are small, marginal farmers and landless labourers and include a sizeable population of tribal folk and people belonging to the scheduled castes.

The turnover of GCMMF (AMUL) during 2008-09 was Rs. 67.11 billion. It markets the products, produced by the district milk unions in 30 dairy plants, under the renowned AMUL brand name. The combined processing capacity of these plants is 11.6 million litres per day, with four dairy plants having processing capacity in excess of 1 million Litres per day. The farmers of Gujarat own the largest state of the art dairy plant in Asia – Mother Dairy, Gandhinagar, Gujarat – which can handle 2.5 million litres of milk per day and process 100 MTs of milk powder daily. During the last year, 3.1 billion litres of milk was collected by Member Unions of GCMMF. Huge capacities for milk drying, product manufacture and cattle feed manufacture have been installed. All its products are manufactured under the most hygienic conditions. All dairy plants of the unions are ISO 9001-2000, ISO 22000 and HACCP certified. GCMMF (AMUL)’s Total Quality Management ensures the quality of products right from the starting point (milk producer) through the value chain until it reaches the consumer

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Ever since the movement was launched fifty-five years ago, Gujarat’s Dairy Cooperatives have brought about a significant social and economic change to our rural people. The Dairy Cooperatives have helped in ending the exploitation of farmers and demonstrated that when our rural producers benefit, the community and nation benefits as well.

The Gujarat Cooperative Milk Marketing Federation Ltd. cannot be viewed simply as a business enterprise. It is an institution created by the milk producers themselves to primarily safeguard their interest economically, socially as well as democratically. Business houses create profit in order to distribute it to the shareholders. In the case of GCMMF the surplus is ploughed back to farmers through the District Unions as well as the village societies. This circulation of capital with value addition within the structure not only benefits the final beneficiary – the farmer – but eventually contributes to the development of the village community. This is the most significant contribution the Amul Model cooperatives has made in building the Nation.

The Three Tier Amul Model

The Amul Model is a three-tier cooperative structure. This structure consists of a Dairy Cooperative Society at the village level affiliated to a Milk Union at the District level which in turn is further federated into a Milk Federation at the State level. The above three-tier structure was set-up in order to delegate the various functions, milk collection is done at the Village Dairy Society, Milk Procurement & Processing at the District Milk Union and Milk & Milk Products Marketing at the State Milk Federation.

This helps in eliminating not only internal competition but also ensuring that economies of scale is achieved. As the above structure was first evolved at Amul in Gujarat and thereafter replicated all over the country under the Operation Flood Programme, it is known as the ‘Amul Model’ or ‘Anand Pattern’ of Dairy Cooperatives.

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Responsible for Marketing of Milk & Milk Products Responsible for Procurement & Processing of Milk Responsible for Collection of Milk Responsible for Milk Production.

Village Dairy Cooperative Society (VDCS)

The milk producers of a village, having surplus milk after own consumption, come together and form a Village Dairy Cooperative Society (VDCS). The Village Dairy Cooperative is the primary society under the three-tier structure. It has membership of milk producers of the village and is governed by an elected Management Committee consisting of 9 to 12 elected representatives of the milk producers based on the principle of one member, one vote. The village society further appoints a Secretary (a paid employee and member secretary of the Management Committee) for management of the day-to-day functions. It also employs various people for assisting the Secretary in accomplishing his / her daily duties. The main functions of the VDCS are as follows:

Collection of surplus milk from the milk producers of the village & payment based on quality & quantity

Providing support services to the members like Veterinary First Aid, Artificial Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales, conducting training on Animal Husbandry & Dairying, etc.

Selling liquid milk for local consumers of the village

Supplying milk to the District Milk Union

Thus, the VDCS in an independent entity managed locally by the milk producers and assisted by the District Milk Union.

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District Cooperative Milk Producers’ Union (Milk Union)

The Village Societies of a District (ranging from 75 to 1653 per Milk Union in Gujarat) having surplus milk after local sales come together and form a District Milk Union. The Milk Union is the second tier under the three-tier structure. It has membership of Village Dairy Societies of the District and is governed by a Board of Directors consisting of 9 to 18 elected representatives of the Village Societies. The Milk Union further appoints a professional Managing Director (paid employee and member secretary of the Board) for management of the day-to-day functions. It also employs various people for assisting the Managing Director in accomplishing his / her daily duties. The main functions of the Milk Union are as follows:

Procurement of milk from the Village Dairy Societies of the District Arranging transportation of raw milk from the VDCS to the Milk Union.

Providing input services to the producers like Veterinary Care, Artificial Insemination services, cattle-feed sales, mineral mixture sales, fodder & fodder seed sales, etc.

Conducting training on Cooperative Development, Animal Husbandry & Dairying for milk producers and conducting specialised skill development & Leadership Development training for VDCS staff & Management Committee members.

Providing management support to the VDCS along with regular supervision of its activities.

Establish Chilling Centres & Dairy Plants for processing the milk received from the villages.

Selling liquid milk & milk products within the District

Process milk into various milk & milk products as per the requirement of State Marketing Federation.

Decide on the prices of milk to be paid to milk producers as well on the prices of support services provided to members.

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State Cooperative Milk Federation (Federation)

The Milk Unions of a State are federated into a State Cooperative Milk Federation. The Federation is the apex tier under the three-tier structure. It has membership of all the cooperative Milk Unions of the State and is governed by a Board of Directors consisting of one elected representative of each Milk Union. The State Federation further appoints a Managing Director (paid employee and member secretary of the Board) for management of the day-to-day functions. It also employs various people for assisting the Managing Director in accomplishing his daily duties. The main functions of the Federation are as follows:

Marketing of milk & milk products processed / manufactured by Milk Unions. Establish distribution network for marketing of milk & milk products.

Arranging transportation of milk & milk products from the Milk Unions to the market.

Creating & maintaining a brand for marketing of milk & milk products (brand building).

Providing support services to the Milk Unions & members like Technical Inputs, management support & advisory services.

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

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

Arranging for common purchase of raw materials used in manufacture / packaging of milk products.

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

Decide on the products to be manufactured at various Milk Unions (product-mix) and capacity required for the same.

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

Arranging Finance for the Milk Unions and providing them technical know-how.

Designing & Providing training on Cooperative Development, Technical & Marketing functions.

