Amul Market Research free essay sample

Loved by one and all ice creams are the best way to beat the heat in India. As soon as summers approach in India the streets are full of vibrant pushcarts belonging to the different ice cream brands that almost force you to pick up a frostik, a cup or a cone. The ice cream market in India has witnessed a steady growth over the last few decades. The growth in the Ice cream industry has been primarily due to a strong distribution network and a good cold chain infrastructure. The ice cream market in India is divided into the branded market and the grey market or the unbranded market. The branded market is currently 100 million liters per annum valued at ` 800 crores. The grey market consists of small local players and cottage industry players. Currently the ice cream industry in India is worth ` 2,000 crores. The per capita consumption of ice cream in India is about 300 ml, as compared to the world average of 2. 3 liters per annum. The main aim of this project is to know the consumer behavior pattern and to recommend steps to improve sales of AMUL in Kerala by a thorough analysis of the customers as well as the retailer. Try to find out what are the main hindrances in the AMUL ice cream sales in Kerala and suggest methods to counter it. 5 Introduction Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF),is Indias largest food product marketing organization with annual turnover (2010-11) US$ 2. 2 billion. Its daily milk procurement is approx 12 million lit (peak period) per day from 15,712 village milk cooperative societies, 17 member unions covering 24 districts, and 3 million milk producer members. It is the Apex organization of the Dairy Cooperatives of Gujarat, popularly known as AMUL, which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. Its success has not only been emulated in India but serves as a model for rest of the World. It operates through 47 Sales Offices and has a dealer network of 5000 dealers and 10 lakh retailers, one of the largest such networks in India. Its product range comprises milk, milk powder, health beverages, ghee, butter, cheese, Pizza cheese, Ice-cream, Paneer, chocolates, and traditional Indian sweets, etc. GCMMF is Indias largest exporter of Dairy Products. Head Office Gujarat Cooperative Milk Marketing Federation, PO Box 10, AMUL Dairy Road, Anand 388 001, Gujarat, India Phone No: (+91) (2692) 258506, 258507, 258508, 258509 Fax No: (+91) (2692) 240208, 240185 Email: [emailprotected] coop 6 Objectives of the study Objective of this study is to make AMUL ice cream the top ice cream brand in Kerala. Location of the study is Trivandrum. AMUL is the No. 1 ice cream brand in India , with sales double that of the nearest competitor. AMUL would like to achieve such a situation in Kerala also for which a sales strategy is to be devised, after meeting retailers as well as consumers. AMUL has mainly two constraints . Firstly it cannot take catering orders as it is not capable of supplying the product at a bulk amount in a very short period as all its products are manufactured in Gujarat and then transported to other states only in Bangalore it has a separate production unit that of milk . Secondly it does not provide high margin to its retailers which other companies like Uncle John, Lassa, Skei, Snowy gives which are mainly frozen desserts made of vegetable fat . Merri boy, Milma and AMUL are companies which manufacture ice cream made of milk and milk fat . There are four categories of retail outlets A,B,C D . A B outlets are the big retail outlets which AMUL targets while small outlets like C D AMUL is not able to make much sales due to other competitors and their offered profit margin which is in the range of 25-40%. AMUL gives a margin in the range of 10-20%. AMUL mainly gives a profit margin of 20% on a sale of 80,000 units of ice cream so the profit comes to be of 16,000 units. At the same time the local brand ice cream companies like Lassa, Uncle John give a profit margin of 40% on 30,000 units of ice cream sales so the profit comes to be of 12,000 units. There is presence of other competitors in A B outlets but AMUL don’t face much competition there as its sales is not much affected and its demand is not only more but also there is a brand loyalty towards AMUL products so there are enough customers who purchase AMUL ice creams. 7 Brief description of the concepts / models introduced in the study a) Porter’s 5 Forces Model: Porters five forces include three forces from horizontal competition: threat of substitute products, the threat of established rivals and the threat of new entrants and two forces from vertical competition: the bargaining power of suppliers and the bargaining power of customers. Fig . 1 )Threat of su bstitute products : AMUL sells its stock in bulk to many large retail shops and the small retail shops are not AMUL’s target so in these shops the main business is done by the local brands(Uncle John,Lassa,Skei) which sell frozen dessert at a good margin. AMUL cannot make a compromise on the profit margin given as all its products are coming from Gujarat and also the production cost involved is very high so all ice cream products are produced at Gujarat and then transported to other states . The production cost for frozen dessert is low so the brands like Uncle John, Lassa,Skei are doing good business and are able 8 to sustain itself in the market even though their promotion strategy is not much effective as AMUL and also their advertisement cost is much lower compared to AMUL. 2 ) Threat of established rivals: Ice cream brands like Baskin Robins which is an international brand has its own customer base who are mainly NRI . The flavours offered by it is 32 and also it has a good advertising and promotion strategy so it is able to make good business without much hurdle. Other brand which has a strong customer base is ,Kwality Walls it has both ice cream as well as frozen products so it is able to make a good business in small as well as large retail shops with good profit margin. Local brand Merri Boy has managed to win the trust of the retailers by providing them with sufficient stock whenever they have demanded. AMUL’s main problem is proper supply of stock due to which retailers face lot of difficulties when it comes to AMUL ice cream sales . Even though the quality of Merri Boy is low but due to proper communication with retailers it has managed to create a good loyality base of retailers . So unless AMUL gives them something extra in terms of offer,supply or margin they would hesitate for AMUL sales. 