A

Project Report
On
The Magnetic Marketing of
“Amul”

CONTENTS
1
 DECLARATION…………………………………………………………………1

 INTRODUCTION………………………………………………………………….2

 AMUL – THE ORIGIN…………………………………………………………..3

 COMPANY PROFILE ………………………………………………………….4

 KEY FEATURES OF AMUL……………………………………………………6

 PRODUCT – THE SOUL OF AMUL…………………………………………...7

 PRODUCTS AT A GLANCE…………………………………………………….8

 PLACE……………………………………………………………………………..

 DISTRIBUTION NETWORK……………………………………………………

 THE NETWORK AT A GLANCE………………………………………………

 SELECTION, MOTIVATION & EVALUATION

OF CHANNEL MEMBERS……………………………………………………..

 THE e-EXPERIENCE OF AMUL………………………………………………

 CONCLUSION…………………………………………………………………….

 BIBLIOGRAPHY…………………………………………………………………

INTRODUCTION
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India is the largest milk producing country in the world after US. In 1997, total
milk production in the country was 72 million tonnes, accounting for 13% of the
world’s total milk production.

During the last three decades, the progress made by the country in increasing milk
production is remarkable. Annual milk production in India has made a quantum
jump from 22 million tonnes in 1970 to 74 million tonnes in 1998–99.

The Operation Flood launched in 1970 under Dr Verghese Kurien was successful
in modernizing the dairy sector in India and creating a strong network for
procuring, processing and distribution of milk through the co-operative sector.
Operation Flood also organized dairy co-operatives in milk shed areas of villages
and links them to metros - the major market for milk .First dairy co-operative -
National Diary Development Board (NDDB), at Anand, Gujarat.

Amul's success led to the creation of similar structures of milk producers in other
districts of Gujarat. They drew on Amul's experience in project planning and
execution. Thus the 'Anand Pattern' was followed not just in Kaira district but in
Mehsana, Sabarkantha, Banaskantha, Baroda and Surat districts also.

Major milk procuring centres in India are: Anand (Gujarat), Mumbai

(Maharashtra) , Chennai, Erode, Salem (Tamilnadu), Bangalore (Karnataka), New
Delhi, Hyderabad (Andhra Pradesh).

The milk market at a glance

 Today in India the liquid milk production is 74 million MT / year and the
milk production growing at around 5 % CAGR.
 In India around 9 MT is pasteurized & packed while the rest is sold loose.
 The demand from metros for packaged milk - around 6 million MT which is
a potential market.
 Per capita milk consumption in India has grown from 132 gms / day to 233
gms per day in 1997-98.

COMPANY PROFILE
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The story of Amul inspired the 'Operation Flood' and heralded the 'White
Revolution' in India. It began with two village cooperatives and 250 liters of milk
per day, nothing  but a trickle compared to the flood it has become today.

Amul (Anand Milk Union Limited), formed in 1946, is a dairy cooperative

movement in India. It is a brand name managed by an apex cooperative
organization, Gujarat Co-operative Milk Marketing Federation Ltd.
(GCMMF), which today is jointly owned by some 2.6 million milk producers in
Gujarat, India.

AMUL is based in Anand, Gujarat and has been a sterling example of a co-
operative organization's success in the long term. It is one of the best examples of
co-operative achievement in the developing economy. "Anyone who has seen ...
the dairy cooperatives in the state of Gujarat, especially the highly successful one
known as AMUL, will naturally wonder what combination of influences and
incentives is needed to multiply such a model a thousand times over in developing
regions everywhere. The Amul Pattern has established itself as a uniquely
appropriate model for rural development. Amul has spurred the White Revolution
of India, which has made India the largest producer of milk and milk products
in the world. It is also the world's biggest vegetarian cheese brand.

Amul is the largest food brand in India and world's Largest Pouched Milk
Brand with an annual turnover of US $1050 million (2006-07). Currently Amul
has 2.6 million producer members with milk collection average of 10.16 million
liters per day. Besides India, Amul has entered overseas markets such as Mauritius,
UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South
African countries. Its bid to enter Japanese market in 1994 had not succeeded, but
now it has fresh plans of flooding the Japanese markets .Other potential markets
being considered include Sri Lanka.

Dr Verghese Kurien, former chairman of the GCMMF, is recognized as the man

behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the
Banaskantha Union, was elected chairman of GCMMF.

