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CHAPTER : IV
MARKETING STRATEGIES OF NFL & IFFCO
1. MARKETING STRATEGY
2. MARKET STRATEGIES OF NFL
3. MARKET STRATEGIES OF IFFCO
1. MARKETING STRATEGIES
NATURE AND PURPOSE OF STRATEGIES AND POLICIES
Changes in the business environment are taking place at a rapid pace. The
top management of an organization therefore needs to respond accurately
and efficiently to these changes and effect a concurrent change in the
direction or course of action adopted by organization. To face these
contemporary challenges, business firms are increasingly relying on the use
of strategic planning. Organizations differ from one another in their degree of
formality, complexity and sophistication. So, the kind of strategic planning
each organization undertakes also differs. Strategic planning is the
formalized, long-range planning process used to define and achieve
organizational goals. Strategic planning involves understanding present and
future trends, determining the direction in which the firm is headed, and
developing the means to achieve the organization’s goals. Strategic planning
is a very complex process. The impact of various external factors on the
functioning of the firm and the utilization of these factors to the firm’s
advantages are also part of the process of strategic planning.
Planning is usually done in an environment of uncertainty. Since it is
difficult to predict the future, people make assumptions or forecasts about
what the environment might be. Some of the forecasts become the basis for
other plans. For instance, the estimated market demand in a particular
industry becomes the basis for making estimates for sales planning, which, in
turn, become the basis for production planning and so on.
Strategy refers to the determination of the mission (or purpose), and the
basic long-term objectives of an enterprise and the adoption of courses
of action and allocation of resources necessary to achieve these aims.
THE THREE LEVELS OF STRATEGY
Arthur A. Thompson and A.J Strickland describe thre e types or levels of
strategies:
1. Corporate-level Strategy
2. Business-level Strategy
3. Functional-level Strategy
Corporate-Level Strategy
The purpose of a corporate-level strategy is to identify the business areas in
which an organization will carry out its operations. It also states how these
business can be coordinated in order to make the organization more
competitive in the market place and how resources can be allocated among
the various businesses in an organization. Thus, an organization operating in
more than one area of business needs a corporate level strategy. The
development of corporate level strategy is generally the responsibility of the
top management in association with the strategic planning personnel of the
organization. Corporate strategy states a comprehensive action plan for the
entire constituent business.
Levels of Strategy
Three Levels Of Strategy in an Organization
Corporate strategy
Business unit strategy
Functional Strategy
Figure No. 11
Source : ICFAI Management Publications.
Business-level Strategy
These day’s many organizations have a number of distinct strategic business
units. A strategic business unit (SBU) is a relatively independent business that
can function to a certain extent, on its own. Each SBU has its own unique set
of goals, competitors and strategies. The business unit has its own strategies
to accomplish.
The focus of business-level strategy is on determining the best ways of
operating a particular business in accordance with the corporate-level
strategy. Business-level strategy, attempt to identify ways and means to
Vision Corporate goal
Philosophy and culture
Mission Business goals
Competencies
Human Research and Development
Marketing Finance Manufacturing
achieve competitive advantages. They also try to respond appropriately to
changing environmental and competitive conditions, and help in allocating the
resources of the business unit. Usually, the heads develops business
strategies of the respective business units, subject to the approval of top
management. At this level, managers are not required to decide what
business they have to be in (as at the level of corporate strategy), but to
develop a business strategy, i.e. formulate plans to take best advantage of the
firm’s areas of distinctive competence in a particular market. If the
organization is involved in only one business, then the corporate-level and the
business-level strategies are same. The corporate-level and business-level
strategies differ only in organizations, which conduct more than one business
in different industries.
Functional-level Strategy
This strategy focuses on developing action plans for managing a particular
functional area within a business. The functional areas include research and
development, manufacturing or operations, marketing, human resources and
finance. Functional –level strategies help the organization to develop strong
functional competencies that enable it to gain competitive advantages over its
competitors.
Porter’s Five Competitive Forces Model
To analyze the nature and intensity of competition in a given industry, a
renowned management expert, Michael E.Porter, developed the ‘five
competitive forces’ model. These five competitive forces are: rivalry,
bargaining Power of customers, bargaining power of suppliers, threat of new
entrants, and threat of substitute products and services. The long-term
profitability or return on Investment of a firm in a particular industry is directly
affected by the collective strength of these forces.
Porter’s Five Competitive Forces Model
Table No. 14
Source: Michael E.porter, Competitive Strategy (New York: Free Press, 1998)
3-33
Competitive Forces Reasons for lower profit Potential
Rivalry Various competitive tactics among rivals, like
lowering the prices that can be charged.
Bargaining power of
customers
Customers force price reductions or negotiate
the increase in product quality and service at
the same price.
Bargaining power of
Suppliers
Suppliers threaten price increase and /or
reductions in the quality of goods or services.
Threat of new entrants New entrants bid prices down or cause
incumbents to increase costs in order to
maintain market position.
Threat of substitute
products or services
Availability of substitute limits the prices that
can be charged.
Rivalry
Rivalry is the extent to which competitors continually compete in order to
secure for themselves the top position in the industry. Firms may exhibit
rivalry by employing tactics like price competition, or by launching attractive
advertising campaigns, introduction of new products, and improved customer
services or warranties. The use of such tactics tends to bring down the profit
margin of the various competitors in the industry either by forcing them to
lower the prices of their products or by increasing their costs of doing
business.
The bargaining power of customers is the ability of the customers of the
company to force it to lower the price it charges for its products or services, or
the customer’s ability to demand better quality or more services from the firm
at the same price. Customers tend to be a powerful entity when:
1. Their purchases form a large chunk of the seller’s total sales,
2. They make bulk purchases of products and services, and
3. There is no difference in the products (in term of features) being
manufactured by the various suppliers in the industry. An increase in
the bargaining power of customers tends to lower the profit potential for
businesses in that industry.
The Bargaining Power of Suppliers
The Bargaining power of Suppliers is the extent to which suppliers can
threaten either to increase the prices or reduce the quality of their goods and
services. Suppliers tend to be powerful when there are only a few players in
the industry, when there are no substitutes for their products or services, or
when their products or services are critical to the buyer’s businesses. The
profit potential for business operating in an industry is reduced if the
Bargaining power of suppliers is high.
The Threat of new entrants
The Threat of new entrants refers to the ease with new competitors can enter
the market. New entrants may have substantial resources and bring in
additional production capacity. This can trigger price wars and /or increase the
cost of doing business for existing businesses due to the higher expenditures
they will have to incur (for a large sales force, advertising better service, etc.)
to retain their market position. The threats of new entrants depend on how
difficult it is to enter the relevant market.
The barriers to entry are high when:
1. A firm needs large capital investment to start a business (e.g. steel
industry)
2. Economies of scale do not allow a new player in the industry to start
small and build up volume over a period of time (e.g. television industry)
3. Established competitors have loyal customers who consider the
products or services offered by these companies to be unique and are
reluctant to buy products or services offered by other companies.
The threat of new entrants is low when barriers to entry are high and new
entrants expect a strong reaction from the present competitors. On the other
hand, the threat of new entrants entering the market is high when barriers to
entry are low and when the new entrants expect only a mild reaction from the
existing competitors.
The Threat of substitute products or services
The Threat of substitute products or services is the extent to which firms in
other industries offer substitute products for a reputed product line. The
availability of substitutes affects the price that firm in an industry can charge
for their products because any increase in price of the product by the firms
may motivate the customers to switch to a substitute product. Availability of
substitute products and services lowers the profit potential of all firms in the
industry.
Competitive advantages
A firm is believed to have competitive advantages when it uses its resources
and capabilities to develop organizational competencies, which, in turn create
substantial value for customers.
Features of competitive advantage:
1. Competitive advantages are the strongest when it is extremely
difficult or expensive for competitors to copy.
