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Why did AMUL Pizza failed in the Indian market despite huge promotion campaigns and investments.

Was it
a wrong marketing strategy or a wrong judgement of consumers' behaviour?

There are many reasons businesses fail. But one of the primary reasons has nothing to do with the type of
marketing that is done.

It is MONEY. Most startups are not capitalized sufficiently to make it through the first three years. And, if one
can not weather the market storm for three years, you're gone.

The market, any market is your guide to tomorrow. Imagine if you will...a market of millions, who daily tell
you that they are not coming into your store because (and you can select any reason and insert it). The key
is...they're not coming in. Just because one or one-hundred people like a particular pizza, doesn't mean it is
right for everyone.

In retail, as for many businesses another key is location, location, location.

But, not knowing this particular retailer, I could not for certain tell you. But, since it is a restaurant, I would be
willing to bet that they did not have the proper funding.

Far away from the pizza hubs of the metros, in remote Surat to be precise, Amul was brewing an
ambitious plot without much ado. The co-operative first opened 10 pizza parlors in Gujarat. Amul
then planned to scale up operations in a year by setting up 2,000 such parlors in 100 cities. What
was crucial to the entire game was PRICING. Amul was then currently test-marketing a basic
capsicum, onion, tomato pizza at just Rs. 20, which could well change the contours of pizza
consumption in the country.
Basically it looked like Amul has adopted this radical strategy to expand the consumption of
mozzarella cheese, a core ingredient that goes into the making of pizzas. "We are the biggest
cheese brand in India and it is time we leveraged this strength,” Mr Vyas (MD-Amul) explained. The
pizza parlours will not be very big in size. An ordinary retail shop, which is strategically located,
could also get into an arrangement with Amul. The entire project is based on the franchisee model.
Amul will ire pizza consultants who in turn will train franchisees. The co-operative will also provide
them with equipment, technical inputs and promotional support.

Amul was hopeful that the right mix of product quality and affordable price will lead to a demand
explosion and could perhaps lure customers away from the established pizza chains. Besides eating
into their market shares, this was a strategic move towards forward integration into the fast food
segment. "Instead of waiting for the pizza market to grow, we decided to create a new mass market
ourselves, "Mr Vyas said.
Once the demand for mozzarella cheese takes off, Amul plans to stimulate the demand for cheese
slices by extending the product line.
Keeping pace with the new age corporate world of backward integration and diversification, Amul
started selling pizza to market its cheese and was now talking about frozen foods.
WHY AMUL ENTERED THE PIZZA MARKET?

An unlikely entrant has stirred the pizza market in India. Indian company Amul, well known for its
milk products, has introduced a pizza for 20 rupees (41 US cents), or one-third that charged by
competitors.
Amul is one of the largest food cooperatives in the world and carries immense financial and
advertising clout. Its parent company, the Gujarat Cooperative Milk Marketing Federation (GCMMF),
turned around 25 billion rupees last year. And even though they may not admit it, competitors have
started tightening their belt, in different ways.

But what prompted Amul to enter a new territory, at a time when the field is flooded with new
entrants, many of them multinationals?

Industry analysts point to two reasons. The main one is the growing acceptance of pizza by the
Indian customers' palate. Pizza has become popular in all major cities and towns. According to
industry sources, it now forms almost 50 percent of the fast-food business.

Pizza joints are as ubiquitous as outlets for vada pav and pav bhaji, two local delicacies. That the
pizza has finally become a part of the Indian eating experience is confirmed by the fact that several
railway stations have set up special stalls to hawk various brands of pizza. Until now, the Indian
railway traveler had to make do with stale tea and rancid sandwiches.

The continued presence of Domino's and Pizza Hut is attracting other multinationals. After delivering
turnips like the Pillsbury Cooker Cake mix, General Mills India (formerly known as Pillsbury India)
has now made a conscious decision to focus only on those products that can clearly deliver
profitability. According to General Mills India president Tanmay Ganguly, in line with this broad
strategy, the company will make forays into categories where consumer habits have already been
created. And that includes the pizza market.

Local outfits, too, are making their presence felt. The south India-based Pizza Corner is now
consolidating its presence up north. It is doubling the number of outlets in the national capital New
Delhi to 20. Pizza Corner also intends to tap the markets of Mumbai, followed by Jaipur and Agra.
And keeping in line with the industry trend, Pizza Corner has a tie-up with Nestle India for its
Nescafe coffee and Maggi sauce, and with Kwality Walls for ice cream.