Conflict Resolution & keeping the entire structure intact.

We move to the year 2008. The dairy industry in India and particularly in the State of Gujarat looks very different. India for one has emerged as the largest milk producing country in the World. Gujarat has emerged as the most successful State in terms of milk and milk product production through its cooperative dairy movement. The Kaira District Cooperative Milk Producers’ Union Limited, Anand has become the focal point of dairy development in the entire region and AMUL has emerged as one of the most recognized brands in India, ahead of many international brands.

Today, we have around 176 cooperative dairy Unions formed by 1,25,000 dairy cooperative societies having a total membership of around 13 million farmers on the same pattern, who are processing and marketing milk and milk products profitably, be it Amul in Gujarat or Verka in Punjab, Vijaya in Andhra Pradesh or a Nandini in Karnataka. This entire process has created more than 190 dairy processing plants spread all over India with large investments by these farmers’ institutions. These cooperatives today collect approximately 23 million kgs. of milk per day and pay an aggregate amount of more than Rs.125 billion to the milk producers in a year.

Impact of The Amul Model

The effects of Operation Flood Programme are more appraised by the World Bank in its recent evaluation report. It has been proved that an investment of Rs. 20 billion over 20 years under Operation Flood Programme in 70s & 80s has contributed in increase of India’s milk production by 40 Million Metric Tonne (MMT) i.e. from about 20 MMT in pre- Operation Flood period to more than 60 MMT at the end of

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Operation flood Programme. Thus, an incremental return of Rs. 400 billion annually have been generated by an investment of Rs. 20 billion over a period of 20 years. This has been the most beneficial project funded by the World Bank anywhere in the World. One can continue to see the effect of these efforts as India’s milk production continues to increase and now stands at 90 MMT. Despite this fourfold increase in milk production, there has not been drop in the prices of milk during the period and has continued to grow.

Due to this movement, the country’s milk production tripled between the years 1971 to 1996. Similarly, the per capita milk consumption doubled from 111 gms per day in 1973 to 222 gms per day in 2000. Thus, these cooperatives have not just been instrumental in economic development of the rural society of India but it also has provided vital ingredient for improving health & nutritional requirement of the Indian society. Very few industries of India have such parallels of development encompassing such a large population.

These dairy cooperatives have been responsible in uplifting the social & economic status of the women folk in particular as women are basically involved in dairying while the men are busy with their agriculture. This has also provided a definite source of income to the women leading to their economic emancipation.

The three-tier ‘Amul Model’ has been instrumental in bringing about the White Revolution in the country. As per the assessment report of the World Bank on the Impact of Dairy Development in India, the ‘Anand Pattern’ has demonstrated the following benefits:

The role of dairying in poverty reduction The fact that rural development involves more than agricultural production

The value of national ‘ownership’ in development

The beneficial effects of higher incomes in relieving the worst aspects of poverty

The capacity of dairying to create jobs

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The capacity of dairying to benefit the poor at low cost

The importance of commercial approach to development

The capacity of single-commodity projects to have multi-dimensional impacts

The importance of getting government out of commercial enterprises

The importance of market failure in agriculture

The power & problems of participatory organisations

The importance of policy

Achievement of the Amul Movements

1. The phenomenal growth of milk production in India – from 20 million MT to 100 million MT in a span of just 40 years – has been made possible only because of the dairy cooperative movement. This has propelled India to emerge as the largest milk producing country in the World today.

2. The dairy cooperative movement has also encouraged Indian dairy farmers to keep more animals, which has resulted in the 500 million cattle & buffalo population in the country – the largest in the World.

3. The dairy cooperative movement has garnered a large base of milk producers, with their membership today boasting of more than 13 million member families.

4. The dairy cooperative movement has spread across the length and breadth of the country, covering more than 125,000 villages of 180 Districts in 22 States.

5. The dairy cooperatives have been able to maintain democratic structure at least at the grass-root level with the management committee of the village level unit elected from among the members in majority of the villages.

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6. The dairy cooperatives have also been instrumental in bridging the social divide of caste, creed, race, religion & language at the villages, by offering open and voluntary membership.

7. The dairy cooperatives have been successfully propagating the concepts of scientific animal husbandry & efficiency of operations, which has resulted in low cost of production & processing of milk.

8. The movement has been successful because of a well-developed procurement system & supportive federal structures at District & State levels.

9. Dairy Cooperatives have always been proactive in building large processing capacities, which has further propelled growth of milk production.

10.The dairy cooperatives are among those few institutions in India, which still cherish a strong Cooperative identity, values and purpose. They still boast of idealism & good will of members and employees.

11.The dairy cooperatives have removed the poor farmers of India from the shackles of agents & middlemen and provided an assured market for their produce. As these are the institutions run by farmers themselves, it has also resulted in fair returns to the members for their produce

12.Dairy cooperatives have been able to create a market perception of honesty & transparency with their clean management

Achievements of the GCMMF

2.8 million milk producer member families 13,759 village societies

13 District Unions

8.5 million liters of milk procured per day

Rs. 150 million disbursed in cash daily

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GCMMF is the largest cooperative business of small producers with an annual turnover of Rs. 53 billion

The Govt. of India has honoured Amul with the “Best of all categories Rajiv Gandhi National Quality Award”.

Largest milk handling capacity in Asia

Largest Cold Chain Network

48 Sales offices, 3000 Wholesale Distributors, 5 lakh retail outlets

Export to 37 countries worth Rs. 150 crores

Winner of APEDA award for nine consecutive years

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Amul Brand Building

GCMMF (AMUL) has the largest distribution network for any FMCG company. It has nearly 50 sales offices spread all over the country, more than 3,000 wholesale dealers and more than 5,00,000 retailers.

AMUL is also the largest exporter of dairy products in the country. AMUL is available today in over 40 countries of the world. AMUL is exporting a wide variety of products which include Whole and Skimmed Milk Powder, Cottage Cheese (Paneer), UHT Milk, Clarified Butter (Ghee) and Indigenous Sweets. The major markets are USA, West Indies, and countries in Africa, the Gulf Region, and [SAARC] SAARCneighbours, Singapore, The Philippines, Thailand, Japan and China.

In September 2007, Amul emerged as the leading Indian brand according to a survey by Synovate to find out Asia's top 1000 Brands.