2. It is not for a firm to have competitive advanta ges over all other
competitors. The factor-giving rise to the competit ive advantages
of a particular firm may be present in other firms as well. Rather
than having no competitive advantages at all it is always better for
a firm to have competitive advantages that is share d by the top 10
percent of the companies in the industry.
3. Competitive advantages are generated on the basi s of
organizational competencies.
Steps in creating competitive advantages:
A firm can create sustainable competitive advantage s by following the
steps given below:
1. Identify the specific target markets the firm wa nts to serve.
2. Identify the potential opportunities that have n ot been tapped,
so the firm can provide better products to customer s, thereby
enhancing value for the customers.
3. Analyze its resources and capabilities to find o ut whether it
can exploit the opportunities that have been identi fied. If it
does not have the necessary resources, it should de velop
plans to obtain them.
4. Examine its capabilities and check whether it ha s the relevant
capabilities for making the best use of opportuniti es. It should
develop plans to obtain relevant capabilities if it lacks them.
5. Integrated resources and capabilities to build d istinctive
competencies so that it can generate additional val ue for the
customer.
Wal-Mart, founded in 1962 by Sam Walton, is the lar gest retailer in the
United States and the world’s largest private emplo yer. An analysis of
Wal-Mart’s history shows that it applied the five-s teps listed above. The
founder, Sam Walton, Identified his target consumer s as residents of
small towns in Arkansas, Missouri and Oklahoma. Wal ton saw an
opportunity in providing value to customers by offe ring products at
everyday low prices along with a high degree of cus tomer services. Wal,
besides hiring employees, with relevant experience from various
functional areas like retailing, distribution, fina nce and human
resources, designed its operations in a very cost e ffective manner. For
instance, it linked all operating units with its co rporate office by means
of the largest private satellite communication syst em. This allowed data,
voice and video communication among all divisions o f Wal-Mart and
speeded up the process of Inventory replenishment. Wal-Mart enhanced
its organizational capabilities by increasing its e xpertise in functional
areas like retailing, marketing, distribution etc. the company also made
the best use of its resources (in various areas inc luding retailing,
inventory, control, customer service, finance and c ost control, product
selection, marketing, location identification and s election, distribution,
acquisitions, international expansion and managemen t information
systems) helped it to provide its customers product s at low prices with
excellent customer services.
A competitive advantage is difficult to develop and sustain. But if a firm
can develop specific and sustainable competitive ad vantages, it can
reap many benefits.
[Adapted from Brad sago, “Organizational Competenci es for
Competitive Advantages,” Business Credit Vol.105, I ssue2 (Feb. 2003): p
16, 2 p.]
Porter’s Competitive Strategies
STRATEGY GURU Michael E. Porter has described three business –level
strategies, which can help a firm, gain competitive advantages over its
competitors in the same industry. A business-level strategy generally
deals with the manner in which the operations of a particular business
are carried out. Since Porter’s strategies can be a pplied across many
different situations, these are also called “generi c” strategies. Porter’s
competitive strategies are overall cost leadership, differentiation and
focus.
Common Requirement For Successfully Pursuing
Porter’s Competitive Strategies
Generic Strategy Common Organizational Requirements
Overall Cost Leadership • Tight cost control
• Frequent, detailed control reports.
Differentiation • Strong coordination among Functions in
R&D, product Development and
marketing.
• Subjective measurement and Incentives
instead of quantitative Measures.
Focus • Combination of the above policies
• Directed at the particular strategies
Target.
Table No. 15
Source: Michael E. Porter, Competitive Strategy (New York: Free Press
1998) 40-41.
Overall Cost Leadership
A cost leadership strategy aims at improving the efficiency of a firm’s
operations in order to bring down the firm’s overall costs of producing goods
and services as compared to its competitors. This strategy involves
attempting to minimize costs in every aspect of the business. Developing
efficient methods for production, curbing overhead, can control costs and
administration costs, procuring materials at low prices and by monitoring costs
of promotion, distribution and service. By bringing down its operational costs,
an organization can offer its products and services at lower prices. It can also
earn higher profits because the profit margins are greater or because the
sales volume is increased. Thus an organization which following an overall
cost leadership strategies can gain an edge over its competitors.
A low-cost strategy is a risky proposition. An organization should never
consider lowering costs at the expense of quality. Moreover, to pursue a cost
leadership strategy effectively, a firm should be the cost leader in the industry
and not just one among a number of firms trying to be cost-effective. Another
disadvantage of the cost leadership strategy is that rivalry between two
businesses trying to be cost leader may bring down the profit of both the
firms. Therefore it is important for the organization to have cost advantages,
which is quite unique and cannot be easily imitated. The organization must
also be able to incorporate improved technologies that can help improve its
operational efficiency. Apart from these aspects, managers must try to bring
out new product or service innovations, which may be very important to
customers. Innovation in products or services is essential to prevent
competitors from using a differentiation strategy and stealing customers by
bringing about significant product innovations or service improvements.
Differentiation
A differentiation strategy attempts to offer products and services that are
considered unique or innovative in the industry. If a firm is successful in
differentiation its products or services from those of its competitors, it can
generate is successful differentiation allows a firm to charge premium prices.
A firm may differentiate its products and service in various ways. It may
differentiate itself from other on terms of design or brand image (e.g. Coca-
Cola), features (e.g. Cadillac), technology (e.g. Intel microprocessors),
customer service (e.g. Hilton hotels), or quality (e.g. Sony). By using the
differentiation strategy, a firm is able to influence the perception of customers
that a product or service is unique, rather than having to reduce its costs to
attract customers.
Focus
A focus strategy helps a firm specialize within a very narrow segment of the
market by establishing a position of overall cost leadership, differentiation, or
both. In other words a firm pursuing a focus strategy tends to serve a specific
segment of the market instead of catering to the entire market. This segment
may be a special group of customers a specific geographic area or a
particular product or service line.
The logic behind a focus strategy is that a firm can serve a market segment
more effectively than its competitors, if it specializes in serving that segment
as compared to its competitors who cover the entire market. To establish itself
within a specific market segment an organization may adopt a low-cost or a
differentiation approach, or a combination of these approaches. It is possible
to achieve differentiation with a focus strategy by customizing the product to
the specialize needs of the market segment. This produces a cost advantage,
since a firm that has specialized may offer better prices on custom orders
than a firm that has a leadership position in serving the needs of the entire
market.
Markets
“A market consists of all the potential customers sharing a particular need or
want who might be willing and able to engage in exchange to satisfy that need
or want.” Thus the market depend upon the number of persons who exhibit
the needs, have resources that interest other, and willing to offer these
resources in exchange for what they want. Business people use the term
markets colloquially to cover various grouping of customers like need
markets, product markets, demographic markets, geographic markets etc.
Economics use the term market to refer to a collection of buyers and sellers
who transact over a particular product or product class.
“Marketing is a social managerial process by which individuals and groups
obtain what they need and want through creating, offering and exchanging
products of value with others.”
Marketing means human activity taking place in relation to market. Marketing.
Means working with markets to actualize wants. A marketer is someone
seeking a resource from someone else and willing to offer something of
value in exchange. The marketer is seeking a response from the other party,
either to sell something or to buy something. The marketer in other words can
be a seller or buyer. We can say that both of them are marketer and call the
situation as ‘reciprocal marketing’.
Resellers Market
The resellers market consists of all the individuals and organizations that
acquire the goods for the purpose of reselling or reusing them to others at a
profit. Resellers purchase goods for resale and good and services for
conducting their operations. Resellers are influenced by some factors,
environmental, organizational, interpersonal and individual. For new item
resellers use roughly the same buying process described for the industrial
buyer. For standard items, resellers simply, reorder goods when the inventory
gets low.
THEORETICAL BASIS OF MARKETING STRATEGY
Marketing Strategies
A Marketing Strategy is a basic statement about the desired impact to be
achieved on demand in a given target market. The detailed approaches for
implementing these strategies are determined through specific marketing
programs, such as advertising programs, sales promotion programs, product
development programs and sales and distribution programs.