The second reason for Amul's invasion into the pizza market is its inherent advantage: the fact that
it does not view pizza as an end-product as much as a medium for pushing sales of its own cheese.

"They are interested in making profits from cheese, rather than from pizza. Given that a six-inch-
diameter pizza contains around 40 grams of cheese, the cost of this comes to hardly 5.50 rupees
per pizza. So, even at 20 rupees per pizza, there is enough margin left to be shared with retailers,"
points out a retailer.

Amul currently sells about 3,500 tonnes of cheese annually, which translates into a 70 percent
market share. Of this tonnage, mozzarella cheese - the semi-soft, high-moisture, unripened variety
used for pizza making - accounts for roughly 700-800 tonnes. Amul has targeted opening 3,000
pizza retail franchise outlets all over the country by the year's end. This is expected to boost the
company's annual sales of mozzarella cheese alone by more than 4,000 tonnes.

Amul's manufacturing facility at Gandhinagar in Gujarat has the capacity to produce 200,000 pizzas
a day. It targets to garner a sales turnover of 500 million rupees by the end of 2002 through pizzas
alone.

According to a Amul marketing officer, the company benchmarked on three aspects to create its
brand image. "The first step was meant to spur more volumes of Amul pizzas, the second step was
to create an association between the brand Amul with pizza and the third aspect was to convert the
brand association into a FMCG [fast-moving consumer goods] product."
Amul supplies retailers the cheese along with the technical training and recipe for pizza making.
Besides, it negotiates with bulk suppliers of vegetables and the pizza base to offer these at
wholesale rates to the outlets. Marketing analysts say that Amul's pizza marketing strategy is
unique because it aims at boosting sales of an "elite" product (cheese) by pushing down prices of
another "elite" product (pizza).

Encouraged by the response to its six-inch pizza, targeted at school-going children and institutions,
Amul is now attempting to expand its horizons in the pizza market. It has rolled out an eight-inch
frozen "Utterly Delicious Heat and Eat Premium Pizza" in new packaging in Mumbai. Initially, 2,000
retail outlets in Mumbai will stock the new product. The number of retailers is expected to touch
6,000 by the end of this month.

A top-ranking Amul official claimed that his company would do to pizza what it has already done for
ice cream. "We want pizzas to become a mass consumption item. And as in the case of ice cream,
we will force other pizza manufacturers to also slash prices. Eventually, this would further expand
the market for cheese," he added.

There are other plans on the anvil. Adds the official, "Once we achieve the target of 500 million
rupees in sales turnover, we may consider setting up a manufacturing facility for introducing
burgers, under the umbrella brand Amul."

SUMMARY OF THE CAUSES FOR FAILURE OF AMUL PIZZA

Amul was successfully able to launch the Pizza.

Amul had an advantage with regard to Pricing.

The problem it had was of winning the trust of the consumer over the quality and freshness of the
Pizzas as they were frozen and were manufactured quite a few days back.

Packaging of the Pizzas was also questionable.

The taste of Pizzas was not at all appreciable

Amul’s Franchisee Model was very faulty.

The selection of the mix of tools i.e., advertising, sales promotion and publicity was inappropriate.

Amul was not fast enough to see the changing trends and accordingly introduce the product.

Amul’s strategy of creation of a mass market was entirely wrong.

Amul lost out because of its inability to communicate the Positioning in a proper manner.

Amul failed to do Product Differentiation properly.

Amul’s Pizzas were not up to the quality levels defined by its all the other products

Amul overlooked the threat from Pizza Professionals like Pizza Hut and Domino’s.

Amul followed a strategy of Forward Integration, which it shouldn’t have done.


Amul missed out on the fact that Cultural Factors and Reference Groups have a very major impact
on buying decisions.

Since the Customer Satisfaction is not there, the brand missed out on Consumer Loyalty.

The Value Proposition promised by Amul was not delivered.

MARKETING MISTAKES

A well-tuned marketing campaign is a beautiful thing. Your advertising not only connects with just
the right prospects, but it seems everyone is talking about you, your product, or service.

Sales come in at a nice pace. Profits mount as you quietly chuckle thinking how little you spent on
marketing. Suddenly, moving your company forward doesn't seem hard at all.

