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Project On

Organisational Study & Marketing Distribution Channels towards

Karnataka Milk Federation (KMF)

Submitted in partial fulfillment of the requirements for

Award of
Master Program for Business Administration

With Specialization

Submitted by

Suresh Babu .P

Reg No- MBA/08/62 or 151

Under the Guidance of


District sales head, “Dharwad Milk Union”

Indian Institute of Business Management

Shivajinagar, Pune – 411 005

This is to certify that the dissertation work titled Organisational Study & Marketing

Distribution Channels towards Karnataka Milk Federation (KMF) is a bonafide work

carried out by Suresh Babu .P

a candidate for the award of Master Program for Business Administration of Indian

Institute of Business Management, Pune under my guidance and direction.

Date: ___________ Signature of guide

Place: ___________

Designation: District sales head.

“Dharwad Milk Union”

The satisfaction and euphoria that accompany the successful completion of any task would be
incomplete without mentioning of the people who made it possible. So with gratitude I
acknowledge who served as an “inspiration” and my efforts with success.

I express my profound sense of gratefulness to my project coordinator and external

guide for my project, Mr. ANAND BABALESHWAR. District sales head, “Dharwad Milk
Union”, for giving me this opportunity to take up this study and his support, encouragement
and valuable timely advice.

I am also indebted to contribution of all the employees of Dharwad Milk Union in extending
their support and co-operation giving shape to my project study.

My special thanks to my Institute Chairman Dr. Khaleel Ahmed Gulam Hussein

Kakamari who is kind enough in providing all the facilities and helped me in completing my

I extend my sincere thanks to my internal guide Rohit .C. Kalaskar, Secretary General
Academic Director who guided me throughout the project and kind and co-operative during
my training period.

I am greatly thankful to Indian Institute of Business Management, Pune for giving practical
knowledge about the industrial sector by including this Major Concurrent Project for four
months as a part of curriculum in the MBA course.

Suresh Babu .

Chapter 1 Rationale for the study 01-01

Chapter 2 Objective of the study 02-02

• Title of the project

• Objective of the study
• Scope of the study

Chapter 3 Profile of the company 03-43

Chapter 4 Theoretical Perceptive 44-44

Chapter 5 Research Methodology 45-46

Research Design

Data collection methods / sources

Sampling plan which should include sampling unit, sampling

size and sampling methods via questionnaire methods,
interview methods, observations etc

Chapter 6 Data analysis and interpretations using various charts and 47-58
Chapter 7 Findings 59-59

Chapter 8 Limitations if any 60-61

Chapter 9 Expected contribution from the study 62-66


The project is three different stages. The objective of undertaking this project i.e. phase first is
“To find out the requirements in the area of respective retailers” and “To work for expansion
of retail distribution network” for implementation of a value driven retail chain for effective
linkage between consumer and organization and to give suggestions for further improvement.
This is the project has been completed with the help of primary data. A survey has been
conducted to know that how the Distribution Network working and what are the problems
being faced in distribution.

As per objective I have find out the possible ways to improve the efficiency and effectiveness
of distribution network. I found that there are some problems such as Lack of retail outlets,
Supply problems, improper supervision, which have to be improved and rectified and hence
we have proposed some recommendations also. The objective of second part is to know the
relationship of sales with the advertisement & to know awareness of people towards new
Nandini Milk and milk products Ad by marketing survey Ad tracking focusing three
segments (youth, children & house wives)

The objective of third phase is to promoting of the nandini milk in Hubli City. As a part of
our recommendation, I have proposed about maintaining product quality according to the
sales. Reason for selecting dealers of Hubli as my respondents is because Dealers of these
places play as the major purchaser of various varieties of products of the company. The
information required to gain insights regarding the Sales promotion activities these are the
best available sources
Chapter 2:- TITLE OF THE PROJECT; Organisational Study & Marketing
Distribution Channels towards Karnataka Milk Federation (KMF)


➢ To find out the various strategies to be adapted by nandini sales.

➢ To find various ways to increase nandini milk sales in Hubli.

➢ To discover the various factors which hurdles people to take nandini milk.

➢ To identify various factors which motivates people to use nandini milk

➢ To get the retailer’s wants in terms of product selling.
➢ To know effectiveness of the marketing strategy and sales promotions in market.
➢ Ensuring the visibility of the product.
➢ Ensuring the availability of products in outlets.
➢ Analyzing the effect of scheme.
➢ Analyzing the effect of discounts.


The research study will help to identify & analyzing the dealers and customers perception
towards the existing products of the company and the promotional activities undertaken by the
organizations situated at Dharwad.



The first dairy in Karnataka is started in Kudige in Kodagu district in 1955. Nandini milk
product project is initially a government of India project established on 1st April 1973 and
handed over to the Government of Karnataka constituted by KDDC (Karnataka Dairy
Development Corporation) Further in June 1974; an integrated project is launched in
Karnataka to restructure and reorganize the dairy industry on the co-operative principle and to
arrange foundation for a new direction in dairy development.

In 1975, the World Bank aided dairy development was initiated. The present
Karnataka Milk Federation (KMF) came into existence in 1984-as a result of merging of
Karnataka Dairy Development Co-operation, small co-operatives and Karnataka Milk
Production Development and loose vendors. At the end of the March 1998, the network of
8023 Diary Co-operative Societies (DCS) have been established which are spread over 166
taluks of the total 175 taluks in all 27 districts of Karnataka. There are 13 Milk Unions and
Dharwad Milk Union (DMU) is one among them.

Karnataka Cooperative Milk Producers' Federation Limited (KMF) is the apex Body in
Karnataka representing Dairy Cooperatives. It is the third largest dairy co-operative amongst
the dairy cooperatives in the country.

To impart training, institutes at Bangalore and regional training institutes at Dharwad

and Gulbarga are functioning. Three nitrogen plants are been set-up to supply nitrogen, which
is used for refrigeration purpose. Three diagnostic centers have been set-up for monitoring
diseases, three fodder farms at Rajkunte, Kuttanahalli and Kodagu have been set-up to supply
good quality of fodder and seed production farm at Shahpur has been set-up. The federation
giving details of the latest technology in dairy industry etc is published "Ksheer Sagar"
magazine monthly.

