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EXECUTIVE SUMMARY
In this research the researcher has put an effort to understand the product promotion
policy of Amul and buying behavior of the consumers towards AMUL products.
“Product promotion includes interest-creating activities which are generally short-term
marketing events other than advertising, personal selling, publicity and direct marketing.
The purpose of Product promotion is to stimulate, motivate and influence the purchase
and other desired behavioural responses of the firm’s customers.”
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.
1
PRODUCT PROMOTION
DEFINITION: Product promotion refers to many kinds of incentives and techniques
directed towards consumers and traders with the intention to produce immediate or short-
term sales effects.
“Product promotion includes incentive-offering and interest-creating activities which are
generally short-term marketing events other than advertising, personal selling, publicity
and direct marketing. The purpose of Product promotion is to stimulate, motivate and
influence the purchase and other desired behavioural responses of the firm’s customers.”
Product promotion offers a direct inducement to act by providing extra worth over and
above what is built into the product at its normal price. These temporary inducements are
offered usually at a time and place where the buying decision is made. Not only are
Product promotions very common in the current competitive market conditions, they are
increasing at a fast pace.
These promotions are direct inducements. In spite of the directness, Product promotions
are fairly complicated and a rich tool of marketing with innumerable creative possibilities
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limited only by the imagination of promotion planners. Product promotion is often
referred to by the names of ‘extra purchase value’ and ‘below-the-line selling’.
Today we find companies in almost all sectors offering some sort of a promotion scheme.
These sectors range from automobiles to beverages, from financial services to foods,
from household durables to services, from household products to business products, from
personal care to textiles and apparel.
CHARACTERISTICS OF PRODUCT PROMOTION
Writing about Product promotion tools, Prof. Philip Kotler observes – “they have 3
distinctive characteristics.”
Communication: They gain attention and usually provide information that may
lead the customer to the product.
Incentive: They incorporate some concession, inducement, or contribution that
gives value to the consumer.
Invitation: They include a distinct invitation to engage in the transaction now
(offer valid till …or till stocks last)
3
REASONS FOR GROWTH OF PRODUCT PROMOTION
There are a number of reasons that are favorable to the growth of Product promotion:
Increasing Competition
Customers Have Become More Price Sensitive
Product promotions Generally Create an Immediate Positive Impact On Sales
Products have become more standardized
Consumer Acceptance
Advertising Has Become More Expensive and Less Effective
Trade Has Become More Powerful
Emphasis on Sales Volumes
Product promotions Maximize Profits
Introducing an Element of Interest:
Impulse Buying Is Increasing
Product promotion Specialists Are Available
Excess Stocks
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ADVANTAGES OF PRODUCT PROMOTION
Product promotions have a significant effect on the behavior of consumers and trades
people. Such promotions can bring in more profits for the manufacturers because they
permit price discrimination.
1. Price discrimination
2. Effect on consumer behavior
3. Effect on trade behavior
4. Regional Differences
DISADVANTAGES OF PRODUCT PROMOTION
While Product promotion is a powerful and effective method to produce immediate short
term positive results, it is not a cure for a bad product or bad advertising. In fact, a
promotion is speed up the killing of a bad product.
1. Increased price sensitivity
2. Quality image may become tarnished
3. Merchandising support from dealers is doubtful
4. Short-term orientation
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OBJECTIVES OF PRODUCT PROMOTION
Product promotion is a tool used to achieve most of the five major promotional objectives
discussed in the Promotion Decisions tutorial:
Building Product Awareness – Several Product promotion techniques are highly
effective in exposing customers to products for the first time and can serve as key
promotional components in the early stages of new product introduction.
Additionally, as part of the effort to build product awareness, several Product
promotion techniques possess the added advantage of capturing customer
information at the time of exposure to the promotion. In this way Product
promotion can act as an effective customer information gathering tool (i.e., sales
lead generation), which can then be used as part of follow-up marketing efforts.
Creating Interest – Marketers find that Product promotions are very effective in
creating interest in a product. In fact, creating interest is often considered the most
important use of Product promotion. In the retail industry an appealing Product
promotions can significantly increase customer traffic to retail outlets. Internet
marketers can use similar approaches to bolster the number of website visitors.
Another important way to create interest is to move customers to experience a
product. Several Product promotion techniques offer the opportunity for
customers to try products for free or at low cost.
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Providing Information – Generally Product promotion techniques are designed
to move customers to some action and are rarely simply informational in nature.
However, some Product promotions do offer customers access to product
information. For instance, a promotion may allow customers to try a fee-based
online service for free for several days. This free access may include receiving
product information via email.
