1.1.

INTRODUCION

Consumer Behavior is the study of individuals, groups, or organizations and the processes they
use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs
and the impacts that these processes have on the consumer and society. It blends elements from
psychology, sociology, social anthropology, marketing and economics. It attempts to understand
the decision-making processes of buyers, both individually and in groups such as how emotions
affect buying behaviour. It studies characteristics of individual consumers such as demographics
and behavioural variables in an attempt to understand people's wants. It also tries to assess
influences on the consumer from groups such as family, friends, sports, reference groups, and
society in general. Customer behaviour study is based on consumer buying behaviour, with the
customer playing the three distinct roles of user, payer and buyer. Research has shown that
consumer behaviour is difficult to predict, even for experts in the field. Relationship marketing is
an influential asset for customer behaviour analysis as it has a keen interest in the re-discovery of
the true meaning of marketing through the re-affirmation of the importance of the customer or
buyer. A greater importance is also placed on consumer retention, customer relationship
management, personalisation, customization and one-to-one marketing. Social functions can be
categorized into social choice and welfare functions.

Each method for vote counting is assumed as social function but if Arrow’s possibility theorem
is used for a social function, social welfare function is achieved. Some specifications of the
social functions are decisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneity
and weak and strong Pareto optimality. No social choice function meets these requirements in an
ordinal scale simultaneously. The most important characteristic of a social function is
identification of the interactive effect of alternatives and creating a logical relation with the
ranks. Marketing provides services in order to satisfy customers. With that in mind the
productive system is considered from its beginning at the production level, to the end of the
cycle, the consumer.

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1.1.1. Definition

“Marketing is the activity, set of institutions, and processes for creating,

communicating, delivering, and exchanging offerings that have value for customers,
clients, partners, and society at large.” 
— American Marketing Association 

Consumer perception:

A marketing concept that encompasses an customers impression, awareness and/or

consciousness about a company or its offerings. Customer perception is typically
affected by advertising, review, public relations, social media, personal experiences
and other channels.

Consumer Awareness:

Consumer awareness, which refers to a buyer’s knowledge of a particular product or

company, allows the buyer to get the most from what he buys. Consumers know
more about their choices when they have product information and benefit from
knowing their rights, hearing about alerts and warnings and finding out about safety
issues.

1.1.2. Information search

Once the consumer has recognised a problem, they search for information on products and
services that can solve that problem. Belch and Belch (2007) explain that consumers undertake
both an internal (memory) and an external search. Sources of information include personal
sources and experience, and commercial and public sources.

The relevant internal psychological process associated with information search is perception,
which can be defined as "the process by which an individual receives, selects, organizes, and
interprets information to create a meaningful picture of the world". Consumers' tendency to
search for information on goods and services makes it possible for researchers to forecast the
purchasing plans of consumers using brief descriptions of the products of interest.
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The selective perception process can be divided into:-

 Selective exposure: consumers select which promotional messages they will expose
themselves to.
 Selective attention: consumers select which promotional messages they will pay attention
to.
 Selective comprehension: consumer interpret messages in line with their beliefs,
attitudes, motives and experiences.
 Selective retention: consumers remember messages that are more meaningful or
important to them.

The implications of this process help to develop an effective promotional strategy, and suggest
which sources of information are more effective for the brand.

Evaluation of alternatives

At this time the consumer compares the brands and products that are in their evoked set. The
evoked set refers to the number of alternatives that are considered by consumers during the
problem-solving process. Sometimes also known as consideration, this set tends to be small
relative to the total number of options available. How can the marketing organisation increase
the likelihood that their brand is part of the consumer's evoked set? Consumers evaluate
alternatives in terms of the functional and psychological benefits that they offer. The marketing
organisation needs to understand what benefits consumers are seeking and therefore which
attributes are most important in terms of making a decision. It also needs to check other brands
of the customer’s consideration set to prepare the right plan for its own brand.

Purchase decision

Once the alternatives have been evaluated, the consumer is ready to make a purchase decision.
Sometimes purchase intention does not result in an actual purchase. The marketing organisation
must facilitate the consumer to act on their purchase intention. The organisation can use a variety
of techniques to achieve this. The provision of credit or payment terms may encourage purchase,
or a sales promotion such as the opportunity to receive a premium or enter a competition may

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provide an incentive to buy now. The relevant internal psychological process that is associated
with purchase decision is integration. Once the integration is achieved, the organisation can
influence the purchase decisions much more easily.

There are 5 stages of a consumer buying process: The problem recognition stage, meaning the
identification of something a consumer needs. The search for information, which means you
search your knowledge bases or external knowledge sources for information on the product. The
possibility of alternative options, meaning whether there is another better or cheaper product
available. The choice to purchase the product and then finally the actual purchase of the product.
This shows the complete process that a consumer will most likely, whether recognizably or not,
go through when they go to buy a product.

Post purchase evaluation

The EKB (Engel, Kollat, Blackwell) model was further developed by Rice (1993) which
suggested there should be a feedback loop. Foxall (2005) further suggests the importance of the
post-purchase evaluation and that it is key because of its influences on future purchase patterns.

Other influences

Consumer behaviour is influenced by internal conditions such as demographics, psychographics

(lifestyle), personality, motivation, knowledge, attitudes, beliefs, and feelings. Psychological
factors include an individual's motivation, perception, attitude and belief, while personal factors
include income level, personality, age, occupation and lifestyle.

Congruence between personality and the way a persuasive message is framed (i.e., aligning the
message framing with the recipient’s personality profile) may play an important role in ensuring
the success of that message. In a recent experiment, five advertisements (each designed to target
one of the five major trait domains of human personality) were constructed for a single product.
The results demonstrated that advertisements were evaluated more positively the more they
cohered with participants’ dispositional motives. Tailoring persuasive messages to the
personality traits of the targeted audience can be an effective way of enhancing the messages’
impact.

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Behaviour can also be affected by external influences, such as culture, sub-culture, locality,
royalty, ethnicity, family, social class, past experience reference groups, lifestyle, and market
mix factors. For example: In India, most online consumers shop during their lunch hours, and
when they are at work. This could be because of inadequate internet connectivity at homes.

1.1.3. Definition

Marketing is the science of meeting the needs of a customer by providing valuable products to
customers by utilizing the expertise of the organization, at same time, to achieve organizational
goals. According to The American Marketing Association:

Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and society
at large.

With this definition, it is important to realize that the customer can be an individual user, a
company, or several people who contribute to the purchasing decision. The product can be a hard
good, a service, or even an idea – anything that would provide some value to the person who
provides an exchange. An exchange is most often thought of as money, but could also be a
donation of time or effort, or even a specific action. A producer is often a company, but could be
an individual or non-profit organization.

Classical marketing is often described in terms of the four “P’s, which are:

 Product – what goods or services are offered to customers

 Promotion – how the producer communicates the value of its products
 Price – the value of the exchange between the customer and producer
 Placement – how the product is delivered to the customer.

A complete analysis of these categories is often called the Marketing Mix. More detail on these
categories can be found in the later entry on the Marketing Plan.

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Marketing has both inbound and outbound activities. Inbound activities largely center on
discovering the needs and wants of the potential customers. The collective group of all potential
customers is called a market. Categorizing these needs into groups is called segmentation.
Organizing markets into segments allows a producer to more logically decide how to best
provide value to that group of potential customers. The analysis of market segment needs;
analysis of existing sales and profitability; the descriptions, design and introduction of new
products; and the analysis of competitor offerings are also inbound activities that are important
but not often seen by the public.

Outbound activities include all aspects of informing the market that a product is available,
delivering that product, and encouraging the purchase decision. These activities include
advertising, promotion, supply chain, sales support, product training, and customer support.

To the public, the most common interaction with marketing is where it touches the discipline of
sales in the form of advertising. This interaction leads to a common misconception that
marketing is only this aspect of promotion. Instead, it is useful in understanding that:

Marketing is a data driven science.

The good marketer will develop the data necessary to define the customer’s needs, develop a
good product based on the available resources, deliver the product in an effective manner to the
consumer at a price that reflects the customer value and the profit desired by the producer.

Marketing Models

When the producer is a commercial entity and the end user makes the purchasing decision, the
model used to describe this transaction is often called a Business to Consumer (B2C) model.
When the producer is a commercial entity and a second commercial entity makes the purchasing
decision but provides the product to their customer, then the model is often called a Business to
Business (B2B) model. The difference in these models affects how the marketer constructs his
marketing analysis and marketing mix.

