Amul Pizza Relaunch

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REPORT: RELAUNCH STRATEGY FOR AMUL PIZZA

INTRODUCTION

Far away from the pizza hubs of the metros, in remote Surat to be precise, Amul was brewing an ambitious plotwithout much ado. The co-operative first opened 10 pizza parlors in Gujarat. Amul then planned to scale up operationsin a year by setting up 2,000 such parlors in 100 cities. What was crucial to the entire game was PRICING. Amul wasthen currently test-marketing a basic capsicum, onion, tomato pizza at just Rs. 20, which could well change thecontours of pizza consumption in the country.Basically it looked like Amul has adopted this radical strategy to expand the consumption of mozzarella cheese, a coreingredient that goes into the making of pizzas. "We are the biggest cheese brand in India and it is time we leveragedthis strength, Mr Vyas (MD-Amul) explained. The pizza parlours will not be very big in size. An ordinary retail shop,which is strategically located, could also get into an arrangement with Amul. The entire project is based on the

franchisee model. Amul will ire pizza consultants who in turn will train franchisees. The co-operative will also providethem with equipment, technical inputs and promotional support.

Amul was hopeful that the right mix of product quality and affordable price will lead to a demand explosion and could

perhaps lure customers away from the established pizza chains. Besides eating into their market shares, this was astrategic move towards forward integration into the fast food segment. "Instead of waiting for the pizza market togrow, we decided to create a new mass market ourselves, "Mr Vyas said.Once the demand for mozzarella cheese takes off, Amul plans to stimulate the demand for cheese slices by extendingthe product line.

Keeping pace with the new age corporate world of backward integration and diversification, Amul started selling pizzato market its cheese and was now talking about frozen foods.

WHY AMUL ENTERED THE PIZZA MARKET?

An unlikely entrant has stirred the pizza market in India. Indian company Amul, well known for its milk products, hasintroduced a pizza for 20 rupees (41 US cents), or one-third that charged by competitors.Amul is one of the largest food cooperatives in the world and carries immense financial and advertising clout. Its

parent company, the Gujarat Cooperative Milk Marketing Federation (GCMMF), turned around 25 billion rupees lastyear. And even though they may not admit it, competitors have started tightening their belt, in different ways.

But what prompted Amul to enter a new territory, at a time when the field is flooded with new entrants, many of themmultinationals?

Industry analysts point to two reasons. The main one is the growing acceptance of pizza by the Indian customers'palate. Pizza has become popular in all major cities and towns. According to industry sources, it now forms almost 50percent of the fast-food business.

Pizza joints are as ubiquitous as outlets for vada pav and pav bhaji, two local delicacies. That the pizza has finallybecome a part of the Indian eating experience is confirmed by the fact that several railway stations have set upspecial stalls to hawk various brands of pizza. Until now, the Indian railway traveler had to make do with stale tea andrancid sandwiches.

The continued presence of Domino's and Pizza Hut is attracting other multinationals. After delivering turnips like thePillsbury Cooker Cake mix, General Mills India (formerly known as Pillsbury India) has now made a conscious decisionto focus only on those products that can clearly deliver profitability. According to General Mills India president Tanmay

Ganguly, in line with this broad strategy, the company will make forays into categories where consumer habits havealready been created. And that includes the pizza market.

Local outfits, too, are making their presence felt. The south India-based Pizza Corner is now consolidating its presenceup north. It is doubling the number of outlets in the national capital New Delhi to 20. Pizza Corner also intends to tapthe markets of Mumbai, followed by Jaipur and Agra. And keeping in line with the industry trend, Pizza Corner has atie-up with Nestle India for its Nescafe coffee and Maggi sauce, and with Kwality Walls for ice cream.

The second reason for Amul's invasion into the pizza market is its inherent advantage: the fact that it does not viewpizza as an end-product as much as a medium for pushing sales of its own cheese.

"They are interested in making profits from cheese, rather than from pizza. Given that a six-inch-diameter pizzacontains around 40 grams of cheese, the cost of this comes to hardly 5.50 rupees per pizza. So, even at 20 rupees perpizza, there is enough margin left to be shared with retailers," points out a retailer.

