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ANALYSIS OF DISTRIBUTION

AND CHANNEL FOR AMUL


BEVERAGES
A STUDY ON THE DISTRIBUTION STRATEGIES OF THE
BEVERAGES SEGMENT OF AMUL
Distribution and supply chain management

Master of business administration


2019-2021

Submitted By:
Group – 2
4th Trimester
Section – M3

Surbhi Lath 1927953


Dayanandan M 1928106
Maneesh Das 1928114
Aveena Prathish 1928128
Mansi Agrawal 1928134
S. Aparna 1928142

Submitted To:
Prof. Suresh A. S
TABLE OF CONTENT
S. No SECTION PAGE NO
Introduction 1

1 1.1.Products and services 2

1.2.Service provided to farmers 3

Industry Eco system 5

2
2.1. SWOT Analysis 6

Market structure 8
3

Levels of channels 10
4

Strategic partners 13
5

Multi-channel, Omni channel. Channel cost as a 14


6
percentage of sales

Market Coverage (Territories/route plans/mapping) 15


7

Commission, Incentive, Pricing policy 17

8
8.1. Pricing 17

Credit availability 18
9

Estimation of ROI of Channel member 20


10

Any Special merchandising requirements, Storage 22


11
requirements, Visual merchandising at POS.

Channel Promotions ATL and BTL. 23


12
Evaluation of the Channel effectiveness. 25
13

Conclusion 28
14

References 29
15

LIST OF TABLES

S. No SECTION PAGE NO.

1.1 Product and services 2

3.1 Market Structure Amul 8

7.1 Market coverage 15

LIST OF FIGURES

S. No SECTION PAGE NO

Products and services of Amul 1


1.1

4.1 Level 1 Distribution 10

4.2 Level 2 Distribution 11

6.1 Amul mode of channels 14


7.1 Map of Amul exports 16

9.1 Time period of payment for different channels 18

11.1 Area wise APO’s chart 23

WORK DISTRIBUTION AMONG TEAM MEMBERS

SI. No Topic Team Member


Name

1. Products and services. Maneesh Das

2. Industry Eco system Maneesh Das

3. Type of market structure (competition, oligopoly, monopoly etc) Maneesh Das

4. Levels of Channels Aveena Prathish

5. Strategic partners/Alliances/Integration Aveena Prathish

6. Multi-channel, Omni channel Channel cost as a percentage of Dayanandan M


sales.
7. Market Coverage (Territories/route plans/mapping) Mansi Agrawal

8. Commission, Incentive, Pricing Policy Surbhi Lath

9. Credit availability. Surbhi Lath

10. Approximate estimation of ROI of Channel member Dayanandan M

11. Any Special merchandising requirements, Storage requirements, S. Aparna


Visual merchandising at POS.

12 Channel Promotions ATl and BTL. S. Aparna

13. Evaluation of the Channel effectiveness Mansi Agrawal


1. INTRODUCTION

Amul, is an Indian dairy cooperative society, based at Anand in the state of Gujarat. Formed in
1946, it is a cooperative brand managed by a cooperative body, The Gujarat Co-operative Milk
Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3.6 million milk
producers in Gujarat. Amul spurred India's White Revolution, which made the country the world's
largest producer of milk and milk products.

Amul was spearheaded by Tribhuvandas Patel under the guidance of Sardar Vallabhbhai Patel. As
a result, Kaira District Milk Union Limited was born in 1946 (later renamed to Amul).
Tribhuvandas became the founding chairman of the organization and led it until his retirement in
the 70s. He hired Dr. Verghese Kurien in 1949. He convinced Dr. Kurien to stay and help with the
mission. Under the chairmanship of Tribhuvandas, Dr. Kurien was initially the general manager
and helped guide the technical and marketing efforts of Amul. Dr. Kurien was the chairman of
Amul briefly after Tribhuvandas Patel died in 1994. Kurien, founder-chairman of the GCMMF for
more than 30 years (1973–2006), is credited with the success of Amul's marketing. The current
Revenue as of 2019, stands at INR 38,550 crores (or US$ 5.4 Billion) and the number of
employees is around 4 million. Unlike other consumer brands, which curtailed or stopped all
advertising during April and May, Amul upped the ante. “We never saw logic in stopping
advertising,” said RS Sodhi, managing director, Amul, “For us, brand building is like long-
term asset building and not just a sales pitch. More importantly, advertising is another form
of communication with the consumer, and for us, they are family. So, if a family member is
distressed, we should communicate more, rather than less.” And that’s exactly what Amul did.