Marketing strategies can be divided on the basis o f following
approaches:
1. Stimulating Primary demand by increasing the number of users.
2. Stimulating Primary demand by increasing the rate of purchase.
3. Stimulating selective demand by retaining existing customers.
4. Stimulating selective demand by acquiring new customers.
Types of Marketing Strategies:
To know which marketing strategies are useful an organization must first
know what types of demand it wishes to influence. Primary demand is
demand for the basic product or service form or class. Selective demand
represents demand for the company’s specific product or brand.
Elements of a Marketing Strategy
Total Relevant Market
Figure No. 12
Source : ICFAI Management Publications.
Target Segment
Target Segment
Target Segment
Product form or Product Class Demand Demand for
Specific
Increase Number of
Class/Buyers
Increase Rate of Retain Existing
Customers. Acquire New Customers.
Primary Demand Strategies:
Primary Demand Strategies are designed primarily to increase the level of
demand for a product form or class by current non-users or by current users.
Product in the introduction stage of the product life cycle and products with
large market shares are both likely to benefit from strategies designed to
increase the number of product form users. Similarly, a firm that attempts to
increase the rate of sales to existing product from buyers is employing a
primary demand strategy. There are therefore two fundamental strategic
approaches for stimulating primary demand.
Increasing the number of users
To increase the number of users, the firm must increase customers’
willingness to buy or their ability to buy the product or service or both.
Increasing the Willingness to buy
The willingness to buy may be increased by demonstrating the benefits
already offered by a product. This approach is often necessary in marketing a
new product form. Additionally, the willingness to buy may be achieved
through product line extensions that offer product variations that meet the
uniqueness of new potential segments.
Increasing the Ability to buy
The ability to buy can be improved by offering lower prices or credit, or by
providing greater availability through having more distributors, more frequent
delivery or fewer stock outs. Similarly a number of manufactures of machine
tools have increased financial assistance to small job shop customers in order
to enable them to buy during an era when price levels and product complexity
rose sharply.
Finally improving product availability will be of critical importance for new
products and existing products if convenience and product visibility are
important in stimulating purchase.
Increasing Rates of Purchase
If market growth rates are modest or if seasonality is a problem, managers
may wish to focus marketing efforts or increase or modify the rate of purchase
using one of the following approaches:
1. Broadening Product Usage.
2. Increasing Production Consumption Levels.
3. Encouraging Replacement Due to Product Redesign.
Selective Demand Strategies
Selective demand strategies are designed to improve the competitive position
a product service or business. The fundamental focus of these strategies is
the market share; because sales gains are expected to come at the expense
product form or product class competitors. Selective- demand strategies can
be accomplished either by retaining existing customers or buy acquiring no
customers. Particularly if industry sales are growing slowly and yet are close
market potential, managers who want to build sales can only do so by
acquiring competitors customers.
Retention Strategies
Retention strategies are more likely to be used by firm with a dominant share
of the market and by small market share firms with entrenched positions in
particular segments. Additionally both retention and acquisition can be
segment specific. Retention strategies can take several forms.
1. Maintaining Customer Satisfaction Regarding Product Performance.
2. Simplifying the Buyers Purchasing process.
3. Decreasing the attractiveness of opportunities for switching to
competitors.
Acquisition Strategies
The choice process centers on buyers assessments of which brand or
supplier, has the best offer on the determinant attributes. Additionally we
indicated that determinant attributes varied among customers and that
segmentation on the basis of attributes or benefits was useful for making
product design and communicating appeal decisions. Because choices will
largely be based on these dimensions, customer acquisition strategies will
essentially be based on how the product is to be positioned in the market.
That is a product position represents how a product is perceived relative to
the competition on the determined attributes desired by each segment. From
a managerial perspective a firm can attempt to acquire customers by
positioning its product in either of two ways:
1. Head To Head Positioning.
2. Differentiated Positioning.
Selecting A Marketing Strategy
In order for a manager to choose the best marketing strategy several kinds of
information must be considered: -
1. The marketing strategy must be consistent with the product objective.
2. Problem and opportunities regarding buyer needs, market
measurements and profitability must be determined from a situation
analysis.
3. The problem and opportunities associated with implementing a strategy
must be considered.
The Rate of Product Objectives
Product objectives help to determine the necessary basic type of
strategy. For example if market share objective is important, then
managers will employ selective demand strategy to retain or expand
market share. Alternatively the greater the importance of cash flow and
profitability objectives the more likely that a manager will select
retention strategies and strategies for increasing repurchase rates. That
is these strategies will in general be less costly than acquisition
strategies or strategies aimed at increasing the number of users.
Applications from the situation analysis
Opportunities for expanding primary demand as a result of analyzing and
measuring the market. More specifically market measurement and forecasting
each of the issues addressed on the situation analysis has implications for the
selection of marketing strategies and programs.
Implications for Primary Demand Strategies and Prog rams
Managers should be able to recognize and provide information on the
magnitude of the strategic gap between market potential and industry sales.
Market analysis and market segmentation provide information on who buys
the product from and on what factors, influence the willingness and ability to
buy.
Implications for Selective Demand Strategies and Pr ograms
Although the importance of expanding or maintaining market share is
established by the product objective, it is the situation analysis that provides
insight into the details of how managers can effectively and efficiently reach
the objective through selective demand strategies.
Developing and using a competitive Analysis
If selective demand strategies are being considered, managers should
evaluate the competitive situation facing their organization in order to
determine the feasibility of the various strategies. Preferably, this should be
done on a segment basis in order to pick out the segment that can best serve
as strategy target.
Basic element in a competitive analysis includes the following:-
1. Competitive Market Shares.
2. Competitive Attributes Analysis.
3. Competitive Distribution Analysis
4. Competitive Resource Analysis
Selecting marketing Strategy
Basic choice between alternatives:
1. Product Differentiation.
2. Market Segmentation.
While facing the problem of the basic choice, a marketing manager has been
suggested to consider the following strategy suited best for the attainment of
the objectives of company.
These factors include-
1. Size of the Market.
2. Consumer Sincerity.
3. Product Life Cycle.
4. Type of the Product.
5. Number of Competitors.
6. Typical Competitors Strategies
(1) Size of the Market: Buyers of a given product must be sufficiently
large in number for the segmentation strategy to be feasible; otherwise
product differentiation strategy is advisable.
(2) Consumer Sincerity: Seek answers to the question, do consumers
appear to be sensitive to the product difference. If the answer is yes, product
differentiation strategy is advisable. If otherwise, i.e. in case of a dull
response, the answer is segmentation strategy, with the product or promotion
mix aimed at a smaller group of prospects.
(3) Product Life Cycle: To introduce a product into a market, where the
similar type of products are already selling, segmentation strategy is advisable
because it is likely to give competitors a clear advantage. If, specially
designed offering to select market segment is made for introducing a product
into a market which is just getting with the type of the product under
consideration, preference should be given to product differentiation strategy to
build primary demand.
(4) Type of the Product: In case of a product of distinct type, say an
automobile, significant changes can be made in its design/ performance extra
such a product will lend itself to market segmentation strategy. But in case of
commodity type product type such as sugar, gas, petrol, etc. there is little
likely hood of consumers perceiving differences among offering by various
manufactures. In such case manufacturer is advised to select product
differentiation strategy in which promotion and or distribution is used for
gaining selective demand.
(5) Number of Competitors: Greater the number of firms selling the
same type of product more difficult it is for any one form to differentiate its
offering from that of its competitors. In such a situation a segmentation
strategy is preferable, if only a few firms in the industry are in the field, a
product differentiation strategy is advisable both from the point of view of
effectiveness and low cost.
(6) Typical Competitors Strategies : There seems to be uncertainty on
the view that most firms in an industry are adopting segmentation strategy
and it will be very difficult for a firm to counter it with the product differentiation
strategy. But when competitors are using product differentiation strategy, a
firm is likely to gain considerable competitor advantages by adopting market
segmentation.
