AN INTERNSHIP REPORT ON

DISTRIBUTION ROUTE EFFECTIVENESS

PRITAM SONAWANE ROLL # 9810063

IN PARTIAL FULFILMENT OF THE MASTERS PROGRAM IN BUSINESS ADMINISTRATION

DEPARTMENT OF MANAGEMENT STUDIES,

INDIAN INSTITUTE OF TECHNOLOGY, ROORKEE UTTARAKHAND.

MAY JULY 2010.

ACKNOWLEDGMENT

I consider it as a great privilege to place a record of my profound gratitude and

indebtedness to my mentor Mr. Sunil More for his constant attention, invaluable guidance,

and constructive criticism given to me, without which the project would have not seen the

light of the day.

I am thankful to all respondents for giving me their valuable time and genuine information.

My heartfelt gratitude also goes out to the staff and employees at Mother Dairy for having co-

operated with me and guided me throughout the two months of my internship period.

In the end I would like to thank my Institute, Department of Management Studies, IIT

Roorkee for having given me this opportunity to put to practice, the theoretical knowledge

that I imparted from the program.

Pritam Sonawane Mr Sunil More

Contents EXECUTIVE SUMMARY ....................................................................................................................... 6

FMCG SECTOR ................................................................................................................................... 7

INTRODUCTION ............................................................................................................................. 7

SWOT ANALYSIS ............................................................................................................................ 8

GROWTH PROSPECT ...................................................................................................................... 9

ADVANTAGES TO THE SECTOR ..................................................................................................... 10

INDIAN DAIRY .................................................................................................................................. 11

MILK PRODUCTION ...................................................................................................................... 11

Flow chart of conversion of milk into traditional Indian dairy products .................................... 13

SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY .............................................................................. 13

INDIA: WORLDS LARGEST MILK PRODUCER ................................................................................. 15

Milk: India's Number One Farm Commodity ................................................................................ 16

MARKETING TODAY & TOMORROW ............................................................................................ 16

NATIONAL DAIRY DEVELOPMENT BOARD (NDDB) ............................................................................ 19

An Institution of National Importance ...................................................................................... 19

Philosophy ............................................................................................................................... 19

Constitution ............................................................................................................................. 20

Dairy Cooperatives .................................................................................................................. 20

OPERATION FLOOD ...................................................................................................................... 21

MOTHER DAIRY ............................................................................................................................... 24

About The Company ................................................................................................................ 24

Objectives and Business Philosophy of Mother Dairy ............................................................... 26

Various Divisions Of Mother Dairy ........................................................................................... 27

INTERNATIONAL BUSINESS .......................................................................................................... 31

STRATEGIES IMPLEMENTED ......................................................................................................... 32

Focused Approach ................................................................................................................... 32

Product Differentiation ............................................................................................................ 32

Smart Marketing ...................................................................................................................... 33

Perspective Strategies applied by Mother Dairy ....................................................................... 34

Strategy for Strengthening Cooperative Business ..................................................................... 34

Strategy for Production Enhancement ..................................................................................... 35

Strategy for Assuring Quality ................................................................................................... 35

Strategy for Creating an Information and Development Research ............................................ 35

Product and Process Technology.............................................................................................. 36

Competition in Different Products ........................................................................................... 36

Advertisement and Promotion by Mother Dairy....................................................................... 37

Mother Dairy and Its Programme for Management of Change ................................................. 38

ORGANIZATION STRUCTURE OF THE SALES DEPARTMENT ........................................................... 39

DISTRIBUTION NETWORK ............................................................................................................ 40

Distribution Routes .................................................................................................................. 40

Distribution Vehicles ................................................................................................................ 41

Distribution System ................................................................................................................. 41

Departments Involved In The Distribution Process ................................................................... 42

Project: Distribution Route Effectiveness Of Cold Chain Products (CCP) i.e. Curd Division. ............... 43

ABOUT THE PRODUCT ................................................................................................................. 44

Mother Dairys Fresh Dairy Division ......................................................................................... 44

Product Profile ......................................................................................................................... 44

Pricing Of Various Packaged Dahi Available In The Market ....................................................... 47

What are Probiotics? ............................................................................................................... 47

Why do we need Probiotics?.................................................................................................... 48

Where to get them from? ........................................................................................................ 49

CURD MAKING PROCESS .............................................................................................................. 50

OBJECTIVES OF THE PROJECT ....................................................................................................... 51

RESEARCH METHODOLOGY ......................................................................................................... 51

METHODOLOGY........................................................................................................................... 52

DATA COLLECTION ....................................................................................................................... 52

Sources Of Data ....................................................................................................................... 52

METHODOLOGY ADOPTED FOR RESEARCH .................................................................................. 53

Area Of Research ..................................................................................................................... 53

Types Of Outlet ........................................................................................................................ 54

SCOPE.......................................................................................................................................... 54

LIMITATIONS ............................................................................................................................... 54

DATA PRESENTATION & ANALYSIS ................................................................................................... 55

MARKET CONSTRUCT MARCH 2010 .......................................................................................... 64

OBSERVATIONS & SUGGESTIONS ..................................................................................................... 65

ADDED PROJECT: SALES PROMOTION .............................................................................................. 67

OBJECTIVE OF PROMOTION ......................................................................................................... 67

PROMOTION TOOLS .................................................................................................................... 67

Samples ................................................................................................................................... 67

Coupons .................................................................................................................................. 67

PROMOTION METHODOLOGY ..................................................................................................... 67

SALES PROMOTION ACTIVITY SNAPS ............................................................................................ 68

CURD SAMPLING DATA ................................................................................................................ 69

DATA ANALYSIS ........................................................................................................................... 70

SALES PROMOTION DATA INETRPRETATION ................................................................................ 71

CONCLUSION ................................................................................................................................... 76

BIBLIOGRAPHY ................................................................................................................................ 77

ANNEXURE ...................................................................................................................................... 78

EXECUTIVE SUMMARY

The main objective of this study lies in understanding the organization, studying,

understanding the marketing channels of the company and to correct its distribution activities

as well.

Deep learning regarding channel efficiency and understanding the market structure,

identifying potential outlets and practical survey was also undertaken.

This project is regarding the distribution route effectiveness, to study the impact of it on sales

and how the company understands the market using different strategies. The project was

undertaken for a period of sixty days and was carried out within the limits of Mumbai.

During the entire course of the project, many outlets were surveyed for analysis regarding

distribution effectiveness & channel mapping.

In the first part of the project, a survey of selected outlets was conducted by taking interview

of outlet owners or managers. Based on the information gathered through the outlet managers

or owners service and distribution improvement, competitive position in the different areas

and scope for the market expansion is studied.

FMCG SECTOR

INTRODUCTION

Products which have a quick turnover, and relatively low cost are known as Fast Moving

Consumer Goods (FMCG). FMCG products are those that get replaced within a year.

Examples of FMCG generally include a wide range of frequently purchased consumer

products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and

detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products,

and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged

food products, soft drinks, tissue paper, and chocolate bars.

Indias FMCG sector is the fourth largest sector in the economy and creates employment for

more than three million people in downstream activities. Its principal constituents are

Household Care, Personal Care and Food & Beverages. The total FMCG market is in excess

of Rs. 85,000 Crores. It is currently growing at double digit growth rate and is expected to

maintain a high growth rate. FMCG Industry is characterized by a well established

distribution network, low penetration levels, low operating cost, lower per capita

consumption and intense competition between the organized and unorganized segments.

The FMCG sector consists of the following categories:

Personal Care- Oral care, Hair care, Wash (Soaps), Cosmetics and Toiletries, Deodorants

and Perfumes, Paper products (Tissues, Diapers, Sanitary products) and Shoe care; the major

players being; Hindustan Lever Limited, Godrej Soaps, Colgate, Marico, Dabur and Procter

& Gamble.

Household Care- Fabric wash (Laundry soaps and synthetic detergents), Household

cleaners (Dish/Utensil/Floor/Toilet cleaners), Air fresheners, Insecticides and Mosquito

repellents, Metal polish and Furniture polish; the major players being; Hindustan Lever

Limited, Nirma and Ricket Colman.