(Source – Jun 22, Economic Times)

Figure 1.1 Product and services

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Table 1.1: Product and services offered by AMUL

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1.2. Services Provided to farmer members

GCMMF’s Amul model of dairy development is a three-tiered structure, with the dairy cooperative
societies at the village level federated under a milk union at the district level and a federation of
member unions at the state level. Farmer members milk their cows twice daily (morning and
evening). GCMMF collects the milk twice a day, makes regular payments to the farmer members
and provides them with cattle feed, fodder, animal breeding and veterinarian services. Anyone
who owns a cow or a buffalo and makes a one-time payment of 11 rupees (10 rupees for the share
certificate and 1 rupee for registration) can become a member of the village cooperative society.
The applicant must agree to provide a set minimum quantity of milk, generally between 600 and
700 litres, to the society each year. The farmer members elect a managing committee that then
chooses a chairman. The managing committee appoints a secretary to discharge the society’s
administrative functions.

Elected representatives of the farmer members make policy decisions at all three levels, which are
then implemented by professional managers and skilled personnel employed by the farmer
members. This structure eliminates all middlemen. By placing the farmer members in command,
in essence, of the dairy cooperative involves them in the development process. This cooperative
structure is democratic, and the farmers are in control, from the milking of their animals to the
final marketing by the federation. For every rupee that GCMMF earns, roughly 75 paise goes to
the farmers. The mandate is clear – production by the masses, for the masses, at its efficient best.

The dairy unions affiliated to GCMMF provide various inputs that contribute to enhancing the
productivity and quality standards, such as:

● Breed improvement and animal healthcare programmes


● Extension activities
● Supplies of balanced cattle feed on a no profit–no loss basis
● Quality fodder seed distribution at subsidized cost
● A network of artificial insemination centres aimed at genetic upgrading of the animals
using frozen semen of pedigree bulls; these centres are managed by educated
unemployed rural youth who provide breeding services to the farmers
● Frozen semen, liquid nitrogen and other consumables
● 24-hour mobile veterinary services for emergencies.

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It is this integrated approach to dairying and addressing farmers’ needs at all levels that
gives the Amul model its uniqueness. And it is why every third litre of milk from a cow or
buffalo in Gujarat is processed in a GCMMF union dairy.

[Source – India, increasing demand challenges the dairy sector by Meet Punjabi, Dairy Consultant,
FAO (Food & Agriculture Organisation)]

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2. INDUSTRY ECO SYSTEM

Below Industrial report has been furnished on the basis of the latest report by IMARC Group,
titled “Dairy Industry in India 2020 Edition.

India has been the leading producer and consumer of dairy products worldwide since 1998 with a
sustained growth in the availability of milk and milk products. Dairy activities form an essential
part of the rural Indian economy, serving as an important source of employment and income. India
also has the largest bovine population in the world. However, the milk production per animal is
significantly low as compared to the other major dairy producers. Moreover, nearly all of the dairy
produce in India is consumed domestically, with the majority of it being sold as fluid milk.

On account of this, the Indian dairy industry holds tremendous potential for value-addition and
overall development. The dairy market in India has reached a value of INR 10,527 Billion in 2019.
Along with offering profitable business opportunities, the dairy industry in India serves as a tool
of socio-economic development. For instance, the “National Dairy Programme (Phase-I)” aims to
improve cattle productivity and increase the production of milk expanding and strengthening and
expanding the rural milk procurement infrastructure and provide greater market access to the
farmers.