EXPORTS

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The signing of Agreement on Agriculture (AoA) coupled with domestic policy reforms has
generated expectation of a quantum jump in the Indian dairy exports, particularly due to India
having a comparative advantage in milk production. Besides domestic markets, the Asian
countries where the sanitary and phyto-sanitary requirements are less stringent, are envisaged as
important exprt destinations of Indian dairy products. In the present study, the export trend of
Indian dairy products has been examined in Asian markets for the period 1991 to 2004 and
export potential for the year 2010 has been projected on the basis of panel data estimation of
import demand elasticity and relative price elasticity. The data on export of Indian dairy products
both, in quantity (kg) and value (US$), to each Asian destination have been taken from the
electronic database from three sources: Directorate General of Commercial Intelligence and
Service, India (DGCIS), Directorate General of Foreign Trade, India (DGFT), and Centre for
Monitoring Indian Economy (CMIE). The Indian sub-continent and the Gulf countries have been
found to be the major export destinations for the Indian dairy products. However, a few south
and east Asian countries like China, North Korea, South Korea and Taiwan have also come up
during the recent period. The export instability has been prominent for Asia as well as for
individual markets. India has exported mainly concentrated or sweetened milk and cream-based
products and butter/fat-based products to the Asian destinations. Some new products like whey-
based products, butter oil, processed and powdered cheese have been added to the export basket
recently, albeit their shares are marginal. The Indian dairy products have import demand and are
relatively price elastic in most of the countries. Gulf, South Asian and East Asian countries have
been observed to be relatively more sensitive to changes in import demand and relative prices
than other countries in the Indian subcontinent.
In the years to come, Gulf countries have been projected as important Asian destinations for the
export of traditional Indian dairy products. In the South and East Asian destinations, export
potential lies for the western products like cheese and whey-based products. India needs to be
more cautious regarding its exports to the neighbouring countries (except Nepal), as it is loosing
these markets, particularly Bangladesh and Sri Lanka. The overall export potential of Indian
dairy products has been found promising. The onus to realize this potential lies to a large extent
on the Indian diary industry through increasing production of quality products to tap the Asian
markets.

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1.2. DAIRY EXPORT

The Economy of India is the seventh-largest in the world by nominal GDP and the third-largest
by purchasing power parity (PPP). The country is one of the G-20 major economies, a member
of BRICS and a developing economy among the top 20 global traders according to the WTO.

According to the Indian Finance Ministry the annual growth rate of the Indian economy is
projected to have increased to 7.4% in 2014-15 as compared with 6.9% in the fiscal year 2013-
14. In an annual report, the IMF forecast that the Indian Economy would grow by 7.5% percent
in the 2015-16 fiscal year starting on April 1, 2015, up from 7.2% (2014–15).

India was the 19th-largest merchandise and the 6th largest services exporter in the world in 2013;
it imported a total of $616.7 billion worth of merchandise and services in 2013, as the 12th-
largest merchandise and 7th largest services importer. The agricultural sector is the largest
employer in India's economy but contributes a declining share of its GDP (13.7% in 2012-13). Its
manufacturing industry has held a constant share of its economic contribution, while the fastest-
growing part of the economy has been its services sector — which includes, among others, the
construction, telecommunications, software and information technologies, infrastructure,
tourism, education, health care, travel, trade, and banking industries.

The post independence-era Indian economy (from 1947 to 1991) was a mixed economy with an
inward-looking, centrally planned, interventionist policies and import-substituting economic
model that failed to take advantage of the post-war expansion of trade and that nationalized
many sectors of its economy. India's share of global trade fell from 1.3% in 1953 to 0.5% in
1983. This model contributed to widespread inefficiencies and corruption, and it was poorly
implemented.

After a fiscal crisis in 1991, India has increasingly adopted free-market principles and liberalised
its economy to international trade. These reforms were started by former Finance minister
Manmohan Singh under the guidance of Prime Minister P. V. Narasimha Rao. They eliminated

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much of Licence Raj, a pre- and post-British era mechanism of strict government controls on
setting up new industry. Following these economic reforms, and a strong focus on developing
national infrastructure such as the Golden Quadrilateral project by former Prime Minister Atal
Bihari Vajpayee, the country's economic growth progressed at a rapid pace, with relatively large
increases in per-capita incomes. The south western state of Maharashtra contributes the highest
towards India's GDP among all states, while Bihar is among its poorest states in terms of GNI
per capita. Mumbai, Maharashtra is known as the trade and financial capital of India.

1.3. OPPORTUNITY IN MILK INDUSTRY

India is set to become the world’s most populated country by 2030 with around 1.53 billion
people and more than 19% of world’s population by the same time.

The country, housing currently approximately 18% of world population, is growing at the rate of
1.3% annually, but has only 7.3% of global arable land and faces a huge challenge ahead for its
agricultural sector to feed these extra mouths.

This task becomes more challenging against issues such as climate change and natural resource
constraints (water and soil foot print) and reduction in cultivable land in the wake of magnums of
unplanned urbanisation. There is clearly a massive challenge facing the Indian industry.

Considerable opportunities With global populations set to rise from 7 billion today, to 8 billion
by 2030 and 9 billion by 2050, opportunities for Indian food producers to respond to this
growing market place are considerable. FAO has analysed global dairy trends as far as 2050.
Their analysis predicts that as incomes rise, people generally prefer to spend a higher share of
their food budget on animal protein, so meat and dairy consumption tends to grow faster than
that of food crops. As a result, the past three decades have seen buoyant growth in the
consumption of livestock products, especially in newly industrializing countries and emerging
markets.

Post-white revolution, the Indian dairy industry has shown constant growth in milk production as
well as per capita milk availability, i.e., 51.4 million tonne in 1990 to about 127 million tonne in

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2011-12 and 291 gm/day respectively. Few reports suggest that with current growth rate of
approximately 3%-4%, it is thought to grow to 185 million tonne and become a $24 billion (Rs
1,44,000 crore) organised industry by 2020 and $140 billion (Rs 8,40,000 crore) including the
unorganised sector. However our research considers the same production levels by 2022-23
itself. Even such volumes could only be attained if the system wakes up and begins to act fast on
the new context being suggested by us by focussing on farmers’ groups, societies and
associations rather than individuals.

1.4. ECONOMIC DEVELOPMENT THROUGH DAIRY INDUSTRY

Based on extrapolations of mega Indian economic story and analysis of domestic growth, India
will shoot ahead of Japan in mid 2030s to become the world’s third biggest economy.
Consequently a huge surge in GDP (gross domestic product) and PPP (public-private
partnership) is expected, reflecting in enhanced protein consumption in the form of dairy
products in India. During the next few years, till 2030, the demand for dairy products is expected
to grow at a rate of 9%-12% and industry at a rate of 4-5%. Clearly, the Indian industry will
struggle to maintain 100% self-sufficiency due to huge local demand, between 160 to 170
million tonne of milk that would be required by 2030. The industry will have to overhaul to meet
ends. With the potential to accommodate imports with home produced dairy products, the Indian
industry will present to be a very lucrative market.

Pressure of urbanization

Net area sown has not grown in proportion to the rate of growth of population. There could be
marked decline in the area allocated for pastures and animal grazing from 7% to 6% by 2020 and
with the increased pressure of urbanisation and modified land bills it could further reduce to
below 5% by 2030. The land for green fodder production will only grow from 5 to 6% by 2030 if
strong measures to induce contract farming or focus on commercial fodder production by
corporate for captive or group usage are not taken up. The compound feed market is also
underserved and the installed capacity is only 10% of the expected total demand of around 60
million MT per annum at current levels. A lot of investments need to be directed towards
building this capacity as well as to incentivise and subsidise cattle feed manufacturers to set up

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mineral mix plants as well. This will ensure better nutrition to the animal, over and above the
feed for health.

The current deficit for green fodder, dry fodder and concentrates is 63%, 24% and 76% (2010
data) respectively, which means that even at today’s demand level for milk production there is a
need to double up the land for fodder growing and pasture feed lots for dairy. There has been
large gap in production of medicines and vaccines for the animal industry.

A robust plan to raise the current home-delivered AI (Artificial Insemination) levels for animal
breeding from around 20% to 80% need to be implemented. Farmers in interiors are perceptually
not ready to accept AI as a technique for their animal breeding. It puts more pressure on the
system to develop large-scale capacity building programmes at community level over and above
looking out for establishing bull breeding farms or semen production.

Biggest impediment Male calves and stray bulls of poor pedigree are considered to be the biggest
impediment to the sustainability of the Indian dairy industry. Both these categories put a lot of
pressure on limited resources therefore some pragmatic solution by using latest technologies like
sexed semen and injection-based sterilization could be evaluated and implemented. The same
problems could also be better handled through a community-led approach rather than an
individual farmer focus.

From 2009 to 2014, the middle class in Africa grew by three times from 120 to 330 million and
by six times from 500 million to 3.2 billion. This trend is yet to bloom fully and this booming
economy and expanding cash-rich middle-class, would mean a lucrative and very incentivizing
market. This would make India a hotspot of globally competitive and compliant dairy
destination.

The dairy industry would witness further consolidation of organised dairy structure to an
impressive 35% by that time. Post-2020’s industry will see increased dominance and importance
of “A” class global brands and emergence of “private labels” meaning Indian dairy industry

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would be under pressure to become globally competitive at all stages of the supply chain.

Efficiency and effectiveness

Customer maturity along with FSSAI (Food Safety and Standards Authority of India) norms and
adaptations of newer versions of food quality norms like FSMA (FDA - Food Safety
Modernisation Act) would coerce the industry to improve efficiency and effectiveness and where
possible, benchmark their performance. The year 2030 will see the apotheosis of the long-sighted
dream of becoming a global giant in the international dairy market with Indian companies
positioning themselves in the hall of fame of global dairy arena. In 2030, it would be rather a
surprise to not to see mega dairy brands like Fonterra, Avon more, Campina, and Alra when you
walk in to a store even in tier 2 and 3 level cities and towns.