PRODUCTS

Amul's product range includes milk powders, milk, butter, ghee, cheese, Masti Dahi, Yoghurt, Buttermilk chocolate, ice cream, cream, shrikhand, paneer, gulab jamuns, flavoured milk, basundi, Nutramul brand and others. In January 2006, Amul plans to launch India's first sports drink Stamina, which will be competing with Coca Cola's Powerade and PepsiCo's Gatorade .

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In August 2007, Amul introduced Kool Koko, a chocolate milk brand extending its product offering in the milk products segment. Other Amul brands are Amul Kool, a low calorie thirst quenching drink; Masti Butter Milk; Kool Cafe, ready to drink coffee and India's first sports drink Stamina.

Amul's sugar-free Pro-Biotic Ice-cream won The International Dairy Federation Marketing Award for 2007.

Mascot

Since 1967  Amul products' mascot has been the very recognisable "Amul baby" (a chubby butter girl usually dressed in polka dotted dress) showing up on hoardings and product wrappers with the equally recognisable tagline Utterly Butterly Delicious Amul.The mascot was first used for Amul butter. But in recent years in a second wave of ad campaign for Amul products, she has also been used for other product like ghee and milk.

Advertising

An Amul butter ad on Pakistan's Kargil Warfiasco. The image shows the "Amul baby" in between George Fernandes and Atal Behari Vajpayee.

In 1966, Amul hired Sylvester daCunha, then managing director of the advertising agency AS to design a new ad campaign for Amul Butter. daCunha designed an add campaign as series of hoardings with topical ads, relating to day-to-day issues. The campaign was widely popular and earned aGuiness world record for the longest running ad campaign in the world. Since the 1980s, cartoon artist Bharat Dabholkar has been involved with sketching the Amul ads, who rejected the trend of

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using celebrities in advertisement campaigns. Dabholkar credited chairman Varghese Kurien with creating a free atmosphere that fostered the development of the ads.

Despite encountering political pressure on several occasions, daCunha's agency has made it a policy of not backing down. Some of the more controversial Amul ads include one commenting on Naxalite uprising in West Bengal, on the Indian Airlines employees strike, and the one depicting the Amul butter girl wearing a Gandhi cap.

In popular Culture

The establishment of Amul is also known as White Revolution. The White Revolution of India inspired the notable Indian film-maker Shyam Benegal to base his film Manthan (1976) on it. The film starred Smita Patil, Girish Karnad, Naseeruddin Shah and Amrish Puri. The film itself was financed by over five lakh rural farmers in Gujarat who contributed Rs 2 each to the film'š budget. Upon its release, these same farmers went in truckloads to watch 'their' film, making it a commercial success, the film was chosen for the 1977 National Film Award for Best Feature Film in Hindi. The Amul success story is taken up as a case study in marketing in many premier management institutes across the world.

The White Revolution ushered an era of plenty from a measly amount of milk production and distribution. Aside from the great measurable success that this project was, it also demonstrated the power of "collective might". A small set of poor farmers of Kheda district in Gujarat had the vision and foresight to act in a way that was good for the society and not for the self alone.

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Mission:

We at GCMMF endeavor to satisfy the taste and nutritional

requirements of the customer of the world through excellence in the

marketing by our committed team. Through co-operative

networking, we are committed to offering quality product that provides best value for money.

Organization Structure:

Organization Structure is divided into two parts:

• External Organization Structure

• Internal Organization Structure

E x te r na l O r g a n i z a t i o n S t r uc t u r e

External Organization Structure is the organization structure that

affects the organization from the out side.

State Level Marketing Federation

District Milk Product Union Ltd.

Village Milk Product Union Ltd.

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As we know, GCMMF is unit of Gujarat Milk Marketing

Federation, which is a co-operative organization. The villagers of more

than 10000 villages of Gujarat are the bases of this structure. They all

make village milk producers union, district level milk producers union and

then a state level marketing federation is established. The structure is line

relationship, which provides easy way tooperation. It also provides better

communication between two stages

Production Function:

Explosion of the production technology and changes in technical

field is going to bring out revolution in the industry sector which

eventually gives stand to study and favors the come backing subject i.e.

production and management.

Production and operation management is planning, organizing,

staffing, directing and controlling of all the production system those

portion of organization that convert inputs into products and services.

In general production system takes raw material, personnel,

machines, buildings and other resources and produce products and

services.

The core of production system is its conversion subsystem where

in workers; raw materials are used to convert inputs into products and

services. This production department is at heart of the firm, as it is able to

produce low cost products and superior quality in timely manners.

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Thus, there arises enormous need of giving due importance to

this department as a whole and a strong concrete base being foundation

pillars of a manufacturing organization, if the intention

is to succeed domestically and globally.

Distribution Network:

Most producers work with marketing intermediaries to bring their products to market. The marketing intermediaries make up a marketing channel also called distribution cannel. Distribution channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.

The Head Office of GCMMF is located at Anand. The entire market is divided in 5 zones. The zonal offices are located at Ahmedabad, Mumbai, New Delhi, Kolkata and Chennai. Moreover there are 49 Depots located across the country and GCMMF caters to 13 Export markets.

A zero level of channel also called a direct marketing channel consists of a manufacturer selling directly to the final customers. A one level channel; contains one selling intermediary such as retailer to the final customers. A two level channel two intermediaries are typically wholesaler and retailer. A three level channel are typically wholesaler, retailer and jobber in between.

GCMMF has an excellent distribution. It is its distribution

channel, which has made it so popular. GCMMF’s products like milk

and milk products are perishable. It becomes that much important for

them to have a good distribution

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Managing Competition:

The Indian market is dominated by a large number of small local and

regional players. There are an estimated 150 manufacturers in the

organized segment, which accounts for 30-35% of sales and about 1000

units in the unorganized segments of the market. In the organized

segment the significant brands are Kwality Walls , Vadilal, Amul,

Havmor, Mother dairy and Baskins & Robbins. GCMMF is facing

very tough competition from both in and outside India.

Amul combats competition from its competitors by providing

quality products at a price which its customers value. Along with good

quality products and reasonable price the packaging is also very good.

Most of its products are available in many flavors. Excellent advertising

backs its products and helps GCMMF (AMUL) to leave its competitors

a tough time. Also Amul has come out with Amul Parlours to cater to

various segments of customers. Amul has a very strong Brand Image in

the Domestic market. Many products are exported by GCMMF.