On the other hand, the private participation in the Indian dairy sector has also increased over the
past few years. Both national and international players are entering the dairy industry, attracted by
the size and potential of the Indian market. The focus is being given to value-added products such
as cheese, yogurt, probiotic drinks, etc. They are also introducing innovative products keeping in
mind the specific requirements of the Indian consumers. These players are also improving their
milk procurement network which is further facilitating the development of the dairy industry in
India. Looking forward, the market is expected to reach a value of INR 25,491 Billion by 2025,
exhibiting a CAGR of around 16% during 2020-2025.

Within the framework of the competitiveness drivers and issues, the smallholder dairy sector’s
strengths, weaknesses, opportunities and threats have been assessed. The strengths and weaknesses
are factors that are directly controllable, while opportunities and threats derive from the external
environment. There are a large number of weaknesses in the sector, implying considerable scope
for interventions. This below SWOT analysis entails matching each of these elements with an
appropriate action.

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2.1. SWOT Analysis

Strengths
● Large number of small and marginal farmers involved in dairying
● An effective marketing channel helps to meet the demands of the urban consumer
● Very large number of animals and huge scope to enhance productivity
● Self-sufficiency in medicine production and do not have to rely on exports

Weaknesses
● Large share of milk (70–85%) of marketable surplus goes through informal channel
where quality is a big concern
● Very little competition to cooperatives because private sector was not allowed to
participate in until recently
● Farmers do not share in the benefits of high demand because of poor governance of
cooperatives
● Milk production is scattered over a large number of farmers producing miniscule
quantities
● Milk distribution is limited to urban and peri-urban areas
● Low milk prices because of lower prices declared by cooperatives, which results in
low prices of milk paid by all players
● Lack of policy focus on strengthening indigenous breeds
● Non-existent extension facilities
● Farmers’ prices are not based on fat measurement, which affects their profitability
● Because of low access to credit and risk-taking ability, farmers cannot increase their
herd size

Opportunities
● Increased farmer income by exploiting the high demand
● Increased consumer sophistication and awareness of quality reception of quality
packaged products (though slowly)
● Entry of large corporations in retailing, which can lead to more investment
● Immense scope to enhance governance of dairy farmer organizations and thus
enable dairy farmers to demand higher prices
● Potential for exports due to low cost of production
● Overall positive growth environment, which is triggering the Government to
enhance infrastructure

Threats

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● Large portion of the population does not care about quality issues in milk
● Because of high price sensitivity for dairy products, people are not willing to pay for
quality
● Significant increase in maize prices can increase feed prices
● Large informal markets that extend credit are constraining farmers
● Low productivity and scattered production leading to high cost of transportation
● Emphasis on milk fat and not on SNF content maintaining relatively lower prices of
milk

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3. TYPE OF MARKET STRUCTURE

The market structure followed by the dairy industry is Oligopoly. Some of key points to be noted
are-

● All the dairy brands are selling the same products, so the scope of product differentiation
is minimum.
● Prominent names are Amul, Nestle, Britannia.
● There are a large number of local brands which are not at par with the above-mentioned
brands, but still occupy larger market share in their respective regions.
● There is high elasticity due to availability of close substitutes, except for Butter & Ice-
cream.
● Cost of entry & exit is exceedingly high, because of the oligopolistic market structure.
● Presence of large number of buyers.

Until 2002, cooperatives traditionally were the dominant players in the formal sector. With
liberalization of the dairy industry, private investment has increased quite significantly.
However, the organized sector’s share in milk procurement is very low because a large
proportion of the milk and milk products are sold through the informal channel. The informal
demand absorbs approximately 41 percent of the milk and milk products produced in the
country, accounting for about 75 percent of the marketable surplus of milk. The formal
channel, with its packaged milk and dairy products, accounts for only about 25 percent of the
marketable surplus, which is about 15 percent of production.

