MARKETING MANAGEMENT

CIA - I
CASE ANALYSIS OF AMUL
A Report submitted in partial fulfillment of the requirements for the degree of
Master of Business Administration
Under the Guidance of

PROF. SABA FATMA

By

GROUP- 7

DIVYANK SINGHAL 1727512

MOHAMMED ROSHAN 1727519
NAVEEN J 1727520
R SRIRAM 1727525
RICHARD SILVEIRA 1727526
SHAIJAL PASARI 1727557
SUSHMITA KUNDU 1727562

Institute of Management
Christ University, Bangalore

SEPTEMBER 2017
Introduction:
India is the worlds largest producer and consumer of Milk and Milk products. It accounts for
18% -20% of the average households food bill.

Amul is an Indian brand and a major producer of Diary based food products. It was founded in
1946, 8 months before Indian Independence. The brand is closely intertwined with the History of
India. Amul was the result of a revolt against the then monopolistic Polson diary, by Indian
farmers who were coerced into selling their produce at a very low price. The government gave
the farmers freedom to form their own cooperative, and thus the Kaira Union began pasteurizing
milk, in June 1948. However, it was only after the introduction of Dr Verghese Kurien, in 1949
that the project gained immense momentum, as he started to believe in the cause and empowered
the farmers. By 1953 the Union was collecting over 20,000 litres of milk per day. Between 1955
and 1960 they began diversifying their product range under the brand name Amul, which was
derived from the Sanskrit word for priceless and symbolized the pride of Indian culture and
could be utilized as an acronym for (Anand Milk Union Limited). Along with this brand name
and the Amul Girl as their mascot they achieved a lot of success from the 1960s that propelled
the organization to great heights. As of 2013 Amuls 3.2 million farmers were producing an
average of 12.8 million litres of milk per day, processed at 49 dairy plants by 16 district member
unions and established 7000 parlors.

Facts and Findings:

1)Indias millennials constitute 60% of the population approximately 700 million
2)As of 2013 worlds largest milk producing and consuming nation, 90 million farmers and 400
million individuals, coming from a rural population of 830 million living in 600,000 villages.
3)50% of milk produced in India retained for self-consumption, 40% distributed by unorganized
milk men, 10% forms the organized sector, 55% large private players 45% local cooperative
societies.
4)Worth of entire organized and unorganized dairy market estimated at 47.6 billion in 2013,
Growth of 7.5% as compared to countries average GDP of 6%
5)Operation Flood: From $60.1 million to $973.7 1972 to 1995
6)In 1979 the IRMA was established, AMUL hired 10-15 graduates each year
7)By 2013 Amuls 3.2 million farmers were producing an average of 12.8 million litres of milk
per day, processed at 49 dairy plants by 16 district member unions.
8)Amul purchases milk twice daily from 3.2 million farmers in 17,000 village cooperatives.
9)Variation in milk production, Amul collected 2.5 million in summer and 3.5 million litres in
the winter.
10)Differential pricing, large packs of commodities sold in cities ranging $0.50 to $3.00, while in
smaller towns same products sold in smaller packs for $0.09 to $0.18.
11)By March 2013, Amul had 46 products, in 8 different categories, available In 3,000 towns at
nearly 1 million retail outlets from mop and pop stores to larger chains.
12) Established 7000 franchised Amul parlours.
13)In 2013 Amul $2.5 billion in sales recorded 20% growth, for 5 consecutive years, in contrast
Nestle had sales of 1.5 billion in 2012, Nestle offered goods at 20% premium compared to Amul
but had to often give discounts to remain competitive.
14)Amul advertising expenses were 1% of turnover as compared to Unilever, 14% and Nestle 8-
12%.
15)Amul also had an eye on foreign players in multibrand retail. In 2012 the central government
began allowing state governments to implement policies allowing 51% foreign direct Investment.
Amul paid margins of 5% for fresh products, 12% for chilled and long-life products, and 22% for
frozen products. Western retailers operated at margins of over 30%.
16)Improving of yield is a challenge, in 2012 average yield of Indian cows was 3.4 litres a day,
world average was 6.3 litres.In 2012 Indian cows averaged 1241 litres a year of whole milk
yield. In comparison the US averaged 9902 litres, EU 5601 litres and China 2918 litres.
17)In 2013 Amul procured 12.8 million litres of milk daily a 17% increase from the prior years average
of 10.9 million litres per day. Rise in procurement was credited to higher payments to their farmers which
increased by 68% over the previous four years.
18) 53% Literacy rate among small landholding farmers implies that there is lack of awareness of global
cutting edge technologies.
19) Encouragement of larger farms 20-30 cattle, which had the scale to benefit from new technology.
Identification of banks that provide loans of around 30,000 $ for start up capital. Amul believes young
entrepreneurs can earn about $700 per month.