Stimulating Demand – Next to building initial product awareness, the most
important use of Product promotion is to build demand by convincing customers
to make a purchase. Special promotions, especially those that lower the cost of
ownership to the customer (e.g., price reduction), can be employed to stimulate
sales.
Reinforcing the Brand – Once customers have made a purchase Product
promotion can be used to both encourage additional purchasing and also as a
reward for purchase loyalty (see loyalty programs below). Many companies,
including airlines and retail stores, reward good or “preferred” customers with
special promotions, such as email “special deals” and surprise price reductions at
the cash register.
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PULL STRATEGY FOR PRODUCT PROMOTION
In case of using a pull strategy, marketing efforts are directed at the ultimate consumer
and consumer promotions such as consumer contests and sweepstakes, rebates, coupons,
free samples, consumer premiums, etc are used. If this strategy is also chosen to include
advertising, then, there are large advertising expenditures.
The objective of such promotional efforts would be to create sufficient consumer demand
to pull the product through the channels that is the consumers are encouraged to demand
the product from retailers who in torn place orders with wholesaler or manufacturer to
meet the consumer demand.
This strategy may require little promotional efforts from the resellers except to stock
input the product on shelves.
A PULL STRATEGY IS APPROPRIATE WHEN
The product demand as high.
It is possible to differentiate the product on the basis of real or emotional features.
Brand consumers show high degree of involvement in the product purchase,
There is reasonably high brand loyalty and
Consumers make brand choice decision before they go to the store.
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PUSH STRATEGY FOR PRODUCT PROMOTION
If a firm decides to use push strategy, its efforts are directed at resellers and the
manufacturer becomes very dependent on their personal selling abilities and efforts.
The promotional efforts are focused at pushing the product through the distribution
channels; the resellers may be required to display, demonstrate and offer discounts, to sell
the product. The communication to resellers is generally through trade circulars or the
sales force.
PUSH STRATEGIES GENERALLY APPROPRIATE FOR
Product categories where there is low brand loyalty
Where many acceptable substitutes are available in the market.
Relatively new products are to be launched
When the brand choice is often made in response to displays in the stores,
The product purchase is unplanned or on impulse and
The consumer is familiar and has reasonably adequate knowledge about the
product.
Manufacturers, who cannot afford to engage in sustained mass advertising, often
use push strategy and offer effective incentives to dealers.
Retailer promotion: Buy Cadbury’s products worth Rs.3000/- and get any 30
chocolates worth Rs.5 each free.
Through this offer the company is pushing its product to the retailers and now that
the retailer has enough incentive the retailer stocks more and thus it becomes
essential for the retailer to push the product to the consumers.
9
AMUL COMPANY OVERVIEW
AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit
"Amoolya," was suggested by a quality control expert in Anand. Variants, all meaning
"priceless", are found in several Indian languages. Amul products have been in use in
millions of homes since 1946. 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. (Turnover: Rs. 80.05
billion in 2009-10). Today Amul is a symbol of many things. Of 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
Of a proven model for dairy development.
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The Gujarat Cooperative milk Marketing Federation Ltd, Anand (GCMMF) is the largest
food products marketing organization 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 3.1 million village milk producers with
millions of consumers in India These cooperatives collect on an average 9.4 million liters
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 2010-11 was Rs. 97.74 billion. It markets the
products, produced by the district milk unions in 30 dairy plants,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.. 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.
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.
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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 have made in building the Nation.
THE EXTRAORDINARY STORY OF AMUL
Every day Amul collects 447,000 litres of milk from 2.12 million farmers (many
illiterate), converts the milk into branded, packaged products, and delivers goods worth
Rs 6 crore (Rs 60 million) to over 500,000 retail outlets across the country.
Its supply chain is easily one of the most complicated in the world. How do managers at
Amul prevent the milk from souring?
Walk in to any Amul or Gujarat Cooperative Milk Marketing Federation (GCMMF)
office, and you may or may not see a photograph of Mahatma Gandhi, but you will
certainly see one particular photograph. It shows a long line of Gujarati women waiting
patiently for a union truck to come and collect the milk they have brought in shining
brass matkas.
The picture is always prominently displayed. The message is clear: never forget your
primary customer. If you don't, success is certain. The proof? A unique, Rs 2,200 crore
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ORGANISATION STRUCTURE
It all started in December 1946 with a group of farmers keen to free themselves from
intermediaries, gain access to markets and thereby ensure maximum returns for their
efforts.
Based in the village of Anand, the Kaira District Milk Cooperative Union (better known
as Amul) expanded exponentially. It joined hands with other milk cooperatives, and the
Gujarat network now covers 2.12 million farmers, 10,411 village level milk collection
centers and fourteen district level plants (unions) under the overall supervision of
GCMMF.
