General Management Project on

(A Study on strategies followed by AMUL)

Submitted in partial fulfillment for the award of degree of

Master of Management Studies (MMS)

(Under University of Mumbai)

Submitted by

Owis Husenali Bashid

M17106B1028

Marketing

Batch 2017-2019

UNDER THE GUIDANCE OF

(Manasi Phatak)

A PROJECT SUBMITTED IN PARTIAL FULFILMENT OF MMS TO

VIDYALANKAR INSTITUTE OF TECHNOLOGY

Wadala (East), Mumbai 400 037

1
CERTIFICATION

This is to certify that project titled “(A Study on strategies followed by AMUL)” is successfully
completed by Mr. Owis Husenali Bashid during the IV Semester, in partial fulfillment of the
Master’s Degree in Management Studies recognized by the University of Mumbai for the
academic year 2018-2019 through ________________________________________________

_________________________________________________________________________

This project work is original and not submitted earlier for the award of any degree / diploma or
associateship of any other University / Institution.

Name: OWIS HUSENALI BASHID

Roll No.: M17106B1028 (Signature of the Guider)

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DECLARATION

I hereby declare that this Project Report submitted by me to the Vidyalankar Institute of
Technology, Wadala, Mumbai -400037 University of Mumbai is bonafide work undertaken by
me and it is not submitted to any other University or Institute for the award of any degree
diploma/ certification or published any time before.

Name: OWIS HUSENALI BASHID

Roll No.:M17106B1028 Signature of the student

3
ACKNOWLEDGEMENT 

This report has been made possible through direct and indirect support of various people for
whom I wish to express my appreciation and gratitude.

I would like to give my special thanks to my respected mentor Mrs. Manasi Phatak (V.I.T
Professor) for guiding me to make this project meaningful.

OWIS HUSENALI BASHID

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 Table of content

TOPIC PAGE NUMBER

Introduction on Amul 06

Amul Model 07

Industry Profile 08

Amul vision, mission, objective 11

Strategies (Meaning, definition) 16

Organizational structure of Amul 18

Marketing Mix 4ps 22

Swot Analysis 29

Distribution Strategy 32

Pest Analysis 34

Porter’s 5 forces model 36

Ansoff Matrix 39

BCG MATRIX OF Amul 45

Bibliography 48

INTRODUCTION

The Birth of Amul

 It all began when milk became a symbol of protest

5
 Founded in 1946 to stop the exploitation by middlemen

 Inspired by the freedom movement

The seeds of this unusual saga were sown more than 65 years back in Anand, a small town in the
state of Gujarat in western India. The exploitative trade practices followed by the local trade
cartel triggered off the cooperative movement. Angered by unfair and manipulative practices
followed by the trade, the farmers of the district approached the great Indian patriot Sardar
Vallabhbhai Patel for a solution. He advised them to get rid of middlemen and form their own
co-operative, which would have procurement, processing and marketing under their control.

In 1946, the farmers of this area went on a milk strike refusing to be cowed down by the cartel.
Under the inspiration of Sardar Patel, and the guidance of leaders like Morarji Desai and
Tribhuvandas Patel, they formed their own cooperative in 1946. 
This co-operative, the Kaira District Co-operative Milk Producers Union Ltd. began with just
two village dairy co-operative societies and 247 litres of milk and is today better known as Amul
Dairy. Amul grew from strength to strength thanks to the inspired leadership of Tribhuvandas
Patel, the founder Chairman and the committed professionalism of Dr Verghese Kurien, who
was entrusted the task of running the dairy from1950.

The then Prime Minister of India, Lal Bahadur Shastri decided that the same approach should
become the basis of a National Dairy Development policy. He understood that the success of
Amul could be attributed to four important factors. The farmers owned the dairy, their elected
representatives managed the village societies and the district union, they employed professionals
to operate the dairy and manage its business.

Most importantly, the co-operatives were sensitive to the needs of farmers and responsive to
their demands.

At his instance in 1965 the National Dairy Development Board was set up with the basic
objective of replicating the Amul model. Dr. Kurien was chosen to head the institution as its
Chairman and asked to replicate this model throughout the country.

The Amul Model

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The Amul model of dairy development is a three-tiered structure with the dairy cooperative
societies at the village level federated under a milk union at the district level and a federation of
member unions at the state level.

 Establishment of a direct linkage

between milk producers and consumer
by eliminating middlemen

 Milk Producers (farmers) control

procurement, processing and marketing.

 Professional management

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The Amul model has helped India to emerge as the largest milk producer in the world. More than
15 million milk producers pour their milk in 1,44,500 dairy cooperative societies across the
country. Their milk is processed in 184 District Co-operative Unions and marketed by 22 State
Marketing Federations, ensuring a better life for millions.

Industry Profile

Dairy is a place where handling of milk and milk products is done and technology refers to the
application of scientific knowledge for practical purposes. Dairy Technology has been defined as
that branch of dairy science, which deals with the processing of milk and the manufacture of
milk products on an industrial scale. The dairy sector in the India has shown remarkable
development in the past decade and India has now become one of the largest producers of milk
and value-added milk products in the world.

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The dairy sector has developed through co-operatives in many parts of the State. During 1997-
98, the State had 60 milk processing plants with an aggregate processing capacity of 5.8 million
litres per day. In addition to these processing plants, 123 Government and 33 co-operatives milk
chilling centers operate in the State. Also, India today is the lowest cost producer of per litre of
milk in the world, at 27 cents, compared with the U.S' 63 cents, and Japan’s $2.8 dollars.

Amul in abroad:

Amul is going places. Literally. After having established its presence in China, Mauritius and
Hong Kong, Gujarat Cooperative Milk Marketing Federation (GCMMF), India largest milk
cooperative is waiting to flood the Japanese market.