Table 3.1: Market Structure of Amul


Market Structure

Performance Still large share of produce; 85% of marketable surplus goes


through informal channel

Quality of milk through informal channel is an issue and to


some extent in formal channel as well

Competitive structure Little competition to cooperatives because private sector was


not allowed in the sector until recently

Entry of supermarkets in retailing of milk is increasing the


competitive structure

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Governance (value chain type) Governance of cooperative structures is constraining
efficiency and expansion

Role of "lead" or organizing firms Role of lead agency has been hampered by government
interference in cooperatives

Farmer organization Immense scope for improving management and governance


through farmer organizations

Marketing chain capacity and


Scope for enhancing efficiency of distribution
efficiency

Distribution channels Cooperatives have a well-developed distribution channel in


urban areas

How market signals are conveyed or Government and political interference in price setting, limits
distorted prices being determined by market forces.

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4. LEVELS OF CHANNELS
Amul beverages reach the final consumer through two channels

1. From the manufacture to consumer.


This is called a 1 level distribution.

Producer Retailer Consumer

Figure 4.1 Level 1 Distribution

Through this level, basically there is only stop for the products before reaching the final consumers.
And the one stop is, Amul Parlours.

Amul Parlours are exclusive Amul outlets which stores and sells the entire range of Amul products.
The outlets are spread over 100 to 300 Sq. Ft in markets, educational institutions, hospitals,
railways, bus stations, etc.

Amul has come out with a unique concept of Amul Parlours. They have classified those under four
types namely: ·

● Centre for excellence -These Amul Parlours are specifically at a place, which has a class of
excellence of its own. We can find such parlours at the Infosys, IIMA, NID Ahmedabad etc
● On the Move- These parlours are at the railway stations and at different state bus depots
across different cities.
● Amul Parlours - These parlours can be seen at different gardens across different cities. These
are fully owned by Amul
● Amul Preferred Outlets - These are the private shops that keep the entire product range of
Amul. They also agree not to keep any competitor brands in the outlets. They can keep other
brands that are in the non-competitor category.

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(www.amul.com)

2. From manufacturer to wholesaler to retailer to consumer


The 2-level distribution adopted by Amul.

Producer Wholesaler Retailer Consumer

Figure 4.2 Level 2 Distribution

Through this level the products will have two stops, the wholesaler and a retailer before reaching
the final consumer. The route the goods take is further broken down below:

First Stage

● Products are transported to company depots using 9 and 18 MT trucks


● There are depots across major cities of India

Second Stage

● Depots to Wholesale Dealers


● Amul has a Network of over 5000 distributors
● Transport through insulated 3 and 5 MT TATA 407’s

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Third Stage

● Wholesale dealers to retailers


● Transport through smaller vans and rickshaws.

The movement of products from the manufacturing units to depots to wholesalers are overseen by
a C&F agent. A Carrying and forwarding agent(C&F) agent is appointed to coordinate the
movement of goods from factory to warehouses.

The Agents are mere facilitators in the network. Then the products are sold to wholesale dealers
who then sell to retailers and then the product finally reaches the consumers.

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5. STRATEGIC PARTNERS
A C&F agent is the most important strategic partner in this distribution network.

Like with other FMCG companies, Amul is focused on breaking the bulk. It supplies its C&F
agent, who then expects to have the appropriate arrangements to store Amul products in bulk, in
huge quantities. Then facilitate the movement to wholesalers.

The C & F Agent takes charge of the carrier's distribution of the Goods directly upon their arrival
at destination.

The stocks which arrive at the premises of the store room of the C & F Agent should be checked
and counted by the C & F Agent. In the event of failure, injury, shortage or spoilage, the C & F
Agent should get from the transporter the required certificate of failure, shortage or spoilage and
if needed arrange for insurance surveys as laid down under insurance company's rule. In the event
of failure to comply with this condition, the liability of financial loss, if any, will entirely rest on
the C & F Agent. The Company will provide the C & F Agent with full details of insurance
requirements.

The C & F Agent arranges for proper storage of the Products in a separate store room with
sufficient space, preferably of 1500-2500 sq. Ft the C & F Agent holds the stocks in a safe and
secure condition to avoid contamination from any source and to prevent damage or loss from
robbery, fire, flood and other hazards.