Branded and Packaged foods and beverages- Health beverages, Soft drinks,

Staples/Cereals, Bakery products (Biscuits, Breads, Cakes), Snack foods, Chocolates, Ice-

creams, Tea, Coffee, Processed fruits, Processed vegetables, Processed meat, Branded flour,

Bottled water, Branded rice, Branded sugar, Juices; the major players being; Hindustan Lever

Limited, Nestle, Coca-Cola, Cadbury, Pepsi and Dabur.

Spirits and Tobacco- the major players being; ITC, Godfrey, Philips and UB

SWOT ANALYSIS

Strengths:

Low operational costs

Presence of established distribution networks in both urban and rural areas

Presence of well-known brands in FMCG sector.

Weaknesses:

Lower scope of investing in technology and achieving economies of scale, especially in

small sectors

Low exports levels

"Me-too products, which illegally mimic the labels of the established brands. These

products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities:

Untapped rural market

Rising income levels, i.e. increase in purchasing power of consumers

Large domestic market- a population of over one billion.

Export potential

High consumer goods spending.

Threats:

Removal of import restrictions resulting in replacing of domestic brands

Slowdown in rural demand

Tax and regulatory structure.

GROWTH PROSPECT

Large Market

India has a population of more than 1.150 Billions which is just behind China. According to

the estimates, by 2030 India population will be around 1.450 Billion and will surpass China

to become the World largest in terms of population. FMCG Industry which is directly related

to the population is expected to maintain a robust growth rate.

Spending Pattern

An increase is spending pattern has been witnessed in Indian FMCG market. There is an

upward trend in urban as well as rural market and also an increase in spending in organised-

retail sector. An increase in disposable income, of household mainly because of in-crease in

nuclear family where both the husband and wife are earning, has leads to growth rate in

FMCG goods.

Changing Profile and Mind Set of Consumer

People are becoming conscious about health and hygienic. There is a change in the mind set

of the Consumer and now looking at Money for Value rather than Value for Money. We

have seen willingness in consumers to move to evolved products/ brands, because of

changing lifestyles, rising disposable income etc. Consumers are switching from economy to

premium product even we have witnessed a sharp increase in the sales of packaged water and

water purifier. Findings according to a recent survey by A. C. Nielsen shows about 71 per

cent of Indian take notice of packaged goods labels containing nutritional information

compared to two years ago which was only 59 per cent.

ADVANTAGES TO THE SECTOR

Governmental Policy

Indian Government has enacted policies aimed at attaining international competitiveness

through lifting of the quantitative restrictions, reducing excise duties, automatic foreign in-

vestment and food laws resulting in an environment that fosters growth. 100 per cent ex-port

oriented units can be set up by government approval and use of foreign brand names is now

freely permitted.

Central & State Initiatives

Recently Government has announced a cut of 4 per cent in excise duty to fight with the

slowdown of the Economy. This announcement has a positive impact on the industry.

But the benefit from the 4 per cent reduction in excise duty is not likely to be uniform across

FMCG categories or players. The changes in excise duty do not impact cigarettes (ITC,

Godfrey Phillips), biscuits (Britannia Industries, ITC) or ready-to-eat foods, as these products

are either subject to specific duty or are exempt from excise. Even players with

manufacturing facilities located mainly in tax-free zones will also not see material excise

duty savings. Only large FMCG-makers may be the key ones to bet and gain on excise cut.

Foreign Direct Investment (FDI)

Automatic investment approval (including foreign technology agreements within specified

norms), up to 100 per cent foreign equity or 100 per cent for NRI and Overseas Corporate

Bodies (OCBs) investment, is allowed for most of the food processing sector except malted

food, alcoholic beverages and those reserved for small scale industries (SSI).

INDIAN DAIRY

Expanding Daily

Indias modern dairy sector has expanded rapidly. From an insignificant 200,000 litres per

day (lpd) of milk being processed in 1951, the organized sector is presently handling some 20

million lpd in over 400 dairy plants. Already, one of the worlds largest liquid milk plants is

located in Delhi, handling over 800,000 litres of milk per day (Mother Dairy, Delhi). India's

first automated dairy (capacity: 1 million lpd) -- Mother Dairy, Gandhinagar -- has been

established at Gandhinagar near Ahmedabad, Gujarat, in Western India. It is owned by

Indias biggest dairy cooperative group, Gujarat Cooperative Milk Marketing Federation

(GCMMF) in Anand, with an annual turnover in excess of Rs 23 billion (US $500 million).

Amul-III with its satellite dairies, with total installed capacity of 1.5 million lpd has also been

commissioned. India's first vertical dairy (capacity: 400,000 lpd), owned by the Pradeshik

Cooperative Dairy Federation(PCDF) has been commissioned at Noida, outside Delhi.

MILK PRODUCTION The Upside

Increasing awareness: As India enters an era of economic reforms, agriculture, particularly

the livestock sector, is positioned to be a major growth area. The fact that dairying could play

a more constructive role in promoting rural welfare and reducing poverty is increasingly

being recognized. For example, milk production alone involves more than 70 million

producers, each raising one or two cows/buffaloes. Cow dung is an important input as organic

fertilizer for crop production and is also widely used as fuel in rural areas. Cattle also serve as

an insurance cover for the poor households, being sold during times of distress.

Supply matches demand: Efforts to increase milk production by dairy farmers are strongly

influenced by the degree to which demand signals are transmitted through the marketing

system. Cooperatives have played an important role in transmitting the message of urban

market demand to them. Since the demand in the urban scenario is rapidly increasing so is the

supply generated by the farmers.

Surplus capacity: Further, the new dairy plant capacity approved under the Milk & Milk

Products Order (MMPO) has exceeded 100 million lpd. The new capacity would surpass the

projected rural marketable surplus of milk by about 40 per cent by 2005 AD.

The Downside

Technological gaps: Several areas of the dairy industry can be strengthened by the induction

of state-of-the-art technologies from overseas. Those who bring in new technologies or sign

joint ventures with foreign companies stand to benefit the most. To make the best out of the

present situation, the following areas require immediate remedial action on the part of dairy

entrepreneurs:

Raw milk handling needs to be upgraded in terms of physico-chemical and microbiological

attributes of the milk collected. The use of clarification and bactofugation in raw milk

processing can help improve quality of the milk products.

Better operational efficiencies are needed to improve yields, reduce waste, minimize

fat/protein losses during processing, control production costs, save energy and extend shelf-

life. The adoption of Good Manufacturing Practices (GMP) and HACCP would help

manufacture milk products conforming to international standards and thus make their exports

competitive.

Latest packaging technology can help retain nutritive value of packaged products and extend

their shelf-life. For proper storage and transportation, cold chain needs to be strengthened.

Good scope exists for value-added products like desserts, puddings, custards, sauces, mousse,

stirred yogurt, nectars and sherbets.

Indian Dairy Products

The term Indian Dairy Products refers to those milk products, which originated in undivided

India.

Flow chart of conversion of milk into traditional Indian dairy products

SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY Strengths:

Demand profile: Absolutely optimistic.

Margins: Quite reasonable, even on packed liquid milk.

Flexibility of product mix: Tremendous. With balancing equipment, you can keep on adding

to your product line.

Availability of raw material: Abundant. Presently, more than 80 per cent of milk produced

is flowing into the unorganized sector, which requires proper channelization.

Technical manpower: Professionally-trained, technical human resource pool, built over last

30 years.

Milk

Cultured

Dahi

Shrikhand

Ghee

Lassi

Kadbi

Condensed Acid

Misti Doi Rabri Kheer Kkoa

Burfi

Pedha

kalakand

Gulabjamun

Percipitation

Paneer

Sandesh

Chhana

Rasgoola

Pantoda

Rasmalai

Weaknesses:

Perishability: Pasteurization has overcome this weakness partially. UHT gives milk long

life. Surely, many new processes will follow to improve milk quality and extend its shelf

life.