While selecting a marketing strategy a firm is further advised not to forget the
two most important determinants of marketing strategy. These are the
strengths and weaknesses of the firm itself. The possible sources of its
strengths are:
1. Large financial resources.
2. A favorable image among large groups of consumers.
3. Talented personnel.
4. Patents on widely demanded products.
5. Strong inter-personal relationship with suppliers, governmental
personnel and other organizations.
Weakness may be listed as under: -
1. Limited funds and sources of capital.
2. A negative image among large group of consumers.
3. In-experienced or uniformed personnel.
4. Poor inter-personnel relationship with suppliers, governmental
personnel and other organizations.
Fertilizer marketing in the Nineties.
More than eight decades after the introduction of chemical fertilizers, India
crossed the 20 million mark during 1988-89. The ever increasing population
and the consequent demand on food grains require another 10 million tonnes
increase in fertilizer consumption in the next decade. This indeed was a
challenging task particularly in view of the fact that the base level is high and
every step in increasing consumption will be tough and arduous job. The
target is clear and it has to be reached for sheer survival. The question is how
we achieve it.
The government and the industry had to work in close co-ordination. Since the
fertilizer industry gets the clue and forges ahead to achieve the goals. Since
mid sixties the governments policies have been to encourage growth of
fertilizer to farmers at a price they can afford. While these policies saw
tremendous growth of the industry and setting up of records both in fertilizer
consumption and food grains production, certain aspects like fertilizer subsidy
received some flab's. It is here that the government has to look at the success
of its overall policy and avoid sacrificing the long term objective for some
short-term gain. This is very important as unlike other consumer products,
fertilizers are to be sold to those who are not sophisticated buyers. It requires
long continuous and sustained effort to change their cultivation method. The
industry has to develop a proper infrastructure in every marketing zone.
Scientific farming and the method of fertilizers usage are taken from lab to
land through intensive extension activities both by the government and the
industry. The industry through demonstrations, village adoptions, training, etc.
has contributed significantly for the fertilizer consumption growth.
In marketing it is the human being who plays a key role. Like water, which
takes the shape in which it is stored, the marketing man has to change as the
environment demands. Yet they have to face the challenge of creating a
brigade of trained and dedicated marketing personnel. This should therefore
be the first priority of the industry. Constant training and motivation of
marketing personnel are to be taken up by the industry. The challenges of this
period are formidable and the fertilizer industry has to gear up to face the
uphill task. Soft options will not yield the desired results. Some hard decisions
by the government and some bold initiatives by the industry are required. The
time is ripe now and any let up will leave us with the poverty and famine.
2. MARKETING STRATEGIES OF NFL
(NATIONAL FERTILIZERS LIMITED)
Product
National Fertilizers Ltd. is producing Kisan Khad (CAN), Kisan Urea and
Ankur on commercial scale. National Fertilizers ltd., is also marketing a
number of industrial products produced as by- product in its plants.
FERTILIZERS PRODUCT
Kisan Khad (CAN)
1. Kisan Khad contains 25% nitrogen in both ammonical and nitrate
forms.
2. The nitrate nitrogen ensures crop growth and maintains natural healthy
condition of soil.
3. The ammonical nitrogen retained by soil ensures sustained
development of the crops.
4. It improves soil productivity by absorbing atmospheric moisture and
providing micronutrients.
5. A boon to cultivators, granular Kisan Khad is ideal for both top as well
as basal dressing.
6. It is natural fertilizer and is good for both by land as well as acidic soil
conditions.
Kisan Urea
1. Kisan Urea in highly concentrated nitrogenous fertilizer containing 46%
nitrogen.
2. It does not leave any harmful residue in soil even after continuous
application.
3. It has a quick and lasting effect on plants and helps to grow luxuriant
bumper crops.
4. Kisan Urea can be safely mixed and applied with other fertilizer and
insecticide but it should be mixed just before the application.
5. Kisan Urea is ideally suited for all crops grown on all types of soil.
6. It is an ideal fertilizer for application in solution as a foliar spray.
Ankur
1. Ankur is a non-pressure liquid fertilizer having 32% nitrogen.
2. Ankur has nitrogen both in ammonical and nitrate form, which is
immediately available and has long lasting effect.
3. It is a pale yellow solution with a specific gravity of 1.3, it can stay as
liquid even below 2 degree Centigrade.
4. It can be applied uniformly both at basal as well as top dressing.
5. It can be mixed and applied with micronutrients, insecticides, etc.
6. It can be applied and sprayed with commonly used equipment by
farmer. It can also be broadcasted and applied through irrigation water.
Industrial Products by NFL
Industrial products produced and marketed by N.F.L. and some of their
important uses are as under:
Ammonia It is used as refrigerant
Liquid Nitrogen As a preservant, particularly in animal husbandry
research projects.
Carbon slurry It is used in plants and pigment industry. It is
used in rubber industry.
Nitrogen Gas It is used as an inert Gas.
Heavy Water It is utilized as a cooling agent in atomic energy
plants.
Liquid Oxygen It is used in steel and copper industry. It is used
in hospitals for artificial respiration.
Oxygen Gas It is used in welding.
Sulphur It is used in sugar industry. It is used for making
sulphuric acid, which is further used in, may
industries.
Methanol It is used in plants industry as thinners. It is used
in pharmaceutical firms.
Ammonium Nitrate It finds as an explosive in mining industry. It is
utilized for making anesthetic gases.
Table No. 16
Source : NFL
Promotion
Sales promotion consists of a diverse collection of incentive tools
mostly short term, designed to stimulate quicker and or greater
purchase of a particular product by consumers. Whereas, as advertising
offers a reason to buy; sales promotion offers an incentive to buy. Sales
promotion includes tools for.
1. Samples
2. Coupons
3. Cash Discount
4. Prices off
5. Premiums
6. Free trials
7. Warranties
8. Demonstration
9. Contests
10. Buying allowances. (Trade Promotion)
11. Free goods
12. Merchandise allowances
13. Co-operative advertising
14. Push Money
15. Advertising and display allowances
16. Dealer sales contest
17. Bonus (Sales- force promotion)
18. Sales rallies
These tools are used by most organizations, including manufacturers,
distributors, retailers, trade associations and non-profit organizations.
A decade ago the advertising to sale promotion ratio was about 60:40. Today
in many consumers packaged good industries the picture is reversed with
sales promotion accounting for between 60 and 70 percent.
Promotion Measures to the services of farmers
The large numbers of the farmers are not aware of economical and judicious
use of fertilizer. They would get the optimum return only with the application of
balanced fertilizer. Since UREA plays a major important role in increasing the
yield of the crops. It is very necessary for the manufacturer for the UREA to
give more stress on the promotional program for educating the farmers.
Farmer is the prime target in fertilizer promotion. He is a complex product of
his environment education, habit traditions, experiences and superstitions,
wants, fears and frustration. His reaction to any messages would be
influenced by these factors and his value judgment for evolving a successful
program of fertilizer promotion. It is necessary to understand the profile of the
Indian farmers in general and the local conditions in particular. Fertilizer
promotion of NFL can be grouped below:
Opening of NFL Agro Service Centres
N.F.L. has opened chain of agro service centres where fertilizer and other
farm inputs like seeds, pesticides agricultural equipments are made available
to the farmers. At present N.F.L. has 18 Agro Service Centres in the different
states in the service of farmers, as under:
NFL Agro Service Centres (Location wise)
Location District State
Dhaniwal Gurdaspur Punjab
Samrala Ludhiana Punjab
Garshanker Hoshiapur Punjab
Ropar Ropar Punjab
Bhatinda Bhatinda Punjab
Jind Jind Haryana
Gurgaon Gurgaon Haryana
Dabwali Sirsa Haryana
Panipat Karnal Haryana
Solan Solan Himachal Pradesh
Jammu Jammu Jammu & Kashmir
Kulgaon Srinagar Jammu & Kashmir
Gwailor Gwailor Madhya Pradesh
Vidisha Vidisha Madhya Pradesh
Shikohabad Manipuri Uttar Pradesh
Etawah Etawah Uttar Pradesh
Alwar Alwar Rajasthan
Bharatpur Bharatpur Rajasthan
Table No. 17
Source : NFL
From ASC the farmers learn how to make the most from his investments. The
services includes
1. Steps to high yield.
2. Seed treatment.
3. Planting Time.
4. Planting rates.
5. Phosphorus and potash application.
6. Land preparation
7. Irrigation practices.
8. Top dressing with Urea.
9. Profit calculation.
10. And many other knowledgeable experiences.
Village Adoption Programmer
This program is carried out with the co-ordination of state Govt. Agricultural
Universities. Fertilizer promotional programme is taken up through various
agencies, aimed to increase fertilizer consumption.
