INDIAN INSTITUTE OF MANAGEMENT ROHTAK

Marketing Management- II

Session (2018-2020)

A Project on

Amul

For the partial fulfilment of requirement of the 2nd term of Marketing Management

SUBMITTED TO: SUBMITTED BY:

Abhinav Tripathi PGP09126

Prof. Arpita Khare
Akshay Bundela PGP09132

Aman Pathak PGP09133

Amit Kumar Dhawan (AKD) PGP09134

Mohd Farhan PGP09158

Praveen Dhusia PGP09166

Sameer Garg PGP09170

 Acknowledgement

We are using this opportunity to express our gratitude to everyone who

supported us throughout the course of this MBA project. We are thankful
for their aspiring guidance, invaluably constructive criticism and friendly
advice during the project work. We are sincerely grateful to our faculties
for sharing their truthful and illuminating views on a plethora of issues
related to the project.

We express our warm thanks Prof Arpita Khare for her support and
guidance at IIM Rohtak and we hope to develop a recurring and intriguing
interest about this topic in the future

Thank you,

Group 4
(Marketing Management- II)
Indian Institute of Management Rohtak
Contents

Company Profile............................................................................................................................................ 4
Marketing Channel........................................................................................................................................ 5
Supply chain .................................................................................................................................................. 9
Retailing decisions....................................................................................................................................... 12
Marketing communication strategies ......................................................................................................... 13
Pricing Strategies ........................................................................................................................................ 17
Exhibits ........................................................................................................................................................ 18
Bibliography ................................................................................................................................................ 20
Company Profile

Amul- Anand Milk Union Limited is a dairy cooperative formed in 1948 in India, based at Anand in
Gujarat state. The brand is managed by a cooperative body, the Gujarat Co-operative Milk Marketing
Federation Ltd. (GCMMF). Today, it is jointly owned by 3.6 million milk producers in Gujarat. It is one of
the best examples of co-operative achievement in the developing economy. Amul has spurred the White
Revolution of India, which has made India the largest producer of milk and milk products in the world. It
is also the world's biggest vegetarian cheese brand.

Today, more than 15 million milk producers pour their milk in 144,500 dairy cooperative societies across
the country. Their milk is processed in 184 district co-operatives unions and marketed by 22 State
Marketing Federations, ensuring a better life for millions. Dr. Verghese Kurien, former chairman of the
GCMMF, is recognized as the man behind the success of Amul. The system succeeded mainly because it
provides an assured market at remunerative prices for producers’ milk besides acting as a channel to
market the production enhancement package. As AMUL is recognized as the country’s largest milk
producing cooperative it has tied up with global supermarket chain WALMART to sell its range of dairy
products and have also tied up with Glaxo over the production of baby food in India. Amul added sweet
buttermilk powder, a second brand of baby food and a high protein weaning food. It also sells its
products to Nepal. Now India is looking to capture neighbourhood markets like Pakistan, Bangladesh
etc. These countries import over 50,000 tonnes of milk each annually & Sri Lanka is flooded with an
Indonesian brand, which is said to be of an inferior quality and also costs less. These countries import
tonnes of milk every year. Amul’s Indian desserts are very well liked in countries like Singapore and
Malaysia. Amul has list of products marketed to various countries few of its products are Amul butter,
Amul cooking butter, Amul cheese spread, Amul pizza cheese, Amul shrikhand, Amul fresh cream, Amul
fat milk, Amul pure ghee, Amulya dairy whitener, Sagar Tea and Coffee whitener, Amul butter milk,
Amul ice creams like cassata, cool candy and frostik, Amul milk chocolate and Amul Eclairs. Amul has
started preparing and selling pizza slices that prominently feature generous portions of Amul cheese.
Amul’s pizza slices are being sold through super markets and large departmental stores that have snack
counters

