1.

INTRODUCTION

In India, dairying has taken off nicely after the white revolution. Semi-commercial dairying
started with the establishment of military dairy farms and co-operative milk unions throughout
the country towards the end of the nineteenth century and after that the journey went on to take
our country to first position in the world in milk production.

1.1 The Indian Market - A Pyramid

India's dairy market is multi-layered. It's shaped like a pyramid with the base made up of a vast
market for low-cost milk. The bulk of the demand for milk is among the poor in urban areas
whose individual requirement is small, maybe a glassful for use as whitener for their tea and
coffee. Nevertheless, it adds up to a sizable volume - millions of litres per day. In the major cities
lies an immense growth potential for the modern sector. Presently, its milk distribution network,
dispensing hygienically packed wholesome, quality pasteurized milk, serves barely 778 out of
3,700 cities and towns. According to one estimate, the packed milk segment would double in the
next five years, giving both strength and volume to the modern sector. The narrow tip at the top
is a small but affluent market for western type milk products.

1.2 Growing Volumes

The effective milk market is largely confined to urban areas, inhabited by over 25 per cent of the
country's population. An estimated 50 per cent of the total milk produced is consumed here. By
the end of the twentieth century, the urban population was expected to increase by more than 100
million to touch 364 million in 2000 a growth of about 40 per cent. The expected rise in urban
population would be a boon to Indian dairying. Presently, the organized sector (both cooperative
and private) and the traditional sector cater to this market.

1.3 Potential for further growth

Of the three A's of marketing - availability, acceptability and affordability, Indian dairying is
already endowed with the first two. People in India love to drink both fresh as well as processed
milk. Hence no efforts are needed to make it acceptable. Its availability is not a limitation either,
because of the ample scope for increasing milk production, given the prevailing low yields from
dairy cattle. Availability here refers to availability in market. It leaves the third vital marketing
factor affordability. How to make milk affordable for the large majority with limited purchasing
power? That is essence of the challenge. One practical way is to pack milk in small quantities of
200 ml or less in polythene sachets. Already, the glass bottle for retailing milk has given way to
single-use sachets, which are more economical. Another viable alternative is to sell small
quantities of milk powder in mini-sachets, adequate for two cups of tea or coffee.

2. THE ORGANISATION

The Greater Ganjam Gajapati co-operative milk producers union (GGGMU) Ltd. first started its
operation in 1976 to bring improvements in the socio-economic condition of the dairy farmers of
Ganjam and Gajapati district through co-operative milk societies. Since then it continues to
achieve its objective of making available of hygienic and good quality milk and milk products.
Now the union operates in hundreds of villages and towns catering to lakhs of milk consumers.

Table 1: Population distribution of Ganjam and Gajapati district.

District Rural Urban Total

Ganjam 2598746 538191 3136937
Gajapati 465675 52773 518448
Total 3064421 590964 3655385
Source: Census 2001

Before 1991, the union was collecting raw milk from the dairy co-operative societies and then
used to send the chilled milk to OMFED for processing. OMFED used to process and market the
milk till that date. But later it was found uneconomical which forced the union to think about
processing of milk to get better margin. Hence after 1991, with the technical and organizational
assistance from OMFED and financial support from ISPO, the union started processing of milk
and manufacturing of milk products. Again after 1996, the union started marketing the milk in
the brand name of “Doodh” and now its sales the milk in the brand name of OMFED.

At present, the union has three chilling plants and one mini-dairy at different places.

Table 2: Chilling and processing units and their location with capacity.

2
Place Activities Capacity (LPD)
Aska Chilling 2,000
Berhampur Chilling,Processing,Manufacturin 8,000
g
Paralakhemundi Chilling 10,000

But with the increase in procurement, the plant suffered in the capacity utilization due to limited
processing capacity. This resulted into further expansion of the chilling capacity of the
Berhampur mini-dairy. Again to keep pace with the growing milk market, the union planned to
set up a new plant of 20000 to 30000 LPD capacities at Ankuspur, which is just 10 kilometer
away from Berhampur. As the present capacity is inadequate to process the procured milk, hence
to maintain a balance between the marketing and procurement, the union reduced the
procurement level in the recent years as a part of its marketing strategy.

Graph1: Daily Average Milk procurement of the union for the last 5 years.

Milk procurement per day(litre)

8000

6000
Litre

4000

2000

0
1999-00 2000-01 2001-02 2002-03 2003-04

Milk procurement per day(litre) Year

However the milk union was not facing any problem in disposing the surplus milk. Because till
2001-02 OMFED used to take the surplus milk from various milk unions of the state. But with
the remarkable increase in the volume of the milk, OMFED put a ceiling up to which, it would
accept milk from different union. This again put the union in trouble. Then the union entered into
an agreement with OMFED, that it would market its milk in the brand name of OMFED instead
of the current brand “dhoodh” under which the union used to sale its milk. As OMFED directed

3
all the union to market milk in a common brand through out the Orissa, so the union leveraged
the brand of OMFED.

Graph 2: Daily Average sales of milk (lt) for the last five years.

Daily milk sale

10000
8000
6000
litre

4000
2000
0
1999-00 2000-01 2001-02 2002-03 2003-04
Daily milk sale Year

The union used to face marketing problem time to time because of over burden activities of
procurement, processing and marketing of different products. To overcome this problem, the
union reduced its procurement of milk from the societies and had to give many milk holidays. At
the same time in 2001-02 the retailers strike further added to this problem. Their demands were,
to increase their commission, to take their consent while appointing a new retailer, to open a
union office in the premises of the chilling plant etc, which were later rejected by the milk union
stating unethical and baseless. This triggered the entry of new player. The angry retailers stopped
selling the OMFED milk and started selling the milk of the other dairies. This led to the entry of
Prithiviraj dairy in 2001-02, Vijaya dairy in 2002-03, and Vishakha in 2003.

So, with the entry of the other players, made the milk market more competitive. The GGGMU
now started intensifying its marketing orientation and adopted various strategies to capture the
milk market. Also planned to enter into new rural market in its market expansion plan and
putting more effort to enhance its brand image through various consumer awareness campaigns.

3. THE GGGMUL’S MARKET

The GGGMU’s market is concentrated in two districts of Orissa, namely Ganjam and Gajapati.
But of late it entered into the Srikakulum district of Andhra Pradesh .In initial years it has

4
targeted only to Notified area councils (NAC’S) and to some bigger towns like Berhempur,
Chhatrapur, Bhanjanagar, Paralakhemundi, Aska etc. But over the year it started selling milk to
almost all towns of the Ganjam district. Now the union planned to expand its marketing activity
to more than about 200 villages, whose population is above 2500 as per the Census
2001.According to a study done by ISNRMPO for integrated Dairy Development Project [IDDP]
for GGGMU, the projected market demand for milk stands around 78000 litres per day.

Table 3: Showing the market demand projection.

Market Demand Projections

Year Milk Demand (in litres per day)
1999-2000 66,867
2000-01 68,968
2001-02 71069
2002-03 73,237
2003-04 75,475
Source: Study done for IDDP for GGGMU by the Dept of Business Administration, Berhampur
University along with OMFED, 1999, Table 2.4, Page-10

The GGGMUL sales maximum amount of its milk in Berhampur town itself. The estimated milk
market of Berhampur town is around 50,000 litres per day which accounts 68.5% of the total
market demand of the Ganjam district. And out of 50,000 litre only 15000 liter is the packed
milk, where the share of the GGGMU, Vijaya and Vishakha is 63%, 21%, and 10.5%
respectively. The local milk vendors are supplying the rest amount i.e. around 35000 litre per
day. The existence of such a huge market in the Berhampur town attracted all the players as it
provides a great opportunity to capture the market. Hence different players including GGGMU
always come out with different strategies to become the market leader. But before the entry of
the other players GGGMUL was the market leader and was enjoying the monopoly.