Lack of control over yield: Theoretically, there is little control over milk yield. However,

increased awareness of developments like embryo transplant, artificial insemination and

properly managed animal husbandry practices, coupled with higher income to rural milk

producers should automatically lead to improvement in milk yields.

Logistics of procurement: Woes of bad roads and inadequate transportation facility make

milk procurement problematic. But with the overall economic improvement in India, these

problems would also get solved.

Problematic distribution: Yes, all is not well with distribution. But then if ice creams can

be sold virtually at every nook and corner, why cant we sell other dairy products too?

Moreover, it is only a matter of time before we see the emergence of a cold chain linking

the producer to the refrigerator at the consumers home!

Competition: With so many newcomers entering this industry, competition is becoming

tougher day by day. But then competition has to be faced as a ground reality. The market is

large enough for many to carve out their niche.

Opportunities:

"Failure is never final, and success never ending. Dr Kurien bears out this statement

perfectly. He entered the industry when there were only threats. He met failure head-on,

and now he clearly is an example of never ending success! If dairy entrepreneurs are

looking for opportunities in India, the following areas must be tapped:

Value addition: There is a phenomenal scope for innovations in product development,

packaging and presentation. Given below are potential areas of value addition:

Steps should be taken to introduce value-added products like shrikhand, ice creams,

paneer, khoa, flavored milk, dairy sweets, etc. This will lead to a greater presence and

flexibility in the market place along with opportunities in the field of brand building.

Addition of cultured products like yoghurt and cheese lend further strength - both in

terms of utilization of resources and presence in the market place.

A lateral view opens up opportunities in milk proteins through casein, caseinates and

other dietary proteins, further opening up export opportunities.

Yet another aspect can be the addition of infant foods, geriatric foods and nutritionals.

Export potential: Efforts to exploit export potential are already on. Amul is exporting

to Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the new GATT

treaty, opportunities will increase tremendously for the export of agri-products in

general and dairy products in particular.

Threats:

Milk vendors, the un-organized sector: Today milk vendors are occupying the pride of

place in the industry. Organized dissemination of information about the harm that they

are doing to producers and consumers should see a steady decline in their importance.

The study of this SWOT analysis shows that the strengths and opportunities far

outweigh weaknesses and threats. Strengths and opportunities are fundamental and

weaknesses and threats are transitory. Any investment idea can do well only when you

have three essential ingredients: entrepreneurship (the ability to take risks), innovative

approach (in product lines and marketing) and values (of quality/ethics).

The Indian dairy industry, following its delicensing, has been attracting a large number

of entrepreneurs. Their success in dairying depends on factors such as an efficient yet

economical procurement network, hygienic and cost-effective processing facilities and

innovativeness in the market place. All that needs to be done is: to innovate, convert

products into commercially exploitable ideas. All the time keep reminding yourself:

Benjamin Franklin discovered electricity, but it was the man who invented the meter that

really made the money!

INDIA: WORLDS LARGEST MILK PRODUCER India has become the world's No. 1 milk producing country, with output in 1999-2000

(marketing year ending March 2000) forecasted at 78 million tonnes. United States,

where the milk production is anticipated to grow only marginally at 71 million tonnes,

occupied the top slot till 1997. In the year 1997, India's milk production was on par with

the U.S. at 71 million tonnes. The world milk production in 1998 at 557 million tonnes

would continue the steady progress in recent years (see Table 1). Furthermore, the annual

rate of growth in milk production in India is between 5-6 per cent, against the worlds at 1

per cent. The steep rise in the growth pattern has been attributed to a sustained expansion

in domestic demand, although per capita consumption is modest - at 70 kg of milk

equivalent.

Annual Milk Production has trebled

India's annual milk production has more than trebled in the last 30 years, rising from 21

million tonnes in 1968 to an anticipated 80 million tonnes in 2001. This rapid growth and

modernization is largely credited to the contribution of dairy cooperatives, under the

Operation Flood (OF) Project, assisted by many multi-lateral agencies, including the

European Union, the World Bank, FAO and WFP (World Food Program). In the Indian

context of poverty and malnutrition, milk has a special role to play for its many

nutritional advantages as well as providing supplementary income to some 70 million

farmers in over 500,000 remote villages.

Milk: India's Number One Farm Commodity

Milk is India's number one farm commodity in terms of its contribution to the national

economy. In 1994-95, the value of its output based on producer price was Rs. 500,051

millions, exceeding that from paddy (rice). Notwithstanding its top place and the many

benefits it bestows on the lower rungs of the rural society, dairying has not received due

attention from planners, economists, social scientists and others. For example, the

investment in dairying made under the five-year plans is not commensurate with its

output. Consequently, its potential has not been adequately tapped.

MARKETING TODAY & TOMORROW The Indian Market - A Pyramid

India's dairy market is multi-layered. It's shaped like a pyramid with the base made up of

a vast market for low-cost milk. The bulk of the demand for milk is among the poor in

urban areas whose individual requirement is small, maybe a glassful for use as whitener

for their tea and coffee. Nevertheless, it adds up to a sizable volume - millions of litres

per day. In the major cities lies an immense growth potential for the modern sector.

Presently, barely 778 out of 3,700 cities and towns are served by its milk distribution

network, dispensing hygienically packed wholesome, quality pasteurized milk.

According to one estimate, the packed milk segment would double in the next five years,

giving both strength and volume to the modern sector. The narrow tip at the top is a

small but affluent market for western type milk products.

Growing Volumes

The effective milk market is largely confined to urban areas, inhabited by over 25 per

cent of the country's population. An estimated 50 per cent of the total milk produced is

consumed here. By the end of the twentieth century, the urban population is expected to

increase by more than 100 million to touch 364 million in 2000 a growth of about 40 per

cent. The expected rise in urban population would be a boon to Indian dairying.

Presently, the organized sector both cooperative and private and the traditional sector

cater to this market.

The consumer access has become easier with the information revolution. The number of

households with TV has increased from 23 million in 1989 to 45 million in 1995. About

34 per cent of these households in urban India have access to satellite television channel.

Potential for further growth

Of the three A's of marketing - availability, acceptability and affordability, Indian

dairying is already endowed with the first two. People in India love to drink milk. Hence

no efforts are needed to make it acceptable. Its availability is not a limitation either,

because of the ample scope for increasing milk production, given the prevailing low

yields from dairy cattle. It leaves the third vital marketing factor affordability. How to

make milk affordable for the large majority with limited purchasing power? That is

essence of the challenge. One practical way is to pack milk in small quantities of 250 ml

or less in polythene sachets. Already, the glass bottle for retailing milk has given way to

single-use sachets which are more economical. Another viable alternative is to sell small

quantities of milk powder in mini-sachets, adequate for two cups of tea or coffee.

Marketing Strategy for 21st Century

Two key elements of marketing strategy for 21st century are: Focus on strong brands and,

product mix expansion to include UHT milk, cheese, ice creams and spreads. The

changing marketing trends will see the shift from generic products to the packaged quasi,

regular and premium brands. The national brands will gradually edge out the regional

brands or reduce their presence. The brand image can do wonders to a product's

marketing as is evident from the words of Perfume Princess Coco Chanel: In the factory,

we pack perfume; in the market, we sell hope!

Emerging Dairy Markets

Food service institutional market: It is growing at double the rate of consumer market

Defense market: An important growing market for quality products at reasonable prices

Ingredients market: A boom is forecast in the market of dairy products used as raw

material in pharmaceutical and allied industries

Parlour market: The increasing away-from-home consumption trend opens new vistas

for ready-to-serve dairy products which would ride piggyback on the fast food revolution

sweeping the urban India.

India, with her sizable dairy industry growing rapidly and on the path of modernization,

would have a place in the sun of prosperity for many decades to come. The one index to

the statement is the fact that the projected total milk output over the next 15 years (1995-

2010) would exceed 1457.6 million tonnes which is twice the total production of the past

15 years!