The C & F Agent also operates software for computerization of documentation, accounts, data
processing and other operations. The C & F Agent prepares, furnishes the documents, information
at fixed intervals determined by the company. The C & F Agent at all times is bound by the
instructions given by the Company. It is also agreed that local transportation expenses for receipt
and delivery of goods shall is borne by C & F Agent and out station transportation expenses for
receipt and delivery of goods shall be reimbursed by the Company.

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6. MULTI-CHANNEL/OMNI CHANNEL

Amul follows a multichannel strategy to reach their end consumers. The main advantage of
following a multichannel strategy is to have a wider reach to the customers making it easy for
customers to buy products from the most convenient point of access. From Amul points of view it
helps in gaining more sales and a faster return on ROI. Amul’s beverages are available across
almost all offline retailers, both organised and unorganised. Amul parlours are another point of
sale where Amul beverages are sold directly from Amul. Amul’s beverages are also available on
online e-commerce platforms such as big basket, grocers, indiamart, amazon, Paytm Mall etc.
They also have social media presence which is a platform of interaction between Amul and its
consumers. Apart from this, Amul also has their mobile apps where consumers can place their
order online and get it delivered at their home. Amul has made sure to get into the maximum areas
of point of contact with the customers making sure their customers can buy their products across
various platforms.

Amul

Offline Online
channels channels

Unorganised Organised E-commerce Social media


Amul outlets Mobile app
retailers retailers sites page

Fig 6.1 Amul mode of channels (Source: Author)

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7. MARKET COVERAGE

We have taken approximate market coverage of AMUL beverages in Jamshedpur, Ranchi, and
Dhanbad. The details taken into consideration are given below:

Table 7.1 Market coverage (source: author)


Jamshedpur Dhanbad Ranchi

Area Zone Area Zone Area Zone

Sonari 12 Kusunda 8 Hatia 6

Kadma Nirsa Sitarandera

Harmau

Bistupur Katras Namkum

sakchi Bank More Booty More

Sitarandera Sindri Harmu

Golmuri Hirapur Main Road


Cable
burma mines

Baridih

birsanagar

TELCO

Adityapur

‘Amul’ milk comes to one specific area “Hirapur” of Dhanbad in unauthorized way from Asansol.
Consumers are charged rupee 1 to 1.5 per ltr more than MRP for Amul milk. There is only one
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distributor and Amul milk is confined to the nearby areas of Hirapur. Interestingly, even when
confined in one single area Amul has been able to achieve a larger consumer base than all other
players except Sudha. Most of the customer base has shifted from Sudha to Amul. In Dhanbad
the no of exclusive outlets is 40 and total retail outlets are 350.

In Jamshedpur no of distributors are 25, number of exclusive outlets are 50 and total number of
retail outlets are 460.

In Ranchi the number of distributors is 5, number of exclusive outlets are 40 and total no of retail
outlets are 470.

Exports

Figure: 7.1 Map of Amul Exports


(source:https://amul.com/m/exports)
Many of the AMUL beverages are now available in different countries here is the map for countries
where AMUL Products are exported.

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8. COMMISSION AND INCENTIVES
If we talk about Amul franchisee, anyone with small capital base and wanting to earn good can
take up the franchisee of Amul as it requires little investment and one can recover the invested
amount within a year. Also, the one taking up the franchisee does not have to pay any royalties or
profit sharing to the franchiser. Anyone can get the franchisee by spending a minimal amount of 2
lakhs to 6 lakhs and thereby making good profits out of it.

Amul's wholesale dealers will supply stocks at the shops and Amul parlours and the franchisee
will avail retail margin. Here, the retail margins will vary from product to product. Franchisee need
not pay any royalty or share any revenue with Amul.

