MERRY MILK

STRATEGIC MANAGEMENT

Strategic management Project on merry milk ice- cream

Prepared by

Velington Afonso Monica Sharma Sumedha Kadam Neha Muzawar Abhishek Pai Khot Rahul Manerkar Yougita Dalvi

Introduction Objectives of the study

To understand the practical applicability of the subject. To witness the operational strategies of merry milk ice cream.

Limitations of the study

Comparison is mostly done with Funtacy ice creams as they are the closest competitors. Survey was done from our personal findings on availability and awareness.

Methodology Primary sources :

Structured questionnaire and personal interviews

Secondary source :
Internet official website of merry milk ice cream Other websites likehttp://www.dare.co.in http://www.baskinrobbinsindia.com/ http://www.quickmba.com/ http://en.wikipedia.org

Company Limitations
Company does not follow practice any HR strategy in particular.

History of ice cream industry

The origins of ice cream can be traced back to at least the 4th century B.C. Early references include the Roman emperor Nero (A.D. 37-68) who ordered ice to be brought from the mountains and combined with fruit toppings, and King Tang (A.D. 618-97) of Shang, China who had a method of creating ice and milk concoctions. Ice cream was likely brought from China back to Europe. Over time, recipes for ices, sherbets, and milk ices evolved and served in the fashionable Italian and French royal courts. After the dessert was imported to the United States, it was served by several famous Americans. George Washington and Thomas Jefferson served it to their guests. In 1700, Governor Bladen of Maryland was recorded as having served it to his guests. In 1774, a London caterer named Philip Lenzi announced in a New York newspaper that he would be offering for sale various confections, including ice cream. Dolly Madison served it in 1812.

Ice cream industry in India

The ice-cream and frozen dessert market in India is estimated at approximately $450 million in 2009-10. Growing at approximately 12-15 per cent, it is expected to cross $900 million by 2014-15. The branded market is estimated at approximately $200 million and is growing at20-25 per cent. India has the right climate for Ice Cream consumption but has a very low per capita consumption, which is approximately 300 ml per annum as against the world average of 2.3 litres per annum, which means a large untapped potential business waits to be explored. Seeing this enormous business opportunity, the war has already begun to grab the most of this pie with national players increasing their production and international players trying to find away to enter the Indian markets. To be part of this race for increasing the market share, it's almost inevitable on behalf of the ice cream manufacturers to optimize their production systems, packaging technologies being used, cold chain management, compliance with quality standards and hitting the right marketing mix.

Company profile
Merry Milk Company has been established since 1985, but it was taken over by Sanjay Parab in 1993. It is located in Bethora Nirankal Road, Near Sapna Park along with an ice cream parlour attached to the factory, providing excellent service to the at-most satisfaction of our entire customer. Merry Milk Foods, Pure Milk Products! Merry Milk are very delighted to introduce themselves as Goas one of the most leading manufacturer of real milk ice cream. They also take bulk orders of ice cream for different occasions like birthday parties, weddings, corporate functions, etc. they also have tie up with decorations, caterings and music etc. T he company has a wide range of flavours such as vanilla, strawberry, chocolate and other delightful flavours. Beside this few years ago merry milk launched wide range of exotic natural flavours such as mangos , orange, pineapple, coconut, pan king..Etc. Our products are self indicative in terms of superiority in price and quality. Our ice creams are made from pure milk and do not contains any vegetable fats or oils.

5-Cs Company: The Company walks on the footstep of its vision, providing good

Company

Context

Customer

5Cs

Collaborato r

Competition

and premium quality ice cream. They also have interestingly innovative natural flavors in wide variety and even a new flavor every season. Customer: The reach and availability of ice-cream is the major hindrance to the customers. The aim of the company is to provide value to money and their main focus is on quality. However being said that the company doesnt have their loyal customer in terms of retailers, when it comes to bulk quantity. Competition: They faces heavy competition from local (Aditya, Funtacy) as well as national brands (Amul, Baskins & Robbins). Collaborators: Supplier of raw material is situated in Goa. Company has been purchasing its raw material from supplier right from inception. Climate: The Goan government has number of policies in providing loans to start business, besides the atmosphere in Goa favors merry milk icecream to conduct its business freely as it is a mean of gross earner of the state. Small and medium scale enterprise account for considerable amount of economic development in Goa.