Block Demonstration
It has been one of the most widely used and effective techniques for showing
farmers what can be accomplished by using improved products and practices
and convincing farmer to adopt the improved products and practices that has
been recommended to them. Demonstration provides evidence that the
improved practices can be successfully applied under the condition faced by
farmer in there farming operation. In a block demonstration all participating
farmers agree to follow the recommended technology.
Formulation of young farmers club
In all the adopted villages, young farmer clubs formulated with an enrolment
of 20-25 farmers with in the age of 25-35 years. Every month a meeting of
each young farmers club is organized. During the meeting, technical
Literature, agricultural university publication like ‘Changi Kheti’ is distributed.
NFL’s representative helps farmers in carrying out various promotional
activities and act as a convener for organizing such meetings.
Farmers Training Programme / Crop Seminar
NFL through its area Agronomists arranges farmers training programmes and
crop seminar from time to time. In these training group discussions are held
most effectively. Some expert from the agricultural university is invited to
throw light on various aspects of modern cultivation and proper use of
balanced fertilizer. This is an effective technique.
Free Soil testing Service
NFL has established soil-testing laboratory at Nangal, Bathinda and Panipat
Units. In addition to this Mobile Soil Testing vans are also in operation at
Nangal in Punjab. Soil samples are tested free of cost.
Distribution of Technical Literature & Crop Calenda rs
Distribution of technical literature and crop calendar is one of the most
effective methods of NFL promotion programme. Literature regarding wheat,
cotton, paddy, maize, bajra, etc. is distributed by the field representative and
publicity vans. ‘Changi Kheti’ and ‘Haryana Kheti’ is also distributed to the
young farmers published by PAU and HAU. Other literature on Kisan Khad
and Kisan Urea are NFL calendars, leaflets, posters, soil testing literature etc.
Exhibitions
NFL arranges exhibitions for brand popularity and it’s communicating the use
of its brand to the users, this is also one of the most appropriate devices of
sales promotion. Exhibitions are arranged at National level, State level,
District level and also at village level.
Hoardings
NFL has installed brand informatory hoardings. (Big signs) on roadsides in the
interior of the country where major farmer community lives or at such places
where maximum number of farmers passes. There are many types of
hoardings i.e. “NFL Welcomes You” or NFL’s Regional Office/ Area Office
Welcomes you to the city, NFL Kisan Khad, Kisan Urea and Adhik Upjay,
Adhik Labh use Kisan Khad, Kisan Urea.
Installation of Boards
NFL has installed different types of boards at different Places.
Village Adoption Board
These boards are installed on the roadside of the adopted village with NFL
monograms and name of the adopted village.
Sale Point Board
These boards are installed on the roads near the sale point of NFL with an
arrow point towards the directions of the NFL fertilizer sale point.
Fertilizer Recommendation Boards
Bus Panels
NFL has fixed the bus panels at the back of the buses in most of the states.
This panel has different type of slogans in different language in different
region.
Tin Sign Plates
Tin sign plates are one of the best promotional devices. These are small in
size and fixed on all important places like village chopals, inside the buses,
dealer’s show room, railway station, bus stand etc.
Wall and Tractor Trolley Paintings
NFL wall painting design is specially prepared in accordance with the region
and place. In different region wall painting has been done in regional
language.
NFL has stared another campaign of promotional activities like tractor trolley
painting. For reaching to the ultimate consumer these trolley paintings are
done in each NFL ‘s adopted village.
Audiovisual Service
1. Radio
2. Screening of films
3. Television
4. Screening of slides
Installation of Biogas Plant
One biogas plant is being installed in each of the adopted villages. As an
incentives National Fertilizer ltd, bears 50% expenditure for the installation of
such plants.
News papers/ magazines
NFL also makes its coverage of advertisement in the different newspapers
and magazines.
Installation Of HYU Of New Crops:
To increase the fertilizer consumption, HYU of crops play a vital role.
Improved seeds of HYU of crops play a vital role. Improved seeds of HYU of
main crops are made available to the farmers.
Bhu-Sewak Concept
A Bhu-sewak is a local young farmer of the village with some educational
background. One Bhu-sewak is selected for each adopted village and he is
involved in all the activities under-taken in the village. NFL imparts regular
training to these Bhu-sewaks and awards are also given for meritorious
services rendered by them.
Mini kits Distributions
The use of Agro inputs mini kits are distributed to the small and marginal
farmers who are using imbalanced dozes of fertilizer at their fields.
Social Forestry
Mahila Mandal Kendras
Human & Health Care
Bus Stand Boards
Railway Station Boards
Distribution
The distribution of fertilizers in India is governed by stringent legal acts like
ECA, FCO and fertilizer Movement (Control) order etc. The logistics planning
is directly influenced by the availability of rail wagons; truck lorries and
storage space at the required place. Restriction of rake load movement to a
few selected destinations, high road freight, insufficient go-down availability in
semi- urban and rural areas and overall shortage of fertilizers did not let the
fertilizer industry go beyond macro level logistics planning. changing pattern
of fertilizer demand, improvement in rural communication, un-certain situation
and unhealthy competition in urban markets and the general social awakening
among customers- farmers has necessitated a fresh look on the entire
fertilizer distribution system particularly in the field of logistics planning.
The fertilizer distribution system adopted by NFL have made only a little
success in making the fertilizer available near the farmers door step, at the
right time, in right quantity. The study of fertilizer marketing system in Punjab
has revealed that not with standing the claim made by the state government
of having one fertilizer sale point in every two villages a farmer on an average
travels 8-10 kms to get the requirement of fertilizer seeds, etc. If this is the
condition in the most developed and geographically small state of Punjab,
then the position of other states can easily be understood.
Importance of Distribution Channels
Every manufacture requires a link with the consumers to sell his products.
The set of marketing intermediaries forming the link is called the distribution
channel or trade channel. Channel is a comprehensive term used to denote
the group of agencies of dealers who help in transfer of goods from the
producer to the consumer. The importance or need of channel arises primarily
on account of physical and economical reasons. Direct selling, that is selling
by producer directly to the consumer is generally not a practical proposition as
the manufacturers will be few in number where as consumers run into million,
direct selling is only possible if the consumers are localized and not scattered
through out the country. Direct selling requires huge finance, which may not
be feasible in today’s environment. These considerations are very much
significant in case of fertilizers because fertilizer industry is high capital
intensive and it has long period and having a modest profitable. Also, the
intermediaries, because of their location and characteristics, are in a better
position to establish closer and wider contact in the market.
Different Channels
There are various types of channel but the ones relevant are mentioned
below.
1. Company’s own retail outlet.
2. Co-operative societies and institutional Agencies.
3. Private trader.
4. Wholesaler.
5. Sole selling Agents.
6. Dealer.
The distribution plan under E.C.A. allocation has not been able to meet the
expectation of the industry. The last plan made for Kharif-87 fails to reach its
target, since 40 % of indigenous production remains unallocated. So it is
necessary to make the basic principle of ECA allocation more rational, which
is as under:
1. The distribution of fertilizers should be judicious to meet the
requirements of all parts of the country.
2. There should be minimum load.
3. No criss-cross movement of similar product.
4. Each fertilizer manufacturer should provide adequate marketing
territory with proper mix of irrigation and rain fed area.