IAI Vision 2030 is second in series of the white papers published by Suruchi Consultants in
association with PCSL (Pixie Consulting Solutions Ltd). In Dec 2011, the first edition of white
paper i.e. Vision 2020 of the Indian Dairy Industry was launched and deliberated. It was
accepted very well by the public, private, research and academia.

 1.5. DAIRY INDUSTRY IN INDIA

Vision 2030 is an attempt to ‘‘reimagine’ dairying in India for the perspective of 2030.’ “Mass
production is production by masses” has been the mantra behind Indian context of agricultural
development and a strong conviction of Mahatma Gandhi. Since Independence, most of our
policies for the agriculture sector have been an outcome of this context.

Dairy comes under fragmented industry as per the definition of uber-guru-on-strategy Michael
Porter, which means local requirements have to be met through local supplies as the production
is scattered and available locally. The strategy for dairy development till date lies with
decentralizing the production and centralizing the processing and marketing.

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In this model, with individual focus to a farmer or even a village level society, scaling is
difficult. The only strategy to counter this state is by building economies of scale at all levels of
business by developing a critical mass. Indian dairy production comes majorly from small and
marginal farmers with an average animal holding of 2-4 animals. Barring very few areas in the
country where dairy is not considered as the main occupation at household level, it may be
perceived as a pocket money business for the homemaker or pastime activity for the elderly at
home. The farmer also keeps a major part of nutritional milk for his family at home. Cost of
production is imputed as the input to animals are either assortment of agriculture residues or by
grazing at community owned pastures land. In such cases though a religious commitment to
animal is visible but business wisdom to grow the business is missing, or in other words, in the
whole model sustainability is missing. In this vision document, we propose to set a new context
while ‘reimagining’ dairying in India.

Sustainable production is production by progressive communities

Research shows that now only a radical change in our national policy-making could bring about
the required growth in milk production by 2030 such that supply meets demand. It requires a
scale orientation and development of critical mass at all levels of the value chain for cost-
effective interventions and investments. The industry does not have time to pursue uninterested
farmer with an indifferent generation “Y” to identify himself with animal rearing. However
much better results at a faster pace could be achieved by focussing on existing dairy
communities in the form of societies or associations or by developing dairy clusters of various
stakeholders in the dairy value chain. A progressive community not only brings in scale to the
business but also brings in necessary commitment to grow and build a professional model
attractive enough for young generation to become part of it. In the later part of the report, we will
offer a blue print of an implementation plan to further support our vision statement.  

1.6.Export Potential of Dairy Products

Dairy development in India has been acknowledged the world over as one of the highly
successful programmes. Dairy sector is the single largest contributor of agricultural sector to
India’s gross domestic product, with its annual value exceeding Rs. 100,000 crores. India has
emerged as the largest milk producer in the world, with a record level of 84.6 mt during 2001-02,

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while the world’s total estimated milk production during the same period is 584 mt. The milk
production in India, accounts for more than 14 per cent of the world and 57 per cent of Asia’s
total production. According to FAO estimates, the world milk production has declined by 2 per
cent in the last three years, while milk production in India has increased by 4 per cent. Having
attained self-sufficiency in food grain production, there is a need to plan for strategic
diversification of Indian agriculture to ensure sustainability and nutritional adequacy.

Diversification of Indian agriculture focused on dairying and export of dairy products

represents excellent potential leading to prosperity of the farming community representing 65 per
cent of the population. With 198 million cattle and 86 million buffaloes, India has the largest
population of milch animals in the world. These livestock constitute more than 50 per cent of the
buffaloes and 20 per cent of the cattle in the world. Although number of livestock is large,
average milk production is far below their genetic potential. With a wellcrafted strategic
approach, this huge animal wealth could be utilised in right perspective for enhancement of milk
production without many incremental inputs. In contrast, a small rise in milk production requires
intensive inputs and crossing of genetic barriers in advanced countries of the world, where milch
animals are utilised to produce milk at their maximum potential. With a modest effort towards
managing increased milk production, India would match/exceed the milk production of major
players of international trade in dairy commodities. It is this potential that can catapult India as a
major dairy exporting country on global basis. A nation-wide programme for prevention and
control of animal epidemics, and creation of diseasefree zones coupled with efficient delivery of
artificial insemination network will have tremendous impact on improving the productivity of
milch animals. This, in turn, would strengthen India’s entry into the global milk products market,
as well as improve the quality and viability of the entire Indian dairy industry. Unlike other milk
producing countries, 54 per cent of India’s milk comes from buffaloes, which is endowed with
unique processing qualities. Buffalo milk is creamier, whiter, and richer in fat, SNF, minerals
like Ca and P, besides possessing relatively higher levels of physiologically significant bio-
immune and extranutritional factors. These unique processing attributes render buffalo milk
especially suitable for commercially important dairy products such as Mozzarella cheese, cream,
butter, dairy whiteners, paneer, khoya, etc.

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 India can emerge as the leading supplier of these products in the world market. Buffalo
milk fat is superior with regard to less cholesterol and has more tocopherol, which is a natural
antioxidant. Indian dairy industry has to derive maximum benefits of the uniqueness and positive
virtues of buffalo milk to obtain the competitive edge in the global dairy market. Indian
agriculture is essentially a ‘crop-livestock production system’, where crop residues are fed to the
milch animals. Feeding cost being the main determinant of the cost of milk production, India is
highly competitive against the industrially advanced countries, where stall-feeding is practiced.
Besides this, dairy farmers utilise family labour available in their own household for milk
production activities. Due to low labour cost, the cost of milk production is significantly lower.
The most important strength of Indian dairy industry is its cost competitiveness. Today, India
either matches or surpasses countries like New Zealand, Australia and Argentina as the cheapest
producer of milk on global basis. Overall, 70 per cent of world’s milk is more expensive than
Indian milk.

1.2 INDIAN DAIRY INDUSTRY

Today, India is 'The Oyster' of the global dairy industry. It offers

opportunities galore to entrepreneurs worldwide, who wish to capitalize on one of the
world's largest and fastest growing markets for milk and milk products. A bagful of
'pearls' awaits the international dairy processor in India. The Indian dairy industry is
rapidly growing, trying to keep pace with the galloping progress around the world. As he
expands his overseas operations to India many profitable options await him. He may
transfer technology, sign joint ventures or use India as a sourcing center for regional
exports. The liberalization of the Indian economy beckons to MNC's and foreign
investors alike.

India’s dairy sector is expected to triple its production in the next 10

years in view of expanding potential for export to Europe and the West. Moreover with
WTO regulations expected to come into force in coming years. All the developed
countries which are among big exporters today would have to withdraw the support and

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subsidy to their domestic milk products sector. 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. Also to take advantage of this lowest cost of milk production
and increasing production in the country multinational companies are planning to expand
their activities here. Some of these milk producers have already obtained quality standard
certificates from the authorities. This will help them in marketing their products in
foreign countries in processed form.

The urban market for milk products is expected to grow at an

accelerated pace of around 33% per annum to around Rs.43, 500 crores by year 2005.
This growth is going to come from the greater emphasis on the processed foods sector
and also by increase in the conversion of milk into milk products. By 2005, the value of
Indian dairy produce is expected to be Rs 10, 00,000 million. Presently the market is
valued at around Rs7, 00,000 million.

India with 134 million cows and 125 million buffaloes has the largest population of
cattle in the world. Total cattle population in the country as on October'00 stood at 313
million. More than fifty percent of the buffaloes and twenty percent of the cattle in the
world are found in India and most of these are milch cows and milch buffaloes.

Indian dairy sector contributes the large share in agricultural gross domestic products.
Presently there are around 70,000 village dairy cooperatives across the country. The co-
operative societies are federated into 170 district milk producers unions, which is turn has
22-state cooperative dairy federation. Milk production gives employment to more than
72million dairy farmers. In terms of total production, India is the leading producer of
milk in the world followed by USA. The milk production in 1999-00 is estimated at
78million MT as compared to 74.5million MT in the previous year.. Of this total produce
of 78mn cows' milk constitute 36mn MT while rest is from other cattle. While world milk
production declined by 2 per cent in the last three years, according to FAO estimates,

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Indian production has increased by 4 per cent. The milk production in India accounts for
more than 13% of the total world output and 57% of total Asia's production.

Although milk production has grown at a fast pace during the last three
decades (courtesy: Operation Flood), milk yield per animal is very low. The main reasons
for the low yield are

 Lack of use of scientific practices in milching.

 Inadequate availability of fodder in all seasons.
 Unavailability of veterinary health services.

MILK YIELD COMPARISON:

Country Milk Yield (Kgs per year)

USA 7002
UK 5417
Canada 5348
New Zealand 2976
Pakistan 1052
India 795
World (Average) 2021

Source: Export prospects for agro-based industries, World Trade Centre, Mumbai

WORLD'S MAJOR MILK PRODUCERS (Million MTs)

Country 1997-98 1998-99 ( Approx.)