PEST ANALYSIS

POLITICAL

TECHNOLOG ICAL

PEST

ECONOMIC

SOCIAL

Political:
Political environment in Goa is almost stable which favours different industry. Government policies are placed in a manner for the upliftment of small and medium business.

Economical:
Goa is a state which was titled last year to have 2nd largest GDP in the country which also implies that the saving, consumption, and spending capacity of the individual is high. Government also support the small and medium scale industry by losing on tax structure.

Social:
Goa is considered as a paradise for tourism where parties and fun adds to the line which is an open invitation to ice cream industry. No doubt Goa has a lot of young blood which is good for ice cream industry to boost but ironically most of the youngster prefers branded ice cream.

Technology
Technologically wise state is not at all backward, connecting to its customers. Either individual or otherwise is done at ease. Companies also make use of electronic and social networking site like telephone and Face book to keep in touch with its customers. For the ice cream companies cold storage transportation facility is another mean reaching its customers

7Ps of Merry Milk (facts) Product

Merry milks production development was driven both by the spirit of the cooperative system and profitability. Merry milk has added a vast variety of flavours to its ever growing range. Their products include fruit ice-cream to ice cream cake. The following are the products of merry milk: Delicious Drops, Fruit ice-cream, Junior cone (60 ml), Fun collection, Classic (100ml cups), Bulk (4ltr.pack), 500ml premium containers, 750 ml pack, Classic(1250ml), Bulk premium (4ltr. pack), Premium party pack, Naturals, Fun cone (1250ml), Classic (500ml), Shrikhand ,Ice cream cake

Place
MERRY MILK FOODS Bethora Nirankal Road, Near Sapna Park, Ponda-Goa, India. Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods/services are moved from manufacturer to the consumer. Merry Milk has its own privilege of selecting its locations, where the marketing team do research and then target the group. The company has 4 distribution vans and supply to about 250 retail shops in goa. On the bigger note this company also take catering, wedding and corporate function orders. Another unique thing to add about merry milk is that the factory is attached with its ice cream parlour. This targets the locals as well as the workers around the estate. Example: They even supply to valley and Sateri retail shops.

Price
There are many ways of pricing a product but merry milk philosophy is to deliver value for money to its customers. Another Strategy which they have adopted is Premium Pricing which is applicable to natural products.

PRODUCT PRICE in Rupees Fruit ice 4 Delicious drops 6-15 Fun collection 12-20 Junior cone(60ml) 12 Fun cone(120ml) 20 Classic(100ml cup) 10-12 Classic (50ml cup) 5-6 500 ml premium container 60 750 ml pack 55-70 Classics(1250ml) 75-110 Bulk premium(4LTR.pack) 475 Naturals 650 Classic(500ml) 40-50 Bulk (4ltr. Pack) 260-385 Premium party pack 145 Shrikhand 14-70 Ice cream cake 350 Merry milk has direct sales to the retail outlet hence saves cost on distribution channel. They have a comparatively less margin of sales for the local retailers so they dont have dedicated retailers for Merry milk ice cream. As there is no service tax on food products, however they have to charge VAT on sale of products. To match with the competitors on price factors they cut down the cost on manufacturing when prices of raw material increases. This was done by installing new machine recently which reduced the wastage and spoilage but it also increased the manpower and production capacity.

Promotion
This includes all of the tools available to the marketer for marketing communication. As considered to be the Goas leading manufacturer of real milk ice cream. They established in the year 1993, till now they have made significant place in local market. Over the years, merry milks advertising techniques had been simple but certainly have evolved. The company advertise through their logo which symbolises pure milk ice cream. Even they have their own ice cream parlour sets. Advertisements on local newspapers, local channels; prudent media and Goa 365 and also trying to connect through Face book and company website, the company have captured the market. They also have special schemes on seasonal products which depend on the raw material stock availability. However they strongly believe on word by mouth promotion of their products. The various CSR activities have also made the society feel their presences. As a corporate social responsibility they provide donations to the old age homes. They organize plant visit for school children as a part of field trip. Merry milk take bulk orders of ice Creams for different occasions and has the provision of more than the order size so that there should not be any inconvenience due to shortage of order and also company accepts the balance order without any charge from the customer thus forming a good image to the customers. They also provide various services like Decorations, Caterings, Music, etc. for different Occasions like Birthday Parties, Weddings, and Corporate Functions etc.