According to Amul, one can make the revenue of around 5 lakhs to 10 lakhs per month with the
franchisee. However, it is strongly affected by the place of the franchisee, outlet. Talking about
commissions, the commission given on the marked price of Amul beverages. The commission
varies for distributors and retailers. For franchisee owners, the commissions for the products which
comes in the pouch and expires within 5 days is 2.5%. And the commission on the rest of the
beverages are 10%. For retailers, a profit of roughly 12Rs. To 15Rs. Per crate (12 litres) is given.
However, there can be variations with respect to location and sales volume.

8.1. Pricing

The pricing of Amul beverages depends on a lot of factors like cost of raw materials, cost of
labourers, profit margin of distributors, prices of competitors, various manufacturing and
administrative overheads, demand and supply position in the market, market demand, etc.
Amul beverages target middle- and upper-class customers and follow a low-cost pricing strategy
to cater to all sections of the society. The different types of beverages offered are available in can,
tetra packs, polypuses and glass bottles and the prices vary according to the packaging. It follows
low-cost high-quality strategy. The focus is more on increasing profits by increasing sales volume.

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9. CREDIT AVAILABILITY

The credit period is different for distributors, wholesalers and retailers. The distributors have an
area assigned to them which is done by the company itself and they use area mapping system
depending on the population and distance from the warehouse. The distributor not only sell to the
retailers but also sells to large mass merchandiser and other outlets who order in large quantities.
Distributor gets the material from Amul on a credit period of 15 days and he gives a credit period
of 10 days to the retailers.

Figure 9.1: Time period of payment for different channels

Here, we can figure out from the diagram about the time period of payment for different channel
members. The retailers get the payment for the product as soon as the customer buys the product.
The payment time can also change depending upon the location. However, this was a rough
estimate given by the company. The State Cooperative Milk Marketing Federation responsible for
18
Marketing and Distribution gives the payment to the District Cooperative Milk Producers’ Union
on a regular basis. The District Cooperative Milk Producers’ Union provides payment to the
Primary Milk Producers’ within 10 days. The payment to the actual milk producers’ who bring
milk to the factory is within 15 days. However, the time can differ a bit according to the location.

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10. ESTIMATION OF ROI OF CHANNEL MEMBER

ROI = Net Income/Investment

Net Income =Gross Income – Total Expenses

Consider a multi brand distributor who caters to products of Amul as well as other non-competing
products.

Net Income -

Assuming the monthly turnover of the distributor as ₹12,00,000 out of which ₹5,00,000 is from
Amul

The margin for Amul is taken as 10%

Thus, income from Amul will be 10% of the 5,00,000 which is ₹50,000

Therefore, Gross Income = ₹50,000 (monthly)

Expense –

Direct expense:

Salary of sales person for Amul = ₹10,000 (monthly)

Indirect expense:

Rent for godown = ₹5,000 (monthly)

Miscellaneous expense = ₹5,000 (monthly)

Total indirect expense = Rent for godown + Miscellaneous expense

Total indirect expense = ₹5,000 + ₹5,000

Total indirect expense = ₹10,000

Percentage of sales for the distributor from Amul = (₹5,00,000/₹12,00,000) * 100 = 41%

Thus, indirect expense for Amul will be 41% of ₹10,000 = ₹4,100

Thus, total expense = Direct expense + Indirect expense

Total expense = ₹10,000 + ₹4,100

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Total expense = ₹14,100

Net Income = Gross Income – Total expense

Net Income = ₹50,000 - ₹14,100

Net Income = ₹35,900

Investment

Investment = Market credit + Investment in stock

Investment = 10,000 + 10,00,000

Investment = ₹10,10,000

ROI

ROI = Net Income/Investment

ROI = (₹35,900/₹10,10,000) * 100

ROI = 3.55% (Monthly) or 42.6% (Annually)

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11. ANY SPECIAL MERCHANDISING REQUIREMENTS,
STORAGE REQUIREMENTS, VISUAL MERCHANDISING AT
POS

The leading brand AMUL, does not really spend much on advertisements, to be precise, it spends
only 1% of the total turnover of the company, Mr. Sodhi,Amul MD says that they have been
spending about 3-4% from this on Amul’s iconic butter girl figure, which has become now a
household name with its pun in the commentaries may it be on topical, political, trending issues.
Whereas other companies in the similar field spend easily about 8-15% on endorsements. But
Amul does not believe in spending more and building the trust about their brand.

