Marketing Planning Term

Project
Amul Butter

Submitted To:

Submitted By:

PGHR14-16
Our group has picked up the Indian company Gujarat Co-operative Milk Marketing
Federation and the product Amul Butter as the topic of our study for this project.
Amul began in 1946 to end the extortion and exploitation by the middle men. The Amul website
says that the birth of Amul was "inspired by the freedom movement".
The parent company, Gujarat Co-operative Milk Marketing Federation Ltd. has an annual
turnover of US $3 billion with milk collection in excess of 13 million liters every day from more
than 32 lac milk producers.
 SWOT ANALYSIS
STRENGTHS
 Creative, pun based tongue in cheek advertisements with Amul girl
o World record holder for longest running ad campaign
o Amul butter has high brand visibility owing to the Amul girl.
 Large distribution network :
o Over 7000 exclusive Amul parlours
o AMUL (GCMMF) has the biggest distribution network in the country with over 7
lac retailers.
o About 50 sales offices in the country
o AMUL has reached to 40 countries across the globe.
 Economical and a variety of packing :
o Available in pack sizes ranging from 100g, 500g, 50g, and 20g to 10g Blister
packs.
 Excellent product quality and trusted name
o Amul Village co-operatives are the first grass root organizations that received ISO
9001 : 2000 certifications
o SahkariVikasRatna Award – awarded on the occasion of Indian Co-operative
Centenary Celebration for the outstanding contributions in the field of Dairy Co-
operative movement in Asia – 2005
o Amul was awarded the "Best of all" Rajiv Gandhi National Quality award.
 Credible Brand and World class quality
o Market share of more than 80%
o Amul was judged as the Most Trusted brand in The Brand Trust Report of 2011
published by Trust Research Advisory under the Food and Beverages category.
o Amul butter is used by children, adults. Its target market is not limited by age or
gender.
WEAKNESS
 Dependence on the rural sector for raw material procurement.
 Promotion of new products is almost negligible
o Amul Delicious and Lite are not as engraved in the public memory as the "Utterly
Butterly Delicious Amul"
 No special offers for customers
o Amul provides, rarely if any discount schemes or promotional schemes.

OPPORTUNITIES
 Aggressive promotion of Health segment products
o Amul is the market leader in butter segment, it can further strengthen its feet by
focusing on health segment products like Amul lite.
 Tie-ups with corporate, hotels, resort chains etc
o Amul butter is served in Indian railways, expansion to hotels and resorts will only
be a cherry on the cake.

THREATS
 Competition in health segment : The competition has come up with 'healthier' alternatives
such as Nutralite. Although the claim of being "better than butter" by Nutralite has not gone
down well with Amul who responded to the claim with a typical amul tongue in cheek ad.
 Competition from local producers :Amul has more than 80% share in national market, while
it is starting get competition from local players, for example the market share of Amul in
Pune is 75 %, below the national average.
 Reduction in consumption by health conscious people
 Amul butter faces direct competition from brands like Mother Dairy, Britannia, and Nestle.
 PEST ANALYSIS OF AMUL BUTTER
POLITICAL
 Amul is cooperative project known as Gujarat Cooperative Milk Marketing Federation
(GCMMF), subsequently gets dynamic backing from Gujarat government.
 Government policies have led Amul to keep the prices of the butter lower than other
brands in the market.
 Amul has employed thousands of rural households and provided self sufficiency.

ECONOMICAL
 Increasing per capita income resulting in higher disposable income and also the developing
working class/urban populace build up the demand for the normal good like Amul butter
leading to an expense of great percentage of monthly income.
 The low cost production gives Amul butter an opportunity to penetrate deeper into the
market.
 India has highest number of cattle in world, 168 million cows and 80 million buffaloes.
 Mother Dairy, Nestle and Britannia products have helped to keep the price of Amul butter
in check.

