to develop a competitive strategy of sudha milk for drmu,baruni (comfed)

TO DEVELOP A COMPETITIVE STRATEGY OF SUDHA MILK FORDRMU, BARUNI (A UNIT OF COMFED)

NIKHIL KUMAR BY

INTRODUCTION INDIAN DAIRY INDUSTRY

India is world’s largest milk producing nation.It contributes about 15 % to the total milk

production of the world.Indian dairy industry stands at a mammoth size of

US$ 70 billion.Gross output of 131.45 million tons of milk in

2014. (Growing 5 % per annum)In India, dairy industry is regulated by National

Dairy development board (NDDB)More than 10 million dairy farmers belong to

96,000 local dairy cooperatives, who sell their products to one of 170 milk producers’ cooperative unions who in turn are supported by 15 state cooperative milk marketing federations.

INTRODUCTION BIHAR STATE MILK COOPRATIVE FEDRATION (COMFED)

The Bihar State Milk Co-operative Federation Ltd is a dairy cooperative established in 1983 is an enterprise of the government of Bihar. It markets its products under the label "Sudha".

There are 11 units of COMFED those are present in different parts of Bihar & Jharkhand recently COMFED launched its products in UP and Delhi.

Approximately 8.35 lakh Farmers are presently members of COMFED through 15944 village dairy cooperatives.

The annual turnover of COMFED is more than 1500 crore per annum.

Deshratna Rajendra prasad Milk Union (DRMU), Baruni

Deshratna Dr. Rajendra Prasad Dugdh Utpadak Sahkari Sangh Limited (DRMU), Baruni is the largest milk union in the eastern part of India.

Its handling capacity of 5.0 lacks liters per day.Total milk procurement is more than 35 TLPD.It is situated in Baruni, Begusarai.Its area of operation is in 7 districts of Bihar.That is Begusarai, lakhisarai, Khagaria, saharsa,

supaul, madhepura and some part of patna district.

There are more than 1, 37,300 farmers are members of dairy through1768 village dairy co-operative society.

INTRODUCTION

Introduction about Product

INTRODUCTION

Serial No.

Milk Milk Type Fat SNF

1. Sudha Gold Full Cream Milk 6.0% 9.0% 2. Sudha Shakti Half Cream milk 4.5% 8.5% 3. Cow Milk Cow Milk 3.5% 8.5% 4. Sudha Healthy Toned Milk 3.0% 8.5% 5. Sudha Smart Double Toned

Milk 1.5% 9.0%

COMFED supply two types of products

1. Liquid Milk

2. Milk product

Ø Sudha Ice-Cream Ø Sudha dahi Ø Sudha Peda Ø Sudha Paneer Ø Sudha Kalakand Ø Sudha Rasogulla etc.

RESEARCH METHODOLOGY

• Research Problem The main problem that organization is facing is, it

is not able to capitalize on the huge market potential of Milk Market.

• Research objective The main objectives of my project are following

Identify competitors of Sudha milk and their market position

Identify the reasons that give an edge to its competitors and also ranked it on the basis of importance

Develop a competitive strategy of Sudha milk

RESEARCH METHODOLOGY

Research design

Sampling Respondents Customers who regularly purchase loose milk Customers who regularly purchase any brand of packaged milk

other than Sudha Sample Size 100 (50 are loose milk purchaser and 50 are the other brand’s

milk purchaser) Sampling Region Begusarai Sampling Method Simple random Sampling

Data collection Desk research Face to face interview Self completion questionnaire

DATA ANALYSIS AND FINDINGS For Unorganized sector

1.Less Price2.High quality3.Credit facility4.Use of chemical in Sudha

milk5.Home delivery facility6.Relationship with

milkmen7.Constant supply in festive

season

DATA ANALYSIS AND FINDINGSFor Unorganized sector

The above table of factor analysis output shows that only two factors are able to explain 82% of variance these output consider only two factors on the basis of the eigenvalue (>1) which is the absolute value of variance. It means that we have to club all the factors into two major factors.


‘Constant supply in festive season’ and ‘Relationship with milkmen’ have not correlated with any of the two major factor, so we can eliminate these two factors from further discussion.

Baruni dairy taking several measures such as pre festival dealer meeting, stock keeping before one to two months. So now, less supply of milk during the festive season is not happening. Similarly, in the case of relationship with milkmen it looks like a good factor, but almost all respondents agree that their relationship with Milkmen is professional.

‘Less Price’, ‘Credit facility’, and ‘Home delivery facility’, these three factors are interrelated to each other so we must have to club these three factors together and give it a name. So I clubbed these factors in a single group and named it “Price & Delivery”.