Amul currently sells about 3,500 tonnes of cheese annually, which translates into a 70 percent market share. Of this

tonnage, mozzarella cheese - the semi-soft, high-moisture, unripened variety used for pizza making - accounts forroughly 700-800 tonnes. Amul has targeted opening 3,000 pizza retail franchise outlets all over the country by theyear's end. This is expected to boost the company's annual sales of mozzarella cheese alone by more than 4,000


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tonnes.

Amul's manufacturing facility at Gandhinagar in Gujarat has the capacity to produce 200,000 pizzas a day. It targetsto garner a sales turnover of 500 million rupees by the end of 2002 through pizzas alone.

According to a Amul marketing officer, the company benchmarked on three aspects to create its brand image. "Thefirst step was meant to spur more volumes of Amul pizzas, the second step was to create an association between thebrand Amul with pizza and the third aspect was to convert the brand association into a FMCG [fast-moving consumer

goods] product."

Amul supplies retailers the cheese along with the technical training and recipe for pizza making. Besides, it negotiateswith bulk suppliers of vegetables and the pizza base to offer these at wholesale rates to the outlets. Marketinganalysts say that Amul's pizza marketing strategy is unique because it aims at boosting sales of an "elite" product(cheese) by pushing down prices of another "elite" product (pizza).

Encouraged by the response to its six-inch pizza, targeted at school-going children and institutions, Amul is nowattempting to expand its horizons in the pizza market. It has rolled out an eight-inch frozen "Utterly Delicious Heatand Eat Premium Pizza" in new packaging in Mumbai. Initially, 2,000 retail outlets in Mumbai will stock the newproduct. The number of retailers is expected to touch 6,000 by the end of this month.

A top-ranking Amul official claimed that his company would do to pizza what it has already done for ice cream. "Wewant pizzas to become a mass consumption item. And as in the case of ice cream, we will force other pizzamanufacturers to also slash prices. Eventually, this would further expand the market for cheese," he added.

There are other plans on the anvil. Adds the official, "Once we achieve the target of 500 million rupees in salesturnover, we may consider setting up a manufacturing facility for introducing burgers, under the umbrella brandAmul."

SUMMARY OF THE CAUSES FOR FAILURE OF AMUL PIZZA

Amul was successfully able to launch the Pizza.

Amul had an advantage with regard to Pricing.

The problem it had was of winning the trust of the consumer over the quality and freshness of the Pizzas as they werefrozen and were manufactured quite a few days back.

Packaging of the Pizzas was also questionable.

The taste of Pizzas was not at all appreciable

Amuls Franchisee Model was very faulty.

The selection of the mix of tools i.e., advertising, sales promotion and publicity was inappropriate.

Amul was not fast enough to see the changing trends and accordingly introduce the product.

Amuls strategy of creation of a mass market was entirely wrong.

Amul lost out because of its inability to communicate the Positioning in a proper manner.

Amul failed to do Product Differentiation properly.

Amuls Pizzas were not up to the quality levels defined by its all the other products

Amul overlooked the threat from Pizza Professionals like Pizza Hut and Dominos.

Amul followed a strategy of Forward Integration, which it shouldnt have done.

Amul missed out on the fact that Cultural Factors and Reference Groups have a very major impact on buyingdecisions.

Since the Customer Satisfaction is not there, the brand missed out on Consumer Loyalty.

The Value Proposition promised by Amul was not delivered.

MARKETING MISTAKES


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A well-tuned marketing campaign is a beautiful thing. Your advertising not only connects with just the right prospects,but it seems everyone is talking about you, your product, or service.

Sales come in at a nice pace. Profits mount as you quietly chuckle thinking how little you spent on marketing.Suddenly, moving your company forward doesn't seem hard at all.

Unfortunately, marketing rarely works that easily, at least at first. Most marketing gets held back by a few verycommon mistakes. Let's look at a few along with ways you can easily correct them to get your advertising back on

track.

Mistake #1: Your marketing gets lost in the crowd. Each of us gets bombarded by thousands of advertising messagesevery day.

Mistake #2: Marketing targets an audience that is too broad. Before you can address the specific concerns of aprospect, you have to narrow the groups of people your marketing is reaching.