The reason being Amul follows the principle of umbrella branding, and they sell everything under
Amul’s name which is one child theory. When it comes to creating brand campaigns, they stick to
its tied and tested catch phrases. They always demand their brand agencies to think lifelong while
creating their advertisements.

Also, one of the prime reasons for not spending much on promotions is that they do not want to
give away margins in advertising its products. Yet, the strong presence of the brand in the market
is due to the quality amalgamated with the affordable pricing that they are able to give to their
customers.

(Source: https://www.amul.com)

Having said this, now we would lie to throw light towards what are the merchandising
requirements, storage requirements, visual merchandising at POS followed by Amul.

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12. CHANNEL PROMOTIONS ATL AND BTL.

1. Amul came up with an innovative strategy of making all its products to have a primary
focus on, hence came up with the idea of Amul Preferred Outlets or popularly known as APO’s.

2. The benefit of setting up APO’s and showcasing their products in those exclusively not
only gives an extended shelf life period but also attracts the customers attention as a whole, where
the customer gets an awareness on the newly launched products as well.

3. It is seen that 42% of the APO’s show a change in the sales, due to the advertisements and
meanwhile 35% of them are affected in a positive way due to offers given to the customers.

(Source: Study conducted by researcher - google)

(48% Main Roads, 22% Others,17% Outskirts and 13% schools)

Figure 11.1 Area wise APO’s chart

4. Mostly ATL activities is what Amul does, like bill boards, hoarding, newspapers, daily
newspaper clipping. Less of BTL activities are followed by them, since amul already focusing on
value pricing or affordable pricing is not ready to lose on its margins still more. Hence sales
promotions are really not given to the customers for its products

5. During new launches, the first 25 gold customers in that retail outlet or APO are given
certain complimentary products to create the awareness.

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6. Last but not the least, since Amul already has a good brand image in the minds of the
people, they follow the umbrella branding policy and spend less on promotions, rather as
discussed, concentrate on setting up exclusive outlets, APO’s to build its brand and gain attention.
Focus is mostly on youngsters in the case of Amul Beverages. Yet the raw materials sources are
the same for all its products.

(Source: https://www.amul.com) (Source: https://www.amul.com)

7. Sponsorship is one of the ways Amul showcases its products especially in the premium
segment, in events like MasterChef India, ICC.

Hence to conclude, the promotional activities done by Amul are divided into ATL
90%(Approximately)and BTL about 10%. The visual merchandising in this industry is taken care
by the APO at different places as well as at other outlets. Customers identify Amul as the “Taste
of India “with the little naughty girl in polka dress since ages creating a top of mind awareness.

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13. EFFECTIVENESS OF CHANNEL MANAGEMENT OF
AMUL

The competitive advantage of Amul over others has been the project ability to constantly
implement best practices across all elements of the system: the federation, the unions, the village
societies and the supply channel.

a) Coordination

Given the large number of organisations and entities in the supply chain and decentralized
responsibility for various activities, effective coordination is important for efficiency and
cost control. GCMMF and the unions play a major role in this process and jointly achieve
the desired degree of control.

Buy-in from the unions is assured as the plans are approved by GCMMF's board. The board
is drawn from the heads of all the unions, and the boards of the unions comprise of farmers
elected through village societies, thereby creating a situation of interlocking control. The
federation handles the distribution of end products and coordination with retailers and the
dealers. The unions coordinate the supply side activities like monitoring milk collection
contractors, animal feed and supplied, educational activities etc.

b) Establishing best practices

Implementation of various TQM practices and strategies like quality circles, housekeeping,
kaizen and good accounting practices at the village society level contributed in success of
Amul. Major focus of TQM strategies has been on regular continuous improvement for
accomplishing long term targets rather than just achieving short term profits. This
improvement program across the Amul involved large number of members and employees
for the implementation of various strategies and this made success rate consistently high.
Benefits accomplished by implementing TQM strategies consist of reduction in
transportation time from the depots to the wholesale trader, improvement in ROI (rate on
investment) of wholesale dealers, achievement of Zero Stock Out through enhanced
accessibility of products at depots and also the implementation of JIT (Just-in-Time) in
finance to reduce the float.

