Development of Strategies for Increasing Market Share of Amul Icecream at Retail Level in Patna

Faculty Guide: Prof. Sudeep S Kumar Prof. Simon George Industry Guide: Mr. Manoj Prabhakar

Presented By Tanvi Srivastava (10349) Vishwajeet Narayan (10356)

Started in 1946 in Anand, Gujarat

Amul(GCMMF ) is the largest cooperative business of small producers with an annual turnover of 2.15 billion US $.

2.8 million milk producer member families with 13,759 village societies and 13 District Unions. 8.5 million liters of milk procured per day and Rs. 150 million disbursed in cash daily.

Largest milk handling capacity in Asia. Largest Cold Chain Network. 48 Sales offices, 3000 Wholesale. Distributors, 5 lakh retail outlets. Export to 37 countries worth Rs. 150 crores

Dr. Verghese Kurien, the World Food Prize and the Magsaysay Award winner, was the architect of India’s White Revolution, which helped India emerge as the largest milk producer in the world. Currently, its headed by Mr Parthi Bhatol

Amul – An Overview

The ice cream industry in India is worth Rs. 2,000 crores.

The industry can be divided into the branded market and the unbranded market. The branded market at present is 100 million liters per annum valued at Rs. 800 crores In 2008-09, in the branded ice cream market, Amul held the number one spot, with a market share or 38%, followed by Kwality Walls at 14%, Vadilal at 12% and Mother Diary at 8%

The per capita consumption of ice cream in India is approximately 300 ml, as against the world average of 2.3 liters per annum.

Vanilla, Strawberry and Chocolate together constitute approximately 60% of the market.

Ice-cream Industry in India

NEED FOR THE PROJECT

Sales Turnover in US $ (in millions)
2500 2000

Sales

1500 1000 500 0
355 400 450 455 850 575 616 672 1050 1325 1504

1700

2172

493

493 500

500

Amul Sales Turnover

Amul Ice-cream Sales in Patna

Market Position of Amul icecream

4 3.5 3 Sales(in crores) 2.5 2 2.9 2.5 Market Position 3.2 3.7 4

4

3.5
3 2.5 2 1.5 1 0.5 0 2 3 3

1.5

1
0.5 0 2007 - 08 2008 - 09 2009 - 10

2010 -11 2010 -11

2009 - 10

2008 - 09

2007 - 08

Decreasing market-share in Patna

 Identification of problems in the distribution and supply chain that adversely affect the sales of Amul Ice-cream at retail level.  Study the behavior of the ice-cream market in Patna region.  Strategies for improving market share of Amul ice-cream in retail and push-cart segment.  Comparative study of different competitors vis-à-vis Amul in the ice-cream sector  Major parameters to be considered in comparative study I. Quality II. Market-share III. Brand value

Project Objectives

PART – I: PROBLEM IDENTIFICATION
 It was decided by the management that the project shall be focused only on the decreasing sales of Amul ice-creams.  The region to be covered in the initial stage would be Kankarbag colony and the whole Patna town at later stage.  The marketing of either Amul ice-creams or any other Amul products shall be out of scope for the project.  The analysis shall cover the analysis of issues faced by distributors, retailers and sales-man dealing with ice-creams only.  The entire sales process, starting from stock supply to dealing with margins to closing of sales, shall be in the scope of the project.

Scope & Limitations

PART-II: QUESTIONNAIRE BASED RESEARCH ON DISTRIBUTORS, RETAILERS AND CUSTOMERS
 The research shall focus on A/B/C/D type of shops dealing with icecreams or planning to do so, in future.  The research shall focus on the sales related variables only and not include matters under the purview of the Human Resources department.

Scope & Limitations

The project was approached in 4 phases: Phase 1: The Silent Observation Phase a. Total number of shops visited was 40. b. Act as silent observers of the ice-cream market of Amul and its competitors in the Patna city, at retail level. c. Information regarding the behavior and perception of retailers as well as customers was gathered. Phase 2: The Retailer Survey Phase a. Consisted of visiting various outlets(A/B/C/D shops) in different geographic locations in the city. b. Personal interviews with different distributors, salesman and the retailers in the region. c. Questionnaire was primarily based on the information gathered in previous phase.