Mistake #3: Marketing isn't consistent. The old saying among veteran marketers is the first ad never works. You get

consistent, long-term results by continuing your ad over weeks and months.It may be true that familiarity breeds contempt, but not in marketing. Familiarity develops awareness and confidencein prospects so they buy.

Mistake #4: Marketing fails to tie different media together. Too many times the direct mail campaign a company doeshas little to do with the magazine ads they are running. Instead, make your ads in different media all relate to eachother

Marketing is one of those aspects of life where the tried-and-true often works best. Use the proven solutions tocommon marketing mistakes to insure your advertising and promotion efforts bring the results you expect.

RELAUNCH STRATEGY FOR AMUL PIZZAS

Improvements are sold by the inch rather than by the yard.AnonymousFor most firms, re-launching failed products requires understanding the ways in which the failed product has met thevalue needs of different customers and the quality of execution. Re-launching a failed product should be done with thehelp of outsiders who were untarnished by the first failure. But the experience gained from a failed launch can be

helpful in the second launch.

Diagnosing the Failure

The first question to address is: What is failure?

The Successful FailureThis may seem like a dumb question, but it isn't. Sometimes, the value of failed product is that it provides superbmarket research and insight that allows you to generate a second-generation product that is successful.

The Failed Success

Sometimes a success is actually a disaster. You have established that a market is viable, but your economics andresources don't let you capture the opportunity. Someone else steps in and takes over the market.

The Misevaluated SuccessAnother common type of failure is the financially successful product where the company is unable to invest sufficientlyto maintain its position of leadership.

Now, for AMUL as a brand the relaunch strategy should be focused around few key areas of dominance in failure,

which are as follows:

SWOT ANALYSIS

BRANDING

POSITIONING

MARKETING MIX


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SEGMENTING AND TARGETING

CONSUMER MARKETS AND BUYER BEHAVIOURS

BUILD ON CUSTOMER SATISFACTION, VALUE AND RETENTION

COMPETITION

SWOT ANALYSIS

If you dont know where you are going, you will probably end up somewhere else.Dr. Lawrence Peter (Canadian Educator)

Amul should do a proper SWOT analysis and if need be, should take help from professional consultants. For instanceAmuls SWOT is as Follows:

STRENGTHS

BRAND (COMPANY) NAME BECAUSE OF THE NUMBER OF YEARS

IN THE MARKETPRODUCTION FACITLITYTRUST OF CONSUMERS

WEAKNESS

NO EXPERTISE IN PIZZA MAKINGLATE ENTRANTDISTRIBUTION CHANNEL

FRESHNESSPACKAGING

OPPURTUNITIES

HIGH GROWTH OF THE FOOD MARKETNICHE MARKET, SO CAN CHARGE A PREMIUM

THREATS

HIGH DEGREE OF COMPETITIONLOSING OUT TO RIVALS LIKE PILLSBURY BECAUSE OF THEPRODUCT OFFERING.

BRANDING

First, say to yourself what you would be, and then do what you have to do. Epictetus

Though AMUL rightly spotted a growing lucrative market for the pizzas, it did the biggest mistake of branding the

pizzas as AMUL PIZZAS. Basically AMUL did the brand extension in order to save the expenses of building a new brandname and thus wanted to cash on the brand value of AMUL.

(Example Case: Ponds had launched toothpaste under the Brand Name PONDS, quite a few years back. The brandPONDs though doing very well that time; its toothpaste was a miserable failure. The reason was analysed to be thatthe peoples association with that of PONDS was with beauty and something to do with outside the body. As soon asthe idea of putting PONDS inside the mouth was introduced, people rejected it. Though they trusted PONDS to beapplied anywhere outside the body but were not open to putting it inside.)

And, this way AMUL committed its biggest mistake. AMUL has always been associated with dairy products or

something to do with milk (Cheese, milk, ice creams etc.) but Pizzas being a totally alien category, people were notable to relate to it. AMUL was known for its quality, freshness etc. but contradictory to this, the Pizzas were frozenfood, kept under refrigeration and served after few days of manufacturing, which according to Indian Mentality makesit Stale Food. The association of product with that of with brand name has been totally lost in this case.

