CASE STUDY

AMUL MILK-Brand Building In A Commodity

Market

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EXECUTIVE SUMMARY

The Gujarat Milk Marketing Federation (GCMMF) was all set to increase the
volume sales of its ‘Amul’ brand of milk in Ahmedabad city territory from 0.13 million
litres per day (lpd)to 0.23 lpd which meant a 76% increase; this was a tough task
since the milk market in the city was growing only at the rate of 7 – 8 % per annum.

The brand name ‘Amul’ was a well known food brands in India. The Kaira
District Co-Operative Milk Producer’s Union which owned the Amul brand handled
one million litres of milk in the peak season. It already had well accepted value
added products like milk products, butter, cheese, etc. Amul was the pioneer of the
diary movement in India, its success prompted the Govt. to formulate “Operation
Flood” that was meant to increase the production of milk in the country.

GCMMF set up “Mother Diary” on the outskirts of Ahmedabad city to cater to

the twin cities of Ahmedabad & Gandhinagar comprising a milk market of 1 million
lpd. Amul milk was launched in Ahmedabad in August 1986 competing with only one
other organised source - ABAD DIARY. GCMMF sourced Amul Milk from its diaries
in HimmatNagar & Mehsana since it didn’t have its diary in Ahmedabad. With
increasing volumes, problems like supply breakdown, leakage & sourage problems
set in.

Market Structure in Feb 1993

Competition in the Ah’bad milk market was so intense that twenty varieties of
milk were sold at the same price. The margins offered by other private packers were
3-4 times that offered by Amul, making it less attractive for retailers. The no. of
private players in the market was large due to sustained investments in the diary
sector by NDDB & the acumen of Gujrati businessmen who sourced the milk from the
villages and set up well organised packing stations in & around Ah’bad. Low barriers
of entry in the market and modest investments made this business lucrative in the
private sector.

Brand Initiation & Building

Amul initiated a 4-film design for its pouches which was also used on its
delivery vans. Over a period, Amul’s distinct design (depicting early morning
symbols) came to be identified with good quality milk & people started asking Amul
by its name, thereby providing a brand entity. However, competitors also adopted
this colour scheme of Amul on their pouches, the distinctiveness of the design faded
away rapidly particularly among lower socio-economic segments.

GCMMF thought that branding different types of milk was the first step in
generating brand preference in the market. Amul launched ‘Amul Gold’ in the high-
price, high-fat premium quality segment. Amul Gold expanded the market and within
three months of its launch, it gained a volume of 32, 000 lpd competing with
‘Shresth’, the market leader who had a 20-year head start over Amul. ‘Amul Saathi’,
a low price, low fat variant was launched with the same price as that of loose milk.
Sales rose to 12, 000 lpd. Amul also changed the names of its ‘Standard’ & ‘Toned’
variants to ‘Amul Shakti’ & ‘Amul Tazaa’ respectively. It also introduced 200 ml

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pouches in May 1993 targeting daily wage earners; sales volume crossing 11,000
lpd. Consumer awareness about fat and SNF was low among consumers, Amul
undertook a consumer awareness campaign using handouts & pamphlets
distribution among the public.

GCMMF appointed a large no. of retailers in an effort to make the product

available as close to the consumer’s home as possible. An incentive was instituted
for the field force to appoint at least five new retailers every month. In eight month’s
time, the retailer base grew from 600 to 1200. GCMMF persuaded ABAD Diary booths
to stock Amul milk; it also directed its distribution focus on the outskirts of Ah’bad
where many new housing complexes were coming up & private packers had not
developed distribution infrastructure. A turnover of 10,000 lpd was generated from
170 new retail points in these developing areas.