NATIONAL DAIRY DEVELOPMENT BOARD (NDDB)

An Institution of National Importance

Due to very wide dispersal of producing and consuming units of milk, the unorganized

sector continues to dominate the milk marketing in India. However, the market structure

for milk is constantly changing. The organized sector now handles above 20% of the

milk output in the country. The cooperative sector accounts for nearly 50% of this. There

are over 1.10 lakh milk producers cooperatives federated into district milk unions and

State Dairy Federations, which have organic links with the Mother Dairy at the national

level. It is heartening to note that the milk producers in the Anand Model of milk

production get net of intermediation, about 60% of the final price. In other basic foods,

the returns are as low as 30% of the final price. NDDB supports the development of dairy

cooperatives by providing them financial assistance and technical expertise. Over the

years, brands in milk products created by cooperatives have become synonymous with

quality and value. Brands like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras

(Rajasthan). Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur) are among

those that have earned customer confidence.The Dairy Cooperative Network i) includes

170 milk unions ii) operates in over 338 districts iii) covers nearly 1,08574 village level

societies iv) is owned by nearly 12 million farmer members.

In sum, NDDB is a unique example of an organisational innovation with a focus on

human resource and co-operative development in India. By placing technology and

professional management in the hands of the village societies it has helped to raise the

standard of living of millions of poor people. These processes prove that true

development is the development of the people and this could be achieved through putting

the instruments of development in the hands of the people.

Philosophy

Cooperation is the preferred form of enterprise, giving people control over the

resources they create through democratic self-governance.

Self-reliance is attained when people work together, have a financial stake, and

both enjoy the autonomy and accept the account ability for building and

managing their own institutions.

Progressive evolution of the society is possible only when development is

directed by those whom it seeks to benefit.

In particular, women and the less privileged must be involved in cooperative

management and decision-making.

Technological innovation and the constant search for better ways to achieve our

objectives is the best way to retain our leading position in a dynamic market.

While our methods change to reflect changing conditions, our purpose and values

must remain constant.

Constitution

The National Dairy Development Board has been constituted as a body corporate and

declared an institution of national importance by an Act of India's Parliament.

The National Dairy Development Board -- initially registered as a society under the

Societies Act 1860 -- was merged with the erstwhile Indian Dairy Corporation, a

company formed and registered under the Companies Act 1956, by an Act of India's

Parliament - the NDDB Act 1987 (37 of 1987), with effect from 12 October, 1987. The

new body corporate was declared an institution of national importance by the Act.

The general superintendence, direction, control and management of NDDB's affairs and

business vests with the Board of Directors.

Dairy Cooperatives

Dairy Cooperatives account for the major share of processed liquid milk marketed in the

country. Milk is processed and marketed by 170 Milk Producers' Cooperative Unions,

which federate into 15 State Cooperative Milk Marketing Federations.

The Dairy Board's programmes and activities seek to strengthen the functioning of Dairy

Cooperatives, as producer-owned and controlled organisations. NDDB supports the

development of dairy cooperatives by providing them financial assistance and technical

expertise, ensuring a better future for India's farmers.

Over the years, brands created by cooperatives have become synonymous with quality

and value. Brands like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras

(Rajasthan). Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur) are among

those that have earned customer confidence.

Some of the major Dairy Cooperative Federations include:

Andhra Pradesh Dairy Development Cooperative Federation Ltd (APDDCF)

Bihar State Cooperative Milk Producers' Federation Ltd (COMPFED)

Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF)

Haryana Dairy Development Cooperative Federation Ltd. (HDDCF)

Himachal Pradesh State Cooperative Milk Producers' Federation Ltd

(HPSCMPF)

Karnataka Cooperative Milk Producers' Federation Ltd (KMF)

Kerala State Cooperative Milk Marketing Federation Ltd (KCMMF)

Madhya Pradesh State Cooperative Dairy Federation Ltd (MPCDF)

Maharashtra Rajya Sahakari Maryadit Dugdh Mahasangh (Mahasangh)

Orissa State Cooperative Milk Producers' Federation Ltd (OMFED)

Pradeshik Cooperative Dairy Federation Ltd (UP) (PCDF)

Punjab State Cooperative Milk Producers' Federation Ltd (MILKFED)

Rajasthan Cooperative Dairy Federation Ltd (RCDF)

Tamilnadu Cooperative Milk Producers' Federation Ltd (TCMPF)

West Bengal Cooperative Milk Producers' Federation Ltd. (WBCMPF)

National Dairy Development Board (NDDB) is the central cooperative board of the

country and was created to promote, finance and support producer-owned and controlled

organizations mentioned above. Two main players Amul of GCMMF and Mother

Dairy of NDDB is the leading brand in India. Our main focus is to analyze the strategic

move of NDDB for mother Dairy from top to bottom. Thus we are going to concentrate

on the progress of Mother Diary and NDDB for their future strategies.

OPERATION FLOOD A recent World Bank audit shows that of the Rs 200 crores it invested in Operation

Flood II, the net return into the rural economy has been a whopping Rs 24,000 crores per

year over a period of ten years, or a total of Rs 240,000 crores in all. No other major

development program has matched this input-output ratio.

Operation Flood, launched in 1970, has been instrumental in helping the farmers mould

their own development. Thus helping reach milk to consumers in 700 towns and cities

through a National Milk Grid. It also helped eradicate the need for middlemen thereby

reducing the seasonal price variations. As a result of the cooperative structure the whole

exercise of production and distribution of milk and milk products has become

economically viable for farmers to undertake on their own. In this manner the farmer

himself can enjoy the fruits of his own labor, instead of surrendering a majority of the

profit to corrupt middlemen.

Operation Flood was implemented in three phases.

Phase I Phase I (1970-1980) was financed by the sale of skimmed milk powder and

butter oil gifted by the European Union then EEC through the World Food

Programme. NDDB planned the programme and negotiated the details of EEC

assistance.

During its first phase, Operation Flood linked 18 of India's premier milk sheds

with consumers in India's four major metropolitan cities: Delhi, Mumbai,

Calcutta and Chennai.

Phase

II

Operation Flood's Phase II (1981-85) increased the milk sheds from 18 to 136;

290 urban markets expanded the outlets for milk. By the end of 1985, a self-

sustaining system of 43,000 village cooperatives covering 4.25 million milk

producers had become a reality. Domestic milk powder production increased

from 22,000 tons in the pre-project year to 140,000 tons by 1989, all of the

increase coming from dairies set up under Operation Flood. In this way EEC

gifts and World Bank loan helped to promote self-reliance. Direct marketing

of milk by producers' cooperatives increased by several million litres a day.

Phase

III

Phase III (1985-1996) enabled dairy cooperatives to expand and strengthen the

infrastructure required to procure and market increasing volumes of milk.

Veterinary first-aid health care services, feed and artificial insemination

services for cooperative members were extended, along with intensified

member education.

Operation Flood's Phase III consolidated India's dairy cooperative movement, adding

30,000 new dairy cooperatives to the 42,000 existing societies organized during Phase

II. Milk sheds peaked to 173 in 1988-89 with the numbers of women members and

Womans Dairy Cooperative Societies increasing significantly.

Phase III gave increased emphasis to research and development in animal health and

animal nutrition. Innovations like vaccine for Theileriosis, bypass protein feed and urea-

molasses mineral blocks, all contributed to the enhanced productivity of milk animals.

From the outset, Operation Flood was conceived and implemented as much more than a

dairy programme. Rather, dairying was seen as an instrument of development,

generating employment and regular incomes for millions of rural people. "Operation

Flood can be viewed as a twenty year experiment confirming the Rural

Development Vision" (World Bank Report 1997c.)

MOTHER DAIRY

About The Company

Mother Dairy Delhi was set up in 1974 under the Operation Flood Programme. It is

now a wholly owned company of the National Dairy Development Board (NDDB).

Mother Dairy markets & sells dairy products under the Mother Dairy brand (like Liquid

Milk, Dahi, Ice creams, Cheese and Butter), Dhara range of edible oils and the Safal

range of fresh fruits & vegetables, frozen vegetables and fruit juices at a national level

through its sales and distribution networks for marketing food items.