India 71 74.5
USA 71 71
Russia 34 33
Germany 27 27
France 24 24
Pakistan 21 22
Brazil 21 27
UK 14 14
Ukraine 15 14
Poland 12 12

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 New Zealand 11 12
Netherlands 11 11
Italy 10 10
Australia 9 10

FRESH MILK

Over 50% of the milk produced in India is buffalo milk, and 45% is cow milk. The
buffalo milk contribution to total milk produce is expected to be 54% in 2000. Buffalo
milk has 3.6% protein, 7.4% fat, 5.5% milk sugar, 0.8% ash and 82.7% water whereas
cow milk has 3.5% protein, 3.7% fat, 4.9% milk sugar, 0.7% ash and 87% water. While
presently (for the year 2000) the price of Buffalo milk is ruling at $261-313 per MT that
of cow is ruling at $170-267 per MT. Fresh pasteurized milk is available in packaged
form. However, a large part of milk consumed in India is not pasteurized, and is sold in
loose form by vendors. Sterilized milk is scarcely available in India. Packaged milk can
be divided according to fat content as follows,

 Whole (full cream) milk - 6% fat

 Standardized (toned) milk - 4.5% fat
 Doubled toned (low fat) milk - 3% fat

Another category of milk, which has a small market, is flavored milk.

EMERGING DAIRY MARKETS

 Food service institutional market: It is growing at double the rate of consumer

market
 Defense market: An important growing market for quality products at reasonable
prices
 Ingredients market: A boom is forecast in the market of dairy products used as
raw material in pharmaceutical and allied industries

18
  Parlour market: The increasing away-from-home consumption trend opens new
vistas for ready-to-serve dairy products which would ride piggyback on the fast
food revolution sweeping the urban India.

MARKET SIZE AND GROWTH

Market size for milk (sold in loose/ packaged form) is estimated to be 36mn MT valued
at Rs470bn. The market is currently growing at round 4% pa in volume terms. The milk
surplus states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat,
Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The manufacturing of milk
products is concentrated in these milk surplus States. The top 6 states viz. Uttar Pradesh,
Punjab, Madhya Pradesh, Rajasthan, Tamil Nadu and Gujarat together account for 58%
of national production. Milk production grew by a mere 1% pa between 1947 and 1970.
Since the early 70's, under Operation Flood, production growth increased significantly
averaging over 5% pa. About 75% of milk is consumed at the household level which is
not a part of commercial dairy industry. Loose milk has a larger market in India as it is
perceived to be fresh by most consumers. In reality however, it poses a higher risk of
adulteration and contamination. The production of milk products, i.e. milk products
including infant milk food, malted food, condensed milk & cheese stood at 3.07 lakh MT
in 1999. Production of milk powder including infant milk-food has risen to 2.25 lakh MT
in 1999, whereas that of malted food is at 65000 MT. Cheese and condensed milk
production stands at 5000 and 11000 MT respectively in the same year. (Source: Annual
Report 1999-2000, DFPI)

MAJOR PLAYERS

The packaged milk segment is dominated by the dairy cooperatives. Gujarat Co-operative
Milk Marketing Federation (GCMMF) is the largest player. All other local dairy
cooperatives have their local brands (For e.g. Gokul, Warana in Maharashtra, Saras in
Rajasthan, Verka in Punjab, Vijaya in Andhra Pradesh, Aavin in Tamil Nadu, etc). Other

19
private players include J K Dairy, Heritage Foods, Indiana Dairy, Dairy Specialties, etc.
Am rut Industries, once a leading player in the sector has turned bankrupt and is facing
liquidation.

DISTRIBUTION CHANNELS:

For refrigerated and frozen food distribution, a world class cold chain would help in
providing quality assurance to the consumers around the region.

RETAILING:

There is scope for standardizing and upgrading food retailing in major metropolitan cities
to meet the shopping needs of a vast middle class. This area includes grocery stores of
European and North American quality, warehousing and distribution.

 PRODUCT DEVELOPMENT:

Dairy foods can be manufactured and packaged for export to countries where
Indian food enjoys basic acceptance. The manufacturing may be carried out in contract
plants in India. An option to market the products in collaboration with local
establishments or entrepreneurs can also be explored. Products exhibiting potential
include typical indigenous dairy foods either not available in foreign countries or
products whose authenticity may be questionable. Gulabjamuns, Burfi, Peda, Rasagollas,
and a host of other Indian sweets have good business prospects.

Products typically foreign to India but indigenous to other countries could also be
developed for export. Such products can be manufactured in retail package sizes and
could be produced from milk of sheep, goats and camel. Certain products are

20
characteristically produced from milk of a particular species. For example, Feta cheese is
used in significant tonnage, in Iran. Sheep milk is traditionally used for authentic Feta
cheese. Accordingly, India's goat and sheep herds can be utilized for the manufacture of
such authentic products.

1.3 COMPANY PROFILE

SALEM DISTRICT CO-OPERATIVE MILK PRODUCER’S UNION LTD IN
SITHANUR

 Home

The prestigious Salem Dairy complex is situated in about in 46 acres of land

bound by Sithanur and Dhalavaipatty villages. It is located just 6 km away
from Salem railway Junction on the way to Govt.Medical College and Salem Steel Plant.

           The Salem District Co-op. Milk Producers' Union Ltd., has been registered on
10.07.1978 and started functioning from 07-10-1978. To begin with, the union started
procuring 33,100 LPD of milk from 227 affiliated primary milk co-operative societies.
Then gradually expanded its activities and now reached a daily average procurement of
more than 4.0 lakh liters per day from 1049 functional District Co-operative Society
(DCS).

It is a Feeder Balancing Dairy i.e. converting surplus milk solids into products like
butter, ghee and Skim milk powder. The commercial production of products viz. Butter,
Ghee and Skim Milk Powder started on 16-08-1983. All the Union activities are fully
computerized. This union is specially featured with

 Training Centre
 Progeny Testing Scheme
 Clean Milk Production at farmer level
 Aseptic packaging Station
21
  Milk Powder plant
 ISO 9001:2000 Certification
  Export

Aavin

Type Cooperative

Genre Milk and milk products

Predecessor(s) Tamil Nadu Dairy Development Corporation Limited

Founded In 1958 (Tamil Nadu, India)

Headquarters Tamil Nadu

Revenue $300 million (2010)

Owner(s) Government of Tamil Nadu

Parent Department of Animal Husbandry, Dairying and Fisheries

(Tamil Nadu)

Website http://www.aavinmilk.com/

22
PROCUREMENT

ANIMAL BREEDING

          In Salem milk union, 591 AI centre are functioning in cluster manner covering all
the DCS for AI activities. Frozen semen is purchased from Nucleus Jersey Stud Farm,
TCMPF Ltd., Ooty and BFSS, TCMPF Ltd, Erode for cattle and buffalo respectively at
the rate of Rs 10/- per dose. AI facility has been extended at the doorstep of the farmers
and thereby the conception rate is improved. They have implemented the Artificial
Insemination Monitoring System since 2001 and have computerized the AI activities.
Based on the report generation, the AI performance is monitored to improve the breeding
efficiency.

Progeny Testing Scheme in cattle and buffaloes is carried out in 70 DCS to select
the proven bulls through Dairy Herd Improvement Programmer Action, TCMPF Ltd.,
Chennai. Calf rally is conducted and the prizes are given to the selected best calves to
motivate the farmers to rear their calves with utmost care.

 ANIMAL HEALTH

          As a part of Animal health management, 16 nos. of regular Veterinary units and
(fortnight route) and Emergency units (round the clock) are functioning to cater to the
needs of the health coverage to all the milch animals of DCS members. Infertility camps
at the society level and the breeding problems in the animals are treated. As a preventive
measure, the animals are vaccinated against FMD to protect the animals and milk loss.

FEED AND FODDER

 They are purchasing 200 metric tonnes (average) of cattle feed per month from
cattle feed plant Erode and supplied to the DCS. To meet out the green fodder
requirement of milch animals the milk union is supplying the fodder by way of

23
cultivating the Co3 fodder/slips for distribution to the farmers throughout the year. Apart
from union land, farmer’s land also being used for fodder cultivation and propagation and
totally 2700 acres of land has been brought under fodder cultivation. Farmers are
educated on Ration Balancing programme to improve the Feed conversion ratio in the
animals. For Dry fodder management, urea treatment of paddy straw is carried out to
preserve the same during surplus season.

COMPETITION

Quality control is one of the major operations in dairy industry. Reporting the
quality status of milk processed and standardized so that milk of the correct standards is
prepared and markets. So that only this aavin milk industry will be lead when compare
to other industry. The combine business turnover of the cooperative sector dairies
touched Rs 11000 cores in 2004 – 2005. This follows an impressive 15 percent growth
in the total milk collection to these dairies which rose to a record 20 million kg per day
during the year.

Aavin stands first in the production and distribution of milk in Tamilnadu. Its
competitors are:

 Arokya
 Heritage
 Thirumala
 Nutra

The sale of liquid milk rose only by about five percent. The report points out that
the NDDB’s support for clean milk production was extended to 5,663 villages in 2004 –
2005. The total villages covered by dairy cooperative milk unions across the country,
adding new processing infrastructure and expanding the existing facilities. Support was
also provided to various dairy cooperatives to launch consumer education campaigns on
the benefits of consuming pasteurized milk. The Delhi Mother Dairy continued to

24
supplement the sales promotion efforts of the other cooperatives by marketing milk and
milk production sourced from them.