GCMMF also invested in advertising to create awareness about the Amul

brand. It also used handouts educating the customer about milk to suit the localised
market, it also instituted a telephonic helpline for its customers. Maximum
importance was given to shop identifiers and in-shop paintings, since GCMMF knew
that the product had a high consumer pull but didn’t know where to get it from.
GCMMF also distributed delivery bags, T-shirts, Caps & umbrellas to its retailers to
retain their ‘interest. GCMMF also started free printing of ‘Home Delivery Coupon’
system & also distributed free delivery bags to strike a friendship with the local
home delivery boys

SWOT ANALYSIS

STRENGTHS WEAKNESSES

• Established brand name • Low margin to retailers

• Caters to almost all segments • Price to milk producers

comparatively low
• Wide distribution network
• Packet design not copy-written,
• Compliance with Quality imitation rampant
standard compliance

THREATS OPPORTUNITIES

• Low barriers of entry in the • Fewer competitors in the

market. outskirts of Ah’bad

• Intense competition in every • Scope for further differentiation

segment.

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SITUATIONAL ANALAYSIS

• Company :

Amul is the trade name of Kaira District Co-operative Milk

Producer’s Union. GCMMF was expecting to cash in on their brand name in the food
product market and distributor networks to increase the sales of their new product.
The company has forayed in the packaged liquid milk market to tap the potential
markets of the twin cities of Ah’bad & Gandhinagar.

• Customer :

Age : People belonging to all age groups are targeted.

Geographic : People in and around Ahmedabad city.

• Competitor :

At the time when Amul milk was launched in Ahmedabad in August

1986, there was only one organized source of milk for the people of Ahmedabad- The
ABAD Dairy run by the Government. Twenty varieties of milk competed in the
marketing place. Intense competition was prevalent among these private players viz.
Uttam, Gayatri, Sardar.

• Collaborator :

1. Retailers: The margins offered to retailers by private packers were 3 to 4

times that offered by Amul.

2. ‘Home delivery boys’ who delivered fresh milk either in the morning or in the
evening.

SEGMENTATION AND TARGETING

The market can be divided into high income group, middle income group,
daily wage earners, working professionals etc. The target market is people from all
age groups.

Niche marketing: High income groups are targeted through Amul Gold, premium
quality high fat, high price milk. The low income customers were targeted through
Amul Saathi, a low fat, low price variant.

Geographic: The Company should concentrate on the developing areas around

Ah’bad which are untapped markets.

Psychographic: Company should create brand awareness among consumers.

Amul has strong presence in each segment of milk with dedicated products
bearing distinct brand names for each segment.

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MARKETING OBJECTIVES

 Identify & cater to emerging markets in developing areas around Ah’bad.

 Create awareness about the brand name and increase customer loyalty.
 Tackle the problem of imitation of design.
 Increase retailer satisfaction by providing better margins.

STRATEGIES

Product

✔ Create awareness about its different brands thereby enabling the customer to
differentiate between its various brands.
✔ Copy-write the packaging design to preserve the distinguishing identity
barring competitors from imitating the same.
✔ Introduction of larger volume pouches in line with economy packs to provide
large scale buyers price benefits.
✔ Different shaped pouches for its products for easy identification, e.g Square
shaped pouch for Amul Tazaa, rectangular shaped for Amul Gold, etc.

Place

✔ Increase penetration in the developing areas around Ah’bad by aggressively

roping in new retailers.

Price

✔ Reduce prices for economy packs to cater to low-income customers better.

✔ Increase monetary margins for retailers to sustain their interest.
✔ Provide credit facilities to regular customers.

Promotion

✔ Create awareness about fat content & SNF in the milk thereby enabling the
customer to differentiate between its various brands.
✔ Provide actual point-by-point comparison with its competitors on the basis of
quality parameters.
✔ Increment in the no. of outdoor advertisements to provide maximum visibility.
✔ Adoption of jingles and audio aids by means of radio.
✔ Increase frequency of TV ads during prime time on all channels.
✔ Sponsor sports events/local teams in Ah’bad thereby creating association of
the brand with healthy drinking.

CONCLUSION

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 Keeping in mind the close competition in Ah’bad, Amul will have to work hard
on its promotional strategies diverging from its conservative stand. Packaged milk is
now a commodity which needs to be marketed as other commodities and hence
promotional budgets must be increased.

Consumers need to be educated about the health benefits of milk

consumption.

Collaborators like home delivery boys, retailers must also be given a

proportionate share of the profit which would increase their loyalty towards the
brand.

A good marketing mix of strategies will increase the market share of Amul in the
Ah’bad market which has ample scope for development.

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