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Advertising by Amul:

Amul has two agencies that look after its entire range of products namely

FCB Ulka and Da cuna

FCB Ulka looks after a broad range of products namely, Amul Lite

Breadspread, Amul Shrikhand, Amul Chocolates, Amul Paneer, Amul

SnowCap Softy Mix Ice cream, Amul/Sagar Ghee, Amul Infant Milk

Formula 1 & 2, Sagar Tea and Coffee whitener, Amul Spray Infant Milk

Food, Amul Mithaee, Amul Gulab Jamun, Amulya Dairy Whitener,

Mithaimate Sweetened Condensed Milk, Amul Ice cream, Sagar Skimmed

Milk Powder and Amul Whole milk Powder

Areas of Operation:

Besides India, AMUL has entered overseas markets such as

Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore,

Hong Kong and a few South African nations. Otherpotential markets

being considered include Sri Lanka.

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List of Products

Marketed:-

Bread spreads

• Amul Butter

• Amul Lite Low Fat Breadspread

• Amul Cooking Butter

Cheese Range

• Amul Pasteurized Processed Cheddar Cheese

• Amul Processed Cheese Spread

• Amul Pizza (Mozarella) Cheese

• Amul Shredded Pizza Cheese

• Amul Emmental Cheese

• Amul Gouda Cheese

• Amul Malai Paneer (cottage cheese), Frozen, Refrigerated and Tinned

• Utterly Delicious Pizza

Mithaee Range (Ethnic sweets)

• Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)

• Amul Amrakhand

• Amul Mithaee Gulabjamuns

• Amul Mithaee Gulabjamun Mix

• Amul Mithaee Kulfi Mix

• Avsar Ladoos

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Pure Ghee

• Amul Pure Ghee

• Sagar Pure Ghee

• Amul Cow Ghee

UHT Milk Range

• Amul Shakti 3% fat Milk

• Amul Taaza 1.5% fat Milk

• Amul Gold 4.5% fat Milk

• Amul Lite Slim-n-Trim Milk 0% fat milk

• Amul Shakti Toned Milk

• Amul Fresh Cream

• Amul Snowcap Softy Mix

Infant Milk Range

• Amul Infant Milk Formula 1 (0-6 months)

• Amul Infant Milk Formula 2 (6 months above)

• Amulspray Infant Milk Food

Milk Powders

• Amul Full Cream Milk Powder

• Amulya Dairy Whitener

• Sagar Skimmed Milk Powder

• Sagar Tea and Coffee Whitener

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Fresh milk

• Amul Taaza Toned Milk 3% fat

• Amul Gold Full Cream Milk 6% fat

• Amul Shakti Standardized Milk 4.5% fat

• Amul Slim & Trim Double Toned Milk 1.5% fat

• Amul Saathi Skimmed Milk 0% fat

• Amul Cow Milk

Sweetened Condensed Milk

Amul Mithaimate Sweetened Condensed Milk

Curd Products

• Yogi Sweetened Flavored Dahi (Dessert)

• Amul Masti Dahi (fresh curd)

• Amul Butter Milk

• Amul Lassee

Amul Ice creams

• Royal Treat Range (Rajbhog, Cappuchino, Chocochips, Butterscotch, Tutti Frutti)

• Nut-o-Mania Range (Kaju Drakshi, Kesar Pista,Roasted Almond, Kesar

Carnival, Badshahi Badam Kulfi, Shista Pista Kulfi)

• Utsav Range (Anjir, Roasted Almond)

• Simply Delicious Range (Vanilla, Strawberry, Pineapple, Rose, Chocolate)

• Nature's Treat (Alphanso Mango, Fresh Litchi, Anjir, Fresh Strawberry, BlackCurrant)

• Sundae Range (Mango, Black Currant, Chocolate, Strawberry)

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• Millennium Ice cream (Cheese with Almonds, Dates with Honey)

• Milk Bars (Chocobar, Mango Dolly, Raspberry Dolly, Shahi Badam Kulfi, Shahi

Pista Kulfi, Mawa Malai Kulfi, Green Pista Kulfi)

• Cool Candies (Orange, Mango)

• Cassatta

• Tricone Cones (Butterscotch, Chocolate)

• Megabite Almond Cone

• Frostik - 3 layer chocolate Bar

• Fundoo Range - exclusively for kids

• SlimScoop Fat Free Frozen Dessert (Vanilla, Banana, Mango, Pineapple)

• Health Isabcool

Chocolate & Confectionery

• Amul Milk Chocolate

• Amul Fruit & Nut Chocolate

Brown Beverage

• Nutramul Malted Milk Food

Milk Drink

• Amul Kool Flavoured Milk

Health Beverage

• Amul Shakti White Milk Food

Ready to Serve Soups

Masti Tomato Soup

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Masti Hot & Sour Soup

Marketing

GCMMF is the marketing arm of the network and manages the physical

delivery and distribution of milk and dairy products from all the Unions to customers.

GCMMF is also responsible for all decisions related to market development and

customer management. These activities, which range from long-term planning to

medium-term and short-term operational decisions are described below.

As mentioned earlier, introduction of new products and choice of product mix and

markets should be consistent with the growth strategy, and synchronous with growth

in milk supply. GCMMF’s demand growth strategy may be characterized by two key

elements: (i) developing markets for its high value products by graduating customer

segments from low value products, and (ii) maintaining a healthy level of customer

base for its base products (low value segment). This strategy often requires GCMMF

to allocate sufficient quantity of milk supply to low value products, thereby

sacrificing additional profits that could be generated by converting the same to high

value products.

Interestingly, advertisement & promotion (a la FMCG) was not considered to be

enough of value addition and hence the budget was kept relatively small. Instead,

GCMMF preferred a lower price with emphasis on efficiency in advertising. In this

context, GCMMF provides umbrella branding to all the products of the network. For

example, liquid milk as well as various milk products produced by different Unions

are sold under the same brand name of AMUL. Interestingly, the advertising has

centered on building a common identity (e.g., a happy & healthy “cartoon” AMUL

girl) and evoking national emotion (e.g., the key advertising slogan says “AMUL -

The Taste of India”).

