1. India’s Amul: Keeping up with the Times
Priyanju HR039 Vrushali HR Arun Karthik HR Somnath HR044 Uzma HR047
Rohit HR048 Saloni HR043 Trishala HR046

2. CONTENTS Case Background Internal Business Environment SWOT Analysis
PESTEL Analysis
Porter’s Five Forces - Industry Analysis
VRIO Analysis
Porter’s Value Chain
Advertising campaigns
Pricing strategy
Diversification strategy
Future prospects
March 22, 2015

3. CASE BACKGROUND
All district milk producers unions of Gujarat came together to form a federation “Gujarat Cooperative Milk Marketing Federation”
Dr. Verghese Kurien : Father of white revolution in India
Founded in 1946,Amul is a Indian dairy cooperative owned by 3.2 million farmers in the Western state of Gujarat
AMUL - "priceless" in Sanskrit from the Sanskrit "Amulya," and symbolizing the pride of Swadeshi
Amul produced 46 types of dairy based foods having a sales turnover of US $2.5 billion as of March 2013
The “Bottom of the Pyramid” Structure
Successful “value for many and value for money” strategy
A successful cooperative society that always take care of the farmers and loyal customers
March 22, 2015

4. INTERNAL BUSINESS ENVIRONMENT
Culture
Consistent focus on Indian culture
80% of revenues back to farmers
Corruption-free
Democratic system representing fair selection without political influence
No promotion, no free products
Customer Relationship
Advertising on popular current events
Prime site hoardings only
Largest exporter of dairy products targeting NRIs staying abroad.
Youth - connect (sponsoring Olympics)
First ice-cream parlour
Umbrella brand marketing
Smaller SKUs focussing rural market
Dedicated franchised outlets
Operations
Strategy focusing on high margin consumer products against low margin wholesale deals
Strong procurement network for large amounts of milk
4 distinct distribution networks
All-day availability
Independent financial sourcing of new projects
Change in procurement strategy (state to national)
Less expenditure on advertising
Technology
Established supply chain using chilled vans to minimize spoilage
Convert buffalo milk into milk powder
Mobile vet vans
Artificial insemination
Training programs on animal husbandry.
Supplier Relationship
Integration of fragmented dairy societies
Society and cattle support and training farmers
Exclusive distribution arrangements with partners
Largest retail chain in terms of number of stores
Low margin- High volume strategy, thus reducing costs & competition
March 22, 2015

5. W S O T SWOT ANALYSIS Highly diverse product mix
Robust distribution network and channels; Arrangements with distribution partners
Cost effective advertising campaigns and marketing strategies
Leadership
Risk of highly complex supply chain system
Procurement issues
Penetration in international markets
Expand existing categories like processed foods, chocolates, etc
Competitors like Nestle, HUL, Britannia
Growing price of milk and milk products
Large foreign retailers
Younger generations shying away from dairy farming
Political interferences O T
March 22, 2015

6. PESTEL ANALYSIS Political interference in cooperatives
Cooperative elections and parties
High growth rate
FDI of 51% in multi-brand retail
Credit/Finance facilities
Rural market
Procurement of quality raw material
Prevention of Food Adulteration Act
Child Labour
Cooperative Societies Act
The Milk and Milk Products Order
Favourable demographic dividend
Dairy products as a culture
Vegetarian culture
Convenience and health consciousness
Increasing education levels
Dairy waste management
Waste to commercial products
Packaging Technology
Efficient Distribution and Transportation channel
Information Communication Technology
Cold chain and low temperature technologies
March 22, 2015

7. INDUSTRY ANALYSIS – PORTER’S
Threat of New Entrants
LOW
- Requires high capital investment and difficult to achieve economies of scale
- Access to very complex and well established distribution channel
Customer Loyalty
Bargaining Power of Buyers
HIGH
- Presence of multiple competitors, Dudhwallas
- Home delivery and freshness of local dairy products make this more complex
Rivalry among Competitors
HIGH
Large no. of competitors
Local Dudhwallas
Threat of Substitutes
MEDIUM
Although many drinking substitutes to milk are available, the dairy industry enjoys high profitability in case of other dairy products
Bargaining Power of Supplier
LOW
Mainly the suppliers are local milk producers; hence their bargaining power is low
March 22, 2015