PRODUCTIVITY

To have an exportable surplus in the long term and also to maintain cost
competitiveness, it is imperative to improve productivity of Indian cattle. When
consider export from this dairy marketing network is managed with 9 milk marketing
offices, 491 agents for milk and 11 products and through the federation throughout the
country and abroad. Here no. of animal under cooperative ambit is 175575 now of
societies covered under A, H is 949, and no. of veterinary routes is 14. No. of
emergency routes is 8. So it can be exported to other nations. Here no. of societies
collecting milk are 968. No of routes operated is 14 and no of sale point is 421, no. of
parlours is 13.

Year Sales turnover

Rs in lakhs

20006 -2007 11521.89

2007 – 2008 12058.42

2008 -2009 15375.97

2009 – 2010 16873.86

2010 – 2011 17065.74

2011 – 2012 18976.57

25
GROWTH RATE

Milk is the prime product of dairy of dairying. India is the largest milk producing
country in the world, in which Tamilnadu is one of the frontline states in milk
production and ranks as number one in the country in the coverage of more than 50% of
revenue villages under cooperative ambit. There are 8246 functional primary milk
societies with 22.29 lakhs members. To further develop the dairy sector in Tamilnadu
and to improve rural economy. The thrust area covered is animal induction,
infrastructure development, implementation of clean milk production, sustainability of
cattle population, quality animal health cover and technical manpower.

Dairying, by playing a significant role in strengthening rural economy, has brought

about socio-economic transformation in Tamilnadu. Small farmers, marginal farmers
and down trodden constitute majority of milk producers. Dairying provides definite
and regular income and employment to millions of rural families throughout the year,
especially to women thereby improving the quality of their life.

The milk producers in the cooperative sector on an average get daily income of
Rs. 396.20 lakhs for the milk they pour to the dairy society which indicates the
importance of this sector in the rural economy. The advisory committee on animal
husbandry and dairying constituted by union planning commission in its final reports
submitted in January 2012 mentions “the potential for the growth of animal husbandry
and dairy sector in tamilnadu is quite impressive, i.e. the dairy sector grew from 2.89
percent of annual compound growth to 5 to 6 percent” in this union growth rate will be
increased day by day.

GOVERNMENT INCENTIVES

The growth of dairying in Tamilnadu is laudable ever since the dairy

development was established in 1958 the administrative and statutory control of all the
airy cooperatives in the state was transferred to this department on 01.08.1965. The
commissioner for milk production and dairy development is the head of the department
26
and also officiates as the functional registrar of dairy co-operatives. He also functions
as the Managing Director authority under milk and milk products order, 1992 for the
state of Tamilnadu.

Under the relevant provisions of the Tamilnadu co-operative societies act,

1983 and Tamilnadu co-operative societies rules, 1988, he exercise statutory functions
like registration of new societies, revival of dormant societies, inspection of societies,
settlement of disputes, conduct of election to the boards of management, constitution of
boards issue of direction to societies in the interest of public etc.,

The commissioner for milk production and dairy development is assisted by

deputy milk commissioner (co-operation) and 25 deputy registrars (dairying) at the
regional level for discharging the statutory and administrative functions.

PRIMARY MILK CO-OPERATIVE SOCIETIES

Since members of the milk producers’ co-operative societies are stakeholders, when the
society earns profit, the member producers are paid dividend on share capital, patronage
rebate and bonus for the services rendered by them to the society. This ploughing back
of profit for the benefit of producers is unique in the dairy co-operative sector and this
has created a close bond between the producers and the co-operative societies.

TAMILNADU CO-OPERATIVE MILK PRODUCERS’ FEDERATION

The Tamilnadu co-operative milk producers’ federation limited the apex body of
17 district co-operative milk producers’ unions was established on 1 st February of 1981.
The federation has 3 dairy plants in Chennai which collect milk from district unions,
process and pack in sachets and send for sale to consumers in and around Chennai city.
The market shares of dairy co-operatives have increased considerably and aavin brand

27
 holds the major market share in Tamilnadu. Ambathur product dairy is engaged in
manufacturing of milk products.

OBJECTIVES OF THE DAIRY DEVELOPMENT DEPARTMENT

 To brings the un-organized dairy sector into organized sector in a phased

manner.
 To monitor, supervise and regulate dairy activities.
 To ensure input activities and animal health care for increasing milk
productions.
 To assure remunerative price to the milk producers.
 To ensure liquid milk availability and supply of clean processed milk
following hygienic and food safety measures to the consumers at reasonable
price.
 To ensure quality of milk and milk products as per statutory specifications.
 To ensure transparency in administration in order to strengthen confidence on
the sector.

AWARDS AND REWARDS

 ISO 9002 was awarded for production, supply of milk, skimmed milk
powder, butter, ghee and UHT milk in tetra pack.
 Aavin Salem is an ISO 9001:2000 certified organization since 24.10.2002.
 Tamilnadu state government supported to the company. They reduced the
taxes for the milk.
 Government gives loans at very lower interest and sometimes government is
discounting the loan also.

Aavin Products:

 Badam Mix Powder

 Butter

28
  Butter Milk
 Curd
 Fruit flavour milk shake
 Ghee
 Gulabjamun
 Ice cream
 Khoa
 Milk powder

1.4 IMPORTANCE OF THE STUDY

The study mainly has elicited views from consumers about price, quality, package,
availability, sales, promotion and encourage of avian milk and enable to ascertain the
respondents level regarding the product, the study makes an attempt to know the
awareness level of customer about the service. So the study can be useful to know more
about the Aavin products and various services provide by it. the study has been
conducted among consumers at Salem town where Aavin milk is marketed. The scope of
marketing is very wide. It may be analyzed in terms of marketing functions are inherent
in every marketing process and these functions may have to be performed many time in
the marketing of a given product. The information gathered through the study could be
useful to the company to the formulate future practices and strategies to attract customers.

1.5 STATEMENT OF THE PROBLEM

Customer Perception Statement of the problem At present in this competitive business world the
milk industry has more than 60 brands in the battle field facing stiff competition in every
segment’s targeted. Even Aavin milk is also facing stiff competition even its 35 years of
heritage. In this juncture it has to identify its competitors in this market by bringing brand

29
awareness in minds of consumers also it has to come up with the consumer behavior and
customer perception. Through this study, the main problem that it studies during this project
work is to find out the customer preference and customer perception towards Aavin Milk and its
milk products and the awareness of brand among the consumers of Salem district. Need for the
study Management needs to know the customer preference information in order to take sound
decisions. Surveys on customer preference can produce favorable or unfavorable result, but
bringing a number of benefits to management. A study on customer preference helps to
understand the performance of the organization and the behavior of the customers. The study of
customer preference indicates the expectations of the customers. Customer preference helps to
understand the loyalty of the customer towards the products. The management finds a possible
way to fulfill the expectations of customers and attracts new customers Scope of the Study. The
study aims to find the customers preference of milk products with reference to Aavin. The study
is restricted to information regarding the customer’s likes and dislikes, their, personal decisions
and family decisions and loyalty of the customers. The study has been carried out for period of 3
months and has focused on all type of customers

1.6 OBJECTIVES

 To examine the level of consumer satisfaction towards aavin milk products

 To analyse the factors influencing to buy aavin milk
 To anlayse the problems facing by consumers of aavin milk.
 To provide valuable suggestions to improve consumer satisfaction and solutions to
problems

1.7 HYPOTHESIS

S.N HYPOTHESIS REMARKS

O
1 Ho There is no significant relationship between gender and health Accepted
2 Ho There is no significant relationship between income and rate of milk Rejected
3 Ho There is no significant relationship between income and spending Rejected
amount

30
1.8 RESEARCH METHODOLOGY

Area of the study

The area of the study is Salem town

Data Collection

For this study researcher has collected both primary and secondary data.

Primary data: Primary data has been collected from the selected respondents through
well structured questionnaire which consists of different questions relating to the
industrial relation provided in the Aavin. To know more details about the Industrial
relations in Aavin additionally the researcher discussed with manager, executives and
workmen.

Secondary data: Secondary data collected from the records & reports of the Aavin.

Research Design

Sample size: The researcher used purposive sampling techniques to select respondents.
The researcher initially issued 150 questionnaires to the respondents, but 123 filled data
sheet were received from the respondent. 23 data sheet has been rejected because of
incompleteness. Finally the researcher has taken 100 data sheets for coding.

Statistical Tools used in data analysis: Percentage analysis, weighted average score, and
Anova.

1.9 LIMITATION OF THE STUDY

 The time of the project period is very less.

31
  Few respondents don’t give proper answer due to their busy schedule and
the researcher rejected unfilled data sheets.
 Due to short time the researcher focused two aavin booths in salem city. The result
may be change, if the sample is exceed.

1.10 CHAPTERISATION

32
CHAPTER-I

Introduction of the study, importance of the study, statement of the problem, objectives of
the study, Research Methodology, Hypothesis of the study, period of the study, scope of the
study, Limitations of the study.

CHAPTER-II

The Review of literature pertaining to the research topic.

CHAPTER-III

Data analysis and interpretations.

CHAPTER-IV

Findings, suggestions, and conclusion.