SOCIAL
 Amul has introduced vending machines at different spots which give job to different
individuals with low income like individuals who can place bundles in the machine,
educate dairy if all the more supply is required furthermore to give Rs 10 note to
purchasers.
 Amul impelled the White Revolution in India, and has helped India in accomplishing the
status of "Highest producer of dairy" in the world. India produces nearly 17% of world's
dairy produce and consumes it.
 Amul made agriculturists understand the essentialness of a cooperative, dispensed with
brokers and made job open doors for almost 80 million farmers. Consequently, it helped in
provincial advancement and overcoming destitution.
 There are 70,000 Village dairy cooperatives, combined into 170 area unions, which thus
are unified into 22 state level unions.

TECHNOLOGICAL
 Milk ATMs are being pioneered by Amul in India.
 Pilot tested DISK system developed by CEG-IIMA.
 Amul has best and most recent engineering for acquirement of milk, handling, assembling
of milk items lastly circulating.
 Amul has had the capacity to deal with its business proficiently by dynamic Development
and usage of Internal Consultant Development (ICD).
 Amul has its own MDP program to build management capacity of secretaries of the co-
operatives and maintain ISO standards.
 PORTER’S FIVE FORCE MODEL

THREAT OF NEW ENTRANTS

 The brand Amul enjoys economies of scale. This factor is difficult to follow up by any other
competitor. It is because of this reason that no regional player has grown to a competitor has
grown to a national level.
 The brand name Amul has a very good reputation at domestic and international level. Here,
the raw material procurement is very is very difficult for the new entrants. Capital
requirement is also high. Still the new entrants are emerging such as domestic and
international players. So the threats are moderate.
 Amul has established its name in the minds of the people. When it comes to availability of
the product, if consumers does not find a specific butter product at one store they would go to
another store.
 The distribution channel of Amul is very robust and organized. For the procurement of
processed milk and dairy products it relies on district unions. The distribution then takes
place third party vendors. The primary responsibility of monitoring the delivery of the milk
collected and ensuring that the milk was picked up on time lies with VCS. Whereas, the
unions are responsible for looking over the supplies and of milk and distribution of finished
products. It will be an uphill task for any new entrant to replicate Amul’s business plan.
 The brand itself holds a strong Cooperative identity and cherishes its value and purpose.
With their clean management they have been able to create and maintain a perception of
honesty and credibility in the market.
 The amount of investment required in the industry is a huge considering the technology
involved and only top MNC’s can consider it as an option. Amul’s strength lies in the brand
itself which is synonymous with quality.
THREAT OF SUBSTITUTES
 There are multiple immediate substitutes existing in the market currently. These substitutes
cater to both health conscious and price conscious consumers. The presence of local retailers
and vendors means there is no dearth of low priced substitutes. Amul still needs to find a
strategy which will help it to combat at this front.
 The customers perceive the products offered by the competitors to be at par with Amul
butter if not better. Therefore, the lingering threat of customers making a shift to other brands
is very high. Besides the buyers are free to switch to other brands without any hurdles.

BARGAINING POWER OF BUYERS

 The bargaining power of buyers is high owing to the presence of large number of existing
competitors in the market. Amul can expect large number of consumers switching to other
brands in case they feel their expectations are not being met.

BARGAINING POWER OF SUPPLIERS

 Amul dairy was not conceptualized with the intention of money making. It works for the
welfare of farmers as it is a part of Co-operative society. Although the concept of Co-
operative society implies that the suppliers have bargaining power, however, since it is works
for the sake of mass and not for profit making, the suppliers have limited rights to bargain.
 In modern times the co-operative rules exist to safeguard the rights of the farmers, therefore,
the suppliers have moderate power of bargaining.

RIVALRY AMONG COMPETITORS

 Amul butter faces stiff competition from market players such as Britannia, Nestle etc.
Following the success of Amul state governments set up similar organizations throughout
India, most of which had their fair share of success. For instance, Parag in Uttar Pradesh,
Vita in Haryana amongst others. Other prominent rival of Amul is National Dairy
Development Board with its Mother dairy brand. Moreover, there is strong presence of local
retailers and processors.
 This industry holds no scope for merger and acquisition as such. However, if any MNC
wishes to enter into this market via a merger it may prove to be a serious threat to Amul.
CONSUMER BEHAVIOUR ANALYSIS
The total number of respondents was 79. 52 males and 27 females. Demographics of the respondents
were highly varied. Respondents ages belonged from about 18 years of age to above 32 years with
about 85% lying between 22 to 28 years of age.