Methodology

Phase 3: The Consumer Survey Phase a. Collection of information regarding the consumers’ buying behavior and their perception of ice-creams and the related brands in the Patna town. b. General survey was conducted keeping in mind the fact that it was beyond the scope of project. Phase 4: Push-Cart Segment Survey Phase a. Targeted the push-cart distributors and brands actively involved in this segment. b. Analyze the market and figure out reasons for Amul’s low presence in this segment.

Methodology

The conclusions derived after each phase: Phase 1: The Silent Observation Phase a. Different brands of ice-cream present in the Kankarbag area were: i. SnowBall ii. Creambell iii. Vadilal iv. Amul v. Golden vi. Rollick The graph below shows the customer’s preference in terms of taste and price Customer Preference Taste
No. of customers(in %) Candies 10% Cones 21% Chocobars 29% 50 40 30 20 10 0 Less than Between 5 5 to 10 4 10 35 46

Cups 40%

Between 10 to 25

Greater than 25

Research Analysis

Phase 2: The Retailer Survey Phase a. The sampling method used here is stratified sampling. b. The sample size was taken as 140 outlets for all strata. c. The regions covered in this phase were: i. Boring Road ii. Belly Road iii. Maurya Lok Complex iv. Gandhi Maidaan v. Kurjee( P&M Mall and Big Baazar) Breakup of the number of stores covered of each class in % in the Kankarbag region (Fig 1) and the whole Patna town (Fig 2).
Kankarbag Region A
8% B 22%

Patna Region
A 16% C 55% B 29%

C 70%

Research Analysis

Phase 2: The Retailer Survey Phase Contd… The ice cream market is estimated to be between Rs 35 crore and Rs 40 crore
The graph below depicts the current market share of different brands in the town.
40 30 40

25 20

20
10 10 0 3

Amul

Cream bell

2

Snow ball

Golden

Vadilal

Rollick

Research Analysis

Phase 3: The Consumer Survey Phase a. The sample size in this case was 300. b. Customers are price-conscious and prefer the ice-creams in the range of Rs 5 to Rs 25. c. Most of customers are not brand-conscious and would go for any icecream which is readily available. d. Profile of respondents:
Occupation
Student 34% Home Maker 32% Female 56%

Sex
Male 44%

SelfEmployed 24%

Service 10%

Research Analysis

Phase 3: The Consumer Survey Phase Contd… a. Sales of ice-cream increases by almost 50% in the marriage season. b. The major factors to be considered in this phase: i. Availability ii. Seasonality iii. Awareness c. Push-carts have major penetration among the customers. d. Profile of respondents: Income Level
< 2 lakhs 9% > 8 lakhs 15% 5 - 8 lakhs 22% 3 - 5 lakhs 34% 40 - 50 yrs 14%

Age Group
> 50 yrs 12% < 20 yrs 32%

2 - 3 lakhs 20%

30 - 40 yrs 16%

20 - 30 yrs 26%

Research Analysis

Phase 4: Push-Cart Segment Survey Phase a. The biggest factor that has been affecting Amul’s presence in the market is its short and poor supply. b. Different players in the push-cart segment: i. Vadilal ii. Treat iii. Golden iv. Amul v. Sudha

Margin Offered to Distributors
38% 40% 30% 20% 10% 0% Golden: On Golden: On cups bricks 22% 40% 30% 30% 25% 20% 20% 15% 10% 5%

Margin Offered to Vendors
22% 16% 20% 15% 17%

Treat

0% Vadilal

Amul

Research Analysis

Bar-graph drawn below measures the over-all satisfaction level of retailers and distributors separately on a scale of 1 to 5.