Vijaya and Vishakha who get their milk from Andhra Pradesh only concentrate in Berhampur
town because, for them it would not be cost effective to enter into other towns. Whereas
GGGMU as located in the Berhampur can easily penetrate into distant rural and urban market of

5
the district and also can easily market in the Srikakulum and Vijayawada area of Andhra Pradesh
because of its location.

4. ACTIVITIES AND PRODUCTS OFFERED BY THE MILK UNION

The main activities are

• Procurement
• Processing/Manufacturing
• Marketing
4.1 Procurement
It procures milk from around 83 primary dairy co-operative societies. The daily procurement is
of 6000 litres and offers price on the basis of fat and SNF content.

4.2 Processing
The mini-dairy at Berhampur produces two kinds of milk as specified by the state milk
federation (OMFED) i.e.
• Toned milk (Fat: 3%, SNF: 8.5%)
• Whole cow milk (Fat: 4%, SNF: 8.5%)
The other products, which are manufactured, are paneer, buttermilk, plain curd, and sweet curd.
But due to technical, infrastructural and manpower constraint the union concentrates more on
milk and buttermilk.

4.3 Marketing
At present the union also undertakes the marketing function because of its autonomy. It sells its
own product as well as the products of the state milk federation under the brand name of
OMFED. Milk and agro-products of the OMFED which the union currently selling is sweet curd,
chenopods, fruit juices, turmeric and horticultural products- Jam, squash, pickles, sauces etc.
Because of the brand leverage the union also supposed to pay 5 paisa per sold packet of the
liquid milk to the OMFED for using the brand name.
Now the presence of other players in the liquid milk has reduced the monopoly of GGGMUL
and forced the union to give more attention to marketing in terms of planning resources, time and

6
manpower. A sales and marketing department has been created which was headed by the
assistant manager (P&I), now handed over to the Assistant manager of plant, who is looking after
the additional charge of marketing department. Again a market development committee is
formed which comprises personnel from various departments to plan, implement, monitor and
review the marketing activities/performance in every month.

4.3.1 Organizational structure of the marketing department

Figure 1: Reporting structure of marketing department

Asst. Manager

Marketing Superintendent

Junior Marketing Officer

Marketing Asst.

At present there is no marketing superintendent in the department.

Figure 2: Existing Physical distribution of milk.

DAIRY
GGGMUL

Sales office/cold storage

7
 Retailer

Consumer

5. THE PROJECT

5.1 Problem definition:

After discussing in detail with the Assistant marketing manager and with other staffs of the
marketing department, the problem definition has been fixed. Apart from this a systematic
scanning of the milk market in and around the Berhampur town was made before setting the
problem definition. Hence the problem of this project is “Study on marketing packed milk in 200
ml pouch.”

5.2 Research problem

To determine consumer preferences and purchase intentions for the proposed launch of the new
pack size of 200 ml.

5.3 Research objectives

1) To determine the demand for 200 ml pouch in the existing market of the union.
2) To identify the potential segments for marketing milk in 200 ml pouch.
3) To examine any likely impacts of 200 ml pouch on the sales of 500 ml pouch.
5.4 Scope of the study
Product: Packed liquid Milk with special reference to 200 ml pack.
Area: Ganjam District.

5.5 Working Definitions

8
 • Consumer: The end user of milk is considered as consumer. Use of milk can be of
different purposes.
• Institutional consumers: Institutional consumers are those who purchase milk in bulk for
different purposes other than their own domestic consumption like tea, coffee, curd,
paneer, sweets etc. Institutional consumers in the study include teashops,sweet shops,
hostels, hospitals etc.
• Retailers: Retailers are the intermediaries who link the consumer with the union. They
procure milk directly from the union by giving indents to the union and sale the milk to
the consumers after retaining a little margin.
• Packed milk: It includes only the liquid milk without any change in its flavour. It includes
only the liquid milk marketed in polypacks.
• Consumer preferences: Consumer preferences would encompass the choice of brand,
product attributes they look for in liquid milk, preferences in packing, pack size,
consumption pattern, price sensitivity, preferred purchase points, perception about
various brands in the market etc.
• Demand: It is the ability and the willingness of the consumers to purchase certain
quantity of a product at a particular price.
• Segment: It is a group of consumers in a particular product market who require separate
product. A particular product market can be divided into different segments which are the
mutually exclusive groups based on the criterion of their need.

5.6 Data Sources

5.6.1 Primary Sources:
a) Consumers of milk (both users and non-users of OMFED milk)
b) Retailers of GGGMU.
c) Retailers of other brands.
d) Distributors of Vijaya and Vishakha.
e) Private milk vendors (Doodhiya)
f) Sweetshops and tea stalls.
g) Hospital and hostels.
h) Sales department staff.

9
 5.6.2 Secondary Sources:
i) Sales record of GGGMU.
j) Sales records of retailers and distributors.
k) Reports of different studies undertaken by ISPO/GGGMU/ISNRMPO for the
organization at different parts of the time.
l) Internet.

5.7 Data Requirements

In order to meet the different objectives of the present study, a variety of data has been
collected from various sources. Consumer surveys, retailer survey and institutional
consumers’ survey and interviews with the sales staff fulfilled the data requirements.

5.7.1 Consumer survey

a) Family detail (Income, No.of family members, Daily requirements)
b) Milk consumption pattern, type of milk, frequency and quantity of purchase, uses.
c) Sources of purchase.
d) Timing of purchase.
e) Attributes looked in the milk purchased.
f) Pack size preferred.
g) Price sensitivity.
h) Quality perception.
i) Awareness about the importance of milk.
5.7.2 Institutional consumers survey.
a) Brands of milk preferred.
b) Purchase procedure.
c) Frequency of purchase.
d) Pack size preferred.
e) Replacement.
f) Delivery.
g) Influence of price, promotion, on purchase decision.
h) Criteria for purchase.
i) Sources of information about packed milk.

10
 j) Terms of purchase.
k) Credit period.
l) Price sensitivity.
m) Consumption pattern of milk, Type of milk, amount of milk.
n) Other information (Miscellaneous)
5.7.3 Retailer Survey
a) Channel structure
b) Brands stocked
c) Criteria for becoming a channel member
d) Sales timing
e) Average daily/weekly/monthly sales.
f) Order giving procedure.
g) Payment system, credit policy.
h) Commission structure.
i) Frequency of stock out.
j) Door delivery.
k) Replacement policy.
l) Feedback from consumer
m) Reason for stocking more than one brand of milk.
n) Provision of deep freezers.
o) Sales /promotion schemes/POP.
p) Scheme for retailer.
q) Market coverage.
r) Complain redressal
s) Pack size preferred by various segments.
5.8 Methodology
5.8.1 Consumer Survey

The respondents were members of the household who made purchase decision for milk. It
included either the housewives or the heads of the household. The questionnaire was prepared
after exploratory research for pre-testing. The respondents again divided into OMFED users and
non-ONFED users. After a little training, the union sales staff was helped in collecting the

11
samples. The ratio of OMFED users versus non-OMFED users was taken at 1:4 .So in total 60
OMFED users and 240 non-OMFED users were sampled which sum up to 300.It was conducted
only in the Ganjam district as per the interest of the milk union.

5.8.2 Institutional consumer survey

The institutional consumers were studied in and around Berhampur. It included teashops,
hospitals and hostels. These institutions were selected based on their likely potential demand for
200 ml pouch. An in-depth interview was conducted in each case through a checklist.