There are similar federations in other states. Right from the beginning, there was
recognition that this initiative would directly benefit and transform small farmers and
contribute to the development of society.
Markets, then and even today, are primitive and poor in infrastructure. Amul and
GCMMF acknowledged that development and growth could not be left to market forces
and that proactive intervention was required. Two key requirements were identified.
The first, that sustained growth for the long term would depend on matching supply and
demand. It would need heavy investment in the simultaneous development of suppliers
and consumers.
Second, that effective management of the network and commercial viability would
require professional managers and technocrats.
To implement their vision while retaining their focus on farmers, a hierarchical network
of cooperatives was developed, which today forms the robust supply chain behind
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GCMMF's endeavors. The vast and complex supply chain stretches from small suppliers
to large fragmented markets.
Management of this network is made more complex by the fact that GCMMF is directly
responsible only for a small part of the chain, with a number of third party players
(distributors, retailers and logistics support providers) playing large roles.
Managing this supply chain efficiently is critical as GCMMF's competitive position is
driven by low consumer prices supported by a low cost system.
DEVELOPING DEMAND
At the time Amul was formed, consumers had limited purchasing power, and modest
consumption levels of milk and other dairy products. Thus Amul adopted a low-cost price
strategy to make its products affordable and attractive to consumers by guaranteeing them
value for money.
INTRODUCING HIGHER VALUE PRODUCTS
Beginning with liquid milk, GCMMF enhanced the product mix through the progressive
addition of higher value products while maintaining the desired growth in existing
products.
Despite competition in the high value dairy product segments from firms such as
Hindustan Lever, Nestle and Britannia, GCMMF ensures that the product mix and the
sequence in which Amul introduces its products is consistent with the core philosophy of
providing milk at a basic, affordable price.
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THE DISTRIBUTION NETWORK
Amul products are available in over 500,000 retail outlets across India through its
network of over 3,500 distributors. There are 47 depots with dry and cold warehouses to
buffer inventory of the entire range of products.
GCMMF transacts on an advance demand draft basis from its wholesale dealers instead
of the cheque system adopted by other major FMCG companies. This practice is
consistent with GCMMF's philosophy of maintaining cash transactions throughout the
supply chain and it also minimizes dumping.
Wholesale dealers carry inventory that is just adequate to take care of the transit time
from the branch warehouse to their premises. This just-in-time inventory strategy
improves dealers' return on investment (ROI). All GCMMF branches engage in route
scheduling and have dedicated vehicle operations.
UMBRELLA BRAND
The network follows an umbrella branding strategy. Amul is the common brand for most
product categories produced by various unions: liquid milk, milk powders, butter, ghee,
cheese, cocoa products, sweets, ice-cream and condensed milk.
Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya and
Nutramul. The edible oil products are grouped around Dhara and Lokdhara, mineral
water is sold under the Jal Dhara brand while fruit drinks bear the Safal name.
By insisting on an umbrella brand, GCMMF not only skillfully avoided inter-union
conflicts but also created an opportunity for the union members to cooperate in
developing products.
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MANAGING THE SUPPLY CHAIN
Even though the cooperative was formed to bring together farmers, it was recognised that
professional managers and technocrats would be required to manage the network
effectively and make it commercially viable.
COORDINATION
Given the large number of organisations and entities in the supply chain and
decentralised responsibility for various activities, effective coordination is critical for
efficiency and cost control. GCMMF and the unions play a major role in this process and
jointly achieve the desired degree of control.
Buy-in from the unions is assured as the plans are approved by GCMMF's board. The
board is drawn from the heads of all the unions, and the boards of the unions comprise of
farmers elected through village societies, thereby creating a situation of interlocking
control.
The federation handles the distribution of end products and coordination with retailers
and the dealers. The unions coordinate the supply side activities.
These include monitoring milk collection contractors, the supply of animal feed and other
supplies, provision of veterinary services, and educational activities.
MANAGING THIRD PARTY SERVICE PROVIDERS
From the beginning, it was recognised that the unions' core activity lay in milk processing
and the production of dairy products. Accordingly, marketing efforts (including brand
development) were assumed by GCMMF. All other activities were entrusted to third
parties. These include logistics of milk collection, distribution of dairy products, sale of
16
products through dealers and retail stores, provision of animal feed, and veterinary
services.
It is worth noting that a number of these third parties are not in the organized sector, and
many are not professionally managed with little regard for quality and service.
This is a particularly critical issue in the logistics and transport of a perishable
commodity where there are already weaknesses in the basic infrastructure.
ESTABLISHING BEST PRACTICES
A key source of competitive advantage has been the enterprise's ability to continuously
implement best practices across all elements of the network: the federation, the unions,
the village societies and the distribution channel.