AMUL –AT A GLANCE

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Member 13 district cooperative milk
producers' Union
No. of Producer Members 2.79 million

No. of Village Societies 13,328

Total Milk handling capacity 11.22 million litres per day

Milk collection (Total - 2008-09) 3.05 billion litres

Milk collection (Daily Average 8.4 million litres
2008-09)
Milk Drying Capacity 626 Mts. per day
Cattle feed manufacturing 3500 Mts per day
Capacity

TYPE Cooperative
ESTABLISHED 1946
NAME Anand, India
Chairman, Gujarat Co-operative Milk
HEADED BY
Marketing Federation Ltd. (GCMMF)
PRODUCTS Dairy
REVENUE $1.33 billion USD (in 2007-08)

SUPPLIERS 2.79 million milk producers

WEBSITE www.amul.com

GCMMF TODAY
GCMMF is India's largest food products marketing organisation. It is a state
level apex body of milk cooperatives in Gujarat, which aims to provide
remunerative returns to the farmers and also serve the interest of consumers
by providing quality products, which are good value for money. GCMMF

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markets and manages the Amul brand. From mid-1990's Amul has entered
areas not related directly to its core business. Its entry into ice cream was
regarded as successful due to the large market share it was able to capture
within a short period of time - primarily due to the price differential and the
brand name. It also entered the Pizza business, where the base and the recipes
were made available to restaurant owners who could price it as low as 30
rupees per pizza when the other players were charging upwards of 100
rupees.

In September 2007, Amul emerged as the leading Indian brand according to a

survey by Synovate to find out Asia's top 1000 Brands

Despite of the economic slowdown Amul has managed to maintain its profit
figures. The sales turn over Amul for the year 2008-09 is Rs. 67113 million.

AMUL’S TARGET MARKET

 Wide range of product categories caters to consumers across all

market segments. For example, Amul kool is targeted at

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 children, while teenagers prefer Kool Café, as it has a cool
imagery associated with it.

KEY FEATURES OF AMUL

 A mass market player
 No premium offerings
 Product level- moved from core benefit to expected benefit.

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  Product type - consumable and perishable products

PRODUCT CLASIFFICATION

DURABILITY AND CONSUMER GOODS INDUSTRIAL GOODS

TANGIBILITY TYPE TYPE

NON DURABLE CONVENIENCE GOODS MATERIAL AND PARTS

GOODS(Amul) (RAW MATERIALS)

STAPLES FARM PRODUCTS

(Amul) (Amul)

 USP- Quality and affordability

 Up against major players – value addition to customers
 Strength- Sheer size and scale of operation
 First entry – first mover advantage
 Continuous New offerings for health conscious and vibrant India.

PRODUCT – THE SOUL OF AMUL

AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit
"Amoolya," was suggested by a quality control expert in Anand. Variants, all
8
meaning "priceless", are found in several Indian languages. Amul products have
been in use in millions of homes since 1946.

The product mix of a company, which is generally defined as the total composite
of products offered by a particular organization, consists of both product lines and
individual products. In this case for E.g. Bread spreads, milk drinks, cheese,
powder milk etc.

A product line is a group of products within the product mix that are closely
related, either because they function in a similar manner, are sold to the same
customer groups, are marketed through the same types of outlets, or fall within
given price ranges. Here For E.g. Powder milk, Fresh milk, health drinks etc.

A product is a distinct unit within the product line that is distinguishable by size,
price, appearance, or some other attribute. E.g. Amul lassee, amul lite.

Like any other product Amul’s product mix also has a certain width, length, depth
and consistency. These are summarized in the table next page.

 The width of a product mix refers to how many different product lines Amul
carries, which are nine in no. as shown in table.

 The length of a product mix refers to the total no. of items in the mix. Here
in the table it is 48.

 The Depth of a product mix refers to how many variants are offered of each
product in the line. Like here Amul Pure Ghee comes in two variants with
three diff. pack. Sizes, then it has depth of six.

 The Consistency of the product mix refers to how closely related the various
product lines are in end use, product lines, or some other way. Here Amul’s
product lines are consistent insofar as they are consumer goods going
through same distribution channel.