People
Presently the company have 25 employees including the top management. 20 employees are at ground level whereas 5 employees are on top management. Other than the top level management the man power is categorised as technical and non-technical staff. The main criterion for recruitment of the technical staff is, the candidate should be a bachelor in the filed micro biology, and experience is desirable. Whereas for non-technical staff they have not kept any specific criteria for selection as of now. For top management staff they recruit employees with business knowledge and experience and other related knowledge, depending on this criteria they hire. The staffs so recruited are trained by the manager (on the job training).

Physical Evidence
250 square feet room has been kept in sync with the colour of the companys logo. The ice cream parlour is painted light green in colour and lit with yellow and cream colour lamps, as yellow colour is in the centre of their logo which signifies the symbol of progress. Merry milk ice creams are packaged in sticks, cups, as well as take home packs and catering packs. The vibrant different ice cream flavours and different products pictures add cheery to the cake.

Process:
Blending Of The Mix Ingredients Pasteurization Homogenization Aging The Mix Freezing Packaging Hardening

BLENDING: The ingredients are blended together to produce what is known as the ice cream mix considering its required quantity.. PASTEURIZATION: The mix is then pasteurized. Pasteurization helps to reduce the number of spoilage organisms such as psychotrophs, and helps to hydrate some of the components. HOMOGENIZATION: The mix is also homogenized which reduces the size of the fat blobs found in milk or cream. The same is repeated twice. AGING THE MIX: The mix is then aged for at least 4 fours and usually overnight. This allows times for the fats to cool down and crystallize and for the proteins and polysaccharides too fully hydrate. Mix temperature should be maintained as low as possible without freezing, at or below 5c. FREEZING: Following mix processing, the mix is drawn into a flavour tanks where liquid flavours, fruit purees, or colour are added. The mix is then enters the dynamic freezing process which both freezes a portion of the water and whips air into the frozen mix. HARDENING: After the particulates have been added, the ice cream is packaged and is placed into a blast freezer at -30 to -40 degree C. Their products are self indicative in terms of superiority in price and quality. Ice creams are made from pure fresh milk and do contains any vegetable fats or oils.

Competitors analysis of Ps Existence

Merry milk marked its existence in Goa in the year 1985, later the company was taken over by Sanjay Parab in the year 1993. However Funtacy came into existence much later then merry milk. Funtacy has marked its presence in the ice cream industry in the year 1999. Which means despite being entering in the market later and having less market exposure Funtacy is being able to spread its wings wider than merry milk. Funtacy is the local brand which is most preferred other than the nationalised brand according to HT media.

Variety and Offerings

In terms of flavours merry milk has more flavours to offer to its customers than Funtacy. As merry milk offer 31 flavours where as Funtacy has only 20 flavours. Again in terms of the product offering Funtacy has 14 different kinds (shapes, sizes, packages etc) where as merry milk only has only 12 including ice cream cake and their premium ice cream. Merry milk launches new product in terms of natural flavours eg: they have recently launched panking and Kaju badam ice-cream where as Funtacy launches the new product relating it to sweets eg: they have launched products like gulab jamun and jalebi. In terms of offering merry milk have more flavours in its limited variety of products.

Distribution channel
The company Merry Milk has 4 distributors in Goa where as Funtacy has 15 distributors however we cannot ignore the fact that the 15 distributors of Funtacy are not solely for Goa but for Maharashtra and Karnataka too. Besides Funtacy have their local ice-cream vendors (cyclewalas) which are absent in terms of merry milk but occasionally merry milk mark their presence with their distribution van on any festive occasion. Otherwise it is unable to capture those customers which are targeted by such vendors (cyclewalas).

Low Profit margin to Retailers

Merry milk believes in value for money. They believe to give quality to their customers. Pure milk is what they brand themselves to be. Hence it becomes heavy in terms of final cost which adversely affects the profit margin of the retailers. However it is not the case with Funtacy, The retailers gets their
satisfactory profit margin. And hence its one of the many reasons as to why merry milk has been able to just target 250 retail shops in Goa.