Satisfaction Level

3

3.5

4

Satisfaction Level

Satisfaction Level of Retailers
3 3.5 3

Satisfaction Level of Distributors
3
3.5 4 3.5 3.5 3.5

Amul Cream Snow bell ball

Amul

Golden

Vadilal

Cream bell

Rollick

Snow ball

Golden

Vadilal

Rollick

Main factors affecting the satisfaction level of retailers are: Margins offered by the companies and Replacement policy.
S. No. Brands Margins Offered to the Retailers Replacement Policy

1
2 3 4 5 6

Amul
Snow - ball Cream - bell Vadilal Golden Rollick

17.5 %
35 – 40 % 17 – 19% 17 – 19% 30 – 40% 18 – 19%

Conditional
None None Conditional None None

Data Analysis

Factor Analysis: The different factors considered are: a. Price b. Quality c. Availability d. Packaging e. Taste f. Awareness Three important factors on which the sales of Amul ice-cream depends in the Patna region.
Factor 1 Taste Awareness Quality Factor 2 Price Factor 3 Availability

Factor Analysis data sheet Customer Response Sheet

Data Analysis

STRENGTHS 1. A well-known brand. respected for its quality, thus less effort required to market Amul ice-creams. 3. Huge demand from customers. 4. Ice-cream made up of fresh milk, unlike others which are made up of vegetable oils.

WEAKNESSES 1. Very poor supply. 2. Inability to provide the entire range of ice-creams during the peak season. 3. Low number of distributors. 4. Very low number of push-carts in the city. 5. No incentive of any kind by the company in the push-cart segment.

OPPORTUNITIES 1. Exploit its huge customer demand by maintaining its demand-supply equilibrium. 2. Increase in the number of push-carts will lead to increase in distributors and in turn will mean increase in sales. 3. There are areas which still need to be tapped. Ex Eco Park (near Strand Road).

THREATS 1. Tendency among the Amul pushcart vendors to switch to other brands. 2. Ice-cream buying behavior mainly depends on the availability in this region 3. Difficult to compete with the local players

AMUL ice-cream’s SWOT Analysis

Push-cart supplied by Amul is manufactured by Voltas (currently by Rockwell) and is shipped from Kolkata. The details of the price-list:
HAPC Rockwell Tricycle Push-Carts 38250 Voltas 41384 39114

If purchased locally, the distribution of costs for a 200 litres pushcart:
Cost of tricycle i.e. framework : Rs 11000-11500 Cost of Western deep-freezer : Rs 24500 (for 200 ltrs, the actual capacity is 130 ltrs) Miscellaneous expenses(inverter, tube-light etc) : 1500 Hence, the total cost comes up to Rs 37000 – 38000. This includes all the taxes and road permit etc which is an addition of 13%. The same when ordered locally (i.e. centrally purchasing) costs less as the taxes and transportation costs are reduced. Hence the cost of one push-cart comes up to Rs 33000 – 34000. Hence, one is able to save 4000 approx., significantly less than what Amul charges for the same.

Data Analysis

1. Amul ice-creams have a huge demand in the town. 2. A brand respected for its quality, hence less effort required to market. 3. Adheres to the norms of ‘ice-cream’ as against ‘frozen dessert’ made of pure milk. 4. Local players very strong in the region. 5. Very poor supply. 6. Entire range of ice-creams absent in the retail stores. 7. Stock outs faced during peak season. 8. Very low number of push-carts in the town. 9. Very few distributors in the push-cart segment present. 10. No incentive in the push-cart segment. 11. Consumers mostly not brand biased while purchasing ice-creams. 12. Target setting done on an annual basis.

Conclusions

Increase the number of SKU’s.

Can put up a factory of the best selling items like cups and chocobars, in the local vicinity.

Increase the number of distributors in the retail as well as the push cart segment.

Tap the areas in the town where there is huge sales potential.

Recommendations

Decrease the cost of push-cart by buying it locally.

The target setting needs to be done on monthly basis rather than the annual basis and it needs to be aggressive.

Recommendations

1. www.amul.com 2. www.wikipedia.org 3. http://www.dare.co.in/opportunities/other-business-opportunities/ice-creamindustry-in-india.htm

References

Thank You

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