Amul, a brand managed by a cooperative body, Gujarat Cooperative Milk Marketing Federation Ltd.
(GCMMF). Amul accounts more than 13% of world’s total milk production making India world’s largest
producer and consumer of dairy products. Also India is world’s largest consumer of dairy products,
consuming almost all of its own milk production. Further India’s dairy is growing at an annual rate of 7%.
Amul is world’s largest pouched milk brand and largest food brand in India.
Marketing Channel

Amul operates two channels- Procurement channel (Upstream) and Distribution channel (downstream)

Procurement Channel

GCMMF
Warehouses

Milk Processing Chilling Trucks Chilling Plants

Unit

Village Dairy Co-

operative Societies (VCS)

Producers

Fig.1
 Distribution Channel

Warehouses

Wholeseller

Retailers/Amul
outlets/ Contractor
Shopkeeper Chilling Trucks

Consumers Consumers

Fig.2

The major development on the distribution front was the development and alignment of four
distribution highways-those of Fresh Products, Chilled Products, Frozen Products and Ambient Products.
This is a significant achievement because it allows them to develop synergies among all product lines

The company's objectives of the marketing channel are influenced by the following factors generally
includes:

a) Nature of the company,

b) Nature of the products in which the company deals in.

c) A width of various marketing intermediaries

d) Penetration of Competitors

e) Environmental factors such as economic condition and legal constraints

In perishable food products, physical distribution is a very important part of the whole business. The
transportation of "Amul Milk and Butter" to the stores that sell "Amul Milk and Butter" is a big
challenge. While transportation, the butter, and milk have to be stored properly so that it does not get
contaminated. To completely understand the physical distribution, consider the case of "Amul Milk &
Butter". Amul is made in "Kaira District" somewhere in Gujarat. From there it is distributed all over India
and it is available at the local store near to us. The destitution guys have to make sure that, every little
"Banya shop" on every little street of our extremely large country gets “Amul Milk, Butter, and other
products”. To add to this enormous challenge, “Amul Milk, Butter and other” is a perishable milk based
product. It has to be stored and transported properly so that it does not get spoilt on the way. And while
the distribution guys do all this, the company has to make sure that they keep the costs under control.
The above example gives the idea of what the distribution guys do. However, in practice what they do is,
set up distribution channels. Distribution channels:

Distribution channels are all the sub-marketers or intermediate marketers of the company. For example:
selling agents, wholesalers, retailers, authorized representatives, and showrooms etc. are basically
distribution channels.

Indirect distribution

Indirect distribution is when the product reaches the end customer through numerous channels in
between. For example – The product goes from manufacturer to the distributor, then to the wholesaler,
then to the retailer and finally to the customer. Thus the chain is long.

As we can see that Amul follows the indirect distribution.

Direct distribution

Direct distribution is when the company either directly sends the product to end customer or when
the channel length is very less. A company selling on an e commerce portal or selling through modern
retail is the form of direct distribution.

Amul also follows direct distribution through railway parlors and Amul scooping parlors for its various
products like ice-creams, flavored milk etc. This is shown in Exhibit 2

As AMUL is recognized as the country’s largest milk producing cooperative it has tied up with global
supermarket chain WALMART to sell its range of dairy products and have also tied up with Glaxo over
the production of baby food in India. Amul added sweet buttermilk powder, a second brand of baby
food and a high protein weaning food.

Intensive distribution - Where the majority of resellers stock the 'product' (withconvenience products,
for example, and particularly the brand leaders in consumer goods markets) price competition may be
evident

Selective distribution - This is the normal pattern where 'suitable' resellers stock the product.
Exclusive distribution - Only specially selected resellers or authorized dealers (typicallyonly one per
geographical area) are allowed to sell the 'product. If a company wants to give a big region to one single
distributor then it is known as exclusive distribution strategy.

Vertical Marketing Systems (VMS)

Vertical marketing systems is a cooperation that exists between the various distribution channels that
are available in various levels with different members working together for promoting the efficiency and
also the scale of economies in way that the products are promoted to the customers. In VMS, the main
members of a distribution channel-producers, wholesalers, and retailers work together as a unified
group in order to meet consumer needs.