CHAPTER-II
REVIEW OF LITERATURE

33
Kaul (1977)1in his article entitled "Are you adding value through rural selling", revealed
that integrating the product message into song and dance events, film based skits, puppet
shows and magic shows are becoming increasingly popular. He further observed that
more than the medium, the consumer wants a product with a quality assurance. He
concludes that customers are more particular about quality.
Prabaharan and Patel (1980)2 conducted a study on consumer awareness and
preferences for milk in Madras city with random sample of 300 households, selected
based on the probability proportion to the number of consumers in each zone. The study
aimed to analyse the awareness of the consumers relating to dairy processing services;
preferences for cow and buffalo milk; preferences for fat contents among toned and
standardized milk and also the preferences for the size of the package of milk. The study
revealed that majority of the respondents never heard about the pastuerisation process and
preference for the cow milk was more than the buffalo milk. It was due to the reason that
cow milk was with less fat content preventing digestable disorders. More percentage of
households was buying standardized milk. About a percentage of households expressed
their desire for toned milk with less fat content than what was available. This type of
preference was mainly expressed in relatively lower income groups because of a feeling
that reduction in fat percentage would further result in a lower price for toned milk.

Ganguly and Gopal (1981)3 in their study on Metropolitan milk markets of India
revealed that in Bombay and Calcutta 75 percent of milk was bought by households with
1
Pummy Kaul, "Are you adding value through rural selling", Business Today, Vol.6,No.1, January 7-21,
1997, pp.98-102.
2
Prabaharan, R. and Patel, R.K, "Consumer awareness and preferences for milk in
Madras city", Indian Journal of Marketing, 1980,December, Vol. 40(4): pp.13-15.

3
Ganguly, B.K. and Gopal, S., "Metropolitan milk market for India", World
Agricultural Economics and Rural Sociology, 1981, Vol. 23 (4): p.304.

34
low or moderate income but in Delhi and Madras almost half of the milk was purchased
by high-income households. In Delhi and Bombay the average household devoted 17
percent of it's expenditure to milk products. It appeared that milk and milk products are
more important to the people of Delhi and Bombay, as 95 percent of all the households
interviewed in these cities bought milk regularly. The modern dairies share in the liquid
milk market had increased presumably because the modern dairies charged 40 percent
less than the traditional sector for their milk.
Ackermann and Cattier (1982)4 in their consumer survey of the milk market in OAE
revealed that Belgians are the lowest milk consumers in Europe except for the West
Germans. Milk being an important food item for most consumers, it was as well as an
important economic element in most Belgium farms. The study examined why milk
consumption percapita in Belgium was so low and likely to decline further. Trends in
demand and milk consumption by type of packaging and type of products were
considered. A profile of typical Belgium consumers was developed which showed
variables in attitude towards products according to various criteria (Age, Religion,
Degree of Urbanisation, Occupation, Social Group, Distribution Channel). The Belgium
consumers were inadequately informed about the product and hence regarded its
purchase as routine rather than involving a choice. Many consumers thus probably
bought a type of milk, which did not answer their particular felt or unfelt needs.
Marketing policy should thus seek to inform the consumer so as to breakdown their
present negative attitudes and increase their interest while seeking to improve the
product's brand image.

Drews (1984)5 sin his study on the market for pasteurized milk and factors affecting
consumption trends in German Federal Republic (GFR) revealed that of about 3.5 million
tons of liquid milk produced by the dairies in the GFR in 1982, approximately 52 percent
4
Ackermann, L. and Callier, K., "Consumer survey of the milk market", World Agricultural Economics
and Rural Sociology, 1982, Vol. 24(3): p.137.
5
Drews, M. "The Market for pasteurized milk and factors affecting consumption trends, German Federal
Republic" World Agricultu ral Economics and Rural Sociology, 1984, Vol. 26(7): p.513.

35
was pasteurized. The increase in the market share of UHT (Ultra High Temperature) Milk
at the expense of pasteurized milk had become less marked in last few years, although the
major part (53.4 percent) of milk sold in packaged form is now UHT milk. Factors
influencing the pattern of milk sales were flavour, Price, Health consideration and
convenience etc.
Brucks (1985)6 in his study entitled "The effects of product class knowledge on
information search behavior", attempted to clarify the meaning and measurement of
consumer product class knowledge and to examine the effect of product class knowledge
on information search behaviour. The measures of consumer product class knowledge
can be an individual's perception of how much he knows or the amount of purchasing or
usage experience with the product.
Singh and Patel (1986)7 studied the effect of socio-economic parameters on the
consumption pattern of milk and milk products. A survey of 100 rural and 60 urban
households in Murzthan Nagar district of Western Utterpradesh showed that adult males
generally accounted for the largest share in the consumption of milk products than on
liquid milk. Consumption of milk and milk products were higher in households with
agricultural occupations, keeping dairy animals. It was also higher in rainy season and
lowest in summer.

Prakash Singh and Raghbir Singh (1986)8 investigated the relationship between
income and consumption of milk products in Chandigarh area. It was found that the
average monthly consumption increased with income for all milk products. Milk products

6
Merrie Brucks, "The effects of product class knowledge on information search
behaviour", Journal of consumer research, Vol. 12, June 1985, pp 1-6.
7
Singh, B. and Patel, R.K, "Effect of socio-economic parameters on consumption
pattern of milk and milk products", Asian Journal of Dairy Review, September 1986, Vol. 28(5); p.172.

8
Satya Prakash Singh and Raghbir Singh, "Consumption of milk products and income", Margin, October
1986, Vol. 19(1): pp.50-57.

36
produced by all the sectors organised, unorgansied and home made showed a dominance
of the organized sector in all income groups.
Raghbir Singh (1986)9 in his study on consumers' perception on organized sector dairy
products was to examine how consumers perceive dairy products manufactured by
organized sector in comparison with those produced by unorganized sector and examine
whether there was any divergence, disagreement among the opinion of household
belonging to different income and educational categories regarding their perception of
dairy products manufactured by organized sector as against those produced by other
sectors. The null hypothesis had been tested. The major conclusion of the study was that
as for as flavour, Nutritional value, moisture content and digestibility were concerned
consumers did not view much difference between the unorganized and organized sector
dairy products. of Consumer Behaviour and established that liquid milk was perceived as
a neutral drink; not ordinary or luxury, as a food not a drink for pleasure and not as being
refreshing.
Termorshwizen (1986)"10 in his study entitled "Consumer behavior in respect of milk in
the Netherlands" used Engel, Kollat and Blackwell (EKB) Model — an Integrated model
The most important socio economic variables explaining individual difference in
consumer beliefs regarding milk are age, level of education and residential area. The
results suggested that empirical model of EKB type could contribute to the understanding
of the consumer behaviour with respect to generic food products.
Shanthi (1987)11 studied consumer preference for `Aavin' milk and its products in
Royapettah and Mylapore. It was found that good quality coupled with the price was the
main reason for consumer preference for milk and milk products. Correct weight and

9
Raghbir Singh, "Consumer perception of the organized sector dairy products", Indian Dairyman, Vol. 38
(3), 1986, pp.89-95.
10
Termorshwizen, J.G., "Consumer behaviour in respect of milk in Netherlands",
European Review of Agricultural Economics, Vol. 13 (1)1986, pp.1-22
11
Shanthi.S, "A study on consumer preferences for Aavin milk and its products in
Royapettah and Mylapore", Margin, July 1987, Vol. 22(2): pp.35-44.

37
convenience found the second place and third place with hygiene coming next. The
quantity of milk purchase increased with the increase in the size of the family. It was also
found that consumption of Aavin milk did not increase with increase in income.
Burmann (1987)12 in his study on consumer attitudes and behaviours with respect to
liquid milk in the German Federal Republic revealed that households consumed milk
frequently, an equal percentage of the consumers were using pasteurized milk and UHT
milk and milk was used more for drinking than for cooking. The dominant features in the
image of pasteurized milk were freshness and nice taste whereas the image of UHT milk
was dominated by convenience and was better among immigrant workers than among
Germans.
Arya and Ram (1988)13 in their survey on factors affecting consumption pattern of milk
and milk products in rural and urban areas of the Kamal district of Haryana state with the
sample of 240 households post stratified the sample households into occupational groups,
per capita expenditure class, type of consumers and vegetarian and non-vegetarian
groups. The log-linear multiple regression analysis was employed to measure the
contribution of various factors affecting expenditure on milk and milk products. The
major findings of the study revealed that the average per capita total expenditure was
almost double in the urban areas as compared to rural areas. The food habits of the

consumers did not have any significant impact over the capital expenditure on milk and
milk products. The study concluded that the independent variable namely percapita

12
Burmann, W. "Consumer attitudes and behaviours with regard to liquid milk in the German Federal
Republic", World Agricultural Economics and Rural Sociology
Abstracts, Vol. 12(2), 1987, pp. 23-26.
13
Swamalatha Arya and Kuber Ram, "Factors affection consumption pattern of milk and milk products in
Rural and Urban areas" Indian Journal of Dairy Science, Vol. 41 (I), 1988, pp.46-52.