5.8.3 Retailer survey: Around 30 retailers were interviewed with the help of a checklist. The
retailers included OMFED retailers and also those who simultaneously sold OMFED milk as
well as Vijaya and Vishakha milk. This was undertaken to know their grievances, the market
structure, their commission, why they are in business and why they sale 3-4 brands
simultaneously and at the same time to know their views about the proposed launch of the 200ml
pouch of liquid milk. The interview was formal and open-ended questions were asked to get the
detail picture of the retailing.

5.8.4 Marketing and sales department study

In-depth interviews and informal discussions were carried out to know the existing marketing
strategies, market potential and market dynamics of the milk market and their view regarding the
launch of 200 ml pouch.

5.9 Sampling Plan

The survey was conducted in the district of Ganjam, where the union sells its liquid milk. The
milk union has selected ten places, out of which one is a municipality and four are NACs and the
rest five are small towns (semi-urban). The places have been identified and selected by the union
itself was judgmental. After the preliminary survey both the OMFED users and Non-OMFED
users were selected for the sample. The non-OMFED users include those using loose milk and
other packed milk like Vijaya, Vishakha and Navjeevan. To have a better representation of both
OMFED users as well as non-OMFED users, the sample size was decided as 300.As per the
preliminary survey the ratio of OMFED users to non-OMFED users was taken in the ratio of 1:4,
which means for every one sample of OMFED user, there would be 4 samples of non-OMFED

12
users. The number of sample for each place has been taken on the basis of the potential demand
of milk. Samples are taken randomly, however the ratio of OMFED users versus non-OMFED
users was maintained 1:4.So in total the sample constitutes 60 OMFED users and 240 non-
OMFED users, which sum up to a sample size of 300.

Table 4: Sampling plan.

Place OMFED users Non-OMFED users Total

Berhampur 16 64 80
Bhanjanagar 6 24 30
Aska 6 24 30
Hinjillicut 6 24 30
Kabisuryanagar 6 24 30
Pattapur 4 16 20
Patrapur 4 16 20
Bhismagiri 4 16 20
Bhatakumarada 4 16 20
Gudiali 4 16 20
Total 60 240 300

5.10 Limitation of the Study:

• The study was conducted in ten places of Ganjam district only, where as the market of
GGGMU spreads to the other districts like Gajapati district.
• Paucity of time: As ten places had to be studied which, were scattered geographically
took more time. Again heavy rain at the time of interview also added to this problem.
• Non-response errors due to lack of interest: This type of errors occur if some members of
a sample were not contacted and hence their responses were not included in the study; or
if some of the members contacted provide an incomplete or no responses to the survey
instrument. The primary reasons for this error occurring include the unwillingness of
respondents to participate in the study and the inability of the interviewer to contact the
respondents. This can also happen due to the conservative nature of the women members
and lack of time due to busy in their work.

13
 • Inaccuracy in response: This is because of tendency to give responses taking into
consideration of social acceptability.
• Possibility of interviewer’s error: This error occurs while interfering with or fail to follow
the exact procedure while collecting data. Also error arises from improper recording the
respondent’s answers.

6. FINDINGS OF THE PRESENT STUDY

6.1 Market size

The market size of the liquid milk for the Ganjam district has been estimated jointly by the
department of business administration of the Berhampur University and OMFED, which is
presented in following table.

Table 5: Demand of the Ganjam district

Year Milk Demand (in litres per day)

2000-01 68,968
2001-02 71069
2002-03 73,237
2003-04 75,475
2004-05 77786
Source: Study done for IDDP for GGGMU by Dept of Business Administration, Berhampur
University, 1999, Table 2.4, Page-10

14
6.2 Players in the market
There are three other players in the liquid packed milk market namely, Vijaya,Vishaka and
Prithivraj dairy. The above players entered into the market after 2001.But before that OMFED
was the sole organized player in the market. Over the year the players started increasing their
share gradually by adopting various strategies and promotional activities. In spite of the
competition the union remains the market leader in the packed milk segment. But loose milk still
constitutes a major share in liquid milk market.

6.3 Market share

The share of the union can be viewed in two different aspects i.e. the share of the union in the
total liquid market and the share in the packed milk market. The share is presented in the table-6
for the last 4 years and a comparison of the share of the union is made with other players to
understand the market dynamics. Over the years the market share of all the players has almost
increased except Vijaya and Navjeevan, where as the union’s share has doubled. Thus the union
still plays the dominant role. The increase of the packed milk has led the share of the loose milk
to decrease. This may be due to the increase of the living standard of the people and more
awareness of the people towards the packed milk.

Table 6: Different players of the liquid milk market in the Ganjam district and their market
share.

Year Market Market sales in litres per day Market share in (%)
demand
(LDP)
Loose Milk

Loose Milk
OMFED

OMFED
Navjeevan

Navjeevan
Vishaka

Vishaka
Vijaya

Total

Vijaya

2001- 71069 4821 800 45 300 64698 71069 6.7 1.2 0.7 0.5 90.9
02 0

15
2002- 73,237 4855 1200 75 560 65872 73,237 6.6 1.6 1.0 0.8 90
03 0
2003- 75,475 8457 1800 10 700 63428 75,475 11 2.4 1.3 0.9 84.4
04 00
2004- 77786 9674 1500 12 500 64912 77786 13 1.9 1.5 0.6 83
05 00
Source: Sales record of the distributors of the other dairies and discussing with the distributors.

6.4 Major market of the union

The union is selling its milk in almost all the towns and NAC’s of the district. Apart from this the
union also started selling its milk in big villages. But most of the milk is sold in the major towns
like Berhampur, Chattrapur, Aska, Bhanjanagar, Hijillicut, Gopalpur, and Digapahandi etc. Out
of which Berhampur town provides a huge market for the union, which is revealed from the sales
data of the union

Graph 3: Average daily milk sale of the union in its major markets.

Average daily sales

4500
4000
3500
3000
2500
2000
1500
1000
500
0
di
ab m
n

t
lag a

a
a

rla jilicu
Ch ar
pu

om rpu

w
k

un
dh
th

ja
ag
As

To

an
m
un

em
an
a

Hn
jan
rh

at

Average
y

kh
m
Be

an
Be

ol
Bh

daily sales
Pa
D

16
6.5 Consumer Survey

6.5.1 Kind of milk purchased:

From the consumer survey it is evident that 62% of the consumers use unpacked milk which they
either purchase from the local milk vendors or from their owned cow. The share of the packed
milk and the milk powder is found to be 28 percent and 10 percent respectively. This gives a
clear idea about the dominance of the loose milk in the market.

Graph 4: Percentage of respondents consuming different kind of milk.

Percentage of respondents consuming different kind

of milk

10%
28%

62%

Packed milk Unpacked milk Milk powder

This might be due to the cheap and easy availability of the loose milk in the market. Where as
the milk powder is consumed by those who occasionally use milk either for tea or for emergency
.So milk powder users are not regular consumer of milk hence it may be difficult to capture this
segment unless some cheapest form or other alternative made available to them.

6.5.2 Choice of source

When asked about the reasons for buying milk from a particular source there were a variety of
reasons why the people preferred purchasing from a place. The relative importance of these
source characteristics can serve as a platform for the dairy to offer additional services to the
consumers. These can become the competitive advantages for the dairy in the long run. From the
survey it has been seen that most of the milk is bought from the doodhiyas and it is also obvious
because of the dominance of loose milk in the market. But those who purchase packed milk i.e.

17
OMFED they prefer or usually buy from the retail shop as compared to milk booth. This may be
due to the number of retail shops dealing with milk and of course because of their higher
visibility.
Graph 5: Percentage of respondents purchasing milk from different sources

Percentage of respondents purchasing m ilk from

different sources

13% 5%
22%

60%

Milk booth Retail shop Doodhiya Own source

6.5.3 Usage of milk

Consumers use milk for different purposes like tea, drinking, curd, paneer and for making sweets
etc. But among the various usage, tea making and drinking are the two major uses for which milk
is generally purchased.