PRODUCT-MIX WIDTH
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Bread Milk Powder Fresh Cheese Desserts Pasteurized Health For
Spreads Drinks Milk Milk Milk Drink Cooking
Amul Butter Amul Kool Amulya Amul Amul Amul Ice Toned Nutramul Amul /
Millk Shaake Dairy Fresh Pasteurised Creams Sagar Pure
Whitener Milk Processed Ghee
Cheese
Amul Lite Amul Kool Sagar Tea Amul Amul Amul Double toned Amul Amul Malai
Coffee Gold Emmental Mithaee Shakti Paneer
Whitener Milk Cheese Gulab Health
Jamuns Food
Drink

Delicious Amul Kool Sagar Amul Amul Pizza Pure Khoya Full cream Mithai
Table Cafe Skimmed Taaza Mozzarella Gulab Mate
Margarine Milk Powder Double Cheese Jamums
Toned
Milk

Kool Koko Amul Instant Amul Gouda Amul Probiotic milk Sweetened
Full Cream Lite Slim Cheese Chocolates Condensed
Milk Powder and Trim Milk
Milk

Nutramul Amul Spray Amul Amul Cheese Amul Flavored milk Masti Dahi
Energy Drink Infant Milk Fresh Spreads Lassee
Amul Kool Food Cream
Chocolate
Milk

PRODUCT PORTFOLIO

CATEGORY MARKET MARKET

SHARE POSITION
Butter , Ghee 85% 1
Milk Powder 40% 1

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 Cheese 50% 1
Ice cream 24.75% 2
Sweets 50% 1
Chocolate Drink 90% 1
Chocolate 10% 3

PLACE

Amul has effectively managed flow of its products. It has always focused on easy
consumer accessibility. The products are available in small shops as well as in
large retail outlets also.

Amul has recently entered into direct retailing through "Amul Utterly Delicious"
parlours created in major cities Ahmedabad, Bangalore, Baroda, Delhi, Mumbai,
11
Hyderabad and Surat. Amul has plans to create a large chain of such outlets to be
managed by franchisees throughout the country. Amul Parlours were created at
some prominent locations in the country, which are run by the company or its
wholesale dealers.

1. Delhi Metro Rail Corporation

2. The Somnath Temple
3. National Institute of Design
4. Infosys Technologies in Bangalore, Mysore & Pune
5. Wipro campus in Bangalore
6. L.J. College, Ahmedabad
7. Ahmedabad Airport
8. Surat Municipal Corporation
9. Delhi Police
10.Gujarat State Raod Transport Corporation
11. Jubilee Mission Medical College, Trichur, Kerala
12. Sanjay Gandhi Hospital Parlour, Amethi
13. Indian Institute of Management, Kolkata
14. Cafe Amul, MDG, Gandhinagar

"Amul Utterly Delicious" parlours are an excellent business opportunity for

investors, shopkeepers and organizations. In order to come closer to the customer,
we have decided to create a model for retail outlets, which would be known as
"Amul Preferred Outlets"(APO).

DISTRIBUTION NETWORK

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THE CHANNEL NETWORK

13
 GCMMF

Head office

GCMMF Manufacturing

Head office

First Leg (From Manufacturing Unit)

Depot...1 Depot...n

Second leg

WD…1 WD…n

Third leg

Retail…1 Retail...n

Procurement Channel
Distribution GCMMF
14
Head Office
 SCM AND MARKET LOGISTICS

THE NETWORK AT A GLANCE

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Milk is procured from the villages and collected at Village Cooperative Societies
(VCS), from there the milk is taken to manufacturing units where the milk is
processed into various products.

The products are then transporters to the company Depots located in various parts
of the country. The products are then sent to Wholesale Distributors (WD) and
from there to the retailers.

THE FACT SHEET

 Milk is procured twice a day from 2 million from Gujarat alone

 The payment is made under twelve hours of procurement
 There are 10000 village cooperative societies
 There are 3600 wholesale distributors in the country
 45 depots
 The C&F agents are not fixed and are decided by the local company
offices
 There are approximately 4,50,000 retailers spread all over India
 Total house hold consumers covered are 100,000
 The milk procured per day is 5 million liters
 Where the total capacity of operation is 7 million liters per day
 The peak processing till date has been 6 million liters per day
 These co operative societies are bound to supply there produce only to
GCMMF

CHANNELS

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Upstream Channel: In which milk is procured from the farmers to the
manufacturing units.