Objectives of the company:

• Providing assured and remunerative market for the milk produced by the farmer
• To build village level institutions in co-operative sector to manage the dairy
• Providing Hygienic Milk to Urban Consumers.
• To eliminate the problems of duplicating and over lapping.
• To expand the market.
• To ensure Milk Production for self-employment at village level preventing
migration to Urban Areas introducing cash economy and opportunity for regular
• The philosophy of Dairy Development is to eliminates middle men and organize
institution to be owned and managed by the milk producers themselves, achieving
economics of scale to ensure maximum return to milk producers at the same time
providing wholesale Milk at lowest possible price to urban Consumers.

Units of KMF:

KMF has the following units function directly under its control:
• Mother Dairy, Yelahanka, Bangalore
• Nandini Milk Products, KMF, Bangalore
• Cattle Feed Plants at Rajakunte / Dharwad/ Hassan
• Nandini Sperm Station at Hessaraghatta
• Pouch film plant at Munnekolalu, Marathahalli
• Central Training Institution at KMF Complex, Bangalore.
• Quality control lab at KMF Complex, Bangalore.

The different Milk unions:

There are totally 13 milk unions in the state. They are:
1) Bangalore Milk Union
2) Kolar Milk Union
3) Mysore & Chamaraja Nagar Milk Union
4) Mandya Milk Union
5) Tumkur Milk Union
6) Hassan Milk Union
7) Dharwad Milk Union
8) Belgaum Milk Union
9) Bijapur Milk Union
10) Gulbarga Milk Union
11) Dakshina Kannada Milk Union
12) Shimoga Milk Union
13) Raichur – Bellary – Koppala Milk Union

1) Bangalore Milk Union, Dakshina Kannada Milk Union and Mother dairy have
obtain ISO 9001-2000
2) 92% of functioning milk producers co-operative societies earning profit
3) At present on average of Rs. 205 lakhs is paid per day to milk producers
4) Establishment of ice cream plant of capacity 3000 LPD at a cost of Rs. 3 crores
which is being expanded.
5) Establishment of milk powder plant at Mother dairy of 30 MT’s capacity per day
at a cost of Rs. 22 crores.



Director Director Director Director Director Add’al
HRD Anl Hus- Marketing STEP DDIL Director
bandry Qty. Control

Joint Dir Joint Dir Joint Dir

Finance/ M/s Purchase co-operative Audit

MD Bangalore MD Mandya
MD Belgaum MD Mysore
MD Bijapur MD Bellary
MD Dakshina Kannada MD Shimoga
MD Dharwad MD Tumkur
MD Gulbarga
MD Hassan
MD Kolar


Director (CHRM)


Joint Director Joint Director Engineers



Assistant Director



Administrative Asst I

Senior Typist

Administrative Asst. II

Administrative Asst. III


Human Resource Management is a part of management. This part is concerned with
the people and their relationship within an organization.

It’s the field of management which has to do with planning, organizing, directing and
controlling the functions of procuring, developing, maintaining and utilizing the labour force.

Objectives are pre-determined goals to which individual or group activity in an
organization is directed.
The objectives are:
1) To employ the skills and abilities of the work force efficiently.
2) To provide the organization with well trained and well motivated employees.
3) To increase the employees satisfaction and self-actualization to the complete
4) To develop and maintain a quality of work life.

1) Assessing and recruiting staff based on the needs specified by the department.

2) Selecting the required candidates as per the requirement by following pre-

determined procedures.
3) Enlarging the jobs of the employees if necessary.
4) Describing the jobs by issuing the job chart to employees to carryout the specific

Human Resource Planning

All the departments in the KMF according to the requirement of workforce submit a
requisition letter asking for recruiting employees to the corporate human resource
management department. This department analysis the actual need of the employees and then
plans how many employees should be called for interview. In case they have excess of
employees then measures are taken to reduce the number of employees.

In KMF recruitment is according to the pre determined procedures. Usually they prefer
internal recruitment for top level. In few situations they feel that they need fresh blood they go
for external recruitment. They usually advertise in newspapers.

Even the process of selection has to be performed according to the rules and
regulations pre defined. For every 1 vacant post they select 10 candidates from the available
pool of recruitment candidates for the final selection. These 10 candidates are selected by
mainly two tests:
a) Qualifying Test
b) Written Test
After the candidates cross the 2 tests the best 10 candidates for each post are selected
and sent for the final interview which is an oral interview. In the final interview the required
candidates are selected.

Orientation & Placement

Here basically whenever a new employee is selected, the supervisor of that particular
division introduces the new employee to the staff and assigns work to the employee. The
supervisors not only assigns work to the employee but also inform him about the procedures
to be followed by him to report to his immediate supervisor, his duties, responsibilities, his
rights and his limitations in the federations.

Training and Development:

In KMF there is a separate unit called as CTI where the employees are trained. The
training period usually lasts for a period of 10-15 days & in which they will be paid a certain
part of the salary.
The techniques followed by CTI to train the employees are:
a) Seminars
b) Guest lectures
c) Case studies etc.
Performance Appraisal and Job Evaluation:
The immediate supervisors appraise their sub ordinates. The supervisors inform the
employees about their conduct in the federation as what they lack, what they excel and what
improvement are to be performed.

Employee Remuneration:
The remuneration for the employee is fixed earlier and all the employees have to abide
to it. This payment increases as their period of service rendered to the federation increases,
that is pay of an employee depends on the number of years he serves the federation.
Incentive Payments:
Employees are paid bonus once in every year depending on profits done on festive

Employee Welfare

KMF has implemented many methods to help the employee’s. The employees are
a. Pension Scheme
b. Group gratuity Scheme
c. Group Personal Accident Insurance
d. Group Insurance Scheme (death of the employee his nominee will be benefited).

Safety and Health:

The measures followed for the protection of employees are:
a) Conferences, workshops are organised to educate the employees
b) They are given compensation according to the “Workman Compensation Act”
c) Easy availability of first aid box.