Thus, the first and foremost thing that AMUL should do is to introduce the pizzas under some other brand name and

AMUL should appear as a latent marketer.

According to our suggestion, we came to a common consensus of n appropriate brand name for Amul i.e., TAVA


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FRESH and the tag or punch line for the brand name would be FRESH AISA GHAR JAISA. Thus by introducing Pizzas

under this brand name, AMUL is giving the message of its repositioned product i.e., now its pizzas can be heated overa tava instead of a compulsory use of an microwave or an oven and apart from that it also connotes to the freshnessof Pizzas.The tagline suggests that the freshness offered by the product is as good as that of anything made at home and alongwith that the ease of making or rather heating the product at home and consuming it. Thus Amul can very well relateto certain emotional and consciousness aspect of the Indian consumer.

By branding, AMUL though will have to spend money on brand building, but it is much safer then risking out its ownbrand image by using the AMUL brand.

AMUL can very well educate and inform the retailers that the Brand is from the house of AMUL and thus win over theirtrust and gain on WORD OF MOUTH publicity.

Thus by introducing the pizzas under different Brand Name it does not then risks the wrong association of product withits Brand Name, which is the case now.

The main reason why brands have been developed in the first place has to do with competition and subsequentincreased consumer choice. However, contrary to popular belief, consumers do not desire choice per se. Choice ismainly a

mechanism that allows consumers to obtain the products and services that theywant at a price that they want to afford. As peoples wants, needs and budgets differ, choice functions as a way tofulfil the requirements of different consumers. Thus, brands cater to this diversity.

POSITIONING

Your image can never be stolen. Everything else can be.-Anonymous

Falling in love! As entrepreneurs, we do it every day. Our passionate belief in, and commitment to, our product (orservice) makes all things seem possible. The most successful entrepreneurs learn to transform their passion intoposition.

Positioning is a perceptual location. It's where your product or service fits into the marketplace. Effective positioningputs you first in line in the minds of potential customers.

Positioning is a powerful tool that allows you to create an image. Being positioned by someone else restricts yourchoices and limits your opportunities.That's why it's so important for entrepreneurs to transform their passion into a market position. If you don't define

your product or service, a competitor will do it for you. Your position in the market place evolves from the definingcharacteristics of your product.Positioning is your competitive strategy. What's the one thing you do best? What's unique about your product orservice? Identify your strongest strength and use it to position your product.

Positioning, when used effectively, can help you be first in the mind. Being first in mind equals ownership. Marketownership allows you to be a big fish in a small pond. When you're a big fish, you can always increase the size of thepond.

According to us, AMUL should relate to certain events or festivities, and create a positioning that is unique in nature, inthe prospects mind. Likewise its competitors strategy for positioning; as in case of PIZZA HUT, it uses the line GOODTIMES START WITH GREAT PIZZAS, and relate it to the celebration of all important events (especially family events)in life. Thus now in most cases whenever there is a celebration time or taking the girlfriend out for date, consumerstend to think of PIZZA HUT.

Similarly, AMUL should also build an aura around itself, may be for example taking into consideration the FamilyPicnics or Outings etc. and relate to that. So that whenever consumers are thinking of that event, AMUL should cometo their minds. But AMUL should not promote many ideas while positioning and should consistently stick to the idea

promoted so that the customers can relate to it.

This strategy of unique POSITIONING and occupying a distinct place in consumers mind, in todays much competitivescenario, will definitely help AMUL to make its product a big success.

MARKETING MIX

As in the case of Cake, proper mix is important in Marketing also.

-Anonymous

PRODUCT

Amul should concentrate on Pizzas more rather than thinking it as a means to increase the sales of it mozzarellacheese. It should give more emphasis on the taste and quality of pizzas and improve the same.

It should introduce more variety of pizzas to cater to different segments of customers.It should also be health focused.Since the majority of its target customers are middle class people, it should introduce the variant of pizzas, which can


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either be heated on a pan or a tava, as in most cases consumers dont have an oven or a microwave.