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GCMMF also plays a key role in working with the Unions to coordinate the supply of

milk and dairy products. In essence, it procures from multiple production plants (the

thirteen Unions), which in turn procure from the Village Societies registered with

each Union. GCMMF distributes its products through third party distribution depots

that are managed by distributors who are exclusive to GCMMF. These distributors

are also responsible for servicing retail outlets all over the country. GCMMF sales

staff manages this process. Retailing of GCMMF’s products takes place through the

FMCG retail network in India most of whom are small retailers.

Liquid milk is distributed by vendors who deliver milk at homes. Since 1999,

GCMMF has started web based ordering facilities for its customers. A well-defined

supply chain has been developed to service customers who order in this manner.

Operations & Supply Chain Management

As mentioned earlier, the strategy, design and practices in AMUL’s network are

strongly driven by the objective of establishing and operating an efficient supply

chain from milk production and procurement to product delivery to customers.

Management of this network is built around two key elements – (a) coordination of

the diverse elements of the network and (b) use of appropriate technology that

includes product, process and information technology and managerial practices and

systems. In what follows, we describe various features of these elements that have

contributed to the evolution of an efficient supply chain.

Coordination for Competitiveness

Robust coordination is one of the key reasons for the success of operations involving

such an extensive network of producers and distributors at GCMMF. Some

interesting mechanisms exist for coordinating the supply chain at GCMMF. These

range from ensuring fair share allocation of benefits to various stakeholders in the

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chain to coordinated planning of production and distribution. More importantly, the

reason for setting up of this cooperative is not amiss to any one in this large network

organization. Employees, third part service providers, and distributors are constantly

reminded that they work for the farmers and the entire network strives to provide the

best returns to the farmers, the real owners of the cooperative. It may be remembered

that coordination mechanisms have to link the lives and activities of 2.12 million

small suppliers and 0.5 million retailers!

There appear to be two critical mechanisms of coordination that ensure that

decision making is coherent and that the farmers gain the most from this effort. These

mechanisms are:

• Inter-locking Control

Coordination Agency: Unique Role of

• Federation Inter-locking Control

Each Village Society elects a chairperson and a secretary from amongst its member

farmers of good standing to manage the administration of the VS. Nine of these

chairpersons (from amongst those VS affiliated to a Union) are elected to form the

Board of Directors of the Union. The Chairperson of the Union Board is elected from

amongst these members. The managing director of the Union, who is a professional

manager, reports to the chairperson and the board. All chairpersons of all the Unions

form the Board of Directors of GCMMF. The managing director of GCMMF reports

to its Board of Directors. Each individual organization, the Union or GCMMF, is run

by professional managers and highly trained staff. It must be pointed that all members

of all the boards in the chain are farmers who pour milk each day in their respective

Village Societies.

A key reason for developing such an inter-locking control mechanism is to

ensure that the interest of the farmer is always kept at the top of the agenda through

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its representatives who constitute the Boards of different entities that comprise the

supply chain. This form of direct representation also ensures that professional

managers and farmers work together as a team to strengthen the cooperative 25. This

helps in coordinating decisions across different entities as well as speeding both the

flow of information to the respective constituents and decisions

Coordination Agency: Unique Role of the Federation

In addition to being the marketing and distribution arm of the Unions, GCMMF plays

the role of a coordinator to the entire network within the State – coordinating

procurement requirements with other Federations (in other states), determining the

best production allocation for its product mix from amongst its Unions, managing

inter-dairy movements, etc. It works with two very clear objectives: to ensure that all

milk that the farmers produce gets sold in the market either as milk or as value added

products and to ensure that milk is made available to an increasingly large sections of

the society at affordable prices. In addition, it has to plan its production at different

Unions in such a way that market requirement matches with unique strengths of each

Union and that each of them also gets a fair return on its capacity. In this regard,

GCMMF follows an interesting strategy. GCMMF, in consultation with all the

Unions, decides on the product mix at each Union location. Some considerations that

govern this choice are the strengths of each Union, the demand for various products

in its region as well as the country, long term strategy of each Union, procurement

volumes at different Unions, distribution costs from various locations etc. Demand

for daily products and supply of milk vary with the season. Further, demand and

supply seasons run counter to each other making the planning problem more

complex. In making allocations to Unions, GCMMF is guided by two main objectives

– (i) maximizing the network surplus, and (ii) maintaining equity among unions for

the surplus realized. In this regard, very often GCMMF is willing to sacrifice

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realizable surplus and allocate products to “less efficient” Unions in order to achieve

better balance in surpluses accruing to the Unions.

Technology for Effectiveness

Service to customers required the following: better and newer “products”,

“processes” that would deliver the low cost advantage to the network and “practices”

that would ensure high productivity and delivery of the right product at the right time.

Thus technology or knowledge that was embodied in products, processes, and

practices became an important factor in delivering effectiveness to the network of

cooperatives. One distinguishing feature of AMUL (in comparison with other similar

cooperatives globally) is the large variety in their product mix. Producing them not

only requires diverse skills but also knowledge of different types of processes.

AMUL dairy led the way in developing many of these products and establishing the

processes for other member Unions.

Equally impressive are the achievements on process technology. While several

continuous innovations to equipment and processes have been done at AMUL, the

most significant one has been the development of processes for using buffalo milk to

produce a variety of end products. Gujarat (and most of India) is a buffalo

predominant area. As more farmers joined the cooperatives, the need to develop a

mechanism for storage of increasing quantities of milk became intense. Moreover, the

cooperative was established on the promise that it would buy any quantity of milk

that a member farmer wanted to sell. The need to store milk in powder form increases

as excess milk quantities in winter seasons could then be used in lean summer

seasons. Moreover, demand for liquid milk was not growing along with growth in

milk production. No technology, however, existed worldwide to produce powder

from buffalo milk. Engineers at AMUL successfully developed a commercially viable

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process for the same – first time in the history of global diary industry. Subsequently,

it also developed a process for making baby food out of this milk powder. It has also

developed a unique process for making good quality cheese out of buffalo milk

thereby converting a perceived liability into a source of comparative advantage – the

task was done through process technology research. Most of its plants are state of art

and automated. Similar efforts in the area of “embryo transfer technology” have

helped create a high yield breed of cattle in the country. AMUL’s innovations in the

areas of energy conservation and recovery have also contributed to reduction in cost

of its operations. AMUL also indigenously developed a low cost process for

providing long shelf life to many of its perishable products.