In traditional marketing systems, producers, wholesalers, and retailers are separate businesses such that
each entity is trying to maximize its profit. When the profit of one channel member comes at the
expense of other members, conflicts arise that reduce profits for the entire channel. To address this
problem, more and more companies are forming vertical marketing systems.

Vertical integration could be done by moving forward or backward within the vertical market or
industry in which the organization operates

Amul operates with both forward and backward integration as seen in Fig.1 and Fig.2. All the milk
producers work jointly and pour milk under village dairy cooperative societies (VCS) and further the
distribution process of Amul works jointly with wholesalers and retailers in order to achieve maximum
profits for the channel. There are numerous milk producing unions under which large number of milk
producers come together to nearby collection center to pour milk and they get paid for the fat content
in the milk. The various unions for milk producers in the backward integration of GCMMF under the
brand name of Amul are listed in Exhibit 1
Supply chain

2.2 million Producers, 10675 VCS, 12 units for milk processing, 700 employees for marketing, 3000 units
in distribution and 5 lakh retailers including Amul outlets.

As shown in Exhibits, the supply chain consists of farmers who produce milk from their cattle. The
farmers who are organized into cooperatives called Village Cooperative Societies (VCS) supply milk to
thirteen different dairy cooperatives called Unions, of which Amul is one. The milk or milk products
made at these unions are supplied to the Gujarat Cooperative Milk Marketing Federation (GCMMF).The
GCMMF is the marketing entity for the products of all unions in the state of Gujarat.
Production: Milk is collected at the Village Diary Society from farmers and processing is done in the
District Milk Union. Milk and milk products marketing is done at the State Level Federation
It helps in establishing the internal competition but also ensure the economies of scale are
accomplished. Amul has also jumped to next generation retailing of milk and milk products. The Gujarat
Cooperative Milk Marketing Federation (GCMMF) sells its milk products through an exclusive digital
platform provided by e-commerce major infibeam.com.
”More and more consumers are shifting online. We want to be present on all digital platforms. With this
digital platform, we will be able to sell perishable product like milk online with same day delivery. The
platform will be up and running by October 1,” R S Sodhi, Managing director GCMMF told Business Line.
Pull Supply Chain

The process of manufacturing and supplying is driven by actual customer demand. In this
type of supply chain logistics, inventory is acquired on a need-basis. The benefits of this
type of planning include less wastage in the case of lower demand. The problem, however,
is that the company might not have enough inventory to meet rising demands due to
unforeseen factors. For example, an auto repair shop that only orders parts that it needs. In
this case, the business waits until it gets an order to procure the parts required for the
repair.
Amul follows Pull supply chain strategy for providing its product to the market. Such that
there should be less wastage of perishable product line.
E-Supply Chain

Amul uses E-Supply Chain Management, E-SCM is described as an integrated approach for planning and
controlling the flow of materials from suppliers to end users using internet technologies. It refers to the
complex network of interrelated relationship that organization maintain with a trading partner to
source, manufacture and deliver the products.
Working of E-SCM Amul has installed over 3000 automatic milk collection system units (AMCUS) at
village societies to capture member information, milk fat content and the amount payable to each
member. The computer calculates the amount which is due to the farmer by fat content in the milk.
On the logistics, more than 5000 trucks move from the villages to the 200 diary processing plants twice a
day according to the planned scheduled. Every Day Amul collects 7 million litre of milk from 2.6 million
farmers and converts the milk to packaged products which it sends to 500,000 retail outlets. ERP
software which is named as enterprise wide integrated application system covers an operation like
planning advertisement, promotion and distribution network planning.
Initially, the producers had to travel long distances to deliver milk to the only dairy, the Polson Dairy in
Anand – often milk went sour, especially in the summer season, as producers had to physically carry
milk in individual containers. These agents decided the prices and the off-take from the farmers by the
season. In winter, the producer was either left with surplus unsold milk or had to sell it at very low
prices.