Promotion and Transfer:

In KMF the employee can be promoted only if there exists a vacant post or if anyone
retires or leaves the organization. Few times employees are promoted on basis of transfers that
is if they have an excess of workforce and they need to send that person to a different unit.
They usually transfer that employee to another unit by giving a promotion.

Trade Unions:

KMF does have few trade unions. But none of them are having recognized by the
Disputes and their Resolution:
KMF has never faced any problems with the trade unions. Whenever any person of the
union approaches the management care is taken to see through that their problem is heard and



Additional Director

Senior Deputy Director Doctors



It is a unit of KMF came into existence from 1st January 1985 is a nucleus-training
centre. CTI is also imparting training in dairy animal management. To women sponsored by
Karnataka State Women Development co-operation Ltd.


The objectives of its is to import training in different fields of activity to the milk
produces who are members of the primary dairy co-operation societies and to the employees
of the members of milk unions and KMF and also the staff and representatives of allied govt.
The objectives are:

1) To humble objective of training in the members of the village level co-operative

and field staff undertaking extension works. The objective today is largely oriented
towards human resource department.
2) Training programs are taken in key areas such as finance, marketing, production
and operation management. & technical program.

Mode of Training:

1) Who are Trainers?

The trainers are usually doctors or highly qualified employed professors.
2) Who are the Trainees?
Farmers or employees appointed by the KMF.

3) What are the techniques of training?

a) Class Room Training b) On the job Games c) Seminars / Guest lectures d) Role play


Conference Hall:

The institute has a spacious conference hall, which can accommodate 60 candidates.
The hall is equipped with a glass board and has facilities for using all the audio-visual aids.

Class Room:

In addition to the conference hall there are 2 classrooms, which have a capacity of
accommodating 25 candidates and have facilities for use of all the audio-visual aids

A fully equipped canteen facility exclusively for the purpose of the trainers residing at
the hostel


The institution has 2 mini buses and a jeep for transport of the trainees for visits to
institutions for in plant exposure training.

There are outdoor games like shuttle court and volley ball court and indoor games like
carom and chess.


The institution has a hostel that can accommodate 80 trainees at a time. The rooms are
available on train sharing be basis

Management Information system


Joint Director (Sys) Senior Deputy Director (MIS)

Assistant Director Admin Assistant Grade I


Grade II
Senior Typist


Management Information system is used to transform data into useful inf. as needed to
support managerial decision making with structured decisions, which are based on predictable
patterns of activities.
It is a network of communication channels and information processing centre-
collecting information from its respective milk unions and milk units


The objective of an Management Information System is to provide information for

decision making on planning, initiating organizing and controlling the operations of the sub
systems of the firm and to provide a synergistic organization in the process.
1) To update the information about procurement, sales, cost, expenses etc.
2) To collect the information at minimum cost at the right time from the milk unions,
milk units and chilling centers.
3) To store the data in a convenient pattern which can be retrieved


1) Periodical (daily, weekly, monthly, yearly) collection of data in prescribed formats

from all over 13 milk union and 9 milk units of KMF
2) After collecting the information we consolidate, verify and compile various
periodical reports for various purposes.
3) Submission of various information to govt and NDDB and furnishing information
to various organizations, as they needed
4) Development of integrated computerized system.


Assistant Director (Finance)

Joint Director

Linear Deputy Director

Deputy Director

Assistant Director

Accountant Assistant

Grade - I

Grade - II

Grade – III

Finance is the lifeblood of business. Financial Management is that managerial activity
which is concerned with the planning and controlling of the firms financial resources.

It is defined as “Planning, organizing, direction and control of financial resources with
the objectives of ensuring optimum utilization of such resources and providing insurance
against through financial deadlock”.

The objectives of KMF are:
• Control the finance
• Minimization of the expenditure
• Providing services to the member milk unions and its societies and in the process
making profit.
“No Organization can survive without Profit”.
Though the objective of the federation is not to make absolute profit, the profits are
incidental to the business.

The functions of raising funds, investing them in assets and distributing returns
earned from assets to shareholders are respectively known as financing:
• Co-ordination with units and member milk union for easy flow of funds.
• Monitoring of funds and investment of surplus funds generated on account of
operational profits.
• Passing of all bills like suppliers bills, transportation. Allowance / medical claims
and miscellaneous bills in respect of central office.
• Coordinating with member milk unions for providing funds and payment of supply
bills in time to avoid cash crunch at the milk unions.


Particulars SCH As on 31-3-2009 As on 31-3-2008
Sources of Funds
Share Capital 1 56292000.00 52430000.00
Reserves & Surplus 2 328147776.02 146468548.37
Deposit from GOI/GOK (KDDC) 33686971.87 33686971.87
Magazine Fund 3 2633476.73 2601856.73
Profit & loss Appropriate A/c 67954712.07 234589545.80
Secured 4.1 215854197.40 244341354.08
Unsecured 4.2 104546853.52 104546853.52

Total: 809115987-61 81665130-37

Application of Funds
Fixed assets 5 521900250.25 529244015.86
Investments 6 72555700.00 72553450.00
Current Assets, Loans & Advances
Cash & Bank Balance 7 271905861.16 260511530.09
Sundry Debtors 8 97214526.79 62051612.77
Inventory 9 137597140.37 168775053.39
Loans & Advances 10 983383275.42 991612674.75

Total: 1490100803-74 1482950871-00

Less: Current liabilities & provisions 11 1275440766.38 1266083206.49

Net current assets 2114660037.36 216867664.51

Total: 809115987-61 818665130-37

Manufacturing & Trading A/c for the year ended 31-3-2005

Particulars SCH As on 31-3-2009 As on 31-3-2008
Opening Stock 12 168775053.39 204147815.09
Purchases 13 2015762855.73 1682906815.21
Procurement Transportation charges 9701067.95 9993724.09
Inter Unit Transfers 14 123255420.42 177351320.65
Processing and manufacturing expenses 15 109036989.29 87948137.66
Salaries wages & other benefits (80%) 16 128827450.69 146182843.97
Gross profit carried to P/L A/c 178064883.47 160337010.79