Mother Dairy sources significant part of its requirement of liquid milk from dairy

cooperatives. Similarly, Mother Dairy sources fruits and vegetables from farmers /

growers associations. Mother Dairy also contributes to the cause of oilseeds grower

cooperatives that manufacture/ pack the Dhara range of edible oils by undertaking to

nationally market all Dhara products. It is Mother Dairys constant endeavor to

(a) Ensure that milk producers and farmers regularly and continually receive market

prices by offering quality milk, milk products and other food products to consumers at

competitive prices and;

(b) Uphold institutional structures that empower milk producers and farmers through

processes that are equitable.

At Mother Dairy, processing of milk is controlled by process automation whereby state-

of-the-art microprocessor technology is adopted to integrate and completely automate all

functions of the milk processing areas to ensure high product quality/ reliability and

safety. Mother Dairy is an IS/ ISO-9002, IS-15000 HACCP and IS-14001 EMS certified

organization. Moreover, its Quality Assurance Laboratory is certified by National

Accreditation Board for Testing and Calibration Laboratory (NABL)-Department of

Science and Technology, Government of India.

Mother Dairy markets approximately 2.8 million liters of milk daily in the markets of

Delhi, Mumbai, Saurashtra and Hyderabad. Mother Dairy Milk has a market share of

66% in the branded sector in Delhi where it sells 2.3 million liters of milk daily and

undertakes its marketing operations through around 14,000 retail outlets and 845

exclusive outlets of Mother Dairy.

The companys derives significant competitive advantage from its unique distribution

network of bulk vending booths, retail outlets and mobile units. Mother Dairy ice creams

launched in the year 1995 have shown continuous growth over the years and today boasts

of approximately 62% market share in Delhi and NCR. Mother Dairy also manufactures

and markets a wide range of dairy products that include Butter, Dahi, Ghee, Cheese,

UHT Milk, Lassi & Flavoured Milk and most of these products are available across the

country.

The company markets an array of fresh and frozen fruit and vegetable products under the

brand name SAFAL through a chain of 400+ own Fruit and Vegetable shops and more

than 20,000 retail outlets in various parts of the country. Fresh produce from the

producers is handled at the Companys modern distribution facility in Delhi with an

annual capacity of 200,000 MT. An IQF facility with capacity of around 75 MT per day

is also operational in Delhi. A state-of-the-art fruit processing plant of fruit handling

capacity of 120 MT per day, a 100 percent EOU, setup in 1996 at Mumbai supplies

quality products in the international market. With increasing demand another state-of-

the-art fruit processing plant has been set up at Bangalore with fruit handling capacity of

around 250 MT per day.

Mother Dairy has also been marketing the Dhara range of edible oils for the last few

years. Today it is a leading brand of edible oils and is available across the country in over

2,00,000 outlets. The brand is currently available in the following variants: Refined

Vegetable Oil, Refined Soybean Oil, Refined Sunflower Oil, Refined Rice Bran Oil,

Kachi Ghani Mustard Oil and Filtered Groundnut Oil. Mother Dairy has also launched

extra virgin Olive Oil under the Daroliva brand.

Mother Dairy has over the last 3 decades, harnessed the power of farmer cooperatives to

deliver a range of delicious products and bring a smile on your face. In times to come,

Mother Dairy shall strive to remain one of Indias finest food companies.

Objectives and Business Philosophy of Mother Dairy

The main stakeholder of Mother Dairy was the farmer member for whose welfare it

existed.

Unlike other organizations, their objective is not to maximize the profit. They are more

interested in giving the best price for the farmers for their milk than in making a large

profit. Thus they look at the price given to their suppliers as not a cost but as an

objective.

Mother Dairy had, as its main objective, carrying out activities for the economic

development of agriculturists by efficiently organizing marketing of milk and dairy

produce, agricultural produce in raw and/or processed form and other allied produce.

This was to be done through:

Common branding

Centralized marketing

Centralized quality control

Centralized purchases and

Pooling of milk efficiently

Mother Dairy had declared, as its business philosophy, the following:

Ensure that milk producers and farmers regularly and continually receive market

prices by offering quality milk, milk products and other food products to

consumers at competitive prices and;

Uphold institutional structures that empower milk producers and farmers through

processes that are equitable.

The biggest strength of Mother Dairy was the trust it had created in the minds of its

consumers regarding the quality of its products. NDDB, and its brand Mother Dairy,

stood for guaranteed purity of whatever products it had produced. Adulteration was

simply not done in any of its products. In India, where such trust was hard to come by,

this could provide a central anchor for Mother Dairys future business plans. For more

than 40 years' Mother Dairy helping to create a national network has been adapted and

extended to other commodities and areas. Their constant effort to learn and to enrich

experience is central to their approach and capacities. In times to come, Mother Dairy

shall strive to become a leading player in the food industry in India.

Various Divisions Of Mother Dairy

The Company is always looking to innovate and come up with, either complete new

products or new ways to pack the existing products. Mother Dairy has a wide range of

products out of which the following products are,

In Milk Division:

NDDB

Mother Dairy

(GCP)

Grocery & Cheese products

- Dhara

- UHT Milk

- Ghee

Milk Division

- Liquid Milk

Spread & Beverages

- Butter

- Cheese

- Fruit Drinks

(IFP)

Ice cream & Frozen Products

- Chillz Ice cream

- Peas

- Frozen Vegetables

Fresh Dairy

- Probiotic Curd

- Curd

- Lassi

- Mishti Doi

Amul

In Ghee Division

In Butter Division

In Ice Cream Division

In Dahi Division

INTERNATIONAL BUSINESS Mother Dairy is a leading marketer of dairy products and fruit & vegetable products in

the Indian sub-continent. Its unwavering commitment to quality, state-of-the-art

technology, and the use of superior ingredients enable it to offer a wide range of world-

class products.

In addition to its market leadership in India, Mother Dairy is also active in the global

arena, exporting its range of dairy products to various international markets. In recent

years, the brand's fruit pulp, pastes, purees and concentrates have evoked tremendous

demand across the globe. To cater to this demand, Mother Dairy has set up a 100 per cent

Export Oriented Unit with a capacity for processing over 15000 metric tonnes of fresh

produce annually. Moreover, a new state-of-the-art plant with an installed capacity for

processing 10 metric tonnes of fruit per hour is being set up at Bangalore. The units are

ISO 9001-2000 and HACCP certified, and the products are Kosher certified.

As another step towards providing quicker and better service to its international

customers, Mother Dairy has established a marketing office in Rotterdam. With a view to

ensuring world-class quality on a consistent basis, Mother Dairy focuses on delivering

value at every stage - right from the farm to the plant. Best ingredients. Streamlined

processes. Reliable customer service. These are the aspects that make Mother Dairy an

outstanding brand.

STRATEGIES IMPLEMENTED

Focused Approach

Mother Dairy wants to get into bigger markets and have bigger shares in those markets.

The cooperative is also expanding its product portfolio further to match rival offerings

particularly those of Amul. For the first 22 years of its existence, liquid milk was the

only dairy product that Mother Dairy offered.

It was in 1996 that it came up with ice-creams. But the real spurt came about seven years

ago, when it introduced curd, flavoured milk, and lassi and mishti doi. It introduced

butter a four-and-a half year ago; ghee and UTH milk four years ago; and cheese, about

three-and-a half year ago. And under its frozen foods and vegetables brand Safal, besides

the introduction of corn and mixed vegetables.

Product Differentiation

While Mother Dairy still may not have a product portfolio as large as Amul, which is

also expanding across the country in a big way and is a much bigger player, it's doing its

bit. Mother Dairy says the idea is not just to enter new markets, but to do well in those

markets - which mean bigger market shares in the different product categories in

whichever market it is present.

The drivers will be value created through quality of the offerings as well as innovations

in products. This will, of course, be backed by relevant marketing and promotion

campaigns. Mother Dairy is bringing in mass Indian flavours which are building up in

terms of absolute percentage of contribution. Their attempt is to make the taste

experience in ice creams as familiar as possible so as to increase consumption.

Take the case of curd. It started off very slow but today, Mother Dairy claims it's

growing at close to 60 per cent year-on-year in Delhi. Here again, the Indian flavour

formula seems to have worked.