Then, GCMMF is also looking at Sri Lanka as one of its next export destinations. Amul products
are already available on shelves across several countries, including the US, China, Australia,
West Asian countries and Africa.

GCMMF

Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), is India's largest food

product marketing organization with annual turnover (2016-17) US$ 4.1 billion. Its daily milk
procurement is approx. 18 million lit per day from 18,549 village milk cooperative societies,
18-member unions covering 33 districts, and 3.6 million milk producer members. It is the
Apex organization of the Dairy Cooperatives of Gujarat, popularly known as 'AMUL’, 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. Its success has not only been
emulated in India but serves as a model for rest of the World. It is exclusive marketing
organization of 'Amul' and 'Sagar' branded products. It operates through 56 Sales Offices and
has a dealer network of 10000 dealers and 10 lakh retailers, one of the largest such networks in
India. Its product range comprises milk, milk powder, health beverages, ghee, butter, cheese,
Pizza cheese, Ice-cream, Paneer, chocolates, and traditional Indian sweets, etc.

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GCMMF – An Overview

Year of Establishment 1973

18 District Cooperative Milk
Members
Producers' Unions
No. of Producer Members 3.6 Million
No. of Village Societies 18549
Total Milk handling capacity per
30 Million litres per day
day
Milk Collection (Total - 2016-17) 6.44 billion litres
Milk collection (Daily Average
17.65 million litres
2016-17)

Cattle feed manufacturing Capacity 7800 Mts. per day

Sales Turnover -(2016-17) Rs. 27043 Crores (US $ 4.1 Billion)

GCMMF SALES TURNOVER IN GRAPHICAL REPRESENTATION

Sales Turnover Rs (million) US$ (in million)

2013-14 181434 3024

2014-15 207330 3410
2015-16 229720 3500
2016-17 270850 4100

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 SALES IN MILLION
300000

250000

200000

150000

100000

50000

0
2014-15 2015-16 2016-17

SALES IN MILLION

AMUL Vision Mission and Future Plans

VISION:

 Liberate our farmers from economic oppression and lead them to prosperity.

MISSION 2020:

 Dairy cooperatives of Gujarat turnover of Rs. 27000 crores by the year 2020.

 To satisfy the taste and nutritional requirements of the consumers and increasing number
of these consumers today are to be found only at the large format stores. Hence, in order
to reach these consumers, we need to form equitable alliances with organized retail
chains wherever possible.

Objective:

 Is to ensure that the maximum share of the consumer’s rupee goes back to the
milk producers.

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WHAT IS STRATEGY?

The word “strategy” is derived from the Greek word “stratçgos”; stratus (meaning army) and
“ago” (meaning leading/moving).

Strategy is an action that managers take to attain one or more of the organization’s goals.
Strategy can also be defined as “A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed strategic
planning process”.

A strategy is all about integrating organizational activities and utilizing and allocating the scarce
resources within the organizational environment so as to meet the present objectives. While
planning a strategy it is essential to consider that decisions are not taken in a vaccum and that
any act taken by a firm is likely to be met by a reaction from those affected, competitors,
customers, employees or suppliers.

Strategy can also be defined as knowledge of the goals, the uncertainty of events and the need to
take into consideration the likely or actual behavior of others. Strategy is the blueprint of
decisions in an organization that shows its objectives and goals, reduces the key policies, and
plans for achieving these goals, and defines the business the company is to carry on, the type of
economic and human organization it wants to be, and the contribution it plans to make to its
shareholders, customers and society at large.

Features of Strategy

1. Strategy is Significant because it is not possible to foresee the future. Without a perfect
foresight, the firms must be ready to deal with the uncertain events which constitute the
business environment.
2. Strategy deals with long term developments rather than routine operations, i.e. it deals
with probability of innovations or new products, new methods of productions, or new
markets to be developed in future.
3. Strategy is created to take into account the probable behavior of customers and
competitors. Strategies dealing with employees will predict the employee behavior.

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Strategy is a well-defined roadmap of an organization. It defines the overall mission, vision
and direction of an organization. The objective of a strategy is to maximize an organization’s
strengths and to minimize the strengths of the competitors.

Strategy, in short, bridges the gap between “where we are” and “where we want to be”.

Organization structure of Amul

It all started in December 1946 with a group of farmers keen to free themselves from
intermediaries, gain access to markets and thereby ensure maximum returns for their efforts.

Based in the village of Anand, the Kaira District Milk Cooperative Union (better known as
Amul) expanded exponentially. It joined hands with other milk cooperatives, and the Gujarat
network now covers 2.12 million farmers, 10,411 village level milk collection centers and
fourteen district level plants (unions) under the overall supervision of GCMMF.

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There are similar federations in other states. Right from the beginning, there was recognition that
this initiative would directly benefit and transform small farmers and contribute to the
development of society.

Markets, then and even today, are primitive and poor in infrastructure. Amul and GCMMF
acknowledged that development and growth could not be left to market forces and that proactive
intervention was required. Two key requirements were identified.

The first, that sustained growth for the long term would depend on matching supply and demand.
It would need heavy investment in the simultaneous development of suppliers and consumers.

Second, that effective management of the network and commercial viability would require
professional managers and technocrats.

To implement their vision while retaining their focus on farmers, a hierarchical network of
cooperatives was developed, which today forms the robust supply chain behind GCMMF's
endeavors. The vast and complex supply chain stretches from small suppliers to large fragmented
markets.

Management of this network is made more complex by the fact that GCMMF is directly
responsible only for a small part of the chain, with a number of third party players (distributors,
retailers and logistics support providers) playing large roles.