Total: 2733423720.94 2468867667-46

Sales 17 2330688398.13 1983249328.27
Inter Unit Transfers 18 265138182.44 316843285.80
Closing stock 19 137597140.37 168775053.39

Total: 2733423720-94 2468867667-46


Particulars SCH As on 31-3-2009 As on 31-3-2008
Salaries wages & other benefits 20% 16 32206862.67 36545710.99
Administrative expenses-Rent, Rates, Taxes 20 57596279.01 3610665.01
License & Insurance 46927596.85 9413998.44
Selling & Distribution expenses 21 35553184.99 41797593.14
Interest & Bank charges 22 35779630.76 32100645.40
Repairs & Maintenance of vehicles 23 1833559.49 1741550.33
Depreciation 24 35134637.20 37348862.04
Net profit TFd to appropriation A/c 25 67954712.07 74760323.97

Total 312986463.04 269815349.32

Income Gross profit
Trading from Manufacturing& Trading. A/c 178064883.47 160337010.79
Other Income 26 122916079.54 100712927.14
Interest on Deposits & advances 27 12005500.03 8765411.39
Total 312986463.04 269815349.32

Profit and Loss Appropriation A/c


Reserve Fund 104488743.89

Building Fund 20164875.00

Bad Debt Fund 2419784.91

Co-operation. Propaganda Fund 5646165.00

Employee Benevolent Fund 8065950.00

Research & Development Fund 12098926.00

Trade fluctuation Fund 25042687.00

Co-operation. Education Fund 787936.00

Loans to Milk Unions 52428678.00

Dividend to Milk Unions 3445800.00

Transferred to Balance Sheet 67954712.07 234589545.80

Total: 302544257.87 234589545.80

Opening balance of P & L A/c 234589545.80 159829221.83
Profit transferred from P & L A/c 67954712.07 74760323.97

Total: 302544257.87 234589545.80

Purchase Department

Purchase department is also called as “Integrated Materials Management”. It mainly
contains buying of raw materials, inventory planning, and store keeping and material

Reduce purchase cost by proper evaluation of vendor (Supplier) by buying the right
material at the right time for the cost with the right supply schedule adherence.
a. Minimize inventory-carrying cost.
b. To reduce ordering cost.
c. Cost reductions checking for economies to profits in buying.
d. Reduce material handling cost.
e. To utilize the input to the most optimum level.

1) Purchasing department in central office will purchase bulk materials with buying
value exceeding Rs. 1,00,000 through tenders.
2) 21 items which come under KMF central purchase committee these are mainly the
packing materials, containers and other requirements of pouch film plant.
3) Cattle Feed Raw Materials (CFRM) is mineral mixture items. This mainly
comprises of Rice Bran, Grains, de-oiled cake extraction.

Purchase Process:
Process involved in purchase of raw material. is given below:

Material Purchase Requisition (MRP)

(Submitted by the user department)
Get the quotation from vendors

Prepare Comparative Chart

(Of all the vendors)

Recommendation from user department

(To choose the best vendors)

Place the order to the vendor

Quotation includes price of the material, validity of the offer, dispatch time, payment
mode of delivery.
There are many methods to manage inventory, they are:
a) Always Best Control analysis
b) FSL
c) Economic Order Quantity
d) First In First Out
e) Last In First Out
f) Just In Time


This division is at apex federation aims at not only controlling the quality but also
development of quality standards from time to time for milk and milk products manufactured
under the brand name “Nandini”. All these products pass through quality standards. The
standards meet the latest quality parameters.

They are responsible for inspecting the quality of raw material used, processing
parameters followed and quality of final products.


1) Modifications of milk film sachet by reducing length.

2) Implementation of II stage modified ISI formula for calculating SNF in milk.
3) Inspection of the cold storage, deep freezers, dairies and chilling centers.
4) Regularly attending consumer complains.
5) Providing specification for packing materials.
6) Micro bacteriological analysis of milk and milk product.
7) Testing all CPC (Central Purchase Committee) materials.
8) Periodical quality analysis of private dairies.

Marketing Management

Sr. Deputy Sr. Deputy Sr. Deputy Deputy Director Asst.
Director Director Director Public Ultra
Retail Bulk Relations High temperature

Asst. Director Asst. Director Depot Incharge Circle

Retail Retail

Field Sales Field Sales Field Sales Field Sal Field Sales
Representative Representative. Representative Representative.
Bangalore Hubli Tirupathi Mangalore

Marketing starts with the determination of consumer wants and ends with the
satisfaction of those wants.
It is the central activity of the business, which always focuses on understanding the
needs of the consumer. It stimulates the demand for a federation product.

Marketing is the process of planning and executing the conceptions, Pricing,
promotions and distribution of ideas, goods and services to create exchanges that satisfy
individual and organizational objectives.

The objectives of KMF are as follows:
• Provide quality milk to urban consumers
• To build village level institutions in co-operative sector to manage the dairy
• Provide assured and remunerative market for the milk produced by the farmer
• To ensure provision of milk produced input processing facilities and dissemination
of know how.

The functions of KMF are:
• Market the surplus milk and milk products
• Milk products that are marketed in the marketing system of KMF are skim milk
powder butter and ghee.
• KMF marketing department within itself has made certain divisions for which a
deputy director or an assistant director is been made to look after the division.
• His work is to look after the works to be performed regarding his division by
discussing with his senior officials.

The divisions made in the marketing system are:

• Liquid milk division
• Retail sale division
• Bulk sale division
• Advertisement and mass media division
• Good life sterilized milk division
a) Liquid Milk Division:
Marketing system for liquid milk is as follows
Milk from Dairies

Agents (Door delivery at dairy cost only

Commission paid by the dairy itself)

b) Retail Sale Division:
This division function is to market the sales of milk produced in retail division.
c) Bulk Sale Division:
This division function is to sell the milk products left after fulfilling the products
for retail sales.
For pricing the products in case of bulk sales a small sub-committee meeting will
be held every week and prices are fixed.
d) Advertisement and Mass Media Division:
This division performs advertising the milk and the milk products to make its
The different modes used for advertisement are:
Electronic Media, Wall Media, Print Media, Charts Explaining the products, All
India Radio

e) Good life sterilized Milk

This is newly introduced milk in the market. Hence it requires more advertisement
so a different division is provided.