Reach
As previously mentioned, Funtacy have extended their reach outside Goa as well, unlike merry milk. Funtacy have customers from Maharashtra and Karnataka and hence that explains its production capacity 3000 units per day. However on the contrary merry milks 1000 units producing capacity also suffice its market.

SWOT ANALYSIS

STRENGTH
Natural products 31 Flavours tie up with event companies ice- cream cake only ice- cream company with a parlour

WEAKNESS
Seasonal availability of food which required as raw material Lack of proper marketing network low margin leads to disloyal retailers no ice cream vendors sales concentrated only in Goa Naturals sold in big containers so no availability to small units

OPPORTUNITY
Wellness among the consumer coming up with sugar free ice cream increase in number of vendors and parlours packaging of premium ice cream in cups and cones improve distribution channel by considering the profit margin can extend the market in and around Goa

THREATS
Goan market is also dominated by other national brands entry of other companies in Goa is high considering the climate and tourism industry and hot climate Dominate market of well established brands like Baskin & Robbins, Amul etc.

Operations Strategy of Merry Milk foods

PROJECT STUDY
In sustaining their competitiveness, Merry milk faces many pressures and constraints due to their limited resources such as finance, skilled manpower and advance technology. Thus, their strategy should match the organizations resources to the changing environment and in particular its markets and customers in the pursuit of its goals and objectives The new competition is in terms of reduced cost, improved quality, and products with higher performance, a wider range of products and better service, and all delivered simultaneously for surviving in this new competition. Merry milk has the areas of competence concerned with new product development, human resource management practices, organizational productivity, the management of quality and management of information which is extremely crucial in terms of influencing small firm growth rates. They have also observed that, they have to measure their suppliers expectations, since raw material like sugar has only one supplier Sanjivani Sugar factory at Kundiam, which has to be maintained.

Analysis on determinants of operation strategy

Cost
Merry milk is a local ice-cream available within Goa hence to sustain the competition they maintain the cost by supplying directly to retailers, bypassing the wholesalers. Raw material like sugar is purchased from the local factory at a factory price. This process helps them maintain the lowest inventory level because of their shortest lead time within a day. Milk is purchased from local suppliers on daily basis to reduce the cost of storage. However Merry milks retailer margin is less than 15% as compared to Funtacy ice-cream with 20% margin. For a long run it can be dangerous to hold only one supplier for sugar.

Quality
They maintain the quality as per the requirements and norms set by Food and Drugs Association (FDA).

Reliability
It is likely to say that the raw materials are purchased from reliable and known sources unlike Funtacy ice-cream, has a bidding system where they check the quality and cost before finalizing the bid. Merry milk also has a regular check on quality of milk and sugar. For fruit ice-creams they have a constant check on the quality of the fruits.

Flexibility
Merry milk has a batch processing system like their competitors, but due to their local raw material suppliers they do not fall short of supplies to process the orders at any given time. They mostly take bulk orders for various local occasions. Merry milk comes up with a new flavour every year with reasonable price to sustain the competition and also have variety of local seasonal flavours. Merry milk can increase their seasonal flavours if they can extend their sales territories to improve the market share compared to its competitors, Funtacy and Aditya milk.

Speed and Delivery

Merry milk has an advantage over its competitors on speed and time due to the location as it is situated at Bethora Ponda, Goa which connects the Bethora industrial estate and local community. Merry milk factory is connected to main road that makes them feasible and faster for delivery of ice creams to various locations.

RESULTS AND DISCUSSIONS

In globalised market, growth of business environment plays a significant role in improving competitiveness. For analyzing business environment, present study focused on determinants of operations strategy and its implications. The business cost dimension includes concerns pertaining to the rising cost of labour, material, energy, packaging, transportation, warehousing and distribution. After this transportation and distribution cost are considered as most important cost elements. It is observed that for local firms, most of the cost components are very less in comparison to national competitors. It implies that local firms have cost advantage in comparison to their global competitors and they should take advantage of this asset for improving their competitiveness. Merry milk is a local factory which is aware of the local tastes and preferences which is an advantage over competitors also, they are known to all the places and routes where they can increase their sales.