Managing this supply chain efficiently is critical as GCMMF's competitive position is driven by
low consumer prices supported by a low-cost system.

Developing demand

At the time Amul was formed, consumers had limited purchasing power, and modest
consumption levels of milk and other dairy products. Thus, Amul adopted a low-cost price
strategy to make its products affordable and attractive to consumers by guaranteeing them value
for money.

Introducing higher value products

Beginning with liquid milk, GCMMF enhanced the product mix through the progressive addition
of higher value products while maintaining the desired growth in existing products.

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Despite competition in the high value dairy product segments from firms such as Hindustan
Lever, Nestle and Britannia, GCMMF ensures that the product mix and the sequence in which
Amul introduces its products is consistent with the core philosophy of providing milk at a basic,
affordable price.

The distribution networks

Amul products are available in over 500,000 retail outlets across India through its network of
over 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of
the entire range of products.

GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the
cheque system adopted by other major FMCG companies. This practice is consistent with
GCMMF's philosophy of maintaining cash transactions throughout the supply chain and it also
minimizes dumping.

Wholesale dealers carry inventory that is just adequate to take care of the transit time from the
branch warehouse to their premises. This just-in-time inventory strategy improves dealers' return
on investment (ROI). All GCMMF branches engage in route scheduling and have dedicated
vehicle operations.

Umbrella brand

The network follows an umbrella branding strategy. Amul is the common brand for most product
categories produced by various unions: liquid milk, milk powders, butter, ghee, cheese, cocoa
products, sweets, ice-cream and condensed milk.

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Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya and Nutramul. The edible oil
products are grouped around Dhara and Lokdhara, mineral water is sold under the Jal Dhara brand while
fruit drinks bear the Safal name.

By insisting on an umbrella brand, GCMMF not only skillfully avoided inter-union conflicts but
also created an opportunity for the union members to cooperate in developing products.

Managing the supply chain

Even though the cooperative was formed to bring together farmers, it was recognized that
professional managers and technocrats would be required to manage the network effectively and
make it commercially viable.

Coordination

Given the large number of organizations and entities in the supply chain and decentralized
responsibility for various activities, effective coordination is critical for efficiency and cost
control. GCMMF and the unions play a major role in this process and jointly achieve the desired
degree of control.

Buy-in from the unions is assured as the plans are approved by GCMMF's board. The board is
drawn from the heads of all the unions, and the boards of the unions comprise of farmers elected
through village societies, thereby creating a situation of interlocking control.

The federation handles the distribution of end products and coordination with retailers and the
dealers. The unions coordinate the supply side activities.

These include monitoring milk collection contractors, the supply of animal feed and other
supplies, provision of veterinary services, and educational activities.

Managing third party service providers

From the beginning, it was recognised that the unions' core activity lay in milk processing and
the production of dairy products. Accordingly, marketing efforts (including brand development)
were assumed by GCMMF. All other activities were entrusted to third parties. These include
logistics of milk collection, distribution of dairy products, sale of products through dealers and
retail stores, provision of animal feed, and veterinary services.

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It is worth noting that a number of these third parties are not in the organized sector, and many
are not professionally managed with little regard for quality and service.

This is a particularly critical issue in the logistics and transport of a perishable commodity where
there are already weaknesses in the basic infrastructure.

Establishing best practices

A key source of competitive advantage has been the enterprise's ability to continuously
implement best practices across all elements of the network: the federation, the unions, the
village societies and the distribution channel.

In developing these practices, the federation and the unions have adapted successful models from
around the world. It could be the implementation of small group activities or quality circles at the
federation. Or a TQM program at the unions. Or housekeeping and good accounting practices at
the village society level.

More important, the network has been able to regularly roll out improvement programs across to
a large number of members and the implementation rate is consistently high.

For example, every Friday, without fail, between 10.00 a.m. and 11.00 a.m., all employees of
GCMMF meet at the closest office, be it a department or a branch or a depot to discuss their
various quality concerns.

Each meeting has its pre-set format in terms of Purpose, Agenda and Limit (PAL) with a process
check at the end to record how the meeting was conducted. Similar processes are in place at the
village societies, the unions and even at the wholesaler and C&F agent levels as well.

Examples of benefits from recent initiatives include reduction in transportation time from the
depots to the wholesale dealers, improvement in ROI of wholesale dealers, implementation of
Zero Stock Out through improved availability of products at depots and also the implementation
of Just-in-Time in finance to reduce the float.

Kaizens at the unions have helped improve the quality of milk in terms of acidity and sour
milk. (Undertaken by multi-disciplined teams, Kaizens are highly focused projects, reliant on a
structured approach based on data gathering and analysis.) For example, Sabar Union's records
show a reduction from 2.0% to 0.5% in the amount of sour milk/curd received at the union.

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The most impressive aspect of this large-scale roll out is that improvement processes are turning
the village societies into individual improvement centers.

Technology and e-initiatives

GCMMF's technology strategy is characterized by four distinct components: new products,

process technology, and complementary assets to enhance milk production and e-commerce.

Few dairies of the world have the wide variety of products produced by the GCMMF network.
Village societies are encouraged through subsidies to install chilling units. Automation in
processing and packaging areas is common, as is HACCP certification. Amul actively pursues
developments in embryo transfer and cattle breeding in order to improve cattle quality and
increases in milk yields.

GCMMF was one of the first FMCG (fast-moving consumer goods) firms in India to employ
Internet technologies to implement B2C commerce.

Today customers can order a variety of products through the Internet and be assured of timely
delivery with cash payment upon receipt.

Another e-initiative underway is to provide farmers access to information relating to markets,

technology and best practices in the dairy industry through net enabled kiosks in the villages.