Smart Marketing

On the marketing front, Mother Dairy says it's trying to take its product campaigns and

communications to a higher platform. For instance, in the case of milk, the campaigns do

not talk about the obvious benefits - milk is good for health, it has calcium and so on -

but rather it targets children and are created around ideas such as "The country needs

you, grow faster".

As far as products such as butter, cheese and ice creams go, the campaigns have been

created around "taste". For butter again, the focus is on children. Here, Mother Dairy has

dared to go different. Since 60 per cent butter is consumed by kids, the company wants

them to sit up and take notice of its butter. Makkhan Singh, a sturdy jovial cow (a

cartoon character) has been made its brand ambassador.

While Mother Dairy has been carrying out school programmes - games and activities

involving Makkhan Singh in Delhi. It also runs a gaming website on the character to

attract children.

It's cheese for children again. A couple of years ago, Mother Dairy carried out a retail

activity: "Cheese khao superhero ban jao", where kids buying cheese at a retail outlet

were invited for a photo op - dressed as superheros - through Polaroid cameras; and the

framed photograph was presented to them. The activity was carried out in about 150

outlets in Delhi and Mumbai, with about 20,000-25,000 snaps being taken. Cheese was

also something that helped the company bond better with its retailers. In November 2005,

retailers in Delhi displayed banners proclaiming, "Cheese ke saath bees ki cheez," a

proposal that said if a consumer buys Mother Dairy cheese, the retailer can offer him

anything worth Rs 20 from the shop - which worked better than offering something free

with the product, which the consumer didn't even needs.

The exercise resulted in better ties with retailers. A positive response made Mother Dairy

to repeat it in Kolkata as well. Clearly, Mother Dairy has aggressive plans. But, strong

regional brands and other co-operatives will continue to give it tough competition.

Perspective Strategies applied by Mother Dairy

Mother Dairy maps the future of dairying in India, setting realistic goals for

Strengthening Cooperative Business,

Production Enhancement,

Assuring Quality and

Creating an Information and Development Research.

The plan was realised with the successful completion of the Operation Flood Programme

and has been developed by the State Milk Marketing Federations and the Milk Producers'

Cooperative Unions in consultation with the Dairy Board. The goals and strategies to

meet them have been drawn by its actual implementers - Federation and Unions and

supported by NDDB.

Strategy for Strengthening Cooperative Business

Recruit, train and motivate increasing numbers of women to work for Mother

Dairy to achieve significant improvements in dairy husbandry, as they primarily

shoulder animal husbandry related responsibilities in rural India

Consolidation and growth in milk and milk product marketing, promoting better

equity for regional cooperative brands and developing qualified and skilled

manpower

Education of producer members, opinion leaders and trained professionals to be

expanded and strengthened

Empower local leaders, strengthen societies and equip their staff and members

with the skills and information they need

Persuade the State and Central Governments to remove the shackles on

cooperative laws so dairy can compete on equal terms with other forms of

enterprise.

Strategy for Production Enhancement

Improve the production potential of indigenous breeds of cattle such as Sahiwal,

Gir, Rathi and Kankrej and breeds of buffalo such as Murrah, Mehsana and

Jaffarbadi through appropriate selection programme

Cross non-descript cattle with Holestein Friesian in areas with adequate feed and

fodder and with Jersey in resource-poor areas

Increase the production and use of high quality feed appropriate to local

conditions

Increase production and availability of green and ensiled fodder

Encourage unions, NGOs and cooperatives to put common property area under

improved pasture and fodder tree

Expand first-aid coverage through village level societies

Increase vaccination of animals against HS, BQ and FMD

Develop Mastitis and Brucellosis control strategies

Strategy for Assuring Quality

Identify and address quality related problems at every stage from the producer at

the village cooperative, to the dairy plant and the process of final delivery to the

consumer

Facilitate improvement of hygiene, sanitation, food safety and operating

efficiency in the dairy plants and sensitize dairy personnel to product quality

aspects as per international standards.

Strategy for Creating an Information and Development Research

Link large cooperatives, Unions, Federations and NDDB in a national network

that collects, adds value and disseminates information

Ensure availability of analytical information for Policy Planning and Decision

Support.

Product and Process Technology

As a part of its effort to add value to the business, Mother Dairy identifies, develops,

tests and transfers product and process technologies.

Regional preferences are an important basis, for developing products and their

manufacturing processes. In addition equipment has been designed and commercialised

for manufacturing indigenous milk products like shrikhand, paneer, khoa, lassi, gulab

jamun, mishti doi and curd as well as popular western products like ice-creams and

cheeses.

In developing process, product and equipment technology, emphasis is placed on

maintaining high quality standards. To check milk quality, test kits have been developed.

NDDB also provides services for analysis of dairy product samples.

Competition in Different Products

The nature of competition varied among the different products. In the case of liquid milk,

competition was from private dairies and contractors. There was also competition from

newly emerging private dairies that had started supplying milk to the consumer. They

were generally not very particular about the brand of liquid milk, so that the sales

depended to a large extent on dealer push. However, there was scope to establish

differentiation through appraising the customers of the quality not only of the initial milk

itself, but also the quality of the supply chain, which ensured the stability of milk.

For butter and cheese, new entrants were making their mark. Britannia, a firm engaged in

manufacture and sale of biscuits, had entered into foods business, and more particularly

in milk and milk related products such as butter. Britannia had introduced new forms of

cheese, and supported its products with extensive advertising campaigns. It was believed

that advertisements played a powerful role in the demand for particular brands of butter

and cheese.

The ice creams market was an emerging market in India, witnessing the entry of

numerous players. The national scene was dominated by Hindustan Lever with its

Kwality and Walls brands, accounting for about 45 percent of the market. GCMMF was

the other national player, with about 30 percent of the market. There were, in addition,

very powerful regional players such as Vadilal Ice Creams in the Western India who

commanded substantial (in excess of 30 percent) of the regional market shares. Ice

creams were largely promoted through local promotions, hoardings (billboards) and

advertisements.

There is a certain kind of monopoly created by the companies in the market. Such as,

Amul creates monopoly over its butter in the market. The retailers are sometimes forced

to keep the other products of the company, if it needs butter. So other product also gets

penetrated in the market because of Amuls monopoly over butter product.

Same way, Nestle also play its game, by creating monopoly over its Maggie noodles. And

so the companys other products also gets penetrated in the market. But, Mother Dairy

Mumbai Office doesnt have any such kind of products on which the company can create

monopoly upon.

It could be expected that these companies would also expand their operations in the

coming years.

Advertisement and Promotion by Mother Dairy

On the marketing front, Mother Dairy says it's trying to take its product campaigns and

communications to a higher platform. For instance, in the case of milk, the campaigns do

not talk about the obvious benefits - milk is good for health, it has calcium and so on -

but rather it targets children and are created around ideas such as "The country needs

you, grow faster".

As far as products such as butter, cheese and ice creams go, the campaigns have been

created around "taste". For butter again, the focus is on children. "Amul butter may be

selling the most, but the advertising and promotions are almost always targeted at

adults," points out an analyst citing Amul's popular Utterly-Butterly campaigns.

Here, Mother Dairy has dared to go different. Since 60 per cent butter is consumed by

kids, the company wants them to sit up and take notice of its butter. Makkhan Singh, a

sturdy jovial cow (a cartoon character) has been made its brand ambassador.

While Mother Dairy has been carrying out school programmes - games and activities

involving Makkhan Singh in Delhi, it has plans to take such activities to Mumbai and

Kolkata as well. It also runs a gaming website on the character to attract children. Equity

and empathy are being built for the brand, the values for which it stands, and the various

other Mother Dairy products, which draw their core values from Mother Dairy milk.

It's cheese for children again. A couple of months ago, Mother Dairy carried out a retail

activity: "Cheese khao superhero ban jao", where kids buying cheese at a retail outlet

were invited for a photo op - dressed as superheros - through Polaroid cameras; and the

framed photograph was presented to them. The activity was carried out in about 150

outlets in Delhi and Mumbai, with about 20,000-25,000 snaps being taken.