5. Fertilizer Distribution Strategy of NFL.
The company products are characterized through the following agencies:
1. Institutional Agencies.
2. Private Trader.
3. Companies own, Agro Service Centre.
As per the Govt. policies, efforts are made to supply fertilizer to co-operative
and private traders in 50:50 ratios. Supply to the co-operative is ensured
through a number of states level marketing federations working in the territory
of NFL.
Institutional Agencies
State co-operatives, Agro Industrial Corporation, State Department
Corporation, for example:
1. Punjab State Co-operative Supply and marketing Federation Ltd.
[markfed]
2. Punjab Agro industries Corporation (PAIC)
3. Punjab Land Development and Reclamation Co-operative ltd.
(PLDRC).
Private Trader: Right from the beginning it has been realized that the strength
of dealership network is an important element in effectiveness of marketing
process. NFL has developed well knit dealers network numbering at present
up to 1300. The selection, appointment and evaluation of performance of
dealers is done at regular intervals and dealers are appointed at block level.
The dealers are motivated to stock sufficient quantities of N.P.K. fertilizers.
They promote the product & render various services to the farming
community.
Channels of Distribution
Figure No. 13
Source: NFL
Production Units
State Co-op
Distt. Co-op
Tehsil Co-op
Village Co-op
Companies Agro Service
Center
Dealer
Retailer
Consumer
Private Dealer Network Category of NFL
State SST EDS EXSM MFDC SC/ST PH Total
Punjab 165 45 35 7 8 1 261
Haryana 115 21 18 6 6 0 166
Rajasthan 67 34 3 3 2 0 109
U.P 108 5 1 0 2 0 116
M.P 330 10 1 0 6 3 350
Karnataka 13 0 0 0 0 0 13
A.P 10 0 0 0 0 0 10
Chandigarh 2 0 0 0 0 0 2
Delhi 2 2 0 0 0 0 4
Total 812 117 58 16 24 4 1031
Table No. 18
Source : NFL
Agro Service Centres
NFL Agro Service Centres were established to ensure the supply of Agro
inputs under one roof to farming community along with technical advisory
service for package and practices, fertilizers, seeds, etc. The main objectives
of Agro Service Centres are as under:
1. To ensure timely supply of N.F.L. fertilizers like CAN, UREA, fertilizers
improved seeds, agro chemicals etc. to farmers directly.
2. To provide soil and water testing for achieving efficient use of
fertilizers.
3. To maintain direct contact with farmers is the ultimate objective.
4. To popularize the use of bio-fertilizers by installing Gobar Gas Plants.
5. To provide hire services to weaker sections of farming community for
achieving efficient use of fertilizers.
6. To educate the farmers and sales men by carrying the training
programmes, crop seminars, field day, etc.
7. The company decided that Agro Service Centre would be established
in phases. Presently 18 NFL-Agro-Service Centers are functioning in
India.
Agro Service Centres of NFL
Table No. 19
Source : NFL
State Location District
Punjab Bathinda
Ropar
Samrala
Dhariwal
GGarhshankar
Bathinda
Ropar
Ludhiana
Gurdaspur
Hoshiapur
Haryana Panipat
Jind
Gurgaon
Dabwali
Karnal
Jind
Gurgaon
Sirsa
Himachal Pradesh Solan Solan
Jammu & Kashmir Kulgam
Jammu
Srinagar
Jammu
Madhya Pradesh Gwailor
Vidisha
Ggwalior
Vidisha
Uttar- Pradesh Shikoabad
Etawah
Manipur
Etawah
Rajashthan Alwar
Bharatpur
Alwar
Bharatpur.
3. MARKETING STRATEGIES OF IFFCO
(INDIAN FARMERS FERTILIZER COOPERATIVE LIMITED)
Introduction
The fertilizer industry has been supplying a substantial portion of the growing
demand of fertilizers within the country. The capacity has reached a level of
around 9.8 million tonnes of nitrogen and 2.9 million tonnes of phosphate
nutrients. India is the third largest fertilizer producer in the world. There are
60 large size fertilizer plants in the country, manufacturing a wide range of
nitrogenous, phosphatic and complex fertilizers. Besides, there are 81
medium and small-scale single super phosphate units.
The cooperative sector has come to play a significant role in the Indian
fertilizer industry. In term of nutrients, the share of cooperative sector in the
installed capacity is 19.7% for nitrogen and 10.2 % for phosphate. Indian
Farmers fertilizer Cooperative Limited (IFFCO) accounts for 64 % of the
installed capacity of Nitrogen and the Phosphate capacity in the cooperative
sector.
The origin of IFFCO
The cooperative sector in India during mid-sixties distributes 70 per cent of
the chemical fertilizers consumed in the country. This sector had adequate
infrastructure to distribute fertilizers but had no production facilities. With the
introduction of multi-agency approach by the Government of India in the
distribution of fertilizers during 1967, the private trade also entered the field of
fertilizer distribution. The private sector production units provided more
opportunities to the distribution network of private trade and gave secondary
preference to the cooperative in the matter of supplies. Due to this
development the cooperative started getting less supply of the fertilizers. To
overcomes this limitation and also to bridge the growing demand for the
fertilizers in the country, a new cooperative was conceived in the year 1964,
the cooperative League of USA proposed to the Government of India that the
American Cooperative were interested to collaborate with Indian cooperative
in setting up fertilizer production capacity. The idea appealed to the
Government of India and eminent cooperators of the country. As a result
Indian Farmers Fertilizer Cooperative Limited (IFFCO) was conceived and
registered on November3, 1967 as a multi-unit cooperative society with the
primary objective of production and distribution of fertilizers. The U.S.
Cooperative through Cooperative Fertilizer International (CFI) provided a
million dollar aid beside technical know-how to IFFCO.
Growth of IFFCO
Over the years IFFCO has grown in strength from a modest membership of
57 societies in 1967-68 to 37424 in 2005-06 which is evident of the growth in
the membership of IFFCO during the last three decades. These cooperative
societies participate in the governance of IFFCO through their contribution to
its share capital and ensure that the activities of IFFCO contribute to
strengthening of the Indian cooperative movement and the welfare of Indian
Farmers. IFFCO strated with an equity capital of Rs 0.6 million contributed by
the cooperative in 1967-68, the share capital grew to Rs 3.62 billion. It
comprises a contribution of Rs 2.896 billion by the Government of India and
Rs 0.725 billion by member cooperative societies of the country. IFFCO has
always ensured that these funds are carefully deployed to meet the
aspirations of thousands of Farmers who own it through cooperative societies.
IFFCO’s financial performance has always been commendable.
Co-operatives play a vital role in the economy of India as they over-come the
defects of capitalism as well as remain away from the evils of communism.
Co-operative is considered to be the best organization suited to the ancient
culture and the tradition of our country.
At present the Indian co-operative system is the biggest in the whole world. In
India there are 4.53 lakh co-operatives societies of all kinds with membership
0f 20.40 crore and a working capital of more than Rs.1, 60,000 crores.
The share of co-operatives in National economy has reached a commendable
level. Co-operatives account for about 57% of the total sugar production, 20%
of the export of the cotton yarn, and 27% of the rice procurement, 60 % of the
total agricultural credit is disbursed through co-operative sector and it also
plays a significant role in production of dairy products, edible oils, etc.
Fertilizer production and distribution is one of the important sector where co-
operatives have made tremendous progress. IFFCO was formed during 1967
as an experiment in a sophisticated field which eventually blossomed to
occupy a place of pride in the Indian fertilizer project in the world.
Governance of IFFCO
The cooperative are running on the cardinal principle of being owned,
controlled and used by the members. In accordance with the same the
activities of IFFCO are governed by the elected body/bodies through
democratically expressed popular will of the member societies. The existing
Multi-state Cooperative Societies Act, 1984 and the bylaws framed by the
General Body of IFFCO form the mainframe work to guide the IFFCO
activities. In accordance with the existing law, IFFCO has a Representative
General Body (RGB); which is a main policy making body. The RGB is the
supreme body which lays down the policies to achieve the objectives of the
Society.