GCMMF has also implemented a Geographical Information System (GIS) at both ends of the
supply chain, i.e. milk collection as well as the marketing process.

Farmers now have better access to information on the output as well as support services while
providing a better planning tool to marketing personnel.

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STRATEGIES FOLLOWED BY AMUL

Marketing strategies of amul

The Marketing strategy of Amul covers various aspects of the business right

from segmentation and targeting to the overall mission and vision of the company and the
various parameters which the company executes to become the top brand that it has in the
market.

So, what is the marketing mix of Amul? Let us discuss

Amul is definitely an “Amoolya” brand. Amoolya in Sanskrit means something which is

invaluable or priceless. With a presence in almost every product which can be made by milk,
Amul has won over hearts along with market share to become a highly valued brand with an
Indian origin. Amul was formed because of a revolt of dairy farmers. And today, Amul is a brand
against which companies want to compete and come on top but the same is not being allowed by
the smart minds in Amul. The reason Amul is such a strong brand is because of the marketing
mix of Amul.

Here is an in-depth analysis of the Marketing mix of Amul.

Product in the marketing mix of Amul

Bread spreads Amul Butter, Amul Lite, Delicious Table Margarine

Cheese Range Amul Pasteurized Processed Cheddar Cheese, Amul

Processed Cheese Spread, Amul Pizza (Mozzarella) Cheese,
Amul Emmental Cheese, Amul Gouda Cheese, Amul Malai
Paneer (cottage cheese), Utterly Delicious Pizza

Fresh Milk Amul Gold Full Cream Milk 6% fat, Amul Shakti

Standardised Milk 4.5% Fat, Amul Taaza Toned Milk 3% fat,
Amul Slim & Trim, AmulCow Milk

UHT Milk Range Amul Gold 4.5% fat Milk, Amul Shakti 3% fat Milk, Amul
Taaza1.5% fat Milk, Amul Lite Slim-n-Trim Milk, Amul

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 Fresh Cream

Milk Powder Amul Full Cream Milk Powder, Amulya Dairy Whitener,

Sagar Skimmed Milk Powder, Amulspray Infant Milk
Food, Sagar Tea and Coffee Whitener

Milk Drink Amul Kool Flavored Milk, Amul Kool Café, Amul Kool
Koko, Amul Kool Milk Shake, Amul Kool Chocolate Milk,
Nutramul Energy Drink

Curd product Amul Masti Dahi (fresh curd), Amul Masti Spiced Butter
Milk, Amul Lassi, Amul Flaavyo Yoghurt

Ghee Amul Pure Ghee, Sagar Pure Ghee

Mithaee Range (Ethnic Sweets) Amul Shrikhand, Amul Mithaee Gulab jamuns,
Amul Basundi, AvsarLadoos

Sweetened Condensed Milk Amul Mithaimate

Amul Newly Launched Ice cream Epic Choco Almond, Epic Almond Fudge, Epic Tanzania,
Colombia, Epic Peru.

Amul Chocolates Amul Milk Chocolate, Amul Fruit & Nut Chocolate, Amul
Choco mini, Amul Bindass, Amul Dark chocolates. Dark
passion, energy bar, Amul Choco Cracker, Amul 90% bitter
chocolates, Amul Green tea chocolates, Amul Sugar free
Chocolates.

Amul newly Launched Single Origin Chocolates Amul Venezuela, Amul Ivory coast, Amul Peru Dark
Amazon, Amul Colombia, Amul Tanzania, Amul Equador
Tropical Dusk, Amul Madagascar, Amul Orange Tropical,
Amul Mystic Mocha.

Amul Frozen Foods Amul French Fries, Aloo Tikki, Amul Hash Brown, Amul
Burger Patty, Amul Masala Paneer Nuggets, Cheese Poppons,
Amul Cheese Onion Paratha.

The List of products Of Amul which was marketed by Amul

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Amul Newly Launched Single Origin Chocolates

List of Competitors of Amul

Cheese Range Britannia cheese, Mother Dairy Cheese,

Gowardhan, Kraft and Prabhat

Mithaee Range (Ethenic sweets) Haldiram’s

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 Milk Range Mother Dairy, Nestle, Aarey, Gokul,
Prabhat

Amul Ice-creams Quality Walls, Mother Dairy, Pastonjee,

Vadila, Cream Bell

Frozen foods McCain’s

Chocolates Cedbury, Nestle, Parle.

SERVICES:

 GCMMF is sole marketer of all products under brand AMUL and SAGAAR.
 It is also the sole selling agent for the National Dairy Development Board’s (NDDB)
edible Oil, DHARA‟.
 GCMMF is India's largest exporter of Dairy Products. It has been accorded a "Trading
House" status. GCMMF has received the APEDA Award from Government of India for
Excellence in Dairy Product Exports for the last 13 years.

Price in the marketing mix of Amul

Amul has a strategy of low-cost pricing. Some may call it penetrative pricing. But penetrative
pricing strategy is used when the market has a high level of competition and a player wants to
establish itself in the market by giving low prices.

However, in the case of Amul, when Amul started, there were no national players and the dairy
market was unorganized.

During the introduction stage itself, Amul had a vision to provide their products to end customers
at the best affordable rates. And the same vision is in place even today.

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Today also, you will find that Amul butter, milk and cheese are available at affordable prices
keeping in mind the end customers. You may call these products costly, but the cost has nothing
to do with Amul’s strategy. Remember that transportation costs as well as storage and
distribution costs are very high in FMCG. Thus, as the cost of transportation, storage and
distribution has increased over the years, so has the cost of Amul products gone up. But
considering their value for the average India consumer, these products are still priced at an
affordable rate.