‘High quality’ and ‘Use of chemical in Sudha milk’ these two factors are interrelated to each other. So we must have to club these two factors together and give it a name. So I clubbed these factors in a single group and named it “Product Quality”.

DATA ANALYSIS AND FINDINGS

For Organized sector

1.Stock out of Sudha2.Advertisement3.Relationship with

retailer4.Positive Word of mouth5.Easy Availability6.High Quality7.Less Price



The above table of factor analysis output shows that only two factors are able to explain 82% of the variance. These output consider only two factors on the basis of the eigenvalue (>1) which is the absolute value of variance. It means that we have to club all the factors into two major factors.

DATA ANALYSIS AND FINDINGS For Organized sector

‘Less Price’ and ‘High Quality’ have not correlated with any of the two major factor, so we can eliminate these two factors from further discussion.

Because quality of Sudha milk is better or equal than other brands packaged milk and as much as price is concerned, then only Sudha is doing cost based pricing and all the other brands follow competitor based pricing so they follow price of market leader in organized sector that is Sudha so the price of all the brand’s of milk is almost equal.

‘Stock out of Sudha’, ‘Availability of other brands’ milk’, and ‘relationship with retailers’, these three factors are interrelated to each other so we must have to club these three factors together and 1give it a name. So I clubbed these factors in a single group and named it “Distribution”.

‘Advertisement’ and ‘Positive word of mouth’ these two factors are interrelated to each other. So we must have to club these two factors together and give it a name. So I clubbed these factors in a single group and named it “Communication”.

Division of milk market of Begusarai

Market Leader

Market Challenger

Market follower

Market nichers

COMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI

Sudha milk (Market overall: 21%), (Market organized: 80%)

Unorganized sector (Loose milk) (Market share: 77%)

Amrit, Raj, and other milk (Market overall: 2%),(Market organized: 20%)

Amul (Market overall: negligible) Present only in milk product segment

Source : Nilsen survey 2012 organized by DRMU with the help of COMFED

Strategy-1: Attack on market leader Market leader: Unorganized sector

Type of attack : Frontal attack Front of attack: Price & Delivery


RECOMMENDATION

PRICE & DELIVERY

Price There is a large difference between the price of Sudha milk and loose milk. The price of full cream milk of Sudha is 40Rs/liter and of price of loose milk is 34-35Rs/liter. But there is a justifiable reason behind this price gap that is processing charge.Since Sudha follows cost based pricing so there is only one way of reducing prices that is reducing costs. For this, they can arrange training & testing of its workforce and also installing superior quality machines within plant.If Baruni dairy can reduce the price gap between loose milk and Sudha milk from 6-7 rupees to 3-4 rupees by reducing cost, then this 3-4 rupees price gap has to be projected as quality leadership price means a special price for superior quality instead of trying to give justifications of processing charges to customers for price gap.


Credit facility Generally people pay the milkmen once in a month, but in

case of purchase of Sudha milk regularly they have to pay cash on a daily basis, it's a difficult task for salary earners due to this many people prefer to buy loose milk. So there require some efforts in this regard. I recommend

Since Dairy collect money from dealer on the daily basis so dealer also collect it from retailers on the daily basis and due to this region retailers are also collecting money from customers on daily basis but if dairy give credit to dealer then retailers will be also in the position of giving credit to customers. So Baruni dairy has to give at least 15 days of credit to its dealers.

Since giving credit facility to customers is fully depends upon retailers, so Baruni dairy has to encourage retailers to provide credit facilities to their regular customers. For this they can give monetary incentive to retailers.

PRICE & DELIVERY


Home delivery ‘Home delivery of milk’ however, not a major concern

for customers, but has a significant role in the purchase decision of milk because in today’s busy schedule, no one has much amount of free time to go to shop daily for milk.

DRMU Baruni has to give full authority to its retailers for charging home delivery fess they can print it on the milk packets.

It has to give incentive to those retailers who are active in home delivery.

In its advertisement, there must be the information that ‘home delivery facility is also available on sudha outlets’.

PRICE & DELIVERY


Strategy-1I: Defense from market leader

Market leader: Unorganized sector

Type of defense : Position defense Front of defense: Product Quality


Quality There is a notion in the mind of customers that the loose milk is

pure and packaged milk has chemicals, and adulterated. However, in reality, the condition is completely different the FAT and SNF in Sudha milk is so high than loose milk, it is hygienic and healthier than loose milk, the quality of Sudha milk is better than loose milk. So I recommended to defense on this issue.

Since the quality of Sudha milk is better than loose milk, so first needed to continue this by constant supervision of production and milk procurement process, quality check, customers complain about quality taking seriously and other means.