In developing these practices, the federation and the unions have adapted successful
models from around the world. It could be the implementation of small group activities or
quality circles at the federation. Or a TQM program at the unions. Or housekeeping and
good accounting practices at the village society level.
More important, the network has been able to regularly roll out improvement programs
across to a large number of members and the implementation rate is consistently high.
For example, every Friday, without fail, between 10.00 a.m. and 11.00 a.m., all
employees of GCMMF meet at the closest office, be it a department or a branch or a
depot to discuss their various quality concerns.
Each meeting has its pre-set format in terms of Purpose, Agenda and Limit (PAL) with a
process check at the end to record how the meeting was conducted. Similar processes are
in place at the village societies, the unions and even at the wholesaler and C&F agent
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levels as well.
Examples of benefits from recent initiatives include reduction in transportation time from
the depots to the wholesale dealers, improvement in ROI of wholesale dealers,
implementation of Zero Stock Out through improved availability of products at depots
and also the implementation of Just-in-Time in finance to reduce the float.
Kaizens at the unions have helped improve the quality of milk in terms of acidity and
sour milk. (Undertaken by multi-disciplined teams, Kaizens are highly focussed projects,
reliant on a structured approach based on data gathering and analysis.) For example,
Sabar Union's records show a reduction from 2.0% to 0.5% in the amount of sour
milk/curd received at the union.
The most impressive aspect of this large-scale roll out is that improvement processes are
turning the village societies into individual improvement centers.
TECHNOLOGY AND E-INITIATIVES
GCMMF's technology strategy is characterized by four distinct components: new
products, process technology, and complementary assets to enhance milk production and
e-commerce.
Few dairies of the world have the wide variety of products produced by the GCMMF
network. Village societies are encouraged through subsidies to install chilling units.
Automation in processing and packaging areas is common, as is HACCP certification.
Amul actively pursues developments in embryo transfer and cattle breeding in order to
improve cattle quality and increases in milk yields.
GCMMF was one of the first FMCG (fast-moving consumer goods) firms in India to
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employ Internet technologies to implement B2C commerce.
Today customers can order a variety of products through the Internet and be assured of
timely delivery with cash payment upon receipt.
Another e-initiative underway is to provide farmers access to information relating to
markets, technology and best practices in the dairy industry through net enabled kiosks in
the villages.
GCMMF has also implemented a Geographical Information System (GIS) at both ends of
the supply chain, i.e. milk collection as well as the marketing process.
Farmers now have better access to information on the output as well as support services
while providing a better planning tool to marketing personnel.
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ACHIEVEMENTS OF THE "AMUL MOVEMENT"
2. 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.
3. 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.
ACHIEVEMENTS OF GCMMF
1. 3.1 million milk producer member families
2. 15,760 village societies
3. 15 District Unions
4. 9.4 million liters of milk procured per day
5. Rs. 150 million disbursed in cash daily
6. GCMMF is the largest cooperative business of small producers with an annual
turnover of Rs. 53 billion
7. The Govt. of India has honored Amul with the “Best of all categories Rajiv
Gandhi National Quality Award”.
8. Largest milk handling capacity in Asia
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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 5,000 wholesale dealers and
more than 7,00,000 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 neighbors, 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.
In 2011, Amul was named the Most Trusted brand in the Food and Beverages sector in
The Brand Trust Report, published by Trust Research Advisory.
LARGEST COLD CHAIN NETWORK
9. 48 Sales offices, 5000 Wholesale Distributors, 7 lakh retail outlets
10. Export to 37 countries worth Rs. 150 crores
11. Winner of APEDA award for nine consecutive years
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AMUL 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 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.
22
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.
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
23
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 consumer. 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.
Managing Third Party Service Providers: Well before the ideas of core competence and
the role of third parties in managing the supply chain were recognized and became
24
fashionable, these concepts were practiced by GCMMF and AMUL. From the beginning,
it was recognized that the core activity for the Unions lay in processing of milk and
production of dairy products. Accordingly, the Unions focused efforts on these activities
and related technology development. Marketing efforts (including brand development)
were assumed by GCMMF. All other activities were entrusted to third party service
providers. 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
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.
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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.
AMUL 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.
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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 is 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”).
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.
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AMUL MARKETING MIX
One of the most conservative FMCG entities, GCMMF spends a mere 1% of its turnover
on promotions. GCMMF has written and re-written rules of the game. Amul butter girl is
one of the longest running ad campaigns in the country for 41 years. Intelligent marketing
of milk, ice-cream and butter milk. Intelligent Marketing
Expansion to foreign shores GCMMF had signed an agreement with Wal-Mart to
stock its shelves with products under its Amul brand name. Amul processed
cheese, pure ghee, Shrikhand, Nutramul, Amul's Mithaee Gulab Jamuns are few
of the products marketed in the US markets. 50 per cent of Americans being
medically obese, and if Amul is really looking to capture the hearts of the second-
and third-generation Indians, offering low-fat versions of its brands, would make
a lot of commercial sense. Hence targeting the large Indian community in the US
markets with its niche products like mithai, packaged ready to eat foods market it
can definitely expand its market to a large extent.