Place in the marketing mix of Amul 

Amul has a massive distribution network because its ice creams, milk, butter and cheese is found
practically everywhere. As it is a FMCG product, Amul follows the methodology of breaking the
bulk. The initial factory output is in bulk. Later on, this bulk becomes smaller and smaller and
finally one individual slab of butter or scoop of ice cream is sold at the retail place.

There are two different channels through which Distribution happens in Amul. One is the
procurement channel which is responsible for collection of Milk through dairy cooperatives. The
other is the distribution channel which is responsible for distributing the finalized product to the
end customers.

In the procurement channel, the milk is individually delivered from farmers to the cooperatives.

The cooperatives then collect all this milk and send the bulk to the manufacturing facility. At the
manufacturing facility, the milk is used to manufacture the finalized products.

In the distribution channel, there are carrying and forwarding agents, distributors, dealers and
retailers involved. There are also Amul Shoppe’s which sell all products in the Amul product
portfolio. The distribution is as follows.

Amul >> Carrying and forwarding agent >> Distributor >> Dealer / Retailer / Amul Shoppe >>
Customer

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Amul >> Modern retail

Thus, there is a lot of transportation involved for all of Amul’s products. However, the
distribution channel of Amul ensures that the products reach every nook and corner of India.

Promotions in the marketing mix of Amul

Amul is responsible for one of the most unique and longest running outdoor campaign as well as
one of the most known outdoor advertising characters – The Amul girl. We would like to take
this opportunity to specially thank Mr. Eustace Fernandes, the creative brain behind the sweet
girl. But we should know by now that the Amul girl is hardly sweet or cute. She is known to be
the naughtiest advertising girl ever. Amul hoardings mainly feature the current news and are
used to take a tongue in cheek viewpoint at current happenings. However, each advertisement
hits the nail on the head.

The promotions of Amul are mainly for butter but for all the other products there is hardly any
promotions. During the launch of products, Amul is known to go ATL and advertise milk, butter
etc. The Smita Patil ad wherein Smita patil is shown as a village milk collector is one of the most
famous ads for Amul. But overall, the main advertisement is BTL through outdoor, trade
promotions, discount schemes and sales promotions.

The major reason for Amul’s absence in hardcore advertising is that Amul does not want to give
away margins in advertising its products. As per Amul, their maximum budget for advertising is
1% of the turnover. Above and beyond that will directly affect the cost of the product. And the
major reason for Amuls strong presence in the market is its excellent quality combined with the
affordable price. Thus, overall promotions will always be low for Amul except for the outdoor
advertising of Amul butter.

This concludes the marketing mix of Amul. The bottom line is that we love that an Indian brand
like Amul has reached such staggering heights and that we are a part of the time when such a
white revolution took place.

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SWOT Analysis of AMUL

Strengths

Very high market share in ice cream – Amul has the top market share in ice cream segment
which further helps it push other products into the market.

Excellent brand equity – amul is a beloved brand over the years and the contribution of amul
girl and her outdoor ads should specifically be mentioned here.

Excellent quality management – even though amul has such a wide and large distribution
network, hardly any quality complaints come for amul.

Strong distribution network – This is one company which is strong in urban as well as rural
distribution. You will find amul present even in small towns and villages.

Good product portfolio – Amul had a deep product portfolio when compared to any fmcg
company. It has many different varieties of milk milk-based food items like cheese, butter, milk,
buttermilk, lassi and many others. In ice creams too, amul has a large variety of flavours.

Strong Supply chain – Vendors love Amul and amul is known for the white revolution in India.

Rural presence – Strong rural presence of Amul is its plus point. It is mentioned here separately
because this rural presence gives amul a strong competitive advantage.

Weaknesses

Cost of Operations – Amul’s operation is huge. And so is the cost. Plus, the sector is such that
maintaining margins becomes difficult day by day. Thus, to face international players,
Amul needs to maintain the operations in the same manner it is carrying out today. It is not a

25
weakness but rather a constant challenge for Amul. In fact, during summers, the brand faces
severe shortage of supply.

Chocolates – Amuls expansion to chocolate has failed and hardly any product of Amul
chocolates is selling in the market. Amul needs further products to expand its product line and
increase bottom line.

Opportunities

Export – Amul can export its product to other countries thereby increasing its turnover and
margins exponentially.

Concentrate more on chocolate market – Amul has a no advertisement policy which creates a
problem for its foray into additional products. Amul should in fact have separate SBU’s and
concentrate more on increasing its product line through chocolates or other such products.

Threats

Increasing competition in Ice cream segment – Many players, local and international, are
entering the ice cream market thereby taking away share of wallet from Amul. Kwality walls,
Naturals, London dairy, Havmor, Arun ice cream, Vadilal, Ramani, are some of the few brands
who are directly in competition with Amul.

Competitive advantage in the Marketing strategy of Amul 

There are two major competitive advantages of Amul over other brands. First and foremost is
the supply chain. Because of the large numbers of dairy suppliers, Amul has a tremendous
strength and reliability in its supply chain. Hence it is able to produce such high volumes. The
second competitive advantage is the wide product portfolio due to which it can run Amul
Shoppe’s and also have its products present in retail. The product portfolio is such that products
like Butter and Ice cream are cash cows for the company.

Distribution strategy in the Marketing strategy of Amul

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Like any FMCG company, Amul concentrates on breaking the bulk. It supplies in huge amounts
to its C&F, who is required to have the right arrangements to store Amul products in bulk. This
C&F then transfers the products to distributors who in turn give it to retailers. Furthermore,
Amul has a direct sale team too which sells to modern retail. Besides this, the company has
exclusive Amul stores which sell all products of Amul brand. Thus, in the marketing strategy of
Amul, distribution is another strength of the brand.