TQM at the grassroots has been a strong movement to develop leadership, operational

and strategic capabilities in the entire network – farmers, village cooperatives, dairy

plants, distributors and wholesalers and retailers. Key elements of this TQM

movement have been:

• Friday Departmental Meetings: Each Friday, at a prescribed time, every one in the

network (from the farmers to the carry & forwarding agents) joins their respective

departmental meeting to discuss quality initiatives and share policy related

information.

• Training for Transformational Leadership so that individuals are able to control

their thoughts, feelings and behavior and take more responsibility in one’s life and

surrounding environment.

• Application of Hoshin Kanri principles to bring about a bottom-up setting of

objectives – aligning policies for effective management of Unions & village

societies on hand with those of channel member on the other hand. ISO/HACCP

certification was obtained for all the Unions and each village society is in the

process of obtaining the same.

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• Training for farmers and their families emphasizing the need for good health care

for not only cattle during its pregnancy and feeding but also for expecting and

feeding mothers and the whole family. This effort has brought about a significant

social change towards such issues in villages that have cooperative milk societies.

• Retail Census: GCMMF undertakes a census of all retail outlets (over 500,000) to

evaluate customer perceptions and distribution efficacy of their network.

Interestingly, this is being done by wholesalers in their respective territories at

their own cost. This information is used for policy deployment exercise.

The extent of IT usage includes a B2C ordering portal, an ERP based supply chain

planning system for the flow of material in the network, a net based dairy kiosk at

some village societies (for dissemination of dairy related information), automated

milk collection stations at village societies and a GIS based data network connecting

villages societies to markets. Milk collection information at more than 10,000

villages is available to all dairies (or Unions) to enable them make faster decisions in

terms of production & distribution planning, and disease control in more than

6,700,000 animals. Similarly, this is linked with information at all 45 distribution

offices and 3900 distributors. This network is being extended to cover all related field

offices in the network. The GCMMF cyber store delivers AMUL products at the

doorsteps of the consumers in 125 cities across the country.

What is remarkable about the above is implementation of very contemporary

practices in rural areas where both education and infrastructure are generally low.

One of the key sources of competitive advantage has been the ability of the

cooperative to continuously implement good practices across all elements of the

network – the federation, unions, village societies and the distribution channel.

Whether it is implementation of small group activities or quality circles at the

federation or SPC and TQM at the Unions or housekeeping and good accounting

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practices at the village societies level, the network has developed very interesting

ways of rolling out improvement programmes across different entities. While these

programs may not be very unique, the scale is impressive. One of the key strengths of

GCMMF & AMUL can surely be characterized as development of processes that

allow them to implement these practices across a large number of members.

Growth and Challenges

From its inception with the formation of its first milk cooperative, AMUL network

has sustained an impressive growth rate for more than 50 years culminating in the

emergence of Indian dairy industry as the world’s leading milk producer. However, it

is unclear whether AMUL’s strategy and practices that have worked well for long can

maintain this growth trajectory in a changing environment with globalization and

increased competition. In this section we describe some of AMUL’s initiatives and

discuss briefly opportunities for growth and challenges that need to be overcome.

AMUL’s growth during the past five decades has been fuelled primarily by growth in

milk supply with corresponding pricing strategy to generate demand. This growth has

been sustained by a two-pronged strategy – (a) growth in the number of member

farmers by widening its coverage with more village societies and increasing the

membership in each society, and (b) growth in per capita milk supply from its

members. This growth is achieved by increasing milk yields and by helping members

raise their investments in cattle. It is worth noting that AMUL has funded these

support activities from its earnings (instead of repatriating them to the members either

as dividends or with a higher procurement price). It is expected that AMUL’s growth

in the immediate future will continue to rely on this strategy.

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However, in the new emerging environment, several challenges have become

apparent and AMUL network needs to evolve proactive mechanisms to counter these

threats. First, competitors are cutting into milk supply by offering marginally higher

procurement prices thereby challenging the practice of provision of services for long-

term growth in lieu of higher prices in the short-term. Second, for a section of its

membership, dairy activity is a stepping-stone for upward mobility in the society.

Typically, such members .

on to other occupations after raising their economic position through milk

production. As a result, AMUL is unable to realize the full benefits of its long-term

strategy, and finds new members (mostly marginal farmers) to replace those who

have higher potential and capacity.

By progressively increasing the share of higher value products AMUL has

been able to grow at a faster rate than the growth in milk supply. AMUL has been

rather cautious in implementing this strategy and has always ensured retention of its

customer base for liquid milk and low value products. With slowdown in the growth

of milk supply this strategy is likely to come under pressure and AMUL will be

forced to make some hard choices. More important, it is fairly clear that its low price,

cost efficient strategy may not be appropriate for the high value segment.

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Thus, AMUL may have to adopt a dual strategy specific to its target markets,

which in turn may lead to dilution in focus.

A part of AMUL’s growth has come from diversification into other agri-products

such as vegetable oils, instant foods etc. In some of these initiatives AMUL adapted

its successful cooperative organization structure, but the experience to date has been

somewhat mixed. More recently, the network is exploring conventional joint venture

arrangements with suitable partners for diversification into areas such as fast food and

speciality chocolates. While it is too early to assess the success of these ventures,

challenges involved are becoming quite visible. For example, diversification has

resulted in expansion of the network with disparate elements, each motivated by their

own objectives. This in turn has led to a lack of focus within the network and dilution

in the commonality of purpose. These developments are likely to have serious

implications for coordination and control in the network. More important, shared

vision and common goal was one of the main planks of AMUL’sgrowth during the

past 50 years, and its dilution is likely to adversely impact the network performance.

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Conclusion

It is well recognized that markets that are fragmented or producers that are too small

to build competitive infrastructures or those who are unable to manage technological

changes in their operational processes would benefit the most through a cooperative

organization. Consequently a large number of cooperatives have taken roots amongst

producers of food (especially those that are perishable). However, there are

interesting cooperative formations in India and China that are starting to emerge

amongst small producers in auto-components (especially those serving the

replacement markets), amongst small scale dyeing communities and the power-loom

operators in the textile industry. In these cases, the producers are coming together to

develop a common brand.

that is based on stringent quality certifications that would distinguish them from other

small producers and for usage of common property resources. The example of AMUL

provides a number of lessons for such organizations to compete successfully in the

face of increasing globalization and competition. More generally, the AMUL case

presents a successful model for operating in emerging economies characterized by

either large under-developed suppliers and/or markets with high potential.