Moving consumers from loose milk to packaged milk and gradually move them
up the value chain (tetra pack to beverages) Being exposed to a brand, it is natural
for a customer to try more products Defense Strategy
Wide range of product categories caters to consumers across all market segments.
For example, Amul Kool is targeted at children, while teenagers prefer Kool Café,
as it has a cool imagery associated with it. Segmentation
Changing retail environment Striking out on its own, with Amul Outlets or
parlours to deliver consumers total brand experience Launched in 2002, there are
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now over 4700 Amul parlours across the country, which contributed 3% to the
brand’s total turnover in year 2009. Targeting
Given this wide product portfolio, Amul’s approach is to promote its brands in a
rotational cycle of two to three years. After ice-creams were launched in 1996, the
category was re-visited in 1999, in order to improve availability of the product
and make it affordable. The focus shifted to cheese in 2001, Amul Masti Chaas in
2004-05 (sales of Masti dahi grew by 25%), Nutramul and Kool Kafe in 2006 and
this year the focus is on Amul Koko — cold chocolate drink Promotion
Uses a variety of media to communicate Most famous is billboard campaign The
endearing polka dressed girl and pun at various issues increased brand’s fan
following. Promotion
Amul food festival, which has been held for the last four year between October
and December in about 50,000 retail outlets. The Chef Of India contest invites
people to come up with recipes using as many Amul products as possible. The
recipe can be submitted on Amul’s website. Slogan Likho Disneyland Dekho
Contest Promotion
Amul Maharani contest: in this contest questions about Amul are asked
Promotion
AMUL sponsored the Singing Competition AMUL Star Voice of India, Amul
music ka maha mukabla, Amul Master Chef Part I and II Promotion
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SUCCESSFUL PRODUCT STRATEGY
1. Product Positioning Strategy- Low price Amul Ice - Creams made Kwality walls life
hell. Chocolate milk was launched ‘Amul Kool koko’
2. Product Re-Positioning Strategy- Jaldhara – Narmada Neer
3. Product Overlap Strategy – Amul Processed Cheese Vs Cheese Spread Nutramul
Energy Drink Vs Amul Kool
4. Product Design Strategy – Use of Utterly – Butterly Girl since 1967
5. Product Elimination – Eliminated Jaldhara – bottled water Successful Product
Strategy
6. Diversification Strategy – Dairy Products
E.g.: Fresh Milk, Milk Drinks & Desserts, and Bread Spreads, Cheese Products Non
Dairy Products Egg: Veg. Oils, Snacks, Instant Food Successful Product Strategy:
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SWOT ANALYSIS OF AMUL (GCMMF)
STRENGTHS
1. The company is having Indian origin thus creating feeling of oneness in the mind of
the customers.
2. It manufactures only milk and milk products, which is purely vegetarian thus providing
quality confidence in the minds of the customers.
3. It is aiming at rural segment, which covers a large area of loyal customers, which other
companies had failed to do.
4. People are quite confident for the quality products provided by Amul.
5. Amul has its base in India with its butter and so can easily promote chocolates without
fearing of loses.
6. The prices of chocolates of Nestles are comparatively cheap as compared to other
companies.
WEAKNESSES
1. There are various big players in the chocolate market, which acts as major competitors
restricting their growth.
2. Lack of capital invested as compared to other companies.
3. Improper distribution channel in India.
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OPPORTUNITIES
1. There is a lot of potential for growth and development as huge population stay in rural
market where other companies are not targeting.
2. 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
1. The major threat is from other companies who hold the majority share of consumers in
Indian market i.e. Cadburys and Nestle.
2. There exists no brand loyalty in the chocolate market and consumers frequently shift
their brands.
3. New companies’ entering in Indian market like Fantasie fine poses lot problems for
Amul.
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MARKETING MIX OF AMUL PRODUCTS
PRODUCTS
DAIRY PRODUCTS
COOKING PRODUCTS
PLACE
RURAL AND URBAN MARKET
INTERNATIONAL MARKET
PRICE
LOW PRICING STRATEGY
PROMOTION
ADVERTISEMENT
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OBJECTIVES OF STUDY
To know the relationship of sales with the advertisement.
To know awareness of people towards Amul Products.
To know in which segment are mostly like/preferred.
To know which advertisement tool is mostly preferred by people.