Brand equity in the Marketing strategy of Amul

Because of the excellent products, the top of the mind positioning, the fantastic distribution and
supply chain channels and finally the point of purchase branding and advertising of the Amul
girl, Amul finds itself in a very strong position where its brand equity is concerned. Amul brand
is worth $3.2 billion as per the 2013 brand equity report. Furthermore, most analysts say that
Amul would have touched the $4 billion mark, but the dropping value of the rupee is what
caused the difference.

Competitive analysis in the Marketing strategy of Amul

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Amul has some good competitors who have entered the market in the last decade and growing
strong steadily. Most of these ice creams entered regionally but then held on to the regional
market share. Thus, even though individually these brands might not be a worthy adversary,
combined and with their total net aggregate, all of them together are giving a very tough
competition to Amul.

Some of these competitors are Kwality walls, Vadilal, Havmor, Dinshaws, Arun Ice
cream, Baskin Robbins, London dairy and others. Many of these ice cream products have their
own niche or geographic targets. Arun ice cream is strong in the south whereas havmor and
Vadilal are strong in the west.

Besides these organized players, there are many unorganized local players who also give
competition to Amul by having their own outlets and their own variants of ice cream. However,
the competition in Butter and Cheese and other dairy products is far lesser.

Market analysis in the Marketing strategy of Amul 

The FMCG market is highly competitive in nature and is known to have a combination of
organized players as well as unorganized players. Similarly, in FMCG, direct competition is
equally important as indirect competition. For example – During winters, ice cream and cold
milk products will not sell, whereas butter and cheese will sell equally well.

But on the other hand, during summers the demand of ice cream shoots up so much so that
companies are not able to meet demands. Thus, when we analyse the market of Amul, in some
cases Amul is the clear market leader, whereas in other products it is a competitor in the market.

Customer analysis in the Marketing strategy of Amul

The typical customers of Amul belong to the Sec B and Sec C segment wherein they are either
middle class or lower class. Amul in general uses mass marketing and therefore it targets these 2

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classes majorly. The high-end customers are more likely to prefer a Naturals, a Baskin robbins,
or any other such brand which meets their taste and status.

PEST ANALYSIS OF AMUL

Political
 Since the budget range is decontrolled, no political effects are envisaged.
Economical
 Increasing per capita income resulting in higher disposable income
 Growing middle class/urban population ± increase in demand
 Low cost of production ± better penetration.
Social
 Per capita consumption expected to increase ± fashion.
 Increasing gifts culture ± increase in demand.
 Lower cholesterol than ³Mithais´ (sweet meat) ± substitute demand

Technological
 Will have to reinforce technology to international levels once India is a ³free´ economy

Amul has been a market leader in dairy products for decades however Amul Chocolate is the
only product which is not doing so well. Amul Chocolates was the market leader in 1970’s but
lost its place to Cadbury in the last 10 to 20 years. Amul has successfully extended its milkman
image to ice cream, butter, cheese and other dairy products, but has made no headway in
chocolate. The main reason behind the decline of the product is lack of promotion and
concentration on other dairy products.

Marketing Plan to increase the Sales of Amul Chocolates.

Since Amul Chocolate as a product is declining & incurring losses to Amul we now make a
marketing plan to improve the performance of the product. We will concentrate on the domestic
performance of Amul Chocolate which means we will make a plan to increase the sales of Amul
chocolates in India.

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We would be using the SOSTAC model to describe the market plan for Amul to improve the
sales of Amul Chocolates. SOSTAC is the abbreviation for Situation Analysis, Objective setting,
Strategy Development, Tactics, and Action & Control.

Situation Analysis

Situation Analysis is the study of trends within the economy and a comprehensive analysis of
market, competitors and the company itself. Now, we will analyze the situation of Amul
chocolates using Porter’s five forces framework which was developed by Mr Michael Porter of
Harvard Business School in 1979. This framework helps us to identify forces that determine the
competitive intensity and therefore attractiveness of a market.

Porter’s Five forces framework for Amul Chocolates

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 1. Bargaining power of the suppliers: In order to produce chocolates, the materials
required are cocoa, milk, sugar, butter, milk powder, fruits etc.

Amul is a market leader in India in products like milk, milk powder and butter so it does not
require any other supplier. Other materials like cocoa, fruits and sugar can also be bought easily
as there are many suppliers considering that India is a land of farmers where Agriculture is the
backbone of the economy. Also, there are millions of farmers who supply fruits and sugar so the
bargaining power of the supplier is very less.

2. Bargaining power of the buyers: India is a fast-growing nation and buyers have a lot of
options when it comes to deciding which chocolate they want to buy. Hence the bargaining
power of the buyers is high.

3. Threat of substitute products: In the last few years, Indian sweets have been substituted by
chocolates. So, there is possibility that people can go back to sweets because nowadays sweets
manufacturers have introduced different varieties of sweets like fat free sweets, sugar free sweets
etc. Also, lot of people these days prefers power bars and protein bars which are also delicious
like chocolate but healthier as well compared to chocolates. Also, there can be other substitutes
like waffers, cakes etc. India is well known for making duplicate products of big brands like

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Daily Milk for Dairy Milk (Cadbury’s ace product) & Kir Kat for Kit Kat (Nestlé’s ace product).
Chocolate manufacturers need to make sure they differentiate their products well & make
consumers aware of the difference because a large number of people in India are illiterate.

4. Threat of potential entrants: In the Indian chocolate market there are 3 major players
namely Cadbury who is the market leader, Nestle & Amul. These 3 companies have been sharing
99% of the chocolate market in India for many years which clearly explains that there is no real
threat of new entrants. However, in the last 5 years, foreign brands like Mars have entered the
market with products like Mars bar, Bounty & Snickers which have become quite popular in
major cities like Mumbai, Bangalore and New Delhi.