It claims that the exercise resulted in better ties with retailers. A positive response made

Mother Dairy to repeat it in Kolkota as well. Clearly, Mother Dairy has aggressive plans.

But, strong regional brands and other co-operatives will continue to give it tough

competition. It will not be a cakewalk anymore.

In Mumbai, Mother Dairy carried out a marketing operation few months back, named as,

Operation Jawalamukhi. Under this operation, sales executives of each division of the

company used to go together to unleash the opportunities. Suppose if an outlet only keeps

Mother Dairy Milk, then this team used to try to convince the retailer to penetrate the

other products of the company also, such as, Curd, Ice cream. Hence, this activity was

carried for two weeks, which brought out many great opportunities in the market.

Moreover, Mother Dairy Mumbai office carried out a new scheme in the market few

months back which was of coupon distribution. The company used to distribute the

scratch coupons to the retailers, which would have a discount of Rs. 10, 25, 50, 100, 200,

300, 500, 1000, 2000 off on it. That means, the retailer used to get the free material

worth of that coupon amount. Hence, this has helped a lot in building strong

relationships with the retailers.

Mother Dairy and Its Programme for Management of Change

Mother Dairy looked at all its operations, strengths and weaknesses as well as

opportunities available, and came to the conclusion that it had to become more customer

centred (rather than merely being farmer or supplier centred). This required paying close

attention to the customer needs and quality. Mother Dairy realized that it was not enough

that Mother Dairy itself was wedded to these ideas; the entire supply chain had to

conform. Hence it launched a Total Quality Management or TQM to ensure the high

quality of the products from the starting point (the village farmer who supplied milk)

right through the value chain until it reached the consumer. This meant the need for the

involvement of farmers, transporters, factory personnel, wholesalers and retailers, each

of whom had a role to play.

What began as a TQM movement gradually became a movement for management of

change in the entire value chain. Mother Dairys Management of Change (MOC)

initiative was launched in six areas: cleanliness of the dairy co-operative societies,

planning and budgeting of the dairy cooperative society, artificial insemination service,

and quality testing and milk measurement by the dairy co-operatives, animal feeding and

management practices and self leadership development.

ORGANIZATION STRUCTURE OF THE SALES DEPARTMENT

Managing Director

Chief Executive Officer

National Sales Manager

Regional Sales Manager

Sales Manager

Area Sales Manager

Senior Executive

Junior Executive

Pilot Sales Representative

DISTRIBUTION NETWORK

Mother Dairy has a wide and well managed network of salesmen appointed for taking up

the responsibility of distribution of products to diverse parts of the City. The distribution

channels are constructed in such a way that the demand of customers is fulfilled at the

right place and the right time when it is needed by them.

A typical distribution chain at Mother Dairy would be:

The customers of the Company are divided into different categories and different routes,

and every salesman is assigned to one particular route, which is to be followed by him on

a daily basis. A detailed and well organized distribution system contributes to the

efficiency of the salesmen. It also leads to low costs, higher sales and higher efficiency

thereby leading to higher profits to the firm.

Distribution Routes

The various routes formulated by Mother Dairy for distribution of products are as

follows:

Institution: The customers in this category collectively contribute a large chunk

of the total sales of the Company. It basically consists of organizations that buy

large quantities of a product in one single transaction. The Company provides

goods to these customers on credit, payments being made by them after a certain

period of time i.e. either a month of half a month.

Examples: Clubs, Fine dine restaurants, Hotels, Corporate Houses, etc.

Modern Retail Format (MRF): This route consists of outlets of Mother Dairy

products, wherein a considerable amount of stock is kept in order to use for future

consumption. The stock does not exhaust within a day or two, instead as and

when required stocks are stacked up by them so as to avoid shortage or non-

Production Plant Warehouse

Distribution Depot

Warehouse Retail Stock Retail Shelf Consumer

availability of the product.

Examples: Departmental stores, Super markets such as More, Spencer, Reliance

Fresh, etc.

General Retail: Under this route, all the outlets that come in a particular area or

an area along with its neighbouring areas are catered to. The consumption period

is not taken into consideration in this particular route.

Examples: All retail outlets.

Distribution Vehicles

The company has six highly insulated vehicles for the product delivery purpose, each

having a capacity of 125 crates. The routes of these vehicles are as follows,

1) First Vehicle Pune

2) Second Vehicle Vashi (Thane to Dombivali, Vashi to Panvel)

3) Third Vehicle Vikhroli to Borivali (E)

4) Fourth Vehicle Jogeshwari (W) to Borivali (W)

5) Fifth Vehicle South Mumbai (Kurla to Churchgate)

6) Sixth Vehicle - For tuning and alteration purpose.

Distribution System

Direct distribution: In direct distribution, the company has direct control over

the activities of sales, delivery, and merchandising and local account management

at the store level.

Indirect distribution: In indirect distribution, an organization which is not part

of the Company system has control on one or more of the distribution elements

(Sales, delivery, merchandising and local account management).

Merchandising: Merchandising means communication with the consumer at the

point of purchase to convey product benefit, value and Quality. Sales people and

delivery personnel both have this responsibility. In certain locations special teams

who go into business locations to specifically merchandise our products.

Departments Involved In The Distribution Process

The Distribution process mainly consists of three departments:

Distribution Department: It appoints distributors and establishes a distribution

network, processes approved sale orders and prepares invoices, arranges logistics

and ship products, co-ordinates with distributors for collections and monitors

distribution stocks and their set-up.

Finance Department: It checks credit limits and approves sales orders in

compliance with the credit policy followed by the firm, records collections from

distributors, periodically reconciles outstanding balances from distributors,

obtains balance confirmation from distributors and follows up outstanding

balances.

Logistics or Warehousing Department: It dispatches goods as per approved by

order, ensures that stocks are dispatched on a FIFO basis, ensures physical

control over load out area and updates warehouse stock records in a timely

manner.

Project: Distribution Route Effectiveness Of Cold Chain Products (CCP) i.e. Curd Division.

The main objective of this study lies in understanding the organization, studying,

understanding the marketing channels of the company and to correct its distribution

activities as well.

Deep learning regarding channel efficiency and understanding the market structure,

identifying potential outlets and practical survey was also undertaken.

This project is regarding the distribution route effectiveness, to study the impact of it on

sales and how the company understands the market using different strategies. The project

was undertaken for a period of sixty days and was carried out within the limits of

Mumbai.

During the entire course of the project, many outlets were surveyed for analysis

regarding distribution effectiveness & channel mapping.

In the first part of the project, a survey of selected outlets was conducted by taking

interview of outlet owners or managers. Based on the information gathered through the

outlet managers or owners service and distribution improvement, competitive position in

the different areas and scope for the market expansion is studied.

ABOUT THE PRODUCT

Mother Dairys Fresh Dairy Division

As a part of my project I have been assigned to the Fresh Dairy division of Mother Dairy.

Fresh dairy handles products which require a temperature control of 0-4 degrees.

Currently the Fresh Dairy division in Mumbai and Pune region have two products in that

product line, while 2-3 products are waiting to be launched. The current product range

includes the Probiotic Dahi, and Regular Dahi. The Probiotic ranges of products are sold

under the brand name of B Active.

The Fresh Dairy division has been making a business of around 4.19 tonnes daily

average and is growing steadily with its packaged dahi brining in the chunk of the

revenue. Mother Dairy started its operations in Mumbai 3 years ago. Since then it has

managed to make a steady progress in the Fresh Dairy products in spite of having 15 year

old competitors like Amul, Chitale, Aarey, Nestle etc.

The sales are depended mostly through the retail route which consists of department

stores, hypermarkets, malls or the local grocery stores. A good distribution network is set

in place with 20 distributors all over Mumbai and Thane region. Expansion plans are in

the pipe line considering the huge potential of the Mumbai region.

Product Profile Products under the Fresh Dairy division (Mumbai),

1) B Activ Probiotic Dahi

Mother Dairy launched their Probiotic Dahi in Mumbai 2 years back. It says its B

Activ plus curd is an innovative and extremely healthy offering containing proboitic

strains and dietary fibre. The company said the curd offers nutritional benefits and

helps in keeping the digestive system balanced. Thus ensuring good health for the

entire family.