A comparison has been made between OMFED milk as well as loose milk to know which milk is
used most for a particular purpose. About 74 % of OMFED users and 62 % of loose milk users
use milk for tea and loose milk is used more for drinking as compared to OMFED milk. Again
only 35 % of the loose milk users are using milk for curd, which is 26% for OMFED users. So
from the graph-6 it is understood that for tea OMFED milk is preferred over loose milk and for
drinking loose milk is most preferred. Also it is seen that the use of milk for other purposes is not
so significant. Again because of the suitability of the OMFED milk for tea making, number of tea
stalls is being run in almost all the towns of the Ganjam district in the name of OMFED milk.

Graph 6: Percentage of respondents use milk for different purposes.

18
 Percentage of respondents use m ilk for different
purposes

80
70
60
50
40
30
20
10
0
Tea only Drinking Curd sw eets Paneer
only

OMFED Loose

6.5.4 Time of purchase

Majority of the customers get milk in the morning (77%), where as only 15% of the consumers
get their milk in the evening. The reason of high purchase of milk in the morning may be due to
the morning tea and being a part of the Tiffin carried by the school going children’s and for
office goers. There are also some segments that need milk during the daytime, which constitute
the population who can’t refrigerate the milk and depend on the nearness of source for purchase
when need arises. Hence from the study it is realized that the union should be very much careful
for timely delivery of milk particularly in the morning and should also target this segments if
wants to increase its market share.

Graph 7: Percentage of the respondents purchasing milk at different time.

Time of Purchase

5%
15%
3%

77%

Morning Afternoon Evening When need arise

19
6.5.5 Price paid per litre by loose milk users
From the consumer survey it has been found that around 57% of the loose milk users are paying
Rs 10 per litre of loose milk they purchase. And only 14% are paying 12 rupees per litre. This
indicates their responsiveness towards price.

Graph 8: Percentage of loose milk users paying different

Percentage of loose milk users paying

different prices per litre of the milk

14% 7%
22%

<Rs 8
Rs 8
Rs10
57%
Rs 12

6.5.6 Frequency of purchase

As evident from the graph-9 almost 87% of OMFED users purchase milk only once a day with
very few of the respondents claiming to be regular buyer of milk for more than 2 times a day.
Similarly those who purchase loose milk generally get it once and they purchase twice if need
arises. This clearly shows that as most of the consumers purchase milk once in a day so milk
should be supplied timely and regularly at the time of their purchase.

Graph 9: Frequency of purchase.

20
 Frequency of purchase

100

80

60

40

20

0
OMFED Non-OMFED

Once Twice

6.5.7 Amount of milk consumed

From the consumer survey it is revealed that around 45% of the respondents consume 0.5 litre
per day, where as 22% consume 1 litre per day. But only 17 % and 9% of the respondents
consume milk less than 0.5 litre and between 0.5 to 1 litre milk per day respectively.

Graph 10: Percentage of respondents consuming different amount of milk (in lt)

Percentage of respondents consum ing different am ount

of m ilk(Lt)

9% 2%

17%
45%

5%

22%

0.5 1 2 Less than 0.5 0.5-1.0 More than 2.0

Only a small percentage of the respondents consume milk above 2 liter per day. Hence the
potential buyer of the proposed launch of the 200 ml pouch may be to those who consume milk
less than 0.5 ml per day and those whose requirement exceeds above 500ml but less than 1 litre,
for which there is no proper pack size is available in the market. It can also be inferred from the
graph-10 that around 97% of the milk users consume milk 1 liter or less than 1 liter.

21
6.5.8 Willingness to purchase packed milk
As from the graph-4, it is evident that around 62% of the milk consumed is unpacked, so we
asked the respondents that whether they will purchase packed milk if the milk consumed by them
is found inferior or sub-standard after the lactometer test? Then the following responses were
obtained which was presented in the graph-11. Around 86% of the respondents showed their
willingness to purchase packed milk if made available at affordable rate at their convenient
place, where as 14% denied purchasing, as they are satisfied with the present
source/form.(Owned cow, milk powder, or cheap loose milk from the milk man) .

Graph 11: Percentage of the Non-OMFED users willing to purchase milk after the lactometer
Test.

Willingness to purchase m ilk after

lactom eter test

14%

86%

Yes No

6.5.9 Preferred pack size

Out of the 86% of the loose milk users who showed their willing ness to purchase packed milk
and their preferred pack sizes are either 500 ml or 200 ml. Again 56% of those 86% of the loose
milk users preferred the pack size of 500 ml where as only 44% of that 86% were interested for
200 ml pack. So on a whole, around 26% of the loose milk users are the potential buyers of the
200 ml pack. This preferred pack sizes were presented in the pie chart.

22
 Graph 12: Preference of pack sizes by those loose milk users who are willing to purchase
packed milk after lactometer test.

Willingness to purchase different pack

size

44%

56%

500 ml 200 ml

Apart from this around 13.34 percent of the OMFED buyers are interested to purchase this 200
ml pack.

6.5.10 Preferred shape of the pack and type of the milk for 200 ml pouch
The people of Ganajm district are very much habituated in drinking packed water while they are
out of their home. After observing the water pouches of 250 ml which are available in the market
in different shapes, I tried to find out whether there is any specific inclination of the buyers
towards a particular pouch shape. And the result is very much remarkable which shows, around
67% of the respondents, who are willing to purchase the 200 ml, preferred the rectangular shape
and 24% preferred square shape, where as 9% were indifferent to the shape of the pouch. They
preferred rectangular shape as it is easy to hold and does not contain any air bubble.

The type of milk preferred for the 200 ml is cow milk. Because 77% of the respondents who are
willing to purchase this 200 ml are interested for cow milk and the rest preferred toned milk.
This may be due to low consumer awareness about the toned milk.

6.5.11 Purchase responses of 200 ml pouch at Rs 3.50

It has been seen that around 13% of the OMFED users and 44% of the loose milk buyers (who
showed their intention to purchase packed milk after lactometer test) have prefer to 200 ml pack.
But when the price of the 200 ml pack introduced at Rs 3.50 they showed a varied response. And
these responses have been presented in the graph-13, below

23
 Graph 13: Responses to buy 200 ml at Rs 3.50.

Percentage of respondents show ing various

respose to buy 200 m l pouch at Rs 3.50

15%
26%

32%
21%
6%

Definitely Buy Probably Buy Can't Say

Probably Not Buy Definitely Not buy

If we consider the conservative estimate, then only those willing to buy definitely at Rs 3.50 can
be finally considered as the potential buyer.

But at the same time the respondents have also expressed their willingness/purchase intentions at
different price levels. Each respondent has mentioned a price at which he is willing to buy
definitely.About 26% is willing to buy at Rs 3.50 where as 32% are ready to buy at Rs 3 etc,
which has been presented in the graph 14.

Graph 14: Purchase intentions at different price level.

Purchase intentions at different price Level

11%
26%
21%

6%
36%

Rs 3.50 Rs 3 Rs 3-2.50 Rs 2.50 Rs 2

Again the cumulative percentage of respondents who are ready to purchase 200 ml at a particular
price level is presented in the graph-15 to understand what percentage of the total respondents

24
will buy the product at a particular price. So from the graph-15, it is clear that about 62% will
buy if the price be fixed at Rs 3.Simmilarly 89% will buy at Rs 2.50.

Graph 15: Cummulative response of consumers to price variation.