The RGB consists of:
1. Members of the Board of Directors.
2. Member Societies holding share of the value of Rs 100 thousand and
above send their representative directly to the Representative General
Body of IFFCO. These are mostly Chairmen of their respective
societies elected by the members of that society.
3. Member-Societies having shares of lower denominations total value of
which is not exceeding Rs 100 thousand, are grouped into constituency
of 200 societies. The Chairman of the respective societies in this group
of 200 societies forms the Electoral College; out of which one
representative is elected as a delegate for the RGB of IFFCO. The
maximum number of such delegate from any state/ Union Territory
should not exceed 25.
Board of Directors
Board of Directors, comprising of 30 Members, is responsible for direction and
control of management of affairs of the societies within the board policies laid
down by the General Body of IFFCO. The Board interprets the organizational
objectives and sets up specific goal to be achieved by the group of
professional managers headed by the Chief Executive. The Board of IFFCO
consists of 12 representatives from the State federations, 5 Directors
nominated by the Government of India, Managing Director of National
Cooperative Development Corporation and 3 Functional Directors, including
the Chief Executive/ Managing Director; whom the Board appoints. The
representatives of the State federations are generally Chairmen who are
democratically elected by the smaller constituent societies of the federations.
Besides, eight Directors are directly elected by the representative General
Body of IFFCO, essentially by the representatives of smaller societies mostly
at village level. Therefore, there is a strong representation from lower level
cooperative on the Board of IFFCO. The presence of Chairman of National
Cooperative Union of India and the Managing Director of National
Cooperative Development Corporation on the Board of IFFCO gives an added
strength in directing the policies within the cooperative framework. The
Chairman and Vice- Chairman are elected from amongst the Board of
Directors. The process of election of cooperative provides equal opportunity to
all village level and state level cooperatives to head the Board of a multi-state
cooperative society. The present Chairman comes from a small village level
cooperative society having a share capital equivalent to US$ 28 only. Similarly
the present Vice-Chairman has also come from village level cooperative
society having capital with IFFCO equivalent to US$ 3025. All the decisions of
the Board are taken by majority opinion.
Seeding Programme
IFFCO started its seeding programme of marketing fertilizers through
representatives and educating their member farmers on efficient use of
fertilizers in the year 1970-71 in ten states of India viz. Punjab, Haryana, Uttar
Pradesh, Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Andhra
Pradesh, Karnataka and Tamil Nadu. The main objectives of seeding
programme were to create brand identity, develop market for the fertilizers to
be produced by IFFCO’s plants and put up the marketing systems in place.
Fertilizer Production
IFFCO commissioned an ammonia- urea complex at Kalol and an NP/NPK
plant at Kandla in Gujarat in 1975. Another ammonia-urea complex was set
up at Phulpur in Uttar Pradesh in 1981. The ammonia- urea unit at Aonla was
first commissioned in 1989 and then expanded in 1996.The installed capacity
of all the plants in terms of the nutrient is 1.2 million tonnes of nitrogen and
309 thousand tonnes of phosphates. All the units of IFFCO have consistently
shown good performance and have received national and international
recognition.
Production Capacity & Performance
During the year 2005-06, IFFCO produced a total of 899.284 lakh tonnes of
fertilizers in its plants.
IFFCO’s Marketing Setup
IFFCO supplies its fertilizer material mostly through cooperative channel.
However the co-operative societies have no obligation to purchase from
IFFCO. This necessitates a competitive approach to nurture brand loyalty.
The marketing strategy of IFFCO is designed to ensure timely availability of
reasonably priced quality products at the doorstep of the farmers through the
nationwide co-operative network. The fertilizer is distributed through Apex Co-
operative Marketing Federations in many states of the country. Direct supplies
to the village level co-operative societies are also undertaken in some states.
Small quantities are provided to other institutional agencies like Agro-
industries Corporations in some states. IFFCO- NCDC societies and IFFCO’s
Farmers Service Centers (FSCs) are also used as outlets for retail sale of
fertilizers. The marketing field setup of IFFCO comprises of 5 Zonal Offices,
14 State offices, 2 State- cum-Area offices and 62 Area Offices. Each Area
Office covers 4 to 6 district. There are 8 to 10 field offices in each Area Office.
They are posted in district and taluka level towns. The field officers work with
the farmers and facilitate the transfer of modern agricultural technology. The
total marketing field force of IFFCO is about 500 persons who are basically
agriculture graduates.
Sales Performance
IFFCO sales have always been high in the Indian market and have kept pace
with production augmentations. The sale as on 31st March 2006 was 946.394
Lakh million tonnes as compared to 2.64 million tonnes of 1989-90. The sales
during 1996-97 consist of 2.14 million tonnes of urea and 1.02 million tonnes
of NPK/DAP.
Farmers Service Centres (FSC)
To provide all agricultural inputs to the farmers under one roof, IFFCO has
established its own Farmers Service Centres (FSCs). These FSCs sell IFFCO
fertilizers directly to the farmers in addition to providing technical know-how
and services, like supply of agricultural implements on custom hire basis and
sales of seed and agro- chemicals. At present, there are 168 FSCs spread
throughout the country.
IFFCO-NCDC Societies
IFFCO in collaboration with National Cooperative Development Corporation
(NCDC) had taken up the task of developing 2500 village level societies on
the pattern of IFFCO’s Farmers Service Centers. Under the Scheme, IFFCO
provided a subsidy of Rs 12,000 to each society for furniture/ fixtures and
agricultural implements. Under the scheme, finally 1450 societies were
adopted and amount of Rs.42.82 million was released to these societies as
margin money. NCDC provided margin money loan through IFFCO ranging
between Rs 30,000 to Rs 40,000 for each society.
Subsequently the scheme was revised and the respective State Governments
distributed the margin money to the remaining societies. At present the loan
limit has been revised up to Rs 100,000 and it is routed through the State
Governments in the form of equity.
Service to the Farmers
Extension & Education Programmes
Keeping in view the specific requirement of an area, IFFCO has devised
various programmes for the benefit of the farmers. By and large, these include
demonstration on farmer’s fields, field days farmers meetings, and crop
seminars, various agricultural campaigns distribution of agricultural
implements and plant protection equipment etc. Along with agricultural
development, IFFCO has also undertaken some work on social development
in rural areas through its village adoption programme. IFFCO also undertook
specific programmes like farmer’s integration, training and visit to research
institutes/ agri- varsities. IFFCO has also pressed into service, two mobile soil
testing vans to cater to the need of the farmers for soil testing. These vans are
also screening films on crop production in the villages. Each year about a
million farmers all over the country participate in the various extension
education programmes organized by IFFCO and take the benefit of
technology transfer or services offered by IFFCO for adoption of new
technologies. Intensive training programmes are also organized for its own
staff to keep them abreast with the recent development in agriculture and
fertilizer use. IFFCO also seeks the support of electronic and print media for
disseminating the crop production technology. To assist agricultural research,
IFFCO has established professor’s Chairs in the disciplines of Agronomy, Soil
Science, Extension and Cooperative, Agri Economics and fertilizer
technology.
Seed Multiplication Programme
In order to supplement the availability of quality seeds to the farmers, IFFCO
has been taking up the seed multiplication programme in various states.
Under this programme, quality seeds of wheat, rice, maize, pigeon pea, pea,
moonbeam, pearlmilet, seas mum, castor, black gram, groundnut, mustard,
sunflower, soybean and cotton were grown on farmer’s fields.
Special Projects
To facilitate transfer of technology, certain special projects are launched in the
areas of dry land agriculture, tribal/ backward area development, land
reclamation, Bio-fertilizers, bio-pesticides, plastic in agriculture, farm
implements, micro-irrigation system, integrated plant nutrient management
(IPNS), wasteland development, watershed management.