1. In the first step, the milk is taken to the VCS by the farmers on foot or
bicycles in small quantities
2. The second step involves the transportation of milk from the co-
operatives to the manufacturing units this is done in special trucks
which are equipped with tankers to carry milk.

Downstream Channel: It is the distribution part of the supply chain from the
manufacturing units to the retailers.

1. First leg
First leg of transport is from the manufacturing unit to the company
depots. This is done using 9 and 18 MT trucks any lesser quantity
will be uneconomical to the company there fore is some time the
quantity ordered is lesser then club loading is done which means that
the product ordered is supplied with some other products.

a. Frozen food the temperature of these trucks is kept below

-18˚C
b. Dairy wet the temperature of these trucks is kept between
0-4˚C

2. Second leg
It is from the depot to the WD’s, this transport is carried out in
insulated 3 and 5 MT TATA 407’s here a permanent dispatch plan
(PDP) is prepared where the distributor plans out the quantity of
various products to be ordered on a particular date.

3. Third leg
This is the flow of good from WD’s to retailers, a beat plan is
prepared and transportation is done on auto-rickshaws, rickshaws and
bicycles.

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SELECTION, MOTIVATION & EVALUATION
OF CHANNEL MEMBERS

Selection:
The company takes into consideration a host of factors while selecting the channel
members. This is because GCMMF believes that selection of channel members is a
long run decision & the rest of the decision regarding the supply chain depends
upon the efficiency & coverage by the channel members. The following are the
host of factors considered by the company in selecting the channel members:

 Authentication is required by the regarding the identity of the channel members,

which includes the name & address, photograph of the location.

 Proof of solvency which requires name & address of the channel member’s
bankers

 Safety of the inventory, which means that the distributor/ dealer should get the
stock of the company insured.

 Inventory or the perishable goods kept by the distributor/ dealer should be in

good condition which means a detail of storage space & Refrigeration facility is
to be provided. Refrigeration system should have deep freezers, cold room &
walk in coolers.

 Details of the delivery vehicle, which includes Light Commercial Vehicles,

Matador, 3 Wheeler Van, Tricycle Van & Hand/Push cart. The number &
model of each of the vehicle needs to be furnished to the company.

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 GCMMF acknowledges the fact that it needs to be sensitive to the market
demands. For this it requires that a number of salesmen needs to be present on
the field. The salesmen too are divided into various categories like the Field
salesmen & Counter salesmen. Also the details of Clerical Staff & Mazdoors
are to be provided. The technical competence of the salesmen needs to be
mentioned

 Details of the product kept of other companies have to be provided. The annual
sales of these products too have to be mentioned. Also details of
complementary products & product lines need to be mentioned.

 Dealers of the company must carry a good reputation. This is due to the fact
that the company believes reputation of the dealer affects the clientele.

 Market coverage by the distributors needs to be defined which includes details

of Geographic coverage & Outlets per market area.

 The company also requires the dealers to furnish any Advertising & Sales
initiative undertaken by them on behalf of the company.

Motivation of Channel Members

GCMMF strongly believes in maintaining a good relationship with the channel

members so that they are genuinely motivated to work for the company. Also if the
channel members are motivated, they can also initiate advertising & sales
promotion schemes on behalf of the company. However to keep the channel
members motivated to work, the company has to incur certain costs but the
benefits of it are felt in the long run. The following are the motivation programs
run by the company:

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Distributors
 One of the main factors, which keep the distributors motivated, is the margin.
Usually the margins offered by the company are 8% & it is raised to 8.5%.
Volume wise this comes out to be a big figure since Amul’s product has a good
demand in the market. However compared to the other companies the margins
are still lower since the new players in the market offer a much higher margin.
But the very fact that Amul’s products have good demand in the market
motivates the distributors to stock it.

 Amul being a cooperative cannot afford to give heavy monetary incentives.

Amul’s products are considered to be value for money since the company does
not believe in charging high margins. In fact all monetary incentives are just the
short run means to promote the company’s product. In order to keep the
Channel members motivated in the long run, Amul builds on the concept of
“Trade Marketing” which makes the dealers & the distributors believe that the
company’s products are worthy of being pushed in the market.

 The company is organizing various Total Quality Management initiatives &

workshops. Here various counseling measures are undertaken by the company
to improve the overall working of the distribution network.