To know the preference of Amul Products with comparison to other
competitive brands.
To know the factors which affects consumer’s buying behavior to purchase
Amul products.
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BCG MATRIX OF AMUL PRODUCTS
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STPD ANALYSIS
SEGMENTATION
Wide range of product categories caters to consumers across all market segments.
TARGETING
Changing Retail Environment
Striking out on its own, with Amul parlors and outlets to deliver the customer a
total brand experience.
Launched in 2002, there are now 4700 Amul parlors across the country.
PROMOTION
Uses A variety of media to communicate
Most famous Billboard Campaign
The endearing polka dotted girl and pun at various issues increased brands
fan
COMPETITORS
Britannia
HLL
Mother Dairy
Nestle
Cadbury
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PRODUCT MIX – COMPETITORS
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AMUL PRODUCT PROMOTION STRATEGY
Product Positioning Strategy
Low price Amul ice-cream made Kwality Walls Life Hell
Chocolate Milk Was launched – “Amul Kool Koko”
Product Re-Positioning Strategy
Jaldhara – Narmada Neer
Product Overlap Strategy
Amul Processed Cheese Vs Cheese Spread
Nutramul Energy Drink Vs Amul Kool.
Product Design Strategy
Use of Utterly – Butterly since 1967
Product Elimination
Eliminated Jaldhara – Bottled Water
Diversification Strategy
Dairy Products
Fresh Milk, Bread Spread, Cheese Products
Non Dairy Products
Snacks, Instant Food
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AMUL PRESENTS MASTERCHEF INDIA ON STAR
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MUMBAI: When experts come together, one ought to be prepared for surprises. Star
Plus’, Amul Presents MasterChef India, a show that takes viewers on a unique
culinary tour, achieves a special milestone as it gives the Country, its biggest ever
chocolate éclair. Passionately prepared by 25 chefs over 72 hours, this gastronomic
milestone is all set to create new records. It stands 26 feet tall at the Atrium,
Ambience Mall in Gurgaon. Chef Kunal Kapoor and Chef Ajay Chopra - the judges
of the show – have led this outstanding project.
The final 12 contestants of Star's ‘Amul presents Master Chef India’ along with the
experts from the kitchen of ‘The Leela Kempinski’ have created this record breaking
éclair on which work began about three days ago with different layers being made by
separate teams. These layers were then brought together and assembled with security
harnesses. Huge rollers & gigantic paint brushes were brought in, to give finishing
touches to this chocolate wonder of the world.
AMUL PRESENTS STAR VOICE OF INDIA ON STAR
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Star Voice of India was an Indian Television singing competition that premiered on 18
May 2007 and ended on 24 November 2007. It was the first Indian singing competition
produced by STAR Plus. The show was directed by Gajendra Singh, creator of the
famous Sa Re Ga Ma Pa series. It also featured judges that were on the Sa Re Ga Ma Pa
series, Aadesh Shrivastava, Abhijeet Bhattacharya, Alka Yagnik, Lalit Pandit and Jatin
Pandit. Shaan, who had previously been hosting Sa Re Ga Ma Pa. The winner of the
show was Ishmeet Singh Sodhi.
AMUL PRESENTS STAR VOICE OF INDIA ON STAR
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Amul Star Voice Of India Chote Ustad Season 2 is hosted by Chinmayi and Omi Vaidya.
The judges are Rahat Fateh Ali Khan and Sonu Nigam. There are 20 contestants, 10 from
Pakistan and 10 from India.
AMUL PRESENTS AMUL VOICE OF INDIA MUMMY KE SUPERSTARS ON STAR
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Amul Voice of India – Mummy Ke Superstars is an Indian television talent show for
child singers on the Star Plus channel. A feature of the show is that all of the contestants
are accompanied by their mothers.[1] The show is hosted by Akriti Kakkar and Ali
Asgar, with Shubha Mudgal, Vishal Dadlani and Shekhar Ravjiani as judges.
AMUL PRESENTS FOOD FOOD MAHA CHALLENGE
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Master Chef Sanjeev Kapoor and Bollywood diva Madhuri Dixit Nene get ready to cheer
along with their teams for India’s biggest culinary reality show, Amul Food Food
Mahachallenge. The duo revealed the program details of the show along with a sneak
preview of their team mates at a press conference held in Mumbai yesterday.
The age old “battle of the sexes” has a platform to perform. Amul FOODFOOD
MahaChallenge is a show that presents a kitchen as the battleground for the sexes to
compete against each other based on their culinary skills. 16 contestants, 8 men and 8
women, have been selected from across India based on their recipes submitted during the
preliminary phase of the contest.