IFFDC Project
The Indian Farm Forestry Development Cooperative Ltd. (IFFDC) has been
promoted by IFFCO and registered as a multi-state cooperative Society. The
board objective of IFFDC is to promote forestations on wastelands through
Primary Farm Forestry Cooperative Societies (PFFCS) at the village level. Its
area of operation is in 11 states. At present IFFDC is maintaining a pilot
forestry project which IFFCO started in 1986-87 and also the IFFDC project
sponsored by IFFCO and India Canada Environment Facility (ICEF) for a
period of 5 year since April 1, 1995. Both these projects are under
implementation in Uttar Pradesh; Madhya Pradesh and Rajasthan. The broad
objectives of the society are to promote Farm Forestry in 20000 wastelands in
the states of Uttar Pradesh, Madhya Pradesh and Rajasthan and to promote
90 primary Farm Forestry Cooperative Societies (PFFCS) at village level.
Co-operative Rural Development Trust (CORDET)
Co-operative Rural Development Trust (CORDET) was promoted by IFFCO
with a view to provide practical training to the farmers to improve their skills in
agricultural production, dairy, poultry, fisheries and professional leadership at
the village level. The trust has two establishments; one each at Phulpur (UP)
and Kalol (Gujarat), at IFFCO’s fertilizer production sites. Activities of seed
production, supply of quality crop seeds and saplings of fruits and ornamental
forestry plants are also undertaken by CORDET. In addition, CORDET is
involved in soil testing. At both the locations, soil testing laboratories of 30,000
samples per annum capacity is operational. Production of bio-fertilizers has
also strated at CORDET, Phulpur. The bio-fertilizer plant has a capacity of 75
metric tonnes per annum. One to two week training programmes on various
aspects of farming are organized.
Support to Cooperative Movement
All along, IFFCO has followed a policy of educating the farmers about the use
of fertilizers, through its field staff at the grassroots level. The scheme is for
the promotion of cooperative fertilizer extending beyond the agriculture sector.
Besides strengthening the cooperative fertilizer distribution system, IFFCO is
contributing to the improvement in the health of grassroots level cooperative
societies by paying regular dividend and patronage rebates. In addition a
large number of cooperative seminars training programmes for cooperative
personnel, promotional and extension programmes are undertaken to
strengthen Indian cooperative sector. IFFCO adopted 500 village
cooperatives in the golden jubilee year of Independence. These societies
were provided with financial, infrastructural and managerial assistance.
IFFCO has promoted IFFCO-NCDC societies and has instituted annual
awards for ‘Best Cooperator’ and ‘Sahkarita Bandhu’ to honor the individual
contributions made for the development of cooperative philosophy in the
country.
IFFCO has made significant contribution towards the cooperative education
programme through National Cooperative Union of India (NCUI). Each year a
handsome amount is being paid from the profit and since 1985-86 a total of
almost Rs 104 million has been paid towards the cooperative education by
IFFCO. This is the highest contribution paid to NCUI by any single
organization.
“Vision 2000”
IFFCO had visualized a long –term comprehensive plan titled ‘Vision 2000’ for
making a significant contribution to the process of nation building. This plan
envisages the expansion of existing units, establishment of new fertilizer
production facilities inside and outside the country, production of agro-
chemicals and augmentation. The project for the doubling of the production
capacity at the existing unit at Aonla has already been completed. IFFCO may
achieve the distinction of bagging the global leader in fertilizer production. The
major progammes taken up under this programme are:
Other Contributions of IFFCO
In addition to its own growth, IFFCO has contributed to the equity of many
other organizations particularly related to the fertilizer industry. Each of these
organizations has in turn achieved good performance standards. IFFCO holds
21.07% of Krishak Bharati Cooperative Limited (KRIBHCO), which is another
major urea producer in the Indian cooperative sector. KRIBHCO’s plant at
Hajira has a production capacity of 1.45 million tonnes of urea per annum.
Godavari Fertilizers and Chemicals Limited (GFCL), in which IFFCO holds
about 25% of equity, has a DAP plant in Kakinada. IFFCO is a joint venture
partner in industries Chimique du Senegal (ICS), Senegal that produces
phosphoric acid and NPK fertilizers. In addition IFFCO has also contributed to
the equity of Indian Tourism Cooperative Limited (COOPTOUR) and National
Films and Fine Arts Cooperative Limited (NAFFAC). IFFCO has participated
in the revival of an ailing sugar factory in cooperative sector by extending
managerial and financial assistance.
Major Investment of IFFCO
Percentage Equity Held IFFCO’s Constribution
(Rs. Million)
Name of Organisation
34% 32.4 Indian Potash Ltd.
1.05% 78 ICS Senegal
24.91 79.7 Godavari Fertiliser and
Chemicals Ltd. (GFCL)
21.07 970 Krishak Bharati Co-op
Ltd (KRIBHCO)
Table No. 20
Source : IFFCO
Recognitions and Awards
IFFCO’s overall performance has been recognized by various Indian and
International bodies. A number of awards have been bestowed on it for its
commitment to excellence in the areas of production, performance, safety,
innovation, energy conservation and project implementation. National Safety
Council (USA), fertilizer association of India (FAI), National Productivity
Council of India (NPC) and Federation of India Chamber of Commerce are the
major bodies from which IFFCO has received major recognition and awards.
Awards Received
KALOL Seven Awards for Overall Performance from AFI
Two Awards for Industrial Safety from GOI
Awards for Technical Innovation from FAI
Two Rajya Sabha Shields for Promoting Hindi
Awards for Safety from National Safety Council, Chicago.
PHULPUR Four Awards for Productivity from NPC
Five National Safety Awards from GOI
Two Awards for Overall Performance from FAI
Two Awards for Technical Innovation from FAI
Three National Energy Conservation Awards
AONLA Awards for best Implemented Project (Second Prize) from GOI
Awards for Conservation of Energy from GOI
KANDLA Seven Awards for industrial Safety from GOI thirteen
Awards for safety from national safety council, USA
Two Awards for overall performance from FAI
Rajya Bhasha Award for promoting Hindi
OTHERS ”Best Cooperative Awards” from National Cooperative Union of
India three awards for best display in FAI Exhibitions
Two awards for high commendable accounts
Awards in appreciation of initiative in family planning
Awards for best house journal.
Celebration of Golden Jubilee year of India’s Indep endence by IFFCO
• Farmer’s Education and Balanced Fertilisation
• Grassroots Cooperative Development
• Overall Rural Development
• Dedication of Expansion Project and Foundation Laying of Grass root
• Ammonia- Urea Complex.
The field staff of IFFCO marketing conducted a variety of educational and
promotional programme benefiting 4,50,000 farmers and 55,000 cooperative
societies. IFFCO is planning to adopt 500 village level cooperative societies to
enhance their financial, infrastructural and managerial capabilities. Storage-
cum-community centres are proposed to be set up to provide information on
agricultural technology to the farmers and will serve as centres for organising
social and agricultural extension activities. These centres will also be linked
with agro-input supplies. Other programmes related to rural development are
also proposed to be launched which include activities like provision of drinking
wafer facilities in villages, schools, bus-stops, renovations of school buildings,
supply of books and equipment, medical checkup, eye camps. The Phulpur
and Kalol expansion projects will be dedicated to the nation and foundation
laying of grassroots project at Nellore is also expected to be undertaken.
Succeed even in high investment high technology areas like fertilizer
production. The entire production can be marketed through the member
cooperative societies. The large scale extension activities and cooperative
development programmes have strengthened the bond between IFFCO and
the Indian farmers who are the consumers as well as members of the village
level cooperative societies. The confidence generated by this success has
paved way for a vigorous growth programme to expand its existing units as
well as established new units. This well enable IFFCO to emerge as a global
leader in production and marketing of chemical fertilizers located in a single
country. The basic philosophy of cooperative, particularly the principles of
democratic. Member control and concern for community, has been the soul of
decision making of IFFCO. The Board of Directors has followed these
principles and IFFCO grew because of the commitment to these principles. At
the end, I must say that IFFCO is proud to be cooperative and is dedicated to
million of its constituent farmers.