 Vision and mission statement: the company cascades down the vision to the
various channel members, this is done through various events organized by the
company at different locations where the values of the company are made clear
and enforced to the channel members.

 Amul yatras: this includes taking the channel members on a guided tour of the
manufacturing and procuring facilities in Gujarat. So that the channel members
can have an experience of the working of the company and can pick up some
quality measures that can help them to synchronize and improve their own
functioning at various levels. This in turn help the company to co ordinate the
entire value chain, as the channel members understand the various constraints
and liberties the company goes through. The company has already got the Rajiv
Gandhi award for quality.

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Retailers
 Trade schemes: these are undertaken by the company only for the hard selling
items e.g. Ice creams, flavored milk etc. for these the company raises the
margins by 2%, also schemes like good packaging incase of butter and cheese is
undertaken by the company. However this is only a short-term initiative to push
the products of the company.

 Glow boards: the company puts up glow boards at the retailer and pays the
major portion of the cost.

 Schedule of the salesmen: they provide the retails with this schedule so the
retailers can pre estimate the quantities of the various products needed.

 Infrastructure facilitation: the company facilitates the retailers to buy freezers

and fridges by formulating an easy payment program and a commitment to buy
back the equipment at a reasonable price when the value of the equipment has
depreciated.

Evaluation of channel members

 Beat plan: this plan is generated for the various product categories i.e. diary
dry, diary wet, Dhara and ice cream. A weekly schedule is prepared for
various markets and the retailers the turnover for each of the product is
calculated for the wholesale dealers.

 Cumulative performance: the performance of the dealers is averaged out

over a period of three years where a comparison is made of the present
performance vis-à-vis the previous ones.

 Target versus achievement: the performance and the targets are compared
and therefore the gaps are identified which help in evaluating the WD and
planning for the next year as well. This is done for each of the product
category.

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 THE e-EXPERIENCE OF AMUL

Enterprise resource planning

The company at has implemented an ERP program as low as Rs. 3 corers in
collaboration with TCS ltd. The company uses it, the data right from the
procurement from the farmers till the delivery of goods to the retailers is fed into
the system. The software enabling the channel members to use for the
synchronized working and best possible utilization of the available resources
maintains details regarding the inventory management. Market logistics deals
with the implementation of the SCM of the company.

The scale of operations of Amul is very large and complex because of the huge
supplier base the Gujarat Village cooperative society members. Amul makes about
10 millions payment daily amounting to transactions worth Rs.170 million in
cash. More than 500 trucks move the milk from villages to 200 dairy processing
plants twice a day. The IT initiatives of Amul started in 1994 IT became the major
thrust area of GCMMF as it can facilitate improvements in operational efficiency.
Since then GCMMF is marching in a big way starting from AMCUS to today’s
DISK.

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 ROAD AHEAD FOR AMUL
To improve further Amul can try out following ideas:

 Amul can venture out on new products like toned milk, condensed milk that
can be used for sweets, baby products.

 There are certain products like amul basundi, gulaab jamun, chocolates etc
which are not as popular as ice creams. Amul must try to understand the
cause of this through thorough market research and work on improving these
products.

 Though amul’s hoardings are a huge success, it can penetrate even better in
the rural areas by advertising through the media via cable channels and
newspapers. Sponsoring shows in TV, sports events can be of great help.

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 CONCLUSION

Amul may justifiably take pride in having built the largest food product business in
the country; they do not pause to rest upon our laurels. In this environment, Amul
has survived and grown on the basis of its greatest strength: co-operative culture,
co-operative networking, market acumen and respect for both producer and
the consumeThus the magnificent marketing mix of Amul has strengthened its
hold in the market beyond comparision.It is indeed magnetic as it has attracted &
retained customers, suppliers, emlopyees, stake holders for years long.

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 EXIHIBIT

Figure 1- MILK OUTPUT IN INDIA

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 BIBILIOGRAPHY
Books:

 Marketing Management by Kotler, Keller, Koshy, jha.

(13th edition- Reprint 2003)

Published by- Prentice Hall Publishers(P) LTD

 Marketing Management by Philip Kotler

Published by- Tata McGraw-Hill Publishing Company Limited, New

Delhi.

Web sources:

 www.amul.tv
 www.amul.com
 business.outlookindia.com

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Thank You

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