Milk and its products are sold under ‘Nandini’ brand name, which has become
household name in Karnataka. ‘Nandini’ brand has 35 members of product ranges in its
family. The milk unions are permitted to market the products within their jurisdiction through
their milk agents / parlors
The federation distributes the products of milk unions by establishing network and
sales depots in Bangalore, Hubli, Mangalore and Tirupathi comprising of 110 wholesale
dealers spread across, Karnataka, Andhra Pradesh, Tamil Nadu states of India and catering
around 20,000 retail outlets once a week.

The activities also include:

Introduction of new products, its price fixation and packing size, Packing Designs,
Advertising plans

Campaigns are undertaken by marketing division providing advertisement materials,

organization of workshops / seminar to improve the quality of the products is another
important function of marketing division.

The many variants of Nandini- Nandini is Ubiquitous

Milk is marketed under Nandini in different types as:
Toned, Homogenized Toned, Double Toned, Standardized, Full cream, Shubham Milk

UHT milk is being marketed in 4 variants via:

• Nandini Good life with 3.5% fat and 8.5% SNF.

• Nandini Smart with 1.5% fat & 9% SNF
• Nandini Good life slim with 0.5% fat & 9%


Distribution - introduction
Distribution (or "Place") is the fourth traditional element of the marketing mix. The other
three are Product, Price and Promotion.

The Nature of Distribution Channels

Most businesses use third parties or intermediaries to bring their products to market. They
try to build a "distribution channel" which can be defined as
"All the organisations through which a product must pass between its point of
production and consumption"
Why does a business give the job of selling its products to intermediaries? After all, using
intermediaries’ means giving up some control over how products are sold and who they
are sold to.
The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling.
They have the contacts, experience and scale of operation which means that greater sales
can be achieved than if the producing business tried running a sales operation itself.

Functions of a Distribution Channel

The main function of a distribution channel is to provide a link between production and
consumption. Organisations that form any particular distribution channel perform many
key functions:
Information Gathering and distributing market research and intelligence - important
for marketing planning
Promotion Developing and spreading communications about offers
Contact Finding and communicating with prospective buyers
Matching Adjusting the offer to fit a buyer's needs, including grading, assembling
and packaging
Negotiation Reaching agreement on price and other terms of the offer
Physical distribution Transporting and storing goods
Financing Acquiring and using funds to cover the costs of the distribution
Risk taking Assuming some commercial risks by operating the channel (e.g.
holding stock)
All of the above functions need to be undertaken in any market. The question is - who
performs them and how many levels there need to be in the distribution channel in order to
make it cost effective.

Numbers of Distribution Channel Levels

Each layer of marketing intermediaries that performs some work in bringing the product to
its final buyer is a "channel level". The figure below shows some examples of channel
levels for consumer marketing channels:

In the figure above, Channel 1 is called a "direct-marketing" channel, since it has no

intermediary levels. In this case the manufacturer sells directly to customers. An example
of a direct marketing channel would be a factory outlet store. Many holiday companies
also market direct to consumers, bypassing a traditional retail intermediary - the travel
The remaining channels are "indirect-marketing channels".
Channel 2 contains one intermediary. In consumer markets, this is typically a retailer. The
consumer goods market in the sell their goods directly to large retailers which then sell the
goods to the final consumers.
Channel 3 contains two intermediary levels - a wholesaler and a retailer. A wholesaler
typically buys and stores large quantities of several producers’ goods and then breaks into
the bulk deliveries to supply retailers with smaller quantities. For small retailers with
limited order quantities, the use of wholesalers makes economic sense. This arrangement
tends to work best where the retail channel is fragmented - i.e. not dominated by a small
number of large, powerful retailers who have an incentive to cut out the wholesaler.

Depot Agents Depot

Whole sellers Retailers Factories


Retailers Consumers Hotels

Consumers Hospitals

Retail positioning
There are several ways in which retail stores can position themselves. One strategy
involves low-cost, low-service. On the opposite side of the spectrum, others may offer
high-cost-high-service. Generally, having a clear strategy and position tends to be more
effective since "average" stores tend to face a greater scope of competition

Stores need to maximize their profits and must consider their margins to do so. Gross
margins generally reflect the difference between what a store pays the retailer and what it
charges the customer. On the average, this difference in supermarkets is about 25%.
(Although there are large differences between product categories, as an illustration, a can
that sold for 1.00 might have been bought on wholesale for 0.75). Net margins, in contrast,
take into account the allocated costs of running the store—wages, rent, utilities, insurance,
and "shrinkage." In grocery stores, these margins are usually less than 5%. Margins can be
considered at the unit level—you make 0.35 on a package of salt—or as a percentage of
sales—35% if the salt sold for 1.00. Sometimes, it may also be useful to consider margins
per unit of space to best allocate retail space to different categories.
There are two theoretical forms of retailing. The "High-Low" method involves selling
products at high prices most of the time but occasionally having significant sales. In
contrast, the "everyday low price" (EDLP) strategy involves lower prices all the time but
no sales. In practice, there are few if any EDLP stores—most stores put a large amount of
merchandise on sale much of the time. It has been found that offering lower everyday
prices requires a very large increase in sales volume to be profitable.

Increasing power of retailers

As more and more products compete for space in supermarkets, retailers have gained an
increasing power to determine what is "in" and what is "out." This means that they can
often "hold out" for better prices and other "concessions" such as advertising support and
fixtures. A significant trend in recent years has been toward manufacturers’ "private label"
brands—that is, the retailers' own brands competing against the national ones. For
example, Del Monte peas may now have to compete against Ralph’s brand of peas in
those stores. Although private label brands sell for lower prices than national brands,
margins are greater for retailers because costs are lower. For example, it is more profitable
to sell a can of peas 1.00 when it cost 0.60 to supply than it is to sell a name brand can at
1.25 when that cost 1.05 at wholesale.