Cooking, grilling, baking, stirring, chopping, blending are all that these contestants will
be doing over 13 grueling weeks. Each episode will assess the contestant’s time
management, culinary skill, creativity, presentation and innovation in the kitchen.
AMUL PRESENTS MUSIC KA MAHA MUQABALA
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Music Ka Maha Muqqabla was a reality show on STAR Plus, which first aired on
December 19, 2009.[1] It aimed to bring a new format to music reality shows in India,
which is based on teams rather than individuals. The show lasted for a total of 13 weeks.
Six teams, led by their own superstar captains, battled it out in this weekly music
competition. The singing superstars included Mika Singh, Himesh Reshammiya, Mohit
Chauhan, Shreya Ghoshal, Shaan and Shankar Mahadevan.
Each team consisted of three well-known singers and one new singer.
The show was hosted by Ayushmann Khurrana. Each week two captains competed for
the highest score in order to win.
The captains that did not compete judged the performances of the singers. There were a
total of five rounds in each competition. The audience and the judges gave the score. The
show took place in a large outdoor stadium in Mumbai.
AMUL SPONSORS SAUBER F1 TEAM IN INDIA
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India's largest food brand Amul is the official partner of Sauber F1 team at the inaugural
Indian Grand Prix. Monisha Kaltenborn, Chief Executive of the Sauber F1 Team, said:
“We are proud that we can announce this partnership with Amul, one of India's leading
brands. Amul products are present in practically every household. Having spent my
childhood in Dehradun, India, I have fond memories of Amul, especially the Amul
butter."
R S Sodhi, Managing Director, Gujarat Cooperative Milk Marketing Federation Ltd.,
welcomed Sauber F1 Team to the first ever F1 Grand Prix in India.
He added that Amul's vision for success through teamwork, technology, speed and
innovation matches the core values of Formula 1. For instance, technology has been the
driving force for over 6 decades at Amul, be it for breed improvement, IT integration at
village level for procurement, processing of milk and for development of several products
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for the first time in the world like milk powder from buffalo milk in 1960's to pro-biotic
and sugar free ice creams in recent times.
Talking about the Amul's sponsorship of a F1 Team, Mr Sodhi said that milk is the
healthiest natural beverage known to mankind since time immemorial. We could not have
lost this opportunity to showcase this to the world at first ever F1 race in India, the largest
producer of milk in the world.
The association with Sauber F1 Team will enhance the Asia's largest milk brand -Amul's
global brand presence. Currently, there is no food brand associated with any F1 team with
on-car presence.
Amul logo will appear prominently on the two Sauber F1 Team race cars the rear wing
front face and the drivers' helmets. Several product integrations too are being planned.
Gujarat Co-operative Milk Marketing Federation is India's largest food products
marketing organization. It procures 4 billion litres of milk annually from 3 million milk
producers in more than 15000 villages, twice a day, and processes and markets its
product range comprising Amul butter, cheese, ice cream, fresh milk, yoghurt, milk
powders, UHT milk, flavoured milk, ghee, paneer etc in 3000 cities and towns of India
and 40 countries around the world. Its annual sales turnover in 2010-11 was US$ 2.2
billion.
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AMUL EDUCATION
Amul Vidyashree & Amul Vidya Bhushan Awards
The foundation of every state is the sound education of its youth and hence is the most
basic constituent for a developing nation like India. Towards this, we at Amul have
always contributed our best towards ensuring development and encouraging the spirit of
enlightenment among today’s youth.
As a continuation towards this endeavour, Amul has instituted Vidyashree Award to
recognize the academic excellence of the class 10 school topper in the examination in
each State/Central Board enrolled school every year.
The objective of the awards is to recognize the efforts of the academic merit toppers and
build equity for Amul among the young India. We are proud to constitute this award
which is the first of its kind in India and operate Pan-India in such a large scale.
By winning this award, not only the student gets recognized, but it also help the schools
to enhance their image as an academy that imparts quality education, putting it at par with
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other premier institutions in India. Both “Amul Vidyashree” & “Amul Vidyabhushan”
Awards consists of:
· A specially designed Trophy,
· A Certificate of excellence signed by MD, GCMMF and
· A Cash Award of Rs.1000/-
· Listed along with photograph on our website www.amul.com
· Feature in press advertisement in a leading national newspaper
The inception of this award took place in the year 2004-05, whereby in the first year we
honoured the award to students of 500 schools in South India, East India and Gujarat. In
the second year (2005-06) we further acknowledged 2267 students across schools in
India. For the academic year 2006-07, we have till date recognized the academic
excellence of around 3077 for Vidyashree Award across India.
Moving ahead, in 2006-07 we have instituted the “Amul Vidyabhushan Award” to
recognize the toppers of 12th Standard examinations. In the first of year of inception, we
have awarded students 2073 students across India.