5. Competitive Rivalry: The biggest factor that is affecting Amul’s market share in India from
last 10 to 20 years is the growth of its competitors like Cadbury & Nestle. Now, with the entry of
foreign players like Mars it getting tougher for them to increase the sales.

Objective Setting

Objectives are the motive of the company’s operational activities. It is basically what the
company wants to achieve. Nothing happens until we plan and good plans have goals and
objectives. Setting objectives lays the foundation for the company’s operations. It shows us the
path to follow. Objectives can also be called as battle plans, the stepping stones on the path
towards achieving our goals.

Objective of Amul Chocolates

The objective of Amul as a company is to give ‘Value for money’ to its customers. Amul has a
range of superior products, consumed by every age group. Since Amul chocolates is not doing
well like Amul’s other products like milk, yoghurt and cheese the objective of Amul Chocolates
as a Business Unit would be to increase its market share in India from a 5% in 2010 to 15% in
the next 10 years by carrying out proper promotion activities and to produce variety of
chocolates to give consumer more options.

And now the current market share of the Amul chocolates is 8 to 10%.

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Strategy development

Now that we have set our objectives, we need to make a strategy to attain the objective of
increasing the market share by 15% in 10 years which is difficult because of the declining trend
and competition however possible because of the Brand strength.

We would be using the Ansoff Matrix, Market segmentation to describe the strategy of Amul
Chocolates to increase its market share in India.

ANSOFF MATRIX

Market penetration: Market Penetration means when a company sells its existing products to
the existing market. Amul can use this technique to increase sales in India.

They also need to advertise and carry out lot of promotional activities to inform the consumers
that they still exist and can provide them with what they want. It’s been years that Amul’s
chocolate advertisement has been telecasted on India’s major television channels like Start &
Zee. Sales promotions like discounts and free samples can help them to increase the Brand
awareness and attract customers to switch brand from competitors. This is the Celebrity age and
every big company uses a celebrity as a Brand Ambassador for its product.

For example, Amitabh Bachchan (Greatest Indian Actor) for Cadbury & Rani Mukherjee (Indian
Actress) for Nestle, Amul also use a brand ambassador for the promotion of its chocolate.

1: Market Development

Market development is a situation where a company is involved in expanding into new markets
with existing products. Amul as a company needs to target rural areas of Northern India like
Uttar Pradesh, Bihar, Jharkhand and Uttaranchal because most of the people in these states are
farmers who have many children. Also, one more benefit of supplying chocolates in these places

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is that its competitors like Nestle and Cadbury do not have a big market in these places. Amul
has a strong brand name in rural areas because of its other dairy products and also has a strong
supply chain and logistics to reach these places.

The Indian Government will also provide them subsidy or lower taxes because they would be
contributing socially by entering into rural markets.

2: Product Development

Product development means a company modifies its product i.e. improves it to appeal to the
existing market. Amul needs to make changes to its product (chocolates) like introduction of
more flavours and attractive packaging because the wrappers Amul uses is not at all attractive
compared to those used by Cadbury and Nestle. Packaging is very important because of majority
of the consumers are kids and youngsters who like attractive packages.

Many kids buy chocolates not because they like it but because of attractive wrappers. This would
keep them in competition with competitors like Cadbury and Nestle. Currently there is a trend
for low calorie and fat free food because people want to be fit; introducing low calorie and less
fat chocolates would be a strong recommendation.

Amul must into market alliances with various portals to offer products (on those portals that
were developed for festive occasions such as Valentine’s Day and Friendship Day.

3: Market Segmentation

Market Segmentation is a process of dividing a large market into identifiable segments having
similar wants, needs or demands. The objective of market segmentation is to design a marketing
mix that matches the expectations of customers in the targeted segment. Every product is
produced with a target in mind.

Amul must divide its market using 2 bases of segmentation.

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1. Demographic Segmentation

2. Geographic Segmentation

Demographic Segmentation: Demographic segmentation is segmentation of market on the bases

of factors such as age, gender, income, occupation etc.

Amul must divide its target market on age factor.

Age 2 to 15

Age 16 to 35

Age 35 & above

For children up to 15 years old, Amul should produce chocolates like plain bars filled with
chocolate in other words high on energy and sweet. The product should be rich in chocolate, nuts
and milk.

For children they must have a lot of variety because children have the tendency to try different
chocolates.

This is the most important target group for Amul considering the product. Hence, major focus
should be on the products targeted to this market.

For the market in the age group of 16 to 35, Amul should produce chocolates which are low on
calories and less fattening as this market segment is diet conscious. Before taste they think about
calories and putting on weight. For this segment Amul should also introduce protein bars which
have become a trend these days. Youngsters who work out and are fitness conscious consume lot
of such items to keep them full and away from high calorie food products.

For the market in the age group of above 35 years, Amul should produce sugar free chocolates
because at this age many people in India are diabetic or have been asked to consume less sugar.

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Geo-demographic Segmentation: Geo-demographic segmentation is a segmentation technique
that classifies people according to where they live. The concept is based on the presumptions that
people who live within a particular area exhibit common purchasing behavior.

Amul should divide its market in to 2 segments

Developed cities like Mumbai, Bangalore, Pune, Kolkata and Delhi

Under Developed states like Bihar, Uttar Pradesh, Jharkhand etc.

People in developed cities like Mumbai, Bangalore and Delhi have a high purchasing power
compared to other places in India. The literacy rate is high in these cities, people have access to
different mediums of advertising and infrastructure is developed. Amul should produce and
supply high quality products in these cities with no compromise on price. However, they must
keep in mind that their competitors are already enjoying a great amount of market share in such
places. Cadbury to some extent enjoys a monopoly in such cities because of its quality of
products, availability and immensely strong brand name. Amul must match Cadbury’s quality to
excel in the market.