When asked about the frequency of use of Amul Butter, the consumers responded heavily on the
positive side. 42% people saying that they use Amul Butter frequently and 32% of people using it
occasionally. A relative minority of 3% people declined using it.
Questioning the respondents about the variety of factors for which they bought Amul butter yielded
some interesting results. Brand, advertisements and taste came out to be the biggest factors for which
Amul was being bought in the given sample population. 90% of people rated taste factor 3 or higher on
a 5 point scale as a parameter in making a purchase decision of Amul butter.
Similarly, 83% cited availability as an important factor and gave it 3 or more points. As much as 86%
respondents were wooed by brand Amul, 38% of them actually gave brand Amul an importance rating of
5 points. Finally the advertisements, Amul is well known for its cheeky ad campaigns, more than half of
the respondents rated importance of advertisements to be 4 or higher. Price, although considered
important came second to the above mentioned parameters. Nearly 44% of people rated it at 3 points
out of 5 but a mere 7% gave it importance of 5 points.

Roughly equal number of people bought Amul butter from Kirana stores as well as supermarkets.
The Amul advertisements have regularly been portrayed as one of the best Indian Advertising ideas due
to their funniness, with quips being its strong point, and their propensity of getting on present scenarios
to bring home a point. Almost 53% of sample population found advertising for Amul Butter most
effective on Newspaper and other print media and 30% found the Bill Boards and Hoardings to be an
effective medium while only 14% were in favor of Television.

Which Method of advertising is most effective for Amul Butter?

Bill
Boards;
24; 30% News-
paper;
42; 53%

Television; 11; 14%

Others; 2; 3%

When looking into the monthly consumption of butter for a consumer, it was found that almost 60% of
the consumers intake of butter was less than 250 grams a month while consumers who took more than
500 grams of butter in a month was meagre 9% of the sample size.
About 19% of sample liked Nutralite butter i.e. more than 4 points out of 5. 31% of people also liked
Mother Dairy butter. 18% of people liked Nestle butter, 26% liked Britannia but as it has been since
forever a whopping 73% people gave Amul butter at least 4 points out of 5.
When asked about the reasons for not liking Amul Butter, almost 76% replied that they do like Amul
Butter and there is nothing bad about it but there were a few responses about its price and taste but
that just made a total of 24% of the sample size.

69% of people in the sample were aware about the other Amul Butter brands like Amul Lite but only
23% were aware about the Delicious Margarine brand. It was interesting to note that there was 8% of
the sample that was not aware of any of the other two Amul Butter brands due to lack of promotion.

SUGGESTIONS

 Should be less fatty

 Packaging is very old and should be changed
 It is a tad bit too salty
 Price should be reduced
 Increased availability for kirana stores in Kolkata
 Should come in more flavors according to the taste of the young generation.
 REFERENCES
1. http://www.scribd.com/doc/75742734/Factors-Affecting-Consumer-Buying-Behaviour-Towards-
Amul-Butter-in-Comparison-to-Gowardhan-Butter-at-Pune-City-With-Reference-to-Gujarat-Co-
operative
2. Amul Official Website : www.amul.com
3. http://articles.economictimes.indiatimes.com/2010-02-16/news/27611648_1_nutralite-butter-
market-amul
4. http://timesofindia.indiatimes.com/business/india-business/Nutralite-spread-in-margarine-
spooks-Amul/articleshow/8426997.cms
5. http://www.bis.org.in/other/rgnqa_win_12.pdf
6. http://www.amuldairy.com/index.php/cd-programmes/quality-movement
7. http://www.promarinternational.com/_userfiles/publications/files/Promar%20Insight%20October
%202013%20Ag%20%20Food%20Investment.pdf
8. http://www.assocham.org/prels/shownews-archive.php?id=4311
9. http://www.thefarmsite.com/reports/contents/inddoct12.pdf
10. http://www.iimahd.ernet.in/egov/documents/disk-and-dairy-portal.pdf