"Power" and "category killer" retailers

a number of retailers have become a great deal more efficient in recent years than has been
traditional in the industry. Firms like Wal-Mart have invested greatly in information
technology and logistics and have committed to taking a risk on placing large orders
placed well in advance of the need. These stores have frequently attracted a large customer
base by charging consistent low prices. The philosophy here is to make a little bit of profit
on each thing sold and then selling a great deal. A special case is the "category killer"
which focuses on a specific product category—e.g., Circuit City buys up very large
volumes of electronics and thus can bargain for low prices from manufacturers.
Manufacturers get the benefit of large, consistent orders, but must in turn offer
exceptionally low prices or risk having business shifted to other brands. Note that in
practice, the category killer tends to carry a large variety of brands, buying a large volume
of each. Thus, the mere threat of switching to other brands is enough to get a concession
from each brand.

Retailing polarity
A number of retailers have tended to go to one extreme or the other—either toward a great
emphasis on price or a move toward higher service. Rapid economic growth has made
high service retailers more attractive to a growing number of affluent consumers and less
affluent consumers have become more accustomed to intense price competition between
different retailers.

Distribution opportunities
First of all, we must consider what is realistically available to each firm. A small
manufacturer of potato chips would like to be available in grocery stores nationally, but
this may not be realistic. We need to consider, then, both who will be willing to carry our
products and whom we would actually like to carry them. In general, for convenience
products, intense distribution is desirable, but only brands that have a certain amount of
power—e.g., an established brand name—can hope to gain national intense distribution.
Note that for convenience goods, intense distribution is less likely to harm the brand
image—it is not a problem, for example, for Haagen Dazs to be available in a convenience
store along with bargain brands—it is expected that people will not travel much for these
products, so they should be available anywhere the consumer demands them. However, in
the category of shopping goods, having Rolex watches sold in discount stores would be
undesirable—here, consumers do travel, and goods are evaluated by customers to some
extent based on the surrounding merchandise.
The product life cycle
In general, a brand can expect lesser distribution in its early stages—fewer retailers are
motivated to carry it. Similarly, when a product category is new, it will be available in
fewer stores—e.g., in the early days, computer disks were available only in specialty
stores, but now they can be found in supermarkets and convenience stores as well. Certain
products that are not well established may have to get their start on "infomercials," only
slowly getting entry into other types out outlets. (Please see PowerPoint chart).

Collaboration with local NGO's

The self-help groups have been appointed as our agents for selling milk in the areas of
Gulbarga and Shimoga Milk Unions. In addition to sale of milk, the said self-help groups
have been entrusted with the task of taking up door-to-door campaign with regard to
nutritional aspects of milk, the health hazards involved in consuming non-
pasteurized/loose milk. This has helped in bringing awareness among the women, children
and also in increasing the sale of nandini milk in those areas.

SWOT Analysis:

1) The network and the cooperation between all the 13 co-operation units are very
2) The production of milk product and milk satisfies the consumer need in both price
and quality.
3) Monitoring the quality of milk and milk products of the unions so, nobody can
dissatisfy the consumer.
4) Regularly attending the customer complains
5) Most important is the trust of people on KMF
1) The company should pay attention to its advertising and strategy though Nandini
milk has a monopoly market.
2) Lack of employees in the quality control department
1) Since KMF is the 3rd largest milk union and biggest in south India, so it has an
opportunity to enter into international market.
2) It is already making different milk products and also has a good infrastructure and
it is a well known brand so it can go for other more milk products.
1) Consumer increasingly expects high quality and service. They perceive fewer real
products difference and show less brand loyalty.
2) Customers are also showing greater price sensitivity.
1) To march forward with a missionary zeal which will make KMF a trailblazer of
exemplary performance and achievements beckoning other milk federation in the
country in pursuit of total emulation of its good deeds
2) To ensure prosperity of the rural milk producers who are ultimate owners of the
Nandini milk and milk Products
Nutritious, delicious creamy ice cream is
manufactured at ISO 9002/HACCP certified Mother
Dairy modern plant. The range includes Vanilla,
Strawberry, Pineapple, Mango, Chocolate, Butter
scotch, Kesar Pista, Orange & Mango Candies,
Mango & Raspberry Dollies, Chocobar and Ball
varieties Vanilla, Strawberry, Sundae.

A delicious beverage with hot or cold milk. It can be

used for kheer, kesaribath, desserts or ice cream. It's
the goodness of Badam mixed with almond, edible
starch, saffron, skimmed milk powder and cane sugar
to give you the ideal Badam delight.


Khova is prepared out of fresh milk. It is an ideal base

to prepare delicious sweets at home like peda, Gulab
Jamoon, Kalakand, Burfi, Gajar Halwa and the like.
Nandini Khova gives you a high nutritive value with
large quantities of muscle building proteins, bone
forming minerals and energy giving fat and lactose.


Delicious Cheese, processed with utmost care to

ensure the smooth and rich taste of pure cheese. It's
highly nutritious an excellent source of milk proteins
and a rich source of calcium.

Enjoy the taste of pure milk! Skimmed milk powder
made from pure milk, processed and packed


Prepared using quality Cashew nuts, Khova and

Ghee. It leaves a lingering Cashew flavour in your
mouth. Available in 250 gm in a P.P.Box, shrink
wrapped to preserve its freshness.


A unique sweet. Cocoa based. Nandini Bite is a

three-in-one sweet prepared by using Mysorepak,
Khova and dremed with Almond. Available in 25
gm Aluminium foil packing.


It is a delicious indigenous product prepared from

pure Ghee, Gramflour and sugar added with
cashews. Available in 250 Gms pack containing 6


NANDINI SET CURD, thick and highly nutritive
curd is made from 3% Toned Milk with added
imported bacterial cultures, filled into 200gm and
400gm cups and allowed to set into curds. Imported
bacterial cultures constitute curd forming bacteria of
high genetic abilities and release antimicrobial
substances into curd imparting disease resistance to
consumers( probiotic characteristic). The curd apart
from therapeutic in nature has very high shelf-life
and can be kept for 15 days in refrigerator without
curds becoming sour. NANDINI SET CURD is
competitively priced at Rs.7 per 200gm cup and at
Rs.13 per 400gm cup.