Response of consumers to price variation

Percentage of respondents

120% 100%
100% 89%
willing to buy

80% 62% 68%

60%
40% 26%
20%
0%
Rs 3.50 Rs 3 Rs 3- Rs 2.50 Rs 2
2.50
Price level of 200 ml pack Series1

Hence the union has to fix a price at which it will accrue some profit as well as should reach at
maximum percentage of the loose milk users.

6.5.12 Demand of 200 ml pouch at Rs 3.50

Among the sampled respondents, 60 were OMFED users and 40 have own cows. So the rest 200
are consuming loose milk and powder. But 30 are consuming milk powder, whose demand is
very negligible so they can not be considered as a potential user for 200 ml pouch as they are not
likely to purchase milk in the near future. Hence the potential buyer of loose milk is only the
remaining 170 out of the sample.

Again out of 170, only 82 respondent’s requirement is only 500 ml milk and showed their
interest to purchase 500 ml if the quality of the milk now they purchase found inferior after the
lactometer test. So they are also not the buyer of 200 ml pouch, but they may purchase the 500
ml pack, which is out of this study. But out of the remaining 88 respondents, 24 have denied to
purchase packed milk because of their faith and closeness with the current vendors and other

25
socio-economic conditions. Hence the rest 64 out of 240 respondents showed their interest to
purchase the 200 ml pack.

Again the daily milk requirement of 20 out of the 60 OMFED users is less than 500 ml per
respondent. But because of the non-availability of the proper pack size in the market they are
forced to purchase the 500 ml pack. Hence in total 84 (64+20) respondents are the potential
buyers of the 200 ml pouch.

But when the price of the 200 ml pack was introduced and asked whether they are willing to
purchase at Rs 3.50, only 22 of them said that they would definitely buy. 14 out of these 22 are
loose milk users and 8 are OMFED users. Hence in a whole 14 are from 240(loose milk users)
and 8 are from 60 OMFED users showed their interest to purchase the 200 ml pouch.

Again from the consumer survey it has been estimated that the 240 loose milk users consume
176 litre and the 60 OMFED users consume 37 litre of milk.

From the secondary data it is found that loose milk users consume about 63000 liter and OMFED
users consume 9000 litre. From these two figures it can be calculated that around 1003 litres will
be the demand for 200 ml pack out of loose milk users and 400 litres will come from the
OMFED users. Hence in total 1400(1000+400) litre will be the demand for 200 ml pack which
comes around 7000 packs of 200 ml pouch.

Again because of the launch of 200 ml pouch, 400 litre of OMFED milk, which is currently
consumed by purchasing 500 ml pack, will be diverted for the 200 ml pouch. So the net increase
in demand would be around 1000 litre(1400-400).Hence there would be a fall of 800 packs of
500 ml pack due to the cannibalism effect of 200 ml pouch.

6.6 Cost of Producing One Litre of Packed Milk

The costs that are incurred by the union for producing a litre of packed milk, which also includes
the procurement price is presented below

The union sales the cow milk at the rate of Rs 14.50 per litre and the toned milk at the rate of Rs
13.50 per litre. So on an average it sales Rs 14 per litre of the packed milk. The average
procurement price estimated for this study as Rs 9 though there is no such flat rate exists. Hence
the profit the union gets is around Rs 2 per litre of packed milk sold.

26
 Table 7: Cost of producing one litre of packed milk.

Sr.No Particulars Cost(Rs.)

1 Procurement price 9.0
2 Procurement cost(Transportation cost) 0.9
3 Distribution cost 0.5
4 Chilling cost 0.25
5 Processing cost 0.70
6 Administrative and overhead cost 0.80
Total 12.15
Source: GGGMUL’s record.

Hence the cost is around Rs 12 where as the selling price is 14, so the profit comes Rs 2 per litre
of the packed milk.

6.7 Financial Benefit of the Union from the 200 ml Pack

The amount of financial benefit in term of net profit that the organization will get after the launch
of the 200 ml has been presented in the table-8.

The total demand for the 200 ml would be 1400 litre out of which 400 litre comes from its own
500 ml pack due to cannibalism effect of 200 ml. Hence the net revenue that the union will get is
Rs 17150 per day. The price of 500 ml is averaged to Rs 14(13.5+14.5). The cost to the union per
litre of packed milk is Rs 12.So had there not been any 200 ml pack in the market; the profit of
the union would have been only Rs 800/day. But with the launch of 200 ml pouch it sacrifices Rs
800/day. However the union gets profit of Rs 5750 per day due to this 200 ml pack. Hence the
net profit is Rs 4950 per day, which comes to be around Rs 148500 per month.

Table 8: Benefit of the union due to the proposed launch of the 200 ml.

Sl.No Parameters 500 ml 200 ml Net effect

27
 1 Price/pack (Rs) 7 3.25
2 Price/litre (Rs) 14 16.25 +2.25
3 Sales (litre) -400 1400 1000
4 Revenue (Rs) -5600 22750 +17150
5 Cost to the union (Rs) 4800 16800 +14000
6 Profit /day (Rs) -800 5750 4950
7 Profit /month (Rs) 24000 172500 148500
Source: GGGMUL’s sales record

6.8 Benefit to the retailer

The retailer gets Rs 0.50 paisa per litre of the present packed milk, where as now in case of the
200 ml, it will get Rs 1.25 per litre. Even if he manages to sale two packs, he will get Rs 0.50
paise .Hence it is a kind of incentive for the retailer to sale the new 200 ml pack with out any
hesitation.

6.9 Consumer preferences:

Consumer preference is one of the vital aspects, which one must know before formulating any
strategy. Hence to understand the consumer preference the indexing method has been adopted.
Different consumer attaches different degree of importance to different attributes that constitute
good quality of milk. Based upon the importance that a consumer attaches to a particular
attribute and the degree to which he finds in a particular brand / type / source of milk, drives his
willingness to purchase that particular brand / type of milk or from that particular source.
Responses of consumers were taken on different parameters for both OMFED users as well as
for loose milk users on a 5 point Likerts scale of least importance to most importance. Among
the various attributes, only quality, fat, price, purity, cleanliness, freshness, fit for tea and door
delivery are being given more importance by both the OMFED and loose milk users. The rest
attributes are not given much importance by both the kind of users. But OMFED users give more
importance to quality (93.33%), cleanliness (65.33%), purity (76.6%), thickness (84.66%) and fit
for tea (74.56%) than loose milk users.

Graph 16: Consumer preferences for different attributes.

28
 100
90
80
70
60
Indices 50
40
30
20
10
0
Fat/cream
Price

Shelf life
Odour

purity
Pack size
Quality

Packaging

Fitness curd
Thickness

Rapport w ith
Available at all
Fitness for tea
Cleanliness

Freshness

Promotions
credit facility
Door delivery
Non-OMFED OMFED Milk attributes

But the loose milk users give more importance to price (66.67%), fat (72.86%), freshness
(64.38%) and door delivery (61.62%) credit facility (60%).

Apart from this the loose milk users also give some importance to rapport with the vendor, door
delivery, credit facility, shelf life etc. Loose milk users also give more importance to pack size
than that of OMFED users.

Thus on a whole, OMFED users give more importance to quality, fitness for tea, thickness,
cleanliness and purity in terms of mixing of water. But loose milk users give more importance to
price, door delivery, credit facility, shelf life, fat/cream and freshness.

6.10 Problems faced by the OMFED users

When asked to the OMFED users about the kind of problems they face while obtaining the
present milk, around 85% of them said charging of higher price than the marked price, 66% said
non-availability at times and other major problems include no door delivery (51.7%) and location
(no near by shop).Also 33% of OMFED users said non-availability of proper pack size.

Table 9: Percentage of the OMFED users facing different problems.