8. AD CAMPAIGNS
‘Utterly Butterly Amul! Utterly Butterly Delicious…’ by Sylvester DaCunha of Advertising and Sales Promotion in 1966
Use of strategic sites for minimum expense and maximum output
Socially relevant issues like Leftist Struggle in Calcutta or The Indian Airlines Strikes.
Amuls ads and sponsorships reflects indian roots and values, for example, Amul Surabhi programme
In 1994, to bring all its brand under one umbrella it goes with the tagline ‘The Taste of India’
Also in order to be relevant with the young generation , they have sponsored the Indian Contingent at the London Olympics 2012, and they have given awards to school children for academic excellence
March 22, 2015

9. PRICING STRATEGY
March 22, 2015

10. PRICING STRATEGY
The Bottom of the Pyramid – In cities it sell large packs of its products at INR whereas in smaller towns, same products in smaller packs at 5-10 INR
Value-added products like Cheese, Dairy Whiteners, etc. are priced lower than its competitors. Multinationals incur higher expense than Amul in advertising, retailing and royalty to parent companies.
However, Amul prices fresh milk at a premium price to its competitors because of its higher transportation costs compared to local diaries
Overall it maintains an affordable price due to a variety of reasons - only 1% of its turnover is used in advertising as compared to 14% of Unilever or 8-10% of Nestle
Advertising campaigns are longer, thus helping Amul to reduce on the communication costs.
The co-operative business model also helps to source raw-material, especially milk economically, allowing to pass the savings to consumers. For example, The Crème Rich Ice-Cream is priced at Rs whereas HUL’s Magnum is priced at Rs.80-85
March 22, 2015

11. Sustainable competitive advantage
VRIO ANALYSIS
Valuable
Rare
Imitable
Organized
Result
Milk (60%)
Yes No
Sustainable competitive advantage
Butter (86%)
Cheese (65%)
Chocolates (10%, 2011)
No advantage
Ice-Cream
(39%)
*Percentages indicate market share as on 2013 given in the case, except chocolates
March 22, 2015

12. PORTER’S VALUE CHAIN SUPPORT ACTIVITIES Margin Margin Procurement
Firm Infrastructure- Head, zonal and overseas offices
SUPPORT ACTIVITIES
Human Resource Management- Leadership & open culture
Customer Value
Technology Development- Integration from farmers to customers; B2B
Margin
Procurement
Inbound Logistics:
Production by co-operative and union members
Operations
Milk processing, Packing
Outbound Logistics:
Village Diary Co-op society,
Milk unions
Sales and Marketing:
Distributors, Retailers
Service and Support:
After sales services
Customer Value
Margin
March 22, 2015

13. DIVERSIFICATION STRATEGY
March 22, 2015

14. DIVERSIFICATION STRATEGY
Related diversification – Milk and Milk products
Cost leadership
Amul Milk
Amul Gold, Amul Taaza
Bread Spreads
Amul Butter, Amul Lite, Delicius, Table Margarine
Cheese
Processed Cheese, Cheese Pizza, Amul Gouda, Mozzarella Cheese
Beverages
Amul Kool, Kool Café, Prolife Lassi/Butter Milk, Spiced buttermilk
Ice-Cream
Frozen Yoghurt, Amul Ice Creams, Amul Flaavyo
Paneer
Malai Paneer, Fresh Paneer
Dahi
Masti Dahi, Probiotic Dahi, Flaavyo
March 22, 2015

15. FUTURE PROSPECTS
By expanding (In terms of milk procurement base, manufacturing capacity, adding new Wholesale Dealers and retailers Amul plans to achieve Rs. 30,000 Crores turnover by
The company has plans to increase its milk processing capability by 90 lakh litres in the coming years and will be coming up with ten new milk processing units across the country
Amul to become the first Indian dairy firm to export to Russia
March 22, 2015

16. Thank You! Priyanju HR039 Vrushali HR040 Arun Karthik HR042 Saloni
Somnath
Shubhanker
Trishala
Uzma
Rohit
HR039
HR040
HR042
HR043
HR044
HR045
HR046
HR047
HR048
Thank You!