Amul should not compromise on quality, as even if it charges a little high price or a premium, people will pay itbecause of the brand name.Packaging of the pizzas should be improved a lot as its always the eye appeal that counts.

PLACE

Amul should improve the distribution channel, as the Amul pizzas are available at all the retail stores (even if it is not

Amul distributor for other product categories), and this leads to a big question mark over hygiene and reliability.Another suggestion that might work will be of opening AMUL brand stores, stocking all Amul products and thus

create a good ambience. This will reduce the questions raised over hygiene and reliability.It should follow Backward Integration Strategy rather than Forward Integration Strategy.

PROMOTION

It should adopt a proper mix of appropriate advertising tools.New advertising campaign should be developed to initiate the consumer learning process and retain the consumerattention.As discussed earlier it should pursue a distinct brand image in its campaigns.Amuls campaign related to Pizzas should be informative and Persuasive.

PRICE

Amul has an advantage with regard to Price as Amul Pizzas are strategically placed at a lower price that any other

available counterpart.

SEGMENTING AND TARGETING

SEGMENTATION

Amul should not focus on creating a Mass Market; rather it should cater to the segments already existing. Basically itis a Niche Market as people in India who would prefer having a frozen pizza are very limited.

Amul should accept he fact that segments exist based on Diffused Preferences and market accordingly.

Another important aspect of segmentation is that of Geographical and Psychographic segmentation and thus Amul

should take that into consideration.

TARGETING

AMUL should adopt Segment-by-Segment Invasion Strategy.

Another important reason is that Amul chose the wrong target audience. It targeted the lower or Middle-income grouppeople and priced the product accordingly. Basically people from that income group are not open to the idea of frozen

foods. The mindset of the consumer is more inclined towards the consumption of hot and fresh food. People think thatany food that is frozen, old and packed is stale food. Thus, Amul chose the wrong segment to cater to.

(EXAMPLE CASE: Maggi Noodles projected themselves as instant solution to hunger. They positioned themselves asinstant, hot and fresh and thus found a huge customer base ready and eager to accept their product and thus are verysuccessful.)

Amul had developed the product that was suitable to the upper or upper middle class of consumers who are open tothe idea of consuming frozen foods but it priced and targeted the product to lower class people. Thus, Amul should

target the product to the class of people that are open to the idea of frozen foods.

CONSUMER MARKETS AND BUYER BEHAVIOURS

Amul should take into consideration the fact that the Cultural Factors exert the broadest and deepest influence on the

buyer behavior and thus Amul should understand that the culture of frozen foods in India is very limited.

Amul should introduce Diversity Marketing.

Amul ignored the fact that its target segment were households with low or mid income group and didnt have oven ormicrowave to heat the pizza. Thus it should introduce a variant for this.

Instrumental Conditioning should not be ignored.


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BUILD ON CUSTOMER SATISFACTION, VALUE AND RETENTION

A satisfied customer is your best advertising.-Anonymous

Amul should try to fulfill Customer Perceived Value (CPV) and thus gain Customer Satisfaction.

This will ultimately result in Customer Loyalty.

The Value Proposition promised, should be delivered.

Attract and also retain the Customers.

COMPETITION

The secret of business is knowing something that nobody else knows.Aristotle

Though Amul is Market Leader in Dairy Products, it is not so in the frozen foods category.

Pillsbury has an offering that is more appealing. It offers a Pizza Making pack compromising of all the ingredientsexcept vegetables, to make pizzas that are hot and fresh and also offers the taste desired.

People dont like frozen Pizzas, rather they would like to have some hot snacks or would order a Pizza home

Pizza Hut, Dominos, Smoking Joes are rivals to Amul Pizza.

Health Foods are gaining the market share at a rapid pace and finding peoples favor. Thus, Amuls offering of FrozenPizza gets diluted.

With the induction of the above said relaunch strategies, Amul Pizza might be able to revive its lost glory in thissegment and thus get a head start in the market of Frozen Foods.

Success needs no explanation and Failure has none.Anonymous

Thus, rather than moaning over the failure, the company should do a self-introspection and with the learned lessons

by failure prepare itself to conquer the market again.

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Documents

Amul Pizza Relaunch