3)Threat of new entrants: AMUL Ice cream products are a brand of the company GCMMF which is known for its taste,quality and brand image. The threat of new competitors is one of the forces of Porter’s model which in this case is more because of the stock availability of AMUL in Kerala which it has not been able to sort out. The company has established its new storage unit at Aluva in a step towards storage of Ice cream products. AMUL 1 litre volume ice cream are available at all AMUL ice cream selling shops which gives a very fearce competition to all other brands present. But when it comes to providing with other variety of ice cream there are only few shops which sell all the ranges of AMUL ice creams. This short coming can work well for new entrants if they will provide good variety and good profit margin. 4) Bargaining power of suppliers: Suppliers tend to be powerful when they re organized or concentrated, in case of AMUL this is seen as a main problem as the retailers feel that the company Managers don’t posses much knowledge about what stocks have come, also those flavors whose demand are low comes in bulk so storage becomes an issue. In case of AMUL the substitutes available are more which gives good freezer schemes than AMUL ice cream so retailers fear that the freezers might be taken a way if they sell AMUL ice cream for which they are not ready to take any risk so suppliers bargaining power is much lower. The best defenses are to build a win win situation with suppliers or use multiple supply sources to increase the AMUL sales it can be in the form of giving good offers, margin or giving pleanty of stocks to retailers. 9 5)Bargaining power of buyers: When the buyers purchase in large quantities then buyer can use their purchasing power as leverage to bargain for price reductions . The retail chains today are exercising sufficient power over major brands which build more margin . AMUL at present has many outlets in all over India ; the company has entered the fast growing retail space with Scooping Parlour. Families and youngsters eating out ice creams can now have a rich and unforgettable experience at the nearest AMUL’s Scooping Parlour, which has helped in boosting brand image and demand. AMUL must aggressively expand the number of exclusive outlets, due to which it can become the No1 brand in Kerala. The competitive struggle is fought through price, advertising and promotion spending and direct selling efforts. AMUL ice creams are affecting its competitors by its price, taste and quality. There is no differentiation in quality between consumer bulk packs . AMUL do not compromise on quality of the products offered, may it be consumer product or bulk packs. All the products have same quality standards in terms of fat, total solids etc . Some features of AMUL ice cream due to which retailers prefer AMUL are Probiotic Range: AMUL is the first company in the India to introduce probiotics in ice cream, for which IDF (International Dairy Federation) has awarded GCMMF the Best Innovation in Nutri Marketing Category. SUGAR FREE Range: AMUL has introduced SUGAR FREE Ice Cream in Bulk Pack to cater this segment. AMUL is the first who made this ice-cream especially for diabetic Patient Who feel Guilt while others are eating Ice-cream in Marriages. b) SWOT Analysis: SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. SWOT ANALYSIS OF AMUL ICE CREAM 1) ? ? ? ? ? S (Strength): Good brand image. No 1 ice cream brand of the country Good Range of prices and volume of ice cream available Has a good loyal customer base Quality unmatched by other brands 10 2) W (weakness): ? Dealer interaction with retailers very low ? More competition from other companies like Skei, Uncle John, Kwality Walls, Merri Boy due to good profit margin and stock supply. ? Retailers are not getting timely supply of goods ? Retailers main concern is the availability of flavor and profit margin for which they are not ready for any compromise and AMUL has failed to deliver it. ) O (Opportunities): ? The month from December to May is the high sales period for ice cream due to many festivals, hot period and vacation times AMUL can increase its sale in these periods by giving proper discounts. ? Due to many products available under the brand name AMUL with good quality, people trust the ice cream product of AMUL and are loyal towards it due to its quality, taste and flavor ? New shop owners are willing for the sale of AMUL ice cream as the company has a great brand name. 4) T (Threats): ? Retailers selling other brands are not ready to take risk of selling AMUL ice cream as the other brands give freezers for free or with some deposit so the retailers fear of losing their contract with other brands. ? Availability of in demand flavor and profit margin is an issue which AMUL has not been able to solve unless this is sorted out AMUL ice cream cannot achieve No1 sale in Kerala. ? Wide range of availability of competitors products due to good distribution system. ? Availability of other ice cream local brand like Merri Boy which gives good variety as well as margin and have a good loyal retailer base. The increase in stock availability, margin and credit by other company force the retailers to sell any brand of ice cream. 11 Brief about the industry / organization where the study was carried out AMUL Ice Cream was launched on 10th March, 1996 in Gujarat. The portfolio consisted of impulse products like sticks, cones, cups as well as take home packs and institutional/cateri ng packs. AMUL ice cream was launched on the platform of ‘Real Milk. Real Ice Cream’ given that it is a milk company and the wholesomeness of its products gives it a competitive advantage.