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The largest segment of the market in emerging economies desires value for

money from its purchases. Development of such markets requires careful nurturing

and a long-term approach. Initial success in these markets is typically based on a low

price strategy (providing value for money) supported by cost leadership. This strategy

helps to grow the market exponentially by focusing on the largest segment of the

population, the middle and the lower middle class. In this context, it is important for

global players to note that the value proposition perceived by consumers is influenced

to a large extent by the state of markets and the economy and cultural factors.

Development of an appropriate value proposition suitable for large mass markets in

India requires a thorough understanding of the environment and a focus on costs.

This in turn, requires designing the organization structure and practices in a manner

that it delivers continued market share through cost leadership. AMUL is a good

example of this strategy. Firms that are able to develop control processes through

better use of operational practices and supply chain coordination are the ones that are

able to serve large volumes and enjoy top line growth in revenues.

Development of suppliers likewise requires nurturing with a long-term

perspective. It is interesting to note that this was achieved by AMUL through a

process of education and social development activities - activities that are not usually

considered to be standard business practices. This type of ‘out of the box’ vision is

essential for developing innovative mechanism in new, unfamiliar environments

where building of relationship with consumers goes much beyond marketing

messages and useful product offerings.

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Environments with underdeveloped markets and suppliers (as in the case of AMUL)

add one more dimension of complexity relating to the relative pace of growth of these

two areas. Through its pricing strategy, AMUL has been able balance the growth in

markets and suppliers and has achieved some degree of synchronization. Otherwise,

gaps between demand and supply would require complementary strategies.

The AMUL example is also instructive for multinational companies and others

contemplating operations in emerging markets by taking advantage of the local small

and medium enterprises. In such cases large businesses are built by forging linkages

with these enterprises thereby changing the boundaries of the entering firm. Such a

partnership reduces the operational risk while providing a credible source of

understanding the behaviour of the consumer through the experience of partners. It

also provides operational flexibility and makes the network responsive to changes

within and outside. To be effective it is important that decision-making be

decentralized to the extent possible, with appropriate coordination mechanisms to

ensure consistency in the system. The leadership of such organizations have always

been larger than life and have been seen to play an important role in the building of

the society even today

Firms that are able to overcome the hesitation of deploying IT for achieving

operational excellence in emerging economies gain considerably from its network

effect. Most firms either automate decision making to such an extent that it eliminates

local initiatives (as many SAP implementations in India are finding out that it has

added more rigidity in decision making as opposed to using it in conjunction with a

more flexible “telephone” mode of communicating) or use manual systems that lead

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to inaccurate data based decision-making.

COMPARATIVE STUDY OF COMPETITORS PRODUCT

MOTHER DAIRY

History

• Mother Dairy - Delhi was set up in 1974 under the Operation Flood

Programme.

• It is now a subsidiary company of National Dairy Development Board

(NDDB).

• Mother Dairy sources its entire requirement of liquid milk from dairy

cooperatives.

• Similarly, Mother Dairy sources fruits and vegetables from farmers/growers

associations.

• This is the place from where milk is distributed in Delhi city.

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ORGANISATIONAL BACKGROUND

Mother Dairy was set up in 1974. Mother dairy Kolkata is a government of West Bengal project, was started under Operation Flood II of National Dairy Development Board . It was set up initially to cater to the demand of the Kolkata urban agglomeration spread over the Kolkata Metropolitan area, later it reached out to the consumers of other districts also. The commissioning of the Dairy started in July 1978. Initially, the management of Mother Dairy was looked after by the National Dairy Development Board . On 24th March 1982 , the then Honourable Chief Minister Shri Jyoti Basu dedicated Mother Dairy Calcutta to the rural milk producers and urban milk consumers of West Bengal.

Mother Dairy is an IS/ISO 9002, IS 15000 HACCP and IS 14001 EMS certified organization. Moreover, its Quality Assurance Laboratory is certified by National Accreditation Board for Testing and Calibration Laboratory (NABL)-Department of Science and Technology, Government of India.

At Mother dairy milk is produced by mixing raw milk, white butter and skim milk powder. Skim milk powder is made by mixing cow and buffalo milk obtained during breeding seasons through various co-operatives in West Bengal and converting them into powder in order to store for a longer period. Raw milk is obtained on a daily basis from the co-operatives. It is then stored in chilling plants and transferred to the Mother dairy factory through insulated tanks. While raw milk is stored in the cold chain at 2°C skim milk powder and white butter is stored under normal temperature. This milk is then pasteurised at 78° C in order to make it free from germs and then it is homogenised.

Mother dairy is presently selling Milk & Milk Products like Khatta Doi , Flavoured Yoghurt, Plain yoghurt, Paneer, Ice cream and Packaged Drinking Water. The entire product mix is shown below :

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Double toned Milk

It‟s fresh it‟s pure it‟s co-operative milk with assurance of Mother dairy. Mother dairy double toned milk - tasty and nutritious with low fat content. A dream come true , especially for all the calorie conscious people who love the taste of milk but are worried of its cream content. Mother dairy double toned milk complements your daily workout perfectly. So , to maintain complete harmony between your body and soul you‟ve got to “fresh and pure”.

Toned Milk

Mother dairy bulk vended token milk – healthy and tasty to the last drop.

Homogenised to evenly distribute the cream content , it‟s thicker and a lot easier to digest. It‟s the magic of homogenisation that makes your kheer thicker and shake frothier. Fortified with Vitamin A , which not only is good for your complexion but also helps prevent night blindness. What‟s more , it gives your children the energy to stay active through work and play

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Full Cream Milk

Mother dairy full cream milk - wholesome and healthy. Packed with energy and nutrition thats essential for growing kids. It makes them stronger from within and keeps them active and healthy. So before they go to bed , and after they rise give them Mother dairy full cream milk to keep them healthy and wise and to see them „grow faster‟.

Cow Milk

Mother dairy‟s cow milk has a yellowish tinge due to presence of an element called carotene and is a good source of Vitamin –A,B-12 and Vitamin D. Cow milk is considered to be easily digestible. Whether poured on breakfast cereal or enjoyed alone as a cold glass of milk, this can be enjoyed year around.

