➖ Situational influence

Situational influences are temporary conditions that affect how buyers behave—
whether they actually buy your product, buy additional products, or buy nothing
at all from you. They include things like physical factors, social factors, time
factors, the reason for the buyer's purchase, and the buyer's mood.
Economic Factors:
“ An economic factor directly affects the economy and its performance, which
in turn directly affects the business and its profitability. These factors include
interest rates, employment or unemployment rates, commodity costs and
exchange rates “
In many countries, Amul has received significant benefits in the form of lower
milk procurement prices of nearly 30% to 60%.

The company has also benefited from this by reducing the prices of its products
like milk powder and butter by 30%. The price of milk powder in India has
increased from Rs.130 to Rs.150, which has affected the milk procurement
prices by Rs.4 to Rs.5 per litre. Both domestic and international markets are in a
recessionary phase.

An increase in transportation costs can significantly impact the Company’s

ability to deliver its products to the end consumer. In 2019, an 11.24% increase
in milk procurement costs and a 14% increase in diesel costs led to an increase
in Amul’s milk transportation costs. In the same year, there was an increase in
interest and bank commission of about 10%.

Social Factors:
MARKETER PERSPECTIVE” The focus here is on the social environment
and identifying emerging trends. This helps a marketer to better understand the
needs and wants of consumers in a social environment. Factors include
changing family demographics, education levels, cultural trends, changing
attitudes, and changing lifestyles “
INDIVIDUAL PERSPECTIVE The individual purchase decision is mainly
the result of social factors such as culture and society. Friends, peers, families,
reference groups can have a great influence on the consumer’s consumption and
purchasing behaviour.

A large number of consumers are increasingly opting for a vegan lifestyle. The
increase in the number of vegans would have a negative impact on the dairy
industry as this lifestyle does not allow the consumption of dairy products
derived from animals. The overall picture for the company looks positive as
Indian households have become more a customary to morning tea and people, in
general, are more accustomed to milk and dairy products. Also, the culture of
fast food encourages a certain lifestyle that increases the consumption of ice
cream.

Technological Factors:
“Technological factors consider the pace of technological innovation and
development that could affect a market or industry. These factors include
changes in digital or mobile technology, automation, research and development.
There is often a tendency to focus only on developments in digital technology,
but new methods of distribution, manufacturing and logistics must also be
considered “
As a global brand, Amul understands the need to invest in various technologies
and also upgrade the current technology to attract and retain the current
customers. The brand has invested Rs 600-800 crore in setting up new milk
processing plants in the current financial year.

The company has also invested to expand the capacity of the existing plants.
The entire industry is gearing up with a host of the latest technologies that will
help in monitoring the productivity of dairy animals and dairy farmers. It is all
about identifying faulty practices and taking corrective measures to meet the
market demand.

The latest technologies are equipped with smart French fries with unique
identifiers that help companies record the productivity and health status of
individual animals.

➖ RISK FACTORS PERCEIVED

Perceived risks refer to the spirit cost associated with customers' purchasing
behavior, which represents a kind of uncertainty about the future. This
uncertainty will directly affect the consumers' purchase intention.
1. LIQUIDITY- In fiscal 2018, revenue rose 3 year - on - year supported by
growth across the product portfolio, including pouch milk, butter, ice cream,
and dairy antener Milk procurement, however, was relatively higher resulting in
increased fat and powder inventory at year - end. Due, debt was higher than
anticipated as of March 31, 2018. Excess inventory is expected to be liquidated
in fiscal 2019, driven by steady demand for milk and milk products, and
initiatives taken by the state government to help reduce powder inventory,
capital expenditure (capex ) of about Rs 100 crores expected to be undertaken
per annum over the medium term towards expansion of capacity at the Ganch
Nagar pant ( Amul fed Dairy ) . Favorable demand for milk and products, and
steady scale up in operations at the new term). capacities are expected to dive
growth in revenue (expected at 10-12% over the medium
2. Susceptibility to changes in government regulations, and
environmental conditions: GCMMF, like all dairy players, is susceptible to
government regulations - such as ban on skimmed milk powder ( SMP ) exports
in the past , and removal of export incentives . Furthermore, it is also
susceptible to failure in milk production because of external factors such as
cattle diseases.

3. Exposure to risks related to volatility in global milk powder prices:

Exposure to risks related to volatility in global milk power prices are inherent in
the dairy industry. - For instance, the global crash in SMP prices in fiscal 2018
led to surplus procurement, which translated into large inventory , leading to an
increase in working capital debt .