Karnataka's most favourite milk. Nandini

Toned Fresh and Pure milk containing 3.0%
fat and 8.5% SNF. Available in 500ml and
1ltr packs


Nandini Homogenised Milk is pure milk which is

homogenised and pasteurized. Consistent right
through, it gives you more cups of tea or coffee and
is easily digestible.


Full Cream milk. Containing 6% Fat and 9 % SNF.A

rich, creamier and tastier milk, Ideal for preparing
home-made sweets & savouries.


Cow's pure milk, UHT processed, bacteria free in a
tamper-proof tetra-fino pack which keeps this milk
fresh for 60 days without refrigeration until opened.


Cow's pure milk, homogenized, double toned UHT

processed milk bacteria free in a tamper proof tetra
fino pack which keep the milk fresh for 60days
without refrigeration until opened. At present the
milk is being directly home delivered on request.


Cow's pure milk, homogenized, Skimmed. UHT

processed milk bacteria free in a tamper proof tetra-
fino pack which keep the milk fresh for 60 days
without refrigeration until opened. Nandini Goodlife
slim skimmed milk is 99.5% fat free.


Nandini spiced Butter Milk is a refreshing health

drink. It is made from quality curds and is blended
with fresh green chillies, green coriander leaves,
asafoetida and fresh ginger. Nandini spiced butter
promotes health and easy digestion.

Buffalo's milk, 100% pure pasteurized processed and

packed hygienically. This milk has 5% fat and 9%


Nandini Curd made from pure milk. It's thick and

delicious. Giving you all the goodness of homemade

Available in 200gms and 500gms sachet.


A taste of purity. Nandini Ghee, made from pure

butter. It is fresh and pure with a delicious flavour.
Hygienically manufactured and packed in a special
pack to retain the goodness of pure ghee.


Fresh and tasty, Nandini Mysore Pak is made from

quality Bengal Gram, Nandini Ghee and Sugar. It's a
delicious way to relish a sweet moment

Great way to those soft and juicy jamoon treats at

home! Nandini Gulab Jamoon Mix is made from
Nandini skimmed milk powder, maida, soji and
Nandini Special Grade Ghee.


No matter what you are celebrating! Made from pure

milk, Nandini Peda is a delicious treat for the family.


Pure and tasty dishes with Nandini Paneer! A fresh,

nutritive product made by coagulating pure milk, it
is an excellent source of milk protein. Nandini
paneer is ideal for vegetarian dishes such as mutter
paneer, sag paneer and various other dishes


Rich, smooth and delicious. Nandini Butter is made

out of fresh pasteurised cream. Rich taste, smooth
texture and the rich purity of cow's milk makes any
preparation a delicious treat.
Chapter 4:- Theoretical Perceptive

If one wants to know what type of people use milk, what they think of, television
commercials, or why they buy particular brands of milk, the natural procedure is to ask them.
Thus, the questionnaire method has come to be the more widely used of the two data
collection method. Many consumers are now familiar with the “We are making a survey”, and
then proceeds to ask a series of questions. Some interviews are conducted in person, others by
telephone, and others by mail. Each of these has its special advantages and disadvantages and
limitations. The questionnaire method in general, however, has a number of pervasive
advantages and disadvantages. Discussion of particular variations will be more meaningful if
these characteristics of the general methods are brought out first.

A questionnaire consists of list of questions to be asked from the respondents and the space
provided to record the answer / responses. Questionnaire can be used for the personal
interviews, focus groups, interviews. The choice among these alternatives is largely
determined by the type of information to be obtained and by the type of respondents from
whom it is to be obtained. The common factor in all varieties of the questionnaire method is
this reliance on verbal responses to question, written or oral.

Questionnaire in the project consists of:

 Multiple choice questions

Multiple choice questions:

 Questions of this type offer the respondents an alternative to choose the right answer
among others. It is faster, time saving and less biased. It also simplifies the tabulating

 In this type respondents are free to answer in their words and express the ideas they
think are relevant, such questions are good as first questions or opening questions.
They introduce the subject and obtain general reaction.


SAMPLE UNIT: - All working people are included both the genders i.e. males and females
irrespective of their education level.


Customers – 80

Retailers - 20

SAMPLE REGION: - Hubli city




Primary data is collected through a self administrated questionnaire. This questionnaire aims
to gather information related to various milk brands

Secondary data is collected through magazines, research papers, internet etc.

Data collection
Questionnaire design

As the questionnaire is self administrated one, the survey is kept simple and user friendly.
Words used in questionnaire are readily understandable to all respondent. Also technical
jargons are avoided to ensure that there is no confusion for respondents.

Definition of the Problem

The study of opportunity for milk companies in the market is a sum total of different
analytical survey of different milk companies in the Hubli area. In one sense, we can say that
it is determination of how much market captured by different milk companies

Changing lifestyles

Rising per capital income, increased literacy and fast urbanization have caused fast growth
and change in demand patterns. The rising aspiration levels, increase in spending power has
led to a change in the consumption pattern.

Geographical area of study

This geographical area is concerned to the where I conducted serve to analyze which is the
best milk brand in the Hubli city’s.

I conducted serve in the serve in Hubli City areas like Gokul road, CBT, Aruna colony,
Navanagar, Maruti Nagar, Sirur park circle, Desh pandye nagar, and Akshay Park, Lingaraj
nagar etc.
Chapter 6:- Data analysis and interpretations using various charts and

Chapter 7:- Findings


➢ There is 100% of the respondents are aware of Nandini brand

➢ 96 % of the respondents have observed the advertisements of Nandini Milk and
Milk products. Among 80% respondents who have observed the
advertisements, (80%) feel that the advertisements were informatory.
➢ Quality was given more importance with 72%, and then the next importance is
given for Availability with 20% response. thickness comes next with 08%,
where as the fat content carries very less importance with purchasing milk and
milk products
➢ Nandini Shubham milk carries highest of 54% of awareness, the next is
Standard Milk which carries the 24% of awareness.