S.no Problems % of respondents

1 Non availability at times 66.7
2 Leakage in milk packets 21.7
3 No door delivery 51.7

29
 4 Lack of credit facility 21.2
5 Behavior of the retailer/shopkeeper/milkman 16.7
6 Location (no nearby shop) 51.7
7 Non availability of proper pack size 33.3
8 Charging higher price than marked price 85
9 Lacking freshness 25
10 Lacking quality 38.3

Hence while launching the 200 ml pouch; the union should take care of these problems to
succeed in its plan.

6.11 Source of awareness

Table 10: Showing the source of awareness for the respondents

Source of awareness % of the respondents(loose milk users)

News paper/TV advertisements 9
Word of mouth 12
Pamphlets 5
Point of purchase 57
Painting on wall 17
The consumer survey shows that most of the consumers get aware about the OMFED and the
packed milk from the point of purchase. Again the other major sources are painting on the wall
and word of mouth. So the union should take care of those Medias while launching the new
products.

6.12 Institutional consumers

In-depth interviews with around 20 institutional consumers were conducted to know their
preferences and nature of consumption of liquid milk. After the exploratory research, hotels,
restaurants and sweet shops have been rejected based on their bulk consumption and non-users of
the proposed 200 ml pouch. So I selected the hospitals, hostels and the teashops for the study.

30
6.12.1 Hospitals
Two most preferred hospital of the town was contacted and after discussing with the diet in-
charge of those hospitals, I got some in-sights of their consumption level. In both the hospitals
the number of patients varies from 80-150 per day. As per the instruction of the department or
authority every patient should be supplied 250 gm/day and twice in a day. But as the patients
have different perception/attitude towards this packed milk, so they use to mix all the packs in a
bucket and then supply it after boiling. Again as milk packs are not ready to drink, hence it needs
to be boiled before its use. But most of the patients belong to distant places, having no facility to
boil. Under these circumstances it is understood that the hospital authority can not supply the
milk (200 ml pouch) to patients directly without boiling, as it is not ready to drink.

One more technical problem arises here about the volume /quantity of milk supplied. In hospitals
the prescribed/instructed amount of milk is about 250 ml, where the proposed 200 ml can not
serve the purpose.

6.12.2 Hostel
In most of the hostels the students consume milk, which they buy and drink after boiling. As per
their opinion, most of them consume once in a day generally in the evening or night time.
Generally they prefer to drink a glass of milk per day. But because of the non-availability of the
proper pack size they are either forced to purchase 500 ml pack or drink it outside from any
teashop. Some times due to financial problem, two students jointly purchase and consume 250
ml each. Hence they showed their willingness to purchase 200 ml pack if it would be available at
Rs 3 to Rs 3.50

6.12.3 Tea shops

Teashops have mushroomed throughout the town. The reasons being high demand of tea made
out of OMFED milk. This is one market, where packaged milk suppliers are the dominant
players. Most of these teashops open quite early in the morning and use packaged milk for
making tea. One of the main reasons is that, loose milk is not available so early, whereas
packaged milk is available to them from as early as 4.00 am in the morning. Teashop owners feel
that tea from packaged milk is better in taste than tea from loose milk. But as they sell around

31
200 to 300 cups of tea, they generally purchase milk in bulk amount. But they showed their
interest that some of the customers want special tea, which can be made out of this 200 ml pack
opening in front of them and making tea with out adding water, which they said is a good idea if
the consumer is ready to pay Rs 2.50 per cup. And 3 cups can be made from a single 200 ml
pack, from which they can get a good profit.

6.13 Retailer survey

Retailers are an important intermediary in the distribution channel as they are the interface
between the dairy and the consumers. They are directly responsible for delivery of milk to the
consumers either at their doorstep or through their retail points / shops. Retailers have been
studied in terms of the product knowledge, their role in the system and financial benefits
accruing out of it, their selection, grievances, loyalty, allegiance, customer services, their
incentives and opinion about the launch of 200 ml pouch etc. Their role has been studied in terms
of the services the retailers offer like – access and availability of milk, door delivery, credit
facility, promotions and providing customer satisfaction.

After the strike of retailers during 2000-01, the Union has reformulated its policy relating to
selection and appointment of retailers. Earlier, to be appointed a retailer of OMFED, the
applicant had to go through a number of formalities. The retailers had to deposit security amount.
Now they can become retailers of OMFED even without depositing the security money.
However, difference in incentive strategy has been maintained to promote loyalty and allegiance.
Those retailers who are depositing security money, are receiving extra incentives like, getting an
extra Rs.100 in case they sold a minimum of 20 litres per day in the month. Earlier, the retailers
could organize and gain strength vis-à-vis the union, as they were few in numbers. Their
bargaining power can be gauged from the fact that in 2001-02, 9 retailers were accounting for
about 30 % of milk sales. However now their bargaining power has decreased to a large extent as
a large number of retail points have come up, which helped to achieve more market penetration.
This policy of stocking OMFED Milk without going through the formalities of becoming an
authorized retailer has helped the dairy in increasing the number of retail points significantly.
Now anyone can stock OMFED Milk.

32
The number of retailers has increased to more than four times in the last two years. The policy of
not denying the retailership to any willing retailer has prevented the retailers from shifting to
other brands. This has also helped the Union in breaking the monopoly of some retailers in a
particular area who used to bother the Union by demanding more margins and other facilities,
which the Union was not in a position to fulfil. The increase in the retailers has also fortified the
penetration as well the distribution system of the Union. This has helped in bringing the dairy
closer to the consumers.

Finding of retailer survey, generated through in-depth interviews, are reported below.

6.13.1 Nature of business

For most of the retailers, milk is a secondary business and gives an opportunity to make money
while continuing their main business. The retailers are generally teashops, grocery shops,
stationery shops and other shops like the telephone booth. Several retailers are keeping more
than one brand. As most of the consumers ask for "packaged milk" or "OMFED", it depends
largely on the retailer that which milk he is giving to the customer, if the customer is not very
particular about the brand. Generally they used to offer that brand in which they get more
margins.

6.13.2 Level of Satisfaction

Different retailers have different levels of satisfaction with the union. It is mainly the big
retailers who are showing discontentment, as a number of retail points have come around them
because of the policy of the Union not to deny retailership to any willing retailer. They have
started facing competition. This has also decreased their bargaining power and their capability to
hold the union to ransom to get their demands fulfilled. The new retailers are more contended.
Some of the retailers demand for freezers etc., which could be a reason for dissatisfaction in case
the demand was not met. Milk Union is not in a strong financial position to supply freezer, etc. to
each and every retailer. So based upon some parameters like number of packets sold daily, the
Union decides to give it. Another main reason for discontentment among the retailers is the
replacement of packets, which have leakage. In case they find leakage after the milk van has left

33
or if the packet developed leakage later, such are not replaced. All other competitors like, Vijaya,
Vishakha and Prithviraj Dairy are giving replacement, if the retailer complains about leakage.

6.13.3 Door Delivery

Many retailers claim that if they provide door delivery then their sales can increase by
substantial figures. There are some door delivery boys who keep all the brands and ferry in some
of the colonies who again take away some of the consumers from the existing retailers. These
consumers are not brand conscious, so even if they are supplied with the brands other than
OMFED, they would not reject it.
Some of the big retailers of Vijaya are providing door delivery to the household consumers and
this has helped in boosting their sales. The expenses of door delivery are entirely borne by the
retailers. This is the economy of sale, which is making the sale of milk viable even after the door
delivery. The big retailers of OMFED feel that door delivery facility might not add much to the
volumes. They believe that it is the brand name, which is pushing the volumes of OMFED but in
case of Vijaya it is door delivery, which has helped in boosting the sales.

