INTRODUCTION:

The case 'Amul's Diversification Strategy' focuses on the entry of GCMMF into the fast food
segment. In 2001, GCMMF launched pizzas in the Indian market in the Rs.20-25 price range.
The price was significantly lower than those of Pizza Hut and Domino's Pizzas. Amul test-
marketed a basic capsicum, onion, tomato pizza at just Rs. 20, that could well change the market.

Q.1 Critically analyze Amul’s diversification strategy in Indian fast

food market in terms of its pros and cons?

PROS of Amul diversification strategy:

 Keeping in view the successful brands and countrywide position of Amul the
diversification seems to be a viable strategy.
 The cheese being one of its existing products and is a main ingredient in a pizza, will be
of a great benefit to Amul.
 The diversification strategy into pizza business will allow Amul to adopt a forward
integration strategy. (being its own cheese supplier)
 The company can enjoy economies of scale by manufacturing cheese in bulk for itself as
well as others (Pizza Hut, Domino’s, and General Public) which will reduce cost.
Bulk rate = Rs. 140/kg
Market price = Rs. 146/kg
Retailers saving = Rs 6/kg
 Amul puts a great competition by offering a pizza @ Rs. 20 which others are none less
than Rs. 39.
 It can use its existing SCM system for pizza business.
  The growing demand for Mozzarella cheese from pizza making companies like Pizza hut,
Domino’s will give additional push to Amul’s cheese sales.

CONS of Amul diversification strategy:

 Amul must rule out the existing pizza manufacturers in terms of delivery, quality and
promotion etc.
 Being new to the business of pizza making could create problems for the company in
terms of expertise.
 Following the principle of “Small is Beautiful”, too many brands are always difficult to
manage.

Q.2 Write a short note on competitive advantage of Amul. Where do

you think Amul can best utilize its competitive advantage?

COMPETITIVE ADVANTAGE:

Amul’s competitive advantage firstly lies in its procurement part, the ability to collect 6mn liters
per day in 14 affiliated dairy plants and milk drying capacity of 450mt per day, with 12 milk
processing units, has membership of 2mn farmers who belong to 10,000 village dairy co-
operatives.
Secondly its numerous successful brands in the market had made Amul a common word of
mouth which is a promotion in itself.
Thirdly, its scale of operations.
Last but not the least its strong brand which stood for purity and quality.

Q.3 How Amul should compare with the giants like Unilever,
Nestle, McDonald, Pizza Hut, Domino’s within various segments it
plans to diversify?
CPM OF AMUL

Nestle Pizza Hut Dominos

Critical success factors Weight Rating Score Rating Score Rating Score

Advertising 0.3 3 0.9 2 0.6 3 0.9

Price competitiveness 0.2 2 0.4 1 0.2 3 0.6

0.2 3 0.6 2 0.4 2 0.4

Market Share
0.2 4 0.8 3 0.6 2 0.4
Product quality

Customer Loyalty
0.1 2 0.2 3 0.3 2 0.2

TOTAL 1.00 2.9 2.1 2.5

Amul should look closely into following aspects if it wants to compete with the giants like
Unilever, Pizza Hut, McDonalds etc.

BRANDING:
Though AMUL rightly spotted a growing lucrative market for the pizzas, it did the
biggest mistake of branding the pizzas as AMUL PIZZAS. According to my suggestion, we
came to a common consensus of n appropriate brand name for Amul i.e., “TAVA FRESH” and
the tag or punch line for the brand name would be “FRESH AISA GHAR JAISA”.
POSITIONING:
According to me, AMUL should relate to certain events or festivities, and create a positioning
that is unique in nature, in the prospect’s mind. Likewise its competitor’s strategy for positioning; as in
case of PIZZA HUT, it uses the line “GOOD TIMES START WITH GREAT PIZZAS”

MARKETING MIX:
 PRODUCT:
Amul should concentrate on Pizzas more rather than thinking it as a means to increase the
sales of it mozzarella cheese. It should give more emphasis on the taste and quality of
pizzas and improve the same.
 PLACE:
Amul should improve the distribution channel, as the Amul pizzas are available at all the
retail stores and this leads to a big question mark over hygiene and reliability.
 PROMOTION
It should adopt a proper mix of appropriate advertising tools. New advertising campaign should
be developed to initiate the consumer learning process and retain the consumer attention.
 PRICE
Amul has an advantage with regard to Price as Amul Pizzas are strategically placed at a
lower price that any other available counterpart.

CONSUMER MARKETS AND BUYER BEHAVIOURS

Amul should take into consideration the fact that the Cultural Factors exert the broadest and
deepest influence on the buyer behavior and thus Amul should understand that the culture of
frozen foods in India is very limited.
Q.4 What strategic recommendations would you like to give to
GCMMF for long term viability of Amul?

Recommendations:

 Keeping in view the changing demographics in the country, especially with regard to the
broadening consumer base, and growing purchasing power, there is a strong need for
newer value added dairy foods.
 The products that will command the future consumer demand include low trans-fat
products.
 Value addition through combination of milk and/or dairy byproducts with fruits, cereals
and vegetables seems very promising for the dairy industry.
 Amul can venture into products such as baby food, condensed milk etc.
 It can penetrate even better in rural areas by advertising through media via cable channels
and news papers.
 Amul can introduce sweets under a different brand name.
 SWOT MATRIX FOR AMUL:

STRENGTHS WEAKNESSES

1. LARGEST BRAND IN
1. NO EXPERTISE IN PIZZA
INDIA
MAKING.
2. HIGH QUALITY LOW
PRICE.
2. LATE ENTRANT.

3. PRODUCTION 3. STRONG DEPENDENCY ON

FACITLITY. VILLAGES FOR RAW
4. TRUST OF MATERIALS.
CONSUMERS.
4. COMPLEX SUPPLY CHAIN.

OPPORTUNITIES SO STRATEGIES WO STRATEGIES

1. HIGH GROWTH OF THE  Control its own cheese  Mergers decreases

FOOD MARKET. supply. (S2, O1)
competition.
 Saving will lead to
2. PENETRATE INT.  Amul can go global.
franchising
MARKETS.

3. NICHE MARKET, SO CAN

CHARGE A PREMIUM.

4. E-COMMERCE.

THREATS ST STRATEGIES WT STRATEGIES

1. HIGH DEGREE OF  Can broaden its consumer  Strategic alliance with

COMPETITION. base in dairy related Domino’s, Pizza Hut.(W1,
2. LOSING OUT TO RIVALS. products. T1)

3. GROWING PRICES OF
MILK AND MILK
PRODUCTS.
4. STIFF COMPETETION
WITH MNC’S IN BUTTER.