Problem Identification:
Marketing Problem:

Brand Differentiation Same Cooperative system and Value chain established by

regional Competitors
Product Differentiation Wide Product Range But similar offerings by Competition
Lack of Premium Dairy Product Offering
Contemporary and Associative Advertising To appeal to the Millennials (Youths of the
Country)
Procurement Problem:

Increasing Cost of Milk Procurements from Farmers (68% Increase over past 4 years)
Consistency in Quantity of Yield Procured Seasonal Fluctuations
Quality of Milk Yield - Fodder/Feed Quality Issues

Geographical Problems:

Transportation costs (Distribution to other regions)

Regional Procurement Challenges Local procurement hurdles due to Law
Potential Conflict in Unions over external procurement
Fragmented Lands and Inheritance Reduction in areas available for Cattle Rearing

Work-Force Problems:

Brain Drain Exodus of Youths from Rural to Urban Population

Reluctance to Continue Dairy farming by next generation
Extensive load on Women of the Household to rear Cattle
Illiteracy of Farmers Inability to take advantage of Government offerings

Monetary Problems:

Lack of Money to invest in Feed quality , breeding technology, veterinary services by

AMUL
Lack of Finance of Farmers to acquire global cutting edge technologies Offered to
Improve Dairy Farming
AMUL cannot increase the margin of its products, else it would lose its competitive edge
in the Market
AMUL not being a PROFIT based Company also limits its ability to spend on
advertising, R&D, Expansion etc., (80 85% revenue passed on to Farmers)
Analysis:
SWOT ANALYSIS:

STRENGTHS WEAKNESSES
High Quality of Products Non-Profit Motive
Consumer Trust Value for Money Lack of Capital for Investment
Products Inability to increase production capacity
Heritage linked with History of India Fluctuating Seasonal Yield
Cow to Consumer Distribution Chain Low Advertising Budget
Distinct Distribution Channel - FROZEN, Not as appealing to the modern youths of
FRESH, CHILLED, AMBIENT India
Exclusive Transportation network and
Distribution Partners
Diversified Products and Product Mix
Technology aided Advanced
Manufacturing Technology, Artificial
Insemination etc.,
Competitive Edge over Pricing
Marketing Expertise from IRMA
Differential Pricing for Rural and Urban
areas

OPPORTUNITIES
Foreign Exports
Product Portfolio diversification
Premium or Niche Product Creation
TREATS
FDI has given way to Large Retail Outlets
Growing Competition from Multinational
Companies
Regional Competition in other States
Brain Drain of Talented youths from rural
area
Increasing procurement costs of Milk yield
Dwindling rates of Rural farmers who
continue Dairy Farming
Non-availability of proper feed and Disease
control measures for Cows
Potential for conflict if Milk procure

Alternatives Available:
Purchasing or leasing out fragmented lands and providing common space for cattle
rearing
Creating SHGs for women to tend to the cattle on shift basis
Establishing independent milk unions for different regions
Investing in Advanced technology such as artificial insemination to improve yield of
Indian cow variety
 Breed cows that are more resilient to Diseases, Temperature etc.,
Acting as a liaison between banks and rural youths, to facilitate loan processing and
encourage entrepreneurship
Increase the product range and compete with niche market product
Focus on Digital Marketing and create an advertising sensation more appealing to the
millennial youths of India
Creating awareness in rural areas regarding government offerings towards better quality
of feed
Persuade farm owners to integrate farm land, explaining the mutual benefits for all parties
Construct new Dairy Farms and manufacturing plants in other states to compete with
regional Competitors like AAVIN and NANDINI

Recommendations:
1. Research into artificial insemination and cross-breeding to create cattle variety that are
less susceptible to diseases with more yield.
2. Revamp the advertising front by shifting from traditional approaches and focusing more
on contemporary trends such as digital marketing which would engage the youth.

Conclusion:
This case study captures the essence of the legacy of Amul of how local farmers came together
to take a stand against a monopoly and succeeded with the help of Verghese Kurien. It also
showcases the challenges and the dillemmas that Mr. R.S Sodhi needs to overcome in order to
maintain the prestige of Amul. There has to be a change in trajectory in order for Amul to
continue to sustain growth and capture new customers while retaining their existing client base.
The interests of farmers must be protected as they survival depends on them. Thus a two-fold
approach to appeal to both the internal as well as external stakeholders must be adopted.