States like Uttar Pradesh and Bihar are not developed like Mumbai and Bangalore. The literacy
rate is less than 50% with poor infrastructure. Many people don’t even have access to electricity.
Majority of them are poor farmers. Amul has an advantage here because their competitors like
Nestle don’t have easier access to such places.

Amul has a strong network because of its ace products like Butter, Cheese and Milk which are
available all over the country. Amul should introduce chocolates which are cheaper but high on
energy in these places.

Action

Now that we have set the objectives & marketing strategies, it becomes necessary to turn them in
to action plans. Action includes 3 activities.

Allocating tasks and responsibilities

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Since our strategy is simple i.e. to innovate our product and promote heavily, we would allocate
the task of product development to the manufacturing sector where they will check the products
of successful competitors and manufacture chocolates in line with them. The manufacturing
sector will be responsible for the quality of the product. The promotion of the product would be
the responsibility of the marketing sector where they will advertise and provide special offers.

Control

Control means taking corrective measures when anything doesn’t go according to the plan. Amul
must use the Sales Control method. They would be monitoring their sales every 3 months to
check if they are meeting the set target. If anything goes wrong then they can take corrective
measures.

Advertising Sample as per the Marketing plan

Value offered by Amul

1. Value for money: Amul’s believes in giving value for money to its customers and it has
always followed that principle. Its products are of high quality and available at affordable prices.

Customer Driven: Amul as a dairy product manufacturer has always focused on customer
satisfaction. Amul has consistently produced and supplied quality dairy products like milk, butter
and cheese in India and other countries.

Adapt quickly to the changing environment: Amul has always met the ever-changing customer
needs by being innovative in its dairy products. This is a major factor why they have been a
market leader in dairy products for many years.

Customer feedback: Amul has taken regular feedback from the customers & worked upon the
negative aspects to improve the quality and increase customer satisfaction.

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BCG MATRIX OF AMUL

Definition
BCG matrix (or growth-share matrix) (or resource allocation model) is a corporate planning tool,
which is used to portray firm’s brand portfolio or SBUs on a quadrant along relative market
share axis (horizontal axis) and speed of market growth (vertical axis) axis.
Growth-share matrix is a business tool, which uses relative market share and industry growth
rate factors to evaluate the potential of business brand portfolio and suggest further investment
strategies.

Understanding the tool

BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic
position of the business brand portfolio and its potential. It classifies business portfolio into four
categories based on industry attractiveness (growth rate of that industry) and competitive
position (relative market share). These two dimensions reveal likely profitability of the business
portfolio in terms of cash needed to support that unit and cash generated by it. The general
purpose of the analysis is to help understand, which brands the firm should invest in and which
ones should be divested.

Relative market share.

One of the dimensions used to evaluate business portfolio is relative market share. Higher
corporate’s market share results in higher cash returns. This is because a firm that produces
more, benefits from higher economies of scale and experience curve, which results in higher
profits. Nonetheless, it is worth to note that some firms may experience the same benefits with
lower production outputs and lower market share.

Market growth rate.

High market growth rate means higher earnings and sometimes profits but it also consumes lots
of cash, which is used as investment to stimulate further growth. Therefore, business units that
operate in rapid growth industries are cash users and are worth investing in only when they are
expected to grow or maintain market share in the future.

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There are four quadrants into which firms’ brands are classified:

Dogs.

Dogs hold low market share compared to competitors and operate in a slowly growing market. In
general, they are not worth investing in because they generate low or negative cash returns.

But this is not always the truth. Some dogs may be profitable for long period of time, they may
provide synergies for other brands or SBUs or simple act as a defense to counter competitors
moves. Therefore, it is always important to perform deeper analysis of each brand or SBU to
make sure they are not worth investing in or have to be divested. Strategic choices:
Retrenchment, divestiture, liquidation

Cash cows.

Cash cows are the most profitable brands and should be “milked” to provide as much cash as
possible. The cash gained from “cows” should be invested into stars to support their further
growth. According to growth-share matrix, corporates should not invest into cash cows to induce
growth but only to support them so they can maintain their current market share. Again, this is
not always the truth. Cash cows are usually large corporations or SBUs that are capable of
innovating new products or processes, which may become new stars. If there would be no
support for cash cows, they would not be capable of such innovations.
Strategic choices: Product development, diversification, divestiture, retrenchment

Stars.

Stars operate in high growth industries and maintain high market share. Stars are both cash
generators and cash users. They are the primary units in which the company should invest its
money, because stars are expected to become cash cows and generate positive cash flows. Yet,
not all stars become cash flows. This is especially true in rapidly changing industries, where new
innovative products can soon be outcompeted by new technological advancements, so a star
instead of becoming a cash cow, becomes a dog.
Strategic choices: Vertical integration, horizontal integration, market penetration, market
development, product development

Question marks.

Question marks are the brands that require much closer consideration. They hold low market
share in fast growing markets consuming large amount of cash and incurring losses. It has

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potential to gain market share and become a star, which would later become cash cow. Question
marks do not always succeed and even after large amount of investments they struggle to gain
market share and eventually become dogs. Therefore, they require very close consideration to
decide if they are worth investing in or not.
Strategic choices: Market penetration, market development, product development, divestiture.

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BIBLIOGRAPHY

Books

Philip’s Kotler – “Marketing Management

C.R. Kothari- Marketing Research

Websites

www.amul.com

www.google.com

https://www.marketing91.com/marketing-mix-of-amul/

https://www.marketing91.com/marketing-strategy-amul/

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