Thus the Kaira District Cooperative was established to collect and process milk in the district of Kaira.
Milk collection was also decentralized, as most producers were marginal farmers who would deliver 1-2
litres of milk per day. Village level cooperatives were established to organize the marginal milk
producers in each of these villages. The first modern dairy of the Kaira Union was established at Anand
(which popularly came to be known as AMUL dairy after its brand name). The new plant had the
capacity to pasteurize 300,000 pounds of milk per day, manufacture 10,000 pounds of butter per day,
12,500 pounds of milk powder per day and 1,200 pounds of casein per day.

With a turnover of $3.2 billion (2013), Amul is the largest food brand in India. Also, Amul is the largest
producer of milk and milk products in India. The model of Amul is such that it benefits small producers
like farmers, who together form an integrated approach to form an economically large scale business.
The model eliminates middlemen, bringing producers in direct contact with the customers.

Every day, Amul collects 447,000 litres of milk from 2.12 million farmers, converts the milk into branded,
packaged products and delivers the goods which are worth Rs. 60 million to about 500,000 retail outlets
across the country.

As shown in the figure, the supply chain of Amul consists of farmers who produce milk from their cattle.
The farmers are organized into cooperatives called Village Cooperative Societies (VCS). These VCSs
supply milk to thirteen different dairy cooperatives, called Unions, of which Amul is one. The milk or milk
products made at these unions are supplied to the Gujarat Cooperative Milk Marketing Federation
(GCMMF). The GCMMF is the marketing entity for the products of all the unions in the state of Gujarat.
GCMMF has 42 regional distribution centers in India, serves over 500,000 retail outlets and exports to
more than 15 countries. All these organizations are independent legal entities yet loosely tied together
with a common destiny.
The ultimate goal of the GCMMF is to benefit the farmers through this hierarchical supply chain that
includes different kinds of entities ranging from small suppliers to large fragmented markets. The
success of Amul can be attributed to the quality of products, the economic pricing and the belief that it
has instilled in its customers.
Retailing decisions
 Amul follows multi-channel retailing channel.
 Amul products are available in over 500,000 retail outlets across India through its network of
over 3,500 distributors
 Amul products are delivered to distributor on weekly basis and after the salesman takes the
order from retailers and after one day the products are placed in retailer’s outlet.
 Amul has come out with a unique concept of Amul Parlours in which it provides specifically their
products at prominent places such as IIM, IIT and Railway Stations etc.

Strategic advantages of using the different retail formats

 Improved customer perception

"People are watching television and using their tablet at the same time. They expect the same
kind of integration with their shopping experience." Brands who don't provide that kind of
experience, he said, are likely to lose customers, especially as the digital generation gains even
more buying power.
 Increased sales
The primary driver for a retailer adopting any strategy is, of course, increasing profit, most
frequently by increasing sales. Multi-channel retailing, by offering a variety of engagement
points for the customer to make a purchase, increases the convenience and ease of sales, thus
boosting profit.
 Better data collection
Knowing the customer is a key tenant for successful retailing, and multi-channel engagement
points provide more opportunities to gather information about customers.
 Enhanced productivity
Multi-channel retailing offers benefits for more than shoppers. Workers, too, can benefit from
the use of new technology, by arming them with more information and increasing their
efficiency.

Types of retail format used by Amul

Indirect

 Department store
 Speciality store
 Supermarket
 Hypermarket
 Convenience store

Direct Retail

 Amul Parlour
 Amul Scooping Parlour
 Café Amul
 Kiosks
 Marketing communication strategies
Creating brand value, TV advertisements, Tagline-the taste of India connects mass population, Amul ads
are one of the longest running ads, “amul dhoodh peeta hai India” targets all income groups of
population

Marketing Communication

Marketing communication, in a nutshell involves spreading the word out about the product through
different means to the end consumer. This is one the most, if not the most important aspect of
marketing as it is by this process only that the customer gets an image of the product in general which
affects his decision to buy or not buy considering if it addresses his needs or not

