01-08-2012, 03:04 PM
Market Analysis & Sales Development of Amul Milk
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INTRODUCTION
2.1 CONTEXT OF THE TOPIC:
The dairy industries companies run mainly on the factors such as availability, service
frequency, affordability, taste and marketing. Availability is plays a vital role because purchasing
power is depend upon availability of that product, in case distributors and retailers service matter a
lot. Retailing includes all the activity in selling goods or service directly to the customers or personal
nonbusiness use .A retailer or retail store is any business enterprises whose sales volume comes
primarily from retailing.
Retailers are the part of milk marketing channels and perform the work of moving goods
from producers to the customers. It overcomes the time, place and possession gap that separates
goods and service from those who needs or wants them. Retailers as member of marketing channel
perform a number of key functions. Some functions (physical, title, promotion) constitute a forward
flow of activity from the company to the customers; other functions (ordering and payment)
constitute a backward flow from customers to the company. Still others (information, negotiation,
finance and risk taking) in both directions.
The project delves into the workings from the distribution aspect of an FMCG organization,
in detail. AMUL, being an FMCG company, attaches a lot of significance to the distribution aspect
of its business. The distribution channel of AMUL holds a lot of potential in affecting the demand or
sales of AMUL products through delivery on time, delivery of variety of products, the retailerfriendliness
of the policies being set by the distributors and equitable distribution of products to all
the retail outlets in a particular region, to name a few.
So, In order to plan retail coverage we map out the positions of Amul outlets, Amul parlors,
and competitor’s outlets. This project was carried out in Pune city. For analyzing and presenting
information that is tied to geographical location, we divided the city in different wards. By analyzing
geographical representation and sales data with spatial distribution Amul outlets, competitor’s
outlets and the density of others in an area, we identify unexplored area and plan location outlets to
increase its market penetration. Using such research we can ascertain the quality and depth of retail
penetration in specific area.
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Addition to this we carried out sales promotion activity through discount coupons. Sales
promotion consists of diverse collection of incentive tools, most short-term designed to stimulate
and/or greater purchase of a particular product by consumers or the trade. Whereas advertise offers a
reason to buy, sales promotion offers incentive to buy. Sales promotion includes tools for consumer
promotion (for example samples, coupons, prizes, cash refund, warranties, demonstrations, contest);
trade promotion (for example buying allowance, free goods, merchandise allowances, co-operative
advertising, advertising and display allowances, dealer sales contests); sales force promotion (for
example bonuses, contests, sales rallies).
Sales promotion efforts are directed at final consumers and designed to motivate, persuade
and remind them of the goods and receives that are offered.
2.2 Promotion Tool Used:
The consumer promotion tools mean the promotion activities, which are beneficial for
consumers as well as company. Such as price discounts, samples, cash refund, premiums, prizes,
cross promotion and coupons etc. We decided to use discount coupons. We distributed it among
customers and validity kept seven days from issued.
• The consumers are seduced to buy the product.
• It helped to increase sales volume.
• Consumer can get good quality of good in cheaper price.
• It can attract the new consumers and customers buying other milk brands.
• Attract brand switchers, who are primarily looking for low price, good value or
premiums.
• Turn switcher to loyal users,
• It induced to make some subsequent purchases.
• Give little permanent gain in market share.
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2.3 Need of Study:
Managers are always curious about the position of their company’s products in the market
which largely depend upon the company’s goodwill, and the position of their brand. In order to
maximize the sale and profit, company must deliver outstanding satisfaction to the retailers,
wholesaler & customers. So market survey of retailers, wholesalers & customers, chart out the
position of the company as compared to the competitors. It helps the organization to find out the
brand being sold most by the retailers along with their stocking and also consumer buying
preferences.
2.4 Statement of The Problem:
“MARKET ANALYSIS & SALES DEVELOPMENT OF AMUL MILK IN PUNE CITY”
It helps to study all activities which can be used to influence large number of customers so as
to increase the sales of the Amul milk effectively”.
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INDUSTRY & COMPANY PROFILE
3.1 Industry Profile:-
3.1.1 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 at
36 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, 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 early
2007-08. The total volume of the world trade in cheese has accelerated and this trend is likely to
continue in the year 2008.
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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.
3.1.2 Indian Dairy Industry -- 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 around
33% 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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3.1.3 Co – Operative Unions:
Backward integration of the process led the cooperatives to advances in animal husbandry
and veterinary practice. 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.
Recently the Indian cooperative movement got a much needed facelift. With competition
snapping at its heels, the sector which has been governed by arcane laws until the recent past will see
a special provision inserted in the companies Act, 1956. All the cooperative unions will be rechristened
cooperative companies; they will come under the purview of the registrar of companies,
instead of the registrar of cooperatives.
Dairy cooperatives account for the major share of processed liquid milk marketed in the
country. Milk is processed and marketed by 170 milk producer’s cooperative unions, which federate
into 15 state co-operative milk marketing federations.
The dairy board's programmes and activities seek to strengthen the functioning of dairy cooperatives,
as producer-owned and controlled organizations. NDDB supports the development of
dairy co-operatives by providing them financial assistance and technical expertise, ensuring a
better future for India's farmers.
Over the years, brands created by cooperatives have become synonymous with quality and
value. Brands like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini
(Karnataka), Milma (Kerala) and Gokul (Kolhapur) are among those that have earned customer
confidence.
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-:Some of the major dairy cooperative federations include:-
• Andhra Pradesh Dairy Development Co-operative Federation Ltd (APDDCF)
• Bihar State Co-operative Milk Producers Federation Ltd (COMPFED)
• Gujarat co-operative Milk Marketing Federation Ltd (GCMMF)
• Haryana Dairy Development Cooperative Federation Ltd. (HDDCF)
• Himachal Pradesh State Cooperative Milk Producers Federation Ltd (HPSCMPF)
• Karnataka Cooperative Milk Producers Federation Ltd (KMF)
• Kerala State Cooperative Milk Marketing Federation Ltd (KCMMF)
• Madhya Pradesh State Cooperative Dairy Federation Ltd (MPCDF)
• Maharashtra Rajya Sahkari Maryadit Dugdh Mahasangh (Mahasangh)
• Orissa State Cooperative Milk Producers Federation Ltd (OMFED)
• Pradeshik Cooperative Dairy Federation Ltd (UP) (PCDF)
• Punjab State Cooperative Milk Producers Federation Ltd (MILKFED)
• Rajasthan Cooperative Dairy Federation Ltd (RCDF)
• Tamilnadu Cooperative Milk Producers Federation Ltd (TCMPF)
3.1.4 The Dairy Cooperative Network
• Includes 170 milk unions
• Operates in over 338 districts
• Covers nearly 1,08574 village level societies
• Is owned by nearly 12 million farmer members.
Apart from making India self sufficient in milk, these dairy co-operatives have established
our country as the largest milk-producing nation in the world.
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3.2 The Organization:
3.2.1 Introduction & 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 were 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.
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However, when the exploitation became intolerable, the farmers were frustrated. They
collectively appealed to Sardar Vallabhbhai Patel, who was a leading activist in the freedom
movement. Sardar Patel advised the farmers to sell the milk on their own by establishing a cooperative
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.
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.
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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 Cooperative 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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At the initial stage only 250 liters of milk was collected every day. But with the growing
awareness of the benefits of the cooperativeness, the collection of milk increased. Today Amul
collect 11 lakhs liters of milk every day. Since milk was a perishable commodity it becomes difficult
to preserve milk for a 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 centers 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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3.2.2 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.
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.
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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.