These are the question which denotes the nandini whole and sole picture about its product and
its quality as well as services provided by nandini and its distributors.

➢ According to my findings in survey area there are 96% of retailer are fully satisfied
with the quality of products and remaining 4% retailers are not satisfied with the
quality of the product.
➢ There are 76% retailers who are satisfied with the quality services provided by the
distributors but there are 24% of the retailers who are not satisfied with the services
provided by the distributors
➢ Customer are demanding Nandini product but there are no distributor provided to
some shop, so they have to sale other brand.
➢ Sometimes distributor delivers product when exp date comes to close.
➢ This retailer wants to sale nandini product but there is no distributor them.
➢ Replacement is not done if product rotten.
➢ According to my findings in survey area there are 86% retailers who are satisfied with
the way the product are being delivered by distributors but there are 14% retailer who
are not satisfied with the way the product are delivered to them.

The remaining 14% retailers facing the problems as follows:

• There are no distributor allotted to the retailers in some backward area

➢ There are many suggestion given by retailers are as follows.
➢ Quality of Nandini is very good.
➢ Increase number of distributors for catering good service.
➢ Provide Nandini milk and milk product delivery in time and in enough quantity
➢ Provide replacement if product is rotten before expired date.
➢ Increase some margin in profit.

Chapter 8:- Limitations

Limitations of study and difficulties encountered:

Nothing in this universe is free from Limitations and present project is not an Acceptation
to it. Due to certain restrictions on the part of potential customers as well as actual
customers and Suppressed and based responses from them, appropriate Figure for relevant
data and their interpretation precisely this has been my personal experience while carrying
out the present study. Some of the limitations I found and difficulties encountered can be
enumerated as under:
➢ Annual reports and journals in the company were not readily available.
➢ Due to time and budgetary constraint, the sample size is restricted.
➢ The salesmen at the outlets showed their discontent with the tight schedule.
➢ Most of the retail respondents showed their discontent with the company for its
unsystematic distribution, replacement, short supply, incentives, and margin so
they were reluctant to talk about the company.
➢ People of the region were not conscious about the survey, so they were not much
➢ Many people do not know themselves why they use any particular brand as their
answer is “we use ……brand because we like it” so the actual reason behind their
liking is not confirmed. Many retailers do not like to interact because of their
business. People are not interested to fill questionnaire as they think it wastage of
time, this is again because of less scope of research in India

Chapter 9:- Expected contribution from the study

➢ Nandini is not providing good margin compare to the other brand in spite of retailer
have to sale Nandini products because customers are very brand loyal.
➢ Provide replacement if product is being rotten before expired date.
➢ Nandini should concentrate on pause area as well as backward area too
➢ Nandini should provide some scheme as other company is providing.

➢ The company should also look in to consumer’s relationship management. A growing

trend by which the company can succeed in winning customers confidence and

➢ The company needs to have a constant touch and communication with the consumers
and continuously needs. To get feedback from them and make necessary arrangements
and corrections to cater the needs of customers.

➢ In many areas there are no Nandini parlors, or dairy. Counters etc., it is better to open
the counters or parlors, in order to provide milk to the consumers to provide for
availability of Nandini products, in all areas.

I concluded that nandini has a very good image in the eye of its customer,
has a very good brand name. But one thing I come to know that its distribution channels in not
good in some wards and because of which retailers has to face many problem.

I also saw that the price of nandini product is high as compare to its
competitor product and hence nandini competitors are able to attract consumer towards their

Another thing is that nandini don’t give the replacement offers to the retailers
and because of which retailers are very much dissatisfied.
Copies of questionnaire
Copies of form(s)
From the company


This survey is an “Organisational Study & Marketing Distribution Channels towards

Karnataka Milk Federation (KMF)” to know the common public opinion on the nandini milk
& other milk dairy. This survey is for academic purpose only and the data collected will be
kept confidential.

Name: ____________________ Date: - / /2010

Address: ________________________________

Age: 20-30 30-40 40-50 50-60

Gender: Male Female

Education qualification: Under graduation Graduation Post graduation

Profession: Business man Govt Employee Pvt Employee Student

Contact no: _______________________
SECTION-2 Do you know about Nandini Brand Milk and Milk products?

(a) Yes (b) No How do you know about nandini milk?

(a) Advertising in print media (b) Advertising in television media (c) Shopkeeper Quantity used by you?

(a) 3 liters (b) 2 liters (c) 1 liters (d) 500ml (e) 200ml Do you prefer Nandini brand milk.

(a) Yes (b) No

A: If yes because of (a) Quality (b) Price (c) Taste (d) Thickness (e) Availability

B: If no any reason __________________________________ How do you purchase nandini milk?

(a)Yourself (b) Home Delivery What type of nandini milk do you use?

(a) Standard milk (b) Full cream milk (c) Toned Milk (d) Loose Milk Over all experience with nandini brand?

(a) Excellence (b) Good (c) Fair (d) Poor
Thank You

This survey is an “Organisational Study & Marketing Distribution Channels towards

Karnataka Milk Federation (KMF)” to know the retailer opinion on the nandini milk products
& other milk products. This survey is for academic purpose only and the data collected will be
kept confidential.

Name of the shop ___________________________
Address ___________________________
Telephone No . ___________________________ What are the milks you usually keep in your shop?

a) Nandini b) Aditya c) Srikrishna d) All Brands Does packing play major role in promoting sales?

a) Yes b) No At what price you sell the milk?

a) At M.R.P. b) Less than M.R.P. c) More than M.R.P. Customer purchase milk because of?

a) Price b) Quality c) Availability Behavior of supply persons?

a) Good b) Excellent c) Bad d) Average Product delivery time?

a) Good b) Bad


1) Text books

Marketing and Distribution Channels

→ Suja.R.nair

Marketing Research

→ K. Ashwathappa

Marketing management

→ Philip Kotler

Marketing management

→ Rajan Saxena

2) Journals & Magazines

3) Internet