Skimmed Milk

In skimmed milk , as much of the fat as is possible is removed , yet it continues to supply all the nutrients that full cream milk does. The young at heart would particularly find it a tempting option. So its the best option to remain energetic and young

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LITERATURE REVIEW

CURRENT SCENARIO

Mother dairy has a market share of around 33 % in the branded sector in West Bengal where it sells 3.4 lakh litres of milk daily on an average and undertakes its marketing operations through around 51 distributors and around 600 retailers in Kolkata itself. It has a huge advantage over its competitors as it is the only player when it comes to sale of loose milk through token. Before the entrance of competitors like Amul ,sale of loose milk through Mother Dairy booths was around 35 % of the entire sale in branded segment , when Mother dairy was the only player in the market. However since last five years the sale is continuously declining and presently it is just 8-9 %.

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Achievements

• Mother Dairy markets approximately 3.2 million liters of milk daily in the

markets of Delhi, Mumbai, Saurashtra and Hyderabad.

• Mother Dairy milk has a market share of 66% in the branded sector in Delhi

where it sells 2.5 million liters of milk daily

• And undertakes its marketing operations through around 1400 retail outlets and

over 1000 exclusive outlets of Mother Dairy

Vision and Mission

• Vision – “Provide quality food and beverages to consumers at affordable prices

while ensuring fair returns to the producers.”

 

• Mission – “Mother Dairy’s heritage is intrinsically linked to the cooperative

movement in India. With determination & pride we will continue to serve our

farmers, rural India & our consumers. Our values reflect who we are & what

we firmly believe in.”

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• Mother Dairy ice creams launched in the year 1995 have shown continuous

growth over the years and today boasts of approximately 62% market share in

Delhi and NCR.

• Mother Dairy also manufactures and markets a wide range of dairy products

that include Butter, Mishti Doi, Paneer, Dahi, Ghee, Cheese, UHT Milk,

Probiotic Products, Lassi & Flavoured Milk and most of these products are

available across the country.

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Products Milk

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Diary Products

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SWOT ANALYSIS OF MOTHER DAIRY

STRENGTHS

• The major strength of the Mother Dairy is the different variety of Milks and a

recognized BRAND name.

• The increasing demand for these products.

• 62% market share in Delhi NCR region

WEAKNESS

• Scarce Mother Dairy Outlets

• Less Margin given to the Outlet owners to match the existing competitors

OPPORTUNITIES

• There is a scope of business as there is a demand for dairy products.

• Dairy should open more outlets to get the maximum advantage of the demand.

• Need to put more stress in the face-to-face direct marketing to reach to the

customers

• The increasing demand for these products presents a great opportunity for the

Mother Diary to increase and scale up the production

THREATS

Increasing competition from the other brands

Strong supply chain management by the competitors 

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Strong marketing strategy by competitors by offering the discount coupons to

consumers and providing healthy commissions to the retailers

CONCLUSION :-

Majority of the customers are satisfied with the Amul milk and Milk products

because of its good quality, reputation, easy availabilities.

From the survey conducted it is observed that Amul milk has a good market share.

From the study conducted the following conclusions can be drawn. In order the

dreams comes into reality and for turning liabilities into assets one must have to meet

the needs of the customers.

The factors considered by the customer before purchasing milk are freshness, taste,

thickness and availability.

Finally I conclude that, majority of the customers are satisfied with the Amul milk

and Milk products because of its good quality, reputation, easy availabilities. Some

customers are not satisfied with the Amul Milk because of high price, lack of dealer

services, spoilage and low shelf life etc. therefore, if slight modification in the

marketing programme such as dealers and outlets, promotion programmers, product

lines etc., definitely company can be as a monopoly and strong market leader.

Amul has also to take care of its competitors into consideration and more importantly

its customers before making any move.

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BIBLIOGRAPHYAND

WEBLIOGRAPHY

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Marketing Management Philip Kotler, The Millennium Edition, Prentice Hall

Of India Private Limited, New Delhi.

Periodical: Business World

Research Methodology: C.R.Kothari , 2nd edition.

S.N Murty and U Bhojanna

W e b s i t e s :

i. www . g oo g l e . c o . i n

ii. www . w i k i p e d i a . c o m

iii. www . a m u l . c o m .

iv. ww w . m a r k et r e s ea r c h. c o m

v. www.da ir y. co m

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ANNEXURE

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QUESTIONNAIRE OF AMUL MILK PRODUCTS

Dear Sir/Madam,

I am conducting a survey entitled “CONSUMER BUYING PATTERN

TOWARDS AMUL MILK “ Please give your valuable information, your

information will be kept confidential and will be used only for academic

purpose.

Rohan P.Naik

Name : - ______________________________________________

Address: - _______________________________________________

Age : - _________________ Gender : - _________________

Contact No.: - _________________________

1) Which milk do you consume?d. Pouch milk e. Loose milk f. Both

2) Are you satisfied with the milk you are consuming? a) Yes b) No

3) What do you like?

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a) Quality b) Taste c) Price d) Availability

4) Do you get milk pouch at…………..a) Doorstep b) From retailer

5) Total consumption of milk in a day?a) Pouch milk in litre……b) Loose milk in litre……

6) Your monthly expenditure in milk (in Rs.)? a) 500-1000

b) 1000-1500 c) 1500 and above

7) In pouch milk which brand do you prefer?a) AMUL b) MOTHER DAIRY

c) GOKUL d) MAHANANDA e) WARANA f) ANY OTHER …………………………………………………..

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8) Do you think the price of the product is high/low compared to competitor’s product?

a) Strongly agree b) Strongly disagree c) Agreed) Neither

9) If you buy AMUL milk pouch which pack you purchase?

a) AMUL Gold b) AMUL Taaza c) AMUL Slim & Trim

10) What is the reason for buying/ not buying AMUL?

a)…………………………………………………….. b)…………………………………………………….. c)…………………………………………………..…

11) What are your suggestion/ expectations from AMUL?

a)……………………………………………………… b)……………………………………………………… c)………………………………………………………

12) CONSUMER OPINION TOWARDS PRODUCT?

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rating No of respondent

poor 15average 25good 7excellent 3

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