6.13.4 Replacement policy

The Milk Union has a policy to change the leaked packets only if the retailers identify the
leakage at the time of delivery. This policy has led the retailers to check each and every packet at
the time of purchase, which increases the average time, spent by the driver at an outlet. The
retailers, which lie towards the end of the distribution route, get late supply and hence take more
milk in the previous delivery. This increases their milk retention period due to which it gets
curdled sometimes. The other brands like Vijaya replace the packet at any stage of the supply
chain.

6.13.5 Variation in the quality and quantity

Some of the retailers feel that the quantity in the OMFED pack is less than Vijaya and Vishakha.
They are not aware about the exact quantity supplied by any of the players. This was particularly
observed by few of the teashops, as they are using many packets per day and even a small
difference per pack can make substantial difference for them. The distributor of Vishakha has
demonstrated at some of such teashops. However, no household consumer has ever complained
about the variation in quantity. Again the quality of the union’s milk has been some times found

34
substandard. They complained that the excessive reconstitution of powder had lowered the
quality and subsequently reduced the brand image of OMFED.

6.13.6 Credit
Loose milk vendors provide credit facility to their consumers. They are generally giving milk
for the whole month and charging the money at the end of the month. None of the branded milk
suppliers are providing credit. Some of the retailers are providing credit to their old customers
but the majority of them are charging the money at the time of purchase only. Credit is not
provided to the retailers also. Vishakha and Vijaya are supplying the milk and then collecting the
money in the second shift. Some of the retailers demanded for the same facility from GGGMUL.
In Berhampur, GGGMU has more than 200 retail points. It may be logistically difficult to
implement this practice unless there is a very strong care made regarding increase in sales.
However, it can try to introduce and test this policy in some smaller market and find out if there
is any impact on the sales.

6.13.7 Price
Most of the retailers are not satisfied with the price as they get less commission, so they wanted
the union should print the price a bit higher as the competitors do. Again the packet should
contain labels mentioning extra charge for refrigeration, which has been omitted recently.

6.13.8 Untimely supply

Because of the opening of the large number of small retailers the delivery van take more time
and the sufferers are those retailers who are located at the end of the route.

6.13.9 Commission and Incentives

Because of the lower print price the retailer are not getting adequate commission, hence they are
charging more per pack above the maximum retail price, for which they face problem in pushing
the product.
Earlier incentives like 4 free packets for every 50 litres, some fixed amount of cash above a
certain level of sales etc are not functioning now. So they started selling the milk of other dairies
where they get better commission and services.

35
6.13.10 Advertisements/Promotions
Most of the retailers are dissatisfied with the union, so far as advertisements and promotions are
concerned. Their shop was not painted, and posters, glow sign boards are not supplied for the last
few years. They are not satisfied with the union’s effort to boost the sales.

6.13.11 Appointment of retailers

Old and loyal retailers of the union have complained that the union should not appoint retailers in
such a large number, as it distorts the business in terms of price variations, consumer dealings,
providing better services and handling their grievances.

6.14 Segmentations
The union needs a clear segmentation of the market to have better marketing strategies for the
200 ml pouch. From the consumer and institutional survey the following segments have been
identified for the 200 ml pouch.

From the consumer survey and institutional survey, it is evident that low income categories
generally prefer loose milk because of their economic conditions and low usage rate.

Graph 17: Percentage of different categories consuming different kind of milk.

36
 Percentage of different categories consume
different kinds of milk

Student
Agriculture
Daiily Wge earner
Business man
Salaried Employee

0 20 40 60 80 100

OMFED Non-OMFED

From the above graph-16, one can easily find that students generally consume/prefer OMFED
milk but their requirement is less hence they are the potential segment where the 200 ml pack
can be positioned. Again the farmers and the daily wage earner use very little amount of OMFED
milk hence this low-income category where the OMFED milk penetration is very less, which
provides ample opportunity for marketing the 200 ml pack.

Graph 18: Percentage of different income categories consuming different kinds of milk

Percentage of different incom e categories

consum ing different kind of m ilk

100
80
60
40
20
0
<3000 3000- 5000- 10000- >15000
5000 10000 15000

OMFED Non-OMFED

From the above graph it is evident that higher income categories generally consume OMFED
milk and the lower income category consume loose milk. Hence there is ample opportunity in the

37
lower income category, where OMFED can penetrate adopting various marketing strategies like
launching of affordable 200 ml pack.

Hence from the above two graphs it is clear that there exists some segments for this 200 ml pack
which are presented in table-12

Table 11: Segments for the 200 ml pouch.

S Segment Characteristics Descriptions

l.No
1 College students Generally drink smaller quantity Having no income, they
once in a day look for low priced quality
product
2 Nuclear families Usually purchase milk for tea. Their usage rate is less and
often looks for savings. So
always searching low
priced product.
3 Daily wage They purchase small quantity of Their income is very low
earners/labour milk for their kids. even <3000,so they look
class for a given quality of milk
at affordable price
4 Farmers They purchase either for tea or Their need is very less, so
for their kids the milkman is reluctant to
supply such a small
quantity.

Apart from the above-mentioned segments, there exist some other segments, like hospitals where
milk is supplied to the patients in smaller doses twice in a day. These institutions can purchase
milk in bulk quantity and distribute in smaller doses, hence they should also be targeted.

As the union has now planned to enter into rural market so it can easily find the above-
mentioned segments in the rural areas. Also the towns like Berhampur where a huge labour force
exists and which also hosts a numbers of hostels and hospitals can be easily tapped.

38
7. CONCLUSION AND SUGGESTIONS

I would like to conclude by aligning the suggestions based on the findings, with the objectives,
which were identified for this study. Firstly, based on the findings it can be concluded that there
exists a good market for 200 ml pouch in the Ganjam district. GGGMUL has substantial
competitive advantage over the competitors in terms of brand image and well-established
distribution network. Secondly, one thing, which comes out very clear from the study, is that
there is a substantial potential for this 200 ml across the entire low-income category. Thirdly, the
union gets an additional profit of Rs 148500 per month with out any investment; rather it
increases its outreach in catering to some specific segments at affordable price. Fourthly, the
increase in revenue due to 200 ml pouch is higher then the fall of the revenue due to fall of 500
ml pouch sale. Finally, the retailer gets better margin in this 200 ml (Rs 1.25/Litre) pouch as
compared to the present 500 ml (Rs 0.5/litre) pack, so there is no bottleneck in pushing the pouch
to the retailer. Thus, I suggest launching the product as it meets the need of the stakeholders and
satisfies the low-income category consumers, who need milk at smaller doses at affordable price.

The union needs to look into all the aspects of Product, Price, Place, Promotion, People and
Positioning. All these aspects should act together to achieve the goal. GGGMU is a small dairy
with limited resources and it has to use its resources in the best possible way to achieve its
objectives. Most of the strategies and suggestions have to do with the redeployment of resources
in an efficient manner.

Based on the finding of the consumer survey and institutional survey the following suggestions
are made to launch the proposed 200 ml pouch.

7.1 Launching 200 ml Pouch

As the 200 ml pouch is a new variant of the packed liquid milk and specially targeted to the
students and low-income category, it needs to be publicized properly. From the consumer survey
it is found that most of the people get aware about OMFED from its point of purchase, so
colourful posters, glow sign boards, the benefits and attributes of this 200 ml pouch should be
displayed in each and every POP.

39
Media highlight is urgently required, which can be done through local newspapers or through
local cable TV. Again it needs to be advertised in the regional TV centre located at Berhampur
before the launch of the product.
Then the date of the launch should be arranged in every block headquarters organising people
from various villages. Free samples should be supplied on the date of its launch.