For the academic year 2007-08, we plan to recognize the efforts of 10,000 Class X &
Class XII merit rankers (5000 students each for Vidyashree and Vidyabhushan Awards).
We further intend to increase the award number every year so that maximum students are
recognized for their academic excellence through our Awards.
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TREE PLANTATION
AMUL COOPS PLANT MORE THAN 311.98 LAKHS TREESMilk Producer members of Gujarat Dairy Cooperatives- better known as AMUL have
been celebrating the nation's Independence Day in a novel manner by planting lakhs of
saplings across Gujarat and have taken up an ambitious plan to save the environment by
planting trees, making India green and thereby reducing the effects of global warming.
The milk producers of Gujarat Dairy Cooperatives are conducting mass tree plantation
drive every year on Independence Day for last five years. In last five years (2007 to
2011) the milk producers have planted around 311.98 lakhs trees). The most striking
feature of these entire programmes was that it has been initiated by milk producer
members of the dairy cooperatives. The unique fact about the programme was that the
milk producer members took up the oath to protect tree saplings till it survives and grows
into tree.
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AMUL CONTESTS
1. AMUL MAHARANI CONTEST
2. AMUL MASTER CHEF OF THE YEAR
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AMUL RANKED NO. 1 "INDIAN" BRAND FOR THIRD CONSECUTIVE YEAR IN ASIA
The "Campaign" magazine published from Hong Kong and Singapore has ranked Amul
as the No. 1 "Indian" brand in its list of Top 1000 Brands of Asia for the third
consecutive year. Amul is also ranked as No.1 dairy brand, ahead of leading food and
dairy brands of the Asia region like Dutch Lady, Dumex, Magnolia etc.
It has overall ranked Amul as the 89th Best Brand in its ranking of Top 1000 brands of
Asia based on a consumer survey conducted in Australia, China, India, Japan, Korea,
Hong Kong, Malaysia, Singapore, Taiwan and Thailand.
Amul's has featured in the list of top 100 brands of Asia consistently for last 3 years.
There is no other "Indian" brand in the list of Top 1000 brands ahead of Amul (#89). The
other Indian brands ranked as per the survey are Kingfisher (# 116), Big Bazaar (#184),
ICICI Bank (# 215), State Bank of India (#216) and Airtel (# 221) to name a few.
Asia's Top 1000 brand listing is based on a proprietary survey by the Campaign
Magazine. Leading Research Agency TNS interviewed people 3322 consumers aged 15-
64 years old across the 10 countries. Two questions were asked to determine the best
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brands in each of the 14 major product/service categories. The questions were pertaining
to the best and second best brand that would come to the respondent's mind for a
particular product/service category. The definition of best was one the respondent would
trust the most or the one that had the best reputation in the product/service category.
The survey reaffirms the faith Indian customers have in the Amul brand and also the fact
that a brand created by India can feature among the top brands globally.
This survey has been published in "Campaign" issue of July 2011.
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LIMITATIONS
Limited time available for interviewing the respondents. As a result of this it was
not possible to gather full information about the respondents.
When I interviewed children and teenagers, sometimes they use to give answers
under the influence of their parents or elders.
As winter training is going under winter season so sometimes people are less
interested in filling up questionnaire.
Sometimes the problem which I face is language problem for which I have to
make them understand.
Non-cooperative approach and rude behavior of the respondents.
If the respondents answer does not falls between amongst the options given then it
will turn up to be a biased answer.
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SUGGESTIONS
In order to maintain and increase the sales in the METRO city, the following
recommendations regarding Amul; particularly regarding advertisement, distribution,
promotional policies, etc, are hereby suggested:
First and foremost Amul should take proper action in order to improve service,
because although being on a top slot in Butter and milk supplies it does not get the
sales in chocolate, which it should get.
Company should use brand ambassador which attracts each age segment i.e.
Saniya Mirza, Shaktimaan, Amitabh Bacchan, Superman, Krrish, Jadoo etc.
Amul should give local advertisements apart from the advertisements given at the
national level. Local advertisement must mention the exclusive Amul shops of the
city.
Try and change the perception of the people through word of mouth about Amul
in advertisements, because they are the best source to reach Children and families.
Though Amul chocolate advertisements are rarely shown on television yet many
people could recall it as per the data of research. It shows that there is only need
to give advertisement only to rememorize customers. Because Amul is very
strong brand name.
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Company should launch chocolate in new attractive packing to change image of
Amul chocolate in consumers mind.
Company should introduce Product promotion schemes like free weight, pranky,
tattoo, contest, free gifts etc.
Advertisement can be done with the help of animations that attracts children and
teenagers because chocolates are consumed largely in this segment.
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