Unfortunately, marketing rarely works that easily, at least at first. Most marketing gets held back by
a few very common mistakes. Let's look at a few along with ways you can easily correct them to get
your advertising back on track.

Mistake #1: Your marketing gets lost in the crowd. Each of us gets bombarded by thousands of
advertising messages every day.

Mistake #2: Marketing targets an audience that is too broad. Before you can address the specific
concerns of a prospect, you have to narrow the groups of people your marketing is reaching.

Mistake #3: Marketing isn't consistent. The old saying among veteran marketers is the first ad
never works. You get consistent, long-term results by continuing your ad over weeks and months.
It may be true that familiarity breeds contempt, but not in marketing. Familiarity develops
awareness and confidence in prospects so they buy.

Mistake #4: Marketing fails to tie different media together. Too many times the direct mail
campaign a company does has little to do with the magazine ads they are running. Instead, make
your ads in different media all relate to each other

Marketing is one of those aspects of life where the tried-and-true often works best. Use the proven
solutions to common marketing mistakes to insure your advertising and promotion efforts bring the
results you expect.

RELAUNCH STRATEGY FOR AMUL PIZZAS

Improvements are sold by the inch rather than by the yard.


—Anonymous
For most firms, re-launching failed products requires understanding the ways in which the failed
product has met the value needs of different customers and the quality of execution. Re-launching a
failed product should be done with the help of outsiders who were untarnished by the first failure.
But the experience gained from a failed launch can be helpful in the second launch.

Diagnosing the Failure

The first question to address is: “What is failure?”


The Successful Failure
This may seem like a dumb question, but it isn't. Sometimes, the value of failed product is that it
provides superb market research and insight that allows you to generate a second-generation
product that is successful.

The Failed Success


Sometimes a success is actually a disaster. You have established that a market is viable, but your
economics and resources don't let you capture the opportunity. Someone else steps in and takes
over the market.

The Misevaluated Success


Another common type of failure is the financially successful product where the company is unable to
invest sufficiently to maintain its position of leadership.

Now, for AMUL as a brand the relaunch strategy should be focused around few key areas of
dominance in failure, which are as follows:

SWOT ANALYSIS

BRANDING

POSITIONING

MARKETING MIX

SEGMENTING AND TARGETING

CONSUMER MARKETS AND BUYER BEHAVIOURS

BUILD ON CUSTOMER SATISFACTION, VALUE AND RETENTION

COMPETITION

SWOT ANALYSIS

If you don’t know where you are going, you will probably end up somewhere else.
—Dr. Lawrence Peter (Canadian Educator)

Amul should do a proper SWOT analysis and if need be, should take help from professional
consultants. For instance Amul’s SWOT is as Follows:

STRENGTHS

BRAND (COMPANY) NAME BECAUSE OF THE NUMBER OF YEARS


IN THE MARKET
PRODUCTION FACITLITY
TRUST OF CONSUMERS

WEAKNESS

NO EXPERTISE IN PIZZA MAKING


LATE ENTRANT
DISTRIBUTION CHANNEL
FRESHNESS
PACKAGING

OPPURTUNITIES

HIGH GROWTH OF THE FOOD MARKET


NICHE MARKET, SO CAN CHARGE A PREMIUM
THREATS

HIGH DEGREE OF COMPETITION


LOSING OUT TO RIVALS LIKE PILLSBURY BECAUSE OF THE
PRODUCT OFFERING.

BRANDING

First, say to yourself what you would be, and then do what you have to do. —Epictetus

Though AMUL rightly spotted a growing lucrative market for the pizzas, it did the biggest mistake of
branding the pizzas as AMUL PIZZAS. Basically AMUL did the brand extension in order to save the
expenses of building a new brand name and thus wanted to cash on the brand value of AMUL.

(Example Case: Pond’s had launched toothpaste under the Brand Name POND’S, quite a few years
back. The brand POND’s though doing very well that time; its toothpaste was a miserable failure.
The reason was analysed to be that the people’s association with that of POND’S was with beauty
and something to do with outside the body. As soon as the idea of putting POND’S inside the mouth
was introduced, people rejected it. Though they trusted POND’S to be applied anywhere outside the
body but were not open to putting it inside.)