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Kaizen (gradual improvement) at the unions have facilitated to improve the quality of milk
in terms of acidity and sour milk. (Kaizen is another TQM strategy to improve the quality;
this is extremely focused on projects to increase the quality)
c) Technology and e-initiatives

In the ever-changing globalized world modern technology and various e-initiatives taken
up by Amul also contributed in the success of the brand. GCMMF's technology strategy is
composed of four distinctive components i.e., new products, process technology, and
complementary assets to enhance production and e-commerce. Few dairies of the world
have the extensive assortment of foodstuffs as produced by the GCMMF network. Village
societies are expectant during subsidies to establish alarming units. Automation in
processing and packaging areas is regular, as is HACCP certification. GCMMF was among
one of the first FMCG (fast-moving consumer goods) firm in India to utilize Internet
expertise to execute B2C commerce. Today customers can select a diversity of products
through the Internet and be secure of timely delivery with cash on payment option.

Another e-initiative undertaken by the Amul is to provide farmers access to information


relating to markets, technology and best practices in the dairy industry during net enabled
kiosks in the villages. GCMMF has also implemented a Geographical Information System
(GIS) at both ends of the supply chain, i.e. milk gathering as well as the promotion process.
Farmers now have improved access to information on the output as well as sustained
services while providing a superior planning tool to marketing personnel.

d) Largest Cold Chain

AMUL has the largest cold chain network in India (i.e. 18000 refrigerators) as compared
to any other company. The chemical components of milk are water, SNF and solids. Milk
is very perishable product so it has to be consumed within 24 hours. In order to avoid
wastage MUL A converts the milk in to SNF and milk solids by evaporating the water,
which comprises up to 60- 70% of milk contents. This is possible only if the distribution
channel right from the producer to the consumer is well organized

The Amul goods distribution network is available through its network of more than 3,500 d
istributors in over 500,000 retail outlets across India. There are 47 dry and cold warehouses
depots available to buffer inventories of the entire product range. Because of the screening
method followed by other major FMCG firms, GCMMF transacts draft proposals from its
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wholesalers on an advance demand basis.
This strategy is consistent with the ideology of GCMMF to preserve cash transactions in th
e supply chain, and minimizes dumping as well. Wholesale dealers carry inventories that ar
e just sufficient to take care of the transit time from the branch warehouse to their premises
. This policy of just-in time inventory increases the return on investment (ROI) for dealers.
All GCMMF branches engage in route scheduling and have dedicated vehicle operations.

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CONCLUSION

Amul being the largest player of dairy products in India has a numerous competitive strength
from their distribution and supply chain. Their large number of dairy suppliers is one of the
main reasons for their large volume of production due to which they are able to keep their costs
low. Their method of sourcing gives them entire control on the cost of sourcing and production
and also ensure the right quality for their production. Just like every other FMCG company,
Amul concentrates on bulk sales volume to their C&F who in turn move the goods to
distributors. Besides this, Amul also have their own sales team who directly deal with modern
retailers. The recent initiatives by Amul to come up with Amul parlours are another main
reason to increase the sales points for Amul. Moreover, the exclusion of paying royalty fees
and sharing of profit makes it more desirable for franchisees to get into the business. The
affordable amount of investment and a good ROI makes it an eye-catching opportunity for
franchisees who are entering into the Amul franchise. Thus, Amul largely succeeds through its
distribution strategy in this manner making it the most sought out brand in the dairy industry
across India.

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REFERENCES

Website https://www.amul.com/index.php
Website https://brandequity.economictimes.indiatimes.com/news/business-of-brands/amul-
looks-to-expand-its-processing-capacity-and-distribution-reach/49976682

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