7.2 Supply of Lactometer

Lactometers should be supplied on the first day itself to those who purchase the 200 ml pack.
This in turn will help in attracting a huge number of consumers to buy this product and will
provide an opportunity to try this 200 ml pack at least once. After this they may stick to the
product if it satisfies their needs. It should also be associated with a campaign "DOODH KA
DOODH PANI KA PANI" to generate awareness about the kind of inferior milk they consume
at their present source.

7.3 Product Differentiation

The union should try to differentiate this 200 ml pouch from the current milk supplied in 500 ml
to attract the public attention or to meet a particular segment. Altering the SNF and fat content to
some desired level could do this.

7.4 Packaging
As most of the consumers showed their preferences for the rectangular shape of the pack, so the
pack shape should be rectangular. Again the colour of the packs may be yellow as it stands for
energy; this can also substantiate its size. After all the union is already marketing its milk in two
different colours, so this may differentiate it from the other packs.

7.5 Sensitising the Consumers

As the union is based on the co-operative philosophy, it should market its product as the
“Product of the people”. It should send some messages to the consumers about the hard work of
the co-operative dairy farmers. This will help in developing a kind of inclination towards this
product among the people in general and among the low-income category (farmers, labourers) in
particular.

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7.6 Pricing Strategy
At the entry stage of a product there are two types of pricing strategy-
1) Skimming and 2) Penetration
It is desirable to adopt the penetration strategy as the targeted population belongs to low-income
category, who are very much price sensitive. Hence initially the price should be low, so that it
can generate the highest possible volume of sales from the start.
Again in the initial stage no competition will arise with the entry of any competing brand.

7.7 Strengthening the Market Intelligence

When a new product is launched and succeeds then the competitors are quick to copy it. Hence
the marketing staffs have to remain very vigil and active to know the consumer behaviours as
well the competitor’s strategy.

7.8 Brand Equity

Though the brand equity of the OMFED products are high as compared to its rivals, still more
advertisements and promotional activities are to be undertaken to build further brand equity
through brand awareness for a sustainable marketing strategy.

7.9 Credit Facility

The union at present takes money in advance for the early morning supply and for other time
supplies (second shift morning supply and evening supply); it is taking money and then giving
the milk. The dairy can give credit facility to the retailers for one day. This policy should be
implemented, initially outside Berhampur, where there are very small numbers of retailers, as it
will be easier to keep a track of smaller number of retailers. Incase there is visible increase in
sales at these retail points / markets, the dairy can try to implement in bigger markets like
Berhampur. But before implementing it in Berhampur, where it has around 200 retail points, it
will have to look into its capability of handling the logistics. This is suggested because of the
problems faced by the retailers. As the consumer of the 200 ml pouch are supposed to be the
low-income category so the likeliness of credit facility to the retailer will help in pushing the

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product to this particular segment. Again as the loose milk consumer are habituated with the
credit facility hence they can not buy it initially, unless it is available in credit.

7.10 Price
As the union and the retailers are getting a fair amount of profit from the proposed 200 ml, so the
union should review the price before its launch. Because for the 200 ml the union is not incurring
any additional expenses rather gets more revenue. Hence to make it more affordable to the
common people it should rethink its pricing policy.

7.11 Retailers in residential area

The potential buyers of the 200ml pouch are the farmers, students and nuclear families, who
often remain busy in their work and hardly get time to visit the market place.. Hence the union
try to reach at those consumers by appointing more retailers in the residential areas and in the
potential rural areas to make available the pouch at the conventional buying time. Also should
think about distributor for the distant places for regular supply.

7.12 Door Delivery

In today’s highly competitive market the consumers judge the product on the basis of the
services offered to them. Hence door delivery can make wonders if worked out efficiently with
proper planning. The Union can employ door delivery boys in major colonies. The dairy can
provide them with ice boxes to store the packets. They should also be educated about the benefits
of pasteurized-packed milk and the quality aspects of milk so that they could be in a better
position to face the consumers. Door delivery also acts as a promotional tool as it increases the
interface with consumers. Proper incentives and commissions should be worked out to encourage
these vending boys. Similarly the retailers and the distributor should also be encouraged door
delivery to those villages where no retailer is available.

7.13 Bulk Schemes

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As the quantity of milk in each pack is 200 ml, so the total liquid milk sale can not be increased
substantially unless there is any remarkable increase in the sale of 200 ml pack. So the union
should introduce bulk schemes. This will incite retailers to purchase in bulk, which will result in
less purchase of competitors brand by the retailers. Hence the scheme should include some sorts
of cash incentives for a specified number of packs.

7.14 Promotions

7.14.1 Road Shows

The union should conduct road shows regularly to increase the faith of the consumers about the
milk they consume. This can be achieved through a number of free trial tests in front of the
consumers or housewives at different blocks and towns, if possible should also be conducted at
the village level.

7.14.2 Media mix

A proper media mix is very important for any promotional activity. So it should be chosen
carefully to reach at maximum number people at least cost. Printed pamphlets in local language,
highlighting the benefits of pasteurized-packed milk, information about Fat and SNF and other
benefits, can be circulated as inserts in Newspapers. But the inserts should not be sent daily.
They should be spaced; this helps in reminding the customer after certain interval of time. Local
cable TV network can also be used.

The views of the Chief Medical Officer (CMO) of Berhampur, regarding the benefits of
using pasteurised milk can be aired. Airing the views of collector also can support this but he
should be asked to emphasise on the cooperative and welfare element of GGGMU and OMFED.
Colourful banners, posters near the film hall, stadium, and bus stand should be displayed to
attract the public attention. Again folk songs and other recreational media should be used to
reach at the people of the rural and semi-urban area who love to watch these conventional
mediums.

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7.14.3 Use of procurement and marketing vans for promotion
Procurements vans can be used by paintings on the vans or by putting banners on the vans to
promote the 200 ml pouch. This is a most effective way of sending the message to the people as
it covers several places and particularly to the farmers of the rural area.

7.14.4 Consumer Orientation Programme

This is to be done from time to time to enhance consumer education and awareness about the
importance of processed milk and the drawbacks of unprocessed milk. The union should draw
housewives from the areas under different sales offices to the dairy premises and should show
them the dairy plant and tell them about milk in general and the importance of hygiene.

7.14.5 Debate
College level and block level debates promoting the ''Idea of Hygiene and Pasteurisation along
with the benefit of consuming the packed milk" can be held. However, it should be borne in mind
that this will help other packaged milk too as the promotion is for Pasteurisation which is more
generic in nature. So, strong emphasis needs to be given to the Cooperative and welfare element
of GGGMU as an organisation. As the 200 ml pouch is targeted for the college students so it
should help in boosting the sales creating awareness among them.

7.15 Entry into New Markets

GGGMUL should look for new markets to sales this 200 ml pouch as most of the consumers are
residing in the rural and semi-urban area. NACs will be able to provide new market opportunities
for GGGMU. It can look into the possibility of entering into the other neighbouring states
markets, as in most of the states the packed milk is generally not sold in smaller packs like 200
ml. This strategy can be followed at some later point of time if the 200 ml pouch performs well
in the Ganjam district. This can also do well in other states and districts because the segment
which has been identified by this study exists everywhere and can easily be met their need,
which subsequently also will increase the sale.

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REFERENCES:

Aaker,D.A.,Kumar,V. and Day,G.S.(2001) “Information from respondents: Issues in data

collection”, Marketing Research, Seventh edition, Replika Press Pvt. Ltd., New Delhi, pp.217-
230.

Kotler Philip (2003) “Gathering Information and Measuring Market Demand”, Marketing
Management, Eleventh Edition, Thomson Press (I) Ltd., Delhi, pp.122-141.

www.amul.com

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