And, this way AMUL committed its biggest mistake. AMUL has always been associated with dairy
products or something to do with milk (Cheese, milk, ice creams etc.) but Pizzas being a totally
alien category, people were not able to relate to it. AMUL was known for its quality, freshness etc.
but contradictory to this, the Pizzas were frozen food, kept under refrigeration and served after few
days of manufacturing, which according to Indian Mentality makes it Stale Food. The association of
product with that of with brand name has been totally lost in this case.

Thus, the first and foremost thing that AMUL should do is to introduce the pizzas under some other
brand name and AMUL should appear as a latent marketer.

According to our suggestion, we came to a common consensus of n appropriate brand name for
Amul i.e., “TAVA FRESH” and the tag or punch line for the brand name would be “FRESH AISA GHAR
JAISA”. Thus by introducing Pizzas under this brand name, AMUL is giving the message of its
repositioned product i.e., now its pizzas can be heated over a tava instead of a compulsory use of
an microwave or an oven and apart from that it also connotes to the freshness of Pizzas.
The tagline suggests that the freshness offered by the product is as good as that of anything made
at home and along with that the ease of making or rather heating the product at home and
consuming it. Thus Amul can very well relate to certain emotional and consciousness aspect of the
Indian consumer.

By branding, AMUL though will have to spend money on brand building, but it is much safer then
risking out its own brand image by using the AMUL brand.

AMUL can very well educate and inform the retailers that the Brand is from the house of AMUL and
thus win over their trust and gain on WORD OF MOUTH publicity.

Thus by introducing the pizzas under different Brand Name it does not then risks the wrong
association of product with its Brand Name, which is the case now.

The main reason why brands have been developed in the first place has to do with competition and
subsequent increased consumer choice. However, contrary to popular belief, consumers do not
desire choice per se. Choice is mainly a
mechanism that allows consumers to obtain the products and services that they
want at a price that they want to afford. As peoples’ wants, needs and budgets differ, choice
functions as a way to fulfil the requirements of different consumers. Thus, brands cater to this
diversity.

POSITIONING

Your image can never be stolen. Everything else can be.


-Anonymous

Falling in love! As entrepreneurs, we do it every day. Our passionate belief in, and commitment to,
our product (or service) makes all things seem possible. The most successful entrepreneurs learn to
transform their passion into position.

Positioning is a perceptual location. It's where your product or service fits into the marketplace.
Effective positioning puts you first in line in the minds of potential customers.

Positioning is a powerful tool that allows you to create an image. Being positioned by someone else
restricts your choices and limits your opportunities.
That's why it's so important for entrepreneurs to transform their passion into a market position. If
you don't define your product or service, a competitor will do it for you. Your position in the market
place evolves from the defining characteristics of your product.
Positioning is your competitive strategy. What's the one thing you do best? What's unique about
your product or service? Identify your strongest strength and use it to position your product.

Positioning, when used effectively, can help you be first in the mind. Being first in mind equals
ownership. Market ownership allows you to be a big fish in a small pond. When you're a big fish,
you can always increase the size of the pond.

According to us, AMUL should relate to certain events or festivities, and create a positioning that is
unique in nature, in the prospect’s mind. Likewise its competitor’s strategy for positioning; as in
case of PIZZA HUT, it uses the line “GOOD TIMES START WITH GREAT PIZZAS”, and relate it to the
celebration of all important events (especially family events) in life. Thus now in most cases
whenever there is a celebration time or taking the girlfriend out for date, consumers tend to think of
PIZZA HUT.

Similarly, AMUL should also build an aura around itself, may be for example taking into
consideration the Family Picnics or Outings etc. and relate to that. So that whenever consumers are
thinking of that event, AMUL should come to their minds. But AMUL should not promote many ideas
while positioning and should consistently stick to the idea promoted so that the customers can
relate to it.

This strategy of unique POSITIONING and occupying a distinct place in consumer’s mind, in today’s
much competitive scenario, will definitely help AMUL to make its product a big success.

MARKETING MIX

As in the case of Cake, proper mix is important in Marketing also.


-Anonymous

PRODUCT

Amul should concentrate on Pizzas more rather than thinking it as a means to increase the sales of
it mozzarella cheese. It should give more emphasis on the taste and quality of pizzas and improve
the same.
It should introduce more variety of pizzas to cater to different segments of customers.
It should also be health focused.
Since the majority of its target customers are middle class people, it should introduce the variant of
pizzas, which can either be heated on a pan or a tava, as in most cases consumers don’t have an
oven or a microwave.
Amul should not compromise on quality, as even if it charges a little high price or a premium,
people will pay it because of the brand name.
Packaging of the pizzas should be improved a lot as its always the eye appeal that counts.