There is greater need of breaking the notion of customer about loose milk, so there has to be arrangement of home fat testing campaign in an extensive manner and frequently, where loose milk customers can test their milk and know the FAT, SNF and other adulteration in their milk and compare it with Sudha milk.

PRODUCT QUALITY


Use of Chemicals in Sudha milk It is again a notion in the mind of customers that

packaged milk contains harmful chemicals for longer product life, but only milk powder is mixed in the milk, that is not harmful for health even good for health.

Advertisement of Sudha milk has to be designed in a way that clarifies the customer’s doubt about the use of chemicals.

For eatable items doctors are opinion leaders so the doctor’s interview regarding this milk has to be published along with the advertisement.

Regular Plant visit of housewife and school children has to be organized so they see the production process and their review must be published in newspapers.

Awareness camps for clarifying all the quality related issue has to be organized at regular interval.

PRODUCT QUALITY


Strategy-III: Attack on market follower Market follower: Organized sector

Type of attack : Frontal attack Front of attack: Distribution & Communication


Availability

DISTRIBUTION

To encourage and give incentive to retailers to make new retailers in the different area.Easing and expediting the process of granting retailer ship.Launching e- retailer ship granting facility.To focus more on general retail outlet rather than exclusive Sudha Shop because general retail outlet has the tendency of cross selling and also less expensive and more profitable.


STOCK OUT OF SUDHA The main causes of stock out are

More demand and less supply Fluctuation of demand Lack of cooling facility

My recommendations for reducing stock out situations are

Increasing supply in the market by increasing production. If curdling or spoilage of milk happens, due to extra stock

demanded but not got sold, then Dairy has to give good compensation to retailers so they are not de-motivated to demand extra stock.

Many of retailers do not demands extra stock because they have Refrigerators provided by Dairy but due to less power supply, refrigerators are not capable of preventing milk from curdling. So Baruni dairy has to provide at least one ice container box to each retailer.

DISTRIBUTIONCOMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI

Relationship with retailers The customer base of Amrit, Raj and other milk

is very small so they can personally care of customers but in opposite customer base of Sudha is huge. So I recommend following measures.

Distribution of Carry Bags, T-Shirts, Caps, Gifts, (Calendar, Pen, Dairy), Key-Ring etc. at the regular interval.

COMFED has to issue a Toll free number for registering complaints about bad behavior of any retailer and also must have to take action on that complaint.

DISTRIBUTIONCOMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI

Advertising (Mass communication) Since our competitors are not withstanding with us on

the front of price and quality so they try to lure customers by advertisement. So we also have to serious on this issue. I recommend following measures.

Generally COMFED is focused on Newspaper, billboards, hording and banner medium of advertisement so first it has to continue these efforts more extensively.

It has to focus on female magazine because generally, in family ladies are the purchase decision maker of milk.

It has to choose popular family TV channels for advertisement.

Its aids has to be informational in the terms of quality and clarify customers doubt such as use of chemical and other quality related issues in its advertisement.

COMMUNICATIONCOMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI

Word of mouth (Personal communication) Since the customer base of competitors is very small, so it is easy to

hear and solve the complaint of customers but the customer base of Sudha is very large so it required some more effort in this regard. So I recommend following measures.

Baruni diary has to encourage and aware customers by various media such as newspapers, billboards and hoardings to register their complaint with any of the following means

Customer satisfaction survey form conducted by academic trainees During Field visits by supervisors To Retailers Toll- Free phone number of COMFED

Customers are informed that they can complain any of the issues regarding

Quality Supply Retailer behavior

COMMUNICATIONCOMPETITIVE STRATEGY OF SUDHA MILK FOR DRMU, BARUNI

LIMITATION

I suggest competitive strategy for Deshratna Rajendra Prasad Milk Union (DRMU), Baruni that has 7 districts of operation, but my survey has conducted in only one of its, Begusarai District. So my project is based on the assumption that my sample collected from Begusarai is representative of all the seven districts.

Since our population is very large, so I want to collect a huge number of samples, but due to very limited time of two months I can collect only 100 samples.

Marketing officials in my organization are very busy in their work so I can meet them only once or twice in a week.

Since my project required support of officials and retailers of competitors’ of Sudha but they are skeptical of my survey and research because they felt that this survey is designed to know our loop whole so Sudha can increase their sales. So they are not willing to support me.

to develop a competitive strategy of sudha milk for drmu,baruni (comfed)

Education

competitors of sudha

cow milk cow milk

tons of milk

liquid milk

milk milk type fat snf

sudha healthy toned

largest milk union

loose milk customers