38
monthly total expenditure, family size, education status of the family members and food
habit of the households largely influence percapita expenditure on milk and milk
products.
Bruner II and Pomazal (1988)"14 in their study entitled "Problem Recognition: The
Crucial First Stage Of The Consumer Decision Process", stated that since 1910, when
John Dewey first introduced the five-stage decision process, it has been a widely
accepted concept and still serves as the central pillar of a popular consumer behavior
model. These stages are Problem Recognition, Information Search, Alternative
Evaluation, Choice, and Outcomes. The importance of these stages is attested by the
considerable attention devoted to most of them in numerous textbooks and journal
articles. Such attention, however, has not come to the Problem Recognition stage. While
some texts provide hypothetical descriptions of this "trigger" of the decision process,
theoretical discussion and empirical support are surprisingly lacking. Journal literature
fares even worse, with articles on the topic almost non-existent. Lack of information on
the topic is even more ironic when one considers that a purchase cannot occur
unless a problem is recognized.
Singh (1989)15 studied consumer's perception of the organized sector dairy products, by
collecting data from 394 households in Chandigarh about the consumer perception of
milk products manufactured by unorganized sectors in India. The organized sector
comprises of Industrial-scale manufacturers and products manufactured by state
corporations, co-operatives and joint stock companies. The unorganized sector comprised
of small-scale manufacturers and home made products. The milk products from
organized sector were perceived to be more 'reliable in quality', 'hygienically prepared',
'cleanly-packaged', 'delicious in taste' and 'effecting good value for money' compared
14
Gordon C. Bruner II, Richard J. Pomazal , "Problem recognition: the crucial first stage of the consumer
decision process", Journal of Consumer Marketing Year: 1988 Vol.5 Issue: 1 pp. 53- 63.

15
Singh, R., "Consumer perception of the organized sector dairy products", Indian Dairyman, 1989, Vol.
41(2), pp. 89-95.

39
with milk products from unorgansied sector. Perception of moisture content, digestibility,
Nutritional value and flavour were rated similarly for organized and unorganized sectors.
Difference in income and education did not influence perception.
Barnard and Ehrenberg (1990)16 in their study entitled "Robust measures of consumers
brand beliefs", revealed that consumers selected brand name more frequently than any
other information.
Many people tend to associate a positive attribute with larger brands than associate it with
smaller brands. The explanation is that a larger brand has more claimed users than a
smaller brand, and that the users of a brand are more likely than the nonusers to give a
positive-attribute-response.
Goswami (1994)17 examined the consumption pattern of milk and milk products of five
district income groups in Shillong town of Meghalaya state with a sample of 200
households drawn from 20 wards. It was observed that with the increase in income, the
expenditure on milk and milk products had also increased. Among the various milk
items, per capita expenditure was maximum on fluid milk for all the income groups.
Linear, Semi-Log and Log-Linear forms of Engel function were found to be best fit for
explaining the consumer behaviour of various income groups with respect to milk and
milk products consumption. It was found that a wide variation was dissemble in the
consumption pattern of milk and milk products across different income groups. The
demand for various milk items was observed to be expenditure elastic for all the income
groups. All respondents expressed that butter and ghee and other milk products as luxury
items.
Singh and Singh (1994)18 in their study on the pattern of milk consumption in urban and
rural areas of Ludhiana district in Punjab, found that the direct consumption of milk was
16
Neil R. Barnard and Andrew S.C. Ehrenberg, "Robust measures of consumers brand beliefs", Journal of
Marketing Research, Vol.27, November 1990, p.477.

17
Goswami, S.N., "Difference in the consumption pattern of milk and milk products among different
income groups", Indian Journal of Dairy Science, Vol. 47 (11), 1994, pp. 62-64.

40
more in rural than in urban areas. The percentage share of domestic consumption was
higher in summer seasons as compared to winter season both in urban and rural areas.
Patel, Kumar and Khera (1994)19 in their study entitled "A study on consumption
pattern of milk and milk products", based on the cross sectional data of 352 households
studied the occupation wise consumption pattern of milk and milk products in Kamal
city. The Engel equation of double log form was fitted for estimating the expenditure
elasticities. The concentration curve technique was used to study the inequalities in the
consumption of milk and milk products for different occupational groups. They observed
that the growth in demand for milk increased rapidly as per capital income increased. The
expenditure elasticities were higher for service families as compared to the business
families and there were greater inequalities in the milk consumption for service families
as opposed to business families.
Sayulu (1994)20 in his study entitled "Rural Marketing in India", analysed that retailers
should develop strategy based on their own circumstances and understanding of the needs
of the rural consumers. He also emphasizes that low price product will be more
successful in rural areas because of low per capita income of majority of rural consumers.
Moreover manufacturer should take a lead in opening up channels of communication
with rural outlets as an extension of their promotional activity and sales representative
should visit the stores regularly.

18
Singh, A.J and Singh, R.P., "Economic aspects of milk consumption in urban and rural areas of
Ludhiana district in Punjab", Indian Dairyman, Vol. 46(7), 1994, pp. 403-410

19
Patel, R.K, Kumar P, and Khera, J.K, "A study on consumption pattern of milk and milk products",
Indian Dairyman, Vol. 46(7), 1994, pp. 350-356.

20
Kuchi Sayulu, "Rural Marketing in India", Advertising and Marketing Journal,
November 1994, pp. 61-64

41
Maheswaran (1994)21 in his study titled "Country of origin as a stereotype: effects of
consumer expertise and attribute strength on product evaluations", revealed that
consumers have well-developed stereotypical beliefs about products that originate from
other countries. Country-of - origin based categories represent a knowledge structure that
is based on a criterion that is less accurate, context dependent, and is likely to vary
across situations.

Mela (1994)22 in his study entitled "The intake and acceptance of Fat in the Diet Journal:
Nutrition & Food", reviewed some of the possible reasons why fat intake is at this high
level, and why consumers find it difficult to reduce intakes. First, there may be psycho-
biological effects of fats which serve to maintain liking for fat-associated sensory
characteristics. Second, consumers often have a poor conception of their own fat intake
and the relative contributions of different food sources. Lastly, there is little known about
the factors influencing long-term dietary change. These are issues which research in
nutrition and food science can and should address.

CHAPTER-III
21
Maheswaran, "Country of origin as a stereotype: effects of consumer expertise and attribute strength on
product evaluations", Journal of Consumer Research, Vol.21 September 1994, pp. 354-55.

22
Mela, D.J., "The Intake and Acceptance of Fat in the Diet Journal: Nutrition & Food", Science Year:
1994 Vol. 94, Issue: 3, pp. 19 — 21.

42
 TABLE-3.1

THE TABLE SHOWING THE GENDER

S.No. Gender Respondent Percentage

1. Male 69 69%

2. Female 31 31%

  Total 100 100

Source: Primary data

INTERPRETATION:

The above table shows 69% of the respondents are male and remaining 31% of the
respondents are female.

TABLE-3.1

THE CHART SHOWING THE GENDER

35

30

25
Percentage

20

15

10

0
Below 20 years 20-30 years
Gender

TABLE-3.2
43
 THE TABLE SHOWING THE AGE

S.No Age Respondent Percentage

1 Below 20 years 10 10%
2 20-30 years 29 29%
3 31-40 years 39 39%
4 Above 40 years 22 22%
  Total 100 100%
Source: Primary data

INTERPRETATION:

The above table shows that 39% of the respondents are 31-40 years, 29% of the
respondents are 20-30 years, 22% of the respondents are above 40 years, 10% of the
respondents are below 20 years.

TABLE-3.2

THE CHART SHOWING THE AGE

40
35
30
Percentage

25
20
15
10
5
0
Below 20 years 20-30 years 31-40 years Above 40 years
Age

TABLE - 3.3

THE TABLE SHOWING EDUCATIONAL QUALIFICATION

44
 S.No Educational Respondent Percentage
1 School level 14 14%
2 Post Graduation 32 32%
3 Graduation 50 50%
4 others 4 4%
  Total 100 100%
Source: Primary data

INTERPRETATION

The above table shows that 50% of the respondents are graduation, 32% of the
respondents are post graduation, 14% of the respondents are school level, 4% of the
respondents are others.

TABLE - 3.3

THE CHART SHOWING EDUCATIONAL QUALIFICATION

50
45
40
35
percentage

30
25
20
15
10
5
0
School level Post Graduation Graduation others
Educational

TABLE-3.4

THE TABLE SHOWING FAMILY SIZE

S.No Family size Respondent Percentage

45
 1 Below 2 members 2 2%
2 3-4 members 56 56%
3 5-6 members 32 32%
4 Above 7 members 10 10%
  Total 100 100%
Source: Primary data

INTERPRETATION

The above table shows that 56% of the respondents are 3-4 members, 32% of the
respondents are 5-6 members, 10% of the respondents are above 7 members, 2% of the
respondents are below 2 members.

TABLE-3.4

THE CHART SHOWING FAMILY SIZE

60

50

40
percentage

30

20

10

0
Below 2 members 3-4 members 5-6 members Above 7 members
Family size

TABLE-3.5

THE TABLE SHOWING OCCUPATION

46
 S.No Occupation Respondent Percentage
1 Employee 54 54%
2 Farmer 17 17%
3 Business man 14 14%
4 student 15 15%
  total 100 100%
Source: Primary data

INTERPRETATION

The above table shows that 54% of the respondents are employee, 17% of the
respondents are farmer, 14% of the respondents are business man, 15% of the
respondents are students.