PLACE

Amul should improve the distribution channel, as the Amul pizzas are available at all the retail
stores (even if it is not Amul distributor for other product categories), and this leads to a big
question mark over hygiene and reliability.
Another suggestion that might work will be of opening “AMUL” brand stores, stocking all Amul
products and thus create a good ambience. This will reduce the questions raised over hygiene and
reliability.
It should follow Backward Integration Strategy rather than Forward Integration Strategy.

PROMOTION

It should adopt a proper mix of appropriate advertising tools.


New advertising campaign should be developed to initiate the consumer learning process and retain
the consumer attention.
As discussed earlier it should pursue a distinct brand image in its campaigns.
Amul’s campaign related to Pizzas should be informative and Persuasive.

PRICE

Amul has an advantage with regard to Price as Amul Pizzas are strategically placed at a lower price
that any other available counterpart.

SEGMENTING AND TARGETING

SEGMENTATION

Amul should not focus on creating a Mass Market; rather it should cater to the segments already
existing. Basically it is a Niche Market as people in India who would prefer having a frozen pizza are
very limited.
Amul should accept he fact that segments exist based on Diffused Preferences and market
accordingly.

Another important aspect of segmentation is that of Geographical and Psychographic segmentation


and thus Amul should take that into consideration.

TARGETING

AMUL should adopt Segment-by-Segment Invasion Strategy.

Another important reason is that Amul chose the wrong target audience. It targeted the lower or
Middle-income group people and priced the product accordingly. Basically people from that income
group are not open to the idea of frozen foods. The mindset of the consumer is more inclined
towards the consumption of hot and fresh food. People think that any food that is frozen, old and
packed is stale food. Thus, Amul chose the wrong segment to cater to.

(EXAMPLE CASE: Maggi Noodles projected themselves as instant solution to hunger. They
positioned themselves as instant, hot and fresh and thus found a huge customer base ready and
eager to accept their product and thus are very successful.)

Amul had developed the product that was suitable to the upper or upper middle class of consumers
who are open to the idea of consuming frozen foods but it priced and targeted the product to lower
class people. Thus, Amul should target the product to the class of people that are open to the idea
of frozen foods.

CONSUMER MARKETS AND BUYER BEHAVIOURS

Amul should take into consideration the fact that the Cultural Factors exert the broadest and
deepest influence on the buyer behavior and thus Amul should understand that the culture of frozen
foods in India is very limited.

Amul should introduce Diversity Marketing.

Amul ignored the fact that its target segment were households with low or mid income group and
didn’t have oven or microwave to heat the pizza. Thus it should introduce a variant for this.

Instrumental Conditioning should not be ignored.

BUILD ON CUSTOMER SATISFACTION, VALUE AND RETENTION

A satisfied customer is your best advertising.


-Anonymous

Amul should try to fulfill Customer Perceived Value (CPV) and thus gain Customer Satisfaction.

This will ultimately result in Customer Loyalty.

The Value Proposition promised, should be delivered.

Attract and also retain the Customers.


COMPETITION

The secret of business is knowing something that nobody else knows.


—Aristotle

Though Amul is Market Leader in Dairy Products, it is not so in the frozen foods category.

Pillsbury has an offering that is more appealing. It offers a Pizza Making pack compromising of all
the ingredients except vegetables, to make pizzas that are hot and fresh and also offers the taste
desired.

People don’t like frozen Pizzas, rather they would like to have some hot snacks or would order a
Pizza home

Pizza Hut, Domino’s, Smoking Joe’s are rivals to Amul Pizza.

Health Foods are gaining the market share at a rapid pace and finding people’s favor. Thus, Amul’s
offering of Frozen Pizza gets diluted.

With the induction of the above said relaunch strategies, Amul Pizza might be able to revive it’s lost
glory in this segment and thus get a head start in the market of Frozen Foods.

Success needs no explanation and Failure has none.


—Anonymous

Thus, rather than moaning over the failure, the company should do a self-introspection and with the
learned lessons by failure prepare itself to conquer the market again.