In addition to the probiotic strains, dietary fibre has been incorporated in the curd

resulting in improved gastrointestinal health, glucose tolerance and better insulin

response helping in wait management. Suitable for the Indian palate, lactic cultures

have been used in the curd ensuing desired texture, consistency and taste that the

consumer generally wants in his / her curd. With the growing health consciousness

among consumers, the consumption of the new fibre which probiotic dahi provides

consumers with the added benefits of improved nutrient absorption and a well

balanced digestive system besides the goodness of dahi, says Paul Thachil, Mother

Dairys Chief Executive Officer (Dairy & Foods), Mother Dairy Fruit & Vegetable

(P) Ltd said. Based on the insight drawn from an extensive consumer research, we

found an inherent need of providing essential ingredients like fibre through the

consumers daily diet. Based on this insight the R & D team came out with this unique

and innovative product which can meet 10% of bodys essential fibre requirement.

Product pricing

200 gms Rs 16/-

400 gms Rs 29/-

Availability Department stores, Hypermarkets, Supermarkets, Retail Outlets, etc.

Life 15 days

2) Regular Dahi

Along with the new launched Probiotic products Mother Dairys Fresh Dairy

Division is growing stronger day by day in the western region with its trump card

Dahi.

Curd or Dahi is a dairy product obtained by curdling (coagulating) milk with

rennet or an edible acidic substance such as lemon juice or vinegar and then

draining off the liquid portion (called whey). Milk that has been left to sour ( raw

milk alone or pasteurized milk with added lactic acid bacteria) will also naturally

produce curds, and sour milk cheese is produced this way. The increased acidity

causes the milk proteins (casein) to tangle into solid masses, or curds. The rest,

which contains only whey proteins, is the whey. In cows milk, 80% of the

proteins are caseins. Curd products vary by region and include cottage cheese,

quark (both curdled by bacteria and sometimes also rennet) and paneer (curdled

with lemon juice). The word can also refer to a non dairy substance of similar

appearance or consistency, though in these cases a modifier or the word curdled

is generally used (e.g. bean curd, lemon curd or curdled eggs).

Mother Dairys Dahi goes through a highly scientific process which involves

standardized milk keeping the calorific and nutritional value of the product high.

As a result of the standardization procedures the quality and the freshness of the

dahi is maintained keeping its taste intact all year round.

Product Pricing

90 gms Rs 7/-

200 gms Rs 15/-

400 gms Rs 27/-

2 kgs - Rs 113/-

Availability Department stores, Hypermarkets, Supermarkets, Retail outlets, etc.

Life 15 days

Pricing Of Various Packaged Dahi Available In The Market

Brands Mother Dairy Amul Nestle Govardhan Britannia

Quantity 200 gms

400 gms

200 gms

400 gms

200 gms

400 gms

200 gms

400 gms

200 gms

400 gms

Price 15 27 15 27 15 27 15 27 15 27

Therefore, the prices are not major issue as all the other competitors have same

prices for their products.

What are Probiotics?

Probiotics are dietary supplements containing potentially beneficial bacteria or yeasts.

According to the currently adopted definition by FAO/WHO, Probiotics are: Live

microorganisms which when administered in adequate amounts confer a health benefit

on the host.

Lactic acid bacteria (LAB) are the most common type of microbes used. LABs have been

used in the food industry for many years, because they are able to convert sugars

(including lactose) and other carbohydrates into lactic acid. This not only provides the

characteristic sour taste of fermented dairy foods such as yogurt, but also by lowering the

pH may create fewer opportunities for spoilage organism to grow, hence creating

possible health benefits on preventing gastrointestinal infections. Strains of the genera

Lactobacillus and Bifid bacterium are the most widely used probiotic bacteria.

Probiotic bacterial cultures are intended to assist the bodys naturally occurring gut flora,

ecology of microbes, to re-establish themselves. They are sometimes recommended by

doctors and, more frequently, by nutritionists, after a course of antibiotics, or as part of

the treatment for gut related candidiasis. Claims are made that probiotics strengthen the

immune system to combat allergies, excessive alcohol intake, stress, exposure to toxic

substances, and other diseases. In these cases, the bacteria that work well with our bodies

(see symbiosis) may decrease in number, an event which allows harmful competitors to

thrive, to the detriment of our health.

Maintenance of a healthy gut flora is, however, dependent on many factors, especially

the quality of food intake. Including a significant proportion of probiotic foods in the diet

has been demonstrated to support a healthy gut flora and may be another means of

achieving the desirable health benefits promised by probiotics.

Probiotics, which means for life, have been used for centuries as natural components in

health-promoting foods. The original observation of the positive role played by certain

bacteria was first introduced by Russian scientist and Nobel laureate Eli Metchnikoff,

who in the beginning of the 20th century suggested that it would be possible to modify

the gut flora and to replace harmful microbes by useful microbes.

The term probiotics was first introduced in 1953 by Kollath (see Haamilton-Miller et al

2003). Contrasting antibiotics, probiotics were defined as microbially derived factors that

stimulate the growth of the microorganisms. In 1989 Roy Fuller suggested a definition of

probiotics which has been widely used: A live microbial feed supplement which

beneficially affects the host animal by improving its intestinal microbial balance.

In the 1960s the dairy industry began to promote fermented milk products containing

Lactobacillus acidophilus. In subsequent decades other (Lactobacillus) species have been

introduced including Lactobacillus rhamnosus, Lactobacillus caset, and Lactobacillus

johnsonii, because they are intestinal species with beneficial properties.

Why do we need Probiotics?

If you are exposed to any of these risk factors, you are a candidate for probiotic

supplementation:

Lifestyle: Increased Stress, Rushed or irregular meals, excessive travel.

Diet: Unbalanced and poor diet and Increased Alcohol Consumption, high intake

of food loaded with chemical additives (packaged and processed foods).

Excessive Medication: Increased use of medicines (contraceptives pills,

antibiotics and steroids).

Environmental: Pollution, and increased use of pesticides.

Others: Poor gut (constipation and diarrhoea), Chemotherapy, Exposure to

harmful radiations.

Where to get them from?

Fermented dairy products: Yogurt, Buttermilk (Chaach), Lassi and Kefir (Thin

drinkable Yogurt), but not in most commercially available ones as the cultures are

not live.

Dietary Supplements Probitic drinks, powders, Capsules, etc. are very useful as

they are highly concentrated sources of good bacteria as compared to the natural

ones. A 65 ml of a probiotic drink provides bacteria, which equals to nearly 60 tubs

(200 ml) of commercial yogurt.

Helpful foods To ensure good gut flora, it is important to take plenty of probiotic

food, which supports the growth of probotic flora. These Foods include Whole

grains, Oats, Wheat Bran, Barley, Isabgol,(Psyllium), Soyabeans and Soy based

products, Flaxseeds, Sunflower seeds, Fenugreek seeds (Methre), Garlic, Onions,

Leek (like spring onions), Carrots, Citrus fruits.

CURD MAKING PROCESS

1) Sterilization of milk

Milk is heated to 120C for a few minutes or to just over 100C for 20 to 30 minutes and

this process kills all pathogenic and most other microorganisms and spores and the milk

will keep for 1 to 2 years. The milk is off white in colour and has a characteristic

caramel, boiled milk taste which is not to everyone likes.

2) Pasteurisation

Milk is often pasteurized to destroy pathogenic microorganisms and to eliminate spoilage

and defects induced by bacteria.

3) Inoculation and curdling

Milk for curd making must be of the highest quality. Because the natural microflora

present in milk frequently include undesirable types called psychrophiles, good farm

sanitation and pasteurization or partial heat treatment are important to the curd-making

process. This is done in Inoculation and curdling.

Sterilization

Pasteurisation

Inoculation and curdling

Packing

Heat Setting & Cooling

4) Packing

The curd is then packed into its respective packages of 90 gms, 200 gms, 400 gms, 2 kgs.

5) Heat Settin