TABLE-3.5

THE CHART SHOWING OCCUPATION

60

50

40
Percentage

30

20

10

0
Exployee Farmer Business man student
Occupation

TABLE-3.6

THE TABLE SHOWING INCOME

47
 S.No Income Respondent Percentage
1 Below Rs.10000 36 36%
2 Rs.10001-15000 39 39%
3 15001-20000 17 17%
4 Above Rs.20000 8 8%
  Total 100 100%
Source: Primary data

INTERPRETATION

The above table shows that 39% of the respondents are Rs.10001-15000, 36% of
the respondents are below Rs.10000, 17% of the respondents are 15001-20000, 8% of the
respondents are above Rs.20000.

TABLE-3.6

THE CHART SHOWING INCOME

40
35
30
Percentage

25
20
15
10
5
0
Below Rs.10000 Rs.10001-15000 15001-20000 Above Rs.20000
Income

TABLE-3.7

48
 THE TABLE SHOWING MARITAL STATUS

S.No Marital Status Respondent Percentage

1 Married 62 62%

2 Unmarried 38 38%

  Total 100 100%

Source: Primary data

INTERPRETATION

The above table shows that 62% of the respondents are married, 38% of the
respondents are unmarried.

TABLE-3.7

THE CHART SHOWING MARITAL STATUS

70
60
50
Percentage

40
30
20
10
0
Married Unmarried
Marital status

TABLE-3.8

THE TABLE SHOWING WEEKLY BUYING MILKS

49
 Weekly buying
S.No milks Respondent Percentage
1 5-7 Litters 47 47%
2 8-10 Litters 37 37%
3 10-15 litters 12 12%
4 Above 20 litters 4 4%
  Total 100 100%
Source: Primary data

INTERPRETATION

The above table shows that 47% of the respondents are 5-7 litters, 37% of the
respondents are 8-10 litters, 12% of the respondents are 10-15 litters, 4% of the
respondents are above 20 litters.

TABLE-3.8

THE CHART SHOWING WEEKLY BUYING MILKS

50
45
40
35
Percentage

30
25
20
15
10
5
0
5-7 Litters 8-10 Litters 10-15 litters Above 20 litters
weekly buying milk per litter

TABLE-3.9

THE TABLE SHOWING PURPOSE OF BUYING

50
 Purpose of
S.No buying Respondent Percentage
1 coffee/tea 70 70%
2 curd 24 24%
3 butter milk 6 6%
  total 100 100%
Source: Primary data

INTERPRETATION

The above table shows that 70% of the respondents are coffee\tea, 24% of the
respondents are curd, 6% of the respondents are butter milk.

TABLE-3.9

THE CHART SHOWING PURPOSE OF BUYING

70
60
50
percentage

40
30
20
10
0
coffee/tea curd butter milk
purpose of buying

TABLE-3.10

THE TABLE SHOWING MONTHLY SPENDING AMOUNT TO BUYING MILK

51
 Monthly
spending amount
S.No to buying milk Respondent Percentage
1 Rs.500 11 11%
2 Rs1000 31 31%
3 Rs.1500 34 34%
4 Above Rs. 2000 24 24%
  Total 100 100%
Source: Primary data

INTERPRETATION

The above table shows that 34% of the respondents are RS.1500, 31% of the
respondents are Rs.1000, 24% of the respondents are above RS.2000, 11% of the
respondents are RS.500.

TABLE-3.10

THE CHART SHOWING MONTHLY SPENDING AMOUNT TO BUYING MILK

35
30
25
percentage

20
15
10
5
0
Rs.500 Rs1000 Rs.1500 Above 2000
monthly spending amount to buying milk

TABLE-3.11

THE TABLE SHOWING PERIODS OF USING MILK

52
 S.No Periods of using milk Respondent Percentage
1 Less than 5 year 40 40%
2 5-10 years 30 30%
3 11-15 years 20 20%
4 Above 16 years 10 10%
  total 100 100%
Source: Primary data

INTERPRETATION

The above table shows that 40% of the respondents are less than 5 year, 30% of
the respondents are 5-10 years, 20% of the respondents are 11-15 years, 10% of the
respondents are above 16 years.

TABLE-3.11

THE CHART SHOWING PERIODS OF USING MILK

40
35
30
percentage

25
20
15
10
5
0
Lessthan 5 year 5-10 years 11-15 years Above 16 years
periods of using

TABLE-3.12

THE TABLE SHOWING REASON OF BUYING MILK

53
 Reason of
S.No buying Respondent Percentage
1 taste 25 25%
2 Rate 4 4%
3 purity 34 34%
4 quality 37 37%
  total 100 100%
Source: Primary data

INTERPRETATION

The above table shows that 37% of the respondents are quality, 34% of the
respondents are purity, 25% of the respondents are taste, 4% of the respondents are rate.

TABLE-3.12

THE CHART SHOWING REASON OF BUYING MILK

40
35
30
percentage

25
20
15
10
5
0
taste Rate purity quality
Reasons of buying

TABLE-3.13

THE TABLE SHOWING BUYING PACKET COLOUR

54
 Buying packet
S.No color Respondent Percentage
1 Blue 30 30%
2 Green 47 47%
3 Red 4 4%
4 Magenta 19 19%
  Total 100 100%
Source: Primary data

INTERPRETATION

The above table shows that 47% of the respondents are green, 30% of the
respondents are blue,19% of the respondents are magenta, 4% of the respondents are Red.

TABLE-3.13

THE TABLE SHOWING BUYING PACKET COLOUR

50
45
40
35
percentage

30
25
20
15
10
5
0
Blue Green Red Magenta
buying packet colours

TABLE.3.14

RELIABILITY TEST

55
 S.No Items Cronbach's Alpha if
Item Deleted
X1 The quality of milk is good. .648
X2 I am satisfied with the rate of AAVIN milk. .649
X3 The taste of aavin milk is Highly satisfied .634
X4 The Smell of aavin milk is like a nature .610
X5 The package of the product is highly satisfied .620
X6 The Availability of the milk is highly satisfied .638
X7 The trust of the milk is highly satisfied .624
X8 I strongly agree the aavin milk helps to maintain my health .616
X9 Aavin milk sold more than MRP .651
X10 I am likely to shift my brand if the price of aavin milk is slightly
.705
raised
Mean 36.0300
Variance 28.878
Standard deviations 5.37381
No of items 10
Cronbach's .785

It reveals that tall the ten measurement scale items are reliable as the Cronbach alpha coefficient
of 0.785. it is greater than the threshold level of 0.70. It’s provided good estimates of internal consistency
reliability and also coefficient alpha values ranged from 0.610 to 0.705 for all the constructs. It is
indicating that the scales used in this study were reliable. It clearly indicates that above scale items are
consistent with each other and they are reliable measure of factors influencing the factors from X 10 to X4,
so that it can be used for next analysis.

4.1. FINDINGS

56
 The study shows that 69 % of the respondents are male, and 31 % of the
respondents are female. In age wise, 39 % of the respondents are in the age
group between 31-40 years.
 The maximum educational qualifications of respondents are graduation
(50%) and others (4%)
The maximum family size of the respondents are 3-4 members (56%) and
below 2 members (2%)
 The maximum occupation of respondents is employee (54%) and business
man (14%)
 The maximum monthly income of respondents is Rs.10001-15000 and
above Rs.20000 (8%)
 The maximum marital status of respondents is married (62%)
 The maximum respondents is approximately buy milk per week is 5-7 litter
(47%) and above 20 litters (4%)
 The maximum respondents are main purpose of buying milk is coffee/tea
(70%) and butter milk (6%)
 The maximum respondents are averagely buy milk per month is Rs.1500
(34%) and Rs.500 (11%)
 The maximum period of using milk of respondents is less than 5 year (40%)
and above 16 year (10%)
 The maximum respondents are main reason of buying aavin milk is quality
(37%) and Rate (4%)
 The maximum respondents are buying colour of milk packet is green (47%)
and red (4%)

57
4.2 SUGGESTIONS

 In spite of various brands available in the market. Aavin stands high, it is

suggested that due effort should be taken to popularize it.
 Most of the consumers suggested that price and quality are the main factor for
purchasing milk. They feel that Aavin price is high. Steps should be taken to
reduce it, society price.
 Extra Quality and Sales promotion measures are the main step to bring consumer
towards Aavin milk, hence it should be improved.
 A permanent sales counter with a coupon system in every urban area may be
implemented.
 Sales depot may be increased in every area (urban & rural area).
 It is found from the analysis that most of the respondents opined that the
 Aavin milk is not available in 100ml, 200ml it is one of the major problems. A few
respondents lodged a complaint against the packaging system of Aavin milk .To
protect the health of the consumers, the concentrate on a good packaging system.
 The researchers strongly recommended introducing the door delivery system in the
urban area for Aavin milk.

4.3 CONCLUSION

58
The Indian dairy industry has made rapid progress since independence. A large number
of milk plants and product factories have been established. These organized dairies have
been successfully engaged in the routine commercial production of various milk
products. Now a day the consumer behavior is a very interesting subject to analysis.
Generally the consumer buying behavior is like a black box. There is a rise in the choosy
nature of consumers. Consumers have helped to upgrade their technologies of dairy
firms. The study reveals that while purchasing for dairy products consumers look for
freshness, quality, taste and texture, validity and convenience. The key challenge lies in
making the milk affordable to all with all the necessary characteristics.

59