Amul has over the years advertised in a variety of different platforms and relied on creating a brand
image through their advertising campaigns rather than being myopically sales focused

These are the platforms used by amul in their marketing communication

 Broadcast Media : Television – Amul has ocassionally broadcasted its ads on TV which is possible
because of its mammoth shoestring budget advertising a plethora of its FMCG products. It also
appears as a sponsor for tv shows like Amul Star Voice of India for higher brand visibility

 Print Media : Newspapers, general Interests Magazines

 The following are the number of newspapers covered by Amul in different regions and different
languages recently

 Outdoor Media : Hoardings/Billboards


Amul’s advertising forte is by far the hoarding and billboards which do not focus on selling but more on
building brand image and it achieves this by using its witty and humorous and focused on being simple,
fresh and innovative and not on hi-tech effects and have a national appeal whenever possible. These are
some of the very good examples

Interstellar –

Net Neutrality issue –

Rahul Gandhi's Vacation –

 Online Marketing – Online marketing through IT was initiated in 1994 and it formed such a
backbone for Amul that the CEO said that Amul is not a food company but an IT company in a
food business.

Amul is working to expand its presence in the virtual world and Trimensions, a Gurgaon
company helped it create virtual lands that tried to simulate customer behaviour online and
mapped their possible reactions and behaviour to any new marketing strategy before executing
it in the real world and this simulation was formed by the actual behaviour of consumers online
to the ads.

Amul has also proliferated its adwords spending and is now looking forward to increase its
advertising to social media platforms like Facebook etc.
Pricing Strategies
Calculation of purchase price by weighing milk and determining the fat content of the milk.

Amul has always and incessantly followed a process of low cost pricing and while this is a strategy
originally used by new companies who enter the market as a means to easily get a market share
sacrificing profits in the short run, Amul has been using this even when there were no dairy companies
and Amul incepted it when it started.

Even though the price of the products have relatively gone up today but the reason for it is entirely
different and that is inflation and the increased prices of transportation, storage and distribution and
even then the pricing is appropriate relatively compared to modern standards.

Also, Amul follows a technique of niche pricing where different categories are priced differently with
popular products like Ghee etc being priced as low as possible while those targeting niche segments like
Prolite, Amulspray etc being priced higher. This is done probably because of the lack of competition in
niche segments compared to broader segments from Brittania, Mother Dairy etc which gives less price
elasticity and hence higher pricing power

Amul Milk – Broad Segment – Competitively Priced Amul Powders – Niche Segment – Value Priced

Amul Butter – Broad Segment – Competitively Priced

Exhibits
Exhibit 1- List of member unions of GCMMF, Amul

Exhibit 2

Railway parlors
Amul Scooping Parlors
Bibliography

Marketing Management- Philip Kotler

“Role of Cooperatives in Inclusive Growth – Comparative study of success of AMUL & Lijjat
Papad in India.” Victoria, Queen and Ingale, M.K.

A case study of AMUL cooperative in India In relation to organizational design and operational
efficiency; Prasad, Ruchira; International Journal of Scientific & Engineering Research Volume
4, Issue 1, January-2013 1

Business Strategies for Managing Complex Supply Chains in Large Emerging Economies: The
Story of AMUL; Chandra, Pankaj; Tirupati, Devanath; IIM A – April 2003

Online Sources

https://www.marketing91.com/multi-channel-marketing/

https://www.amul.com/

http://www.thehindubusinessline.com/industry-and-economy/agri-biz/amul-turnover-touches-rs-
19100-crore/article4849923.ece

http://www.iitk.ac.in/ime/MBA_IITK/avantgarde/?p=1018

https://rctom.hbs.org/submission/amul-the-taste-of-india/

http://www.ndtv.com/photos/news/amuls-take-on-barack-obamas-four-more-years-
10709#photo-183793

http://www.business-standard.com/article/companies/amul-turnover-grows-14-to-cross-rs-20k-
cr-in-fy15-115051400858_1.html